Sitting of 13 July 2004

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS
  The Secretary of State was asked—
  FOREIGN AND COMMONWEALTH AFFAIRS

    British Virgin Islands
    1. Mr. Anthony Steen: If he will make an official visit to the British Virgin Islands to discuss the savings directive. [183354]
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Bill Rammell): There are no plans for a Foreign and Commonwealth Office ministerial visit to the British Virgin Islands to discuss the EU savings directive, but my right hon. Friend the Paymaster General and I held meetings with BVI Ministers during their recent visit to the UK, at which we discussed this issue.
    Mr. Steen: Why are the British Overseas Territories so disadvantaged with regard to the EU, when Britain is an EU member? They get none of the advantages, but all the disadvantages are thrown at them. What will the Minister tell the islands when the savings directive means that they will lose $40 million? That money will go to independent Caribbean islands. I am secretary of the all-party Caribbean parliamentary group. [Interruption.] I have yet to go to the British Virgin Islands, but what will be done when they lose $40 million a year because of the European directive?
    Mr. Rammell: I do not believe that there is any evidence that it will be possible for the islands to sustain a loss on that scale. Whether or not the Caribbean overseas territories come under the ambit of the EU, it is manifestly in their interests to adopt the highest possible standards of international regulation and transparency. There is no evidence to suggest that businesses will relocate as a result of the directive. At a recent BVI financial services roadshow in the far east, there was much interest in doing business in the BVI. The directive was not mentioned once as a factor in location decisions.

  Uzbekistan
  2. Mr. John Grogan: If he will make a statement on relations with Uzbekistan. [183355]
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Bill Rammell): The UK's relations with Uzbekistan are, in general terms, constructive, but we have serious concerns about the human rights situation and the lack of economic and political reforms. We press those concerns strongly, both publicly and privately, with the Uzbek Government.
  Mr. Grogan: As regards Uzbekistan, who does my hon. Friend think has the better emphasis? Our splendid ambassador Mr. Craig Murray said recently in a speech that Uzbekistan was "not a functioning democracy", and he drew attention to the fact that there are between 7,000 and 10,000 religious and political prisoners there. In contrast, our esteemed ally Mr. Donald Rumsfeld said in a recent speech that US-Uzbek relations were growing stronger every month. He failed to mention human rights concerns.
  Mr. Rammell: This Government have been extremely forthright in our criticism of the Uzbek Government's human rights record. Our ambassador's position on human rights has this Government's full support, as I and other Ministers have made clear. However, the US Government also express similar concerns. I hope that my hon. Friend will look at the annual human rights report from the US State Department, in which significant concerns about human rights in Uzbekistan are expressed. Both the US and UK Governments have a policy of constructive but critical engagement to try to improve the human rights situation in that country.
  Tony Baldry: Does the Minister accept that all the central Asian republics—including Uzbekistan but with the exception of Kazakhstan—are very poor, having depended for their income largely on the former Soviet Union? Will he and other Ministers use their best offices with EU partners to ensure that more of the EU's external affairs budget is focused on poor countries in central Asia, and on former eastern European states such as Moldova and others in the south Caucuses that are not part of the EU? If we are not careful, such states will become black holes— failed and failing states—in a few years.
  Mr. Rammell: I certainly take the point that poverty is a major issue. We need to see what more we can do, bilaterally and through the EU, in terms of support and engagement. However, poverty, or any other problem, is never a justification for a poor human rights record. That is why we express concern about Uzbekistan in the way that we do.

  Iraq
  3. Mr. David Stewart (Inverness, East, Nairn and Lochaber) (Lab): What his assessment is of progress made so far by the Iraqi Interim Government. [183356]
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): Good progress has been made since the Iraq Interim Government took over sovereignty on 28 June. Security remains the major challenge, but as Iraqi Foreign Minister Hoshyar Zebari spelled out to EU Foreign Ministers yesterday, the new sovereign Government are cracking down on crime and

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  terrorism, accelerating reconstruction, and preparing for elections by January 2005. We are proud to be a leading supporter of their efforts.
  Mr. Stewart: Does my right hon. Friend share my view that the acid test of the Interim Government's success is how it changes the lives of ordinary Iraqis, such as those in Basra whom I visited last year? The key is to secure the economy by ensuring that the pipeline operates efficiently. The Iraqi Prime Minister has said that every bomb that blows up a pipeline takes food out of the mouths of ordinary Iraqi children. Does my right hon. Friend agree?
  Mr. Straw: I entirely agree with my hon. Friend. The saboteurs, criminals and terrorists sought to justify their destruction of parts of Iraq's infrastructure on the basis that they were attacking the occupying forces of the United States and the United Kingdom. It was never true, but that excuse has now gone. They are attacking the lifeblood of the Iraqi people. Notwithstanding that, there has been a significant increase in oil production, an increase in electricity generation and a great improvement in the number of jobs generated in Iraq in the past year, and we look forward to the continuation of that success.
  Mr. Andrew Mackay: Does the Foreign Secretary agree that an important aspect of the work of the Interim Government in Iraq is to ensure good relationships with the Kurdish north, to ensure that a devolved Administration works there and to ensure that senior Kurdish representatives are included in the Government not just now but for the future to maintain a united Iraq?
  Mr. Straw: Yes. One of the striking things about the new Iraqi political sentiment is that ideas of Kurdistan becoming a separate sovereign country have disappeared almost altogether, and all the Kurdish representatives whom I meet are fully committed to maintaining Iraq as a sovereign nation within its existing borders.
  Chris McCafferty: Given the increasing difficulties for women in Iraq, can my right hon. Friend tell the House what progress has been made towards registering women's votes? Will any special measures be introduced to enable women to vote safely when the full democratic elections take place in Iraq in January?
  Mr. Straw: Of course we recognise the particular problems faced by women in Iraq, but one of the striking things about the new Government is their commitment, which they have put into practice, to increase women's representation. Six of the 30 members of the Government are women. That may not be a sufficient proportion, but it is greater than in many Governments across Europe.
  The electoral process has been led by the United Nations and Mrs. Perelli. The election commissioners have now been appointed. There is a big challenge to register electors, both men and women, but I believe that the process will be undertaken sufficiently for elections to take place by the end of January.
  Mr. Michael Ancram: I join in wishing success to the Iraqi Interim Government in restoring
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  control of Iraq to the Iraqis. However, it appears that recently considerable numbers of Iranians have entered Iraq, many through the British-controlled sector, and have remained there. Can the Foreign Secretary give any indication of their numbers? Are there any connections between them and recent incidents of terrorism and insurgency in Iraq? Does he agree that it would be highly damaging to the credibility of the Interim Government if Iran were in any way seeking to exercise undue influence over political developments in Iraq? How do the Government propose to help the Iraqi Interim Government to combat that?
  Mr. Straw: I agree with the last sentiment expressed by the right hon. Gentleman. Generally, we have had good co-operation with the Iranians, including the establishment of border posts along the sector that we previously controlled. Following 28 June, the whole of the border is now under the control of the Iraqi Government; we are there as forces in support. All the neighbouring countries are seeking to exercise some influence over Iraq, but again one of the striking things about the Iraqis, including the Shi'a, is their own sense of being Iraqi and their wish to ensure that they determine Iraq's future, and that it is not determined by other countries.
  Llew Smith: As the Interim Government came a bout as a result of the war with Iraq, and as we went to war because we were told that the Iraqis had weapons of mass destruction that could be used within 45 minutes and were a threat to the world, if no weapons of mass destruction are found will the House be right in expecting resignations from some of the highest levels of Government?
  Mr. Straw: I will not anticipate the outcome of the Butler report, which will be published tomorrow, but I remind my hon. Friend that we took military action because Saddam had flagrantly violated 12 years of Security Council mandatory resolutions and that the whole international community, including China, France, Russia and Syria as well as the United Kingdom and the United Stales, declared in Security Council resolution 1441 that Iraq posed a threat to international peace and security by reason of its proliferation of weapons of mass destruction, its long-range missile systems and its defiance of the United Nations. I believe that the international community was right to make that judgment when it did, in November 2002, and—in the light of subsequent events—it would be right to make that judgment today.

  Israel
  4. Chris Grayling: What recent discussions he has held with the Israeli Government about the border wall under construction in the west bank.[183357]
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): My noble Friend Baroness Symons and I have discussed the issue of the barrier with Israeli Ministers on many occasions. I hope to talk to Israeli Foreign Minister Shalom later today. All of us understand Israel's need to take steps, within

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  international law, to protect itself from terrorist attack, but together with the European Union we have consistently made it clear to the Israeli Government that the barrier built on occupied territory is illegal.
  Chris Grayling: Does the Foreign Secretary agree that the Israeli Government's decision this week to proceed with construction of the wall represents a serious and potentially lasting threat to any prospect of middle eastern peace? Is there anything that he or other western Governments can do to persuade the Israeli Government to back away from a course that appears to be utterly disastrous?
  Mr. Straw: We have to continue with the process set out in the road map and get both parties back on track to implementing it. The road map places clear obligations on the Palestinians. in respect of security and taking action against terrorists operating within the occupied territory. It also places clear obligations on the Israelis. We welcomed the initial step taken by the Sharon Cabinet to withdraw from Gaza, although that is currently stalled, but I accept the burden of what the hon. Gentleman says. Taking territory from the Palestinians—and it is their territory—may be justified in the short term on the basis that helps to maintain security within Israel. However, in the long term it is not in the interests of the Israelis, nor it the interests of the Palestinians, as well as being unlawful. The only way to secure a safe future for both sides is by the implementation of Security Council resolutions for a secure state of Israel and a viable state of Palestine.
  Mr. Ernie Ross: I agree with all that my right hon. Friend has said. However, the ordinary person in the middle east sees Israel flouting international law again and the most powerful nation in the world—the United States of America—saying that the International Court of Justice is not the appropriate forum in which the matter should be decided, at the same time as doing little to move tile road map forward. Can my right hon. Friend take furl her action with the American Administration to ensure that despite their internal problems, they do something to move the road map forward and—at least—send a message to the middle east that we are as concerned about Israel breaking international law as we are about anyone else doing so?
  Mr. Straw: I shall be happy to pass on my hon. Friend's sentiments to the US Government and I think that they are widely shared on both sides of the House. I should say that the conclusions reached at the G8 summit in Sea Island last month were satisfactory and called on all sides to make further progress to implement the road map obligations. I understand the frustration expressed by my hon. Friend, and it is widely shared.
  Sir Patrick Cormack: When the Foreign Secretary speaks to the Israeli Foreign Minister this afternoon, will he tell him that friends of Israel on both sides of this House are
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  increasingly exasperated by the promises and actions of the Israeli Government and that we see their actions as the biggest single obstacle to peace in the middle east?
  Mr. Straw: Yes, I shall be happy to do so.
  Mr. Andrew Dismore: Two weeks ago, I visited Israel and the west bank and saw the fence for myself. Can my right hon. Friend confirm that in fact the fence is a fence, not a wall, for 97 per cent. of its length? I share some of my right hon. Friend's concerns about the line that the fence follows, but there can be little doubt that it has contributed to a significant reduction in terrorism within the borders of Israel. There have been very few attacks since May this year.
  Mr. Straw: On my hon. Friend's first point, it is properly described as a fence for part of its line and properly described as a wall for another part, but it serves the same function—it keeps people out, where it runs. Our difficulty with the fence is not in the areas where it runs along what we regard as the international border—the 1967 line—but where it takes territory from the Palestinians. That is the problem. I understand, as we all do, the justification for putting up the fence, but I do not believe—nor, by the way, does the Israeli High Court appear to believe—that it was necessary to put it on that line in order to ensure the security that the Israelis justifiably require for themselves. While I understand the Israelis' concerns, however, it must be put on the record that in recent weeks although two Israelis have been killed in Israel and the occupied territories, 33 Palestinians have been killed. That may include some terrorists but it also includes six children and a mentally handicapped person.
  Sir Menzies Campbell: Can the Foreign Secretary explain to the House why the Government appear to have shown little enthusiasm for the recent judgment of the International Court of Justice? Can he also tell us what assessment has been made by the Foreign Office of the likely consequences for UK influence and interests in the middle east as a result of the Government's lukewarm response to that judgment?
  Mr. Straw: The position we adopted in respect of the ICJ application by the Palestinians was common to all European Union countries; our submission was that although we regarded the wall as unlawful and illegal we did not think it appropriate for the court itself to make judgments, given that there was not consent from each party, which the right hon. and learned Gentleman will know is a major part of the process if the ICJ is to have any function other than simply declaring what all of us accepted. However, on 30 October 2003 the UK voted in the General Assembly of the United Nations for a resolution declaring the barrier—the wall—outside the 1967 line illegal. That remains our position and I am certain that that will continue to be the position of the EU as a whole.
  Mr. Tony Clarke: Ariel Sharon's response to the ruling of the international court was both predictable and disturbing when he called for building work to be stepped up. Does my right

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  hon. Friend agree that the barrier is not a security wall and that it does not separate Israelis from Palestinians but separates Palestinians from Palestinians? Will he call for the UN Security Council and General Assembly to discuss the matter so that a ruling can be made?
  Mr. Straw: We have to understand why the Israelis put up the barrier. They did so to protect themselves from the effects of terrorism; there is no question about that. It is a security barrier. We all understand Israel's concern about security and we are all aware of the figures, which are clear, on the reduction in terrorist attacks since the wall went up. We do not argue with Israel's need to protect its security, although that must be within international law; what we argue about is the route of the barrier where it diverges from the line established in the 1967 resolutions.
  On the second part of my hon. Friend's question, I have no doubt at all that the barrier will indeed be discussed at the General Assembly, and possibly in the Security Council as well.
  Mr. James Clappison: In the same vein, when the Foreign Secretary meets the Israeli Government, will he communicate to them the anguish felt on both sides of the House at the suffering of people in Israel in the past as a result of the unremitting stream of suicide bombs directed at civilian targets in Israel? Will he reassure the Israeli Government that our Government and the EU will do all they possibly can to bring pressure to bear on the Palestinian Authority to bring to an end that stream of suicide bombers, without the need for a fence?
  Mr. Straw: Yes, of course I will do that. We are doing a great deal to give support and encouragement to the Palestinian Authority in terms of advice and assistance in respect of their improvements to internal security so that they can better interdict the terrorists who are operating in the occupied territories.
  David Winnick: Although I deplore all forms of suicide bombings—I hope that that is the view of all of us—would it not be useful if the Israeli Government were told that what happened over the barrier is totally unacceptable to the international community and, moreover, can only increase the anger and resentment of Palestinians who, seeing the absence of any political progress, only come to the conclusion, understandably but unfortunately, that they should give more support to terrorism? Sharon has brought misfortune on Israel and, undoubtedly, even more so on the Palestinian people.
  Mr. Straw: There is no excuse at any time for terrorism, which always ensures that its victims are random and almost always innocent. That must be a rule that we apply without fear or favour, but I understand what my hon. Friend is saying when he suggests that there is very little political hope in the occupied territories, and the erection of the wall in plain contravention of international law obviously does not help those in the Palestinian Authority and the occupied territories who are seeking a political solution to those long-standing problems.
  Mr. Gary Streeter: Given that a likely condition of Shimon Peres re-entering the
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  Israeli Government—we welcome that—is that negotiations with the Palestinians in one way or another are likely to be restarted, is it not now time for the security wall itself to be expressly included as part of the road map? Would that not recognise both the Israeli need for security and legitimate Palestinian concerns about the wall's route and impact, enabling a step-by-step approach to be taken so that, as suicide bombing and terror diminish, parts of the wall could be rerouted or dismantled? Is that not something that the Quartet might take forward?
  Mr. Straw: That is an interesting suggestion, which we will certainly consider. As the hon. Gentleman is aware, the road map is an agreed document, so for that suggestion to be included in the road map would require the agreement of the Israeli Government as well as the Palestinian Authority and the other key members of the Quartet, but it certainly ought to be considered. Since Prime Minister Sharon himself has said that, when and if there is a political solution, the wall will have to come down—we welcome that—it is very clear that, even in his mind, an end to this line of the wall will have to form part of a final settlement.

  Oil
  5. Harry Cohen: What research he has commissioned on future international relations consequent upon demand, supply, distribution and trade in oil; and if he will make a statement. [183358]
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs: The Foreign and Commonwealth Office White Paper entitled "UK International Priorities" identifies the security of UK and global energy supplies as a strategic challenge that, with our international partners, we intend to meet.
  Harry Cohen: The Minister will be aware that current thought links energy security with industrialisation and modernity and that oil remains key to that despite its being a finite resource, but there is high demand for it, including from countries such as China, Brazil and India. Does he agree that it is a myth that such things can be controlled by the market and that, inevitably, military force will apply? Should not the Foreign Office commission a review now to seek some international order in oil supply and demand, rather than the current free-for-all, and to examine the United Kingdom's position, thus shifting us to more sustainable energy sources, less dependent on oil?
  Mr. Rammell: If it comes to military action, we will certainly all be the losers in those circumstances. What we need is a comprehensive strategy that takes account of market conditions, whereby we seek to achieve greater political stability in energy-producing countries. We consider energy security, but we certainly consider sustainability. That is why our commitment to the Kyoto protocol and moving beyond that is particularly important, as is increasing our commitment to renewable energy, so our leadership in the renewable

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  energy and energy efficiency partnership internationally is a key component in what we are trying to take forward.
  Richard Ottaway: Has the Minister considered the foreign policy implications of the fact that we are about to become a net importer of energy over the next couple of years, much of it gas from Russia? If, for example, we wanted to invade a middle east country to remove its weapons of mass destruction, unless countries such as Russia agreed with us, they would turn off the gas. Given that the Government's energy policy is for us to become 70 per cent. dependent on gas in the future, does that not leave us rather exposed?
  Mr. Rammell: The reason why we are pursuing such a comprehensive strategy is that we will become dependent on oil imports, for example, from about 2010. Our relationship with Russia is especially important, which is why we need to consider the security of supply, and the situation explains why it is such a key partner to us. There is no one simple quick-fix solution. The issue is extraordinarily complicated, so we need to take things forward on a variety of fronts.
  Jane Griffiths: When my hon. Friend considers these matters, will he pay particular attention to the south Caucasus, given the presence of President Saakashvili in London today., and especially to the continuing tension between Azerbaijan and Armenia, given that Azerbaijan has oil and Armenia has none?
  Mr. Rammell: We certainly will take account of those issues. When I was in Georgia last week, we examined specifically the matter of the pipeline, which can be a significant component of the diversification of energy supply within that area. That is something that we must take forward, and I am sure that the Foreign Secretary and I will discuss it with President Saakashvili this afternoon.

  Constitutional Treaty
  6. Mr. Win Griffiths: Whether he plans to discuss the constitutional treaty for the European Union with members of the Trades Union Congress.[183360]
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): Yes, on Wednesday 21 July, when I shall meet the TUC executive committee.
  Mr. Griffiths: Can my right hon. Friend confirm that he will encourage trade unionists to vote for the constitutional treaty when we have a referendum because it will provide a sound legal framework to enable trade unions to pursue their members' interests within the law in a beneficial manner?
  Mr. Straw: Yes, indeed I will. That is one of the many reasons why I shall urge the TUC executive committee and the trade union movement more generally to support the constitution for the European Union when it is put forward in a referendum.
  Angus Robertson: Many thousands of workers in the onshore and offshore fisheries industries
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  are gravely concerned by the incorporation of the common fisheries policy as an exclusive competence of the European Union. Many of them are trade union members who are worried that we will see the continuing decline of our coastal communities. Will the Foreign Secretary tell them whether he believes that that failed policy will lead to more or fewer jobs in the fishery industry in the future?
  Mr. Straw: I think that members of the fishing industry are more concerned about the unconvincing dissembling of members of the Scottish National party over the issue, for which it received a disastrous result in the European parliamentary elections in June. As the erstwhile leader of the Scottish National party admitted to me, it is quite wrong for it to pretend that the conservation of marine biological resources is, for the first time, to become an exclusive competence under the constitution. It has been an exclusive competence ever since the European Union was established. The hon. Member for Moray (Angus Robertson) knows that, and he needs to spell it out to Scottish fishermen.
  Mr. Peter Mandelson: Would my right hon. Friend accept that many of us regard the Government's achievement on the constitutional treaty as a considerable political and diplomatic coup in British interests? In that context, it was right for the Government to apply belt and braces to the charter of fundamental rights, but does he accept that by doing so, they gave the impression of giving too little weight to the social dimension in Europe? I think that that is an impression rather than a fact but, none the less, the Government would do well to redress it in the coming weeks and months.
  Mr. Straw: I accept the compliments that my right hon. Friend offered in the first part of his question, and I understand the point that he makes. During my discussions with the Trades Union Congress next Wednesday—and in many other ways—we will certainly emphasise the benefits to British people and British trade unionists that have arisen over the past seven years and more of a Labour Government as a result of signing up to the social chapter. We shall continue with the agenda of social Europe.
  On the issue of the charter, a bit of belt and braces was necessary to ensure that it remained for the British Parliament to determine our industrial relations laws, not the European Union. We have done that, but British trade unionists, especially, celebrate all the benefits that they have received as a result of our decision to sign up to the social chapter, including proper guaranteed holidays and parental leave. The previous Conservative Government denied all such things—they would deny them again—and we will certainly emphasise those points in the campaign for a yes vote to the constitution.
  Mr. Richard Spring: Given that the charter of fundamental rights in the constitution will assuredly, according to legal counsel and the European Commission itself, lead to the European Court of Justice overriding our asylum laws and make it easier for trade unions to call strikes, why on earth do we need it?
  Mr. Straw: Were it true, there would be cause for worry, but both points that the hon. Gentleman raises

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  are nonsense. He will be aware that, under an existing article of the treaties, issues concerning negotiation of pay and the right to strike are specifically excluded from the European Union's competence and are a matter for national Governments and Parliaments.

  Tyrannical Regimes
  Mr. Graham Allen(Lab): What plans he has to take further steps to seek to amend (a) international law and (b) the structures of the UN to deal with tyrannical regimes. [183361]
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Bill Rammell): This Government have led the international debate on improving collective action against tyrannical regimes. International law and the role of UN bodies are continually evolving to meet new challenges. We therefore fully support further reforms that strengthen the capacity of the UN and other bodies to deal with such regimes.
  Mr. Allen: Does my hon. Friend accept that progressive opinion both inside and outside this House will judge our tenure in the Foreign Office against the criteria of whether we have been able to tackle tyrannies globally, first by strengthening international law and secondly by boosting global institutions so that we can effectively tackle tyrannies? Will he therefore redouble his efforts to seek humanitarian-based criteria for intervention in tyrannical regimes and report to the House on the current state of play in the high-level panel created by the Secretary-General of the UN to bring these matters to a serious conclusion, hopefully before the next general election in this country?
  Mr. Rammell: I thank my hon. Friend for that question and for his interest in this issue, which I know is long standing. We have already taken significant steps, such as through our commitment and support for the International Criminal Court, but much still needs to be done. We need to work on developing an international consensus through the United Nations in terms of the circumstances that should justify intervention in a variety of forms to meet a developing humanitarian crisis. We are very strongly putting that view forward, and I believe that that argument is increasingly gaining ground in the high-level panel.
  Mr. Desmond Swayne: Does the Minister agree that there are two difficulties with this matter? First, tyrannical regimes do not tend to abide by the provisions of international law. Secondly, the United Nations is itself significantly populated by such regimes, which will define the criteria by which the law might be changed.
  Mr. Rammell: In many respects, that is a counsel of despair. Historically, one of the biggest indictments of the whole international community and the United Nations was our failure to act in 1994 when genocide was taking place in Rwanda. I never want us internationally to face that situation again, which is why I believe that it is crucial that we take the agenda forward as positively as we can.
  Huw Irranca-Davies: I applaud the ministerial team for its efforts in taking this agenda
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  forward quite boldly, especially with the high-level panel, but what hopes does it hold that we can effectively have charter change and accomplish a two-thirds majority, so that we can seek intervention on humanitarian grounds in exceptional circumstances? When I held a panel of sixth-formers on Monday morning, many of them were opposed to intervention in Iraq, but would also support such action and are frustrated when they look at other parts of the world and see the failure of the international community to intervene in exceptional circumstances.
  Mr. Rammell: There is a developing consensus and we would be prepared to consider charter change, although given the requirement for a two-thirds majority at the General Assembly, that is a significant hurdle that we would have to overcome. If one looks at the history of the development of the United Nations, one sees that it has often been through a process of evolution. What gives me confidence, however, is that across the board internationally, there is a growing acceptance that we need to move forward on this issue. We are at the forefront of those arguments.

  Iran
  Sir Teddy Taylor: If he will make a statement on relations with Iran. [183362]
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): The United Kingdom's relations with Iran are based on a policy of constructive but conditional engagement. We aim to support Iranian efforts to reform, while making clear our concerns about Iran's policies in areas such as its nuclear programme, human rights and its attitude to the middle east peace process.
  Sir Teddy Taylor: Does the Secretary of State agree that Iran, which has suffered so much from the brutal bomb attacks from members of the Mujaheddin e-Khalq organisation—the MKO—should have a meaningful role in discussions on the future of its 3,800 members who are housed in Camp Ashraf in Iraq, which is at present protected by US forces? Would not such a step improve relations between Britain and Iran and confirm the US's declared opposition to international terrorism?
  Mr. Straw: I fully understand Iran's concern about the MKO, which I, when I was Home Secretary, declared to be a terrorist organisation following the passage of the Terrorism Act 2000.
  On the detainees at Camp Ashraf, I should point out to the hon. Gentleman that they are a matter for the Iraqi Government and the United States authorities; the United Kingdom is not directly involved. However. I am well aware of the concerns of the Iranian Government. We have made proper representations in the past to the United States Government and to the Iraqi provisional Government, and we will make those too to the Iraqi Interim Government.
  Mrs. Louise Ellman: What specific representations has the Foreign

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  Secretary made to Iran in relation to its practical support for terrorist groups who oppose the existence of a state of Israel? Does he agree that support for terrorism by those who oppose the very existence of the Jewish state is the real barrier to securing a two-state solution to the problems in the middle east, not a defensive fence?
  Mr. Straw: There are several problems in securing a positive and peaceful outcome to the problems in the middle east. One of those, as I accept, and always have, is the failure by some states, including Iran, properly to recognise the right of Israel to exist and to live in peace within its declared international borders.
  On my hon. Friend's specific question, I have raised that issue on many occasions during discussions with my Iranian colleagues about the MKO, when I point out to them that I declared the MKO to be a terrorist organisation. I also say that we have a consistent and common definition of terrorism. In the same list under the Terrorism Act, as Home Secretary I declared organisations that it supports, such as Hamas and Islamic Jihad, also to be terrorist organisations.
  Mr. Michael Ancram: Nearly two weeks ago, we were told in a written ministerial statement that the deadline of 29 June for Iran to return the marine equipment and weapons that were illegally seized from our servicemen on the Shatt-al-Arab waterway had not been met. Two weeks later, it appears that they still have not been returned, yet the silence from the Government is deafening. I have to say that the Foreign Secretary's timidity on this matter is quite extraordinary. Of course, improving relations with Iran is important, but not at any price. Cannot he see that a relationship based on giving in to aggression will always be suspect, and that if Iran wants genuinely to lift the veil of suspicion that hangs over her, she should be publicly pressed to apologise and to return our equipment forthwith?
  Mr. Colin Pickthall: Send a gunboat.
  Mr. Straw: My hon. Friend says, "Send a gunboat." For the avoidance of doubt, we do not intend to do that.
  I simply say to the right hon. and learned Gentleman that we make judgments about how best to maintain our relations on the basis of the best information available. Very occasionally, the use of a megaphone and a rant, which seems to be his approach, might be appropriate, but on this particular occasion neither a megaphone nor a rant will secure the return of the boats and equipment that are over there.
  I also point out that we opposed very strongly, and I deplored, the masking of the service personnel. However, as a result of the diplomatic relations that we have with Iran we were able quickly to get the crew on those boats returned into United Kingdom presence.
  Mr. Ancram: The Foreign Secretary may dismiss my remarks, but this is the first time that we have heard him make a statement at the Dispatch Box about the
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  incident, three weeks after it took place. I find that extraordinary. Does not the fact that our servicemen were intercepted by Iranian forces while sailing legally in Iraqi waters, forcibly escorted into Iran, and there humiliated by being paraded blindfold constitute a grave and hostile act; and why will not the Government stand up for Britain and say so?
  Mr. Straw: The right hon. and learned Gentleman should say what he proposes rather than simply increasing the volume. Does he propose military action against Iran—apparently not—or breaking off diplomatic relations? Neither proposal is sensible. The Government's approach is sensible and it is remarkable that the right hon. and learned Gentleman has not suggested a single constructive alternative to our approach.
  Rob Marris: The Iranian Government's record on human rights is poor to say the least. What representations have the UK Government made to the Government of Iran on human rights in that country, especially with regard to the Kurds?
  Mr. Straw: We have a continuing human rights dialogue with the Iranians. It is one of the reasons for maintaining diplomatic relations with them.

  Cyprus
  9. Bob Spink: What recent representations he has received on solving the Cypriot problem. [183363]
  The Minister for Europe: We remain in frequent contact with all parties to the Cyprus problem about the way ahead. On 1 July, the Foreign Secretary and I met Mr. Ali Talat, leader of the Turkish Cypriot community, in London. Yesterday, I met Greek Cypriot Foreign Minister, Mr. Iacovou at the EU General Affairs and External Relations Council in Brussels. I hope to visit the island shortly to urge both sides to move forward rather than remaining camped on the existing positions.
  Bob Spink: Did the Minister manage to meet the mayors of Famagusta, Kyrenia and Morphou on their recent visit to the House? Does he agree that any settlement must include the right for people to return to their homes, businesses and properties? Does he welcome the fact that the three mayors are willing to work closely with Turkish Cypriots to rebuild their communities for the benefit of both communities on Cyprus?
  Mr. MacShane: I commend that initiative and the hon. Gentleman's excellent speech in a debate on Cyprus in Westminster Hall last week.
  It is vital that all barriers to trade and communication between the north and south are lifted. We want Mr. Talat to lift restrictions and President Papadopoulos to support the EU Commission's proposal to increase trade and transport links to the north.

  Afghanistan
  10. Mr. Eric Illsley: If he will make a statement on the funding of the proposed elections in Afghanistan. [183364]
  The Minister for Trade and Investment: The United Nations estimated total budget for the elections in Afghanistan is £106 million. The United Kingdom contributed £13 million of that. The UN has indicated that voter registration is now fully funded. It is confident that existing pledges from donors will cover the total cost of the election budget.
  Mr. Illsley: When the Foreign Affairs Committee visited Afghanistan in May, we were somewhat surprised to learn that none of the funding that the United Nations had pledged in respect of the Afghan elections had materialised, given that voter registration is lower than was anticipated earlier this year and that the election timetable appears to be slipping. I urge my hon. Friend to put continual pressure on our international partners to ensure that the funding for those important elections materialises.
  Mr. O'Brien: The UN has indicated that the funding is forthcoming. Not all of it has arrived but we hope that it will. Six million of the 9 to 10 million potential voters are registered in Afghanistan; 38 per cent. are women. The joint elections management board announced on 9 July the separation of the presidential and parliamentary elections. The presidential elections will be held on 9 October and the parliamentary elections will be held separately in spring 2005. The UN advised President Karzai that there was not enough time to organise more complicated parliamentary elections with 2,500 anticipated candidates. It was unrealistic in the time frame. However, we are satisfied that the presidential elections can go ahead and we hope that the parliamentary elections will take place in the spring.

  Chagos Islands
  11. Jeremy Corbyn: In what circumstances Chagos islanders may visit the Chagos Islands. [183365]
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs: Under the immigration law of the British Indian Ocean Territory, all persons other than members of the United Kingdom or United States armed forces and Government officials require a permit to visit any part of the territory, including both Diego Garcia and the outer islands. With regard to the Chagossians, we have twice put in hand preparations to organise a visit for them to the outer islands—most recently in 2002. Those plans fell through for reasons beyond our control, but we remain genuinely prepared to reinstate the visit, should the Chagossians make such a request.
  Jeremy Corbyn: Does the Minister not accept that the Orders in Council signed on 10 June, which prevent the Chagossian people from exercising the right to return to the islands that they won in the High Court in this country in 2000, is an absolute disgrace? Does he not
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  also accept that this issue should be debated on a substantive motion before the House and not be hidden behind Orders in Council? The reality is that pressure from the United States on the British Government overturned the legitimate court order made in this country regarding the legitimate right of return of the Chagossian people. Is it not time that the Minister met representatives of the Chagossian community to sort this out, so that those people can exercise their legitimate right to return to the islands from which they were quite disgracefully removed in the 1970s?
  Mr. Rammell: I have already met the legal adviser for the Chagossians. I have also met my hon. Friend and the Father of the House to discuss their concerns on this issue, and I am more than happy to meet any other representatives who have similar concerns. We cannot change what happened in the past. We are legislating on the situation as it is today, some 33 years after the islands were depopulated. Successive British Governments have compensated substantially in regard to this issue, and we are trying to take this process forward. We most certainly took this decision on our own account, and not because of any representations made by the United States Government.
  Mr. David Heath: Many in the House will find that very difficult to believe. Many people feel that the, treatment of the islanders by the British Government has been shameful over many years, and this latest expedition just confirms how little the British Government have done to protect their interests. Would it not be more honest simply to cede sovereignty of the Chagos Islands to the United States, perhaps in return for an appropriate sum, rather than maintaining the pretence that we have any interest in serving their inhabitants?
  Mr. Rammell: If that is a substantive contribution, I am not sure that it meets up to the situation that we are facing. I would ask the hon. Gentleman to reflect on what he would have done had he been in Government and been presented with the independently conducted feasibility study that made it abundantly clear that maintaining long-term inhabitation was likely to be prohibitive, and that resettlement of the islands would be precarious. In those circumstances, it would be unreasonable for any Government to permit repopulation 33 years after the Chagossians left the islands. I am not absolving the British Government of responsibility. As I said, successive British Governments have compensated substantially on this issue, but to alloy, a return at this stage would be unreasonable in the present circumstances.

  Zimbabwe
  12. Mr. Andrew Turner: What recent discussions he has had with Commonwealth leaders about democracy in Zimbabwe. [183366]
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs: We are in regular contact with our Commonwealth partners about Zimbabwe. My right hon. Friend the Foreign Secretary discussed the matter with the South

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  African Foreign Minister on 13 June, and will do so again when he visits South Africa next month. I discussed the issue at the African Union summit in Addis Ababa last week. We will continue to work for the restoration of democracy and the rule of law in Zimbabwe.
  Mr. Turner: We hear about June, July and then August. It is not only my Zimbabwean constituents who are concerned about the situation in their country. Many people are concerned about the abuse of food aid as a political weapon, militia beatings, police-condoned assaults on Opposition politicians, and attacks on the press and judicial independence. Why is democracy in Zimbabwe apparently an optional extra for this Government?
  Mr. Mullin: It is not, as the hon. Gentleman well knows. As I have said before—and as we said in the debate on this subject the other day, at which he was not present—hardly a day passes without the subject of Zimbabwe passing across my desk or that of one or other of my colleagues. We take the situation in that country very seriously, and we have made it clear to all parties that we want to see a return to democracy and the rule of law there.
  Mr. Ian Davidson: In his discussions with Commonwealth leaders, has the Minister analysed how we got into this terrible mess with Zimbabwe? Will he discuss with them ways in which the failure to address the land question can be avoided elsewhere in the Commonwealth and, in particular, ways in which similar issues that are now arising in Namibia can be dealt with?
  Mr. Mullin: We have addressed the land issue, and we made it clear from the outset—and made money available some years ago to Zimbabwe to help it redistribute land through the rule of law—that we fully acknowledge the unfairness of land distribution in that country. What we do not accept, however, is the criminal way in which it has gone about redistributing land. It remains the case that we are ready to assist in the event that some future democratic Government in Zimbabwe set about trying to reform the land ownership structure in a responsible and democratic way.
  Mr. Douglas Hogg: Should we not be exploring how the Ministers and senior officials of Zimbabwe can be made personally accountable and ultimately criminally liable for their acts?
  Mr. Mullin: Certainly, that is an issue that will arise after the return of democracy in that country, but it will ultimately be a matter for the people of Zimbabwe.
  Mr. Peter Pike: Is it not a fact that each of the Commonwealth countries neighbouring Zimbabwe has a number of refugees from Zimbabwe? That spells out clearly the problems being faced by the people of Zimbabwe. Is it not time that President Mbeki
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  took a strong lead to end the problems that the poor people of Zimbabwe are facing because of the regime there?
  Mr. Mullin: The South Africans are under no illusions about the extent of the crisis in Zimbabwe. They have the best part of 2 million refugees from that country, and I am sure that they are as frustrated as we are by the lack of progress. I know that President Mbeki has been trying to achieve dialogue between ZANU-PF and the Movement for Democratic Change. So far, we see no evidence that that is working. As I said, I am sure that they are as well aware as we are of,the scale of the problem, and they share our frustration.

  Iraq
  Hugh Robertson: If he will make a statement on the Government's reaction to reported corruption at the UN during the oil-for-food programme in Iraq. [183367]
  The Minister for Trade and Investment (Mr. Mike O'Brien): We support the high-level independent inquiry approved by the UN Security Council on 21 April into the administration and management of the oil-for-food programme. Obviously, it is inappropriate for us to comment on the specific allegations of wrongdoing until the investigation has been completed.
  Hugh Robertson: I thank the Minister for that answer. But given that Iraqi sources estimate that $10 billion was corrupted by Saddam Hussein and his immediate entourage, and that that money is being used to fund the insurgency that is threatening both Iraqi civilians and our troops, can he give the House more details about when the Government were first aware of this scandal, and what specific moves they are making to support an investigation, independent of the UN, which cannot of course conduct an investigation into its own corruption?
  Mr. O'Brien: The Government became aware of some allegations. We were able to take some action on those during 2001. Before that, there were rumours for some time of things happening in Iraq. We were aware that the way in which this operation was being carried on meant that it looked like some illegal surcharges were being placed on the price of Iraqi crude oil. It looks as though there were some illegal surcharges on humanitarian contracts through inflated prices, agreements with suppliers to supply inferior items at reduced price with refunds of the difference, and a US dollar fee for unloading and transporting goods within Iraq. A number of issues were therefore being examined. Certainly, it has become clear that the independent investigation must consider all of those. We support the work that Paul Voicker is doing in carrying that out.

  Israel
  Dr. Brian Iddon: What assessment the Quartet has made of Israeli plans to withdraw from the Gaza strip. [183368]
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs: The Quartet principals met in New York on 4 May and issued a statement in which they welcomed and encouraged Prime Minister Sharon's withdrawal plan, saying that it
  "should provide a rare moment of opportunity in the search for peace in the Middle East".
  They also set out how the international community should support the process, offer economic help to the Palestinian Authority, and provide input on security.
  Dr. Iddon: Was not my hon. Friend at all concerned when Ariel Sharon unilaterally announced his Gaza withdrawal plan, apparently without consultation with the Quartet, or, more importantly, with the Palestinians? If and when the settlers are withdrawn, will he be pressing with the UK Government for the total
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  withdrawal of the Israelis from Gaza, and especially of the Israeli defence force, which causes so much death and destruction there?
  Mr. Rammell: I think the Quartet has made its position clear, and we support it. The Quartet welcomes the Israeli Cabinet approval of Prime Minister Sharon's plan, but sees it very much as a step along the path to implementation of the road map. Nothing in this process avoids the need for those road map commitments on both sides to be implemented, and the plan presented by the Israeli Government certainly does not avoid the need for final-status negotiations which, in particular, will include the issue of borders and refugees.
  Hugh Robertson: On a point of order, Mr. Speaker.
  Mr. Speaker: Order, Points of order are always taken after statements.

Spending Review: ODPM Settlement
12.31 pm
The Deputy Prime Minister (Mr. John Prescott): I am delighted to welcome yesterday's announcement by my right hon. Friend the Chancellor of the Exchequer.
The 2002 spending review allows the Government to take the next steps towards the creation of sustainable communities across the country. By 2008 my office will have over £1.3 billion more to spend on our main programmes than it has this year, an average annual increase of 3.3 per cent. in real terms. By 2008 our spending on housing will also be £1 3 billion more than this year, an annual average increase of 4.1 per cent. in real terms. Since 1997, more than 1 million homes have been built, 1 million more homes have been made decent, and 1 million homes have gone into home ownership.
This is not just about housing, however. During the five years up to 2008, my office will spend £38 billion on creating sustainable communities. That is £16 billion more than the £22 billion in the sustainable communities plan that I launched in February last year.
As the Chancellor said yesterday, providing affordable homes for those who need them most is a key element of our programme to create sustainable communities. By 2008 the Government will have more than doubled spending on new affordable housing since 1997: it will have reached £2.25 billion. We will provide an extra 10,000 homes a year for social rent, 50 per cent. more than today, which means the provision of 75,000 new socially rented homes over the three years. On top of that, we will deliver more than 40,000 homes for essential public-sector workers, and low-cost home ownership in areas of high housing demand. Our programmes to increase the amount of affordable housing will also help to turn around the rising trend in homelessness.
The growth in affordable housing will be achieved over the next three years with money for the Housing Corporation and the regional housing boards, public finance initiative credits for new homes, and procurement savings. Altogether that is worth about £1.5 billion. Much of the new housing will continue to be on previously developed land. As the House knows, we set a target of 60 per cent. of new homes on brownfield land by 2008. We have already achieved 66 per cent., an increase on the 56 per cent. of 1997. At the same time, we are saving greenfield land by building at higher densities. I issued a direction to increase the density in London and the south east from 25 to 30 homes per hectare, a rise of more than 20 per cent., and we are well on the way to achieving that.
A good example of our approach is the way in which English Partnerships is leading the transformation of the Greenwich peninsula, the most polluted, poisonous piece of land in London, into a sustainable community. The Greenwich millennium village has the best in new design, eco-friendly housing and open space. As a whole, the Greenwich peninsula will have 12,000 new homes—33 per cent. of which will be affordable housing—new schools, a health centre, new transport links and new public spaces. It will be only a couple of stops from the new channel tunnel rail link, which will be here in 2007 on the new part of the Jubilee line. That
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was possible only because the Government were willing to invest in cleaning up the land, which has unlocked a further £4.8 billion of public and private investment.
We have increased the size of the green belt by some 19,000 hectares since 1997—an area larger than Solihull. I see that the hon. Member for Meriden (Mrs. Spelman), the usual spokesperson, is not present. Where is she? We shall probably hear later. It seems that we have only the shadow shadow Minister, rather than the real one—but we can talk about that later. Our commitment to sustainable communities is underpinned by our fundamental reform of the planning system with new legislation, new guidance and new resources.
The sustainable communities plan recognises that different parts of the country face different problems and need different solutions. As hon. Members will know, and as the Kate Barker report confirmed, house prices in London and the south-east have been rising faster than wage rates, which denies people on moderate incomes a home of their own. The Barker report called for more housing supply and recognised that we have already begun to unlock the huge potential of our growth areas, such as the Thames gateway, to provide more private and public housing. This spending review means that we are on track to build an extra 200,000 homes in the growth areas to tackle the urgent need for more homes and to respond to further proposals for growth. That means a total of 1.1 million new homes across London and the south-east by 2016, an increase of 20 per cent. on the original plan.
Across Government, we are working in new ways to co-ordinate our approach and support innovative public-private partnerships. One example is the ambitious joint venture that English Partnerships and Bellway Homes are forming to develop Barking reach. Altogether, more than 10,000 new homes will be built, creating a new sustainable community with affordable and market housing. Today, I can announce that we will be doubling the Office of the Deputy Prime Minister's expenditure on the growth areas outside the Thames gateway to help prepare sites and improve local infrastructure so that we can unlock the land for development. Working with my right hon. Friend the Secretary of State for Transport, the ODPM is also creating a new community infrastructure fund to provide an extra £200 million for transport infrastructure in the growth areas over the review period.
In London and the south-east, our aim is to meet the pressing need for more affordable housing, but in other parts of the country, we face the challenge of housing market failure and surplus houses. Many hon. Members have welcomed the nine market renewal pathfinders set up in the north and the midlands under the sustainable communities plan. Those market renewal pathfinders aim to create vibrant and attractive communities, where people want to live and do not want to leave—as is currently too often the case. They have been designed to turn round declining communities and lift the value of land and homes through public-private partnerships.
We are beginning to see early signs of success in overcoming the massive problems of negative equity, exploitation by rogue landlords, and a deteriorating public realm. This year's settlement means that I am

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trebling our spending on combating low demand and housing market failure from £150 million this year to more than £450 million in 2008. That will maintain the growth of the pathfinders, as well as widening our approach to other areas of low demand.
Creating sustainable communities involves not only building new homes, but improving the quality of existing homes. The refurbishment of an existing property may not show up in the statistics as a new house, but to the people who live there it is a new home. Many of us take facilities like modern kitchens, bathrooms, insulation and central heating for granted, but they mean a huge amount to people who do not have them.
In 1997, we inherited a £19 billion backlog of repairs in the public sector, which the previous Government left to deteriorate. With the help of our partners in local authorities and housing associations, we have made excellent progress in ending the appalling neglect of publicly owned housing. We have reduced the number of non-decent homes in the social sector by 1 million since 1997. The spending review will allow us to reduce that figure still further, by another 600,000 homes.
By 2008, more than 2.5 million people will have benefited from our decent homes programme. We have delivered that programme by increasing the funding that local authorities have available to repair and improve their properties through a programme of transfers, PFIs and arm's length management organisations for those authorities that want further investment to improve housing. We have committed £3.4 billion to PFI projects and ALMO programmes since 2002, and £5.3 billion of private sector finance has been raised since 1997 to fund repairs and improvements to homes transferred to new landlords. There have been 153 ballots for ALMO and transfer schemes, and 82 per cent. of them resulted in a yes vote. The settlement allows us to continue that ambitious programme, and I will make an announcement on the details in due course.
A number of local authorities and tenants have experienced a funding gap between income from rents and the cost of renewing homes. I can announce that we expect to provide £180 million for gap funding to enable transfers to proceed. I also welcome the fact that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will be delivering an additional £95 million a year by 2008 for the Warm Front programme, to help end fuel poverty for vulnerable households by 2010. Since 2001, we have doubled the amount of new social housing provided in small rural settlements. Rural areas will also benefit from the substantial increase in social housing in this settlement.
Our drive to create sustainable communities is about more than a roof over people's heads; it is also about people taking pride in the place where they live, so that they can feel confident and secure in their own neighbourhood. So as well as providing new and improved homes and infrastructure, we are determined to provide high-quality living environments for people to enjoy. Under the sustainable communities plan, we are already investing more than £200 million to help
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create cleaner, safer and greener communities. This will be measured by a new liveability target, as part of our public service agreement.
In addition, I can announce that my right hon. Friend the Home Secretary and I will bring together existing funding streams amounting to at least £660 million, in order to create a new safer and stronger communities fund. This will improve the quality of people's local environment and their safety. Such schemes, to which Members have previously referred, have been successful. This money could, for example, be used to provide up to 5,000 new wardens.
Tackling disadvantage is one of the key themes of this spending review. My right hon. Friend the Chancellor and I have been working with Government Departments to ensure that their new public service agreement targets help to close the gap between the most disadvantaged people and the rest of society. Again, this initiative will be welcomed. I am delighted to announce that we are maintaining the neighbourhood renewal fund, which the press predicted would be cancelled, at £525 million a year. alongside our continuing 10-year commitment to the new deal for communities. Such schemes have also been discussed in this House, and the National Audit Office found them to be very successful. Indeed, the NAO recently acknowledged the success of our approach to neighbourhood renewal by saying that the NDC has brought "significant benefit." That is indeed true.
We are convinced that creating sustainable communities is not simply a task for the Government. I want to thank a range of regional and local partners in the public and private sector who are delivering substantial change on the ground. The Housing Corporation and English Partnerships are finding imaginative ways to create new homes and communities. Regional assemblies, regional development agencies and the Government offices for the regions, all of which the Opposition want to scrap, are also critical to the success of our agenda. They are key delivery agents in the drive to achieve greater sustainable growth and regeneration throughout our English regions.
As the Chancellor said yesterday, the northern regional development agencies, supported by our Government offices for the regions, are working on a "northern way" growth strategy to help the north to achieve its full potential. Just think: if our three northern regions raised their performance to the national average, the gross domestic product would be £35 billion higher, and 200,000 more people would be in work. That is a huge prize worth working for, but the Opposition want to throw it away by scrapping the successful regional bodies, which will deliver jobs and growth. As my right hon. Friend the Secretary of State for Trade and Industry will outline in due course, we will be providing the RDAs with £4.7 billion over the next three years. Our funding of RDAs in 2007–08 will be virtually double the amount that they received in 2001.
Local government has a crucial role in supporting the development of sustainable communities and tackling disadvantage. Since 1997, we have increased grants to local government by 30 per cent. in real terms, which has contributed to rising standards in local services; 55 per cent. of councils are now "good" or "excellent". And we

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will provide an extra £7.2 billion in general grant by 2008 compared with this year—an annual growth rate of 2.7 per cent. in real terms.
My right hon. Friend the Minister for Local and Regional Government is making a written statement today about the outcome of the spending review for local government. We are having ongoing discussions with colleagues in local government about a 10-year vision for the role of local authorities and our relationship with them.
One key element of our approach is to simplify funding and bureaucracy. As my right hon. Friend the Chancellor said yesterday, there will be three-year budgets for local authorities, which they have been requesting for a good period of time. We will also pilot local area agreements to simplify the central Government funding streams going into those areas.
The House will also be aware of the concern that we should recognise and deal with the new threat from terrorism. The spending review will allow us to continue investing in the modernisation of the fire and rescue service. It will give increased funding to strengthen the ability of the service to counter terrorism. That will deliver a fire and rescue service fully equipped and trained to decontaminate and rescue the public in the event of a major terrorist incident, a new national communications system by 2008 and regional fire control rooms in each of the English regions.
A lot has already been done since I launched the sustainable communities plan in February 2003. We know that there is still a great deal more to do, and I shall publish a five-year strategic plan for my Office in the autumn, setting out in more detail our plans to create sustainable communities across the country. The spending review will allow us to move up a gear. We will be spending a record sum of —38 billion over five years on new homes, new infrastructure and new open spaces, as well as rebuilding and renewing existing towns and cities.
That is our agenda for reform and renewal. We aim to bring prosperity and pride across all regions, to work harder for the most vulnerable people in society and to create sustainable communities for all.
Mr. Bernard Jenkin: We certainly share the Government's stated objective of creating sustainable communities for all, but where is the evidence, on the basis of their past record, that the Government will ever achieve that? All the increases would be welcome if we could have real confidence that the money would be spent efficiently and that the Government knew how it would be paid for.
The Deputy Prime Minister claims that there will be efficiency savings in his Department of £6.45 billion by reducing waste in government. Conservative Members have been complaining about waste under the Labour Government ever since the Government were first elected. Why is the Deputy Prime Minister currently wasting £6.45 billion, unless it is as a result of his sheer profligacy and incompetence over the past seven years? How can we have any faith in his latest promises to save money when he has presided over an average 70 per cent. increase in council tax—a tax not mentioned in his statement, and I wonder why. Will the Deputy Prime Minister confirm that the spending review means that
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the council tax will rise again by 7 per cent. next year, the year after that and the year after that—at three times the rate of inflation as it has every year since 1997?
This is a tax-and-spend Government, and this spending announcement means that taxes will rise again. No doubt the Deputy Prime Minister will, in a moment or two, accuse us of threatening cuts as our alternative, just as the Chancellor of the Exchequer did yesterday. Let us go through it all again. Let me tell the right hon. Gentleman what our alternative actually is. As my right hon. Friend the Member for West Dorset (Mr. Letwin) said yesterday, it is indeed cuts. We will cut bureaucracy; we will cut inefficiency; we will cut quangos, regulations and the hordes of interferers who do nothing good for this country. We will cut borrowing; we will cut waiting lists; and we really will cut homelessness, as we did under the last Conservative Government. We will cut failure in schools and the £1 billion local government inspection regime. We will cut crime; and we will really cut this big fat Labour Government down to size.
Pride of place in the Deputy Prime Minister's statement goes to his housing announcements. Having presided over a 40 per cent. slump in social house building, an erosion of the green belt and a 27 per cent. increase in homelessness, he now expects plaudits for trying to unravel some of the damage that he has done. The increase in funding for social house building is welcome, but the Minister for Housing and Planning has rightly questioned whether we are getting value for money from this budget by channelling the funding through the Housing Corporation. Why is there no word in the Deputy Prime Minister's statement about the reform of Housing Corporation funding mechanisms?
The communities plan will chew up vast swaths of greenfield land, and concentrating house building in the prosperous south-east will widen the gap between north and south. The Deputy Prime Minister says that he is protecting and even increasing the green belt, but we all know that he is increasing it in places where there is less development pressure, while sacrificing it in areas where it was doing the job of preventing urban sprawl. His regional planning guidance is removing green belt designations. He says that 60 per cent. of homes will be built on brownfield land, but his definition of brownfield land includes the leafy suburbs and back gardens treasured by so many people in our cities.
The Deputy Prime Minister says that the comprehensive spending review will secure the implementation of the communities plan with its 200,000 additional homes in the south-east, but how will his £150 million community infrastructure fund begin to deliver the infrastructure required, when the Housing, Planning and Local Government Committee estimates that it will cost at least £20 billion?
On regional government, we welcome the proposal that local business people should help decide investment priorities throughout the country. We have not said that we will scrap the regional development agencies; I have never said that.[Interruption.] It is incumbent on the right hon. Gentleman to accept that I have never said it and it is not our policy. Perhaps he will correct the record. We want to reform the RDAs, not destroy them. What is the point of increasing the so-called "single pot" for the RDAs if the RDAs, like the rest of the increasing

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bureaucracy of regional government, are more and more dictated to by Ministers with targets, performance agreements, interference and diktats? That is centralisation, not decentralisation.
How can we take Labour seriously on decentralisation in England when elected regional assemblies will control less than 2 per cent. of the public money that they will be spending in those regions? The powers that they will exercise are not taken from central Government; they are stolen and stripped away from local government, which is increasingly controlled by central Government.
What do the Government mean by—I quote from the document published yesterday—
"strengthening the conversation between central and local government on shared priorities"?
What does it mean when the Deputy Prime Minister wants to strengthen the conversation with local government? What sort of conversation is it when local government representatives' pleas for real freedom and flexibility so that they can innovate and lead their communities are answered by a punch in the face from the Deputy Prime Minister in the form of rate capping, comprehensive performance assessments and best value? How will he reduce the regional disparities that he talks about, when he is concentrating so much of the investment that he announced today in the south and the south-east?
Under Labour, fake savings are matched by fake decentralisation. Nothing the Government announced this week is designed to have any real impact before the general election. What the country needs is not more fictional figures and fake savings from failed Ministers, and not more synthetic statements leaked in advance to the press to win votes in the short term. Why does the statement fail to address so many of the real problems—soaring council taxes, urban sprawl in the countryside, the growing burden of central Government, growing bureaucracy and the ever-growing burden of taxation, which the people of this country will still be paying long after the Deputy Prime Minister has become the ex-Deputy Prime Minister?
The Deputy Prime Minister: Have I got to reply? That was pathetic. That response probably makes the shadow Chancellor look quite effective. I do not know where the real spokesman for the Tory Opposition is today, but she would have done a lot better than that.
Let me try and answer some of the points that the hon. Member for North Essex (Mr. Jenkin) made. I shall answer with the evidence of what occurred under the previous Administration—that is the only way we can judge the Opposition. The hon. Gentleman asks about the sustainability of our seven-year programme. Millions more of our people are back at work, and more are in education and in our hospital services. More houses are being built and more communities are being developed. All that is about sustainability and we have achieved it in seven years. In the years before, we had the boom and the bust, record unemployment and cuts in local authorities. It is a bit of a cheek for the hon. Gentleman to tell us that he is a friend of local authorities when, in the last four years of the previous
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Administration, their grants were cut by 7 per cent. in real terms, whereas we have increased grants by 30 per cent. in real terms. That is one of the realities.
If the hon. Gentleman wants to talk about tax, how much waste resulted from the poll tax? Everyone agrees that billions of pounds were spent on the poll tax, the Tories' alternative for the local authorities. How much was wasted in the millions unemployed under the previous Administration? The debts and the interest payments to meet the debts to pay for the unemployment were greater than the education budget. That is not only waste, but a wrong priority.
On council tax, I have heard the arguments over the course of the past few years. For example, last year the hon. Gentleman and his friends often predicted that the rise in council tax would be 15 or 20 per cent. In reality, it ended up at 5.9 per cent. on average, with Tory councils charging a lot more than Labour councils. We will wait and see w hat happens to council tax in the future.
The hon. Gentleman said, as did the shadow Chancellor, that the Conservatives were the party of cuts. We entirely agree. They are the party of cuts—cuts in support to local authorities, and cuts that went on in education, health and housing. In the last five years of the previous Administration, they halved the budget for housing. As I understand it from what the shadow Chancellor said, he intends to cut housing and local authority expenditure again, by a total of £18 billion in the first two years, and £400 million of that will be the housing programme, which he does not say much about. We on the Labour Benches all agree that the Opposition were the party of cuts in the past and they intend to be the party of cuts in the future£no doubt about it. We must take into account what they did in the past.
Let me deal with the point about brownfield land. The cheek of the hon. Gentleman to talk about brownfield and building on greenfield land! Does he understand that when we set a target for brownfield, that means the rest is greenfield? Has he worked that out? There is no pink or yellow land. It is brown or it is green. If he had a brownfield target of 50 per cent., as he did, that meant that the other 50 per cent. was on greenfield. As we set the target at 60 per cent. and it is now 66 per cent., he will be able to work out that we are building fewer houses on greenfield land and more on brownfield, despite his record. It is one hell of a comparison.
As for green belt, the previous Administration built more houses on greenfield and green-belt land than has ever happened under the present Administration. We have 20,000 more hectares of green-belt land in seven years, despite all the talk, which is just a load of rubbish.
On regional government structure, I shall look up the quote. We read it before. The hon. Gentleman is now saying that the Tories will not get rid of the RDAs. We welcome that, but w ill they keep the budget, which we have doubled? He had better talk to the shadow Chancellor of the Exchequer about that. Will he get rid of the regional assemblies, if many Tories are sitting on them, which they are apparently prepared to do?
Mr. Jenkin Mr. Jenkin indicated assent.
The Deputy Prime Minister: The hon. Gentleman is nodding: he will get rid of the regional assemblies. Will

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he get rid of the regional government offices as well, as was predicted? They were set up by the previous Administration with no political accountability. The hon. Gentleman talks about decentralisation. It is a load of poppycock. It is a load of rubbish—typical of the Tories. They do not know what they will do in the future. If he has been brought on to give a better answer than the person who is supposed to be in charge of the Department, goodness knows what she would have said. The hon. Gentleman has shown that he does not understand and that he does not have an alternative. The people of this country will recognise that what we are proposing is in their interest.
Mr. Edward Davey: I thank the Deputy Prime Minister for his statement and for that response, which we all enjoyed. I welcome at least one element of the statement—the three-year settlements for local government revenue and capital. We have long championed that and it is very welcome.
Can the Deputy Prime Minister say how much of their new three-year budgets councils will be free to manage? Will ring-fencing go up or down as a result of the review? How does he reconcile his previous rhetoric on new localism with the increased centralisation that we have seen from the Government in recent days? How does he square massively reducing the role of local education authorities with the aim of giving councils more power?
On local government budgets, can the Deputy Prime Minister confirm that in a press release yesterday, the Office of the Deputy Prime Minister is assuming a 7 per cent. average increase in the unfair council tax next year? Can he also confirm that the Treasury is assuming that councils will raise local tax and charges by 8 per cent. in years two and three of this review? Given that, does the Deputy Prime Minister still intend to cap councils that do not keep rises to low single figures next year?
The Deputy Prime Minister has made pledges on cleaner, greener and safer public spaces. How does he square them with the real-terms cut in councils' environmental services grant? The Deputy Prime Minister may put a target on liveability, but district councils will have to live with that grant cut.If the difference is to be made up from central Government's new safer and stronger communities fund, how much of the cash allocation for that fund is new money, as opposed to money recycled from old schemes?
On efficiency savings, how does the Deputy Prime Minister propose that schools make the 40 per cent. efficiency savings earmarked for them? Will head teachers have to make 2.5 per cent. year-on-year efficiency savings in school budgets?
In total, the Chancellor is asking local government to make one third of the £20 billion in efficiency savings recommended by Gershon. How will that be delivered under new localism? How many local civil servants are to be sacked?
On housing, the Deputy Prime Minister was expansive in his boasts, but will he confirm that he proposes to build fewer than half of the new social homes demanded by the Barker review? Will he admit that more than half of the extra housing cash comes from an unsigned programme of private finance
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initiative borrowings, and an unproven programme of £355 million of efficiency savings? Will any of the PFIs be with Jarvis plc? How much of the PFI money is already signed for?
What discussions has the Deputy Prime Minister had with registered social landlords about the efficiencies that he assumes that they will make? What penalties will they face if they do not make those savings? Will the right hon. Gentleman say what the implications for his housing investment figures are if the efficiency savings are not made?
On the regions, the minor extra devolutions that have been announced—such as the Business Link service—are marginal to the real challenge involved in taking power away from Whitehall. What is behind paragraph 23.7 of the spending review, the most intriguing of all? It states:
"The Government will also consider whether devolution on transport could be accelerated in regions which vote for Elected Regional Assemblies."
Is it the Deputy Prime Minister's objective to devolve transport budgets? Will people in the three northern regions hear about the proposals before they vote on 4 November, or afterwards?
The Deputy Prime Minister would have been better advised not to make a statement today. He is sandwiched between the Chancellor yesterday, and the Prime Minister tomorrow. He and local government have been kebab'd in the spending review.
The Deputy Prime Minister: It would be a pretty expensive kebab if that were the case. Anyway, the amount of money at stake is more than local government was given when the hon. Gentleman's party was last in power, in 1913 or 1914 or whenever it was.
The hon. Gentleman made some fair and proper points about my statement and the role of local authorities. Many of the matters that he raised were covered in the written statement on local authority expenditure from my right hon. Friend the Minister for Local and Regional Government. However, I shall answer some of the points that the hon. Gentleman raised, which are now under active discussion as a result of the Government's statements.
The hon. Gentleman was right to say that local authorities wanted the three-year review. I welcome that. I campaigned for the review, as did my right hon. Friend the Minister for Local and Regional Government. The review is what councils wanted: they have accepted it, and it is a good step forward.
Local authorities have received considerably more in resources, but the hon. Gentleman was right to point out that costs have to be met and that that will affect next year's council tax levels. I repeat that the Government expect that council tax rises will be confined to low single figures again next year. We were told that the target would be impossible this year, but the hon. Gentleman will agree that we achieved it—even though, unfortunately, Liberal Democrat councils set higher levels than we wanted. Perhaps he will help us and ensure that those councils set council tax at the levels that we want. I look forward to his assistance in that respect. He knows that there is an ongoing discussion

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between Government and local authorities on these matters, and today's written statement is another contribution to that.
The hon. Gentleman is right that efficiency savings depend on taking money from back-line services and giving it to front-line ones. My right hon. Friend the Chancellor made that clear yesterday, and I have confirmed it today. The Government have a part to play in that, and local councils will make a contribution equivalent to the money that they receive under the spending review—that is, they must make savings of about one third. We will begin discussions with them as to how that will be achieved.
The hon. Gentleman was right to say that the Barker report contained higher figures for social housing. There remains a long way to go. Ms Barker recommended that there should be between 17,000 and 25,000 new houses a year, and we have doubled the number being built to 10,000. We are studying how to achieve the Barker target. She made recommendations about extra resources, and I want to point out, helpfully, to my right hon. Friend the Chancellor that that is something to which we should give fair consideration. I think that we need to provide more than the 10,000 new houses that we are at present achieving, even though that is a doubling of the number being built and is a step in the right direction.
I note that Ms Barker has welcomed today's statement as a good step forward to achieving her targets. Also, the organisation Shelter has welcomed the progress being made—which is more than it ever did about the Tory Administration's approach to housing investment.
The hon. Gentleman was a bit unfair about Business Link. It is an important initiative, but I think that he was really asking about its powers. He must wait for the statement to be published shortly on what powers the Bill will contain. Also, there will be a debate in the House next week about some of the orders that will be brought in.
The hon. Gentleman also asked about transport. As I have said to him before, my right hon. Friend the Secretary of State for Transport has suggested in several statements to the House that he wants the regions to take more account of their expenditure in that area. I cannot pre-empt the statement that my right hon. Friend will make next Tuesday, but the Government are concerned to achieve a better balance in the resources given to the regions for that purpose, and better accountability.
Several hon. Members rose
Mr. Speaker: Order. I inform Back Benchers that they must ask only one supplementary question.
Andrew Bennett: I congratulate my right hon. Friend on getting the extra money for housing, and especially the amount needed to ensure that the decent homes target is achieved for the vast majority of people in rented accommodation. However, will he look again at the small number of
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tenants in local authority housing who have voted not to transfer their stock and who would like their homes to reach the decent homes target by borrowing money against future rent income? Is it not time we let them have the same benefits as other tenants?
The Deputy Prime Minister: I thank my hon. Friend for his fair comments about what we have achieved in the spending review. He raises a serious point, over which he and I differ. When I faced the £19 billion disinvestment in housing, I had a choice: either I could get the money from tax and public sector borrowing, or I could raise it in other ways. In the end, I have done both. The amount of money given to local authorities for housing maintenance and management has increased, but I also offer different alternatives to those wanting to improve their properties at a faster rate. Those alternatives include the PFI and the transfer plan, but then I also introduced the new scheme involving arm's length management organisations. Under that scheme, houses still belong to the local authorities, which can then vote on what happens to them. Of those that voted, 82 per cent. voted to make improvements to housing—in kitchens and so on—at a faster pace than would have been allowed by borrowing through public expenditure in the normal way.
The hon. Member for Kingston and Surbiton said that a minority voted against that option, and he is right. We have asked the few who did to rethink, but the rules must be fair to all authorities. If I changed the rules half way through the process, why should authorities not say that they preferred to do things in another way?
The ALMO programme is owned by the local authorities, and tenants are represented on the decision-making body—
Mr. Ken Purchase: No!
The Deputy Prime Minister: Whether I like it or not, I am bound to say that administrative efficiencies of between 10 per cent. or 15 per cent. have been achieved. That means that I have more money available for housing, and that less is lost in administration.
Gregory Barker: In point 8 of his statement, the Deputy Prime Minister blatantly admitted that homelessness had continued to rise, on trend, over the past seven years. Is not that a terrible indictment of seven years of Labour Government? If homelessness continues to rise, why should we expect that the crew that failed to tackle the problem over the past seven years should be any more successful in the future?
The Deputy Prime Minister: It is a fact that homelessness has continued to rise. It doubled under the previous Administration, but that does not help us. The Government intend to reduce—and probably eliminate—the homeless by 2008.[Interruption.] I am sorry, but the House knows that I have problems with English. I did not go 10 public school, so there is a limit to what I am able to say. Opposition Members can be such twits. We believe that we can eliminate the problem of homelessness by providing more resources, which is precisely what we are doing.
I do not think that the record of the previous Administration is anything to shout about. We inherited a tremendous amount of homelessness. We also inherited a tremendous number of families living in bed-and-breakfast accommodation, whom we have now put into proper accommodation. Homelessness is still a problem for us, and we are dealing with it.
Mr. Purchase: I welcome the additional expenditure that has been announced. On a narrower point following on from what my hon. Friend the Member for Denton and Reddish (Mr. Bennett) said, does my right hon. Friend remember a famous. socialist, Aneurin Bevan, saying that he would have to stuff the mouths of the doctors with gold in order to bring health services under democratic administration? Does he understand the disappointment felt in the Labour movement as a whole that we are stuffing local authorities with refurbished kitchens and bathrooms in order to take housing out of democratic administration?
The Deputy Prime Minister: If I remember rightly, Aneurin Bevan resigned because of the difficulties of finding the resources to meet that programme.
Mr. Purchase: Didn't they all?
The Deputy Prime Minister: That may well be, but I remind my hon. Friend of the problems even for Aneurin Bevan of making public resources meet public priorities. On his general point about democratic accountability, the houses managed by arm's length management organisations are owned by the local authorities. The ALMOs put tenants on the board, which councils do not do. That allows tenants to take part in the administration of the housing and the organisations are allowed to borrow from the public sector under certain conditions. That is probably a proper compromise. It is one that I thought was important to deal with public accountability. It is one of three measures that has led to a tremendous improvement.
My hon. Friend should not be too dismissive of the fact that people will have a decent kitchen and a decent home to live in. It is something that they welcome and it is why they are voting in overwhelming numbers for it.
Mr. John Horam: The Deputy Prime Minister referred to quality of life in his statement, and most of us would agree with what he said. Does he realise that in suburban areas he is reducing quality of life by, in practice, giving the green light to any developer who wants to grab any back garden or greenfield site, regardless of the quality of the development or the effect on the environment?
The Deputy Prime Minister: I recognise the point that the hon. Gentleman makes. There has been some speculation in the press about this. It is a point that has normally arisen under the planning rules when the grounds of some big houses have become available. Residents have complained that houses are being built in an area where they did not expect them. However, we are getting land used much more effectively than before, and that should be welcomed.
Suburban sprawl happened at a tremendous rate under the previous Government. If I remember correctly, the hon. Gentleman was a member of that Government. The number of out-of-town shopping centres increased from 150 to 1,050, and that aided suburban sprawl. We are now changing that. More people are coming back to the cities, we have increased the density of housing and we are getting more houses built on less land. That is something that the hon. Gentleman should welcome.
Helen Southworth: I welcome my right hon. Friend's statement. He is well aware that in the north-west Warrington is a high-growth area. In my constituency, demand for affordable housing greatly exceeds supply. Will he invest in shared ownership schemes and other measures that allow affordable houses for sale to be kept within the affordable sector?
The Deputy Prime Minister: My hon. Friend makes a good point. What she says is true in both the north and the south. I am well aware that Warrington, where I started work, is a tremendous growth area— another success of Labour party policies. But that has created real problems in providing affordable homes. We are increasing the amount of money for affordable homes on a scale that has not been achieved before. Hopefully, that will help. As my hon. Friend knows, the Dean report suggests different ways in which people may be able to purchase their homes. We shall be reporting on that shortly. We have put some of the measures in the Housing Bill, and we hope that they will bring about an improvement. We are giving a tremendous amount of attention to our policy on affordable homes, because an awful lot of people have the desire to own a home but simply cannot afford one. Our doubling of the social housing programme will help in that.
Mr. Roy Beggs (East Antrim) (UUP): I welcome the commitment to building new homes and improving existing stock. Those fortunate enough to get new or improved homes will no doubt have enhanced health in the future, and that will be a good contribution to the nation. Will the Deputy Prime Minister accept that the right to buy and access to home improvement grants in Northern Ireland have helped to transform estates and rural housing? Will he commit to further promoting those opportunities here on the mainland?
The Deputy Prime Minister: I do not know the exact details for Northern Ireland, but in the parts of the country for which I have responsibility, I am not sure that the right to buy has necessarily helped solve the problems in rural areas. In fact, people constantly complain to me that the right to buy is taking public housing away and denying people who wish to live in the area the opportunity to do so. The rule should have been that those who bought a house intended to live in it, but in my experience houses are purchased at the highest price by someone who lives in the area—that was one of the conditions laid down by the previous Administration—but they then rent it out as a holiday home. That denies people public housing.
Most of the —40 billion that was used to subsidise the right-to-buy programme simply led to the current —19 billion disinvestment in public housing. That is why we

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brought in certain restrictions on the right to buy. We do not deny that people want to buy their homes. One million people have bought their homes under the various measures that we have available. We will improve on that, but at the end of the day the right to buy has to be taken into account in acknowledging the right of people to live in a decent house.
Mr. Jim Cousins: My right hon. Friend is to be congratulated on the introduction of the neighbourhood renewal fund and the housing market pathfinders. They were his personal initiative and they have proved their value. Does he think it is time to consider extending those schemes to whole areas such as Tyneside, Sunderland and Teesside rather than confining them to patches of those areas? Does he think that it is time to give the private as well as the public sector a strong signal to relocate in those neighbourhoods?
The Deputy Prime Minister: I am well aware from discussions with my hon. Friend of his concern for making sure that development does not all take place outside the inner cities. We have discussed some of those aspects as they apply to Newcastle. But at the end of the day, the £2 billion programme in the 39 new deal areas has proved successful. The neighbourhood renewal programme has also been successful; that is why we have announced another £500 million for it, when much of the press was predicting that it would be cancelled. We have found such schemes to be very successful. My hon. Friend's request that we extend them is limited by resources. We have set up a 10-year programme for the new deal. I will take into account what my hon. Friend says, but it is always about measuring how we can put resources into certain areas.
I am aware that when an area that is not getting such funding is next to an area that is, it causes tension. We are trying to do something to help, but I cannot promise that we will extend the programme in any major way.
Mr. David Curry: Will the Deputy Prime Minister accept that one of the most important things that he has announced today is the gap funding to enable the transfer of estates with relatively low value cash flows and in large need of repairs? Is he concerned about the flagging transfer programme, as opposed to the ALMO programme, which scores against the public sector borrowing requirement? Does he hope that his announcement will accelerate the transfer programme? Will he send a clear message to those Labour Members of Parliament who wish to see councils funded to keep homes in their own management and bring them up to the decent homes standard that they are knocking their heads against a brick wall and that councils have no choice but to go in for transfers, ALMOs or PFIs on a small scale, unless they have the resources to improve housing by themselves?
The Deputy Prime Minister: I agree with the right hon. Gentleman, who shows a great deal of expertise and understanding of the judgments that we make about public expenditure, which are at the heart of the
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argument. The money that we raise from the private sector does not count as public expenditure and does not count towards our judgments about the handling of the economy, debt, interest rates and everything else. So we have to make a balanced judgment.
ALMOs are measured against public expenditure. If all 153 authorities that took up the proposal had gone ahead, it would have put billions on public expenditure. We had to make a choice about that. The right hon. Gentleman is right to say that the £180 million for gap funding is important. My hon. Friend the Member for Bethnal Green and Bow (Ms King) is very much responsible for pressing us on that matter. On some estates, the rent flow is not sufficient to raise the money that is necessary to make improvements and we thought that such estates were being penalised. That is why we announced the £180 million. But yes, we did take it off public expenditure. I have heard a great deal about it, but I have to say to my colleagues that the fourth option that they talk about is not an option.
Mr. Gordon Prentice: My right hon. Friend knows that we have 80,000 low-demand properties in east Lancashire, 79,000 of which are in the private sector. That is why I welcome the trebling of resources for the pathfinder areas. However, can he give me some indication of the picture at the end of the review period in 2008 in east Lancashire? How many of those properties will be turned round?
The Deputy Prime Minister: I welcome the comments by my hon. Friend, who has been somewhat critical of the programmes and thought that they might not work. Indeed, until they begin to do so, it is difficult to judge, so he is right to have some reservations. The programme in north-east Lancashire has met with considerable acceptance. I thought that I had some information for my hon. Friend, but I have lost it. Many houses will be demolished, some will be improved and some will be rebuilt. I will write to him with the exact figures and I apologise for not being able to supply them at the moment.
Mr. Nick Gibb: Is the Deputy Prime Minister aware of the enormous concern in Felpham and Bersted in my constituency about the imposition of 1,350 new houses on what is mostly grade 1 agricultural land? Those new houses would put an enormous strain on the infrastructure and the effectiveness of the flood plain. There has been a huge amount of house building in Bognor Regis in the past 30 years, but local factors are ignored when allocating housing numbers to counties. Should not more say and power be given to local people when making those important decisions, because they directly affect the quality of life of people in those communities?
The Deputy Prime Minister: That question is frequently asked in the House and I have to tell the hon. Gentleman that the decisions about house building are partly taken by local authorities, working to the planning agreements that we make with them, and by central Government, who decide a number for the whole area. That is how we settle demand for housing, and we have to take proper account of the environment and the

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infrastructure. In the final analysis, we have to settle on a figure that meets demand in the areas in question. That question usually arises in southern areas, and people seem to suggest that the sons and daughters of local people who grew up in the area cannot live there. I do not accept that proposition and that is why we are increasing housing.
Mr. Chris Mole: I welcome the extra 10,000 homes a year announced in the statement, but I also note the doubling of spending on housing support in growth areas outside the Thames gateway. Can my right hon. Friend confirm that the new housing support will be available not only in growth areas, but to support significant development of affordable homes to rent in towns such as Ipswich, which are outside the growth areas but have been identified regionally as locations with strong growth potential?
The Deputy Prime Minister: I assure my hon. Friend that the support will be provided for all areas. As he knows, responsibility for housing was transferred to the regional bodies and they will make the decisions about distribution in their areas.
Mr. Desmond Swayne: Does the Deputy Prime Minister understand the frustration of residents in New Milton, Milford-on-Sea and Lymington about the transformation of their neighbourhoods for the worse by the application of densities that might be appropriate for urban redevelopment on brownfield sites but are inappropriate in suburban and more rural areas?
The Deputy Prime Minister: The consequence would be the need to use more greenfield areas for building. I thought that the Opposition's feeling was, "Please keep development off greenfield sites. Don't let Prescott and his bulldozer concrete over the south-east." I notice that the Barker report, which emphasises the increasing demand for housing, says that less than three quarters of 1 per cent. of land would be needed. Leaving that argument aside, the answer to the hon. Gentleman is that the density arguments are as applicable in towns as outside them.
Ms Oona King: I shall skip over the trauma of listening to the Conservatives talk about homelessness, when their Government removed the rights of homeless people—
Mr. Speaker: Order. The hon. Lady should indeed skip over that matter and ask her question.
Ms King: I shall skip quickly on to the subject of gap funding, which is so important in areas such as Tower Hamlets. I put on record my thanks to my right hon. Friends the Deputy Prime Minister and the Minister for Housing and Planning, but I would ask that they maximise the proportion of family-sized affordable housing for rent, improve security arrangements and provide decent homes, so that we can also tackle antisocial behaviour.
The Deputy Prime Minister: I am advised by my right hon. Friend the Minister for Local and Regional
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Government that those matters are under active consideration. Around 30 per cent. of expenditure will go on three-bedroom homes. We are aware of the issue and discussions continue. We have made some progress, but we are aware of the sensitivities that my hon. Friend has pointed out.
Mr. Steve Webb: The Deputy Prime Minister mentioned the regional control centres for the fire service. If he is determined to pursue that policy, I draw his attention to the situation in the southwest, where the Avon fire brigade headquarters at Lansdown has the capacity to serve the entire southwest, but because it is a public sector building the Government may insist on a PFI and refuse to use an existing public sector asset. Can he assure us that if a good public sector asset exists and could be used, he will use it?
The Deputy Prime Minister: The hon. Gentleman makes a fair point, as he often does on such matters. We are looking at a range of options, although some fire authorities have developed more centralised control rooms and that will have some influence on our judgments for each region.
Ms Karen Buck: I warmly welcome the extension of the neighbourhood renewal fund and the additional investment in housing. In my constituency, half of our council housing stock has been lost over the years and former right-to-buy properties resell for up to £400,000. My constituents face a crisis of affordability, overcrowding and homelessness. Can my right hon. Friend assure me that the extra investment will be distributed fairly within regions? Will he ask for an urgent review of the sub-regional allocations to ensure that constituents such as mine benefit properly from their share of the extra housing investment?
The Deputy Prime Minister: My hon. Friend makes some important points about new neighbourhood development and housing, and I am well aware of them. We will increase social housing from 19,000 to some 29,000, which is a fair increase. We are aware that the problem is huge and we will try to find what resources we can to meet it. To be honest, I know that what I have announced today will not solve every housing problem, but it will be a major step towards doing much more about it.
Mr. Michael Jack: At a recent meeting of Members from both sides of the House, support was given to the Deputy Prime Minister's objective of increasing the supply of affordable housing in the north-west. At the same meeting, concern was expressed that outside the renewal pathfinder area, his policies on new housing starts were inhibiting the flow of affordable housing. Will he review that policy, so that affordable housing stock can increase all over the north-west?
The Deputy Prime Minister: As I understand it, no moratorium is suggested and 13,000 or more could be built. The resources available are an important factor, as are the prices and subsidies we provide. The level of efficiency will determine the amount of resources. As the

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right hon. Gentleman knows, many of the decisions will be taken by regional boards. The north-west wants more accountable decision-making, and that is why we will decentralise decisions to the regional housing boards.
Lynne Jones: The additional 10,000 new social homes will be a good start, but even my right hon. Friend has accepted that that figure is inadequate. In Birmingham alone, we need an extra 3,000 homes a year for the next five years. Those needs are urgent: when will the Government produce their proposals for meeting the Barker recommendation of 26,000 new social homes a year?
The Deputy Prime Minister: That too is a matter of resources, as my hon. Friend well knows. I have got a good deal from my right hon. Friend the Chancellor, given the resources that have been available. We are on the way to achieving the lower end of the Barker recommendations, but as the report said, if we want to achieve the recommended numbers by 2016, we will need to obtain increased resources from different sources. Kate Barker suggested one or two methods of funding which I favour, but my right hon. Friend the Chancellor has not yet made his mind up. We will continue to have discussions through the usual channels to see whether we can achieve what Barker said was necessary in social housing. The problem is the resources.
Angela Watkinson: The Deputy Prime Minister has announced additional investment in the fire service. He will recall the pay dispute in 2002 that was resolved by the promise of an additional 16 per cent. to be paid in three stages. The first stage, 4 per cent. in November 2002, was paid. The second stage, an additional 7 per cent. in November 2003, was not paid because of a dispute over working practices. The third and final stage is due now, in July 2004. Can he confirm that it has been paid or, if it has not, will he tell us what he will do to avoid another pay dispute that neither firefighters nor the taxpayer can afford?
The Deputy Prime Minister: The hon. Lady will know from the many debates that we held on the unfortunate dispute in the fire service that we came to an agreement, accepted by the Fire Brigades Union, that the increase in wages would be financed by changes and modernisation. That is a matter for local authorities and fire authorities but unfortunately it is still in dispute, although talks are continuing. There are threats of a fire dispute. I hope that that does not come about and that the talks, in which I think the TUC is involved, are successful. We are clear, however, that payment of the money will depend on modernisation.
Dr. Alan Whitehead: I congratulate my right hon. Friend on the introduction of the idea of three-year funding for revenue and capital settlements for local authorities. I warmly welcome that move. Will he introduce in his Department, and prevail on' other Departments to introduce, a no-surprises regime to ensure that orders or legislation with an
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impact on the revenue and expenditure of local authorities during the three-year periods are synchronised with the three-year funding cycles?
The Deputy Prime Minister: My hon. Friend has considerable experience in local government and we listen carefully to what he says. I am grateful for his endorsement of the three-year rule that local authorities have been asking for. He raises an important point about orders and new burdens for local authorities during the three-year periods. As he knows, there is an understanding that new burdens will not be put on local authorities once the standards have been set and I make that point vigorously to my colleagues. Nevertheless, I shall bring my hon. Friend's point to the attention of the Chancellor and others, and we shall redouble our efforts to try not to impose unnecessary extra burdens, through orders of the House, on local authorities after deciding on a financial agreement.
Mr. Damian Green: I am sure that the Deputy Prime Minister is sincere when he says that he wants to build sustainable communities, but will he consider one of his four high-growth areas—my constituency of Ashford? Despite his efforts and the very good efforts of Ashford borough council and Kent county council, although we are building 1,000 houses a year we are creating only 300 jobs a year, and thus creating a commuter dormitory town. What is there in his statement to help Ashford remain a sustainable community so that it does not become merely a dormitory town, which would be against the wishes of the vast majority of people in Ashford?
The Deputy Prime Minister: When I visited Ashford some time ago, the local authority made the useful point that we need to make sure that transport connections are included, as well as increased housing. We all agree that road connections are important and negotiations with the highway authority are in their final stages. Transport infrastructure is one of the aspects of the new funding and we are talking about it. Unless we achieve it, we cannot expect those new areas to be opened to housing.
The hon. Gentleman is also concerned about developing new jobs. We have been talking to local authorities and they feel that, once they are more connected to the system, that will help in developing jobs, which are a necessary aspect of sustainability, along with infrastructure investment, housing and education. Without them, we cannot achieve the sustainable communities that we are committed to providing.
Mr. Harry Barnes: Does my right hon. Friend remember Clay Cross and the Housing Finance Act 1972? Clay Cross is in my constituency and people are getting increasingly agitated about the absence of the option 4 that my right hon. Friend has unfortunately dismissed. As 70,000 new social rented houses will be built over three years, is there not scope—where it is wanted—for an element of council house provision and council house refurbishment under council control? That is what people in some areas want.
The Deputy Prime Minister: I tried to set out to the House the balance between private and public money in

1277
achieving a faster rate of property improvement. My hon. Friend asked whether part of the new housing could be council-owned. That is the case under arm's length management organisations: housing is council-owned and there is representation on the board. Council tenants own the properties.
I do not know what has happened in Clay Cross. My hon. Friend the Member for Bolsover (Mr. Skinner) has left the Chamber, thank goodness, so I do not have to face him, because I well remember the battle over Clay Cross with the then Member for Grimsby. Where there has to be a fourth option, give people the choice—choice is in, I hear. Let them choose the scheme they want—
Mr. Ken Purchase: That is all they want—a choice.
The Deputy Prime Minister: Wait a minute. The figure is 83 per cent. They can either own their homes through the ALMO or go through the older system where the council owns and administers the houses, but the council has to be good at administration. Whether I like it or not—and I am not too happy about it—it is a fact that administration costs are between 10 and 15 per cent. less. I do not know why that is, but why pay more money for one form of house ownership when an ALMO is much more efficient?
Mr. Henry Bellingham: Is the Deputy Prime Minister aware that in King's Lynn in my constituency there are several council estates where a small number of drug addicts, hooligans, litter bugs and graffiti artists make life a misery for the vast majority of tenants? What will he do to ensure that housing associations get a grip on that problem? Will he come down to King's Lynn—
Mr. Speaker: Order.
The Deputy Prime Minister: As the hon. Member for North-West Norfolk (Mr. Bellingham) knows, antisocial behaviour orders are important in dealing with that problem. Another way, especially in private property, is licensing by local authorities, which is embodied in the new Housing Bill.
James Purnell: My right hon. Friend's announcement on gap funding will be very welcome in Hattersley where our previous transfer fell through due to a gap of £35 million. We are about to present my right hon. Friend with a new proposal and a new partner, so will he arrange for officials from the ODPM to talk to officials from Tameside and Manchester councils about whether that gap funding will he available?
The Deputy Prime Minister: I have always believed that it is good to talk, so I shall see whether we can arrange those discussions. I do not know the full facts of the case but I shall certainly see whether my officials can arrange to hold discussions on that matter with people from my hon. Friend's constituency.

Motor Vehicle Manslaughter
1.37 pm
Jim Knight: I beg to move,
That leave be given to bring in a Bill to create offences of motor vehicle manslaughter and aggravated motor vehicle manslaughter; to amend the law relating to road traffic; and for connected purposes.
In bringing this Bill before the House I am building on the work done by RoadPeace and other groups that have, through their hard work, put this important issue on the political agenda.The Sun newspaper has also been running a vigorous campaign, with its readers, against drivers who kill and maim.
Since I was elected to the House in 2001, three cases relating to this matter have been brought to my attention. My constituents Anthony Wakelin, Tom Dowdney and Claire Clements were killed on the roads due to the negligence and dangerousness of drivers, who in turn escaped with fines in the magistrates court. I am aware that many right hon. and hon. Members have equally tragic stories of families whose lives have been similarly affected by death on the roads, and I am grateful for their support.
About 3,500 people die each year as a result of traffic offences. More than 500,000 people are injured and more than 100,000 are seriously injured. There is a genuine challenge for us to reduce the number of deaths on our roads and I welcome moves by the Government to introduce higher penalties for various driving offences and to increase the general safety of drivers, which will, we hope, lead to fewer accidents on our roads. But we need to go further and change the law, so I propose replacing the existing offence of death by dangerous driving with two new charges of motor vehicle manslaughter and aggravated motor vehicle manslaughter.
In October 2002, a 15-year-old boy, Anthony Wakelin, was killed by a speeding motorist while cycling in his home village of Wool in my constituency. The driver concerned, James Boffey, already owed £1,400 in driving fines from previous convictions and had no driving licence or insurance. At Wareham magistrates court, Boffey admitted careless driving, plus driving without insurance or a licence, and was subsequently handed a £200 fine and a two-year driving ban.
James Boffey had a string of previous convictions. Despite the fact that he never passed his driving test and has been convicted nine times of driving without a licence or insurance, he was still only charged with careless driving. Plainly, the punishments that Boffey received previously did not provide the necessary deterrent, as is evident from the fact that he continued to drive while disqualified. He continues to stick two fingers up at the law.
Anthony's mother, Sarah, and sister, Natalie, were obviously shocked and confused that the Crown Prosecution Service and the police elected for the charge of careless driving. The public would naturally assume that, when a persistent offender who has been banned from driving kills someone on the road, it would constitute dangerous driving, but to bring a charge of dangerous driving, the prosecution is required to prove that the driving itself constituted dangerous driving. As

1279
it could only be proved that Boffey was travelling at a maximum of 43 mph, the prosecution could not proceed with the charge of dangerous driving.
Magistrates say that they cannot take account of any fatality or injury but must consider only the driving error itself. In other words, a motorist who kills an innocent party through negligent driving can be sentenced only for that driving, not for the resulting death. As a result, the death or injury is sometimes not even mentioned by the prosecution in court, and when it is mentioned, defence lawyers and magistrates labour the point that it can have no influence on the sentence passed.
The police and the CPS are often reluctant to use the charge of causing death by dangerous driving, despite their desire to secure justice for the victim and their family. Why? Because the prosecution must prove that the driving was dangerous, but what constitutes dangerous driving? What is good driving and what is careless driving, and how does that differ from dangerous driving? How do we agree what is well below the driving standard expected? That allows clever barristers a field day. All those loose definitions make it very difficult to agree on a charge and therefore, by default, the lesser charge of careless driving is more often than not used to ensure at least some sort of conviction.
The Bill would remove that argument over definitions. It would provide a better solution than the offence of death by careless driving that some suggest, which would involve the same problems about defining an adjective. The term "manslaughter" is understood, as is "aggravation". That clarity would make the offence more robust and increase confidence in the system. That leads me to perhaps the most important reason why we need to change the law: the Government have stated their commitment to reform on behalf of victims and witnesses, putting their needs at the heart of the criminal justice system. The new charge would give recognition that a death has occurred. That is very important for victims and their families. At present, there is a deep sense of grief and inadequacy among friends and victims about the way in which they are treated by the criminal justice system.
Let me tell the House about the second case, that of Tom Dowdney— again, a young constituent of mine. Tom died after a road traffic accident that took place on 14 October 2003. The CPS could not prove the allegation that the car was travelling in excess of 100 mph. The driver of the car in which Tom was a passenger was charged with careless driving. He was fined £100 and disqualified from driving for 12 months.
I have spoken to Tom's mum, Susan. In her letter to me, she mentions her anguish that the offence that killed her son is
"without the recognition of Tom's death"
and that
"it is the fact that it will not be recorded that he"
—the driver—"has killed Tom" that particularly grieves her. Tom's mum was not even told by the police and the CPS that the case was going to court. She heard by hearsay that her son's killer had got off with a fine. That is not putting victims at the heart of the criminal justice system.
The other case is that of 17-year-old Claire Clements from Preston road in Weymouth. Claire was a passenger in a car that was travelling north on the M6 in April last year. All three in the car were cadets in the Merchant Navy. They were travelling to Scotland to visit family for Easter. As they drove up the motorway in Cumbria, the driver lost control of the vehicle while overtaking at speed on the outside lane of the motorway. The vehicle drifted across the three lanes of the motorway and down the embankment. Claire was thrown from the car some distance, hit her head on a post and died instantly.
The driver had a previous conviction for driving at 71 mph in a 30 mph zone. He was driving at between 80 and 85 mph when he hit the motorway kerb and crashed. He was fined £500, given a six-month ban and ordered to take a retest after being found guilty of careless driving. In that case, the CPS charged the driver with death by dangerous driving but, because he could not remember how the accident happened, they could not prove dangerousness beyond reasonable doubt. He was only convicted of careless driving. The gulf between careless driving and dangerous driving is so huge that it makes the whole process completely unworkable.
Claire's father, Mike Clements, told me, "It has left Barbara, me and Claire's brother, Jack, with a feeling of being let down by the courts and we feel that there is something fundamentally wrong with road traffic law and the way their particular offence is perceived."
What I am ultimately seeking is a change in our attitude towards road traffic accidents where serious injury or death occurs. It is nonsensical that the fact that a death has occurred is not taken into account. The US has an offence of vehicular manslaughter. In most European countries, the law addresses the death first. We must change the law so that such cases are given the priority that they deserve in our judicial system. We can then retain flexibility over sentencing, to allow judges to consider the individual circumstances of each case.
The new offences that I propose will also help to deter persistent offenders. Where individuals knowingly commit a criminal offence, even if it is driving without insurance or while disqualified, they would know that they would go to Crown court, with a higher chance of receiving a custodial sentence under the charge of aggravated motor vehicle manslaughter. I hope that the likes of James Boffey, who killed Anthony Wakelin in Wool, would then think twice.
The current offence of death by dangerous driving could not take all of James Boffey's criminal history into account. A charge of aggravated motor vehicle manslaughter would ensure that his lack of a licence or insurance would have formed a central part of the prosecution's case. Other aggravating factors could include, but not necessarily be limited to, driving while already disqualified, failing to stop for the police, driving under the influence of drink and/or drugs, having no insurance, driving a stolen motor vehicle, failure to stop or driving a class of vehicle for which no licence had ever been held.
At this point, it is worth mentioning that this is not and should not be seen as yet another attack on the motorist. Sixty per cent. of those who die on the roads are car occupants, so such new legislation is very important for motorists themselves. The heart of this proposal is to preserve life and prevent disability and

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death on the roads, but under the new legislation, people must be responsible and accountable for deaths. Justice is essential. Changing the law cannot by itself change attitudes, but bad law reinforces unacceptable conduct.
Those injustices have embittered fair-minded, upstanding and law-abiding citizens who, because of their experience on the receiving end of car crime, have become convinced that the current law is ineffective at deterring reckless driving and is too weak to deter persistent car criminals. The Bill seeks to restore the credibility of the criminal justice system in this area. It seeks justice for the families of victims like Anthony, Tom and Claire.
Question put and agreed to.
Bill ordered to be brought in by Jim Knight, Mrs. Alice Mahon, Ian Lucas, Mr. Andrew Miller, Bob Russell, Tim Loughton, Mrs. Louise Ellman, Mr. Denis Murphy, Mr. David Kidney, Mr. Alan Campbell, Clive Efford and Mr. David Amess.

MOTOR VEHICLE MANSLAUGHTER
Jim Knight accordingly presented a Bill to create offences of motor vehicle manslaughter and aggravated motor vehicle manslaughter; to amend the law relating to road traffic; and for connected purpose: And the same was read the First time; and ordered to be read a Second time on Friday 15 October, and to be printed [Bill 139].
Orders of the Day

  Statute Law (Repeals) Bill [Lords]
  [Relevant document: The First Report of the Joint Committee on Consolidation, &c., Bills, Session 2003–04, on the Statute Law (Repeals) Bill [HL], HC 403.]
  Read a Second time.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 58 (Consolidation Bills),
  That the Bill be not committed.—[Jim Fitzpatrick.]
  Question agreed to.
  Read the Third time, and passed, without amendment.

  Energy Bill [Lords]
  As amended in the Standing Committee, considered.
  1.49 pm
  Mr. Alex Salmond(SNP): On a point of order, Mr. Deputy Speaker. We are about to begin consideration of the Energy Bill, the timetable for which was agreed at an earlier stage. Additional information has come to light since the Committee stage that influences several amendments that Mr. Speaker, with his normal great wisdom, has selected under the heading "Distribution costs and transmission charges." The amendments address future electricity generation in Scotland and the future of the Government's renewable targets, so they are of vital concern. Is there anything that we can do to guarantee that those vital amendments will not be talked out due to the timetable that was produced at an earlier stage of the Bill, given their huge importance to Scotland?
  Mr. Deputy Speaker(Sir Michael Lord): The hon. Gentleman will appreciate that the Chair has no control over the length of time for which hon. Members speak, and is bound by the Programme Order that the House has already agreed.

  Energy Bill [Lords]
    New Clause 4

      MICROGENERATION
      '(1) The Secretary of State—

      (a) must prepare a strategy for the promotion of microgeneration in Great Britain; and

      (b) may from time to time revise it.

      (2) The Secretary of State—

      (a) must publish the strategy within 18 months after the commencement of this section; and

      (b) if he revises it, must publish the revised strategy.

      (3) In preparing or revising the strategy, the Secretary of State must consider the contribution that is capable of being made by microgeneration to—

      (a) cutting emissions of greenhouse gases in Great Britain;

      (b) reducing the number of people living in fuel poverty in Great Britain;

      (c) reducing the demands on transmission systems and distribution systems situated in Great Britain;

      (d) reducing the need for those systems to be modified;

      (e) enhancing the availability of electricity and heat for consumers in Great Britain.

      (4) Before preparing or revising the strategy, the Secretary of State must consult such persons appearing to him to represent the producers and suppliers of plant used for microgeneration, and such other persons, as he considers appropriate.
      (5) The Secretary of State must take reasonable steps to secure the implementation of the strategy in the form in which it has most recently been published.
      (6) For the purposes of this section "microgeneration" means the use for the generation of electricity or the production of heat of any plant—

      (a) which in generating electricity or (as the case may be) producing heat. relies wholly or mainly on a source of energy or a technology mentioned in subsection (7); and

      (b) the capacity of which to generate electricity or (as the case may be) to produce heat does not exceed the capacity mentioned in subsection (8).

      (7) Those sources of energy and technologies are—

      (a) biomass;

      (b) biofuels;

      (c) fuel cells;

      (d) photovoltaics;

      (e) water (including waves and tides);

      (f) wind:

      (g) solar power;

      (h) geothermal sources;

      (i) combined heat and power systems;

      (j) other sources of energy and technologies for the generation of electricity or the production of heat, the use of which would. in the opinion of the Secretary of State, cut emissions of greenhouse gases in Great Britain.

      (8) That capacity is—

      (a) in relation to the generation of electricity, 50 kilowatts;

      (b) in relation to the production of heat, 45 kilowatts thermal.

      (9) In this section—
      "consumers" includes both existing and future consumers;
      "distribution system" anti "transmission system" have the same meanings as in Part 1 of the 1989 Act;
      "fuel poverty" has the same meaning as in section 1 of the Sustainable Energy Act 2003 (c. 30);
      "greenhouse gases" means—

      (a) carbon dioxide;

      (b) methane;

      (c) nitrous oxide;

      (d) hydrofluorocarbons;

      (e) perfluorocarbons;

      (f) sulphur hexafluoride;

      "plant" includes any equipment, apparatus or appliance.'.—[Mr. Timms.]
      Brought up, and read the First time.
      1.50 pm
      The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms): I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: New clause 2—Annual report on energy efficiency—
      'The Secretary of State shall publish in such form as he sees fit an annual report setting out what steps he has taken and proposes to take to secure carbon savings from domestic energy efficiency of 5MtC per annum by 2010 and a further 4MtC per annum by 2020.'.
      New clause 3—Duties relating to energy efficiency and carbon savings—
      (1) 'It shall be the duty of the Secretary of State to—

      (a) promote energy efficiency generally; and

      (b) in particular, implement energy efficiency measures that will—

      (i) assist with the achievement of carbon savings from domestic energy efficiency by 2010 over and above the 4.2MtC savings specified in the Energy Efficiency Implementation Plan; and

      (ii) achieve carbon savings of 5MtC by 2010 from energy efficiency in the domestic sector.

      (2) Action taken pursuant to this section shall be commenced as soon as is reasonably practicable.

      1285
      (3) In this section. the "Energy Efficiency Implementation Plan" is the document entitled "Energy Efficiency The Government's Plan for Action" published by the Department for Environment, Food and Rural Affairs in April 2004 (Cm 6168).'.
      New clause 6—Amendment of Sustainable Energy Act 2003—
      '(1) After section 2 of the Sustainable Energy Act 2003 there is inserted—
      "2A Energy Efficiency of Residential Accommodation: UK Policy Goal
      (1) For the purposes of this section the 'UK policy goal' is the amount of carbon savings from energy efficiency of residential accommodation specified by this section.
      (2) Subject to subsection (5) below the UK policy goal for energy efficiency of residential accommodation shall be the achievement of 5MtC savings by 2010 and a further 4MtC savings by 2020.
      (3) The energy efficiency aim set pursuant to section 2 of this Act shall be the achievement of such pet tentage of carbon savings of the UK policy goal that in the opinion of the Secretary of State ought to be delivered by measures relating to England.
      (4) Where an aim has been set pursuant to section 2 of this Act that does not reflect the percentage of the UK policy goal to be delivered by measures relating to England, then within six months that aim shall be changed in order to reflect that percentage and the Secretary of State must take reasonable steps to achieve that changed aim.
      (5) The Secretary of State may at any time designate an increase in the UK policy goal and any such designation must be published in such manner as the Secretary of State deems appropriate and in such case any aim set pursuant to section 2 of this Act shall be reviewed and if necessary amended to reflect the percentage of the new goal that in the opinion of the Secretary of State ought to be delivered by measures relating to England.
      (6) The Secretary of State shall report annually to Parliament on steps that he has taken and proposes to take to assist with the achievement of the UK policy goal.
      In this section 'residential accommodation' has the meaning given by section 2(9) above."
      (2) After section 9(3) of the Sustainable Energy Act 2003 there is inserted—
      "(3A) Section 2A(1), (2), (5), (6) and (7) extends to England, Wales, Scotland and Northern Ireland.
      (3B) Section 2A(3) and (4) extends to England only.".'.
      New clause 19—Renewable heat obligation—
      (1) 'For the purpose of encouraging the generation of renewable heat in order to reduce carbon dioxide emissions, provide employment in UK agriculture and improve energy security, the Secretary of State may, by order impose on each supplier of fossil heating fuels falling within a specified description (a "designated heating fuel supplier") an obligation to do what is set out in subsection (3).
      (2) The descriptions of heat supplier upon which an order may impose the renewable heat obligation are those supplying fossil heating fuels—

      (a) in Great Britain;

      (b) in England and Wales; or

      (c) in Scotland,

      excluding such categories of supplier (if any) as are specified.
      (3) Subject to the provisions of this section the renewable heat obligation is that the designated heating fuel supplier must, before a specified day (or before each of several specified days, or before a specified day in each year), produce to the Authority evidence of a specified kind showing—

      (a) that it has supplied to customers in Great Britain during a specified period such amount of heat generated by using renewable heat sources as is specified in relation to such a supplier; or

      1286

      (b) that another heating fuel supplier has done so (or that two or more others have done so); or

      (c) that, between them, they have done so.

      (4) If the order applies only to fossil heating fuels suppliers in part of Great Britain, it may specify that the only heat supplied which counts towards discharging the renewable heat obligation is heat supplied to customers in that part of Great Britain.
      (5) Evidence of the supply of renewable heat may not be produced more than once in relation to the same heat.
      (6) In the case of heat generated partly by renewable sources and partly by fossil fuel, only the proportion attributable to the renewable sources can count towards discharging the renewable heat obligation.
      (7) Before making an order, the Secretary of State must consult—

      (a) the Authority;

      (b) the Council;

      (c) the fossil heating fuels suppliers to whom the proposed order would apply;

      (d) the generators of heat from renewable sources; and

      (e) such other persons, if any, as he considers appropriate.

      (8) In this section—
      "fossil heating fuels" means coal, substances produced directly or indirectly from coal, lignite, natural gas, crude liquid petroleum, or petroleum products sold for the purposes of generating heat energy;
      "natural gas" and "petroleum products" have the same meanings as in the Energy Act 1976;
      "renewable heat sources" means metered sources of heat energy other than fossil fuel or nuclear fuel, but includes biodegradable waste;
      "specified" means specified in the order.
      (9) An order under this section shall not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.
      (10) The order may provide for the Authority to issue from time to time, in accordance with such criteria (if any) as are specified in the order, a certificate to the operator of a renewable heat installation or to a renewable heat supplier.
      (11) A certificate is to certify—

      (a) that the operator of a renewable heat installation or in the case of a renewable heat supplier, a renewable heat installation specified in the certificate, has generated from renewable sources the amount of heat stated in the certificate; and

      (b) that it has been supplied to customers in Great Britain (or the part of Great Britain stated in the certificate).

      (12) If a heat supplier produces a certificate to the Authority, it is to count for the purposes of subsection (3) as sufficient evidence of the facts certified.
      (13) The order may provide that instead of producing evidence under subsection (3), an electricity supplier may discharge (in whole or in part) its renewable obligation (or its obligation in relation to a particular period) by making a payment to the Authority.
      (14) The order may make provision—

      (a) as to the sum which for the purposes of subsection (12) is to correspond to the supply of a given amount of heat;

      (b) for different such sums in relation to different periods;

      (c) for different such sums in relation to heat generated in different ways specified in the order and

      (d) for any such sum to be adjusted from time to time for inflation by a method specified in the order (which may refer to a specified scale or index or to other specified data of any description, including such a scale or index or such data in a form not current when the order was made, but in a subsequent form attributable to revision or any other cause and taking effect afterwards).

      1287
      (15) The Authority must pay the amounts received to renewable heat suppliers in accordance with a system of allocation specified in the order.
      (16) The system of allocation specified in the order may provide for payments to specified categories of renewable heat supplier only.'.
      New clause 20—Electricity to be exempted when determining electricity supplied—
      'In section 32A of the 1989 Act, after subsection (1)(h), insert—
      "(i) that electricity generated by a generating station producing a heating or cooling effect in association with electricity shall not count towards the amount of electricity supplied by an electricity supplier that is subject to the obligation.".'.
      New clause 21—Further amendment of the 1989 Act relating to combined heat and power—
      'In section 32A of the 1989 Act, after subsection (1), insert—
      "(1A) For the purpose of securing that the amount of electricity generated under the obligation is not reduced by the exercise of powers contained in subsection (1)(i), the Secretary shall have the additional power to vary an order under section 32 so as to vary the obligation requirement, based on either the previous calendar year's production of electricity generated by the combined heat and power process or else by his estimate of that which will be produced by the same process in the current year.".'.
      Government amendment No. 1
      Amendment No. 20, in page 64, clause 81, leave out lines 2 to 24 and insert—
      '(1) The main duties of the Secretary of State and the Gas and Electricity Markets Authority (in this Act referred to as "the Authority") in carrying out their respective functions under this Part are—

      (a) to protect the interests of consumers in relation to electricity conveyed by distribution systems, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity or the provision or use of electricity interconnectors;

      (b) to carry out their respective functions under this Part in the manner which he or it considers is best calculated to further the duty set out in paragraph (a), having regard to—

      (i) the need to secure that all reasonable demands for electricity are met, and

      (ii) the need to secure that licence holders are able to finance the activities which are the subject of obligations imposed by or under this Part, the Utilities Act 2000 or Part 3 or 4 of the Energy Act 2004; and

      to ensure that there is no detriment to the promotion of—

      (i)renewable energy, and

      (ii)sustainable development.'.

      Government amendments Nos. 2, 13, 14 and 8 to 10.
      Mr. Timms: I hope that we will he able to make brisk progress to cover the topics before us. I shall begin by speaking to new clause 4 and the Government amendments in the group, and I hope to catch your eye later, Mr. Deputy Speaker, to speak to amendments and new clauses tabled by other hon. Members.
      There is no doubt that microgeneration has an important role to play in reducing greenhouse gas emissions. As the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths) said in Committee, we are already supporting microgeneration to the tune of £35 million through our funding of the major photovoltaic demonstration programme and the clear skies initiative, which provide grants towards the cost of residential or community renewables projects. The distributed generation co-ordination group, which was established by the Department of Trade and Industry and the Office of Gas and Electricity Markets, already specifically examines the integration of microgeneration. We have recently legislated to make it easier for small renewables generators to receive renewables obligation certificates so that they may benefit from such arrangements.
      The clause on a strategy for microgeneration that was originally proposed in the other place caused us some difficulties. For example, the inclusion of a duty to set specific targets for the small-scale generation of electricity could have conflicted with other commitments in the White Paper. However, it is clear that there would be distinct benefits if we were to have a clear strategy for microgeneration. Lord Ezra, among others, put it to me that a legal duty to establish a strategy would give confidence to the industry and potential investors, and I accepted that argument before I tabled new clause 4. The provision will impose a clear duty on the Government to publish a strategy on microgeneration within 18 months of its commencement and then to take steps to ensure its implementation.
      Government amendment No. 10 is a consequential amendment that will ensure that the microgeneration strategy does not cover Northern Ireland, given that energy is a devolved matter. However, we will remain in close touch with Northern Ireland colleagues as we take the work forward.
      On Government amendments Nos. 1, 8 and 9, I do not think that there is much difference between the intention of several Members of this House and the other place and what the Government want to deliver. The aim of the original draft of clause 81 and amendment No. 20, which was tabled by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner), was to ensure that there was a commitment to the development of renewable energy sources and to the principles of sustainable development. I agree with those aims, but if clause 81 remained in the Bill—even as amended by amendment No. 20—it would cause serious problems.
      When we published the Green Paper "A Fair Deal for Consumers" in 1998, we made it clear that protecting the interests of consumers would be at the core of independent economic utility regulation, and that was reaffirmed in the Utilities Act 2000. Clause 81 represents a drastic move away from that principle, so it would not be appropriate to adopt it without the minimum requirements of consultation and a full regulatory impact assessment. I argue that Ofgem's current principal objective provides the right balance between existing and future consumers while maintaining the competitive position of the industry. One problem is that clause 81 would he likely to lead to higher electricity

      1289
      prices, which would increase the problem of fuel poverty. Alan Asher, the chief executive of Energywatch, said that the clause would
      "have grave consequences for consumers."
      We have delivered a long-term framework that will allow investments to be made with confidence, including those in renewable energy.
      Brian White: My hon. Friend is aware that regulators primarily look at the face of statutes rather than at their detail. Given that there have been problems with sustainable development in certain parts of the industry, how does he intend to address such regulatory barriers?
      Mr. Timms: I suggest to my hon. Friend that Ofgem is starting to address effectively the challenges of sustainable development in precisely the way in which all of us would wish. That is happening under the arrangements that we have in place, and I shall say a little more about those in a moment.
      Clause 81 specifically addresses renewables, but we have a strong and effective renewables policy in place. The renewables obligation is incentivising unprecedented investment in the sector. The British Wind Energy Association estimates that some 350 MW of capacity will be built this year, which is more than three times as much as last year. More than 2,000 MW of wind generation projects have already received consent, and a recent Ernst and Young report ranked the UK as the place with the most potential to invest in new wind energy capacity, and as the second country out of 17 for renewables investment as a whole. The policies that we have in place are delivering the results that we all want to achieve.
      The commitment in clause 81 on sustainable development that my hon. Friend underlines is already built into existing energy legislation, which is demonstrated by what is happening at the moment. Both my right hon. Friend the Secretary of State and Ofgem must have regard to environmental matters when carrying out their functions under part I of the Electricity Act 1989. In practice, Ofgem produces regulatory impact assessments for key proposals, including assessments of any impact on the environment. It publishes an annual environmental action plan, and "helping protect the environment" is one of the seven themes of its new corporate strategy. We can see progress made on the social aspects of sustainable development by examining Ofgem's annual social action plan. Ofgem is actively taking forward its brief on environmental and social,concerns, so I put it to the House that a sustainable development commitment already exists.
      Mr. Robert Key: I am grateful to the Minister for giving way on the question of Ofgem's environmental concerns. An it dependent panel of environmental experts has been established to guide Ofgem's green agenda. The environmental advisory group is made up of policy experts from government, industry and green groups to advise the regulator on the priorities for its work in relation to the environment. However, I was surprised to learn that the nuclear industry, the electricity generator that produces a
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      quarter of our electricity—the most environmentally friendly electricity because it is carbon free—is not part of that green committee. Why not?
      Mr. Timms: The hon. Gentleman helpfully—from my point of view—underlines the strength of Ofgem's commitment to address the issues seriously. We all recognise that the nuclear industry produces a substantial amount of carbon-free electricity, which represents a valuable contribution. Of course, there is a question whether we will have new nuclear capacity in the future, and I know that that topic is close to the hon. Gentleman's heart. I say to him, as the Prime Minister said to the Liaison Committee last week, that there are serious barriers to address. We must consider the economics of new nuclear power and whether people will be prepared to invest in it. Some major issues on nuclear waste also need to be addressed. I welcome the fact that Ofgem has put in place the advisory group to which the hon. Gentleman referred.
      Mr. Michael Weir: Will the Minister give way?
      2 pm
      Mr. Timms: I think that I need to make a little progress, particularly in view of the points made by the hon. the Member for Banff and Buchan (Mr. Salmond) about the need for us to be brisk.
      Government amendments Nos. 8 and 9 are consequential amendments that are necessary following the deletion of clause 81. Both amendments reinsert parts of other clauses that were deleted in Committee as a result of the introduction of clause 81.
      Government amendment No. 2 ensures that the annual reports to be produced under the Sustainable Energy Act 2003, for which my hon. Friend the Member for Milton Keynes, North-East was responsible, cover the implementation of the technologies specified, as well as progress made in research and development. That captures the intent of the amendment tabled by my hon. Friend the Member for Brighton, Kemptown in Committee. There has been a slight change from his original wording—he mentioned deployment—in respect of the phrase "bringing into use", which was included as a result of legal advice. I hope that he will agree that the meaning remains the same.
      Government amendments Nos. 13 and 14 are important amendments that seek to improve investor confidence in the renewables market by taking further steps to reduce the impact of a future shortfall in the renewables obligation buy-out fund. During the passage of the Bill, there has been some debate about whether the moves now represented in the amendments can be made. In Committee, we agreed to consider an amendment on this issue tabled by the hon. Member for Hazel Grove (Mr. Stunell). As I said at the time, the case for mutualisation or recovering some or all of a shortfall after it had arisen has been made here and in another place. We have listened to those arguments and taken account of developments in the market, some of which have strengthened the case for mutualisation in recent months.
      I should make it clear that while our amendments go further than the existing provisions in clause 116 in reducing the impact of a supplier shortfall, I am under

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      no illusion that they will remove the risk of a shortfall altogether. The renewables obligation is a market mechanism. There is inevitably an element of risk as companies can and do fail. What we want to achieve is a balance between reducing the risk and impact of shortfalls and not placing undue additional burdens on consumers or adversely affecting competition.
      Mr. Andrew Stunell: I thank the Minister for tabling the amendments. Is he entirely satisfied that the mechanics that they set out will deliver the benefit that he asserts they will? There seem to be some technical problems, about which I have received representations, and I would be grateful for his reassurance on that point.
      Mr. Timms: I think that the amendments deal with those issues, and if the hon. Gentleman wants to put to me a detailed point about mechanics, I shall be happy to look at it.
      The amendments need to be seen as part of a set of measures to address the problem of supplier defaults, sitting alongside the measures already set out in clause 116 to address reductions in the length of obligation periods and impose surcharges on late payments. Together, those provisions are a sensible response to the problem of supplier default, and a balanced one that provides a measure of protection for the buy-out fund at an acceptable cost to consumers.
      Mr. David Drew: Does my hon. Friend accept that one of the problems during the period of default of a major supplier is that the administration process may not prioritise the renewables obligation certificate? Will he talk to his friends in the Department to ensure that we clarify the situation with regard to the administrative process, with particular regard to this aspect of energy production?
      Mr. Timms: I shall be happy to talk to my officials along those lines, although I am not sure whether anything further can be done on that front. I pay tribute to my hon. Friend, who has followed the matter with close interest and raised it frequently with me. I think that he will welcome the steps taken in the amendments as an effective response to the problem.
      In broad terms, Government amendment No. 13 gives the Secretary of State power to introduce an order requiring licensed suppliers to make additional payments following a shortfall. A number of detailed issues will need to be addressed, such as how the payments are assessed, when the suppliers need to make them and over what period and at what level they need to be made. Perhaps the issue that my hon. Friend has just mentioned will also arise. Those will all be the subject of a statutory consultation exercise later this year, before the detailed changes to the renewables obligation can be made. The amendments enable us to introduce mutualisation to recover part or all of a shortfall, and so give some additional confidence to the renewables market.
      I hope that the House will welcome those amendments, and the other Government amendments and new clause.
      Mr. Laurence Robertson: It is a pleasure to follow the Minister in speaking to the amendments.
      The Bill was greatly improved by Members of the other place and was the subject of interesting debate in Committee. It started off as a necessary and functional Bill when the Government introduced it into another place, but their lordships greatly improved it by introducing a number of measures that went beyond the original content. One of those measures was a clause relating to microgeneration.
      It would indeed be a useful step forward if every household in Britain could generate electricity as well as use it, particularly if they could do so from renewable sources. Such electricity could be used as it was generated or sent to the grid for use by business at that time. The household could perhaps draw other electricity later in the day when it needed to do so.
      Obtaining maximum benefit from such an arrangement would probably require a change in building regulations. Although their lordships' amendment did not go so far as to make such a suggestion, it was very useful in that it sought to require the Government to produce a strategy on microgeneration—a strategy that could perhaps include an intention to amend building regulations to require all new houses to be fitted with solar panels, for example.
      Their lordships' amendment also included a requirement for the Government actually to set targets for microgeneration. I understand that the Government have varied the amendment slightly and are saying that specific targets for microgeneration would cut unhelpfully across other commitments in the energy White Paper relating to renewables and combined heat and power. That is their reason for attempting to change the original Lords amendment. I think that that is a little unfortunate, because I do not see how that could happen. In many ways, those strategies are very different. However, we are where we are, and given that new clause 4 is the only one available for the House to consider today, we will support it.
      I should like to spend a little time speaking to new clauses 20 and 21, however, which were tabled in my name and those of my hon. Friends. New clause 20 attempts to put back into the Bill another amendment that was made in another place, introducing a clause that attempts to increase the use of combined heat and power—a process that is more efficient than other forms of generation, because it uses the surplus heat that is used for generation in the first place.
      In respect of a number of combined heat and power, proposals, planning permission has been obtained, but nothing has yet been built, and a number of CHP plants are running at below capacity. I understand that is the case because there is a lack of confidence and investment in generation at the moment, which is a general problem that must be addressed. However, given that we all want to cut emissions and that it is recognised, certainly by the Opposition, that there may be a problem with security of supply in the medium term due to that lack of investment, a greater contribution from CHP would be

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      very good news indeed. The Government must have recognised that that was the case when they set the CHP target of 10 GW by 2010, but the industry is apparently on course to realise between only 7 and 8 GW by that date unless something is done to help it along. That is what new clause 20 is all about.
      My discussions with the Combined Heat and Power Association have led me to believe that excluding CHP from the renewables obligation calculation would in fact provide sufficient encouragement to the industry, enabling it to have a more realistic chance of reaching the Government's own targets. In Committee, however, the Government had the original clause removed, basically because they claimed that removing CHP from the renewables obligation calculation would have an adverse impact on the use of renewables. The CHPA disputes that fact. New clause 21 would give the Secretary of State the power to amend the renewables obligation target if necessary, based on the previous year's or the present year's CHP Production, to counter any possible adverse effects on renewables. That is complicated, but I am sure that the House is with me.
      I accept that that arrangement could cause a seesawing of production from each source, but that is unlikely once the investment in each has been made. It would move us along towards cutting our emissions, again in the way that the Government say that they want to do; otherwise, we may have a problem in meeting the emissions targets by making the cuts in emissions that we all want. Renewables, which we all support, are struggling along, and most commentators feel that the 2010 and 2015 targets are challenging, to say the least. Over the next 20 years, the nuclear industry will be reduced to providing just 2 percent. of our electricity generation from its present output of 22 per cent., unless there are extensions or new build. Even if renewables entirely replaced nuclear—and there has to be a big question mark over that—we would have gone absolutely nowhere on cutting carbon emissions, because, as the Minister acknowledged, nuclear emits no carbon. That point is frequently made by my hon. Friend the Member for Salisbury (Mr. Key).
      Combined heat and power can make a contribution in that situation. However. the Government seem to be saying, "Carbon emissions bad, no carbon emissions good." That is true, but surely lower carbon emissions, as with CHP, represent a move in the right direction. It is wrong to say that because it is not a zero-carbon process it should not be encouraged, because if it emits less carbon, it is better than those methods which produce much carbon.
      I am disappointed that the Government chose to strike out the help and encouragement that we are trying to give to the CHP industry. If they believe that our amendments were and are imperfect, I regret that they did not and have not proposed their own, nor have they proposed any form of assistance to the CHP industry. That will be a great disappointment to it.
      I should like to give encouragement to the Labour Members who, in Committee, proposed the amendment on clause 81, which deals with they principal objective to promote renewable energy. I have no intention of stealing their thunder by speaking against Government amendment No. 1, which seeks to undo all their good work, but I assure them that if they oppose that
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      amendment and force a vote, they will find us in the same Lobby.[Interruption.] I remind Labour Members that we won that vote in Committee, so there is all to play for.
      On the new clauses relating to the renewables obligation, we support moves to strengthen the security of the obligation in terms of moneys paid in, or due to be paid in, and we recognise the Government's attempts to achieve that through new clauses 13 and 14. Although, like Liberal Democrat Members, we have one or two concerns, we recognise the need to improve that obligation and accept that the Government are doing their best to move in the right direction in that respect.
      I do not intend to say much about new clauses 2 and 3, which deal with energy efficiency. Indeed, I should like to draw attention to the fact, almost as a point of order, Mr. Deputy Speaker, that this morning we were informed that my hon. Friend the Member for Vale of York (Miss McIntosh) would be able to move those new clauses, but it subsequently turned out that that advice was incorrect. I regret that, because she would have spoken with far more eloquence and knowledge than I could possibly muster.
      Mr. Deputy Speaker: Order. The hon. Gentleman appears to be combining a point of order with his speech. It is for Front Benchers to decide which Front-Bench spokesmen will deal with the debate—it is not a matter for the Chair.
      Mr. Robertson: I was advised only this morning, Mr. Deputy Speaker, that two Members could speak from the Front Bench on this particular group of amendments—probably because it comprises such a broad range of amendments and new clauses. That advice turned out to be wrong, but I will not detain the House any further on the matter.
      2.15 pm
      If my hon. Friend had spoken, her main point would have been that we are puzzled as to why a Government who love setting targets have removed their very targets relating to household energy efficiency. Will the Minister explain that about-turn?
      We support the clause requiring the Government to produce and implement a microgeneration strategy, although we regret the slight weakening of its original proposal. Will the Minister explain why the Government are opposed to the amendments relating to combined heat and power? If he intends to say that the amendments are imperfect, what strategy will the Government develop to help the CHP industry to contribute to the clean and efficient generation of electricity, and how they will move that industry forward to give it the confidence that its representatives say that it needs?
      Brian White: The amendments reflect key debates in Committee on a range of subjects. New clause 6 tries to take forward the issue of energy efficiency in relation to debate on the old clause 3, as it came from the House of Lords. It would establish the concept of a policy goal across the United Kingdom, an aim that differs slightly from that of the Sustainable Energy Act 2003.
      The Tory amendments put me a position that I do not much like. I must have forgotten the first rule of politics, which is never to trust a Tory promise. What is worse, that allows my Whips to say, "I told you so." I suppose that lessons are always worth reinforcing. What saddens me about the amendments and the incompetence with which they were moved is that, as was amply demonstrated, the Conservatives see the matter as one for point scoring, not one of taking forward a serious issue. As for the hon. Member for Tewkesbury (Mr. Robertson) trying to tempt us to vote with the Tories, any chance of my doing that went out the window with his opening speech. I shall try to touch on some of the real issues involved in energy efficiency, combined heat and power, and the way in which renewables and micro-generation need to develop.
      When we originally discussed the energy White Paper, the then Minister, my right hon. Friend the Member for Cunninghame, North (Mr. Wilson), cited 20 per cent. as the contribution that could be made by energy efficiency. That translated into 5 megatons of carbon savings, but we are now talking about 4.2 megatons, or about 16 per cent., of savings. The White Paper said that residential energy efficiency was the cheapest, cleanest and safest way to achieve CO2 emission reductions. It seems absurd to reduce our key target for achieving our carbon-saving objective. Surely we should be setting challenging targets, not reducing them. That has an impact on the energy efficiency savings industry, which sees it as one of the key things that it can take to the market in developing its investment strategies, as was made clear in a letter to the Prime Minister on 11 May, in which the industry stated:
      "we cannot stress highly enough the seriousness of the blow dealt to the energy efficiency industry by this…reversal of Government policy"—
      the reduction from 5 megatons to 4.2 megatons. The letter continues:
      This has caused a major crisis of confidence."
      How do we ensure that the industry makes investment, that we do not repeat the mistakes of the past and that the industry can move forward? I question the figures on which the Minister has based his judgment about the 4.2 megatons.
      The Energy Savings Trust, which had worked on the figures for some months, gave evidence to the Environmental Audit Committee on 25 May, stating:
      "We were involved in developing the Plan … we …did not have the final decision and we do not agree with it."
      It gives several reasons for that, and I am sure that the Minister has examined the evidence. The trust claims that some matters were not taken into account, such as a recurring annual saving. Several other measures were not factored into the plan.
      I stress that I appreciate that the Minister has to take the flak, I understand that the Department wants to do as much as possible for energy efficiency, and I thank him for his work since Committee. However, many people support a challenging aspiration. They say that the key way in which to achieve our carbon savings is through energy efficiency. I hope that our debate will allow the Minister to take the matter forward and work
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      with the industry to ensure that savings from the residential energy efficiency sector can be more than the proposed 5 megatons.
      Government amendment No. 1 would remove clause 81. In an intervention, I asked the Minister how he intended to implement something that was not on the face of the Bill. There is a problem, which applies to several independent regulators. How can we square Government policy with the role of an independent regulator? Bryan Carsberg, the first telecoms regulator, said that the regulator would always go back to the statute book. That constitutes the regulators' terms of reference. If a provision is not on the statute book, a barrier is created.
      What happened to combined heat and power after the introduction of the new electricity trading arrangements is an important indicator of the impact that a regulator can have. Those events could be repeated. I understand that the Minister wants to ensure that they are not, but the regulatory framework that could allow that to happen still exists.
      The problems in the renewables industry do not arise because the companies are not viable or because they do not do good work, but because of the regulatory hurdles that it has to overcome. The Sustainable Energy Act 2003, which introduced regulatory impact assessments into Ofgem's work, has improved matters. At a meeting of the Liaison Committee, the Prime Minister said:
      "We believe we will meet the target for renewables, but it is challenging and I think that there is a need, as we are doing, to step up investment in renewables…and it is one of the issues that we will be raising in the context of our G8 chairmanship next year…This requires an awful lot of investment in research and development."
      He is right that a step change is required, and for that to happen, we must remove some existing barriers. One such is Ofgem's terms of reference. I appreciate that the Minister has to ensure, in removing clause 81, that the barriers are not replicated.
      We need to ensure that there is a public awareness campaign for energy efficiency. We need to build capacity in the industry and to stimulate uptake. Those are important issues but they all come back to the way in which Ofgem interacts with Government policy. We have given Ofwat a sustainable development duty, but it does not apply to Ofgem. The question of whether environmental issues are at the heart of government needs to be answered in the context of regulators' duties. If we are adequately to tackle sustainability, consistency should apply to water, electricity and all the other regulators. As the Government remove clause 81, I urge them to consider the way in which we remove regulatory barriers.
      We have a history of targets for combined heat and power. Representatives of the industry have been to see the Minister, and there is a crisis of confidence about investment, including in micro combined heat and power. In Committee, the Minister made several comments, with which I shall deal shortly. First, though, I thank him for being prepared to meet industry representatives and for the meetings that he has held since Committee. They have been helpful, and I place my thanks on the record.
      In Committee, the Minister said that removing the renewables obligation on CHP would mean an impact of less than 0.3 MW. The Combined Heat and Power

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      Association said that more than 2,000 MW of CHP plant is currently on hold and that much of it could be realised if such a provision was in place. If we are not to introduce such an exemption, it is incumbent on us to find other mechanisms to ensure that the CHP industry can move forward.
      Many hon. Members wish to speak, and we have already heard a point of order on that. I shall therefore be brief. We need to ensure that the energy efficiency, CHP and renewables industries have open-door access to the Minister. The key players in each industry are the same. Their investment decisions will determine whether we are successful. It is immaterial whether the amendments are successful. What matters is the Government's interaction with the industry. I urge the Minister to accept that dialogue with the industry on microgeneration, the renewables obligation and energy efficiency is critical and needs to be taken forward.
      Norman Baker: I acknowledge that the Bill is a better measure than some of us might have dared to hope. That is partly because it was well scrutinised in Committee by members of all parties, including Labour Back-Bench Members, such as the hon. Member for Milton Keynes, North-East (Brian White). In addition, the Government have listened to several points, and some Government amendments reflect our discussions in Committee. Those of us who art ready to criticise the Government regularly for failing to listen should give credit when there is evidence that they have listened. That is not to say that the Government amendments are perfect, that everything will be hunky dory or that energy efficiency, combined heat and power and renewables will take off like a jet liner, but it is to say that the Minister and his colleagues are willing to understand the arguments. I want to put that on the record.
      Government new clause 4 on microgeneration is welcome. Although it does not go as far as some of us would like, it is a step in the right direction. I am worried that we are not maximising opportunities for microgeneration. For example, we have not yet found a method of ensuring that the million meters that are replaced each year are two-way meters so that net metering is maximised. The Minister knows that British Gas has mothballed micro CHP design because it cannot envisage a market for the project. There are problems with microgeneration but we are making some progress.
      We have not made sufficient progress on energy efficiency. Hon. Members of all parties are disappointed by the downgrading of targets. The Minister was prepared to endorse in Committee the reduction in expected energy efficiency saving; from the domestic sector. When he was challenged, he said that the industrial sector was run rather better and that the Government did not worry too much about the matter. That response was complacent and inappropriate because his point should be perceived as an extra gain rather than a substitute. I fear that he is getting into the position of identifying what is happening in the market and subsequently setting a target to reflect reality rather than setting a target that requires a change of policy. That is a fundamental mistake when it comes to something as powerful and important as energy efficiency. After all, there is a drastic need to reduce carbon emissions in this country as well as globally.
      The 20 per cent. target for carbon emissions to which the Government are adhering is very challenging, and I regret that we do not appear to be able to meet it. The Minister will be aware that, in the six years since his Government came to power, we have seen a net reduction in carbon emissions of only 0.2 per cent., so it is difficult to imagine that we can achieve 20 per cent. from such a low base. One way for the Minister to get there, if he tries hard, is to use energy efficiency to its maximum capacity. To do that, we need to set challenging targets.
      2.30 pm
      Energy efficiency is the best of the options. It is clearly better than fossil fuel burning. It is also better than nuclear power, which the hon. Member for Salisbury (Mr. Key) promotes so assiduously. Nuclear power has a number of downsides, which we might discuss later. Energy efficiency is even better than renewable generation, because that, too, has downsides, as Conservative Members in particular are keen to point out whenever the opportunity presents itself. Energy efficiency and conservation seem to offer a wonderful solution, because they reduce the amount of energy consumed. The Minister ought to be championing those causes, but I do not think that he is.
      I am disappointed that the target has been downgraded, and if the House votes today on any of the amendments that seek to reinstate a higher one, my colleagues and I will be happy to support them. I would say to the hon. Member for Milton Keynes, North-East that we would do that on the basis of sensible policy rather than on the basis of point scoring. He would acknowledge that that is where we are coming from, at least on this issue. I would like to put it on the record, by the way, that I have signed his new clause and the one tabled by the Conservatives, both of which point in the same direction. We are happy to secure energy efficiency gains, wherever they come from, and we are prepared to have some very odd bedfellows in order to achieve the target that we want.
      New clause 19 appears, mistakenly, in the amendment paper to have been tabled by the hon. Member for Angus (Mr. Weir). It was in fact tabled only by my hon. Friend the Member for Hazel Grove (Mr. Stunell) and me, although I am delighted that the hon. Gentleman has joined us. I do not really mind whose name the new clause is in, provided that the Government accept it. It is our proposal for a renewable heat obligation, which is a serious matter. The Minister will know that energy for heat makes up approximately one third of the UK's demand for energy. The Government recognise the contribution of renewable heating systems to the UK's climate change programme but having recognised it, they have not introduced a dedicated policy to support the low-cost, proven carbon abatement option. That shows a gap in their energy strategy.
      Perhaps the Minister will have recognised by now that we are collectively trying to turn the Bill—which is actually a nuclear bail-out Bill with some wind energy tacked on—into a proper, sustainable, comprehensive energy Bill. We have made some progress on that, and new clause 19 would go further. The Minister will be aware that the case for extending the concept of the renewable obligation to include renewable heat and

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      creating similar incentives for industry to those operating in the electricity industry was put forward by the Royal Commission on Environmental Pollution, in its May 2004 report on biomass as a renewable energy source. Page 39 of that report states:
      "It has become clear to us that the most obvious gap in the current support schemes is the lack of any mechanism for supporting the generation of renewable heat energy comparable, for example, to the renewable obligation scheme for renewable electricity. We recommend that the Government introduce such a support mechanism."
      The new clause gives voice to the commission's recommendation, and I hope that the Government will therefore be minded to support it, or at least to tell us how they intend to take forward that proposition.
      It is not enough to allow the market to fill the gap. There is a proper role for markets. Indeed, these days, there is considerable consensus across all three parties—or perhaps all four or five—on the role of the market in energy. That debate, which was quite lively 10 or 15 years ago, has largely dissipated. However, there is an issue over the extent to which Government policy should drive markets or set down the railway lines along which they travel. There was some discussion about that in Committee between the hon. Members for Southampton, Test (Dr. Whitehead) and for Milton Keynes, North-East, myself and others.
      If the Minister wants renewable heat to play a significant role in the Government's energy policy, which I suspect he does, he will have to do rather more than he has done so far, because it is not happening in any meaningful way. The Government need to intervene, at least to set the framework in which things can happen. In regard to the operation of CHP plant, the year after the new electricity trading arrangements— NETA—were introduced, CHP output fell by 15 per cent., and 2002 saw the first fall in CHP capacity since the electricity sector was privatised. Indeed, many people believe that NETA continues adversely to affect the operation of CHP plant, and little has been done to overcome that. That is a serious issue, and I hope that the Government will address it.
      The Minister referred earlier to Ofgem's duties and responsibilities —they are two different things. He picked up a point made by the hon. Member for Milton Keynes, North-East about what the duties should be, and whether they should be put into legislation. I concur with the view that something set down in legislation does not carry the same weight as guidance, speeches by Ministers or comments on television and radio programmes. We need something about this issue in the legislation. If some provisions are included in the legislation and others are not, it will be natural for Ofgem, or any regulator, to interpret those two kinds of provisions in different ways.
      In the electricity legislation, there is a duty on Ofgem to look after consumers. Indeed, in its whole history, Ofgem has operated in the way the legislation established it to do. I am not criticising that in any way. Ofgem was established to liberalise markets and to drive down the price of electricity. That is what it was set up to do and, by and large, that is what it has done. While those outcomes are not undesirable, however, it has never had a primary duty to act in a sustainable way.
      There has been so much criticism of Ofgem from so many quarters for failing to act in a sustainable way that it is now, belatedly, identifying ways of doing so. It has moved in that regard, and I do not wish to pretend that it has not. However, unless the legislation contains a primary duty to take sustainability into account that is of equal weight to Ofgem's requirement to act in the interests of consumers, it will not give the same weight to that duty. I believe that hon. Members would like it to accept such a primary duty and, frankly, it should be required of it if we arc to have an energy policy based on sustainable outcomes that optimises energy efficiency and seeks to reduce consumption in a sustainable way, and to drive forms of energy that are less polluting and environmentally damaging than those on which we currently rely for the majority of our energy needs. Will the Minister think again about how we can get Ofgem not only to recognise this issue but to put it on the same level as some of the other activities with which it has been charged by existing Acts of Parliament?
      I welcome the fact that the Government have listened to some of the points raised in Committee. I believe that they did so partly because those points were well put, and also—I hope that I can say this without sounding patronising—because Labour MPs were able to articulate sensible policy points without being disloyal to their Government. I think that that sharpened minds at the Department of Trade and Industry. We have a better Bill as a consequence, and better amendments before us today, but there are still gaps. More work is needed on energy efficiency, and I hope that the Minister will return to the Ofgem issue in some form.
      Mr. Brian Wilson: I will speak briefly, because I very much endorse the points made at the opening of these proceedings on the need to make time for a full discussion of the last group of amendments later on. It would be scandalous were there not time left for discussion of those important issues.
      Briefly, I Want to support the new clause on microgeneration. In doing so, I declare a relevant, however, is to allow the largest number of individuals to participate directly in the growth of renewable energy, and want to participate in it, and every petition against renewable energy and every petition against renewable energy opens with the preamble, "While I am in favour of renewable energy in priniciple…" What we want is an opportunity for people to participate in practice.
      Perhaps it would be easier to introduce a large number of small renewable energy units than it is proving to be to get a relatively small number of very large renewable energy units. The references in today's debate to combined heat and power offer a timely warning: setting targets, commissioning reports, and doing all the mechanistic things to show good intent are easy, but they do not in themselves deliver a single watt of electricity. While the targets for CHP were more ambitious than those for renewables—which is not widely realised, because they were expressed in quantity terms rather than percentage terms—when I was in the job that the Minister for Energy, E-Commerce and Postal Services now holds, the actual performance was

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      going down rather than up. Setting targets is not much good in itself. For any of those things to be effective and to be implemented, they must be carried through on a cross-government basis. Every propeller must turn in the same direction if there is to be delivery as opposed to fine words and poor outcomes.
      In commending my hon. Friend for the new clause on microgeneration, I want to raise one issue, which is crucial to delivery of the good intentions —planning. Unless something is done on a radical scale, and rapidly, about planning, it will end up in the same impasse in which so much else in relation to renewable energy is currently languishing. What is needed, whether people want to install wind, solar or any other micro-units in their homes, is some simplified, teneralised planning procedure on the same principle as that for satellite dishes. We need a general permitted development order rather than the absurd situation in which local authorities must deal with every application on an individual basis, making the whole process unwieldy and unviable.
      I cannot resist returning to a story in relation to the protestations of the hon. Member for Lewes (Norman Baker). In a similar debate, I remember drawing attention, in a ministerial capacity, to the antics of Lewes district council, of which he has some knowledge. While the Liberal Democrats were marching round the country preaching higher renewables targets, Lewes district council, under Liberal Democrat control, was busily turning down applications for solar panels in people's houses on the grounds that they were unsightly. I believe that the council mended its ways subsequently.
      Norman Baker: I am grateful to the right hon. Gentleman for raising that issue while I am in the Chamber. When that application first came in, I wrote to the Government for advice on it. I wrote to the Department of Trade and Industry and the Office of the Deputy Prime Minister about what advice the Government could give to local authorities. The Government refused to say that local authorities should give permission to such applications. That advice was passed on to Lewes district council. He ought to examine ministerial advice before he attacks a particular council.
      Mr. Wilson: I think that the hon. Gentleman is confused. I do not want to get into that argument, but my precise point is that if it is left to individual councils to make individual decisions, the result will be the sort of ideological confusion displayed by his local council. There must be some general principle. Government must be more proactive in giving guidance to local authorities to make that happen, rather than leaving it to the foibles of individual local authorities. As a follow-through to the welcome new clause, there must be rapid communication with the ODPM.
      2.45 pm
      To reinforce that point, someone who had written to the ODPM about the installation of small windmills received the following reply:
      "I believe that the issue at stake is whether their design would require planning permission or whether it would fall within the remit of 'permitted development rights'. This is not something on
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      which ODPM can advise you. Such a decision could, ultimately, only be made in the courts, but in the first place it would be a decision for the local planning authority, taking into account the location, size and surroundings of the proposed siting, together with the Government's planning and energy policies encouraging the use of renewables."
      If that is to be the approach, we can have as many targets and as many reports back as we want, but in practice not very much will happen.
      All that I ask for is a logical follow-through from the good will that has been expressed by the Minister today. Let us make this happen so that millions of people can participate directly in renewable energy.
      Mr. Key: It is a particular pleasure to follow the right hon. Member for Cunninghame, North (Mr. Wilson), whom I had the pleasure of shadowing when he was a Minister, and we rarely disagreed about anything. Of course, that may be the reason why he is no longer the Minister. It is also a pleasure to have the current Minister here today—
      Mr. Wilson: Has the hon. Gentleman considered the possibility that it is also the reason why he is no longer shadowing anyone?
      Mr. Key: The right hon. Gentleman is very kind, and we go back a long way.
      The present holder of the office, however, has helped us in admirable ways through the passage of this Bill, but it is nevertheless good to hear the common sense being spoken by the right hon. Gentleman. Of course, he is right about planning. For all sorts of reasons, it was a great disappointment to me that the Government produced a Green Paper on planning that looked as if it was going to move forward, and within months, all the things that would take us forward had been abandoned and taken out of the original proposals.
      I want to support Government new clause 4, for the reasons that my hon. Friend the Member for Tewkesbury (Mr. Robertson) has suggested, and his new clauses 2 and 3. I feel that combined heat and power has been neglected for far too long. I have thought that for a very long time, and I have been disappointed that the Government have not seemed to know quite what they are doing about it. It must be some four years since I visited the combined heat and power plant at Slough estates, for example. Since then, the situation has steadily deteriorated. If we see what is happening on the ground on such an estate, and if we listen to the day-to-day problems in relation to the sources of fuel, rules and regulations, and different tax levels depending on what waste is being burned on a particular day, we realise that it is not being addressed seriously.
      I was therefore particularly sorry, but by no means surprised, to read in Hansard this morning, in a written answer, in a section on combined heat and power, at column 878W, that the study on combined heat and power potential due for release in January 2004 will be published shortly. Come on—January 2004 was the date when we were told that it would be published, and it still has not happened. In the same section, there is a question from a Member asking whether the Secretary of State
      "will publish details of the Combined Heat and Power Quality Improvement Programme mentioned in the CHP Strategy."
      The DEFRA Minister replied:
      "In common with the other measures set out in the strategy that have not yet been implemented, this programme is currently in development."—[Official Report, 12 July 2004; Vol. 423, c. 878W.]
      Here we are, in the closing stages of the Energy Bill, and the Government have simply not decided what to do about combined heat and power. I regret that very much, because it is extremely important.
      I also want to support new clause 19. There was an interesting little dispute earlier—a little flurry. The Liberal Democrats showed a bit of amour propre, feeling that their new clause had been pinched by a Scottish Member. There is a lot of thinking behind it, from Friends of the Earth among others. If Friends of the Earth think that the Liberal Democrats can deliver anything at all in terms of energy policy, they are making a sad mistake—but of course they do not think that, so they are not making a sad mistake.
      Many good Conservatives in my constituency support a number of Friends of the Earth's objectives. I just wish that Friends of the Earth would go a step further. Go the extra mile, Friends of the Earth, and admit that we cannot reach our emissions targets over the next 20 years unless we embrace a new generation of nuclear power. It cannot be done: there can be no argument about that. Come on, Friends of the Earth, get real. Then we can make some progress instead of sniping from the sidelines.
      What I like about new clause 19 is the provision relating to employment in the United Kingdom's agriculture industry. That is hugely important, especially in constituencies like mine. Opportunities for the rural economy would be revolutionised if our farmers could produce crops for energy, not just for fuel, subject to the vagaries of the international markets. That would also make a real contribution to the energy security of our country.
      Heat accounts for roughly a third of our demand for energy, and renewable heat is a low-cost way of reducing carbon emissions. Currently, however, it receives no dedicated support in the marketplace. There is no doubt that energy policy in this country is skewed in all sorts of ways, not least because we do not have a carbon tax. I do not think we believe in a carbon tax, but in my opinion we should reconsider. One reason for the imbalance is that energy policy supports renewable sources of electricity, but not of heat. As I have said, a third of our demand is for heat.
      We are a long way from our national climate change target. Emissions levels since 1997 have remained virtually unchanged. Renewable heat is a low-cost form of carbon abatement. Under the climate change levy, tax on heating fuels is a third of that on electricity, 0.15p per unit compared with 0.43p. That implies that the buyout price of a unit of renewable heat would be only a third of that for renewable electricity—£10 per megawatt hour. The Government could achieve carbon savings at minimal cost to the consumer and to industry. The new clause is an enabling provision which does not appear to commit the Government to any action, but maximises the legislative opportunity provided by the
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      Bill. The results of consultations on renewable heat could be quickly enacted by means of secondary legislation.
      Sources of renewable heat use proven technologies and can be quickly deployed. They include wood-fuelled boilers, biogas, solar thermal and ground source heat pumps. I am particularly keen on the latter. We have heard nothing about them during the Bill's passage so far, but we need only cross the English channel to see them being developed on the continent. There are one or two exceptions in this country: I believe that Leicester is using ground source heat pumps in municipal developments, and other towns may be doing the same.
      Dr. Alan Whitehead: The hon. Gentleman may wish to visit Southampton and see the geothermal energy project at work.
      Mr. Key: I am delighted to hear that that is happening in Southampton, which is just down the road from Salisbury. Such technology, however, is having a minimal impact, and not many people know about it.
      Unlike, for example, direct solar panels on roofs, ground source energy is already there. As we have seen in Canada, heat can be extracted from soil whose temperature is below freezing. It is a remarkable technology, and we should take it more seriously. Long-term investment is required, but it is certainly a possibility. We need this enabling legislation, which is supported in recent reports including one from the Royal Commission on Environmental Pollution. Page 39 of "Biomass as a Renewable Energy Source", published in May, states:
      "It has become clear to us that the most obvious gap in current support schemes is the lack of any mechanism for supporting the generation of renewable heat energy, comparable for example to the Renewables Obligation scheme for renewable electricity. We recommend that the government introduce such a support mechanism."
      The Department for Environment, Food and Rural Affairs commissioned a report from Ilex Energy Consulting in December 2003. That report, entitled "Policy Mechanisms to Support Biomass-Generated Heat", states:
      "Ilex recommends that the government focus on the option that appears to be the most effective in terms of delivering significant quantities of renewable energy at least cost. In Ilex's view this would be some form or obligation mechanism with tradable certificates similar to the existing Renewables Obligation."
      Those strike me as pretty good reasons for supporting new clause 19.
      In the spirit of the national interest rather than party policy, I am prepared to support new clause 19, which I find interesting. Above all, however, I hope that the message sent during the closing stages of the Bill's progress will be that we must all get real, and stop sniping at each other about whether we are greener than the next man or woman. That is not really relevant. We need to get together, and conclude that of equal value in tackling the problems of global warming are nuclear energy and renewables of all kinds, including tidal movements. If we could make some progress, even at this late stage, it would be very welcome to our constituents.
      Dr. Desmond Turner: I thank my hon. Friend the Minister for accepting the principle of my amendment in Committee and incorporating the progress on deployment of renewable energy in his reports relating to the Sustainable Energy Act 2003.
      There is no disagreement between the Government and me—and, probably, many other Members—on what we want done to encourage the use of renewable energy. We want to ensure that there is a stable, friendly environment in which investment in renewable energy can take place and that investors can feel confident that that environment will continue for some time. We are talking about long-term investments that carry high risks, apart from regulation. We want that to be absolutely clear.
      It is one thing to have an environment that is suitable for investment in wind power, as we currently have, but if we are to achieve our renewable energy targets we desperately need to use other technologies, notably our marine technologies the risks of whose initial deployment will be very much higher, and hence the challenges to investors will be very much higher as well.
      The message that I receive from serious players in the energy market—not just people in sandals—is that investors regard Britain as a difficult market for investment in renewable energy. Their greatest concern is a political one, involving the regulator. That is probably very much coloured by the history of the regulator. I am glad to note that, since Ofgem's reconstitution last autumn, it has been an entirely different animal, behaving in an entirely different way. It has been taking serious note of the guidance issued by the Minister. A disjunction still exists between what the legislation states is required from the regulator, what the Government are asking the regulator to do and what the regulator currently does. That is fine, so long as the relationship between the Government and the regulator is good, and that they both agree and work to the same agenda. Sadly, such a relationship cannot be agreed for all eternity. In my view, it is common sense to bring the statutory duties of the regulator—clause 81 couples the regulator with the Secretary of Sate, so the regulator would not act on its own—into line with future objectives.
      3 pm
      I freely admit that clause 81's drafting goes too far, because it makes renewable energy the sole primary purpose. The regulator responded to clause 81 by saying, "Ah, if you are going to make that my prime duty, I will do nothing else and the market will pay", despite the fact that clause 81 states that the change should occur with due regard to other factors such as competition, consumer protection and security of supply, which are also part of the regulator's duties. The primary duties stated on the face of the Bill are important and the regulator cannot get away from them. Amendment No. 20 attempts to get round that problem by maintaining the current primary duty of the regulator and associating it with security of supply and the protection of sustainable energy, which it makes primary duties too.
      The DTI helpfully provided me with its technical analysis of my amendment, which it does not agree with, although one would not expect it to. It points out that the amendment relegates consumer protection from being the principal duty to being one of a number of duties, but I think that that is sensible. What do we mean by consumer protection? We are all consumers and, as a consumer, I want not only the cheapest possible unit of electricity, but to be sure that the lights will not go out, so I am concerned about the security of supply, which is also a matter of consumer protection. I also want protection from climate change, which is a long-term consideration and the ultimate in consumer protection.
      Brian White: Does my hon. Friend know that the Communications Act 2003 recognises the difference between a consumer and a citizen and that the Water Act 2003 recognises the role of sustainable development as distinct from consumer protection?
      Dr. Turner: I was not aware of that detail, but I am grateful to my hon. Friend for pointing it out, because it makes sense and provides a precedent for amendment No. 20.
      I am happy for clause 81, in its current form, to go—I will not oppose the Government amendment to delete it—but I hope that the Government will think seriously about the principles behind amendment No. 20. As it happens, DTI officials also pointed out that having a number of similarly weighted duties would make it difficult for the regulator to balance priorities, but the Government and the regulator must balance priorities anyway—if they did not do so, we would return to the situation under the previous regulator, when market prices dominated everything to the detriment of renewable energy and combined heat and power. The balancing act is inevitable and we cannot get away from it. We must get the semantics right and the Electricity Act 1989 must be amended.
      Officials also pointed out a technical drafting flaw in my amendment, and they are right, which is a slight problem, so I will not take up the invitation of the hon. Member for Tewkesbury (Mr. Robertson) to set off a rebellion. However, I know that my hon. Friend the Minister agrees with me on the intentions behind regulation and I earnestly hope that he will undertake to re-examine the regulator's current statutory duties and make it clear to market investors that they can invest with confidence in the regulator. Investors will have enough problems in financing the development of new technologies to a commercial level and in moving the technology into the harsh marine environment, so let us make sure that neither Government policy nor the regulator's interpretation of Government policy is ever allowed to form a barrier to them.
      Mr. Richard Page: I shall start by taking up the point made by the hon. Member for Banff and Buchan (Mr. Salmond), who spoke about the time available on Report. The 11 Government new clauses, plus two Government amendments that are long enough to be clauses, are unacceptable and should be considered in Committee. This important Bill has been through a gestation process in a Department, a Green Paper, the other place and here, so the amount of material in front of us today is

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      not right. However, given the Government's power and huge majority, I shall get on with the few points that I intended to make in the first place and not delay the House long, otherwise the fears of the hon. Gentleman will be realised.
      I welcome new clause 4, which clarifies the purpose of a microgeneration strategy and provides a clear definition. I want to discuss the removal of the duty on the Secretary of State to impose targets. In a letter to members of the Committee on 28 June, the Minister for Energy, E-Commerce and Postal Services stated that the removal of targets constituted
      "the only fundamental difference from the original clause"—
      clause 120. I must delicately point out that one or two more fundamental changes have also occurred. Why has the time scale for the publication of a strategy been extended to 18 months? Surely the Government have had long enough—I mentioned the process earlier—to implement the strategy. Why can the strategy not be published in one year rather than 18 months? It is up to the Government to explain why a longer period is needed.
      The definition of "micro-generation" in clause 129 applied to the generation of energy by means of equipment installed in or for use by a single unit or a small number of units of office or residential accommodation. To judge by the comments already made today, it seems that such a provision is basically welcomed and encouraged. The new definition in new clause 4 relies on the definition of specific sources or technologies of a set capacity, as set out in subsections (7) and (8).
      Such an approach is much wider, and it might apply, or come to apply, to units of office or residential accommodation that are well above the size envisaged in the original clause. Is that a deliberate or accidental move? The Government have changed so much of the Bill that it would not surprise me if they wanted to make further changes. Either way, is the consequence that might flow from that approach desirable?
      My hon. Friend the Member for Tewkesbury (Mr. Robertson) and the hon. Member for Milton Keynes, North-East (Brian White) touched on targets. All of us in Committee, excluding, of course, the Minister and his loyal Parliamentary Private Secretary—and perhaps the hon. Member for Milton Keynes, North-East, who might want to be a PPS one day—felt that we should have targets and milestones through which we can measure how we are getting on. I understand the Government's worry. The House will remember that, when they took office, they produced targets as if they were going out of style. There were targets for this, that and the other; indeed, every single Department had them. Most were missed, leading to subsequent embarrassment, so I can understand why the Government are running away from the idea of ever having a target again.
      I shall not transgress into the territory of the short debate that will take place on new clause 5 and security of supply, but if we do not get that issue right, we could face blackouts or brownouts. My hon. Friend the Member for Salisbury (Mr. Key) said that we have got to get together and look at all possible sources of energy,
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      so that we can supply the needs of this nation and he is absolutely right. I hesitate to say that I am as enthusiastic a supporter of nuclear energy as he is—I am more of a political coward than him. He is bigger than me, so he can batter his way through; I might get bounced around a little. That said, I am with him, in that this Government are displaying enormous cowardice by not coming forward with a nuclear strategy.
      As night follows day, I cannot see how this country can get by and meet its energy demands without having a nuclear strategy at some point. I wish that we did not need one, but the reality is that we do. If someone asked me whether I would rather have a power station belching out smoke or a nuclear power station, I know which I would choose and I know which is more detrimental to our health. Some of the environmental groups that have been mentioned are being less than honest in their proposals. They simply are not recognising the realities.
      I want to finish by touching on combined heat and power plants, which have already been mentioned. As this House learned when the Utilities Act 2000 went through, for some reason, the exports of electricity from CHP plants were included in the renewables obligation structure. I do not know whether that was deliberate or an oversight, but it has had a hugely detrimental effect on CHP plants. In effect, one low-carbon technology—CHP— is facing an additional cost burden to support another low-carbon technology, which is predominantly wind power. As we all know, an amendment was introduced in the House of Lords that the Minister then wiped out with a cavalier flick of his hand in Committee. As a result, we are now without any form of support for CHP.
      The CHP industry has advised the Government that, in the past couple of years, we have fallen some 2,000 MWe short of the target of 10,000 MWe. The Government do not want targets, and if such shortfalls are going to happen in other fields of energy generation, I can understand why, because they would be hugely embarrassing. We are talking about a 20 per cent. drop compared with the original figure. That decline has led to an extremely difficult period for the industry. Even the DTI's own statistics show that CHP capacity and output have fallen.
      3.15 pm
      I shall not go through all the reasons why CHP is a good thing, because other Members have done so. The Government's own drive to install CHP has stalled, and action is needed now to rebuild confidence and to get things going again. I welcome new clause 4 and the consequences flowing from it, but I am sorry to learn that the Minister is running away from targets. We need targets to know where we are and to measure what we have to do if we do riot meet them. When the right hon. Member for Cunning tame, North (Mr. Wilson) was a Minister, he was an enthusiastic advocate of a target of 10 per cent. renewable; by 2010, but he always fell a little short in terms of how that would be achieved. We have taken a small step—and I mean a small one—towards achieving that target, but I am desperately worried that there will be a shortfall. I do not want the people of this country to experience blackouts or to run short of

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      power. It is up to the Government to ensure that they have targets, so that we know where we are, where we are going and what we need to put right.
      Ms Joan Walley: It is always a pleasure to follow the hon. Member for South-West Hertfordshire (Mr. Page). He and I go back a long way, but I should point out that I do not share his conviction concerning a nuclear future. I want the Government to do everything that they can with renewables and energy efficiency, so that we can get to where we need to be. The Bill, and the new clauses and amendments that we are discussing, which were quite controversial in Committee, are all about security of supply. We must take the right act ion now to get us to where we need to be. We must avoid going down the nuclear route, and ensure that we have what we need when we need it.
      The amendments and new clauses before us deal with perhaps the most complex and central issue of our time: how to provide the energy that we need. As was pointed out, there was a rebellion in Committee—we do not want another one this afternoon—but the Minister has listened to many of the arguments, It has been pointed out that the debate seems now to be about semantics rather than anything else; I hope that that is so, and that we are showing that this is an ongoing issue and campaign. We need to get the legislation right. We need to provide the tools to achieve the necessary investment in renewables, so that we get the energy policy that we actually need.
      The debates in Committee centred on two main themes: residential energy efficiency, and the power of the regulator. The Government rejected a residential energy efficiency target, clause 3 was withdrawn, and there was a vote on clause 81. Many of us felt that that was a way of dealing with an issue that should have been dealt with in a more up-front way through clause 3. The most important point is that it is possible that existing carbon savings are simply not being counted. There was a great deal of frustration among many members of the Committee, including hon. Friends who are far more conversant with these issues than me, that the carbon savings had not been properly counted. In Committee it seemed wrong to go for a lesser target than that which we already had.
      That is why I support my hon. Friend the Member for Milton Keynes, North-East (Brian White) as he continues to try to drive the agenda forward. He has tabled new clause 6, which deals with a policy goal. I do not mind whether something is a "target" or a "policy goal", but I do mind that we should have a Minister who aspires to make the carbon savings that we really need.
      Mention has already been made of evidence given to the Environmental Audit Committee. We heard, for example, from the Energy Saving Trust and it is clear from its evidence that savings have been made, but are simply not being counted. There may be a role for the Sustainable Development Commission working with officials from the Department of Trade and Industry and, by that means, we could reach the stage that we should have reached in respect of energy efficiency. I believe that 5 megaton of carbon savings is absolutely on the cards, and we could achieve It quickly. I hope that in further discussions in the other place and in the
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      Minister's ongoing policy work—I do not mean only when he speaks on the "Today" programme, defending his policy so admirably at whatever time in the morning—the necessary action will be taken forward. We want the Minister to make the carbon savings that we absolutely need and ensure the security of energy supply that we also absolutely need.
      The role of the regulator is important. New people are responsible for the regulator's work and we may never go back to the days of Clare Spottiswoode, when we were categorically told that there was no way that environmental sustainability issues could be taken into account. It may not be necessary to have everything built into the legislation, and I hope that the Minister can provide us with an assurance that a change of direction has already taken place. The Sustainable Development Commission, under the chairmanship of Jonathon Porritt, could be more actively involved in ensuring that the regulators are conversant with the way in which the new duties have been spelled out in respect of the Government's and the Minister's long-term objectives.
      The Deputy Prime Minister made a statement earlier today in which he referred to the new programme of house building across the country, which I believe that hon. Members on both sides of the House support. The extent of new house building and modernisation and investment in our existing housing stock will make it more important than ever that we have joined-up thinking across government. We need to ensure that we consider the impact of the energy systems in new residential properties, which could be significant in terms of carbon emissions. We need to promote joined-up thinking through the Green Ministers Sub-Committee and we need much tighter regulations from the Office of the Deputy Prime Minister on energy efficiency. We might then be able to start to deliver some of the policy goals set out in the new clause proposed by my hon. Friend the Member for Milton Keynes, North-East.
      I believe that the Government have an opportunity to drive this agenda further forward. The thrust of legislation on energy efficiency and renewables is right. I welcome the provisions on microgeneration, which will also help. The day-to-day implementation will be crucial and the devil will be in the detail of how we get to where we want to be in respect of averting global warming and meeting the Government's Kyoto commitments. The Prime Minister has pledged himself to meeting them and will speak at the G8 talks next year. I hope that our consensual debate means that progress will be made on those most important issues.
      Mr. Weir: I shall be brief in the vain hope that we might reach the last set of amendments in due course, but I should like to make a few points about this important group of amending provisions. I support new clause 6 and new clause 19—despite its proprietorial implications, as pointed out by the hon. Member for Lewes (Norman Baker).
      New clause 19 is, in fact, supported not only by Friends of the Earth, which the hon. Member for Salisbury (Mr. Key) mentioned, but by the National Farmers Union, Slough Heat and Power, the Renewable Power Association and many others. They all support it because it deals with an issue that is vital

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      to rural as well as urban areas. The renewable heat obligation provides the opportunity for biomass to contribute to our energy mix, which could be important for our farming communities as they look for new work to replace traditional work whose economic importance is not as great as it used to be. It also provides an opportunity for the forestry industry in Scotland, for example, to have an outlet for much of its produce.
      I have already said that I support Government new clause 4, though I am slightly disappointed that its terms have been watered down. We debated an earlier draft in Committee, and I prefer the original wording. Microgeneration could be important in rural areas of Scotland where there is considerable interest in it, particularly on the part of those who have very expensive oil-fired central heating. Microgeneration provides an opportunity for replacing that fuel with a renewable source of energy, which would help many of our rural areas. It will become a very popular option if clauses 176 and 177 are passed in their present form and it will impact on many areas of Scotland.
      I want to deal briefly with the regulator, particularly Ofgem, which the hon. Members for Milton Keynes, North-East (Brian White) and for Brighton, Kemptown (Dr. Turner) mentioned. I strongly agree that some guidance should be given to the regulator about how best to interact with Government policy, although I do not share the view expressed about the supposed improvement in Ofgem. My hon. Friend the Member for Banff and Buchan (Mr. Salmond) and I met representatives of Ofgem yesterday and, frankly, I was shocked at the fact that they did not seem to take any cognisance whatever of Government policy on renewable energy. Ofgem's entire raison d' être seemed to be to deal with markets and with what it saw as consumer protection. It did not take into account anything to do with renewable energy. In its calculations it did not seem to take into account what the Government are trying to achieve—an increasing element of renewable energy in our energy mix, which we all support.
      That is a serious defect. By passing the Bill in its present form without addressing that problem, we are in danger of making it worse. We are all going forward together, across parties even, towards a renewable future, yet we may find it being sabotaged by the regulator, which is operating on an entirely different agenda. That is a serious matter, which the Government need to address. If they do not, the renewable future may go down the tubes very quickly.
      3.30 pm
      Mr. Colin Challen: I am pleased to say that through the Bill, the Government seek to deliver power to the people. I always knew they would. New clause 4 puts that into practice. Microgeneration will give people at a local level or an individual level a high degree of control over their sources of energy supply. It is good not to be dependent on a supply industry that has under-invested. The grid, allegedly, is on its last pylons, if not its last legs. We are told continually that power stations do not have the necessary capacity and that we may face another winter
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      blackout crisis. We do not want a Californian situation in this country. That points to one good reason why we should give more control over these matters to people in their communities, just as is beginning to happen in Germany.
      The hon. Member for South-West Hertfordshire (Mr. Page) asked why the period of consultation should last 18 months. He was given a good response to that from my right hon. Friend the Member for Cunninghame, North (Mr. Wilson) and my hon. Friend the Member for Stoke-on-Trent North (Ms Walley), who said that there are clear issues that the Office of the Deputy Prime Minister must grapple with. There are also issues that the Department for Environment, Food and Rural Affairs must address. I urge my hon. Friend the Minister to ensure that the consultation that flows from the clause is extremely thorough and that it is carried out in partnership with those two Departments, so that the impact of the clause on the announcements that we heard today from the Deputy Prime Minister is taken on board by the Office of the Deputy Prime Minister.
      I am concerned that that may not be the case. There is a great enthusiasm to build as many houses as we can get for the price that we are prepared to set. We should examine ways of funding environmental improvements. The Barker review suggested a windfall tax on sales of land for housing, which is not a bad idea. We might also consider a windfall tax on the profits of house builders, and we could Government hypothecate those amounts to improving the environment. I hope that the consultation that floes from the new clause will examine such proposals.
      Microgeneration offers a great opportunity for the Department of Trade and Industry to show that the United Kingdom plc has a new manufacturing base and a new manufacturing strategy. If we get that right, there will be enormous markets—for example, in the developing world, where small and remote communities would benefit enormously from cheaper solar power. There are, of course, many different ways of trapping solar energy. If we can develop it in this country, we will have a potential export industry of a high order. That would help our manufacturing plant.
      The week before last, with other members of the Environmental Audit Committee, I visited Aberdeen, which is known as an energy town, second only to Houston. People in the oil and engineering industries there are looking for new ways of developing what they see as a declining industry. When we discuss new alternative technologies, it is important that we recognise that we are not necessarily against those in the existing energy and engineering industries—we could work with them.
      I thoroughly support new clause 6. It represents the other side of the coin to the sentiment about power to the people. If people can generate their own power through microgeneration, it makes sense that they should not have to generate so much energy. Energy efficiency, the other side of the coin, is known as the fifth fuel. I am a little perturbed by the reduction of the target from 5 to 4.2 megatons.
      In that context, my hon. Friend the Member for Milton Keynes, North-East (Brian White) referred to a memorandum and evidence to the Environmental Audit Committee from the Energy Saving Trust. On the same

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      day, 24 May, we also had before us representatives of the Carbon Trust, which was set up a few years earlier. It deals with the industrial and commercial side of energy saving, whereas the Energy Saving Trust is more concerned with the domestic side.
      I was interested to note that the Carbon Trust said that the energy efficiency implementation plan would leave
      "a gap to 2010 of around 4m tonnes of CO2…assuming the 20 per cent. goal is applied specifically to the business and public sectors. Clearly, this gap could still be closed by ramping-up existing measures and introducing new ones. This should be a key issue for the review of the CCP later this year."
      I hope that that approach also applies to domestic energy efficiency. Both the trusts to which I have referred believe that a lot more could be done, but they would say that, wouldn't they? However, I tend to agree with them—a lot more could be done.
      We heard in Committee that the shortfall on the domestic energy front could be made up, and exceeded, in the commercial and industrial sectors. If so, I do not see why the same approach cannot be adopted for domestic energy. Why does one sector have to be downgraded, and the other upgraded? Industry and commerce obviously contribute a great deal in terms of carbon emissions, but the many hon. Members in receipt of this week's report from the Confederation of British Industry will know that that body is worried that environmental measures could make business uncompetitive. That is a very valid concern.
      The very noble cause of reducing fuel poverty is at the centre of Government strategy. The DEFRA chapter of the 2004 spending review talks about the environment, and shows that it is fuel poverty that drives the policy on energy efficiency in the domestic market. That is very worthwhile, but what happens when everyone is released from fuel poverty? Will there be an end to grants for insulation, the Warm Front programme, and the rest of it? Clearly, there needs to be a greater emphasis on environmental need. We should not concentrate solely on fuel poverty.
      I shall end with a brief comment in support of amendment No. 20. The EAC heard from the UK World Business Council for Sustainable Development that it was in favour of inserting a tighter requirement on the regulator. It wanted to use the phrase "sustainable development", and I noted that my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) spoke earlier about "renewable energy". Those may be narrow definitions, but any reference merely to "the environment" can mean so many different things that it could mean nothing at all. I hope that the Government will listen to the intent behind the amendment, and act on it in some way.
      Sir Robert Smith: The hon. Member for Morley and Rothwell (Mr. Challen) will be very popular in Aberdeen city. He recognised that it is an energy city, and not just an oil and gas city Aberdeen has been trying to rebrand itself and move away from the traditional industries that grew up there because of the resources in the North sea. As the hon. Gentleman said, the aim is to get the skills available in the energy industry transferred into the new and growing renewables sector, and to build a manufacturing base that will support that sector.
      I want to speak in support of new clause 19. I shall be brief: the final group of amendments to be considered today also significantly affects Scotland, and I want to make sure that there is time to discuss those proposals.
      In his introductory remarks, the Minister mentioned the Government's clear skies initiative. I wrote to the Secretary of State to pass on concerns expressed by a constituent of mine about the problems of accreditation for that scheme. That letter was passed to the Minister by the Secretary of State, so I hope that he will make sure that the problems are dealt with.
      New clause 19 is important to my constituency. I represent a large, rural area, in which few communities are on the gas main. The heating alternatives for domestic dwellings and businesses rely on carbon-emitting fuels such as oil, coal and liquefied petroleum gas. The Government should welcome any move to replace those direct heat sources with renewable sources as a way to achieve their Kyoto commitments, and to reduce this country's carbon emissions.
      In my constituency, one possible renewable source of heat comes from the rural community—the farming industry or, as the hon. Member for Angus (Mr. Weir) said, the forestry industry. Managed forests lock up carbon during the growing cycle, which is then used as fuel during the harvesting cycle. The process then repeats itself over the generations. However, many of our forests are reaching a point of maturity where they desperately need to be thinned. The problem is that there is no economic outlet for the wood taken during thinning. If we do not thin the forests now, we will not be thanked by later generations, as the forests that we leave to them for harvesting will be of much lower quality. Any measure that underpins the market for thinnings will help to boost the forestry industry. Obviously, those thinnings could be an ideal fuel for a biomass plant providing heating for a district or for industry.
      Aberdeenshire council has been working hard to promote in the community the use of biomass as a renewable fuel and has come up against the argument from potential users that a renewable obligation might well be the tipping point that would make them take up that energy. It is important for the Minister to say how he plans to take forward what is in new clause 19, which seems to be the best way to encourage that form of substitution of carbon and advance that policy. District heating schemes are being considered for communities. As other hon. Members have said, the technology exists to use the fuel; it is not an unproven technology. It is simply a question of stacking up the economics properly. A level playing field needs to be created with other forms of renewable energy. If the fuel is used to generate electricity, it gets some element of renewable recognition, but where it is used just to produce heat there is no recognition of the valuable contribution that it can make to reducing our carbon dioxide emissions.
      Mr. Timms: We have had a good debate on this series of amendments and new clauses. I welcome the support expressed for new clause 4 by a number of hon. Members, including my predecessor, my right hon. Friend the Member for Cunninghame, North (Mr. Wilson), who made an important point about addressing planning issues for microgeneration within

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      the strategy. He will know that the updated renewables planning policy statement, PPS22, is due to be published by my right hon. Friend the Deputy Prime Minister shortly, but microgeneration will raise some new planning issues that we will need to consider in the context of that work.
      Mr. Wilson: I am grateful for my hon. Friend's comments. Does he think that it will be possible within the time scale to incorporate the microgeneration issues into the report from the ODPM? I am slightly alarmed at the thought that it will take 18 months to get around to those issues. Surely if there is a sense of national urgency about all this, we could make rapid progress on microgeneration planning issues as well as on those that are more familiar.
      Mr. Timms: I cannot give my right hon. Friend an assurance that those issues will be fully addressed in the imminent document from the Deputy Prime Minister, but he is right to say that we will need to address them in the context of the strategy. If we can make progress more quickly on that part of the work, we will certainly do so. I take on board his point about the urgency of making headway.
      New clauses 2, 3 and 6 relate to energy efficiency. I recognise that there has been some disappointment that the Government's published aim of delivering annual savings of 4.2 million tonnes of carbon from households by 2010 is at the low end of what was indicated in the White Paper. I use that form of words because it has been said that the target has been reduced, and that is not the case. There was no target in the White Paper, but an indication that we thought that around 5 million tonnes—that was the expression used—of carbon could be saved from households. As I said in Committee, in my book "around five" means somewhere between four and six and the figure has come out at 4.2. The overall saving from energy efficiency was set out in the White Paper as 10 million tonnes—5 million from households and 5 million from industry. We are confident that we can deliver 12 million tonnes, with a substantially greater contribution from industry and 4.2 million tonnes from households. I have had the opportunity to meet the Association for the Conservation of Energy to discuss the issues, as I said in Committee that I would.
      I cannot recognise the point that my hon. Friend the Member for Milton Keynes, North-East (Brian White) made about the crisis of confidence in the industry. We propose a doubling of the market for domestic insulation— cavity wall insulation. That is a huge boost to the industry; it can plan with great confidence for a big expansion. I accept that it is not quite such an enormous expansion as might once have been thought, but it is big, and the industry can be confident about its prospects.
      We will review our energy efficiency aims in the household sector both, as my hon. Friend the Member for Morley and Rothwell (Mr. Challen) said, through the review of the climate change programme commencing later this year and through the 2007 review of the aim that was announced in the action plan. We will also look to maximise the cost-effective contribution from energy efficiency. I agree with my
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      hon. Friend the Member for Milton Keynes, North-East who expressed the hope that we can go further than we have committed ourselves to doing at this stage. However, until those reviews take place, it would not be right to change the present aims.
      3.45 pm
      Miss Anne McIntosh: Does the Minister accept that the residential efficiency aims were changed not by his Department but by the Department for Environment, Food and Rural Affairs in the energy efficiency implementation plan? I do not know whether the two Departments have some history on that issue that the Minister might like to share with us. When does he intend to introduce the statutory requirement in the commercial sector?
      Mr. Timms: The hon. Lady is right to say that DEFRA takes the lead on energy efficiency. However, as I am sure she has noticed, the two Departments work closely, and there is no difference between us on the issue. I do not agree that the figure of 4.2 tonnes is a change from "around 5 tonnes". It is simply a clarification of what the White Paper said.
      The hon. Member for Lewes (Norman Baker) made a point about the importance of consumer behaviour, and I agree. We are working through the Energy Saving Trust to address the question of consumer behaviour. With marketing and communication specialists, we are considering how to take forward a new climate communications programme to draw to people's attention how significant a contribution they can make to achieving the objectives that are important to all of us. Our aims are challenging and will require concerted effort from all involved, and if we can increase them at a later stage, we will use our planned reviews to do so.
      I wish to make the point to the hon. Member for Lewes that the Government remain firmly committed to our domestic target of a 20 per cent. reduction in carbon dioxide emissions by 2010. He suggested that that was not the case, but it certainly is. Clause 82 already imposes a requirement to report on "things done" for the purpose of achieving the energy efficiency aims designated under the Sustainable Energy Act 2003. That removes the need to have a separate report, as the amendment suggests.
      New clause 19 addresses the issue of a renewable heat obligation, and we have had some interesting discussion of that point. It is an interesting idea and an important issue that we also discussed in Committee. Introducing such a measure, even in the permissive way in which new clause 19 is helpfully drafted, would be rash, given the little time that we have had to give it the serious consideration it deserves. We first need to do some serious analytical work, and we will. I shall meet representatives of several interested parties, including Friends of the Earth, which has rightly been mentioned, to hear how their ideas for renewable heat are evolving.
      An obligation approach, as proposed by the hon. Member for Hazel Grove (Mr. Stunell)—I am pleased to see that he is in his place—may prove to be the best way forward. The Royal Commission on Environmental Pollution has referred to that approach, but other options need to be examined, too. We would need to examine the costs of a support scheme to the

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      consumer and the impact on other policies to tackle fuel poverty. If we excluded the domestic sector from such a scheme, we would need to consider the administrative costs and whether they would be justified for the limited market that would be left. We would need to consider whether such a scheme would represent good value in terms of the carbon savings; the implications for the heating fuel supply industry; and whether the obligation should be placed on those who sell heat or those who supply fossil fuels for heating. All those issues can be resolved.
      The question of renewable heat was also raised last month by the European Commission in its communication to the Council and the European Parliament on the share of renewable energy in the EU. The Commission noted that there is no legislation in place at European level to address renewable heat production at present, and that renewable energy in heating has grown slowly over the last seven years. The Commission has yet to come up with proposals on how that issue can best be tackled.
      I very much welcome the fact that we have held discussions and the wide support that has been expressed in the debate, and I am grateful to the hon. Gentleman for airing the matter again today.
      Mr. Stunell: The Minister is expert in giving us calm, warming words on these matters but what is he actually planning to do? He has set out a list of questions that need to be answered, but what does he intend to do and when?
      Mr. Timms: I shall attempt to calm and reassure the hon. Gentleman. We shall take forward the analytical work that is needed to address all t he questions that I have raised. As I am sure he agrees, those questions are serious, and we need answers before we can make headway. In addition, I shall meet those, such as Friends of the Earth and others, who have drawn particular attention to the importance of the matter. I agree that it is important and that we need to make headway, but we also need to do more analytical work before we can determine precisely the right way forward, or indeed the time scale for making progress. I hope that the hon. Gentleman feels reassured on that point—as on many others—by my answer.
      Sir Robert Smith: Will the Minister give way?
      Mr. Timms: I really need to make some headway, given the points that have been made, rightly, about other matters on our agenda this afternoon.
      On new clauses 20 and 21, I realise the importance of addressing the current problems for combined heat and power, but we need to do so in a way that does not undermine other objectives. As we have said both in the House and in Committee, we mug not undermine what we all want to achieve on renewables, and that would be the problem under the new clauses. It is not just I who says so: as I mentioned in Committee, I have received representations from the Renewable Power Association, the British Wind Energy Association and the Association of Electricity Producers expressing their concern. Centrica plans to invest £750 million in renewables projects and sees the proposals in the new clauses as
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      "undermining the ROC market which is still in its infancy".
      I appreciate that new clause 21 would attempt to make up for the loss on the renewables side, but it would introduce a range of uncertainties that do not exist at present, and that would be unhelpful. There is a real danger of moving the goalposts, thereby undermining the confidence that is so essential for delivering what we want across the range, especially on renewables.
      Mr. Laurence Robertson: As I acknowledged earlier, the Minister makes a good point when he suggests that the new clauses are somewhat less than perfect, but will he make some proposals about how we can encourage the CHP industry? Although it is not carbon-free, it is certainly more efficient than many other traditional forms of electricity generation.
      Mr. Timms: I agree. Several of my hors. Friends have made the same points about the importance of CHP and its benefits, and the significantly greater potential of its contribution. We set the ambitious target of more than doubling the amount of installed CHP capacity by 2010. Currently, it looks as though we are heading for 8.5 GW capacity rather than the 10 GW that was our target, so I agree that we need to address the shortfall. However, we need to find ways of doing so that do not undermine other objectives so I am especially grateful to my hon. Friend the Member for Southampton, Test (Dr. Whitehead) for his interesting suggestion in Committee that a possible means of providing further support for CHP would be a mechanism that he described as being like a fixed-rate mortgage, whereby the Government would guarantee a certain level of spark spread for CHP. Spark spread, as the House will know, is the difference between the price paid for gas and the price obtained for electricity generated.
      Yesterday, my hon. Friend my noble Friend Lord Whitty and I attended a meeting with representatives of the Combined Heat and Power Association and others from the industry, and we had a good discussion of my hon. Friend's idea. Of course, at this stage, we have not been able to undertake any analysis of the practical and cost implications, but those at yesterday's meeting, including the association, agreed that that very interesting idea might give us a way to increase the attractiveness of investing in CHP without putting at risk other energy policy objectives. So we will work with the industry to consider whether we could move in the direction suggested by my hon. Friend. We also need to work with the industry to consider other options in case that one does not work out in the way that is hoped, so that we can produce proposals in support of CHP that are demonstrated to be cost effective and that do not undermine other policy objectives. I hope that that dialogue will be fruitful. My hon. Friend made an appropriate point about the importance of our success.
      My hon. Friend the Member for Brighton, Kemptown (Dr. Turner) spoke to amendment No. 20, and I am grateful to him for making a number of points, including his acknowledgement of some technical difficulties with the drafting. By deleting the current principal objective for Ofgem and putting in place a number of similarly weighted duties, the amendment would in practice make it very difficult for the regulator to work out how to prioritise its work and balance its duties. The current set of duties strikes a careful balance

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      between a number of different objectives and was arrived at after much consideration and consultation. I certainly would not want to change those duties without, as a minimum, doing a similar amount of work and ensuring that there was a wide understanding and acceptance of the change that was being made. The current principal objective of
      "protecting the interests of consumers"
      is well understood and welcomed by all stakeholders, and we should not delete it.
      In amendment No. 20, there is a particular difficulty with the phrase
      "to ensure that there is no detriment to the promotion of".
      The strength and inflexibility of that phrase could cause some difficulty in making our energy markets work for the good of consumers and UK competitiveness. However, I hear what hon. Members, including a number of my hon. Friends, have said about the importance of sustainable development to Ofgem's work. Of course, guidance is already in place. I welcome the fact that, for example, my hon. Friend recognises that Ofgem is now seen to deliver effectively on those priorities, but I have noted the strength of feeling that my hon. Friends have expressed on that point.
      On the basis of the explanation and assurances that I have given, I hope that the House will feel able to agree to new clause 4 and the associated Government amendments and that hon. Members will not press to a vote the other amendments and new clauses in this group.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 5

      ANNUAL REPORT ON SECURITY OF ENERGY SUPPLIES
      `(1) The Secretary of State must, in 2005 and in every subsequent calendar year—

      (a) publish a report dealing, as regards both the short term and the long term, with the availability of electricity and gas for meeting the reasonable demands of consumers in Great Britain; and

      (b) lay that report before Parliament.

      (2) The report must include, in particular, overall assessments, as regards both the short term and the long term, of each of the following—

      (a) generating capacity in Great Britain and its offshore waters so far as it will be utilised for generating electricity for introduction into transmission systems in Great Britain;

      (b) the availability of capacity in those systems and in distribution systems in Great Britain for transmitting and distributing electricity for supply to consumers in Great Britain;

      (c) the availability of capacity in infrastructure in Great Britain for use in connection with the introduction of gas into licensed pipe-line systems in Great Britain; and

      (d) the availability of capacity in those systems for conveying gas to consumers in Great Britain.

      (3) The report must be prepared jointly by the Secretary of State and GEMA.
      (4) In this section—
      "consumers" includes both existing and future consumers;
      "distributing", "distribution system", "transmission system" and
      "transmitting" have the same meanings as in Part 1 of the 1989 Act;
      "gas" and "gas transporter" have the same meanings as in Part 1 of the Gas Act 1986 (c. 44);
      "infrastructure" includes pipe-line systems, terminals and other facilities but does not include licensed pipe-line systems;
      "licensed pipe-line system" means a pipe-line system that is operated by a gas transporter for the conveyance of gas to any premises or another pipe-line system as authorised by his licence under section 7 of that Act;
      "offshore waters" means, in relation to Great Britain—

      (a) so much of the territorial sea of the United Kingdom as is adjacent to Great Britain; and

      (b) waters in a Renewable Energy Zone (within the meaning of Chapter 2 of Part 2 of this Act).'.—[Mr. Timms.]

      Brought up, and read the First time.
      Mr. Timms: I beg to move, That the clause be read a Second time.
      Security of supply is vital to the UK—a key underpinning for our economy, and something that we all take for granted in our daily lives. Debates on the Bill both in the House and the other place have reflected the strength of feeling and concern on the issue among hon. Members of all parties. At the outset, I should like to thank the hon. Members for Tewkesbury (Mr. Robertson) and for Hazel Grove (Mr. Stunell) for their contributions to identifying what is now a broadly acceptable way forward to address security of supply in the Bill.
      A provision agreed to on Report in the other place would have given the Secretary of State a broad duty to ensure the integrity and security of gas and electricity supplies. However, it was pointed out to us through numerous subsequent representations that it would unintentionally create great uncertainty in the market and undermine the independence of the regulator and incentives for investment. The provision was taken out of the Bill in Committee, but I undertook to think further about a proposal made by both Conservative and Liberal Democrat members of the Committee to require the Secretary of State to report annually to Parliament on security of supply. I said at the time that I thought that that was a helpful suggestion, so I am pleased to be moving a provision along those lines today, which I have been able to discuss with the hon. Members for Tewkesbury and for Hazel Grove. The new clause reflects the Secretary of State's ultimate responsibility for security of supply and her accountability to Parliament for its delivery.
      4 pm
      New clause 5 will place a duty on the Secretary of State to publish an annual report. She will also be required to lay the report before Parliament, which will provide an opportunity for an annual debate in Parliament during which hon. Members may scrutinise her account. I hope that that opportunity will be taken up. The report will have to cover energy security in both the short and long term. I envisage that the short term will relate to the next year or so, and I would expect the

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      long term to cover 10 years ahead, although certain aspects of the report will lend themselves to different time scales. For example, National Grid Transco currently forecasts plant margins seven years ahead in its seven-year statement, whereas the effects of the renewables obligation will extend well beyond 10 years. I do not think that we can put a firm figure on the time covered by "long term", but I hope that I have set out the sort of period that the report will cover.
      Brian White: It was said in Committee that security of supply was not only a supply-side but a demand-side issue. Will the Minister assure me that that will be considered in any report? Will the term "reasonable demands" allow the consideration of demand-side issues that should be addressed?
      Mr. Timms: Yes, account will have to be taken of those issues. As my hon. Friend will know, we will report separately on progress made on energy efficiency, but the report about which I am talking will certainly need to take account of future realistic levels of demand and the extent to which we can identify reductions to that as a result of headway made on energy efficiency. My hon. Friend makes a good point.
      We have specified areas that the report must cover: the availability of electricity generating capacity, or the plant margin; the availability of gas infrastructure, which we have defined as including pipelines and terminals for importing liquefied natural gas; and the availability of electricity and gas networks to get supplies to consumers. Those factors are especially important, and they focus on electricity and gas infrastructure located in Great Britain, which reflects the fact that that is where the Secretary of State and Ofgem have direct responsibilities.
      The list is not exhaustive, but subject to the more general requirement that the report must deal with
      "the availability of gas and electricity for meeting the reasonable demands of customers in Great Britain".
      We will have to consider wider issues such as the one to which my hon. Friend the Member for Milton Keynes, North-East (Brian White) referred. If the report were published now, for example, it would be appropriate for it to cover measures taken to liberalise energy markets in Europe and to agree international treaties for gas pipelines. Those issues will change over time, and it is thus right for the specific focus of the report to be the availability of electricity generating capacity, gas infrastructure, and electricity and gas networks.
      There has been discussion of whether the report should also address the security of oil supplies. Oil security is firmly on the Government's agenda and we play a full part in the work of the International Energy Agency, including its emergency oil-stocking arrangements. The IEA is a centre of expertise for oil analysis and publishes regular analyses on the long-term availability of oil. However, I suggest that this report is not the best or most appropriate vehicle to deal specifically with those issues. Its focus on gas and electricity reflects the fact that those are both regulated areas in which the Secretary of State and Ofgem have important duties in relation to security of supply. The situation is rather different in respect of oil, which has an internationally competitive market.
      The new clause also specifies that the report is to be prepared jointly by the Secretary of State and Ofgem, reflecting their complementary roles. Areas such as enforcement of licence conditions are properly delegated to the independent regulator, as the necessary expertise lies with Ofgem. Of course, the regular discussions that we have with industry at ministerial and official level about security of supply will also help to inform us as we draw together the report.
      Mr. Martin O'Neill: My hon. Friend has just mentioned energy efficiency, but since the responsible Ministry is the Department for Environment, Food and Rural Affairs at least, it has a substantial part of the responsibility—should it not be included in the Bill, and even if not, should not a nod be given in its direction to say that its information will be utilised as well?
      Mr. Timms: I can certainly give my hon. Friend the reassurance that we will work with DEFRA and other Departments in compiling the report, but the legislation vests the legal obligations for ensuring security of supply in the Secretary of State and Ofgem. Hence, they have lead responsibility in preparing the report.
      Mr. Bill Tynan: Will the report contain a plant margin percentage that would require to he met every year?
      Mr. Timms: Yes, the report will specifically address the question of the plant margin.
      The new clause represents an important step forward. It will enable Parliament, industry and the public to scrutinise the Secretary of State's assessment of the security of energy supplies in Great Britain and to call her to account. Again, I am grateful to Opposition Members for making this helpful suggestion and for the constructive way in which both they and the industry have helped in developing the proposal. I hope that the whole House will feel able to support the new clause.
      Mr. Laurence Robertson: I thank the Minister for the generous and courteous way in which he has dealt with the new clause. He has certainly involved me at every stage, for which I am grateful to him. We have got to a position that is acceptable to hon. Members in all parts of the House, and that is very sensible.
      I wish to go back a little bit in time and explain what the Lords— certainly the Conservative Lords—were thinking about when they proposed the original provision, which placed a duty or even burden on the Secretary of State in respect of the integrity and security of gas and electricity supplies. Of course, that provision came on the back of power cuts in California, New York, Italy and, more relevantly, London and the west midlands. Those problems arose for different reasons that were not necessarily related to the actual generation of electricity, but following those incidents, the BBC programme "If…the Lights Go Out" was broadcast. On that day, which was particularly cold, the national grid and Transco issued a warning of insufficient margin, as the margin fell to about 7 per cent. That is not necessarily a dangerously low position, but put together, all those factors had an effect and inspired those in

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      another place to table an amendment to the Bill that placed responsibility for securing energy supply with the Secretary of State.
      The issue also went wider. We now face a situation in which our indigenous gas and oil supplies are starting to decline; I shall not put it any stronger than that. There are a lot of environmental pressures on the coal industry from the large combustion plant directive and the emissions trading scheme. Rightly, we have our own targets for reducing emissions. Over the next 20 years, unless extensions and new build are embarked upon, the nuclear industry will decline from its present 22 per cent. of electricity generation to just 2 per cent. We all support renewables in terms of the practical challenge of building them and bringing them online, as well as in a philosophical sense, but there is a long way to go to make up the potential loss of the nuclear and coal generating industries.
      The point that I am making, in a roundabout way, is that there is a question mark over the security of supply and our ability to generate sufficient electricity in the medium term. The medium term could be two, three, four or five years, or slightly longer—it is a moveable feast—but however we define it. the problem remains. It is not only Conservative Members who put forward that proposition—as the Minister and Liberal Democrat Members know, many industry commentators share our concern. They are worried that falling wholesale prices will make many investors nervous about investing in the generating business, given that they have to make money and can choose to invest anywhere.
      That was the general background to the drawing up of the amendment that the Lords originally added to the Bill. The Minister is right to say that that was perhaps misinterpreted by the industry. People came to us and said, "You were the party which freed up the electricity industry in the first place—why are you supporting a clause that could reverse that?" Of course, it would not have had that effect, because it gave the Secretary of State no more power than he—or she, in this case already had. There was alarm, however, and the last thing that we wanted to do was to create any more uncertainty in the market. I readily agreed to discuss it with the Minister, and we have reached a sensible compromise whereby the Government will produce an annual report on the position with regard to gas and electricity over the short to medium term.
      I entirely accept the Minister's explanation as to why the report will not deal with oil, because that situation differs in many respects. However, it is serious and needs addressing. We all remember the difficulties in the early 1970s following the huge hike in oil prices, and we have all endured the recent scare over the security of oil supplies, not to mention price. But I digress slightly.
      The Minister said that the report could provide the opportunity for a debate in the House. That is important, because I would not like the report to be hardly seen, heard about or debated. People like me can come to the Dispatch Box and ask for a debate, but if the Government are not willing to provide the time, it will not happen. Will the Minister confirm that he intends the report to be debated in Parliament every year? If he can give that assurance in clear, unequivocal terms, I see no reason why we should not support the new clause.
      4.15 pm
      Mr. O'Neill: I agree with the hon. Member for Tewkesbury (Mr. Robertson) that such a debate should take place in Government time. We hold several debates on, for example, the armed services. The issue that we are considering is also a matter of life and death. Perhaps it is not as dramatic as some other subjects but it is as important. The Government new clause constitutes a good compromise.
      When the relevant amendment came from the Lords, I thought that there was a wee bit of mischief making and opportunism, but that is the function of the Opposition and we cannot complain about it. However, it was always acknowledged that, regardless of who owns oil, gas and electricity utilities and generating capacities, if the lights go out, the Government get the blame. A more formal structure is therefore welcome. We used to have documents, such as the brown book on the North sea, which continue to be published; but something that is more pointed and better focused will assist.
      We must try to hold a more mature and better informed debate on issues such as security of supply. We wasted a lot of time considering whether the American experience was relevant and whether that on the east coast or the west coast applied more to the British position. We also examined whether it was appropriate to take account of what happened in Italy or, indeed, in London and Birmingham. When the Select Committee considered the matter, it became clear that events in London and, to a lesser extent, Birmingham were probably accidental. However, they were wake-up calls that conveyed a warning that we cannot afford to be complacent about the organisation of maintenance—that was the difficulty in London—or taking off supply specific power stations that have not been called in for many years. That was the case with the Lotts Road facility.[Interruption.] We had a problem with a fly, but I think it has been sent away.
      My hon. Friend the Member for Hamilton, South (Mr. Tynan) made the point that margins should be considered seriously because they are important. There has been a debate about whether some sort of payment should be made to companies for keeping plant available. The increase in electricity prices, at least in the short term, may have resolved that matter, because it is now worth a company's while to keep its reserve stations ticking over so that they could be used.
      More attention should be paid to gas supply and storage. We have long established a number of days' supply of oil and, in the past, we had coal reserves in power stations. The demise of the coal industry has meant that such precautions no longer form part of the physical landscape of Britain. The power stations that I pass have nothing like the supplies of coal that they used to hold. Before long. we must not only pay more attention to the provision of reservoirs and undersea salt caves, which will doubtless be used for storing gas, but we should have proper accounting of the number of days' supply, especially as dependence on gas increases.
      In Britain, we have been incredibly fortunate for many years in being self-sufficient in energy. In transport, we have had a bit of elbow room for essential services. However, we could find ourselves in the

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      position of being no different from many other countries in our dependence on imported gas, while having nothing like the provision for emergencies that they have had to adopt as a matter of course over a number of years. That is an area of adjustment that we have not fully addressed. We are getting supplies through the deal that was struck with the Norwegians last year, in which my right hon. Friend the Member for Cunninghame, North (Mr. Wilson) played an important role, but we need to ensure that if there are to be interruptions, there will still be a sufficiency of supply necessary to deal with them.
      It has been pointed out that pipelines and interconnections are outwith British shores. They are significant, however, and I should like to think that they would be included in the proposed annual report. My hon. Friend the Member for Hamilton, South mentioned the question of margins, but we also need to address the issue of the predicted lifetime of a number of the major generating facilities, so that we can see which will be coming off supply and which will be remaining. That would be of assistance to our debate. It would also strengthen the hand of Ministers wishing to encourage investment programmes in particular ways or areas, seeking to persuade the Chancellor that a more sympathetic fiscal regime might be necessary, or assisting a regulator to change the nature of pricing to make it more attractive to undertake investment of this kind over a period of years.
      It has been pointed out that pipelines and interconnections are outwith British shores. They are significant, however, and I should like to think that they would be included in the proposed annual report. My hon. Friend the Member for Hamilton, South mentioned the question of margins, but we also need to address the issue of the predicted lifetime of a number of the major generating facilities, so that we can see which will be coming off supply and which will be remaining. That would be of assistance to our debate. It would also strengthen the hand of Ministers wishing to encourage investment programmes in particular ways or areas, seeking to persuade the Chancellor that a more sympathetic fiscal regime might be necessary, or assisting a regulator to change the nature of pricing to make it more attractive to undertake investment of this kind over a period of years.
      Mr. Stunell: The Liberal Democrats will support new clause 5. I certainly do not recognise the description of the hon. Member for Ochil (Mr. O'Neill) of the provisions as mischief-making by the Lords. It is a fundamental part of the Bill that some attempt should be made to set out a strategy for this country's energy supply, and I believe that such an attempt has been made, with the support of Conservative and Liberal Democrat Members in the other place. I want to acknowledge my opposite number at the other end of the building, Lord Ezra, who worked exceptionally hard on this and other aspects of the Bill.
      I am very pleased that the Government have agreed that a modified version of those proposals should go into the Bill and that they have produced this new clause. They have understood that the Secretary of State would have an inescapable obligation to give an account of themselves and their Government, if the moment came when the lights went out. For them to have a rain check every year, with an annual report coming to the House, is therefore an important way of guarding against that eventuality and of protecting themselves against that nasty, unpleasant surprise, should it happen.
      I hope that the Minister will pick up the case made by the hon. Member for Milton Keynes, North-East (Brian White) who, as so often in these energy debates, made a very useful point. He said that it is not just a question of pushing stuff into the system, but of sucking stuff out of it. It is one thing to control the taps that run into the bath, but we must also make sure that the plug is in the bath and that we do not waste the energy that we have. I hope that he will acknowledge that we need to consider efficiency of use and energy conservation as part of that annual reporting and planning process. Perhaps he will reflect on the fact that, while those two important functions are split between two different Departments, there is an inherent risk of things falling through the gaps. This process could be a way of making sure that that gap is closed and that Government policies are coherent and joined together.
      The Minister had a number of things to say about defining what "long-term" and "short-term" meant. I was interested to hear what he said, not least because I had alerted him to the fact that I would be on my guard to see that "long-term" covered the full range of options. I remind him and the House that we are talking about an industry that, over the next 40 years, will have to renew every part of its infrastructure—all the generating capacity currently in existence will need to be replaced, along with all the transmission equipment, and for that matter, all the equipment in our homes and in industry that consumes the energy. There will be a complete turnover of infrastructure. One of the most fundamental questions for the Government in developing their energy policy is whether to be proactive or to let a likefor-like replacement policy dominate, without taking advantage of the technological and market changes that are available.
      I therefore hope that the Minister will confirm that "long-term" will be as long as it needs to be and, if we are considering the overall patterns of generation, transmission and consumption, that the longer view will be taken into account and factored in. The decisions taken in the short or medium term will determine whether we can reach the long-term solutions that I believe that he wants. Certainly, the White Paper said that the Government wanted such solutions, but they cannot be achieved simply by leaving matters to chance.
      We will support the new clause, which is a very important part of the Bill. It is the nearest there is to a provision that considers an overall long-term strategy. From that point of view, it is the core of the Bill.
      Mr. Tynan: May I add my welcome for this vital new clause? It gives the Government and the Opposition an

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      opportunity to examine annually how we maintain security of supply in this country. That will become an increasing problem over the next few years, with the phase-out of coal-fired power stations because of the European emissions targets and the situation in relation to nuclear power.
      We must consider what the best source of energy for this country would be. I happen to believe that it would be nuclear rebuild. I know that that will not gain much support in the Chamber today. The hon. Member for South-West Hertfordshire (Mr. Page) referred to the Government's cowardice on energy supply. I would level that charge at the Opposition, who believe in a nuclear policy but have so far failed to demonstrate their support for it in the Chamber.
      Mr. Laurence Robertson: May I read out part of a letter from my right hon. and learned Friend the Leader of the Opposition? In reply to a constituent about energy policy for the future he says:
      "I can assure you that nuclear energy will be a vital part of this".
      That is pretty clear.
      Mr. Tynan: I am delighted to be corrected and accept the evidence of that correspondence. Certainly, it helps me to feel a lot better, because it means that I am not alone in my support for nuclear energy.
      Carbon dioxide emissions will be another major problem over the next few years. I asked the Secretary of State
      "What estimate she has made of how much carbon would be emitted if all gas fired power stations that have been approved, but are yet to enter into service, entered service."
      The Minister told me:
      "There is currently around 4,800MW of gas-fired capacity comprising six large stations, approved but yet to enter into service."
      That sends signals to me that there could be a move to a gas economy. The Minister also said:
      "emissions from these stations would amount to around 3 million tonnes of carbon per annum."—[Official Report, 15 June 2004; Vol. 422, c. 814W.]
      There is no such thing as a carbon dioxide emission from nuclear power.
      4.30 pm
      I understand the waste problem, but that already exists, especially with military and civil waste. It must be dealt with and I am glad that the nuclear decommissioning authority is being set up to deal with it.
      Other major issues are security of supply and global warming. It is said that either 20 or 40 per cent. of our energy must come from renewables. I welcome the news of a renewables obligation and of an increase in the use of renewables—although I believe that the Scottish environmental and culture committees said that there was a problem with wind power and that we should move towards tidal power. I am sure that that will be the subject of a future debate.
      How can we ensure security of supply? If we intend to obtain 70 per cent. of our energy from gas—which would presumably feature in the report—and if it is to come from, say, Russia or the middle east, I do not think that we can guarantee secure supply. Given renewable power and a 20 or 40 per cent. target, and given all the measures relating to domestic heating referred to in new clause 4, security of supply will be the big issue in connection with gas coming into this country. I understand that we have kept the nuclear option open, but unless the Government make a decision on our new nuclear power build —perhaps we shall have to wait until the next general election for that—I do not believe that we can maintain security of supply.
      I certainly do net believe that we can do that with wind power. I visited Dunlaw, a wind farm on the east coast of Scotland. It had 26 turbines with a capacity of 17.26 MW and on a windy day, it was producing 4 MW. That was the standard level. The problem with wind power is that it is an intermittent source of energy. I welcome the news that we are to use it, but without some back-up we shall have a problem. I understand that in 2015 Longannet power station will be phased out, not because of any problem with transmissions but because unless it changes to clean burn, European emissions arrangements will ensure that it disappears. Wind power is, however, the most flexible power source we have at present.
      I welcome the idea of an annual report. It is an essential means of holding the Government to account and I am pleased that Government time will be available for the report to be discussed. It will be interesting to see what it contains and how secure supply will be. I believe that history will show that, unless we change the mix that we propose in the future, with the majority of energy coming from gas, we will fail the people of this country badly. To those who want no nuclear power, let me say that the people of this country will never forgive the Government if we lose power for a day, two days or three days. If that happens, people will not care which energy source the power to light their homes comes from. The report could be used as a serious measure in the development of power and security of supply.
      Mr. Page: As the House knows, clause 1 originally placed on the Secretary of State the duty
      "to ensure the integrity and security of electricity and gas supply".
      Placing that duty on the Secretary of State's shoulders was responsible and justifiable. but the hon. Member for Ochil (Mr. O'Neill) feels that it would be too much for any Secretary of State to bear. With a verbal flick of the hand, the Minister condemned the clause to oblivion with the same relaxed attitude as a Roman emperor would dispatch a group of Christians to the lions. That said, I am grateful for new clause 5. It is perfectly possible to accept the assurance from the Minister for Energy, E-Commerce and Postal Services in his famous letter of 28 June, which I like to quote, that the new clause is designed to
      "emphasise the Secretary of State's responsibility for security of supply",
      although "security of supply" and the Secretary of State's accountability to Parliament for its delivery are not mentioned. However, the new clause is obviously better than the vacuum in Committee, and I therefore welcome it.
      I support the request from the hon. Member for Ochil for a debate in Government time. As a former Parliamentary Private Secretary to a previous Leader of the House, I know that the timetable is subject to competing pressures, and even the best intentions of Ministers as responsible and mature as the Minister for Energy, E-Commerce and Postal Services may get pushed to the back of the queue, so the debate should be set in tablets of stone.
      I want to make three quick points. First, I endorse the remarks made by other hon. Members about the various time scales. I can see short-term and long-term strategies, but I cannot see a medium-term strategy, and I wonder why we do not have such a strategy on energy production—I do not know whether I am being pedantic or whether the point is relevant.
      Secondly, I support the hon. Member for Hamilton, South (Mr. Tynan) on the importance of nuclear power. New clause 5(2)(a) states that an assessment must be made of the
      "generating capacity in Great Britain".
      and I hope that that includes an assessment of the generating capacity of nuclear power. I shall give a little encouragement to those faint hearts who do not believe that nuclear power has a significant role to play, by quoting last week'sThe Sunday Telegraph—it must be true—which states:
      "In total, there are some 30 nuclear power stations currently under construction around the globe…Together they will generate 2610TWh of power without emitting greenhouse gases. Coal-powered stations generating the same amount of power would spew 2.4bn tonnes of carbon into the atmosphere every year."
      If that saving is not significant, I do not know what is. I hope that the evaluation and monitoring of what is available from our nuclear industry is kept at the forefront, because as much as we all want renewables to win through and provide our energy, if the wind does not blow, it is difficult to obtain a satisfactory base load.
      Thirdly, on annual reports, our energy requirements will increasingly be met from abroad. Our gas will come from further and further afield, and it will go through areas and regions that may not be stable. The annual report should look at security of supply of oil and gas from other countries to ensure that we do not get caught without any power. As has been said, if the lights go out, people will not say, "Oh, it is because of this or that." They will rightly look for someone to blame.
      Having said all that, I welcome new clause 5, which helps to fill the vacuum that was created. I still think that the original phraseology was right, because it would have focused the Secretary of State's attention. Nevertheless, the Minister has taken such responsibility off the shoulders of a future Secretary of State and we now have a reasonable compromise.
      Mr. Wilson: I was always surprised to discover how little impact the statistics on prospective gas use had on the public, or, indeed, on political opinion. It is a startling prospect that a country that has been a net exporter of energy since the beginning of the industrial revolution is about to become a net importer on an enormous scale. The course that we are following will mean that by 2020, we will be between 70 and 80 per cent. dependent on gas for our electricity, and 90 per
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      cent. of that gas will be imported. Those are remarkable statistics and the very least that we should do is to monitor their credibility from year to year. 1 therefore welcome the new clause.
      I am pro-nuclear and pro-renewables because I am pro-carbon reduction —it is as simple and straightforward as that. As the decade advances and global warming's profile rises as a political issue, so nuclear and renewables will be seen as two sides of the same coin. In the context of the new clause, the crucial question is: what are we doing to keep the nuclear option open? Contrary to the spin that was applied to the energy White Paper by some sources, it was not an anti-nuclear tract. It was very firm on the need to keep the nuclear option open, which means maintaining this country's existing nuclear skills, being full participants in international research into reactor design and doing everything else necessary to remain a credible force in the global nuclear industry.
      One reason for keeping open the nuclear option and keeping up the skills base is that many parts of the world whose nuclear industries do not have the same technical qualities as ours look to the United Kingdom for support. We should not lightly throw away that pool of expertise. I therefore hope that the Minister can assure us that the yearly review will include an update on how we are doing in giving substance to the White Paper's commitment to keeping the nuclear option open. In my view and that of many others— including thinking environmentalists who are not bogged down in the antinuclear obsession—we are going to need the nuclear option. Describing the practical steps that we are taking to keep it open must therefore form part of any such review.
      Mr. Timms: The latter part of the debate was particularly concerned with nuclear energy and as my right hon. Friend the Member for Cunninghame, North (Mr. Wilson) rightly pointed out, the energy White Paper made it clear that we want to keep the nuclear option open. However, we are not yet in a position to say whether we will need new nuclear power stations.
      I listened with the interest to the exchange between my hon. Friend the Member for Hamilton, South (Mr. Tynan) and the hon. Member for Tewkesbury (Mr. Robertson) about the Opposition's policy on this issue. My hon. Friend was perhaps too optimistic about the hon. Gentleman's quotation from the letter from the Leader of the Opposition. Although the latter said in his letter that the Conservatives will have a policy on nuclear as part of their energy policy, it was not clear to me what that policy would be. Perhaps I missed something, but I did hear—
      Mr. Tynan: Perhaps I have more faith in the Opposition than my hon. Friend does.
      Mr. Timms: On Second Reading, the hon. Member for Eddisbury (Mr. O'Brien) said:
      "Let me say for the record that we have an open mind on the future of nuclear energy."—[Official Report, 10 May 2004; Vol. 421. c. 57.]
      That sounds rather like the policy of keeping one's options open.
      I welcome the support for the new clause. We have had a useful debate, which has highlighted some of the detailed issues that the proposed report will have to address.
      4.45 pm
      As my hon. Friend the Member for Ochil (Mr. O'Neill) rightly said, we have arrangements for annual debates in Government time on matters such as defence. I have to say to the hon. Member for Tewkesbury, who fairly raised the matter with me earlier, that I have not yet had an opportunity to raise with the Leader of the House whether we could guarantee an annual debate. As a former Energy Minister himself, my right hon. Friend takes a close interest in these issues, so I am sure that he will be receptive to the suggestion. Fortified by the strong arguments made on both sides of the House in the debate today, I will certainly do all that I can to ensure that we do indeed have the annual debate that has been called for. I agree that it would be valuable and add to our confidence in taking these matters forward.
      Mr. Laurence Robertson: I am concerned that the matter has not yet been raised with the Leader of the House. Will the Minister confirm that, in line with the new clause, it is the Government's intention to have the report debated in Government time every year? Is that the intention of this particular Minister?
      Mr. Timms: It is certainly my intention, though I would not want to look too many years ahead. It is not, of course, in my gift to deliver that aim into the indefinite future. However, it is certainly my intention and I will do all that I can to ensure that we achieve it.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

      New Clause 7

        IMPOSITION OF RENEWABLE TRANSPORT FUEL OBLIGATIONS
        `(1) The Secretary of State may by order impose on each transport fuel supplier of a specified description the obligation mentioned in subsection (2) (a "renewable transport fuel obligation").
        (2) That obligation is an obligation, for each specified period, for the supplier to produce to the Administrator, by the specified date, evidence which—

        (a) is of the specified kind and in the specified form; and

        (b) shows that during the specified period the specified amount of renewable transport fuel was supplied at or for delivery to places in the United Kingdom.

        (3) An order under subsection (1) is referred to in this Chapter as an "RTF order".
        (4) Before making an RTF order the Secretary of State must consult such persons appearing to him to represent persons whose interests will be affected by the order, and such other persons, as he considers appropriate.
        (5) The power to make an RTF order is subject to the affirmative resolution procedure.'.—[Mr. Timms.]
        Brought up. and read the First time.
        Mr. Timms: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 8—Administrator.
        Government new clause 9—Further provision relating to RTF orders.
        Government new clause 10—Renewable transport fuel certificates.
        Government new clause 11—Discharge of obligation by payment.
        Government new clause 12—Imposition of civil penalties.
        Government new clause 13—Objections to civil penalties.
        Government new clause 14—Appeals against civil penalties.
        Government new clause 15—Interpretation of Chapter 4 of Part 2.
        Government amendments Nos. 18 and 19.
        Mr. Timms: I think that everybody recognises that renewable transport fuels have an important part to play in our efforts to tackle climate change. In the short term, that means biofuels—we have already discussed biomass—but in the longer term it may well mean other fuels such as hydrogen produced from renewable electricity. We have already taken steps to promote the take-up of biofuels, including the 20p a litre duty incentive that the Chancellor has guaranteed for three years, but we also have to consider carefully options for the longer term and a form of renewable transport fuel obligation is a serious possibility.
        An amendment for such an obligation was tabled in the other place at the beginning of the year. A lot of constructive discussion and debate took place and the outcome was a permissive clause in the Bill. I confirmed in Committee that we were content in principle with that clause, but that it needed further work on the wording to cover some of the practical issues. I tabled those Government amendments last week, and hon. Members will have noted that this has involved transforming one clause into nine, entirely replacing the current clause 125. That reflects some of the complications that had to be faced in retaining the principle behind the original clause, while ensuring that it was legally and practically robust. I believe that we have achieved that objective and I hope that the House will welcome the seriousness with which we have taken it forward.
        The new clauses will allow the Government to require designated transport fuel suppliers to demonstrate that their total UK fuel sales in a given period included, in aggregate, a specified proportion of renewable transport fuels. That is broadly analagous to the current renewables obligation with which we are familiar. Renewable transport fuels would cover biofuels and other non-fossil fuels, such as renewably produced hydrogen.
        The detail may seem extensive, but we need to allow flexibility in respect of how precisely a future obligation might operate and we need to consult extensively with industry and other interested parties on the scheme's final design. We have also had to deal with complications because we do not have an existing

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        regulatory body to help run the scheme. A number of clauses relate to the appointment of an administrator, funding issues and a penalty and appeals regime.
        In general, the drafting reflects electricity legislation on the renewables obligation. It allows for the issuing and trading of renewable transport fuel obligation certificates; provides a buy-out mechanism to add flexibility in meeting the obligation and to protect against unacceptably high costs to consumers; and makes different arrangements for different fuels based on their comparative benefits. We have not taken a final decision on precisely how a scheme might operate. A scheme that we chose to introduce might be a very simple one or a more complex one. All that would be a matter for detailed consultation.
        Mr. Page: I am intervening now because, in view of the time, I will not make a contribution. Will all the steps that the Minister is outlining allow biofuels to be produced in the United Kingdom, so that we do not create a regime whereby those come in from abroad? The biofuels manufacturers feel that the 20p support is not enough. It is satisfactory for processing chip oil and for rendering, but for other purposes it is not quite enough.
        Mr. Timms: The obligation will be helpful in that respect. We need to build up a scale of demand for renewable fuels in the UK that would justify investment in the UK to provide the biomass that would allow the fuels to be produced. The obligation has the potential to deliver that. The detail will need to be decided as a result of consultation, and the issues relating to benefit to the UK economy will need to be addressed.
        The clauses allow for the appointment and funding of an administrator, an appropriate penalty and appeals regime, and requiring fuel suppliers to provide information in connection with the obligation. I hope the House will agree that the clauses fully reflect and build on the principle of the amendment tabled earlier in the year. There has been a good deal of constructive debate on the matter, and I believe the end result is a testament to that. I commend the clauses to the House.
        Mr. Laurence Robertson: As the Minister says, this group of new clauses is a response to pressure put on the Government in another place oven the introduction of a renewable transport fuel obligation. It is also a response to the requirements of the EU biofuels directive, which requires the Government to demonstrate how they will increase the use of biofuels.
        Given that requirement, it is a little surprising that the Government's new clause only gives the Secretary of State the power to introduce an obligation. It does not require the Secretary of State to introduce that obligation. It would be interesting to have on record the Government's plans in this respect. How do they intend to fulfil the requirements of the directive? Will they indeed introduce the obligation?
        As with the process of generating electricity, there is a need to cut carbon emissions from transport, which are significantly high, as well as to move towards a position of security of supply of fuel for transport. As we have
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        already discussed, we remember the problems that an over-dependence on oil brought to this country and others.
        The use of sustainable primary sources of fuel might have the added benefit of assisting our farmers at a very difficult time for them. As my hon. Friend the Member for South-West Hertfordshire (Mr. Page) suggested, we must ensure that any potential benefit that could come to farmers actually reaches them, and does not merely benefit companies that might be commissioned to bring in such crops from abroad. That is an important point. I am sure it is not beyond the scope of joined-up government to bring it about.
        One of the questions arising from the introduction of such an obligation is how it should be approached. I note that concerns are being expressed —for example, by the United Kingdom Petroleum Industry Association, to which I spoke this morning. It complains of
        "the complete absence of consultation"
        during preparation of the amendments,
        "and hence any consideration by those most affected by them."
        That is of concern, especially given that, as the Minister said, these new clauses set out various aspects of the obligation in some detail. It is unfortunate that the discussions with the industry did not take place before new clause 7 was introduced. As my hon. Friend the Member for South-West Hertfordshire noted, it is a shame that the new clause was not tabled in Standing Committee, when there would have been more time for discussion. We are rushing the proposal through the Chamber this afternoon, and there is only one hour left to debate many other important matters. It would have been useful if this new clause had been introduced in Committee, after discussions with the industry had taken place.
        I hope, therefore, that the Government will consult with the industry before filling in the finer details of the obligation. Industry representatives have raised questions about how much the administrator will cost, who will pay for him and monitor him, who is a supplier and on whom the obligation will he placed. They want to know at what point the amount of biofuel will be measured and how quality can be assured, and they also need to be informed about the details of penalties and about who will get the certificates. The Government may feel that they have covered those issues, but the industry representatives who raised the matter with me this morning, and previously, are not satisfied.
        That said, we support in general terms the concept of a renewable transport fuel obligation, and look forward to seeing how and when it will be implemented.
        Dr. Whitehead: I shall not detain the House, but I want to say that I welcome the extended version of the obligation, which the Government have introduced after undertaking to do so in Standing Committee. However, I imagine that the obligation would apply, in the first instance, to bioethanol and biodiesel. How can we ensure that the industry, and those who supply the biomass from which those substances are derived, produce amounts that are relevant for conversion into biofuel? The extended version of the obligation does not make that entirely clear.
        The hon. Member for South-West Hertfordshire (Mr. Page) asked how can we ensure that bioethanol and biodiesel are made in the UK, rather than imported. I

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        note that new clause 9 contains a provision that means that biofuel produced outside the UK would not count for the purposes of the obligation. I imagine that that would enable the administrator and the Minister to specify, essentially, that biofuels are made in the UK.
        I shall set out my understanding of how an obligation might work. In California, a similar provision was limited to ensuring that a certain number of cars should have the opportunity to run on biofuel. I believe that, under the proposed obligation, biofuel should be an essential component of the fuel that goes into cars from the pumps. That would mean that biodiesel would have to be mixed with diesel in a certain proportion, and the same condition would apply to bioethanol and petrol.
        What would be the relative proportions in those mixtures, and what would be the relevant period as specified? Those are the important questions. I should be grateful if my hon. Friend the Minister, when he replies to the debate, would clarify what is meant by the phrase "for each specified period" in new clause 7. Various new clauses are being introduced to make the obligation possible, but it appears that a separate order would have to be laid before the House for each type of obligation being placed on the industry.
        I suggest that the right way to go about introducing an obligation such as this is to ensure that the industry has certainty in the long term about what it is letting itself in for. That has been mentioned several times in this Chamber today. The industry needs to know how the obligation would be introduced, and over what period.
        If we are to make sure that the supply of renewable fuel comes from within the UK and not from outside it, we must be certain that the industry has the necessary production capacity in the first place. Therefore, a form of escalator, whereby the obligation was introduced at perhaps 1 per cent. in one year, 2 per cent. the next year, 3 per cent. in a third year, and so on would seem the most appropriate way forward. I am not certain whether a separate order for each percentage increase would need to be introduced or whether an escalator could be introduced within the terms of the new clauses as they are set out.
        I have raised a minor concern against the background of a warm welcome for the fact that we will now enshrine in statute the possibility of introducing an obligation. I believe that it is likely to he introduced shortly, bearing it in mind that an obligation working in the way that I have described would save about one third of the carbon dioxide emissions that are envisaged in the transport section of the climate change plan without having to put in place new infrastructure or to consider different forms of engine design or manufacture or development of supply at the pumps. I welcome the new clause and hope that, with the clarification that I have sought, it will be supported by the House.
        5 pm
        Mr. Stunell: The terms of the new clauses are substantial and very necessary, but I echo the comments made by the hon. Member for Tewkesbury (Mr. Robertson) when he said that they had been introduced
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        at the last minute. It is a great pity that we did not have the opportunity to look at them in the detail from which they would have benefited.
        We broadly support the intention in the new clause. Transport uses 25 per cent. of primary energy in the United Kingdom and there is plenty of scope for reducing carbon emissions in a pain-free way. We are not talking necessarily about restricting people's access to transport so much as giving them a carbon-free or, more accurately, a cat bon-neutral source of energy. In so far as the fuel obligation can work towards achieving that, we welcome this mechanism.
        However, the Government have introduced nine pages of new text that I suspect will translate into about 20 pages of Bill material. I was notified of it by a letter sent to me on 6 July. That act has cut out of the process the opportunity to raise a number of legitimate concerns and questions.
        In common with a number of other hon. Members, I have received a briefing from British Sugar, which is one interested party. I do not know whether the points that it makes have legitimacy or not, but we have not had the opportunity to test them out or to allow the Minister to respond to them. Other possible consultees in the industry and those who would like to be part of that industry have been left out of the process. I have a concern about inserting such an amount of material into the Bill raw and unexamined. I hope that the Government will be open to further consideration in the Lords because there ire obviously matters of detail, in some cases quite significant ones, that need to be sorted out.
        British Sugar refers to the fact that any such fuel has to be derived wholly from biomass, which rules out any mixing procedure, which is often used when the product is used. Even at the most basic definition level there are serious questions to which I as a Member of Parliament do not know the answer and will not get the opportunity to test the Minister on.
        On a slightly wider platform, we have an opportunity here to develop a new production industry in this country and contribute to creating a cleaner economy. Therefore, the foundations that we lay in the Bill are important to ensure that that is achievable. One of the issues is to what extent the raw product will be grown in this country. I made the point in Committee that at present much of the biomass material that is the subject of experiments by, for instance, the electricity generating industry is imported from overseas, primarily from tropical and sub-tropical countries, where growth rates are higher and labour costs are lower and, therefore, the material is more readily available.
        The material does not primarily come from UK farming sources, and there are ways in which the amount that does come from such sources can be maximised. However, we need to be fully aware of the fact that such material comes from overseas at present. The largest producer of biofuel is Brazil. It is worth noting that the most efficient way of bringing the product to this country is not bringing the agricultural product here and processing it in this country. but processing it at the point of growth and importing the fuel. In terms of carbon reduction, I have no objection to that, but the Minister needs to recognise that it would not benefit UK agriculture or UK industry, either in

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        producing the plant to do the processing or in providing the labour and investment for the processing to take place. That is not a reason to oppose the proposal, but it is a reason for taking time to think through the mechanics of the fiscal and regulatory system that the Minister intends to introduce, so that we do not face unintended consequences. We might reduce carbon emissions from vehicles but fail to maximise the economic and social benefits that might otherwise be available.
        We will support the new clauses, but we are concerned by the lack of opportunity that the House has had to bring to bear its critical faculties—and that the industry has had to bring to bear its knowledge and experience—to improve the proposals.
        Mr. Timms: I am pleased that the new clauses have attracted the support that they have, although it is slightly churlish to complain that it has not been possible to consult as widely as might have been ideal, because the proposals were not in the Bill when it started its journey through Parliament. They have been added since, and much credit is due to officials for their efforts in providing a worked-up set of clauses to add to the Bill. Of course, we will need much consultation and discussion beyond this stage about how the framework will be put into practice.
        The hon. Member for Tewkesbury (Mr. Robertson) is right to say that the new clauses contain a permissive power: the Secretary of State will not be required to introduce a scheme but may decide to do so following consultation. My hon. Friend the Member for Southampton, Test (Dr. Whitehead) described a model for the obligation that sounded very similar to the renewables obligation, which has an increase each year and a future period during which the obligation applies. As I said in opening the debate, the clauses are closely modelled on the renewables obligation, so progress could be made on such a model using these clauses. We want to have a full discussion with the industry and others—including the association mentioned by the hon. Member for Tewkesbury, for example—to ensure that we get the details absolutely right before we decide whether to proceed. The new clauses would allow us to do that.
        The hon. Member for Hazel Grove (Mr. Stunell) asked about biofuels produced using some fossil energy. We can address such details in secondary legislation, and we will consult on them, but in principle the clauses would allow blended biofuels of the kind that he mentioned. Time has been tight, but the benefit is that we have worked-up clauses that will, if we choose to do so, allow us to introduce an obligation for which I sense there is wide support on both sides of the House.
        On the question put by the hon. Member for South-West Hertfordshire (Mr. Page) about imports and domestically produced material, the answer will depend in part on how the obligation is framed. We shall certainly have to take account of that when we undertake the work, but the hon Member for Hazel Grove is right: the main aim of the measure is to achieve carbon savings, whether the biofuels are made in this country or elsewhere. There could be a big prize for UK agriculture and industry, and if we decide to proceed I hope that we shall be able to realise it.
        Question put and agreed to.
        Clause read a Second time, and added to the Bill.

      New Clause 8

        ADMINISTRATOR
        `(1) An RTF order may, for the purposes of provision made by or under this Chapter, appoint a person as the Administrator.
        (2) Such an order may—

        (a) confer or impose powers and duties on the Administrator for purposes connected with the implementation of provision made by or under this Chapter;

        (b) confer discretions on the Administrator in relation to the making of determinations under such an order and otherwise in relation to his powers and duties; and

        (c) impose duties on transport fuel suppliers for purposes connected with the Administrator's powers and duties.

        (3) The powers that may be conferred on the Administrator by virtue of subsection (2) include, in particular—

        (a) power to require a transport fuel supplier to provide him with such information as he may require for purposes connected with the carrying out of the Administrator's functions;

        (b) power to impose requirements as to the form in which such information must be provided and as to the period within which it must be provided;

        (c) power to impose charges of specified amounts on transport fuel suppliers.

        (4) Sums received by the Administrator by virtue of provision within subsection (3)(c) must be used by him for the purpose of meeting costs incurred by him in carrying out his functions as the Administrator.
        5) The duties that may be imposed by virtue of subsection (2)(c) include, in particular, duties framed by reference to determinations made by the Administrator.
        (6) Only the following persons may be appointed as the Administrator—

        (a) a body or other person established or appointed by or under any enactment to carry out other functions;

        (b) a body established by virtue of subsection (8).

        (7) Where provision is made by an RTF order for the appointment of a body or other person within subsection (6)(a), such an order may make such modifications of any enactment relating to that body or person as the Secretary of State considers appropriate for the purpose of facilitating the carrying out of the functions of the Administrator.
        (8) An RTF order may—

        (a) establish a body corporate to be appointed as the Administrator;

        (b) make provision for the appointment of members of that body;

        (c) make provision in relation to the staffing of that body;

        (d) make provision in relation to the expenditure of that body;

        (e) make provision regulating the procedure of that body;

        (f) make any other provision that the Secretary of State considers appropriate for purposes connected with the establishment and maintenance of that body.

        (9) The provision that may be made by virtue of subsection (8) in relation to a body corporate includes, in particular, provision conferring discretions on—

        (a) the Secretary of State;

        (b) the body itself; or

        (c) members or staff of the body.

        (10) The Secretary of State may make grants to the Administrator on such terms as the Secretary of State may determine.'.—[Mr. Timms.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 9

        FURTHER PROVISION RELATING TO RTF ORDERS
        `(1) An RTF order may make provision about how amounts of transport fuel are to be counted or determined for the purposes of provision made by or under this Chapter.
        (2) The provision that may be made by virtue of this section includes, in particular—

        (a) provision for amounts of renewable transport fuel to count towards discharging a renewable transport fuel obligation for a period only if the fuel is of a specified description;

        (b) provision for amounts of renewable transport fuel of a specified description to count towards discharging such an obligation only up to a specified amount;

        (c) provision for such an obligation not to be treated as discharged unless a specified minimum amount of renewable transport fuel of a specified description has been counted towards its discharge;

        (d) provision for only such proportion of any renewable transport fuel of a specified description as is attributable to a specified substance, source of energy, method, process or other matter to count towards discharging such an obligation;

        (e) provision as to how that proportion is to be determined;

        (f) provision for an amount of renewable transport fuel of a specified description to count towards discharging such an obligation only if, or to the extent that, specified conditions are satisfied in relation to its supply, the person by or to whom it was supplied or the place at or for delivery to which it was supplied;

        (g) provision for evidence produced by a supplier in relation to any fuel not to count for the purposes of his renewable transport fuel obligation for a period if evidence in relation to the same fuel has previously been produced (whether by him or by another supplier);

        (h) provision for evidence produced by a supplier in relation to any fuel not to count for those purposes if, after the supply to which the evidence relates, the fuel is supplied by any person at or for delivery to a place outside the United Kingdom or a specified part of the United Kingdom;

        (i) provision about the measurement of amounts of different descriptions of transport fuel;

        (j) provision for units of transport fuel of a specified description to count for more or less than the same units of transport fuel of other descriptions;

        (k) provision about how measurements in different units of different descriptions of transport fuel are to be aggregated;

        (1) provision for the application of presumptions where specified matters are shown.

        (3) The provision that may be made by virtue of this section also includes, in particular, provision which—

        (a) is made having regard to one or more of the effects mentioned in subsection (4) (whether in the United Kingdom or elsewhere); or

        (b) requires regard to be had to one or more such effects.

        (4) Those effects are the effects of the production, supply or use of fuel of a particular description on—

        (a) carbon emissions;

        (b) agriculture;

        (c) other economic activities;

        (d) sustainable development; or

        (e) the environment generally.'.—[Mr. Timms.]

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

      New Clause 10

        RENEWABLE TRANSPORT FUEL CERTIFICATES
        '(1) An RTF order may make provision for the Administrator to issue certificates to transport fuel suppliers ("RTF certificates").
        (2) An RTF certificate is to certify—

        (a) that the supplier to whom it is issued has supplied the amount of renewable transport fuel stated in the certificate;

        (b) that that amount of such fuel was supplied by him during the period stated in the certificate;

        (c) that that amount of such fuel was supplied by him during that period at or for delivery to a place in the United Kingdom or in the part of the United Kingdom stated in the certificate; and

        (d) the other specified facts.

        (3) Such a certificate may be issued to a supplier only if—

        (a) he applies for it in the specified manner;

        (b) his application includes evidence of the specified kind and in the specified form; and

        (c) the other specified conditions are satisfied.

        (4) An RTF order may authorise transfers of RTF certificates (whether for a consideration or otherwise) between persons of specified descriptions.
        (5) Such an order may also provide that such a transfer is not to be effective unless—

        (a) the specified details of it have been notified to the Administrator in the specified manner and within the specified time; and

        (b) the other specified requirements have been complied with.

        (6) If a supplier produces an RTF certificate to the Administrator, it is to count for the purposes of section [Imposition of renewable transport fuel obligations](2) as sufficient evidence of the facts certified.
        (7) An RTF order may provide that, in specified circumstances, evidence produced by virtue of subsection (6) may count to the specified extent towards the discharge of a renewable transport fuel obligation for a period even if it is produced after the time by which evidence had to be produced for the purposes of that obligation.
        (8) Such an order may also provide that, in specified circumstances, evidence produced by virtue of subsection (6) may count to the specified extent towards the discharge of a renewable transport fuel obligation for a period that is later than the period stated in the certificate in question in accordance with subsection (2)(b).'.—[Mr. Timms.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 11

        DISCHARGE OF OBLIGATION BY PAYMENT
        `(1) An RTF order may provide that a person who does not

        1341
        wholly discharge his renewable transport fuel obligation for a period by the production of evidence must pay the Administrator the specified sum within the specified period.
        (2) The provision that may be made by virtue of subsection (1) includes, in particular, provision—

        (a) for the specified sum to increase, in cases where that sum is not paid within a specified period, at the specified rate until it is paid or until the occurrence of a specified event;

        (b) for specified amounts to be adjusted from time to time for inflation in the specified manner;

        (c) for the repayment of sums in cases where provision made by virtue of section [Renewable transport fuel certificates](7) applies in relation to a person;

        (d)prohibiting the Administrator from taking steps to recover the specified sum or a part of that sum if specified conditions are satisfied.

        (3) Provision within subsection (2)(b) may refer, in particular, to a specified index or to other data, including any index or data as modified from time to time after the coming into force of the order.
        (4) An RTF order may provide that, in a case in which the amount of payments by virtue of subsection (1) which the Administrator has received by the specified time in respect of renewable transport fuel obligations for any period falls short of the amount due in respect of that period, the persons who—

        (a) were subject to renewable transport fuel obligations for that period, and

        (b) are of a specified description,

        must, within the specified period and in the specified circumstances, each make a payment (or further payment) to the Administrator of an amount calculated in the specified manner.
        (5) The provision that may be made by virtue of subsection (4) includes, in particular, provision for the making of adjustments and repayments after a requirement to make payments has already arisen.
        (6) An RTF order may require the Administrator to use, to the specified extent, the sums received by him by virtue of this section for the purpose of meeting costs incurred by him in carrying out his functions as the Administrator.
        (7) To the extent the Administrator does not so use the sums so received, they must be paid by him to transport fuel suppliers, or to transport fuel suppliers of a specified description, in accordance with the specified system of allocation.'.—[Mr. Timms.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 12

        IMPOSITION OF CIVIL PENALTIES
        `(1) An RTF order may—

        (a) designate a provision made by or under this Chapter for the purposes of this section; and

        (b) provide that a person is to be liable to a civil penalty if—

        (i) he contravenes that provision; and

        (ii) any other specified conditions are satisfied.

        (2) Where the Administrator is satisfied that a person (the "defaulter") is so liable, he may give a notice to the defaulter in the specified manner (a "civil penalty notice") imposing on the defaulter a penalty of such amount as the Administrator considers appropriate.
        (3) That penalty must not exceed the lesser of—

        (a) the specified amount; and

        (b) the amount equal to ten per cent of the turnover, as determined in the specified manner, of the specified business of the defaulter.

        (4) The civil penalty notice must—
        1342

        (a) set out the Administrator's reasons for deciding that the defaulter is liable to a penalty;

        (b) state the amount of the penalty that is being imposed;

        (c) set out a date before which the penalty must be paid to the Administrator;

        (d) describe how payment may be made;

        (e) explain the steps that the defaulter may take if he objects to the penalty; and

        (f) set out and explain the powers of the Administrator to enforce the penalty.

        (5) The date for the payment of the penalty must not be less than 14 days after the giving of the civil penalty notice.
        (6) A penalty imposed by virtue of this section must be paid to the Administrator—

        (a) by the date set out in the civil penalty notice by which it is imposed; and

        (b) in a manner described in that notice.

        (7) Sums received by the Administrator by virtue of this section must be paid to the Secretary of State, who must pay them into the Consolidated Fund.'.[Mr. Timms.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 13

        OBJECTIONS TO CIVIL PENALTIES
        `(1) A person to whom a civil penalty notice is given may give notice to the Administrator that he objects to the penalty on one or both of the following grounds—

        (a) that he is not liable to pay it;

        (b) that the amount of the penalty is too high.

        (2) The notice of objection—

        (a) must set out the grounds of the objection and the objector's reasons for objecting on those grounds; and

        (b) must be given to the Administrator in the specified manner and within the specified period after the giving of the civil penalty notice.

        (3) The Administrator must consider a notice of objection given in accordance with this section and may then—

        (a) cancel the penalty;

        (b) reduce it;

        (c) increase it; or

        (d) confirm it.

        (4) The Administrator must not enforce a penalty in respect of which he has received a notice of objection before he has notified the objector of the outcome of his consideration of the objection.
        (5) That notification of the outcome of his consideration must be given, in the specified manner—

        (a) before the end of the specified period; or

        (b) within such longer period as he may agree with the objector.

        (6) Where, on consideration of an objection, the Administrator increases the penalty, he must give the objector a new civil penalty notice; and, where he reduces it, the notification mentioned in subsection (5) must set out the reduced amount.'.—[Mr. Timms.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 14

        APPEALS AGAINST CIVIL PENALTIES
        `(1) A person to whom a civil penalty notice is given may appeal to the court on one or both of the following grounds—

        (a) that he is not liable to pay the penalty;

        1343

        (b) that the amount of the penalty is too high.

        (2) An appeal under this section must be brought within such period after the giving of the civil penalty notice as may be set out in rules of court.
        (3) On an appeal under this section, the court may—

        (a) allow the appeal and cancel the penalty;

        (b) allow the appeal and reduce the penalty; or

        (c) dismiss the appeal.

        (4) An appeal under this section is to be by way of a rehearing of the Administrator's decision to impose the penalty.
        (5) The matters to which the court may have regard when determining an appeal under this section include all matters that the court considers relevant, including—

        (a) matters of which the Administrator was unaware when he made his decision; and

        (b) matters which (apart from this subsection) the court would be prevented from having regard to by virtue of rules of court.

        (6) An appeal under this section may be brought in relation to a penalty irrespective of whether a notice of objection under section [Objections to civil penalties] has been given in respect of that penalty or whether there has been an increase or reduction under that section.
        (7) In this section "the court" means—

        (a) in England and Wales or Northern Ireland, the High Court; and

        (b) in Scotland, the Court of Session.'.—[Mr. Timms.]

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

      New Clause 15

        INTERPRETATION OF CHAPTER 4 OF PART 2
        `(1) In this Chapter—
        "Administrator" means the person appointed by virtue of section [The Administrator] as the Administrator for the purposes of provision made by or under this Chapter;
        "biofuel" means liquid or gaseous fuel that is produced wholly from biomass;
        "blended biofuel" means liquid or gaseous fuel consisting of a blend of biofuel and fossil fuel;
        "civil penalty notice" has the meaning given by section [Imposition of civil penalties](2);
        "renewable transport fuel" means—

        (a) biofuel;

        (b) blended biofuel;

        (c) any solid, liquid or gaseous fuel (other than fossil fuel or nuclear fuel) which is produced—

        (i) wholly by energy from a renewable source; or

        (ii) wholly by a process powered wholly by such energy; or

        (d) any solid, liquid or gaseous fuel which is of a description of fuel designated by an RTF order as renewable transport fuel;

        "renewable transport fuel obligation" has the meaning given by section [Imposition of renewable transport fuel obligations](1);
        "RTF order" has the meaning given by section [Imposition of renewable transport fuel obligations](3);
        "specified" means specified in, or determined in accordance with, an RTF order;
        "supply" means, in relation to fuel, the supply of that fuel to any person with a view to its being used (whether by that person or persons to whom it is subsequently supplied) wholly or primarily for transport purposes;
        "transport fuel" means—

        (a) renewable transport fuel;

        1344

        (b) fossil fuel; or

        (c) any solid, liquid or gaseous fuel that is neither renewable transport fuel nor fossil fuel;

        "transport fuel supplier" means a person who, in the course of any business of his, supplies transport fuel at or for delivery to places in the United Kingdom.
        (2) For the purposes of this section a process powered by electricity that was generated by energy from a particular source is to be treated as being powered by energy from that source.
        (3) For the purposes of this section fuel is used for transport purposes if—

        (a) it is used as fuel for one or more of the following, namely, vehicles, vessels, aircraft, trains or any other mode of transport; or

        (b) it is used for producing fuel that is intended to be so used.

        (4) In this section—
        "biomass" means the biodegradable portion of a specified product, waste or residue;
        "fossil fuel" has the same meaning as in section 32 of the 1989 Act;
        "renewable source" watts, in relation to energy, any of the following sources of energy—

        (a) wind;

        (b) solar heat;

        (c) water (including waves and tides);

        (d) geothermal sources; or

        (e) biomass.'.—[Mr. Timms.]

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

      New Clause 1

        REGULATIONS RELATING TO PROPOSED DISCONNECTION OF ELECTRICITY SUPPLY
        `(1) The Secretary of State shall, within six months of the coming into force of this section and from time to time thereafter, make regulations prescribing the procedures to be followed in the event of a proposed disconnection of supply by an electricity company, in particular in relation to households with—

        (a) customers of pensionable age,

        (b) adults or children who are disabled or have a long-term illness, or

        (c) children aged five or under.

        (2) Regulations under this section shall, in particular, make provision about the role of the Social Services Departments of local authorities in relation to proposals for disconnection.
        (3) Regulations under this section shall, in particular, set out the administrative procedures to be followed as part of suppliers' final licence obligation.
        (4) Before making regulations under this section, the Secretary of State must consult such persons as he considers appropriate.
        (5) Subsection (4) may be satisfied by consultation that took place wholly or partly before the commencement of this section.
        (6) The duty to make regulations containing provision authorised by this section is subject to the affirmative resolution procedure.'.—[Miss McIntosh.]
        Brought up, and read the First time.
        Miss McIntosh: I beg to move. That the clause be read a Second time.
        Madam Deputy Speaker Madam Deputy Speaker(Sylvia Heal): With this it will be convenient to discuss the following amendments:
        No. 48, in page 132, line 26 [Clause 173]. at end insert—

        1345
        '(1A) It shall be a duty of every supplier of gas to ensure that the standing charge, if applied, and the unit cost of gas supplied by means of a pre-payment meter shall be no more than the standard charges applied to customers purchasing gas by means of quarterly bills.'.
        No. 49, in page 133, line 16 [Clause 173], at end insert—
        '(2A) It shall be a duty of every electricity supplier to ensure that the standing charge, if applied, and the unit cost of electricity supplied by means of a pre-payment mete r shall be no more than the standard charges applied to customers purchasing electricity by means of quarterly bills.'.
        Miss McIntosh: It gives me great pleasure to introduce the new clause; it is a timely proposal and one on which the Under-Secretary will, I think, look favourably—if he can drag his attention back to the business of the House for a moment. The consultation process undertaken by the Government threw up several ideas, and we have drawn on them. The National Consumer Council and some other non-governmental voluntary organisations, notably Age Concern, expressed concern about the rate of disconnection, which continues to grow unacceptably.
        Our proposals would give the Secretary of State power to make regulations setting out procedures to be followed in the event of a proposed disconnection. The National Consumer Council, Ofgem and the Energy Retail Association are in agreement that such procedures should apply in particular to households where there are
        "customers of pensionable age…adults or children who are disabled or have a long-term illness, or…children aged five or under".
        Ofgem and the Energy Retail Association should be invited to revise the proposals to prevent the disconnection, at any time, of households where anyone is in those categories.
        Our new clause also sets out the role of local authority social services departments in relation to proposals for disconnection. That would offer the Government a good opportunity to set out in the Bill those provisions of the Data Protection Act 1998 relating to disconnections, bearing in mind the tragic case of the elderly couple whose electricity supply was disconnected. Rightly or wrongly, the social services department used the provisions of the Act so as not to intervene.
        We have set out what we believe is the best definition of the term "vulnerable customer". It would be interesting if the Minister were to say what definition his Department currently uses. Our understanding is that there is no statutory definition. I understand that the Energy Retail Association proposes to use a definition along the following lines:
        "A vulnerable customer at risk from disconnection will be unable to safeguard his or her personal welfare or the welfare of any children in the household, and will be in need of care and attention by reason of age or infirmity, or suffering from chronic illness or mental disorder, or substantially handicapped by being disabled."
        I could go on much longer, but mindful of the other sets of amendments that we have yet to consider, I simply propose the new clause in the hope that the Minister and the Government will see it as a helpful response to the excellent points made in the consultation
        1346
        process by the National Consumer Council and others. It would enable the Government to draft regulations so that there is less scope for disconnection, which leads to tragic consequences, and to set out what the role of local authority social services departments should be.
        5.15 pm
        Mr. O'Neill: It would be unfortunate if new clause I were passed. It would not do very much. To rely on anything that the people who sell electricity are prepared to advocate as a means to protect disadvantaged consumers is rather like asking foxes to make the security arrangements for a chicken coop. The definitions that they have provided are in no way valid. They are nothing like as comprehensive as they should be. It is not for nothing that Energywatch—the consumers' energy protection organisation—rubbished the idea. It is also wrong to suggest that the proposal comes from Ofgem—it does not. Ofgem asked the Energy Retail Association to make proposals that would avoid the possibility of the tragedy to which the hon. Member for Vale of York (Miss McIntosh) referred. Ofgem did not sponsor the research or the report; it requested it, and I understand that it has yet to pass judgment on whether to accept it. We have not yet produced our report, but if the hon. Lady had read the Select Committee on Trade and Industry's proceedings on disconnection, she would have seen that the proposal does not enjoy the imprimatur of Ofgem. Ofgem merely asked ERA to produce a report, which it is still considering. As far as I know, ERA does not have too many friends in that area. I am not sure whether the National Consumer Council has a view—it has been cited as having one—but the Gas and Electricity Consumer Council, Energywatch, has a view: it does not regard the proposal as satisfactory.
        The new clause certainly bears the hallmark of the kind of legislation that the Tories proposed in the 1990s, when they spoke about those people who should be protected. Indeed, under the Gas Act 1995—I was about to say the Gas Bill—they made provision for age and disability, but not for economic disadvantage. They made no provision for the poor. If one group is just as entitled to claim protection from disconnection as the sick and the elderly it is the economically disadvantaged. Frankly, that group is not addressed by the new clause.
        When the Under-Secretary responds—if he will give me a minute of his attention—perhaps he will tell us the actual cost of disconnection. I understand that estimates range from £150 to £450 per disconnection, so there is a lot of uncertainty. It is one thing to have a system with a series of protections for people who are vulnerable because of their income, age or physical infirmities, but it is quite another for disconnection to be simply a first resort for some sections of the community. I am not happy at all with the current provision. Anyone involved with fuel poverty in this country—perhaps I should declare an interest as honorary president of Energy Action Scotland, a Scottish charity engaged in trying to eradicate fuel poverty—has little good to say about the proposal in the new clause. As I said, it was considered by the Trade and Industry Committee, which I am fortunate to have the honour of chairing.
        Disconnection is one of the most regrettable and unacceptable manifestations of poverty in our society. We heard pious speeches earlier this afternoon about the

        1347
        lights going out, but if the lights go out for one poor family, that is just as devastating for them as if it happens to the whole country because of the failure of a Government or an electricity company to invest.[Interruption.] Well, one is as bad as the other, but the new clause contains no reference to the poor. It refers only to people who are physically infirm or elderly. It is far too restrictive and represents a piece of irrelevant opportunism by the Tories. It would not clarify the situation or protect the poor in any way, shape or form. The present arrangements are no better or worse than the proposals. If the hon. Lady had given any thought to the matter, she would have realised that the proposal was a sham put forward by those who make a living from selling electricity. It is an attempt to square their consciences with a tragedy for which they were not responsible—other players were involved.
        Miss McIntosh: Obviously I am grateful to the hon. Gentleman for allowing me to intervene on his rant. I am mindful of his position in Scotland. Given that he is a Scottish Member, perhaps he did not think that he was in a position to read the comments of the National Consumer Council, which will be disappointed to hear of his complete disregard for people whom it considers to be extremely vulnerable customers. I think that one household that faces disconnection in such circumstances represents a tragedy.
        Mr. O'Neill: The people who know specifically about energy consumers, representatives of Energywatch, disowned the proposals before the Select Committee that I chair. They are far more expert than the broad-brush merchants of the National Consumer Council.[Interruption.] The hon. Member for Vale of York can smile and laugh, but the people who have disparaged the proposal are the specialists in the field.
        The new clause is similar to provisions put forward by the Tories in the 1990s when they were responsible for trying to protect poor consumers. It is not satisfactory, and I hope that the Government will not accept it because it would set back a debate that is just beginning to be engaged in. We must determine whether it is necessary for failure to pay energy bills to result in disconnection. Such arrangements are no longer in place for water, so why should they exist for electricity? We should outlaw such action once and for all. The ERA is interested not in doing that, but in creating conditions that would make it more difficult.
        Mr. Stunell: I must say that I was rather disappointed with the contribution of the hon. Member for Ochil (Mr. O'Neill). Whatever one might say about the Conservatives—I have said some things about them in my time—there is nothing wrong with the new clause, which is why I was happy to add my name to it.
        The hon. Gentleman should not look so hard at the messenger but should take a look at the message: we have to tackle the issue of disconnections. I believe that the new clause is a sensible way of moving forward, and it has not come out of the mischief-making cupboard that has been mentioned a couple of times today. It has a good provenance and a good intention, and it seems capable of achieving some benefit for the disadvantaged
        1348
        in society, including those in Hazel Grove, as well as in Ochil. Whatever its merits or demerits, I do not think that he has served the debate very soundly.
        In Committee, where we discussed the issue only very much in passing, it was pointed out that there are serious considerations in developing this country's energy policy, as it is not simply about demand and supply, but about the protection of consumers. The White Paper made that point, which has been endorsed by all political parties. I took it that the new clause had been tabled in that context and as a step towards filling the policy vacuum arising from the Bill's general inadequacy in fulfilling the obligations set out in the White Paper.
        Even if the Minister does not feel able to accept new clause I in its current form, I hope that he will give us some assurances that this gap in the Bill will be filled and that, even if that cannot be done here and now, it will be done when the Bill goes back to the Lords in a week or two.
        Mr. Weir: I shall be very brief, as I canvassed the issue in Committee, where we had an interesting debate about it.
        The amendments that I tabled in Committee sought to reduce payments through pre-payment meters by a slightly different route from that taken in amendments Nos. 48 and 49, in which I am seeking to ensure that such payments are equal to those paid in quarterly bills.
        This is a serious problem. Figures from Energywatch show that 30 per cent. of all consumers on incomes of less than £6,500 and 50 per cent. of all single parent families use pre-payment meters. Energywatch also disclosed that 65 per cent. of gas pre-payment meter users were in debt, which effectively meant that they could not move to alternative suppliers.
        The British electricity trading and transmission arrangements have been sold to us on the basis that they will mean lower prices for consumers, but they will not necessarily mean lower prices for those on pre-payment meters—the people who can least afford higher prices. There can be considerable differences in annual costs for those on such meters, as opposed to those who pay by regular bills, and the differences are even greater for those who pay by direct debit. Interestingly, many of those on low incomes who use pre-payment meters will be the same people who do not have bank accounts, which makes direct debit an almost impossible option.
        It is perverse that the poorest, who spend the greatest proportion of income on energy, are least able to get the best deals. Those on the lowest earnings spend 9 per cent. of their income on energy, while those on higher incomes spend 2 per cent., yet those on pre-payment meters pay about 20 per cent. more for gas and 6 per cent. more for electricity. That is a significant difference, especially for those on low incomes.
        In some areas, but not all, there is a premium on the standing charge rather than the electricity itself; hence the wording of the amendment. It is worth noting that it is perfectly possible for the standard charge to be waived. Indeed, I note that London Electricity introduced a pilot scheme called Powerkey Plus that did just that.
        My amendments are therefore an attempt to pass on some of the benefits of lower energy prices to consumers who are on pre-payment meters. It would be impossible

        1349
        to give such consumers the same deals as those who can pay by direct debit, so I have framed the amendments to try to give them some benefit and perhaps contribute in a modest way to ending fuel poverty.
        The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): This group of amendments draws together two separate issues—the disconnection of electricity supply and the tariffs paid by those with gas and electricity pre-payment meters. I shall deal first with new clause 1, which relates to electricity disconnections. Electricity disconnections represent less than one tenth of all fuel disconnections. In response to my hon. Friend the Member for Ochil (Mr. O'Neill), the cost of disconnection varies from supplier to supplier, but I understand that the evidence given to the Select Committee on Trade and Industry suggests that the whole process, if it leads to final disconnection, costs about £150.
        5.30 pm
        New clause 1 would directly involve the Secretary of State in the regulation of one aspect of electricity supply by requiring her to make regulations in respect of electricity disconnections. She would be required to prescribe procedures in respect of disconnections of households with customers or residents who were of pensionable age, disabled, had a long-term illness or were under five. She would also be required to make provision for the role of social services departments in disconnections. Disconnections for debt should of course be minimised, and appropriate safeguards should be built into disconnection arrangements, especially for vulnerable customers. Those arrangements should be carefully monitored and, where necessary, improved. Indeed, it is because action has been taken to improve them that the new clause is unnecessary.
        This year, Ofgem, with the encouragement of my hon. Friend the Minister for Energy, E-Commerce and Postal Services, has been in extensive discussion with suppliers about disconnection activity. Those discussions focused on improving processes for identifying and dealing with vulnerable customers and on clarifying procedures for notifying relevant agencies where vulnerable customers were in payment difficulties. In April, that led to proposals for improved industry-wide arrangements that will be set out in an industry code of practice. Ofgem published that consultation paper to maximise both the audience and the response. The key elements of the consultation were an agreed definition of vulnerability and guidance on the operation of the Data Protection Act 1998. The proposals were designed to ensure that, as far as possible, vulnerable customers would not be disconnected in future.
        The consultation has now closed, and a range of responses has been received. I expect the final proposals, which should be published shortly, to be improved in the light of those responses. In particular, I expect the definition of what constitutes a venerable household to be widened and more detail to be given on the range of bodies with which suppliers can work in dealing with vulnerable customers and on the arrangements for involving those bodies, whether they be social services or other caring organisations. The new arrangements
        1350
        will then be applied. Ofgem retains the power and the right to propose changes to suppliers' licences if the arrangements do not serve their intended purpose.
        Although I understand what the hon. Member for Vale of York (Miss McIntosh) is trying to achieve in the first part of her new clause, that activity is already in hand and is being dealt with by those who should be responsible—the industry, working with the guidance of the regulator.
        Let me turn to the second main element of the new clause—the role of social services. It would serve no practical purpose for the Secretary of State to prescribe behaviour or activity as the new clause envisages. The organisation that needs to be involved, be it a social services department or a caring organisation, will vary from case to case, as will what those organisations will need to do. The key is not to prescribe a particular action or role, but to ensure that suppliers are ready and able to involve social services or others. The code provides for that. The consultation paper that was issued in April also provided useful guidance from the data protection commissioner about when companies might legitimately reveal information about customers to social services and others. The code, not a legislative responsibility imposed upon Ministers almost by whim, is the right way to deal with this issue.
        As well as being unnecessary, the proposal is flawed in two other ways. The first flaw is a practical one. As I said earlier, the bulk of the disconnections occurs in gas supply, whereas the new clause deals only with electricity. By implementing the proposal, we would create a striking asymmetry between the duties that are imposed on suppliers. Last year, the new clause would have applied to possibly only 8 per cent. of disconnections through debt. In 2002, it would have applied to 4 per cent. The number of vulnerable customers in those small percentages would have been minute.
        Although I welcome the hon. Lady's interest in the social aspects of the energy market, there are strong philosophical and practical arguments against legislating in the way she proposes. It is entirely right that Parliament and the Government should be involved in developing and setting energy policy and the role of the regulator in that energy framework. However, that is a long way from micro-managing regulatory activity or interfering in the province of the regulator on the basis of the hon. Lady's current thinking. The new clause would do that. We may not agree with Ofgem's approach on all matters, but we must let it do its job. In the case that we are considering, it has done so. It played a key role in driving the industry to take action without the need for primary or, at this juncture, secondary legislation. That is an example of regulation and self-regulation carrying out is proper function. I urge hon. Members to give it the chance to work.
        Amendments Nos. 48 and 49 deal with pre-payment meter tariffs. They would make identical changes to the Gas Act 1986 and the Electricity Act 1989, as amended. They would require the unit cost of gas or electricity supplied through a pre-payment meter to be no more than that of gas or electricity supplied under a standard credit tariff. If suppliers continued to apply a standing charge, it would have to be the same for both payment methods.
        The amendments represent an amended version of those that were considered and rejected in Committee. In their revised form, they remain unacceptable. They would be unfair to many of the most vulnerable energy consumers. Although I fully understand and share the concern of the hon. Member for Angus (Mr. Weir) for pre-payment meter customers, some of whom will be on low incomes, it is not true to say that all pre-payment customers are disadvantaged or fuel poor. Indeed, not only are pre-payment meter customers no more likely than standard credit customers to be fuel poor, but pensioners, who make up about half the fuel poor, represent less than 10 per cent. of pre-payment meter users. The amendments would mean that pre-payment meter customers would be subsidised by other customers, many of whom would be on low incomes, and whose bills would rise accordingly.
        The cost to suppliers of serving pre-payment meter customers is higher than that of serving other customers, chiefly because of the cost of the meters and the infrastructure required to support them. Some companies have structured their credit and pre-payment tariffs to the benefit of pre-payment meter customers. That is a matter for them, and pre-payment customers may, in a competitive market, choose to be supplied by them. However, companies should be allowed accurately to reflect costs and properly to apportion them between their customers. I therefore regret that I cannot support the amendments, and I hope the hon. Lady will feel able to withdraw them.
        Miss McIntosh: In view of the Minister's conciliatory tone and his appreciation of the vulnerability of some customers and Ofgem's excellent work, I beg to ask leave to withdraw the motion.
        Motion and clause, by leave, withdrawn.

      New Clause 17

        ENVIRONMENTAL PRINCIPLES FOR PURPOSES OF PART 1
        `(1) Part 1 of this Act is based upon general environmental principles which must be followed by any person or body in carrying out any of its functions under this Part of this Act.
        (2) These general principles are—

        (a) that the health and safety of people and the environment must be protected from the harmful effects of nuclear wastes;

        (b) that the costs of pollution must be borne by the person or body responsible for causing the pollution; and

        (c) that international best practice in radiation protection should be implemented.

        (3) In addition to the above principles, the NDA should also seek to ensure—

        (a) that the creation of nuclear waste should be avoided or minimised;

        (b) that nuclear wastes should be concentrated and contained rather than diluted and dispersed throughout the environment;

        (c) that the most hazardous wastes are prioritised for conditioning to put them into a passively safe state; and

        (d) that there are no unnecessary transports of waste.'.—[Norman Baker.]

        Brought up, and read the First time.
        Norman Baker: I beg to move, That the clause be read a Second time.
        Madam Deputy Speaker: With this, it will be convenient to discuss the following: Amendment No. 26, in page 3, line 31 [Clause 3], leave out subsection (4) and insert—
        '(4) The Secretary of State must satisfy himself on an annual basis that any person with control of a nuclear installation who is not—

        (a) a Crown appointee;

        (b) the UKAEA

        (c) a wholly-owned subsidiary of the UKAEA;

        (d) any other publicly owned company which was so owned on 4th July 2002;

        (e) a wholly owned subsidiary of such a company; or

        (f) the NDA itself,

        is taking the necessary steps to ensure that decommissioning work and liabilities will be fully funded through the establishment and maintenance of a fully segregated fund for that purpose and that an appropriate contribution is made to the funding of the designated long-term nuclear waste management body.'.
        Amendment No. 41, in page 3, line 38, at end insert—
        '(4A) The provisions of subsection (4)(e) above shall only be exercised in respect of British Energy following bankruptcy of that company.'.
        Amendment No. 37, in page 4, line 21, at end insert—
        '(10) No powers allocated to the NDA shall be taken to affect the powers and duties of NIREX.'.
        Amendment No. 42, in page 5, line 29 [Clause 5], at end insert—
        `(5A) The provisions of subsection (5)(e) above shall only be exercised in respect of British Energy following bankruptcy of that company.'.
        Amendment No. 38, in page 7, line 10 [Clause 7], at end insert—
        '(1A) The NDA shall undertake no activities that will lead to an increase in the generation of nuclear waste except pursuant to the safe operation of nuclear plants for power generation.'.
        Amendment No. 39, in page 7, line 18, at end insert—
        '(2A) The NDA shall not allow considerations relating to the potential generation of income to result in additional production of nuclear wastes.'.
        Amendment No. 29, in page 8, line 33 [Clause 9], leave out
        `need to safeguard the environment'
        and insert
        `environmental principles set out in section [Environmental principles for purposes of Part 1] and'.
        Amendment No. 30, in page 8, line 34, leave out paragraph (c).
        Amendment No. 31, in page 8, line 39, leave out paragraph (a) and insert—
        '(a) to ensure that the health and safety of people and the environment must be protected from the harmful effects of nuclear wastes;'.
        Amendment No. 32, in page 8, line 42, leave out paragraph (b) and insert—
        `(b) to ensure that the costs of pollution must be borne by the person or body responsible for causing the pollution; and'.
        Amendment No. 33, in page 9, line 1, leave out paragraph (c).
        Amendment No. 34, in page 9, line 4, after first 'to', insert
        `section [Environmental principles for purposes of Part 1](1),'.
        Amendment No. 40, in page 9, line 4, after first 'to', insert 'section 7(2A),'.
        Amendment No. 35, in page 9, line 4, leave out 'to (c)' and insert 'and (b)'.
        Government amendments Nos. 11 and 12, and 15 to 17.
        Norman Baker: I am sorry that we have just 21 minutes left of the Report stage. Members of all parties have been brief and to the point this afternoon, but we are still running out of time. Other important amendments have still to be discussed; I guess that they will be picked up on Third Reading, if at all.
        I was complimenting the Minister earlier for having taken on board certain points that had been raised in Committee. That was true, but none of them relate to the nuclear industry. There has been a studious refusal by the Government to take on board the points that were made properly and convincingly on that issue by several Members in Committee. The Bill will make £48 billion of public money available to decommission the nuclear industry, which is £8,000 for every man, woman and child in this country. That is one reason why the uncharacteristically glib suggestion by the hon. Member for Salisbury (Mr. Key) that we should have a new season of nuclear power stations needs to be taken with a pinch of salt, given the massive cyst to the taxpayer. The second reason is, of course. the amount of nuclear waste that is mounting across the country as we speak.
        The proposal for a nuclear decommissioning authority is a sensible one. My colleagues and I have always welcomed the idea that such an authority should be set up to deal with this problem, which has been allowed to fester for far too long. Unfortunately, however, the way in which the Government proposes to set up the NDA has worrying aspects. They were raised in Committee, and I am bound to say that we did not receive satisfactory answers from the Minister to some of the salient points that we made.
        The NDA has no overarching environmental responsibility, which seems extraordinary for a body that is to deal with nuclear waste. I draw the Minister's attention to new clause 17, which seeks to instil some environmental principles into the NDA. The general principles set out in subsection (2) are:

        "(a) that the health and safety of people and the environment must be protected from the harmful effects of nuclear wastes;

        (b) that the costs of pollution must be borne by the person or body responsible for causing the pollution; and

        (c) that international best practice in radiation protection should be implemented."

        Subsection (3) states:
        "In addition to the above principles, the NDA should also seek to ensure—

        (a) that the creation of nuclear waste should be avoided or minimised;

        (b) that nuclear wastes should be concentrated and contained rather than diluted and dispersed throughout the environment;

        1354

        (c) that the most hazardous wastes are prioritised for conditioning to put them into a passively safe state; and

        (d) that there are no unnecessary transports of waste."

        Those are completely uncontroversial, commonsense principles, and I fail to see why the Government do not want to adopt them. Perhaps the answer is that the NDA will not simply be a body that is set up to decommission the nuclear industry and to deal belatedly with some of the environmental mess that it has caused, as some of us wish it to be. Perhaps it will have the further function of providing an income stream for the Treasury. Members on both sides of the House have made the point that there has been a refusal to allow segregated funds to be established. That would be dealt with by amendment No. 26, which was tabled by my hon. Friend the Member for Hazel Grove (Mr. Stunell) and me.
        We believe that the NDA is going to continue to be allowed to operate plants ad infinitum. That is on the record from the Minister in Committee. There is no absolute cut-off point; it will be able to continue to operate those plants. Indeed, if the hon. Member for Salisbury is correct in his assertion that there is going to be a big gap in our energy supply, the NDA could suddenly be called on to carry on operating those plants indefinitely. That is not what is intended for the NDA, but it is allowed for in the Bill. That should not be the case, and the amendments would prevent that from occurring.
        Let us be clear about this. There is a nuclear generation industry, for better or worse, and there should be a decommissioning industry as well. We should not mix the two up, which is what the Government are doing as a result of the way in which they have structured the NDA in the Bill. I detect the hand of the Treasury here. It wants money back from the nuclear industry. It is baulking, understandably, at the £48 bill that has landed on Gordon Brown's doormat, and it wants some money back. The way to do that is to get an income stream from the NDA, which would get the money from generating electricity and otherwise using the existing plant. So the irony is that the NDA, which is being set up to decommission the industry, is actually going to be given the power to generate further waste. That is what the Government have set out in the Bill, but amendments Nos. 38 and 39 would explicitly prevent that from happening.
        Amendment No. 38 states:
        "The NDA shall undertake no activities that will lead to an increase in the generation of nuclear waste except pursuant to the safe operation of nuclear plants for power generation."
        That would prevent any reprocessing, which the Minister is apparently also happy for the NDA to be involved in. Amendment No. 39 states:
        "The NDA shall not allow considerations relating to the potential generation of income to result in additional production of nuclear wastes."
        That should be the position of the NDA. We should separate the generation capacity from the decommissioning capacity, but as a result of the way in which the Government have structured the Bill, that has not been done. The NDA will even be enabled to hand over money, and power, to British Energy, a private sector company. That is what is allowed for in the Bill.
        The Minister said that of course there must be a backstop, in case nuclear waste is arising and a private company cannot handle it. Yes, but does not that allow a nice let-out for British Energy, which already has a pretty nice credit line from the DTI? That money could be used for other purposes. Our amendment suggests that that option should only be exercised if British Energy goes bankrupt. It is then a matter for the public purse to deal with, for the sake of the environment. Of course we must deal with it in that situation, but Parliament's role, and the DTI's role, is not to bail out private companies. The Minister should therefore accept that amendment too.
        I am conscious of time, and other Members want to speak. I suggest to the Minister, however, that he has convinced neither the Committee, nor, I suspect, the House, on the nuclear aspects of the Bill. As I said to the Minister in Committee, the Government's nuclear policy is not bad, but it is not reflected in the Bill that has been written for him.
        5.45 pm
        Mr. Timms: As the House will know, the spending review announced yesterday by my right hon. Friend the Chancellor included a good settlement for the NDA, with a budget of some £2 billion a year for the three years of the spending review period. The NDA will therefore be well placed to achieve the targets that we have set for safe, secure, cost-effective and environmentally friendly nuclear clean-up.
        New clause 17 and amendments Nos. 29 to 35 would establish general, overarching environmental principles that should govern the operation and behaviour of the NDA. Our position is clear: the protection of the environment and the safety of people are central to the objectives and activities of the NDA and of its site operators. Ensuring the observance of the high standards that we have in the UK is the responsibility of the nuclear regulators. Nothing in the Bill alters the regulatory framework, and potentially, it would be seriously damaging to cut across that well-established regulatory framework by giving the NDA, as this proposal would, a principal objective of ensuring the delivery of what are regulatory requirements. We must not do anything to undermine the successful work of the regulators.
        Amendments Nos. 38 to 40 would constrain the NDA's activities by ruling out the generation of additional nuclear waste. That is an admirable objective but could impose damaging constraints on the work of the NDA in managing nuclear clean-up effectively. That is a decision for the NDA properly to make within the framework of its duties and responsibilities.
        Amendment No. 37 would delineate the roles and responsibilities of the NDA and Nirex. The Government have established the Committee on Radioactive Waste Management to advise on long-term policy for the management of higher-activity wastes. The future roles and responsibilities of the bodies involved will be decided in the light of that advice.
        Norman Baker: How is it that the Minister can announce the chair of the NDA before the Bill is even passed, but cannot announce the separation of roles between Nirex and the NDA when the Bill is almost complete?
        Mr. Timms: The hon. Gentleman will recall that we had extensive discussion in Committee about the position on the NDA and Nirex, and I set out the arrangements by which we had been able to appoint a chair designate, because of the importance of the NDA and of having the authority in place by April next year.
        On amendment No. 26 on financing, it is already the Government's policy to require the establishment of segregated funds for privatised parts of the nuclear industry—for example, in the case of British Energy. We do not consider it necessary to extend that to all private sector companies with nuclear facilities. We will take decisions on whether to establish a long-term nuclear waste management body once we have received advice from the Committee on Radioactive Waste Management.
        Amendments Nos. 41 and 42 would prevent the Government from exercising effectively an important option in respect of restructuring agreements to protect taxpayers' interests We have taken an option to buy each of British Energy's nuclear power stations for £1 at the time that British Energy plans to shut them, either to decommission them or to continue to operate them beyond that date. It may be possible to decommission them more cost-effectively in the public sector, using expertise gained by the NDA on public sector nuclear sites. It might also be possible to defer decommissioning costs, which would fall on the nuclear liabilities fund, which is underwritten by Government, by operating the stations and generating income beyond the date when British Energy would shut them. Those benefits, and the protection that they offer the taxpayer, would be lost if we were prevented from passing British Energy sites to the NDA to decommission only if British Energy was bankrupt. I do not think that the proposed change is sensible.
        Mr. Wilson: It does not look as though we shall have time to discuss the final group of amendments. Will the Minister confirm that British Energy had to be bailed out because of the market-driven ideological zeal of Ofgem? Would it not be a pity if the same approach were applied to renewable energy and transmission systems? That too would fly in the face of Government energy policy and ultimately Ofgem would make a decision against the national interest, the energy interest and the public interest.
        Mr. Timms: I think that my right hon. Friend is stretching a point by trying to bring in the last group of amendments at this stage—and I do not think that he is being fair in saying that what happened to British Energy was entirely down to Ofgem. No doubt we shall still be able to have some exchanges about that last group.
        Amendment No. 32 places a duty on the NDA to ensure that the polluter pays for nuclear clean-up. The NDA is not the appropriate body to determine who pays for clean-up. The Government's position is clear.

        1357
        We support the polluter pays principle, but when that proves impossible it is right for Government to determine the appropriate arrangements for financing clean-up. The Bill allows the NDA to be made responsible for securing the clean-up, and for the levying of appropriate charges.
        I undertook in Committee to consider what could be done to respond to suggestions from the hon. Member for Tewkesbury (Mr. Robertson) about increasing parliamentary oversight of the ND A's activities. I hope that he will welcome amendments Nos. 11 and 12, which require the NDA's strategy and annual plan to be laid before Parliament, and provide for parallel provisions for the Scottish Parliament that have been agreed with the Scottish Executive. Amendments Nos. 15 to 17 make three minor drafting changes arising from the last detailed check of the Bill.
        Mr. Laurence Robertson: It is regrettable that we must rush through 20 new clauses and amendments, with two more groups to debate in the remaining eight minutes. I will not go into as much detail as I would otherwise. It is also regrettable that the hon. Member for Lewes (Norman Baker) took such an anti-nuclear stance when raising important points. I agree with the hon. Gentleman that the relationship between Nirex and the NDA should have been determined long before the Bill was even introduced but, mindful of the time, I will not go into that.
        I welcome amendments Nos. 11 and 12. As expected, the Minister has been as good as his word. They are important amendments that allow the House sight of the financial plan and the NDA's strategy. Given the amount of money to be allocated to and deployed by the NDA, and given that it will do so much work, it is vital for Parliament to have sight of the reports. We pressed for that in Committee, and I am grateful to the Minister for tabling the amendments.
        Norman Baker: I am not convinced by what the Minister said. He has failed to grasp the nuclear nettle. There are numerous outstanding issues relating to finance, the construction of the NDA and its relationship with Nirex. As there is very little time anyway, I intend to press the new clause to a vote.
        Question put,
        That the clause be read a Second time:—
        The House divided: Ayes 39, Noes 273.

        Division No. 223]

        [5:54 pm

        AYES

        Baker, Norman

        Harris, Dr. Evan(Oxford W & Abingdon)

        Beith, rh A. J.

        Cable, Dr. Vincent

        Harvey, Nick

        Calton, Mrs Patsy

        Heath, David

        Campbell, rh Sir Menzies (NE Fife)

        Jones, Nigel (Cheltenham)

        Keetch, Paul

        Carmichael, Alistair

        Kirkwood, Sir Archy

        Chidgey, David

        Laws, David(Yeovil)

        Cotter, Brian

        Llwyd, Elfyn

        Moore. Michael

        Davey, Edward(Kingston)

        Price, Adam(E Carmarthen & Dinefwr)

        Doughty, Sue

        Ewing, Annabelle

        Pugh, Dr. John

        Foster, Don(Bath)

        Bendel, David

        George, Andrew(St. Ives)

        Robertson, Angus(Moray)

        Gidley, Sandra

        Salmond, Alex

        Hancock, Mike

        Sanders, Adrian

        1358

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

        Weir, Michael

        Williams, Roger(Brecon)

        Stunell, Andrew

        Wishert, Pete

        Taylor, Matthew (Truro)

        Thurso, John

        Tellers for the Ayes:

        Tyler, Paul (N Cornwall)

        Bob Russell and Mr. Alan Reid

        Webb, Steve (Northavon)

        NOES

        Abbott, Ms Diane

        Davidson, Ian

        Adams, Irene(Paisley N)

        Davies, rh Denzil(Llanelli)

        Ainger, Nick

        Davies, Geraint(Croydon C)

        Alexander, Douglas

        Dawson, Hilton

        Allen, Graham

        Dean, Mrs Janet

        Anderson, rh Donald(Swansea E)

        Denham, rh John

        Anderson, Janet(Rossendale & Darwen)

        Dismore, Andrew

        Dobbin, Jim(Heywood)

        Armstrong, rh Ms Hilary

        Dodds, Nigel

        Austin, John

        Doran, Frank

        Baird, Vera

        Dowd, Jim(Lewisham W)

        Barnes, Harry

        Drew, David(Stroud)

        Barron, rh Kevin

        Dunwoody, Mrs Gwyneth

        Battle, John

        Eagle, Angela(Wallasey)

        Bayley, Hugh

        Efford, Clive

        Beard, Nigel

        Ellman, Mrs Louise

        Beckett, rh Margaret

        Farrelly, Paul

        Begg, Miss Anne

        Field, rh Frank(Birkenhead)

        Bell, Sir Stuart

        Fisher, Mark

        Benn, rh Hilary

        Fitzsimons, Mrs Lorna

        Berry, Roger

        Flint, Caroline

        Betts, Clive

        Flynn, Paul(Newport W)

        Blackman, Liz

        Foulkes, rh George

        Blears, Ms Hazel

        Francis, Dr. Hywel

        Blizzard, Bob

        Gapes, Mike(Ilford S)

        Bradley, rh Keith(Withington)

        George, rh Bruce(Walsall S)

        Bradley, Peter(The Wrekin)

        Gerrard, Neil

        Bradshaw, Ben

        Gibson, Dr. Ian

        Brown, rh Nicholas(Newcastle E Wallsend)

        Gilroy, Linda

        Godsiff, Roger

        Bryant, Chris

        Goggins, Paul

        Buck, Ms Karen

        Griffiths, Jane(Reading E)

        Burnham, Andy

        Griffiths, Nigel(Edinburgh S)

        Campbell, Alan(Tynemouth)

        Griffiths, Win(Bridgend)

        Campbell, Mrs Anne(C'bridge)

        Grogan, John

        Caplin, Ivor

        Hall, Patrick(Bedford)

        Cawsey, Ian(Brigg)

        Hamilton, David(Midlothian)

        Challen, Colin

        Hamilton, Fabian(Leeds NE)

        Chapman, Ben(Wirral 5)

        Hanson, David

        Chaytor, David

        Harman, rh Ms Harriet

        Clapham, Michael

        Harris, Tom(Glasgow Cathcart)

        Clark, Mrs Helen(Peterborough)

        Henderson, Ivan(Harwich)

        Clark, Dr. Lynda(Edinburgh pentlands)

        Hendrick, Mark

        Hesford, Stephen

        Clark, Paul(Gillingham)

        Hewitt, rh Ms Patricia

        Clarke, rh Tom(Coatbridge & Chryston)

        Heyes, David

        Hodge, Margaret

        Clarke, Tony(Northampton S)

        Hoey, Kate(Vauxhall)

        Clelland, David

        Hopkins, Kelvin

        Coaker, Vernon

        Howarth, rh Alan(Newport E)

        Coffey, Ms Ann

        Howarth, George(Knowsley N & Sefton E)

        Cohen, Harry

        Colman, Tony

        Howells, Dr. Kim

        Connarty, Michael

        Hughes, Kevin(Doncaster N)

        Cook, rh Robin(Livingston)

        Humble, Mrs Joan

        Corston, Jean

        Hurst, Alan(Braintree)

        Cousins, Jim

        Iddon, Dr. Brian

        Cox, Tom(Tooting)

        Ingram, rh Adam

        Cranston, Ross

        Irranca-Davies, Huw

        Cryer, Ann(Keighley)

        Jackson, Glenda(Hampstead & Highgate)

        Cryer, John(Hornchurch)

        Cummings, John

        Jackson, Helen(Hillsborough)

        Cunningham, Jim(Coventry S)

        Jamieson, David

        Cunningham, Tony(Workington)

        Johnson, Alan(Hull W)

        Curtis-Thomas, Mrs Claire

        Johnson, Miss Melanie(Welwyn Hatfield)

        Davey, Valerie(Bristol W)

        1359

        Jones, Helen(Warrington N)

        Pickthall, Colin

        Jones, Jon Owen(Cardiff C)

        Pike, Peter(Burnley)

        Jones, Lynne(Selly Oak)

        Pollard, Kerry

        Jowell, rh Tessa

        Pope, Greg(Hyndburn)

        Joyce, Eric(Falkirk W)

        Prentice, Ms Bridget(Lewisham E)

        Kaufman, rh Sir Gerald

        Keen, Alan(Feltham)

        Prentice, Gordon(Pendle)

        Keen, Ann(Brentford)

        Prosser, Gwyn

        Kennedy, Jane(Wavertree)

        Purchase, Ken

        Khabra, Piara S.

        Purnell, James

        Kidney, David

        Quinn, Lawrie

        Kilfoyle, Peter

        Rapson, Syd(Portsmouth N)

        Knight, Jim(S Dorset)

        Reed, Andy(Loughborough)

        Kumar, Dr. Ashok

        Reid, rh Dr. John(Hamilton N & Bellshill)

        Ladyman, Dr. Stephen

        Lawrence, Mrs Jackie

        Robertson, John(Glasgow Anniesland)

        Laxton, Bob(Derby N)

        Lepper, David

        Rooney, Terry

        Leslie, Christopher

        Ross, Ernie(Dundee W)

        Levitt, Tom(High Peak)

        Roy, Frank(Motherwell)

        Lewis, Ivan(Bury S)

        Ruddock, Joan

        Lewis, Terry(Worsley)

        Russell, Ms Christine(City of Chester)

        Liddell, rh Mrs Helen

        Linton, Martin

        Salter, Martin

        Lloyd, Tony(Manchester C)

        Sarwar, Mohammad

        Lucas, Ian(Wrexham)

        Savidge, Malcolm

        Lyons, John(Strathkelvin)

        Sedgemore, Brian

        McCafferty, Chris

        Sheridan, Jim

        McDonagh, Siobhain

        Short, rh Clare

        MacDonald, Calum

        Simpson, Alan(Nottingham S)

        McDonnell, John

        Singh, Marsha

        MacDougall, John

        Skinner, Dennis

        McFall, rh John

        Smith, rh Andrew(Oxford E)

        McGuire, Mrs Anne

        Smith, Angela(Basildon)

        Mclsaac, Shona

        Smith, rh Chris(Islington S & Finsbury)

        McKechin, Ann

        McKenna, Rosemary

        Smith, Geraldine(Morecambe & Lunesdale)

        Mackinlay, Andrew

        McNulty, Tony

        Smith, Llew(Blaenau Gwent)

        MacShane, Denis

        Southworth, Helen

        McWalter, Tony

        Spellar, rh John

        McWilliam, John

        Starkey, Dr. Phyllis

        Mahmood, Khalid

        Stevenson, George

        Mahon, Mrs Alice

        Stewart, Ian(Eccles)

        Mandelson, rh Peter

        Stinchcombe, Paul

        Marris, Rob(Wolverh'ton SW)

        Strang, rh Dr. Gavin

        Marsden, Paul(Shrewsbury & Atcham)

        Stringer, Graham

        Stuart, Ms Gisela

        Marshall-Andrews, Robert

        Sutcliffe, Gerry

        Martlew, Eric

        Tami, Mark(Alyn)

        Meacher, rh Michael

        Taylor, rh Ann(Dewsbury)

        Meale, Alan(Mansfield)

        Taylor, Dan(Stockton 5)

        Merron, Gillian

        Thomas, Gareth(Clwyd W)

        Michael, rh Alun

        Thomas, Gareth(Harrow W)

        Milburn, rh Alan

        Timms, Stephen

        Miller, Andrew

        Touhig, Don(Islwyn)

        Mitchell, Austin(Gt Grimsby)

        Trickett, Jon

        Moffatt, Laura

        Truswell, Paul

        Mole, Chris

        Turner, Dennis(Wolverh'ton SE)

        Moonie, Dr. Lewis

        Turner, Dr. Desmond(Brighton Kemptown)

        Moran, Margaret

        Morgan, Julie

        Twigg, Derek(Halton)

        Morley, Elliot

        Tynan, Bill(Hamilton S)

        Morris, rh Estelle

        Vaz, Keith(Leicester E)

        Mountford, Kali

        Vis, Dr. Rudi

        Mudie, George

        Ward, Claire

        Mullin, Chris

        Wareing, Robert N.

        Munn, Ms Meg

        Watts, David

        Murphy, Denis(Wansbeck)

        White, Brian

        Murphy, Jim(Eastwood)

        Whitehead, Dr. Alan

        Naysmith, Dr. Doug

        Wills, Michael

        O'Brien, Mike(N Warks)

        Wilson, Brian

        Olner, Bill

        Winnick, David

        O'Neill, Martin

        Winterton, Ms Rosie(Doncaster C)

        Perham, Linda

        Picking, Anne

        Wood, Mike(Batley)

        1360

        Woodward, Shaun

        Wyatt, Derek

        Worthington, Tony

        Wright, Anthony D.(Gt Yarmouth)

        Tellers for the Noes:

        Wright, Tony(Cannock)

        Charlotte Atkins and Joan Ryan)

        Question accordingly negatived.
        It being after Six o'clock, MADAM DEPUTY SPEAKER put forthwith the Questions necessary for the disposal of the business to he concluded at that hour, pursuant to Order [10 May].
        Amendment proposed: No. 5, in clause 100, page 79, line 23, at end insert —
        `36B Duties in relation to navigation
        (1) Neither the Secretary of State nor the Scottish Ministers may grant a consent in relation to any particular offshore generating activities if he considers, or (as the case may be) they consider, that interference with the use of recognised sea lanes essential to international navigation—

        (a) is likely to be caused by the carrying on of those activities; or

        (b) is likely to result from their having been carried on.

        (2) It shall be the duty both of the Secretary of State and of the Scottish Ministers, in determining—

        (a) whether to give a consent for any particular offshore generating activities, and

        (b) what conditions to include in such a consent,

        to have regard to the extent and nature of any obstruction of or danger to navigation which (without amounting to interference with the use of such sea lanes) is likely to be caused by the carrying on of the activities. or is likely to result from their having been carried on.
        (3) In determining for the purposes of this section what interference, obstruction or danger is likely and its extent and nature, the Secretary of State or (as the case may be) the Scottish Ministers must have regard to the likely overall effect (both while being carried on and subsequently) of—

        (a) the activities in question; and

        (b) such other offshore generating activities as are either already the subject of consents or are activities in respect of which it appears likely that consents will be granted.

        (4) For the purposes of this section the effects of offshore generating activities include—

        (a) how, in relation to those activities, the Secretary of State and the Scottish Ministers have exercised or will exercise their powers under section 36A above and section 101 of the Energy Act 2004 (extinguishment of public rights of navigation); and

        (b) how, in relation to those activities, the Secretary of State has exercised or will exercise his powers under sections 94 and 95 and Chapter 3 of Part 2 of that Act (safety zones and decommissioning).

        (5) If the person who has granted a consent in relation to any offshore generating activities thinks it appropriate to do so in the interests of the safety of navigation, he may at any time vary conditions of the consent so as to modify in relation to any of the following matters the obligations imposed by those conditions—

        (a) the provision of aids to navigation (including, in particular, lights and signals);

        (b) the stationing of guard ships in the vicinity of the place where the activities are being or are to be carried on; or

        (c) the taking of other measures for the purposes of, or in connection with, the control of the movement of vessels in that vicinity.

        (6) A modification in exercise of the power under subsection (5) must be set out in a notice given by the person who granted the consent to the person whose obligations are modified.
        (7) In this section—

        1361
        'consent' means a consent under section 36 above;
        'offshore generating activities' means—

        (a) the construction or operation of a generating station that is to comprise or comprises (in whole or in part) renewable energy installations; or

        (b) an extension of a generating station that is to comprise (in whole or in part) renewable energy installations or an extension of such an installation;

        'the use of recognised sea lanes essential to international navigation' has the same meaning as in Article 60(7) of the United Nations Convention on the Law of the Sea 1982 (Cmnd 8941).
        (8) In subsection (7) 'extension', in relation to a renewable energy installation, has the same meaning as in Chapter 2 of Part 2 of the Energy Act 2004.".'.—[Mr. Timms.]
        Amendment made to the proposed amendment: (b), in proposed subsection (7)(b), leave out from 'navigation' to '(Cmnd 8941)' and insert
        `means—

        (a) anything that constitutes the use of such a sea lane for the purposes of Article 60(7) of the United Nations Convention on the Law of the Sea 1982 (Cmnd 8941); or

        (b) any use of waters in the territorial sea adjacent to Great Britain that would fall within paragraph (a) if the waters were in a Renewable Energy Zone.'.—[Mrs. Dunwoody.]

        Amendment, as amended, agreed to.

      Clause 81
        PRINCIPAL OBJECTIVE TO PROMOTE RENEWABLE ENERGY
        Amendment made: No. 1, in page 63, line 39, leave out clause 81.—[Mr. Timms.]
      Clause 82

        REPORTS UNDER SECTION 1 OF SUSTAINABLE ENERGY ACT 2003
        Amendment made: No. 2, in page 64, line 32, after 'development', insert
        'or the bringing into use'.—[Mr. Timms]

      Clause 98
        INSTALLATIONS IN TERRITORIAL WATERS AND RENEWABLE ENERGY ZONES
        Amendment made: No. 3, in page 78, line 1, leave out clauses 98 and 99.—[Mr. Timms.]
      Clause 100

        EXTINGUISHMENT ETC. OF PUBLIC RIGHTS OF NAVIGATION
        Amendments made: No. 4, in page 78, line 18, after `extension', insert 'of a generating station'.
        No. 6, in page 79, line 32, at end insert—
        `() In subsection (1) of section 35 of the Coast Protection Act 1949 (c. 74) (operations not requiring consent under section 34), after paragraph (g) insert—
        "(ga) subject to subsection (3) of this section, any operations comprised in offshore generating activities carried out in accordance with consent under section 36 of the Electricity Act 1989 granted after the commencement of section 100 of the Energy Act 2004;".
        () After subsection (2) of that section insert—
        "(3) Operations in or as regards Scotland fall within paragraph (ga) of that subsection only if and to the extent that the Scottish Ministers by order made by statutory instrument so provide.
        (4) A statutory instrument containing an order under subsection (3) shall not be made unless a draft of the instrument has been laid before and approved by a resolution of the Scottish Parliament.
        (5) In that paragraph 'offshore generating activities' has the same meaning as in section 36B of the Electricity Act 1989.".'. —[Mr. Timms.]

      Clause 101
        FURTHER PROVISIONS RELATING TO PUBLIC RIGHTS OF NAVIGATION
        Amendment made: No. 7, in page 79, line 42, after 'extension', insert 'of a generating station'.—[Mr. Timms.]
      Clause 116

        DISCHARGE OF RENEWABLES OBLIGATION IN GREAT BRITAIN BY PAYMENT
        Amendments made: No. 13, in page 95, line 26, leave out from beginning to 'insert' in line 37 and insert—
        '() For subsection (3) of that section substitute—
        "(2A) An order under section 32 may provide that, where—

        (a) a renewables obligation is one in relation to which provision made by virtue of subsection (1)(b) applies in the case of the electricity supplier who is subject to the obligation, and

        (b) the period ending with such day (after the day by which the obligation had to be complied with) as may be specified in or determined under the order has not expired,

        the taking of steps under section 27A in respect of a contravention by that supplier of that obligation is prohibited or otherwise restricted to the extent specified in the order.
        2B) An order under section 32 may provide that, in a case in which the amount received by the Authority, or by the Northern Ireland authority, by way of discharge payments for a period falls short of the amount due in respect of that period, persons who—

        (a) were subject to renewables obligations for the relevant period, and

        (b) are of a description specified in or determined under the order,

        must, by the time and in the circumstances so specified or determined, make a payment (or further payment) to the Authority of an amount calculated in the manner so specified or determined.
        (2C) An order under section 32 may not by virtue of subsection (2B) confer an entitlement on the Authority to receive a payment in respect of the shortfall for any period—

        (a) in the case of a shortfall in the amount received by the Authority, if the receipt of the payment is to be while a prohibition or restriction by virtue of subsection (2A) applies, in one or more cases, to the taking of steps in relation to contraventions of renewables obligations for that period; or

        (b) in the case of a shortfall in the amount received by the Northern Ireland authority, if the receipt of the payment is to be while a prohibition or restriction by virtue of a corresponding provision having effect in Northern Ireland applies, in one or more cases, to the taking of steps in relation to contraventions of Northern Ireland obligations for that period.

        (2D) The provision that may be made by virtue of subsection (2B) includes—

        (a) provision for the making of adjustments and repayments at times after a requirement to make payments in respect of a shortfall for a period has already arisen; and

        (b) provision that sections 25 to 28 are to apply in relation to a requirement imposed by virtue of that subsection on a person who is not a licence holder as if he were a licence holder.

        (3) The amounts received by the Authority by virtue of the preceding provisions of this section must be paid by it to electricity suppliers in accordance with a system of allocation specified in an order under section 32."
        () In that section, at the end'.
        No. 14, in page 95, line 40, at end insert—
        '(7) For the purposes of this section—

        (a) the amount received by the Authority by way of discharge payments for a period falls short of the amount due in respect of that period, and

        (b) the amount received by the Northern Ireland authority by way of discharge payments for a period falls short of the amount due in respect of that period,

        if, and to the extent that, the Authority or (as the case may be) the Northern Ireland authority would have received more by way of discharge payments if every renewables obligation or (as the case may be) Northern Ireland obligation for that period, so far as it was not otherwise discharged, had been discharged by payment.
        (8) In this section—
        `discharge payment', in relation to a period, means—

        (a) a payment by virtue of paragraph (a) of subsection (1) for discharging (in whole or in part) an electricity supplier's renewables obligation for that period;

        (b) so much of a payment by virtue of paragraph (b) of that subsection for securing that such an obligation is treated as discharged to any extent as does not exceed the payment that would have discharged that obligation to the same extent if it had been made before the day mentioned in that paragraph; or

        (c) so much of any payment to the Northern Ireland authority as corresponds, in relation to a Northern Ireland obligation for that period, to anything falling within paragraph (a) or (b) above;

        `Northern Ireland obligation' means a renewables obligation of a Northern Ireland supplier under Article 52 of the Energy (Northern Ireland) Order 2003 (S.I.2003/419 (N.I.6));
        "the relevant period"—

        (a) in relation to a shortfall in amounts received by the Authority by way of discharge payments for a period, means that period; and

        (b) in relation to a shortfall in amounts received by the Northern Ireland authority by way of discharge payments for a period, means any period that includes the whole or a part of that period.".'.—[Mr. Timms.]

      Clause 125
        RENEWABLE TRANSPORT FUEL OBLIGATION
        Amendment made: No. 18, in page 101, line 23, leave out clause 125.—[Mr. Timms.]
      Clause 140

        CONSEQUENTIAL AMENDMENTS OF THE 1989 ACT
        Amendment made: No. 8, in page 108, line 34, leave out `3A(5)(a)' and insert `3A—
        () in subsection (1) (principal objective of GEMA in relation to electricity), at the end insert "or the provision or use of electricity interconnectors"; and
        () in subsection (5)(a)'.—[Mr. Timms.]

      Clause 182

        APPLICATION OF GENERAL DUTIES TO PART 3 FUNCTIONS ETC.
        Amendment made: No. 9, in page 143, line 12, at end insert—
        `() In section 3A(2)(b) of the 1989 Act (duty to have regard to ability of licence holders to finance obligations under Part 1 or the Utilities Act 2000), for "or the Utilities Act 2000" substitute ", the Utilities Act 2000 or Part 2 or 3 of the Energy Act 2004".'.—[Mr. Timms.]

      Clause 185

        SERVICE OF NOTIFICATIONS AND OTHER DOCUMENTS
        Amendment made: No. 19, in page 144, line 39, after `than', insert
        `sections [Imposition of civil penalties] to [Appeals against civil penalties] or'.—[Mr. Timms.]

      Clause 190
        SHORT TITLE, COMMENCEMENT AND EXTENT
        Amendment made: No. 10, in page 149, line 6, after `sections', insert '[Microgeneration],'.—[Mr. Timms.]
      Schedule 2

        PROCEDURAL REQUIREMENTS APPLICABLE TO NDA'S STRATEGY
        Amendment made: No. 11, in page 160, line 27, at end insert—
        `() The Secretary of State must lay before Parliament a copy of anything that the NDA publishes in accordance with subparagraph (1) or (2), and the Scottish Ministers must lay before the Scottish Parliament a copy of anything that is so published.'.—[Mr. Timms.]

      Schedule 3

        PROCEDURAL REQUIREMENTS APPLICABLE TO NDA'S ANNUAL PLANS
        Amendment made: No. 12, in page 163, line 5, at end insert—
        `() The Secretary of State must lay before Parliament a copy of anything that the NDA publishes in accordance with subparagraph (1) or (2), and the Scottish Ministers must lay before the Scottish Parliament a copy of anything that is so published.'.—[Mr. Timms.]

      Schedule 6
        STRUCTURE ETC. OF TRANSFEREE COMPANIES
        Amendment made: No. 15, in page 179, line 4, leave out `transfer'.—[Mr. Timms.]
      Schedule 7

        FINANCES AND ACCOUNTS OF TRANSFEREE COMPANIES
        Amendment made: No. 16, in page 183, line 28, leave out
        'issued out of the Consolidated Fund'
        and insert
        'paid by the Secretary of State'.—[Mr Timms.]

      Schedule 9

        TAXATION PROVISIONS RELATING TO NUCLEAR TRANSFER SCHEMES
        Amendment made: No. 17, in page 201, line 23, leave out '1988' and insert `Taxes'.—[Mr. Timms.]
        Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, and Prince of Wales's consent, on behalf of the Duchy of Cornwall, signified.]
        6.11 pm
        The Secretary of State for Trade and Industry: I beg to move, That the Bill be now read the Third time.
        I am particularly grateful to my hon. Friend the Minister for Energy, E-Commerce and Postal Services for his highly skilful and assiduous handling of the Bill during Committee and Report stages, and also to my hon. Friend the Minister for Small Business and Enterprise for his valuable contribution at both stages. May I express my thanks to them and to all hon. Members who served on the Standing Committee?
        The Bill is part of the Government's continued commitment to deliver a sustainable energy future for the United Kingdom. We face enormous challenges—climate change, declining indigenous energy supplies and ageing infrastructure. We cannot ignore those challenges, for our own sake and for the sake of future generations.
        In the energy White Paper that I published last year we set out how we would tackle fundamental changes in our energy environment, and we set challenging goals—to cut greenhouse emissions by 60 per cent. by the middle of the century, with real progress by 2020, to secure reliable energy supplies, to maintain competitive markets at home and abroad, and to ensure that every home in our country is adequately and affordably heated. We are working hard right across Government to deliver on all those commitments and, following my right hon. Friend the Chancellor's announcement yesterday, we have the resources to do so.
        The Bill is an even larger picture of activity delivering on the white paper. Much of the discussion that we have had in the House and in Committee during the passage of the Bill focused on that bigger picture, and rightly so—the Bill presented an excellent opportunity for debate. In April, we published our first annual report on the implementation of the white paper, setting out what we are doing to deliver our commitments.
        I refer particularly to the issue of security of supply, which is of huge importance and is recognised as such in all parts of the House. The new duty to report annually
        1366
        to the House on security of supply underlines how seriously we in Government take that issue. But we know from business and consumers that primary legislation is not always the answer. We have to be creative and flexible to overcome many of the challenges that we face. As ever, we will regulate only where it is appropriate and with a light touch.
        Many other issues have arisen during our debates. Energy efficiency was mentioned by a number of my hon. Friends and by Opposition Members. We remain committed to increasing investment in energy efficiency, as it is by far the most cost-effective way to meet all our energy goals. The energy efficiency action plan aims to deliver more than 12 million tonnes of carbon saving—well beyond the 10 million that we anticipated in last year's White Paper. There is also the potential of saving consumers more than £3 billion a year by the end of the decade.
        I recognise that there has been some disappointment that our goal of delivering annual savings of more than 4 million tonnes of carbon for the household sector by 2010 is lower than what we initially projected in the White Paper. Since that was published, we have continued to refine the projected savings that we can achieve in that sector. None the less, the objective that we are setting currently represents a demanding increase in activity from the industry. It also requires us to promote sustained consumer demand for greater energy efficiency.
        We will review our progress on the energy efficiency aim for the household sector in the review of the climate change programme later this year, and in the 2007 review announced in the energy White Paper action plan. If we find that we can go further than we set out in the action plan, we will do so.
        Brian White: Many industries in the sector are in the market for investment at the moment. Will my right hon. Friend assure them that they will be taken into account when the climate change review is under way, and that there will be constant dialogue with the industry?
        Ms Hewitt: I am happy to give my hon. Friend that assurance. One of the best ways for us to ensure that we deliver our energy efficiency aims is to involve the industry. It is at the leading edge of energy efficiency technologies, and can help make sure that we design a regulatory framework—and take other action to deliver the results that we want—in the cheapest and most effective way.
        In the context of delivering affordable and low-carbon heating, combined heat and power can make a significant contribution. Again, we have set ambitious targets. A recent analysis by Cambridge Econometrics suggests that we are likely to be within 1.5 GW of our target by 2010. In other words, there is still more to do.
        Just yesterday, my hon. Friend the Minister for Energy, E-Commerce and Postal Services and my noble Friend the Under-Secretary of State with responsibility for food, farming and sustainable energy met key partners engaged in the CHP industry to discuss the long-term options for increasing the support that we give to CHP. We remain committed to our target, and we have a strategy in place for achieving it, which we

        1367
        published alongside the White Paper annual report earlier. We will continue to monitor progress, and to work with the sector to see what more we can do.
        Renewable energy is a source of some controversy, in this House and elsewhere. After just two years, the renewables obligation is proving popular with both investors and developers. It is backed by £350 million in capital grants and research and development support for those renewable technologies that are still some way from being commercially competitive.
        Mr. Salmond: In the Secretary of State's opinion, does Ofgem act in accord with the Government's renewables targets in everything that it does?
        Ms Hewitt: We had extensive discussions with Ofgem in the preparation of the energy White Paper. I am quite satisfied that Ofgem fulfils its statutory duties, as laid down by Parliament, and that it takes into account our commitment to deliver on our climate change goals, and on all our other goals, through an increase in renewable energy.
        Mr. Salmond: In that case, why were two Ofgem officials unable to give an answer to that very question, which I and my hon. Friend the Member for Angus (Mr. Weir) put to them three times during a meeting yesterday evening?
        Ms Hewitt: I speak to the chairman, chief executive and other members of that authority, and I am satisfied on that matter. The members of the authority are well aware of the need to support renewable development, both through an appropriate regulatory framework and through ensuring that the necessary infrastructure is put in place to enable renewable electricity to connect to the grid.
        Mr. Wilson: Perhaps I can help my right hon. Friend, as we both know that there are two approaches to renewables, and especially to those that come from peripheral areas. The Ofgem approach is that it does not want to touch them with a bargepole, as it is not interested in them. The Government approach is to encourage renewables, particularly in those parts of the country where the resources are at their best. It is admirable that the Secretary of State has recognised the problem and tried to bridge it with the capping proposal. Should she not, even in the dying breaths of this Bill, take that logic further and remove the sunset clause, which limits capping to 10 years? That at least would ameliorate what Ofgem has tried to do in the past year. It would be greatly welcomed and would be a positive signal to renewables rather than a negative one.
        Ms Hewitt: My right hon. Friend has played a sterling role in supporting renewables both in his role as a Minister and now in his present position. As he rightly says, we recognise the need to make a further change in the legislative framework. That is why we have taken the power in this Bill to cap transmission charges for remote renewable generators. We did so under the European renewables directive.
        My right hon. Friend raised the issue of the 10-year sunset clause on this provision. I should stress that the clock will start to run only when we start to use the power. It is our judgment that 10 years will be adequate for any remote renew able generators to benefit because transmission charges are only one cost to the generator. We believe that, as the renewables industry becomes established, the costs will decline. We have seen that happen with onshore wind farms and we will see it happen with offshore wind farms. If 10 years proves inadequate and there is a need to address the matter again, that can he tackled by the Government of the day.
        Mr. Wilson: There is not much dividing us here, but this is so important Ten years is not enough of a signal to investors in major projects in many parts of the country where renewable resources are greatest. It would be a relatively modest change for my right hon. Friend to give herself the flexibility to vary the terms of the sunset clause rat her than putting 10 years in the Bill. If she had that flexibility, someone—
        Madam Deputy Speaker: Order. I really do think that the right hon. Gentleman's intervention is rather lengthy.
        Ms Hewitt: I understand well the point that my right hon. Friend makes. We have discussed it on a number of occasions. The important thing is to recognise that the power that we have taken in the Bill for a 10-year cap on the transmission charge, if that proves necessary, comes on top of the extensive support that we are giving to the renewables sector through the renewables obligation, which will amount by the end of the decade to some £1 billion a year of support as well as the £350 million programme of capital grants and R and D support to which I have already referred. I do not think that our enthusiasm for the renewables sector can be challenged in any way. We are certainly putting our money, or the taxpayer's money, where our mouth is.
        Mr. Calum MacDonald: I accept the point that my right hon. Friend makes. The incentives are equally available to all developments throughout the United Kingdom, but there is a particular problem with the peripheral areas such as my constituency, which will be meeting these high charges. The point needs to be made that it is a question of encouraging banks and other institutions to provide lending for well over a 10-year period. Therefore, the sunset provision creates a danger that banks will be put off investing in those areas of Scotland where the resources are at their very best and the economic impact is potentially the greatest.
        Ms Hewitt: I absolutely understand my hon. Friend's concern. He has been assiduous in promoting the possibilities for renewable technology, especially in his constituency. It is precisely the argument that he and my right hon. Friend the Member for Cunninghame, North (Mr. Wilson) have made that has persuaded us to take the new capping power in the Bill. It applies only to the remote peripheral areas. We have discussed that carefully with the sector, and my judgment and that of my colleagues is that, on top of the already extensive incentives and grants, a 10-year capping power— with

        1369
        the possibility of further extension if necessary—will do what is required to encourage the development of the industry in my hon. Friend's constituency and in other parts of Scotland. However, other issues arise, especially in connection with the planning regime. I had the opportunity to discuss those issues in Edinburgh yesterday with the First Minister. I know that he and my right hon. Friend the Deputy Prime Minister will continue to play their part in ensuring that the planning regime is favourable towards the development of renewables, because it can be another barrier to the full realisation of that sector's potential.
        We seek to create an entirely new energy sector that will provide the cleaner, greener energy that consumers undoubtedly want and help to give our country and our economy the diversity that we need to ensure security in energy supply. This is a market-led solution, but with Government intervention to ensure that the market develops. It is working. We see Centrica planning to invest £750 million in renewables. RWE Innogy ION has attracted £400 million of investment from the City for its renewable energy projects. The City is showing its confidence in the sector, and that is good news.
        Mr. Bob Blizzard: One of the problems that the renewables sector faces is the approach that the Opposition have adopted during the passage of the Bill. They have tried to set up one obstruction after another to the development of offshore renewable energy. They say that it is intermittent and expensive, and they seem to want to give a power of veto to one sort of pleasure boat on the establishment of wind farms. We have seen this before— the Opposition say that they support renewable energy, but not offshore wind generation.
        Ms Hewitt: My hon. Friend makes his point with great force—
        Mrs. Gwyneth Dunwoody: May I just point out that far from referring to one pleasure boat when we talk about wind farms in shipping lanes, we are talking a Knit major shipping lanes around the UK that are an extremely important part of our economic development?
        Ms Hewitt: My hon. Friend makes an important point. We have looked very carefully at the report from her Select Committee and we will respond to it. Indeed, we have had a valuable debate on it. We took all such interests into account when we originally designated offshore areas as potential sites for offshore wind farms, including shipping interests; radar and other defence interests; and environmental concerns, including nesting of particular species of birds. All of those partners have been carefully involved in our plan; for developing the sector and I do not minimise the difficulties.
        I shall be interested to see where the Opposition end up on the issue. Will they support the development of renewable power that will make a hugely important contribution to our energy supplies in future, or will they line up with those who think that the future lies only in nuclear energy?
        Mr. Salmond: The Secretary of State appears to agree with the hon. Members for Waveney (Mr. Blizzard) and
        1370
        for Crewe and Nantwich (Mrs. Dunwoody), but they argued diametrically opposed positions. Genuinely offshore wind power might be the answer that reconciles those positions, but under the Secretary of State's sunset clause it will become impossible to make the necessary billion pound investments, such as in the Beatrice field in the Moray firth. Scottish generators were promised a better arrangement that would reduce connection and interconnector charges. However, the Secretary of State's proposals, which Ofgem helped to draw up, could actually result in generators in the north of Scotland paying more under the new system. How can that be fair, equitable or just and how will it help renewables and other forms of generation?
        Ms Hewitt: That matter was dealt with pretty extensively at earlier stages of the Bill and is one for Ofgem to decide. It is examining the issue extremely carefully with both the National Grid Company and the industry and I have no doubt that they will make the right decision and that we shall get the infrastructure as well as the generation investment that we need.
        Finally on renewables, I remind the House that last December my hon. Friend the Minister for Energy, E-Commerce and Postal Services announced measures to increase the obligation to 15.4 per cent. by 2015–16 and to continue that level of support until 2027, providing exactly the long-term framework that is needed.
        There has been much debate on the future of nuclear energy. There is no change to our policy and I echo the comments of my right hon. Friend the Prime Minister when he appeared before the Liaison Committee last week. Although he acknowledged the carbon-free benefits of nuclear power, he emphasised the point that the public still need to be persuaded both of its safety and its economic viability.
        The plants that currently provide a rather important share of our total electricity are coming to the end of their life, building new stations is economically unattractive at present and we have yet to resolve serious issues relating to the disposal of nuclear waste. Alongside those issues, the Government have always recognised the importance of supporting the social and economic development of west Cumbria, which is so dependent on our nuclear industry and the skills of our excellent work force.
        Tony Cunningham: I thank my right hon. Friend for restating the Government's commitment to the economic and social development of west Cumbria, and also for establishing the West Cumbria strategic forum. It is important that the forum meets quickly, so can my right hon. Friend tell us when it will meet for the first time? Will local groups and local partners be involved, especially the local councils—Cumbria, Copeland and Allerdale? Their involvement will be vital to the success of the proposals.
        Ms Hewitt: I am grateful to my hon. Friend not only for making that point but also for his work supporting the establishment of the West Cumbria strategic forum. It will indeed involve not only Whitehall Departments with a direct interest in west Cumbria, but also regional partners, including of course the Northwest Development Agency, and local partners, especially the local authorities of Cumbria, Copeland and Allerdale,

        1371
        as well as local community groups. Obviously, the nuclear decommissioning authority will also be represented.
        I confirm that I shall be chairing the first meeting of the forum and that it will take place in early October. It will bring national focus and energy to bear on the long-term strategic issues that west Cumbria faces. We remain completely committed to supporting the Northwest Development Agency and its delivery bodies as the prime regeneration agency for the area.
        Once the nuclear decommissioning authority is up and running, it will provide long-term strategic direction for the clean-up of our civil nuclear sites and will have responsibility for safety, security, environmental protection and value for money. It is the major achievement of the Bill and we all, on both sides of the House, want to see the NDA established by April next year, and the new electricity trading arrangements for Great Britain implemented in the same time frame.
        In conclusion, I repeat my thanks to hon. Members from all parties for the constructive and positive approach they have taken to the scrutiny of the Bill. I have no doubt that we have a better Bill as a result of that scrutiny, building on the pre-legislative scrutiny that began in January 2003. Our improvements to the Bill will enable the NDA to engage in environmental schemes in local communities and we have set out in much more detail the scope of the annual reports required under the Sustainable Energy Act 2003. We have built in flexibility to deal with the effect of transmission charges on remote renewables generators—the problem we have just been discussing. We have given Ofgem a statutory duty to have regard to the principles of best regulatory practice. We have given more flexibility to customers on pre-payment meters to vary the terms of their supply agreements.
        The Bill is an extremely important part of achieving those big energy goals that we set ourselves in the energy White Paper. I am grateful to all hon. Members for the consideration that they have given to the Bill, and I commend it to the House.
        6.35 pm
        Mr. Stephen O'Brien: I welcome this Third Reading debate. The substantial elements of the Bill have our support, not least because of the extent to which it was revised and improved by the Opposition teams in the other place, where it was introduced and subjected to rigorous and expert scrutiny under the leadership of my noble Friend Baroness Miller of Hendon, and during debates here in Committee and on Report, which were expertly and responsibly conducted by my hon. Friend the Member for Tewkesbury (Mr. Robertson). Not for the last time this evening, I record my enormous gratitude to them for their positive contribution, and, indeed, to all members of the Standing Committee, particularly those of the official Opposition, who made important, cogent and expert contributions then and today. I pay tribute to the unfailing courtesy of the Minister for Energy, E-Commerce and Postal Services, who was responsible for steering the Bill through the House.
        The principal effect of the Bill will be to extend to Scotland the electricity trading arrangements for England and Wales, by replacing NETA with BETTA, and to establish a structure to safeguard and manage the clean-up of Britain's nuclear legacy. by establishing the nuclear decommissioning authority and a civil nuclear constabulary.
        The Bill follows the 2003 White Paper, "Our Energy Future: Creating a Low Carbon Economy", which sets out the four goals of the Government's energy policy: to put ourselves on a pith to cut the UK's carbon dioxide emissions by 60 per cent. by 2050; to maintain reliability of energy supplies; to promote competitive markets in the UK and beyond; and to ensure that every home is adequately and affordably heated. Measured against the Government's criteria, which I have just recited, no doubt, to their pleasure, the Bill substantively deals with only one of the four declared policy goals: the promotion of competitive markets.
        Given that energy Bills are a relative rarity, the Government must concede that the Bill represents something of a missed opportunity, particularly in the context of the urgent need to address the challenge of climate change without jeopardising long-term access for the UK to safe, reliable and affordable energy supplies. That is not to say that none of the measures in the Bill is constructive. Many such measures were inserted at the Opposition's behest. Among the new clauses added to the Bill since Second Reading, I particularly welcome new clause 5, which secures the Government's concession to a commitment to make an annual report to Parliament on the availability of short-term and long-term energy supplies, to which I shall return in a moment, and which was secured only on the instance of and after protracted negotiations with the Opposition teams in both Houses.
        I acknowledge the merit of introducing the renewable transport fuel obligation, although I note that the Secretary of State is merely awarding herself powers without specifically proposing to use them. Still on renewables, I welcome the amendment to clause 100 on duties in relation to navigation that prevent installations of offshore wind turbines in areas where they would interfere with international shipping lanes, although it is an inferior replacement to the similar amendment originally inserted in the other place under the authorship of Lord Jenkin, whose experience in energy matters is beyond dispute. I commend amendment (b) to Government amendment No. 5, which was agreed to during the last minute nod-through that we suffered in the guillotine on Report and successfully secured by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) to help to safeguard shipping.
        I am pleased that the Bill contains a clause on microgeneration, noting again that its presence in the Bill is another triumph for the Opposition. However, we must wait to study the details of the strategy before we know how serious the Government are about promoting it. I welcome the fact that the Government have agreed that copies of the nuclear decommissioning funding account should be laid before Parliament, and I pay tribute to my colleagues, particularly my hon. Friend the Member for Tewkesbury, for securing its inclusion.
        Notwithstanding those positive improvements and additions, the Government's reluctance to address the wider policy goals that they identified in the White Paper

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        has been an enduring theme during the Bill's passage through the other place and then on Second Reading, in Committee and on Report. The most notable instance of the Government's aversion was seen during the flurry that followed the insertion of the so-called security of supply amendment by Opposition Members in the other place, which tried to formalise in statute the Secretary of State's responsibility for setting a framework that would enable markets to deliver energy supplies over the medium and long term. Ministers opposed that suggestion by claiming that such a clause would usher in re-nationalisation of the industry. I made it crystal clear on Second Reading that the Conservative Government liberalised energy markets in the teeth of blind opposition from the Labour party of the day, and Conservatives do not have an ounce of nationalising blood in them, unlike several Labour Members. In the same breath, the Government went on to argue that the provision would be unnecessary, and thus flawed, because it simply restated a clearly recognised reality. The logic of those claims was cancelled out when the Government made them simultaneously, but the individual claims do not stand up to close inspection either, especially when examined in conjunction with the Government's response to a similar provision in the constitutional treaty to which they, if not the energy industry, British business or the British public, are keep to sign up. Article III-157 of the constitution states that for the first time the Commission will henceforth take charge of policy to
        "ensure security of energy supply in the Union".
        I note that the United Kingdom Offshore Operators Association called on the Government in October 2003—forlornly in the end—to make conceding that co-competence a red-line issue.
        The Minister for Energy, E-Commerce and Postal Services told the European Scrutiny Committee on 2 December 2003 that
        "the fact that there is an Energy Chapter"
        in the constitution
        "in itself is something that we are happy with."
        He may be happy that energy policy will be a co-competence between the democratically elected UK Secretary of State and the unelected EU Commission, but he has not explained during the passage of the Bill—or at any other time—the effect that that will have on Ofgem's present duties to regulate the UK energy market or the Secretary of State's duty to negotiate bilateral treaties with non-EU Governments on, for example, the building of gas pipelines, let alone the possible powers of the Commission to intervene in our domestic energy markets.
        While I am on the subject of the European Union, will the Secretary of State give us a categorical assurance in relation to the Bill that the nuclear decommissioning authority will not run into difficulties with the competition commissioner? Is she entirely satisfied that the Bill is in line with EU rules on state aid? If she does
        1374
        not want to intervene on that point now, will she consider the matter and write to me, placing a copy of the letter in the Library of the House?
        Mr. Blizzard: Will the hon. Gentleman give way?
        Mr. O'Brien: Very briefly, because the hon. Gentleman has already had a go—it did not work then.
        Mr. Blizzard: As chair of the all-party group on the offshore oil and gas industry, I have had several discussions with that industry. Everyone in the industry has told me that they are more than happy with the wording of the new energy chapter, which was negotiated by the Government. Indeed, I have received letters setting that out precisely. The industry is not unhappy with the new wording of the energy chapter.
        Mr. O'Brien: I am grateful to the hon. Gentleman for telling me what he has heard, but I have naturally held my own consultations on the matter, as he would expect, and we are receiving representations of a different character. The interpretation of what the Government have agreed—I am glad to say that it has not yet been agreed by the British people—has yet to be determined, so we must wait to see what happens. I suspect that the record will show that the argument was not as clear cut as the hon. Gentleman hopes, against all expectations.
        The fact that there is an energy chapter in the European constitution makes an annual report on the availability of supply of electricity and gas in the UK all the more vital. Again, I pay enormous tribute to the work of my colleagues in the other place, especially my noble Friends Baroness Miller of Hendon, Earl Attlee and Lord Jenkin of Roding, and Members of this House, not least my hon. Friend the Member for Tewkesbury, who deserves special recognition, for using their patient negotiating skills to secure the commitment to that annual report. They also secured numerous other key amendments that I shall not have time to cover, which have improved the Bill immeasurably.
        I must put it on the record that we have experienced the Government's habitual practice of tabling important and serious amendments on Report at the last minute, despite the fact that many could, and should, have been tabled much earlier in the process to allow full scrutiny. Additionally, they have yet again imposed a deliberately mean timetable on the House, which has meant that important groups of amendments, especially those tabled by the minority nationalist parties, have been excluded from debate, although their consideration would have formed an important part of the Bill's passage. The annual report does more than any other aspect of the Bill to put pressure on the Government to pay due regard to their role in setting the medium to long-term framework through which markets remain able and are further enabled to deliver security of supply.
        That is important, because the Government's record in that respect is suspect. On their watch, normal operative standby has fallen sufficiently low to provoke concerns among academics and industry experts, as well as in a recent report from the other place. They have refused to rule out the possibility of blackouts as soon as this winter. Our nuclear reactors are mothballing, to the

        1375
        extent that they will contribute just 2 per cent. of our energy supply in less than two decades. The contribution of renewables to the energy mix has remained disappointing, at 2 to 3 per cent. since 1997.
        With every passing day, the hole in the nation's energy mix looms closer—it is debated whether there is a low or high probability—and every day, the Government's response is to set an ambitious or stringent new target. Two headline examples from last year's White Paper are the commitment to cut carbon emissions by 60 per cent. by 2050 and the pledge that renewables will contribute 20 per cent. of our energy supply—at least, that is now the aspirational target—
        by 2020.
        The Government also want to achieve at least 10,000 MW of installed, good-quality combined heat and power capacity by 2010, despite the fact that they have opposed an Opposition clause tabled in another place, which my colleagues have sought to influence them to reinsert, that sought to exempt CHP when determining the electricity from a supplier that is subject to the renewables obligation. The Government have a poor record in encouraging the CHP industry to invest. Striking that clause from the Bill will do little to encourage investor confidence, and still less to help the Government reach their CHP target for 2010, which it is currently estimated they will miss by 20 per cent.
        Needless to say, the Government are on target to miss their targets, but given their record, they are also on target to move their targets— downwards only, of course. Meanwhile, the energy intensive users group has recently calculated that electricity prices will be pushed up 40 per cent. by 2010 because of the EU carbon emissions trading scheme. We are also set to become net importers of gas for the first time. That is not inherently a concern, but we may be relying at times on supplies from unstable or distant parts of the world.
        We are still waiting for legislation that will produce a strategy for moving towards a low-cost, low-carbon, balanced mix of energy supply. That is the big elephant in the Chamber that the Bill does not seriously address. Indeed, members of the public with an interest in energy matters, of whom there are now many more than there were a few years ago, may read the Bill and wonder why it has so little to say about the topics driving public concerns about energy supply.
        For example, since Second Reading, important contributions have been made by a range of parties, including Lord Browne of Madingley, Professor James Lovelock, the originator of the Gaia theory, and even, in the past few days, as the Secretary of State mentioned, the Prime Minister himself. Those contributions have, at the very least, sought to highlight the challenge of climate change and the range of options for supply in the future, not excluding the need for a debate about new nuclear build.
        As the Prime Minister put it, nuclear power must be on the agenda
        "if you are serious about climate change."
        That reflected the statement by Professor Lovelock, which has set a tough challenge for those who regard themselves as seeking exclusively to push green credentials. Why, then, is the issue not on the Prime
        1376
        Minister's agenda? Why were the only references to keeping open the option of new nuclear build contained in amendments tabled by the Conservative party but struck out by the Labour Government? Why did last year's White Paper. which the Prime Minister described as a "milestone" in energy policy, make only a passing reference to keeping the nuclear option open?
        As I confirmed on Second Reading, my party and I are happy with that approach. For the avoidance of doubt, and given that the Minister for Energy, E-Commerce and Postal Services kept suggesting that we did not have a policy, I point out that the Leader of the Opposition has said on the record, and in terms, that nuclear energy will be a vital part of future energy and electricity supply.
        Mr. Timms: On Second Reading, the hon. Gentleman said that his party was neither for nor against nuclear power. Does that remain the position, or has it changed since Second Reading?
        Mr. O'Brien: I would have thought that the Minister, who usually has a good memory, would recall my words. I not only said that I had an open mind, but put it on the record that the Opposition, too, were completely happy with the idea that the nuclear option should be kept open℄something that the Government have been saying. As has been mentioned, we have given an assurance that nuclear energy will be a vital part of energy policy under a future Conservative Government. That is a lot clearer than what we have heard from the Government.
        We are keeping the nuclear option open while our present facilities are run down and the number of qualified nuclear scientists in the UK diminishes. I pay tribute to the former Energy Minister, the right hon. Member for Cunninghame, North (Mr. Wilson), for his speech, which I was able to catch on the monitor. He said that we must ensure that we do not lose our capacity for new nuclear build through the flight of the necessary engineers and scientists whom this country has developed and retained in the past, thereby gaining competitive advantage. That significant point gave reality to the idea of keeping the nuclear option open. Last but not least, why did the Secretary of State for Environment, Food and Rural Affairs tell us to
        "come back in another generation"
        if, in the national interest, we need to debate new nuclear power generation?
        Neither the public debate nor today's debate have focused only on nuclear energy—far from it. A series of prominent figures, including the environmentalist, Sir David Bellamy, and the editor of The Ecologist, Zac Goldsmith, have expressed concern about wind turbines on environmental and aesthetic grounds. At the same time, Jorgen Abilgaard. director of Econ, which acts as consultant on wind and renewable energy for the Danish Government—Denmark's proportion of wind power is the highest anywhere in the EU—says of wind power that
        "it is not a long-term solution to any of the problems of climate change".
        It is alarming that the White Paper and, to a lesser extent, the Bill, choose to focus so exclusively on wind power as the long-term replacement for carbon-based

        1377
        fuels. Clearly, wind has an important role to play in meeting the UK's renewable energy targets, but in the face of growing public opposition, Ministers are deluding themselves if they believe that it is the unique solution to making the transition to a low-carbon economy.
        We might have had the chance to explore some of these issues had the Liberal Democrats not called a rather unnecessary Division just before the end of Report, perhaps to avoid the exploration of their own embarrassment over wind turbines, which they seem to favour, because they are renewables, so long as they are not in Liberal Democrat-held constituencies. Wind turbines are unsightly to growing numbers of the public, and their power generation is worryingly intermittent. They are also uneconomic, as is reflected by clause 177 on the adjustment of transmission charges.
        Mr. Alex Salmond: On a point of order, Mr. Speaker. In terms of the rules and Orders of the House, is any protection offered to Scottish Members who have waited to debate vital Scottish matters, such as the biased use of system charges and the question of renewables for the north of Scotland, only to find that the Government's contemptuous use and abuse of procedures and unwillingness even to listen to debate on these matters leave us in a position whereby they are not being aired, let alone voted on? Is that an argument for removing them to the power of a Parliament that might find the time to debate them?
        Mr. Speaker: That is not matter for the Chair. I would say to the hon. Gentleman that it is not a matter of calling Scottish Members, but of calling Members of the United Kingdom Parliament. I am bound by the rules that the House has given me, and those rules say that these proceedings stop at 7 o'clock. I have no powers to stop any hon. Gentleman, although I do say, while I am on my feet, that Front Benchers should bear in mind that there are Back Benchers in this House of Commons.
        Mr. O'Brien: I am grateful, Mr. Speaker. I am sympathetic to the position of the hon. Member for Banff and Buchan (Mr. Salmond), but I note that I have not taken nearly as long as the Secretary of State, and these points need to be debated on equal terms.
        I am not convinced that the Government have made much effort to inform consumers of the financial cost of wind power that is designed to be passed on to them. I commend the amendments tabled by Lord Jenkin of Roding in the other place—sadly, they were ultimately unsuccessful—because they would have required greater transparency and public consultation.
        The Government need to be aware that they are giving the impression that their energy policy is getting lost in internal disputes. The message from the Minister to wind power companies is to "go out and build", while Professor Howard Dalton, chief' scientist at the Department of Environment, Food and Rural Affairs, says:
        "Wind power can make a contribution but do we really want windmills all over the countryside and covering swathes of the ocean? I don't think so."
        1378
        He goes on to describe them as an "eyesore".
        The Prime Minister tells us that he has "fought long and hard" with his party
        "to make sure that the nuclear option is not closed off".
        He said that only the other day. However, I fear that the content of last year's White Paper and this Bill suggest that the Secretary of State for Environment, Food and Rural Affairs must have fought even longer and harder.
        We support the provisions to promote more competitive markets. We support the nuclear decommissioning authority and the new Government commitment to prepare an annual report on availability and security of supply with an accompanying debate on the Floor of House, as the Minister for Energy, E-Commerce and Postal Services previously promised and confirmed today. We shall hold the Government to that, and we look forward to the debate, subject to the receptiveness of the Leader of the House to granting it in Government time each year.
        Mr. Key: Will my hon. Friend confirm that we also support the civil nuclear constabulary? It was most unfortunate that chapter 3 received so little attention in Committee and that we have not had the opportunity to debate it this afternoon. It is extraordinary that the jurisdiction of the civil nuclear constabulary will be reduced. It will be less able to look after our nuclear industry in future than in the past.
        Mr. O'Brien: My hon. Friend makes an important point. We welcome the new civil nuclear constabulary. I pay tribute to the shadow Minister for Homeland Security, who has assisted greatly in providing advice, as well as to my hon. Friend the Member for Salisbury (Mr. Key), who brought his expertise to the debate. It is regrettable that we could not explore some of the issues in greater depth.
        The Government have alighted on the right questions in their White Paper. However, Ministers are clearly at loggerheads over the solutions to reducing carbon dioxide emissions while ensuring the reliability and affordability of energy supplies. We do not fundamentally object to the Bill. We broadly support its contents, as far as they go. However, we do not pretend that it papers over the fault lines or, indeed, the movement of plates in the Government's uncertainty and indecision about the way in which to execute their clearly stated broader energy policy goals.
        6.56 pm
        Mr. MacDonald: Given that we are running against the clock, I shall try to be as brief as possible. Although the Bill has huge merits and I was proud to serve on the Committee that considered it, a question remains at the heart of clause 177. We debated it in Committee, but we did not emerge from the debate much the wiser about the reason for the need for a sunset clause. The worries expressed in Committee have become more serious in subsequent weeks. For example, Scottish and Southern Energy representatives have approached me to say that they believed that their discussions with Ofgem and the national grid were heading towards a reasonable conclusion, but they are now going backwards. They are worried about the viability of investment in renewables in the north of Scotland.
        Such worries are even greater for communities that have decided to venture into renewables. Several communities in Scotland are developing community-owned operations, which will maximise the benefit to the local community as well as contributing to the national need. They are especially dependent on longterm financial backing. Such finance will be much harder to get with the 10-year horizon, beyond which lies uncertainty about the user charges that affect those companies.
        I want to make two requests of the Secretary of State and the Minister. First, will they urge Ofgem to accept the need for a fair, reasonable and stable set of charges that will allow renewables to develop even in the most peripheral parts of the north of Scotland? The issue should be resolved as quickly as possible to provide some certainty to the industry.
        My second request is whether the Secretary of State and the Minister would be willing to meet a delegation from not only my constituency but from Orkney and Shetland, and to discuss the matter with the hon. Member for Orkney and Shetland (Mr. Carmichael) and me. A delegation from the island communities would be especially useful, given the vast resources in those communities and the fact that they will be most affected by the uncertainty that remains at the heart of clause 177.
        6.59 pm
        Mr. Stunell: We support the Bill. It has more vision and ambition than it originally possessed, and I am delighted that the Lords have managed to impose on it security of supply, the renewables transport fuel obligation and microgeneration requirements, which the Government had omitted. Plenty more could and should be done, and we shall come back to the Government time and again to ask for an ambitious energy policy, an implementation plan that works and a long-term vision.
        Question put and agreed to.
        Bill accordingly read the Third time, and passed, with amendments.

      DELEGATED LEGISLATION
      Queen's recommendation having been signified—
      Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation) and Order of 22 June,

      ELECTORAL COMMISSION
      That, with effect from 1st April 2004, the Resolution of the House of 26th March 2001 making provision with respect to the remuneration and expenses of any Electoral Commissioner other than the Chairman of the Electoral Commission ("a relevant Commissioner") be amended by substituting, for paragraph (1) of that Resolution, the following:
      "(1) In respect of remuneration a relevant Commissioner shall be paid for each day he performs functions as such ("a relevant day"):

      (a) £275 for a relevant day up to 31st March 2004;

      (b) £313 for a relevant day from 1st April 2004 up to 31st March 2005; and

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      (c) For a relevant day in any year starting with 1 April thereafter, the sum payable in accordance with the provisions of this resolution in respect of a relevant day in the immediately preceding year, increased by the percentage by which the salary of a High Court judge having effect on that 1st April has increased compared to that having effect on the previous 1st April.".—[Paul Clark.]

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

      ATOMIC ENERGY AND RADIOACTIVE SUBSTANCES
      That the draft Uranium Enrichment Technology (Prohibition on Disclosure) Regulations 2004, which were laid before this House on 1st July, be aoproved.—[Paul Clark.]
      CONTRACTING OUT
      That the draft Contracting Out (Functions relating to Broadcast Advertising) and Specification of Relevant Functions Order 2004. which was laid before this House on 10th June be approved.—[Paul Clark.]

      NORTHERN IRELAND
      That the draft Northern Ireland Act 1998 (Designation of Public Authorities) Order 2004, which was laid before this House on 10th June, be approved.—[Paul Clark.]
      Question agreed to.
      Motion made, and Question put forthwith, pursuant to Standing Order No. 115(3)(Northern Ireland Grand Committee (delegated legislation)),

      NORTHERN IRELAND
      That the draft Budget (No. 2) (Northern Ireland) Order 2004, which was laid before his House on 8th June, be approved.—[Paul Clark.]
      Question agreed to.

      PETITIONS

        Post Office Closures
        7 pm
        Mr. Andrew Rosindell: I rise to speak this evening not only as the Member of Parliament for Romford but as a local resident of the Rise Park community in my constituency. The residents of that community are appalled at the prospect of the local post office being closed. Hon. Members will be aware that a review of local post offices is taking place across the country, but people in the Rise Park community are particularly concerned that their post office will be one of those that is likely to be closed.
        During the past few months, local residents have campaigned to save their local post offices, particularly the Rise Park post office that I have mentioned. I shall present to the House this evening a very large petition, containing no fewer than 1,519 signatures from the residents not only of Rise Park but of the Marshalls Park, Gidea Park and Collier Row communities in the Romford constituency. Signatures have been collected by local residents, by members of the Havering Road Methodist church in Rise Park, by parents from the Rise Park junior and infants schools, by local shopkeepers and by many other concerned local people. The petition

        1381
        is also supported by the local councillors for the Pettits ward, Councillors Joe Webster, Alby Tebbutt and Ray Morgon. The petition reads as follows:
        The people of the Rise Park area of Romford declare that the Rise Park Post Office is threatened with closure by Post Office Ltd. The Petitioners therefore request that the House of Commons does all in its power to keep the Rise Park Post Office open.
        And the Petitioners remain, etc.
        To lie upon the Table.
        Mr. Rosindell: I rise to present a second petition. It is yet another petition relating to the prospect of the closure of local post offices in my constituency. This petition has been signed by no fewer than 1,166 local residents from the Ardleigh Green area of Romford, which comes under the Hornchurch postal district but is very much within the Romford constituency. Ardleigh Green is a small community containing many elderly residents who depend heavily on the services provided by the Ardleigh Green post office, and on the services of all the local shops that would be badly affected if the post office were allowed to close.
        This petition is the result of a campaign that was launched by local residents in January, and it has received support from people across the communities of Ardleigh Green, Gidea Park, Nelmes, and the County Park area of my constituency. It has received particular support from members of the All Saints church, Squirrels Heath, and from many patents of the Ardleigh Green infants and junior schools. The petition is also strongly supported by the local councillors for the Squirrels Heath ward, Councillors Michael White, Eric Munday and Eddie Cahill. The petit ion reads as follows:
        The Petition of the people of the Ardleigh Green area of Romford declares that Ardleigh Green Post Office is threatened with closure by Post Office Ltd. The Petitioners therefore request that the House of Commons does all in its power to keep the Ardleigh Green Post Office open.
        And the Petitioners remain, etc.
        To lie upon the Table.

      Planning (Fareham)
      7.5 pm
      Mr. Mark Hoban: The petition that I shall present is from more than 1 400 residents of the borough of Fareham.
      The petition states:
      The petition of residents of Fareham, in Hampshire, declares
      That local people and their councillors should be given a much greater role in decisions about how many homes should be built in their area and where those homes should be built.
      That the views of local people should carry much greater weight than those of the Deputy Prime Minister.
      That decisions on planning should be taken in line with local plans and local development frame works and should not be overridden either by unelected regional bodies or the Office of the Deputy Prime Minister.
      The Petitioners therefore request that the House of Commons amend the law relating to planning so as to increase the role of local authorities and local residents in implementing housing policy
      And your Petitioners remain, etc.
      To lie upon the Table.

      Carbon Capture and Storage
      Motion made, and Question proposed, That this House do now adjourn.—[Derek Twigg.]
      7.6 pm
      Mr. Bob Blizzard: I am particularly pleased to have secured this debate on a day on which we have been considering the Energy Bill, as I believe that the topic, carbon capture and storage, holds the key to one of the most important issues underlying debates on the Bill throughout its stages.
      Most people accept that one of the greatest problems that we all face on the planet is that we are producing too much carbon dioxide, and that we must tackle it. The simple solution is to reduce massively the amount of CO2 that we create, but it is easier said than done, given our patterns of life and our dependency on certain technologies that create CO2. Therefore whatever one's political stance, it is unlikely to be achieved quickly. Without downplaying the need to avoid creating CO2 emissions in the first place, we also need to consider dealing with the CO2 that is emitted. I am talking about capturing the CO2 from both coal and gas-fired power stations, and other major industrial sources, and storing it deep underground.
      Will it work? We already know that we can store CO2 deep underground for 10,000 years or longer, in depleted oil and gas reservoirs in the North sea and all over the world, which held the materials that we have extracted, naturally and securely, for millions of years. That is already happening at Weyburn in Canada. But further immeasurably massive capacity exists to store CO2 in the saline aquifers deep beneath the sea bed. That is already happening in the Sleipnir gas field in the Norwegian sector of the North sea. It complies with the OSPAR regulations, and there have been no leaks.
      That process is also being piloted in Texas where, for example, it is thought that the Frio geological formation could store between 200 and 350 billion tonnes of CO2 —30 years worth of the 7 billion tonnes that we create through human activity each year. Scientists there expect that the CO2 plume might spread a few hundred metres over tens of thousands of years, but do not see any risk of a large and dangerous escape from naturally sealed reservoirs. Let me emphasise that I am not talking about just dumping CO2 in the deep ocean, as was once suggested.
      Carbon capture and storage is safe, but do the public think it safe? The Tyndall centre for climate change research in Manchester carried out a survey and found, first, that nobody had ever heard of CCS, but when it was explained, although most people said that they would rather see a move to renewable energy and improved energy efficiency, they thought that it could solve a problem in the next few decades as part of the solution, and they preferred it to nuclear power. CCS could provide a bridge for the CO2 emissions problem to 2050 and probably well beyond, but there is clearly much more applied research and development to be done before CCS becomes a fully commercial solution.
      My hon. Friend the Minister for Energy, E-Commerce and Postal Services, in answer to my oral question last week, said that it is difficult to envisage CCS becoming viable before 2020. But his Department's

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      report, "Review of the Feasibility of Carbon Dioxide Capture and Storage in the UK", which was published in September last year, said:
      "earlier deployment could occur to tie in with the pattern of electricity plant replacement. In addition CCS in combination with Enhanced Oil Recovery"
      —about which I shall speak shortly—
      "could be implemented from about 2010."
      But that will only happen—even the 2020 deployment will only happen—if the Government get fully behind CCS now. The lead-in times are necessarily and inevitably long, and the investment needs to be attracted.
      Why do we need to bother with this? A huge expansion in renewable energy generation and energy conservation is, rightly, the cornerstone of Government energy policy as set out in the White Paper. But there is still a big problem. A graph produced by the Department shows that even if we meet the difficult 20 per cent. renewables target and implement the White Paper's energy efficiency policies, according to the latest DTI energy predictions—published in May—the carbon dioxide emissions reduction target will go off track in 2010, and the 60 per cent. reduction sought by 2050 will not be achieved unless something else is done. There will still be a gap.
      As a short-term fix, we could close all the coal-fired power stations and substitute gas; but I think that many of my hon. Friends would be rather concerned if we did. There seem to me to be only two options: it is CCS, or a new generation of nuclear power stations. We may eventually need both, but for various reasons we must have more than just the nuclear option available. Because of the long lead-in times, we shall have to make a strategic decision fairly soon. The Prime Minister said that only last week, although he only mentioned the nuclear option. I want to demonstrate that there is another option, although CCS is not as well known as nuclear power and does not yet have established political and industrial support.
      In deciding how to fill the emissions reduction gap, we must look at the impact on energy policy and on other existing and planned energy sources. Let us consider renewables first. The Government recognise that if we invest in new nuclear power now, investment in renewables would be killed off. So the White Paper creates a window for renewables. If we have no other option, however, it could be quite a small window.
      Investment in nuclear power is incompatible with investment in renewables. Because of the huge capital cost, the start-up cost and the low operating costs, once the investment in nuclear power has been made it will keep renewables out for a long time. It is inflexible. No one will close a nuclear power station early once the investment has been made. Nor should we forget that the huge cost of nuclear clean-up has made it uneconomical. We know the costs to the taxpayer attached to that part of the Energy Bill which we have just passed: £48 billion. We need to keep the nuclear option open, but we must not proceed yet.
      There are some who fear that CCS will just prolong fossil fuel generation, to the detriment of the development of renewables. CCS is actually a bridge in
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      the long changeover to a low-carbon fuel economy, giving renewables more time to be nurtured rather than being snuffed out. It is flexible by virtue of its cost structure. We could abandon it in favour of more renewables if we wished.
      We also need to look at the implications for coal and gas. For reasons of reliability and security of supply, we will have to continue a balanced energy policy including fossil fuels—for some time, especially as we cannot be certain that we will achieve the 20 per cent. renewables target. It is equally vital that we comply with CO2 reduction commitments and future targets.
      I represent a coastal community which I do not want to disappear under the sea, but CCS squares the circle. We still have plenty of the gas that has given us cheap energy and enabled t is to meet our Kyoto commitments, although we will become a net importer in a few years' time. Most other countries are not in such a strong position on the percentage of indigenous gas used for power generation. Huge reserves of gas remain in the world—we will source piped gas from Norway and Russia and liquefied natural gas from all over the world. CCS enables us to use that gas and deal with CO2, emissions. I do not know much about coal, but CCS is probably its only long-term future.
      What about the cost of CCS? The costs are comparable to the published costs for most low-emission options that are not entirely straightforward, such as offshore wind, and they are estimated to be comparable with those of nuclear power—the difference is 1p per kilowatt-hour at most. The DTI report, which I mentioned earlier, said:
      "Current costs for CCS are estimated to add 1-2.3p/kWh to the cost of electricity",
      but costs can be brought down to 0.2 to 1p per kilowatt-hour. if CCS is combined with enhanced oil recovery. The injection of CO2 into depleted reservoirs can enable more oil and gas to be recovered and enhance the usable quality of the oil, extending the life of oil fields in the North sea, which would bring economic benefits such as jobs and tax revenues for public spending.
      Much of the infrastructure, such as pipelines, already exists and could be re-used, and we could avoid some of the environmental challenges associated with decommissioning. Again, there is only a certain window of five to 20 years in the time scale towards the depletion, abandonment and decommissioning of the oil and gas infrastructure in the North sea. We should not and must not miss the opportunity, but the market will not deliver FOR alone, and the Government must take a strong line on CCS to send out the right signals to the industry.
      We hear that hydrogen fuels are the fuels of the future, and fuel cell technology for transport must form part of the strategy for CO2 reduction, but where will the hydrogen come from? Fossil fuels are the most likely source, but CCS will be needed to deal with the CO2 produced in making the hydrogen.
      In conclusion, the DTI recognised the important role of CCS in the White Paper and its subsequent report. The technology will need to deliver and prove that it can deliver, but if we are to develop it further, we need a Government policy steer and some support. We must fill that emissions reduction gap, and CCS can deliver a three-way win.
      First, CCS offers a win on security of supply. It squares the fossil fuels that we will need to keep the lights on with the vital CO2 reduction targets. It could enable a more gradual transfer from self-sufficiency in oil and gas to imports, and we could derive valuable income internationally from the massive storage facility we have in the North sea. Secondly, CCS offers an environmental win. It reduce. CO2 emissions dramatically and provides time for renewables to develop unthreatened by a commitment to a long-term alternative. Thirdly, CCS offers a political win. It would be more acceptable to people than the sudden switch in lifestyle demanded by some of the more radical green alternatives to deal with CO2 and climate change, which mainstream political parties find it difficult to talk about, let alone implement. Have we really examined the political implications of authorising a new generation of nuclear power stations? CCS may be an easier choice, although we may need both.
      CCS could offer other wins, such as a big global win. It is a workable, near zero-emissions solution for fast growing energy users such as China and India, which seem unlikely to want to give up their enormous coal reserves in favour of renewables. Tile west alone cannot tackle global warming. We have the opportunity to develop, supply and sell the technology—if we take a lead and derive the economic benefit s of being a leader in such an industry. Australia, with its seemingly unlimited reserves of coal and gas, appears to be thinking this way too, and it is pursuing CCS. But to be a winner, we must act now and push ahead wish developing the technology. At the very least, we roust make the same commitment that is being made to keep the nuclear option open; I am not sure that we are doing so in terms of supporting development work for CCS.
      Just as the nuclear option needs to be kept open, so the CCS option needs to be opened; moreover, the CCS/ EOR option needs to be exercised in time. The Government should make sure that people have a range of low-emission generation options when those decisions have to be made in two to four years' time. It will be interesting to discover what choice people make.
      In answer to another of my oral questions, I was told that CCS is a medium-term solution. The world has a medium-term CO2 problem, and if we do not stabilise emissions by 2050, it will probably be too late to bother. Either we stop using fossil fuels, or we capture CO2 and store it. That is not a hard political decision to make.
      So I ask my hon. Friend the Minister to recognise the potential of CCS and the policy and political advantages that it has to offer. I am not asking for blind faith in a not fully proven technology, but I am asking him to put his weight behind it, so that it is given an opportunity. It would be terrible if it were the best idea ever that was never given a chance.
      7.21 pm
      The Minister for Energy, E-Commerce and Postal Services: I congratulate my hon. Friend the Member for Waveney (Mr. Blizzard) on securing this debate. He is an indefatigable campaigner on this topic, on which he secured an Adjournment debate in March, and as he said, he pressed me on it during Trade and Industry questions only last week. I am also grateful to him for his contribution to the
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      debate on the Energy Bill, to which we have just given a Third Reading. His work as chairman of the all-party group on the offshore oil and gas industry is of course highly appreciated by the industry.
      My hon. Friend works closely with the United Kingdom Offshore Operators Association, does a great deal of work on the issues facing the industry and puts a lot of effort into considering the offshore industry's long-term strategic opportunities. For example, he was active and vociferous—and from my point of view very helpful—on the question of offshore wind during consideration of the Energy Bill. He has also been an active campaigner for carbon capture and storage, which could also provide a big opportunity for the offshore industry.
      We are well aware of the opportunities that CCS could provide in achieving our energy White Paper target to reduce carbon emissions by 60 per cent. by 2050. We certainly have not lost sight of its potential and the contribution that it could make to sustainable and secure energy supplies. I agree with my hon. Friend about the urgent need to move decisively in that direction.
      We have investigated the feasibility of such technologies because we recognise their future potential and, more recently, we have undertaken two in-depth studies of CCS. The first investigated the feasibility of CCS as a means of disposing of the CO2 emitted by power generation that uses fossil fuels such as coal and natural gas. The second looked at the possibility of using CO2 to enhance the recovery of oil from our depleting oil fields, an idea to which my hon. Friend referred in particular. Both studies were undertaken in full consultation with the industry and others. We are building on that work and officials in my Department are developing a new carbon abatement technology strategy that will be of particular interest to him. It will begin to map out the work needed to help make these technologies commercially viable. Our aim is to publish the strategy at the turn of the year, but I hope that there will be an extensive public consultation beforehand to support it. We plan to publish the consultation document in the next few weeks to kick off the consultation.
      The new strategy will replace the existing cleaner coal technology programme. The fourth and final call for proposed projects under that programme was made in February. Presently, 10 projects have been shortlisted for further consideration. The last call moved the emphasis of research and development into CO2 reduction rather than the abatement of other emissions from coal-fired power generation. It is generally recognised that technologies to control emissions of acid gases—SOx and Nox—are now sufficiently developed that they no longer warrant Government support. A new carbon abatement technology research and development programme arising from the new strategy will focus specifically on CO2 capture and improving efficiencies from traditional generating technologies.
      We have started work on defining the new strategy in the context of the conclusion from the energy White Paper. As a first step, the industry-led advanced power generation technical forum has developed an industry view on what the new strategy should cover. A report from the consultancy, NERA, reviewing the old cleaner coal technology programme and making

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      recommendations for a new carbon abatement technology strategy was produced in June. Those and other reports, together with the public consultation, will provide the basis for the development of the new strategy. That will be significant for the aims that my hon. Friend has set out.
      From the work completed to date, our conclusion has been that, although carbon capture and storage technologies could well assist us in meeting our 2050 target, they are unlikely to be ready and commercially viable before 2020, so they can be deployed only in the longer term. My hon. Friend rightly referred to some of the caveats around that conclusion. His point was accurate, but it is the case that mainstream commercial viability is likely to be achievable in that time frame. As I set out in answering his oral question last week, there are a number of hurdles that need to be overcome before the technology can be brought successfully to market. Our judgment of the time scale is very much in line with the judgment made in other countries—in the USA, for example, where the dependence on coal is significantly greater and where work is already in hand to identify projects such as FutureGen that will take a considerable number of years to develop. As I pointed out last week, there is a substantial price tag.
      In discussing the barriers to carbon capture and storage, it is important to split the technologies into two distinct areas of capture and storage because each has a very different set of hurdles to overcome. First, on capture, the costs of the CO2 capture technologies have to be reduced so that they become commercially viable and competitive with other low carbon solutions. There is not only considerable R and D required beforehand to get those costs down, but we need to tackle the energy penalty in capturing the CO2 because the capture process alone takes up considerable additional energy. No one has yet demonstrated a fully integrated carbon capture and storage process, although the components have been used separately in a number of industrial applications. That is why the USA is planning to spend $1 billion over the next decade on the FutureGen project. We will follow it with great interest and work with the USA on some of the issues raised by it. In the meantime, there are other low to zero carbon technologies, such as renewable energy, wind power and offshore wind, which my hon. Friend has particularly championed, that will assist us in meeting our targets up to 2020.
      Secondly, there are the storage issues and we need to address the reliable and permanent storage of CO2. That is, when we store it underground, we have to be confident that it will stay there and will not leak back to the atmosphere. We are thinking along the same lines as my hon. Friend—that depleted oil and gas wells as well as saline aquifers beneath the North sea are likely to prove ideal repositories for CO2. The British Geological Survey has estimated that we could store the UK's current annual CO2 emissions for well over 100 years. That would certainly give us more than ample time to develop new, reliable, fossil-free power generation technologies. If that is to be an effective means of disposing of CO2, we must be certain that we can safely and reliably store it in those locations.
      There are a number of important issues arising from that requirement. On the legal side, we must make sure that we do not contravene the OSPAR and London conventions on dumping waste at sea. When the conventions were drawn up nobody was thinking of geologically storing CO2 beneath the seabed, so those conventions are net clear about the legality of that, although I noticed what my hon. Friend said about Norway in that respect. We will need to work with the international community to resolve that challenge, and that will take a link time.
      There are also opportunities for the UK from storing CO2. The European Union emissions trading scheme that comes into effect in January could contribute towards the cost of capture and storage and could also earn credits from storing the carbon emitted by other countries. If we want to make sure that we can gain those benefits by earning carbon credits, a reliable monitoring and verification system will need to be established.
      We must understand the risks around storage, the likelihood of leaks and the environmental impact on the ecosystem. Work to date by other countries—my hon. Friend mentioned two examples, Norway in the Sleipner gas field and Canada in the Weyburn oil field—indicates, as he said, that we can reliably store CO2, but more work will be needed before we can be entirely confident.
      A regulatory regime would need to be established to make sure of best practice and to cover the ownership and responsibility for stored carbon in the medium and the very long term. We should be aware that there would be some public concern about the wisdom of storing carbon beneath the ground and how secure that would be. We will have to be able to demonstrate that what we are doing is responsible and safe.
      None of those barriers is insurmountable, but there is a good deal of work still to be done to bring us to the point where the technologies could be deployed with confidence. If the difficulties can be overcome, it is my view and the Government's view that there are considerable gains to be had, as my hon. Friend pointed out.
      We recognise that much of our effort will be in collaboration with other countries—for example, with Norway on resolving the storage issues, with the USA under the US/UK memorandum of understanding on cleaner fossil fuel technologies and on developing capture technologies. and with EU member states on the proposed fossil energy coalition, which is preparing a case for support.
      What I have not mentioned so far, although it is important, is the potential for hydrogen production from these technologies. My hon. Friend raised the question of where the hydrogen will come from in future. It is generally considered that the first generation of hydrogen will come from fossil fuel, rather than from renewables. Using natural gas-fired power plant with carbon dioxide capture would enable hydrogen to be produced, which would have applications not only for electricity, but for transport and for fuel cells. That alone gives us a strong incentive to research and develop carbon capture and storage technologies for future exploitation.
      Our more recent report on the possibilities of using carbon dioxide for enhanced oil recovery was published in March. That work arose from the energy White Paper because we saw it as a possible first step to CO2, storage, utilising the infrastructure already in place, as my hon. Friend pointed out, with the added benefit of the extra oil recovered and the commercial gain from that. From a good deal of consultation with the major oil companies operating in the North sea, it was clear that at present they do not see the technology as viable, due to the significant gap that exists between the revenue received for the additional oil recovered and the extra costs of adapting installations. as well as the cost of CO2, capture.
      However, we are maintaining a watching brief on this matter. The situation might change and my hon. Friend will be familiar with the pilot initiative on brown fields, which addresses the technical and commercial barriers to the further development of mature fields.
      There has been some suggestion that we ought to be looking at a sustainable fossil fuel obligation comparable to the renewables obligation. I think that it is an interesting idea, although any such sustainable incentive would have policy, technical and financial implications that would require considerable study. A
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      mechanism, similar to the renewables obligation, that was designed to promote the sustainable use of fossil fuels in electricity generation would be much more complicated to implement than that for renewables. Fossil fuel power plants emit a variety of noxious gases—such as the acid gases sulphur dioxide and nitrous oxide, as well as carbon dioxide—with varying degrees of intensity. In contrast, renewable technologies are carbon-free, or carbon-neutral.
      I hope that I have been able to give my hon. Friend and the House some reassurance that the Government take carbon capture and storage very seriously as a way to make deep cuts in our emissions from 2020 onwards. We will be working on those and other matters in the new carbon abatement technology strategy that is being developed.
      I warmly welcome the great interest that my hon. Friend has shown in this matter and the way in which he has drawn the House's attention to it again in this evening's debate. I look forward to working with him and others on this very important topic.
      Question put and agreed to.
      Adjourned accordingly at twenty-four minutes to Eight o'clock.

Preamble
[MR. BILL O'BRIEN in the Chair]

NHS (Thames Valley)
Motion made, and Question proposed, That the sitting be now adjourned.—[Paul Clark.]
9.30 am
Mr. David Cameron: I am delighted to have the opportunity to open this debate on the national health service in the Thames valley. My remarks will focus mainly on my county of Oxfordshire, where the state of the national health service remains a huge concern to my constituents. I held a debate on the NHS in Oxfordshire more than two years ago in this Chamber, and rereading it today, the issues are depressingly familiar: the closure of cottage hospitals, problems at the John Radcliffe hospital, staff shortages and bed blocking. I am not going to make exactly the same speech again, but there will be similarities.
It would take a heart of stone not to repeat to the Minister the pledge that we heard so many times from Labour in 1997—"24 hours to save the NHS". In Oxfordshire and parts of the Thames valley, seven years on, it all sounds rather hollow. I shall put a genuine puzzle to the Minister this morning. There have been huge increases in spending on the national health service in Oxfordshire—no doubt the Minister will dazzle us with the statistics at the end of the debate—so the puzzle is why, with all the increased spending, the news flow about the NHS in Oxfordshire and the Thames valley is so bad.
Let us take a number of true stories from the past 18 months. They come from my postbag, my surgery, local newspapers and local doctors. The Witney minor injuries unit is to be shut in the evenings. Community beds are to be cut throughout the county, north and south. Ambulance stations are to close, including the two in my constituency, Witney and Chipping Norton. A new out-of-hours service is to be introduced, which will give less than the good service that we enjoy now. There are blocked beds, cancelled operations, financial problems and large deficits at the John Radcliffe, and substantial cuts are set to follow. As is the case across large swathes of the country, no NHS dentists take new patients except in emergencies.
If that sounds like a list of moans and groans, that is because it is. Those problems are all genuine and all inconvenient, and sometimes a lot worse, for my constituents. First I shall try to explain the three problems at the heart of the NHS economy and the health economy in Oxfordshire. I will then rewind and run through some of the individual problems that I have mentioned in more detail. I will finish with a few suggestions for the Minister on how to try to start to put the NHS economy in Oxfordshire back on track.
In the spirit of fairness, I should say that there is some good news—Thames Valley strategic health authority helpfully gave me a sheet entitled "Good News". Waiting times were 11 weeks on average at the end of
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2003–04, compared with 14 and a half weeks the previous year. Accident and emergency waiting times were dreadful in Oxfordshire; we no longer have people waiting more than 12 hours for admission—but no one should ever have to wait in accident and emergency for 12 hours. We no longer have many four-hour waits in A and E, but sometimes waits are still very long.
I have spent quite a lot of time in the John Radcliffe hospital over the past couple of years with my son, who is severely disabled. We have had some long waits in accident and emergency, but recently it has got better. The care that we have received at the John Radcliffe—normally on ward 4C, known as Smallpiece—has been superb. I pay tribute to the wonderful caring nurses who have looked after us, and the excellent doctors and consultants. We have had our problems trying to get discharged, particularly with the right set of drugs. When asked, I always say that the John Radcliffe is hard to get into and hard to get out of, but it is wonderful while one is there.
To return to the mystery: what is wrong with the health economy in Oxfordshire? As I have said, at its heart lie three problems. First, Thames Valley receives low funding per head of the population—according to the head of the Thames Valley strategic health authority, whom I met last week, it is the lowest in the country. Of course we are a wealthy and, as a result, quite a healthy area, but the money is asked to stretch very far compared with what happens in other parts of the country.
The second problem, which is at the heart of all this, is the state of the finances of the Oxford Radcliffe Hospitals NHS trust. Last year, the trust faced a deficit of more than £40 million, and broke even only with £25 million of external support and housekeeping savings of £20 million. This year, it looks as if the situation will be even tougher. The external support will fall and there are additional cost pressures, which include the consultants contract, the pressure on the drugs budget, and NHS inflation. The Thames Valley strategic health authority financial performance report put it like this:
"The Oxford Radcliffe position is now £10m worse than the original plan: a £7m shortfall on the savings originally planned, £2m further costs of the Consultant contract … and £1m of other pressures (mainly activity-related). Overall, there is a potential deficit of up to £45m, to be reduced by the further savings plans that are being worked on."
On the general situation in Thames Valley, the report says:
"The overall level of savings needed to give breakeven would be £154m, equal to an average 7.6% of PCT allocations. There is £14m of planned support available towards this, which still leaves a requirement for £140m"
of savings, which is
"almost 7% of allocations overall. This level of required savings creates significant financial risk, reflected in the deficits currently forecast."
There are also significant risks that there would have to be substantial cuts in NHS services in order to meet those deficits. That is what the Minister has to focus on. We can all look at the Thames Valley SHA report and see the reductions in services that will be needed in our own health areas.
For Oxford Radcliffe Hospitals NHS Trust, even the earlier figure mentioned as the amount needed for savings—£35 million—is 8.7 per cent. of its income.

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That would mean making substantial reductions. I meet the new team at the Oxford Radcliffe Hospitals NHS Trust regularly, as do colleagues, and it seems to me that Sir William Stubbs, Trevor Campbell Davis and their team are trying to get to grips with the real problems. However, the size of the deficits make it likely that there will have to be significant cuts, including redundancies. Given that we are endlessly being told that the health service is expanding rather than contracting, that seems extraordinary. I hope that the Minister will look into the matter carefully.
My hon. Friend the Member for Banbury (Tony Baldry) has been raising the issue consistently. As a former Minister, he does not cry wolf, and he has looked into the matter carefully. However, the problems continue, and he has written an endless number of letters to the Department of Health about them. I appeal to the Minister to take some time to consider the Radcliffe, try to understand what is wrong, and make sure that front-line services do not suffer.
The Oxford Radcliffe Hospitals NHS Trust towers over the rest of the health economy in Oxfordshire. Its problems and deficits have caused problems for all other trusts. The reductions in the rest of the budgets set out in the Thames Valley SHA plan may look small, but one has to remember that the primary care trusts are very small, and have little discretionary spend. Most of their money is already allocated to GP practices and to commissioning in the health service, so any cuts that they have to make will hit the extra services that they have been funding, such as community health services.
Part of the issue is funding, and part is the fact that the health system seems to have a problem with a hospital as complex as the John Radcliffe. It is a district general hospital, a specialist referral centre and a teaching hospital. That can give it something of an identity crisis. More to the point, the system does not seem to reward it adequately for all that it does. The John Radcliffe strategic review is now under way, and we hope that it will settle some of the issues. I hope that the Department of Health will engage in that process.
Both the strategic health authority and the John Radcliffe have mentioned to me the way in which research and development is funded under the trust. They believe that there is a shortfall of some £7 million to £10 million. I would like the Minister to look into that, and perhaps write to me after the debate.
Matters are made worse by the third problem at the heart of the health economy of Oxfordshire, and it is a problem that also applies to the rest of the Thames valley—the high cost of living for our constituents and ourselves. House prices in parts of Oxfordshire are well above those in parts of London, so the temptation for nurses and doctors—just as for teachers and police officers—is to train in Oxfordshire and then go to lower-cost areas of the country. That partly explains the high level of vacancies in Oxfordshire. There is a 10 per cent. vacancy rate at the Oxford Radcliffe Hospitals NHS Trust, and that helps to explain the truly frightening figures for the use of agency staff. We all know that use of such staff is a tremendous waste of money, when we should have permanent staff.
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The high local costs have been, and still are, a problem, but I believe that they are about to become even more of a difficulty. The Government are moving the NHS towards a tariff system for costing operations and a concept of payment by activity and payment by results. A cynic might say that that sounds a little like the internal market that they abolished with such a fanfare seven years ago, but we will let that pass.
The new problem for the tariff, as I understand it, is that the costs of some London hospitals will be adjusted by 30 per cent., but the cost of the John Radcliffe hospital and other Oxford hospitals will be adjusted by only 3 per cent., even though the costs in Oxfordshire, as I said, are very high. Indeed, this tariff derailed the one piece of good news that the Government hoped to announce about the Oxfordshire health economy—the fact that the Nuffield orthopaedic centre, or NOC, had applied for foundation status. The way in which the tariff system will work is one reason why NOC's application for foundation status had to be rejected, so the thousands of hours of work and the thousands of pages of paper that it produced for the application were all in vain.
I have set out the problems of the overall funding situation, the special position of the John Radcliffe hospital, and the costs in Oxfordshire and the Thames valley, so I shall go into a little more detail about some of the key health issues that now affect the county in general and my mainly rural constituency in west Oxfordshire in particular. First, there are the community hospitals—an issue that is close to the hearts of many of us here today. We in west Oxfordshire are scarred because of the experience with Burford hospital, a much loved hospital that was closed after 1997. We were told that money would be reinvested in the area, and that there would be new community hospitals in other parts of the county, but so far we have been very disappointed.
Cottage hospitals are in a very strange position in the modern NHS. Patients love them, and write to me and to other Members about the wonderful intimate care that they receive in them. Local GPs like them, and the fact that they can visit their patients as they get ready to go home. Local communities adore them, and work their socks off to raise money to equip and endow them. The only people who seem not to treasure the cottage hospitals are those in the local NHS.
The most recent threat comes in the shape of the southern locality plan and the northern locality plan, whose raison d'être appears to be to reduce the number of beds in community hospitals. Whenever one asks why it is necessary or desirable to reduce the number of beds, one is pointed towards a study on the shifting balance of care and the White Paper entitled "Shifting the Balance of Power", which is all about trying to ensure that people are treated in the right setting. As my hon. Friend the Member for Banbury said, it should be called not "Shifting the Balance", but "Shifting the Blame", because the local emphasis has been on trying to save money in the Oxfordshire health economy to cope with the deficits at the John Radcliffe hospital.
I have four points to make about that. First while 100 to 150 beds are still blocked at the John Radcliffe hospital, it seems perverse to be trying to close beds in

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community hospitals. I should add that representatives of the John Radcliffe hospital gave me those figures in my meetings with them; I did not make them up.
Secondly, representatives of the John Radcliffe hospital argue that Oxfordshire has too few beds, not too many, so we must ask why their view is different from that of the PCTs. Thirdly, if Oxfordshire health chiefs want people to believe that more care can be delivered at home rather than in a hospital, they must first prove it. Given our natural scepticism, it is not good to say, "We'll all be fine and there will be much more treatment in the home," when we know from our postbags that social services cannot currently deliver that care in the home. After everything that has happened, we are sceptical, which not surprising.
Fourthly, work needs to be done to determine whether the community hospitals operate at or near full capacity. There seems to be some disagreement about that, as the hon. Member for Oxford, West and Abingdon (Dr. Harris) said in his Adjournment debate some weeks ago. If they do operate at full capacity, and it is my understanding that some of them do so much of the time, it seems hard to believe that the number of beds should be reduced.
The next point in my list of woes on the Oxfordshire health scene is about the way in which the Witney minor injuries unit has been managed. There have been two announcements that the unit would have to shut in the evenings. The first was because the John Radcliffe hospital was withdrawing staff from the unit so that it could meet its own four-hour waiting limits at its accident and emergency department. That is targetitis gone mad: one set of targets is met by shutting provision elsewhere. No one needs to worry about missing targets at the unit because, hey presto, it has shut—and if it is not open, it cannot have a four-hour waiting time. That is madness. Then the minor injuries unit was threatened with evening closure because the emergency nurse practitioners were hired by the PCT responsible for the Witney hospital to run the out-of-hours doctors service at Abingdon hospital. I hope that that will not appear in the manual of how to practise joined-up government.
West Oxfordshire district council stopped the closure by bravely taking the PCT to the High Court for its failure to consult, and reason now seems to be prevailing. However, I repeat the message that patients, staff and their communities at large value their community hospitals, and we should consider ways of building on them. They, too, suffer from the difficulties of recruiting and retaining staff, and the problems with the minor injuries unit prove just how thin the cover can be: if one nurse is off sick, the whole service can be threatened.
Wanting community hospitals to succeed is part of the solution. West Oxfordshire district council would help with key worker housing if the staff kept some of the rural facilities open. That is only right and natural, and the council would be doing its job of looking after local services. The health authority should be talking to the council.
I cannot stress the rural factors enough. We are often told, "The ideal size for a hospital is 60 beds, so your small cottage hospital just won't work." However, if people in rural areas were offered a choice between the perfect hospital 50 miles away and their present
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hospital, they would choose to keep what they have. To put it bluntly, in rural areas, living a long way from a hospital can mean death. We would rather keep what we have in Witney and west Oxfordshire than have the ideal hospital—or courthouse, or care home—somewhere else.
I turn now to the proposed out-of-hours service to cover for doctors. I shall then deal with the ambulance service and the proposals for Chipping Norton hospital, before making suggestions for the future. We all understand that out-of-hours cover was proposed because of the new GP contract, but my constituents want a simple answer to one question: will the new service be at least as good as, or better than, the existing service? At the moment, it is hard to believe that the answer could be yes.
In the South West Oxfordshire PCT, which covers about half my constituency, doctors' practices run a co-operative system, under which a doctor is on call. That is to be replaced by a service run out of Witney hospital, under which a paramedic will be on call. Anyone needing a doctor will have to go to Abingdon, which will become the hub of the service, with Witney as a spoke. For those who live in the countryside—in Leafield or Charlbury, for example—getting to Abingdon can take about an hour. People will not go to Abingdon; they will get in their car, drive to the John Radcliffe hospital and further fill up an already overcrowded A and E department. If the money being put into services is intended to improve them, it would seem logical to make Witney a hub, like Abingdon, because that is what it is to our villages. The service should also provide cover by a doctor as well as a paramedic.
With ambulance stations, I accept, as I am sure my constituents do, that it is the level of service, not the bricks and mortar, that matters. We should not be too sentimental about bricks and mortar, but people are sceptical about the level of service that they will receive when the ambulance stations in west Oxfordshire close. They are used to seeing the stations in their communities.
There is, however, a simple answer to that problem; I hope that colleagues will join me in recommending it, and I press the Minister to take it up. At the moment, the ambulance service is required to meet the eight-minute response time 70 per cent. of the time. However, that is calculated on a county-wide basis, so if the service concentrates on meeting its targets most of the time in urban areas such as Oxford, it does not have to worry so much about the rural parts of the county. Why not have a new stipulation that the eight-minute response time must be met 70 per cent. of the time in every part of the county, including rural areas? One could ensure that that it was met in every postcode area. That would be a neat solution to the problem: it would give people in rural areas a real feeling that they were being listened to and that the level of service that they received mattered.
In a way, Chipping Norton hospital presents a microcosm of the problem that we face in Oxfordshire. Retired doctor Sheila Parker wrote to me, saying:
"This hospital which was started by public subscription is part of our town and belongs to the citizens of Chipping Norton. Not to the Primary Care Trust who have the task of administering it."
I am afraid that she is probably wrong: the hospital probably does now belong to the primary care trust. However, her letter shows that people really feel that the

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hospital is theirs. The preferred solution is for the primary care trust and Oxfordshire county council to build a new care home, and for the health service to have some rehabilitation beds in that home. Under that plan, however, there would be no X-ray unit, although there is one now, no minor injuries unit, although there is some form of unit now, and fewer beds. People are left asking, "If all this extra money is going into the health service, why are we going to get less?"
Graham Pike, a nurse in Chipping Norton, wrote to me saying:
"Closure of the minor injuries unit … will also affect waits in the EDs"—
the emergency departments—
"The PCT claims that it is not well-used enough to be economical. I have lived in Chipping Norton for three years, yet I did not even know we had a MIU until I worked a shift at Chipping Norton Hospital. If people don't know about it, it will not be used. Far better, surely, to advertise the service better—thus taking a load from the EDs".
The primary care trust does not advertise or promote those services enough.
I shall end on what I believe the Government need to do for the health economy in Oxfordshire and Thames Valley. First, we need a proper explanation of the overall funding pattern, and of why the funding per head in Thames Valley is so much lower than in other parts of the country. Secondly, we need a proper Government-inspired look at the John Radcliffe hospital's finances and funding. To judge from my experience of looking at the issue—I am sure that my hon. Friend the Member for Banbury would agree with this—that seems to be at the heart of the problem. The big deficits at the John Radcliffe hospital cause a lot of problems elsewhere.
Thirdly, we need to take another look at Oxfordshire social services. It is no good saying that we will be able to have fewer community beds, when Oxfordshire social services already spend way more than the standard spending assessment, and yet are under so much pressure. Fourthly, we need greater moves towards flexibility on local pay. I do not see how our hospitals will ever be able to recruit and retain the necessary level of staff unless they have more flexibility on pay.
In order to restore the confidence of my constituents and others, I would also ask that the plan to reduce the community beds be shelved. The northern locality plan and the southern locality plan have been met with a hail of bullets, as it were, from MPs and others in our community, who simply do not believe that the argument has been made. If we are thinking about freedoms for hospitals to manage themselves—the Government are, and my party certainly is—we should give them to all hospitals, not do as the Government have proposed. We need a pledge from the Government, and all those involved in the health service in Oxfordshire, that if the deficits must be dealt with within a year—I am not at all clear why that should be the case—the axe will fall on bureaucracy, not on front-line services. On that note, I look forward to hearing the rest of the debate and the Minister's reply.
9.52 am
Tony Baldry: The Chamber will be grateful to my hon. Friend the Member for Witney (Mr. Cameron) for having initiated this debate and for describing the issues so excellently. The Oxfordshire health economy is in serious difficulties. I understand that the Oxford Radcliffe Hospitals NHS trust is expected to be overdrawn by at least £40 million next year, and there is speculation that the figure could be even higher. This is not the first time that that has happened. It also happened last year, when disaster was staved off only by using the proceeds from the sale of the Radcliffe infirmary to pay off the trust's overdraft, instead of recycling them back into new capital build in the NHS. That was not a particularly sensible way of using resources.
In part, the problem reflects the unfair formula by which the Government allocate money to health authorities across the country. It has never been properly explained why funding per head in Oxfordshire is so much less than elsewhere in the country. In part, that reflects the fact that there is no local cost of living allowance in Oxfordshire, which means that the trust has to pay premium rates to recruit and retain such staff, but has no budgetary provision for that. For example, the National Institute for Clinical Excellence guidelines for post-operative radiotherapy treatment for women who have had operations for breast cancer specify four weeks. By comparison, the period in Oxfordshire is 24 weeks on average, even with the trust paying radiotherapists a 30 per cent. premium on their salaries.
In part, the problem arises because no one has ever really got to grips with the nature of the John Radcliffe hospital, what part of the budget should be allocated to it as a district general hospital, what part should be allocated to it as a teaching hospital and how it should be rewarded for the research done there. That is not a new problem; it is ongoing, and has been so for at least the 20 years for which I have been fortunate enough to be an MP for an Oxfordshire constituency.
May I suggest that the time has come for an independent review, perhaps by an organisation such as the King's Fund, of what actually happens at the John Radcliffe, to ensure that it is fairly rewarded for the work done there? It cannot be right for a district general hospital to be substantially overdrawn year on year. Over the past 20 years, John Radcliffe hospital has experienced a sort of cyclical crisis: either the chief executive or the chairman is sacked or removed, and then there is a new internal review or a suggestion that the hospital has an internal problem. What is needed is an external objective investigation into the complexities of the way in which a district general hospital, a research hospital and a centre of excellence are organised together in Oxford.
The overspend has implications across Oxfordshire. One of the consequences is that primary care trusts are asked to make savings on their budgets but are not allowed to pass on the cost of making those savings to the Oxford Radcliffe Hospitals NHS trust budget. That makes nonsense of the concept of commissioning. Cherwell Vale primary care trust, for example, will have to find a £2 million saving this year. That may not seem a significant sum, given the totality of the budget, but because most of the budget is ring-fenced for GPs and others, that saving has to come out of just £9 million,

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most of which is for community health—so it is likely that nurses will be withdrawn from schools, the number of health visitors will be reduced and there will be other cuts in important front-line services.
Disturbingly, those reductions in primary care trust community budgets come at a time when the strategic health authority is trying to reduce the number of beds in community hospitals on the grounds that patients can better be treated at home. That is being done as a consequence of a White Paper called "Shifting the Balance of Power". As my hon. Friend the Member for Witney said, it should be entitled "Shifting the Blame", because it seems to be a rather cack-handed exercise. The NHS is shifting the responsibility for community health from community hospitals and the NHS budget to social services and the county council budget.
My constituents will never see the new 30-bed hospital at Bicester of which the right hon. Member for Darlington (Mr. Milburn) spoke when he was Secretary of State for Health. That is just not going to happen, and people in Bicester feel betrayed. They were promised a community hospital, and they are not going to get one. There are many other instances of the downgrading of local services. For example, it is clear that we will end up with, at most, two mental health in-patient beds in Banbury. Once Orchard Lodge closes, that resource will be moved to Oxford and we will also, effectively, lose The Elms. Any hope of a new-build successor to The Elms is forever lost, and, increasingly, any medicine that is vaguely specialist will be centralised in Oxford as a cost-saving measure.
It is also disturbing that we have been told that, as a consolation for not getting a community hospital in Bicester, we will have a minor injuries unit there. Having heard my hon. Friend the Member for Witney describing what is happening to the minor injuries unit at Witney, I wonder what benefit a minor injuries unit at Bicester will bring, and whether it will function as promised. There is a substantial attempt to shift the blame, both by the NHS centrally and by the strategic health authority, which seeks to blame any problem on the primary care trusts. That is one of the reasons for my concern about a treatment centre in Banbury. Of course one wishes to see greater activity in the national health service, but my concern is whether there will be increased money to match the increased activity.
Whenever I question the strategic health authority about that, I am told by the chief executive that:
"decisions on the commission of services are taken within the PCT's current commissioning budgets",
and that
"PCTs are in control of how and where their commissioning funding is used."
In other words, the funding for a new treatment centre in Banbury will have to come largely from Cherwell Vale primary care trust's existing budget. The PCT is in danger of being put in the invidious position of feeling obliged to support the treatment centre initiative, even though it might have to do so at the expense of funding that would otherwise have gone to the Oxford Radcliffe Hospitals NHS trust. If that turns out to be the case, it will be a curious state of affairs. Local people—GPs and others—would rather see services delivered coherently at the local NHS hospital than have to worry about the fact that delivery of services at that hospital is being
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undermined to satisfy ministerial press releases saying that additional activity is being introduced into the NHS.
Our other challenge in the Thames valley is the EU working time directive. Obviously, the directive's impact will be felt throughout the NHS, but potentially it will be greatest on smaller general hospitals. The geography of England is not convenient; the population does not always divide neatly for the purposes of the large general hospitals, and Oxfordshire is a case in point.
Oxford is pretty much in the centre of what is now the county of Oxfordshire, and, conveniently, the John Radcliffe hospital is able to serve much of that county's population. Looking at a map, one sees that the north of Oxfordshire tapers into a triangle surrounded by Warwickshire and Northamptonshire. At the apex is Banbury, the second largest town in the county, which is at the centre of what historians have frequently referred to as "Banburyshire"—the traditional area of surrounding towns and villages, from Brackley in Northamptonshire to Chipping Norton, and across to the Cotswolds in Oxfordshire and Shipston-on-Stour in Warwickshire.
Such places have always looked to Banbury, which was historically a day's cart ride away, as the local market town. To many people, Banbury is still the local town. The Horton hospital in Banbury has a catchment area with some 140,000 people, with many more at the margins. For decades, it has been the chosen general hospital of a very large population in north Oxfordshire, south Warwickshire and south Northamptonshire. There is no way that the John Radcliffe hospital could cope with all the extra work from the Horton.
However, there is no doubt that the Horton is a smaller general hospital. A number of years ago it started to have difficulties with some of the royal colleges, which asked whether medical training for junior doctors at the Horton alone was sufficient for them to qualify. Horton General Hospital NHS trust merged with the John Radcliffe NHS trust to form the Oxford Radcliffe Hospitals NHS trust, largely for that reason. The main intention was that junior doctors should be recruited by the trust as a whole and required to work both in Oxford and Banbury. By suitable rotation, one could then ensure good junior doctor coverage at the Horton and the junior doctors would achieve the necessary specialist training to satisfy the royal colleges. That system has been working well for some time.
However, the threatened impact of the EU working time directive is about to cause considerable difficulties at the Horton hospital. The Oxford Radcliffe Hospitals NHS trust is already reviewing whether it can continue to deliver 24-hour-a-day in-patient paediatric care at the Horton. That is a good service, which has existed in Banbury for at least 30 years. If the in-patient paediatric care goes, there will be a potential knock-on effect for the 24-hour-a-day accident and emergency cover and for the maternity unit.
If the Government were willing to make money available to smaller general hospitals to enable them to recruit additional junior doctors, that would be one way through the problem caused by the EU directive. I

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would imagine that the number of general hospitals would not be huge; they would be mostly in rural areas such as Cornwall or Lincolnshire. However, there would be a number in semi-urban mixed rural areas such as Banbury.
Presumably, the Government do not want to see existing general hospitals such as the Horton getting into difficulties with what services they can provide. Indeed, that would be all the more ironic, given that the Government are intent on setting up a treatment centre in Banbury. Presentationally, it would look perverse for the Government to set up a new treatment centre there while the general hospital, which has been in existence for decades, ran down its services.
This coming Monday, a petition signed by 40,000 people local to Banbury will be presented at Downing street. That is probably north Oxfordshire's biggest ever local petition; 40,000 signatures mean that at least one person in every household in Banbury and the surrounding area will have signed, because they wish to see children's services at the Horton saved. We have taken our campaign to Ministers at the Department of Health, to the president of the Royal College of Paediatrics and Child Health, to the board of the NHS trust, and now to Downing street.
The Prime Minister is ultimately responsible for funding the NHS, and he—and, through the Department of Health, the taskforce—should listen to the deep local concern. If paediatric services are downgraded at the Horton, children's lives will quite possibly be put at risk, as was said at the public inquiry that set them up 30 years ago. We come back to the conundrum with which my hon. Friend opened this debate. Ministers will tell us that more and more money is being put into the NHS, but the practical effect on the ground in our general and community hospital services in Oxfordshire is cuts and reduced services, bringing short-term crisis and long-term uncertainty.
10.5 am
Dr. Evan Harris: We should all be grateful to the hon. Member for Witney (Mr. Cameron) for securing this debate, which has given us an opportunity to talk about the problems affecting health services in the Thames valley—and, as we can see from the MPs who are present, Oxfordshire. I am in no doubt about the hon. Gentleman's commitment to improving services in his area. The same applies to the hon. Member for Banbury (Tony Baldry), who has a long history of seeking to secure the maximum possible effectiveness of the services in his area, and has raised some of the issues in various Adjournment debates and in questions to the Prime Minister.
I shall deal with a number of points, but I shall try not to duplicate what has been said by the hon. Member for Witney, much of which I agreed with. I agree that the problem is one of the health economy. When we discuss the NHS in Oxfordshire, we need to ensure that we do not "silo off" parts of the NHS, and that we recognise that it is all interrelated: we are talking about acute trusts, primary care trusts, community services and social services. If one or more of those service providers
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is constrained, it will have significant implications for the rest of the system. If we sort out constraints at the cheaper end of the service, where care costs less per night stay, for example, we can deliver savings in the rest of the system, and avoid false economies.
As the hon. Member for Witney said, that has not happened in Oxfordshire, because of the ongoing problems facing social services both with its budget—the services that it provides already have very tight eligibility criteria, although it spends above standard spending assessment, and is under Government pressure to reduce that spend for fear of council tax capping—and because of the difficulty, in an area of housing shortage, in recruiting relatively low-paid staff into jobs that are difficult. challenging and not well rewarded.
If the concept of joined-up government and joined-up provision of services is going to mean anything, it is time the Government demonstrated how they can be provided at a local level. There are partnerships, and service providers are working together, but a lot of that working together simply shows that none of them has any spare funding.
At the acute end, where most of the targets apply, there is enormous pressure to invest in acute services—"Hospitals first," in the words of the Prime Minister—but that means that we often do not get the funding for the more community-based services that would reduce demand for and spend on acute services. I am in no doubt that the money available could be better spent on simply sorting out the order of treatment. The Cinderella services—community and social services—should get a fairer share of the funding. The Government are at fault, because they have invested so much political capital in meeting targets that predominantly relate to the secondary care sector, which is far more expensive.
I did not wholly agree with the comments of the hon. Member for Witney about the unfair allocation system. I have always supported a system of funding allocations weighted according to the York formula, and I supported from the Front Bench the amendments that the Government made in the early years to ensure that it responded to need even more accurately. I cannot say that it is wrong and unfair simply because an area such as Oxfordshire gets less per head of population than inner-city areas, or areas in the north of the country with greater health needs and more deprivation. I have always been clear about that. It is easy to claim that the system is wrong if one is not prepared to look for more money globally.
However, the Government can be criticised on two grounds. First, generally speaking—I believe that this has been confirmed by independent inspectors—although there have been significant real-terms increases in funding, which have given the opportunity for underfunded primary care trusts, and health authorities before them, to move more quickly to target, the Government have not moved quickly enough to tackle areas whose funding is significantly below target. However, that criticism does not apply to Oxfordshire and the Thames valley as a whole. The figures show that if anything, Oxford city, which covers part of my constituency, has benefited in a sense from the slowness of the movement towards target, and I recognise that.

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That is a general point, and we should look beyond our own areas. I hope that the Government take on board the fact that as there are significant real-terms increases—for which I voted on every occasion—if they set out a target allocation based on need, they have a duty to move those who are below target more quickly to it.
The point that the hon. Member for Witney made about Oxfordshire and other parts of the Thames valley receiving proper recognition of the cost of living—effectively, the cost of hiring staff—needs to be stressed. It is clear that the arrangement is inadequate when the comparison is made with the London living allowance. Something must be done, because the inability to attract staff because of the high cost of living, and particularly of housing, is the major constraint at all levels of health and social care provision in Oxfordshire.
The Government have chosen to try to tackle the housing issue by providing mortgage help for what they call key workers—although I do not think that their definition of key workers is wide enough. That is not a holistic approach to the problem. Merely increasing the demand side through mortgage subsidies does not solve the problem; if anything, it puts house prices up. I want the Minister to say which NHS land has been identified as useable for affordable housing for key workers.
As Members of this House, when we get lobbied against development, we must remember how acute that problem is in the public services. Oxfordshire needs housing, and I am acutely aware of that. My instinct is not to oppose every new development, even those on greenfield sites. I recognise that there is a balance between environmental and housing issues. The Government must play their part, alongside the local health services, and release land in health service sites for housing—and they must do so quickly. I would argue that we are already seven years too late.
The other problems in Oxfordshire are too numerous to mention in this debate, although I will touch on a few. The GP contract is running into problems. I met GPs in Abingdon the other day and they pointed out that they were promised money this year for enhanced services, but that it has not been made available; legally it did not have to be, but they were at a presentation where it was promised. Therefore, there has not, for example, been fair recompense for sexual health services, because the money has been used by the PCT to prop up the family planning clinics, which were threatened with closure, and saved by central diktat at the cost of a transfer of money from other services to which it had previously been allocated.
The John Radcliffe's financial problems mean that there will be job cuts. Rumours abound that the hospital has accepted that there will be such cuts, and it has not said that they will involve only civil servants or bureaucrats—the sort of jobs that, trendily, it seems that we do not have to worry about these days. Front-line jobs will be cut for some of those savings—otherwise known as cuts—to be made. I do not see how that fits with a growing service.
Social services are still having difficulty recruiting. That situation is not getting better quickly enough, judging by a meeting that I recently had with the director of social services. I fear that in the health economy, matters will get worse before they get better.
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I support the comments made by the hon. Member for Witney about recognising fairness in the new system of financial flows. I have had representations not only from the Nuffield orthopaedic centre but from other hospitals in Oxford to say that the tariffs still do not recognise the extra costs of delivering specialised care and ultra-specialised care. Research funding under the tariff—and, indeed, under the current system—is inadequate. It is clear that the London teaching hospitals and medical schools get the lion's share compared with everywhere else; there is clearly an imbalance. I hope that the Minister recognises that, and will explain how it will be dealt with.
There are other developments in Oxfordshire in relation to the provision of care that are effectively cuts. For example, South West Oxfordshire PCT has ruled that people who have previously received respite care in a community hospital cannot receive it any longer, unless they are being rehabilitated.
Mr. Cameron: I am glad that the hon. Gentleman said that. As I was preparing for this debate I opened a constituent's e-mail, which arrived at 5 o'clock this morning. It said:
"Up to last March my wife was given 7 days respite in Witney community hospital every 8 weeks and we were not charged for it. Now we have to pay the full cost of any respite. Can anyone tell me why we have to pay when Tony Blair tries to lead us into believing that the NHS is free for all?"
An important change has taken place. That e-mail is yet another example of people saying to me, "We've had all this extra money spent on the health service, yet I'm now having to pay. What's happened?"
Dr. Harris: I have several constituents with the same problem. I am glad that the hon. Gentleman took the opportunity to raise that case in his own debate. This is a stealth tax. People who were getting respite care in community hospitals are now being means-tested for it and are having to pay. South West Oxfordshire PCT said that the reason was not that patients did not require nursing care—although that might be a basis for saying, "Let's ensure that the respite care is provided elsewhere, as we don't need NHS nurses to provide it"; the question was whether the patient could be rehabilitated.
Most patients with chronic care needs could not benefit from rehabilitation, but their carers require the support that respite care gives. The decision to deny people ongoing respite care that was provided for only a few days a year, and which was probably inadequate already, has upset several people. I question whether there was adequate consultation on that decision, and therefore whether it was lawful. Will the Minister look into whether that decision, whatever its merits, was conducted in a lawful manner in terms of process, with adequate consultation? I hope that he will agree to do that; I do not expect him to have a reply ready now.
I recognise that we do not have an opportunity in this debate to discuss the likely cuts in the mental health sector, which are often overlooked. We hear that there are proposals to reduce health services in the mental health trusts in Oxfordshire so that they can break even.
Finally, I shall talk about the treatment centre, and the serious allegations of bullying in Oxfordshire. I know that the hon. Member for Witney is aware of this

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matter, as he has been working closely with the people who have raised concerns. There was a proposal to transfer a contract for cataract surgery from the Radcliffe infirmary to a new independent provider, Netcare. Expressions of interest were invited in 2003, and both Cherwell Vale primary care trust and South West Oxfordshire primary care trust expressed interest.
It later emerged that part of the Oxford Radcliffe infirmary—the eye hospital—was going to meet the three-month waiting time limit on schedule, without the need to resort to expensive Saturday morning lists paid at private practice rates, and was delivering those operations cheaply, significantly below the NHS average—the so-called tariff. Yet when the PCTs realised that they did not need that service, and that it would not be cost-effective to purchase it, they were not allowed to pull out.
In an interview in The Guardian, and on "File on 4", the South West Oxfordshire PCT claimed that it was given the full business case only one hour before the meeting at which it was due to decide. We also learn that prior to that, its members had been verbally threatened with being personally surcharged if it failed to vote the scheme through. However, the primary care trust had a legal responsibility for the scheme, and it was not a national scheme, so it is outrageous that someone should have threatened people with bankruptcy and surcharge if they failed to vote it through. That was never followed up. That is the worst kind of bullying, because the threat was unfounded. We have never heard that idea retracted, unless the Minister can say that the allegation was a falsehood—but I believe that it has been confirmed by more than one person.
After the primary care trust rejected the deal—which, under "Shifting the Balance of Power", it had the right to do—the then chairman of South West Oxfordshire PCT, Martin Avis, said that he contacted Jane Betts, the strategic health authority chair, to communicate the decision. She said, "The tumbrels are ready." If that is not a threatening expression, I do not know what is. Martin Avis said that he took it to mean that his job was on the line, and that she was aware that hers was, too. He went on to say that Jane Betts said:
"Our jobs were at risk if there was not a note on the secretary of state's desk by the beginning of the following week saying that the decision would be reversed."
We have never heard the Government explain the role of the Secretary of State in pressurising the primary care trust to reverse its decision. Indeed, a fortnight later that decision was reversed by a full turnout of executive members, who are effectively employees of the Secretary of State.
The chairman of the primary care trust, who was well regarded by people on all sides of the debate, was the only primary care trust chairman not automatically reappointed when his job fell due for reappointment. He was told that he would have to apply again for his own job solely because of the decision that had been made. He had taken a casting vote to side with all the non-executive members of the primary care trust, whose job it is to defend the interest of the patient and the community when such decisions are made. At best, it is a murky business. We have never received full clarification of the matter from the Government. I do
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not understand why the Minister does not request an independent inquiry. When Sir Nigel Crisp, the head of the NHS, was questioned on Radio 4 about what had happened, he ended the interview and walked out of the room. What sort of response was that? What sort of open government or accountability was that?
If the head of the NHS will not take responsibility for such matters, politicians must. Will the Minister ensure that the issue is examined independently so that we know what is happening? We will not find people to work as non-executive directors in Oxfordshire or Thames Valley because of the bullying, let alone the financial problems facing the NHS that we have heard about today.
10.23 am
Mrs. Patsy Calton: I offer my congratulations to the hon. Member for Witney (Mr. Cameron) on introducing the debate, and to the hon. Member for Banbury (Tony Baldry) and my hon. Friend the Member for Oxford, West and Abingdon (Dr. Harris), who have also made important points. The hon. Member for Witney made it clear that despite the huge increases in spending, the news on the ground is bad. The bad messages tend to overwhelm the good news that the hon. Gentleman acknowledged when he said that there were decreases in some waiting times, that no one was now waiting for more than 12 hours—although that still seems a long time—and that his son had received superb care. He also acknowledged that when one is inside the system, it is brilliant. It is getting in, and sometimes getting out, that can be difficult. In the light of my experience, I echo that.
The good news is being somewhat overwhelmed by the bad news. However, it would have been fair for the hon. Member for Witney to acknowledge that although the situation is bad, it would have been considerably worse if the decisions had been up to the Conservatives, who voted against the extra funds that have recently been put into the health service.
After listening to the problems that have been aired and reading the necessary information to familiarise myself with the issues involved, I believe that there is a real problem centring around the role and functions of the John Radcliffe hospital. We have had a national sickness service, focused on hospitals rather than on primary care and care outside hospitals. We must acknowledge that the model we have now, whereby gradually everything gets sucked closer to hospitals, needs to change. I suspect that no one in the Chamber would say that no change is necessary, but change can sometimes be painful and difficult, and the process of change could be a lot better managed.
The hon. Member for Witney is concerned about staff shortages, and about the fact that many of the potential closures do not allow for travel by public transport. Although the target-driven culture is undoubtedly producing some change for the areas that are covered, they are hospital-focused, which can mean that anything that is not a target gets neglected. My hon. friend the Member for Oxford, West and Abingdon made it clear that those targets are distorting clinical needs. The Government would do well to consider that.
The responsibility for local services, and the role of the PCT and its autonomy, is reflected throughout the country, not just in the Thames valley. Although the

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Minister of State, Department of Health, the hon. Member for Doncaster, Central (Rosie Winterton), has said in a written answer that the responsibility for local services now rests with PCTs, the truth is that, as we can see from South West Oxfordshire, local PCTs are autonomous only as long as they do as they are told. In my area, the Greater Manchester strategic health authority will allow plans to go forward only if it is satisfied with them. If it is not entirely satisfied, the PCT has to go back to the drawing board—and that will continue until it comes up with something that the Greater Manchester strategic health authority is happy with.
There is overt bullying. An article in The Guardian on 2 June 2004 said:
"the recently-retired chairman of the areas primary care trust … explained how his board was bullied by Thames Valley strategic health authority … to sign a contract with a South African company for a treatment centre that it did not need."
The chairwoman of the SHA, who has also retired, admitted that she had engaged in
"bullying tactics, but claimed her authority was merely 'the jam in the sandwich',
and she was simply carrying out what she had been asked to do:
"It behaved as it did, she said, because it was under heavy pressure from the Department of Health to deliver a deal that the Prime Minister had set his heart on."
The Government cannot have it both ways; they have to make their mind up. Do they want PCTs to take responsibility, or are they intent on ensuring that everything happens from the centre and there is total central control?
Both the Conservatives and the Liberal Democrats have made it clear that they would like control to be much closer to home, and that it should be in the hands of local people. The difference between the Conservatives and the Liberal Democrats is that they would give the control to local hospitals, whereas we would like to see proper democratic control, both locally and regionally.
The hon. Member for Banbury asked the Minister to give a proper explanation of funding, and particularly wanted him to consider the finance and funding of the John Radcliffe hospital and Oxfordshire social services. He wanted greater flexibility on pay, with which we agree, and freedoms for all hospitals to manage themselves. The Liberal Democrats also want to see a considerable advance on that front.
My experience of consultation in my area is that plans for future provision are often nebulous. With regard to provision for care outside hospital, people have been asked to agree to locations, but when they look at the map it says, "Location still to be determined." That is not real consultation. It is the type of consultation in which it is hoped that those being consulted have not read the document, and when they read it, they find that they cannot possibly agree with it because it does not give them enough information. Rather than people going through the motions of consultation, there should be true consultation. There should be true engagement with local people. That sort of consultation is not taking place, either with patients or with local people.
That must start to happen. I doubt whether anyone in Oxfordshire or the Thames valley thinks that there should be no changes to hospital services or other
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services in their area. However, if there is not proper consultation about what needs to happen, people will feel that things are being done to them, rather than that they are being properly involved in the future of the health service in the Thames valley.
10.31 am
Mr. John Baron: I, too, congratulate my hon. Friend the Member for Witney (Mr. Cameron) on powerfully raising his concerns about the state of the NHS in the Thames valley. I hope that the Minister will address those concerns, and some of my hon. Friend's suggestions. I also congratulate other Members on their contributions, including my hon. Friend the Member for Banbury (Tony Baldry), who has done a lot over many years to raise these issues; among the concerns that he has raised in this debate is the impact of the working time directive.
My hon. Friend the Member for Witney was right to say that the extra resources being pumped into the NHS are not achieving the results that we expect and hope for. Nowhere is that clearer than in the Thames valley. My hon. Friend touched on the financial health of the NHS in the Thames valley. That is a major concern. The 2003–04 report of the chief executive of the Thames Valley strategic health authority stated:
"Overall, the NHS in Thames Valley achieved financial balance but had to rely on one-off measures to achieve this."
The one-off measures needed to meet the Government's target of achieving financial balance last year included the sale of the Radcliffe infirmary. In addition, the Oxford Radcliffe Hospitals NHS Trust had to take out a £25 million loan. Across Thames Valley strategic health authority, the debts run up by the health service were so serious that PricewaterhouseCoopers was called in to help. Last Wednesday's financial performance report of the Thames Valley SHA board suggests that in order to meet the Government's target, and despite the increases in health service expenditure, funding of the NHS in Thames Valley may have to be reduced by 7 per cent. That is quite a cut, all things considered.
The effect on, for example, Milton Keynes, with its rapid population growth, is likely to be far worse even than that. On July 8 the chairman of the Milton Keynes primary care trust said that it had to provide for 235,000 patients but that funding was available for only 212,000.
The Government must shoulder some of the blame for the deterioration in the finances of the NHS in Thames Valley. The PCTs in the Thames Valley area will receive £170 per head less than the English average for next year. That has contributed to the appalling financial situation there. In addition, we have heard that there is no local cost of living allowance. I want the Minister to explain why Thames Valley is being discriminated against compared with other areas. The facts speak for themselves, and they suggest that there is a major issue here.
The Parliamentary Under-Secretary of State for Health (Dr. Stephen Ladyman): Will the hon. Gentleman share with us which areas of the country he thinks should get less so that Thames Valley can get more?
Mr. Baron: The Minister is missing the point. I am suggesting that no area should be discriminated against.

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It is clear from the funding formula that has been devised for Thames Valley that it receives far less than other areas, which is wrong. I simply ask the Minister to explain why that is the case.
The Government will doubtless point to increasing staff numbers, and to a long line of statistics that suggest that the NHS is improving. There is no doubt that it is improving in certain areas, but our central point—to return to the conundrum presented by my hon. Friend the Member for Witney—is that there has been a massive increase in money, but not as much improvement as we had all hoped. As I said, no doubt the Minister will point to an increase in the head-count number of people working in the various departments of the NHS, but the three-month vacancy rate for posts in the Thames Valley area is worse than the English average. For example, the average three-month vacancy rate for all qualified nursing and midwifery staff in the strategic health authority area is 4 per cent., and that rate rises to about 7.5 per cent. in Milton Keynes general hospital. The English average of about 2.9 per cent. is well under half that.
In addition, the lack of permanent staff surely exacerbates the already grave finances of the NHS in Thames Valley as the rising cost of the agency staff needed to fill temporary staffing posts kicks in. That does not help the situation at all. There is also a particular shortage of radiographers in Thames Valley, and breast cancer patients are forced to wait up to four times longer than specialists recommend they should have to wait for potentially life-saving radiotherapy.
There are also problems in dentistry. The Thames Valley area has the lowest percentage of people registered with an NHS dentist. For example, only about 32 per cent. of adults in Oxfordshire are registered. That is an appalling record of the Government's making. They have now been in power for seven years, but they have done very little to reverse the decline in the general dental service. As a result, only 11 of the 113 dental practices in Oxfordshire are taking on new NHS patients.
The Government will no doubt hail the new contract as a solution to those problems, but we are not so optimistic. They will know that the British Dental Association has warned that 60 per cent. of dentists will reduce their NHS commitments, or will opt out of them altogether, when the new contract comes into force. That, surely, does not bode well for the future. Little attempt seems to have been made to increase the dental work force above 1997 levels. In 1997 there were about 576 graduates of UK dental schools. Last year there were about 549—a clear drop.
People with Alzheimer's disease are also suffering needlessly in the Thames Valley area. Recent research has discovered that many people with the disease are being denied access to drugs that could slow the advance of their condition. The drugs in question were recommended in guidance issued by the National Institute for Clinical Excellence back in January 2001, but a recent report has shown that there is significant geographical variation in their uptake. West Yorkshire has a population of 312,000 over the age of 65, and about £880,000 was spent on the drugs last year. Thames Valley has the same size of population over the age of 65,
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but not much more than half that amount—about £485,000—was spent on the drugs. That postcode lottery in the prescription of drugs is all the more tragic, because, as we all realise, without medication to slow the onset of the disease, sufferers will be forced into residential care.
What is happening in Thames Valley illustrates what is happening throughout the NHS, and returns us to the conundrum presented by my hon. Friend. There is no disputing the Government's best intentions, given the extra money that has gone into the NHS, but improvements have not been what they should have been. In some cases things have got worse, as we have heard from Members' contributions today.
One of our key concerns is the demotivating effect of targets. Despite the best efforts of NHS staff, to whom we are all thankful for their hard work and achievements, the NHS suffers from too many Government targets and too much red tape, which clogs up the NHS, prevent; many people from reaching front-line services, distorts clinical priorities and demoralises staff. That is one of he main reasons why there are so many recruitment and retention problems in the NHS, and why, after such a massive increase in spending, there has been only a modest increase in activity, and patients are suffering because they have to wait longer than necessary to be treated. It is also one reason why staff turnover in the NHS runs at something like 22 per cent., whereas the national average is 16 per cent. In financial terms, the cost to the NHS of about 270,000 people leaving and having to be replaced is approximately £1.5 billion—the cost of something like 10 new hospitals.
There is no shortage of evidence that the Government's targets are distorting clinical priorities and demotivating staff. Last year, BMA News asked its readers whether then were too many specific targets set in the NHS. Nine out of 10 replied that there were, and more than 60 per cent. suggested that they had personal experience of clinical priorities being distorted to meet targets. What will the Government do to try to reduce the incidence of clinical priorities being distorted by their targets? Such targets can and do demotivate staff who are already working under tremendous pressure. As Dr. Ian Bogle, outgoing chairman of the British Medical Association, put it last year:
"The one memory that will linger long … is the creeping, morale-sapping erosion of doctors' clinical autonomy brought about by micro-management from Whitehall which has turned the NHS I hold so dear into the most centralised public service in the free world."
No wonder morale among medical professionals is so low and frustration so high. A recent Royal College of Nursing survey, "Stepping Stones", consulted 10,000 nurses. One third said that they would quit the profession if they could, and more than 11 per cent. said that they planned to quit in the very short term. No wonder the number of nurses leaving for the US doubled last year. Morale has not been helped by the delay in the roll-out of "Agenda for Change". What measures are the Government going to take to reduce staff turnover and raise staff morale? That is so important to the efficient running of the NHS.
It is no surprise that, with morale so low and staff turnover so high, the NHS has not made the progress that it should have, bearing in mind the extra money

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being spent. We know the figures: expenditure has increased by more than 40 per cent. in real terms since 1997, and yet hospitals treatments have increased by only 5 per cent. According to the Organisation for Economic Co-operation and Development, the NHS increase in output lags far behind increases in input. It points out that
"in the health sector there are few indicators showing unambiguous improvements in outcomes over and above trend improvements that were already apparent before the surge in spending".
We have seen a massive increase in bureaucracy: the number of managers has increased at approximately three times the rate for doctors and nurses. There has been a £2 billion increase in the amount spent on administrative and other non-clinical staff. Meanwhile, the Department's own figures suggest that average waiting times have increased—a fact admitted by Sir Nigel Crisp, the chief executive of the NHS. In addition to addressing the specific concerns with regard to Thames Valley, will the Minister address the central conundrum of why money is not reaching front-line services so that patients can benefit? something is clearly going wrong.
I hope that the Minister will address the specific concerns raised by me, and by other Members, about the state of the NHS in the Thames Valley. but I put it to him that what is happening there reflects the fact that, although it cannot be denied that there have been some improvements in the NHS, progress it not what it should be, bearing in mind the money invested. Why else does the NHS have such a high turnover? The situation is not the fault of the professionals who work in the NHS, but that of the Government, who still cannot see that they have got their approach fundamentally wrong. Politicians must stop interfering and the Government must stop bombarding staff with targets and micro-managing the NHS. The NHS has been a political football for far too long. Politicians must learn to trust medical professionals and allow them to get on with their job. Targets simply ensure that the NHS responds to the Government and not to patients' need for care.
I put it to the Minister that the time has now come to scrap targets and the star-rating system, and give all hospitals true freedom so that they are accountable to patients, not bureaucrats. Such an approach would usher in an environment in which doctors and nurses would choose to stay because they enjoyed the freedom to deliver to patients a standard of care of which they could be proud. In that environment, the NHS, for the first time in a long time, would realise its full potential and become a patient-centred health service. That would benefit the patients in Thames Valley, and throughout the country.
10.45 am
The Parliamentary Under-Secretary of State for Health (Dr. Stephen Ladyman): I, too, congratulate the hon. Member for Witney (Mr. Cameron) on securing the debate and on the interest that he takes in the national health service in his area and in general, although in other Adjournment debates that I have shared with him, he took a slightly less political and more constructive view than he has today. Before I deal with the hon. Gentleman's substantive points, let me dispose of the two contributions from the Opposition Front Benches.
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The hon. Member for Billericay (Mr. Baron) asked what we could do to reduce staff turnover. One thing that we can do to reduce turnover and increase morale is to stop running down the NHS. Several times during his contribution, the hon. Gentleman said that things were getting worse. They are not. His comments contained numerous inaccuracies, one of which was the ludicrous productivity figure that the Conservatives continually trot out, which takes account only of operations done in hospitals. It ignores the huge increase in services now being provided in primary care, and does not look holistically at the total output of the NHS. That demoralises the people who are providing valuable services in primary care, which the Conservative party completely ignores.
If we want to increase staff morale, we can also stop talking about a huge growth in bureaucracy, red tape and the recruitment of managers. The fact is that when the hon. Gentleman cites statistics for the total management overhead of the NHS, he is including people such as cleaners, cooks and technicians—everyone who is not a doctor or a nurse—to arrive at his ridiculous figures. If we compare the management overhead of the national health service with that of any blue-chip company in the private sector, the NHS appears rather lean and mean. It would be nice if the Conservatives started to recognise the contribution that management makes to the improvements in the NHS.
Mr. Baron: Will the Minister give way?
Dr. Ladyman: No I will not, because the hon. Gentleman took too long, and I need to get on to the points made by the hon. Member for Witney.
I wonder whether the hon. Member for Cheadle (Mrs. Calton) recognises some of the contradictions in her comments. At one point she talked about the need to democratise the national health service, but she contradicted that when she voted against foundation hospitals, which are a small step in the direction of democratisation. However, I note that although she voted against them in the House of Commons, she then shot back to her constituency and issued press releases to say that she supported the creation of a foundation hospital there.
Mrs. Calton: Will the Minister give way?
Dr. Ladyman: I will not, because I have very little time.
Mrs. Calton: This is on a matter of fact, so I again ask the hon. Gentleman to give way.
Dr. Ladyman: Very well.
Mrs. Calton: The Minister will know that that hospital was seeking foundation hospital status before the Bill was published or debated, and that there were various flaws in the Bill that were not put right by the time it became an Act. It was therefore not difficult to vote against it.
Dr. Ladyman: So the hon. Lady is now telling me that she does not support her local hospital becoming a

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foundation trust, which I do not think is the case. It believes that she is supporting its bid to become a foundation trust under the existing Bill, which she voted against.
That was not the only contradiction in the debate. The hon. Lady referred to her local Greater Manchester strategic health authority and its strategic overview. That is why strategic health authorities exist—to take such an overview and to ensure that PCTs are working together. I do not accept the allegation that central influence has been used, which emerged several times in the debate in connection with the treatment centres in Thames Valley. The other allegation, which was put to us by the hon. Member for Banbury (Tony Baldry), was that we are not using central control on issues such as community hospitals. On the one hand, we have the cynical view that "Shifting the Balance of Power" is actually shifting the blame, and that we should be more dogmatic and centrally controlling from Whitehall in establishing community hospitals. On the other hand, we hear from the Front Bench that all targets should be swept away and all power given to the front line.
The Conservative party cannot have it both ways. Either we shift the balance of power to the front line, which is what we are trying to do, or we keep it at the centre and I decide from my office whether the hon. Gentleman gets a community hospital in his constituency. I suspect that he would not want me to make that decision, as I do not know his constituency as well as local people do. That is why we are shifting the balance of power—to allow such conflicts to be resolved locally. They are conflicts and challenges, and as the hon. Member for Cheadle said, for consultation to work, people have to understand the challenges that are being faced.
Several hon. Members mentioned the affection that local people have for community hospitals. That is true, but equally, when we speak to people about what they believe can happen in a small community hospital, we discover that they have completely unrealistic service expectations, which it would be clinically unsafe to try to fulfil through community hospitals. Clinical safety and patient outcomes must be put first, and part of any consultation process is ensuring that people start to face and address the challenges.
The hon. Member for Witney mentioned a number of issues, including—several times—delayed discharges. I do not know which political party controls Oxfordshire. I suspect that it is not the Labour party, but whoever it is, he might wish to talk to them about the social services that are being provided. It is largely the authority's responsibility to take a strategic view of facilities in the community to enable people to be discharged.
I also note that the hon. Gentleman voted against the reimbursement system. which is having a tremendous impact across the country. It has reduced delayed discharges by 1.5 million bed days since its introduction, which is the equivalent of eight district general hospitals. That was opposed by him, and both the Opposition parties represented here are committed to getting rid of the legislation if they form a Government. If the reimbursement system were removed, how would that alleviate bed blocking at the John Radcliffe?
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This is not the only time that I have debated the health economy of Thames Valley in this Chamber. Last time, the debate was largely focused on Buckinghamshire, and I remember one Conservative Member making the bizarre argument that because the wealthy middle classes are more assertive and articulate, they place greater demands on the national health service than poor people from inner-city communities who may have greater health needs. According to that Member, we needed to reflect that in the money given to the Thames valley health economy.
Mr. Cameron rose —
Dr. Ladyman: Let me just finish my point.
I am pleased to say that that bizarre argument was not deployed today, but the hon. Member for Witney did his best to give the impression that the health service in the Thames Valley is somehow fighting against insuperable odds, with falling budgets and crippling financial overheads, and that services are going backwards as a consequence. In reality, the average expenditure per weighted head of population in the area now covered by Thames Valley SHA was £594.29 in 1997. whereas in 2002–03, expenditure was £904.32—a 52 per cent. increase. In case the hon. Gentleman did not catch that, I will repeat it: £594.29 then and £904.32 now. Those figures do not even include dental or pharmaceutical services, and under this Government, plans are in place for that expenditure to continue to grow.
Mr. Cameron: The Minister said, rather unfairly, that I had introduced the debate very politically, but as his reply so far has been pure politics and knocking copy aimed at the two Opposition Front Benches, will he now address the question about the John Radcliffe hospital? He only has five minutes left. My hon. Friend the Member for Banbury (Mr. Baldry) and I have discussed the serious problem there many times, and it seems to us to be causing some of the problems in the Oxfordshire health economy. We came to debate that point seriously, and I wish that the Minister would respond in the same spirit.
Dr. Ladyman: If the hon. Gentleman wanted to debate the issue seriously, he should not have filled his contribution with political knockabout stuff or given the ridiculous impression that services in his area were declining. However, he is right to say that the financial balance at the John Radcliffe hospital is important, and is causing pressures in the local economy. The hospital has managed to achieve balance in the past two years as a result of land sales and funding from the NHS bank, but it has still not managed to address the overspend. In June the trust estimated it at £25 million, although it believes £17 million to be a more realistic figure. It will have to be put right.
Each local health economy must end up with a balanced budget. If it does not, the money must come from another area. Why should an area that has managed its budget properly finance an area that has failed to balance its budget? The hon. Member for Billericay seems not to understand that for every average, there are always some people above the average and others below it. As I told him, shifting money to Thames Valley from another area would mean that that area lost out.

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We can argue about whether the funding formula is a good one, but no one who has spoken in the debate has challenged the view that there should be variability in the funding formula to reflect the different costs in different areas. The present funding formula reflects the increased cost of provision in some areas, which is one reason why Thames Valley gets more money. As the hon. Member for Oxford, West and Abingdon very fairly noted, however, it is also important that funding distribution should reflect areas' health needs. Areas with the greatest health needs must have the most funding.
One could argue, as the hon. Members for Witney and for Billericay did, that all that variability has left Thames Valley too far behind and that it is being unfairly treated, but how do we measure whether it is too far behind? Surely, one way would be to look at the performance of the area's health economy to see whether it was moving forward. How has the Thames Valley health economy performed under the existing funding formula? No patients are now waiting more than nine months for planned treatment. Twelve-month waits fell from 1,657 in March 1997 to zero in March 2004, while nine-month waits fell from 3,712 to zero in the same period. The number of people waiting more than 13 weeks for out-patient treatment fell from 4,256 in March 1998 to 992 in March 2004.
Patients are being treated more quickly in the accident and emergency departments. Three acute trusts in the Thames Valley—Buckinghamshire Hospitals NHS trust, Heatherwood and Wexham Park Hospitals NHS trust and Milton Keynes General NHS trust—were among the first to receive financial rewards for overachieving on A and E targets. They saw more than 94 per cent. of patients within four hours in the quarter to December 2003. Overall, 89.5 per cent. of patients were admitted, transferred or discharged within four hours in the quarter to December 2003. Some 99.4 per cent. of people with suspected cancer are now seen by a specialist within two weeks of being referred by their GP. Some 96 per cent. of people can now see a GP within 48 hours, while 97.8 per cent. of people are offered an appointment to see a primary care professional within one working day. There are 1,970 more nurses and midwives than in 1997—
Mr. Bill O'Brien (in the Chair): Order. We must now move on.

Landfill Directive
11 am
Sue Doughty: I am grateful for the opportunity to raise this issue, which is extremely topical. In 2001, 5.2 million tonnes of hazardous waste were produced in England and Wales, of which 40 per cent. was landfilled. I know that the Minister will know an enormous amount about the changes to the regulation of hazardous waste, but for the record I should state that they will have a huge impact. This year, more waste will be classified as hazardous, and the co-disposal of hazardous and non-hazardous waste will rightly be banned. As a result, however, more businesses will need to dispose of increasing quantities of hazardous waste while the availability of waste disposal sites plummets. There will be dramatic cost increases to business. The new regime starts on Monday, and it means that small and medium-sized businesses face major changes for which they are ill prepared.
I want to explore the impact on small businesses—I should say at the outset that they are not against meeting their environmental commitments, and the purpose of this debate is not to have a barney with the Minister as to whether they should do so; I do not want the debate to become such a confrontation. There are opportunities for small businesses in finding novel ways to replace some of the more hazardous products that we use and to treat hazardous waste. They have a strong role to play. However, I am particularly interested in small businesses that produce substances, sometimes in very small quantities, that will now be classified as hazardous waste, and what they will need to do to conform to the requirements.
Yet again, there has been too little planning, information and publicity ahead of the implementation date of a major environmental directive. That leaves small businesses in particular with major problems. The difference between small businesses and medium-sized and large businesses is that larger businesses have people who make it their job to be aware of the environment and environmental measures. They have time to scour the relevant websites, and they have large industry groups. For small businesses, however, we are usually talking about the people doing the payroll in the evening, and new regulation can sometimes pass them by, no matter how hard they try to conform to it. Such businesses rely on waste contractors to tell them of changes coming down, and as the Minister knows, if contractors are not certain about what the requirements will be, problems will occur. There is, therefore, the risk of increasing costs and of non-compliance. Sadly, there is also the risk of cowboy contractors moving in on the market and fly-tipping, which none of us wants.
I have been told about a plant protection and pharmaceutical testing firm in south-west England, which disposes of approximately 10 litres of hazardous chemicals every six months at a cost of £80 plus transport costs. It relies entirely on the contractor to deal with the relevant paperwork. It files the paperwork and ensures that the waste is disposed of correctly within the law. However, last month, when I received this information, the firm had not been advised by its contractor of any future problems or increased costs associated with waste disposal. We are talking about a cost of £80. We should also bear it in mind that, in the

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south-east of England, the only site licensed for hazardous waste as of Monday would take only asbestos, so it will not be able to take any of the product to which I have referred.
The Federation of Small Businesses reviewed a business park in Surrey. There were 35 businesses in a broad range of sectors. It considered what the impact of the changes would be, talking with the facility manager and the waste contractor. The former did not know of the changes, and the latter was not able to help either. It was therefore not possible to do the costings, but when a small business is putting in a bid, it has to know what things will cost. There is a problem with lack of facilities in the south-east and in other places, such as Wales, but major problems will also arise from sheer lack of information.
Because contractors have not been able to tell businesses what changes there will be—they have not had the specifications—they have not been able to advise them, as they have traditionally done. Businesses need to be able to plan. If they are to meet these requirements, they need to know what they are. They have got to be able to work with contractors and trade organisations, and they must look at opportunities for co-operative working to drive down costs—and rightly so. Yet when back in April I asked the Secretary of State for Trade and Industry how many of the 100.000 special waste producers and the 750,000 future hazardous waste producers the Department had contacted to inform them of the hazardous waste requirements of the landfill directive, the Department of Trade and Industry said that the Department for Environment, Food and Rural Affairs leads on hazardous waste and the landfill directive. It said, however, that the DTI was investing in the development of a communications strategy to raise awareness of these issues among businesses through a variety of mechanisms and media.
By the week of 19 April, therefore, business still did not know sufficiently what was required of it. With respect, that is not good enough, because business must plan. Such directives have long lead-in times, and businesses cannot suddenly get together in co-operation to dispose of waste paint, litres of chemicals, fluorescent tubes and computer monitors; that takes time and planning. Small businesses may not have the capacity for storage that would be required if they were to bulk up materials for disposal somewhere in the north of England, for example.
What discussions has the Minister had with his colleagues in the Department of Trade Industry to understand the impact of the landfill directive on small business? Has he taken a view on the need to communicate the changes to business, and has he had any information from his DTI colleagues? Does he understand why small businesses are different from large businesses and need strong messages? Will he work with the DTI on a rapid roll-out of information and awareness-raising programmes specifically for small businesses? It is a question not only of whether we are going to tell them anything, but of what we are going to tell them.
The European waste catalogue defines hazardous substances, but new substances are being added all the time. Every time a new substance is added, people who
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use and dispose of the substance need to be told of their responsibilities. Does the Minister have any plans for a strong media programme to explain to businesses their responsibilities and how to conform? We are finding that they do not know enough about the directive. In a survey by the Federation of Small Businesses, 41 per cent. of businesses said that if they knew how to meet environmental objectives, they would try to do so. It is not the case that business does not want to know—it does.
Business wants to use a range of remedies. Businesses are not saying that they are going to continue using a product, and what the hell, if costs go up. The purpose of the directive is to encourage the use of safer substances. It encourages the phasing out of the most damaging products. It aims to avoid ticking time bombs with hazardous waste going into landfill, and some of the problems that developers are now facing because they have built on top of landfill. All sorts of damaging products and their associated risks are coming to the surface. It is quite right that we are implementing this directive, but business cannot plan for and phase out the use of the worst of these substances without clear information.
Anybody who regularly debates the environment knows that we often come back to the problem that businesses use a lot of batteries, for example. There are also salts and solutions, heavy metals and waste paint. The number of small painting and decorating businesses that use those products and that will have to find appropriate disposal facilities is enormous. There will be a huge problem of cost. If I get in the painters, they may say to me, "Next week we will cost more, because we have to pay more for the disposal of paint." However, if it is to cost them 100 per cent. more because of the increasing gate fees, which I shall come on to, and the excessive travel to dispose of paints, I as a consumer have a right to say, "Hang about, this is a bit sudden. That was not in the quote you gave me two months ago, before you were free to get on with my job." Certainty in business is important.
Hazardous waste producers will be required to register what they are doing, and 1.5 million businesses will come into the hazardous waste regime. At present, we do not know whether there will be a de minimis for registration. There is a question as to whether minimal and sporadic waste producers—a hypothetical case is those who dispose of monitors once every five years—need to conform to the requirements. If they do—I am not saying that they should or should not—what will we do to support such businesses through an incredibly difficult time?
Businesses want to comply, but the arrangements are vague and cripplingly expensive. My purpose is to express their concerns. I have no difficulty with the Government's supporting the environmental objectives of the directive, but we have the problem of too little, too late. There are risks, for example, that cowboy contractors will mix waste oils with sawdust and then just shove them into a landfill site somewhere. No one wants that to happen.
Yesterday, I attended the conference of the all-party group on sustainable waste. In fact, I was chairing the session just before the Minister kindly joined us. The representative of the Chartered Institution of Wastes Management, of which I am an honorary fellow,

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pointed out how much the costs will increase. The waste industry wants to be respectable, dispose of waste in the right way and drive out the cowboys. It does not want unsustainable discounts put into the costs of waste management, but it is concerned that the gate fees are bound to go up because of the limited number of sites. It is also a fact of life that there is extra cost in pretreatment.
As far as the waste management business is concerned, the directive may present good opportunities, and there is nothing wrong with their taking such opportunities. The problem is with people at the beginning of the spout, the businesses that produce the material. Their costs will escalate rapidly, and that is a considerable concern.
I would like to hear from the Minister not only his reaction to what may be an increasing problem for small businesses, which are very important, but how he will be much more proactive with the DTI on the issue and—I am sorry to return to this—how lessons learned from earlier failures will be applied. There have been problems in the past. It is considered below the belt to mention fridges, but let us not forget that tyres were also a big problem. We have had since 1999 to get our act together. The issue is not new or something that suddenly came along—whoops, we did not know. Everybody except small business has known about it, yet there will be problems.
The next time a directive comes around, will we start by engaging business, particularly small businesses, from the very beginning, and ensuring that we understand the cost implications and how the process will be managed? Without that, we cannot go forward. We may have to go through product by product, depending on the likely damage and the impact of any de minimis regulations that say that one product can be allowed but not another.
I look forward to the Minister's response. I hope that he has some good news for small businesses and at least recognises their innocence in this situation. They want to comply, but their compliance must be at a price that they can afford.
11.14 am
The Minister for the Environment and Agri-environment (Mr. Elliot Morley): This is a very important issue, and one that the Government take seriously. As the hon. Lady knows from the discussion yesterday in the all-party group on sustainable waste, the directive offers important benefits. I welcomed the opportunity to address that conference, and I thought it was useful in bringing together many of the key players in the waste sector. Indeed, that is part of raising awareness about the changes and what is happening.
There has been a great deal of debate on the issue since 1999, as the hon. Lady rightly states. All the regulations on landfill have now been published, and it is true that there will be a consultation on hazardous waste regulations over the summer Of course, the hazardous waste forum has been held, which involves representatives of all sectors, including the Federation of Small Businesses.
It is quite remarkable that the FSB today put out a press release that appears to say that it has no role in the situation that we are discussing. The FSB is actually
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involved in a forum discussing the details, and one reason for that involvement is precisely so that it and other such organisations can give information back to their members as part of the communication strategy. Yet the FSB seems to think that it has no role whatever in these issues. Although the FSB often goes on about too much government, it appears that, for the FSB, any kind of change involves hand-holding with the industry sectors that it represents.
Having said that, of course there is a role for central Government in terms of communication, and we take that seriously. I might just point out a mistake in the FSB press release. It claims that there are no waste sites in the south-east, but that is not true: there is availability there.
Sue Doughty: I hope that the Minister is right, because it is my understanding that the site in the south-east will take only asbestos. If he has good news about a wider range of hazardous wastes, I will be delighted to hear it.
Mr. Morley: I will certainly give the hon. Lady that information. There is more than one site in the south-east, as a matter of fact. It may well be that there is one that takes just asbestos, but there are others, too, and I will give her more information on that.
There has been enormous discussion of the issue. There has been a lot of press and TV coverage, and I did something on the subject on the BBC over the weekend. It is not as if the matter is not in the public domain. In fact, we know that businesses are taking note, because as the hon. Lady will have heard at the conference, there has been a 45 per cent. increase in disposal of hazardous waste. That is because companies know that the regulations are being introduced in July, so they have been advancing some of their arisings before the regulations come in. There is plenty of evidence that people are well aware of what is going on.
It is true that there are very small businesses that may produce very small quantities of materials that are regarded as hazardous waste—painters are certainly a case in point—but most small businesses get rid of their waste through commercial contractors or local authorities, both of which are well aware of what is going on. In relation to amenity sites, many local authorities have facilities for paint, batteries and asbestos, which they collect. They can collect small quantities until they have gathered a lorryload of material that it is economical to dispose of, and they provide that service for small companies. None of that will change. We do not want to overestimate the potential change. Incidentally, there will be no de minimis. We should be clear about that.
Sue Doughty: With local authorities taking trade waste and, as the Minister said, bulking it up before onward disposal, there will still surely be rising costs. Where is the cost likely to fall?
Mr. Morley: It is likely that there will be an increased cost, and it will vary according to circumstances. I repeat the point that the hon. Lady heard me make yesterday: the costs of disposal in this country for a range of waste, including hazardous waste, has been the lowest in Europe. The reason for that is that people have

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benefited for a long time from cheap, unsustainable landfill. The true costs of the environmental impact have not been borne by various sectors. That is going to change: there are no two ways about it. It is appropriate that the costs reflect the environmental impact and the costs of proper treatment and disposal by professional companies. People will have to accept that change, which is fair and equitable in terms of the environmental impact of waste handling. The increased cost is also an inducement for a range of companies to think about the waste that they produce and consider minimising, reusing and recycling it.
Yesterday, we heard from some companies that are gearing up and investing in many ways to provide reuse and recycling services. I talked to a few of their representatives afterwards. Perhaps in future various streams of waste, which are currently considered waste streams to get rid of, might have value because they can be reused and marketed. We want to encourage that, and we are putting money into bodies like the Waste and Resources Action Programme to support research and development, and into small and medium-sized enterprises to help develop the growing sector of environmental industries. That is good for the economy, the country and the environment. Part of the approach is for companies to bear the proper costs of the environmental disposal of waste, and we should not be too apologetic about that.
There is always a risk that when costs relate to disposal, there is a temptation for the cowboy element. We understand that, which is why we are talking to the Environment Agency about the work that it is doing to combat fly-tipping and crack down on illegal activity, which we take seriously. It has been doing a good job and has introduced specific campaigns in hot spots, which has been impressive. I should like to see more such action and I will be talking to it about what can be done.
Sue Doughty: In the Minister's discussions with the Environment Agency, what representations has he had from it about this problem and about an increase in the risk of fly-tipping as of next Monday, because of the current shortage of capacity in the regions where waste is being produced? Will it need more resources? Are the resources adequate to deal with fly-tipping? What publicity is available to make it clear that fly-tipping is a crime and must not happen?
Mr. Morley: I will come to that point in a moment, and I will go through all the actions that have been taken on publicity.
Of course, I talk with the Environment Agency about issues such as resources. However, although we are not complacent about fly-tipping, we do not assume that there will be a large increase in the fly-tipping of hazardous waste post-16 July. The bulk of hazardous waste has always been contaminated soil. We know that developers understand the regulations and know about that. A lot of hazardous waste has always travelled to specialist sites, and there is nothing new about that. There will probably be a reduction in the number of sites, which will mean that waste will have to go to fewer sites. In many cases, however, there will be no change.
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For example, a lot of hazardous waste in Scotland has always been transported over considerable distances, so there will be no change. I am keen to see as good a geographical spread of site facilities as possible. We are beginning to see that happening, and we will certainly see it over the next 12 months.
The changes on 16 July will not automatically lead to an increase in fly-tipping, but we must not be complacent. The current level of fly-tipping is not acceptable and we need to take action on it. The Environment Agency is taking action. It has been assisted by the new "Flycatcher" initiative, about which the hon. Lady may have heard yesterday, and targeted enforcement exercises, such as those I mentioned to her, which have been successful. Letters have been sent to all hazardous waste producers, waste managers and local authorities. All categories have received individual letters to alert them to their responsibilities and their duty of care. New powers, including stop and search, have been given to local authorities to help combat fly-tipping. There are permit arrangements for the transportation of hazardous waste. The responsibility is not only on the transporter: under the duty of care, it goes back to the people who have produced the waste. If they do not ensure that it is properly disposed of with transport and proper permits, they are liable.
Sue Doughty: Given that the new regulations will require more producers to register so that 1.5 million businesses will be drawn into the arrangement, does the Minister mean that letters have been sent to existing hazardous waste producers or to all the 1.5 million businesses?
Mr. Morley: Letters have certainly not been sent to 1.5 million businesses because, as the hon. Lady rightly says, some of the businesses are small. They have gone to the main producers of hazardous waste. However, there is information for everyone. I shall run through the type of work that is being done.
A communications manager has been appointed so that there is a full-time person working on getting over the message to stakeholders. A communications programme has been put in place. It co-ordinates the communications activities of the Department for Environment, Food and Rural Affairs, the Environment Agency and Envirowise. Activities include a new web portal, www.hazardouswaste.org.uk, specific leaflets aimed at all producers of hazardous waste, press releases, mailings to trade associations either as inserts or by email, articles in the trade and regional press, attendance at exhibitions and conferences with speakers and displays, and surveys. In addition, guidance has been issued by the Environment Agency to appropriate parties.
More work is being done in relation to dedicated communications mangers. To answer the hon. Lady's question, the co-ordinated communications strategy has been set up with the DTI, part of which is to set up a communications network throughout the country with active participation by industry and relevant trade associations. The website will reinforce that. The hazardous waste forum, which includes the Federation of Small Businesses, has been kept informed at every

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stage of development, which allows it to communicate such matters to its members, which I assume it has been doing.
Sue Doughty: The Federation of Small Businesses, which was actively involved in the waste forum, has made recommendations that dissemination should be made through small firms, waste contractors and local authorities. Although it could do so much, it believed that not only it should make such an outreach. Not every small business is a member of the FSB.
Mr. Morley: I absolutely accept that. I am not for a moment suggesting that the responsibility should fall entirely on the shoulders of the Federation of Small Businesses. All I am saying is that it is part of the network of information dissemination. To pretend that it is outside the loop and that it has not received the information would be misleading. I am not accusing the federation of doing that; I merely want to emphasise that it is part of a framework of communication that is sophisticated and comprehensive.
We shall do more in the future and ensure that the message gets across so that people understand their responsibilities and how new regulations will impact on them.
11.29 am
Sitting suspended until Two o'clock.

National Parks
2 pm
Lawrie Quinn: It is a great personal pleasure and privilege to be allowed to introduce this debate, which I hope will enable us to consider the present activities and future mission of national parks in the United Kingdom. The debate will allow us to consider the issues surrounding national park authorities and their role in national conservation, recreation, tourism and rural regeneration agendas.
First, I thank you, Mr. O'Brien, and all right hon. and hon. Members who, with me, have requested an allocation of time to consider this important matter. This Adjournment debate is timely and I congratulate everyone who has been able to find time to attend this afternoon. I hope that we shall have a good debate and that we shall be able to give wide consideration to the important issues concerning national parks, which are one of the most important—indeed, vital—parts of national life. In an attempt to allow as many hon. Members as possible to participate, I shall make my opening comments as brief as possible.
I represent Scarborough and Whitby and live in one of the most beautiful parts of the United Kingdom. As the secretary of the national parks parliamentary group, I know only too well that there are many rivals for that tribute. I have been able to appreciate many different aspects of national parks throughout the country and, as I look round the Chamber this afternoon, I am pleased that I have had the opportunity on many occasions to visit national parks with my colleagues. We have had some very pleasant times indeed, but the jury is still out on which is the most beautiful part of the country.
I am sure that you are aware, Mr. O'Brien, that last week was the first national park week. That important period of celebration, recently concluded, was aimed at achieving a greater understanding and commitment at two levels; first, by encouraging people to visit and enjoy a range of events and sites, and secondly, to raise the profile of national parks nationally.
I am reminded of that old public information message that a dog is not just for Christmas. I passionately believe that the national parks are for every day of the year in every weather, and are not just for holidays. I am sure that my constituents and fellow residents of the North York Moors national park agree, as, I hope, do other Members of the House.
Our special week celebrated national parks and was given an excellent opening by the Minister who announced the Government's intention to confirm the designation of the New Forest as a national park.
Mr. Desmond Swayne: The hon. Gentleman will be aware of my concern that the park as designated is too small to protect its sensitive core. The Minister has now decided to follow the inspector's recommendation and make it even smaller by excluding Lymington, Ringwood and other areas. I hope that the Minister will be open to representations on that score.
Lawrie Quinn: I thank the hon. Gentleman for his intervention. From our previous encounters on the issue

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I know of his passion for the national parks movement and I am sure that the Minister has heard what the hon. Gentleman said.
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): I want to make it clear that the points raised by the hon. Member for New Forest, West (Mr. Swayne) are not open to reconsideration. In my announcement, I sought to define clearly the New Forest national park according to the characteristics of the national park and the New Forest. He referred to urban areas. Urban areas such as Buxton in the heart of the Peak district do not need to be part of the national park area to be clearly engaged with and related to it. I suggest that both my hon. Friend and the hon. Gentleman read the details of the decision, which was clearly based on the inspector's report, the landscape expertise and the representations made during the seven months of public inquiry. The conclusions were reached carefully and the areas that remain concern three possible small additions that would improve the overall definition of the national park.
Lawrie Quinn: I thank my right hon. Friend for that quick response to the intervention. I am sure that the Official Report will be read by all of us in what I regard as the national parks family in Westminster. Indeed, it is from that sense of family that I give a warm welcome to everyone who will be part of the new national park in the New Forest; not only the residents but the authority and all the partners.
The debate will go on, with the words of the Minister regarding the remit and the necessity for designation ringing in our ears. I am sure that the future management of the New Forest will benefit from a focus not only at the national but the local level. Without doubt that national park designation can and, I believe will, allow greater community and public park participation. I want to encourage that.
The national parks movement goes back to the mid-19th century in north America. I have had the privilege and pleasure of visiting national parks across north America. It is my aim to try to emulate the high standards in national parks such as Yellowstone. It is important that we try to take a lead from the inspiration of the post-war settlement in terms of national parks to make sure that that place provides the tools for local communities to build a national park in their location in the way that they want.
The possibility of extending the national parks designation to other areas is also important and I look forward to seeing more national parks closer to more heavily populated parts of the country. Given the dynamic nature of the economy in south-east England and this capital city of ours, I hope that the landscape and the opportunities that the south downs offer will allow for a designation in the near future, if not next year. The quality of that landscape deserves the high accolade of national park status of which I am sure everyone would be proud.
Mr. David Lepper: I welcome the comments that my hon. Friend made
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about the south downs. Is he aware that a poll carried out by Meridian television showed that about 85 per cent. of people in the proposed south downs areas support the national park? There is a great deal of public support in the Sussex and Hampshire areas.
Lawrie Quinn: My hon. Friend has great experience and I recall that he had the opportunity to participate in a similar debate approximately four years ago, in November 2000. I wish him and his constituents well in bringing that forward.
The media involvement and interest in the issue gives credit to the national park movement, which has used national parks week to focus the significance of that vital part of national life across the nation. The hundreds of pieces of print and broadcast coverage during that week, both near to national parks and beyond, have allowed us to give the country a flavour of the wide variety of opportunities in national parks.
It is interesting to note that many other audiences were reached in different ways. The UK's largest outdoor retail store featured a national parks week window promotion in its 260 stores nationwide. I am sure that that has prompted many people from urban areas to find out for themselves the great attractions that national parks have to offer.
Dr. Ian Gibson: I see that the hon. Member for Mid-Norfolk (Mr. Simpson) is present. We both enjoy the delights of the Norfolk broads, but the local council is attempting to close the toilets and demean other public facilities such as refuse collection. Is not the wonderful work taking place in Norfolk and other areas undermined by aberrant councils?
Lawrie Quinn: I thank my hon. Friend for that contribution to the debate. Perhaps hon. Members will recall the incident in my part of the world where Scarborough borough council tried to close public conveniences in the same way as my hon. Friend described. Famously, the local playwright, Sir Alan Ayckbourn, who was given the opportunity to comment on whether there should be public conveniences or extra grants for his local theatre, said he did not want to get himself involved in a debate that would consider the important question of luvvies or lavvies.
At the end of the day, public opinion will doubtless win through. I wish my hon. Friend the Member for Norwich, North (Dr. Gibson) and the hon. Member for Mid-Norfolk well with their campaign to ensure that people see sense about how to spend a penny. [Interruption.] I think we will forgo that comment on rendezvous in public toilets.
To return to the comments made by my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper), there was a lot of publicity during national parks week. The Association of National Parks commissioned public surveys, and the interest in national parks from the survey conducted by Meridian television that my hon. Friend has mentioned is supported by the national survey, which showed that 95 per cent. of people thought that national parks were an essential part of national life. For all of us politicians, a 95 per cent. approval rating of our work would be well received, but perhaps we can look to that only as a political holy grail.

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The key point of the debate is to support the vital work within the national parks family and to further stimulate public awareness. That point was highlighted in the review of national parks authorities published last year. One strong recommendation was that the parks do a better job of promoting their activities. On the North York Moors national park, the parks authority, those who work in the park and the friends of the national park have taken up that recommendation and done a far better job of promoting their activities.
In my part of the world and in many national parks throughout the country, a crucial component is the management of natural resources within the parks. Fundamental to that is the participation of people who work in the agricultural industry and the industry itself. The industry defines, maintains and undertakes the important stewardship of the landscape.
Over the last bank holiday, I visited the Peak District national park and, without a doubt, the landscape has been worked to provide us with a national treasure and has the acclaim of being our first national park. From conversations with farmers in the Peak District national park, we learned that Parliament must closely monitor agriculture for the next 10 years, as the common agricultural policy mid-term reform and single farm payments scheme impacts on those vital landscapes and their communities.
I hope that everyone agrees that it is essential to sustain the farming communities in the national parks. They are some of the most isolated and hard-working communities and they receive very little reward. I know only too well from my constituency mailbag how much support we should give to those communities, and the work that DEFRA has embarked on is part of the process of encouraging farmers to make more of the benefits of national park designation. The park authorities want to work more with the farming community to help it become more sustainable, not only in terms of agricultural product, but in terms of the diversification of the activities that it is able to carry out.
The parks are addressing the facilitation of the nation's sustainable development agenda. That has been helped by one of the Minister's personal initiatives; the sustainable development fund strategy. If he will forgive me for saying so, it is a passion of his. It is an exciting initiative, which involves communities and businesses in sustainable development at a practical level, and instead of just talking about the topic, it is delivering practical results in the nation's national parks.
In the North York Moors national park, a small engineering company was supported in the development of a small, environmentally friendly boiler, which is now a leader in the world market. That all started because of the support and the considered judgment of the park authority. Through agricultural and industrial support, the national parks have become an exciting place to do business. Many other organisations could take a leaf out of the national parks' book and follow their lead. They are all about teamwork and partnership and ensuring that such engagement continues into the future.
My right hon. Friend the Minister is respected among the family of national parks, principally because of his personal interest in the national park movement. I have been pleased to welcome him to my constituency on the
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occasions when he has visited the national park that covers 60 per cent. of my constituency. I particularly remember the fine day when we celebrated the 50th anniversary of the North York Moors national park. With typical style, we had a brisk ministerial moorland walk. The Minister impressed all who accompanied him on that day, not least the park rangers, who had allotted double the time we actually took to travel the route, which is a tribute to the years of training the Minister had on the slopes of Snowdonia. Without a doubt, on that day in North Yorkshire, he was not only well briefed but well booted. Many people, including rangers, still mention that day to me, and the way that he was able to get involved with discussions in the park.
For the record, we were also able to bring parliamentary colleagues from the national parks group to North York Moors national park in May 2003. There were many highlights to that trip, but one of the important things was the drive towards bringing sustainable tourism to the national parks in North Yorkshire. Last year, more than 8.5 million visitors spent time in the North Yorks Moors national park. Most would agree that that figure illustrates the importance of tourism to the area. Without a doubt, after the ravages of foot and mouth—which happily stopped halfway down my constituency, but none the less damaged many local businesses, many of which were linked to tourism—the North Yorks Moors national park sustainable tourism project allowed local businesses to understand what a special product they had and to develop the proposition that it is great to come to the North Yorks Moors national park.
The popular village of Goathland in my constituency is well known as Aidensfield in "Heartbeat" and it acts as a magnet for many people coming into my part of North Yorkshire. The special role that North Yorks Moors national park is able to perform in stimulating effective management of transport systems, effective promotion, and, above all else, a real partnership with the local community, allows us to look forward positively to the future.
I am conscious of the time. I want to allow many other colleagues to take part in the debate, but it would be remiss of me not to mention the tremendous work that has been done to debunk the ideas relating to social exclusion in national parks. People in areas such as Teesside, Humberside and other parts of West Yorkshire—people from ethnic communities in particular—have not felt that they would be afforded a welcome and hospitality when they visited a national park. The authority has done tremendous work in North Yorkshire and the Minister may recall seeing a presentation on it. It has made a huge difference and has made our national park feel like a national park, so Muslims from Teesside or Hindus from Hartlepool can come and enjoy the wonders of the fantastic moorland.
I want to mention a particular concern of mine that is exemplified by the ongoing debate about the future of RAF Fylingdales in the North Yorks Moors national park, which has made me particularly aware of the specialist and tremendous work that national park planning officers do. It gives me some concern that, as a nation, we are perhaps not sustaining and developing that particular group of professionals to allow them to undertake their specialist work of sustaining and keeping the national park together for the future.

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I hope that the Minister will consider speaking to his colleagues in the Office of the Deputy Prime Minister to examine whether there will be a development, both professionally and in terms of the training opportunities that can be afforded to that special group of people. Over the years, I have seen planning officers who have been trained up, and have become very effective in their role of working for local communities, but who have been almost seduced away from the delights of the national park movement towards private practice. That puts pressure on the ability of planning officers to work effectively for the future. The debate on RAF Fylingdales has shown me what an excellent job such people do in contributing to the viability of national parks.
There is so much that I could say, but I will finish with one final point. The Minister took over from the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Sunderland, South (Mr. Mullin), who set in train a debate about the future of national parks. At the end of 2003, an action plan for the review of the English national parks authorities was published. At the end of the debate, perhaps the Minister could take the opportunity to highlight where we are up to with the action plan, what has been achieved and whether there are any lessons to be learnt. Above all, what role can be played by local MPs, who serve these wonderful communities around the country, to keep the action plan alive and relevant and to service the needs of not only local residents but the nation?
Mr. Bill O'Brien (in the Chair): Order. Hon. Members will be aware that this debate will finish at 3.30 pm, and I intend to start the winding-up speeches at 3 o'clock. There are 35 minutes to call as many Back Benchers as possible.
2.25 pm
Mr. Keith Simpson: I congratulate the hon. Member for Scarborough and Whitby (Lawrie Quinn) on securing a debate on this important subject. I am lucky that my constituency straddles the broads at the eastern side. As hon. Members will know, the Norfolk and Suffolk broads are the UK's premier wetland area and have been shaped and matured since Roman times.
Agriculture remains a crucial element in the economy of the broads, but is more important today for securing the landscape and wildlife. Tourism is now the major driving force behind the economy. I know that the Minister has visited the broads in the past couple of years and that he used to go on the broads as a child, so he is well aware of the area's importance and natural beauty.
The broads were finally established as a UK national park under the Norfolk and Suffolk Broads Act 1988, which was steered through the House by my predecessor in Mid-Norfolk, who is now Lord Ryder of Wensum. That legislation is tailored to meet the specific additional interest of protecting navigation on the broads.
The broads' boundary is tightly drawn around the rivers Bure, Yare and Waverley, and encompasses an area of about 301 km of mainly open, under-developed
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landscape of water, fens, marshland and woodland. It also includes many waterside villages and towns, such as Wroxham, Acle, Reedham and Brundle, which happen to lie in my constituency, as well as many others. It is a truly beautiful area. An extensive inland waterway system, comprising 190 km of navigable, lock-free rivers and permanently open water bodies is also an important part of the broads.
The Broads Authority has three aspects to its remit: first, conserving and enhancing the natural beauty of the broads; secondly, promoting the enjoyment of the broads by the public; and thirdly, protecting the interests of navigation. One specific concern about the broads is the impact of climate change, especially the rise in sea level and the risks from flooding. Will the Minister comment on what additional action the Government are taking to protect the Norfolk broads from that growing threat?
Together with the important urban hinterland, the broads can facilitate growth and urban regeneration in that part of eastern England. Transport, including the road system, is absolutely crucial. The Minister will be aware of the vital importance to Norfolk of our main east-west road, the A47. Something that has particularly caught the local attention is the debate over the dualling of the so-called "Acle straight", the single-lane road between Acle and Great Yarmouth. The Highways Agency is due to report shortly on whether the road should be dualled.
One concern expressed by local people is that although the environmental impact is the main consideration, economic factors are not being considered at all. I spoke in a debate on transport in the eastern region the other week, supported by the hon. Member for Great Yarmouth (Mr. Wright). I know that that issue is not the Minister's responsibility, but it reinforces what the hon. Member for Scarborough and Whitby said about the fine balance in areas such as the broads between economic aspects, regeneration, and the natural habitat.
Managing the habitat is incredibly important. The wetlands and hinterlands are crucial for birds and wildlife. We must also consider the management of predators, and how they can be contained and eliminated. There particular concern in several areas about foxes; without wishing to raise a fox hair, I ask if the Minister accepts the need to cull foxes, which according to the RSPB, are a threat to birds.
The total value of tourism to the broads was £146.6 million in 1998; more than 2.3 million visitors visit the broads annually. Boatbuilding and boat hiring are very valuable to the local economy. The hire-boat industry is the single most important provider of holidays in the broads; the number of licensed boats using the broads in any year is between 12,700 and 13,200, and 4,350 jobs in the broads area are dependent upon tourism. Other recreational activities include angling, sailing, walking and horse and bicycle riding. The economic aspect of a national park such as the broads cannot be over-emphasised.
The Broads Authority, which manages the broads, has an annual budget of approximately £4.5 billion and raises about £1 million in addition from external sources. It relies on a number of services provided by district councils, including public lavatories—not

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toilets, of course—and waste disposal. As the hon. Member for Norwich, North (Dr. Gibson), who seems to be fascinated by the subject, said, we have a problem in that respect, which I shall mention briefly.
In the past few months, there has been considerable agitation in the broads area about the proposal by district councils—those that directly affect the broads and the hinterland—to close some, if not all, public conveniences. The hon. Gentleman is on record as saying that one district council in particular was being a cheapskate about the matter.
I did some factual investigation into the subject as it seemed to go beyond the national parks. I have received representations on the matter from the Broads Authority, the district council, the Broads Hire Boat Federation and from that most powerful of organisations, the Women's Institute of the village of Reedham. Quaver in your shoes, I say to the hon. Member for Norwich, North, at the thought of the WI intervening in this matter. There has been a lively correspondence in the local press about it and the Broads Authority will be discussing access to public lavatories and waste disposal at a board meeting on 16 July. Access to public lavatories on the broads and the removal of waste is very important not just for the environment but for local communities, business and tourism.
My concern in the debate is to consider the facts and to see what can be done to enlist the Minister's support where he is able to resolve the problem. He, and the hon. Gentleman, will be aware that district council funding for public conveniences is discretionary expenditure. Most district councils, especially those in Norfolk, are at a disadvantage because many of them have funds withheld by the Government and are facing problems in meeting their statutory obligations, let alone their discretionary obligations.
The future of public lavatories is a national problem and many councils throughout the country have already gone ahead and closed them. For example, Shepway has closed all 28 of its public lavatories, and South Devon district council has done the same. North Norfolk and South Norfolk district councils must also consider that solution. There is a financial problem connected with the issue, which I suspect affects the constituencies of other hon. Members whose constituencies cover parts of the national park. It will cost an,extra £100,000 for Broadland district council to modernise its public lavatories, including the provision of disability access. That appears to be a small sum of money, but translated into the council tax, it means an extra 3 per cent. It is not a small-change issue.
What is the solution? I hope that the Minister can bring some pressure to bear on his colleagues in other Departments to admit that this is a national problem, and that the decision on withholding moneys from district councils should be reversed. In particular, Broadland district council, whose policy is under question at present, should be given the moneys that it is due. I believe that the Broadland district council should continue to find local solutions to the problem of keeping those public lavatories open, such as joint financing arrangements with parish or town councils. Such arrangements already exist with two parish councils in my constituency.
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Given that the Broads Authority has recently received extra moneys for tourism and planning, it might, at its meeting on 16 July, consider some form of joint financing with local district councils for public conveniences, because those conveniences are needed by local communities, and also come under pressure from tourism.
As far as waste disposal is concerned, I know that some boatyards are establishing their own local agreements with district councils for the emptying of skips. One of the problems faced by many of our district councils is that a large amount of fly-tipping occurs around the skips, which causes major problems for the environment, as well as encouraging the rodent population. I hope that the district councils in Norfolk that cover the broads area can continue to maintain a waste disposal service for the broads, which the Government will support, and that there will also be contributions from other stakeholders.
My constituents in the broads area are privileged to live in an area of great natural beauty, but many of them also make their living from the area. They also have to extend a welcome to millions of tourists every year. The Government, district councils and the Broads Authority must resolve a number of competing issues of which, at the macro level, there is the impact of tourists on the environment and, at the micro level, the opening or closure of public conveniences.
Mr. Bill O'Brien (in the Chair): Order. There are six hon. Members wishing to speak, and we are running out of time. I appeal to them to restrict their contributions to three or four minutes each.
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Mr. David Lepper: I also congratulate my hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) on securing the debate. He is right that it is nearly four years since we last debated national parks, also at his instigation.
I am glad that he talked about the future of the national parks movement. I represent an area that does not yet have a national park, although a public inquiry is under way on the designation of the south downs as a national park. What is clear from the inspector's reports on the New Forest designation is his belief that area of outstanding natural beauty status is not enough to secure the protection that is needed for areas such as the New Forest and the south downs.
Reference has already been made to the widespread public support for designation in the area covered by the Sussex downs. There is public support because people see designation as a way of securing protection and conservation of a unique landscape through strategic planning. They also see it as a way of securing additional funding, through the EU or from the lottery, for example, to help with that conservation and protection. However, I want to mention one concern that is emerging in that public inquiry, although I would not necessarily expect the Minister to comment on it, because he is in a difficult position because of his quasi-judicial role.
Concern was expressed earlier about the narrowness of the boundary of the New Forest national park. There is concern that the boundary of the south downs national park might be more narrowly drawn than the Countryside Agency recommended.

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It is well known that West Sussex county council is opposed in principle to the idea of a national park for the south downs. It has reportedly set aside a budget of £200,000 to fight designation. Its current tactic seems to be to suggest that there should be a south downs national park consisting of chalk landscape only. That would leave out many of those areas recommended by the Countryside Agency, which are important from the point of both landscape and history. There were 6,000 responses to the public inquiry into the south downs national park, compared with 420 for the New Forest; 90 per cent. wanted more land included within the boundaries rather than less. I do not necessarily expect the Minister to comment because of his role, but I flag up for his attention the genuine local concern about the possible spoiling tactics being adopted by West Sussex county council.
I have been asked, as have all hon. Members, to keep my comments brief. Support for the proposed designation grows day by day. My local authority has always supported it but other authorities have now become more sympathetic to the idea. I pay tribute to the work of the South Downs Campaign, which draws together nearly a hundred organisations including parish and district councils to put the case as strongly as possible for completing the work suggested in the Hobhouse report of 1947 to include the south downs in the family of national parks.
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Mr. Patrick McLoughlin: I shall try to be brief but I want to cover a few points. I congratulate the hon. Member for Scarborough and Whitby (Lawrie Quinn) on securing this important debate. He rightly referred to the Peak District national park, which forms a large part of my constituency and which the all-party group visited a few weeks ago.
I fully agree about the importance of national parks. Colleagues have talked about visitor numbers being 2 million to the broads and 8 million to the Yorkshire moors. The Peak District national park gets 19 million visitors each year. It was once described as the lungs of Britain because it is within an hour's drive of 60 per cent of the population. It sometimes seems that they do all come. That proximity brings a lot of problems, as well as enabling people to enjoy the beauty of the Peak district. People tend to come for the day and they do not necessarily spend much money while they are there. I was impressed when I visited the Eden project to see how it has encouraged people to stay overnight. Overnight stays in Cornwall have dramatically increased. Unfortunately that does not happen in the Peak district.
I thank the Minister for listening to the representations that a number of us made about the size of the Peak District national park. It is a unique national park in that it is made up of so many authorities. I realise that that might not be the case once the south downs authority is established. The all-party group visited Chatsworth, a fantastic house and beautiful building that is a very important part of the Peak district. However, I often make the point that if anyone tried to build Chatsworth today, they would not stand a cat-in-hell's chance. I do not think we would allow even the stables to be built, let alone the house.
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That is part of the problem that I want to raise with the Minister; the question of building and allowing organic growth. I am very concerned about how house prices in the Peak district have rocketed in the past five years. I know that many areas face that problem, but for the Peak district, being so close to places such as Sheffield and Manchester and not far from Birmingham, it is especially serious.
I wrote to the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Pontefract and Castleford (Yvette Cooper) on the subject. She replied:
"In carrying out its planning functions the National Park Authority must also have regard to the purposes for which the Park was designated, which include conserving and enhancing the natural beauty and cultural heritage of the Park."
Nobody would disgree with that.
"It also has a duty to foster the economic and social well being of local communities within the Park."
Many people who grow up in national park villages currently stand no chance of being able to afford housing within it, and the problem is becoming ever more serious.
We often talk about affordable housing, but affordable housing in the national park is more expensive because of planning criteria. I urge the Minister, when he meets representatives of the national park, to discuss allowing more organic growth. If local people want to build extensions to their house so that they can bring up families, that should be looked at sympathetically.
I could say a lot more, but because of the time constraints, I shall leave it at that. I hope that the Minister will consider the point. There is no easy solution, because of the complicated nature of the problem, but at the moment there is unnecessary restriction and too narrow a view taken on planning. None of us wants to see the national parks becoming the preserve of very wealthy people who can afford to pay huge prices for what are in some cases moderate houses. I urge the Minister to consider that. I accept that there are no easy solutions, but we need to address the problem seriously.
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Mr. Colin Pickthall: I will cut out the general material that I wanted to talk about and move straight to the issue on which I want to concentrate. I want briefly to put on record my concerns about some precious landscape between the Lake District and Yorkshire Dales national parks. I know that the Minister is aware of the problem.
Cumbria has large tracts of spectacular landscape that anywhere else in England would be in a national park but in Cumbria are not. Some of the landscape is protected—as areas, of outstanding national beauty, for example—but other parts are not. With little effort, I could make the case for including the whole of north-west England north of Carnforth in the Lake District national park, but that would be pushing it a little far.
The landscape that I am concerned about is that found between the A6 and M6 north of Kendal, the Orton fells and the part of the Howgill fells that is not included in the national park. Those areas were recognised by Dower in 1945, when he put the Howgills

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on the reserve list for future national park status, and by Hobhouse in 1947, although he did not recommend the Howgills for national park status. He did that not because of the quality of landscape, but because of the exceptional quality of the landscape that was next to them.
I want to zero in on the landscape lying between the A6 and M6 that butts on to the Lake District national park; Westmoreland Borrowdale for want of a better term. The land is under threat, although it is an environmentally sensitive area, and its landscape quality is equal to that of the Lake District national park, and potential developments there could directly affect the visual quality of the national park itself. This stretch of Cumbria consists of parallel ridges running east-west and valleys, and it is outstanding walking country. It is virtually uninhabited and was beloved of Alfred Wainwright, among many others. It has been designated county landscape by Cumbria county council. At present, one of its ridges, the Whinash ridge, is threatened by a plan to place 27 wind turbines, some of the largest ever built, along it. It is such a huge development that it has to be treated as a power station by the Department of Trade and Industry. Incidentally, it would be nice to know from the Minister what consideration Ofgem, Ofwat and other bodies have to give to the needs of national parks.
That is a threat not only to the Whinash ridge and to the visual amenity of the area but to the visual amenity of large tracts of the eastern part of the national park. That is a problem right round the Lake District national park borders, where the fells just outside the park have attracted wind turbine developers as honey attracts files. For example, the Burlington wind farm on Kirby moor is now the visual southern end of the whole of Coniston water.
Of course, if the wind farm were to appear on the Whinash ridge, any case for inclusion of the area in the national park would vanish. I do not want to make the case for inclusion simply as a defensive move to prevent a wind farm, because the area should be included in the national park on its own merits, and there is widespread agreement on that. Certainly, the district and county councils are in favour, and the process could now be one of pushing at an open door, so far as local opinion is concerned. I know that the local Member, the right hon. Member for Penrith and The Border (David Maclean), is of the same opinion.
There is an urgency to this matter, which I want to register. I am aware that the Friends of the Lake District have secured counsel's opinion from Robert McCracken QC to the effect that the Government could carry out a discrete area extension to a national park without opening the whole boundary to review, and the Minister and the Department have responded positively to that, which is great. The Countryside Agency board visited in early May and was, I under stand, impressed by the landscape, as are all of us. It has set up a working group to produce a report to the board in the autumn. That is all very promising. I hope that the Minister will keep his strong interest in this matter fresh and, in the nicest possible way, remind Pam Warhurst—if she needs reminding—of the urgency involved.
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Dr. Julian Lewis: As well as trying to be as brief as possible, I shall try to be as positive as possible. I apologise on behalf of my hon. Friend the Member for New Forest, West (Mr. Swayne), who is at this moment having to debate a statutory instrument in another part of the Palace of Westminster.
The announcement that the New Forest is going to become a national park has made a small group of my constituents very happy indeed. That is the New Forest, East Labour party, the only group in my constituency who consistently wished for, desired and campaigned for a national park model for the New Forest. I pay sincere tribute to Mr. Peter Sopowski, the former chairman of the New Forest, East Labour party, and Mr. Alan Goodfellow, my former opponent at general elections, because they are the only people who have consistently wanted this solution. If it works out well, it will reflect great credit on them in the future.
Most other groups in my constituency and in the New Forest area as a whole did not want this solution. That does not mean that they did not want the New Forest to be protected, but they wanted it to be protected in the future in the way in which it has traditionally been protected in the past: through special legislation. They were concerned that if a national park model were imposed on the New Forest, it would lead to rigidity, bureaucracy and the overriding of the former, consensual way of running the New Forest by a compulsory way of running it. Everything will depend in the future on the sensitivity and self-restraint shown by the people in the national park authority.
The Labour Government have a democratic mandate to carry this proposal out. They announced before the last general election that they proposed to create a national park in the New Forest, and having won that general election, they can claim a democratic mandate for what has now been done. It was never the case that the public inquiry into the proposed New Forest national park would turn it down on the basis that a national park was not the best way forward for the New Forest. The purpose of that public inquiry, as I said at the time, was simply to see whether the New Forest measured up to the criteria necessary to become a national park, and of course it did.
However, after the general election, when I went to see the Minister's predecessor—who is now the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Sunderland, South (Mr. Mullin)—he made me this promise. He said, "Julian, there will be a national park for the New Forest, but we are open to persuasion as to how it might be tweaked and tailored to suit the New Forest's particular needs."
That is why, in the few seconds that remain to me, I want to express surprise that a site of special scientific interest such as Dibden bay has been excluded from the national park, whereas Fawley power station has been included. According to a quote from the Minister in the local press, that is because otherwise
"We would have a hole in the map just because there happens to be a power station there."
I only hope that we do not, as a result, see a renewed assault on that triple SI, which only recently was, thank goodness, saved from port development.

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Finally, I draw the Minister's attention to the press release from New Forest district council. The chief executive, Mr. Dave Yates, commented:
"The Inspector appears to have accepted that it would be a good thing if the development control arrangements within the National Park were delegated back to the local authority. However, we understand that the Minister has not made any final recommendation on this".
I, for one, would take it as fulfilment of the promise made to me by the Minister's predecessor if he gave a positive response on that all-important concern.
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Kate Hoey: I do not speak on behalf of a national park—Vauxhall does not have one—but for right hon. and hon. Members' information, we have just reopened our public toilets in Kennington park.
I want to sound a note of slight discord in the debate and I am speaking particularly on behalf of many people who feel that national parks are not as welcoming and open to them as they are to others. Those are people who want to get involved in many different minority sports. I am all in favour of national parks being areas of quiet enjoyment and peace, but I have concerns where there are large areas of national park.
I am referring particularly to the Lake District national park, where there is a large number of lakes. It seems wrong that that national park has gone blindly down the line of trying to ban all water skiing and any use of the lakes by boats travelling at more than 10 mph. This issue is very important, and I have tried to secure Adjournment debates on it. Historically, Windermere, which is the largest of those lakes, has been a lake where water sports and fast speedboating could go on. It is a very large lake. In 1978, when a 10 mph speed limit was introduced on the other three lakes—Coniston, Ullswater and Derwent water—after the three-lakes inquiry, the agreement with the British Water Ski Federation was that Windermere would always remain a venue for water sports.
This has been a long saga, as my right hon. Friend the Minister knows. There was a public inquiry, but a Secretary of State in the previous Government refused to accept its findings, because he felt that there could be a management plan that allowed all users of that large lake to work together. All the users in the area of the lake have got together and they all want a solution to the problem. I pay particular tribute to what the hon. Member for Mid-Norfolk (Mr. Simpson) said, because the Norfolk broads have been an example of how, with good will and no political correctness, people can get together and work out how to allow water skiing, even on the broads.
I want the Minister to respond to this point. The issue will not go away. Let me explain the situation as from next year. Water skiing is not banned, but there is a 10-mph speed limit. That will bring on to the lake all sorts of other uses of the boats. It will put boats back on to the other three lakes. There was an agreement that the other three lakes would not have boats on them, but no one can prevent them from going back. Instead of that being an asset and something that will help the Lake District national park, we will drive away small
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businesses, tourists and people who have brought their families there; people who have been able to take part in activities on the lake with their young people and then go off and have peaceful enjoyment further into the national park.
That is a travesty. We should be reconsidering the issue and ensuring that our lakes and national parks are open for all people within reason. All reasonable people should be able to find a way to sort out this problem. Windermere is big enough for everybody.
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Mrs. Jackie Lawrence: I am grateful to have a chance to speak, even if it is just for a minute, as I am chairman of the all-party group on national parks. I congratulate my hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) on his contribution. It was comprehensive, but he missed one thing. On sustainability, there is an essential need for section 62 to be strengthened and re-emphasised and for all Government Departments and statutory bodies to be encouraged, if not obliged, to commit to park purposes. That would do away with the need for extra legislation.
I want to emphasise sustainability, particularly the SDF. The Minister himself, in his former capacity as First Minister for Wales, used Wales as a test bed for what has been a successful ongoing scheme throughout the UK. Just this morning, I received a document from my constituent Ridchand Blacklaw-Jones, who obtained SDF funding to examine local procurement of organic food in Pembrokeshire. Pembrokeshire has one of the largest areas of organic farming. I cannot go into the detail of what he has written, but it holds great promise for the national park and for farmers in it and wider afield.
Another element about which I hoped to go into some detail falls outside of agriculture. My hon. Friend mentioned the importance of SDF funding. The project on tidal energy, which is being funded by the national park in Pembrokeshire, also holds promise for Pembrokeshire and wider afield.
Finally, I wish to mention affordable rural housing in the parks, which has already been mentioned by the hon. Member for West Derbyshire (Mr. McLoughlin). In my area, property prices have gone up by 100 per cent. in only three years. There is a wonderful economic vibrancy in the local community, which has had a drop of more than 90 per cent. in youth unemployment. That means, for the firs time in generations, that young people are able to stay in the national park where they and their families have been brought up and to keep the area vibrant. We do not want the national park to be a place just for people from the cities to play in or, after their working lives, to retire to with income that they have accumulated elsewhere.
Within that framework, it is important that we put in place the means for local people to find housing. Pembrokeshire and Exmouth are trying. I hope that the Minister will comment on that and efforts to make affordable housing available in UK national parks.
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Mr. Roger Williams: I, too, pay tribute to the hon. Member for Scarborough and Whitby (Lawrie Quinn) for obtaining this debate.

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Many important issues about national parks have been raised in the contributions of hon. Members. Many of those issues actually cross the boundaries of national parks, but national parks have been able to act as a test bed for them. National parks are important to this country not only in themselves but as models of good practice for other rural areas.
I was pleased that the hon. Member for Preseli Pembrokeshire (Mrs. Lawrence) was able to catch your eye, Mr. O'Brien. I would like to pay tribute to the role that she has undertaken as chairman of the all-party group on national parks. Her energy and enthusiasm have enabled the group to stick together and do valuable work. She has indicated that she will lot seek re-election at the next general election, but I pay tribute to her work for that all-party group.
Members should remember that the national park movement was founded outside Britain, in America, by pioneers who had enough foresight to understand that, even in that huge country, the pressure of development could endanger and put an end to the qualities of the countryside that we so value. Indeed, several national parks in America are virtually uninhabited.
I went to Atlanta, Georgia, recently and was taken around the Martin Luther King area by national park rangers. I found that a little strange, given the tradition of national parks in America. That just goes to show how the national park movement is developing.
One great thing they have in America is wilderness and that is precious in this country also. The opportunity for people to walk in national parks knowing that they will not encounter elements of human development is what makes those areas so attractive. From a parochial point of view, I believe that any development of wind farms in national parks or development that encroaches on the visual aspects of national parks is entirely unacceptable. People go to those areas for recreation; not in the ordinary way but to recreate themselves and to get back the internal spiritual energy that they have lost because of their jobs and the pressures of work today. They can go to those areas, think about things, find themselves again and re-energise themselves for their tasks.
The unfortunate experience of foot and mouth disease showed without doubt how important it is to have access to rural areas and national parks. That was a lesson for us. We did not need the problems, heartache and heartbreak that the foot and mouth outbreak brought, but it taught us an important lesson. In the area that I represent there has been a greater coming together of effort and thought between the farming community and the community that is dependent on tourism and visitors than there ever was before the outbreak. I believe that the pressure and concern during the outbreak will stand us in good stead in future when more and more farming businesses become involved in tourism. One issue that will come out of the mid-term review of agriculture is that people will see that they have energies and skills that can be used outside food production. They can look after people in a huge range of ways by providing interpretation of the countryside and allowing them to take part in active holidays such as walking, climbing and horse riding. There will be more and more of that.
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I was a member of a national park authority for more years than I care to remember and chairman for a number of years. The great challenge was always to obtain a balance between the national responsibility of national parks and the needs of local people by ensuring that they were not disadvantaged by other people benefiting from the existence of national parks.
Planning authorities in national parks are often criticised for being over-zealous in their approach and preventing developments that could take place without deleteriously affecting the purposes of national parks. It is important that a number of national park authorities have now won awards for their planning work and the national parks, building on those good practices, will be able to make great advances. National parks are at the forefront of innovation in terms of rural development and should not be afraid of being innovative in the way in which they operate.
I was pleased that the review of Welsh national parks—I believe that I can speak about those, Mr. O'Brien, as we are discussing national parks as a whole—recommended that there should be direct elections to national park authorities. I do not know whether the Minister, who represents a Welsh constituency but is responsible for English national parks, feels that he could possibly comment on such a matter, but the Welsh Assembly should not be afraid of that suggestion. If there were elections and candidates supported the purposes of national parks, they would receive a huge amount of support. Indeed, that would stimulate a positive and balanced debate about how national parks should be administered and run and where their future lies.
I believe that Britain plays an important part in the national park movement throughout the world. We have many lessons that can he learned about how to manage rural areas in which people live and farm intensively. I am sure that the debate will go on. We could do with a debate on the Floor of the House to give us more time in which to examine these subjects.
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Mr. James Gray: In the few moments available to me if I am to give the Minister time to answer the various points raised during the debate, I will touch on two or three of those points and remind him of the questions that we seek answered when he winds up the debate. First, I congratulate the hon. Member for Scarborough and Whitby (Lawrie Quinn) on taking the initiative to call what has been an extremely useful and important debate.
It will be remembered that my hon. Friends the Members for New Forest, East (Dr. Lewis) and for New Forest, West (Mr. Swayne) raised two particular points. They drew a blind over the fact that the Minister, rather disgracefully, chose to announce the New Forest national park on the "Today" programme rather than in a statement to the House.
Alun Michael: Will the hon. Gentleman give way?
Mr. Gray: No, I will not. The Minister can answer in a moment. My hon. Friends raised—
Alun Michael: On a point of order, Mr. O'Brien.
Mr. Gray: Oh for heaven's sake!
Alun Michael: I want to make it clear that what the hon. Gentleman said is not true.
The Chairman: That is not a point of order.
Mr. Gray: The Minister will have the opportunity to respond more fully in a moment.
My hon. Friends the Members for New Forest, East and for New Forest, West raised two particular points. The first is that, as the Minister finally delineated it, the New Forest national park is 38 square miles smaller than that which was proposed by the Countryside Agency. As I understand it, the Minister himself made that decision. It misses out such important places as, for example, Dibden bay—which my hon. Friend the Member for New Forest, East referred to—with some detriment to the value of the national park. The Minister might like to tell us why that is and what can be done to make sure that it does not happen again and make sure that suitable constraints are placed on areas such as Dibden bay so that they are looked after.
Two hon. Members—the hon. Member for West Lancashire (Mr. Pickthall) and one other—referred to the issue of wind farms. That is a particularly worrying matter in the context of national parks and the areas surrounding them. Conservationists are alarmed about planning policy guidance note 22. Local authorities will be unable to create buffer zones around national parks such as the Lake District, which the hon. Gentleman referred to.
As Ruth Chamber, the deputy chief executive of the Council for National Parks, said:
"This would be an outrageous and blatant disregard of the Government's statutory responsibilities to protect these areas on behalf of the nation".
It is plain in PPG22 that buffer zones against wind farms may not be created in the areas surrounding national parks. That would have a particularly deleterious effect on national parks.
Nor may the planning authorities take any account of the cumulative impact of wind farms on national parks. We feel that that is also not right. The Minister might like to tell us fully what the policy he will adopt with regard to wind farms and national parks is.
A number of hon. Gentlemen and Ladies referred to farming. We forget too easily that farmers are the guardians of our landscapes and national parks as much as of anywhere else. If we allow farming to go the way that it appears to be going—particularly lifestyle farming—national parks will suffer as much as anywhere else. The Minister might like to touch on the Haskins review and how it will affect lifestyle farming, particularly in the uplands of various national parks.
Mr. McLoughlin: One of the decisions that the Secretary of State for Environment, Food and Rural Affairs has made is to change the designation as far as the new payments are concerned. That will have a serious effect in places such as Parwich. Farmers may farm in the same village but because one falls in a lowland area and one in an upland area or SDA—severely disadvantaged area—they will receive different payments.
Mr. Gray: My hon. Friend makes an extremely good point. I think that the mid-term review, at least as it was handled in this country, did not take account of less-favoured areas. There would have been deleterious
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effects had that not been corrected. It would be interesting to know, in addition to Haskins, how the Minister feels that the mid-term review will affect national parks.
We know that the current Government funding for the national parks authorities is about £36 million. The Minister made it plain in a recent statement that funding would not be increased by any more than inflation. In view of the announcement yesterday, it may not even be by that much. Will the Minister clarify whether the inclusion of the New Forest national park will result in a significant increase in funding for national parks in general? If the inquiry into the south downs national park were to find in its favour, would he commit the Government to providing the extra funding necessary for those two national parks?
On the subject of areas that are not currently national parks but may become so, in the aftermath of the statutory instrument debate last week about two areas of outstanding natural beauty, the Chilterns and the Cotswolds, it has been made abundantly clear to me from both places that any subsequent move towards national park status would be deeply unwelcome there. Will the Minister provide some reassurance that that is not in the Government's mind, that the AONB boards he has introduced are as far as he intends to go and that there will be no Trojan horse for national parks following on behind?
I will not tempt the Minister into any commentary on the long-running public inquiry into the south downs; that one will run and run. However, he must at least acknowledge that the fact that the public inquiry is so long running means there is a diversity of opinions. The hon. Member for Brighton, Pavilion (Mr. Lepper) told us, and he is quite right, that West Sussex county council are opposed to a national park. Its opinion must be taken into account; others are very much in favour of it.
As my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) reminded us with regard to the Peak district, we must take account of the fact that large numbers of tourists being attracted to an area such as the south downs has its downsides. It is good for the local economy, but it has its downsides. One problem that my hon. Friend the Member for New Forest, East mentioned was that because the New Forest national park will be smaller than originally planned, it will concentrate tourist activity in a smaller area. That will have an environmental downside.
The Minister may like to acknowledge the diversity of opinion about the best way to treat the south downs should it become a national park or some sort of enhanced conservation board. They are difficult issues to which I do not have the answer.
Like the hon. Member for Vauxhall (Kate Hoey), I am slightly reluctant to go down the easy route and say that all national parks are good things. They are broadly good things and we are broadly in favour of them, but there are downsides to them. We do not want to turn the whole of the United Kingdom into one great national park and say, "Isn't that marvellous?" There are definite downsides to parks; they remove authority from some local authorities and there are difficulties associated with them.
It is right to address those difficulties and consider such matters as water skiing in the Lake district and the point made by my hon. Friend the Member for Mid-

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Norfolk about public lavatories and waste disposal on the Norfolk and Suffolk broads. They may sound mundane issues, but they are very important.
Broadly, everyone in the Chamber would agree that national parks have an enormous amount to recommend them and that they go some way to preserving delicate and sensitive landscapes that deserve our enhancement and protection. However, we must be aware of the problems of low-cost housing, as my hon. Friend the Member for West Derbyshire mentioned, and of water skiing in the north of England, and we must also be aware of the way in which we handle tourists. They are difficult issues that must be debated carefully. In giving the Minister extra time to reply to them, I look forward to his response.
3.19 pm
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): I am grateful to the hon. Member for North Wiltshire (Mr. Gray) for the large number of extra seconds that he has given me. I congratulate all Members who have taken part in the debate and packed so much into the time available. Like them, I wish there were more time because I would like to respond in full. I will do what I can to respond to the specific points that have been made and, where I am not able to do so, perhaps write to Members.
I congratulate my hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) on obtaining the debate and on championing his national park, second only to his championing of national parks in general. I also congratulate my hon. Friend the Member for Preseli Pembrokeshire (Mrs. Lawrence). In recent times she has been a doughty champion of national parks in general as well as those in Wales, and has been a leading influence in Parliament in raising issues that concern to national parks.
I congratulate the Association of National Park Authorities on the success of national parks week, which I hope will be the first of many celebrating our national parks, sharing them and exploring their potential. It was about letting the public know what their parks can do for them and what they can do for the national parks. One characteristic that the national parks have in common is that each of them is unique; when I visit them, people at each say that it they are different and special, which is true. They are all unique; the national parks are a very special family.
In his introductory remarks, my hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn) asked about the action plan that follows the review of national parks. We are making good progress on about 50 recommendations, in line with the action plan that I published last year. I am happy to update him and others on our progress.
Section 62 of the Environment Act 1995 is an issue that concerns my hon. Friend and I can tell him that during the national parks review in 2000, responses made it clear that not all public bodies are clear about their obligations to take into account national park purposes, a matter which has been referred to in the debate. As recommended, we considered the detail of the impact of section 62 and its meaning. I will write shortly to all the bodies that will be affected by the 1995 Act reminding them of their responsibilities, and asking
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them to confirm how they are carrying out those responsibilities. The national parks authorities report annually on the observance of section 62 in their own national park, which I hope will help to follow through the issue raised by my hon. Friend.
My hon. Friend the Member for Scarborough and Whitby suggested that there might be a drift away from national parks because the planning officers were recruited elsewhere. The main drift that I have seen is the Peak district national park's recruitment of a chief executive from the Department for Environment, Food and Rural Affairs, which showed its good judgment. All the national parks in England had planning delivery grants from the Office of the Deputy Prime Minister in recognition of their good planning practice. I am not aware of a specific problem; it has not been raised with me by any of the national parks.
As my hon. Friend said, rural regeneration is very important. I am pleased to have been able to bring together the regional development agencies, national parks in England and representatives of areas of outstanding natural beauty to talk about sustainable development and the interface between national park and RDA work. Each of the national parks can make a contribution to its region.
I welcome my hon. Friend's reference to the efforts being made to welcome ethnic minorities to national parks, and the Mosaic project has shown the way forward in that matter. The parks must be for everyone if they are to be truly national parks, as hon. Members on both sides of the House will agree.
My hon. Friend and my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) were right to suggest that I would not say anything about the south downs; it would be improper to do so until I have the report of the inspector who is conducting a public inquiry into the proposed designation. However, I assure my hon. Friends that all views will be taken fully into consideration. The same applies to issues such as the Whinash proposals, to which my hon. Friend the Member for West Lancashire (Mr. Pickthall) referred, which will be the subject of a public inquiry.
The hon. Member for Mid-Norfolk (Mr. Simpson) rightly pointed out that the broads are designated under separate legislation because of navigation concerns. However, I agree with him about their value; they are fully a part of the national parks family and share its rich diversity. The hon. Gentleman was right to refer to the importance of global warming and the potential impact on the broads, which illustrates why the issue is so important to the Department for Environment, Food and Rural Affairs and such a high priority for the Secretary of State. I have insufficient time to deal with that matter and with the navigation issues, but I will write to the hon. Gentleman about them. Similarly I defer to his knowledge—and that of my hon. Friend the Member for Norwich, North (Dr. Gibson)—on the subject of toilets in the Norfolk area, except I would point out that considerable additional funds have been provided to local authorities, and those issues should be dealt with locally.
The hon. Member for Brecon and Radnorshire (Mr. Williams) rightly said that foot and mouth disease had shown how important access is to all of those in the country: those who earn their living in the countryside,

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those who live there and the farming community. It is worth celebrating the fact that the National Farmers Union has played a full part in the development of tourism and bringing people back to the countryside. There is an increasing sense of the importance of access.
The hon. Gentleman touched on the issue of direct elections, which is a matter for the National Assembly for Wales in relation to Welsh national parks. I must say that I am not attracted to the idea as far as my responsibilities are concerned. As most representatives on the national park authorities are local, and as the tendency in recent years has been to include parish council representatives, the need for those people to be rooted in the opinion of people living in the area is well catered for as far as the English national parks are concerned.
I am grateful to my hon. Friend the Member for Preseli Pembrokeshire for referring to the environmental development fund in Wales. I am pleased to say that the sustainable development fund in England, which has now been operating for two years, contributed to more than 300 projects in its first 18 months, and levered in about £13 million from other funding sources. I hope that it will go from strength to strength.
My hon. Friend the Member for Vauxhall (Kate Hoey), who is noted for her support for activities described as minority sports, is quite wrong in her criticism of the Lake District national park authority. The proposals, which were decided on some years ago, were considered carefully and at great length, and were confirmed by my predecessor, my hon. Friend the Member for Sunderland, South (Mr. Mullin). I wholeheartedly agree with the policy that has been developed by the Lake District national park authority.
The hon. Member for North Wiltshire (Mr. Gray), who has a talent for spoiling the party, was absolutely wrong to claim that I made any announcement on the "Today" programme. I did not. The first announcement relating to the New Forest was made to the House in a statement. I have made that clear.
Dr. Lewis: On a point of order, Mr. O'Brien. Following the Minister's example, it must be made clear
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that the Minister made a written statement without informing the hon. Members concerned that it was going to be made.
Mr. Bill O'Brien (in the Chair): Order. That is not a point of order.
Alun Michael: What the hon. Gentleman says is quite untrue. He knows that in advance of making that statement I undertook—and carried out the undertaking—to fax to his office a copy of the letter that had been placed on the Board so that all hon. Members directly affected heard about it at the moment when the decision was announced to the House.
Dr. Lewis: Will the Minister give way?
Alun Michael: No. The hon. Gentleman has made enough misrepresentations. Perhaps he will stand up to make a point of order in order to apologise.
Dr. Lewis: On a point of order, Mr. O'Brien. I have been accused of misrepresentation. I said that the Minister's office tipped off the BBC three days in advance of any announcement and did not tell the hon. Members concerned that any announcement was to be made.
Mr. Bill O'Brien (in the Chair): That is not for the Chair to decide.
Alun Michael: I was absolutely scrupulous in ensuring that the House heard about the matter before anyone else. The hon. Gentleman's canard is not justified.
I am very pleased that the Landscape Institute has recognised the national park movement as the greatest influence on the landscape of the UK in the past 75 years. During the past 50 years, the national park authorities have protected some of our finest landscapes and our most important natural and cultural heritage. This year, two more national parks will celebrate their 50th anniversaries, the Exmoor and Yorkshire Dales national parks. They are holding a series of events to celebrate that. I hope that many hon. Members will take the opportunity to take part in those celebrations.
It is worth remembering the roots of the parks. They were called for by the people and are truly for the people.
Mr. Bill O'Brien (in the Chair): Order.

Pension Service (York)
3.30 pm
Hugh Bayley: I begin by thanking Mr. Speaker for responding so quickly to my request for a debate on the closure of the York pensions centre with the loss of 313 jobs. I have invited the hon. Member for Ryedale (Mr. Greenway) to join me in this debate, which will show that there is all-party support in and around York for all possible action to be taken to avoid compulsory redundancies for the staff concerned.
I pay tribute to the staff of the York pensions centre and their manager, Ron Stead, who have done a first-class job to introduce the pension credit in East Yorkshire and North Yorkshire. In City of York, there are now 6,230 pensioner households receiving the pension credit, on average getting £34.90 a week, which means that an extra £217,000 a week, or £11.3 million a year, is coming to our pensioners. Can the Minister assure the hon. Member for Ryedale, my hon. Friend the Member for Selby (Mr. Grogarn)—who is also here to support me and his constituents, who are affected by the decision—and me that the quality of the Pension Service for pensioners living in York will not decline as a result of the closure decision?
The decision is a serious blow to the York economy. Although unemployment in York has fallen by almost three quarters—from some 6,400 10 years ago to 1,700 today—it was not at all helpful for my hon. Friend the Minister for Pensions to say:
"York's economy is fairly buoyant and it is therefore more likely that some of those affected will be able to find alternative work."
York's economy is performing well, but it is going through a difficult patch at the moment. Some 316 jobs at Terry's of York, the chocolate factory, will be lost when it closes next year, and 150 nigh-tech computer jobs at Norwich Union are to be made redundant as a result of the company's decision to put some of that work out to contractors. I shall do all I can to help Pension Service staff from York to find alternative work, but the Government have created the problem, and I hope that they will assure me that they will do all they can to help those staff to find alternative work and that it will be possible to avoid compulsory redundancies.
When the Lyons review was considering relocating jobs from the south of England to the north, I submitted evidence arguing York's case as a suitable location for job relocations. When the review was published, York emerged as one of the favoured locations. Before the announcement of the Department for Work and Pensions closure decision on the York pensions centre, I wrote to the Department for Environment, Food and Rural Affairs and to the Ministry of Defence to ask them whether they were considering moving jobs, under the Lyons review, from the south to the city of York. I chose those two Departments because they already have a substantial civil service presence in the city, and I received helpful responses from Ministers in both Departments.
This is therefore a time for joined-up government. The DWP must co-ordinate its decision, which will lead to job losses in York, with decisions being taken by other Departments to increase job opportunities in
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York and to try to achieve a seamless transfer so that people are not left jobless but can transfer from their current jobs to new civil service jobs in the future. I was grateful to the Secretary of State for Work and Pensions for contacting me on the day on which he made his announcement, and when I spoke to him, I asked him to get in touch with those Departments, and any others that he knew were considering moving jobs to York, to see whether such joined-up government, and coordination of Departments, could take place. I would be grateful if the Minister told us what progress has been made on that front.
I know that the Department for Work and Pensions has met the York Inward Investment Board, now known as york-england.com. I would like an assurance from the Minister that he will continue to co-operate with the local authority and the York Inward Investment Board until an alternative user can be found for the Pension Service building, Triune court.
Last week I visited the centre, which is just over the border of my constituency in that of the hon. Member for Ryedale, and met managers, members of staff and the trade union representative for the pension centre, Julie Kemp. I was pleased to see that the management and union are working together to deal with the problems that they face, but there can be no hiding the anger that staff feel at the decision. For instance, one employee had given up a higher paid job to transfer to the civil service because he believed that a lower salary was compensated for by greater job security. I met a woman who had just had a baby and is losing her job at the pension centre because of the Government's decision. Her husband is also losing his job at Terry's in York.
I was concerned to be told that many staff believe that the Government planned from the outset an early closure of the pension centre. They think that the Government opened it to deal with the peak work load when pension credit was introduced. Having worked as a junior Minister in the Department, I do not believe that early closure was planned from the start. I would be astonished if the Government had taken on a 15-year lease through their property manager, Trillium, and spent millions of pounds on equipping and commissioning the building, as well as recruiting and training staff, for a short-term purpose. However, that poses a difficult question: how did the Department get its projection of the number of staff needed for the Pension Service so badly wrong? What will the Government do to avoid similar mistakes in the future? It is important to avoid such mistakes, because they are costly, especially for the staff concerned, who think they have job security only to find that they do not and who may get in great difficulty with their mortgages or other financial commitments. It is also costly for the taxpayer if the Government invest in a new building, staffing and training, only to write off those costs after three years.
Will the Minister answer some questions of which I have given him notice? How long is Trillium's lease on the premises, Triune court? How long is the Department for Work and Pensions under an obligation to pay Trillium for using the premises? What will the premises cost his Department if left vacant from April next year, when the pension centre is due to close? What was the cost to his Department of commissioning the building—putting the walls up in the right places, painting and

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furnishing it, installing computers and cabling the building? How much has been spent on recruiting staff for the York pension centre?
The way for the Government to recoup part of those big costs is to retain the staff within the civil service when other Departments move to York and to retain the building for Government use so that the cost of commissioning it is not written off. Will the Minister closely examine other Departments' decisions to move staff to York as a result of the Lyons review, and co-ordinate the time scale for his Department's regrettable closure decision with other Departments' decisions to move jobs to York? Then there would be a prospect that some—I hope many and possibly all—staff at the pension centre could transfer to other civil service jobs in the area.
3.39 pm
Mr. John Greenway: I begin by congratulating the hon. Member for City of York (Hugh Bayley) on securing the debate. He referred to the speed with which Mr. Speaker granted the debate; it happened before I could scratch my head and work out in my diary when I could apply for a slot for this debate—as the hon. Gentleman said, the facility is in my constituency in the York suburbs.
York has four Members of Parliament, and three of us are here today. Announcements on redundancies of such magnitude transcend party politics, certainly locally, and I want to impress on the Minister the fact that we all want to do our best to represent the interests of the community that we collectively serve. That means, first, finding an alternative use for the work and pensions office; secondly, securing alternative employment if the alternative use does not allow everyone to keep their job; and, thirdly, in any event to cushion the blow to the local economy, which is suffering at the moment from other job losses at Norwich Union, the Terry's factory and elsewhere.
I, too, visited the facility, and I have some experience of private sector call centres and IT processing centres. I am bound to tell the Minister that what has been created in York is the equal of anything I have seen in the public or private sector. I have made that view clear, because the staff deserve congratulations on what they have been able to achieve in a relatively short period.
I am told that the Department for Work and Pensions is preparing the necessary data to market the site and staff to other Departments. Will the Minister confirm today exactly what his Department is doing and over what time scale the closure will take place? Yorkshire Forward is pursuing private sector means, and I believe that the facility has attractions for both the private sector and other Departments.
I particularly want to impress it on the Minister that my first preference is to find, as far as possible, an alternative use for the facility—the staff and equipment as well as the building. The last thing I want is the premises to be vacated and everything to be ripped out, only to find two or three years down the track that there is an alternative use and that we must start all over again. That would be a wicked waste of public funds for the reasons made clear by the hon. Member for City of York.
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Yesterday, the Chancellor announced the relocation of some 20,000 civil service jobs from the south-east to the regions with the idea that some would go to Yorkshire. Yorkshire was specifically mentioned in the context of the Department for Environment, Food and Rural Affairs. It is a shame that the way that our business has been organised means that the Minister responsible, who is from that Department and who was here a few minutes ago, has vanished. We would have liked to ask him about those matters, for reasons that will become obvious in a moment.
I want to stress that there is some interest and, I dare say, optimism that that relocation of jobs might be good news for York, but we must be clear about the fact that the 20,000 jobs that will come from London to the provinces represent redeployment. Given that there will be 100,000 or more redundancies throughout the civil service, competition for alternative jobs in the civil service will be extremely intense. I understand that when the Department for Work and Pensions opened the facility at Triune court at Monks Cross, a number of people were redeployed and came to York because they saw it as an attractive place to live. As the hon. Member for City of York said, some even took a pay cut to come, but a significant number were recruited locally, and we hope that that will be, the same in this instance.
The Chancellor, in his statement yesterday, referred to the potential for 250 posts from the Department for Environment, Food and Rural Affairs to be moved to Yorkshire, and just under 100 from the Department for International Development to East Kilbride. We are interested in the 250 DEFRA jobs coming to Yorkshire, and I want to impress on the Minister the history of what was previously the Ministry of Agriculture, Fisheries and Food when it moved jobs to York.
When my party was in government, we were very successful in persuading Ministers not just to create the central science laboratory at Sand Hutton in the south of my constituency on the outskirts of York, but to pull down the old Adams hydraulics factory in the Vale of York constituency. That enormous site was redeveloped with brand new office buildings occupied by DEFRA, mostly for the Meat Hygiene Service. If DEFRA wants to go to York, it may wish to take up accommodation in Kings Pool on Foss Island road, which might mean one or more of the agencies in Kings Pool, such as the Meat Hygiene Service, relocating locally. The scale of the facilities at Triune house would fit the bill.
Finally, I stress the importance, if only in terms of the human cost and the value for money cost of what has been invested in Triune house, of finding an alternative use for this facility. We need strong marketing, but the product that we have to offer is first class. I endorse what the hon. Member for City of York said about the cost and terms of the lease. All those questions are in my notes, but I shall not repeat them. We need reassurance that when the Department says it will find an alternative use, we will see evidence of action to that effect.
3.46 pm
>The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): I, too, congratulate my hon. Friend the Member for City of York (Hugh Bayley) on securing the debate. The House knows him not only as the previous holder of the ministerial office

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that I occupy, but as an assiduous and effective constituency Member of Parliament. He has demonstrated that effectiveness in the debate this afternoon. I also want to pay tribute to the hon. Member for Ryedale (Mr. Greenway), who has also sought to represent his constituents in a constructive, but determined, way. I hope we can work with them both to find a way forward on a problem that faces us all.
My first remarks must be directed towards the staff of the Pension Service in York. I understand that this is a distressing time for many of them and that the announcement that the closure of the York pension centre is planned must have come as a shock. These are inevitably uncertain and worrying times for them. I pay tribute to the professionalism with which they have responded—one of their first concerns was to ensure the continued efficient service to the public. I therefore want to give them and my hon. Friend the two assurances that he asked for in his opening remarks.
First, the high level of customer service being delivered to pensioners will not be affected by the organisational changes we are making. Secondly, we will do everything we can to help those staff whose jobs are affected by these changes and to pursue vigorously all redeployment options where staff reductions are necessary, with the aim of helping them to find suitable alternative employment wherever possible. My hon. Friend will understand that we cannot rule out the possibility of some redundancies.
These are now matters for consultation with the unions, which is one of the reasons why I cannot give the hon. Member for Ryedale a precise idea of the time scale here. That would be premature, given the consultation process, but in a few moments I will say a little more about the practical arrangements we are making to help staff.
The situation in York should be viewed in the overall context of the changes we are mating in the Pension Service and the Department as a whole. Since 2001, the Department has been rationalising its office network. The creation of Jobcentre Plus and the Pension Service combined the old Benefits Agency and Employment Service networks in two new agencies in modern offices that are focused on the needs of our customers. That has involved moving from an organisation with hundreds of public offices to a centralised approach processing work in larger centres.
As well as the obvious economies of scale, the creation of the local service network working with partners in the state and voluntary sectors has enabled us to be more responsive to our customers' needs and to deliver services more effectively to them. When we made our plans for the introduction of the Pension Service, we did so on the basis of an unprecedented investment in the Department's future. I am talking about an investment of some £5 billion across the Department, including £2.8 billion over two spending reviews in modern IT infrastructure.
We always knew and made it clear that over time our staffing needs would peak with the roll-out of pension credit. That was especially the case given the radical approach of having five-year awards for pension credit. Greatly reducing the requirement to report changes not only improved the experience of our customers, but
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simplified ongoing administration. We set out our plans for a managed reduction in our work force of 18,000 posts in October 2002. Since then, we have had the added efficiency challenge, which was announced by the Chancellor in March. That has resulted in our having to find further savings over the four-year period to 2008.
The lessons learned from the establishment of the Pension Service and the success of the centralised process for delivering pension credit demonstrate that we can maintain high levels of service with a reduced work force. Since the budgetary announcement, further detailed planning has been taking place across the Department. This has included discussions on the future size and shape of the Pension Service, the scope for integrating benefit processing in larger centres in Jobcentre Plus, and the continued modernisation of the Child Support Agency and the Appeals Service.
From those discussions, it has emerged that, of the 29 pension centres, we have identified six that should transfer to Jobcentre Plus to improve the efficiency of benefit processing. Two further pension centres will transfer to the Appeals Service and the Child Support Agency. However, at this stage, we have been unable to identify alternative departmental uses for the two pension centres in Liverpool and York.
As requested by my hon. Friend the Member for City of York and the hon. Member for Ryedale, I can give an assurance that we are doing all we can to promote the sites and the work force to other Departments and the private sector, in the spirit of joined-up government that my hon. Friend requested. Both hon. Members know, as they know the site well, that it is extremely flexible and will be attractive in respect of other uses. Given its location, we are optimistic that, if we work closely with them and other agencies, we will be able to find alternative uses. We are working closely with york-england—formerly the York Inward Investment Board—and, as the Secretary of State pointed out when he spoke with my hon. Friend, he has been actively promoting the York and Liverpool sites to Cabinet colleagues.
The Department has an agreement with york-england jointly to market our site and our people, and I can assure both hon. Members that we are investigating opportunities with four Departments that may have an interest in the York area. Following yesterday's spending review announcement, the position of other Departments may be clearer that it was even 24 hours ago and they are therefore in a better position to assess their own needs.
Concerns have also been raised that, when the Lyons report is recommending moving jobs out of London and the south-east, these centres are being considered for closure. It is only fair to point out that when we set up the Pension Service, we did not locate any of the centres in London and the south-east. In fact, only 10 per cent. of the Department's work force is in London and a further 7 per cent. in the south-east. In the north-east, including Yorkshire and the Humber, the figure is 20 per cent.
As a responsible employer, we have been completely honest with our employees and have gone to great pains to explain the situation to them and to help them to prepare for the future. Within the Pension Service, a redeployment unit has been established to work with

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managers to find people redeployment opportunities in the DWP or in other Departments. The unit's aim is to help to find people jobs as quickly as possible and to facilitate the development of skills to enable people to take up opportunities. The unit's approach will be fair, open and transparent and it will follow DWP principles of equality of opportunity and diversity, with individuals' needs being taken into account in determining suitable alternative opportunities. In addition, the pension centre management team are in the process of creating a local redeployment service to support staff in activities such as identifying vacancies and completing training to strengthen their Cvs.
Since the announcement at York, we have ensured that the staff have access to experienced human resource professionals to advise on the detailed issues associated with redeployment and severance policies. We have also provided a counsellor from Right Corecare, one of the providers of an employment assistance programme used by the Department. I understand that most staff have attended a presentation by human resource staff and have had a personal counselling session with a human resource adviser.
I shall respond to both hon. Members on the issues that they raised about the criteria used to select York as one of the sites that would no longer be required by the Pension Service. My hon. Friend the Member for City of York raised questions about the cost of setting up the centre in the first place and the cost of closing it now. We obviously needed to balance those costs in making the decision on which of the 29 centres should be considered for closure.
The criteria covered a number of areas and were divided into two categories: the operational tests and the economic tests. The former category included things such as the quality and age of the facilities, the lay-out of the site and the site's capacity to handle larger work loads.
I hear what my hon. Friend says about the buoyancy of the local labour market, but he will agree that there has been substantial growth in employment since 1997, both in the Ryedale constituency and in the city of York. That is not why we took the decision to close the York pension centre, but it is an important part of the context.
The economic analysis concentrated on retaining sites with higher exit costs and lower running costs, including such things as staff exit costs and estates and telephony exit costs.
The suggestion was made that when we established the York centre we always intended to close it soon afterwards, and that the considerable investment we
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made was therefore irresponsible. The implication was that we were being less than honest with our staff. I give the reassurance today that that was never the case; we would never have made that investment had we not intended the provision to be long term, but circumstances have changed. The new efficiency challenge that the Department faces—a considerable challenge, but one that we believe we can meet—means that we have to make such organisational decisions across the board.
Mr. Greenway: I want to raise a separate point that is important to the people of North Yorkshire. When the office was opened, a number of smaller, local offices closed and people were advised that they could raise their queries at York. Can the Minister assure me that there will be no reduction in service for people living in the county in relation to pensions and other advice on social security?
Mr. Pond: I can certainly give the hon. Gentleman that assurance. There will be no reduction in the service. From the point of view of our customers—the pensioners whom we serve—the impact of the organisational changes will be invisible. We are committed not only to maintaining the service, but to improving it and to providing pension credit to as many people as possible who are eligible.
My hon. Friend the Member for City of York asked one or two questions about some costs involved and the period over which we have the arrangement with Trillium. Our contract with Land Securities Trillium is until March 2018, and because of the categorisation of York pension centre we can give notice to LST in April 2008 for disposal in October 2008. We may be able to reduce that commitment through a commercial negotiation with LST once a decision has been taken on the future of the York building.
My hon. Friend also asked for other specific information on costings. I will write to both hon. Members with that information, which I hope they will find useful.
In the few seconds remaining, I pay a final tribute to both hon. Members for raising the issues in the debate and, most importantly, to the staff of the pension centre in York, who have acted professionally. I reiterate my assurance that we will do everything possible to help the staff through this uncertain and difficult period of change and to ensure that we find them suitable alternative employment wherever possible. To that end, we will be working with them and their staff representatives.

NHS Funding (East Sussex)
4 pm
Norman Baker: I am pleased to be able to raise a significant matter for Lewes, namely the delivery, funding and organisation of health services as they affect my constituents.
Let me say first that I recognise that the Government have put significant extra resources into the health service, particularly in the past couple of years. That investment is welcome, and if that allows the Minister to tear up 10 minutes of her speech telling me how much the Government have allocated, so be it. This is not a plea for the overall amount of money allocated to the health service to be increased.
There are particular local factors that make NHS delivery complicated in my area and currently detrimental to my constituents. The Minister will be aware that my constituency has a significant number of elderly people, so the demands on the health service are greater than elsewhere. That is particularly true in towns such as Seaford and Polegate.
It is also true that East Sussex is not part of the rich south-east. We are sometimes wrapped up with Surrey and West Sussex and regarded as having a lot of money, but, according to all the Government's indicators, East Sussex is a poor county. Dependence on the health service is greater there, and the possibility of going private, which might be an option elsewhere, is not available to as many people. In any case, we all want to reach the stage at which the NHS is delivering so fantastically that there is no wish to opt out in that way. The Minister and I probably agree on that objective.
Let me say as a preface that nothing in this speech is a criticism of the excellent staff who work in our health service and hospitals and who look after my constituents to the best of their ability. However, there are particular problems that specifically affect my constituents.
The first is health service inflation. The Minister will know that the inflation rate for the health service runs ahead of that for the economy as a whole. That is partly to do with the ever-increasing drug budget. Will she comment on how those issues are considered by the Government? What steps can they take to ensure that drug companies do not abuse the extra money that is being made available to the health service? We all want to see the money going to the patients, rather than the companies simply cornering it for themselves.
Secondly, the Government have rightly been trying to reduce waiting lists, and they have been largely successful. However, the price of reducing waiting lists has been extra pressure, albeit perhaps only in the short term, on the acute trusts in particular. Given the historic absence of doctors and nurses, the trusts have responded by recruiting large numbers of agency staff. That has produced a gigantic bill for the local trusts, which has meant that some of the money that should be directly allocated to front-line services has been allocated to agencies that supply staff. That has been a short-term reaction to the work of reducing waiting times. The Government's ultimate objective is desirable but there is a short-term problem, and I would welcome the Minister's comments on it. I am concerned about the
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amount of money spent on agency staff by my local NHS trusts—the Brighton and Sussex University Hospitals NHS Trust, which covers the western part of my constituency, and the East Sussex Hospitals NHS Trust, which covers the eastern part.
The third issue that worries me, and which is particular to my constituency and those of other East Sussex Members, is the relationship and co-ordination between the various parts of the health service and those who are delivering health care. I refer in particular to the three trusts—the two acute trusts and the non-acute trust, the East Sussex County Healthcare NHS Trust, which delivers mental health and other such services—the primary care trusts that serve my constituents, and East Sussex county council, which is responsible for dealing with the care of those who are discharged from hospital, or not as the case may be.
Let me start with that last point. If the Minister has seen the figures for bed blocking in East Sussex, she will be concerned, as the incidence of bed blocking is unacceptably high. Indeed, her colleague, the Under-Secretary of State for Health, the hon. Member for South Thanet (Dr. Ladyman), stated in an Adjournment debate on 22 June that
"last week 10 per cent. of the acute hospital beds in East Sussex were occupied by patients who no longer required hospital treatment. That is not good enough."—[Official Report, 22 June 2004; Vol. 422, c. 1319.]
I entirely concur that that is not good enough. The figures from the East Sussex Hospitals NHS Trust for 1 July tell me that 99 people who should not be in hospital are occupying beds. More than 10 per cent. of the beds are occupied by bed blockers, and well over half of those result from the county council's failing to take responsibility for people who ought to have been discharged into county council care.
What steps will the Minister take to ensure that the county council takes its responsibility seriously and discharges people from hospital in a timely fashion, not simply leaving them in hospital beds, thereby preventing other people from occupying them? That has an impact on waiting lists, creates unnecessary costs for the NHS and, sadly, because the patients are not in a suitable environment, causes their condition to deteriorate.
The Minister may say that the Government have introduced an Act of Parliament that subjects county councils and others to a fines regime if they fail to take their responsibilities seriously. I personally do not have a problem with such a regime, but I wonder—perhaps I am being rather cynical—what the position is if a county council or similar authority decides that it is financially more advantageous to pay the fines that are racked up than to take responsibility for those who ought to be in its care? It seems that the financial arrangements are not on an even keel. I suspect that the county council is not taking its responsibilities seriously and discharging people into its care as readily as it might. I hope that the Minister will address that point.
The Minister will also be aware from earlier discussions in the House and elsewhere that there are plans to close wards in the Eastbourne district general hospital, which serves my constituents in Seaford, Polegate and elsewhere. She may have seen the front page of the Eastbourne Herald, which is one of the papers circulating in my constituency. It states:

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"Wards to be shut at DGH: This is a scandal!"
That is what my local paper is saying.
I raised the matter with the relevant PCT and also with the acute trust. They tell me that the closures are partly the result of the bed blocking to which I referred, but that they would close wards behind those who left the hospital even if the bed blocking problem were solved. In other words, the wards will shut in any case as soon as the bed blockers are discharged. Part of the reason for that is that the hospital has been set a savings target for this year of £10.8 million—more than 5 per cent. of the budget—despite the fact that its management costs have decreased by 0.5 per cent. in the past year. The difficult financial situation and the ongoing clinical review are leading them to consider options that are not regarded as acceptable or palatable by my constituents and others.
Despite the initial denial, the options include discontinuation of in-patient children's services at Eastbourne, which will be transferred to Hastings. The trust has been rather mealy-mouthed about that. It has said in public that that will not happen—indeed, the Under-Secretary of State for Health, the hon. Member for South Thanet, quoted the trust in good faith on 22 June—but I have subsequently had discussions with the trust and learned that that service is secure for only a year and that financial and recruitment pressures may force it to be discontinued thereafter. Front-line services are being affected in a way that is unacceptable and contrary to the Government's clear intentions to provide better health care services for the population at large. They have provided the money, but services are still being cut.
The Minister ought to ensure that Government money is being spent properly and that Government targets are being met. I do not believe that that is the case. It appears that the trust's deficit will rise to about £5 million by the end of the year. That means that several improvements are on hold and treatments that have been approved by the National Institute for Clinical Excellence will not be implemented or begun in my trust area because it cannot afford it. So we return to the post-code lottery of health services, which the Government tried to avoid by creating NICE, because trusts suffer from a shortage of money.
The problem also affects the other acute trust, the Brighton and Sussex University Hospitals NHS trust, which serves the Lewes and Newhaven end of my constituency. In 2003–04, the trust failed to meet its primary duty to break even, having a retained deficit of £7.9 million on total income. It has a financial recovery plan, but the reasons that it gave for the deficit are, first, the high cost of temporary staff to cover vacancies—the point about agency staff that I mentioned a moment ago; secondly, the use of the private sector to maintain levels of patient care and achieve its waiting-list targets—because it is striving hard, as it should, to meet the Government's determination to get waiting lists down, but that has a high, short-term cost; and, thirdly, the increased costs of development in medicines and supplies, which ran ahead of anticipated levels by 12 per cent. last year, and the cost of drugs. The Government need to grasp those things if they are to deliver want they want to deliver.
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Management costs, have been kept at 3.3 per cent. of turnover. The trust is not run by the bureaucrats the Chancellor wants to get rid of; there is a pretty tight management team in Brighton. It says that the 2004–05 budget will be
"every bit as challenging as 2003–04, particularly given the brought-forward deficit of £7.9 million that needs to be repaid and the underlying cost pressures that must be controlled."
The East Sussex County Healthcare NHS Trust has a horrendous problem, mainly because of spending on locum doctors and agency nurses, various private sector placements and the rising costs of drugs—the same reasons given by the other two trusts to which I spoke. The trust took up the matter with the strategic health authority, but it offered no financial support and merely said that any deficit at the end of 2003–04 would have to be repaid in full as a first call on this year's resources. It considered some serious options, including a full vacancy freeze, avoiding all private sector placements and said:
"Clearly, services, clients/patients and staff will be affected."
The trust has made desperate efforts to improve matters since then, but in its most recent statement to me it presented a pretty bleak picture of how things are. Ironically, that letter sent to me on 17 May by the chief executive Stephanie Parkes-Crick stated:
"I am pleased to be able to advise that as at the end of March, so the end of the last financial year, the Trust was £1 million overspent."
The chief executive was "pleased to advise" that she was £1 million overspent—that shows the depth that the trust had reached. There is a further £2.8 million to be realised this year, which will be provided by avoiding private bed usage, and the PCTs have said that they want a further £1 million in the course of the year from that already tight budget to contribute to the East Sussex health economy's financial gap. A trust that is absolutely strapped for cash is being asked to make a further contribution of £1 million.
The trusts say that the PCTs require too much money from them, and that they should consider savings first. I am not able to judge who is right, but I can tell the Minister that serious cuts are being made in front-line services despite the Government's extra cash to the health service. There is a dispute between the PCTs and the trusts, which the strategic health authority will not sort out, and also between the acute trusts and the county council about who is responsible for bed blocking and where the buck should stop in that respect.
It is not a happy situation. I am not particularly interested in where the blame lies; I just want my constituents to have the best possible health care. I welcome the fact that the Government have made more money available through the NHS but it is not reaching the people on the ground. That is not necessarily the Government's fault, but now that I have drawn it to their attention, it is up to them to sort it out. People are suffering; they are denied treatment that is available elsewhere in the country and that requires the Minister's help.
I will give the Minister an example. A constituent of mine, a Liberal Democrat councillor called Peter Harper, who lives in Newhaven, was in hospital for a serious operation in M arch. He has been told that he will have at least a 14-week wait for the pain clinic; he will

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have to endure three months of agony before he can be seen by someone at Brighton. That is simply not good enough. I know that the Minister and her colleagues want to deal with the problem. I hope that the information that I have given will enable her to consider the issues that I have raised and to try to ensure that the Government's objectives, which by and large I share, result in action on the ground to make life better for my constituents, particularly those in Seaford and Polegate. They are seeing services disappear from those big towns into Eastbourne, rather than having more services on the ground.
4.15 pm
The Parliamentary Under-Secretary of State for Health (Miss Melanie Johnson): I congratulate the hon. Member for Lewes (Norman Baker) on securing the debate. I very much appreciate the interest that he takes in his local health services, and these matters are obviously of considerable interest to him and his constituents. I join him in paying tribute to all the NHS and social care staff who work in the local health economy. Their commitment is obviously to the continual improvement of the local NHS and social care services, which is to be commended, because they make the difference.
I will deal first with the question of national investment. I am glad that the hon. Gentleman welcomed the investment we have put in and accepted that a lot of extra money is being invested. There is 7 per cent. real growth year on year in terms of what goes into the NHS, which is considerable real-terms growth. The NHS plan, which was launched in July 2002 and drawn up with the help of staff, patients and other stakeholders, set out a programme of sustained investment to turn the NHS round, and it has delivered real progress.
Let me turn briefly to progress that has been made in East Sussex. No patient in East Sussex now waits longer than nine months for in-patient treatment or longer than 17 weeks for an out-patient appointment. I accept the hon. Gentleman's point that 14 weeks is still a long wait for a pain clinic, but we are making progress. Indeed, we have made considerable progress and we hope to make more.
Yesterday's announcement highlighted the fact that we are working towards a maximum 18 weeks from referral to treatment for every patient across the NHS by 2008. Considering we inherited IA waits of more than 18 months from out-patient clinics to treatment, that shows what a huge turnaround has been achieved and our ambitions for the service. Ninety-seven per cent. of patients in the Eastbourne Downs primary care trust area can access a general practitioner within 48 hours, and 100 per cent. of patients in that area can access a primary care professional within 24 hours.
The indications show that all primary care trusts in East Sussex are making good progress against the target for reducing the number of patients waiting six months for an in-patient appointment. The PCTs are also making good progress against the target for reducing the number of patients waiting 13 weeks for an outpatient appointment. The situation is very positive.
The new MRI scanner equipment at the Conquest hospital in Hastings is faster and 50 per cent. more powerful than the previous scanner. That hospital also
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has a new investigation suite for urology and gynaecology investigations. There is a new consultant in care of the elderly at Eastbourne district general hospital, which may be relevant to other issues that the hon. Gentleman raised.
In counter-balancing some of the hon. Gentleman's remarks, which suggested that everything is dire, I emphasise that big improvements are going on in the NHS. I am not saying that everything is all right; lots of things still need to be done. We accept that although we are making a lot of progress in the NHS, including in East Sussex, more is needed. That is why the continuing investment and reform are necessary. We continue to increase our investment—our spending on buildings and equipment—which has gone up from £1.1 billion to £3.4 billion. Without those things and without the help of NHS staff, we will not improve services and access to care and treatment.
As the hon. Gentleman knows, the funding system has changed. I will not spend too long on this point. Primary care trusts are those with the specific local knowledge and expertise that are responsible for improving health, securing the provision of the relevant local health services and integrating health and social care. I will return to the point about the relationship between health and social care in a moment.
PCTs are the cornerstone of the modernised NHS and they are best placed to reflect the needs of local communities. I am sure that the hon. Gentleman, as a Liberal Democrat, supports devolution and local decision making, because they are in common with his party's general philosophy. PCTs control 75 per cent. of the budget at local level.
The funding allocated to East Sussex PCTs comes on the basis of the relative needs of the population. A weighted capitation formula is used to determine it. I know that the hon. Gentleman started by saying that he is not concerned about the funding and that he recognises that we have put a lot more money in, but at times he was tempted to blame money for the problems he outlined, which still need to be resolved.
I am sure that the hon. Gentleman is happy that the PCTs in the constituency will receive considerably increased allocations. Eastbourne Downs PCT gets £47 million, or a 29 per cent. increase, during the years 2003–06. I am sorry that I do not have the updated figures. Sussex Downs and Weald PCT will receive a cash increase of £33.8 million, or 30 per cent. That is close to the England average of 30.8 per cent. So, they are receiving funding on a par with the rest of the country.
Norman Baker: I accept the Minister's figures on the PCTs' money, but my queries, which are twofold, are not about the overall sum. First, are the PCTs passing on the money properly or are they taking too much for themselves in management costs? What is the mechanism to deal with that? Secondly, what about the short-term pressures in the health service to get the Government's waiting lists down, which are leading to excessive short-term spending on agency staff? Those are the issues that I referred to, not the amount allocated.
Miss Johnson: I understand the hon. Gentleman's point, but I am making the point that money is going in,

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and going in based on, and in recognition of, need. The East Sussex trust has also got additional money—from £161 million in 2003 to £167 million in 2003–04—and it will get £7 million more in 2004–05. So, the picture is of additional resources going in.
As the Under-Secretary of State for Health, my hon. Friend the Member for South Thanet (Dr. Ladyman), pointed out in a debate on 22 June, which the hon. Gentleman referred to, the NHS in East Sussex has achieved and continues to achieve the national standards. That is good news, but we want to go further and build on it.
To do that, the NHS must consider how it uses the resources it receives and the health care and social care organisations in East Sussex need to consider carefully how they work. That is, in fact, what they are doing. I am glad to receive confirmation from officials that the Surrey and Sussex strategic health authority and the PCTs in East Sussex have agreed funding positions for the delivery of the local delivery targets for 2004–05. The local delivery plan describes how the NHS and social care community will deliver during the next three years. It has been agreed by all the NHS organisations in the area.
The hon. Gentleman referred to the county council. The East Sussex county council cabinet has endorsed the overall direction of travel. That envisages a reduction in the number of avoidable admissions to hospital, which is a key area and often one in which a much better performance can be secured; shorter stays in hospital, which relates to the question of people who are unnecessarily still in hospital; reduced hospital capacity; and a reinvestment in community facilities, in particular intermediate care. That also relates to issues that the hon. Gentleman raised.
In the short term, the NHS and its partner organisations need to work together to make the most of their resources. I do not know the details of the working relationships between, for example, the county council, the strategic health authority and the PCTs locally. If there are particular problems with them, I would be grateful for more detail from the hon. Gentleman about what he considers the problems to be. As far as I am aware, all the mechanisms are in place. The NHS and its partner organisations have agreed a common strategy and they are working along the same lines to achieve the progress envisaged with the issues that they face.
I would be disconcerted to hear that any county council was more interested in receiving a fine under the revised community care arrangements than making progress with the provision of better services and on the issue of delayed transfer. I understand that there are challenges associated with the delayed transfer of care, but the strategic health authority and the Commission for Social Care Inspection are working with the East Sussex PCTs and social services in the county to bring down the number of delayed transfers of care. They have recently improved systems to streamline the
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transfer of patients. I am not sure whether the hon. Gentleman's remarks take account of that or whether the arrangements have been in place long enough to be reflected in the changing figures. Improved arrangements obviously take some time to be delivered and seen in improved figures.
Mr. Nigel Waterson: Will the Minister give way?
Miss Johnson: No I am afraid that I will not.
The hon. Member for Lewes raised concerns about agency staffing. Due to our concerns about agency staffing nationally and its costs, we announced the establishment of a special health authority to tackle the problems involved. It will be responsible for the strategic oversight of the NHS temporary labour market. Obviously the NHS needs a temporary, short-term and part-time labour market because of the nature of the work that it does, but it is important for NHS trusts to try to cut back as much as they can on the use of, in particular, expensive agency staffing.
The management of the agency framework contracts, the setting of standards and the policy framework for the NHS rest with NHS Professionals, the NHS in-house agency arrangement for staffing. NHS Professionals has already had considerable success in some parts of the country in reducing the expenditure on temporary staffing, and in due course I would expect that to be reflected across the country.
I do not how much engagement with NHS Professionals the hon. Gentleman's own trusts and PCTs have had in their discussions on what can be done locally, but a local problem can easily be exacerbated by spending a lot of money on solving it. I realise that, in the short term, they need to do that, but it can lead only to further problems. That may be the downward spiral in which they have found themselves.
There are ways out of this, however, and other health economies are not in that position. On the relationship with NHS inflation, which the hon. Gentleman mentioned, there is a substantial increase in funding in any case. Although I recognise that he is highlighting problems in several trusts and PCTs in his area, if we consider medicines and supplies, there should he a wider problem across the NHS but we do not see that.
The resources are with the local health service. It is in a position to deliver and there is a recovery plan in place for three years, which amounts to some £26 million. The partners are working together; there are mechanisms for dealing with many issues that the hon. Gentleman has raised. I trust that people will work together—I agree with him here—to focus on the needs of patients and to deliver for them in the most cost-effective way possible. I am sure that national agencies and the Department are happy to help the strategic health authority and the local trusts if they need more examples of how that has been done elsewhere to deal with the issues that face us.
It being half-past Four o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

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

Lord McKenzie of Luton
William David McKenzie,Esquire, having been created Baron McKenzie of Luton, of Luton in the County of Bedfordshire, for life—Was, in his robes, introduced between the Baroness Gould of Potternewton and the Lord Faulkner of Worcester.
Baroness McDonagh
Margaret Josephine McDonagh,having been created Baroness McDonagh, of Mitcham and Morden in the London Borough of Merton, for life—Was, in her robes, introduced between the Lord Alli and the Lord Sawyer.

Sudan: Darfur
2.49 p.m.
Baroness Rendell of Babergh Baroness Rendell of Babergh asked Her Majesty's Government:
Whether a proportion of the aid going to Sudan could be directed to the people of Darfur.
The Lord President of the Council (Baroness Amos): My Lords, the UK Government are deeply concerned about the crisis in Darfur. As the second largest donor, we have already allocated £62.5 million for humanitarian assistance in response to the crisis. In addition, the Department for International Development has provisionally allocated £35 million for Sudan this financial year in anticipation of a comprehensive peace agreement for Sudan. The Chancellor yesterday announced £150 million for the following three years for emergency and other relief.
Baroness Rendell of Babergh: My Lords, I am grateful to my noble friend for her Answer. Is she aware that conditions in the villages of Darfur are so poor and the food shortage is so great that some already malnourished children are forced to eat wild plants that are known to be toxic? Is she also aware that people are taking refuge in these villages, escaping from war and destruction, and that the villagers have to share their meagre supplies with them?
Baroness Amos: My Lords, my noble friend is right; the conditions in the villages merit a great deal of attention. Darfur has always been chronically poor. I am aware that host communities which are already poor are sharing resources with those internally displaced. That is why the humanitarian effort in
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Darfur is so critical. There have been hold-ups with aid distribution, but it is gradually improving. In June the World Food Programme reached 500,000 people, although we estimate that 1.2 million people are in need.
Baroness Rawlings: My Lords, further to the Minister's reply, what steps have Her Majesty's Government taken to help farmers return to their villages? Can they provide figures for those who have managed to get back in time to plant this season's crop? What money do the Government plan to provide to help to alleviate the specific food crisis? Perhaps Her Majesty's Government could emulate the programme of the charity Kids for Kids by donating to families one donkey and harness to carry water and fodder, which cost only £27 and has proved so successful.
Baroness Amos: My Lords, the noble Baroness may be aware that the rains have already started. That is one of the reasons that the aid programme in Darfur has been hampered. The focus is on getting food in to feed those in the villages and ensuring that the NGOs have proper access. We have worked very hard to persuade the Government of Sudan to ease some of the bureaucratic restrictions. I have met Kids for Kids; it does very good work in Sudan.
Baroness Cox: My Lords, is the Minister aware of UN reports that the Janjaweed militia, which has been supported by the Government of Sudan, continues to attack clearly marked humanitarian convoys, despite the escalation of the catastrophe, with possibly 300,000 more people dying in coming weeks? What steps are Her Majesty's Government taking to ensure that the Government of Sudan stop the militia's interference with the humanitarian effort and are themselves brought to account for complicity with the military offensives, which are the cause of the catastrophe?
Baroness Amos: My Lords, we regard the safety and security of humanitarian workers and the people in Darfur as paramount. I have been alerted to reports of continuing attacks. That remains a cause of serious concern. As the noble Baroness will be aware, my right honourable friend the Secretary of State for International Development, Hilary Benn, Colin Powell and Kofi Annan visited Sudan, as a result of which an agreement has been made with the Government of Sudan. We want to see that agreement implemented.
Baroness Northover: My Lords, is the noble Baroness aware that the rainy season has now started in Sudan—
Noble Lords Noble Lords: My Lords, she has said so.
Baroness Northover: My Lords, I am glad to hear that everyone is clearly paying attention.

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In that case, have the Government identified airstrips where food aid can be dropped? Is she aware also of trouble developing in other parts of Sudan, particularly Malakal? Are the Government concerned about that?
Baroness Amos: My Lords, I am aware that the rainy season has already started. We are investigating with the UN and the World Food Programme the best ways of distributing food in the light of that. I am aware of trouble in other parts of Sudan, including Malakal, and the need to get humanitarian assistance into those areas as well.
Lord Eden of Winton: My Lords, further to the question asked by my noble friend Lady Cox, is it not clear that the Government of Sudan are, at the very least, closing an eye to what is taking place in Darfur, or, at the very worst, condoning it? Surely this atrocity has now reached a scale where the United Nations ought to exert every effort to call the Government of Sudan to account.
Baroness Amos: My Lords, the noble Lord will be aware that Kofi Annan was in Darfur recently. There has been a discussion on Darfur at the UN Security Council, to which Kofi Annan gave a video-link report on the situation in Sudan. The UN is taking the issue very seriously. The noble Lord will be aware that we were concerned at the lack of speed of the UN response in the early days, but that has improved.
Baroness Whitaker: My Lords, will my noble friend urge the Government to congratulate the African Union on sending to Darfur not only peace monitors but troops to protect them and the local population?
Baroness Amos: My Lords, of course I can. The African Union, at its recent summit, made a strong statement on the need for support in Sudan. We are supporting the ceasefire monitoring mission to the tune of some £2 million.
Lord Alton of Liverpool: My Lords, given that the Machakos peace accord relies on reconstruction of many parts of Sudan, including southern Sudan, which I visited, will the Minister confirm that the Question on the Order Paper, calling for aid to be switched from other parts of Sudan to Darfur, is not the Government's policy and that the overall amount of aid that will be given to Sudan will not change? Can she also say something about the exodus of people from Darfur into Chad and the perilous conditions that they are now in?
Baroness Amos: My Lords, I can confirm that we will not switch aid from other parts of Sudan to Darfur. We have given some £62.5 million for the humanitarian crisis in Darfur itself, with an additional £35 million allocated for the rest of Sudan. Yesterday the Chancellor announced another £150 million over three years.

Commission for Equality and Human Rights
2.57 p.m.
Lord Ashley of Stokeasked Her Majesty's Government:
Whether it is intended that the proposed new Commission on Human Rights will have a disabled commissioner and a disability committee on which half of the members will be disabled people.
Baroness Andrews: Yes, my Lords. We published the White Paper Fairness for All: A New Commission for Equality and Human Rights on 12 May. In it we set out our proposals for distinctive governance arrangements for disability. These proposed arrangements include a statutory requirement for at least one disabled person (or a person who has had a disability) to be appointed to the board, and the establishment of a disability committee where disabled people (or those who have had a disability) represent at least half of its membership.
Lord Ashley of Stoke: My Lords, I thank my noble friend for that reply. The White Paper has been warmly welcomed. But in view of the proposed developments in the White Paper and legislation and the Government's splendid and extensive programme for legislation on disability, can we have an assurance that provision will be made for specialised expert staff and special money for the disability committee? Can we have that assurance written into legislation for the new Commission on Equality and Human Rights?
Baroness Andrews: My Lords, I am grateful for the warm welcome that my noble friend has given the White Paper, not least because of his outstanding record in promoting the rights of disabled people. It would be unthinkable for the new Commission for Equality and Human Rights (CEHR) not to employ a good number of disability experts to support the committee's work. It will take forward the very energetic agenda that the Disability Rights Commission (DRC) has in mind. We certainly expect staff from the DRC to have the opportunity to transfer into the CEHR under the normal TUPE arrangements, and to maintain its excellent work.
In response to the second point, we are fully committed to ensure that the CEHR is adequately resourced so that it can implement the programme. There would be little point in doing otherwise. However, I do not think that we want to constrain the board in any way as regards its internal arrangements. I hope that my noble friend will be satisfied with that reply.
Baroness Howe of Idlicote: My Lords, I am sure that noble Lords will agree on the vitally important role played by the Equal Opportunities Commission in promoting equal opportunities for women. In the light of that, do the Government believe that the proposed new combined commission can be anything like as

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successful in carrying forward and sustaining the issues that still remain to be tackled in this field, not least in ensuring that all our public bodies promote equality of opportunity?
Baroness Andrews: My Lords, already two distinguished Members of the House have set high standards indeed for the EOC. I am convinced that each strand of the equality work, including the EOC, will go forward and will be expanded in relation to new challenges, in particular in relation to the human rights element. We have a unique opportunity to address the public agenda and make sure that public authorities live up to those responsibilities. We also anticipate in the White Paper a new gender duty, which will oblige public bodies to ensure that their actions as employers and service providers will guarantee equality of opportunity.
Lord Addington: My Lords, will the Minister confirm that if we are to have a committee to back up a commission, the committee will not only be drawn from disabled people, but from disabled people from a wide range of disability backgrounds? Although it may be easier for a person who, say, has a mobility problem to empathise with someone who has a similar one, first hand knowledge will be important. Hidden disabilities and movement problems must be represented across the board to ensure that this committee achieves its full potential.
Baroness Andrews: My Lords, absolutely. The Disability Rights Commission, in its three or four years, has already established the width, breadth and scope of expert investment in the disability field. I particularly take the point made by the noble Lord in relation to learning disabilities, because I know that he is concerned about those. I am sure that those people will be well represented.
Baroness Finlay of Llandaff: My Lords, can the Minister confirm that provision will be made for all posts to be open to women and disabled people who may be unable to work full time? Will the disabled commissioner have a duty to represent the views of the disabled in the central body?
Baroness Andrews: My Lords, I am sure that if we can look to any organisation to have equal opportunities in their employment practices, it will certainly be the new commission. I can also confirm the noble Baroness's second point.
Baroness Wilkins: My Lords, the proposed disability committee will be subject to a mandatory review after five years. Can the Minister outline how such a review is likely to be conducted and with what level of parliamentary scrutiny? Can she also assure the House that disabled people and their organisations will be fully involved and listened to in the review?
Baroness Andrews: Yes, my Lords, I can give an assurance on the last point. Parliamentary scrutiny
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will not least be part of the obligation to prepare an annual report and even a Select Committee inquiry. In terms of the five-year review, we do not have that degree of detail yet. I am sure that in the consultative process, which is not yet concluded, there will be attention to that sort of detail. I will write to the noble Baroness if there are aspects that I do not have a grip on.
Baroness Wilcox: My Lords, we too welcome this move. To what extent do the Government envisage that a disability committee within the CEHR would be free to set its own strategy and develop its own policies with respect to disability issues? What powers would the committee possess?
Baroness Andrews: My Lords, the detail of the powers is to be worked out over the coming months as the new steering board makes the transitional arrangements for the development of the full board, which will not come into operation until the end of 2006. We have been concerned not to constrain or restrain any of the administrative detail. The disability committee, having inherited the work of the Disability Rights Commission, will be able to set its own remit. I am sure that it will want to follow along the lines that it has already started.
Lord Carter: My Lords, will the commissioner be able to deal with a situation where the easy-read version for the learning disabled of the Fairness for All White Paper, which deals with equality, was produced only yesterday; some eight weeks after the standard version and almost two-thirds of the way through the 12-week consultation period? Is that the proper way to involve disabled people in matters that really concern them?
Baroness Andrews: No, my Lords, it most certainly is not. I am sorry to hear of the length of time that it has taken to get that document out. It is rather a specialised document, but there is no excuse for that. I know that when the noble Lord chaired the Joint Scrutiny Committee, he was able to ensure that both versions of the document came out at the same time. We absolutely welcome responses from disabled people, particularly those with learning disabilities. The door is not shut on 6 August. Given the shorter period of consultation, I am absolutely sure that if they make a response it will be taken seriously.

EU Constitutional Treaty
3.5 p.m.
Lord Harrisonasked Her Majesty's Government:
What steps they are taking to ensure accurate reporting of the European Union constitutional treaty, in the light of recent newspaper coverage.
The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the Government have no power to ensure accurate reporting of the constitutional treaty, as some recent press coverage clearly indicates. The Foreign Office will produce a short and clear guide to the treaty and an analysis of the treaty indicating the provenance of the text in terms of previous treaties, together with other material as necessary to inform a free and frank debate on the merits of the treaty.
Lord Harrison: My Lords, given the moonshine issuing from newspapers such as the Sun, suggesting that Brussels dictates the size of our Army, our taxes and even our bananas, does the Minister recognise that it is welcome news that a pamphlet will be produced detailing the elements of the constitutional treaty and thereby rebutting some of the Euro myths? Will the Government also consider encouraging the use of correction columns in newspapers, such as those in the Guardian and the Mirror, so that such Euro myths can be rebutted quickly and effectively at the time of publication?
Baroness Symons of Vernham Dean: My Lords, sadly, the Sun is not in a class of its own in the respect that the noble Lord has drawn to your Lordships' attention. A great number of inaccuracies are littered around our newspapers. We have written to the editors of several national newspapers to correct inaccuracies, but if we were to do it for every inaccuracy that occurs, the staff of the Foreign Office would be doing little else.
The Foreign Secretary wrote to the Times on 21 April; the Minister for Europe wrote to the Telegraph on 21 May, to the Times on 25 June, to the Independent on 25 June and to a whole range of other newspapers as well. Officials have also been engaging in this correspondence.
The Lord Bishop of Portsmouth: My Lords, do the Government agree that this is precisely the conundrum that was faced over student debt prior to the Higher Education Bill? The Government are unduly constrained in the communication of issues prior to the debate of legislation, and that is an unfair position to be in, regardless of which party is in power.
Baroness Symons of Vernham Dean: My Lords, the debate about the way in which the press covers a number of issues is one where the Government could look sorrowful and say how unfair things are in that respect; but that would not command a great deal of sympathy. What the Government must do in the circumstances is set out as clearly as possible why we believe that this treaty is a good treaty and deserves support. The point about analysing the treaty properly and indicating that many of the things that are complained about were in fact signed up to in the Single European Act and the Maastricht Treaty should be a salutary lesson for one and all.
Lord Tebbit: My Lords, does the Minister agree that since within 24 hours from now we will have read the
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Butler report, her criticisms of the accuracy of articles in the press might sound just a little like the kettle calling the pot black?
Baroness Symons of Vernham Dean: No, my Lords, because I already have the evidence for what I am talking about in relation to the European Union. Had the noble Lord been in the House yesterday when I was answering questions related to WMD and the Butler report, he would know that I was scrupulously careful not to do anything such as he has suggested.
Lord Russell-Johnston: My Lords, while entirely agreeing with the Minister that ensuring accuracy on this question is practically impossible, not least when the love affair between the Prime Minister and Rupert Murdoch seems to have withered on the vine, I would encourage the Government to continue to raise specific outstanding examples of inaccuracy. Could the Minister perhaps also encourage both the British Broadcasting Corporation and ITV to increase the number of programmes devoted to discussing and educating on the proposed European treaty?
Baroness Symons of Vernham Dean: My Lords, I do not know how great their audiences would be. It is one thing to broadcast programmes, but it is another thing to make people watch a channel engaging in such a debate. It is enormously important that a range of activities should be undertaken to give the British people the opportunity to look at the facts about the constitution. I have mentioned publications, but there will also be ministerial visits, meetings with UK regional audiences and a regularly updated website.
Baroness Billingham Baroness Billingham: My Lords—
Earl Ferrers Earl Ferrers: My Lords—
Baroness Amos Baroness Amos: My Lords, I think that we should hear from my noble friend Lady Billingham.
Baroness Billingham: My Lords, can the Minister assure us that if literature is produced it will be in a suitably wide range of languages? My grandson is in a class at a London primary school where 40 languages are spoken. I do not expect the Foreign Office to respond in quite such measures, but it is imperative that the information should be available in a wide range of languages so that all our citizens can read the information fully and clearly.
Baroness Symons of Vernham Dean: My Lords, my noble friend has made a very important point, which, I am sure, has already been taken on board in the Foreign Office. I shall certainly ensure that officials are aware that that is exactly what should happen.
Lord Howell of Guildford: My Lords, is not one of the most serious inaccuracies about reporting the treaty the description that it was just a tidying up of existing texts? That view was not only uttered in another place but appears to have been endorsed by

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the noble Baroness both last week and just a few moments ago. Surely she must agree that placing all previous texts as well as many new provisions into a new, written, legal, constitutional document, encased in a higher legal order for the whole of the European Union, presents the British people with a fundamentally new proposition that is quite different from anything in previous treaties. Is that not an accuracy that should be made very clear? Is that not the reason why the Government now agree—I am glad to say—that there should be a referendum so that the British people can make a judgment on this totally new set of propositions?
Baroness Symons of Vernham Dean: My Lords, I think that the noble Lord is being uncharacteristically rather unfair about that. From this Dispatch Box, over and over again, I have never used the phrase to which he has referred—not once. I have said throughout that there is much in the treaty that brings together the four—or, indeed, five, if one includes the Treaty of Accession—previous treaties. Indeed, there are new matters in this treaty; for example, the very important power being given to parliaments for the first time.
Much of what is being complained of is already in the treaties. Perhaps I may take the issue of fishing, about which I understand the party opposite is very exercised. The provisions in the treaty, for example, on fisheries bring forward the competencies first agreed by the noble Lord's party when it was in government and signed up to our accession. That is my point. Many of the difficulties made about this constitutional treaty arise from points that are already in treaties; but not exclusively. I have never said that from this Dispatch Box, and the noble Lord knows that.
Earl Ferrers: My Lords, the noble Lord, Lord Harrison, said that myths are a bad thing. Does the noble Baroness not agree that Brussels determining the size above which a rocking horse may not be built is absurd? Why does Brussels involve itself in that kind of thing? Why should we sign up to that kind of thing?
Baroness Symons of Vernham Dean: My Lords, I agree that some of the issues covered by the single market provisions look very silly when taken out of context. But when they are looked at as safety provisions—I am sure that the noble Earl would not wish his grandchildren to be riding on unsafe rocking horses—perhaps they look a little different.

EU External Action Service
3.14 p.m.
Lord Wallace of Saltaire Lord Wallace of Saltaire asked Her Majesty's Government:
Whether they support the proposals for the establishment of a European Union external action service.
Baroness Symons of Vernham Dean: My Lords, we welcome the proposal to establish a European external action service to be set up following ratification of the constitutional treaty. The service would support the work of a new EU foreign Minister and would draw staff from the Commission and the Council secretariat as well as secondees from member states.
Lord Wallace of Saltaire: My Lords, I thank the Minister for that reply. Can I encourage the Government to publish a brief Green Paper on how they see the European Union external action service developing? The Sun and the Daily Mail are already talking about a taking-over of the British diplomatic service. A Green Paper might, for example, include reference to the useful sharing of facilities that we already have with the German Government and others and a recognition that when there are more than 190 states in the UN it is very difficult for us to have resident missions in all of them. Is a Green Paper a useful idea?
Baroness Symons of Vernham Dean: My Lords, it may be a very useful idea in due course. But if we produced Green Papers to refute every single inaccuracy published by the Sun and the Daily Mail—which are not alone in publishing inaccuracies—we should be littered with Green Papers all around Whitehall.
The way in which the external action service will be set up and operated will be discussed in detail after the 29 October signing of the treaty. Then of course there will be a great deal of interaction between the Commission and member states about the exact way in which the external action service should operate. But I think that the noble Lord's idea of a Green Paper is excellent.
Lord Wright of Richmond: My Lords, is the Minister aware that some 15 years ago when I was still head of the Diplomatic Service I received a delegation of French parliamentarians? One of them asked me whether I thought that at the turn of the century there would still be an individual British diplomatic service. I replied that I was almost certain that there would be, but that I was totally certain that there would still be a French diplomatic service.
Baroness Symons of Vernham Dean: My Lords, indeed, I was not aware that the noble Lord had received a French delegation. I am very glad that he gave such a robust response. Of course, there is no suggestion that the external action service would replace national diplomatic representation because the draft treaty states:
"This service shall work in cooperation with the diplomatic services of the Member States", and,
"The diplomatic missions of the Member States and the Union delegations in third countries and at international organisations shall cooperate".

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I think that makes it very clear that these will be separate.
Lord Renton: My Lords, does the noble Baroness agree that a European Union external action service may require the use of force? If that is so, would not its responsibilities overlap with those of the United Nations, NATO and, indeed, our own Armed Forces?
Baroness Symons of Vernham Dean: My Lords, no. I do not think that is true. The common foreign and security policy will proceed only on the basis of a unanimous vote. That was one of the red lines the Government set themselves in the drafting of the recent treaty. That has been clearly maintained. As the noble Lord may recall, the European security and defence policy (ESDP) similarly means that national governments will have to take decisions over any decision to use force.
Lord Howell of Guildford: My Lords, following the question posed by the noble Lord, Lord Wright of Richmond, has the Minister received any expression of concern from Foreign and Commonwealth Office staff or the diplomatic corps about the dangers of overlap between the new external service and the existing national diplomatic services? Is there not some concern that as there is no common European foreign policy—indeed, we disagree quite strongly with many of our neighbours on major and central foreign policy issues—it will be very difficult for this new diplomatic service, which, in effect, is what it will be, to be effective and produce a combined view in areas where all the member states disagree?
Baroness Symons of Vernham Dean: My Lords, I have not received any representations of that nature. I am not suggesting to your Lordships that there will not be some concerns. I appreciate the point made by the noble Lord. It is important to ensure that there is not duplication of effort. There will be further discussion about how the European external action service will be established. I do not expect those discussions to start until at least the end of this year. I remind the noble Lord, as regards his worries in relation to the common foreign and security policy, that it was the Maastricht Treaty that introduced the concept of such a policy.
Lord Wallace of Saltaire: My Lords, can the Minister confirm that the British Government already share some facilities in embassies in third countries with a number of European governments? Are the Government considering any interim measures that might extend that useful way of saving money and extending effectiveness?
Baroness Symons of Vernham Dean: My Lords, we share buildings only. The whole point is that we do not have common embassies, but we do look at co-location. That is a continuing process. I have no reason to believe that such co-location projects will not be possible in the future.

Israel: Security Barrier
3.20 p.m.
Baroness Northoverasked Her Majesty's Government:
What action they propose to take in response to the International Court of Justice ruling on 9 July on the legality of the wall being built by Israel in the West Bank.
Baroness Symons of Vernham Dean: My Lords, we are considering the detail and implications of the International Court of Justice advisory opinion on the Israeli barrier. We have been consistent in recognising Israel's legitimate security concerns, but consistent, too, in believing that the barrier built on occupied territory is unlawful. We have made it clear to the Israeli Government that Israel must act within international law. We have also stressed to the Palestinian Authority its responsibilities for improving Palestinian security.
Baroness Northover: My Lords, I thank the noble Baroness for that encouraging reply. Does she note the advice from the court that the wall is not only illegal, but also jeopardises the two-state solution? Does she also note the judgment of the Israeli Supreme Court of 30 June, which ordered major changes to the route of the wall because it is,
"disproportionate … violates the rights of the Palestinians"
and that,
"Only a separation route based on the path of law will lead the [Israeli] state to the security so yearned for".
What urgent action are the Government taking on this issue and what action are they urging on their US and EU allies both in the UN and elsewhere?
Baroness Symons of Vernham Dean: My Lords, much as I appreciate the importance of the court ruling, it does not make any difference to the point that I was making at the beginning that we believe that it was an unlawful barrier in the first place. We have been making such representations for quite some time. I agree with the noble Baroness that the barrier may be said to jeopardise the two-state solution because it separates the West Bank into different cantons and therefore undercuts the possibility of a viable and contiguous—that is an important word—state of Israel. I also believe that the Supreme Court ruling is very important because it is about the humanitarian impact of the wall, which has been adjudicated on by the courts which have asked for 30 kilometres of the wall in east Jerusalem to be reconsidered. We are heavily engaged on this issue.
Lord Campbell-Savours: My Lords, in the event that this matter and the actions are illegal, would not an abstention at the United Nations on such matters be quite inappropriate?
Baroness Symons of Vernham Dean: My Lords, this is an extremely delicate question and perhaps I may

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deal with it at two levels. First, as the noble Lord will know, we did not believe that referral of this issue to the ICJ in the first place was appropriate because hitherto such referrals have concerned matters where both parties have consented to the referral. We believe that this referral has made it a much more politically-based issue. We are not alone in believing that. The whole of the EU thought so, as did Australia, Canada, New Zealand and a whole range of countries. They all made the same point. The question we must ask ourselves is what does any UN resolution say and will it be in the appropriate context of looking at the very important question of security as well as the legal and humanitarian impact of the security barrier.
The Earl of Onslow: My Lords, is it not true that all the faffing about whether it is legal or not does not make a ha'porth of difference? When the United States says "Do it", they will do it, and when it says "Don't do it", they won't. Until the United States puts its effective power behind the peace settlement in the Middle East nothing will happen.
Baroness Symons of Vernham Dean: My Lords, no. That is far too nihilistic a view of what is going on. It is a very complicated position. As I have already said, we believed that this barrier was not legal before the ruling. But it is important to look at why the barrier is being built in terms of Israel's legitimate security concerns. They cannot be swept on one side; they are real. The fact is that the Israeli Government have produced figures, which I grant are their own, which show how many fewer deaths from terrorism there have been since the wall was erected. That does not make it legal. It is still unlawful. But there is a legitimate issue about security and one issue cannot be addressed without the other. It is enormously important. We will lose any legitimacy that we have with both sides in the argument if we choose entirely to ignore the points of one side about their own security and the possibility of terrorism jeopardising their people.
Lord Turnberg: My Lords, will my noble friend agree that, while the Palestinians are still setting up terrorist training camps for youngsters, as reported by Sky television recently, it would be unrealistic to expect the Israeli Government not to make every effort to defend their citizens? Is it not also the case that many governments, including that of the United Kingdom, made it clear that at a time when Israel is taking the first steps to implement the road map by withdrawing from Gaza, the wall is not something on which the international court should be spending its time?
Baroness Symons of Vernham Dean: My Lords, I take issue with my noble friend on one point. It is not Palestinians who are setting up the training camps but extremists. I would be very sorry to see your Lordships falling into the error, of which I have heard quite a lot in the United States, of deciding that all Palestinians are terrorists. That is self-evidently not true. There are many law-abiding Palestinians who long for peace as
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much as anything else. The point is that the British Government have been discussing with the Palestinians ways in which we can help with their security. They are discussing the same issues with the Egyptians at the moment. I hope that ICJ rulings and incidents which we have to deal with throughout the peace do not detract from the overall position that one must listen to both sides of this long, complex and horrible problem in order to try to make progress. I believe that that is possible through the road map.
The Lord Bishop of Worcester: My Lords, is it not the case that it is 24 hours since the Minister was speaking about the importance of compliance with United Nations resolutions? Is it not also the case that while we absolutely recognise Israel's proper concern about security, that must be held within some kind of international consensus? For instance, there is the fact that the right of a nation to defend itself does not include the right to build defence installations on territory which it has not been agreed to be theirs?
Baroness Symons of Vernham Dean: My Lords, indeed. It is unlawful for the barrier to be built where it is. It is unlawful to have settlements in the occupied territories. These points have been reiterated again and again from this Dispatch Box. The difference between the resolutions which we were discussing yesterday and those as regards Israel's obligations are twofold. First, the resolutions that we discussed yesterday were mandatory under Chapter 7. Secondly, almost all the resolutions which refer to Israel's obligations also refer to Palestinian obligations. The fact is that neither side has fulfilled its obligations under UN resolutions.
Lord Steel of Aikwood: My Lords, as the Minister keeps saying that it is not the existence of the wall which at issue but its route, which is correct, and as Prime Minister Sharon continually ignores the point made by the international court and the Israeli Supreme Court, "what action", to quote my noble friend's Question, are the Government going to take within the EU, for example, to bring to an end the favourable trade treatment arrangement with Israel if it will not subscribe to international law?
Baroness Symons of Vernham Dean: My Lords, I have to tell the noble Lord that no serious attempt has been made to change in any way the trading relationship with Israel within the European Union. The noble Lord suggests by implication that there has been a push for this, and one that we have resisted. That simply has not been the case.
It is important that we continue to press Israel. Only two weeks ago I was in Israel and raised this issue. Over and over again I pressed the Israelis about the route of the barrier. I pressed them not only on the legal basis, which I agree is enormously important and not something to be dismissed, but also on the basis that this would jeopardise the two-state solution, the point made by the noble Baroness, Lady Northover. Moreover, on a day-to-day basis the barrier, built

1137
where it is so that it separates east Jerusalem, separates not Israeli from Palestinian, but Palestinian from Palestinian. Its impact in humanitarian terms on the day-to-day lives of Palestinians is out of all proportion. That is an enormously important point to keep putting back to the Israelis who, of course, live under the rule of law just as we do.

Business of the House: Standing Order 47
3.30 p.m.
Baroness Amos: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with to allow the Finance Bill to be taken through all its remaining stages on Tuesday 20 July.—(Baroness Amos.)
On Question, Motion agreed to.

Scottish Parliament (Constituencies) Bill
Read a third time, and passed.

Constitutional Reform Bill [H.L.]
3.31 p.m.
The Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer of Thoroton): My Lords, I beg to move that the House do now resolve itself into Committee (on Recommitment) on this Bill.
Moved, That the House do now resolve itself into Committee (on Recommitment).—(Lord Falconer of Thoroton.)
Lord Richard: My Lords, before the House agrees to the Motion, perhaps I may say a few words about the work of the Select Committee to which the House committed this Bill on 8 March and which I had the honour of chairing. Noble Lords may recall that the Select Committee procedure is used very rarely in respect of government Bills. The last occasion on which a government Bill was so committed and reported to the House with amendments was as far back as 1917. In 1976 a Select Committee on the Hare Coursing Bill recommended that the Bill should not proceed and it was thereby killed. So it is not a procedure that has been in a great deal of use recently.
A Select Committee on a Bill can hear evidence on the policy of the Bill, report on it like any Select Committee on a policy issue and, if it wishes, amend the Bill. That is the real difference between this type of committee and a normal Select Committee. I have to say to noble Lords that we have indeed made 400 amendments to the Bill, and the legislation now before the House reflects those changes.
Between 24 March and 24 June when we were charged to complete our report, we met twice a week for two to three hours at a time. That placed a
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considerable load on members of the committee and I should like to thank them for their assiduity and commitment. I thank also our Clerk, Mr Rhodri Walters, and our specialist adviser, Professor Andrew Le Sueur of the University of Birmingham, for their valuable assistance. I do not think that we could have produced a report which distilled so much evidence and so much argument into what I hope is a reasonably comprehensible form without the efforts of the Clerks and the special advisers.
I pay tribute also to the members of the committee. It was a committee divided on party lines, with five Labour members, five Conservatives, three Liberal Democrats and three Cross-Benchers. What I found especially heartening was the extent to which all members of the committee genuinely sought the maximum amount of agreement consonant with their individual views. It is not always the experience of someone in this building serving on a committee to find such a genuine search for consensus. In this case it seemed that there was, and I should like to make that public.
Finally, I thank the House for giving me the opportunity of chairing the committee. It was a stimulating and, as it turned out, very enjoyable task.
Our work was divided into three main phases. First, we met in public to take oral evidence from more than 32 witnesses. We received over 80 written submissions. We considered the views of 14 serving judges, seven retired judges, 14 academics, the lawyers' professional bodies in England and Wales, Scotland and Northern Ireland, as well as campaign groups, individual lawyers and law firms, and members of the public. The evidence is published in Volume 2 of the report.
This collation of the evidence and analysis of the facts and opinions about the reforms proposed in the Bill will, I hope, be of assistance to the House as it now resumes its scrutiny. I hope, too, that it provides a firm evidential basis for future argument, which no doubt will take place.
During our deliberation stage we met in private to consider the central issues that had emerged from the evidence. In total, we identified and examined 44 separate issues. On many of those questions we were able to reach conclusions on the basis of consensus. On some, our report shows that the committee supports the policy of the Bill. On other issues, we agreed to amend the Bill on the basis of amendments tabled by the noble and learned Lord the Lord Chancellor. Alternatively, we have indicated our support for amendments that the Government have undertaken to bring forward at a later stage.
It will be no surprise to noble Lords to learn that there were issues on which we did not reach agreement and consensus. Those included the two major questions of whether the office of Lord Chancellor should be abolished and whether a Supreme Court should be established. The committee was more or less evenly divided on those issues and we have explained the reasons for our disagreement in the report. Not only were we more or less evenly divided, but under the procedures of the committee the chairman had no

1139

casting vote. However, I have to say that, even if he had had such a casting vote, he would not have exercised it because it would have defeated the whole object of the committee if we had voted along those lines. These are major constitutional changes and it is right that they are determined by Parliament as a whole.
In the final, formal stages of our work, we amended the Bill and agreed our report. The amendments included those to which I have already alluded—the ones brought forward by the noble and learned Lord the Lord Chancellor in response to our discussions. Here I should say in parenthesis how valuable it was to have the noble and learned Lord there as a member of the committee. He could hear the argument, he had the authority and, in circumstances in which he thought it proper, his flexibility and natural charm allowed him to agree. Not only that, we accepted amendments which we felt would give better effect to the concordat between the Lord Chancellor and the Lord Chief Justice. Finally, we made a large number of minor drafting and technical amendments at the request of the Lord Chancellor. All the amendments were made by agreement.
What of the points of disagreement? As we explain more fully in paragraphs 7 and 8 of the report, we took the view early on that little would be served by seeking to vote. Instead it was better to register the areas of our disagreement in the report itself. I think that some of my colleagues on the committee would also wish me to emphasise that, in those areas of disagreement, the fact that we have stood the clauses and schedules as part of the Bill does not imply that we all acquiesce to them, nor will it inhibit some of our number at least from registering such disagreements at later stages of the Bill.
I turn briefly to some of the chief points we made. Given that the House set up the committee, which then collected evidence and sat for three months, I think it is quite important to put the committee's report in the context of this debate, and perhaps just as important to put the context of this debate in the framework of the report.
In Chapter 2 we considered in detail the issues arising from the policy of the Bill to abolish the office of Lord Chancellor. Like most of our witnesses, we all agreed that change is inevitable. No one suggests turning the clock back to before 12 June last year when the Government announced their proposals for reform. None of us supports the idea that the Minister responsible for the courts should continue to sit as a judge. We all accept that the Lord Chief Justice of England and Wales should be recognised as head of the judiciary.
But what should be the characteristics of the Minister responsible for "judiciary-related matters"? About this we certainly disagreed. Some of us support the Government's policy that the Minister should be a mainstream Secretary of State, and so not necessarily a senior lawyer but possibly an MP rather than a Member of the House of Lords. Some of us believe that the Minister should continue to be called the Lord
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Chancellor and be a senior lawyer and a Member of the House of Lords. It will now be a matter for the Committee of the Whole House to consider this important issue further.
It is also fair to say that there was, among those who wished to retain the office of Lord Chancellor, no clear agreement on what his precise functions would be. We hope that the analysis of the rival arguments set out in our report will provide a sound basis for this continuing debate.
One of the issues we also examined, which was a fairly controversial one, was the proposal in the Bill to put the constitutional conventions safeguarding the independence of the judiciary, and the rule of law, on a statutory footing. The Government brought forward an amendment to the Bill to put that into statutory form. We all agreed that the Bill should say something about these matters and the report set out various options as to how the Bill could achieve this, but we were unable to reach a consensus about the best way forward.
In the next chapter of our report we considered the proposal to create a Supreme Court for the United Kingdom. We received a wide range of views in evidence: some strongly supporting the idea that there should be a Supreme Court; some strongly supporting keeping the United Kingdom's highest court within the House of Lords. It will come as no surprise to anyone that there was no consensus within the committee on this issue.
Although we made no recommendations on the basic issue of whether there should be a Supreme Court, we did go on to make several important amendments to this part of the Bill. Indeed, this is a very good example of the way in which the committee approached its task. We disagreed on whether there should be a Supreme Court at all. We disagreed on whether commencement of this part of the Bill—the commencement of the Supreme Court assuming its responsibilities—should be delayed, pending a move to permanent premises.
Apart from those major issues, there was very considerable consensus. We agreed on the name of the court, the number of justices and that at least two should be Scottish. We agreed the qualifications for appointment to the Supreme Court. We agreed the composition of the selection commission. We agreed further that the selection commission should provide the name of only one candidate for appointment. We agreed the extent of consultation with senior justices and the devolved administrations.
We agreed that the role of the Prime Minister should solely be to act as a conduit between Ministers and the Queen. We agreed on the provisions for acting justices and the supplementary panel. We agreed that the designation of the Supreme Court as a superior court of record should remain. We agreed that there was no need to change provisions of the Bill in respect of the Scottish civil and criminal appeals or the leave arrangements for Scottish civil appeals. We agreed with the proposal to transfer devolution jurisdiction from the Privy Council to the Supreme Court. We

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agreed that the court should make its own rules. We agreed—extremely importantly—that the court should be established according to the model of a non-ministerial department, so that it would have greater control over its own financial and administrative agreements. We agreed that it should set its own fees.
We agreed that there should be an amendment to the Bill which safeguards the separate jurisdiction to be examined by the Supreme Court in respect of Scottish, Northern Irish, English and Welsh laws.
The effect of this procedure is that, if the House decides that it wants a Supreme Court to be established, many of the subsidiary issues will already have been considered in the committee and, I hope that the House will come to the conclusion, have been fairly dealt with. Of course, it will be open to the House to arrive at different conclusions, but I hope that the House will at least take the broad view that, having set up the committee and the committee having deliberated in the way that it has, the House should perhaps concentrate on the major issues. The virtue of this report is in the details, and I hope that we managed to give those details a thorough examination.
I apologise for taking some time before we reach the main debate of the day, but it is perhaps important that I spell out how we approached what we did.
3.45 p.m.
Chapter 4 of the report deals with the reform of judicial appointments in England and Wales. We considered whether the Bill is correct to propose a recommending rather than an appointing Judicial Appointments Commission. We agreed—some of us reluctantly—that a recommending commission was a satisfactory system. We agreed that the composition of the 15–person commission struck the right balance between judicial and lay involvement. We accepted amendments proposed by the Government to ensure that every panel of the commission should include at least one judicial and one lay member. Some members of the committee took the view that the arrangements for the appointment of High Court judges needed to be altered. Accordingly, we made no recommendation about that.
We were of one view in supporting the policy of the Bill that judicial appointments should be made on the basis of merit alone, and therefore accepted a government amendment to allow the Judicial Appointments Commission rather than the Minister to define "merit". We also agreed that diversity among the judiciary should be promoted, without diluting the merit principle, to ensure that more women and people from ethnic minorities are able to serve as judges. We therefore made an amendment to the Bill encouraging specific reference in the guidance issued to the commission to the importance of,
"encouraging diversity in the range of persons available for selection".
Chapter 5 of the report deals with two parliamentary matters of extreme importance, certainly to this House. Clause 94 of the Bill proposes
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to remove the right of senior serving judges to participate in the legislative and scrutiny work of the House of Lords. It will be no surprise to anyone that on this—as on the creation of the Supreme Court—we did not reach a consensus. Whether or not judges are disqualified from Parliament, we considered a second question: should a parliamentary committee be established with general oversight of judicial matters? Our view was that such a committee was indeed desirable and could act as a valuable bridge between the legislature and the judiciary.
As to whether this procedure was a success, I confess that I have mixed views. If a Bill is properly prepared and launched after appropriate consultation, then a Select Committee of this sort should not be necessary; but where, as in this case, the proposed legislation involves major constitutional issues, I think that a gathering of the evidence and an examination of the arguments have proved useful. A great deal of ground has been covered and has been cleared, and the Bill is now in a much better state than it was at Second Reading.
Lord Goodhart: My Lords, I should like to endorse what the noble Lord, Lord Richard, has said and to fill in one major omission from his speech today. I refer to the enormous debt owed by members of the committee to the noble Lord for his brilliant chairmanship of the committee.
On Question, Motion agreed to.
House in Committee (on Recommitment) accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Guarantee of continued judicial independence]:
Lord Kingsland Lord Kingsland moved Amendment No. 1:
Page 1, line 5, at beginning insert "The Lord Chancellor, other"
The noble Lord saidBefore I speak to my amendment, I should like to add my tribute to the noble Lord, Lord Richard. He referred to the noble and learned Lord the Lord Chancellor's flexibility and charm. The noble Lord, Lord Richard, had both those qualities in abundance and, in addition—and I hope that he will take this as a compliment—a good helping of Welsh guile, which helped to get the committee through one or two difficult phases in its work. I should like to thank him very much indeed.
It is my responsibility to begin the Committee stage by moving Amendment No. 1. This amendment is linked with Amendment No. 7 and a number of clause stand part debates, as noble Lords will see from the Marshalled List and the groupings list. Essentially, the issue is this. The Government wish to expunge the office of Lord High Chancellor of Great Britain from our constitution. They wish to do so because they think that the office has now outserved its usefulness. We, the Opposition, disagree. We believe that the office still has a vital role in protecting the rule of law in our country.

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When the debate on Amendment No. 1 is ended, it is almost certain that the matter will be put to the test. I would not wish any of your Lordships, therefore, to underestimate the importance of the occasion. But, at the same time, I would not wish your Lordships to oversimplify it. The question of whether or not the office of Lord Chancellor ought to survive has to be seen in the context of the Government's Bill.
There have been several debates on the Bill and many noble Lords will by now be familiar with its content. I should like to say at the outset that not only the Opposition but, I believe, a large number of your Lordships accept many of the provisions in the Bill; and the Select Committee stage has helped to crystallise our thoughts on the issues in detail. We sympathise with the initiative to set up a Judicial Appointments Committee; we support the conclusion of a concordat with the Lord Chief Justice; we accept that it is no longer appropriate for the Lord Chancellor to sit in the Appellate Committee of your Lordships' House.
Taken together, all these initiatives represent perhaps the most dramatic change in the judicial arm of our constitution since the Act of Settlement. The changes will replace decision-making on the work of the judicial arm by one individual—the Lord Chancellor—with a tripartite arrangement divided between the Judicial Appointments Commission, the Lord Chief Justice and the Secretary of State for Constitutional Affairs.
I emphasise at the outset of the debate that it is not the Opposition's intention to unravel, in any way, the architecture of the Bill; we accept the tripartite architecture in full. Our only concern, encapsulated in Amendment No. 1, is whether the position of Secretary of State for Constitutional Affairs is sufficiently powerful to carry out the tasks stipulated in the Bill for that role.
Over the past six months, many noble Lords have speculated long and hard about what it was on 12 June 2003 that led the Government to make their announcement about the position of the Lord Chancellor. Much time has passed and the Select Committee has had a chance to look at the matter dispassionately. In taking our decision today, we have to test, against the new architecture in the Bill, whether the Government's decision on 12 June—or purported decision because they could not put it into effect—was right.
In order to test this, I should like to refer your Lordships to two parts of the evidence. The first part was given in a most imaginative contribution by Professor Robert Hazell, who is the head of the Constitution Unit at University College London. He put the issue in this way. He said that in any modern Cabinet there are two forces—the forces of order and the forces of law—and successful government requires those two forces to be in balance, and he added that there is a real concern in many modern governments that the force of order will prove too strong for the force of justice.
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In his response to the consultation by the noble and learned Lord the Lord Chancellor, on the question of the survival of the office, the noble and learned Lord, Lord Bingham, said:
"Fourthly, we do not in this response comment on the proposal to abolish the office of Lord Chancellor. We are, however, very greatly concerned that the important constitutional values which the office of Lord Chancellor protected should continue to be effectively protected".
Will the proposed office of Secretary of State for Constitutional Affairs deliver what the noble and learned Lord, Lord Bingham of Cornhill, wants?
The component parts of the office have been described on several occasions by the noble and learned Lord the Lord Chancellor and others. It is envisaged that the office will normally be occupied by a party politician, who is not a lawyer, in another place and without any special precedence in the Cabinet. It is my view that an office so constituted will prove a deeply inadequate protection for the rule of law in our nation.
I derive some support for saying that from the experience of the noble and learned Lord, Lord Woolf, in respect of the ouster clause in the Asylum and Immigration (Treatment of Claimants, etc.) Bill, now thankfully no longer in the text. In his Squire centennial speech in Cambridge, a few months ago, the noble and learned Lord Woolf, in the heat of contesting the clause, said:
"I am worried about a Department for Constitutional Affairs becoming a subsidiary of the Home Office or unable to compete with the dominance of the Home Office. The result could be the Home Office being in a position to dictate the agenda for the courts, which would not accord with the need for independence".
If that is the judgment of the noble and learned Lord, Lord Woolf, on the present state of the office of the Secretary of State for Constitutional Affairs, what changes are necessary in the Bill to remedy this defect? I shall suggest what changes we believe are necessary.
First, the individual who occupies the office of the Secretary of State for Constitutional Affairs must, in our view, be a senior and experienced lawyer. This follows not only from the stipulations of the relationship between the Secretary of State and the Judicial Appointments Committee and the requirements of the concordat; it is also very hard to see, on a dispassionate reading, how anyone other than an experienced, qualified lawyer could possibly perform his constitutional duties.
Further, the responsibilities of the Secretary of State for Constitutional Affairs are also to the independence of the judiciary and the rule of law. What have been the great challenges to the rule of law over the past three years? The introduction of propensity evidence in the Criminal Justice Act 2003; the purported ouster clause earlier this year in the asylum Bill; and an attempt—which luckily failed—to change the burden of proof in a number of other criminal matters. In order to contest such matters in Cabinet the Secretary of State for

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Constitutional Affairs will have to have a real, in-depth grasp of the criminal law. I do not see how someone can perform the role without having legal qualifications.
Secondly, in my submission, the Secretary of State will have to be in your Lordships' House. This is not only because there is a poverty of qualified lawyers coming from another place to your Lordships' House; but also because your Lordships' House is able to stand back from the hurly-burly of political life in another place and assess the constitutional implications of Bills that come to it, or decisions that are made about those Bills. Again, Professor Robert Hazell, in his evidence, saw your Lordships' House as the natural guardian of the constitution, a view recently endorsed by the noble Lord, Lord Wakeham, in his report on your Lordships' House.
But would a Secretary of State for Constitutional Affairs—legally qualified and a Member of your Lordships' House—do the job that the noble and learned Lord the Lord Chancellor now does? It seems to me highly unlikely that he would.
It is just imaginable that someone could still emerge from another place. My noble and learned friend Lord Howe served as a Law Officer and held two great offices of state in the 1980s as Chancellor of the Exchequer and Foreign Secretary. If the noble and learned Lord, with all those qualifications, had been made Secretary of State for Constitutional Affairs in your Lordships' House, I have no doubt that he would have carried the same amount of political clout as if he had been made Lord Chancellor.
4 p.m.
But in the 21st century, I am afraid, there will be almost no Lord Howes coming off the production line in another place. Sadly, very few lawyers of that quality are able to enter politics in another place. Future Secretaries of State for Constitutional Affairs will come direct from the legal profession into your Lordships' House carrying no political clout at all. Their political clout will derive from the office that they hold. The office of Lord Chancellor will provide them with that clout—its prestige, its status, its weight, its parallel classification with the Home Secretary, the Foreign Secretary and the Chancellor of the Exchequer. That is why maintaining the office of Lord Chancellor is so crucial in our constitutional arrangements. It is the only guarantee that, in the deliberations of the Cabinet, the rule of law will stand up to the predatory ambitions of those who represent the forces of order.
The Government have sought to promote the notion of the separation of powers as being at the heart of our constitution. It is not. It is not the separation of powers but the balance of powers that matters in our constitution. The Lord Chancellor in the Cabinet is a great inconvenience to the executive. That is the reason he should stay there. I beg to move.
Lord Lloyd of BerwickI too would like to add my tribute to the noble Lord, Lord Richard, for chairing the Select Committee in the way he did and for producing a report in record time.
At Second Reading I dared to suggest that it might be possible to produce a report by the end of July. Without wanting to be too controversial at this stage of my speech, I should say that the noble and learned Lord the Lord Chancellor described that as fanciful. In fact we succeeded in doing it by the end of June. For that we owe a deep debt of gratitude to the noble Lord, Lord Richard. What a good report it is; it is a model of clarity. I would particularly like to emphasise the point which the noble Lord, Lord Richard, made at the end of his address—that it will provide a very useful precedent if ever again we are presented with a Bill which ought to have received pre-legislative scrutiny, but which for one reason or another has not had it. We do not know what the reason was in this case; we have not been told. The report will be a very useful precedent for the future.
I see that I have already spoken for 15 minutes—but perhaps the clock has not been changed. One of the advantages of the Select Committee procedure is that some of the issues which seemed to loom so large have now disappeared altogether and all the issues are now in much better focus. The proposed abolition of the Lord Chancellor is a very good example of that. Everybody now agrees that the Lord Chancellor—if the post and office are retained, as I profoundly hope that they are—should no longer sit as a judge. In some ways I regret that, because some recent Lord Chancellors have been very good judges indeed. In the absence of the noble and learned Lord, Lord Mackay, I can say that he is a very good example of how good a judge a Lord Chancellor can be.
But I accept that there are problems with a judge sitting as a member of the Cabinet, particularly, it seems, among the newly joined members of the European Union. So it is now common ground that if the Lord Chancellor is retained, he should be debarred from sitting as a judge. It is also common ground that he should no longer be solely responsible, as he has been in the past, for selecting the judiciary. We all agree that that task will now be performed by the new Judicial Appointments Commission, to which we all look forward.
So what, having got rid of those functions, is left? Sometimes, listening to the Lord Chancellor, one has had the impression that almost nothing would be left. But that of course is quite wrong; there will still be a huge job for the Lord Chancellor. In the first place he will run the courts, including the magistrates' courts, as he has always done. Secondly, he will have his role of defending the independence of the judiciary and the rule of law, and being—as has so often been said the voice of the judges in Cabinet. Thirdly, he will have his role as Speaker of this House. I will say no more about that because it will be a question for this House whether he should continue as Speaker. So I put that on one side.

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As for the other functions, they are exactly the same functions as would be transferred to the new Secretary of State under this Bill. That is a point on which we reached agreement. I hope to quote very little from the report, but I will quote paragraph 43, which stated:
"The Committee agrees that in view of the Concordat the future duties of the Lord Chancellor/Secretary of State office-holder should be responsibility for 'judiciary-related' matters (that is, the provision of systems to support the carrying on of the business of courts and tribunals, judicial appointments, and overseeing judicial discipline); and responsibilities as the 'constitutional conscience' of Government, defending judicial independence and the rule of law in Cabinet".
So there you have it—the Select Committee is agreed that the two jobs will be exactly the same. That prompts the question of what on earth the point is of transferring those functions from the Lord Chancellor, where they will rest under our scheme, to the new Secretary of State. I suggest that that is a question to which we have never heard a convincing answer.
Let me very briefly remind the Committee of the arguments that have been advanced from time to time. There are four in all. First, there is the argument based on separation of powers—that it is wrong for a judge to sit in Cabinet. But once we take away the judicial role, as everybody agrees, that argument falls flat on its face.
Secondly, there is the argument that there is too much for the Lord Chancellor to do. That was an argument that featured very largely in the original consultation paper. It was almost the only argument. But again, once we take away the judicial role and his role in selecting and appointing the judges, we have exactly the same role as that proposed for the Secretary of State. So that argument, too, falls to the ground.
Thirdly, there is the argument—a difficult argument perhaps at first to comprehend—of the so-called inherent tension or conflict in the role of the Lord Chancellor. That is an argument which featured very largely in the speech of the noble and learned Lord the Lord Chancellor on 12 February, and in his written and oral evidence to the Select Committee. The argument is that on the one hand the Lord Chancellor has to uphold the rule of law, and that on the other he has to run a great department. He argues that those roles are in conflict and therefore should be split. Since this is such an important argument, I should again quote the Lord Chancellor's argument in his own words. He said:
"My Lords, the Lord Chancellor must form a view about where the rule of law is being infringed. That will frequently bring him into conflict with his political role. If it does, the rule of law must prevail".
Then the noble Baroness, Lady Kennedy of the Shaws, intervened and asked:
"Can we be confident that a Secretary of State with ambition will not side with the political part of his background, as distinct from that which will protect the rule of law? That is where our anxieties lie".
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The noble and learned Lord, the Lord Chancellor, replied:
"My Lords, that point is absolutely rightly and forcefully put. The question that the abolition of the Lord Chancellor's role raises is: can you go on with a £3 billion budget? With these policy responsibilities—a responsibility for being the protector of the judiciary and the upholder of the rule of law—there is an obvious conflict. The conflict has become greater and greater. The separation of powers is not some abstract concept. It is preventing your role as a Minister overtopping your role as the protector of the constitution or preventing your role as a protector of the constitution overtopping your role as a Minister. Eventually, we are getting to the point where that conflict cannot be contained in one office".
At that point, the noble Earl, Lord Onslow, intervened to say:
"That seems a rum old argument from the Lord Chancellor" .— [Official Report, 12/2/04; col. 1318.]
Whether it is a rum old argument or not, the problem is that exactly the same argument will apply to the Secretary of State, because he will be running the same department and defending the independence of the judiciary under Clause 1. Therefore, how can the Lord Chancellor rid himself of this inherent tension and conflict simply by changing his name, unless the duty under Clause 1 is not intended to press on him too heavily? I asked the Lord Chancellor that very question—question 29 on page 29—and I did not get a very satisfactory answer.
I therefore come to the fourth and last argument that has been advanced. It is said that the Prime Minister should be free to appoint whoever he wants to run the courts—free to appoint a Member of the other place who is not a lawyer and could be quite junior in Cabinet ranking. That is the real difference between the two sides in this debate. In my view, the task of defending judicial independence in the Cabinet is of such critical importance that it should be given to a senior judge or lawyer who is a Member of this House and not to a politician on his way up the greasy pole.
Why do I say that the Prime Minister's role should be limited in this way but not in others, because after all, nobody would suggest that the Secretary of State for Defence should be a soldier or sailor? The distinction is almost too obvious to state. The Army must do what the Government say: there is no room for conflict or tension. However, the courts do not have to do what the Government say. Indeed, it is the other way round. It is the task of the courts to ensure that the Government do what Parliament says, which is very different. Therefore, there is obvious scope for friction between the judiciary and the executive, which may be getting wider all the time—although I hope that it is not. However, since such scope exists, it is essential to have someone running the courts who has the respect of both sides—the judiciary and the executive.
For similar reasons, it is essential to have someone who is a Member of this House, so that he can, as far as possible, be kept away from the hurly-burly of political conflict in the House of Commons. That would have the incidental advantage, often mentioned by the noble Lord, Lord Elton, of having two Cabinet Ministers in this House instead of one. We all know

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that our constitution depends on checks and balances, and that is especially important when one party or the other has a huge majority. One such check is the presence of the Lord Chancellor in the Cabinet. Of course, it is possible to exaggerate his influence, but I hope that I do not do that. I accept that he can always be dismissed by the Prime Minister. However, until he is, the check is there and we get rid of it at our peril.
4.15 p.m.
Lord GoodhartThis group of amendments concerns the future title of the Minister at the head of the Department for Constitutional Affairs. In speaking to Amendments Nos. 1 and 7 in this group, I will have to discuss our own Amendment No. 8, which proposes the alternative name for the office of Secretary of State for Justice. Our position on Amendments Nos. 1 and 7 cannot be explained without reference to that alternative name. I asked to have Amendment No. 8 grouped with Amendments Nos. 1 and 7. That has not been done, so I will have to speak to Amendment No. 8 in this debate and I promise the Committee that I will not speak to it again when we reach the point at which it appears on the list.
As the noble Lord, Lord Richard, said in his very informative introduction to this debate, there was broad consensus in the Select Committee on what the Minister should and should not do. It was agreed that the Minister should not sit as a judge, should not be head of the judiciary in England and Wales and should have only a limited role in the appointment and promotion of the judiciary—a step that would greatly protect the independence of the judiciary. It was agreed that the Minister should continue to be head of his department, which is now a substantial department with a budget of more than £3 billion a year including legal aid. It was agreed that the Minister should have a role as defender of the independence of the judiciary and of the rule of law and that that should be recognised in the Bill, although we have not yet achieved consensus on the text.
The disputes that remain, therefore, are not about the functions of the Minister. They are: first, whether the Minister should have legal qualifications; secondly, whether he—I use the word "he" because of the current convention for using the gender of the present holder of the office—should have to be a Member of your Lordships' House; and thirdly, what he should be called. In a way, I regret that the title of the office has come first in the debate. It might have been better to tackle the other issues first so that we could see what kind of creature we were describing.
Titles are symbolic, but that does not mean that the issue is unimportant. Symbols have potency. However, it is plain that the new office is very different from the old one. In the past, the office had both judicial and political functions. Certainly, at times in the past the judicial functions were the more important of the two—as, for example, in the time of Lord Eldon, who was Lord Chancellor for some 20 years between 1805 and 1825 and spent most of his time sitting as judge of the Chancery Court.
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Now, of course, the judicial role, or the vestiges of it, are to be removed. The question is whether the title of Lord Chancellor should go with it. It would be possible to retain the name of Lord Chancellor for the remaining functions of the Minister. There are arguments for that. First, continuity would be maintained. Secondly, it is said that if it is at least coupled with the requirement that the Minister should have legal qualifications and be a Member of your Lordships' House, it would strengthen the standing and independence of the Minister and his ability to stand up to Cabinet colleagues to protect the independence of the judiciary and the rule of law. That argument has been clearly and forcefully put by both the previous speakers.
I am not persuaded. The question of legal qualifications and membership of your Lordships' House does not arise out of this group of amendments. It is a matter for later groups. We can see the advantage of having legal qualifications, but I do not believe that an intelligent and well informed lay person is incapable of understanding and defending the rule of law. Lawyers tend to have somewhat fixed and rigid views on this subject, and it is more than possible that an outsider could have a better understanding of the constitutional implications. However, that is a different issue. We shall be voting not on whether the Minister should have a legal qualification, but simply on whether he should be called Lord Chancellor.
We are certainly opposed to making it the rule that the Minister, as head of a department with a significant budget, should necessarily be a Member of your Lordships' House, whether or not there are suitable candidates for this office in another place. We need a Minister, in your Lordships' House or not, legally qualified or not, called whatever title, who will stand up for the independence of the judiciary and the rule of law. Will retaining the historic office or title of Lord Chancellor strengthen the hand of the Minister in defending judicial independence and the rule of law? The answer is no. The standing and authority of the Minister depends on the character and quality of the person who holds the office, the willingness of the Prime Minister to choose a person who has the character and quality to do the job, and the willingness of the Prime Minister to heed that person's advice.
We have had a series of strong and effective Lord Chancellors in recent years. The late Lord Hailsham and the noble and learned Lords, Lord Mackay of Clashfern and Lord Irvine of Lairg, all fall into that category. They were strong and effective not because they were called Lord Chancellor but because they were strong and effective people appointed by Prime Ministers who were willing to appoint such people.
Not all Lord Chancellors have been strong and effective. It would be invidious to name names, but there is no magic about the title. As shown on 12 June 2003, the Lord Chancellor, however strong, is a Cabinet Minister who can be sacked by the Prime Minister like any other Minister. A future Prime Minister who wants a compliant Lord Chancellor will

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find one. The mystique attached to the office of Lord Chancellor was shattered by the events of June last year and I do not believe that it can be reconstructed.
That was a concern expressed by the noble and learned Lord, Lord Woolf, in his speech at which I was present in Cambridge on 3 March this year, when he said:
"I also have doubts whether it would be possible now to restore the special culture that needs to exist if the Lord Chancellor is to successfully combine his different and conflicting responsibilties".
Professor Robert Hazell, head of the constitution unit at University College, London, as someone who regretted the announcement that the office was to be abolished, said in evidence to the committee:
"The damage may well have been done. The Government, having decided to abolish the office, in a way have broken the vase and it may be too late to put the pieces together again".
We do not see the retention of the office of Lord Chancellor as being a necessary or even valuable addition to that role. We also have to say, however, that we are not happy with the title of Secretary of State for Constitutional Affairs, which is an inaccurate description of the office. We have long advocated the title of Minister of Justice or Secretary of State for Justice.
Justice is the core role of the department and the Minister. The department has some constitutional roles that cannot be described as justice matters. For example, it is an umbrella department for devolution and it is responsible for the conduct of elections. Those are fringe activities that should probably go elsewhere. But the administration of the court system, the role in judicial appointments and discipline of the judiciary, responsibility for legal aid, and for civil law and procedure are central to the department. What it lacks—and should get—is responsibility for criminal law and procedure, which would leave responsibility for prisons and police with the Home Secretary. That would leave us with a Ministry of Justice responsible for law and a Home Office responsible for order. That is a logical division of responsibility, which has been adopted in most other democratic countries, and which should be adopted here.
We cannot expect the transfer of criminal law from the Home Office to the Ministry of Justice while the present Home Secretary remains in office. The "Secretary of State for Justice" accurately describes the present functions of the Minister and the department and points out the direction in which the department should move to become a fully fledged Department of Justice. A move in that direction as soon as possible is essential to give the Minister equal standing with the Home Secretary, which cannot be achieved by retaining the historic title.
If we cannot have the title of Secretary of State for Justice, although I hope that it is possible, we are faced with an unattractive choice. Do we support the retention of the historic title when the office to which it was attached has been transformed into something completely different, or do we support the introduction of a new title, which is an incomplete and inaccurate description of the duties of the office?
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The movement to our objectives—the Ministry of Justice and the Minister of Justice—will be easier if we can move to a new name now, even if it is not one that we ultimately want. That name recognises rather than conceals the change of function of the Minister. While I am entirely sympathetic to the motives of those who wish to retain the title of Lord Chancellor, they are misguided in believing that it will have that effect. We do not believe that the retention of an outdated title will assist the protection of judicial independence and the rule of law. We shall therefore vote against the amendment.
Lord Howe of AberavonI fancy that this is the first occasion after 12 years in your Lordships' House that I have taken part in a Committee stage debate, so I apologise for any procedural infelicity. I am also conscious of the fact that it is now some 32 years since I last wore a wig in anger, so I am to some extent disqualified in that respect as well.
During the intervening years, I have had the opportunity of presenting and discussing the reputation of our legal system in this country in many other parts of the world as Foreign Secretary and, in the decade or so following that, as an adviser to one of the world's largest American law firms. Throughout the world, our legal system, because of its structure and shape, commands universal respect which we put at peril with great unwisdom.
It is interesting that that was clearly recognised by Her Majesty's Government only a very short time before the events of 12 June—to be compared almost with 9/11 in their folly. When the Council of Europe pressed the Government to explain the extraordinary anomaly of the Lord Chancellor's role, emphasising the separation of powers and so on, the Lord Chancellor's Department submitted a long paper in response to Mr Eric Jurgens's motion in the Parliamentary Assembly of the Council of Europe, which explained the position as follows:
"The Lord Chancellor provides a counter-balance for the judicial branch against the centralised power of government and Parliament … he is removed to the House of Lords, away from the full force of party politics. The Lord Chancellor is always a senior lawyer or judge, and therefore comes to government imbued with full understanding of legal culture and the rule of law".
He is thus,
"both a link and bulwark between the judiciary and the executive and the legislature".
The phrase,
"imbued with full understanding of legal culture and the rule of law",
goes a long way to answering the point most recently made by the noble Lord, Lord Goodhart. That is the position as it was until June last year.
4.30 p.m.
We are all agreed, as the noble Lord, Lord Richard, has pointed out—and I join in paying tribute to his chairmanship—on the acceptability of discarding the judicial role of the Lord Chancellor, and of saying a sad farewell to his sitting on the Woolsack in this

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House. As the noble and learned Lord, Lord Bingham of Cornhill, said, and we recorded in our report, the old days when the Lord Chancellor spent the first half of the day sitting judicially and the second half sitting as Speaker have, for better or for worse, gone for ever. We know that his sitting in this House was short-lived; the late Lord Chancellor, the noble and learned Lord, Lord Irvine, actually sat as a judge during his three years on only two cases. The nature of the job is therefore not substantially changed by that alteration, and the case that the Government were making remains exactly as strong as it was when they made it to the Council of Europe.
My noble friend Lord Kingsland has already quoted from the judges' response to the initial decision explaining why the Law Lords wished the office to continue with its present strength and reputation. But that support for the present state of affairs is also supported very powerfully and clearly by the report of the Constitutional Affairs Committee in the other place from 10 February this year. The committee said, referring to Lord Chancellors of recent times, that all have been distinguished within the legal profession, to which they have professed great loyalty. It went on:
"There is a radical difference between on the one hand a Lord Chancellor … who has a special constitutional importance enjoyed by no other member of the Cabinet and who is usually at the end of his career (and thus without temptations associated with possible advancement) and on the other hand a Minister who is a full-time politician, who is not bound by any judicial oath and who may be a middle-ranking or junior member of the Cabinet with hopes of future promotion".
That is the second essential distinction. That general argument is, interestingly, robustly supported by a noble friend in familiar disguise—the noble Lord, Lord Lester, under the heading of the Odysseus Trust. Under the heading,
"Arrangements to replace office of Lord Chancellor",
the evidence that the Select Committee received from that quarter said:
"We strongly favour the creation of a powerful Minister of Justice, with the legal stature and qualifications of a traditional Lord Chancellor, and a specific duty to uphold the rule of law and the independence and integrity of the judicial system".
There we have, from the Liberal Democrat Benches, support for the proposition that the office holder needs to have,
"the legal stature and qualifications of a traditional Lord Chancellor".
That is no doubt a recognition that that is the right way of securing, more surely, in the phrase of the noble Lord, Lord Goodhart, a "strong and effective" holder of this important office—someone qualified in that way.
Three things follow from that analysis, which are quite familiar. First, we need to have in that office a distinguished senior figure at the end of his career. Paragraph 36 of our report sums it up in the following words. The holder must have,
"reached the pinnacle as well as the culmination of his political and legal career".
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That plainly means a senior lawyer. I am grateful to my noble friend Lord Kingsland for his generous tribute to the expiring breed that I appear to represent. He will also remember that in the course of our committee's deliberations, the original phraseology was not,
"culmination of his political and legal career",
but "terminal". That was kindly altered to a happier word.
The second proposition, which is again familiar to the Committee, is that the holder of the office should be in this House. There are good practical reasons for that. First, as my noble friend Lord Kingsland, said, sadly there are almost no leading lawyers left in the other place. When I was fortunate enough to be appointed Solicitor General, there were at least half a dozen Members of my own party clamouring and competing for that job, and I counted myself extremely lucky to get it. There were at least as many on the other side of the House, many of them of real distinction.
Alas, if one goes to the other place now, one looks not quite in vain, but one finds people with that kind of qualification only with difficulty. The evidence for that is that the two Attorney-Generals under this Government have both been Members of this House. For the first time for many centuries, that office has had to be held in this House. So the idea that there may be spare lawyers of the distinction and quality to be appointed to holder of this office simply lying around on the Benches of the House of Commons is certainly a myth. I must say with some sadness that the decline was demonstrated by the fact that for a short time the shadow Attorney-General was not a practising lawyer of any kind but a parliamentary agent. That illustrates the extent to which the holder of this office, if he is to be a senior lawyer, must be in this House.
Another important point relating to why the holder should be in this House comes from remarks by Professor Robert Hazell. Paragraph 65 of our report said:
"The House of Lords has a particularly important role to play as a guardian of the constitution".
That was rightly endorsed, as my noble friend Lord Kingsland pointed out, by the Wakeham Royal Commission. Professor Hazell went on by saying:
"If … one important function of the Lord Chancellor or Secretary of State is to be a guardian of the constitution, then in that respect it is entirely appropriate for that Minister to be a Member of this House".
The third conclusion relates to the title of the office. If the office holder is to have the qualifications of a senior lawyer and Member of this House, with the duties imposed on him as we are all agreed, one comes back to that old phrase that if it looks like a duck and if it walks like a duck, it probably is a duck. If this creature's qualifications are going to be equivalent to those of the present Lord Chancellor, why on earth should we not call it Lord Chancellor?
The name matters not just because of the nomenclature of the office but because of the historic authority attached to that title. I noted the rather lighthearted way in which the noble Lord, Lord Goodhart, was happy to dismiss that antique title. I understand

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the thinking behind the notion of a Minister of Justice but, frankly, we do not have a Ministry of Justice and we do have a hugely important and long-respected office of Lord Chancellor. It is not sensible to say that the title has been so badly damaged by the way in which the Government have handled it that we should simply shed a few tears over the broken vase and let it lie.
This will be the last time I quote from Professor Robert Hazell, but it is interesting to read his description of his understanding of the question, which was in the very first evidence before the committee. He said that he could understand why the Government were ready to discard the judicial role of the Lord Chancellor and his role as Speaker of this House. But he said:
"I do not understand why the Government wanted also to throw away his first hat and abolish the title for the function as a Cabinet Minister. No convincing reason was advanced in the consultation paper and I am not sure that any has been subsequently. It seemed almost as if the Government were casting down the title of Lord Chancellor in an act of mindless modernisation and it certainly put the judiciary in a fright. It raised unnecessary fears that the independence of the judiciary was under threat and that in casting aside the office the Government were also casting aside the values which the Lord Chancellor upheld as the constitutional conscience of the Government and as the protector of the judiciary".
That is the head of the constitution unit at University College, London, describing his impression of the impact made by the reckless decision to discard the office of Lord Chancellor. We cannot respond to that by saying, "Well, it's too bad chaps—it's gone so let it go". If we are going to maintain the authority of the office holder, we need to do what we can to repair the damage that has been recklessly committed. It shows the damage done to the vase and I am not prepared to accept it.
That impression is powerfully reinforced by some observations made from time to time by the noble and learned Lord the Lord Chancellor himself. In last week's edition of the House Magazine, that immensely influential organ, he said:
"Why should any Prime Minister be constrained in the person he chooses to do that job—constrained by it having to be a lawyer, constrained by it having to be a member of the House of Lords? The key thing is quality of the individual, and the Prime Minister should have the widest possible choice".
I see no wisdom in that whatever. If so many people on all sides of our society, and certainly in the world outside, attach great importance to the legal qualifications—senior lawyer qualifications—and membership of this House, surely we should respect those views. As I look at that observation by the noble and learned Lord the Lord Chancellor and the insight that it gives one into his thinking, I am reminded of the cynical legal comment that even in an affidavit the truth will out.
The Lord Chancellorship is the most remarkable and important aspect of our constitution. Yet the shape of that office depends not on statute but on what our constitution depends—that is, conventions. If one looks up constitutional law and human rights in the relevant volume of Halsbury's Laws of England, as I
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did, to find the qualifications of the Lord Chancellor, one finds that there are no statutory qualifications for the office of Lord Chancellor although it has,
"long been the practice to appoint a member or a former member of the Bar, often but by no means always from among the Bench or someone who has been Attorney General or Solicitor General".
That is the foundation of this cornerstone of our constitution. Over centuries, the quality, qualifications and authority have been defined and upheld by constitutional convention and by convention alone—convention that this Government have been recklessly disposed to overthrow, with possibly far-reaching consequences.
I do not want to use the phraseology of the noble and learned Lord the Lord Chief Justice, but the noble and learned Lord the Lord Chancellor is personally a most engaging colleague. For that reason, I do not relish having to make my next remark. But I have to say that I do not find it easy to respect someone, however personally agreeable, who has the privilege of being appointed to such an historic and constitutionally vital office and is then disposed, at little more than a moment's notice, to set about its demolition. In order to prevent such constitutional vandalism—I make no apology for repeating the phrase—that office now has to be recreated, preserved and strengthened. It is no longer a convention rightly respected over centuries. It now has to be restored by Act of Parliament. It has to be restored by the will of this House.
4.45 p.m.
Lord BrennanThe Bill provides a new and fundamentally different framework for the constitutional position of our judiciary that does not involve a Lord Chancellor. Those who propose these amendments assert that the role of Lord Chancellor should continue, and they essentially rely on its antiquity and the supposed scope of its functions to justify its retention. They particularly rely, as did the noble and learned Lord, Lord Lloyd of Berwick, on the role of the Lord Chancellor in protecting the independence of the judiciary. I will henceforth call that "the role".
That approach confuses the office with the functions. I strongly disagree with the approach and I regret to say, but will say, I hope forcefully, that the contention does not survive objective analysis. The Bill is intended to reform. It will preserve the best of the past to advance the future but will not be trapped by the past in making that future constitutionally good.
Let me start with history. Before this debate, I had occasion to look at each of the major textbooks on constitutional law and history, in particular, Dicey. In none of them did I find any significant reference to the role of protecting the independence of the judiciary. It simply was not there. Indeed, when I looked at the history, what was there was the predilection of Lords Chancellor up to the Second World War to appoint judges, up to and including the Lord Chief Justice, by dint of political patronage and not merit. In my research, I found that it was only in 1975 that the Lord Chancellor—

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Lord Hailsham—first explicitly expressed the role of defending the independence of the judiciary inside the Cabinet and in Parliament as important.
But on what basis can it be defended? We are fortunate in Lords Chancellor such as the noble and learned Lords, Lord Mackay and Lord Irvine, but do we know if they ever had occasion to defend the independence of the judiciary in the Cabinet? If so, on what principle did they defend it? It is not written; it is not even mentioned in the textbooks. Perhaps that might indicate to us that this is exaggerating a problem. The independence of the judiciary of this nation is protected not by the Cabinet and not by the Lord Chancellor, but ultimately by us in Parliament. I shall now develop that contention.
As to the functions of the Lord Chancellor as judge or senior judge, nobody can plausibly argue that he should sit. It is better that he does not. The Bill does away with that. As to his function as Speaker of this House, is it acceptable that a senior Cabinet Minister should spend so much time here as is required when his main function is to serve the public interest in his own ministry? Perhaps we should change our procedures.
The only area in which this debate is significant is in the administration of justice. Within that, the only issue that is seriously raised for the retention of the Lord Chancellor is the role in protecting the independence of the judiciary. I disagree with that emphasis. The independence of our judiciary as to security of tenure, appointment and discipline rests with Parliament. For 300 years, the judges of this country have been independent and have had security of tenure; that is since the Act of Settlement. Politicians respect that independence. Judges, realising that they have it, show its importance by the integrity with which they bear office. It does not and did not need a Lord Chancellor to produce that constitutional position.
The system of appointment by the Lord Chancellor—not in terms of personalities, but as a system—has been heavily criticised. The Bill changes it to an independent commission, the assessment and recommendation of which will have to be decided on by a Minister. If he disagrees, he must explain in a reasoned—in which I include that it would be rational—explanation why he did not accept a recommendation. That is very different from times past. It does not involve a Lord Chancellor.
Lastly, there is discipline. The Bill creates a new system of discipline, effectively exercisable by the Lord Chief Justice on behalf of Ministers, with prescribed procedures and an overview by an ombudsman. That is better than before, and it does not need a Lord Chancellor. Those functions—security of tenure, appointment, discipline—are all developed in the Bill for the better. They do not depend upon a Minister.
What of the role, the critical question of whether the Lord Chancellor must be there to protect the judges? That is the ultimate and only question arising in the amendments. Of the three branches of power in a democracy, the judiciary is the weakest—the least able
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to protect itself, because of its independence and its inability to enter public debate. It is therefore everybody's democratic duty to ensure that it is properly protected. A constitutional principle is needed to do it, and that is what the Bill creates. It makes for new and better protection of the judiciary, for the following reasons.
First, the concordat agreed in January of this year is an historic and unique document. It is the first time in our history when the judges and the Government have agreed together on the best way to manage the judiciary. It is founded on a welcome concept of,
"real and effective partnership between the Government and the judiciary",
which is seen as being "paramount". That is an advance. It does not need a Lord Chancellor.
The concordat is substantially embodied in the Bill. However, it includes a new, enhanced and much more powerful role for the Lord Chief Justice. By Clause 2, he becomes the president of the courts of England and Wales. In that role, he has a statutory duty to represent the judges. He must manage their administration and he must deal with Ministers and Parliament in all of those duties. This is new, different and important, and it does not involve a Lord Chancellor—far from it.
Lord Lloyd of BerwickI am grateful to the noble Lord for giving way. Will he bear in mind that the noble and learned Lord, Lord Woolf, said in his evidence that he saw no reason why the concordat, to which everybody attaches importance, should not work with a Lord Chancellor or a Secretary of State? He could see no difference.
Lord BrennanI thank the noble and learned Lord for reminding me of that fact, but I should like to concentrate, before I return to answer that point, on the question of what the Lord Chief Justice is to do.
he new role appears to be little understood. It is assumed that the Lord Chancellor is the only person who can represent the judiciary. The Bill says different. The Lord Chief Justice, as well as the Minister for Constitutional Affairs, will represent the judges and their independence. He will do so with Ministers and Parliament and if necessary do so by public debate, if he feels that that independence is under threat. He will not be trammelled by political constraint where a Lord Chancellor would be.
My next point will enable me to deal with the point raised by the noble and learned Lord, Lord Lloyd. The role of the Lord Chief Justice fits in with and is fortified by the constitutional guarantee in Clause 1 of the continued independence of the judiciary. That involves all Ministers involved in justice and every Minister, whether in justice or not, is forbidden from interfering with judicial decision making. The noble and learned Lord, Lord Lloyd, reminded me of what the noble and learned Lord, Lord Woolf, said. What

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he said was that it may be the Lord Chancellor, or it may not. He did not say that it has to be the Lord Chancellor. Prudence on his part would surely lead him not to overstate at this stage the new role that the Bill gives to him. The role of the Lord Chief Justice and the constitutional guarantee work together.
Lord Campbell of AllowayI thank the noble Lord for giving way. Will he not accept that there is no guarantee whatever in Clause 1 and that it is wholly unacceptable to suggest that there is a guarantee? Does he not appreciate that in paragraphs 75 to 79 of the committee's report reservations were expressed by noble and learned Lords and by Lady Justice Arden about enforcement? The black-type guarantee of judicial independence, as the noble Lord must know, is a marginal gloss. It is not part of the statute or the Bill. It cannot be amended and it cannot be referred to as an aid to interpretation; and in any event it is totally misleading and wrong.
Lord BrennanIt is embarrassing to remind ourselves that in 2002, we in Parliament enacted a guarantee similar to this to protect the judges of Northern Ireland. Did we then, in doing so, consider that it was of no effect, that it was a gloss? Of course we did not. We wrote it then as we write it now in the Bill—as a constitutional provision. We may be little accustomed to dealing with written constitutions in this country, but it is time that we started to learn to use them with the intended effect that they are intended to have.
How is the guarantee to be honoured? That is the question implicit in the intervention of the noble Lord, Lord Campbell. It will be honoured in many different ways. The Secretary of the Cabinet, in his proper constitutional position, properly exercised, could not for a moment permit Cabinet discussion to occur in which political interest was threatening the independence of the judiciary, if this clause is law. It is unthinkable that that could occur.
Secondly, if there is difficulty about the independence of the judiciary in Cabinet, the Attorney-General can attend. It was only in 1992 that the Attorney-General stopped representing the Lord Chancellor in the House of Commons on all of these questions. Thirdly, and in any event under the Bill, the Lord Chief Justice himself will have the right to make representations, in public if necessary, to ensure that the guarantee is honoured.
Last and most important of all, when a constitution is written it is not Ministers or judges who give it the final protection—it is this Parliament. Would we be so supine as to allow this guarantee to have no effect? Are we not prepared to use the Select Committee on Constitutional Affairs and give it strength to make it an effective guarantee? Are we not prepared to debate in this House whether or not the guarantee has been observed? It seems to me that in this debate the parliamentary duty to preserve the constitution is fundamental.
Lord Phillips of SudburyI am grateful to the noble Lord for giving way. How supine was the House on 12 June last year, when the role of Lord Chancellor was de facto abolished? How effective were we then?
Lord BrennanThat is a matter for our own consciences. How effective were we when we debated the ouster clause in the Asylum and Immigration (Treatment of Claimants, etc.) Bill? It was changed. It was far more important that that happened than that we did not debate adequately or fully at the time the provenance of these changes.
I want to finish. Having discussed how this guarantee can be honoured, the ultimate guarantor in parliamentary terms is us, but in terms of government it is the Minister. What kind of cheapskate politics do we anticipate will occur when a Minister with a constitutional duty will ignore his duty? It is difficult to accept that we should approach our constitution in such a way.
Lastly, if the Bill is given its full reforming effect, the Lord Chancellor's office has come to an end—an honourable end—but the new start is a better start. A combination of constitutional guarantees, roles of the Lord Chief Justice and so on make it better. To continue the role would be to preserve a name. It would be confusing and unhelpful. It would certainly be undemocratic to require such a Minister to be a lawyer and from this House. It would certainly anticipate a lack of calibre that I do not accept in politics: Roy Jenkins, not being a lawyer, presented the first Prevention of Terrorism Bill in the other place with distinction, as many other non-lawyer Ministers have done with complex litigation. Above all, it is unnecessary.
The concordat indicates at paragraph 5 that the new arrangements should reinforce the independence of the judiciary. In the previous debate in this House, the noble and learned Lord the Lord Chief Justice himself said that the Bill had his firm support in implementing the concordat because it would ensure the continued independence of the judiciary.
The noble Lord, Lord Kingsland, is right. This is a dramatic change in constitutional life. But what is the choice? Is it to be a practice vague to discern, dependent upon the strength and personality of a Lord Chancellor to make it effective; and to be effective in circumstances about which we know next to nothing? Or should it be a principle writ large in a constitutional chapter; plain to read; readily understood; and thereby much more enforceable?
The chapter of our constitution that the Bill represents is an occasion for necessary change. It is an occasion when this House should support this Bill, whether it sadly leads to the end of the Lord Chancellor or not.
5 p.m.
Lord Crickhowell: My Lords, I want to address two of the principal points made by the noble Lord, Lord Brennan; the role of this House and the particular position of Clause 1.

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Members of the Select Committee very soon learnt that my King Charles's head, my obsession, was the question of the enforceability of Clause 1, an issue that had been raised at Second Reading by, among others, the noble and learned Lords, Lord Mackay of Clashfern and Lord Lloyd of Berwick. I raise it again now, partly because it has just been raised by the noble Lord and partly because the alleged "guarantee of continued judicial independence"—that is the heading to Clause 1—has been placed right at the front of the Bill. The worth of that guarantee should be evaluated and fully understood by noble Lords before they decide that the proposed abolition of the office of Lord Chancellor is to be supported or rejected.
The Judges' Council Working Party on the Bill, in its written evidence to be found on page 213 of the evidence volume, stated:
"The protection of the judicial independence is the keystone of the new constitutional arrangements".
Another working party of greatly respected Members of this House, chaired by my noble friend Lord Alexander of Weedon, whose important memorandum to the Select Committee can be found on page 465 of the evidence volume, drew attention to the attempt made in Clause 1 to impose a statutory duty to protect the independence of the judiciary and commented:
"We have the strongest doubts about the effectiveness of those provisions. Their existence demonstrates the dangers that arise from these reforms. We do not understand how such duties can be enforced".
The noble and learned Lord the Lord Chief Justice, giving oral evidence in response to my question on the subject (question 527), said that it was not intended that a clause of this sort should be enforced in the courts. He compared it to the declaratory provisions to be found in education and National Health Service legislation and told the committee that a Minister failing to fulfil the responsibilities set out in the clause,
"will be answerable to Parliament and the public for failure to do so".
With great respect to the Lord Chief Justice, I believe that this clause, which seeks to impose very specific highly important duties, is intended to be of much greater significance than clauses which impose general duties to promote education or to establish a comprehensive health service. And as the Alexander of Weedon working party pointed out in paragraph 61,
"if the proposed statutory duty proves ineffective, it is likely the Lord Chief Justice will be drawn further into political and media controversy in order to defend individual judges".
It identified other equally unfortunate consequences of the same failure.
When Lady Justice Arden, who chaired the Judges' Council Working Party, gave evidence (question 745), I pursued the subject again and asked a number of questions about this
"keystone of the new constitutional arrangements",
which is supposed to protect judicial independence and, it is hoped, the rule of law. I argued that the House of Commons, with a large government
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majority, is not likely to be an effective body to challenge executive action and that this House may not find it easy.
I suggested that if the clause is extended to cover the rule of law and, even more, if Clause 1 is given enhanced status by imposing an interpretive obligation along the lines of Section 3 of the Human Rights Act 1998, as proposed by the Judges' Council,
"surely there will be citizens outside who perhaps do not feel that Parliament is doing its job effectively who will want to take the matter to the courts and to judicial review".
We have got into a sort of circular position because we started with an unenforceable clause, and then we are told that it is okay because Parliament will deal with it; but if Parliament fails to do something about it for the people, the people's only remedy is to go to the courts.
When I put this proposition to Lady Justice Arden, she said that if it was required it should be possible to draft a clause that was enforceable; but that, understandably, she did not wish,
"to express a view either way on whether clause 1 would be capable of being relied upon by the citizen who wishes to take the matter to the courts by judicial review".
It seems to me wildly unlikely that the clause will be redrafted to make it legally enforceable. The last thing that Ministers want is to be pursued in the courts for their failures. And as Professor Jolowicz argued in his written evidence (page 365), although the clause is a fine example of what he called lex imperfecta, it may not be wise to open the door to an application for judicial review. That, he said,
"conjures up a vision to delight the enthusiastic lawyer, but may not be entirely sensible".
So we are left with a declaratory clause unenforceable in the courts and the concordat which, apart from the bland and unsubstantiated statement quoted by the noble Lord, Lord Brennan, that,
"The new arrangements should reinforce the independence of the judiciary",
gives little comfort. Like Professor Jolowicz, I believe that there is no adequate substitute for a Lord Chancellor and that it is,
"seriously misguided deliberately to destroy an office whose traditions have succeeded in creating for its holders a remarkable and deserved reputation for trustworthiness".
The Alexander Weedon working party gets to the heart of the question in paragraph 56, when it says:
"we consider that the Lord Chancellor presently holds a strong role in protecting the independence of the judiciary within Government ... First, he acts as their spokesman in arguing for resources to enable them to do their work properly and to ensure that their position is protected. Secondly, he can remind other members of the cabinet of their role within the justice system. As such, he acts as a counter-balance to the equally important role of the Home Secretary in looking after the interests of public security".

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Equally telling is the working party's earlier quotation of Lord Birkenhead's defence of the office, written in 1922, to be found on page 467 of the evidence volume. It firmly deals with the argument of the noble Lord, Lord Goodhart, that all we are talking about is a name. Lord Chancellor Birkenhead wrote:
"it provides a link between two sets of institutions"
the judiciary and the executive—
"if they are totally severed there will disappear with them any controlling or suggestive force exterior to the Judges themselves, and it is difficult to believe that there is no necessity for the existence of such a personality, imbued on the one hand with legal ideas and habits of thought, and aware on the other of the problems which engage the attention of the executive Government. In the absence of such a person the judiciary and executive are likely enough to drift asunder to the point of violent separation, followed by a still more violent and disastrous collision".
We live in a moment of history when that warning seems prescient and apposite.
My final reference is to the Law Lords, who told the Select Committee, as reported at page 116, that they are,
"very greatly concerned that the important constitutional values which the office of Lord Chancellor protected should continue to be effectively protected. In the past the Lord Chancellor's role was to uphold constitutional propriety and champion judicial independence. The constitution would be gravely weakened if that safeguard were removed and not replaced".
The Prime Minister decided to remove that historic safeguard without consultation and, astonishingly, without reference to the Cabinet—so much for the idea that the Cabinet Secretary is to be the proper defender of the independence of the judiciary. It seems unarguable that an unenforceable declaratory clause cannot be an adequate substitute for the historic role of the Lord Chancellor. Furthermore, the authority and influence of the role does not stem simply from his responsibility for what were described in our report as "judicially related matters". The special responsibility as the "constitutional conscience" of government, defending judicial independence and the rule of law in Cabinet goes much wider and springs from the historic character and seniority of the office. That must not be casually put on one side, which is why I strongly support the amendment and the other clauses that go with it.
Lord Carter: My Lords, I wish to add to the encomiums addressed to my noble friend Lord Richard, the chairman of the Select Committee, who did a brilliant job in guiding us. As some noble Lords will remember, I was opposed to the appointment of the Select Committee on the grounds that the procedure of such a committee was not appropriate. We proved that to be the case. In the first part of our work, we treated the Bill as draft legislation and produced extremely good evidence. If we had stopped there, it would have been very helpful. But we then ignored the procedure in the Companion, decided to take no votes and dealt with amendments to the whole Bill in one day, with the exception of Clause 1, on which there was another short session. Until halfway through the process—the taking of evidence and the report—the procedure was extremely good. However,
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the procedure that we then adopted showed that, if we had followed the procedure that should have applied, the appointment of a Select Committee on a substantive Bill would not have worked at all.
We have heard a great deal about the historic role of the Lord Chancellor. I understand the history and great dignity of the office. However, let us look at what Lord Chancellors do in practice. They emerge from highly charged political discussions with the Prime Minister and ministerial colleagues involving personalities, issues and policy; they revert to acting as head of the judiciary; they help to draft the party manifesto for the general election; at the same time, they are extremely busy as a departmental Minister with a very large budget and some 20,000 civil servants; then, in their spare time, they serve as the Speaker of the House of Lords.
5.15 p.m.
We all have our views about what happened on 12 June, but without this Bill, the situation would have continued. We now agree that the Lord Chancellor should not be the head of the judiciary and perhaps should not be the Speaker of the House of Lords in the new role that we are now defining and agreeing. All that would have continued. None of the noble Lords who have tabled amendments proposed to change that situation; it was a complete anomaly, with the role involving a mixture of politician, judge and the other aspects about which we all know. The Bill has put that right; without it there would have been no concordat between the judiciary and the executive for the first time.
I have described the role of the Lord Chancellor. In practice he would not so much need Chinese walls between his various roles as the Great Wall of China. It seems generally agreed that the Lord Chancellor should not sit as a judge and should therefore not be the head of the judiciary. As a non-lawyer—I think that I am the first to speak in this debate—I have always thought it odd that the head of the judiciary need never sit as a judge, would very rarely sit as one and was appointed by the Prime Minister.
Any dispassionate examination of the role of the Lord Chancellor would conclude that the Speaker of this House should no longer be appointed by the Prime Minister but should be elected by the House. The noble and learned Lord, Lord Mackay of Clashfern, agrees with that view in an article in today's Times. As the noble and learned Lord, Lord Lloyd of Berwick, said, that is a matter for the House that need not concern us now.
If the roles of head of the judiciary and the Speakership are removed, it leaves the central question: what should the new role of the Lord Chancellor be? We agree that the Lord Chancellor should at least relinquish his role as head of the judiciary and Speaker of this House. Even if those functions are removed, all the amendments in this group are intended to ensure that there is a senior lawyer and a Member of the House of Lords in the Cabinet to protect the independence of the judiciary and the rule of law.

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I have listened carefully to the arguments in favour of a senior, experienced lawyer; I understand where they come from. If I were a very unkind non-lawyer, I would say that it was special pleading in spades. I was reminded of the famous remark by Jo Grimond on "Any Questions" 30 or more years ago, when there was much discussion of restricted practices in the trade union. He said:
"If you really want to see restricted practices, put on your hat and walk down to the Temple".
If we were to require that the Lord Chancellor must be a senior experienced lawyer and a Member of the House of Lords, it would be a unique prescription on the power of the Prime Minister in the construction of the Cabinet. Any noble Lord who has spoken has dealt with the point that this House does not control supply. However, those who support the amendment suggest that a senior departmental Minister—I see that there are two former Chancellors of the Exchequer sitting opposite—with a budget of £3 billion should be a Member of this House and not the House that controls supply.
Lord Howe of AberavonMy Lords, perhaps I may pick up on the noble Lord's use of the words "unique prescription". The unique prescription that the Lord Chancellor should be a senior lawyer and a Member of this House has prevailed for 100 or 200 years, but by convention and not by statute. But the unique prescription has been there; Prime Ministers and the nation have managed to live with it quite well.
Lord CarterI am describing the prescription as a matter of law, not convention. It would now, I assume, be a matter of law that the Lord Chancellor should be a senior lawyer and a member of the Cabinet. That would be a unique prescription in law of the power of the Prime Minister and the appointment of the Cabinet. There is the major point that a departmental Minister with a budget of £3 billion—
Lord Campbell of AllowayYour Lordships will no doubt be aware that at paragraph 35 of the report, the view that the office of the Lord Chancellor should be retained in some way was expressed, putting it briefly, by noble and learned Lords, noble Lords and academics. In that context, it is wholly relevant—
Lord CarterI have not finished.
Lord Campbell of AllowayI am so sorry.
Lord CarterI was just pausing for breath. In the report, we deal with the evidence against the Lord Chancellor being a senior lawyer. Evidence was received from Justice, where witnesses agreed with the Government's view that it was not essential for the Minister to be a lawyer in order to carry out his functions under the Bill. That was evidence from Roger Smith of Justice.
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In the Scottish Executive, there is no requirement that the Minister for Justice be a lawyer. The Committee was told by Roy Martin QC, vice-dean of the Faculty of Advocates, that his assessment of the experience in Scotland—where of the two Ministers for Justice since devolution one was a lawyer and one was not—is that it does not make a particular difference. On the final question—
The Earl of Onslow: I—
Lord Campbell of Alloway: I—
Lord CarterAre you intervening? I just bent down to put down my papers. If noble Lords are patient, when I have finished I will say, "I am finished". Then I am sure that noble Lords opposite will all get to their feet.
I conclude on the point of the rule of law. Seven members of the committee either were members of the Cabinet or had attended Cabinet, as I did for five years. We asked if any of us could remember from our time when the rule of law had specifically been discussed as the rule of law in Cabinet. Now, I am sure that there were many discussions with Lord Chancellors on points of law. No one could actually remember the rule of law being discussed as such in Cabinet. The evidence of the Lord Chancellor says it all:
"The rule of law in the questions that we are talking about is not has the Government complied with the law ... we are talking about big constitutional issues which are identifiable to all members of the Cabinet. The question boils down very often to is it only a lawyer who can identify these sorts of rule of law issues? I do not believe it is, I believe that all constitutional politicians can spot them".
For the help of the noble Lord, Lord Campbell of Alloway, I should say that I have now finished.
Lord Campbell of AllowayMay I—
Noble LordsCross Benches!
Lord SkidelskyI support Amendments Nos. 1 and 7 to Clause 1. I do so as a member of the working party of Members of your Lordships' House chaired by the noble Lord, Lord Alexander, set up on the initiative of the Bar Council to consider the implications of the changes proposed in the Constitutional Reform Bill.
The reason that your Lordships' House took the unusual step of setting up a Select Committee at Second Reading was because we objected to the way in which the reform had been introduced. The Prime Minister's announcement on 12 June 2003, without consultation and as a kind of add-on to a Cabinet reshuffle, typified the extraordinarily cavalier way in which the Government have embarked on the process of constitutional change, perhaps more appropriately called the unravelling of our constitution.
It is for that reason that I cannot accept the argument of the noble Lord, Lord Brennan, that the rule of law and independence of the judiciary are adequately protected by Parliament. That may have

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been true in the past; I am not confident that it will be in the future. The noble Lord referred to Lord Hailsham. It was Lord Hailsham who warned of the dangers of "elective dictatorship". That is the permanent danger of a unitary constitution. That is why we should not abandon such defences as we have erected over time, however inadequate such defences may be, against a wilful Prime Minister who has an enormous Commons majority at his back.
I believe, as did our committee, that the Lord Chancellor is an essential counterweight to the supremacy of the executive and particularly to the power of the Home Office in our constitution. There is no need to remind your Lordships that ours is a fused constitution with a balance of powers and not a separation of powers. In this constitutional scheme, the Lord Chancellor is the main link between the legal profession and the government, representing the judges' views to the executive and the executive's views to the judges. He is thus an important element in the protection of the judiciary and the legal profession from political pressure. Such an office, and such an office holder, would be unnecessary and otiose if we had a formal separation of powers between the executive, legislature and judiciary, as in the United States, for example. That is not what the Government are proposing. There is to be no breach in the sovereignty of Parliament. What is proposed is simply to replace the Lord Chancellor with the Secretary of State for Constitutional Affairs.
Four essential functions are fulfilled by the Lord Chancellor in our constitutional system, which cannot be replicated by a Secretary of State for Constitutional Affairs. All these four functions flow not just from the name of the Lord Chancellor, as pointed out by the noble Lord, Lord Goodhart, with all the conventions attached to that name, but to the qualities that inhere in that name, whose connection with the name "Secretary of State for Constitutional Affairs" would be purely fortuitous.
The first function is to protect the independence of the judiciary. The noble and learned Lord, Lord Howe, has already quoted words from the Constitutional Affairs Committee of the House of Commons, pointing to the radical difference between the Lord Chancellor who is bound by judicial oath, and who is usually at the end of his political career, and a Minister who is a full-time politician not bound by judicial oath, and who may be a middle-ranking or junior member of the Cabinet with hopes of future promotion. Our own evidence at paragraph 21 adds that,
"there is no guarantee that the Minister will be a lawyer and so may lack the understanding of successive Lord Chancellors of the role that the legal system, the judges and the profession play in achieving a balanced constitution".
The second function is to protect the self-regulation of the legal profession. The noble Lord, Lord Carter, talked of restrictive practices. Restrictive practices can play a constructive role, if they protect the professional competence and integrity of the profession. The self-regulation of the legal profession ensures that. While the Secretary of State for Constitutional Affairs is to
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inherit the Lord Chancellor's power to improve or amend the ethical rules of the profession, our committee, at paragraph 51, was concerned that someone who is not imbued with legal habits of thought may interfere with the profession's rules,
"in ways that might assist the Government's own agenda, but which might be inimical to the wider public interest in the administration of justice".
Thirdly, we believe that the Lord Chancellor has an essential part to play in protecting the principle of appointment by merit. That is, he should continue to be responsible for appointing senior judges on the nomination of the Judicial Appointments Commission. As our evidence noted at paragraph 33,
"dangers inherent in [the powers of the Secretary of State for Constitutional Affairs to reject candidates for senior judges proposed by the Commission] could be very much lessened if the Lord Chancellor were to remain the appointing officer".
Finally, we believe that the Lord Chancellor is the best person to protect the running of the courts—particularly with respect to the function of listing cases—from executive interference. In our evidence at paragraph 44 we wrote that the administration of the courts,
"should be in the hands of a minister of the appropriate seniority to understand the needs of the judiciary and the position of the staff supporting them".
That is why I strongly support the amendments to enable the Lord Chancellor to retain his essential place in our fused constitution. Whether he continues to be our Speaker is for your Lordships to decide.
Lord Peyton of YeovilAs regards the Select Committee, perhaps I should confess—
5.30 p.m.
The Lord Bishop of WorcesterI am grateful to Members of the Committee for allowing me to speak now. First, it has been an extraordinarily valuable education to read the Select Committee's report. Whatever else is accomplished, a volume has been produced that young people and people with an interest in the way our constitution works will profit greatly from reading, to which I pay tribute.
I came to this debate on the whole—and I think that I still am—in support of the instincts that lie behind the amendments. The analysis of the situation made by the noble Lord, Lord Brennan, was, again, a tremendous education in all the different factors that are at stake and it is largely to his arguments that I think we should address ourselves.
One way of characterising the noble Lord's speech is to say that he analysed the Lord Chancellor's role in terms of functions and examined the ways in which they would be discharged after the enactment of the statute. He considered that the functions would be at least as well discharged and that therefore there is no case for continuing the post of Lord Chancellor.
On these Benches, we may feel inexpert in some of these matters, but we know quite a bit about what it is like to have one's role dealt with in terms of functions. One learns a bit about what a bishop is by what a bishop does, but one does not learn very much. In this

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debate, it is quite important that we use the words "role" and "function" in a somewhat distinguished way from each other. Indeed, there are functions that a person in the role of Lord Chancellor discharges.
The question concerns what the Lord Chancellorship represents to the heart of our society, which I shall look at under the heading of the separation of powers. This House is essentially a unitary place that brings into the common life of the nation a variety of perspectives. Our daily prayers express the desire for the unity and the knitting together of all estates and persons in this realm. They are an expression of what we seek in a society where different functions can be discharged but in which we actually bring those functions together in a single, deliberative council.
Much as I enjoyed my time in the United States and hugely admired the architecture of its constitution, I am not terribly persuaded—certainly not at present—that the separation of powers guarantees very much. It guarantees that those who wish to exert power resort to all kinds of means in order to bring the other branches of government on their side. Some of the spectacles are not particularly edifying.
If I have to choose between a vocational understanding of politics and office—that is, the Lord Chancellor has a role to which he or she is called—and one that rests on keeping things separate, I would have more faith in the vocational understanding. It seems to provide something to which a person who holds such an office can be, and historically has been, held to account. I do not really trust the possibility that that will simply happen by the interplay of different branches of government.
The separation of powers idea, which I have no doubt lies at the root of these proposals—apart from the changes of detail which, for the most part, are excellent—does not offer what is claimed for it, as well as not being the experience of the constitution of our society. Therefore, for that reason alone, I think that we are going down the wrong track. I feel confirmed in that view by the context in which this discussion is taking place.
I could imagine this House having had this debate before the famous 12 June 2003 and before the debate on the asylum Bill ouster clause. Perhaps, if we had had that debate in a more abstract and calmer frame, I should have been more likely to be persuaded of the course of action on which the Government are embarked. But I cannot state too strongly the undermining of confidence that both those episodes created in me, and I am not alone.
The 12 June episode underlines the fact that we do not seem to have any operative conventions about how the fragile, nuanced, unwritten constitution of our society evolves and changes. It seems to me that if it can be changed by simply a fiat or announcement, that is very serious because it says that we have not expressed the conventions to ourselves clearly enough. If we have not, we are in considerable danger. That is confirmed by repeated statements made in this debate
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that we cannot go back to before 12 June. It tells us that if an announcement of that kind is made, we have no choice but to accept that we go along with it.
With great respect to the riposte made by the noble Lord, Lord Brennan, to the noble Lord, Lord Phillips, as regards the asylum Bill ouster clause, it is not my recollection of that event that it was this House's debate that caused the clause to be changed. We came to the debate with an announcement that the clause would be changed. I think that was because of the intervention of some notable persons who, as it happens, but not just as it happens, had held the office of Lord Chancellor.
Lord GoodhartI am grateful to the right reverend Prelate for giving way. First, does not the row over the ouster clause show that one cannot necessarily rely on someone who holds the office of Lord Chancellor? Secondly, if this Bill goes through, the Lord Chief Justice would be in a much stronger position as the head of the judiciary in England and Wales. It is he who would be in the best position, rather than the Lord Chancellor, to act as the defender of these rights.
The Lord Bishop of WorcesterI appreciate the noble Lord's intervention. With all due respect to the noble and learned Lord, Lord Falconer, although he is of course the holder of the office of Lord Chancellor, he is the holder of that office post-12 June. That makes a profound difference to how his interventions can be regarded. The powers given to the Lord Chief Justice are very important. But what concerns me most about the ouster clause is that it was ever proposed. That is the serious matter to which I draw attention.
My final point relates to the process of this discussion. We need some conventions about how our constitution is to be changed. Although I know that many noble Lords will disagree, I think that it is very strange that the Government should make an announcement; that they should not present it to the elected representatives of the people for the first expression of their will; and that they should then process it through this House. I realise that the Committee brings formidable expertise to the task of scrutinising and revising a Bill which emerges from another place. That is how it is supposed to work. It is not going to be able to work in quite that way because the Bill will go from here to another place and we shall not have the kind of scrutiny functions to deploy as regards any amendments made there.
It is because of the fundamental questions of substance, the processes by which we are dealing with them and the context in which we have been placed, that at the moment I am persuaded to support the amendments.
Lord Peyton of YeovilI have listened and it is desired—
Lord Evans of Temple GuitingI believe that we should hear from the noble Lord, Lord Campbell of Alloway, who has risen to his feet five times.
Lord Campbell of AllowayI shall be very brief. I sought to make the point that paragraph 35 of the report states "in some way" the office must be retained.
The other point I want to make relates to the speeches of the noble and learned Lord, Lord Lloyd of Berwick, and my noble friend Lord Kingsland, which concern functions. It arises because of the recommendation at paragraph 45 of the report, which makes it relevant to this amendment to consider whether the scope of the retained functions justifies retention of the office.
On the basis on which this was dealt with by the noble and learned Lord, the scope is wholly sufficient to justify retention of the office. That is particularly so if one adds to those functions the prime importance of the constitutional role, which has been dealt with by other Members of the Committee, the retention of the Great Seal, which confers authority, and the exercise of the parliamentary role spoken to by noble and learned Lords, including the Speakership, which stands as the guarantee for self-regulation undertaken according to our extant regime. There appears no reason or justification for change, and no one elected or appointed would have the same authority as the Lord Chancellor.
The other matter is that the office was established before the Conquest and the keepership of the Great Seal was conferred, I believe, when the king was otherwise engaged during the 30 Years' War. That seal is kept in the Purse of the Lord Chancellor at the State Opening of Parliament with the gracious Speech. Is it the idea that Clause 12 is to abolish that ceremony which takes place in your Lordships' House, with the Lord Chancellor attendant on the sovereign?
On two occasions this great office has been abolished by decree—by Cromwell pending the restoration of the monarchy, and by the Prime Minister today pending immediate restoration to enable this House to sit.
The circumstances of that occasion are all well known to Members of the Committee now and have been aptly described by my noble friend Lord Kingsland on another occasion. Those circumstances cannot yet again justify abolition. As regards the interest of the body politic from the speeches which Members of the Committee have heard, do not those circumstances cry out for the retention of the office? It is accepted by all Members of the Committee to whom I have referred, and I totally agree, that there must and shall be substantive reforms. Reforms, yes, but not abolition.
At all events, the Great Seal has to be retained in order to confer proximity with the monarch and the precedents, rank and status which is required to discharge the functions to which I have referred. Members of the Committee may remember the point made by the noble and learned Lord, Lord Lloyd of Berwick, of checks and balances as to the use of power. It is reminiscent of Darwin's Mathematical Bridge over the Cam by Queens', which held itself up by the forces of gravity. Once dismantled, no one could put it together again.
5.45 p.m.
Lord Evans of Temple GuitingI suggest that the noble Lord, Lord Lester, speaks next, followed by the noble Lord, Lord Peyton and my noble friend Lord Richard.
Lord Lester of Herne HillI shall not follow the noble Lord, Lord Campbell of Alloway, into the tangled undergrowth and thickets of the ancient British constitution through the ages. Instead I shall make one point only and a point in support of the speeches made by my noble friend Lord Goodhart and the noble Lord, Lord Brennan.
I wish to give a short piece of evidence to the Committee. I am one of the few Members of this House who has served in a government in which ruleof-law questions came up frequently in Cabinet. The conduct of Ministers at the time persuaded me that the present system was not quite as perfect as suggested by those with a conservative disposition.
I had the privilege of serving in the second Wilson government—
A noble LordAs a special adviser.
Lord Lester of Herne HillI was coming to that. It was a government who contained, among others, the noble Baroness, Lady Williams of Crosby, as a distinguished Minister. I served as Roy Jenkins's special adviser. In that capacity I was given responsibility for looking at the constitutional issues as they came before the Wilson Cabinet. I was a great admirer of the Lord Chancellor, Lord Elwyn-Jones, and of the Attorney-General, Sam Silkin. As I travelled back from Morocco I said to Elwyn Jones, on the eve of the Labour government's election, "What would you do if you were Lord Chancellor?". I remember that charming, genial and fine lawyer saying, "I would not be the last Lord Chancellor". I said, "Apart from that, Elwyn, what else would you do?". It was not clear to me that he had a clear idea. He served with great geniality.
The issues which arose in that Cabinet included what should be done about the Shrewsbury pickets. What should be done about the Clay Cross councillors? What should be done about the fact that the Scottish devolution proposals made no allowance at all for judicial review which, as contemplated at the time, would have given the judges no proper autonomy or power?
I have to say that, time and time again in Cabinet, the person who stood up for the rule of law was not the Lord Chancellor. It was not even the Attorney-General when he was allowed to be there. It was Roy Jenkins. I do not say that because I believe that a lay person who is not a lawyer would necessarily have the qualities of Roy Jenkins any more than would a lawyer. But I do say from my own observations of Cabinet proceedings—I hope that the noble Lord, Lord Wilson, will agree that I am not in breach of the Official Secrets Act in saying this after more than 30 years—that it is an innocent illusion to suppose that

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the label of "Lord Chancellor" or the office of Lord Chancellor matters. As the noble Lord, Lord Brennan, said so effectively, what matters is the structure within which the senior office holder operates, the individual personality of that office holder, and whether he or she is a person of strong and robust independence, integrity and understanding of the rule of law.
All I can say from my personal experience is that to carry on romanticising about 1,000 years of history and so forth is beside the point.
Lord Peyton of YeovilI listened with rapt attention and considerable admiration to the opening of this debate by my noble friend Lord Kingsland. I listened with similar respect and attention to the noble and learned Lord, Lord Lloyd of Berwick. However, I wonder whether their generosity had not led them to forget rather too soon the events which preceded 12 June. Those events sowed some widespread seeds of deep mistrust both of the Government and of the noble and learned Lord the Lord Chancellor himself. I must briefly remind noble Lords of why that was so.
In my view, since they came into office the Government have handled your Lordships' House in a thoroughly hamfisted way. They were cavalier in their dismissal of a promise which persuaded hereditary Peers to agree to depart from the House on the basis that a reasonable settlement would be made before anything further was done. As far as I can recall, the noble and learned Lord who now sits on the Woolsack dismissed it in a rather lighthearted manner by saying that it was a temporary arrangement which no one could really expect to last. But that was a very different standpoint from that adopted by the noble and learned Lord, Lord Irvine of Lairg, whose name, surprisingly, has not been mentioned in the debate so far. The noble and learned Lord, Lord Irvine, considered that a promise was a promise, and so he stood in the way of the Government.
My other charge against the Government is that they have been singularly naive in their attempt to wrap all this up in the garments of respectability, saying that it is a well thought out plan of constitutional reform. I do not really think that it was anything of the kind. Moreover, a shock was administered to the Government when they found that neither the Prime Minister nor the noble and learned Lord himself could wave a wand and cause his office to disappear. To get out of the situation created by the honourable conduct of the noble and learned Lord, Lord Irvine, the Government called back the Lord Chancellor from the Dome—where, incidentally, he was winning very few laurels—because he had just those qualifications for the job of the present post that the noble and learned Lord, Lord Irvine, lacked. The obedience and flexibility of the noble and learned Lord the Lord Chancellor commended him to the Prime Minister.
I question the idea that a Secretary of State would be able to resist the pressures of the Home Office. As I said the other day, although the noble and learned
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Lord did not take my words seriously, I believe that he and his department would make a very easy meal for the Home Secretary.
I cannot forget the cavalier treatment of a certain binding promise which was made. The noble and learned Lord affected to treat it as if it was time-expired.
We have now had the experience of seeing the noble and learned Lord sitting happily on the Woolsack, still determined, at the end of his term, to destroy the office. I agree with what was said about this by my noble and learned friend Lord Howe. He expressed surprise that the noble and learned Lord, having enjoyed the office, could so easily then destroy it. If the noble Lord, Lord Goodhart, was right in what he said—that we are simply arguing about the name and title of the office—I cannot see why the Government should not accept that.
I do not think that the noble and learned Lord can be all that surprised at the chilly reception given to this Bill and which, indeed, has been accorded to him for his part in it. He is perhaps the first holder of his office who has thoroughly enjoyed eating his cake, and now relishes destroying it.
As I have said, I find it quite impossible to dismiss from my mind all the events which preceded 12 June. My one fear is that, when the Bill goes back to the House of Commons, the calm attitude and reasoned compromise displayed by my noble friend Lord Kingsland arid the noble and learned Lord, Lord Lloyd of Berwick, will not in any way be echoed by the Members and Ministers who sit in that House. I do not share the hopes expressed by my noble friend and I am very sorry for it.
Lord RichardHaving spent a modest 15 years in this House listening to the noble Lord, Lord Peyton, and 10 years in the other place listening to him, I have always been struck by the thought that beneath that curmudgeonly exterior, of which the noble Lord is very proud, there is a very gentle man; indeed, a humorist trying to get out. It is a great pity that he spoils it by being overly acid. It is like putting too much vinegar in the stew. You end up tasting only the vinegar and not tasting the meat. I have to say to him, in all candour and in great friendship, that the speech he has just made was frankly disgraceful in the context of this debate.
6 p.m.
Perhaps I may try to bring this down to reality. We have been up in the realms of the constitutional stratosphere. Everybody has been telling me what a great office the Lord Chancellor is, as are the duties he performs, and how the constitution will be, if not destroyed, at least rocked if the Lord Chancellor goes.
Let us look at the alternatives. In our report we set out four possible ways in which, if one wanted to preserve the office of Lord Chancellor, it could be preserved. First, we could retain, preserve and enhance several crucial features of the office, including that he has to be a senior lawyer and a Member of this House.

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Secondly, the office of Lord Chancellor could be redefined so that the office became more a judicial than a political one, and legal aid could be transferred to other departments. Indeed, that was the argument put by the noble and learned Lord, Lord Mackay.
Thirdly, the title Lord Chancellor could be used for the Secretary of State for Constitutional Affairs. In other words, there is the Secretary State, and the person who is performing that function does what the Bill requires of him, but he is called the Lord Chancellor. That, as I understand it, has been the position taken up by the noble and learned Lord, Lord Howe.
Fourthly, the title Lord Chancellor could be used for the Speaker of the House, and indeed that is what the noble Lord, Lord Campbell of Alloway, seems to be advocating. One noble Lord who gave evidence to us said that the Lord Chancellor was Speaker of the House and, when asked what else he could do, said that he could "hold himself at the disposal of the House". I was not quite sure what that meant at the time, nor indeed am I sure now.
It is therefore important to start this argument by looking at the four main elements of what the Lord Chancellor is supposed to do and to ask ourselves is he doing them, in this day and age should he be doing them, or should they be done in some other way?
What are they? First, he is the senior judge in the United Kingdom, recognised as such as head of the judiciary. Secondly, he is responsible for the administration of the courts, legal aid, and some other administrative matters. Thirdly, he appoints the judges. Fourthly, he sits as Speaker of the Lords.
Let us look at each of them. First, it seems to me to be absolutely basic that if he cannot sit as a judge he cannot sit as head of the judiciary. We heard very strong evidence that it is not possible at the moment for the Lord Chancellor to sit. Reference was made in parenthesis by the noble and learned Lord, Lord Howe, to what the noble and learned Lord, Lord Bingham, told us about the efforts made to try to find work for the noble and learned Lord, Lord Irvine, to do.
I will read to the House what the noble and learned Lord, Lord Bingham said.
"In the three years until Lord Irvine retired when I was here he sat on two cases. It was agreed between us that he could not do anything with crime because that affected his colleague, the Home Secretary, he could not deal with human rights because he had piloted that Bill through the House, he could not deal with judicial review because it was of government interest and he could not deal with commercial cases because they always went on for much longer than he could possibly sit. That left him in that period of three years with two cases, one about whether premises could be a dwelling for the purposes of the Rent Act if they did not have a kitchen and one about the construction of a mortgage deed".
The conclusion of the noble and learned Lord, Lord Bingham, was quite firm:
"This was the result of both of us trying to find cases on which he could sit. I came to form the view that really no useful purpose was served".
That seems to me to explode the idea that the Lord Chancellor should continue to be a judge or be regarded as head of the judiciary; and, if he is not going
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to be the head of the judiciary, who is? The answer to that is the Lord Chief Justice. The question that then has to be asked is whether he is in a better position to safeguard the independence of the judiciary than is the Lord Chancellor—this emasculated Lord Chancellor—who is no longer a judge and no longer head of the judiciary itself.
It seems to me that the one thing the concordat does—and I very much agree with what my noble friend Lord Brennan said on this—is to establish a firm relationship, as far as I know for the first time in British constitutional history, between the judges and the executive. That is a much greater protection for the judges than they have ever had in the past, other than merely relying upon the efforts, unseen, of a Lord Chancellor. Therefore, that first function of the Lord Chancellor's office goes.
Secondly, he is the Minister now responsible for the administration of the courts and legal aid. Noble Lords may not like this, but the change in the Lord Chancellor's Department over the last 10 or 15 years has been dramatic. It is bound to cause changes in the role of the Lord Chancellor and in the office that any possible Lord Chancellor may occupy.
What is it? He now administers a budget of £3 billion a year. The manpower of the department is now 23,000 and will soon be 30,000-strong. If one were approached, objectively and cold, and asked, "My department has a budget of £3 billion and employs 30,000 staff. Where should the Minister sit?", the automatic reaction of anyone who has been connected with politics would be, "Down the other end". I am not saying that the Lord Chancellor has to sit down the other end, but I am saying that you cannot rule it out. For a senior Secretary of State of a major spending department of that sort, under our constitution, supply is determined down the other end of the corridor, not up here. It seems to me that a situation in which he was sitting up here and there was a junior answering for him on matters in the House of Commons would not be satisfactory.
If those responsibilities are removed from the Lord Chancellor's brief, which is the suggestion, and they go to a Secretary of State and the Lord Chancellor does other things, what is left? At the moment, judicial appointments are very much within the discretion of the Lord Chancellor. The existing process is arcane and shrouded. In recent years, since 1945, there has been very little criticism of the process on political grounds. By and large, judges are no longer appointed because of their political allegiances. It was not always so. Those attached to the 1,000 year-old institution, its mystique and its tradition, should perhaps recognise this.
There is a famous story told of Lord Halsbury when he was Lord Chancellor. There was a vacancy in the High Court and someone approached him and said, "Lord Chancellor, ceteris paribus, you will of course appoint the best man for the job", to which he said, "Ceteris paribus be damned! I shall appoint my nephew"—and he did.

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The history of Lord Chancellors until the end of the Second World War is not the mystical one that we have heard about today—as the guardian of the constitution, the guardian of the rule of law. All too often, Lord Chancellors of the past have not been interpreting the views of judges to the Cabinet. What they have been doing is taking the views of the Cabinet and enforcing them on the judges and on the judiciary. By and large, the process has been in the opposite direction to that which noble Lords opposite seem to think.
I come back to the point I made a little earlier. In terms of the independence of the judiciary and the rule of law, the concordat is a greater safeguard than the existing position of the Lord Chancellor.
The consensus on the Committee, and I think now generally, is that the time has come to establish a Judicial Appointments Commission. That proposal may need fine-tuning, but I think that the Government's approach is inescapable and right.
Finally, there is the fourth function of the Lord Chancellor—sitting on the Woolsack as the Speaker of this House. I ask those who support the office of Lord Chancellor on the basis of the 1,000 years of history, tradition and greatness behind him, do they really think that the office should be so diminished as to be confined to somebody who sits on the Woolsack of the House of Lords for two hours a day when the House is sitting and, indeed, when the House is self-regulating? Is that what it comes down to? With great respect, we are arguing about a name and shell. We are not arguing about a post. We are not arguing about anything particularly concrete. We are arguing about whether, after 1,000 years of history, we take this terribly dramatic step of removing the name "Lord Chancellor" from the British constitution. The way in which the office of Lord Chancellor is going—his functions are going to go; his powers are going to go— you will be left with only a name.
Lord Campbell of AllowayWill the noble Lord give way?
Lord RichardPerhaps I may finish this sentence and then I shall of course give way. The noble Lord having risen, perhaps I should say that the name and the Great Seal will be left. I had forgotten the Great Seal.
Lord Campbell of AllowayThe noble Lord referred to "name and shell"; what about the Monarch and the State Opening of Parliament? It is not a name and a shell.
Lord RichardI am very much attached to the State Opening of Parliament. I enjoy it; it is colourful. It gives great fun and enjoyment to all those concerned. However, it does not have to be the Lord Chancellor who goes down on his knee and hands up the Queen's Speech. I am sure that anyone who sits on the Woolsack at any given moment could do that. Indeed, even perhaps one of the other Ministers in the House
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of Lords could do that. I do not think that the nature of the ceremony of the opening of Parliament is a justification, one way or another, for retaining the Lord Chancellor.
Lord KingslandI am grateful to the noble Lord for giving way. In order that there should be no misunderstanding, when I introduced the amendment I made it absolutely clear that we accept the new architecture of the Bill. The issue is not whether the Lord Chancellor should or should not remain in status quo; the issue is whether in the new architecture of the Bill, the Lord Chancellor should fulfil the function of the Secretary of State for Constitutional Affairs. To say other is to misrepresent our position.
Lord RichardIt is not your position; there is not one position on the matter. That is the unreality of the debate. Everyone is saying they want to retain the Lord Chancellor, but there are different versions of the kind of Lord Chancellor they want to retain. The noble Lord, Lord Kingsland, is clear and the noble Lord, Lord Campbell of Alloway, is clear—but the two certainly do not agree. The noble and learned Lord, Lord Mackay, if he was in his place, would not agree.
Before people attack the Bill in a slightly virulent way, it is incumbent upon the Opposition to say what kind of Lord Chancellor they want. I have heard it from the noble Lord, Lord Kingsland, and, with respect, I do not need to hear it again. I heard it in Committee; I have heard it twice today; I understand it.
Perhaps I may now briefly finish what I was going to say. The only argument that seems to me to be left for some individual called the Lord Chancellor is that he should be a kind of constitutional nanny in the Cabinet, where he could pass on to the rest of the Cabinet and the Government his preoccupations about whether the Government are doing something which interferes with the independence of the judiciary and the rule of law. History does not lead us to believe that the function of many Lord Chancellors in the past has been in that direction. As I said earlier, too often it has been in the other direction.
If the post goes and there is very little left of it except the name and shell, should we keep the name? The noble and learned Lord, Lord Woolf, was quoted earlier and perhaps I may be allowed to quote him. He was very firm that continued use of the title would create confusion. He said:
"because of an accumulation of events, including the fact that the role of the Government Minister envisaged in the Concordat is very different from the historic role of the Lord Chancellor, I have real reservations as to whether it is possible to retain the title".

Change is inevitable. The only real question now is how does one effect it. It seems to me that the time has come for this particular bullet to be bitten.
6.15 p.m.
Viscount BledisloeI detect that the feeling of the House is reaching the stage of wishing to hear from the noble and learned Lord the Lord Chancellor and then bringing the matter to a conclusion. But perhaps, as

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someone whose name is attached to the amendments, I may be allowed to postpone that for one—but only one—speech further.
The first thing I was going to say has just been said in the intervention of the noble Lord, Lord Kingsland. After hearing the speeches of the noble Lords, Lord Brennan, Lord Carter and Lord Richard, and the question put by the noble Lord, Lord Goodhart, to the right reverend Prelate, one would have thought that none of them had heard the various concessions and points made by the noble Lord, Lord Kingsland, at the beginning as to what these amendments do not seek to change. It is no good noble Lords on the Government Benches knocking down cock-shies that do not exist.
The noble Lord, Lord Richard, said that there are various models of Lord Chancellor that might be kept. That may be so, but the model we are debating is the one contained in these amendments—and it is quite clear what that model does and does not seek to do. Under the government proposals in the Bill, there is a substantial role for a Government Minister. Obviously that is right; there has to be a considerable ministerial involvement in processes such as being responsible for the courts and judicial resources and the administration of those services; being responsible for setting up the Judicial Appointments Commission and recommending judicial appointments on its selection; and for implementing the concordat.
Various people have spoken about the concordat but have forgotten—or perhaps some have not read every word of Schedule 1 and so have not known—what it actually involves. The concordat involves an enormous number of decisions, made either by the Lord Chief Justice in concurrence with the Minister, or by the Minister in concurrence with the Lord Chief Justice, or by one having consulted the other. There is a very large ministerial role. The question is: who is to perform it?
The noble Lord, Lord Brennan, quite rightly said that under the Bill the Lord Chief Justice is to represent the views of the judges. But the noble Lord seems to have forgotten that under the Bill also the Lord Chief Justice will be deprived of his voice in this place and will not be able to comment in advance, or speak in Cabinet or to Ministers, about proposals that have not yet emerged. We all know that the word that gets out early and prevents someone announcing a detrimental course of action is infinitely more influential; it is easier than trying to turn someone from a policy that they have announced.
Under Clause 1, the Minister will have a special responsibility for guarding judicial independence and the rule of law. That is a role which inherently involves tension. There is inevitably and rightly a conflict between the demands of order and efficiency and the demands of justice and the rule of law. Those whose duty it is to protect the latter—the demands of justice and the rule of law—must be willing and able to stand up for their cause notwithstanding that inherent tension.
The Government say that one of the purposes of their proposals is to remove that inherent tension. If that is what the effect of the Bill will be, then the
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defence of constitutional propriety will have gone by the board. If the tension is not there, the role is not being fulfilled.
The question before the House is not one of name or how you preserve the Lord Chancellor. We do not start from the premise, "Oh, we must have a Lord Chancellor doing something; now let's find him something to do", as the noble Lord, Lord Richard, seems to think. We are saying—to use the words of the right reverend Prelate—that there are functions under this Bill; what kind of person do you want to discharge them?
The Government say that we are to have an ordinary, run-of-the-mill House of Commons politician in the middle of his career looking for promotion, with no particular knowledge of the law and its workings, hoping to keep the Prime Minister's good will and get promotion and move upwards, sideways or perhaps, if he is difficult, outwards, in a very short time.
Contrariwise, we say that there should be somebody in the traditional mould of a Lord Chancellor who has served the British constitution in an evolving way for many centuries. It should be a senior lawyer in this House, bound by an oath to the duties imposed on him by Clause 1. It should be somebody—and this is the key perhaps—at the ceiling of his career, who has nothing to hope for by way of promotion and who therefore is in a stronger—I only say stronger— position.
The noble Lord, Lord Carter, said that it is surprising that we are seeking to encapsulate that in the statute. It has been the practice and convention for centuries. The only reason why it has to be encapsulated in statute now is because the Government have sought to tear up that convention.
The advantages of having such a person are that he is in a much better—I only say better—position to fulfil the vital role of protecting the rule of law and judicial independence. What is fascinating is that that is a view expressed by the House of Commons constitutional committee. Surely, therefore, it is not very surprising if your Lordships' House takes the same view. Such a person is more likely to see the ruleof-law implications, and is in a better position to insist on them.
Of course that person can be sacked. Any Minister can be sacked. But that is a very drastic tack for a Prime Minister to take. Everyone will be aware that he has been sacked, and he will be around to make his displeasure or his reasons for dissenting known, whereas an ordinary Minister can be moved with no trouble without ruffling the waters. He can be "promoted" or moved sideways. Nobody will know that that is because he was putting his foot down or seeking to say, "Oi, look, the rule of law and the independence of the judiciary are offended by your proposal".
We are not saying that a Lord Chancellor will always succeed in standing up for the rule of law sufficiently strongly, or that he will succeed. No mechanism in a constitution—certainly no mechanism

1181
depending on a person—will always be successful. But we are saying that on average he will be more likely to be successful in that role than a run-of-the-mill politician hoping for promotion. It does not avail us for the noble Lord, Lord Lester, to tell us how wonderfully Lord Jenkins no doubt would have done that job, or for the noble Lord, Lord Kingsland. to tell us how wonderfully the noble and learned Lord, Lord Howe, would have done that job. Of course there are always exceptions. But what we are looking for is what in general will be better. I would suggest that there is no doubt that that is somebody in the mould and with the qualifications of a judicial Lord Chancellor.
I entirely agree with the right reverend Prelate the Bishop of Worcester that it is totally defeatist to suggest that, because the Government have sought to smash the mould, that mould is irretrievable. There have always been bad holders of particular offices, or periods when offices did not do particularly well, but that does not mean that those offices were ruined. That is no more the case now.
There is one other point which I do not think has been made. If there is a person with the qualifications of a Lord Chancellor, it will be infinitely easier for the partnership between the Lord Chief Justice and the Government to function properly, and for them to handle judiciary-related matters. There are hundreds of different matters in Schedule 1 alone. If there is a new Minister from outside with no relevant background, and the Lord Chief Justice has to get his concurrence or consult him or vice versa on myriad issues, the Lord Chief Justice—poor man—will spend the first six months of that man's time in office teaching him the basics of what is going on. He will have to explain to him who the difficult personalities are, and explain the problems. Just when they are beginning to talk the same language, he will be moved on to another department, whereas Lord Chancellors have on the whole been relatively permanent, certainly by the relevant standards.
That raises a very important point on which the noble and learned Lords, Lord Bingham and Lord Mackay, expressed great concern. It is on whether, if under the Bill an enormous amount of administrative work is loaded on to the Lord Chief Justice, top lawyers and the best judges will want to take that role if they have those administrative burdens made infinitely more difficult by having to deal with a series of new Ministers coming in and having to be taught.
It is said that one does not have a doctor as Minister of Health, or a soldier as Minister of Defence, so why does one need a special qualification for this role? The answer is another question: is the administration of justice simply a department of government, or is it a separate and vital strand of our constitution? As the very distinguished working party chaired by the noble Lord, Lord Alexander of Weedon, and including Members from all parts of the House, made absolutely plain, the administration of justice is different and therefore cannot be equated with the Minister of Health.
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I sought to explain why there are enormous advantages to the course proposed by the amendment. Are there any disadvantages? I can see only one, but I fear that it will weigh with the Government's Front Bench very strongly. It is that the proposed amendment is not the scheme devised by the Prime Minister on the back of an envelope after long minutes of thought, research and consultation during the afternoon of 12 June.
Earl FerrersThis afternoon we have had a debate which has consisted mostly of speeches by legal and noble and learned Lords. Some of them have been learned and some are just legal, but most of them have fallen into that category. I do not fall into either category.
I have listened with a certain degree of surprise to what has been said. We have heard everyone saying what a Lord Chancellor should do, what the independence of the judiciary means, how it ought to be achieved, what the lawyers ought to do and how justice can be properly performed in this country. I listened to this with amazement because I had never thought that we had done this before. We had a Lord Chancellor for a thousand years; they may have all been different, years and years ago, but recently we have looked back on them with admiration and have thought that they conducted their work well. It is surprising that one then has people saying, "We ought to adjust this and adjust that", as if we were trying to devise a system for a new country that was starting up.
When a government come along with the intention of disposing of the office of Lord Chancellor, frankly, I wince in a great way. What was the first reaction of your Lordships' House? It was, "What are we going to do without a Lord Chancellor? We will have to have a Speaker". So, like all good authoritative bodies, we set up a committee to find out what kind of Speaker we should have. It was chaired by the noble and learned Lord, Lord Lloyd of Berwick, and it was decided that we would have to have a Speaker and pay him £100,000 a year. Then, surprise of all surprises, we will have to find something for him to do.
It never occurred to us to consider such things when we had a noble and learned Lord sitting on the Woolsack. He fitted in all the responsibilities that he was given. The noble Lord, Lord Richard, said that his office has increased enormously. I daresay that it has; so has the Prime Minister's office. In some people's minds the Prime Minister seems to manage all right with his greatly inflated office and I have no doubt that the noble and learned Lord the Lord Chancellor can too. However, that is not an argument for doing away with that which we have had and that which has been run well.
6.30 p.m.
Other countries do not have a Lord Chancellor and people come to this country to see what we do and how we do it. I spoke to someone from South Africa the other day. He said, "We are engaged in building a new

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country and are trying to find out what to do. We come to your country and what do we find? You abolish everything and do away with it all".
I am not at all impressed by the idea of having a Speaker in your Lordships' House. We had one in the noble and learned Lord the Lord Chancellor and despite being able to ridicule that, it worked well. However, we will obviously have to do something if this office is abolished.
No noble Lord has yet referred today to what the Government are doing to the constitution. They are going around rather like Boadicea in her chariot chopping off everything that they can, particularly in your Lordships' House. First, they did away with hereditary Peers. Then they said that they must have 100 of them back, so 100 came back. Just for the sake of embarrassment, I remind your Lordships that we are the only Peers who are elected—none of the others is. Then they said, "Now we will do away with the Law Lords"—vaporise them—so the Law Lords went. Then the Lord Chancellor came along and said, "I want the Lord Chancellor's head off"—which used to be treason, but I suppose that it is not nowadays.
When we have got rid of the hereditary Peers, the Law Lords and the Lord Chancellor, what is left but the life Peers. Let nobody think that they will not be the next to go. Of course they will. We cannot have a House made up of a lot of life Peers packed in by the Government. We have recently seen and are continuing to see new Peers admitted day after day and good luck to them. We welcome them broadly. However, let us not pretend that that is the right way to fill a Second Chamber, when all the other participating bits have been removed.
I suppose that even the right reverend Prelates' chances are numbered. Certainly, their numbers are numbered. That is a great pity because the right reverend Prelate the Bishop of Worcester made a significant contribution when he asked why anything should be sacrosanct about 12 June 2003 just because the Prime Minister, however important he is, makes a judgment. That does not mean to say that nobody can then go down that path afterwards.
What the Government are doing to the constitution is of tremendous effect. They are wrong and it is wrong to encourage the Government to destroy the constitution, even if it means that there should be some way of changing slightly the work or the duties of the noble and learned Lord the Lord Chancellor. He ought to stay in his place as it is.
Lord Falconer of ThorotonMay I join other noble Lords and express my gratitude to the work done by my noble friend Lord Richard for successfully chairing the Select Committee? The committee made real progress in improving the Bill. In two significant areas we failed to reach agreement —the future of the Lord Chancellor, and the Supreme Court. Even in those areas we heard evidence which illuminated our discussions. We are not nearly so far apart in our views as this debate might suggest.
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I am glad that we had the Select Committee. I opposed it at the time, fearful that the most recent precedent prior to this Select Committee would be followed and the Bill would be killed. That has not happened. As my noble friend Lord Carter said, it has allowed for something akin to pre-legislative scrutiny in the course of the Bill going through Parliament. It has allowed the pace of reform to be more deliberate, so that proper consideration has been given to the principles and the details. That is to the good. The circumstances surrounding the birth of these proposals have led to them being attended by suspicion. They deserve to be considered on their merits. The Select Committee has given us time to do that. As the noble Lord, Lord Kingsland, said, there has been an emerging degree of agreement on what he described as the architecture of the new arrangements.
The role of the Lord Chancellor as it has developed over the past century until the beginning of the 1970s has the following elements. He is: the Speaker of this House; a judge; the head of the judiciary appointing, deploying and disciplining judges; the voice of the rule of law and the independence of the judiciary within government; and the head of a major government department responsible for the courts, legal aid and a number of other constitutional policy responsibilities.
Until the 1970s, as the noble and learned Lord, Lord Bingham, said in evidence to us, the predominant aspects of the Lord Chancellor's job and day were as judge and head of the judiciary, and Speaker of the House of Lords—the morning in the Judicial Committee of the House of Lords and the afternoon on the Woolsack. His ministerial responsibilities were not onerous. Indeed, in 1885, the Lord Chancellor's Office comprised only a Permanent Secretary and seven other officials, the vast majority of whom were lawyers. Following the Courts Act 1971, his office grew to 10,000 staff, with a budget to match. As has been stated often in the course of this debate and in Select Committee, that budget now stands at over £3 billion, over half of which is devoted to legal aid.
The expenditure of such large sums has increasingly become, quite legitimately, the object of political controversy. Questions are rightly asked about how well criminal courts handle the management of criminal cases, how the legal aid budget should be spent and how quickly and fairly the magistrates' courts deal with public law children cases. The regulation of the legal profession is a matter of legitimate political debate and there are questions about the extent to which the vulnerable and the socially excluded have proper access to advice and justice. Those are matters of political debate throughout the country.
The increase in both the size of the ministerial function and the political attention that it has attracted have been accompanied, although for different reasons, by a reduction of two other parts of his responsibilities—those of Speaker of this House

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and those of sitting as a judge. Since Lord Hailsham's tenure, the Lord Chancellor has had to be supported by a significant number of Deputy Speakers with whom to share the workload of the Woolsack. Although it is ultimately a matter for your Lordships' House to decide, the continuing role as Speaker is uneasy and difficult to reconcile with the changing demands of the office. By that, I do not refer to the burden of work, but to the nature of the work. A significant ministerial job is not easy to reconcile with being the Speaker of this House. As your Lordships have heard, the sittings of the Lord Chancellor as a member of the Appellate Committee of your Lordships' House have become fewer and fewer. As the noble and learned Lord, Lord Bingham, made clear in the extract of his evidence read by my noble friend Lord Richard, it has become increasingly difficult to find cases in which the Lord Chancellor can participate.
Practical difficulties aside, it has appeared increasingly inappropriate for the Lord Chancellor to sit judicially. There is now little if any support for that role. The Select Committee's first area of broad agreement was,
"that it has long been impracticable for the Lord Chancellor to sit as a judge".
At the same time, the Lord Chancellor's workload in other areas has increased, but in respect of significant responsibilities of his role as head of the judiciary—the appointment, deployment and
disciplining of judges—there is a growing sense that the time for significant change has arrived. As Committee members have been told in the course of this debate, members of the Select Committee were unanimous that the time had come to set up a Judicial Appointments Commission. It is neither sensible nor defensible to leave the appointment of judges to one person.
Whereas 50 years ago, he would be making about 25 appointments a year from a pool of barristers who would be largely known to him personally, now he makes over 700 appointments. The majority of those are not from the Bar but from a pool that is substantially unknown to him.
There is also acceptance of the need for the explicit involvement of the executive, albeit constrained, in the appointment system. The concordat negotiated with the judiciary, of which we have heard much in the debate, and for which there is considerable support, represents the view of the executive and the judiciary about what their relationship should be. It is possible to have different views about the precise involvement, but it is important to point out that the concordat envisages that the Minister fulfilling the role of the appointer— or the giver of advice—under the concordat is no longer either the head of the judiciary or a judge. There is acceptance that the role of the Lord Chancellor as a judge and head of the judiciary has gone.
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On the matter of discipline, change has already occurred. Both my predecessor and I have regarded it as wholly inappropriate to consider disciplining a judge without consulting the Lord Chief Justice. In relation to any serious step against a judge, we would seek his concurrence. A protocol to that effect already existed between us. The concordat sets out in detail how the discipline process would work in the future. Again the role envisaged by the Minister in the concordat is not that of a judge but a Minister.
Finally, in respect of deployment, the judiciary and I agree that, both as a matter of practicability and constitutional principle, it is wholly wrong for the Lord Chancellor to determine which individual judge should sit in which court. That is patently a matter for the judges. The view of the vast majority of those who gave evidence was that the time had come for the Lord Chancellor to cease to be the head of the judiciary. Instead, the Lord Chief Justice—the chief professional judge in England and Wales—should take that role.
There remains the Lord Chancellor's function as the person in government who protects the independence of the judiciary and the rule of law. This is a critical function. It must and will be preserved. It is the expression of key values on which our constitution rests: justice, the independence of the judiciary and the rule of law, aside from party politics. That role goes beyond the mere identification of the law and the need to adhere to it. It goes further than simply ensuring that the Government take proper legal advice before doing something.
In the context of a democracy, which is based on parliamentary sovereignty, it involves speaking out privately, and if necessary publicly, where the rule of law may be threatened. But the role is as part of government, not separate. It involves speaking for justice, the rule of law and the independence of the judiciary within the Cabinet and the Government. It is one aspect of a number of protections that exist. The Attorney-General, the courts, the police and lawyers all have a role. But the Minister, given his responsibilities for the justice system and the judiciary, has an important role to play.
The holder of the office needs to be a respected and trusted member of the Government, able to put the requirements of justice and the rule of law above daily considerations. The role—critical in our constitution—must be performed by someone who is no longer a judge. The effect of our deliberations in the Select Committee, and as we believed the position to be before that committee, was that the role of judge and head of judiciary had effectively gone. A judge in Cabinet, increasingly perceived to be outside the mainstream by his colleagues and the public, will not be as effective in protecting those interests of the judicary and the rule of law as a strong, respected member of Cabinet, with a clear and unequivocal responsibility to uphold justice and the law.
The Earl of OnslowWill the Lord Chancellor give us some evidence of that fact? The idea that Lords Chancellors Hailsham, Mackay, Jowitt or Gardiner could not do that is incomprehensible. The noble and learned Lord's assertion that, because he is not a judge, a Secretary of State can is incomprehensible. There is no basis in fact for that.
Lord Falconer of ThorotonThe point that I am making is that there is widespread acceptance of the view that the person currently fulfilling the role of Lord Chancellor should no longer sit as a judge. There is also widespread acceptance of the view that a member of the Cabinet cannot discipline judges, cannot deploy individual judges and should not appoint judges on his own. Indeed, the Select Committee was unanimous on those three points.
6.45 p.m.
Lord Howe of AberavonI apologise for interrupting the noble and learned Lord the Lord Chancellor, but we should make it absolutely clear that there is no difference between us on that point. It is entirely common ground that the Lord Chancellor in Cabinet should not be a judge but that he should be a senior lawyer in this House. The Lord Chancellor has articulated a strong case for exactly that conclusion without any question of the man being a judge.
Lord Falconer of ThorotonI am grateful to the noble and learned Lord, Lord Howe, for making that point. There is complete agreement that a judge will no longer be head of the judiciary. The particular authority that came, and comes, to the Lord Chancellor in Cabinet is because he is a judge—the senior judge.
Lord Phillips of SudburyIn response to that point, will the noble and learned Lord the Lord Chancellor accept that when he was in Birmingham court on Saturday last before 350 young people and an equal number of parents and teachers, his magnetism revolved solely and exclusively round his personal qualities and the fact that he was the Lord Chancellor of England—not because he was Secretary of State for the Department of Constitutional Affairs?
Lord Falconer of ThorotonThe 300 or so 13 to 14-year-olds were unaware that my personal magnetism was based on the fact that I was the Lord Chancellor.
Just as the Leader of the other place and the Leader of this place have roles requiring them on occasions to put the interests of the Chambers they lead before their political affiliations, so must this Minister when it comes to justice and the protection of the rule of law. Of course, in every case it will depend on the quality and timbre of the holder of the office. He cannot expect his views always to prevail, but his voice must be heard, and the strength of the office depends on its relevance and its defensibility.
1188
In the place of the Lord Chancellor the Bill provides the right combination to provide an office of appropriate certainty. It clearly sets out the responsibilities of the executive and the judiciary. It is unique in that the justice functions given to the Minister by the Bill cannot be removed save by primary legislation. For the first time, it provides for judicial independence with a defined role for the Minister. We shall place on the Minister a clear, statutorily defined role to protect the rule of law. We will debate in later groups the terms of that role but there will be no doubt that such a role will be placed in the Bill.
The job description—this reflects where the process has got to, not because of 12 June, but the position that already existed—is, therefore, of a Minister with a substantial budget performing a role within government that puts him in a mainstream position in terms of political issues, with a special obligation in respect of justice and the rule of law.
Baroness Williams of CrosbyThe noble and learned Lord the Lord Chancellor is aware of the relative pattern of powers among departments in government. Does he agree that to have the singular effect that he is now claiming for the future Secretary of State, it would be better to have a department that is as powerful as the Home Office? That would mean switching the criminal justice system from the Home Office to that of the new Secretary of State for Constitutional Affairs?
Lord Falconer of ThorotonI do not think that it would be necessary to do that, but I agree with the basic proposition that the office we describe has to be strong enough to stand up not just to the department to which the noble Baroness referred, but to any department that may seek to do something that infringes the rule of law. It is also important to remember that the holder of this office has to be someone who is capable of being a Minister expending £3 billion of government money in respect of issues of legitimate public concern. Therefore, the rule of law and the ministerial role must go together.
Lord Mackie of BenshieWould this Minister's position be protected, and its independence enhanced, by the automatic right to a substantial pension?
Lord Falconer of ThorotonAnybody's position would be enhanced by access to a substantial pension. I do not put forward substantial pension and large salary as the basis of status— rather, it is the position and the requirements of that position set out in statute; the irremovability of certain functions from him as a result of statute; and the fact that he or she is going to perform a very important role.
Some suggest that incremental change is all that is required; they say, "Don't abolish—simply change". The temptation of that course will be great, particularly to this House, but I urge the House to resist. The basis on which the Bill is drafted and the assumption on which the concordat was agreed is that the new office holder should be a Minister. While his

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responsibilities will involve working closely with the judiciary, it is not as a judge that he will be doing this; it is as a Minister. That is the inescapable consequence of his no longer sitting as a judge or being the head of the judiciary.
The time has come to accept this fundamental change. This is not something that has come out of the blue.
Noble LordsOh!
Lord Falconer of ThorotonThe organisation Justice raised these issues back in the 1970s. The noble and learned Lord the Lord Chief Justice said in giving evidence to the Select Committee that the concordat,
"reflects an inevitable development brought about by gradual changes in the office of Lord Chancellor and his department over the past half century".
We may debate how this change should be achieved. We need to craft, very carefully, the role and standing of the new job to ensure that the proper balance exists. But let us no longer doubt that the change must be made. Some appear to have accepted that argument. I include the noble Lord, Lord Kingsland, and the noble and learned Lord, Lord Howe, in that. But they suggest that there may be some benefit in calling the new office holder the Lord Chancellor. Again, I believe that the answer is no. He is not doing the same job. We should recognise that and not suggest that he is. We should also recognise that the job requires the rule of law element—to use shorthand—and the ministerial role. Both those roles must be balanced in the appointment that the Prime Minister makes at a particular time. Furthermore, we do not want there to be any confusion with the new role of the Lord Chief Justice.
Others argue that additional restrictions are required: that the office holder should be a lawyer or a judge, or take a special oath or be a Member of this House. We shall come to those amendments later. I can certainly see that on occasion it would be an attraction to a Prime Minister to have a senior lawyer in the post. I can see the attraction of the holder of this office being in this House. But the question is, should the Prime Minister be constrained to have a senior lawyer in the House of Lords?
Noble LordsYes!
Lord Falconer of Thoroton: Should he, when confronted with the choice of, say, Mr Michael Howard QC or Viscount Whitelaw as the holder of this office, be forced to have Mr Howard on the basis that he is a senior lawyer? Is it not possible to conceive that making a choice between competing skills, the right conclusion for the Prime Minister of the day to come to is that the best man or woman for the job would be someone in another place who was not a qualified lawyer?
The Earl of ErrollI believed that one of the objects of Parliament was to constrain the powers of the Prime Minister. The Prime Minister is arrogating to himself the powers of the monarch, so we now have the monarch's powers sitting within Parliament. We must at some point constrain those powers, or we shall go back about 800 years in history.
Lord Falconer of Thoroton: This Bill and the debate in relation to it gives Parliament the opportunity to determine whether the changes should take place. I submit that the right course to take is to accept that change should occur. It is welcome change and, rather than seeking to cling to the historical aspects of the argument, we should see what is best to get the protections that I believe we all want.
Returning to the heart of the debate, the only grounds on which the amendments in this group can be supported is either that the office of Lord Chancellor is not abolished, or, if it is, that the name is retained. I believe that neither of those propositions, in the light of the acceptance of the new architecture, is sustainable. It is not right, and it does not protect either the citizen or the interests of justice, that we continue with the current arrangements.
I believe that we agree about more than we perhaps think. We know what we want the office holder to do. We do not achieve that by refusing to face up to the difference between the job of the Lord Chancellor, as I have described it, and the widely supported functions of the new Secretary of State. I invite the movers of Amendments Nos. 1 and 7 to consider very carefully, in the light of what I have said, whether the best protection for the public and for justice, is to withdraw the amendment and accept the changes that have occurred.
Lord KingslandI am going to say this to the government Benches only once more. In tabling the amendment, we are not seeking to defend the status quo. We accept the architecture of the Bill. We simply believe that its foundations would be so much deeper if the role granted to the Secretary of State was played instead by the Lord Chancellor. The issue is simple: what sort of person should perform the role of the Secretary of State as defined in the Bill?
Whatever the Government's motives for opposing the amendment, I have no doubt about the consequences. The effect of operating these new arrangements with a Secretary of State for Constitutional Affairs will profoundly and needlessly undermine the rule of law.
The Government are risking our future by their uncontrollable obsession with obliterating our past.
I wish to test the opinion of the Committee.
6.57 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 240; Not-Contents, 208.

Division No. 1

CONTENTS

Ackner, L.

Ferrers, E.

Ampthill, L.

Flather, B.

Anelay of St Johns, B.

Fookes, B.

Arran, E.

Forsyth of Drumlean, L.

Astor, V.

Fowler, L.

Astor of Hever, L.

Fraser of Carmyllie, L.

Attlee, E.

Freeman, L.

Bagri, L.

Freyberg, L.

Ballyedmond, L.

Gardner of Parkes, B.

Bell, L.

Garel-Jones, L.

Belstead, L.

Geddes, L.

Biffen, L.

Gilmour of Craigmillar, L.

Blackwell. L.

Glenarthur, L.

Blaker, L.

Glentoran, L.

Blatch, B.

Goschen, V.

Bledisloe, V.

Gray of Contin, L.

Bowness, L.

Greenway, L.

Boyce, L.

Hanham, B.

Bramall, L.

Hanningfield, L.

Bridge of Harwich, L.

Hanson, L.

Bridgeman, V.

Harris of Peckham, L.

Brooke of Sutton Mandeville, L.

Hayhoe, L.

Brookeborough, V.

Henley, L.

Brougham and Vaux, L.

Higgins, L.

Burnham, L.

Hodgson of Astley Abbotts, L.

Buscombe, B.

Hogg, B.

Butler of Brockwell, L.

Home, E.

Byford, B.

Howard of Rising, L.

Caithness, E.

Howe, E.

Cameron of Lochbroom, L.

Howe of Aberavon, L.

Campbell of Alloway, L.

Howe of Idlicote, B.

Carlisle of Bucklow, L.

Howell of Guildford, L.

Carnegy of Lour, B.

Hunt of Wirral, L.

Carr of Hadley, L.

Hurd of Westwell, L.

Carrington, L.

Hutton, L.

Chadlington, L.

Hylton, L.

Chalfont, L.

Inge, L.

Chalker of Wallasey, B.

Inglewood, L.

Chilver, L.

James of Holland Park, B.

Chorley, L.

Jauncey of Tullichettle, L.

Coe, L.

Jellicoe, E.

Colville of Culross, V.

Jenkin of Roding, L.

Colwyn, L.

Jopling, L.

Cope of Berkeley, L. [Teller]

Kalms, L.

Courtown, E.

Kelvedon, L.

Cox, B.

Kilclooney, L.

Craig of Radley, L.

Kimball, L.

Craigavon, V.

King of Bridgwater, L.

Crathome, L.

Kingsland, L.

Crawford and Balcarres, E.

Kirkham, L.

Crickhowell, L.

Knight of Collingtree, B.

Cuckney, L.

Laidlaw, L.

Cumberlege, B.

Laing of Dunphail, L.

Dahrendorf, L.

Laird, L.

Darcy de Knayth, B.

Lamont of Lerwick, L.

Dean of Harptree, L.

Lane of Horsell, L.

Dearing, L.

Lang of Monkton, L.

Denham, L.

Lawson of Blaby, L.

Dixon-Smith, L.

Lindsay, E.

Donaldson of Lymington, L.

Listowel, E.

Dundee, E.

Liverpool, E.

Eccles of Moulton, B.

Lloyd of Berwick, L. [Teller]

Eden of Winton, L.

Lucas, L.

Elles, B.

Luke, L.

Elliott of Morpeth, L.

Lyell, L.

Elton, L.

Macfarlane of Bearsden, L.

Erroll, E.

MacGregor of Pulham Market,

Feldman, L.

L.

1192

MacLaurin of Knebworth, L.

Sainsbury of Preston Candover,

Maginnis of Drumglass, L.

L.

Mancroft, L.

St John of Fawsley, L.

Mar, C.

Saltoun of Abernethy, Ly.

Marlesford, L.

Sanderson of Bowden, L.

Masham of Ilton, B.

Sandwich, E.

Mayhew of Twysden, L.

Seccombe, B.

Miller of Hendon, B.

Selborne, E.

Monson, L.

Selsdon, L.

Montagu of Beaulieu, L.

Sharpies, B.

Montrose, D.

Shaw of Northstead, L.

Moran, L.

Shrewsbury, E.

Morris of Bolton, B.

Skelmersdale, L.

Moser, L.

Skidelsky, L.

Mowbray and Stourton, L.

Slim, V.

Moynihan, L.

Slynn of Hadley, L.

Murton of Lindisfarne, L.

Soulsby of Swaffham Prior, L.

Naseby, L.

Sterling of Plaistow, L.

Neill of Bladen, L.

Stewartby, L.

Newton of Braintree, L.

Stoddart of Swindon, L.

Nickson, L.

Strange, B.

Noakes, B.

Strathclyde, L.

Northbourne, L.

Sutherland of Houndwood, L.

Northbrook, L.

Swinfen, L.

Northesk, E.

Tanlaw, L.

Norton of Louth, L.

Taylor of Warwick, L.

O'Cathain, B.

Tebbit, L.

Oliver of Aylmerton, L.

Tenby, V.

Onslow, E.

Thatcher, B.

Oppenheim-Barnes, B.

Thomas of Gwydir, L.

Oxford, Bp.

Thomas of Swynnerton, L.

Park of Monmouth, B.

Trefgarne, L.

Patten, L.

Trenchard, V.

Perry of Southwark, B.

Trumpington, B.

Peyton of Yeovil, L.

Ullswater, V.

Phillips of Sudbury, L.

Waddington, L.

Pilkington of Oxenford, L.

Wade of Chorlton, L.

Platt of Writtle, B.

Wakeham, L.

Plumb, L.

Waldegrave of North Hill, L.

Plummer of St. Marylebone, L.

Walker of Worcester, L.

Prior, L.

Walpole, L.

Pym, L.

Warnock, B.

Rawlings, B.

Weatherill, L.

Rees, L.

Wilcox, B.

Rees-Mogg, L.

Williamson of Horton, L.

Renfrew of Kaimsthorn, L.

Wilson of Dinton, L.

Renton, L.

Wilson of Tillyorn, L.

Renton of Mount Harry, L.

Windlesham, L.

Roberts of Conwy, L.

Wolfson, L.

Rogan, L.

Wolfson of Sunningdale, L.

Rotherwick, L.

Worcester, Bp.

Ryder of Wensum, L.

Wright of Richmond, L.

Saatchi, L.

Young of Graffham, L.

NOT-CONTENTS

Acton, L.

Blackstone, B.

Addington, L.

Blood, B.

Ahmed, L.

Boothroyd, B.

Alli, L.

Bradshaw, L.

Amos, B. (Lord President of the Council)

Bragg, L.

Brennan, L.

Andrews, B.

Brooke of Alverthorpe, L.

Archer of Sandwell, L.

Brookman, L.

Ashley of Stoke, L.

Burlison, L.

Ashton of Upholland, B.

Campbell-Savours, L.

Avebury, L.

Carter, L.

Bach, L.

Carter of Coles, L.

Barker, B.

Chan, L.

Bassam of Brighton, L.

Chandos, V.

Beaumont of Whitley, L.

Christopher, L.

Berkeley, L.

Clark of Windermere, L.

Bernstein of Craigweil, L.

Clarke of Hampstead, L.

Best, L.

Clement-Jones, L.

Billingham, B.

Clinton-Davis, L.

Birt, L.

Cohen of Pimlico, B.

1193

Corbett of Castle Vale, L.

Mackenzie of Framwellgate, L.

Crawley, B.

McKenzie of Luton, L.

Currie of Marylebone, L.

Mackie of Benshie, L.

David, B.

McNally, L.

Davies of Coity, L.

Maddock. B.

Davies of Oldham, L. [Teller]

Mallalieu, B.

Dean of Thornton-le-Fylde, B.

Mar and Kellie, E.

Desai, L.

Marsh, L.

Dixon, L.

Mason of Barnsley, L.

Donoughue, L.

Massey of Darwen, B.

Drayson, L.

Merlyn-Rees, L.

Dubs, L.

Miller of Chilthorne Domer, B.

Elder. L.

Mishcon, L.

Evans of Parkside, L.

Mitchell, L.

Evans of Temple Guiting, L.

Morgan, L.

Falconer of Thoroton, L. (Lord Chancellor)

Morgan of Drefelin, B.

Morgan of Huyton, B.

Falkner of Margravine, B.

Morris of Manchester, L.

Farrington of Ribbleton, B.

Neuberger, B.

Faulkner of Worcester, L.

Newby, L.

Fearn, L.

Nicol, B.

Filkin, L.

Northover, B.

Finlay of Llandaff, B.

Oakeshott of Seagrove Bay, L.

Fitt, L.

Parekh, L.

Fyfe of Fairfield, L.

Paul, L.

Gale, B.

Pendry, L.

Garden, L.

Peston, L.

Gibson of Market Rasen, B.

Pitkeathley, B.

Giddens, L.

Plant of Highfield, L.

Golding, B.

Ponsonby of Shulbrede, L.

Goldsmith, L.

Powell of Bayswater, L.

Goodhart, L.

Prosser, B.

Gordon of Strathblane, L.

Prys-Davies, L.

Goudie, B.

Ramsay of Cartvale, B.

Gould of Potternewton, B.

Randall of St. Budeaux, L.

Graham of Edmonton, L.

Razzall, L.

Grantchester, L.

Rea, L.

Greengross, B.

Redesdale, L.

Grenfell, L.

Rendell of Babergh, B.

Grocott, L. [Teller]

Richard, L.

Hamwee, B.

Richardson of Calow, B.

Harris of Haringey, L.

Roberts of Llandudno, L.

Harris of Richmond, B.

Robertson of Port Ellen, L.

Harrison, L.

Rodgers of Quarry Bank, L.

Hart of Chilton, L.

Rooker, L.

Haskel, L.

Roper, L.

Haskins, L.

Rosser, L.

Henig, B.

Russell-Johnston, L.

Hilton of Eggardon, B.

Sainsbury of Turville, L.

Hogg of Cumbernauld. L.

Sawyer, L.

Hollis of Heigham, B.

Scotland of Asthal, B.

Holme of Cheltenham, L.

Sharp of Guildford, B.

Hooson, L.

Sheldon, L.

Howarth of Breckland, B.

Shutt of Greetland, L.

Howells of St. Davids, B.

Simon of Highbury, L.

Howie of Troon, L.

Smith of Clifton, L.

Hoyle, L.

Smith of Leigh, L.

Hughes of Woodside, L.

Snape, L.

Hunt of Chesterton, L.

Stallard, L.

Hunt of Kings Heath, L.

Steel of Aikwood, L.

Jones, L.

Stern, B.

Judd, L.

Stone of Blackheath, L.

King of West Bromwich, L.

Strabolgi, L.

Kirkhill, L.

Symons of Vernham Dean, B.

Layard, L.

Taverne, L.

Lea of Crondall, L.

Taylor of Blackburn, L.

Lester of Herne Hill, L.

Temple-Morris, L.

Linklater of Butterstone, B.

Thomas of Gresford. L.

Lipsey, L.

Thomas of Macclesfield, L.

Lockwood, B.

Thomas of Walliswood, B.

Lofthouse of Pontefract, L.

Thomson of Monifieth, L.

McDonagh, B.

Thornton, B.

Macdonald of Tradeston, L.

Tope, L.

McIntosh of Haringey, L.

Tordoff, L.

McIntosh of Hudnall, B.

Triesman, L.

MacKenzie of Culkein, L.

Truscott, L.

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Tunnicliffe, L.

Warwick of Undercliffe, B.

Turnberg, L.

Watson of Invergowrie, L.

Turner of Camden, B.

Watson of Richmond, L.

Uddin, B.

Whitaker, B.

Varley, L.

Whitty, L.

Wall of New Barnet, B.

Wilkins, B.

Wallace of Saltaire, L.

Williams of Crosby, B.

Walmsley, B.

Williams of Elvel, L.

Warner, L.

Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.
7.11 p.m.
Lord Evans of Temple GuitingI beg to move that the House do now resume. In moving this Motion I suggest that the Committee stage begin again not before 8.15 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Uranium Enrichment Technology (Prohibition on Disclosure) Regulations 2004
Lord Triesmanrose to move, That the draft regulations laid before the House on 1 July be approved [24th Report from the Joint Committee].
The noble LordMy Lords, we face a very real threat from weapons of mass destruction. Nobody in this House could avoid this unhappy fact.
The draft regulations we are discussing this evening concern one key technology used in the civil nuclear industry—uranium enrichment. This technology can also be used in the production of nuclear weapons. We have a responsibility to ensure that it does not fall into the wrong hands, and so increase the risk of the proliferation of nuclear weapons. These draft regulations will strengthen the protection provided by our law in this area.
I would like to spend a few moments explaining the background to this technology. As many of your Lordships will be aware, the production of fissile material is necessary both for the generation of nuclear power and for the construction of nuclear weapons. One of the ways that this can be achieved is by separating uranium isotopes, a process usually known as enrichment. It was first achieved on an industrial scale during the Manhattan project in the Second World War.
Enrichment of uranium can be achieved in a number of ways. In the UK uranium is enriched by means of a cascade of centrifuges to produce nuclear fuel for power generation. Elsewhere in the world other technologies to enrich uranium are used, such as the gaseous diffusion method employed in France and the USA.
Uranium enrichment technology is used in the civil nuclear industry to produce low-enriched uranium. It is part of the process of manufacturing nuclear fuel for

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power stations. However, it can also be employed to enrich uranium to a far higher level, which can then be used in nuclear weapons programmes.
Because it can be used to develop nuclear weapons as well in civil nuclear power programmes, uranium enrichment technology is attractive to certain states and to terrorists. In recent decades there have been a number of reported instances of disclosure of this technology. In the 1970s Abdul Qadeer Khan, a Pakistani nuclear scientist, illegally acquired this technology from the Netherlands and very recently admitted providing this technology to Libya, North Korea and Iran. In the 1980s Karl-Heinz Schaab, a German national, supplied this technology to Iraq.
Uranium enrichment technology is so proliferation-sensitive that we must not allow it to circulate freely even within the UK, because to do so would increase the risk of the technology finding its way into the wrong hands.
Transfers of this technology are already regulated under UK law including by patents and export control legislation. But the coverage of the law is not total. There are gaps that have to be addressed.
Because of this, these draft regulations will create a new offence of unauthorised disclosure of this technology. The draft regulations are being made under powers in Section 80 of the Anti-terrorism, Crime and Security Act 2001.
The draft regulations will penalise disclosures made with intent to assist a uranium enrichment programme or disclosures that are made recklessly—by which I mean that the person knows or is indifferent to the risk that an unauthorised disclosure would assist a uranium enrichment programme, or gives no thought to an obvious risk that disclosure would assist such a programme.
The uranium enrichment industry in the UK needs to make disclosures of this technology in the normal course of its business. The draft regulations will address this and other legitimate circumstances by making those persons who make certain limited disclosures of this technology exempt from prosecution. Such exemptions include disclosures authorised by the Government, those made in connection with a patent application for this technology, or where the technology is already legally in the public domain.
We have also taken full account of the special position of Internet service providers. They will not face prosecution if, for example, they are unaware that information about uranium enrichment technology has been placed on a website they are hosting. To do otherwise would plainly be unjust.
I am very much aware that work on this form of enrichment and related areas may be carried out by the academic and scientific community. I certainly do not want to put barriers in the way of scientists carrying out their research. However, the academic and scientific community need not worry about these draft regulations.
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This is because the draft regulations focus on the key proliferation threat. They prohibit only the disclosure of technology which can be used to enrich uraniumx2014;in other words technology which will be of direct assistance to a proliferator. The House will be assured that the regulations do not prohibit disclosure of the research into the generally applicable fundamental science and engineering which enrichment makes use of, nor of items such as centrifuges which have been designed to do things other than to enrich uranium. If a scientist has this technology in his or her possession and wishes to disclose it, he can apply to the security regulator for the nuclear industry—the Office for Civil Nuclear Security—for an authorisation to do so.
In drawing up the draft regulations, the department has consulted a wide range of interested academic and scientific representative bodies. They include the Royal Society, the Royal Academy of Engineering and Universities UK. I am pleased to report that none has opposed the draft regulations. The House may recall that Professor Eyre of the Royal Society recently pointed out that the scientific community must be aware of its responsibility to stop technologies which can be used in weapons of mass destruction from getting into the wrong hands.
Your Lordships will also be aware that the draft regulations were withdrawn and then relaid. We did this so that we could incorporate the suggestion of the Joint Committee on Statutory Instruments that there should be a delay before the regulations came into force. That was because the penalties for falling foul of the regulations are severe and it is important that everyone should know where we are going before they are introduced. The delay of 28 days will allow us to bring the regulations to people's attention before they come into force. I am most grateful to the Joint Committee for its valuable scrutiny.
I probably do not need to remind the House in any way of the threat the world faces from the proliferation of weapons of mass destruction. These draft regulations address one important aspect of that threat and in that light, I commend them to the House. I beg to move.
Moved, That the draft regulations laid before the House on 1 July be approved. [24th Report from the Joint Committee].—(Lord Triesman.)
Baroness Miller of HendonMy Lords, I thank the Minister for his explanation of these regulations and for the excellent explanatory notes published by his department. Of course, we on these Benches support the regulations as we support all measures designed to inhibit the availability of any weapons of mass destruction which may find their way into the hands of bloodthirsty terrorists, to whom human life means little.
However, I am by no means certain how effective these regulations will be in achieving that objective, because the actual information about the technology is widely available in text books and over numerous websites on the totally uncontrollable and uncensorable Internet. I am equally uncertain how

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effective they may be when, as we have seen recently, what I can describe only as rogue scientists have been prepared to give or sell their country's atomic secrets to others. That has happened in the case of a Pakistani scientist and the Minister gave a few other examples.
There are valid fears that scientists of the former Soviet Union may have been peddling know-how, and indeed nuclear material itself, as well as essential equipment. There is little doubt about the source of North Korean and Iranian nuclear capability and the threats they pose to the world.
I was a little concerned that the regulations may impinge on normal academic freedom which enables our universities to teach and our scientists—especially research scientists—to exchange information with colleagues. Academic freedom is a subject which we have debated at length previously and the Government have given assurances that they entirely respect the concept.
I would have liked to have an assurance from the Minister that the exemptions contained in paragraph 2(2) take academic freedom into account. However, I believe that the noble Lord, Lord Triesman, in introducing these amendments, has given me that assurance. He said that the Royal Society, the Royal Academy of Engineering and Universities UK have been consulted and that they agree and that gives much assurance to the House.
Even though, as I said earlier, these regulations may be circumvented by the actions of irresponsible governments and by non-UK persons out of the jurisdiction of our government, they are necessarily to be welcomed as giving our courts some additional powers to deal with those who do assist in undesirable nuclear proliferation. I know that BNFL was consulted by Her Majesty's Government in the early formulation of the legislation and it, too, is content with it. We are therefore pleased to support the regulations.
Baroness Miller of Chilthorne DomerMy Lords, first, I must apologise to the Minister for missing the opening part of his statement. I was under the impression that the business would be taken in the dinner hour and did not know of the change. However, I assure him that I heard the brief delivered by his right honourable friend in the Commons committee yesterday. It was substantially the same, so I am aware of what was said.
We welcome measures to prevent terrorism and there can hardly be a more serious combination than nuclear technology and terrorism. However, I must ask whether the regulations are proportionate and appropriate because it would be easy to pass regulations that were disproportionate. For example, although we may feel a terrorist threat here, we do not want to stop all people visiting the Houses of Parliament so we have tried to have a proportionate reaction. Does the Minister believe that these regulations are proportionate?
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I want to explain why, given various factors, I am not sure that they are. First, they cast a further veil of secrecy over the whole of the nuclear industry, which has already had a secretive history and in which the public have a legitimate interest. In fact, one of the points in the Energy Bill, made so ably by the noble Lord, Lord Jenkin of Roding, was that the opening up of the nuclear industry was to be welcomed. Secrecy serves no public interest. I presume that the regulations have been produced in reaction to an Intelligence Service assessment. Can the Minister reassure me of that? As the noble Baroness, Lady Miller of Hendon, said, the knowledge is already out there.
The reality is that throughout the world, where there are nuclear reactors there is a more present threat, as was highlighted in December 2003 when 37 bars of highly enriched uranium were recovered by an international specialist armed unit from a shattered Bulgarian power station. A further eight bars of material went missing, one of which was recovered by the secret services and seven are still missing. If in passing these regulations we therefore believe that we have secured the UK, we are ignoring reality. I believe that we would be better off to put the effort into the kind of programmes in which the United States and Russia are engaged; those of blending down uranium so that it cannot be used in nuclear weapons.
There other current issues such as nitrate fertilisers, commonly available and quite unregulated. When blended with other commonly available substances, they become lethal. Have the Government given any thought to the chemical compounds which could still be useful to farmers but would make fertilisers far less useful to terrorists? That is the kind of practical regulation that would be helpful.
At a time when the Government have said they are keeping the nuclear option open—it would be fair to say that several leading Conservatives have been calling for new nuclear-build programmes— public debate on the nuclear issue is liable to be stifled if we see a large number of regulations, of which this is the start, closing down information on the nuclear industry. With these regulations, it will be much harder to ask questions about the safety of processes. How will public meetings be held, especially public inquiries where detailed information should be disclosed with regard to new planning permissions, for example? I notice that the regulations cover building, so presumably those planning permissions will take place on buildings which no one should know about and no one can discuss.
Then there is the matter of the resulting waste. Something will still have to be done with that waste—it will still have to be counted in a waste inventory and finally disposed of, but no one will have the right to know how much is likely to be produced by the technologies which will now be so regulated.
Do regulations denying the public such information comply with their rights under the new Aarhus Convention? The regulations talk of compliance with EU obligations but not with EU conventions. And

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how do they relate to the international situation? We are asking other countries to be open about their nuclear processes and ensure that civil programmes do not have military potential, but we will no longer be able to have that assurance in the UK as we shall not know what the Government are sanctioning under the guise of these regulations.
Finally, there is the question of the democratic process. I believe that these are important and highly significant regulations because uranium enrichment should concern us all. In the Commons yesterday, there was the statement that the Minister has repeated here today, followed by one minute of scrutiny. That is not very good. But in this House, we have been allocated a slot in the dinner hour, which is perhaps a little better; it may receive about 20 minutes of scrutiny.
I believe that the regulations merit a full debate with arguments from all sides. The Minister is looking puzzled. But if all that technology is shielded from public scrutiny, how shall we have the right to know what developments are taking place in the UK? I shall give him an example. New laser isotope enrichments can convert the acid-grade fuel to weapons-grade fuel. That is of great concern. As the non-proliferation treaties proceed, how will the electorate here know what the Government are sanctioning in its name?
Some time ago, the US Department of Energy declassified information on highly enriched uranium inventories. Among its reasons for doing so was that the data may permit more environmentally relevant information to be provided to stakeholders and the public. Crucially, it may permit more knowledgeable public discussion on uranium storage and disposal. That is part of the process.
I appreciate that that goes slightly wider than the regulations, but I suspect that they are the first of a tranche of regulations to be issued about the industry. At the very time that the industry is expected to expand, we must scrutinise very carefully the veil of secrecy that we are being asked to draw.
Finally, the regulations beg the question of why the UK is planning to enrich yet more uranium when we are committed to nuclear non-proliferation. Why is that?
Lord TriesmanMy Lords, I am grateful to both the noble Baronesses, Lady Miller of Chilthorne Domer and Lady Miller of Hendon, for the points that they made. I shall try to deal with them briefly. First, the noble Baroness, Lady Miller of Hendon, was right to draw attention to the possibility that, given the current state of knowledge in some of these technologies, it will be possible for people to circumvent the requirements of these—or any—regulations. She made the point, with which I wholly agree, that it remains a plain obligation on our part to try to ensure that there is no proliferation of weapons of mass destruction. I am also happy to repeat my confirmation that the academic community was in the loop during the discussions. The nuclear industry and the scientific community generally were in the loop of the
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discussions and it is of some comfort that they had no objection to the principle of the proposals. They were content that viable academic research and the normal exchange of academic information can proceed.
The noble Baroness, Lady Miller of Chilthorne Domer, made some important points, but it may well be that we will disagree to some extent about the processes involved. Are the regulations proportionate? Certainly. The proportionate quality that I shall describe is not because I want to answer the question about any recent intelligence; it is not the Government's policy to respond to intelligence assessments in either House of Parliament and I have no intention to do so. Indeed, I think that it would raise some eyebrows were I to do so.
However, I hope that it would be a common concern that various uranium enrichment technologies have become particularly sensitive, precisely because they are commonly used in the production of nuclear fuels in the civil nuclear industry but are so easily adapted for nuclear weapons programmes. The intention is to ensure, as far as possible, that the coverage of existing law is as strong as it can be to try to ensure that the information involved does not escape recklessly. Do many people already have that kind of information? They do. But it is also true that it is an area in which people are continually trying to improve techniques, as well as considering further methods of uranium enrichment. Those techniques and new methods may well be of value to people who have hostile and terrorist intent.
We would be negligent if we were to say simply that there is a lot of information out there already and that we are content to allow for the possibility that it could spread still further. The regulations are proportionate. They do not deal explicitly with stolen nuclear materials overseas. I do not think that we could make regulations in this House that could conceivably do so. That does not mean that that is not worrying. I share the worries that have been expressed. But they are not part of the regulations. Nor is it a part of the regulations that we consider other commonly available chemicals, that can, with relative ease, be turned into explosives. Quite aside from whether there are good alternatives to nitrate fertilisers, there are probably a number of chemicals which, put together with other chemicals and reactive agents, would produce devastating effects.
The regulations do not cover such matters, although they are of course extremely important and we should try our best to ensure that we are dealing with them appropriately. Nor, with the greatest respect, do I think that this is an issue of planning permission. It may be about the specialist design of specialist buildings that deal with specialist equipment in the process of uranium enrichment. But, generally speaking, most of the issues about the planning arrangements for all kinds of power generation sites are covered in other legislation, including much that we have discussed recently.
Baroness Miller of Chilthorne DomerMy Lords, I am sorry to interrupt the Minister, because I realise that time is pressing, but, if a building is to be erected for the process of uranium enrichment, will the information about the use of the buildings be available to the public, so that they can make their views known?
Lord TriesmanMy Lords, when commercial planning permissions are sought—the nuclear energy industry is a commercial proposition—the planning permissions must meet the full range of the planning requirements for information before planning consents can be given. I candidly do not think that that is an area of huge secrecy. It is hard to build a nuclear reactor, if new nuclear reactors are to be built, without people generally being aware of its likely use and the likely content of the nuclear fuel.
I am now paraphrasing a little, and I apologise for that. Will we deal with declassification of information at the same time as we are encouraging other countries to reveal their nuclear weapons development capability? We are all parties to the non-proliferation treaties. The obligations that we urge on others are obligations under the non-proliferation treaties. They should not be doing the things that they are doing. On our part, the information will not be declassified if that would present a threat to our national security.
In all conscience, I do not believe that it could be said that the democratic processes or possibilities of debate are limited in the United Kingdom. But, such as they are, the limits certainly concern where it is of grave danger to the peoples of the United Kingdom that weapons of mass destruction or the technologies to build them could be spread. That seems to me a sensible precaution and that is all that the regulations deal with.
I assure the House that we introduce measures such as these only where we believe that they are entirely justified by the threat that we face and after careful thought about the consequences. There is no crying wolf about this. The draft regulations are necessary and I commend them to the House in that light.
On Question, Motion agreed to.

Regulatory Reform (Patents) Order 2004
7.39 p.m.
Lord Triesmanrose to move, That the draft regulatory reform order laid before the House on 7 June be approved [20th Report from the Regulatory Reform Committee].
The noble Lordsaid: My Lords, I beg to move the Motion standing in the name of my noble friend Lord Sainsbury. The Regulatory Reform (Patents) Order 2004 comprises many reforms which in combination will amend the Patents Act 1977. They will do so to make it possible to administer the Patents Act 1977 and the Patents Rules 1995 in a manner compliant with the World Intellectual Property Organisation's Patent Law Treaty, which I will refer to from now on as the PLT to save time.
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It is also intended to unify the criteria for allowing restoration of a ceased patent and the new provision for reinstatement of a terminated application for a patent; to allow patent applications withdrawn as a result of an error in a request from the applicant to be resuscitated; and to remove an anomaly in the treatment of patents as items of personal property between Scotland, the remainder of the United Kingdom and the Isle of Man.
While the proposals will be of considerable benefit to patent applicants and patentees, simplifying procedures and removing unnecessary burdens, care has been taken to ensure that they do not in any way undermine the interests of the public in general. In particular, the proposed legislation specifically protects the rights of third parties whenever a patent application whose termination has been made known to the public is resuscitated or reinstated.
The field of patents is specialised. The strange mixture of law with technology means that, in practice, most dealings with the Patent Office are conducted by highly skilled professional representatives working on behalf of patent applicants and patent proprietors. The department has consulted widely, and we are satisfied that these proposals are accepted as sound, reducing processing complexity without affecting the balance between rights-holders and third parties and being substantially cost-neutral. As such, they have been welcomed by those who represent the interests of applicants and patentees.
Articles 4 to 7 of the draft order seek to remove burdens from the process of making an application for a patent, and, in particular, from the requirements associated with qualifying for a date of filing. The date of filing of an application is important. The priority date of an invention is determined by the date of filing of the first application made in respect of it and sets the temporal boundary of the "state of the art"—that is to say, the known body of knowledge against which the novelty of the invention is to be judged.
The administrative formalities associated with qualifying for a date of filing should, therefore, in so far as it is possible, be reduced to the minimum. At the same time, the maximum scope possible should be afforded to applicants to comply with other less time-sensitive formal requirements by a later date, although this will as a consequence carry the risk that an application may be treated as withdrawn or refused if not all the formal requirements are subsequently complied with.
It is therefore proposed to reduce the amount of detail that needs to be supplied about the applicant; to make clear that where a description is filed in a foreign language it will still qualify for a date of filing; to allow a reference to an earlier application for the invention to be made instead of filing a description; and to abolish the filing fee and replace it with an application fee that can be paid later.
It is also proposed to improve on the existing arrangements for the late filing of missing material and to allow such material to be included without amendment of the date of filing where it was wholly

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contained in an earlier application from which the applicant legitimately claims priority rights. The new filing requirements will also keep applicants better informed of the status quo of their applications. In particular, when no application fee is paid at the time of filing, the applicant will be notified of the time available in which to pay it and the consequences of not paying in time.
Payment of the application fee will cause the Patent Office to examine the application for formal defects and to notify the applicant of any outstanding requirements. Between them these two provisions will allow those applicants who wish only to obtain a date of filing to do nothing more than meet the date-of-filing requirements, while at the same time ensuring that those who want to proceed need only pay the application fee to be promptly and fully informed of the outstanding requirements to be complied with. This represents the best use of resources for both applicants and the Patent Office.
Articles 17 and 18 of the order are concerned in part with the resuscitation of applications withdrawn as a result of an error in a request from the applicant, and in part with the extension of time limits specified by the comptroller. The present proposals not only make clear that the error-correction provisions of the Patents Act 1977 are available to correct such mistakes, but will also provide for the protection of third parties whenever the fact that an application has been withdrawn is published before the error has been remedied.
While many time limits are specified in the Act or prescribed in the rules, there remain some which are set by the comptroller. They are outside the scope of the existing provisions for extension of time periods, and the present reforms will remedy that deficiency. A first extension of any time limit specified by the comptroller will be available on request as of right, provided that the request is made within a prescribed time. Second and subsequent extensions will be allowable at the discretion of the comptroller. There is at present no formal provision for reinstating an application which has been refused or treated as withdrawn as a result of the applicant having failed to meet a time limit.
Article 8 of the proposed reforms will enable applicants to request, and the comptroller to allow, reinstatement of terminated applications, provided that the applicant can show that there was always a genuine intention to continue with the application. Where notification that an application has been terminated is published, appropriate third-party protection will be a precondition for allowing reinstatement. Article 9 adapts the existing provisions for restoring ceased patents to be uniform with the standards required by the newly instituted reinstatement provisions of Article 8.
I have already mentioned the importance of the date of filing in establishing the priority date of an invention. Until now, declarations of priority have been allowed only when the date of filing of the later application is not more than 12 months after the date of filing of the earlier application from which priority
1204
is claimed. Article 5 of the present proposals will allow the applicant to request, and the comptroller to allow, declarations of priority to be made with respect to applications filed within a limited period after expiry of that 12 months, provided that the applicant can show that it was always his intention to have filed it in time.
Article 10 addresses an anomaly in the treatment of patents as objects of personal property in Scotland, the remainder of the United Kingdom and the Isle of Man. Articles 12 to 16 and 19 effect consequential amendments to the Patents Act 1977 and are made necessary by the principal changes, which have already been explained. Articles 20 to 23 provide the transitional arrangements necessary to ensure a smooth introduction of the proposed reforms.
I thank the members of the Select Committee on Delegated Powers and Regulatory Reform for their finding that the present proposals are appropriate to be made under the Regulatory Reform Act 2001, and for recommending them to the House. The committee in another place has also considered the proposals. I had not treated them as a repeat of anything said in the other place because the debates in this House are freestanding on the matter. It concluded that they remove burdens within the meaning of the Regulatory Reform Act 2001 without removing any necessary protections or preventing the exercise of any existing rights or freedoms. On the committee's unanimous recommendation, the order was unanimously approved in the other place. I now commend it to this House.
Moved, That the draft regulatory reform order laid before the House on 7 June be approved [20th Report from the Regulatory Reform Committee].—(Lord Triesman.)
Baroness Miller of HendonMy Lords, I thank the Minister for his very clear, detailed explanation of the order and for his department's usual excellent Explanatory Notes, which were of great help.
This is a highly technical order which will easily be understood by a specialist in patent law—indeed, the Minister mentioned that it was often the patent lawyer who got involved in doing this. I am advised by one such patent lawyer, whom I consulted, that the order removes a number of anomalies in the 1977 Patents Act and simplifies what are now considered to be over-rigid time limits and excessively prescriptive procedures for the presentation and granting of applications and transfers of the valuable rights constituted by a patent.
This is not a controversial matter, especially as it has undergone not one but two separate exercises in Parliamentary scrutiny. We are pleased to give it our support.
Lord Shutt of GreetlandMy Lords, I too, thank the Minister for his detailed presentation of the order. I am neither a patent lawyer nor a patent agent. I suspect that it could have been quite an interesting career, but

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it was not to be. Perhaps there is a place in your Lordships' House for a patents expert—we may already have onex2014;but I am not one of those.
On the basis that the order is about the removal or reduction of burdens, the removal of anomalies, and enabling the Act to be administered in conformity with the World Intellectual Property Organisation Patent Law Treaty, we are happy on these Benches to support it.
Lord LyellMy Lords, I wonder if I might take one minute of your Lordships' time. I congratulate the noble Lord, Lord Triesman, for taking such care in explaining the law of patents.
The noble Lord, Lord Shutt, could not have spoken a truer word. From the end of January 1977—I think it was 24 January—until some time in July of that year, I occupied the position roughly similar to that of my noble friend Lady Miller. I am neither a lawyer, nor a barrack-room lawyer, nor an expert. I am a mere accountant. I always love to tease my noble neighbour that I am a poor country boy from Angus and a mere accountant, but that did not stop me from assisting my noble friend Lord Belstead with the 1977 Patents Bill, which later became the Patents Act. The noble Lord, Lord Triesman, will be gratified to know that in those days the speakers included the Lord Chancellor and the noble and learned Lord, Lord McCluskey, who was here for an earlier matter and has now fled the coop—perhaps for good reason; I know not. The Labour government's Minister was in attendance with a full panoply and representatives of the Patent Office. Those of us on these Benches were briefed from the patent agents. I confirm to the noble Lords, Lord Triesman and Lord Shutt, that it was an extremely detailed and complicated Act, but it did not faze anyone in the accountancy profession, let alone Back-Benchers.
I really want to congratulate the noble Lord, Lord Triesman. I reiterate the thanks given by my noble friend Lady Miller to his department for the clear Explanatory Notes. I wonder whether he could confirm something either quickly tonight or at a later stage. I was invited to look, and did look, at the Explanatory Notes, and my attention was drawn to page 5 of the order. I think that he mentioned Article 5 and the new Section 15A on preliminary examination. Subsection (8)(b) says:
"As a result of the observations, the comptroller is satisfied that the formal requirements have been complied with".
It seems to me that this is doing exactly what is spelled out in the Explanatory Notes. Where there is a fairly small or one hopes not particularly significant error—the Latin word that we used in 1977 was lacuna—that can be corrected without major complication or indeed any complication, and that above all will not harm the rights of third parties, the patent applicant will be protected.
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I apologise that I have gone into even a third minute. I am most grateful to the noble Lord, Lord Triesman. I commend him in proposing the order, and I wish it all success.
Lord TriesmanMy Lords, I start by confirming that that is precisely the position. If I have misunderstood any part of it, I will most certainly write. I believe that I have the same understanding. I was also grateful for the Notes, because I am not a lawyer, just a humble mathematician ploughing a trade in economics. I feel that I understood it, despite its complexity, reasonably well. I am grateful to all noble Lords who have taken part in the brief debate.
On Question, Motion agreed to.

National Minimum Wage Regulations 1999 (Amendment) (No. 2) Regulations 2004
7.54 p.m.
Lord Triesmanrose to move, That the draft regulations laid before the House on 17 June be approved [23rd Report from the Joint Committee].
The noble LordMy Lords, I beg to move the Motion standing in the name of my noble friend Lord Sainsbury. I am pleased today to present these regulations to the House. The national minimum wage remains without doubt one of the Government's finest achievements. It has made a substantial difference for at least 1 million low-paid workers in the United Kingdom every year for the past five years.
In July last year, the Government asked the independent Low Pay Commission to report on two issues connected with the minimum wage by February 2004. We asked it to review the rates that it had previously proposed for October 2004 in the light of the latest economic position. We also asked it to look at the possible introduction of a new minimum wage rate for 16 and 17 year-olds. The commission reported in February 2004, and the Government announced in March that we accepted their recommendations. In particular, the regulations that we are debating today implement the increases recommended by the commission to the adult and development rates of the minimum wage. They also, as recommended by the commission, introduce a new rate payable to those aged below 18.
It may be helpful if I briefly explain the regulations. Regulation provides for the regulations to come into force on 1 October 2004. That will give employers sufficient time to prepare and plan for the rate increases, which were, of course, announced by the Government in March. Regulations 2, 4(a) and 4(c) deal with increases to the minimum wage rates. Having laid firm foundations to the minimum wage in the first four years, the Government were able to accept the commission's recommendation last year that the adult rate should be increased by around 7 per cent. This year, the commission has recommended further increases of around 8 per cent in the case of the adult

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rate, increasing that rate to £4.85 an hour, and 5 per cent for the development rate, taking that to £4.10 an hour.
The commission concluded that these increases were justified, as the overall economic outlook remains favourable, with continuing high employment and very low unemployment levels. In addition, employment across low-paying sectors as a whole is continuing to grow, and there is little or no evidence that the minimum wage is having any adverse impact on these sectors. The increases would extend the coverage of the minimum wage substantially, so that 1.6 to 1.9 million low-paid workers stand to benefit. That can only be good for the United Kingdom.
Regulation 3(a) has the effect of providing that workers under 18 and who are over school-leaving age now qualify for the minimum wage. Regulation 4(b) sets a minimum wage rate of £3 an hour for such workers. The Government agreed last year that the commission should consider that issue, following the findings in its 2003 report that some full-time jobs were offering extremely low levels of pay and minimal training to young workers. The commission has found continued evidence that some jobs in this age group offer very low rates of pay and little or no training. The commission concluded that it is important to introduce a minimum wage for 16 and 17 year-old workers in order to stop exploitative rates of pay. The Government agree.
However, it is clearly important to set any rate for this group cautiously. Unemployment and employment levels for 16 and 17 year-old workers are substantially worse than for those aged 18 to 21, and the Government's main priority for people in this age group is for them to remain in education or training, which would be in their long-term interest, rather than to take up low-paying jobs. The commission concluded that a rate of around £3 per hour would have little impact on young people's decisions on whether to remain in education. The implementation of education maintenance allowances this autumn also seems likely to encourage young people to stay in education rather than opt for low-paying jobs. The Government therefore accepted a rate of £3 an hour. The National Minimum Wage Act 1998 only covers people,
"who have ceased to be of compulsory school age".
Therefore, the new £3 rate will apply only to those under 18s who have ceased to be of "compulsory school age". We believe that is right that youngsters who are still at school should be encouraged to focus attention on their education and educational development.
Under regulation 3(b), noble Lords may know that apprentices aged between 19 and 25 are presently exempt from the minimum wage for the first 12 months of their apprenticeship or participation in such schemes. We have left that position unchanged. Regulation 3(b) simply updates the titles of the government schemes treated like apprenticeships operating in England and Wales. The titles of those schemes are unchanged in Scotland and Northern Ireland.
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A key issue that needs to be considered is the position of very young apprentices. We know that many 16 and 17 year-old apprentices earn less than the new rate of £3 an hour and that many 18 year-old apprentices earn less than the new 18 year-old rate of £4.10 an hour. We are very concerned to ensure that employers continue to offer apprenticeships and, recognising that they are breaking new ground and will feel the need for caution, the commission recommended that apprentices aged under 18 should not be entitled to the new rate. The Government have accepted the commission's recommendation.
The Low Pay Commission also recommended that people aged under-18 who are on schemes at a pre-apprenticeship level should be exempt from the new rate. The Government think it is sensible that workers on these schemes should be exempt from the minimum wage, bearing in mind that, as I mentioned earlier, they would be exempt from the minimum wage for at least the first 12 months if they progressed on to an apprenticeship. Regulation 3(c) lists the pre-apprenticeship schemes.
Regulation 5 increases the value of the accommodation outset. That is the amount that may be taken into account when determining whether the minimum wage has been paid in situations where a worker is provided with living accommodation by the employer. The amount—again, the recommendation of the commission—is increased from £3.50 to £3.75 per day.
Regulation 6 makes some minor amendments as a consequence of the fair piece rate regulations that were passed by this House in the spring. It requires businesses employing output workers—people who are paid per piece produced or task performed—to, where relevant, keep copies of the written notices that they have provided to their workers and details of how they have set a fair piece rate paid to those workers.
Regulation 7 contains some minor technical transitional provisions. I hope that I have given a fair account of these regulations. I commend these regulations to the House.
Moved, That the draft regulations laid before the House on 17 June be approved [23rd Report from the Joint Committee].—(Lord Triesman.)
Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation of this Motion and, as usual, for his department's explanatory note. As the Minister has told us, these regulations increase the basic hourly national minimum wage from £4.50 to £4.85 and the lower hourly rate is increased from £3.80 to £4.10.
Of course, we accept the principle of the national minimum wage, but those increases are substantially above inflation. We are a little concerned that that might impact on competitiveness. My honourable friend the Member for South Suffolk said that this adds to the cost of business at a time when the outlook for both jobs and investment in the private sector look poor.

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The regulations also introduce a national minimum wage in favour of those below the age of 18, which could have an impact on employment opportunities for such young people, especially as Brendan Barber predicts that it,
"should mean that more significant increases can take place in future years".
I should like to remind the Government that in the economic situation in the world, of course it is very important that the Government focus on the need to improve Britain's competitive position by cutting rather than increasing the burdens that they place on British business. But with that very small caveat, I can tell your Lordships that we shall not oppose the Motion.
Lord Shutt of Greetland: My Lords, I, too, thank the Minister for explaining the Motion, which I support. However, I should like to make a couple of comments based on personal experience. For some years, I have been a non-executive director of a not-for-profit guesthouse. In circumstances where people are being paid above these rates, one knows that when the rates are changed the people just above also change. If the increase is above the rate of inflation, one has to think very carefully about its effect. If one is running a not-for-profit organisation, which is a tight ship, these things have to be worked out.
There is a great deal of perception that people will not pay certain prices, particularly when they have to be increased above the rate of inflation. It is therefore very important that when changes like this have to be made maximum notice is given. In the guest house and catering industries, particularly when looking at tariffs, which have to be planned in advance, maximum notice of changes is necessary.
It is my belief that people are prepared to pay proper prices and not exploit people for accommodation, services, catering and so forth. But the people who run such business need to know when changes are to be made and they need the maximum amount of notice. With that contribution about being given maximum notice in terms of changes that may take place in the future, I am happy to support the Motion.
Lord TriesmanMy Lords, I thank the noble Baroness, Lady Miller, and the noble Lord, Lord Shutt, for the important and interesting points that they made. It is right that we are eager to ensure that regulatory and other burdens are kept within close limits for the good conduct of business and to encourage competitiveness.
The decisions to make awards above the rate of inflation or to introduce a scheme for those under the age of 18 were the subject of very detailed discussions in the commission. Over the history of the commission, both under George Bain and now under Adair Turner, the potential risks of taking that kind of course of action have been dealt with in considerable detail—not just in themselves, but also because there are knock-on
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consequences in other parts of the reward systems that apply in firms. I think that they have always come to a judgment very carefully in those circumstances.
The regulations are important. More than 1.6 million workers stand to benefit from the increases. I think that they will have the impact of ensuring that young workers are also not exploited through excessively low wages. In all of those cases, having good notice so that we can all plan properly is extremely important. All those points are very well taken.
On Question, Motion agreed to.

Landfill (Scheme Year and Maximum Landfill Amount) Order 2004
8.7 p.m.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)rose to move, That the draft order laid before the House on 22 June be approved [22nd Report from the Joint Committee].
The noble Lord: My Lords, we are considering the Landfill (Scheme Year and Maximum Landfill Amount) Regulations which set the maximum amount by weight of biodegradable municipal waste allowed to be sent to landfill in the UK. The instrument is made under the Waste Emissions Trading Act 2003.
The regulations set the maximum amount of biodegradable waste that the UK will be required to landfill over the next 15 years. They then divide the UK's obligations under the Landfill Directive between England, Scotland, Wales and Northern Ireland by setting targets for 2010, 2013 and 2020. These target year dates take into account the four-year derogation available to the UK under the directive.
In order to encourage a steady reduction in landfilling and so reduce the risk of the UK breaching its targets, this instrument sets maximum amounts which can be landfilled for the years leading up to the first target in 2010. Thereafter straight-line reductions to the latter targets will apply. Separate national regulations will be made in each country to implement landfill allowance schemes. The regulations for landfill allowances and a trading scheme in England will be laid before Parliament shortly. In Wales the National Assembly has already approved the Welsh landfill allowances scheme and similar regulations are being drafted for Scotland and Northern Ireland.
This instrument also amends the definition of scheme year in the Waste and Emissions Trading Act from 17 July to 16 July and from 1 April to 31 March. As noble Lords will remember, this was a matter of some debate during the passage of the primary legislation. However, this change brings the scheme year onto the same footing as the financial year for central and local government. For Wales the scheme has been further amended to allow the scheme to start in October this year part way through a scheme year. In England, Scotland and Northern Ireland the schemes will start on 1 April 2005.

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The instrument has been drafted in consultation with Scottish Ministers, the National Assembly for Wales and the Department for the Environment of Northern Ireland. It has been agreed by them. I commend the order to the House.
Moved, that the draft order laid before the House on 22 June be approved. [22 Report from the Joint Committee].—(Lord Whitty.)
Lord Dixon-Smith: My Lords, I am grateful to the Minister for his explanation of the regulations and particularly for the knowledge that the scheme year is to be the same as the financial year. As the noble Lord said, it was a fruitful source of debate when we were dealing with the Bill.
These regulations are going to bring about a really major change in the way in which we handle waste in this country. While the Bill provided for the establishment of this scheme of targets for each year, the only target that I am really concerned about is the one at the end. Given that we are postulating a major change in the handling of waste and given the complexities and delays imposed by the planning system which can take a long time, and the difficulties that authorities have had in making up their minds as to how they are to handle these problems, I hope that there will be some sympathy from the Government if waste disposal authorities fail to meet the interim targets, provided that the Government can be confident that they are going to meet the final target, because that is the one which matters.
It has to be said that the change to be brought about will be very expensive. One looks at what is spent at present in this country on waste collection and management. It amounts to £1.8 billion. If one extrapolates from the Dutch experience which already meets the 2015 target, our expenditure needs to rise to £3 billion. If one looks at what has happened under the Comprehensive Spending Review, the fact is that the increases in expenditure do not suggest that the money will be available. The particular figure which causes me concern is the extra Private Finance Initiative credits for investment to increase to £155 million by 2007–08. My own local authority will require to spend £200 million in order to meet this target. If one extrapolates from that level of expenditure, the PFI credits presently being provided will not prove adequate to enable these targets to be met.
None the less, we have to accept that the effort has to be made because there is the threat of fines of £500,000 per day in 2018 or 2019 if we fail. But I am bound to say to the noble Lord that in my view, horrendous though that fines is, it is less than the cost of financing the improvements which will need to be made in order to avoid paying the fine. That is quite an interesting calculation.
That said, I would not advocate being in the position of having to pay the fine because that would be dead money. At least if you are investing, you will get something back for what you are paying out.
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We support the order and will not be objecting to it.
Baroness Miller of Chilthorne Domer: My Lords, we welcome the order and the targets it will lay down. It will ensure some certainty about what the targets are for those who will need to work towards them. After hazardous waste, biodegradable waste could be said to be the most difficult kind of waste to deal with because it is hard to persuade individual householders and commercial interests to separate it. I believe that further work needs to be done in this area. All too often the answer has been to give householders subsidised compost bins. Biodegradable waste deposited in such bins turns into a very unpleasant sludge which puts everyone off trying to make compost.
The future may lie in more widespread municipal composting. Can the Minister tell me whether BSI standards have been set for compost? If the end product were proved to be truly useful, that would mark a good step forward. If householders are enthusiastic about separating their waste, perhaps the Government might like to encourage local authorities to give the resulting compost away. I realise that that is a matter for individual authorities, but it is a proposal which needs to be considered.
Has any work been undertaken on the link between this order covering composting—by which time biodegradable waste has ceased to be a waste product and has become a resource once more—and the European Union soils directive, which requires a great deal of soil improvement to take place?
Lord Whitty: My Lords, I am grateful for the support of both opposition Front-Benchers for the order, and in particular for the recognition of the need for a substantial shift in the way in which we deal with waste in this country. The noble Lord, Lord Dixon-Smith, also recognised that the redefinition of the financial year will be helpful to local authorities and others. Although I was slightly startled at one point when I thought that he was about to advocate nonpayment of fines and civil disobedience, it is undoubtedly true that this work will be expensive. The fines reflect the importance of potential breaches. However, it is important that we recognise the benefits both to society and to the environment from achieving these targets. It is an expensive effort for local authorities and will mean a change in behaviour on the part of both householders and commercial bodies.
The noble Baroness asked about the issues surrounding the separation of biodegradable waste and composting standards, how to persuade householders to separate their waste and then how to treat it. Discussions are going on between ourselves, the Office of the Deputy Prime Minister and the various municipal authorities to review Defra guidance on municipal waste management strategies, as well as on the guidance that is appropriate for the planning system, a point referred to by the noble Lord, Lord Dixon-Smith. That work is ongoing. I cannot

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answer directly the question put to me by the noble Baroness, Lady Miller, about BSI standards, but if there are any developments, I shall let her know.
The noble Lord, Lord Dixon-Smith, was correct to say that the end target is the most important thing, but it is also important that local authorities are kept on a trajectory towards that end target. That is why the directive has been drafted in this way and why we are specifying the targets for the interim years as well.
Turning to the point about an overlap with the EU soils strategy, I think that that is slightly limited in relation to the provision before us because we will be dealing with different methods of disposal of the waste created in fields and elsewhere. However, there may be some crossover and I shall look into that.
I repeat my appreciation of the support of the opposition parties.
On Question, Motion agreed to.

Constitutional Reform Bill [H.L.]
8.18 p.m.
House again in Committee (on Recommitment) on Clause 1.
Lord Lloyd of Berwickmoved Amendment No. 2:
Page 1, line 7, leave out "continued"
The noble and learned Lord: I am not sure whether this is a drafting or a probing amendment, but it seems to me that the word "continued" serves no real purpose. Everybody accepts that the judges are independent now. Why does that fact need to be stated in the Bill? My suggestion is that the word "continued" is verbiage. If we do have to have an adjective qualifying independence, then I would suggest that "existing" is a better word than "continued". I beg to move.
Lord Falconer of Thoroton: There does not seem to be much between us. The duty of all Ministers to uphold the independence of the judiciary is nothing new. There has always been an expectation that Ministers will behave in this way, even though it has not previously been expressed as a statutory duty.
Clause 1 gives statutory force to what is now a matter of convention and will ensure that our long history of an independent judiciary continues. We believe that putting the duty into statute and ensuring that it extends to all Ministers will provide stronger protection for judicial independence than exists now.
However, although the form of protection will be enhanced, we believe that the substance of what we are protecting should be defined by reference to what we have now: the sophisticated and well respected notion of judicial independence as it has developed over the centuries. As now drafted, the clause adds certainty that what we now know to be the case will not change.
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Removing the word "continued" from this duty would suggest that one is seeking to remove the link with the existing concept of judicial independence. I am not sure what the noble and learned Lord, Lord Lloyd, is seeking to achieve by this but it may be, as he said, that it is simply a probing amendment.
The function of the word sought to be deleted is simply to ensure that judicial independence is defined and must develop in line with the concept as it is now understood. It will not freeze the content of judicial independence at a particular point in time. In exact accord with the judicial method in the common law system, it will simply ensure that the starting point for any consideration of what judicial independence requires must be the concept as it was known at the time the Bill is enacted. The concept can of course evolve to reflect changing circumstances, but the parameters of any such evolution must surely be set by what exists now.
The amendment tabled by the noble and learned Lord would imply something else: that the Bill was declaring some new principle, in a deliberate break with the past. From what he has said, I do not think that is what he intends. I am encouraged in that respect by his use of the word "existing". I do not think that there is much difference between us, therefore.
Declaring such a break with the past—which I do not think he intends—without defining the content of the implied new principle would, in my opinion, sow confusion and uncertainty in an area where clarity and certainty are crucial factors. It is very important in an area such as this that all those concerned have as much certainty as possible as to what is expected of them. What the current provision states clearly is that we want to perpetuate the existing state of affairs, allowing for gradual evolution in accordance with changing circumstances. That must surely be the correct approach to a principle of such crucial constitutional importance.
In those circumstances. I ask the noble and learned Lord to withdraw his amendment.
Lord Lloyd of Berwick: The difference between the noble and learned Lord the Lord Chancellor and me is that he cannot see my purpose in excluding the word "continued"; I cannot see his purpose in including the word "continued". Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Windleshammoved Amendment No. 3:
Page 1, line 7, at end insert "and the rule of law"
The noble Lord: The proposition lying behind this amendment is more significant than the one we have just disposed of so briskly and quickly. It concerns the rule of law.
The proposition is that the rule of law is such a fundamental principle that it deserves to be recognised specifically in this historically significant constitutional Bill.

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If we are moving towards a written constitution—which in a number of respects we are—we can all agree that it should be inclusive. Some may argue that such an amendment to this Bill is unnecessary and that a recognition of the rule of law is omnipresent in every ministerial office. A happy picture indeed to visualise, and I hope that it applies to the office of the noble and learned Lord, Lord Falconer, together with his ministerial colleague. If that was ever true, however, it certainly cannot be regarded as an accurate description of some of the policies of the Home Office under the leadership of the present Home Secretary. Mr Blunkett, as we recognise, has many exceptional qualities, but I do not think he would claim that a willing deference to the rule of law is among them. His recent setback over the handling of immigration appeals is only one of a number of Home Office policies to have been successfully challenged in the courts.
This amendment, however, is not an occasion for partisan point-scoring; it is intended to be constructive. I recall the controversy over mandatory sentencing under a Home Secretary who now leads, very successfully, my own party. I refer to Michael Howard. An issue when Michael Howard was the Home Secretary in a Conservative administration was that injustice could result where the sentence for a criminal offence was a mandatory sentence fixed by law rather than one which was adjusted to reflect the severity of an offence and the harm done.
One of the difficulties in adhering to the rule of law is to recognise situations in which it arises, where it may be applied and where it is relevant. Let me give an example. Not long ago the present Government attempted to strengthen the enforcement of probation orders by withdrawing supplementary benefit from offenders who had failed to conform with the requirements of a probation order, very often by failing to report to their supervising officer, which is at the heart of the probation concept.
It was a salutary experience to try to persuade the department concerned at that time—the DHSS or the Department for Employment—that such action would be contrary to the rule of law and that entitlements to social security payments were based upon entirely separate considerations. Finally, after the issue had been raised both in this House and in print, the department gave way and the noble Baroness, Lady Hollis—the Minister then as now—was able to assist in devising some alternative penalties.
That may be regarded as a relatively minor example, but often matters of principle arise out of humdrum situations which are not recognised at the time as amounting to conspicuous issues of injustice. It is just one example which illustrates the need for vigilance.
More broadly, there is a large body of received political wisdom surrounding the definition and the meaning of the rule of law, the subject of the amendment, and the notion of constitutional legality. After a long and controversial debate and a short welcome break for dinner, this is certainly not the moment to probe its significance or to pontificate on
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its application. However, what can be claimed without fear of contradiction is that the rule of law is an honourable inheritance which has been developed over a lengthy period of time and which upholds fundamental British values and the political society we enjoy today. Long may it continue. It is our responsibility to ensure that it does.
That is the case, in brief, for adding a specific reference to the rule of law to the opening clause of the Bill. I commend it to your Lordships. I beg to move.
8.30 p.m.
Lord Goodhart: Amendment No. 19, which is in my name and that of my noble friend Lord Maclennan of Rogart, is grouped with Amendment No. 3. We on these Benches support Amendment No. 3. We think it is right that all Ministers should be required by statute to uphold the rule of law as well as the independence of the judiciary. However, there are issues which have not yet been resolved about what this obligation really means and how it is to be implemented. Some of these issues are raised by Amendment No. 19.
There can be no doubt that the rule of law is a principle of the constitution and has been so for at least 300 years. That battle was fought for most of the 17th century, from the struggle between Lord Coke and Lord Chancellor Bacon in the early years of the century up to the Act of Settlement around the end of it. However, it is difficult to define the rule of law. Some would say that it is mainly or wholly procedural, that rights and powers must be exercised in accordance with established law and not by arbitrary decision, or that principles of natural justice must be applied, such as that no one must be a judge in their own cause and that both sides are entitled to be heard.
It is less clear whether the rule of law has a substantive content. The question arises whether there are laws, such as the Nazi race laws, which are so repugnant to fundamental human rights that they cannot be regarded as legitimate laws at all.
The question has been raised that if the Government were to introduce laws which were inconsistent, or might be thought by some to be inconsistent, with the rule of law, would the courts be bound to apply them? If the judges have power to disregard laws in such cases, then we get a potential conflict between the rule of law and another principle of the constitution, which is the sovereignty of Parliament. We have not had to resolve that issue and I hope we never will. I do not think that we should aim to decide it in this Bill. That means that we should not use the Bill to restrict the sovereignty of Parliament as it exists.
We believe that the duty of Ministers to uphold the rule of law will be part of the legal background when reviewing an executive decision or the validity of secondary legislation, but the decision of a Minister to lay legislation before Parliament should not be capable of being restrained because that legislation is arguably contrary to the rule of law.
The possibility of a judicial review before an Act of Parliament or a Bill is laid before Parliament is a route to the rule of lawyers rather than the rule of law. That

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is why Amendment No. 19 spells out that nothing in the Bill is intended to derogate from the sovereignty of Parliament.
Lord KingslandI am most grateful to the noble Lord for giving way. As I understand it, following the incorporation of the European Convention on Human Rights into our law, the Minister is under a duty not to put before Parliament a Bill which contains a contravention of the convention. Why should that same principle not apply to the rule of law?
Lord GoodhartI do not believe that there is such a duty. There is a requirement in the Human Rights Act that there must be a statement on whether the Bill complies, but I do not think there is any duty not to lay a Bill before Parliament. The sovereignty of Parliament still permits a Minister to lay before Parliament a Bill that does not comply with the rule of law. Indeed, as I understand it, the Civil Partnership Bill now before the House of Commons following its hectic passage through your Lordships' House contains a statement by the Minister that she is not satisfied that it does comply with the European Convention.
Lord KingslandDoes it not follow from the obligation to certify a Bill that, should a Minister conclude that a Bill were not certifiable, he would be restrained from promoting it? Alternatively, he would have to place on the Bill, "I am promoting this Bill even though I do not think that it complies with the European Convention".
Lord GoodhartThe second point is obviously correct, but the first point is not. For example, it must be correct that it is open to any government who saw fit to repeal the Human Rights Act 1998 as a matter of constitutional legality. I cannot think that anything less than that would, in itself, involve something that was restrainable by any judicial process.
Amendment No. 3 concerns duties under Clause 1(1) which apply to Ministers generally. It does not apply to the specific duties of the Minister—or the Lord Chancellor as we must now continue to call him following the passing of the amendment earlier today. The specific duties are covered by Amendment No. 10 and in part also by Amendment No. 19, although I will not now deal with the particular part of that amendment which relates to the specific duties of the Lord Chancellor.
The Government have not yet come up with their own amendments on the rule of law issues. It is desirable to see them before we take a vote on this issue, if indeed we have to take a vote. Therefore, although we support Amendment No. 3, we hope that it will not be put to the vote today and we do not intend to press our own amendment to a vote in Committee so that we can give time for further consideration of the rather complex and abstruse issues raised by the duty to uphold the rule of law.
Lord CarterI have two points. I will return to the definition of the rule of law, but my first point is an
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interesting one. Something has always puzzled me, and what happened over the Civil Partnership Bill is a good illustration. I have always been concerned about what would happen if a Bill were introduced that was compliant with the Human Rights Act and had the ministerial certificate, but was then amended—which would have to happen in the House of Lords, because the Government have not lost a Division in the Commons since 1997—which made that Bill non-compliant. Of course, the Minister would have to introduce it to the Commons and say that it was not compliant in order to use the Commons majority to make it compliant. That probably answers the point made by the noble Lord, Lord Kingsland. The Bill must be promoted as non-compliant in order to use the power of the Commons to make it compliant. I think that that answers the puzzle that I have always had about what would happen if a Bill became non-compliant on its passage.
To return to my second point, as members of the Committee who were on the Select Committee will remember, we had long discussions about the rule of law. There were nine lawyers out of 16 of us and it was a very interesting discussion. I was interested in the point made by the noble Lord, Lord Goodhart. He said that it was hard to define the rule of law. In fact, I do not think that it has ever been defined. I asked a number of members of the Select Committee, "Could you please define the rule of law?" Nobody could. Amendment No. 19 states:
"The rule of law is a principle of the constitution".
Is it not odd to include in the Bill a principle of the constitution that cannot be defined? Perhaps the noble and learned Lord the Lord Chancellor would like to have a go at defining it.
Lord CrickhowellI follow the noble Lord, Lord Carter, if only because we have one thing in common: he and I are not lawyers. The noble Lord performed an immensely valuable function in the Select Committee by producing solutions to all those parliamentary questions that arose, just as he has now.
He has attempted to steal my function which, as a non-lawyer, is to ask what I call the Pooh Bear or damn-fool question, which sometimes produces astonishing truth when put to the experts.
It is in that spirit that I intervene. I have no great difficulty with the amendment tabled by the noble Lord, Lord Goodhart. I accept that the rule of law is the principle of the constitution. He put it to one of our most eminent witnesses that the courts would assume that it was and would act on that basis. Equally, I have no difficulty with the principle of the sovereignty of Parliament. I do not think that anyone in the Committee argued that whatever the lawyers decided, they were interpreting the law as made by Parliament, and Parliament could always change the law. We are not far apart on that. I am glad to hear that we shall come back to the noble Lord's amendment when we have all considered it again.
My reason for intervening on the proposition that we should include a specific reference to the rule of law is that on that point we have the support of the Lord

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Chief Justice, the noble and learned Lord, Lord Woolf. On page 152 of the evidence section, in answer to question No. 501 put by the noble Viscount, Lord Bledisloe, the Lord Chief Justice said:
"It seems to me that it is very desirable that there should be a clear statement which reflects the need for the protection of the rule of law and I can well see that there is a very important role for the individual, whether he be called the Lord Chancellor or whether he be Secretary of State, to perform the function that you have just identified within government".
Encouraged by the fact that the noble and learned Lord, Lord Woolf, thinks it is a good idea to have a specific rule, I turn to the Committee's opinion, expressed in paragraph 73. We decided, unanimously I think, or certainly without difficulty, that there should be a reference to the rule of law. The Lord Chancellor undertook to produce a suitable amendment. The only point that I made at that stage because we were well advanced in our deliberations is that I hoped that his amendment would come back in adequate time for us to consider it, and not on the last Tuesday on which we were sitting when we would have to agree it without proper consideration. About 10 days passed and no amendment came from the Lord Chancellor.
That is why I intervene today. I am pretty confident that the Lord Chancellor produced an amendment and then found that he was in considerable difficulty with his colleagues in Cabinet, particularly the Home Secretary. There was then great difficulty in reaching agreement on an amendment that would be acceptable both to those of us who wanted to defend the rule of law and to the Home Secretary. That encourages on why we need a specific reference in the legislation on that point.
The Lord Chancellor came back eventually in the final week—so late that we had to sit on the Thursday to consider the final draft of the committee—and we looked at the amendment, which is in the record so I need not read it out. It seemed to be one of the great masterpieces drafted by Sir Humphrey. Sir Humphrey had clearly been brought back from retirement—perhaps because the most distinguished Permanent Secretary to the Lord Chancellor's Department gives a masterly performance of Sir Humphrey on charitable occasions. Those of us who have attended at Smith Square on one of those occasions will know that he is a master at performing the role of Sir Humphrey, and may have wondered perhaps whether, in drafting this amendment, he made a contribution to it. But it was a contribution of such obscurity, in its complex bringing together of the need to protect the rule of law with the need to maintain the supremacy of Parliament, that a very large number of us in the Committee said that we simply could not accept it.
8.45 p.m.
The noble and learned Lord, Lord Lloyd of Berwick, and my noble friend Lord Kingsland produced very clear amendments whose objectives we could all understand. But all those amendments—the complex, Sir Humphrey-drafted amendment of the noble and learned Lord the Lord Chancellor and
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the clearer amendments tabled by the noble and learned Lord, Lord Lloyd of Berwick, and my noble friend—were all withdrawn on the simple basis that as a Committee we decided that we could not press to a Division amendments on which we could not agree. That is why we are back in the House this afternoon.
This is an important issue, which goes back to that issue referred to in the earlier debate about the inevitable tension in government between those who protect the rule of law and those with equally important functions—the functions of the Home Secretary—in trying to maintain law and order. As a non-lawyer, I certainly do not have a solution, and I support the noble Lord, Lord Goodhart, in saying that this is probably not an issue that we shall press to a conclusion tonight. However, before this Bill leaves the House, and certainly before it becomes an Act, we should have greater clarification than we have at present. We need to have, as the noble and learned Lord the Lord Chief Justice said that we should have, a very clear statement in the Bill to protect the rule of law.
Lord CarterMy Lords, I am sure that the noble Lord will agree with me that it is extremely hard to define the rule of law—and if it is extremely hard to define, how does one know that one is in breach of it?
Lord CrickhowellThat is exactly the question of which I said that the noble Lord was following my example in asking the damn fool question that sometimes produced interesting answers. Surrounded as I am by some of the most eminent lawyers in the country, and indeed the world—lawyers with a huge reputation—I hope that before we reach the end of our proceedings, we shall have enlightenment. And who better to give us enlightenment than the noble and learned Lord the Lord Chancellor himself?
Lord GoodhartI should like to say, before the noble Lord sits down, that the situation is surely that one does not always know when one is in breach of the rule of law, but that there are times when one knows when one is.
Lord CrickhowellI had thought that I had sat down, but I note what the noble Lord says.
Viscount BledisloeI support the amendment so ably and concisely moved by the noble Lord, Lord Windlesham. Until now, it has been the Lord Chancellor's role to be what the noble and learned Lord, Lord Bingham, described as the guardian of constitutional propriety. Although that has been a vital role, until now it has never been spelt out in any statute. But now that role is to be codified in Clause 1, which imposes both a general duty on Ministers and a special duty on the Lord Chancellor.
Since the role is now to be codified, it is surely vital that the wording of Clause 1 sets out the whole of that duty as guardian and does so in clear and forceful language. At present, Clause 1 fails in that in several

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different respects, which will be covered by the various amendments—the one now before us and some of its successors.
In respect of this amendment, the trouble with Clause 1 is that it relates only to the independence of the judiciary and says nothing about upholding or defending the rule of law. That, when one is codifying, is a very serious omission, because if part of a duty is expressed and the other part is not, the inevitable conclusion is that the second half no longer exists. A nauseating Latin expression used by lawyers is expressio unis est exclusio alterius. It means that if we say that it is the duty of Ministers to uphold the independence of the judiciary and do not also say that it is their duty to uphold the rule of law, we have lost their duty to uphold the rule of law.
The noble and learned Lord the Lord Chancellor accepts that principle. Indeed, in his closing speech in the somewhat better attended earlier debate he referred specifically to the duty to uphold the rule of law being part of the function of the relevant Minister. As the noble Lord, Lord Crickhowell, has said, at a late stage he put an amendment before the committee that was met with almost universal criticism and was withdrawn. Our present solution is very simple. It is to insert the rule of law alongside judicial independence as the things that must be upheld.
The answer, with respect to the noble Lord, Lord Carter, is—to paraphrase some words of Lord Denning—"I may have difficulty in defining it but I can recognise it when I see it". The answer is that one can recognise something that is in breach of the rule of law, even if one cannot write a sentence that codifies precisely what it means.
The noble Lord, Lord Goodhart, is correct that once the words "rule of law" have been inserted in Section 1(1) they also have to be inserted in Section 1(4), and that that is dealt with by Amendment No. 10. I am delighted to hear that the Liberal Democrats support this amendment. I must confess that I have some problems with their Amendment No. 19. I am not sure whether it is meant to be an alternative or a cumulative amendment. I would point out two slightly difficult problems with it. The first is that it imposes a duty in relation to the rule of law on the one Minister only. That is curious when the duty to uphold the independence of the judiciary is imposed first on all the Ministers and secondly under Section 1(4)—
Lord GoodhartAmendment No. 19 was tabled after Amendment No. 3, so it was taken to be cumulative to that amendment. The difference is that Amendment No. 3 deals with the rule of law as it applies to Ministers as a whole in Section 1(1). It does not deal with the specific duty of the Lord Chancellor under Section 1(4). Therefore, something else needed to be put in to deal with that. That would be either Amendment No. 10 or Amendment No. 19.
Viscount BledisloeI am very grateful to the noble Lord for that explanation. The other difficulty with Amendment No. 19 is that it appears to deal with the
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rule of law somewhat differently for the independence of the judiciary, and I suspect that if the Government do not accept this amendment we will need to get together and produce a compendium version. I suggest to the noble and learned Lord the Lord Chancellor that the right thing to do at the moment is to accept Amendment No. 3, write in the rule of law there and then go on to decide what further amendments are needed. I hope that idea will commend itself to him.
Baroness Williams of Crosby: One of the beauties of the House of Lords is that noble Lords who have not been part of Select Committees are entitled to contribute to the debate. I speak with a consciousness of great humility because we have heard a brilliant Sophoclean dialogue between noble Lords who were members of the Select Committee, and not many other noble Lords have taken part in the debate so far.
I am not a lawyer and therefore I shall address in fairly simple terms the arguments that a politician might bring to bear on this particular argument. One of the things that emerges—and I think I might use the words "après le deluge"—is how we find a basis of agreement because clearly it would be an impossible situation for the two Houses to enter into an unending game of ping-pong with no outcome. It would do considerable and grave damage to the status and standing of Parliament. My brief remarks in this discussion are directed towards how we might move steadily towards some sort of broadly acceptable compromise. I will not go back to the issue of the title because that has been decided, for at least the time being, by a substantial majority in the Committee. Frankly, I do not think that it matters as much as the substance of the role of the new Minister.
From my point of view, and probably from that of many outside the House, the key question is not so much the title as the role, significance and weight of the person who holds office in the department that will be responsible for upholding the independence of the judiciary and the rule of law. That is obviously the crucial consideration, so we should address the question of how we improve the standing, status and weight of this department.
It is well known that the Liberal Democrats believe that the best way to do that is to create a Ministry of Justice, which would include the criminal justice responsibilities of the existing Home Office, and leave the Home Office more involved in the application and execution of law than the making of law and legal guidelines. Since for the moment that simply is not a possibility, much as we would like it to be, the House must address itself to every possible way in which it can enhance the status of the department that will be responsible, whether the title of the noble and learned Lord is Lord Chancellor or Secretary of State for Constitutional Affairs.
We on these Benches support Amendment No. 3, tabled by a group of Cross-Bench and Conservative Peers, because we think that even in a small way it will enhance the position of the Minister responsible for upholding the rule of law. It is only a first step, not in

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itself sufficient, and although I always dislike in any way disagreeing with that formidable intellect, the noble and learned Lord Brennan—
Noble LordsNoble but not learned.
Baroness Williams of Crosby: Not learned? He sounds awfully learned to me. I apologise—the noble Lord, Lord Brennan. I disagree with the noble Lord to some extent, because I thought that in his brilliant speech he put rather too much weight—and I am very sorry to have to say this—on the response, reaction and power of Parliament. In the past 15 years—I make no political distinction whatever—there has been a steady encroachment of the executive on the influence and power of the legislature. That has increased, partly in legitimate response to concerns about security after 9/11.
The great issue that confronts us is how we limit the demands of security, which are now powerfully enhanced, by setting against them the responsibility of Parliament for upholding the liberties on which the whole significance and justice of our society depend. That makes the position of the Lord Chancellor/ Secretary of State for Constitutional Affairs much more important than it was a few years ago.
In the United States, there is a full and thoroughgoing separation of powers. Following the Patriot Act, the Senate finally woke up—it was very late in doing so—to depending upon its own considerable status and holding the executive to account. That happens much more rarely in the United Kingdom.
How can we enhance the powers of the new department? One way is that suggested by the noble Lords who tabled the amendment. There are other ways in which we need to address the question. We need to consider whether we should set any conditions. We also need to consider the argument for the person concerned being a lawyer, with a more instinctive knowledge of the rule of law. We also need to consider the question of whether he or she should sit in this House or another. On that, I am persuaded by the arguments of the noble and learned Lord the Lord Chancellor that the Prime Minister should not be constricted in that way.
Finally, we must address the most difficult question of them all. The Lord Chancellor, in his speech on the first group of amendments, pointed to the need for the most capable, able, intelligent and, above all, courageous person to be appointed to the job we are now discussing. I hate to say it, but we must address the fact that there is no longer the trust in politicians that once existed. Therefore, arguing that the crucial issue is who a Prime Minister—any Prime Minister—has in mind and that he will always have regard to the integrity and courage of that person rather than to his own association, party links or whatever, no longer carries a great deal of weight with the public.
For those reasons, I believe that we need to be more specific about some of the powers that should adhere to this department and about some of the requirements
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we would expect the person appointed to it to meet. We must recognise the fact that that extraordinarily negative vote we have just seen in part arises as much from distrust in politicians as it does from the view that the title Lord Chancellor should be retained.
9 p.m.
Lord Lloyd of Berwick: I want to follow the noble Baroness in the wider ground which she has opened up before us, but it is better to confine myself strictly to the amendment now before the Committee. I support Amendment No. 3.
In the Select Committee, as I am sure the noble Lord, Lord Richard, will confirm, we waited anxiously from day to day for the Government to produce an amendment to cover the inclusion of the rule of law. At that stage, I thought that that was common ground. Eventually, at the 59th minute of the final hour, an amendment was produced and it was, as accurately described by the noble Lord, Lord Crickhowell, quite unacceptable.
If I had been asked before 12 June 2003 whether we should ever be debating in this House an amendment which would require Ministers of the Crown to uphold the rule of law, I would have thought that was perfectly absurd. Of course Ministers must uphold the rule of law. It is one of the basic facets of our constitution. But all that changed when the Government decided to abolish the office of Lord Chancellor. It is because of that decision—and only because of that decision—that this amendment is now necessary. I support the amendment.
Lord Campbell of Alloway: I support the amendment. The wider appreciation of the noble Baroness, Lady Williams, encapsulated some of my own thoughts and anxieties. I know not yet how those may be resolved. The rule of law and judicial independence as such are all but incapable of definition. Being incapable of definition, they cannot be enforced by any court of law. There is no suggestion that they should be or that Clause 1 should be amended to confer express jurisdiction.
That being so, I come back to the way in which the noble Baroness, Lady Williams, presented the situation. I do not know what the committee's view was, as I was not a member. I just read the report, but I did not find much in it to help me with this problem. Is it to be assumed that the committee took the view that these obligations, as they were incapable of definition and enforcement by the courts, should not be enforced by the courts? If it took that view—and I have a feeling that it may have done, although I do not know what its view was—
Lord Carter: I have been waiting ever since my speech for the chance to intervene on the noble Lord, Lord Campbell of Alloway. If we accept the principle that the obligation can be neither defined nor enforced, what happens to the legal principle of certainty?
Lord Campbell of Alloway: I shall try to deal with that. I am very grateful for the intervention, which was wholly irrelevant to the question, with respect. There is a far wider problem apart from the question; it was raised eloquently and objectively by the noble Baroness, Lady Williams of Crosby. What was the Select Committee's attitude? Was it that there would be no recourse to enforcement of these obligations by the courts or was it not? I assume that, as the obligations could not be defined, they could not be enforced by the courts.
Lord Lloyd of Berwick: I shall let the noble Lord complete his speech, but I would like to ask him a question before he sits down.
Lord Campbell of Alloway: If the obligations cannot be enforced by the courts, it seems that the only way in which they can be enforced is by retaining the persuasive powers of the Lord Chancellor in a constitutional role in the Cabinet. If that is the position, what other measure is to be taken?
Lord Lloyd of Berwick: On the question of what was discussed in the committee, there was no agreement on whether the clause was enforceable. As the noble Lord will notice, I have tabled Amendment No. 16, which is specifically designed to make the duty under Clause 1 enforceable in the courts.
Lord Campbell of Alloway: I am very much obliged to the noble and learned Lord.
Lord Brennan: I am about to give some advice to my noble friend the Minister which is gratuitous and, therefore, all the more likely to be objective: he should approach this question with extreme caution.
The Bill is about the independence, structure and administration of the judiciary. In any written constitution, that would be a discrete chapter. Although I commend the sentiment that the rule of law should prevail in our justice system, to latch it on to the end of a clause dealing with the independence of the judiciary is constitutionally clumsy. If we were debating a written constitution, the role of the rule of law and our obligation throughout government and justice to maintain it would be a declaratory statement and the first or second article of a written constitution.
It is therefore inappropriate for us now to use the phrase loosely, as if we all know what it means, in the context of this clause, for the following reasons. First, the rule of law requires to be defined. It is not a law in the sense of an enforceable law between parties, so much as a constitutional principle that feeds the justice of the community to which that constitution applies.
Secondly, in determining what the phrase means constitutionally to our community, we must consider broader considerations than justice. Clause 1 refers in subsection (1) to the role of Ministers and those connected with the administration of justice. The rule-of-law obligation should apply to all Ministers in all departments.
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Thirdly, subsection (1) says:
"Ministers of the Crown and all with responsibility for … the administration of justice".
The "and" is conjunctive, not disjunctive. That means that this all requires some careful consideration. That is not to demean the intent of the amendment, rather to ensure that when we debate it further, and when my noble and learned friend from the Government considers it, our responses are produced carefully. What he says tonight and hereafter will be seized on as the view of the Government on the status of the rule of law in our constitution. That requires very careful thought. The amendment proposed by the noble Lord, Lord Windlesham, is extremely simple; the amendment proposed by the noble Lord, Lord Goodhart, is analytically unacceptable when it is subjected to some careful thinking, and neither really achieves the intent of all parties.
This is important stuff. In the enthusiasm to deal with the judiciary constitutionally, those who are conservative become liberal and expand it to include the rule of law in a general way. I commend the enthusiasm, but let us do it carefully, comprehensively, and in a way that has constitutional significance across the board.
Lord Slynn of Hadley: The noble Lord Lord Brennan has beaten me to it in his gratuitous advice. He is obviously more nimble than I am in getting up.
I support the inclusion of a reference to the rule of law somewhere in the document, but I have some hesitation in including it in subsection (1). I shall be brief, because my noble friend Lord Brennan has already said it, but the clause deals with those,
"with responsibility for matters relating to the judiciary or otherwise to the administration of justice",
and it probably would be construed as meaning, "Ministers concerned with matters relating to the judiciary". In other words, it would read, "Ministers of the Crown and all others with responsibility for matters relating to the judiciary". If it is meant to apply to all Ministers of whatever kind, whether concerned with the judiciary or otherwise, that ought to be made explicit. I can see some lawyer appearing before the Judicial Committee—I hope that it is still in existence —arguing that there is a doubt about this.
It is common in constitutions for there to be a reference to the rule of law simply as a principle of the constitution. I hope that I am not misremembering, but I think that in the Treaty of Rome as amended, and in the draft constitution, there is a reference to the rule of law as a principle of the constitution. That seems to me—despite the anxieties of the noble Lord, Lord Carter, which I well understand—to point without doubt to not including a definition of the rule of law in the Bill. Judges have been applying the rule of law, enforcing it, making people act in accordance with the rule of law, and preventing people acting contrary to the rule of law for a long time without necessarily on every occasion giving a clear, specific, detailed definition of it.

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I support the inclusion of a reference to the rule of law somewhere, but I am not in favour of including a definition of what is in essence a constitutional principle.
9.15 p.m.
The Lord Bishop of Worcester: Perhaps I may build on this debate. Much of what we have been saying today seems to have been a struggle towards some articulation of social transcendence. That may sound rather abstract and pretentious, but we are trying to find a way of speaking about that which overrules even that which rules us, or even those who rule us, and to which those who rule us are, in some sense, accountable, even if they could get a popular majority for a quite different course of action.
I am not nostalgic about a society in which everyone assented to the kinds of assumptions that are built into our daily prayers. But it is not possible for a society to do without some articulation of the transcendent in relation to its own life, even if that is done in entirely humanistic terms. I would hold that there will always be limitations to our ability to do that. But I think that that is what we are struggling towards.
As I understand it, to have some articulation of what the rule of law means —because it is not the rule of a law; it is certainly not the rule of lawyers; and it is not the rule of politicians—is to have a discussion about what it is to which we are all accountable: that is, not just this Minister; not just all Ministers; not just all Members of the Houses of Parliament, but everyone. That cannot be dealt with by inserting three words into a clause. Nevertheless, it is an important obligation that we do not lose the fact that that is what is emerging from this important debate about this important Bill.
Lord Kingsland: I should like to ask the noble Lord, Lord Goodhart, another question about his amendment. New subsection (3) in Amendment No. 19 states:
"Nothing in this Act shall derogate from the sovereignty of Parliament".
As I understand it, the sovereignty of Parliament is a doctrine of the courts. If I am correct in that, what function does making a reference to it serve? The courts in their jurisprudence will determine exactly what the sovereignty of Parliament is in a particular context. They might take the view, as did many courts in the 16th and 17th centuries, that the sovereignty of Parliament was qualified by the genius of the common law; or, as in 19th century Benthamite England, they might take a much more robust view about the powers of the legislature. But in the last resort it is the courts that define the sovereignty of Parliament, not Parliament itself. In those circumstances, is it really very helpful to add subsection (3) to the amendment?
Lord Goodhart: I think that it is inaccurate to say that the sovereignty of Parliament is a creation of the courts. It is something that is certainly recognised by the courts, but it is a constitutional principle. It was recognised by Dicey, as is well known, and by many
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other distinguished constitutional lawyers since. There have been questions about whether there is a limit to the sovereignty of Parliament and, if so, what that is.
The intention behind subsection (3), and why it is necessary to include it, is that, as I said in my speech earlier, there is the possibility that at some time we might get a major conflict—which could have happened on the ouster clause in the asylum Bill—between the courts and the Government about whether the courts were bound to recognise the sovereignty of Parliament and the legitimacy of decisions made by Parliament. It seemed desirable that the question should be left as open after this Bill as it was before. I did not want any conclusion to be drawn that, because there was a specific reference in this Bill to upholding the rule of law, therefore parliamentary sovereignty was in any way less than it would be if this Bill were not passed. I hope that that is an adequate explanation of why I included this particular amendment.
Lord Campbell of Alloway: As we appear to be debating Clause 19, having listened to what the noble Lord has said, I cannot see the slightest justification for retaining subsection (3). It does not make any sense at all.
Lord Elton: As a non-committee member and a non-lawyer, I am a little puzzled over the difficulty about the rule of law. Are we not simply asking Ministers of the Crown to do what we ask the wearer of the Crown to do when we say, "May she uphold our laws" and perhaps adding sotto voce, "Until you are able to change them"? That is what it comes down to. It is for Parliament to see whether the laws are changed or not.
Lord Kingsland: There appear to be two separate issues as regards the clause with which we shall have to grapple over the next few days in Committee. The first is whether it should be enforceable. That is dealt with in later amendments. The second is the content. At one level one might say that, constitutionally, the rule of law deals with issues such as the ouster clause; or one might posit an unlikely set of circumstances in which Parliament passed an Act limiting the franchise of the electorate. Those are two circumstances in which the courts might decide that the fundamental nature of the common law constitution was undermined by the sovereignty of Parliament.
At the other end of the scale it might be said that a defendant's rights in a criminal trial form part of the rule of law. I am rather attracted to that argument because it seems to me that the weakest point of the European Convention on Human Rights relates to the rights of the accused in a criminal trial. That arises, I believe, because we in this country have a very different system of criminal litigation to that on the Continent. There the protections are in my view at a much lower level. Therefore, the jurisprudence of the European Court of Human Rights is not much help, for example, when governments introduce proposals about propensity evidence to be led by the prosecution.

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I believe that the issues of content and enforcement have both to be looked at in greater depth as we move closer to the heart of this topic. I heard with interest the views of the noble and learned Lord, Lord Slynn of Hadley, and of the noble Lord, Lord Brennan, who rightly identified a possible weakness in the positioning of the amendment. Nevertheless, I believe that the expression "rule of law" has to come somewhere. I shall be interested to hear what the Lord Chancellor says about it.
Lord Falconer of Thoroton: This is an important issue which I do not believe we can resolve tonight. We have always been particularly concerned to ensure that our constitutional reforms in no way dilute the rule of law as a fundamental principle of the United Kingdom constitution. On the contrary, we believe that the overall effect of the reform should and will be to strengthen the constitutional principle of the rule of law by entrenching the independence of the judiciary and ensuring increased clarity and transparency in judicial and ministerial rules.
Members of the Select Committee who considered the Bill considered amendments similar to those before us. They also considered a government amendment. I have not tabled that amendment again as I first wished to listen to the views of Members of this Committee on what principles they believed an addition to the Bill on the rule of law should encompass.
Noble Lords have already raised the importance of ensuring that the rule of law continues to be upheld, but before we get to the detail of such an amendment, perhaps I may seek to establish clearly what the objectives are that we are seeking to address in this Bill. It seems to me that there are a number of key principles that ought to guide us in our consideration of this issue, excepting as I do that there should be a reference to the rule of law in the Bill. The principles are as follows.
First, in referring to the rule of law in the Bill, we ought to be seeking to ensure that the responsibilities in regard to the rule of law currently discharged by the Lord Chancellor are, after the change or abolition of that office— whatever may happen in the future—still discharged within government.
Secondly, the responsibilities of the Lord Chancellor or the office holder in regard to the rule of law arise, I believe, from his or her ministerial responsibilities for the justice system. Thirdly, we must accept that other Ministers of the Crown have responsibilities in regard to the rule of law; for example, the simple proposition that they must abide by the decisions of the courts. But the Lord Chancellor, or whatever the office holder may be called, because of his responsibilities for the justice system and their importance for the rule of law, has a special position within the Cabinet and within the executive.
Fourthly, the responsibilities of the Lord Chancellor or office holder in regard to the rule of law are not and should not be a matter for enforcement by
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the courts. They are discharged in the Cabinet and in the executive through his position there and his influence in discussion with his colleagues. The operation of Cabinet government is central to our constitution and we should not be seeking to change that in the Bill by imposing a duty that would fall to be discharged in Cabinet, but that could be subject to judicial review going to the merits of the action taken or not taken by the office holder.
Fifthly—and this is why I think that in terms of principle, the noble Lord, Lord Goodhart, is right in his third subsection—any provision we add to the Bill should not in any way restrict the ability of Ministers or others to put proposals before Parliament on which Parliament can then decide.
Finally, any provision we add to the Bill must properly take account of the roles of persons other than Ministers in regard to the rule of law, and not undermine their—the other person's—proper responsibilities. It is not the purpose of this Bill to codify the roles of all persons with responsibilities for the rule of law in our constitution. The danger of codifying some and not others is that we would upset the delicate balance that currently exists, which is not defined and could not be satisfactorily defined, in statute.
A further general point about the rule of law which I think must guide our deliberations is that the rule of law is not itself a directly applicable legal rule, but a description of the status that the law as a whole should be accorded within our constitutional system. It informs the content, interpretation and application of the law, as the courts have often said in, for example, cases involving Article 6 of the European Convention on Human Rights. But the rule of law is not and never has been of itself a standalone legal doctrine. It does not by itself form a directly applicable part of the law, so the courts could not at present declare actions to be illegal solely on the ground that they were contrary to the rule of law. If the rule of law is engaged, there must be some specific legal rule that gives expression to it before the courts can intervene. Any amendment that did not take account of this distinction would have constitutional effects reaching far beyond the subject matter of this Bill.
It follows from the above principles that any provision in the Bill on the rule of law should seek to provide reassurance that the existing position in relation to the rule of law is preserved while avoiding wider constitutional effects. It should preserve the balance in our constitutional arrangements while demonstrating the continuity and providing the clarity that noble Lords both on the Select Committee and in this Committee have been rightly anxious to secure with respect to the constitutional principle of the rule of law.
Before proceeding to the detail of the amendments I would like to make one further point which I think is highly relevant and was touched upon by the noble and learned Lord, Lord Slynn of Hadley, but which is frequently overlooked.

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9.30 p.m.
The point is that securing the independence of the judiciary forms a very substantial part of the Lord Chancellor's current role in upholding the rule of law and of Clause 1 of the Bill. The starting point for any attempt to define what is the Lord Chancellor's role with respect to the rule of law must be his ministerial responsibility for the justice system. Fundamental to this is the need for an independent and impartial judiciary. The centrality of that need to the rule of law is something that all commentators on the topic agree upon.
That substantial part of the Lord Chancellor's role in upholding the rule of law has already been referred to in Clause 1 of the Bill. The duties imposed represent a very substantial strengthening of the protection for judicial independence by comparison with the present position. Not only is the current role of the Lord Chancellor in securing judicial independence placed in a statute for the first time, it is also extended to all government Ministers.
The task in hand in relation to the rule of law in the Bill is therefore to define what additional role the Lord Chancellor has in relation to the rule of law, over and above the question of judicial independence, and to provide for continuity with that role after the office is changed. It seems to me that many of the differences—if there are differences—between the Government's position and that of others in your Lordships' House, and many of the difficulties we have identified with the amendments now before us, can be traced back to this point.
In short, we do not think that the point is properly taken account of in the amendment tabled by the noble Viscount, Lord Bledisloe—a matter to which I will return in a moment, after recalling the views of the Select Committee in relation to the rule of law.
The Select Committee that examined this Bill was able to agree on a number of significant areas with respect to the rule of law, although perhaps these areas have received less attention than the areas of disagreement. For that reason, the Committee was able to agree easily that it is desirable for the Bill to make reference to the rule of law. We also agreed, first, that the reference to the rule of law should replicate as far as possible the responsibilities in regard to the rule of law currently discharged by the Lord Chancellor. Secondly, we agreed that, while other Ministers have responsibilities in regard to the rule of law, the Lord Chancellor has and should continue to have a special role in relation to the rule of law within the Cabinet. Most of the Committee, though not all, agreed that this duty is not and should not be directly enforced through the courts, but stems from his position in Cabinet and is exercised by way of his influence in discussions with colleagues.
The simplicity of the amendment of the noble Viscount, Lord Bledisloe, at first seems alluring. Indeed, my initial inclination was exactly the same as his. At the outset it appeared that achieving our objectives would simply require a reference to the rule
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of law to be added to Clause 1 of the Bill, as this amendment seeks to do. However, closer scrutiny has revealed some fundamental problems.
As I have said, the rule of law denotes a state of affairs in which, in the event of conflict, the law has paramount force and effect in relation to any persons, institutions, interests, values, customs, practices, and so forth. It is not a directly applicable legal principle but a description of the status that the law as a whole should be accorded within our constitutional system. It can inform the content, interpretation and application of the law, but is not itself a directly applicable part of the law.
This amendment would remove that distinction and make the rule of law into a directly applicable legal doctrine, binding on certain individuals. On one interpretation, it would require those individuals to ensure that a constitutional state of affairs, that is, the supremacy of law, prevails in all circumstances. On another, it would require them to act in accordance with a standard determining the legality of their actions and possibly to enforce that standard in relation to the actions of others.
On either interpretation, the amendment is unsatisfactory for three main reasons. First, the amendment could not work because the content of the principle of the rule of law is controversial, with opposing views having been expressed over time by judges, academics, politicians, and practitioners. So individuals could never know with certainty what was required of them. Secondly, the amendment treats in identical terms roles that are fundamentally different.
At present, the rule of law is upheld—that is, the supremacy of law is secured—primarily by the courts. The prominence of their role follows from the fact that it is they who have the authority to interpret the law and authorise its enforcement against all persons, including against the Government.
Others, too, have roles in upholding the rule of law. The nature, extent and content of these roles varies considerably and has developed gradually over centuries as part of the process of constitutional development. Parliament ultimately has the power to make or unmake any law. The Attorney-General advises the Government on the law and represents the public interest before the courts. The police prevent and investigate criminal behaviour to ensure that the criminal law is enforced. The legal profession advises and represents individuals, corporations and governments in their dealings with the courts and with each other. This helps to ensure that the law prevails in private dealings, in police investigations and in court proceedings. Ministers are required to obey the law but do not generally have any direct role in enforcing the law against others.
None of these roles is presently defined as such in statute although the relative positions of some of the players are buttressed by specific statutory or common law rules—such as, for example, the provisions in the Act of Settlement about the removal of judges. They are all different in nature and content. They fit together to form the overall structure of the

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constitution and ensure the status of the law within it. None of them amounts to a comprehensive duty to ensure that the rule of law is upheld in all respects. No one in our present constitutional system has such a duty.
Seeking to impose upon Ministers of the Crown and all with responsibility for the administration of justice an unqualified statutory duty to uphold the rule of law, which is the effect of Amendment No. 3, fails to recognise that none of these persons would be in a position by themselves to ensure that the rule of law is upheld even within the limits of their own constitutional roles. It also fails to recognise that the status of the law within the constitution can only be guaranteed as the net effect of different independent roles that complement and, at the same time, act as checks and balances upon each other. Making each and every one of these persons comprehensive guardians of the rule of law in identical terms, which is the effect of Amendment No. 3, would ignore these distinctions and impose a duty on each that he would find himself unable to fulfil.
The Lord Chancellor has certainly never been subject to such an undifferentiated duty. As I have said before, we have already improved upon the Lord Chancellor's role in defending judicial independence in Clause 1 by giving it statutory expression in unqualified terms and extending it to all Ministers of the Crown. That is an important advance. The issue we are grappling with now is to define and give expression to what else the Lord Chancellor's role in relation to the rule of law comprises.
I very much thank the noble Lords, Lord Goodhart and Lord Maclennan, for their amendment. It is an interesting and thoughtful attempt to come to grips with the complexity of this matter. The approach suggested in their amendment is much more in line with the principles that I have already set out as key to our consideration of this important issue. The amendment appears to have considerable merit but I wish to consider the draft further. I believe that, as it stands, the draft does not quite address some of the concerns I have raised in relation to the other amendment on the rule of law of the noble Viscount, Lord Bledisloe, that we have debated.
As drafted, the proposed subsection (1) could give rise to considerable legal uncertainty—there is a difficulty about what is meant by the rule of law—but, as I said, I accept that the words "the rule of law" have to go into the Bill somewhere. The amendment that I proposed to the Select Committee referred to the rule of law as an existing principle. The intention was to make it clear that whatever is agreed as encompassing the rule of law now is the principle that we are seeking to safeguard in the future in order to provide as much certainty as possible. I am concerned that the unqualified mention of the rule of law—that is, without reference to the word "existing"—as per the amendment would not provide this clarity or certainty.
I also have some concerns that unless the Bill makes clear that it is the existing principle of the rule of law that is to continue, the provision could be interpreted
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as creating a new constitutional principle. I think we all agree that we are seeking to replicate an existing principle.
Subsection (2) of the amendment causes some difficulty in its use of the term "respect". I remain unsure what is meant by this term in this context and what its effects in practice are intended to be. More importantly, I am not sure how the courts, if it were ever to come to it, would interpret the term. That uncertainty is reflected in the fact that, as far as I am aware, a statutory obligation to respect something is hitherto unknown in primary legislation. When dealing with a contested and potentially fluid concept such as the rule, I have reservations about introducing more uncertainty of terminology.
I also have some misgivings as to whether the amendment appropriately takes into account other important constitutional principles. We must be very careful not to disturb the balance of existing constitutional principles, as I have gone through before. I accept that proposed new subsection (3) seeks to acknowledge the sovereignty of Parliament, but there are other principles whose status under the proposed text would need to be considered very carefully.
There is no doubt, as I have said, that we need to introduce provision in relation to the rule of law. I remain committed to bringing in an amendment to ensure that the rule of law continues to be upheld. I have listened carefully to the debate and will seek better to understand the views of the whole House before tabling an amendment of my own at a later stage. That later stage will be while the Bill goes through this House.
No written constitution, to my knowledge, has a provision imposing general obligations to uphold the rule of law. Given the nature of the principle, and the complexities and subtleties of its application, that is perhaps unsurprising. That highlights the scale of the task before us, and the importance—as the noble and learned Lord, Lord Slynn, and the noble Lord, Lord Brennan, said—of not rushing ahead and of ensuring that we get this provision right. I hope that in those circumstances the noble Lord will feel able to withdraw his amendment.
Viscount Bledisloe: Can the noble and learned Lord be a little more specific about what he intends to happen if the amendment is not now pressed? He said that he would bring forward an amendment at some later stage of the Bill before it leaves this House. In the light of our previous experience, as vividly described by the noble Lord, Lord Crickhowell, I am afraid that we want something more categorical.
Will the noble and learned Lord assure us, first, that he will produce that amendment for Report, and, secondly, that he will circulate and discuss it with those who have taken part in this debate before tabling it?
Lord Falconer of Thoroton: It would be useful to have a discussion with those people who have taken part in this debate and those who were members of the

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Select Committee. I very much hope that I will be able to table an amendment before Report. As Report will probably not take place until October or November, I have a very long time in which to prepare it.
Viscount Bledisloe: A very long time is not always enough for the noble and learned Lord.
Lord Windlesham: The response of the noble and learned Lord, Lord Falconer, was in two parts, almost audibly so. There were his own extempore reactions for the first three or four minutes and then the Government's prepared response, which he was naturally bound by, but treated with a fairly free hand. There was generosity in those replies. The importance of rule of law is clearly recognised by the Minister, as well it should be. It is a question of how that primacy can best be reflected in the Bill. We can take encouragement from what has been said, particularly in the last few minutes of his reply.
The short debate was also notable for the contribution of the noble Baroness, Lady Williams of Crosby. If I may say so to her, and to Members of the Committee, there are few people who have done more to encourage the growth of human rights in their public career—hers is a very long public career—than she has, irrespective of the Benches on which she was sitting at the time. Her contribution was a most important one. We value it and thank her.
The noble Lord, Lord Brennan, made a conservative speech. He said that, broadly speaking, things were all right as they stand and any question of introducing changes, amendments and so on had to be looked at most carefully. Broadly speaking, he appeared not to favour any change at all. That was a revelation from someone whom we respect as one of the greatest orators in the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.45 p.m.
Lord Falconer of Thorotonmoved Amendment No. 4:
Page 1, line 7, at end insert—
"( ) Subsection (1) does not impose any duty which it would be within the legislative competence of the Scottish Parliament to impose.
( ) A person is not subject to the duty imposed by subsection (1) if he is subject to the duty imposed by section 1(1) of the Justice (Northern Ireland) Act 2002 (c. 26)."
The noble and learned Lord: Amendments Nos. 14, 90, 91 and 98 are grouped with this amendment. These amendments address two issues relating to the extent of Clause 1. First, we have concluded that in one sense the present drafting is too narrow. As it stands, the duty is confined to the territory of England and Wales only. It could therefore be argued that it applies only to the actions of Ministers and others that take place within the physical limits of England and Wales. It could also be argued that the judiciary other than that of England
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and Wales fall outside the scope of the protection afforded by the duty. It would not include the justices of the new Supreme Court, the judiciary of Northern Ireland and Scotland, and the judiciary of international courts and tribunals.
Secondly, we think that the drafting is too broad in another respect—it does not take account of the positions of the devolved administrations in Scotland and Northern Ireland. The scope of the clause needs to be narrowed to take account of that.
The effect of the amendments in this group is as follows. The territorial extent of Clause 1 will be the whole of the United Kingdom. Clause 1 will remain binding on Ministers of the Crown and all with responsibility for matters relating to the judiciary or otherwise to the administration of justice. The clause will not impose any duty that could be imposed by the Scottish Parliament. It will not, therefore, infringe on the competence of that Parliament. That is in line with the unanimous views expressed by the Select Committee. Those bound by the parallel provisions in Section 1 of the Justice (Northern Ireland) Act 2002, which already contains provision in relation to continued judicial independence and to which my Amendment No. 17 refers, will not be bound by the existing Clause 1 duty. As both duties will be coextensive, the effect of being bound by either one of them will be the same.
I believe that this approach accords with the opinion of the Select Committee on these issues. But, I should spell out one aspect of the amendments that could, at first blush, appear not to be in line with the opinion of the committee. The Government, respecting the devolution settlement, fully accept that Clause 1 should not bind Ministers of the Scottish Executive and their officials, or otherwise operate within the competence of the Scottish Parliament. My Amendment No. 4 achieves that. However, the Government believe that the object of Clause 1 should be all of the judiciary of the United Kingdom, including the judiciary of England and Wales, of Scotland, Northern Ireland and the justices of the Supreme Court of the United Kingdom. It must be right that the responsibilities of UK Ministers should cover all members of the judiciary in the UK. That said, Amendment No. 4 makes it clear that it will be for the Scottish Parliament to decide whether, and if so what, duties in this area are appropriate for the Scottish Executive. I would note that the approach taken by these amendments has been agreed with those in the devolved assemblies.
Amendment No. 98 limits the territorial extent of Clauses 2, 4 and 5 to England and Wales only; those clauses deal with the judicial posts in England and Wales. I would also note that Amendment No. 14 defines the "judiciary". As well as covering all members of the UK judiciary, the amendment will cover the judiciary of any court or tribunal which exercises functions of a judicial nature in pursuance of any international agreement to which the United Kingdom is a party or any resolution of the Security Council or General Assembly of the United Nations. That would include the International Court of Justice,

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the International Criminal Tribunal for the Former Yugoslavia, the International Criminal Court, the European Court of Justice and Court of First Instance and the European Court of Human Rights.
Finally, Amendments Nos. 90 and 91 make it clear that the term "Minister of the Crown", as used in Clause 1, follows the definition in the Ministers of the Crown Act 1975:
"holder of an office in Her Majesty's Government in the United Kingdom".
That makes it clear that Ministers of the Scottish Executive are not caught by the clause. I beg to move.
The Duke of Montrose: I need a little clarification. Not being a lawyer or having gone into all the findings of the Select Committee, is it right that the Scottish Parliament has no role in relation to the independence of the judiciary? I see from the Scotland Act that the existence of the High Court and the Court of Session is reserved to the United Kingdom Parliament at Schedule 5, under reservations to the constitution. I believe that the salaries and pensions of judges are also reserved to the United Kingdom Parliament under financial and economic matters.
Perhaps the Scots are not totally excluded because I believe that in certain circumstances, Scottish Ministers are Ministers of the Crown. There is a stipulation under Section 52:
"Statutory functions of the Scottish Ministers, the First Minister or the Lord Advocate shall be exercisable on behalf of Her Majesty".
I am not sure whether that means that they rate as Ministers of the Crown and, as such, have a responsibility for the independence of the judiciary.
Under Clause 53:
"The functions … so far as they are exercisable within devolved competence, [shall] be exercisable by the Scottish Ministers instead of by a Minister of the Crown".
It seems to me that it is not the Scottish Parliament that has to do with the independence of the judiciary, but perhaps some Scottish Ministers.
Lord Falconer of Thoroton: First, Ministers of the Crown do not include members of the Scottish executive. Secondly, the Scottish Parliament has legislative responsibility for a measure similar to Clause 1 in so far as it affects Ministers of a Scottish Parliament or the Scottish executive. That is why we have not included them in the provision.
Thirdly, the reservations in the Scotland Act, to which the noble Duke referred, relate to the existence of the Court of Session only, and this has nothing to do with the existence of the Court of Session. Justice is devolved, which is why if there were a duty that Scottish Ministers should be prevented from interfering with the independence of the judiciary, it would be a matter for the Scottish Parliament, not this Parliament.
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In relation to the changes that we have made, we have done two things. First, any Minister of the UK executive should be prevented from interfering with a judge, wherever he—the Minister—might be geographically. Secondly, that includes judges of the Scottish court.
Lord Cullen of Whitekirk: I wonder whether I may make a few comments on Clause 1 as affected by Amendments Nos. 4 and 14.
I am grateful to the noble and learned Lord the Lord Chancellor and Secretary of State for pursuing the objective to which the amendments are directed. It is clear that, even if one proceeds on the basis of the opinion expressed by the Select Committee report that it should be left to the Scottish Parliament to impose on Scottish Ministers duties similar to those in Clause 1, there would still be an anomaly in that Ministers of the Crown and other persons who have responsibilities throughout the United Kingdom would be subject to Clause 1 duties only as regards England and Wales.
Amendment No. 14, along with a consequential amendment to Clause 109(1) which deals with extent, are designed to fill that gap.
The terms of Amendment No. 4 do not impose any duty which would be within the legislative competence of the Scottish Parliament to impose. I appreciate the difficulty in devising a form of words that leaves a Minister or other responsible person in no doubt as to when he or she is subject to a duty under the clause, as it would be amended. It may be possible to improve the wording. No doubt that can be discussed in due course.
Lord Falconer of Thoroton: I am obliged to the noble Lord, Lord Cullen, for that intervention. Certainly, if the wording can be improved, we would consider an amendment on Report. I shall entertain suggestions on those lines.
On Question, amendment agreed to.
Lord Evans of Temple Guiting: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Asylum and Immigration (Treatment of Claimants, etc.) Bill
Returned from the Commons on Monday 12 July with certain amendments agreed to with amendments, with certain other amendments disagreed to but with amendments in lieu thereof, and with the remaining amendments agreed to; the Commons amendments were printed pursuant to Standing Order 51(2).
House adjourned at five minutes before ten o'clock.

Official Report of the Grand Committee on the

  Pensions Bill
  (Third Day)
  The Committee met at half past three of the clock.
  [The Deputy Chairman of Committees (Baroness Lockwood) in the Chair.]
  Clause 39 [Financial support directions]:
  Lord Skelmersdalemoved Amendment No. 116:
  Page 28, line 21, leave out subsection (5) and insert—
  "(5) A person falls within this subsection if at the relevant time—

  the person is the employer in relation to the scheme,

  the employer in relation to the scheme is a company and the person controls the employer, or

  the person is a company which is a member of the same group of companies as the employer in relation to the scheme; and

  the employer in relation to the scheme is a service company providing the services of its employees to the person and one or more of those employees is an active member of the scheme."

  The noble Lord: We now turn to a discrete section of Part 1—Clauses 39 to 46—although Clauses 47 to 50 have a bearing. From the wording of the Bill, it is clear that financial support directions can be issued to an associate of, or a person connected with, an employer that is a service company or that is insufficiently resourced. The use of those definitions from insolvency law gives the regulator incredibly wide powers. It comes under my heading of "draconian"—the word that I used at Second Reading.
  The regulator would not only have power to serve financial support directions on any company in the same group as the employer and any shareholder that owned more than a third of the employer's shares but would also have power to issue financial support directions to associates of directors and shadow directors of the employer.
  The full class of connected persons and associates seems very widely drawn and rather oddly random. It would include the company's employees and, in theory, even the nanny of the managing director's children. I know that that is a silliness, but I am advised that, in theory, such a person could be included. It would also include the current business partners of, for example, an ex-wife who divorced the finance director 30 years ago. Yet it might not include a 30 per cent shareholder of the company, and that clearly is important.
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  The impact of these clauses is to cut across the concept of corporate limited liability and to deter companies from investing in companies with defined benefit pension plans. For example, an acquisitive company that has an interest in many concerns will probably have a significant number of defined benefit pension plans operating in the group. If any of those are underfunded and the employers cannot meet a prescribed percentage of the Section 75 debt, the company will be liable to receive financial support directions. Broadly, if financial support directions are received, all the companies in the group will have to agree to be responsible for the affected employer's pension plan, the holding company must agree to be liable for that pension plan, or additional resources must be provided, because that is what it is all about.
  The provisions will, in particular, act as a disincentive to a potential buyer of the company in difficulty. There has been much about that recently in the press, and I am sure that Members of the Committee will have seen numerous articles in the Financial Times, the Times and the Guardian and so on.
  The potential buyer will probably either insist on an asset purchase, leaving the pension plan behind with the shell company as the employer, or walk away from the deal; otherwise, other companies already in the buyer's group are likely to have to take on the purchased company's pension liabilities, and the directors themselves could be served with financial support directions.
  However, even the asset sale may not be able to go ahead in order to save the business. If there is an asset sale, the regulator might find that the only reason for structuring the sale in this way is to prevent a Section 75 debt becoming due. That would be the result of the structure if the struggling company had participated in a multi-employer pension plan. If the regulator found that such a structure was not in good faith, even if it might save the business, the seller would be exposed to the threat of a contribution notice, which I accept we have already covered. If the seller was an insolvency practitioner, even the slightest possibility of receiving such a notice would be unacceptable.
  Another issue would be the ease with which the companies could raise capital or borrow money. When a company does not itself operate a defined benefit pension plan but where there is such a plan in the group, the possibility will always exist that the company will be required to fund that pension plan. That will impact on the ability of companies to invest in future growth and will therefore impact on jobs in the United Kingdom, as this country becomes even less competitive. Figures for that were given to us in the Chamber only yesterday. We are aware that similar provisions have been introduced in the United States. Since they have been operative, defined benefit pension plans have become almost as rare as hen's teeth in all but the largest unionised companies. These measures are likely to have exactly the same effect.
  I do not know what, if any, thinking is going on in the department regarding Clause 39. However, at the very least, the potential recipients of a financial

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  support direction should be limited from the wide group perhaps caught by the current wording. Recipients should be limited to persons with a strong link either with the scheme or the company. Where the employer is not a service company, the potential recipients should be limited to scheme employers or companies controlling the relevant employer. Where the relevant employer is a service company, the recipient can also be a person who benefits from the employment services provided by that company. There is no justification for holding other persons liable for the relevant employer's liability to the scheme. Those other persons who, as I said, may be caught by the current wording of the Bill may not even be aware of the existence of the pension scheme.
  Two other amendments have been grouped with this one. I prefer to reserve my comments on them until after they have been spoken to. For the moment, I beg to move.
  Lord BorrieAt least, I agree with the noble Lord, Lord Skelmersdale, that this is a significant clause. It enables the regulator to bolster a pension scheme's viability and to do that by a suitable arrangement of financial support. When I first read Amendment No. 116, I thought it was helpful and was intended to clarify subsection (5), but it turns out that it is narrower than subsection (5), which refers to people who are connected with or are associates of the employer.
  Page 22 of the Explanatory Notes suggests that persons,
  "connected or associated with the employer … will include members of the same company group, controlling shareholders, directors, and the owners of unincorporated businesses".
  I am not sure why the noble Lord wishes to exclude controlling directors from helping to bolster the scheme, if the regulator thinks that is necessary for the benefit of the scheme. So it seems to me that this is an attempt—as indeed are certain other amendments that we are yet to discuss—either to hobble the regulator or to narrow his options. I think that probably would be undesirable considering the practical benefits of the clause.
  The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)I am grateful for the contribution of my noble friend Lord Borrie. I agree with much of what the noble Lord, Lord Skelmersdale, has said. This is clearly not meant to be a clause to catch nannies. In so far as technically it might be read in that way, this is clearly—as with a lot of our discussions at the end of our previous sitting on moral hazard —an issue we shall wish to revisit to clarify the wording and any ambiguity. But, as my noble friend said, it revisits the issue of moral hazard.
  As it is a key tool, it may be worth taking a moment to explain the purpose of a financial support direction, the provisions of which are contained in Clauses 39 to 46. The purpose of the directions is to ensure that there is a guarantee of pension liabilities in circumstances in
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  which employers have attached their pension schemes to service companies or companies with very few assets. Although most employers who have done that have perfectly legitimate reasons for doing so—we made it clear last time that we were not in any sense trying to inhibit legitimate mergers and acquisitions that keep an otherwise ailing company, possibly at risk of closing, afloat—and have no intention of avoiding their pension liabilities, we have to ensure that the majority are protected from unscrupulous minorities who seek to invent ways of taking away the assets but dumping the liabilities—almost shell companies, whether or not they are service companies.
  We therefore propose to give the regulator the power to ensure that, when a scheme is underfunded and attached to a service company or an insufficiently resourced company—this is where a company is part of a collective group —any pension promises are underwritten by other members of that group of companies. The thinking behind that is that obviously this is a debt that in all decency should be honoured as far as possible. A debt to the pension scheme is as much a debt as a debt to the suppliers of the company that is being acquired and should not be treated in any less favourable way.
  Much of the talk seems to suggest that somehow pension liabilities are an encumbrance that gets in the way of doing useful things. That is unfortunate because those pension debts are moneys owed to the employees who have earned them legitimately, honestly and honourably. I am sure that there is no dispute in the Committee. As the noble Lord, Lord Oakeshott, said, it is a question of trying to keep the balance right. I am willing to be persuaded that we may need to revisit each clause to see whether we have got the balance right. However, that we need some such provision seems to me to be without doubt. I am sure that the Committee will agree that, in general terms, sponsoring employers of pension schemes should be genuine entities carrying on a material trading activity or holding material assets so that the employer guarantee of the scheme is meaningful.
  I shall give the Committee a real example, although not with real names. I am happy to disclose on Privy Council terms should the Committee wish. One of the examples I was going to use was recognised and pre-identified by the noble Lord, Lord Higgins, so it may be that this case may also be one such. Spunoff plc is a subsidiary of the Vast Group. Its employees were formerly employed by Vast plc or other members of the Vast Group and formerly participated in the Vast Group pension scheme. When Spunoff plc was created, employees were moved into it from throughout the Vast Group and a new pension scheme was created, the Spunoff pension scheme. Since its creation, Spunoff plc has been rapidly run into the ground, although not wound up, and there is a £25 million deficit in the Spunoff scheme. As I said, this is a real case.
  The Vast Group has so far refused to make up the deficit and has also refused to permit the members to transfer back into the Vast Group pension scheme, although that is still under negotiation. This would be

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  a situation in which I believe, and I suspect all Members of the Committee would believe, that it would be appropriate for a financial support direction to be issued to ensure that the Vast Group stood behind the Spunoff pension scheme.
  I would point out that this is one of a range of powers the regulator has and one that is at the extreme end, where all other steps so far have failed to persuade a company to honour a promise that it could and should make and which it is seeking artificially to avoid. If, despite being attached to a service company, the scheme trustees and employer have in place appropriate funding arrangements or a concrete and realisable recovery plan, and the employer and parent company are committed to supporting the pension scheme, the regulator would monitor the situation rather than issue an FSD.
  These powers will be exercised only when it becomes apparent that the scheme is insufficiently funded and the employer, either because it was a service company or because it was extremely weak in comparison to other companies in the group, is unable or unwilling to put a concrete and realisable recovery plan in place to restore the funding position.
  The regulator's first steps would be to work with the trustees and employer to look for ways to restore the funding position and get assurances as to the commitment to that scheme. In other words, there would be a presumption of good faith to start. It would be only when that had failed that the regulator would consider issuing a financial support direction. Such a direction can be issued to anyone connected or associated with the employer—here I take the
  remonstrances of the noble Lord, Lord Skelmersdale. The regulator will have to consider this very carefully as it will have to consider who is in a position to put these arrangements in place. I have to say that it did not strike me that the nanny would be in a position to put those changes back in place.
  It may well be that the threat of that direction would be sufficient to encourage the parent company to commit to guaranteeing the funding on an ongoing basis. One option could be for companies to move the pension liabilities out of the weak scheme to a stronger one—in other words, back to Vast from Spunoff—or strengthen the company itself; that is, moving resources from Vast into Spunoff.
  Those served with the direction would be given appropriate time to put in place appropriate arrangements. However, if this does not happen, there must be serious questions over the schemes'—and the scheme members'—future. That is why the regulator would issue a non-compliance contribution notice to anyone named in the direction. We discussed that on the previous occasion. Of course, it will not be appropriate for the regulator to issue a notice to all those named in the direction. Some individuals may have been named in the direction because they are in a position of influence and able to ensure the directions are put in place. However, it would not be appropriate then to seek to ensure that they contribute to the funding of the scheme.
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  Factors that the regulator must take into account are set out in Clause 42(4). We have discussed them. They comprise whether the person has taken reasonable steps to secure compliance with the financial support direction; the relationship that the person has or has had with the employer; the relationship which the person has or has had with the parties to any arrangements put in place in accordance with the direction; and any connection or involvement that the person has or has had with the scheme and the financial circumstances of the person. We discussed all the considerations that the regulator would have in mind on the previous occasion. The regulator would take those factors into account as part of the reasonableness test.
  The sum in the contribution notice as a maximum can be the Section 75 debt due or potentially due. However, the regulator could reduce that amount as we discussed on the previous occasion. For example, it may choose a sum which would then allow the employer to put a concrete and realisable recovery plan in place to restore funding within an appropriate timescale. To pay the Section 75 debt all at once might tip the scheme over, but a recovery plan over, say, three years might very well be acceptable and tolerable and keep the scheme and the members on a steady course.
  3.45 p.m.
  The sum could also be reduced to take account of the financial position of those named in the notice. Therefore, there are plenty of safeguards. Before a financial support direction or a non-compliance contribution notice is issued, the regulator will send a warning notice to all those likely to be directly affected by any decision. It will set out the evidence it has, why it thinks it is reasonable to exercise the power and, if necessary, details of how any sum has been calculated. The directly affected parties will then be able to make representations—either on paper or in person if they prefer—to the Determinations Panel.
  If the Determinations Panel exercises one of the powers, directly affected parties could go beyond that—again we discussed this briefly on the previous occasion—and appeal to the Pensions Regulator tribunal, which is entirely independent, before the order or direction has effect. They can go beyond that. If they are not satisfied with that decision, they may seek permission to appeal to the Court of Appeal on a point of law.
  The amendments seek to clarify the category of person to whom the regulator can issue these directions. As I say, I am sympathetic to the points that the noble Lord made. I have taken some time over my reply as it is the first time that we have discussed FSDs. I thought that it was worth putting those comments on the record to enable people outside to see what our intentions are in that regard. As I mentioned, over the summer we shall continue working with the various interested parties to ensure that these concerns are met.

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  It may be appropriate to mention that at the end of our previous day's discussion on the Bill I agreed to take away a number of concerns. I have listed them. I do not have sufficient copies for every Member of the Committee but I shall ensure that they are fully distributed. We are taking away for further consideration issues such as the contribution notice on an insolvency practitioner; whether it is reasonable to apply a retrospective time period; the clearance procedure guidance—we shall produce an initial draft by Report; and industry codes—we are waiting for the noble Lord, Lord Higgins, to produce an example of those.
  We are also considering contribution notices under Amendment No. 112. In addition—this relates to amendments that we might discuss more fully—the Committee may think that there is not much point in repeating the debate on financial support decisions which we have already had on contribution notices because in all these cases I am perfectly willing to take these issues away.
  Meetings and discussions will take place over the summer on this bundle of related issues, including the one that the noble Lord, Lord Skelmersdale, raised. I understand from my officials that the first meeting scheduled with the organisations is expected to take place before the end of July. No one is wasting time on this. I hope very much that I shall be able to give a report to Members of the Committee before Report, following the summer discussions, to show how far we have been able to reach consensus with the industry. I ask the Committee not to push me further than that. We are seriously engaged with the organisations to see what we need to clarify, what issues we need to revisit, what we need to discuss and what would appropriately be contained in a code of practice, a code of guidance, a regulation and so on.
  In the light of that very lengthy explanation, for which, I hope, the Committee will forgive me, I ask the noble Lord, Lord Skelmersdale, to withdraw the amendment. I also invite the Committee, if I may, not to move some of the amendments that have been tabled, as they repeat some of the territory that we have discussed. At this stage, I cannot take the Committee any further forward than I did at the end of the previous sitting.
  Lord Oakeshott of Seagrove BayWe are continuing where we left off the other night. I welcome the Minister's assurances about the active programme of consultation. In particular, I press her to ensure that the report that she is talking about comes in good time for Report. That is the stage at which we and, no doubt, other noble Lords will look to see whether and how far amendments are necessary. We hope that the process will also produce government amendments. I thank the Minister, and I encourage her to press on with the programme, as there is widespread concern in industry and on these Benches.
  With regard to these amendments, I support and sympathise with what the Government are trying to achieve, as was our approach towards the end of the
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  previous sitting. However, I do not feel that they have got there yet, and I support the plea made by the noble Lord, Lord Skelmersdale, for clarity. In that context, I shall not go through the amendments line by line, but we look forward to the clarification that we expect.
  I have one further point to make on the general topic. I agree with the noble Baroness that pension funds are not some minor irritant that gets in the way of a deal. That is often the tone of conversation on the issue. In particular, I refer to the remarks of Mr Philip Green, the tax exile from Monaco who is trying to take over Marks & Spencer. He described the attitude of the pension fund trustees as arrogant, rude, untimely and unhelpful. That was the pot calling the kettle black.
  Lord LucasI accept the noble Baroness's invitation to speak now and shut up later, if that is all right.
  Baroness Hollis of HeighamYou put it so elegantly.
  Lord LucasI agree with everything that she said about the objectives of this part of the Bill and about what is to be achieved. However, I have some great reservations about possible side-effects.
  It seems reasonable to start with Mr Philip Green. As I understand it, the trustees of the fund have said that, if he takes over M&S with a very geared vehicle, they will change their investment policy. That will result in a current deficit of about £250 million becoming a deficit of about £2 billion. That is a thoroughly reasonable decision, given the way in which trustees consider such things or are coming to consider such things. Someone who asked the same question a few years ago would not have got the same answer from the trustees.
  It is a matter of fact with markets that, although you can reasonably project a rate of return for the equity market, you will, in any average 30-year period, underperform by 30 per cent about 30 per cent of the time. The ability of the employer to make up the deficit from cash flow, if the investments have gone wrong over that sort of timescale, is important to the interests of the scheme members. It seems right that trustees should react to the solvency of the sponsoring company by adjusting the expectations that go into their investment policy. That is in line with current thinking. However, there are substantial consequences. There is a substantial transfer of value from owners to pensioners. They will get substantially less for the companies that they are selling. That may be something that we want to achieve, and I suspect that it is an objective of the Bill to make sure that pensioners are looked after and that shareholders come second in the queue—or certainly not first. We should accept that.
  The board of M&S may think that that consideration is a convenient poison pill, but, if they consider the matter further, they will see that what we are introducing is a substantial mechanism. If an ordinary company starts to get into difficulties, the pension fund trustees will follow the precedent that has been set in such capital letters and say that they have to change their investment policy. So, the moment that

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  the company gets into difficulties, the pension fund starts to add to it, because it starts to change its investment policy. Anyone running a major defined benefit scheme will feel it standing behind them, and the moment that there is a downward slope in results or a dip in the balance sheet, the trustees will push. They will increase the rate of contribution. They will declare a deficit. Such a scheme will be extremely dangerous to run.
  As my noble friend Lord Skelmersdale says, unless we are careful this will result in the accelerated death of defined benefit schemes. They are becoming dangerous and powerful to live with. It will result in pension funds becoming more risk-averse generally, which is not the result we wish for nationally. We need our pension funds and our big investors to be prepared to take risks. It will also be compounded because leverage buyers have been good payers for companies, by and large, and if they are no longer in the market because they cannot take the pensions consequences, that will reduce the general value of equities, which will compound in terms of reducing the returns that are available from investment in equities.
  So, we need to look at the consequences of this carefully and decide whether we want to place that risk on the individual company—on the individual set of trustees—and effectively make them react to this change in circumstances by becoming risk-averse, or whether it would be better for the economy as a whole that we place the risk on the pension guarantee fund. We would be saying that employers as a whole should take the increased risk—or, at least, where the balance should lie. The consequences emerge slowly. This particular problem is not really a consequence of the Bill. It goes back to the Pensions Act 1995 and maybe before. It takes a long time for such effects to work through, because the orthodoxy takes a long time to change and develop in the pension fund industry.
  One way or another, this move will have major consequences and its relevance to this part of the Bill is that trustees will be in a position to create a deficit where none appears to exist. As the circumstances of a company change or as it passes from the control of one person to another, a great deal of uncertainty is created regarding the transfer of a company. If one asked 3i about how it sees this matter, it would say that companies were dying and that companies have died because of the uncertainty and because they could not, under the Bill as it stands, see how they could make a deal with the pension trustees and say, "Fine, if we invest in this company we will set such and such a contribution rate and that is the way that the pension fund will be run", because that arrangement could be overturned by the regulator. It would be caught by the retrospective provisions. Companies are now dying due to the current provisions in the Bill and the uncertainty that it creates.
  Do we really want that to happen? There always will be a dilemma in a company that is doing badly, over how a scheme should run, between the interests of pensioners and keeping the company going. We must ask whether we have got this right. Looking at Clause 39 in particular, I find myself thinking that
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  perhaps I am watching an episode of "DIY Disasters". We are hacking away at the roots of company law and the foundations of a joint stock company, which is limited liability. It creates losers.
  Every time that a company goes down, people lose money through no fault of their own. But it has enabled the joint stock company to exist and flourish. How many bricks can we take from the foundations before there is a real problem? My suspicion is that we shall not even begin to see the problems that we are creating for 10 years. Maybe it is all right and maybe it is not, but I cannot find anyone who has really thought through the problem, but we are taking limited liability to pieces for pensioners.
  4 p.m.
  As my noble friend said, this can run through to shareholders. 3i is clear on the legal advice it has: it runs through to shareholders. If they invest in a company with a defined benefit scheme, they are liable. They cannot escape it. The whole business of dealing with a company which has any sort of difficulties, of putting more money in and rescuing it, where they are exposed to the risks of a company with a defined benefit scheme, becomes impossible because of the uncertainty. You cannot restrict your likely loss to the money you are putting in. Each time, your potential loss will be the whole of your assets.
  We need to find ways of dealing with that. I do not think that the Bill is intended to destroy the basis of 3i and its competitors' business. We talked about getting clearance under Clause 35. We need a mechanism for clearance under Clause 39 too. There needs to be a way in which someone who is taking on a company with a defined benefit scheme, acquiring it or putting themselves in a position where they are likely to be attacked can say, "This is our maximum potential liability for pensions before such and such a date. This is how we can do a deal with the pension fund trustees so that they will not suddenly rush into gilts and create a deficit that will hold up in front of the regulator and the courts". Unless we do that, we shall have great difficulties.
  It will be difficult enough to do an audit of a company in a group. Once the Bill is passed, to sign off an audit you will have to know the state of the pension fund of every company that might bite back—certainly all the companies in the group but also, probably, other companies owned by your major shareholder, because the group runs so wide. There are big liabilities that could come running at you. How that should be done and how audits should be signed off is quite a question. I have not yet found anyone who can answer that.
  I suppose at the root of this lies the problem that we are moving on limited liability. We have long accepted that limited liability can be crossed when there is fault; that is, fraud or malfeasance. We have done that, and that is accepted. Clauses 34 and 35 take us to the point where it can be done by mistake, just by carelessness. You can do something as a trustee of a pension fund which makes you liable for all your assets just because

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  you did not realise that it could have those sort of consequences or that you should get clearance. There are plenty of pension funds which are not beautifully run.
  In Clause 39, we break limited liability without fault, without any involvement in what has been going on, without any fault anywhere. I know that there are companies which the noble Baroness described with which we all want to deal. Sainsbury's got into trouble and the Sainsbury family were presumably regarded as people whose personal assets could be gone after for the Sainsbury pension fund. That seems to me to be breaking the basis of limited liability in a way which would have very unfortunate consequences.
  Lord Oakeshott of Seagrove Bay Noblesse oblige.
  Baroness Hollis of HeighamPerhaps I may respond briefly to the noble Lord, Lord Lucas. I do not want to reopen the general discussion about getting the balance right. We have discussed that thoroughly. However, I want to make it clear that the clearance system with contributions that he rightly identified will also apply here. So, that should also help with financial support directions.
  However, the general point about which I would put up a red light relates to the noble Lord's somewhat vague comment that, where a company is going through a merger and acquisition and the pension fund is a liability it would quite like to duck, it should be able to dump it on the PPF. That means that you produce a moral hazard. It becomes in the company's interest to run the fund down on the grounds that other companies not in their group will pick up the cost by virtue of the levy. Frankly, that is unacceptable.
  One of the regulator's jobs is to ensure that pension schemes enter the PPF if, and only if, the employer is insolvent and the scheme is underfunded and cannot meet its wind-up liabilities. Otherwise, it will lead to the situation I gave as an example on Second Reading. If employers can let the state pick up the bill for asbestosis, no employer will ever protect his employees from asbestosis. We are in exactly the same situation, and that is what the noble Lord is inviting us to do. I hope very much that the Committee will not agree. He would not have the support of the industry voices that I have heard for any scheme in which the last man standing will pick up the bill for all the other schemes that have been able to manipulate their liabilities on to the PPF.
  Let me give that warning now. The noble Lord may not intend to go that far, but I cannot let him think that there is a solution in the PPF. We have to get the balance right. I do not think that any of us disagree, and we will work on that over the summer.
  Viscount TrenchardI should like to add two or three brief points following the remarks of my noble friend Lord Lucas. I entirely agree with him that it will be a great pity if the Bill is inadvertently detrimental to companies introducing and maintaining defined benefit pension schemes.
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  The defined benefit pension scheme, as has been operated by many British companies, is an excellent means of planning for retirement. Unfortunately, people entering the workplace today are less likely to be able to join one of these schemes than was the case when I entered the workplace. I am heartened to see that major companies such as Tesco have recently renewed their commitment to their defined benefit pension scheme, which has 130,000 members. That is very important.
  We need to be concerned about breaching the principle of limited liability, particularly in Clause 39. It is a delicate balance, as the Minister said, between giving the regulator too much unfettered power and creating a situation in which overseas investors are less likely to invest in British companies.
  The Minister has said that she will look closely at industry representations. I hope that they will include those made by the British Venture Capital Association, which is clearly very concerned about this. It is particularly concerned about the effect on investors from United States companies. That slightly puzzled me; I am by no means an expert on the American set-up, but I understand that the PPF is, to some extent, modelled on an American equivalent. Is there any limit on what a company could be ordered to pay to make good, as in the United States model, or any compromise with the principle of limited liability?
  However, I entirely agree with the noble Baroness and the noble Lord, Lord Borrie, that we have to make sure that Vast and Spunoff do not leave their pensioners in the lurch. I have had a very large number of letters from deferred pensioners belonging to companies that are not insolvent but are nevertheless going into wind-up. Some companies may still be trading or are better funded than those which are winding up their pension fund. I welcome the fact that they will be caught by this clause.
  I know that the noble Baroness has said that she will come back later to the amendment of my noble friend Lord Skelmersdale, but I agree with the first thoughts of the noble Lord, Lord Borrie. It is clearer than what is presently in the Bill, and it catches just about everybody that it ought to catch.
  Baroness Hollis of HeighamI must clarify the point about the US. My understanding is correct: in the USA, there is joint and several liability in company schemes for DB schemes. So in the States the provision is already more widely drawn than would be the effect of these clauses—and they still manage to invest.
  Lord LucasBut it stops with the shareholders. It runs within a group and stays there. It has been promised that the issue will be reviewed.
  Perhaps I may press the noble Baroness on the matter of clearance under Clause 39. What is she thinking of clearing, and how?
  Baroness Hollis of HeighamThe suggestion made on the previous occasion was that, where a company or group of companies proposed a merger or acquisition, such that it had implications for the viability or

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  funding its pension scheme, we wanted to make a distinction between a legitimate merger and acquisition—in which case, remedying that deficit might take three years, five years or whatever period the remedial plan might be agreed for—and an artificial manipulation. Any company acting in "good faith" could go to the regulator and get the equivalent of planning permission that this was acceptable activity and that it would work co-operatively in order to produce a remediation of any situation affecting the pension scheme—as opposed to assuming bad faith.
  That still leaves open the issue of whether the building control inspectors need to see whether you have done the work correctly. The point about the clearance is to ensure that companies which might be in the early stages of exploratory talks and which are clearly doing this in good faith to rescue the ailing companies the noble Lord was talking about could proceed knowing that they would not be hit by something out of the blue from the regulator, if they were handling the matter with propriety.
  Lord SkelmersdaleAfter that discussion, what can I say but mea culpa, particularly for not speaking to my Amendment No. 119, which answers the question of the noble Lord, Lord Borrie, on what my ideas mean regarding control.
  My noble friend Lord Trenchard was right: we were trying to simplify things. I started this hare, as I am sure the Minister would call it, running because I had not understood from our discussions on the previous clauses that she intended to carry her consideration through to the whole of the ball game. Now that I have understood it, it makes life a lot easier.
  My Amendment No. 119 covers the Minister's illustration of the small company Spunoff owned by Vast. I am delighted to hear, which again I had not appreciated even after our discussions last week, that this form of direction was a matter of last resort. It is the final plank after one has gone through all the other activities of the regulator and indeed the activities of the good firm, to which reference has been made.
  I am grateful to my noble friend Lord Lucas for his extensive support. Clearly, he shared my impression that each part of the Bill would be considered separately by the noble Baroness and her team over the summer. Now that we have that straight, we all understand, So that is brilliant.
  The Minister mentioned the effect of the Bill. One understands that, but one does not want the unintended consequences of such an effect. I am sure that that will be part of her thinking over the summer.
  Lastly, like the noble Lord, Lord Oakeshott, I am delighted to hear that the Minister will produce the results of her thinking before Report and, as she said to him, in good time so that we can consider it and decide whether we want to pursue this fox—I will not use the hare again—through further stages of the Bill. I am grateful to the Minister for her explanation. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  4.15 p.m.
  [Amendment No. 117 not moved.]
  Lord Lucasmoved Amendment No. 117A:
  Page 28, line 25, at end insert—
  "(6A) In performing his duties under subsections (3) and (6) the Regulator shall seek contributions from the groups of persons set out in subsection (6B) in the order in which they are set out, and shall not seek contributions from persons in a lower group if, in his opinion, persons in a higher group are together capable of furnishing (and likely to furnish) a sufficient total contribution.
  (6B) The groups referred to in subsection (6A) are—

  companies owned by or owning the employer in a 100% shareholding relationship,

  companies owned by or owning the employer in a 75% to 100% shareholding relationship,

  companies owned by or owning the employer in a 50% to 75% shareholding relationship,

  companies associated with the employer in a 33.3% to 50% shareholding relationship,

  directors of the company at the time the act or failure occurred to the extent that they or their associates have benefited from the act or failure,

  associates of the directors only to the extent that they have benefited from the act or failure."

  The noble Lord said: I shall be extremely brief, and I do not expect a substantive reply. On this occasion, I do mean this amendment, and I know why it is there. We saw it before, when it was in the wrong place.
  The amendment suggests that there ought to be a hierarchy. There is no fault—you ought to go after the company before you go after the directors. I hope that that gets factored into the conclusions.
  There are a couple of other things I wanted to ask. If there are clearance procedures, where a company is in any sort of trouble, you will presumably have to get clearance every time you declare a dividend or pay a director—all sorts of little things which involve the transfer of money to associated people. Clearly this applies to the big transactions, but if you declare a dividend, you are taking money from the company and giving it to the big shareholders or other companies. In a company which is in any sort of difficulties with its pension fund, you are doing something which may affect the interests of its pensioners. How will you get clearance for that large number of relatively small, day-to-day transactions?
  Secondly, how will you deal with directors put on the board by venture capital companies where a company is known to be in difficulties? How will they be sure that their personal assets are not at risk if, despite their best endeavours, the company goes down and the pension fund is in deficit? I beg to move.
  Lord Oakeshott of Seagrove BayI should like to reiterate my feelings on the similar amendments previously moved by the noble Lord, Lord Lucas. We feel that this very prescriptive order is too restrictive on the regulator. In some situations, he could be trying to protect a pension fund at risk with one hand, or even both hands, tied behind his back.
  Baroness Hollis of HeighamWe have already discussed a similar amendment, Amendment No. 103A, so I will not go beyond what I said then. However, I may be able to help the noble Lord, Lord Lucas, on specific points about trustees or directors. We have had an example, apparently, of directors asking if they would be liable if they accepted positions with employers with underfunded schemes. The answer is no, and the regulator can "clear this" and similar queries.
  As for dividends, there obviously have to be sensible limits. The regulator will give clearance on the bigger issues, and guidance on the process will be developed and published in consultation with the industry. I cannot go into the detail before we engage the regulator in discussions about what is the most helpful way forward in developing such a scheme.
  Lord LucasI beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
  Lord Skelmersdalehad given notice of his intention to move Amendment No. 118:
  Page 28, line 27, after "period" insert "not exceeding five years"
  The noble Lord said: I do not expect the Minister to respond a jot, a tittle, or even a single word to this amendment. This subject has been covered already and continues to be in the noble Baroness's thinking.
  [Amendment No. 118 not moved.]
  [Amendment No. 119 not moved.]
  Lord Skelmersdalemoved Amendment No. 120:
  Page 28, line 33, at end insert—
  "( ) The Regulator, when deciding for the purposes of subsection (2) whether it is reasonable to issue a financial support direction to a particular person, must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—

  the degree of involvement of the person in the creation or continuing position of the employer as a service company or in its insufficient resourcing,

  the relationship which the person has or has had with the employer,

  any connection or involvement which the person has or has had with the scheme,

  the financial circumstances of the person,

  whether the imposition of liability on the person will substantially affect the funding of the scheme,

  that the purpose of imposition of liability is intended to be curative of the scheme funding, and not punitive of the individual, and

  such other matters as may be prescribed."

  The noble Lord said: As I understand it, we have not discussed this amendment before. I can be extremely brief because, again, it probes the regulations in the obvious—and understandable—absence of a draft as yet.
  It seems unreasonable for the employer, unless very well off in assets—or perhaps, as a subsequent amendment suggests, net income—not to be able to top up the scheme by instalments. Although it is very similar to Clause 35, it is different. The second stage under Clause 35—namely, where the regulator first
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  decides whether an individual is capable of having liability imposed upon him and then deciding whether it is reasonable to do so—does not appear to appear here. I apologise—that is terrible English. I rather think that that provision should be here. Perhaps the noble Baroness could consider that. I beg to move.
  Lord BorrieI feel that there is a slight sleight-of-hand here. The amendment refers to the regulator,
  "when deciding for the purposes of subsection (2) whether it is reasonable to issue a financial support direction",
  but subsection Clause 39(2) does not say anything about anything having to be reasonable.
  Rather different is Clause 42, which we have not come to yet. It is all about contribution notices when the financial support direction is not complied with. Subsection (3) says very specifically:
  "The Regulator may … if the Regulator is of the opinion that it is reasonable to impose liability".
  There is something odd about the amendment from that point of view.
  The amendment also seems unduly prescriptive and complex. I am not quite sure what in proposed paragraph (a) is meant by the,
  "continuing position of the employer".
  That sounds slightly odd. Perhaps it is intended that the regulator will hardly ever exercise this power. I cannot really see any other point for the amendment.
  Baroness Hollis of HeighamIt appears to be a version of Clause 35(6), as far as I can see. This is about what counts as the test of reasonableness, and that will be part of the discussions this summer.
  Lord SkelmersdaleI am very grateful. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 39 agreed to.
  Clause 40 [Meaning of "service company" and "insufficiently resourced"]:
  Lord Lucasmoved Amendment No. 120A:
  Page 29, line 1, after "assets" insert "or net income"
  The noble Lord said: In moving Amendment No. 120A, I should also like to speak to Amendments Nos. 120B and 120C.
  This amendment merely makes the point that the ability to contribute can be entirely income-based rather than assets. To take an example that I used previously, supermarkets could traditionally be entirely creditor-financed. You could have a balance sheet of zero and an enormous cash flow. There are many quoted companies which, under some definitions of assets, have negative net assets. It is essentially just like being taxed. If you are being asked to pay, cash flow is much more important than assets. I beg to move.
  Baroness Hollis of HeighamI am a little puzzled. My understanding of net income is that it is a subset, in a way, of net assets. The amendment would ensure that net income can be taken into account instead of net assets when the regulator is establishing the net

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  assets of both the sponsoring employer in relation to a scheme and of any connected or associated persons in determining whether an employer is insufficiently resourced.
  The concept of net assets is based on the definition in Section 264(2) of the Companies Act 1985 which says:
  "'net assets' means the aggregate of the company's assets less the aggregate of its liabilities".
  We have allowed for this provision to be in regulations to allow for flexibility. The way in which employers' assets and liabilities are assessed may need to change, due to differing factors or economic conditions which the regulator may need to take into account. We think that it is an appropriate concept and, as I said, of course a person's net income may be taken into account if it becomes necessary to impose a non-contribution compliance notice as part of their financial circumstances. So I am not sure how much difference there is between the noble Lord, Lord Lucas, and myself, but I hope that, with that explanation, he will feel able to withdraw the amendment.
  Baroness NoakesI should like to contribute for the first time to the proceedings on the Bill, although I have been following them in Hansard. I hope that I am not too far behind the pace.
  I support my noble friend in this amendment. The test of net assets is a static test at a point in time, something shown in a set of accounts. If you believe that sets of accounts show something very useful about a company, then you might believe that this test was useful. In fact, when looking at the worth of an employer to a pension fund, you need to look at its cash flow. I think that that was the idea behind the net income to which my noble friend referred.
  This seems to be the wrong sort of test. We should be looking at the ability of the company—the entity—to generate the resources that would allow it to support the pension schemes concerned. The wording of the amendment may not be quite right, but when the Minister talked about the definition in the Companies Act, I genuinely felt that the wrong kind of test was being proposed.
  Lord Oakeshott of Seagrove BayI, too, have some sympathy with the amendment. Assets and income are not the same thing. In particular, the sort of companies which get into difficulties with their pension fund are often declining industrial companies where, in theory, although the assets might look very valuable, they are not in fact very realisable. So I think that it is worthwhile to have an element of considering cash flow as well.
  Lord LucasPerhaps if we replaced the words "net assets" with "resources", that would be a more general phrase which could encompass everything.
  Baroness Hollis of HeighamI am perfectly willing to look at it. However, we may be misunderstanding the thrust. The test here is to establish whether one company is comparatively weaker than others in the group. We are not testing the capacity of any
  GC 254
  individual company to pay. The clause is not about the requirement to pay—if it were, I would take the point about cash resources as opposed to, say, large acres of contaminated land somewhere in the depths of the north, the east, the west or wherever.
  Much of this will be done by regulations. As it stands, if we compare company with company, we need to know the assets and not just the cash flow. I am not even sure that the cash flow would necessarily be especially relevant in those circumstances. It is not a question of whether companies will pay, but of making comparisons between other groups in the sector within the group. This comes within that subset of the service company and the insufficiently resourced company.
  Lord LucasI beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
  [Amendment No. 120B not moved.]
  Baroness Noakesmoved Amendment No. 120BA:
  Page 29, line 7, leave out subsection (4).
  The noble Baroness said: I think that we will continue a little of the discussion that we have just had. This probing amendment would delete subsection (4), which deals with how net assets are to be determined. We want to get at the thinking behind the test of net assets.
  The Minister spoke a moment ago about what was shown in the accounts. One of the questions I was going to ask was whether the accounting conventions used in the accounts would be used, and I think that she said that they would be. One consequence of that is that that will be sorted by whether there are valuations in the accounts, whether the historical cost convention has been used throughout or has been modified and, looking forward, whether the company has been following UK GAAP or has moved on to international financial reporting standards. You can get quite different measurements of net assets on those two bases.
  That is the provision in the context of using financial reports. I had hoped that the Minister would not rely on net assets being derived from sets of accounts— that, instead, they would have been derived from normal valuation principles, which is when you look at cash flows again. The way in which the worth of net assets is determined is by looking at the discounted value of the cash flows or some alternative valuation methods.
  I tabled the amendment to try and tease out what we are talking about here. It is important to understand that historical cost accounts—the ones referred to under the Companies Act—have severe limitations for the use of determining whether there are sufficient net assets to meet the possible debt that could arise. We may be illogically pulling into the net companies that have a perfectly good valuation, on the basis of their cash flow, but whose accounts show a particular position. Alternatively, we could be ignoring companies that appear to have assets but do not yield particularly good cash flows and are not particularly good backing for employer debt.

  GC 255
  My amendment is a probing amendment. I want to tease out what we are talking about with regard to net assets. I beg to move.
  4.30 p.m.
  The Deputy Chairman of Committees (Baroness Lockwood)I must point out that, if the amendment is carried, I cannot call Amendment No. 120C, which will probably not be moved anyway.
  Baroness Hollis of HeighamThe purpose of the clause is to define the meaning of "service company" and "insufficiently resourced". In effect, an insufficiently resourced company is one that has insufficient net assets to pay a prescribed percentage of the estimated Section 75 full buy-out debt, although another connected or associated company may have sufficient net assets to do so. The test is designed to identify situations in which a company group has attached pension liabilities to one of the weakest companies in the group.
  The amendment would remove the provision allowing the net assets of the connected or associated company to be determined, calculated and verified in a prescribed manner. The concept of net assets is, as the noble Baroness, Lady Noakes, said—I should have welcomed her to the Committee when I began—based on the definition in Section 264 of the Companies Act 1985, which means that they are the difference between the assets and liabilities.
  The purpose of having regulations to define net assets further is twofold. The clause allows the regulations to provide certainty for companies and the regulator about how net assets will be calculated. It also allows for flexibility. That is important because the way in which employers' assets and liabilities are assessed may need to change, if economic conditions change. There will be consultation on regulations made under this clause.
  I hope that, with that assurance, the noble Baroness will feel able to withdraw the amendment.
  Lord LucasI support what my noble friend said. We are after a concept that allows us to describe the ability of a company to support its debt to its pensioners or, in the case of subsection (3)(b), an associate's debt. That is not described by the phrase "net assets" in the Companies Act sense. Many companies go bust with enormous net assets, because their net assets are calculated on a going concern basis. When a company goes bust, the key figure is the amount that someone else will pay for those assets, and that is often nothing.
  The balance-sheet total produced by accountants is not a good measure of a company's ultimate ability to deal with a debt. It is more of a cash-flow concept, as my noble friend said, which would be better expressed, if we are to use the phrase "net assets" by assessing net assets on a valuation basis. Someone who is running a newspaper, for instance, may have net assets that are close to zero. Someone running a regional newspaper may have no physical assets at all, but they will have
  GC 256
  wonderful cash flow. The balance sheet will look awful, but their ability to support a deficit of £20 million on a pension fund may depend on only half a year's profit.
  It does not show on the balance sheet, if you use the accounting method; it must be a valuation method. I think that that is what my noble friend is saying: we need something that brings out the ability to deal with debt, particularly if, as set out in paragraph (b), someone else will carry the can.
  Baroness Hollis of HeighamWe have taken advice on the matter, and we have had extensive discussions with the DTI. This is one of the issues on which we will consult before the regulations are made. The comments made by the noble Baroness may be helpful and may steer some of that discussion, but, so far, the measure appears to be appropriate, on the basis of the advice that we have received. If we need to clarify the intent of the regulations, we will, of course, take the matter forward.
  Baroness NoakesI thank the Minister for that reply and my noble friend for his contribution to the debate. I shall keep my own counsel about whether I would have consulted the DTI on the correct way to measure net assets. With the amendment, I was trying to tease out the issues. They are important and are worth examining again, if we are to have a genuine measure.
  The Minister said that it was right to have flexibility in regulations and that people could see how the measure was calculated. I have absolutely no problem with that. I have no problem with regulations being used. However, I am slightly concerned that a rational basis should be used, although the cost and benefit issue will need to be considered. The kind of valuations that I was discussing that involve cash flow are more complex although they reach an answer that is approximately correct rather than a very definitely wrong answer, which the Minister will get if she considers accounting type formulations. But doubtless we can return to this measure another time.
  Baroness Hollis of Heigham Baroness Hollis of Heigham: Before the noble Baroness sits down, I invite her to write to us more fully stating precisely where her concerns lie and how she thinks we should approach the matter. I am perfectly willing to send the noble Baroness into bat against some of the assumptions of the DTI. I am sure that we all have open minds about the result of that. I invite the noble Baroness to follow up the matter in correspondence as we would appreciate that.
  Baroness NoakesI would be happy to do that so long as I do not have to talk to the Department of Trade and Industry. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 120C not moved.]
  Lord Skelmersdalemoved Amendment No. 121:
  Page 29, line 17, leave out subsection (6).
  The noble Lord said: This is purely a probing amendment because I simply do not understand the Bill here. Subsection (6) of Clause 40 on page 29 refers to,
  "the estimated section 75 debt"—
  that is, Section 75 of the Pensions Act 1995—being "disregarded". I confess to being somewhat more confused than usual on this issue. What on earth does it mean? Section 75 of the Pensions Act 1995 is headed, "Deficiencies in the assets". In this Bill the phrase, "insufficient resources" is used. I assume that they mean the same thing. Therefore, I believe that that particular point is explained. But what is not explained, even in the Explanatory Notes, is that the word "estimated" does not appear anywhere in Section 75. Section 75 is all about real debts determined, calculated and verified by a prescribed person, as can clearly be seen in subsection (5) of that section. I repeat, why the disregard for something that does not exist?
  The situation gets worse. If there is already a Section 75 debt and it is so badly calculated that the money due is insufficient to ensure the solvency of the scheme, that surely is the fault of OPRA, whose actions the regulator is taking over. Why, then, should the employer, however defined, be subject to a redetermination that would not occur post the handover? After all, there is nothing in Clause 39 to provide for cases of redetermination unless I have totally misunderstood the entire clause. I beg to move.
  Baroness Hollis of HeighamThe noble Lord, Lord Skelmersdale, is absolutely right to identify this as quite a technical subsection. I am almost certain that I shall need to follow this up with him in writing. When I pressed for a similar explanation, I was given to understand that the measure prevents a company being held liable for debt twice over. The existing Section 75 debt may have changed by the time the further calculations are done. It may be lower or higher. Therefore, the new estimated Section 75 debt should displace it; otherwise, there may be no power to cancel the original one.
  To some extent, the measure seeks to take account of gaps in chronology in that subsequent measures may be put in place. That is the broad thrust of the measure. I shall need to obtain further advice from lawyers in order to follow up the matter. I want to make sure that the concerns that the noble Lord raised, which I shared, are fully addressed.
  Lord SkelmersdaleThat is a typically honest answer and I look forward to further discussions with her on this, whether in writing or in person. At the moment, even with that potted explanation, the matter is as clear as mud. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 40 agreed to.
  Clause 41 [Meaning of "financial support"]:
  Baroness Noakesmoved Amendment No. 122:
  Page 29, line 26, at beginning insert "Subject to subsection (4),"
  The noble Baroness said: I shall now risk the wrath of the Minister by attempting to talk to the amendment to clarify the points that emerged before. The notes given to us by the noble Baroness said that the noble Lord, Lord Higgins, agreed to withdraw slightly similar amendments from the earlier section. However, I wish to probe a little further because I do not believe that this group of amendments is exactly the same as those discussed earlier.
  Baroness Hollis of HeighamThe answer will still be the same.
  Baroness NoakesThe noble Baroness said that the answer would be the same, but I am afraid that I shall have to test her patience. I did say that I knew that I would risk incurring her wrath and I shall now do so. We are not talking about the earlier clauses but the financial support directions and when they can be issued in Clause 41, which determines the meaning of financial support. These amendments, in particular Amendment No. 125—the others being paving amendments—focus on two problem areas. One is where the employer is willing to pay and the other looks a little more at the degree of liability that can attach.
  New subsection (4)(a) does this by saying that the employer shall be treated as willing to continue funding the scheme so that the calculations under (3)(b) reflect that. I am not sure whether that was exactly the same as the issue debated before, but it seems reasonable that if the employer is prepared to continue to fund the scheme that it would not fall within the ambit of the financial support directions.
  New subsection (4)(b) takes a slightly different approach, because it ensures that a person's liability is restricted by a formula that will reflect the extent of the person's association with the employer, using an association percentage, dealt with later in Amendment No. 136 by my noble friend Lord Skelmersdale, which restricts liability, either by reference to an ownership or benefit connection. The two amendments try to constrain the way in which financial support directions can apply—not to challenge the principles themselves, but to say that in certain situations they should not apply due to willingness to pay or that they would be constrained by reference to the connection between the person involved and the pension scheme. I beg to move.
  Baroness Hollis of HeighamAmendments Nos. 122, 124 and 125 are similar to Amendment No. 103, which we have already debated, and similar to Amendments Nos. 128 to 130, which we are to discuss shortly. In summary, the amendment moved by the noble Baroness limit the regulator's discretion in determining what financial arrangements the regulator can require a person to put in place where a party other than the employer triggers the wind up of the scheme and where the employer is willing to fund the scheme on an ongoing basis.

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  As I have already said in the previous discussion on Amendment No. 103, the Government's view is that the full pension promise should be met regardless of who decides to wind up the scheme. If a scheme is being wound up, it is being wound up. With those assurances that the scheme's status will be taken into account, I ask the noble Baroness to withdraw her amendment.
  4.45 p.m.
  Viscount TrenchardPerhaps I may ask an additional but related point. I fully sympathise with my noble friend's amendment, which, again, I see as securing greater clarification of the ambit within which the regulator can operate. But why does subsection (2)(b) refer to the holding company of a group and,
  "a company which meets prescribed requirements",
  and why do the Explanatory Notes explain that "prescribed requirements" include the requirement that the ultimate parent company must be incorporated in a European Union country?
  To return to the examples used earlier by the Minister, if Vast is a German company, perhaps it can be caught, but if it is incorporated in, for example, the United States or Japan, it seems that it will not meet the prescribed requirements and therefore will be outside the scope of freedom of action of the regulator.
  Baroness Hollis of HeighamI shall need to take advice on that. Obviously the guarantees cannot be enforced outside the EU as easily as they can inside the EU. In the case of Vast, another company in the group could be the ultimate guarantor. In other words, if the holding company were in Japan with other companies within Germany and the UK, the company in Germany could be held responsible. If I am able to amplify that in any way in writing, I shall do so.
  Baroness NoakesI am sorry that the noble Baroness took the view that she did. I think that we should take away this matter and look at it again. We did not dream up these amendments for the purposes of irritating the noble Baroness; they came from one of the interest groups which had particular concerns about this matter.
  Baroness Hollis of HeighamI was not complaining about that. This matter is entirely in the hands of the Opposition, but my personal view is simply that amendments which deal with the same issue should have been grouped. We could have dealt with this matter when we debated the previous related amendment because it covered the same theme. Given the number of amendments that the Opposition have tabled and their opposition to a number of clauses stand part, it seemed sensible to deal with an issue and move on to the next rather than, as in this case, revisiting the same issue two or three times at different stages in the debate. That is why I sought to expedite the proceedings of the Committee.
  Baroness NoakesI understand what the noble Baroness is saying. I thank her for that. We still believe
  GC 260
  that a serious issue arises as to the way in which the Bill applies to companies which are willing to pay or which have only a tangential relationship with the pension debt. That is a big issue that needs to be explored. It may well need to be explored in several places in the Bill, but it is doubtless a matter to which we shall return on Report. However, for today, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Skelmersdalemoved Amendment No. 123:
  Page 29, line 37, leave out paragraph (d).
  The noble Lord said: I have already talked about the draftsman making my hackles rise, and I am afraid that he has done it again. This is an amendment to the belt-and-braces subsection (2)(d). It allows an afterthought but there must be some limit to the afterthoughts here. What do the Government consider might be necessary in this case? I beg to move.
  Baroness Hollis of HeighamThis goes back to a point raised by the noble Lord, Lord Skelmersdale, fairly early in our proceedings—possibly the first day of Committee—with which I heartily agreed. He said, and we agreed, that the tighter the description on the face of the Bill, the easier it will be to get around it. I think that the noble Lord, Lord Skelmersdale, thought that X and Y would not last for long because he could see ingenious ways of getting around it.
  Regulations enable the regulator—in this case, when dealing with financial support directions—to produce regulations within the framework of the policy intent of the Bill without coming back via primary legislation. Many highly paid professionals will find ways of avoiding the encumbrance of some of the regulations, and the regulator may wish to catch them. Regulations are not only about prescribing detail; to some extent, they provide clothes that are too large for the Bill at the time but they produce something that the Bill can grow into as practices develop. This is such a situation.
  Lord SkelmersdaleI think I am grateful to the noble Baroness. Of course, I recall what I said during the first day of Committee. Certainly at one point I said that I am sure we shall revisit this matter in four or five years' time. Paragraph (d) enables the situation to be dealt with far more quickly than that, should the need arise.
  However, I wondered—I did not receive a satisfactory reply—what might be necessary currently and not as the situation develops three years down the line or whatever. Clearly, the noble Baroness does not know the answer and, with that, I am content to leave—
  Baroness Hollis of HeighamWe are saying that we have not foreseen all the circumstances in which the regulator may need to exercise his power. That is not unusual, and I am surprised that the noble Lord is surprised.
  Lord SkelmersdaleI am entitled to be as surprised as I like. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 124 and 125 not moved.]
  Clause 41 agreed to.
  Clause 42 [Contribution notices where non-compliance with financial support direction]:
  Lord Skelmersdalemoved Amendment No. 126:
  Page 30, line 26, after "person," insert—
  "( ) any relevant facts or circumstances that are specific to the employer or the scheme concerned, including industry codes of practice,"
  The noble Lord said: Much of the Bill is written in terms of a worst-case scenario, and it is absolutely right that it should be. However, I gather that pensions providers have decided a whole lot of rules for themselves. The amendment uses the term "industry codes of practice", for want of a better expression. Those have already been given a nod and a wink from OPRA and there is no reason on earth why the regulator should not also recognise them. If they have been lived up to, the regulator will no doubt be far more lenient than if they have not. Obviously I have no problem with that; nor do I have a problem with the regulator becoming involved with industry in producing such codes of practice. So often the industry works faster than the Secretary of State, the department, the regulator or any quango or civil servant.
  In Amendment No. 127, I suggest that the contribution notices should specify a time limit. However, we have already been through that and I do not expect the noble Baroness to respond to this amendment. But I should be grateful for an answer to Amendment No. 126. I beg to move.
  Baroness Hollis of HeighamI circulated a little hand-list earlier. This amendment is identical to Amendment No. 112, which we discussed previously. I said then that I had sympathy with the purpose of the amendment, which was to ensure that the regulator takes into account the circumstances of all directly affected parties, as set out in Clause 94. I think that we already do that.
  I also said that I was sympathetic to the regulator considering relevant codes of practice. I asked the noble Lord, Lord Higgins, whether he had any in mind. He did not, but it was agreed that if he could find some, he would send them to me during the summer. I await the arrival of a bumper postload with interest. It is possible that others may have examples.
  As I said, we shall certainly consider the matter during the summer. If there are any relevant codes— we are not aware of any but that may reflect my lack of information on the subject—we shall be glad to see them. My answer is exactly the same: if such circumstances exist, we shall be happy for them to be taken on board. However, we are not yet aware of such circumstances; nor have we received any evidence of them. But I am happy to receive them if there are any.
  Lord SkelmersdaleAgain, I am very grateful to the Minister. During the summer, we shall see where we are at. August will obviously be a busy month for all three of us, or possibly all four of us. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 127 not moved.]
  Clause 42 agreed to.
  Clause 43 [The sum specified in a section 42 contribution notice]:
  Baroness Noakesmoved Amendment No. 128:
  Page 30, line 36, at beginning insert "Subject to subsections (4)(b) and (6),"
  The noble Baroness said: I shall move the amendment so that I can speak to it, but I am conscious that it concerns the same territory as Amendments Nos. 122 to 124, which we discussed a moment ago, and certain amendments that we discussed on the previous occasion.
  The amendments in this group pick up the points about willingness to pay and restricting the amount that can be covered by a contribution notice to a relevant amount based on a connection that can be established with the person who is being asked to pay. Does the Minister consider it right that that should be taken into account, or should we simply leave it wholly to the regulator's discretion when issuing a contribution notice under Clause 42?
  The amendments deal with Clause 43, but I am discussing whether these matters are covered by the discretion given to the regulator in subsection (4) of Clause 42. Should the regulator take account of willingness to pay and the nature of the connection between the person to whom the notice is to be issued and the debt, or should that be left wholly to the regulator's discretion? This relates to the degree of certainty or uncertainty that will prevail in the business world.
  I move the amendment to seek guidance from the Minister on whether she believes that it is reasonable that these provisions should require the regulator to take into account matters such as willingness to pay because the drafting does not require him so to do. I beg to move.
  Baroness Hollis of HeighamI wish to make a distinction between who is triggering the wind-up and whether the scheme is in wind-up. When determining the amount of liability imposed by the contribution notice, the regulator will have to take into account whether the scheme is in wind-up or subject to an assessment period. However, it is irrelevant who decided to wind up the scheme. For it to be otherwise would be to penalise members.
  I believe that many of the noble Baroness's remarks deal with a pre-wind-up situation. I wonder whether that is the difference between us. Clearly the regulator is anxious to ensure that the pension promise is met for employees. If the company is solvent and it suits the parties concerned to wind it up in the sense that a full buy-out of liabilities can be met, that may be the appropriate way forward. If that wind-up has been generated by some other party, that is irrelevant. What matters is whether the wind-up is the best way of protecting the employees' interests, not who triggered it.

  GC 263
  Given that, I am not sure that there is all that much between us. Clearly, if the regulator believes that it is in the best interests of the company to continue the scheme, the employer is willing to continue it and there is a reasonable funding contribution, that is fine. However, by the time you have gone into wind-up, it seems to me that you have already gone through that territory—you are in the last stage. The regulator is seeking to ensure that the pension promise is met through the company being solvent and having the capacity to pay the liabilities that will possibly fall due—in some cases many years hence—by buying deferred annuities and so on, rather than that scheme coming to the PPF. I wonder how much difference there is between us. No one wants to wind up a scheme if it can continue. Equally, it may be appropriate to wind it up and protect the liabilities. The individuals may have moved on to another job knowing that that the scheme is secure because there is a deferred annuity.
  From our point of view, it does not matter who has triggered the wind up. Therefore, I wonder whether there is as much difference between us as the noble Baroness seems to think.
  5 p.m.
  Baroness NoakesI thank the Minister for that reply. I shall certainly consider it carefully when I read it in Hansard. Based on the submissions that we have heard from outside parties, it is my understanding that it is likely to cause a problem for those who are happy to continue paying. It may well be the way in which the discretion is phrased, or it may not. I am happy to take this matter away and to see to what extent there is a difference between us.
  Baroness Hollis of HeighamI should have said that the employer may be willing to continue paying but the amount he may be willing to pay is unrealistic, inappropriate or not sufficiently substantial. I should have made that qualification. Subject to that, I doubt very much whether there is any difference between us.
  Baroness NoakesI take the point about the willingness to pay an insufficient amount. That was not the ground on which I was trying to stand. I was trying to stand on the ground where the employer was seeking to pay a proper or reasonable amount. As I said, I shall take this away and look at it again to see whether the area of difference between us is as large as I had thought it to be. If it is, we can return to it again on Report. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 129 and 130 not moved.]
  Lord Skelmersdalemoved Amendment No. 131:
  Page 31, line 17, at end insert—
  "( ) If the person to whom the contribution notice is issued is an individual, the sum specified in the contribution notice shall not exceed the actual amount of any personal gain that he has acquired to the detriment of the scheme as a direct and intended consequence of the circumstances giving rise to it."
  GC 264
  The noble Lord said: I hope that Amendment No. 131 is self-explanatory. It asks a very simple question, the background to which is that the object of the whole exercise is to bring a pension fund up to a state in which it is capable of fulfilling the promises that the rules of the scheme made to the miscellaneous employees. If it does that, no matter how it got into difficulty in the first place, I believe that no fine should be involved in the determination, and I should be grateful if the noble Baroness could tell me that that will be the case. I beg to move.
  Lord Oakeshott of Seagrove BayWe do not support the amendment. I should have thought that it would be very difficult to prove the exact amount of personal gain or to prove that it is detrimental to the scheme and a direct and intentional consequence. We think generally that this is fettering the regulator too much.
  Lord BorrieThat seems to be right. Under Clause 42, the regulator is already required to behave in a reasonable manner. The various provisions listed in subsection (4) include that he must take into account the financial circumstances of the person on whom the contribution notice is issued. I shall not read out the other points. It seems rather unnecessary to have this provision.
  Baroness Hollis of HeighamThose are my views precisely. We are not unsympathetic to the push behind this matter but we believe that it is adequately covered. The regulator must take into account, in particular, the degree of involvement in the act and the financial circumstances of the person. I think that we are back to Amendment No. 112. As I said, if the noble Lord thinks that there is an issue here which we have not picked up, I shall be happy to explore it, but we believe that it is simply not necessary.
  Lord SkelmersdaleI take the point about Amendment No. 112 on Clause 36 that we discussed earlier. I am asking something rather different. The object of the exercise must surely be to make up the pension fund to a state at which it can live up to its promises. We have established that that is the last plank in the arrangements for it to be made to do so. Over and above that, is there to be a fine on the perpetrator? That is the question that I asked.
  Baroness Hollis of HeighamAgain, when we were discussing Amendment No. 112, I wondered whether that was what the noble Lord was getting at. He asked me specifically whether there was a punitive element to any of this. I gave the assurance that there was not, and that remains my answer.
  Lord SkelmersdaleI am grateful.
  Baroness Hollis of HeighamObviously, that is subject to an offence not having been committed to which the fine could be attached.
  Lord SkelmersdaleI beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 43 agreed to.
  Clause 44 [Content and effect of a section 42 contribution notice]:
  Baroness Hollis of Heighammoved Amendment No. 132:
  Page 32, line 6, after "for" insert "the debt in respect of"
  On Question, amendment agreed to.
  Clause 44, as amended, agreed to.
  Clause 45 [Section 42 contribution notice: relationship with employer debt]:
  Baroness Hollis of Heighammoved Amendments Nos. 133 and 134:
  Page 32, line 12, after "person" insert "("P")"
  Page 32, line 37, at end insert—

  "Where a sum is paid to the trustees or managers of the scheme or, as the case may be, to the Board in respect of the debt due under section 75 of the 1995 Act, P may make an application under this subsection to the Regulator for a reduction in the amount of the sum specified in P's contribution notice.

  An application under subsection (7) must be made as soon as reasonably practicable after the sum is paid to the trustees or managers or, as the case may be, to the Board in respect of the debt due under section 75 of the 1995 Act.

  Where such an application is made to the Regulator, the Regulator may, if it is of the opinion that it is appropriate to do so—

  reduce the amount of the sum specified in P's contribution notice by an amount which it considers reasonable, and

  issue a revised contribution notice specifying the revised sum.

  For the purposes of subsection (9), the Regulator must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—

  the amount paid in respect of the debt due under section 75 of the 1995 Act since the contribution notice was issued,

  any amounts paid in respect of the debt due by virtue of that contribution notice,

  whether contribution notices have been issued to other persons in respect of the same non-compliance with the financial support direction in question as the non-compliance in respect of which P's contribution notice was issued,

  where such contribution notices have been issued, the sums specified in each of those notices and any amounts paid in respect of the debt due by virtue of those notices,

  whether P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

  such other matters as may be prescribed.

  Where—

  P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

  a revised contribution notice is issued to P under subsection (9) specifying a revised sum,

  the Regulator must also issue revised contribution notices to those other persons specifying the revised sum and their joint and several liability with P for the debt in respect of that sum."

  On Question, amendments agreed to.
  Clause 45, as amended, agreed to.
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  Clause 46 [Sections 39 to 45: interpretation]:
  Lord Skelmersdalemoved Amendment No. 135:
  Page 32, line 39, leave out "39" and insert "35"
  The noble Lord said: I am afraid that I cannot be quite as brief as I was in speaking to the last few amendments. With this amendment, we are seeking to distinguish between two different kinds of situation: one where the person being made liable is acting in a way that is consistent with the scheme continuing to be funded on an ongoing basis—that is, "blameless"— and one where, in effect, he is trying to prevent continued ongoing funding. We have already established the situation relating to fines but this is rather different.
  For the distinction to work, clearly I need to explain what is meant by "funding on an ongoing basis", and that is why subsection (4) is included in the amendment. The rationale for distinguishing between "blameless" and "not blameless" cases is that if the person is blameless, the level of liability should not, and, indeed as we now know, will not be calculated punitively.
  Baroness Hollis of HeighamIs the noble Lord dealing with Amendments Nos. 135 and 136 together?
  Lord Skelmersdale: Yes.
  Baroness Hollis of HeighamOn the list that I have, they have been ungrouped. As I think the noble Lord rightly suspected, Amendment No. 135 is meaningless without Amendment No. 136. Therefore, we are talking about the two amendments together and not separately as shown on the groupings list.
  Lord SkelmersdaleAbsolutely. I am afraid that a gremlin has obviously crept into the system. Clearly, as the noble Baroness said, Amendment No. 135 is a paving amendment for Amendment No. 136.
  It is necessary to ascertain the degree of blamelessness to ensure that the person's liability is not disproportionate to the degree of association between that person and the employer—a subject that we partially covered in earlier amendments. I should also be grateful if, at some stage, the noble Baroness would indicate how liability might be calculated. I suspect that she will not be able to do so now because the explanation will be very complicated and will need to be written down.
  The purpose of new subsection (5) is to clarify what kind of conduct constitutes,
  "inconsistent with a scheme continuing to be funded on an ongoing basis".
  Subsections (6), (7) and (8) describe how one measures the degree of association between the person being made liable, to whom we have given the initial A, and the employer concerned, B. How it works I am not entirely sure, but by this formula we are trying to take due account of the fact that A may have had only a very short-lived association with B when seen in the context of the period over which B's overall pension liabilities have built up. New subsections (7) and (8) also seek to cover the possibility that the degree of

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  association between A and B may have varied over the course of time. I would hope that that would go into the regulator's calculation when he reaches this last plank that is still being discussed. I beg to move.
  Baroness Hollis of HeighamEssentially, there are two parts to Amendment No. 136, and I shall deal with them in reverse order. The second part deals with the percentage amount for which each individual person may be liable in the event that contribution notices or financial support directions are issued to more than one person in respect of the same debt.
  I understand the concern behind the amendment. We will take it away over the summer but certainly at this stage we are not into the "percentage game", as the noble Lord will understand perfectly well, so I shall not now go back over that territory. I understand the need for clarity and certainty as far as possible.
  I do not know whether the noble Lord intends this and obviously I can respond only to the amendments as drafted, but the proposed new subsections (4) and (5) in Amendment No. 136 would have the effect of ensuring that if the pension scheme of a solvent employer were to be wound up by a person other than the employer, the full buyout provisions would not apply to that employer.
  I am sure that that cannot be what the noble Lord intends—that by finding someone else to wind up the scheme you reduce your liability when there is a capacity to meet that liability. That is what the amendment does. Therefore, I have already said that the Government consider it entirely appropriate that a pension promise made should be a pension promise honoured. That is why we are introducing the PPF and the full buyout provisions on winding up when the sponsoring employer remains solvent so that liabilities do not inappropriately and unnecessarily fall on the PPF.
  I am not sure whether the noble Lord's understanding of the amendment is the same as mine. However, given the advice I have had, that would be the effect, which I am sure is not one which the noble Lord would want to see. On that basis, I wonder whether he would perhaps like to take it away and reconsider it before Report.
  Lord SkelmersdaleWe spent quite a lot of time in the debate on the first amendment today on the law of unintended consequences, which clearly comes into play in new subsection (4) of this amendment. Of course it was not intended to do that. The noble Baroness is quite right to slap my wrist.
  However, I am grateful that during the summer the noble Baroness will add to her list of things to consider those that we have put into the subsequent subsections on the amendment. On that basis, I am happy to beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 46 agreed to.
  [Amendment No. 136 not moved.]
  Clauses 47 and 48 agreed to.
  Clause 49 [Content and effect of a restoration order]:
  On Question, Whether Clause 49 shall stand part of the Bill?
  Baroness BarkerWe have one question for the Minister, and if she does not have the answer to hand, perhaps she will write to me. Is there a minimum time in which a person would be allowed to comply with a restoration order in subsection (2), or would it have to be complied with at once? We are not clear about this.
  Baroness Hollis of HeighamThere is always a problem when one is dealing with a question that comes up under clause stand part, because one has not had the time to research the appropriate answers. I am assured that there is a minimum time, which would depend on each individual's circumstances. I shall certainly write to the noble Baroness with some examples.
  Clause 49 agreed to.
  Clause 50 [Contribution notice where failure to comply with restoration order]:
  On Question, Whether Clause 50 shall stand part of the Bill?
  Lord SkelmersdaleI apologise for this, but Clause 50(3) says:
  "The sum specified by the Regulator in a contribution notice may be either the whole or a specified part of the shortfall sum in relation to the scheme".
  I assume that this is to allow for payment by instalments. In other words, it could be unreasonable in certain circumstances to expect the employer to make up the deficit in the pension scheme in one fell swoop. I assume that the provision recognises that instalments will be necessary. I would be grateful if the noble Baroness could let me know at some point, and I apologise for bouncing her.
  Baroness BarkerPerhaps the noble Baroness could use the letter she said she will write to answer another, similar question. How much time will there be between a non-compliance event and the issue of a contribution notice? No time limits are specified anywhere in the clause.
  Baroness Hollis of HeighamThe reason that I was getting another file is because this clause is a consequence of Clause 47, which has already been agreed. That is why I was going back. Given that Members of the Committee wish, perfectly reasonably, to press me on what Clauses 47 to 51 do, perhaps it is worth saying something about them.
  The clauses are designed to protect the pension protection fund against actions taken that reduce the assets in an eligible scheme which may, because of the insolvency of the employer, be taken into the PPF. Clause 47 allows the regulator to issue a restoration order directing that the position of the scheme be restored where that scheme has entered into a transaction at an undervalue within a two-year period leading up to an insolvency event, as set out in Clause 115, or an application notification under Clause 121.

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  A transaction at an undervalue is exactly what it says—a transaction involving scheme assets which results in the scheme receiving no consideration, or consideration which is less than the market value, in return. This could include, for example, trustees being persuaded to purchase a property on the basis of planning permission for a development which does not actually exist; or a director of a company persuading trustees to offer him a transfer on a very generous basis to prevent his benefits being reduced by the compensation cap, should the scheme enter the PPF.
  Within insolvency legislation, there is currently provision retrospectively to undo transactions at an undervalue, involving company assets which occur in the run-up to insolvency. These clauses introduce similar provision in respect of transactions involving scheme assets in order both to protect the scheme members from having the assets of their scheme unfairly depleted and to guard against the possibility of the PPF having to assume responsibility for such schemes where it otherwise would not have done so.
  The power to issue a restoration notice or order is reserved to the determinations panel and exercised by standard procedure. It is also subject to the powers to vary and revoke contained in Clause 95.
  In line with Clauses 35 to 38, which give the regulator power to issue contribution notices where there has been evidence of avoidance of employer debt, the power to issue restoration orders where there is a scheme transaction at an undervalue will apply to actions taken after 11 June 2003 when the proposal to introduce the PPF was announced. This ensures that where a transaction at an undervalue has taken place since that date, when my right honourable friend the Secretary of State clearly warned that we would have to introduce protection against engineering designed to circumvent the intent of our proposals, the scheme's position can be restored. When we discussed a similar issue earlier, I was able to quote Mr Willetts and Mr Webb, who both endorsed the need to protect what is basically a closing-down sale before dealing with the situation.
  That is the point of the restoration orders. Clause 50 is, in that sense, pretty much consequential upon Clause 47. I wonder whether I have met the noble Lord's points by retrospectively revisiting Clause 47.
  Lord SkelmersdaleI am grateful to the Minister. As I have said several times, the trouble is that the Bill is drafted in such a topsy-turvy way that one is always looking backwards or forwards or, on many occasions such as during the passage of the Pensions Act 1995 or the Welfare Reform and Pensions Act 1999, looking sideways. Therefore, it seems sensible to take the clauses in the order in which they are set down in the Bill, wherever that may subsequently take us in relation to either the questions or the explanations.
  I am not sure that the noble Baroness answered my primary question: what about instalments? They do not necessarily apply to a restoration order, but they do apply to the other orders that we have been discussing on these clauses.
  Baroness Hollis of HeighamObviously, if it is possible to make good the shortfall in the scheme by a reasonable pattern of payments so that it is appropriately met, that is no problem. But it may be that, by this stage, we have gone past that moment. Bluntly, I think that the structure that we are setting up would fail if at the 59th minute of the 11th hour there was suddenly a capacity to pay by instalments. That issue should have formed part of the good-faith negotiations much earlier on either to prevent the scheme being wound up or to prevent the risk of the company becoming insolvent.
  In that sense, I am not sure that a question concerning a restoration order should be asked at this point, where a company is seeking artificially to reduce its assets by playing games with valuations or land or whatever so that it may then not need to go into the PPF. In various ways, we are seeking to gain access to other assets within the company group where appropriate under mergers and acquisitions or we are seeking to gain access to some of the assets—for example, property such as land and so on—into which the pension scheme money has been turned.
  Although the lawyers will probably shout at me, at that stage, I would make an assumption of bad faith and of a deliberate running down of, or playing games with, available assets in order to reduce liabilities. Certainly, at that stage I should be quite surprised if the employer suddenly popped up and said, "Oh well, we can make this good by instalments". If that discussion was decent and honourable, it should have occurred 17 or 18 stages further back down the line. However, I suppose that it is possible for that to happen and the regulator may believe that, as a result of either a merger or acquisition, the situation has changed and it is now reasonable to make instalments. However, the assumption here is that it is a once-and-for-all, make-good order. If the regulator had good grounds, presumably he would have the power to revisit the situation.
  On the question of timing raised by the noble Baroness, I may be able to add to the answer that I gave her. What counts as "reasonable notice" will depend on the circumstances. For example, if the transaction involved land, by definition, it might take time to turn the land into a realisable asset. Therefore, once the time for compliance has ended, the regulator may issue a non-contribution notice. That would not happen immediately as both those powers would have to be exercised with a determinations panel. Therefore a warning notice would be given.
  The vocabulary that we continue to use includes the words "balance" and "tight rope" and so on. We are trying to ensure that we hold fast to the assets which should properly go into the scheme without them being disposed of. We are also trying to ensure that we provide enough time for the assets, which may have been disposed of, to be brought back into the scheme in order to meet its liabilities. Clearly, the length of time that that takes will depend on what type of asset the money has been—I was going to say "laundered"—transmogrified into.

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  I think that this matter will have to be left to the judgment of the regulator. But I do not doubt that, if it is appropriate, the industry will encourage the regulator to consider codes of guidance—in some cases, they may be codes of practice—to describe some of the situations intended here. Behind all this is an assumption that the assets will have been deliberately run down. There are various ways to do that, and therefore the presumption is that we are not necessarily dealing with companies acting in good faith.
  Lord BorrieIn an attempt to be helpful but also brief, I have the feeling that the most obvious interpretation of subsection 50(3) is that the regulator on a once-and-for-all basis says either that the whole of the shortfall should be paid or that a specified part of it should be paid. I have been thinking about the more imaginative interpretation of the noble Lord, Lord Skelmersdale, since the moment he mentioned it, not having thought of it myself. That may be a possibility but it certainly is not the most obvious intention of this clause.
  Lord SkelmersdaleI do not want to delay the Committee but clearly, if the regulator insists on a specified sum he could subsequently insist on a second specified sum.
  Baroness Hollis of HeighamNo—
  Lord SkelmersdaleIt does not say that he cannot.
  Baroness Hollis of HeighamI think that he can specify a sum less than the full sum. I do not think that he can then go on to specify a subsequent sum in addition to top up at some later stage. In my view, that would not preclude the regulator breaking down the pattern of payment if he thought it appropriate. However, it seems to me that it would be very unlikely at this stage that he would think it appropriate because that is the sort of discussion, in good faith, that should have gone on many stages earlier.
  Lord SkelmersdaleI take the point.
  Clause 50 agreed to.
  Clause 51 agreed to.
  Clause 52 [Regulator's right to apply under section 423 of Insolvency Act 1986]:
  Baroness Hollis of Heighammoved Amendment No. 137:
  Page 37. line 40, leave out from "debtor" to "subsection" in line 42 and insert—

  "has been adjudged bankrupt,

  is a body corporate which is being wound up or is in administration, or

  is a partnership which is being wound up or is in administration,"

  The noble Baroness said: This clause is designed to give the regulator the same standing as an insolvency practitioner to pursue debts due to a pension scheme by reason of transactions made at an undervalue—the issue we have just discussed.
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  The regulator may apply to the court under Section 423 of the Insolvency Act 1986 if he can show that employer assets were sold at an undervalue for the purpose of putting assets beyond the reach of the pension scheme—the bad faith issue we just discussed—or of otherwise prejudicing the interests of the scheme.
  The application to the court can be made only in two circumstances. One is where the PPF board has obtained an actuarial valuation of the fund which outlines the assets and the protected liabilities of the scheme and the assets are not sufficient to meet those liabilities at the time of the insolvency. By way of reminder, protected liabilities are the cost of benefits for members to the level which would be paid by the PPF, non-member liabilities of the scheme and the estimated cost of wind-up.
  The other circumstance is where the trustees or managers of the scheme have obtained an actuarial valuation and the scheme funding objective is not being met. Any applications by the regulator under Section 423 are treated as being made on behalf of the victims of the transaction, that is, the trustees, members of the scheme or the pension protection board.
  The amendment ensures that the references to "administration" in subsection (5) are consistent with the current Insolvency Act, which was amended by the Enterprise Act 2002. As originally drafted, it referred to the version of the Insolvency Act before it was amended by the Enterprise Act rather than the revised version after the amendments were made. So, the amendment seeks to bring the drafting up to date, but I thought it might be helpful to the Committee to explain why we needed to do it. I beg to move.
  On Question, amendment agreed to.
  Clause 52, as amended, agreed to.
  Clause 53 [Register of occupational and personal pension schemes]:
  Lord Skelmersdalemoved Amendment No. 138:
  Page 38, line 14, at end insert—
  "( ) A scheme registrable under subsection (1) must be notified to the registrar within 6 months of being created."
  The noble Lord said: I suspect I will be told that we have already covered this, but I am not entirely sure that we have. As we know, the whole point of creating the regulator is for him to keep a watching brief on the pension schemes, usually but not exclusively of any other type than a money purchase scheme.
  In the first three years he will clearly have had the enormous job—how can I put it—of tidying OPRA's register. That would probably be the best way to explain it. There is already a register of some 20,000 schemes which the regulator will have to satisfy himself is complete and correct in every respect. He will also have to establish what additional information he initially wants for each of the schemes. That is one hell of a job. I do not envy the regulator at all. I have tabled a later amendment which suggests that that is divided into steps. I cannot currently find the amendment number, but we will get to it in due course.

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  The point of Amendment No. 138 is that new employers, and therefore new schemes, come along all the time. It is important that the registrar is not only aware of them but has them on the register. The amendment may be in the wrong place in the Bill, but surely a duty to register new schemes should be required somewhere in pensions legislation. It may not even be in this Bill and I may have missed it in one of the previous Acts, particularly the 1995 Act. I am not entirely sure. I should be grateful if the noble Baroness could tell me. I beg to move.
  5.30 p.m.
  Baroness Hollis of HeighamLet me answer that last direct question and see whether that is sufficient for the noble Lord. I direct his attention to Clause 56(1), (2) and (3). Those subsections impose a time period of three months. The noble Lord was pressing me on why there was no requirement to notify within six months, as a reasonable offering. That is not needed because we have specified a period of three months in a subsequent clause. That deals with the noble Lord's point. I do not know whether there is anything further that he wishes to push me on. In which case I shall sit down.
  Lord SkelmersdaleI am very grateful. In leaping around the Bill one sometimes has mental gaps. This has clearly been one of mine. That is exactly what I wanted to know.
  Lord Oakeshott of Seagrove BayI apologise; I wanted to ask one question on Clause 53(5). It states:
  "Information recorded in the register must be so recorded in such manner as the Regulator considers appropriate".
  That obviously is the blankest of blank cheques and raises possible concerns about data protection. Will there be any kind of provision or would the Minister be prepared to consider any provision whereby the Secretary of State has some responsibility for monitoring that and perhaps reporting from time to time to Parliament on it? Clearly one wants to ask about data protection in issues drawn as widely as that.
  Baroness Hollis of HeighamI think that the emphasis is on the word "recorded". This is a trivial point, which is simply that we want comparable information that can go on to a database. It is not a question of what information, but that the information recorded in the register must be recorded in such a manner as the regulator considers appropriate. The push there is to ensure a common pattern of entry of information on to the database. It is nothing more than that.
  Lord SkelmersdaleI beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 53 agreed to.
  Clause 54 agreed to.
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  Clause 55 [The register: inspection, provision of information and reports etc]:
  Lord Skelmersdalemoved Amendment No. 139:
  Page 39, line 38, at beginning insert "Subject to subsection (7),"
  The noble Lord said: First, I should apologise to the Committee that I did not spot earlier that somewhere along the line the words "shall be" have gone AWOL in Amendment No. 142. They should appear after the word "Regulations". Amendments Nos. 139, 140 and 142 are grouped together. Amendments Nos. 139 and 140 are paving amendments for Amendment No. 142.
  Baroness Hollis of HeighamWhich amendment are we dealing with?
  Lord SkelmersdaleAm I still confusing the noble Baroness?
  Baroness Hollis of HeighamYes. I do not have the amendment. I apologise.
  Lord SkelmersdaleIn that case, I shall expand a little more than is my normal wont. Amendment No. 142 seeks at page 40, line 21, at end to insert a new subsection (7). There are two words missing, which are the words "shall be" after the word "Regulations" at the beginning of the new subsection. I had hoped that the office had informed the department of these amendments, or perhaps it guessed because clearly without the words the amendment does not make sense.
  Two things concern me in Clause 55. First, subsection (1) only provides a power to regulate to enable inspection and so on of the register. I believe that there should be a duty to regulate to enable such inspection and so on in respect of the specific information mentioned in the last line of the amendment; that is, registrable information except for individual trustees' or managers' names and addresses.
  Secondly, is there any reason why the names and addresses of individual trustees and managers under Section 54(2)(c) should be revealed? It seems to me that the regulations could well reveal potential terrorist targets, not obviously of the 9/11 type, but, for example, Huntingdon Life Sciences Company, where there was ongoing persecution by the animal rights lobby. I believe that one should think about the matter. I beg to move.
  Baroness Hollis of HeighamI am again at a disadvantage. Certainly my understanding of Amendments Nos. 139, 140 and 142 does not conform to the speech made by the noble Lord. It may be useful if I spell out why the clause is drafted in this way and see whether that addresses the concerns of the noble Lord.
  Lord SkelmersdaleI introduced the amendment by saying that there should be a change from a power to a duty to regulate to enable the various things in

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  subsection (1) to take place. Perhaps the noble Baroness could explain what subsection (1) means and does. That would be helpful.
  Baroness Hollis of HeighamClause 55 provides the power for regulations to be made relating to the provision of information recorded in the register of pension schemes and extracts from the register or copies of the register. The Secretary of State may by virtue of this clause direct the regulator to produce reports, which may be published, concerning the information held in the register, including the operation of the regulator's functions in relation to the register. That will enable the Secretary of State to be provided with statistical information about pension provision generally and to inform and assist future policy development.
  I do not know whether the noble Lord is anxious about the Delegated Powers Committee. It was concerned with the provisions of subsection (3), which would enable regulations made under subsection (2) to modify Clause 76, relating to the disclosure of restricted information. Given that the noble Lord was concerned about the trustees of the Huntingdon Life Sciences Company and terrorists and so on, I sense that he might be.
  There is nothing sinister about the provision. The data protection rules continue to apply within the provision. The regulation-making powers in subsection (2) will enable the Secretary or State or his agent to provide a pension tracing service. This function is currently undertaken by OPRA in its role as the registrar of pension schemes. The service enables those who have lost touch with old pension schemes to trace them and to find out what additional pension provision is available to them. Last year OPRA succeeded in providing contact addresses for over 25,000 requests. The scheme is vital for helping individuals comprehensively to plan for and to make informed choice about their retirement.
  Clause 76, quite rightly, imposes very strict controls over the ability of the regulator and to any person to whom the regulator has made an authorised disclosure of restricted information to disclose such information to any third party. Anyone who does so is guilty of a criminal offence. The Delegated Powers Committee thought this was an important safeguard.
  The clause takes away the pension tracing service from what was OPRA, and would be the Pensions Regulator, into the DWP because we do not think that it sits sensibly with the other responsibilities of the Pensions Regulator. This connects with concerns in Part 4 of the Bill about planning for retirement, informed choice and so on.
  Some of your Lordships were present when we looked at the informed choice retirement planner. Obviously, for that information one would need access to a pension tracing service so that people can bring
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  into play the available information on existing bits of deferred pension that they may have lost sight of some time previously.
  Lord SkelmersdaleI was not actually going to ask about that. I thought I heard the noble Baroness say that this was not a suitable subject for the regulator. Therefore, it was being given to the organisation to be set up in the next part of the Bill. That surely cannot be right; I must have misheard.
  Baroness Hollis of HeighamOr I may have misstated the position. The pension tracing service, which 25,000 people used OPRA for, is a very useful "relatively low-level service". It may require a high degree of ingenuity. Nevertheless, we think it better sits with the Secretary of State's concern for information, retirement planning and all the other bits that come under Part 4 of the Bill, which we shall come on to discuss. I associated that with the retirement planner. I cannot remember whether that display was held in this Room. It had pretty slides and certainly interested the noble Lord, Lord Freeman.
  That is why we are removing the responsibility from the Pensions Regulator, who otherwise inherits the functions of OPRA, and bringing it over to the DWP. This is a tracing service, which in many ways is not dissimilar to finding out what one's national insurance contributions are, what one's entitlement is to state pension, how many years of added pension one has built up with SERPS or S2P and so on. It is at that level, and better provided by the DWP.
  We think that the costs will be fairly modest. It is a useful piece of—I was going to say "graffiti", but that is the wrong word—low-level mechanical processing, which is best taken away from the regulator because, as the noble Lord will know, the function of the regulator is to seek to identify risk. OPRA has been bedevilled by the fact that it was required to carry on too much low-level activity, such as scheme returns coming in two or three days too late, which accounted for nearly half its complaints. We are trying to clear some of that stuff away from the Pensions Regulator. This is one such example, and nothing more than that.
  Lord SkelmersdaleIs it not lucky that I am not a particularly suspicious or cynical character? Another interpretation would be that this is pure centralisation. But I would not dream of levelling that particular criticism at the noble Baroness on this particular occasion and in this particular circumstance.
  The debate has been helpful, but we still have not got to the bottom of whether the power should be a duty on the Secretary of State, the department or whoever.
  5.45 p.m.
  Baroness Hollis of HeighamThe power of the Secretary of State is the responsibility to operate the tracing service. That is a long way away from the other issues the noble Lord introduced, which is the point on the Huntingdon Life Sciences Company. That is completely different. It is about restricted information, which cannot be disclosed by the

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  regulator unless it is already in the public domain. If it is a disclosure which is not in the public domain it becomes a criminal offence for the reasons the noble Lord identified.
  I am not sure any more what the debate is between us. I think a misunderstanding may have occurred because perhaps there was not a full appreciation that the pension tracing service was coming over from OPRA to the department, for reasons I hope I have explained.
  Lord SkelmersdaleI think that perhaps on this occasion the boot should be on the other foot and that I should write to the noble Baroness. I undertake to do that. For the moment, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 140 not moved.]
  Baroness Noakesmoved Amendment No. 141:
  Page 40, line 20, leave out from "State" to end of line 21 and insert "shall lay before Parliament any report submitted to him under subsection (4)"
  The noble Baroness said: This is a simple amendment in the days of open and transparent government. As the noble Baroness knows, Clause 55(4) says that the Secretary of State can direct the regulator to make various reports to him. But subsection (6) merely says that the Secretary of State "may" publish any report submitted to him under subsection (4).
  Amendment No. 141 deletes that permission to publish and replaces it with a requirement to lay any reports that the Secretary of State has directed before Parliament. I hope that we have not thrown the baby out with the bathwater and that laying the report before Parliament would not preclude any other form of publication. The principle behind the amendment is twofold: first, if the Secretary of State has gone to the trouble to direct the regulator to produce a report, why cannot Parliament see it as well? Secondly, publication should not be left to the discretion of the Secretary of State, but should flow naturally. I beg to move.
  Baroness Hollis of HeighamThe noble Baroness is absolutely right to pick up the point about the discrepancy. The Secretary of State may by virtue of this clause direct the regulator to produce reports, which may be published, concerning the information held in the register—surveys equivalent to those that GAD or NAPF produce. I hope that for the first time we shall have; providing the information is consistently recorded, a firm database on which to extrapolate information which may be of public interest. That may include the operation of the regulator's functions in relation the register. Up-to-date and detailed information from the register will be vital to future policy development.
  Amendment No. 141 seeks to remove the Secretary of State's discretionary power to publish only the reports he considers appropriate, or of particular interest, and requires him to lay all such reports produced before Parliament.
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  Obviously, there will be a presumption that publications will be laid before Parliament where appropriate. I think everyone would agree that the department has a good reputation for openness. But we could—and this goes back to the point about the Huntingdon Life Sciences Company—have a report that contains, for example, the names and addresses of trustees, which it would not be appropriate to make public. In that sense, it might not be appropriate to require the Secretary of State to make that report public, as the amendment would require.
  There could be an issue not only about data protection but also about protected information and so on. I think there is a line to be drawn. In practice, any report of the sort we seek to get from the regulator, which is the broader brush information and so on, will not only be laid before Parliament but—as in the past with Pickering, the National Audit Office report on OPRA, the Quinquennial Review of OPRA and so on—published and placed in the Libraries of both Houses.
  However, there may be situations which come within both data protection and human rights implications where it would not be appropriate. That is why we have that opt-out clause.
  Lord Oakeshott of Seagrove BayI am not impressed with the Minister's reply. I think that the points the noble Baroness, Lady Noakes, makes are absolutely right. The Minister cited specific exceptions. Perhaps she would care to take this back and amend the amendment in that way. But if there are specific reasons, she should change the amendment or bring forward a government amendment reflecting them. Apart from that, it is absolutely right that it should be "will" rather than "should".
  Baroness NoakesI thank the noble Lord, Lord Oakeshott, for his support, and the Minister for her reply. I had reached the same conclusion as the noble Lord, Lord Oakeshott—indeed, I had understood that such a provision requiring the Secretary of State to publish would not override the basic requirements of human rights or data protection legislation. If that is the only problem, I invite the Minister to think about this again and consider an amendment which merely restricted the exclusion from publication to those sensitive areas.
  We need to move into an era where government is more open and transparent and the Secretary of State does not withhold to himself the power to choose whether it is convenient to release information to the outside world or to Parliament. I hope that the Minister will think about this again over the summer. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 142 not moved.]
  Clause 55 agreed to.
  Clause 56 agreed to.
  Clause 57 [Duty of the Regulator to issue scheme return notices]:
  The Deputy Chairman of Committees (Lord Brougham and Vaux)Amendments Nos. 143 and 144 have already been spoken to with Amendment No. 138.
  Lord Skelmersdalemoved Amendment No. 143:
  Page 41, line 18, leave out from "fall" to "and" in line 22 and insert—

  "if the notice was issued by 31st March 2006, within a period of three years, or

  if the notice was issued by 31st March 2007, within a period of two years, or

  if the notice was issued after 31st March 2007, within a period of 12 months,"

  The noble Lord said: If the Committee will allow me, I shall speak very briefly to Amendment No. 143. We have got ourselves into a muddle somewhere. I understood the Lord Chairman to refer to Amendment No. 138, not Amendment No. 143, which I intend to move.
  I have already spoken about the enormous job that the regulator has. I cannot believe that the information required on these notices will all be returned on the same day. The clause provides for a trickle effect, but I find it somewhat lackadaisical—it is not as precise as I think we might reasonably expect.
  The scheme managers have a year to think about their response and then two years to submit it, as we can see in Clause 57(4). This is far too long a time on many occasions, and I propose a more formalised return time. We are almost talking about re-registration at the beginning, and I am content to follow the Bill's proposal of three years because there will be a flood of registrations, re-registrations, checkings and so on. The regulator and the firms will need time to consider them. However, as the flood slows down, three years will no longer be necessary. One year will be quite long enough because the regulator and the scheme managers will know what they are about. I beg to move.
  Baroness Hollis of HeighamThe reason for this flurry of activity was that, as the noble Lord will see from the Marshalled List, Amendment No. 138 is grouped with Amendments Nos. 143 and 144. Therefore, I presumed that it had been spoken to already and thought that I had responded to it. If the noble Lord is now saying that he had intended to degroup it and wanted to address it separately, so be it. I was going back to some of my earlier files to try to identify it. I am in the noble Lord's hands. Does he wish to reopen the issue?
  Lord SkelmersdaleI apologise—I have clearly got myself into a total tangle. I did indeed intend—
  Baroness Hollis of HeighamI think we have discussed this. I will certainly give an undertaking that if industry representatives would find a version of this clarity helpful, I am perfectly happy to look at it.
  Lord SkelmersdaleI am grateful. That is a neat way of getting us out of our difficulty. I hope that I can get my act together for the rest of the afternoon. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 144 not moved.]
  Clause 57 agreed to.
  Clauses 58 to 64 agreed to.
  Clause 65 [Reports by skilled persons]:
  Baroness Noakesmoved Amendment No. 144A:
  Page 46, line 10, at end insert—
  "( ) This section is subject to section 296."
  The noble Baroness said: In moving Amendment No. 144A, I shall speak also to the other amendments in this group. The majority of the amendments owe their provenance to the Scottish Law Society, which I have learned to respect as a source of amendments.
  There are three sub-groups of amendments in this group. The first group, Amendments Nos. 144A, 144B and 144C, amend Clauses 65, 66 and 69 respectively to make them subject to Section 296. Clauses 65 and 66 concern the regulator issuing a notice to obtain reports or information. Clause 69 deals with the powers of inspectors when they inspect premises. Clause 296 is entitled, "Protected Items", and deals with excluded items from disclosure or inspection, which are subject to legal privilege.
  The amendments seek to make it clear in the Bill that the powers in Clauses 65, 66 and 69 are indeed subordinate to the provisions of Clause 296; that is to say that legal privilege will prevail in those instances.
  Amendments Nos. 144D and 148A amend Clauses 70 and 72. Clause 70(6)(a) allows for the retention of documents that have been taken during an inspection of premises until the conclusion of proceedings, and Amendment. No. 144D adds that such retention must be necessary and proportionate, otherwise documents that were not needed could be retained for the full period until the end of proceedings, and that would not be fair, in particular with businesses which may want access to their documents. Amendment No. 148A does the same to Clause 72, which deals with documents retained after being obtained by a warrant.
  The last amendment in this group, Amendment No. 145, also deals with document possession under Clause 70 but here it inserts a new safeguard for the person from whom the documents are taken by requiring the inspector to sign for what he has taken. Ministers will be aware of the importance of documents to businesses. That will ensure that there is clarity about what has happened to documents. I hope that the Minister and, indeed, inspectors, would welcome some kind of formal procedure to avoid later disputes. I beg to move.
  Baroness Hollis of HeighamThese are important amendments covering a number of clauses, which hang together. I can give assurances on the last two points made by the noble Baroness, but it may be better to deal with them as we go through.
  Clause 65 gives the regulator the power to obtain expert opinion and analysis to assist it to exercise its functions. Clause 66 sets out the regulator's ability to collect information which underpins the new risk-based approach to regulation. As I am sure the noble Baroness will agree, it is essential that the regulator have the powers to request information even where there may be some reluctance to comply in order to assess the risk to the scheme members' benefits. I was told this morning—I hope that it is not protected information—that at one stage OPRA went on one of its visits and found a file on the front of which was marked, "To be hidden away from OPRA".
  Lord Oakeshott of Seagrove BayThat was a decoy.
  6 p.m.
  Baroness Hollis of HeighamThese are important amendments which cover a number of clauses that hang together. I can give the noble Baroness assurances on her last two points, but perhaps it would be better to deal with them in the course of my reply.
  Clause 65 will give the regulator the power to obtain expert opinion and analysis to assist it to exercise its functions. Clause 66 sets out the regulator's ability to collect information which underpins the new risk-based approach to regulation. As I am sure the noble Baroness would agree, it is essential that the regulator has the powers to request information, even where there may be some reluctance to comply, in order to assess the risk to scheme members' benefits. I was told this morning—I hope that it is not protected information—that at one stage OPRA found on one of its visits a file that was marked on the front, "To be hidden away from OPRA".
  Lord Oakeshott of Seagrove BayPerhaps it was a decoy.
  Baroness Hollis of HeighamYes. Clause 69 outlines the powers of the inspectors when inspecting premises. When an inspector enters premises which are liable to inspection he may make such examination and inquiry as may be necessary to the purpose for which the premises are entered. The inspector may take possession of any document appearing to be relevant to compliance with the regulatory provisions, or take any steps which appear necessary for preserving the document or preventing interference with it. He may also take copies of any document—and, yes, he will sign for them so that there is a proper paper trail of such activity. To reassure noble Lords I should emphasise that we are talking about inspectors who are, in DWP terms, extremely senior—Grade 7 civil servants or above, who are equivalent to fully qualified tax inspectors. So we are talking about a more modest level of seniority in exercising such powers.
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  Amendments Nos. 144A to 144C seek to ensure that the powers contained in these clauses shall not extend to the disclosure of protected items by adding to it the provisions contained in Clause 296 on protected items. Has the noble Baroness made the cross-reference with Clause 296? There it is made clear, regarding the matter upon which she pressed me, that protected items include,
  "communications between a professional legal adviser, his client or any person representing his client which fall within subsection (3)",
  in connection with the giving of legal advice and so on. That should deal with the point made by the noble Baroness about protected information and legal advisers.
  The phrase "protected item" relates to one that is subject to legal privilege; that is, any communication between a professional legal adviser and his client, or any person representing his client, which is made in connection with the giving of legal advice, and so on. However, this amendment is unnecessary as it seems to be fully covered by Clause 296.
  Clause 70 provides additional provisions in respect of Clauses 67, 68 and 69. An inspector applying for admission to any premises for the purposes of this clause must produce his certificate of appointment if required to do so. Any document relevant to proceedings may be retained until the conclusion of those proceedings where proceedings are commenced before the end of the retention period of 12 months, otherwise to the end of the retention period. The regulator may extend the retention period.
  As drafted, Amendment No. 144D implies that the regulator may abuse its powers. An essential element of the work of the regulator is to focus on protecting the benefits of members of work-based pension schemes, concentrating its effort on schemes where it assumes or assesses that there is a high risk of fraud, bad governance or poor administration. Therefore, Clauses 67, 68 and 69, also prevent the regulator abusing its powers.
  In some situations it is appropriate for staff of the regulator to visit and inspect premises. These are powers that OPRA already has. It may be of interest for noble Lords to know that OPRA has made 12 unannounced visits per year since its inception in 1997. This is a power that is currently being used and I have not come across any suggestion that its powers have been abused. However, although OPRA was able to visit premises and inspect documents, it had no powers to seize or copy documents. That is a lacuna that should never have been permitted in the original legislation in 1995. I and my noble friends present also share culpability for not spotting that at that time. That lacuna has been remedied in Clause 69.
  Amendment No. 145 seeks to ensure that any document seized by an inspector of the regulator will be detailed and an appropriate receipt given. That is what will happen. The regulator will follow best practice guidelines, contained, for example, in Police and Criminal Evidence Act Code B.

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  Clause 72 provides the regulator with the power to apply for a warrant to inspect premises in cases of suspected fraud or in serious breaches of pensions legislation which may have a significant impact on members' benefits. OPRA currently has a similar power to apply for a warrant under Section 100 of the Pensions Act 1995, which it has exercised only 12 times since April 1997—that is entry by use of a warrant as opposed to arriving unannounced. Each warrant that OPRA has applied for has been granted.
  Like OPRA, the regulator will be able to apply for a warrant only in specific circumstances; for example, if it has requested information under Clause 66 that has not been provided, if there is a risk that requesting information would cause it to be destroyed, or if there is evidence of criminal activity.
  Amendment No. 148A would appear to seek to ensure that any document taken from the premises should only be retained provided that retention was necessary and proportionate in the circumstances. The amendment has no purposeful effect because Clause 72 is very specific to the powers afforded to an inspector when a warrant is issued.
  I hope that I have addressed all the issues raised by the noble Baroness in these amendments that cut across those clauses, but, if not, I am sure that she will press me further.
  Baroness NoakesI thank the Minister for that reply. Perhaps I may press her on one or two points of detail, although the drift of her comments is what we were hoping to hear. First, she said that the inspectors would sign for documents. Under what authority would that arise, because it is not under the Bill? Would it apply as a matter of procedure?
  Baroness Hollis of HeighamYes. In practice anyone who took documents without signing for them would be a fool, because there would be no record of where they had been obtained and there would be no paper trail that would stand up in court if a criminal process were to be pursued. Such a practice is required by the Police and Criminal Evidence Act Code B and the inspectors would abide by that.
  Baroness NoakesI thank the Minister for that. Does that code apply currently to the department's inspectors and will they apply to the inspectors who will be carrying out the regulator's functions?
  Baroness Hollis of HeighamYes. The inspectors, who have quite a senior level of responsibility, will be required to sign for documents when they take them. If they do not there will be a serious question mark about the paper trail, because we are dealing with cases that may well go to court, if there has been a criminal offence at some stage. Obviously, such evidence would not stand up unless appropriate procedures had been followed, as laid down by the Police and Criminal Evidence Act Code B.
  Baroness NoakesI thank the Minister for that. Of course, the answer was given by the Minister from the
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  perspective of preserving evidence. My question was asked in the context of preserving the company's ability to have some record of documents that had been taken from it so that it could ensure that it could retrieve those documents at a later stage. But I imagine that there would be some commonality of interest.
  Baroness Hollis of HeighamOr copies made, for example.
  Baroness NoakesYes. The Minister also said that Amendments Nos. 144A to 144C were not necessary because of Clause 296. I was seeking an assurance that, from the Minister's perspective, Clause 296 overrides the earlier clauses, in effect.
  Baroness Hollis of Heigham: Yes.
  Baroness NoakesI thank the Minister for that. My last point related to Amendments Nos. 144D and 148A, which relate to the retaining of documents only if that retention is necessary and proportionate. The Minister spoke about regulators not abusing their powers, but then said that there would be a power to seize documents, which, presumably did not apply before. Having obtained the power to seize documents, should there not be something that says that one could not hold on to them for an unnecessary period? My point is that documents are often the lifeblood of a company. There may or may not be some wrongful act for which the company may be brought to book, but inspectors could enter premises and take away large amounts of documents, which could inhibit the way in which the company carried out its lawful business.
  While I completely understand that documents should be retained when they are needed for proceedings, the Bill does not say that the documents should be retained only for the purpose of proceedings. It says that, "You can hang on to whatever you have managed to gather in for as long as the proceedings are going on". I believe that that should be restricted in some way.
  Baroness Hollis of HeighamIf the documents are part of the lifeblood of the company—and I realise that they might be in certain circumstances—they could simply ask for the documents back. The regulator would keep a copy and send them back.
  Baroness NoakesI thank the Minister for that assurance. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 65 agreed to.
  Clause 66 [Provision of information]:
  [Amendment No. 144B not moved.]
  Clause 66 agreed to.
  Clauses 67 and 68 agreed to.
  Clause 69 [Inspection of premises: powers of inspectors]:
  [Amendment No. 144C not moved.]

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  On Question, Whether Clause 69 shall stand part of the Bill?
  Lord LucasPerhaps I may ask a question about Clause 69. It is not clear to me whether subsection (2)(d) would give the power to remove or require a copy of a document which was encrypted. If that was the case, the inspector would not be able to say that the document appears to relate to compliance, because he would not know what the document was. If an encrypted directory on the computer was used for maintaining the pension scheme records, one could expect that there might be relevant matters in it. I cannot see how subsection (2)(d) would apply in that case. Does it and, if so, how? I do not need an answer now.
  Baroness Hollis of HeighamI think that the noble Lord will end up with a bouquet of steeled wire. I should first compliment the ingenuity of his concern. I thought that I had prepared for all possible contingencies, but encrypted, protected, coded documents had not occurred to me. However, we can legally take information stored in any form, so there is no legal problem. There may be a problem of identifying whether information is relevant by virtue of it being encrypted. I understand that you do not know what you do not know. That is always a problem. But if you do know what you do not know, so to speak, then the information may be taken—that is empowered under Clause 69(2)(e).
  Lord LucasI do not think that that covers encrypted information because it cannot appear to be relevant. I think a "might" could be needed in the subsection.
  Baroness Hollis of HeighamThe noble Lord made my point in my earlier discussion with the noble Lord, Lord Skelmersdale. The ingenuity of people surpasses all expectations. I am sure that we have legal authority to take that information, but I take on board his point in terms of forewarning the regulator that skills worthy of the security services might need to be employed by the inspectorate's staff.
  Clause 69 agreed to.
  Clause 70 [Inspection of premises: supplementary]:
  [Amendments Nos. 144D and 145 not moved.]
  Clause 70 agreed to.
  Clause 71 agreed to.
  Clause 72 [Warrants]:
  Baroness Hollis of Heighammoved Amendment No. 146:
  Page 53, line 7, leave out subsection (3) and insert—
  "(3) In subsection (1), any reference in paragraph (a) or (b) to a document does not include any document which is relevant to whether a person has complied with—

  subsection (3) of section 228 (information and advice to employees) or regulations under subsection (4) of that section, or

  any provision in force in Northern Ireland which corresponds to that subsection (3) or is made under provision corresponding to that subsection (4),
  GC 286
  and is not relevant to the exercise of the Regulator's functions for any other reason.

  (3A) For the purposes of subsection (1)(c)(iii), any liability to pay a penalty under—

  section 10 of the Pensions Act 1995 (c. 26), or

  any corresponding provision in force in Northern Ireland,

  which might arise out of a failure to comply with any provision within subsection (3)(a) or (b) is to be disregarded.
  (3B) References in subsection (2) to such a document as is mentioned in subsection (1) are to be read in accordance with subsections (3) and (3A)."
  The noble Baroness said: I hope that the Committee will accept this amendment. We want the regulator to be able to apply to the court for a warrant to be issued so that an inspector can enter premises, by force if necessary, to search for and take copies of documents. This power will force compliance where a request for information has failed to produce the documents.
  Amendment No. 146 is a technical amendment to ensure that a warrant may not be issued solely on the basis that a document is on the premises which goes to compliance with the Northern Ireland equivalent of Clause 228—obligations on employers to enable employees to obtain information and advice about pensions—or solely on the basis that a person is liable to pay a civil penalty order in respect of a breach of the equivalent in Northern Ireland to Clause 228. Without these amendments, warrants could be issued in relation to those Northern Ireland provisions which would be out of step with the position regarding the equivalent GB provisions.
  6.15 p.m.
  Enabling inspectors to search premises and the regulator to apply for warrants to forcibly search for and copy documents, if necessary, is vital. This ensures compliance with the power to request information, which otherwise schemes could ignore wilfully, depriving the regulator of the full picture of a scheme. That could mean that regulatory action which might need to be taken could not be, putting members' benefits at risk.
  Without the power, through a warrant, forcefully to search for and copy documents, vital evidence could be destroyed. This could deny the regulator vital proof of wrongdoing which could be used as justification of regulatory action or in a court case as evidence, putting members' benefits at risk. Not being able to take regulatory action or allow criminal behaviour to go unpunished, are equally unacceptable. However, the regulator will apply for a warrant only in the most severe cases, where there is evidence to suggest that there is a considerable risk of documents being altered or destroyed. It is recognised that in the vast majority of cases, schemes will send the regulator the

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  information requested, meaning that this power will be used sparingly. As a result, I hope that the amendment will stand part of the Bill. I beg to move.
  The Deputy Chairman of CommitteesI should advise the Committee that if the amendment is agreed to, I cannot call Amendments Nos. 147 and 148.
  Baroness NoakesPerhaps I may ask the Minister to clarify what the amendment actually does. It seems to exclude from the ability to obtain a warrant documents relevant to compliance with Clause 228. I understood that the Minister's justification was, of course, on the basis that the regulator had to have the power to obtain the information and obtain a warrant, if needed. But my reading of the amendment is that new subsection (3) says that in subsection (1), which relates to a justice of the peace issuing a warrant, the reference in (3)(a) or (b) does not apply to any information required under Clause 228(3). I may be completely wrong, but my understanding of the amendment was that it achieved the opposite of her description.
  Lord SkelmersdaleVery unusually, may I also challenge the Minister? My Amendments Nos. 147 and 148 are pre-empted, as the Lord Chairman has told the Committee, if we agree to the new subsection (3).
  Lines 10 to 12 of the original subsection (3) said that a document did not include any document which was relevant to Clause 228(3)—a point that my noble friend Lady Noakes has just covered. Surely the point is that the regulator will already become involved under Clause 228(3), so why this prohibition? In fact there are more or less similar words in the amendment. So the same question does arise.
  Baroness Hollis of HeighamThe reason we need the amendment is that Clause 288 without amendment could apply to any employer whether or not he has a pension scheme. That is why the restriction is needed. The rest is basically technical, to ensure that all of those matters that we have discussed including the terms of eligibility for warrants and so forth, apply to Northern Ireland as well as to Great Britain.
  On Question, amendment agreed to.
  [Amendments Nos. 147 to 148A not moved.]
  Baroness Noakesmoved Amendment No. 148B:
  Page 53, leave out lines 40 and 41 and insert "sheriff"
  The noble Baroness said: This is another Scottish amendment.
  Baroness Hollis of HeighamThe amendment is not technically correct, but I suggest that we take it away, because it makes a perfectly valid point.
  Baroness NoakesI beg leave to withdraw the amendment which I did not quite reach the point of moving.
  Amendment, by leave, withdrawn.
  Clause 72, as amended, agreed to.
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  Clause 73 agreed to.
  Clause 74 [Offences of providing false or misleading information]:
  Baroness Barkermoved Amendment No. 149:
  Page 54, line 10, after "false" insert "or maliciously provides the Regulator with information which is misleading or likely to mislead"
  The noble Baroness said: This amendment may seem pedantic, but I believe that it is important. Providing false or misleading information becomes an offence under the Bill. It is important to establish whether someone has knowingly and maliciously provided false information and whether they have knowingly and recklessly provided information which was misleading.
  Secondly, how does one establish what is misleading information? Information can be misleading on the part of the person who provides it. Equally, it can be misleading to the person who receives it. The purpose of the amendments is to tighten that up when we are talking about a criminal offence.
  An assessment must be made about the likelihood of information being misleading and misunderstood by the recipient. In most cases, the recipient will be the regulator and the board; they will be highly equipped and will no doubt have easy access to a great deal of expert information. That may be different from those who are providing the information to them.
  We are seeking to spell out in slightly greater detail than is in the Bill the standards by which information should be assessed. Somebody could probably provide information in the belief that it was perfectly good, but it could mislead the regulator. So we are trying to ensure that we get to those who maliciously provide wrongful information and to establish greater legal certainty in taking into account the recipient of the information. It is a pedantic argument but quite an important one. I beg to move.
  Lord BorrieI oppose, quite strongly, the amendments presented on behalf of the Liberal Democrats by the noble Baroness, Lady Barker. I feel that the present proposal, which is quite common form in legislation—that a person who knowingly or recklessly provides the regulator with information which is either false or misleading in a material particular is guilty of an offence—is perfectly reasonable. If you say that that is all right for false information but if, in relation to misleading information, you want to insert the words "maliciously provides", I would say that that is a severe watering down of the provision for the offence and exceedingly difficult for anyone to establish. I think that the amendment should be rejected.
  Amendment No. 151 states that,
  "information is misleading or likely to mislead only if it is misleading or likely to mislead when viewed in the light of the addressee of that information".
  Of course, the addressee is the regulator. We have not yet determined whether it is "he" or "it—there are further amendments on that score. That presumably means that if the regulator should know that the

  GC 289
  information is misleading, there is to be no offence. That seems to let off very lightly someone who may have knowingly or recklessly provided information which is misleading to many people but perhaps not to the knowledgeable regulator. Normally, one judges these matters objectively: is the information misleading or is it not? I believe that on all those counts the amendments should not be accepted.
  Baroness Hollis of HeighamI feel like simply saying, "I agree" and sitting down again.
  Lord Oakeshott of Seagrove BayWith him or with her?
  Baroness Hollis of HeighamAbsolutely not with the noble Baroness, Lady Barker. It seemed to me that the response of my noble friend Lord Borrie was exactly right. I want to add one point. Clearly, the provision refers to the person giving the information, not to the degree of knowledge the regulator may or may not have, such as he could or could not be misled.
  It is for the regulator—and this may give some assurance to the noble Baroness—where there is a question not of bad faith but of honest doubt—and we are all out to catch the bad faith cases, but there might, I suppose, be a question of honest doubt or inadequacy by the person giving the information—to prove beyond reasonable doubt to a court that a person who provided false or misleading information did so knowingly or recklessly. That is a very high standard of proof. It is for the regulator to establish that in a criminal court.
  So, in addition to everything my noble friend Lord Borrie said, which seemed to me to be exactly right, I think the noble Baroness could have the comfort that there is actually a high hurdle for the regulator to establish were these consequences to flow.
  Baroness BarkerI could not disagree more with the noble Lord, Lord Borrie. Our reading of the clause as it stands without our amendment is that it is possible that information could be deemed to be misleading only if it were proven to have misled someone. Therefore, the supply of information which was in fact misleading but was never caught would fall without that. That is important. That is why we have inserted the provision about being,
  "likely to mislead".
  My second point is—
  Baroness Hollis of HeighamWhat distinction does the noble Baroness draw between misleading information and wrong information? It is like asking what colour is an orange in the dark. Does someone have to know it is wrong for it to be wrong in terms of the recipient?
  Baroness BarkerThat is exactly the point that we are trying to get at. We are trying to establish that there is a reciprocal duty of care on the recipient of information as there is on the provider of it.
  The recipient in this case is largely the regulator.
  Baroness Hollis of HeighamSurely, it is not the regulator's duty to ensure that he is not misled; it is the duty of the person providing the information to ensure that he does not mislead the regulator. We may be dealing with thousands of schemes. We are seeking in the Bill to establish that the regulator may be able to, so to speak, take his eye off the vast majority of schemes where there is no significant issue of risk involved to members and to be able to concentrate— we all agree—his resources where there is real risk. To do that he has to be able to rely on the reliability, the accuracy and so on of the information presented to him.
  Therefore, there is a duty of care on the person providing that information—trustees or whatever or scheme professionals. It is not the job of the regulator to ask, "Am I misled?", it is the duty of the person providing that information to ensure that, given all the guidance that has been put out and so on, the information is as clear as possible.
  Having said that, the test of state of mind and of intention comes into play in the second stage of whether the information was indeed knowingly or recklessly misleading. That is where the test has to be established in a court of law.
  Baroness BarkerWe were seeking to establish a test whereby someone provided information which was perfectly reasonable but where the regulator was misled in the context. It is, however, clearly a matter on which we shall have to go back and reflect. It is important to establish the level of responsibility the regulator has to make efforts to determine whether someone provided information with an intention to mislead or whether wrong information was given that was not intended to mislead.
  Baroness Hollis of HeighamIn which case could we not stand up in the courts? That was the point I was trying to make. The backstop is there but he has to prove beyond reasonable doubt, not on the balance of probabilities. It is not a civil test; it is a criminal test, which is actually very high. Perhaps the noble Baroness can help me. Can she think of an example in which someone unwittingly—if I can put it this way— produced information which misled the regulator but, none the less, he could establish in court that that person should be subject to a criminal offence? I find it hard to conceive of any such example. Perhaps the noble Baroness has such an example in mind.
  6.30 p.m.
  Baroness BarkerI do not have one to hand but I am certainly willing to think about the matter and get back to the noble Baroness. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 150 and 151 not moved.]
  Clause 74 agreed to.
  Clause 75 agreed to.
  Clause 76 [Restricted information]:
  [Amendment No. 152 not moved.]

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  Clause 76 agreed to.
  Clause 77 agreed to.
  On Question, Whether Clause 78 shall stand part of the Bill?
  Lord SkelmersdaleTwo points occurred to me in relation to this clause. First, presumably the word "valuation" in subsection (2) means actuarial valuation in this case. Secondly, as regards subsection (3), it is important that the consultees should not divulge the information either. I hope that that is what all that means.
  Baroness Hollis of HeighamOn the first point, "valuation" could be any form of valuation and not just the more limited actuarial valuation. Secondly, any information divulged by the regulator that is protected information to, say, the Inland Revenue or to another body could not be further processed without the consent of the appropriate parties. The information does not lose its protected status as it goes down or along the chain.
  Lord SkelmersdaleIn order to save time on a future amendment, does that include the Secretary of State?
  Baroness Hollis of HeighamI am assured that it does.
  Clause 78 agreed to.
  Clauses 79 and 80 agreed to.
  Schedule 3 agreed to.
  Clause 81 [Other permitted disclosures]:
  Baroness Hollis of Heighammoved Amendment No. 153:
  Page 58, line 11, after "7" insert "or 23(1)"
  The noble Baroness said: This goes back to one of the issues raised by the noble Lord, Lord Skelmersdale, a moment ago. It is a minor amendment but it may be sensible if I explain the purpose and nature of the clause.
  Clause 81 replicates and expands Section 108 of the Pensions Act 1995 by setting out other circumstances in which the regulator can disclose restricted information. Those include disclosures to the Secretary of State, the Inland Revenue—the example that I gave earlier—or the Department for Social Development in Northern Ireland if the regulator believes it is in the interest of scheme members or in the public interest.
  Clause 81 also allows disclosure for the purposes of any criminal proceedings arising from specified provisions; disciplinary proceedings relating to carrying out professional duties by a solicitor, an actuary, an accountant or an insolvency practitioner; and in relation to disciplinary proceedings against a public servant.
  Disclosure is also permitted if it is to assist an authority in a country outside the UK to carry out functions under this Bill or the Pensions Act 1995 or in the pursuance of an EC obligation.
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  The regulator is not prevented from disclosing information to the Director of Public Prosecutions, the Director of Public Prosecutions for Northern Ireland, the Lord Advocate, a procurator fiscal or a constable. Neither is it prevented from disclosing restricted information where disclosure is required by law, or to a trustee—this would be an independent trustee—appointed by the regulator under Section 7 of the Pensions Act 1995 if the information is required by the trustee to carry out his work. The amendment adds to that provision in order to enable the disclosure of information to an independent trustee appointed by the regulator under Section 23 of the 1995 Act.
  The ability to disclose information to any regulator-appointed trustee is an important one. OPRA does not currently have that power and, as a result, it is often aware of information extremely relevant to the trustee whom it appoints but which it is unable to disclose. Such information could vary from, for example, scheme bank account details to information about previous regulatory action in respect of the scheme in question. It seems absurd to appoint an independent trustee and he cannot be told about a previous investigation in respect of the scheme in question.
  I remind the Committee that any person to whom the regulator gives information is able to disclose it further only with the permission of either the regulator or the person to whom the information relates; in other words, as I said to the noble Lord, Lord Skelmersdale, the protection continues down the chain. I hope that with that explanation the Committee will accept the amendment.
  On Question, amendment agreed to.
  Clause 81, as amended, agreed to.
  Clause 82 agreed to.
  Clause 83 agreed to.
  Clause 84 [Codes of practice]:
  Baroness Turner of Camdenmoved Amendment No. 154:
  Page 60, line 5, at end insert—
  "( ) the discharge of the duty imposed by section 50 of that Act (requirement for dispute resolution procedures);"
  The noble Baroness said: Amendment No. 154 stands in my name and those of my noble friends. We are now dealing with a different aspect of the Bill altogether—what I suppose one can call dispute resolution.
  As I understand it, the Bill simplifies the existing requirements for IDR procedures principally by removing the requirement for a two-stage process and requiring only a single stage. As I understand it, this change is driven by simplification and a view that the present process is too complex and time-consuming. However, a single formal stage will realise these advantages only if it is supported by informal procedures. The amendment seeks to achieve that by requiring the regulator to produce a code of practice—Clause 84 concerns codes of practice—commending the use of informal procedures.

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  The nature of many complaints is that the member, while dissatisfied, may have very little concept as to the full facts and rules relevant to the case. In the era before IDR was required, company schemes and companies and schemes often fobbed off complainants quite summarily.
  The key advantage of the two-stage process was that it allowed the complainant to make what might be called an "uninformed complaint" and then guaranteed him a reasoned response—perhaps an explanation with reference to the rules. He could then bring an informed complaint at the second stage if he was not satisfied. Often the second stage was not so much an appeal as an elaboration of the original complaint, which might well include information not previously known to him.
  The purpose of commending informal procedures is to try to retain the essential advantage of a two-stage system while meeting the objectives of simplification. This is a very simple amendment. I beg to move.
  Baroness Hollis of HeighamAs my noble friend has explained, the amendment would include internal dispute procedures as one of the subjects on which the regulator must issue a code of practice.
  I can either go into a long explanation or say that we do not consider that the measure is necessary at this stage but if OPAS or any other body thinks that it is necessary, we have the powers under Clause 84(1) to do precisely that.
  I could go into a much fuller explanation but perhaps my noble friend considers that what I have said is sufficient—that if we consider that the measure is necessary, the regulator will issue a code of practice. We do not have any evidence to think that that will be necessary and therefore we are not proposing it at this stage. I do not know whether that explanation is sufficient for my noble friend. I can give a fuller answer if she wishes.
  Baroness Turner of CamdenI think that is adequate, if I may say so. I am very grateful to my noble friend the Minister for those comments. This amendment was suggested to me by my union, no doubt based on its experience of what has happened in the past. I am grateful to my noble friend for what she has said. If it is possible for OPAS, a union or any other body to say, "We want this because we think it is necessary in order that scheme members can be properly dealt with", that would be all right. In the circumstances, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Hunt of Wirralmoved Amendment No. 155:
  Page 60, line 9, at end insert—
  "( ) required procedures in relation to the internal and accounting controls in money purchase schemes;"
  The noble Lord said: This amendment would insert on page 60, line 9, the words,
  "required procedures in relation to the internal and accounting controls in money purchase schemes".
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  This amendment is designed to ensure that the new pensions regulator takes the necessary direct measures to require companies to impose adequate systems of controls upon pension schemes.
  As I understand matters as they stand now, ensuring that strong systems of internal controls are in place in relation to a scheme's assets is to some extent the province of the Financial Services Authority, which is responsible inter alia for investment managers and insurers, to which most trustees entrust their asset management. However, trustees do have responsibilities to control their investments—even where these are delegated—and to make sure that the relevant administrative systems function properly.
  The main purpose behind the amendment is to assist in the enforcement of proper controls, in particular in relation to money purchase schemes. The amendment stands in my name and that of my noble friend Lord Lucas. We regularly hear from scheme auditors about how frequently they encounter poor internal controls in pension scheme administration systems. For those final salary schemes where the pension is calculated purely on the basis of final salary and years of service, the employer pays the balance of the costs so this may not be problematical for the member. In money purchase schemes, however, where the members' benefits depend on the contributions and investment return thereon, it can be very damaging.
  I anticipate that the Minister may want some examples. Typical problems that are encountered include incorrect contribution calculations. The wrong rate may be applied for a variety of reasons. The payroll may be misinformed or there may be a complex contribution structure, depending on member age and choices, and this may not be correctly applied.
  Another typical problem is failure to pay sums on due dates, causing investment dates to be missed and failure to apply member investment choices. I have, for example, been informed of one administrator making a large compensation payment because it did not apply the switching arrangements for members within 10 years of retirement age when they were supposed to have a phased move from equities to bonds. The market falls in equities that have taken place meant that the members lost material sums from this failure.
  There may be failure to ensure that regular and frequent reconciliations are carried out between investment records and administration records. Otherwise, where discrepancies do arise between the two, investigation of differences is going to be very time consuming and expensive.
  Finally, there may be failure to apply the correct rules and processes when unitising funds, so that the members are not given the correct number and value of units.
  It is my contention that these problems could all be eliminated in the vast majority of instances by the application of strict and clearly established internal control processes. This would both ensure that the employer checks that the correct contributions are paid, and that the administrator and investment manager make sure that the members' entitlements are

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  correct. I am informed that too often auditors find that the necessary internal systems and disciplines are absent, which results in uncorrected errors. Because of the nature of money purchase schemes, these can rapidly snowball over time and be perpetuated.
  Since money purchase schemes are rapidly supplanting final salary schemes, this has the potential to become a really serious problem. There is no provision for compensation for maladministration, so member protection has to be achieved by proper controls and a mechanism for enforcement. The potential for recovering compensation from administrators is likely to be very restricted.
  I should have preferred to give the Minister much more detail in advance. I apologise for the fact that I have not been able to do so. However, I understand that the Institute of Chartered Accountants for England and Wales has given examples in the past similar to those which I have specified. It has requested the addition of an extra code of practice under Clause 84 and also for a separate clause for the implementation of the European directive's provision in Article 14(1). I beg to move.
  6.45 p.m.
  Lord LucasI am in total support of this amendment, which is not surprising given that I am a chartered accountant, and the amendment emanates from the Institute of Chartered Accountants. The Bill is doing a great deal for defined benefit schemes. We ought also to make sure that it does what is needed in terms of defined contribution schemes. So far as I can establish from the institute and from talking to other people, the problems are largely administrative. They are really quite extraordinary. These are complicated schemes because the arrangement is so flexible. You find that up to 20 per cent of schemes are not doing any reconciliations at all and are piling up all sorts of problems. I think of the incomplete records that I used to encounter when I was training to be an accountant.
  We have Article 14 of the forthcoming directive insisting on proper standards—this is referring forward to Amendment No. 302 which I apologise for not grouping with the one that we are discussing. However, we are proceeding 10 times faster in terms of discussing amendments than our noble friends in the Chamber. They are still on the first group. We are doing well.
  To return to the subject in hand, it seems to me that this is the main known problem with defined contribution funds and that we ought to look to doing something about it in the Bill—since we have a directive that is pushing us in that direction.
  Amendment No. 303, which is also not grouped with the amendment, picks up the wording of the current Companies Bill to give auditors additional powers which would also help defined contribution schemes.
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  I throw in a final question. My understanding is that Clause 173 applies to defined contribution funds and that therefore we have the protection that that offers against fraud, but I should just like to check.
  Baroness Hollis of HeighamThe noble Lord, Lord Lucas, and I are in complete agreement on one point; that is, I, too, am baffled by the fact that we are considering almost every amendment separately and that we are not grouping amendments which in my view could reasonably be grouped. We have one such example here which I believe has been explained.
  Amendment No. 155 would apply the measure that we are discussing to money purchase schemes. Amendment No. 302, with which it has not been grouped, would allow such controls to apply to all schemes. The question is whether it would be useful to have a code of practice to support such a requirement.
  In relation to accounting controls we have always been happy to allow the accounting profession to take care of setting standards and giving guidance. I am not sure why two distinguished members of that profession are now saying that it should not be left to that profession but should be left to the regulator. There may be an answer here that I have missed but it suggests a degree of—
  Lord LucasMy understanding is that there are obligations on companies to do this properly and the auditors can then check that they have done it. The auditors are checking rather than enforcing. Therefore, you need the obligation before you can check whether it has been done.
  Baroness Hollis of HeighamI was talking about accountancy rather than the actuarial profession but perhaps we can blur that line. There is no reason for the regulator not to issue a code of practice if he thinks it is appropriate and desirable. Obviously he would respond to representations made to him by professionals or possibly trustees of schemes who feel that there is a need for guidance on the matter.
  What we are resisting at this point is specifying in advance what codes of practice and so on the regulator should issue. I am slightly puzzled why internal controls are a matter for the regulator rather than for the actuarial and accountancy professions. Be that as it may, should the measure prove necessary or desirable, people would be entirely free to persuade the regulator that this would be an appropriate code of practice. From what has been said, that may well be the case.
  That answer may not be as helpful as the noble Lord would wish but I do not want to start being specific about which codes of practice we should require the regulator to produce in this area.
  Baroness NoakesMay I ask just one point of clarification on the Government's approach to Clause 84? The Minister said that she did not want to specify codes of practice, but that is exactly what has been done in subsection (2) where paragraphs (a) to (k) represent those items for which the Government do want to specify codes of practice. Whenever someone

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  suggests that a matter should be covered by a code of practice, the Minister replies that the regulator might do that if he considers it necessary. What principles underpin the requirement of a code of practice? That might help others in knowing whether they could breach this particular defence.
  Baroness Hollis of HeighamI am not entirely willing to help the noble Baroness breach our defences but none the less there is a point there. The point that I am making is that I am not sure why we need to approach the matter in the way that is suggested given the controls that already exist. Professionals in the field that we are discussing may tell me that I have misunderstood the situation. However, audited accounts are required for money purchase schemes.
  The regulator will be able, via scheme returns, to identify schemes that do not have audited accounts and take appropriate action, for example through education, an improvement notice or a third party notice—all the matters that we discussed on the first and second days of Committee. The Committee will know that we have already piloted scheme returns and that we have had very positive feedback I come back to professional standards. If the auditors are not satisfied, they do not sign off the accounts. If they do not sign off the accounts, at that point the regulator gets involved because there is clearly a problem. I ask in all honesty why that procedure should not be adequate to meet the problem identified by the Committee?
  Baroness NoakesPerhaps I can help the Minister. The auditors will sign off the accounts provided there is no material misstatement in them. An organisation could have pretty inadequate controls and procedures. It could be doing many of the things, such as paying moneys into investments late, to which my noble friend Lord Hunt referred, but the audited accounts could still be signed off because there is no material misstatement in them.
  The Minister needs to understand the difference between what a set of financial statements does and what audited accounts convey as information, and what happens within an organisation in terms of the financial controls and procedures that are necessary to ensure that the operations produce the right result—in this case for those who are beneficiaries of money purchase schemes.
  I was originally disinclined to support my noble friends on this amendment because I wondered whether it was going a little too far. However, when the Minister said that the audited accounts are all that are needed, it seemed to me that perhaps there was a misunderstanding in the department of what information audited accounts convey. If that is not well understood within the department, the Minister's officials may want to reconsider whether there should be a provision on the face of the Bill regarding appropriate controls and procedures.
  Baroness Hollis of HeighamI also want to go back to the point about what we should specify, as mentioned by the noble Baroness. We are specifying
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  that some codes of practice are both essential and mandatory. That applies to areas where legislation would impose obligations in general terms to do something within a reasonable time which would need to be amplified by codes of practice to be sufficiently clear and certain for practical purposes.
  The noble Baroness asked what principles we had in mind regarding the requirement to have codes of practice. I refer to matters such as a notifiable event or a reasonable timescale. People need to understand what is meant by that. That is without prejudice to the regulator's general powers to issue codes relating to other obligations.
  I have no objection at all to asking officials to reconsider the matter, but I am slightly shocked by the noble Baroness's comments about the inability of auditors to ask the appropriate questions to satisfy themselves that it is appropriate to sign off accounts. Perhaps I am wrong to be shocked and perhaps it is reasonable for the auditors not to know about certain things. However, I am slightly puzzled. I am perfectly willing to do more research on the noble Baroness's concerns. I take seriously the point that people in the profession consider that they want tighter controls than the profession can exercise through the scrutiny of the relevant professional association. I am slightly taken aback by that, but I am happy to look at it further.
  Lord Hunt of WirralI want to point out that I am a member of the legal profession, not the accountancy profession. With that I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [The Committee was suspended for a Division in the House from 6.58 to 7.8 p.m.]
  [Amendment No. 156 had been withdrawn from the Marshalled List.]
  Baroness Noakesmoved Amendment No. 157:
  Page 60, line 10, at end insert—
  "(1) the degree to which the Regulator shall take into account commercial considerations when considering whether to issue a contribution notice pursuant to section 35(2) and, in particular, must cite examples of acts or failures to act in relation to which the Regulator considers—

  it is extremely likely that a contribution notice would be issued;

  it is extremely unlikely that a contribution notice would be issued;

  to fall between (i) and (ii) depending on the circumstances of the matter."

  The noble Baroness said: The amendment would add another paragraph to the long list of codes of practice that the Government have determined should be issued by the regulator. This is a probing amendment because I am not sure that it is in the right place. The list of codes of practice which the regulator must issue appears to deal with matters that others should follow, but, within the wording of Clause 84, I am not sure whether there is any particular reason why

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  the regulator should not have a code of conduct that he should follow. However, the point that I want the Minister to consider is whether or not the regulator should be giving guidance on the issue covered by the amendment.
  Here, we are partly returning to the subject of contribution notices under Clause 35. That was debated extensively last week and I do not want to repeat what was said. The issue is whether or not the regulator should be giving guidance on commercial considerations. The example given here is whether it is acceptable for commercial reasons to structure a transaction as a business sale with a TUPE transfer, even though the company owning the business will not incur a Section 75 debt.
  Baroness Hollis of HeighamI am sorry. This is normally said to me, but could the noble Baroness give me the example a little more slowly?
  Baroness NoakesWe are trying to require the regulator to give some guidance on issues which will have commercial considerations. The example is whether it is acceptable, for commercial reasons, to structure a transaction as a business sale with a TUPE transfer, even though the company owning the business will not incur a Section 75 debt. The question is whether or not that is avoiding a debt. Therefore, the amendment also asks for examples of the acts which could trigger, or not trigger, a notice in order to help people to understand the implications of their actions.
  The point is: how do we issue guidance on how, and to what degree, the regulator will take into account commercial considerations when deciding whether to issue a contribution notice so that those in the commercial world will know, in broad terms, whether what they are contemplating is or is not within the territory that is likely to cause a problem for the regulator? Therefore, the purpose of the amendment is to get the regulator to issue guidance that others can look at in determining what kind of commercial considerations will be taken into account when approaching particular transactions—that is, what would or would not or what may or may not be acceptable, depending on the circumstances. It is a call for guidance. I beg to move.
  7.15 p.m.
  Baroness Hollis of HeighamI am not sure whether the noble Baroness is asking me to go beyond the Second Reading debate of 10 June and our subsequent discussions in which I assured the House that the regulator will issue guidance on the clearance procedure in respect of contribution notices and which I reiterated to the Committee last week. I believe that such guidance would address the noble Baroness's concerns. I think that she is asking me to repeat what I have already agreed. Guidance will certainly be issued on how the regulator will use the power to issue contribution notices—I have said that twice. Financial support directions will also be included.
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  I was not quite sure about the thrust of the noble Baroness's argument regarding the word "commercial". As for the examples that she gave in terms of the contribution notice and how it will apply, I have already made the commitment that the regulator will be expected to issue guidance to that effect. Perhaps the noble Baroness can tell me what I am missing on this point.
  Baroness NoakesI thank the Minister for that reply. I undertake to look again at what she has already said. The emphasis was not quite so much on the word "commercial" as on the kinds of transaction into which companies could enter so that they had some understanding of what is likely to come within the provision, what is not likely to come within it and what is likely to fall in the middle. If the Minister is clear that the assurances she has already given on the clearance procedure will have that guidance attached to it—her officials are nodding—
  Baroness Hollis of HeighamThat was the purpose of it.
  Baroness NoakesI suspect that my concerns are met by that. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Noakesmoved Amendment No. 158:
  Page 60, line 10, at end insert—
  "( ) Any code of practice issued by the Regulator must include an analysis of the costs and benefits of the code."
  The noble Baroness said: In moving Amendment No. 158, I shall speak also to its sister amendment—Amendment No. 161.
  We know that codes of practice often impose costs. There is no problem with that, but costs have to be weighed in the balance with the benefits that would be produced. Regulatory burdens are the single issue most complained about by businesses large and small, whether we are talking to the Federation of Small Businesses or the Confederation of British Industry. The regulator's powers go beyond those currently held by OPRA. Therefore, we need to ensure that the legislation is mindful of the impact of any additional regulatory burden.
  Against that background, Amendment No. 158 would amend Clause 84 so that any code of practice issued analyses the costs and benefits and so that we can have a proper public debate on that.
  Perhaps more importantly, Amendment No. 161 requires draft codes to include a draft analysis of costs and benefits. The debate should properly be had before codes are issued.
  This is not an unusual requirement. It appears in Sections 155 and 157 of the Financial Services and Markets Act 2000, and so there is already good

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  precedent for codes of practice being required to include draft regulatory costs and burdens at the time that they are issued for consultation. I beg to move.
  Lord Oakeshott of Seagrove BayThe amendments seem reasonable to us, and we support them.
  Baroness Hollis of HeighamThey do not seem entirely reasonable to us. I am sorry to break this happy mood. I have a very practical argument. My best response is to go to what I am sure is bedside reading for Members of the Committee—the Cabinet Office document entitled, Better policy making: A guide to regulatory impact assessment. It lays down the conditions under which one effectively carries out a cost-benefit analysis—that is, a regulatory impact analysis. It was issued in 1998 and on page 6 it states:
  "You do not need to do an RIA for proposals which impose no costs or no savings, or negligible costs, or savings on business, charities or the voluntary sector; increases in statutory fees … or road closure orders … However, even if you think the effects of your proposals are likely to be negligible, it is still good practice to produce an RIA. It is not always clear when a proposal is being formulated whether there will be any impact on business … Early consultation or informal soundings with your stakeholders will be particularly important in the situation".
  I can give the noble Baroness the assurance she wants. The regulator will follow these good practice guidelines for its codes of practice. So, clearly there is not much point going for a cost-benefit analysis where the costs of that are probably higher than the costs of the activity proposed. But where exactly the line is drawn in that scheme is shaped in these guidelines, which state, more or less, that where in doubt, there should be a cost-benefit analysis. I hope that the noble Baroness would think that that is a pragmatic and sensible way to proceed; that is, to follow the best practice guide.
  Baroness NoakesIt is always good practice to follow good practice guides, but would that always happen? The purpose of the amendment is to hard wire that requirement into the Act so that it is clear that the regulator really has to follow that. Clearly, if there are no cost benefits, it would take only one line in any draft regulations to say that there are no costs and no benefits, or no cost and some benefits, whatever is the case. So, it is not very onerous to state that in a draft being put out for consultation.
  That requirement is clearly specified in the FSMA. That Act imposed potentially very significant regulatory burdens on the financial services industry, for good reason. Nevertheless, it was considered important then—by the Government, presumably—to include it in the Act. I struggle to see why this Bill, which is pretty significant, with significant regulatory burdens inherent within it, should not also be explicit. I hope that the Minister might think about it again, or we may return to it on Report. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Noakesmoved Amendment No. 159:
  Page 60, line 23, at end insert "proceedings of the Pensions Regulator Tribunal,"
  The noble Baroness said: This is a relatively small amendment. We are not quite clear why the Government have excluded the proceedings of the Pensions Regulator tribunal from the definition of legal proceedings in Clause 84; that is, that when there are proceedings within the Pensions Regulator tribunal, that forum should have to take into account the regulator's codes of practice. Why have the Government excluded the Pensions Regulator tribunal from needing to take into account the regulator's codes of practice? I beg to move.
  Baroness Hollis of HeighamWe have not so excluded. Such proceedings are already included within the meaning of "legal proceedings" by definition. That is because any tribunal that the Council on Tribunals has a duty to keep under review is considered a court by virtue of Section 119 of the Courts and Legal Services Act 1990. Paragraph 3 of Schedule 12 to the Bill amends the Tribunals and Inquiries Act 1992, adding the Pensions Regulator tribunal to those tribunals under the general supervision of the council. In the light of that, I hope that the noble Baroness will be happy—at least happier than on the previous occasion—to withdraw her amendment.
  Baroness NoakesI am more than happy to beg leave to withdraw the amendment on the basis of that excellent explanation given by the Minister.
  Amendment, by leave, withdrawn.
  [Amendment No. 159A not moved.]
  On Question, Whether Clause 84 shall stand part of the Bill?
  Lord SkelmersdaleI am in the hands of the Committee. I note that we have six minutes left of today's proceedings. I have already had an adverse comment from the Minister in producing an amendment which goes backwards in the Bill. My block starting at Amendment No. 167 refers to a great extent to this clause. Therefore, I can either talk about my problem now or wait until that block. I am prepared to do whichever the Committee would prefer.
  Baroness Hollis of HeighamI always prefer Members of the Committee if possible to speak to an amendment rather than to whether a clause should stand part. By specifying an amendment I know what concerns are being raised, and it gives me an opportunity to get a properly researched reply, which is then recorded in Hansard. I probably would also have the resources to go into any necessary full detail that may be helpful to people outside. If noble Lords debate whether a clause should stand part, it becomes a fishing trip. So I would invite the noble Lord to speak on Amendment No. 167 and I promise not to make rude remarks about retrospection.
  Lord SkelmersdaleIn that case I am grateful. I put the noble Baroness on fair warning that I shall be referring to subsections (4) and (5) when speaking to the amendment block starting with Amendment No. 167.
  Clause 84 agreed to.
  Clause 85 [Procedure for issue and publication of codes of practice]:
  Baroness Noakeshad given notice of her intention to move Amendment No. 160:
  Page 60, line 38, leave out "it" and insert "he"
  The noble Baroness said: I just remark that the Minister often refers to the regulator as "he".
  Baroness Hollis of HeighamThat, my late husband would have said, is the result of a quasi-classical education. In Latin, hominus and vir mean different things.
  The substantive point is that the regulator is actually the regulatory body. I would hope that it would have women members on it and, who knows, in due course perhaps women chairs and certainly women chief executives.
  [Amendment No. 160 not moved.]
  [Amendments Nos. 161 to 163 not moved.]
  Baroness Noakesmoved Amendment No. 164:
  Page 60, line 42, at end insert ", and
  ( ) in such a manner that provides a minimum period of twelve weeks for the submission of responses"
  The noble Baroness said: Amendments Nos. 164 and 166 are straightforward amendments. Amendment No. 164 is similar to one we discussed a moment ago. It tries to put into the Bill the Cabinet Office's code of practice on consultation to make sure that defined periods for consultation are allowed. The Financial Services Authority currently uses a period of 12 weeks. It would be curious if a lesser period was ever allowed under the Bill. So the regulator should be required to follow that period, especially as many of the players that the two will be communicating with are the same. Perhaps the Minister could explain whether there would ever be a case where a lesser period of consultation would be required. That might short-circuit some of our discussions.
  Amendment No. 166 is similar, but it omits the extremely wide-ranging power of the Secretary of State in Clause 85(4)(b) to do away with the requirement for consultation altogether. We are dealing with codes of practice that a certain class of people will have to comply with. We find it difficult to conceive of any circumstances where a code of practice could be imposed without any form of consultation. It is in the nature of codes of practice that they embody actions that are appropriate for individuals or classes of individuals or bodies.
  Surely, the regulator should not be both the judge and jury of whether such codes are acceptable. We reject the possibility that the Secretary of State should ever find any reason of urgency to do away with the well known requirements for consultation on codes. I beg to move.
  7.30 p.m.
  Baroness Hollis of HeighamCertainly, we are expecting that codes of practice will be issued by the regulator only after ongoing consultation has taken place with the appropriate industry and with DWP policy representatives. We do not consider a formal, 12-week consultation period at the end of the process to be particularly justifiable, helpful or meaningful because much of it will have been front end-loaded in the development rather than back end-loaded with consultation taking place after the event.
  We shall be working to ensure a "no-surprises" approach by working with the industry on the development of the codes of practice. For example, where the Social Security Advisory Committee has consultation powers, in some cases it goes out to an unsuspecting audience and a formal consultation period is required. But where such a procedure is drawn up with the affected bodies, it can seem a little bizarre subsequently to consult them again at the end of the process. That is why we are seeking flexibility.
  The only exception to consultation is where there is a need to issue a code as a matter or urgency and where consultation would be inexpedient. As the noble Baroness said, that provision is contained in Clause 85(4)(b). The next pensions liberation scam could be an example of the need to act very quickly. I do not think that the noble Baroness was with us when I tried to demonstrate to the Committee just how offensive some practices are. I gave the example of two men who received sentences of five and a half years between them. We had no sense of that scam until OPRA picked it up. Therefore, we assume that occasionally there may be the need for urgent procedures which bypass consultation, certainly for any defined period of time, although I would expect such occasions to be fairly rare. We do not want to tie ourselves to a specific timetable precisely because, as I said, consultation will have been built in at the beginning—that is, at the development stage—rather than the end.
  Ultimately, we all need to buy into this. If consultation is appropriate after the development of the codes, it will take place then. But I do not want to tie us down to a period of 12 weeks. That may be three months of wasted time when all the parties have already agreed to the codes before the draft is in the public domain.
  Baroness NoakesI thank the Minister for that reply. I shall give it further thought when I have read it in Hansard.
  At this stage, I simply remark that it seems very inward to believe that just because one consults on the draft, one does not then need to have a consultation period which, by definition, lays the issue open to anyone who has an interest in it. It is a little arrogant to say that you do not need formal consultation periods because you know everyone who might be affected. I suggest to the Minister that that is a rather dangerous

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  path to follow. Proper periods of consultation should be included to allow things that the regulator might not know about to be brought forward. In addition, particular interests affected by a code of practice may not have been identified by the regulator.
  Baroness Hollis of HeighamIs the noble Baroness saying that every code of practice must have a formal three-month consultation period at the end? That is what her amendment would achieve. I am not saying that there will not be consultation; it may be entirely appropriate for consultation to take place on the draft. We are trying to avoid tying ourselves automatically into a three-month period of consultation which may not be necessary. It may very often be necessary, and a longer period of consultation may often be necessary. I can conceive of a range of circumstances that may arise. I am asking whether the noble Baroness is really sure that she wants to require every code of practice, however it is developed and under whatever circumstances, to have three months of consultation.
  Baroness NoakesI think I am saying that the default period should be three months. The FSA is using a three-month period, as I outlined, and I can see no reason for not doing the same. I am concerned that we may be setting up a regulator who considers it normal to do far less than that or nothing at all.
  Baroness Dean of Thornton-le-FyldeI would caution against this going into the Bill. Any regulator worth his salt will publish the rules by which he will operate. Surely—I have done so myself—those rules would state, "We will normally expect to have a minimum of 12 weeks". There will be times when a longer period is needed, but the odd incident will arise where time is not on the regulator's side and he needs that flexibility. Therefore, I do not think that the Bill
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  is the place for such a measure. The regulator needs to take responsibility for operating properly and for publishing his normal guidelines for consultation.
  Baroness NoakesI thank the noble Baroness for that response. I think that my approach is that these are codes of practice.
  I do not quite understand "urgency". Earlier, the Minister gave the example of a scam, which I read about in Hansard. However, I am not clear that issuing a code of practice is necessarily the response which the regulator needs to make. The regulator needs to deal with that particular circumstance and needs to issue a press release, which says, "This has happened and we are not having it happen again and, by the way, we might in due course ensure that our codes of practice reflect that whatever has happened is unacceptable behaviour". I am rather unimpressed by all this talk of urgency on codes of practice. However, I shall not labour the point today because we have gone past the witching hour for Grand Committee. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 165 and 166 not moved.]
  Baroness AndrewsBefore I formally adjourn the Grand Committee, I have two very small announcements to make. First, I draw attention to the unusual starting time on Thursday—11 o'clock. We shall sit from 11 a.m. to 12.30 pm and from 1.30 p.m. to 3 p.m. That has been done with the agreement of all parties. Secondly, the magnificent officials who are here all the time are also here half an hour before the Committee starts every day. So, if there are small points of detail that could be cleared up before the Committee starts, I am sure that they will be willing to meet with Members of the Committee.
  The Deputy Speaker (Lord Hogg of Cumbernauld)The Committee stands adjourned until Thursday at 11 o'clock.
  The Committee adjourned at twenty-four minutes before eight o'clock.

  Judicial Review
  Lord Laird
  asked Her Majesty's Government:

  Why no central records are kept about judicial reviews and their cost; and [HL3536]

  Which public bodies were subject to judicial review in 2003; who were the complainants; how much was paid in legal aid; and to which solicitors. [HL3596]

  The Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer of Thoroton):
  In England and Wales records are kept by the Administrative Court Office of the number of applications made for permission to apply for judicial review, which include details of claimants and defendants, whether permission was granted or refused, and the final date of disposal. The Northern Ireland Court Service holds a central register which records similar information in respect of Northern Ireland applications for judicial review.

  Neither the Administrative Court Office nor the Northern Ireland Court Service record the overall cost of judicial review. This information could only be provided at disproportionate cost.

  Information on which public bodies in England and Wales were subject to judicial review, including who were the complainants, has been placed in the Libraries of both Houses. Information on which public bodies in Northern Ireland were subject to judicial review, including the number of applications made against each public body, has also been placed in the Libraries of both Houses, together with a separate list of the complainants.

  The Legal Services Commissions for England and Wales and Northern Ireland are responsible for the granting and payment of legal aid in relation to judicial reviews issued in their respective jurisdictions.

  The Legal Services Commission for England and Wales is not able to determine, without incurring disproportionate cost, which solicitors received legal aid for judicial review work. However, the total number of judicial review certificates for which a main bill was paid in the calendar year 2003 was 5,740, at a total cost of £20,510,068.

  In Northern Ireland during 2003 a total of £696,000 was paid out of the Legal Aid Fund for judicial review work in respect of 134 cases. A breakdown of the solicitors to whom payments were made cannot be provided for Northern Ireland cases without incurring disproportionate cost.

  It should be noted that not all judicial reviews are funded by legal aid.
  WA136

  Prison Custody: Girls Aged 15 to 18
  Lord Chadlington
  asked Her Majesty's Government:

  How many girls aged between 15 and 18 are currently in prison; and what are the numbers per age group; and [HL3369]

  How many girls aged between 15 and 18 are currently held in prison service custody; and what are the numbers per age group. [HL3370]

  The Minister of State, Home Office (Baroness Scotland of Asthal):
  On 31 May 2004, there was one 16-year-old, 74 17-year-old and 114 18-year-old females held in prison establishments in England and Wales. Of these, there was one 16-year-old, 20 17-year-old and 29 18-year-old females held under prison rules, with the rest in young offender institutions.

  On 31 May 2004, there was one 16-year-old, five 17-year-old and six 18-year-old females held in Scottish penal establishments.

  On 29 April 2004, there was one 16-year-old, two 17-year-old and one 18-year-old females held in prison establishments in Northern Ireland.

  Criminal Offences
  Lord Patten
  asked Her Majesty's Government:

  How many criminal offences were in existence in England and Wales in (a) May 1997 and (b) May 2004. [HL3477]

  Baroness Scotland of Asthal:
  Criminal offences are defined in many statutes both central and local and no attempt is made to keep track of the total number.

  Asylum Claimants: Returns to Libya
  Lord Hylton
  asked Her Majesty's Government:

  Whether it is their practice at present to return unsuccessful asylum claimants to Libya. [HL3574]

  Baroness Scotland of Asthal:
  All asylum and human rights claims made by Libyan nationals are considered on their individual merits in accordance with our obligations under the 1951 UN Refugee Convention and the European Convention on Human Rights (ECHR). Our practice is to return to Libya those whose claims are refused.

  Learner Satisfaction Survey
  Baroness Sharp of Guildford
  asked Her Majesty's Government:

  How much was spent on undertaking the Learner Satisfaction survey, produced by the Learning and Skills Council in 2003. [HL3635]
  WA137
  The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland):
  The views and feedback from learners who have taken up further education, work-based and adult and community learning opportunities funded by the Learning and Skills Council (LSC) is a very important indicator of the quality of the provision that is being delivered. I was pleased to see that the last national survey, published in November 2003, showed that overall 90 per cent of learners were satisfied.

  The survey was commissioned by the LSC and the chief executive has agreed to write to the noble Baroness directly with the information about the costs involved.

  Army Recruitment
  Lord Astor of Hever
  asked Her Majesty's Government:

  Further to the Written Answer by the Lord Bach on 28 June (WA 5), how delaying Phase One (Basic) training after recruitment selection for (a) single service or (b) multi-service recruits will help maintain balance in Army manpower numbers. [HL3515]

  The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach):
  The Army's manpower requirements are dynamic, and subject to change in light of evolving doctrine, the strategic environment, changing commitments, equipment, and technology. To maintain a proper balance in Army manpower numbers it is sometimes necessary to make minor adjustments to inflow and outflow. Controlling when recruits enter the training system is a means of doing so as this determines the point at which they are taken on to trained strength.

  There is currently a pause on some recruits starting their phase 1 training. Some of those who have successfully passed through the recruit selection procedure may be given a date to commence phase 1 training later in the year. This is a short-term measure that has been introduced to help maintain balance in Army manpower numbers, and is likely to continue until October. It does not equate to banning recruitment. There is no ban, freeze or cap on Army recruitment and no one expressing a wish to join the Army is turned away.

  The Army does not conduct phase 1 training of recruits on behalf of the other services.

  Olympic Games 2012: London Bid
  Lord Moynihan
  asked Her Majesty's Government:

  Further to the Written Answer by the Lord McIntosh of Haringey on 16 June (WA 76), whether there has been any change in the financial remuneration of Barbara Cassani for her work as vice-chairman of the London 2012 Olympic Bid since the appointment of MI Associates to work on the technical side of the bid. [HL3619]
  WA138
  The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey):
  Effective from 1 July, Barbara Cassani is supporting the bid in an unpaid position as a vice-chairman.

  Internet Access: Rural Households
  Baroness Byford
  asked Her Majesty's Government:

  How many English villages have access to a community Internet resource within 1.5 miles; and how many do not. [HL3489]

  The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville):
  In its publication The State of the Countryside 2003, the Countryside Agency reported that 54 per cent of rural households are within 2 km of a public access point (UK online centre). This does not include other community access points such as Internet cafes.

  Neonatal Care: Pre-term Deliveries
  Lord Morris of Manchester
  asked Her Majesty's Government:

  What steps they are taking to counter the risk of permanent developmental brain disorder, poor school performance and chronic ill health due to very pre-term delivery and low birth weight; and [HL3271]

  What was the annual incidence of very pre-term deliveries since 1950 in the United Kingdom. [HL3274]

  The Parliamentary Under-Secretary of State, Department of Health (Lord Warner):
  Last year the Government invested an additional £70 million over three years and recurrent funding thereafter of over £20 million per annum to improve neonatal intensive care services. We are also launching later this year, a Children's, Young People and Maternity National Service Framework, the maternity module of which will focus on securing the best achievable outcomes, including very pre-term and low birthweight deliveries which are sadly associated with longer-term morbidity and compromised performance at school.

  The Government's Sure Start initiative covers children from conception through to age 14, and up to age 16 for those with special educational needs and disabilities. This initiative includes the creation of a growing network of children's centres providing integrated early education, childcare, health services, family support and help into employment. The Government are committed to providing children's centre services to all pre-school children and their families in the most disadvantaged areas of England and to those facing the greatest adversity—with a long-term vision of a centre for every community.
  WA139
  There is a need however to improve ways in which morbidity from these causes can be countered. The Confidential Inquiry into Maternal and Child Health will continue the existing programme of inquiries into maternal, perinatal and infant mortality and extend its remit to encompass childhood morbidity and the establishment of a new national enquiry into child health. We expect this will inform an even more focused series of healthcare interventions in childhood.

  The data available on the incidence of pre-term deliveries in England and Northern Ireland are as in the tables. Information relating to Scotland and Wales are matters for the devolved administrations.

  Estimated number of pre-term and very pre-term deliveries, England

  Weeks gestation

  32

  32–37

  Number

  Percentage

  Number

  Percentage

  Total deliveries

  2002–03

  7,900

  1

  32,500

  6

  548,000

  2001–02

  7,200

  1

  32,200

  6

  541,700

  2000–01

  7,500

  1

  34,200

  6

  564,300

  1997–98

  7,000

  1

  34,000

  6

  585,000

  1994–95

  7,600

  1

  33,100

  5

  604,300

  Notes:Prepared by Department of Health, Statistics Division 3G. NHS hospital deliveries only.Data is only available for the selected years.The term delivery refers to a birth episode whereby a multiple birth is counted as one delivery.
  Number of pre-term and very pre-term deliveries, Northern Ireland

  Weeks gestation

  32

  32–37

  Number

  Percentage

  Number

  Percentage

  Total deliveries

  2002–03

  288

  1

  2,212

  10

  21,231

  2001–02

  268

  1

  2,265

  11

  21,302

  2000–01

  261

  1

  2,211

  10

  21,340

  1997–98

  302

  1

  2,372

  10

  23,668

  1994–95

  270

  1

  2,354

  10

  24,010

  Notes:Prepared by DHSSPS Northern Ireland (Source—the Child Health System which is resident in each Health and Social Services Board Area in Northern Ireland).Hospital and home deliveries.The term delivery refers to a birth episode whereby a multiple birth is counted as one delivery.

  Sport and Physical Recreation Promotion: Department of Health Funding
  Lord Moynihan
  asked Her Majesty's Government:

  What is the departmental budget allocated to the promotion of sport and physical recreation by the Department of Health and its associated agencies for each year since 2001–02. [HL3383]

  Lord Warner:
  The Department of Health is committed to developing policies that provide people with the skills, information and support to make and sustain healthy lifestyle choices.
  WA140
  The budget allocated to the promotion of sport and physical recreation by the department and its associated agencies, excluding the National Health Service, for the past three years is set out in the following table.

  £

  2001–02

  90,000

  2002–03

  640,000

  2003–04

  360,000

  Primary care trusts have a key role in delivering local programmes of disease prevention and health promotion, including effective policies for increasing physical activity. Spending on the promotion of sport and physical recreation by the NHS is not recorded centrally.

  NHS: Private Finance Initiatives
  Lord Tebbit
  asked Her Majesty's Government:

  Whether sums committed by public/private partnership schemes to provide facilities within the National Health Service are included in the Government's statement of expenditure on the National Health Service. [HL3442]

  Lord Warner:
  Yes. Section 4 of the Department of Health's Departmental Report 2004 summarises the National Health Service capital investment plans. These include the estimated yearly construction costs to private sector contractors on schemes taken forward under the private finance initiative as well as the figures for the department's capital resource consumption as financed from the amounts voted annually by Parliament.

  Potassium Chloride Concentrate
  Lord MacKenzie of Culkein
  asked Her Majesty's Government:

  Whether they will ban the supply of potassium chloride solution in vials similar to those used for the supply of water for injection. [HL3531]

  Lord Warner:
  Cases have been reported in the United Kingdom and internationally where potassium chloride concentrate has been mistaken for and administered instead of sodium chloride and water.

  The National Patient Safety Agency (NPSA) issued a patient safety alert to the National Health Service in July 2002, highlighting the risks of inappropriate use of potassium chloride concentrate and recommending safety controls to minimise these risks.

  As some clinical procedures (for example cardiac bypass surgery) require the use of potassium chloride concentrate, the product will need to remain available.

  The NPSA is currently completing a consultation to identify new ready-to-use packs, which will further

  WA141
  minimise the use of potassium chloride concentrate in ampoules and vials.

  NHS: Retirement Age
  Lord MacKenzie of Culkein
  asked Her Majesty's Government:

  Whether there are plans to raise the retirement age in the National Health Service to 65; and whether consultations have taken place with the professions and staff organisations. [HL3532]

  Lord Warner:
  There is no nationally determined retirement age for nurses and other non-medical staff. Hospital, public health and community doctors employed under existing terms and conditions of service are required to retire at age 65, although there is provision for an employing authority to extend employment in a locum capacity beyond 65. For consultants working under the 2003 consultant contract there is no age restriction to practise and the requirement that existing general practitioners (general medical services) cannot act as principals after age 70 was removed from 1 April 2004. There is no age restriction on doctors in the personal medical services.

  The Government have said that they intend to proceed with the proposal to move to a normal pension age of 65 in the public services, through reviews of the public service pension schemes and in consultation with employers and employee representatives.

  The NHS Confederation has been asked by the Department of Health to lead a review of the NHS pension scheme on behalf of National Health Service employers and in conjunction with the Department of Health, the NHS Pensions Agency and the National Assembly for Wales.

  Actinic Keratosis
  Lord Henley
  asked Her Majesty's Government:

  What action they are taking to facilitate early diagnosis and treatment of actinic keratosis in England. [HL3562]

  Lord Warner:
  Actinic keratosis is a dermatological condition with a small risk of cancer, typically brought on by chronic exposure to sunlight. There are two equally important health issues that need to be addressed: how to treat the condition once it occurs; and how to prevent it in the longer term through effective health education.

  Treatment of actinic keratosis is relatively straightforward and involves freezing or cutting away any skin lesions. Guidance published by the Royal College of General Practitioners on the role of general practitioners with a special interest in dermatology will help to improve advice, training and support for general practitioners and other members of the primary health care team in the management of common skin conditions.
  WA142
  We are also addressing the need to improve people's awareness of preventing skin conditions like actinic keratosis. We have commissioned Cancer Research UK to provide the SunSmart skin cancer prevention campaign for the next three years. This will provide:
  posters at all UK doctors' surgeries to help general practitioners and practice nurses identify suspicious skin lesions;
  health information leaflets for distribution to patients by doctors' surgeries.

  Free Eye Tests
  Lord Hoyle
  asked Her Majesty's Government:

  How many pensioners have received free eye tests in each of the past two years; and what was the cost. [HL3588]

  Lord Warner:
  From 1 April 1999, the Government restored eligibility to free National Health Service sight tests to everyone aged 60 or over regardless of income. Eligibility is therefore for all over 60s, not just those who are pensioners.

  The total number of NHS sight tests paid for patients aged 60 and over in England for the years 2001–02 and 2002–03 (the latest years for which figures are available) are detailed in the following table, as is the estimated cost of those sight tests.

  Year

  Sight tests for those aged 60 and over

  Cost of sight tests for those aged 60 and over

  2001–02

  4,012,950

  £65 million (E)

  2002–03

  4,135,710

  £69 million (E)

  (E) = Estimate

  The number of sight tests cannot be equated to the number of patients. Although most people do not come back for a sight test within the year, some patients suffering from medical conditions are advised to have re-examinations sooner.

  Medical Treatment Abroad: E112 forms
  Lord Chadlington
  asked Her Majesty's Government:

  How many people have been treated abroad under the E112 health benefit scheme since January 2003. [HL3603]

  Lord Warner:
  Patient numbers are not available but 1,336 E112 forms have been issued between 1 January 2003 and 30 June 2004. Some of these relate to repeat visits by individual patients.

  Dental Implants
  Baroness Howe of Idlicote
  asked Her Majesty's Government:

  Whether they are considering the recognition of implantology for use within the National Health Service; and

  [HL3629]
  WA143
  How near the General Dental Council is to registering implantology as a recognised dental technique; and [HL3630]

  How many United Kingdom dentists carry out implantology techniques; and how many recommend their patients to specialists in this field; and

  [HL3631]

  How many patients have had dental implants in the United Kingdom; and how this compares with comparable figures for (a) the United States; and (b) leading European Union member states; and

  [HL3632]

  What is the average charge for each dental implant in the United Kingdom. [HL3633]

  Lord Warner:
  Dental implants are not within the scope of the General Dental Services, but are available under the National Health Service in the Hospital Dental Service, either as an in-patient or outpatient procedure. All general dental practitioners can refer a patient to a hospital consultant where they judge it to be clinically necessary.

  The General Dental Council's ethical guidance to registrants states that dentists should practise within the limits of their knowledge, skills and experience. We are aware that some dentists offer implants to private patients, but information is not held by the Department of Health on cost, nor is information held centrally on the number of implants fitted in the United Kingdom or in overseas countries.

  Vehicle Emissions: Health Impacts
  Lord Stoddart of Swindon
  asked Her Majesty's Government:

  What are their most recent estimates of deaths and illnesses caused by vehicle emissions annually. [HL3641]

  Lord Warner:
  It is accepted that vehicle emissions are associated with deaths and illnesses. Estimates are made of the likely health impact of changes in vehicle emissions as a result of specific vehicle emission policies when the costs and benefits of these policies are assessed. However, estimates of deaths and illnesses caused by total vehicle emissions on an annual basis are not available. The Department of Health's Committee on the Medical Effects of Air Pollutants will begin work on a report on the quantification of the health effects of air pollutants next year and this will consider the health impact of emissions from the transport sector.

  Obesity
  Lord Clement-Jones
  asked Her Majesty's Government:

  How they plan to increase the public's understanding of the impact of increased incidence of obesity in children on cholesterol levels, high blood pressure and diabetes in later life and of the risk factors associated with these conditions. [HL3684]
  WA144
  Lord Warner:
  The Government have recently conducted a major consultation exercise on improving public health. The consultation covered a range of lifestyle issues that would help to tackle childhood obesity, including diet and physical activity. Responses to the consultation exercise will inform the development of a public health White Paper, expected later this year.

  We recognise the impact that obesity has on health and disease and are committed to halting the current trend. At present a variety of initiatives are in place that also raise awareness about the impact of obesity on health. These including the reform of the Welfare Food Scheme; action within schools (such as the Food in Schools Programme); the 5 A DAY Programme including the School Fruit and Vegetable Scheme and action to address sugar, fat and salt levels in the diet. working with the Food Standards Agency (FSA). The FSA, as part of its Nutrition Action Plan, also supports a wide range of initiatives aimed at improving the diet and nutrition of children.

  Increasing levels of physical activity among children is also a key priority across government. Significant investment is being made to transform physical education, school sport and club links over the next three years.

  Cardiovascular Health
  Lord Clement-Jones
  asked Her Majesty's Government:

  What plans they have to increase awareness among the public regarding raised cholesterol levels as cardiovascular risk factors. [HL3683]

  What plans they have to increase awareness among the public of the benefits of reducing cholesterol, regardless of its level. [HL3685]

  Lord Warner:
  The Government have recently conducted a major consultation exercise on improving public health. The consultation covered a range of lifestyle issues, including diet and physical activity. Response to the consultation exercise will inform the development of a public health White Paper, due later this year.

  High intakes of saturated fat can raise cholesterol levels. The Government provide practical guidance on how consumers can reduce the saturated fat in their diets through healthy eating advice. As part of a balanced diet, foods rich in saturated fat need to be replaced with unsaturated fats such as oil rich fish and foods containing oils such as sunflower, rapeseed and olive oils. The Department of Health also funds a range of non-governmental organisations to increase awareness of the benefits of eating a healthy diet and of active lifestyles.

  The pharmaceutical industry also conducts its own campaign to raise awareness of the benefits of statins in moderating the risk of coronary heart disease.
  WA145
  Lord Clement-Jones
  asked Her Majesty's Government:

  Whether they will provide clear diet and lifestyle information and advice to help reduce the incidence of cardiovascular disease. [HL3686]

  Lord Warner:
  The Government have recently conducted a major consultation exercise on improving public health. The consultation covered a range of lifestyle issues that would help reduce the incidence of cardiovascular disease, including diet and physical activity. Responses to the consultation exercise will involve the development of a public health White Paper, expected later this year.

  Smoking is the major preventable cause of cardiovascular disease. The Government have a comprehensive programme of awareness raising, advice and information to help individuals. This includes: the recent Department of Health funded British Heart Foundation "fatty cigarettes" campaign; new stark health warnings on tobacco products, including "Smoking clogs the arteries and causes heart attacks and strokes"; and nationwide NHS Stop Smoking Services.

  Diet and lifestyle information is provided at present within the 5 A DAY programme, which includes a number of communications initiatives to inform consumers of the benefits of eating of at least five portions of a variety of fruit and vegetables a day for heart health as well as other health benefits. Regarding physical activity, a campaign to increase exercise is being piloted this summer in the north-east of England. Led by Sport England, the campaign will encourage people to include more physical activity in their daily routine.

  The Food Standards Agency, as part of its Nutrition Action Plan, supports a wide range of initiatives aimed at improving the diet and nutrition of the population. The Department of Health also funds a range of non-governmental organisations to increase awareness of the benefits of healthy diet and active lifestyles,
  WA146
  including a campaign to make the public aware of the importance of knowing their blood pressure numbers.

  Smoking in Public Places
  Lord Stoddart of Swindon
  asked Her Majesty's Government:

  What claims of damage to health caused by tobacco smoke in the environment have been made by the medical doctors who have recently requested a complete ban on smoking tobacco in indoor public places; what clinical and statistical evidence they provided to support their request; what are the sources of such evidence; and whether they have been tested by any objective expert body. [HL3689]

  Lord Warner:
  The Government received 4,500 letters from doctors on the need for smoke-free public places as a result of the initiative of the British Medical Association (BMA).

  There is clear evidence of the harm done by secondhand smoke. In 2002, the WHO's International Agency for Research on Cancer published a summary of its monograph on the evaluation of carcinogenic risks to humans, which concluded that "there is sufficient evidence that involuntary smoking (exposure to secondhand or 'environmental' tobacco smoke) causes lung cancer in humans". The full monograph Tobacco Smoke and Involuntary Smoking was published in 2004.

  The Scientific Committee on Tobacco and Health (SCOTH) in 1998 concluded that secondhand smoke is a cause of lung cancer, heart disease, respiratory illness and asthma attacks in children, and is a cause of sudden infant death syndrome.

  SCOTH is undertaking a review of studies since 1998 and its report is expected shortly.

  The BMA has included its views on smoke-free public places in its response to the Choosing Health? consultation. We are currently considering all the many responses we have received. These will inform the development of a White Paper on improving health that we will publish later in the year.

  Northern Ireland Forest Service: Key Performance Targets 2004–05
  The Lord President of the Council (Baroness Amos):
  My honourable friend the Parliamentary Under-Secretary of State for Northern Ireland has made the following Ministerial Statement.

  The Forest Service is an executive agency of the Department of Agriculture and Rural Development for Northern Ireland. It acts on behalf of the department for the promotion of the interests of forestry in Northern Ireland, the development of afforestation, the production and supply of timber, and the maintenance of adequate reserves of growing trees. Its functions include the delivery of social, recreational and environmental benefits for the public at large.

  I have set the following key targets for the agency for the 2004–05 business year:

  To publish a strategy for the delivery of forest policy by December 2004;

  To establish 500 hectares of new plantations;

  To retain certification under the UK Woodland Assurance Standard;

  To replant 750 hectares of land following harvesting;

  To produce 400,000m3 of timber for sale to the wood processing sector;

  To achieve 400,000 paying visitors to forests.

  Crown Prosecution Service Inspectorate: Annual Report
  The Attorney-General (Lord Goldsmith):
  The annual report of HM Crown Prosecution Service Inspectorate has today been published and laid before Parliament. Copies have been placed in the Libraries of both Houses.

  National Employers' Advisory Board
  The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My honourable friend the Parliamentary Under-Secretary of State for Defence (Mr Ivor Caplin) has made the following Written Ministerial Statement.
  I am pleased to inform the House that yesterday evening I signed the National Employers' Advisory Board memorandum of understanding with Lord Glenarthur DL, chairman of the National Employers' Advisory Board.
  The memorandum of understanding sets out the responsibilities and requirements of members of the National Employers' Advisory Board. It underlines the seriousness with which the Ministry of Defence treats employers and their support for Reservists. Lord Glenarthur and the National Employers' Advisory Board play a central role in ensuring that the Government are accurately informed about employers' attitudes and concerns.

  Adult Learning Inspectorate
  Lord Bach:
  My honourable friend the Parliamentary Under-Secretary of State for Defence (Mr Ivor Caplin) has made the following Written Ministerial Statement.

  I am pleased to inform the House that I have signed a memorandum of understanding with the Adult Learning Inspectorate on behalf of the MoD. This MoU provides for the introduction of an agreed annual rolling programme of independent inspection, reinspection and oversight of defence training and education, including the welfare and duty of care provided within the training environment. The MoD is one of the largest single providers of training and education in the United Kingdom, particularly for those in the 16-plus age range. The MoD offers training for over 300 specialist career paths, and its educational development programmes range from basic skills and vocational qualifications to postgraduate level.

  In signing this, the MoD seeks to achieve:

  The implementation of quality assurance arrangements which guarantee high standards, meet MoD requirements, add value to the expenditure of public money and at least match the quality of comparable civilian learning programmes.

  The ability to have access to the national learning community to share good practice and benchmark defence training & education.

  The ability to maintain and update professional skills through continuous professional development activity in order to support the lifelong learning agenda and skills development in the MoD.

  The MoD and ALI will work together to develop appropriate working arrangements to facilitate a suitable training and inspection programme that will complement existing internal quality assurance and improvement procedures of the armed services implemented through the defence systems approach to training quality standard (DSAT QS); a British Standards Institute accredited private standard.
  WS53
  This MoU marks an important milestone in helping to ensure that the MoD's highly regarded training and education standards continue to improve and to ensure that its service and civilian personnel are provided the best opportunities to develop their skills in order to carry out their demanding roles in the face of the challenges of the 21st century.

  A full copy of the MoU is being placed in the Library of both Houses.

  School Funding 2005–06
  The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland):
  My honourable friend the Minister for School Standards (Mr David Miliband) has made the following Written Ministerial Statement.

  This statement relates to school funding in 2005–06.

  In his Statement to the House on 29 October 2003 my right honourable friend the Secretary of State set out a package of measures designed to restore confidence in the school funding system and deliver stability in school budgets and predictability for head teachers and governors. These included a minimum increase in every school's budget; additional resources to help every LEA to support schools with additional pressures; the reversal of planned cuts in the Standards Fund; and targeted transitional support to help all schools to achieve balanced budgets. He explained that these arrangements would apply for the two years 2004–05 and 2005–06, but that the precise level at which the various elements would be set would be updated for 2005–06.

  Evidence from LEAs' budget statements suggests that the measures put in place this year have been successful in restoring stability and predictability. In particular:

  the vast majority of authorities have passported the increase in their schools formula spending share to schools in full;

  overall, over two-thirds of schools received a funding increase above the level of the minimum guarantee. The remaining third received a funding increase in line with the minimum guarantee;

  there is no significant difference in the number of schools receiving the guarantee by type of school (primary, secondary, special) or by size of school;

  the guarantee has been helpful in giving schools earlier information about the minimum level of their budget to aid planning and to provide stability and predictability; and

  the limit on central spend by LEAs has helped to maximise schools' own budgets, while allowing for special circumstances in some authorities.

  We now need to look ahead to 2005–06. One of the things that authorities and schools have been telling us over the past year is that they would welcome earlier announcements from central government in order to enable them to plan ahead effectively. I am pleased
  WS54
  therefore to be able to make this announcement over three months earlier than the equivalent announcement last year.

  As in 2004–05, our starting point has been an analysis of the cost pressures which will face schools in 2005–06. My officials have discussed these cost pressures—including increases in teachers' pay and support staff pay and pensions—in detail with local government representatives and the head teacher associations. Excluding the costs of workforce reform, to which I will return, our best estimate is that cost pressures on the average school in 2005–06 will be in the range from 3.8 per cent to 4 per cent. There remain some uncertainties, in particular around the cost of local government pensions, which will impact unevenly on authorities.

  We have also considered the costs of the implementation of the national agreement on workforce reform. Earlier in the year, with the support of our partners, we undertook a survey of schools in six LEAs to get a better understanding of their starting points, how they plan to deliver the workforce reforms and to what extent this can be achieved through the redeployment of existing resources. I am grateful to all those LEAs and schools for their help.

  This work confirms that the pressures of workforce reform, and in particular guaranteed time for planning, preparation and assessment, will impact mainly on primary and nursery schools in 2005–06. The precise cost for individual schools will, of course, depend on the strategies chosen to implement the reforms and the amount of time that needs to be created, but we expect the average cost pressure to be between 0.8 and 1 per cent for primary and nursery schools. The survey also indicates that most secondary and special schools will be able to implement the September 2005 contractual changes from their existing resources. We recognise that some secondary and special schools may incur additional costs, and will undertake further work with our partners during the autumn term to examine the nature and extent of these costs, including in particular the transfer of exam invigilation from teachers. It will be for schools and LEAs to take forward the results of this work through workforce remodelling and through the headroom provided under the arrangements I am announcing today.

  Of course, remodelling is not just about extra funding. We will continue to work with our partners, the National Remodelling Team and the network of LEA remodelling advisers and consultant leaders to offer guidance and support for all schools in implementing workforce reform. In particular, we will examine the support required by schools to manage effectively the transfer of exam invigilation from teachers from September 2005.

  Our priority for 2004–05 and 2005–06 has been stability in school budgets, and in 2005–06 all schools will therefore continue to have a guaranteed minimum funding increase which is at least equal to the average cost pressures which schools are likely to face. However, I also believe that it is important to retain

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  flexibility for LEAs to respond to local circumstances by directing additional resources where they are most needed, especially since the costs of workforce reform will vary significantly between schools depending on their starting point.

  Against that background, I have decided that in 2005–06 the minimum guarantee should again be set at 4 per cent for secondary schools. As in 2004–05, this means that pupil-led elements of schools' budgets will increase by 4 per cent per pupil, and fixed elements by 4 per cent in cash. A secondary school whose pupil numbers stay the same between 2004–05 and 2005–06 will therefore be guaranteed at least a 4 per cent per pupil increase in its overall budget next year, on top of a minimum increase of 4 per cent this year. Secondary schools whose pupil numbers decline will receive an increase of more than 4 per cent per pupil, to help to cover their fixed costs. And those whose pupil numbers rise will receive at least a 4 per cent increase in their cash budgets, and an overall per pupil increase of at least 3.9 per cent.

  For primary schools, I have decided that the minimum guarantee should be set higher, at 5 per cent, to take account of the additional costs which these schools face in implementing workforce reform. Primary schools whose pupil numbers remain unchanged will therefore receive at least a 5 per cent per pupil increase, and those with declining numbers will receive more than 5 per cent. Those with rising rolls will receive at least a 5 per cent cash increase in their budgets, and an overall per pupil increase of at least 4.9 per cent. As with 2004–05, special arrangements will apply to schools with 75 pupils or fewer.

  The available evidence suggests that most special schools will be able to implement the national agreement on workforce reform at no net cost, though as I have mentioned we will do more work on this with our partners during the autumn term. Where costs arise they are likely to be very uneven across schools, and it is therefore more appropriate to deal with them by targeting LEA resources rather than through a higher minimum guarantee. The guarantee for special schools will therefore be set at 4 per cent for 2005–06. The special arrangements that applied to the calculation of the guarantee for special schools will continue in 2005–06.

  Nursery schools received delegated budgets for the first time in 2004–05 and therefore no guarantee applied to them this year. We have agreed with our partners that the cost pressures on nursery schools are likely to be similar to those on primary schools in 2005–06 and therefore the guarantee will be set at 5 per cent for them. LEAs will be able to choose, in consultation with nursery schools, whether to operate the standard pupil-led form of the guarantee for nursery schools or a place-led version like that for special schools, depending on how their nursery schools are currently funded.
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  All of these figures are the minimum increase in funding which schools of each type will receive in 2005–06. As with 2004–05, we expect the majority of schools to receive an increase which is higher than the minimum guarantee.

  Our work with LEAs on the cost of workforce reform also suggested that the costs of implementing the national agreement are likely to be highest for very small schools—those with under 100 pupils. The main reason for this is that it can be more difficult for a very small school to secure small proportions of support staff time in order to release teachers for planning, preparation and assessment time. In urban areas schools can collaborate to resolve these difficulties, but that can be harder to do in rural areas where travelling distances are greater. Subject to consultation, I therefore propose to apply a larger increase to the sparsity unit cost in the primary formula within the schools formula spending share, to direct more resources to authorities with a high proportion of schools in this situation. I am also doubling the announced increase in the school standards grant band for schools with under 100 pupils, to ensure that all small schools have some extra help with the costs of workforce reform.

  In October the Secretary of State promised that the income schools receive from the school standards grant and the Standards Fund would be uprated in line with the minimum guarantee in both 2004–05 and 2005–06, and the Learning and Skills Council promised to do the same for school sixth form provision. I can confirm today that:

  Standards Fund support for schools will be increase by 4 per cent in 2005–06. Detailed allocations will be announced in the autumn.

  Schools will be entitled to either a 4 per cent per pupil increase in their school standards grant or their announced SSG band for 2005–06, whichever is higher; and

  the Learning and Skills Council will increase all its funding rates for school sixth forms by 4 per cent in 2005–06.

  Of course the minimum guarantee must be backed by adequate resources for LEAs. Next year we expect the average increase in the schools formula spending share to be around 7 per cent per pupil, and I intend to set the minimum increase which any authority can receive at 5.5 per cent per pupil. This is a minimum increase—the increase for most authorities will be higher. Setting the minimum increase at this level will again ensure that all authorities have some headroom after implementing the guarantee, to allow the local funding formula to operate or to direct additional resources where they are most needed. The provisional increase for each authority will be announced at the time of the local government settlement in the autumn.

  Authorities where teachers are on the outer London teachers' pay scale face particular pressures in 2005–06 because the value of that scale will increase by a higher amount than the national average increase in teachers' pay as a result of the award for September 2005 following recommendations by the School Teachers'

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  Review Body. The minimum increase in the schools Formula spending share will therefore be set at 5.8 per cent for these authorities. Again, increases for individual authorities will be announced in the autumn.

  Next year the Government will again expect each authority to passport in full its SFSS increase into a matching increase in its schools budget, unless there are wholly exceptional circumstances.

  As in 2004–05, we also expect LEA spending on their central education budgets to rise no faster than spending on schools next year. LEAs will again be able to seek an exemption where exceptional local circumstances arise—23 such exemptions were agreed this year. The view of the Schools Forum will again be important when any applications for exemptions are being considered.

  In October the Secretary of State announced a package of transitional support which would he available to authorities to help schools experiencing particular financial difficulties to bring their budgets back into balance. The main element of that package was a targeted grant, totalling £120 million nationally, which went to the 51 authorities which would otherwise have had the lowest increases in revenue support for education between 2002–03 and 2004–05. The Secretary of State indicated in his October Statement that around half this amount would he available to the same authorities in 2005–06.

  I can now confirm that the same 51 authorities will be eligible for exactly half of this year's allocation in 2005–06, subject to broadly the same conditions that applied this year. In particular, eligible authorities will need to update the transitional support plans which were agreed with my department earlier this year, to show how they will use the additional funds to target schools in the greatest difficulty and bring their budgets back into balance. I am placing a list of transitional grant allocations in the Library. No further transitional grant will be available from 2006–07.
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  This year we also amended the school funding regulations to give all local authorities the flexibility to target their own resources outside their school funding formula to support schools in financial difficulty. A number of authorities have made use of this flexibility in 2004–05 and we propose to continue it in 2005–06.

  Finally, this year my department, working with the National College for School Leadership, KPMG and the head teacher associations, set up a programme of financial management training and support to help head teachers and governors to manage their budgets more effectively. This programme, which has focused in the first year on schools in authorities in receipt of transitional grant, has been very successful and received very positive feedback.

  I am pleased to say that the programme will continue into the coming academic year, and will be expanded to cover schools across the country. Workshops will be available for up to 10,000 schools, and will be based on a menu of options from which LEAs and schools can draw. In particular, workshops will be available to support schools with the financial management aspects of workforce reform, and of falling rolls. Follow-up consultancy will be available for schools that need additional support over and above the workshops, and financial management master classes will be held for LEA staff. The financial management in schools website will also be maintained and enhanced.

  The decisions I have outlined today will continue the successful arrangements which have been introduced this year and ensure that the stability and predictability that has been restored to school funding will continue in 2005–06. However, I have always been clear that these arrangements were a short-term measure. The dedicated schools grant that the Government have announced for 2006–07 and beyond, together with guaranteed three-year budgets for schools, will give head teachers and governors unprecedented financial security and confidence, and the ability to plan for the future. The arrangements for 2005–06 that I have announced today will provide an effective bridge to those longer-term arrangements.