Sitting of 18 March 2004

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair][MR. SPEAKER in the Chair]
Preamble
SIR NICHOLAS WINTERTONin the Chair]

The Scientific Response to Terrorism
Relevant documents:Eighth Report from the Science and Technology Committee, Session 2002–03, HC 415–, and the Government's response thereto, Cm 6108.]
Motion made, and Question proposed, That the sitting be now adjourned.—[Charlotte Atkins.]
Mr. Deputy Speaker (Sir Nicholas Winterton):I call the Chairman of that important Committee, who is a distinguished Member of the House, Dr. Ian Gibson.
2.30 pm
Dr. Ian Gibson (Norwich, North) (Lab):Thank you, Mr. Deputy Speaker—you flatter me. I am pleased to deliver the report and to introduce today's debate. Although this is an important subject, the debate is not unique. For many years we have talked about science and its role in defending the state and the world against terrorist acts. We did so in the late 1960s, particularly in relation to events in Ireland and so on—the British Society for Responsibility in Science examined events in Northern Ireland and how to allay some effects of the acts that went on there. Such consideration continues today.
It is appropriate that we are having this debate today, in the wake of the atrocities in Madrid. We offer our great respect to the people there, who have stood up with great dignity and said that enough is enough. We associate ourselves with them—not only those in the scientific community, but the whole community in Spain who have suffered that atrocity. We believe that a similar event may happen here—indeed, many people in this part of the world probably thought that it had happened this morning, when Parliament square was closed off. Thankfully, the cause was a spillage from a chemical container after a crash, but it could have been the type of event that we all dread.
That is the spirit in which the Committee entered into our deliberations and investigations. It was a spirited inquiry. We examined how counter-measures against biological, chemical and radiological terrorism are informed by science and technology; how the surveillance of dangerous chemicals and pathogens is co-ordinated nationally and internationally; the policies that we have here and internationally to respond; the public communications policy on such threats and on the responses to biological, chemical and radiological terrorism; the relevant research being undertaken in the UK and the controls that we place on that; and the need for an ethical code of conduct for scientists working with pathogens and chemical substances.
I am pleased that we have the opportunity today to discuss the report. Yesterday, in an astronomically superb Budget, science was mentioned—perhaps more times than I have had hot dinners in a month—not
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only in terms of its relationship to terrorism, but in terms of improving health, understanding of climate change and so on. I am proud to be associated with our Government's putting money into such fields. Of course, terrorism was also mentioned, so our debate is very apt.
We recognise that we now live in a dangerous world. The attacks in Washington, Bali and, of course, New York have heightened our resistance to such events. Terrorism is not merely about suicide bombers, or planes crashing into twin towers; it is now about individuals' propensity to release white powders. White powders were released last weekend, and good science was required to identify whether they were talcum powder or anthrax spores. In the aftermath of New York, panic was created in that city and in Washington by the release of suspect packages. The postal services in this very place were actively looking at the possibilities. At one end of the scale are pranksters; at the other are serious terrorists who are trying to impose their ways and ideals on the world. I always think that that is a vicious, nasty way to get one's political views over—ht affects defenceless people. We have to take every possibility seriously and try to make sure that nothing gets past our surveillance systems. We can never claim to be 100 per cent. perfect, but we can be 80 or 90 per cent. sure that we are pulling out all our stops against terrorism and such a use of science.
I often wonder how to define terrorism, given how the word has been used. The literature that I have received from the Halifax, where I have an account, defines it brilliantly. Insurance companies and building societies have had it right for a long time, but I bet that few right hon. and hon. Members have looked at their building society policy to see how such institutions define terrorism. The Halifax defines it as
"the use, or threat of use, of biological, chemical and/or nuclear force or contamination by any person(s), whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purposes including the intention to influence any government(s) or put any section of the public in fear."
Gosh—that definition covers everything. It makes us sit up and think that such institutions have been thinking it through. Hopefully, we can relate to that attitude and see the whole fight against terrorism in those terms.
Before discussing the inquiry, I must thank the Committee Clerks, whose brilliance is often exposed by our Committee, through Radio 4 and letters to Ministers. They keep us in check—by gosh, that is sometimes a hard job, but they do it brilliantly—and I thank them for that. I also thank the people who have hosted us, such as the Home Office officials who steered us through difficult waters, and the British embassy in Washington and the consulates-general in Atlanta and San Francisco, who hosted the Committee on its annual visit to the United States, which was very useful. I must also thank our well known and distinguished specialist advisers: Professor Roy Anderson of Imperial college; Professor Alastair Hay of Leeds university, who was, of course, strongly associated with the David Kelly inquiry; Professor Bill Keevil from Southampton university; and Professor Michael Elves, who used to work for Glaxo Wellcome. They helped us in our inquiries, and tailored and supported us in our question.

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Although many issues should be highlighted, today I shall address three main points in the report, the first of which is openness and security. I do not do so vindictively; I simply want to question how Select Committees, through our inquiries, are able to obtain information to inform and instruct us, thus allowing us to feel as though we are making a responsible, well researched response to the cases being examined. Another job of mine is to sit on the Liaison Committee with the Chairmen of other Select Committees. A few hours ago, the Foreign Affairs Committee's first special report on the decision to go to war in Iraq was published. It identifies many of the same problems of openness and security that our Committee faced, although I shall not go into all the instances detailed in the report.
I believe that the issue will be raised on the Floor of the House, and might be resolved there. How is the judgment made on whether individuals are to be allowed to go before a Select Committee to give information and to answer questions honestly? How is that balanced against their role of protecting the state, the nation, the realm and so on, which means that they cannot give information that might be highly secret and might be given to the enemy or terrorists? That is an extremely difficult balance to strike, and no one has a perfect solution, but we learn by experience. As the Chairman of the Committee, I was engaged in many back-room conversations with all sorts of people who are high up in the Government about getting hold of information, and I often found that things that seemed to be secret were not. Quite a lot of them were on websites. Even the high-ups in Government do not always know exactly what is out there. Perhaps we should address that.
Talking to people behind the scenes resolved a lot of misunderstandings. For instance, some people thought that we were out of order for conducting the inquiry. We made it clear that we were looking at the use of science and technologies in the war against terrorism. We did not want to know the dreadful secrets—who knew what and when, and who said what to whom. We wanted to know what was going to happen, who made the decisions, and whether decisions on new areas of endeavour would be made. After discussion, those matters were resolved—it took a bit of hammering out, but we got there in the end, and I am grateful for that.
The Home Office originally greeted us with some antagonism and, although I say this to my right hon. Friend the Minister for Citizenship and Immigration in real friendship, we felt somewhat slighted at the time. At no point were we attempting to discover dreadful secrets. We just wanted to know what was being done in a general sense. For example, when the Committee was examining what was happening on the London tube, we did not want to know details about the District line or the Circle line; rather, we wanted to know that general problems were being looked at, that questions were being asked and that progress was being made. That information was hard to get. The Foreign Affairs Committee—for obvious reasons—encountered much the same attitude during its work on Iraq. The problem is getting to people. If they do
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not want to answer a Select Committee member's question, fine—they can say, "I'll write to you," or, "I'll have to take advice on this." We are not there to nail people to the carpet and put them under that pressure. Our job in Select Committees is to allow the public to see that there is proper, open scrutiny of processes in this place. As politicians, it does us good to engage in such processes. I have got that off my chest now. I hope that we never have to go through such an experience again.
When we conduct inquiries, we talk to the Chairmen of other Select Committees so that we do not cross each another. For example, when we examined scientific teaching in schools, I had no problem with my opposite number on the Education and Skills Committee—we talked about the problem, each asking the other whether his Committee wanted to do the job. On another subject, I might say, "No, you do it", to which the reply might be, "Great, we'll keep in touch". That is the spirit we need, especially in the field of science and technology, which crosses boundaries.
The US National Academy of Science undertook studies of the scientific response to terrorism—that is why we went there; we knew that the people there were up to the work. The information that the academy gave the US Government about the gaps in capability was published freely. The academy agreed to limit distribution of only one chapter, an agricultural study, which was fair—that chapter was about problems in the agricultural mid-west and so on. For a long time, the only studies that we came across in this country were secret and denied to us. Those who think that we might have been overstepping the mark must forgive us, because we had the American example before us. I appreciate that American society is wide open and the people there love talking—well, I wonder sometimes, but more seems to come out there because of their structures and the openness of American society. Many of us feel that that is something that we in this country might mimic.
I am interested in that topic, because my friend Sir David King, the chief scientific adviser, told our inquiry:
"I have…travelled around the United States and talked to a large number of groups both in private and in public and…I would say it becomes immediately apparent to me I can say less in public about what we are doing than my counterparts in the United States could say".
That statement is illustrated by recent events, when David King was told to shut up about climate change versus terrorism and so on. I might add that David King has said similar things to others down the line. The problem is partly to do with our culture and the way we work. Our experience is that that does not happen in the United States to quite the same extent, and it was illuminating to see how easy it is to conduct work on science and terrorism there.
It was a great privilege to visit the top brass at Fort Dietrich, the Lawrence Livermore, universities, Capitol Hill, the Department of Homeland Security, the Department of Health and Human Services and other places that I had never in my whole life imagined I would visit. I never felt that there was any question that those people would not answer, except for one moment in Riverside, California. The chap speaking to us said, "I'm not sure I should be telling you this, but

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I will anyway." He told someone else to go out just to check and carried on speaking. The other guy came back and said, "It's okay, carry on." Well, the chap had said it by then. That atmosphere made us feel that we were learning something and that we could apply that information to the situation in this country.
As my right hon. Friend the Minister herself told the Committee, secrecy is not in itself something that we should protect and hold up as a virtue. We should try to open things up.
Mr. Robert Key (Salisbury) (Con):Will the hon. Gentleman confirm that all the information that we were given in confidence at establishments that we visited in this country remained confidential, and that is extremely important because it means that our Select Committee—indeed, all Select Committees—can be trusted with such information?
Dr. Gibson:Of course I confirm that. The Select Committee visited various places in the hon. Gentleman's constituency, including Porton Down. There can be nowhere more secret than Porton Down, which is at the forefront in its work to protect the nation and solve problems. Its staff are so knowledgeable. However, I have to say that most of their work is in defence, not civil defence. We discovered that more work goes into Ministry of Defence projects than protecting the public.
I believe that I represent the Select Committee when I say that the more the public know, the more confident they become. Although there are limits, of course, trust becomes an issue if the public believe that they are not being given information. We hear that all the time, whether we are talking about genetically modified crops, measles, mumps and rubella-MMR-jabs or Iraq. Politicians have to judge when to release information to make people feel better. For example, the Washington metro issued a press release describing how its detection system would operate in the event of a chemical or biological weapon attack. I do not particularly want to know the details; I instantly forget them anyway, and I am much more interested in other things that happen in the United States. However, the fact that the information is available on a website allows people to feel that something is being done, whether it is detecting a radiological weapon, a biological weapon or whatever. That contrasts with our Committee's efforts to find information about the tube in this country.
As many people have said, there is a heightened risk in this country. People travel on the tube in the morning. I travel to work at 7 o'clock. That is, of course, when the working classes go to work, so fewer of them are likely to be blown up. I suppose that the time to hit the middle classes would be at 9 o'clock in the morning. Both early-morning tube goers and tube goers who travel later in the morning need to know what would happen if someone released something. If someone had released something in Parliament square this morning, I would have had every confidence in the services' response. I watched how the police instantly cleared the place and the fire brigade got to work. That is fine in London, but would that happen at the Forum in Norwich if, one Saturday morning, my right hon.
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Friend the Secretary of State for Education and Skills and I were leading the charge and talking to members of the public about a major higher education issue? Suppose that they were all in there listening and drinking coffee—I assure hon. Members that thousands would be listening to us—and someone did something. Could the Norfolk response force respond fast enough? Having made local investigations, I have my doubts. We never know where such an incident will happen.
The Select Committee met members of MI5 and MI6. It was all very secret, but one thing that I remember—perhaps I should not divulge it—is that Parliament, while an obvious target, would not necessarily be the place where an attack would happen. As the Home Office said this week, one cannot make assumptions about where it might happen. We must be ready for an instant response on a geographical basis to whatever the problems might be.
I have rabbited on enough about openness. The Select Committee examined the homeland security situation in the United States. We were right to say that we should not invest billions and billions of pounds in a homeland security unit, as they have in the United States, even though we have the money. Every time the Chancellor stands up, I feel so confident that money will appear for whatever is necessary. However, the arguments against such a department are not simply financial; they relate to the necessary structures, and there are relevant structures in this country. We have experience, built on history, of handling terrorist attacks and bombings. Everyone here knows that. However, the Committee asked that something be done about creating a Home Office defence research centre. Lots of people have lots of information about health, vaccines and so on, but it is spinning around in a maelstrom—it is not joined up. We feel that we need a bricks and mortar building or at least a virtual set-up of some sort, so that people could access new information about scientific discoveries, such as chemical detection mechanisms, or ways to detect powder containing the anthrax bacillus. We feel that we need some means of co-ordinating information, so we were disappointed when the Home Office said that the necessary provisions were all there and that co-ordination would kick in, just like that, if there was an incident.
At my age, however, I am quite cynical about the "we British will muddle through" philosophy. People say, "We will muddle through if something happens. It will be okay," but let us face it, the attacks that happened in Madrid were, in a sense, obvious—the effects of the bombs were centred on one geographical area and all the organisations could focus there. However, the fallout from a biological or chemical weapon could blow around. As the Committee saw at Porton Down, excellent research is being done on modelling air plumes to determine how they might, at certain times of the year and with the wind in a certain direction, move from one place to another. Such research is going on, but how do we know that it will get to all the people who are interested in the subject? Do the fire service or railway staff know about it? How would they get that information? If something happened, who would tell them, "We've got to go over there. The wind's moving in that direction, but it might move that way."? Who would co-ordinate such things?

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I know that my right hon. Friend the Minister saw the exercise in London, because I saw her lurking in a doorway watching. I gather that there will be a coordinated exercise between the US and the United Kingdom—the Home Secretary recently went to the US to talk about a joint exercise. There is nothing like a fire drill to find out which doors are propped open and who does not know where to go. We need to ensure that we have some experience of the calamity that might ensue if someone managed to release something and it started to spew out. That will at least make clear what everyone's responsibility is and how scientists can access information and feed it to the front-line staff who will have to implement procedures.
Bob Spink (Castle Point) (Con):The hon. Gentleman mentioned collaboration and co-ordination between this country and the United States. Would it not be a good idea for this country to have the same degree of collaboration with other European Union countries? Such collaboration does not exist at the moment.
Dr. Gibson:I believe that I have read and heard that there will be such co-ordination between Ministers across Europe. There is a realisation that interaction with authorities across "the pond" is only one aspect of what we need to do. Incidents can happen anywhere, and the effects on one country can spread to others as people move around. We saw that with severe acute respiratory syndrome—SARS.
One of my best experiences during our trip to the States was at the Centres for Disease Control and Prevention in Atlanta. What a centre! Hon. Members will remember me sitting, like someone on the bridge of the Starship Enterprise, in an amazing room. Press conferences were going on and information was coming in from every city and township in the United States. If there had been an outbreak of anthrax or some other infection, the centre would have known where it was. The operation was beautifully co-ordinated. I will always remember hearing that one of Mayor Giuliani's first reactions on seeing the planes go into the twin towers was to say suddenly, "Phone up those"—I shall not use the words he used—"at that centre in Atlanta. Those planes might have had biological and chemical weapons on them." What thinking. I doubt that anyone in this country, without training and co-ordination, would have thought like that. Although I know that Mayor Giuliani is a genius, I cannot believe that one man alone arrived at that way of dealing with things. It is more that there was a certain attitude: no one would assume that there was just one event happening, because there could be two or three associated events. When the planes hit the Pentagon and the towers, that is what he thought. Within an hour, helicopters were moving to New York and Washington to take samples and so on. That has not been publicised, but it shows how the co-ordinated approach was instilled. Getting it together can save many lives.
My final point is about recent work by the Royal College of General Practitioners with the Department of Health. In their report, mention is made of front-line GPs and staff in the primary care communities and
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what they would know in the event of a terrorist incident. The paper includes some very interesting stuff. It is just about to be published, and has not yet been ratified, but I doubt whether there will be major changes. The report considers the right way to handle front-line medical people and how those teams would react to chemical, biological, radiological or nuclear release. The report makes the point that GPs have never seen anthrax or many of the diseases caused by the organisms that might be used. It also picks up a point from our report, which stated:
"Unless GPs are able to give authoritative information the health service risks being overwhelmed by concerned members of the public."
Panic can be prevented, if GPs are up to it. They are trusted—I trust my GP, and I think that many people feel the same way. GPs must be brought up to date on potential terrorism, and on what to look for in people who might turn up in their surgeries on a Friday night, or whenever. The report also deals with what would happen after an event. How should the worried well be handled—people with nothing wrong with them, but who are scared? Informing and instructing people about how things should be handled would, I think, decrease the number of worried well. The royal college says that such information is important, and it is involved in work on such issues. Many other questions arise for GPs—legal questions and matters of personal protection. The matter is being taken seriously, and I welcome the interaction.
We do not need to think that we will send people into a panic. I truly believe that the more information people have, the more confidence we instil in them, and the less the terrorists will be able to get their ideas through. I know that there is a limit, but my question for my right hon. Friend the Minister is, how are we to define that limit? The only way forward is a corporate interaction between all the people who will be on the front line when the incident happens. I am far from being alone in believing that such an incident will happen in this country. Are we ready? Are we organised?
2.58 pm
Mr. Robert Key (Salisbury) (Con):I start by endorsing the final remarks of the Chairman of the Select Committee. The biggest lesson that we learned from our inquiry, and particularly from our visit to the United States, was the fundamental difference of approach to secure information on either side of the Atlantic. We tend to be obsessive about secrecy, and often we are secretive about the wrong things—things that do not matter that much. In the United States the culture of openness is entirely intentional, and the philosophy behind it is: the more people know, the less they will panic, and the more the aggressors will know that we are several steps ahead of them. We need a complete change of our approach to secrecy in government in this country. I can keep a secret as well as the best man, and perhaps better, because of the large military presence in my constituency. In the past 20 years I have been briefed and trusted regularly by successive Governments with a lot of information, which has helped to inform my contributions in this House and helped me to represent my constituents.

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The hon. Member for Norwich, North (Dr. Gibson) is right: our Committee's visit to the United States was remarkable, and our report is remarkable because of the depth of the information that we sought and were given. I promise that I will bore the Chamber with this point only once, but there was something special for me in the visit. Wherever we went, whether it was the White House, Fort Dietrich, Atlanta or the Lawrence Livermore national laboratory, my constituents were praised because of their work at the two establishments at Porton Down—the Health Protection Agency and the Defence Science and Technology Laboratory. I was proud of that.
Dr. Gibson:They all vote Labour.
Mr. Key:The hon. Gentleman can be sure that they will not be voting Labour at the next election.
I shall dwell on two aspects of our report. The first relates to paragraphs 180 to 182, the section is on "Planning and exercises". In it, we invite the Government to release more information to the public and to ensure that lessons learned are disseminated throughout Government. We also press for more complex, larger-scale exercises. The hon. Member for Norwich, North commented on the Home Office's extraordinary ability to engage in the incident that occurred this morning in Parliament square. While preparing for this debate, I, too, observed what happened from Portcullis House, and I was impressed. I compliment the three emergency services directly involved and the others who were involved behind the scenes. After watching for about half an hour, it became clear that the response was well organised, the personnel well trained, and the procedures and clear-up efficient. I am sure that the incident was enormously inconvenient to thousands of people throughout the capital, but there could not have been a better demonstration of the progress that has been made in this country in preparing for such incidents.
When I returned to my office, one of the first things that I did was to get on to my computer and look up London Prepared, the website established by the London emergency services. On it, I saw exactly why I was right to judge that the services had been well trained and prepared for incidents such as today's. I looked at a few more websites to see whether anything had changed since last I checked them, and I am delighted to say that a lot had changed and that they had all been updated. The terrorism pages on the Home Office website are extremely informative, as is www.ukresilience.info. The Health Protection Agency website is especially helpful: it is designed to help GPs and anyone else, including ordinary families, to understand what is going on and what they should do if they are worried or if something happens. A lot of people will be checking such websites at this time of heightened concern about terrorism. Those websites are good, but hon. Members will not be surprised to hear me say that the best one is the Wiltshire police website. It is the only website of its sort that I have seen. There are links from the Home Office, Health Protection Agency, UK Resilience and other websites to its major incident planning pages, which are a good example of what can be achieved in terms of co-ordination at a local level. I commend them strongly.
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When the Minister gave evidence to the Select Committee, I asked her about some exercises that were taking place. I was delighted by the outcome of the exercise in London at Bank station, which obviously taught a lot of people a great deal, but I recalled the Minister saying that a lot of desktop exercises were taking place as well, so I checked them out. From the Health Protection Agency website pages on the emergency response division exercise programme, I learned that there have been five recent exercises. There was Red Scar I, a smallpox exercise on 24 March last year in Oxford; Exercise Shipshape, a SARS exercise on 6 June last year in Bristol; Red Scar II, another smallpox exercise on 7 July last year in Leeds; Green Goblin, a chlorine gas terrorist attack exercise on 10 October last year in Peterborough; and East Wind, a dirty bomb terrorist attack exercise on 23 January this year in Cambridge. I delved a little deeper and discovered that Green Goblin involved syndicates from the local and regional eastern and east midlands areas, and the HPA national area. The key action points that emerged from the exercise are that there should be a formal joint health advisory cell training exercise involving health training with the police; a review of major incident plans to include the CBRN element; and an identification of alternatives in the event of mobile phone and BT networks going down, and so on.
There was considerable detail, but that was only a tabletop exercise. That is the problem that we have to come to terms with. It entails changing our attitude towards secrecy, taking the British public into the Government's confidence and having full-scale exercises, such as the London exercise at Bank tube station. Such exercises should be extended to cover not just chemical threat, which is comparatively easy to deal with because it is about containment, but biological, radiological or nuclear threat. I found a contrasting example by going to the US Department of Homeland Security website and seeing the announcement on 1 March of the deployment of the national incident management system—NIMS—which went into enormous detail. We should not be surprised, given the immense resource that US Administration have put into it, that the amount of planning, preparation and detail on that website is very impressive. We in this country should move forward more swiftly in such areas. Much of that depends on training and much training has been done. The Home Office is right to have concentrated on that.
The nuclear, biological and chemical centre at Winterbourne Gunner in my constituency used to be the Army's exclusively. The site is now shared with the police NBCR centre, where many thousands of policemen and women from every constabulary in the United Kingdom have now trained. As an aside, Mr. Deputy Speaker, I was interested to discover that all journalists going in theatre where the military are active now have a briefing from the defence NBC centre at Winterbourne Gunner, which is no doubt why we saw more responsible journalism during Operation Telic than we saw a decade ago. To return to my theme, tabletop exercises are all very well, but what people are doing in Peterborough, Leeds or Cambridge might not filter through to Bristol, Plymouth or Southampton. I ask the Minister to carry out more exercises—we need more effort and expenditure in that regard.

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The second major area that I wish to explore arises from evidence given to the Committee on 2 April 2003—question 207 in particular, which was put by the hon. Member for Bolton, South-East (Dr. Iddon). He asked Dr. Wright of the Association of the British Pharmaceutical Industry about concerns for the safety and security of sites. Dr Wright replied that there was great concern about animal rights extremists, both on site and elsewhere. That must be a concern for British industry, and for all the people who work at such sites. I dare say, Mr. Deputy Speaker, that you noticed an item on BBC News Online on 10 March, repeated on the media generally, about scientists' neighbours being targeted. The report said:
"Scientists are being targeted by animal rights activists the University of Nottingham says."
It described how letters were being sent to scientists' neighbours, which was placing undue pressure on those communities. We are familiar with the problem—the story of Huntingdon Life Sciences comes to mind. The day before yesterday, the Secretary of State for Health made an announcement in the House about developments in respect of variant Creutzfeldt-Jakob disease and blood donations. As it happens, work on blood donations has been done by scientists who also work on vaccines and the protection of military and civilian populations. To protect people, those scientists need to conduct trials on some animals. I learned only yesterday that, as a result of that work, a family in my constituency is about to be harassed by animal rights activists because the man is the owner and managing director of a very small business that provides mice. His house is to be picketed on mothering Sunday, and he and his wife will have to go, or stay and be intimidated. Such harassment is outrageous, and I do not believe that it earns anyone any friends.
What do we do about it? Is it true that there is adequate legislation to protect individual households? In the United States, there is federal and state legislation on the issue. The federal legislation, for which the reference number is HR 3448, is the Public Health Security and Bioterrorism Preparedness and Response Act 2002, section 336 of which is entitled "Animal enterprise terrorism penalties". That legislation is applicable throughout the US. I believe that, had similar legislation been applicable in this country, what happened to Huntingdon Life Sciences and the companies serving and the people working for it would not have occurred. State legislation is pending in Missouri in the form of Senate Bill No. 657 of 27 February 2003. Texas has new section 28.09 of the penal code, entitled "Animal Rights and Ecological Terrorism", which is about to be enacted. New York state has Bill A04884. There are other examples—state legislatures are taking the issue very seriously.
In this country, there has been a great deal of argument about whether it would be practical to protect civilian work forces, whether at military or civilian establishments. The Government amended the Criminal Justice and Police Act 2001, section 42 of which gives police the power of direction to stop the harassment of a person in his home. Section 43 deals with malicious communications—telephone calls in the middle of the night and so on—and section 44 with collective
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harassment. However, I spoke to the police today about the case that I described, and I learned that they are diffident about using such provisions. There is not much experience of using them, and the police are not very confident that the amendments that the Government made to that Act will work. We shall see.
Bob Spink:Does my hon. Friend think that one solution might be to extend the Protection from Harassment Act 1997? That Act protects individuals, but offers no protection to corporate bodies, so it could not be used to protect Huntingdon Life Sciences, for instance. It should have been able to be used. Such an extension would be a good way to make progress, and I believe that the industry agrees.
Mr. Key:Yes, my hon. Friend makes a very practical suggestion, for which I am grateful. However, I think that it will run up against a problem that has been identified by a number of concerned groups. Obviously, the Association of the British Pharmaceutical Industry is concerned, but so are the Research Defence Society, the Biosciences Federation, the trade union Amicus and others. They have been working for some time on a draft Bill, which they call the Scientific Procedures on Animals (Public Order, etc.) Bill. It is pretty wide. First, it defines harassment, which relates to the family in my constituency who will have such a horrible weekend. The Bill provides that harassment is, in certain circumstances to do with animal research, illegal and talks about how the measures would work. Clause 5 relates to the conduct of putting people in fear of violence, clause 6 is about police direction to stop the harassment of a person in his home and clause 7 relates to harassment of a person in his home. That is all entirely practical.
The Home Office argues that there would be a duplication of existing legislation, but I am not sure that that is a strong argument. There are plenty of examples of apparent duplication, such as football hooliganism legislation. It was argued for years that there was no need to bother with specific legislation because football hooliganism was already covered by public order legislation. However, that position did not stand and legislation was introduced that was effective because it was specific to the case. We need legislation, and there is no problem with duplication, because we need to facilitate the coherent approach that is sought by the police. I say "sought" because the police would do more to protect citizens if they could.
There are four arguments in favour of passing such legislation. First, it would allow organisations such as universities or companies that are regulated by the Government to be protected and for them to protect their staff. That cannot be done now under injunctions obtained under the Protection from Harassment Act 1997. Secondly, a special Act would provide the courts with powers to issue restraining orders against those with a proven track record of criminal or intimidatory behaviour. Thirdly, it would make illegal so-called home visits that have the sole intent of intimidating families. It is terribly important to prevent such behaviour, because it is contrary to article 8 in schedule 1 of the Human Rights Act 1998, which states the right to secure and peaceful private and family life. That is impossible if people are picketing one's front door on

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mothering Sunday. Finally, such legislation would provide a three-strikes-and-you're-out clause for repeat offenders. At the moment, activists say time and again that what they do on one occasion does not add up to a row of beans, but it sure amounts to a row of beans if all the beans are counted.
The time has come for us to grasp the nettle. A number of interested parties are talking to the Department of Health—I am thinking particularly of thousands of my constituents who work in this field, at Porton Down and elsewhere. They want to know that the Home Office is actively engaged with the issue, because if we cannot encourage scientists to undertake such work, two things will happen. First, the work will simply be done elsewhere, probably in the United States, and we will lose an important part of our science base in this country. Secondly, we will all be losers because we will be less safe. We will not be protected by our scientists in the way that our citizens should be able to expect from the Government. We should do what our citizens who are scientists and researchers—in my case, my constituents—expect us to do to protect them, for the sake of our nation's security.
3.19 pm
Geraldine Smith (Morecambe and Lunesdale) (Lab):There is no doubt in my mind that the terrible acts of terrorism that occurred on 11 September 2001 in the United States of America brought home in the starkest possible fashion the threat to freedom and democracy posed by international terrorists. The devastation and carnage and the chilling disregard shown by the perpetrators for any human life, including their own, sent shock waves throughout the world, as did their willingness to slaughter thousands of innocent people without warning in the pursuit of some fanatical belief.
It should have been clear to everyone that such terrorist groups, if they acquired weapons of mass destruction, would not hesitate to use them. A major factor in my decision to support the war in Iraq was the fact that the United Nations was convinced that Saddam Hussein was developing chemical, biological, radiological and nuclear weapons programmes, and the danger that those weapons could find their way into terrorists' hands. I still think that that was the right decision. Saddam Hussein was a threat to the world, and even though weapons have not been found, I still believe that we did the right thing, because of the danger that he represented.
Bob Spink:Like me, the hon. Lady is aware that Saddam Hussein was not only thought to have those weapons, but had them and had used them. He used them at Halabja on 16 March, 16 years ago this week, and followed that with the Anfal campaign, in which 182,000 Kurds were slaughtered by chemical weapons of mass destruction. There is no grey area: we all knew that he had those weapons and that he would use them if he could, although we do not know what has happened to them and when he lost them. I congratulate the hon. Lady on having the courage to support the Prime Minister in going to war and removing that evil regime.
Geraldine Smith:I thank the hon. Gentleman. I agree with what he says. Iraq is a better place because Saddam
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Hussein is gone. People who think that we are threatened by terrorism because we went to war are mistaken and naïve; that threat existed before the war with Iraq, and there is no rhyme or reason governing why those fanatical people attack certain countries.
The Government and the official Opposition both recognise the threat of international terrorism and the terrible consequences that the failure to defeat that threat would have. The Prime Minister has rightly mounted a personal crusade to bring the issue to the top of the international agenda. I think that the following short extract from a recent speech that he made crystallises the extent of the threat that he perceives:
"September 11th was for me a revelation. What had seemed inchoate came together. The point about September 11th was not its detailed planning; not its devilish execution; not even, simply, that it happened in America, on the streets of New York. All of this made it an astonishing, terrible and wicked tragedy, a barbaric murder of innocent people. But what galvanised me was that it was a declaration of war by religious fanatics who were prepared to wage that war without limit. They killed 3000. But if they could have killed 30,000 or 300,000 they would have rejoiced in it. The purpose was to cause such hatred between Moslems and the West that a religious jihad became reality; and the world engulfed by it.
We know that the terrorists would, if they could, go further and use chemical, biological, or even nuclear weapons of mass destruction. We know, also, that there are groups of people, occasionally states, who will trade the technology and capability of such weapons. It is time that this trade was exposed, disrupted, and stamped out. We have been warned by the events of 11 September, and we should act on the warning.
From September 11th on, I could see the threat plainly. Here were terrorists prepared to bring about Armageddon."
I firmly believe that the Prime Minister was right in his assessment of the situation. Avoiding the nightmare scenario that he describes will require international cooperation on an unprecedented scale. I have every confidence that the UK Government will do all in their power to facilitate the necessary mechanisms, measures and procedures to make that happen. It has been said that there is impressive collaboration between the UK and its allies, particularly the United States. However, co-operation within the European Union is less evident. The Government agree that there is scope for increasing co-operation within the European Union, and after the appalling atrocity that occurred in Madrid, that will no doubt be easier to achieve.
I am less confident that the Government have adequate measures and structures in place to prevent or deal with the effects of a chemical, biological, radiological or nuclear attack. MI5's considered view is that it is only a matter of time before a CBRN attack is launched on a major western city. Bearing it in mind that the United Kingdom is high on the terrorists' hate list, there must be a real prospect of one of our cities becoming a target. Despite that, the Science and Technology Committee was unable to detect any extensive effort to develop CBRN counter-measures. As a result, there has been no clear statement on what is required, and the research community has been unable to respond in a co-ordinated manner.
Homeland defence depends heavily on the input of the Defence Science and Technology Laboratory at Porton Down. Although, as hon. Members have stressed, that establishment is internationally recognised for its expertise in defence-related

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technologies, its main function is to support the military. A similar establishment, working in civil defence against CBRN attacks, is required. That could be achieved by the creation of a Government agency—a centre for home defence—under the auspices of the Home Office. It could have its own research budget and would be responsible for researching and deriving new technologies for home defence, as well as adapting military technologies for civil use. It would have the ability to commission research by the Department of Health and the Defence Science and Technology Laboratory, and would be responsible for identifying relevant research expertise within universities and research council institutes, as well as for forming strong links with academic and Government research laboratories overseas. I am firmly convinced that the creation of such an agency would greatly enhance the country's ability to produce effective counter-measures against a CBRN attack.
My final point relates to an issue that has already been mentioned: the unnecessary secrecy that seems to permeate the Home Office, which we saw during our Committee inquiry, and the lack of information on these matters that is made available to the public at large. I accept that there must be a balance—I was quite pleased that, after meeting the head of MI5, I knew no more about national security and secrets than I had an hour before; I felt that she was just doing her job. We sometimes have only ourselves to blame: when ex-Cabinet Ministers run to the press to talk about matters that could damage national security and the national interest, it undermines our credibility as politicians.
It is sad to say—but true—that the Committee learned more on our visit to the United States about how the Americans are dealing with some aspects of CBRN threats than we could glean from our Government about how we are dealing with such threats. When we were in America, we visited the Centres for Disease Control in Atlanta, which even lists the number and distribution of smallpox doses for vaccinations. Scientists at Lawrence Livermore national laboratory in California briefed us on their detection systems and capabilities. US officials gave our Committee unrestricted briefings, and we met representatives of the Department for Homeland Security. The US was definitely much more open with information, and is it less safe as a result? I do not think so, so impressive are the measures that the Americans are putting in place to fight terrorism. Their openness with the public is the right approach.
One of the consequences of over-zealous secrecy is that it inevitably gives rise to the suspicion that the Government are simply avoiding embarrassing questions and have a misguided view that openness will somehow panic the public. As has already been said, if we are more open and tell people what the risks are, they become more confident and less frightened. I believe that much more needs to be done to make people aware of the potential danger and how the risk can be limited. We in this country seem to be in a bizarre situation: the vast majority of Members of Parliament fully recognise the real threat that terrorists will launch a chemical, biological, radiological or nuclear attack, and how devastating the consequences would be, but it seems that
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a substantial proportion of the public believe that the threat is too remote to be taken seriously and that politicians are just trying to scare them. We need a much more open public discussion about all the issues surrounding the terrorist threat and what can be done to combat it. The Government must take the lead and inform the public as frankly as they are able to about the risk and the nation's state of preparedness to deal with a chemical, biological, radiological or nuclear attack.
3.31 pm
Bob Spink (Castle Point) (Con):It is always a pleasure to follow the hon. Member for Morecambe and Lunesdale (Geraldine Smith). Today she showed the familiar passion and courage that this House and the country have come to expect from her, and for which she is known. I shall be echoing many of the points that she made.
I pressed the Committee to prepare the report, and I welcome the debate which is, as the hon. Member for Norwich, North (Dr. Gibson) said, most timely. There was a full-scale chemical alert around the Palace of Westminster today, when a van was in an accident involving two chemicals which, if mixed, might have produced poisonous gases. That was not, as we have already heard, a terrorist attack, but it clearly shows, as my hon. Friend the Member for Salisbury (Mr. Key) explained, what can happen and what the response should be. I agree entirely with my hon. Friend's remarks and I associate myself with his praise for the services that dealt with the incident. I was in the middle of it.
Our inquiry looked at how science and technology could be harnessed to develop counter-measures to chemical, biological, radiological and nuclear devices employed by terrorists, and how science and technology are informing the response to terrorism. The UK's greatest source of expertise is, of course, the Defence Science and Technology Laboratory at Porton Down. It has a military focus and no home defence remit. Therefore it is logical that the Committee should recommend the establishment of a centre for home defence, under the Home Office, to develop technologies that can be put to civilian use. Protecting civilians is as important as protecting servicemen and women.
I shall focus on the Government's overall management of the use of science and technology in home defence and their duty to make the public aware of what is going on. Our report is very relevant in the light of the Madrid bomb, as we have heard, and the escalating threat of terrorist attacks on the UK—principally London, I suspect.
The report is particularly relevant to my constituents, who feel, for two jolly good reasons, that they are in the front line of a potential terrorist attack. They were attacked by terrorists about 20 years ago. It was IRA terrorists who perpetrated an attack, with explosives, on Castle Point. The oil storage plant that they attacked is no longer in my constituency, so I stress that it is no longer a target for anyone in that respect. However, my constituents still feel under threat because thousands of them travel to London by train every day. They use the tubes and travel on the roads. They have a right to know what is going on and I have a duty to fight in this House for their best interests. That means ensuring that they know what is going on. That is why I pressed so hard for the report in the first place, as hon. Members may recall.

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Let me inform the debate by giving hon. Members the result of a recent internet poll, which asked:
"Do you feel confident there are enough security measures in place to prevent an attack on London's transport system?"
Some 85 per cent. of those who answered—some will have been my constituents—said, "No." That is a very stark message for the Government, who have a clear duty to reassure the public that adequate steps are being taken. That is why it was wrong of the Department for Transport to pull out of the evidence session. It had no good reason to do so—at least, no reason has been given for its shyness.
The Home Secretary has a duty to proceed sensitively when inquiries deal with highly classified information. However, the members of the Select Committee, like members of all such Committees, are grown-up people. We understand the sensitivities and we accept that there is sometimes a need for confidentiality. We would therefore have accepted it if Ministers had told us that certain issues could not be discussed openly. However, the Government were disingenuous when they said that our inquiry's remit did not justify a detailed analysis of counter-terrorism measures. Select Committees are here to hold the Government to account and it is for us, not a control-obsessed Government, to set and interpret our remit. We do our job with total responsibility and a clear awareness of the sensitivities and the need for security.
I suspect that the Government's reasons for secrecy and non-co-operation with our inquiry had more to do with controlling information, avoiding embarrassment and a misguided belief that openness might cause panic in the population. A culture of secrecy is embedded in the Home Office, which is afraid that public scrutiny will expose the Government's lack of preparedness and incompetence in this important area. The Government are far too preoccupied with the danger of alarming the public, but that makes the public cynical and distrustful, and it lowers their confidence that adequate measures have been or are being put in place for their protection.
Constituents tell me that they want to know more. Mrs. C. F. from Thundersley contacted me just this week, saying that she did not trust the Prime Minister to tell the truth on the issue. The hon. Member for Norwich, North, who is muttering at the moment, has said that if the public are kept in the dark, "trust becomes an issue". The public are being kept in the dark and trust is an issue, which is why Mrs. C. F. of Thundersley contacted me this week, and she is not the only one.
Mr. Tony McWalter (Hemel Hempstead) (Lab/Coop):Would the hon. Gentleman accept that a little learning can be a dangerous thing and that people who do not have sufficient understanding might be frightened out of their wits?
Bob Spink:No one in this place or anywhere else could ever accuse the hon. Gentleman of having only a little learning. He is extremely intelligent and articulate—hence his excellent intervention, which I will answer in this way.
My constituents want some facts. They want to know what the risks are because they face them daily. They want to know what defences are in place to
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protect them. They want to know what chemical, biological, radiological and nuclear counter-measures can be expected in the event of an attack. They want to know what they should and can do in certain circumstances to help themselves and others who may be hurt or need assistance, and to ensure that they do everything possible to assist the security forces to prevent a crisis in the first place or to deal with one if one sadly takes place. People want to be trusted and empowered; they do not want to be nannied by a control-obsessed state.
Our health professionals and general practitioners, as the hon. Member for Norwich, North mentioned, will be unable to give authoritative advice and in a crisis the health service could easily become overwhelmed by concerned members of the public. The media would not be able and ready to feed information to the public quickly and accurately to help in the counter-terrorist battle. Such states of preparedness are long overdue and should be delivered by the Government. We are not in a state of preparedness, so our response in a crisis will be less good. The impact of any attack would therefore be greater in human and organisational terms.
As we have heard, the United States prepares itself differently. Sadly, I could not attend the United States visit because I had a constituency engagement and one's constituency comes first. It is accepted that the United States does things more openly, so it is more accountable for its actions or inactions in a crisis. That does not make it less safe; it improves the response and limits the risk. During our inquiry—although I did not attend, I followed the evidence carefully—the US Government gave us evidence, including unrestricted briefings on therapeutic counter-measures conducted by the US military. Indeed, they gave us more briefings and information than our Government would trust us with. The bottom line is that being prepared and informed makes the target smaller; being uninformed and unprepared makes the target bigger. That is why I welcome this report. As for potential terrorists, they have access to the internet and other sources of information, and have been using and training on them for many years. They have access to information of which the public would never dream. We cannot tell them anything that they do not already know or could not already find out.
I now move from the issue of secrecy to that of organisational competence. The Government are found wanting here too. The first question is: who is responsible? The Government fall at that initial fence. Our inquiry found that it is not clear who in Government is responsible for determining to what threats the UK should respond and with what priority. We have not established how risk assessments inform Government policy, nor, therefore, the scientific and intelligence response. It is our duty to highlight that shortfall. For instance, we need closer collaboration and co-ordination between the Home Office and the Department of Health. We must be clearer about where responsibilities lie, including the roles of the Health Protection Agency, the Medical Research Council, the Defence Science and Technology Laboratory at Porton Down, and other agencies and bodies such as the research councils, the military and the pharmaceutical industry, which could play a crucial

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role in helping to develop biomedical countermeasures. There is still much to do to co-ordinate those various disparate bodies. We must have proper co-ordinated control of the myriad agencies that are or should be involved in ensuring that science and technology are maximised in this country's defence against possible terrorist threats. We must have a single, high-level, ministerial point of responsibility, so that we have a clear point of accountability, which, pray God, will never be called to ultimate account.
Our proposed centre for home defence would be a key factor in pulling all the various players together as a single team. Its first job might be to oversee much needed research on decontamination processes and procedures. At the moment, the buck must stop with the Prime Minister, as the inquiry showed him to be wanting. I commend the all-party report and urge that action be taken to improve information flows, including to the public, and to sort out the lines of responsibility, management and overall organisation of the defence of Britain against the terrorist threat.
3.46 pm
Dr. Brian Iddon (Bolton, South-East) (Lab):It is a great pleasure to see you chairing another debate involving the Select Committee on Science and Technology, Sir Nicholas. I am starting to think that you are an honorary member of the Committee.
Terrorism is undoubtedly one of the greatest threats facing the world today. Our distinguished chief scientific adviser can think of only one greater threat—climate change—as he revealed during his recent visit to the United States. Last week's events in Madrid have brought terrorism into sharp focus once again, as, regrettably, do the almost weekly events in Baghdad.
We have a new expression—asymmetric warfare. We do not know who the enemy is or how, where or from which direction they will strike. Recent events worldwide have shown that the new form of terrorist is not even prepared to give a warning to save lives. Indeed, the evidence shows that they want to cause as many deaths as possible. That is why these people are some of the most evil terrorists in recent history.
Who would have thought that anyone could even dream of flying an aeroplane fully laden with passengers into a tower block? To fly two such aeroplanes into the highest tower blocks in the world is beyond my comprehension, not to mention flying another into the Pentagon and a fourth that crashed into the ground. How many scenarios can a terrorist think of? The possibilities are endless, which is a big problem. That is why the provision of intelligence, in which science has a role to play, is critical in combating terrorism. Nosey neighbours are back in business.
I have always believed that tackling the causes of terrorism is far more important than declaring a war on terrorism, which only creates more terrorists, as we are beginning to see. In my opinion, the main causes are poverty, intolerance and social exclusion. We need to declare a war on those problems first.
We now come to the main theme of the debate. I have been concerned about building security ever since the IRA began to attack areas of Britain that have high-rise
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buildings or office blocks with frontages that have acres of glass in them. It appears that we do not build high-rise blocks in Britain that could collapse like a pack of cards, as the twin towers did in New York. I am, however, greatly concerned about the amount of glass in buildings that can, and usually does, fall on to people, or fly in and out and damage people, when there is a bomb blast. I am also concerned that air intakes are usually at the bottom of buildings and are unprotected, so they can be used to introduce volatile chemicals to buildings.
Science can provide the answers to these problems. We can, for example, design chemical and biological detection devices that can be placed in air intakes, or filters that will filter out certain biological agents and even chemical agents. The obvious answer, however, is to redesign buildings to make them safer—for example, by removing air intakes from areas that are open to the public. I am pleased that organisations such as the Institution of Structural Engineers have begun to take the issue very seriously indeed. The IStructE published "Safety in tall buildings and other buildings of large occupancy" in July 2002, which was a useful addition to the debate. We should ask how safe a tall building is. However, I would like to put the question another way: "How tall can a safe building really be?" We must think how many people work in the building or visit it and how many would therefore need to escape in a real emergency, be it an accident or a terrorist attack. I can find no debate in the public domain on how tall such buildings should be, no matter how costly the land in London, New York, Manchester or other major cities.
I turn to the Anti-terrorism, Crime and Security Act 2001. When I was a research chemist in 1965, I synthesised a new polyfluorinated compound that was impossible to handle in the department in which I worked, even using the extremely efficient new fume cupboards that had been fitted in the laboratories. That compound was so volatile and lachrymatory that within minutes of my isolating it for the first time from an ethereal solution in a fume cupboard, the whole department—a large department at Durham university—had to evacuate the building. Even in great dilution, the chemical was swept in through the air intakes and in a few minutes had filled every room in the building. That compound was of obvious interest as a potential riot control agent. I believe that its properties were drawn to the attention of the chemists working for the chemical defence establishment at Porton Down at that time—many years ago, I hasten to add.
That incident brings me on to one of the main themes of the Committee's report, which is covered in chapter 7, "Security of research". Parts 6 and 7 of the 2001 Act tighten controls on access to pathogens and toxins used in UK research laboratories. Under the 2001 Act, universities and research establishments must notify the Government if they hold dangerous substances and provide information to the police if requested. Would my new compound have counted as one of those? Is there a list of such toxins? The answer is that the 2001 Act would not have applied to my new compound.
There is a list of biological agents for export control. In fact there are two lists and therein lies another problem. The chemicals on the best-known list, the so-called Australia group list, which is in schedule 5 of the 2001 Act, are not like mine. They are highly toxic chemicals, such as ricin, that are entirely natural

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products, not synthetic chemicals. The other materials in the Australia group list are viruses, rickettsiae, and bacteria. We are also told that counter-terrorism officers are drawing up a second list, the so-called Salisbury list, which seems to have a different categorisation from the Australia group list. I am told that the hon. Member for Salisbury (Mr. Key) is in no way connected with the Salisbury list.
Clearly, there is some confusion on the Committee about the two lists. The Australia group list is current in the 2001 Act, so that is the legal requirement. The public are not allowed to be told much about the Salisbury list, although we understand that it has been widely distributed among university health and safety officers. Perhaps my right hon. Friend the Minister will clear up the confusion over the two lists and tell us why the Government seemed to be so secretive with the Committee about the content of the Salisbury list. It would seem that toxic chemicals other than natural products should be on the Salisbury list. The Australia group list contains none of those, not even organophosphates—nerve agents, such as sarin, which terrorists used on the Tokyo underground.
Perhaps my right hon. Friend the Minister can also tell us why scientists are still waiting for the Government to set a minimum standard of compliance with the 2001 Act. She told our Committee that that would happen by the end of next August. Perhaps she can tell us today whether the target will be met.
There is a need for greater awareness in the academic community of the contents and implications of the 2001 Act. What are the Government doing to encourage universities and others to comply? I note that the Government's response to our report, published on 22 January, agrees:
"The present situation in relation to the Anti-Terrorism Crime and Security Act is unsatisfactory".
Next, let us turn to the thorny problem of vetting students and researchers. In the 1960s, the university of Salford, where I worked, had one of the best laboratories of any country in Europe for handling low and high-level radioactive chemicals that emitted all the potentially dangerous radiations: alpha-rays, beta-rays, gamma-rays and x-rays. People came from all over the world to be taught nuclear science in the Cockcroft building, and a large contingent of both undergraduate and postgraduate students came from, and returned to, Iraq. Need I say more?
We cannot predict a terrorist threat today that might be several decades away. Genetics is a red-hot research topic. However, who knows what threats will be possible tomorrow from knowledge gained today? Nevertheless, a voluntary vetting scheme was set up in 1994 to assist the Government in preventing the transfer of risky technology abroad. Currently, the scheme covers 10 countries of concern and 21 academic disciplines of concern. Where a postgraduate research application from a country of concern coincides with an academic discipline of concern, the advice is that the application should be referred to the Foreign and Commonwealth Office. I repeat that the scheme is voluntary.
Evidence gathered during our investigation suggested that not all universities are taking the voluntary scheme as seriously as they perhaps should,
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especially in the current climate. The obvious conclusion is that if they do not start to comply and to take the voluntary scheme seriously soon, it will be replaced by something more rigorous, which might restrict their academic freedom more than at present. When we visited the United States of America, we were told that things are much more difficult there regarding the entry of students from abroad, who appear to be rigorously vetted. The long delays in granting visas are now causing serious problems for research programmes. Even travel to a conference abroad, followed by re-entry, poses severe difficulties.
Concerns that scientists could undertake unethical research have led to a proposal that they should take an oath analogous to the Hippocratic oath taken by medical doctors. The Pugwash conferences on science and world affairs have proposed such an oath, which can be found on page 63 of our report. The International Committee of the Red Cross has called on scientific and medical associations and industry:
"To adopt professional and industrial codes of conduct aimed at preventing the abuse of biological agents".
Many learned societies have already introduced such codes of conduct for their members and we have recommended that all learned societies should consider introducing
"an overt ethical code of conduct as a prerequisite of membership".
However, it is not essential for all scientists to belong to a learned society.
Concerns have also been expressed about the publication of research papers that might contain information of great interest to terrorists. In January 2003 a statement on such publications was issued by a journal editors' group on scientific publishing and security that featured mainly north American publications, although The Lancet and Nature were also involved. We recommend in the report that the science Minister raise the issue in the European Union.
The Scott inquiry resulted in the Export Control Act 2002, which controls the export of military and dual use goods. It is essential that the Government do not use that Act to prevent the interchange of scientific samples between countries. We heard that scientists in the United States of America are finding it more difficult to exchange samples with scientists in other countries, including Britain.
In conclusion, a clampdown on security could make life much more difficult for British scientists and inhibit the usual academic freedoms across the world. Science has always relied on a free exchange of information, and people in different countries also freely exchange their roles. We urge our Government to take that into account when planning new legislation or enforcing existing legislation. We also call on scientists throughout the world to behave responsibly. There is a fine balance to be struck between the need for tight security and freedom in the academic community, which I hope will always lie in the latter direction rather than the former. Whatever we do, we must use all the endeavours of the scientists and all the available scientific techniques to minimise the risk of a terrorist attack.
4.1 pm
Mr. Tony McWalter (Hemel Hempstead) (Lab/Coop):It is a pleasure to follow my hon. Friend the Member for Bolton, South-East (Dr. Iddon), who is learned in this subject—he always brings a tremendous expertise to our deliberations—and my fellow Committee members. One thing that I hope will come out of the debate is a strong sense that, in its ranks, Parliament has people who can make an important contribution to public understanding and the promotion of scientific matters.
Our Committee exists partly to act as a voice for science and engineering and their cognate disciplines, and to ensure that the numbers of scientists available to our country and the conditions under which they work are understood and protected. It also exists to check whether the understanding of science and technology in Government is sufficiently well developed. The premise is that science and engineering can make enormous contributions to the public good, not only for our generation and its successor, but into the distant future for generations yet unborn. Science contributes something to our culture that is ineluctably part of what it is to live in a civilised society.
I want to focus not on our report's virtues—although, like other Committee members, I am extremely proud of our work—but on its deficiencies. In the report, we have tried to change some things about the culture of our country, but so far we feel that we have failed. We have failed because, as Karl Popper was wont to emphasise throughout his academic life, science is characterised by its openness and spirit of rationality. There is a spirit of people making claims that are open to challenge by others and, in the light of those challenges, sometimes rescinding or modifying those claims and making them more resilient to empirical investigation.
Science is a model of how one might conduct oneself if one was trying to be attentive to the voices of others. In that respect, it is very different from the approach of terrorists, who are entirely and insanely deaf to the pleas, arguments and world views of other people. They are deaf even to the right of others to continue living their lives. At its best, science can show us how human rationality and the desire to improve life can be one of the attributes of which a civilised society is most proud. However, some people in this world learn the techniques, understand the technology and study science with a view not to improving the lot of humankind, but to promoting their own ideology, at whatever cost to other members of the human species.
We must ensure that we have the capacity to rebut the escalating expertise of terrorists. The hon. Members for Castle Point (Bob Spink) and for Salisbury (Mr. Key) made good points with regard to the increasing capacity of terrorists to understand scientific techniques and technology and to devise nefarious methods for the destruction of people who do not share their ideology. We need a counter-culture to give people the knowledge to rebut the arguments of terrorists. Knowledge is power and ignorance is not only powerlessness, but a source of fear. Terror is fear at its worst and we do people no favours if we pretend that voices that seek to understand these things should be silenced. That is what happened with the report and that is why it is, in many ways, defective.
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My hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith) made the powerful point that we have ended up knowing more about how Americans understand and deal with these matters than ever we found out about how the United Kingdom does so. We know more about American preparedness to tackle terror than about the UK's preparedness so to do. I put it to the Minister and the Government that that cannot be right.
Let us consider just one example. The American Association for the Advancement of Science published an excellent book on the preparations that were being made to deal with terror. One chapter dealt with the water supply. The problem with the UK is that if one starts to talk about anything in detail, the response of the Government and of Government agencies is almost to say, "No, we mustn't discuss that any more: we'll give the terrorists ideas." I think that they have ideas enough, as my hon. Friend the Member for Bolton, South-East was sharp enough to point out. Terrorists have ideas. They have thought about water, electricity and the very air that we breathe. It is up to us to stop pretending that as long as we are silent, ignorant and pretend not to take cognisance of these matters, somehow we will be safer—we will not be safer.
In the chapter that I mentioned, the American association considered the water supply and where it was vulnerable. It is very interested in the public understanding of that. If, for instance, an average member of the American public saw someone behaving in a suspicious way near an aquifer it is very likely that they would report it to the authorities with a view to having the behaviour investigated. At least, there is far more chance of that happening in America than here, because the Americans have tried to make their population aware of points of vulnerability, whereas we have not done so to anything like the same extent.
What can be done with water? The public in Britain, who on the whole are shielded, protected, or insulated from any of the matters in question, might well have a feeling of terror at the very thought that the water supply could be interfered with. After all, if it takes, say, 1 g of cyanide to kill a person, a tonne introduced to the water supply looks capable of killing 1 million. That is the thought, at least, that people who are scientifically uneducated might have. However, it brings to light immediately one of the issues that we have tried to understand. What I said about cyanide just now is of course a scientific non sequitur. It is true that cyanide is a terrible substance and that it could wreak great havoc and fear if substantial quantities were available to people as malevolent as the Madrid bombers. However, cyanide in the water supply reacts with the residual chlorine to produce potassium chloride, which, when suitably diluted, is relatively innocuous.
It does not follow, as the Americans point out, that because someone wants to poison people, vast quantities of poison in the water supply will do the trick. Chlorine itself would be a far more potent poison than potassium chloride, particularly in the quantities in which chlorine is available with respect to much of its industrial use.
Dr. Iddon:I am impressed by my hon. Friend's knowledge of chemistry, but I hope that he will agree with me on one point that has not emerged in the

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debate—that all over the world, now, people are monitoring the production, transport, export and import of chemicals. That does not happen only with respect to the production of illicit drugs. While I have not heard this, I am sure that monitoring is also taking place of chemicals that could be used by terrorists. It is now, fortunately, very difficult to get hold of some chemicals.
Mr. McWalter:I agree strongly with my hon. Friend, but it is interesting that chemicals that are produced in very large quantities, for very large-scale industrial processes, are sometimes those about which we need to be most wary.
An interesting aspect of the Americans' work on water supply is how the monitoring of water quality is developing. Not only is the focus on so-called naturally occurring pollutants—clearly, some nitrates and other pollutants are introduced through agriculture—but an attempt is being made to monitor water for much rarer components. The Americans are moving towards filtering out impurities that it would, in the normal course of events, be surprising to find in the water system.
The American Government approach is to have an open debate, to admit that there is a threat, to admit to vulnerabilities and to seek to engage the public where they can help. They want to let the public own the problem, rather than to say, "Oh, no. We are not going to let you own the problem. We are going to take it to some ultra secret hole in the ground and we will solve all the problems for you. There's nothing to worry about."
The Committee thinks that there are things to worry about, not least because the Committee is getting quite good at sometimes identifying where there is a scientific deficiency within Government. There was an amusing example of that only this Monday. One of the leaders of the research councils told us that they would engage the Government in discussion if only they could find someone sensible to talk to. He was not referring to the Home Office, I hasten to add.
The Committee has the capability. We are not front-line scientists, but we are experienced enough and have seen enough to understand when someone is trying to pull the wool over our eyes. At the Committee sitting dealing with water we asked the United Kingdom representatives about these problems and read them chapter and verse from the Americans, but they said, "We disagree." That was that. There was no argument. There was no discussion. There was no depth. In place of rational argument and an open sharing of concerns and understanding there was a complete clam. That is what is wrong with our report. Despite strenuous efforts, particularly by our ever-resilient Chairman, we were unable to break the mould of that way of thinking.
We are glad that the Home Office now has a chief scientist—we have been pressing for that—but I am slightly worried that the efforts of the Committee to get more scientists into government might be curtailed by things that were said in the Budget debate yesterday. If one is trying to get more expertise into government, the best way to go about it might not be to have large-scale redundancies in Departments that often seem to lack understanding of fundamental science.
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I believe that our report is one of which we can all be proud. We are also all proud of our debate today. It has the capacity to change the culture of government so that the Government are more responsive to science and more willing to give credence to scientific expertise held outside government and outside Oxford and Cambridge. If the Government persist in thinking that this is a problem that the public need not own, we will all regret it. The Metropolitan Police Commissioner was quite right when he said that we would have to deal with this in the end.
The Committee has sought to make the public more aware of the scale of the threats and then to equip them to understand how to work through the traumatic events that the terrorists would visit upon us. I hope that the Minister will announce today that the Home Office is more willing to share with us its view of these problems and that from today's debate will come a sense that not only the public, but the Committee, are being asked to share the problem.
4.19 pm
Mr. Richard Allan (Sheffield, Hallam) (LD):It is a pleasure to be the first non-member of the Committee to speak. I have found this afternoon's debate fascinating, particularly the obvious unanimity of views of Committee members about the value of the report. They are perhaps more unified on that than they are on the war with Iraq and how to deal with terrorism. The report has brought them all together and made a useful contribution to the debate on how to respond to the threat of terrorism. The hon. Member for Newark (Patrick Mercer) and I have considered that in relation to the Civil Contingencies Bill. We examined the planning for such incidents in the abstract, whereas the Committee considered the specifics of how responses can be most effective.
Following on from what was said by the hon. Member for Hemel Hempstead (Mr. McWalter), I find it curious that we are bringing together the most rational and humane of disciplines—scientific disciplines—with the most irrational and inhumane actions, which are those of terrorists. To bring the two together is a helpful way of reminding us that in dealing with the terrorism threat we must continue to act rationally. The terrorism threat is designed to make us act in irrational ways—in other words, to break down our sense of humane and civilised behaviour. Throughout the period that we are under such a threat, it is important that we continue to behave rationally, and science, in a sense, is the apogée of our rational behaviour.
The report can help us in two respects. First, it discusses the technology that we need to respond to specific threats posed by terrorism. Secondly, it promotes the scientific discipline of evaluating risk properly to decide on the appropriate response. The technological responses are comprehensively covered in the report and I hope that the material collected there will form a useful benchmark for the Government's planning. As a layman I found it helpful. I am a technologist but not a scientist, and I recognise the difference between the two, but I found the report helpful in explaining some scientific issues engendered, in particular, by trying to respond to potential chemical,

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biological, radiological and nuclear attacks on the United Kingdom. It is a very helpful document from that point of view.
I detected a certain amount of needle between the Government and the Committee over the report, which comes out in the Government's response. It starts by saying how wonderful the report is and that many of the recommendations are to be accepted, but goes on to say that they cannot accept some recommendations and completely to reject others. Clearly, there was some needle, but I hope that in terms of the substance of the report, as parliamentarians will appreciate, fences are being mended between the Government and the Committee and will continue to be mended with the help of the Minister's response this afternoon.
I found two areas useful when looking at the technological response, which relates to the applied science that must be brought into play to combat the terrorist threat. The first is the question whether research is too defence focused, as was set out in recommendation 6 of the report and to which the hon. Member for Norwich, North (Dr. Gibson) referred in his introduction. There are associated recommendations, such as recommendation 54 on a centre for home defence. I hope that that issue will be followed up effectively, as the Committee is on to something there.
In the past, the focus of research was naturally on the threats imagined then, which were CBRN threats to military personnel in the field, or a nuclear catastrophe involving the protect and survive response that we would have had in the cold war, when there could have been massive nuclear attacks on cities throughout the United Kingdom. Neither scenario particularly applies these days and there seems to be significant scope for remodelling at least some ways that we might respond to attacks, given the expectation that they would take a completely different form.
In particular, I am considering the science of behaviour when dealing with the civilian population in the situations that we are thinking of, such as attacks on cities and transport networks. The responses might be quite different from those in a military situation. I support the Committee's recommendation in that regard.
Geraldine Smith:Does the hon. Gentleman think that if the general public were to see the Government setting up a home defence agency, they would realise that the Government were taking the threat seriously? Although the public hear the Prime Minister saying that the fight against terrorism is a priority, they do not see any back-up. That needs to happen to make the general public realise how serious the situation is.
Mr. Allan:The hon. Lady makes a good point. She makes me think of the Centre for Disease Control, which a number of hon. Members mentioned that they saw when they went to the United States. Such a visible presence is important for reassurance. The public are reassured by being shown a group of people with shiny machines who clearly know what they are doing. At
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present, we will not get such reassurance from the military facilities, which are, by definition, secretive. However, it would be useful if there were civilian equivalents that could be seen by the public—the equivalent of the Royal Automobile Club control centres that people see in another area of their lives—so people knew the far more significant threat to life and limb was being addressed. I agree with the hon. Lady that there is scope for that.
The question of the scientific expertise in the Home Office was raised in recommendation 7. I found echoes in that of the work that I do on information technology, as that relates to the Home Office. The Home Office seems to be a little light—to use a suitably delicate word—on the necessary expertise when dealing with scientific and technological matters. There is a genuine fear that joined-up government is not operating as effectively as it should on scientific and technical issues, including information technology. The Department of Trade and Industry is the lead Department in those areas and it has far more technical expertise, but frequently the Home Office is the operational Department that introduces legislation. If the Home Office is the lead Department in responding to attacks, it is important to beef up its scientific resources. We must overcome the sense that if the matter is scientific it is for the DTI and the Home Office is not going to employ scientists because the DTI already does so. We must ensure that the rhetoric of joined-up government works in that important context.
The other area to which science can make a major contribution is in the evaluation of risk. I noticed that there was a bit of a spat in the Government's response about defining risk versus threat. The Committee was using risk in a scientific sense, meaning the overall risk of something unpleasant happening, as one would use risk in the context of the measles, mumps and rubella vaccine and a measles outbreak. The Government responded rather petulantly by saying that they were talking about something else—that threat analysis and risk analysis are different. I believe that the Committee was correct to talk about the need to weigh up risk in terms of lost benefits as against the potential overall threat—both the likelihood of something happening, which is necessarily based on intelligence, and the severity of any incident. I recognise that those two need to be considered together.
That matter is particularly relevant in the context of the debate and was mentioned by the hon. Member for Bolton, South-East (Dr. Iddon) in relation to research and research directions. One could take a precautionary approach in which all forms of research that are potentially dangerous are shut down and there is no engagement with scientists from any countries that are potentially dangerous. There is a risk in continuing to engage in research in certain subject areas and with people from certain countries, but that risk must be evaluated against the potential benefits or disbenefits of ceasing to do so.
The hon. Member for Bolton, South-East mentioned Iraqi scientists in the UK in the 1960s. We do not know whether the scientists whom he met at Salford were so impressed by the way of life in the UK that they gained a code of ethics that diverted them from engaging in

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any programmes that we would find offensive. If we had shut the doors, they would not have had that opportunity, nor that exposure. It is a complex picture, but I believe that the Committee is right to argue against responding simply by shutting things down. We must be sensitive to the complexity of the situation and maintain a delicate balance.
As an MP who represents a constituency in which there are two active universities—Sheffield and Sheffield Hallam—I know that scientists from all over the world make enormous contributions to those universities and return to their countries as ambassadors for the UK. Those interactions continue over many years and the idea that we should shut down such exchanges carries significant risks in itself.
Dr. Gibson:Does the hon. Gentleman agree that it is incongruous that, as a consequence of the top-up fees issue, we will have to recruit more students from abroad to get the money into higher education?
Mr. Allan:I am not sure, but I get the sense that the Committee may be more united on tuition fees than perhaps they were on Iraq. Was not the Committee away on a visit during the last vote on the Higher Education Bill? Were not Committee members encouraged to stay on that visit by the powers that be, because they might have tipped the balance the wrong way if they had returned? I am entirely at one with the hon. Gentleman on tuition fees, which are a serious issue for universities.
One thrust of Government policy seems to be that universities should act more like businesses in a global economy—that they should go out and sell themselves and bring people in. If we are to do that, we must recognise the full consequences of it. We cannot do it and then say to them, "Ah, but, we're going to make life difficult for you when you try to do that."
The hon. Member for Bolton, South-East spoke about vetting. I hope that voluntary vetting can mature so that universities may properly go about their business. Export controls are not too restrictive and voluntary vetting works and is better than trying to shut things down, perhaps without thinking of the knock-on consequences.
Mr. McWalter:I am glad that the hon. Gentleman has returned to his theme of shutting things down. Does he agree that it is more dangerous to shut things down than to continue to develop the expertise that our universities and other institutions can give us, so that we can deal with these matters as effectively as possible?
Mr. Allan:I entirely agree with the hon. Gentleman. We require research to deal with threats, so research cuts both ways. I was interested in the point that the hon. Member for Bolton, South-East made about expecting people to sign up to the ethical code and about the Pugwash conferences. We have similar debates in the IT field about science and technology being primarily for the benefit of humankind: it has no purpose outside that. By and large, the people who work in science and technology subscribe to the idea that their work is intended to benefit humankind.
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Sadly, there is sometimes a public perception that scientists and technologists are trying to create Frankenstein's monster and to get us all. That is not the case. I have certainly never found it to be true in my experience of working with scientists in Sheffield. I am sure that other hon. Members wholeheartedly agree with that.
It is important that we are clear about the fact that allowing scientists the freedom to work will allow them the freedom to advance humankind, including by finding solutions to problems that we face. For example, some solutions to finding intelligence on potential terrorists and dealing with them are technological, but they will not be found if technologists are not allowed to advance.
I was interested in the comments about openness. There was a clear clash for the Government over which approaches should and should not be taken. I shall not intrude into anyone's private grief, because there is plenty in the report and the Government response about the different attitudes on this issue. I am also aware of the Liaison Committee debate and can testify to the fact that the Chairman batted as firmly as he could—I do not know whether I should use a cricketing metaphor with this Chairman. He tried to punt the ball into the goal as accurately as he could on behalf of the Committee.
Dr. Gibson:On the head.
Mr. Allan:Indeed, and he took it on his head. He did a robust job and was widely praised by people across the House who want Select Committees to have the freedom to act on behalf of Parliament and not be muzzled by the Executive. That is an ongoing tension, which will always be there. However, I thought it important that the Committee stuck to its guns on that occasion.
Several hon. Members spoke about creating a full picture for the public. The hon. Member for Norwich, North started by talking about the more open culture in the US and then various other hon. Members spoke to that subject. I believe that the phrase that the Government have been using in the context of terrorist alerts is, "Be alert and not alarmed." We could add "be informed" to that. The tone of the report is that we should be alert and informed.
We particularly need to be informed about risk and understanding risk, perhaps in the sense that it was meant in the report. That is part of a much wider scientific debate with which we are all struggling, not least members of the Committee. We must try to get people to understand risk—for example, by understanding that devastating attacks of the kind that sadly occurred in Madrid, for which conventional bombs were used, are the most likely scenario. We are trying to evaluate the type of threat that we are most likely to face. The threat of an attack using chemical, biological, radiological or nuclear weapons is less likely, but such an attack would be more devastating if it should take place. People must understand that; they should not focus on CBRN attacks to the exclusion of conventional bombs just because the former have more devastating consequences than the latter. People must understand that the threat is about

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the likelihood and the consequences of an outrage happening, dealing with the outcome and reducing casualties.
Dr. Gibson:I am tempted to say something about the intricacy of the bombs in Madrid. Using a mobile phone was an intricate means of exploding the bombs. The people who exploded them had done some training, so it would be as easy for them to learn how to use biological weapons as well. We must not underestimate the act. As horrific as it was, it was quite a complicated technological feat.
Mr. Allan:That brings us back to the points made about access to materials. The bombs that exploded in Madrid were triggered by mobile phone and the type of electronic equipment that allows remote triggering of devices by mobile phone is available in Maplin. One can buy circuit boards there that allow one to switch on lights at home. Clearly it is more complicated to set up a bomb, but the technology that turns a mobile phone ring tone into an electronic impulse that triggers an action is widely available for various legitimate purposes. There are questions about access to the materials required for CBRN attacks, because they are not so readily available.
My understanding of the Madrid attacks is that they were a combination of readily available electronics with—if they were the materials mentioned originally—explosive material stolen from French quarry sources. It was material that can be stolen from a variety of places, put together with technology that is widely available. With CBRN attacks, if we effectively shut off access to the materials, they will not be so readily available. I defer to scientists on this, but it would be quite a delicate job to create the delivery mechanisms with the infective purposes required. That suggests that if people are really serious about causing damage, they can mount conventional explosive attacks on a regular basis, as the IRA showed over a long period. They might have the capability of mounting CBRN attacks, but they would require a more extensive lead-in period.
Dr. Gibson:Five people died due to the anthrax envelope delivery system in the States, so it is not too difficult to get enough of it around by simple methods. If it is posted and somebody opens it, it goes into people's nasal tubes and they die.
Mr. Deputy Speaker:Before I call the hon. Gentleman to respond to that intervention, I must say that I want to give the Minister proper time to reply to this important debate, and the Opposition spokesman has yet to speak.
Mr. Allan:I am grateful for that reminder. We could continue this technical debate over a cup of tea or a beer later.
A lot of information about the specific likelihood of an attack at any place at any time is necessarily covered by the secrecy that the security services require, but there should be an understanding of the relative
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impacts of different types of attack and the complexities of people being able or likely to mount such attacks. Those are scientific issues that should be widely disseminated: people should be able to gain such information from open sources. I hope that we can work towards better information sources for the public and I congratulate the Committee on its contribution to that aim.
4.39 pm
Patrick Mercer (Newark) (Con):It is a pleasure to speak opposite the Minister again, whom I wish well.
If one is a terrorist, it has been a fantastic fortnight: an extraordinarily well-co-ordinated operation took place in Iraq on the celebration of the day of Ashura, which was co-ordinated with simultaneous operations in Pakistan and failed operations in Afghanistan. They were followed by further operations in Iraq, particularly in Baghdad. Then, this time last week, we saw the shocking events in Madrid, which have been followed by more attacks in Pakistan and last night's hideous attack with a large bomb in Baghdad.
I am surprised that neither the Liberal Democrat spokesman—the hon. Member for Sheffield, Hallam (Mr. Allan)—nor the Chairman of the Select Committee referred in their exchanges to events in the United Kingdom last February. I do not want to be drawn into precisely what happened, but last February we believed, correctly or incorrectly, that this country had suffered a chemical or biological attack. It was thought—it may have been proved untrue and I believe that some details are sub judice—that ricin had been deployed in north London by associates of Ansar al-Islam, which is a branch of al-Qaeda. I shall not elaborate.
The report could not be more apposite. Not only have hundreds of people been killed in the past fortnight by bog standard terrorism, if I can call it that, but this country's experience so far at the hands of Islamic fundamentalist terrorists has been of the CBRN variety, at least within these shores. I am therefore particularly grateful to the hon. Members for Bolton, South-East (Dr. Iddon) and for Hemel Hempstead (Mr. McWalter) for making the scientific elements of the debate so very clear. They pointed out that the responsiveness of science is clearly a responsibility not only for the terrorist, but for the Government. People who believe that science is a black art or something that can be sneered at, as my arts-inclined 12-year-old son tends to think at the moment, are quite wrong. Science can be the friend and ally of the terrorist, but it must be the friend and ally of western liberal democracy.
The Liberal Democrat spokesman mentioned that he and I sat on the Committee that considered the Civil Contingencies Bill. Frankly, that was a mixed pleasure. However, the Select Committee's report very clearly plugs the gap in the inadequacies that he and I described so many times. The hon. Member for Morecambe and Lunesdale (Geraldine Smith) and the Chairman of the Committee made the whole issue of openness so very clear—if that is not tautology. A point made all the time during proceedings on the Bill was that the Government are not prepared to tell us what is going on. In a narrow sense, the Select Committee has made the openness of information and of witnesses more likely.

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I want the Minister to take note of my fervent belief that we must be told what the threat is if we are going to be able to counter terrorist threats in general and the CBRN threat in particular. Our population must be treated like adults and must be handled responsibly. I wholly disagree with the Government's approach that it is better not to panic people, and it is clear that several hon. Members here today agree with me.
People will continue to be ignorant and horrified unless they know that they are likely to be attacked with explosives and fire, or chemical, biological or nuclear weapons. The reality is horrifying, but a little knowledge goes a tremendously long way. The Government seem to be saying that keeping knowledge to themselves will prevent panic. I say that knowledge dispels fear.
Several hon. Members, particularly my hon. Friend the Member for Castle Point (Bob Spink), made the point that we need to be trained. As well as being told what is going on, the population need to be trained in how to handle the effects of such attacks. The hon. Member for Morecambe and Lunesdale referred to a centre for home defence. I would strongly support the creation of such a centre, which could inform training and ensure that people do not simply react to a terrorist incident in the way that they have been trained to react to, say, a fire. Clearly, reacting to a fire involves getting out of the building, moving to a concentration point and listening to further orders. Reacting to a contamination attack involves precisely the opposite: people must stay in one place and be dealt with by the authorities. The issue of training the public is therefore crucial.
My hon. Friend the Member for Salisbury (Mr. Key) raised a similar issue. I must declare an interest because I spent many weeks in his constituency being trained in what we used to call nuclear, biological and chemical warfare skills—although with me it was more a case of a lack of skills. I pay tribute to Porton Down, where even a dunderhead such as me began to understand the intricacies of NBC—or what we might now call CBRN—warfare.
My hon. Friend said that the agencies' training exercises must go, but I strongly disagree. We have had only one field training exercise, or FTX, so far, but it was not a success and went nowhere like as far as it should have. All it did was point out the deficiencies in the training of our blue-light and emergency services. I do not mean to be rude about those services or to undermine their confidence, but table-top exercises or, to use the military terminology, CPXs—command post exercises—are not good enough. We must have more live exercises if we are to understand the threat and how to deal with chemical, nuclear and biological contamination. That could not have been made clearer than in the comments of the hon. Member for Bolton, South-East, who described the gamut of scientific threats. We can learn how to overcome such threats only through constant practice and constant exercises. Sadly, that will involve a cost, and the public must accept that, although we went through something similar before the second world war and during the cold war.
Several hon. Members referred to the extraordinarily sensible idea of a centre for home defence. The Chairman of the Committee said that someone or something needs to draw the different agencies together
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and to act as a focal point. Someone has to be able to take control not only of research and analysis, which lead to conclusions, but of what physically happens when an event occurs. I can conclude only that many hon. Members in the Chamber would agree with me that we need a Minister for homeland security. It would not be the first time that we have had such a Minister. Indeed, we have had a Minister of Home Security. Probably the most famous was that well-known socialist, Herbert Morrison, and it is a great pleasure for me to follow in a socialist's footsteps.
Many points have been made about the issues before us, particularly during consideration of the Civil Contingencies Bill, and I would ask the Minister to consider most carefully an issue that has been touched on this afternoon. Our blue-light, emergency and military services will have to be thoroughly trained to deal with CBRN/NBC attacks. Is there, however, a national pool of volunteers, whose training—they may have been soldiers, sailors, airmen, policemen or scientists or have worked in the nuclear industry—is such that we would absolutely want to call them forward to deal with such events? It is interesting that David Veness, an assistant commissioner of the Metropolitan police, is talking about a gentlemen's agreement with the private security industry. Under such an arrangement, workers in the industry with past CBRN or NBC experience would be asked to volunteer to provide the muscle and the work force for disasters of the sort that we have discussed today. The Minister is aware that I have been peddling such a scheme for many months. I am sorry to bore her, but I would be interested to hear a response to that proposal. An emergency volunteer reserve could not only be useful, but provide a helpful focus for other volunteer work—next year is the year of the volunteer—and be remarkably cost-effective.
The Committee has produced a terribly useful report. It is slightly frightening and it shows differences between the Committee and the Government, but that is why we are here. We are here not to score party political points, but to seek things that are for the good of the nation. I very much hope that the Government will not only consider the points that the Committee has made, but implement them.
4.51 pm
The Minister for Citizenship and Immigration (Beverley Hughes):May I repeat the comments made by others and say that it is a great pleasure to see you in the Chair, Sir Nicholas?
I thank the Committee, personally and on behalf of the Government, for producing the report. I am particularly glad to have heard such fine contributions from all parts of the Chamber today. The Committee's evident commitment to the issue is visible and powerful. Clearly, the Government take the threat from terrorism very seriously indeed, as I am sure do Members from across the House.
Protecting the public and our national security is probably our most important duty. Recent international terrorist attacks have presented the UK and our allies with new challenges, as we have seen in the past week. We have realigned our counter-terrorism programme to try to ensure that we are ready to respond to that new, evolving threat that we have faced since

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11 September 2001. The threat has new dimensions and, as it has manifested itself, it has not remained static. The nature of the threat and our understanding of it evolve all the time.
Today's debate focuses on one aspect of the Government's programme—the scientific response. Delivering the counter-terrorism programme involves more than just science; it involves equipment, guidance, procedures, training—which the hon. Member for Newark (Patrick Mercer) mentioned—intelligence, legislation, law enforcement and other matters. Nevertheless, science is crucial to development in those areas and often underpins it. Science adds value to the four main strands of our overall strategy: prevention, pursuit and detection of terrorists, protection and preparation to withstand the effects of any attacks.
By way of a slight digression, listening to my hon. Friends the Members for Bolton, South-East (Dr. Iddon) and for Hemel Hempstead (Mr. McWalter) talk about the detail of science took me back a few years. Although I made a fairly quick transition after higher education from dealing with substances to dealing with people, I, too, did a science degree. When my hon. Friend the Member for Hemel Hempstead reminded us of Popper, my mind leapt without any effort to Thomas Kuhn and the other philosophers. They showed us not only that scientific research and the substance of scientific findings are important for so many areas in life, particularly counter-terrorism, but that the paradigm of science—the principles, the philosophy and the methodology—gives us some very strong frameworks within which to approach such a complex subject.
I recognise that that is the case, and key to our response to terrorism has been a commitment to harnessing the best science and technology available. Whether or not people think that the Government have done enough soon enough, we are very well placed to deliver on that commitment, because the science base at our disposal is second to none in the world. The facilities and expertise on which we draw—be that within Government or through academia, industry or links with international allies—are world class. That makes it even more important that we do everything we can to utilise to the full the potential that such facilities and expertise give us.
The Committee's inquiry was extremely valuable. It has enabled us to take stock of how we co-ordinate the scientific response to terrorism and to identify ways of doing that better. Picking up on the comments of the Chairman of the Committee, I do not believe that it was out of order for the Committee to examine that issue. Indeed, I welcome the focus that the inquiry has given to the important role that science and technology play in our counter-terrorism and broader capability programmes.
The challenge of co-ordinating the scientific response to terrorism is clear. We must seek out the best scientific expertise and apply it as effectively as possible to every part of the Government's counter-terrorism programme. I welcome the Committee's endorsement of our long-held view that there is no need for a department of homeland security based on the US model. I shall say more about that later when we talk about the proposal for a centre for home defence.
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We are all trying to achieve the same objective, in that we recognise that to make progress on a very complex issue in which many strands of activity need to be brought together if we are to have an effective counter-terrorism strategy, the key is how we bring those issues together. At different ends of the spectrum are the arguments that we must have everything in one place, and that we cannot have everything in one place and must have strong and effective co-ordination mechanisms.
Leaving aside science and technology as a specific issue, if we are to develop an effective counter-terrorism response, we cannot simply have a split between the scientific expertise and capability that a Department might need to deal with a disaster, and the capability that it needs to respond to a terrorist event. For example, the Department of Health must be able to ensure that it and its satellite agencies can deal with mass fatalities or casualties however they are caused. Placing all the scientific expertise in a centre for home defence would mean that we had to replicate it in the parent Department to enable it to respond to non-terrorist incidents.
Dr. Gibson:With regard to yesterday's speech by my right hon. Friend the Chancellor of the Exchequer, it is interesting to note that one great success story in the cancer field involves the National Cancer Research Institute, which is becoming a paradigm for dealing with mental health issues and other issues. The institute is not made of red bricks; it is a virtual centre where people such as those from the Department of Health and charities can meet. The centre has been recognised as a good unit to take forward clinical trials in respect of cancer and so on. It is a model for other centres. The Committee is saying that we need something like that centre—even a virtual centre would do—where people are brought together regularly. The excitement and enthusiasm generated by people working together and getting together a strategy base on cancer and on how to handle the services meant that the establishment of the institute in 2000 was a major step forward.
Beverley Hughes:I thank my hon. Friend for that observation. As for the concept of a centre for home defence and virtual centres, I am not quite sure how different such an approach would be from what we are doing, which is establishing a cross-government and cross-discipline methodology.
The purpose of the methodology is to benchmark what we have and audit it, and to identify the gaps, the priorities and finally the action necessary to fill the priority gaps, and to have a mechanism to ensure that we do those things within the time scales that we envisage. In a sense, that could be a concept of a virtual arrangement that ensures that what we both want to achieve—the development of the necessary scientific expertise and making sure that it is readily available—happens.
To meet the challenge of effective scientific coordination we need to do three things. First, we need to make the best use of the available sources of scientific expertise within Government. Secondly, we need to build up scientific resources in key areas. Thirdly, we need to ensure that we make the most of the knowledge

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base and capabilities outside Government, especially in industry, in academia and among our international allies.
The first part of meeting the challenge is to look at what we have and to use it effectively. The Defence Science and Technology Laboratory and the police scientific development branch, two world-class scientific institutions, have been involved in most parts of the programme, from testing equipment to scenario modelling and ensuring that guidance to first responders is scientifically sound, for example. Scientists from both bodies were also seconded to the Home Office to provide direct and immediate scientific support and to maximise synergies with their respective parent organisations.
The Committee has rightly identified the need to improve the quantity and quality of science in the Home Office. I accept that point, as did our response to the Committee's report. So far, we have appointed Professor Paul Wiles as chief scientific adviser to the Home Office. He is working with Professor Sir David King, the chief scientific adviser to the Government, to improve the scientific culture of the Home Office. They are both driving that forward.
More recently, the remit of the police scientific development branch has been broadened to cover all Home Office directorates and units. The new Home Office development branch, as it will be known, will be managed by Professor Wiles and enable the Home Office to adopt a more strategic approach to science and technology. Through his involvement in the cross-Whitehall network of chief scientific advisers, Professor Wiles will also be well placed to ensure that the Home Office benefits from the scientific expertise of other Departments.
In addition to improving the use of science within the Home Office, the Committee has rightly identified the need to look more closely at CBRN counter-measures in a civil, rather than a military, context. I accept that the DSTL and existing military technologies certainly offer useful starting points, but the Government agree that the civil environment poses different challenges that require different solutions. I know that members of the Committee will clearly understand that.
Our programme needs to capture those differences. We are addressing that issue through a Home Office-led cross-government civil counter-terrorism research programme, which aims systematically to identify, prioritise and fill gaps in civil counter-terrorism research. In a way, I alluded to that when I outlined our approach. The programme has already produced a prioritised list of those research requirements, which has been agreed across all Departments, and a cross-Whitehall committee of chief scientific advisers has been tasked with scrutinising the list and ensuring that the relevant research is commissioned as part of each Department's core research programme.
That model has an important characteristic that would not necessarily be so strong if we had not a virtual, but a concrete centre for home defence: it retains the responsibility, ownership and accountability required of each Department for commissioning and delivering research relevant to its own area that is necessary for the counter-terrorism strategy. That is important. We cannot deliver everything that we need
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for counter-terrorism in a centralised way. We have to keep Departments involved and committed. They must own their responsibility. It has to be a cross-Government approach.
Geraldine Smith:One of the problems is having someone in charge of everything to ensure co-ordination across Departments. We all know how difficult it can be at times to achieve the joined-up government that we want. Governments, be they Labour or Conservative, have always had problems because they work in Departments. It is hard to break down that culture and to get different Departments to work together. I am glad that there seem to be some positive moves, but a home defence agency, be it virtual or concrete, could be helpful.
Beverley Hughes:This is one of the dilemmas that we face in any level of government. Some hon. Members here shared my experience in local government. I encountered the problem then. If an issue spans the gamut of the responsibility of the Government or council, there is a question of delivery. In seeking to reduce poverty among children, one cannot have a child poverty reduction department; it is necessary to have a strategy that demands the integration, commitment and involvement of all of the elements of one's work that impinge on child poverty. That could be education, social services, job creation, youth offending and so on.
It is not feasible to put in a single Department everything related to the expertise and activity that need to be deployed for counter-terrorism purposes. As all Departments have their own core business, such an approach runs the risk of allowing Departments to leave things to someone else. The main point is that there is a cross-over between the skills, capacity and expertise that individual Departments need for their core business and what they need to respond and contribute to a counter-terrorism strategy and its implementation.
Geraldine Smith:I can understand what the Minister is saying about the need to work across Departments, but with something so serious as terrorism there is also a need for someone to take ultimate charge and to have the power to work across Departments. What happens if one is dealing with another Department and it says that it has to refer back to its Minister? Such matters are difficult, unless they can be pinned down to one person who has the responsibility to work across the Departments and to co-ordinate efforts.
Beverley Hughes:At ministerial level, in terms of the relevant committees that they chair, both the Prime Minister and the Home Secretary have ultimate responsibility.
Perhaps I can outline in simple, broad terms what the structures are in government. I had planned to do so in response to an important point made earlier by the hon. Member for Castle Point (Bob Spink). I hope that these comments will reassure hon. Members.
The policy and strategy have several strands. There is a clear strategy for counter-terrorism. The capability programme is about minimising the damage from any attack and maximising our resilience. Within that programme is the CBRN programme, on which I report

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to the Home Secretary. Each of those elements has clearly identified work streams covering the whole range of issues and required expertise. Each work stream has an identified lead Department, lead Minister and lead senior officer, who together are responsible for reporting on and delivering the action plan and the priorities that have been agreed. It is a highly structured and detailed set of arrangements with clear accountability and responsibility at ministerial and official level. We could not operate with anything less. I assure hon. Members that those arrangements in government are really the only way in which we can deliver effectively on the complexity and range of issues that need to be addressed in an effective counter-terrorism strategy.
Bob Spink:Will the Minister therefore tell me which specific Minister is finally and fully responsible for keeping my constituents, who are in the front line of the terrorist threat, in the dark about that threat?
Beverley Hughes:If the hon. Gentleman will be a little patient, I will get to that point when I talk about secrecy and openness, which are key issues that I want to address.
We have digressed slightly from how we make the most of scientific expertise in government and how we improve our scientific base. The third issue that I want to mention is how we make the most of the knowledge base and the capabilities outside government—in industry and academia, and among our international allies. It is important that we tap the expertise of those groups.
I am confident that the cross-government civil research programme will facilitate a more focused dialogue with research councils and industry because, as I said, what has come out of it is a clear prioritised list of counter-terrorism research requirements. We will commission research by individual Departments to meet those priorities.
On the international side, I welcome the Committee's support for our strong links with our US counterparts. The Home Secretary's recent visit to the US demonstrated the strength of those links and how closely we are working together. I understand that it made a powerful impression on Members and was very much welcomed.
I agree that there is more scope for developing links at the European level. Of course, there are links already, particularly between the Department of Health and the EU Health Security Committee, and with individual countries. There are also links between our security services and those of our main European partners. I would not want hon. Members to think otherwise. Those links are very strong, and the intelligence reports that we get regularly include as much intelligence from international sources, including our European partners, as from domestic sources. All the information is put together. We share ours and they share theirs. That is the only way that we can hope to piece together the pictures that arise from information on what is happening in different parts of the world and make connections between activities. Al-Qaeda is a fluid,
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networked organisation with sophisticated communication patterns, and the only way to proceed is through detailed sharing of intelligence, as has been the case post-Madrid.
I also want to discuss the issue of openness and the media. The initial process by which the Committee began work and the response to its activities got off to a bad start with regard to the provision of information to it, and I realise that the wider issue of communication with the public has also been raised today. I hope, and my hon. Friend the Chairman of the Committee has acknowledged, that notwithstanding that bad start, through negotiation and greater understanding of the Committee's requirements and of what information Ministers felt that they could give, the Committee heard most of the information that it needed and most hon. Members who wanted to attend did so.
It was not a question of not trusting the Committee; it was a matter of initially not being clear about the detail required, how much we could let out into the public domain and whether some information could be given in closed session. We were comfortable about sharing information on the general remit in respect of the role of science and technology, but it would not be right to put in the public domain details of operational matters and implementation, such as information on the location of radioactivity detectors. I hope that through the Committee process, as difficult as it initially was, we reached a greater understanding, and that members of the Committee will accept that if there is another similar inquiry, we can start from a higher level of understanding.
Openness in public communications is another important issue. I do not think that we have a culture of keeping secrets from the public either because we are frightened that they will panic or because we do not think that they can take that information. I think that we have a mature public who are experienced, through 30 years of Irish terrorism, in taking a realistic view of the nature of a threat and the risk that it poses, and about being determined that, notwithstanding the need for sensible precaution, observation and vigilance, they will not allow the threat of terrorism to alter the course of their daily lives.
Patrick Mercer:How does the Minister answer the point that, in response to repeated inquiries from me and other hon. Members about what state of national alert we are on, the Government say, "This is not information that we are prepared to divulge."? To find out what state of alert we are on, we have to depend on leaks from the BBC.
Beverley Hughes:The organisation responsible for assessing the threat is the fairly newly created JTAC—the Joint Terrorism Analysis Centre. That body, not Ministers, provides information on a sector-by-sector basis on any change in the threat. The Government repeat that, as we have constantly said, the threat is real and serious. The director-general of the Security Service has made it clear that she thinks that it is a question of "when, not if" an incident occurs.
The JTAC changes the perceived threat level, but not in the general way that it is changed in America. In fact, the Americans are interested in our system because they

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sometimes change the general level of threat in their colour-coded way, but people do not understand what that means for them. An example of how we work in this country is our response to fears about Heathrow. Extra security measures were introduced and we changed the threat level for the aviation industry and the travelling public in the air. That was a sector-specific change in the threat level. That makes more sense because it helps people to understand in a more focused way the implications for them of any change.
One or two of my hon. Friends put to one side the fact that there is a real issue about preparedness and what we can say in detail in public. We do not know fully the knowledge and understanding that terrorists have; their scientific and technical expertise; or what they know about where our vulnerabilities lie. If we put that information in the public domain and it were used in any way, we would rightly be held accountable.
I hope that Members accept that there is a difficult balance to strike. It is a question not of being secret for secrecy's sake, but of trying to strike the right balance in relation to the detail of preparedness and what we are doing to increase our capability. As John Stevens said yesterday, we have had 30 years of dealing with terrorism and talking to the public about terrorism. That is not to say that we do not need to learn new lessons; we do. However, let us remember that we have that experience. I am sure that Members will accept that Ministers feel a heavy responsibility and are committed to getting this right. That informs our practice as much as anything. We have families too, and we have constituencies. If we thought that putting more information in the public domain would be helpful, we would do it, because the protection of our people is our highest priority.
We are reviewing how we communicate with the public. As we look at what is happening around the world, we might come forward with some variation in approach. We are not saying that we think that we have got everything right or that we do not want change. Indeed, we are examining the situation thoroughly, and we have not made any decisions.
Mr. McWalter:Is my right hon. Friend saying that she is afraid that we might give terrorists ideas?
Beverley Hughes:Yes. I cannot go into specifics, but I am aware of certain technologies, and we do not know how much the terrorists know about the potential of our devices that could be used in an incident.
Mr. McWalter:Does my right hon. Friend not agree with the Americans that, if we assume that the terrorists know pretty much everything that is relevant, we will be much better prepared to deal with them than if we cross our fingers and hope that there are mutations of pathogens that they do not know about?
Beverley Hughes:Yes, I agree. Assuming that terrorists know everything informs what people do in strategic, tactical and operational terms to be prepared. However, that is not necessarily an argument in favour of telling terrorists everything, because if they did not know everything they would know it afterwards and they would have been given another tool in their armoury.
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In the few minutes remaining I will try to deal with other issues that hon. Members raised. My hon. Friend the Member for Bolton, South-East mentioned security of research. I am grateful for his acknowledgement that we must find a balance and a proportionate response. We must work to ensure the security of dangerous substances and knowledge, while guarding against disproportionate security measures that would undoubtedly hamper legitimate scientific research and academic freedom.
My hon. Friend also mentioned two lists: the Australia list in schedule 5 of the Anti-terrorism, Crime and Security Act 2001 and the updated list, which is not yet incorporated in legislation. I can tell him that work on that is still going on. The counter-terrorist security officers, who are tasked with advising laboratories on their protective securities, are using the more up-to-date list, even though, strictly speaking, only the older version is legally binding. Those officers have visited most laboratories in the country and have not encountered any problems in dealing with the up-to-date list. None the less, he is right that we are examining how we can incorporate a revised single list in the legislation. That needs to be done. I am simply saying that the fact that we have not yet done it is not affecting practice, which is based on the up-to-date list.
My hon. Friend also talked about the voluntary vetting scheme, which is also under review, and the Committee's recommendation for an ethical code of conduct, which is interesting. As a result of that suggestion, he knows that we are consulting representatives of the research community on the viability and value of such a code. Its implementation will be discussed under the auspices of the biological weapons convention next year.
I want to touch on a couple of points about health, and particularly the role of GPs, which my hon. Friend the Chairman of the Committee raised. The Department of Health has done quite a bit of work to ensure that information, including information on biological agents in particular, is disseminated to front-line professionals. It has funded the Health Protection Agency this year to undertake a programme of work to raise awareness through a number of initiatives: training sessions for accident and emergency staff together with police, fire and ambulance personnel are being delivered in each region; clinical action cards for GPs have been produced and are being distributed to every GP; training sessions for GPs are being delivered locally through the "train the trainer" mechanism, whatever that is; standard training material is being provided for use in GP postgraduate courses; there are exercises for training consultants; and so on. Therefore, "They are on the case" is the message. That programme is continuing.
The hon. Member for Salisbury (Mr. Key) and one or two other hon. Members raised the important question of exercises. I agree that it is critical that people do not merely write down what they should do in guidance, operational and procedural notes and so on. Departments and Government agencies already carry out exercises, including on a statutory basis, that are designed to test the planning and framework

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arrangements for radiological and biological incidents, using deliberate releases and accidents. Those will continue to be a feature of the exercise programme for CBRN resilience and counter-terrorism.
Numbers are also an issue. Since spring last year, there have been seven very large-scale live exercises. Six took place in England and one in Scotland. In addition, there were more than 30 smaller table-top exercises to support them. They took place in different parts of the country. There are also the counterbalance exercises, which I think I mentioned earlier. They are organised jointly by the Home Office, regional resilience teams, the devolved Administrations and the emergency planning societies. All those exercises focus on CBRN and long-term resilience. Since last year, there have been seven counter-balance exercises in England and one in Wales.
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Therefore, there is an ongoing and not insignificant programme of exercises at different levels to ensure that people practise what they are supposed to do and that they learn the lessons. Indeed, I do not agree that the Osiris initiative was unsuccessful. It taught us a great deal about how dealing with the health issues in particular and identifying and assessing an incident at an early stage can be most effectively achieved.
As time is up, if I have not addressed a particular issue I will write to hon. Members.
Mr. Deputy Speaker:May I say to the Minister that she finished in the nick of time? I congratulate the Chamber on a high-quality debate on a very important subject. All those who participated are to be congratulated on their contributions.
Question put and agreed to.
Adjourned accordingly at half-past Five o'clock.

DEFENCE
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TRANSPORT

  Road Haulage Modernisation Fund
  The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson)
  On Wednesday 17 March my right hon. Friend the Chancellor of the Exchequer announced that the Department for Transport would be allocating resources to allow the more worthwhile road haulage modernisation fund (RHMF) projects to continue.

  I am pleased to announce today that the Department will be allocating a budget of £3 million in 2004–05 so that more of the haulage industry can benefit from projects to help them apply the most up to date and efficient practices. The budget will also allow the completion of some projects started during the current financial year.

  The list of projects includes:

  (a) A further phase of the Driver Training programme to promote Safe and Fuel Efficient Driving (SAFED).

  (b) A further phase of the Fuel Economy Advisor programme to encourage more fuel efficient operations, using regional seminars and site specific advice.

  (c) A further phase of training using the truck driver simulator—more drivers will benefit from simulator training followed by a study to understand better the medium term benefits of simulator training.

  (d) A further phase of the Respect for People project—to consolidate industry take-up of this project, which spreads best employment practice by encouraging the use of key performance indicators so that operators can benchmark their performance against the best companies.

  (e) The development of a careers website—to raise the industry's profile and draw attention to its opportunities.

  In addition, the Department will provide funding to complete the training of 1,200 existing candidates for licence acquisition, with over half of these being funded through to achievement of their Logistics Skills Award. We are also considering proposals made through the Road Haulage Forum to fund some research projects to help understand recruitment and training needs and how they can be met.

  This programme reflects the Government's commitment to help the industry to help itself. I look forward to discussing this programme with industry stakeholders at the next meeting of the Road Haulage Forum.

NORTHERN IRELAND

  Northern Ireland Housing Executive
  The Minister of State, Northern Ireland Office (Mr. John Spellar)
  The accounts of the Northern Ireland Housing Executive (NIA 8/03 1 for the year ended 31 26WS
  March 2003 incorporating the Reports of the Local Government Auditor and the Comptroller and Auditor General thereon will be laid before the NI Assembly on Thursday 18 March 2004.

  Copies of the Northern Ireland Assembly Paper have been placed in the House of Commons Library at Westminster and in the NI Assembly Library at Stormont.

ENVIRONMENT, FOOD AND RURAL AFFAIRS

  Fisheries
  The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw)
  From 1 January 1999 all British registered fishing vessels over 10m in length and catching more than 2 tonnes of quota stocks have had to demonstrate an economic link with fisheries dependent communities in the United Kingdom. This link can be demonstrated in a number of ways—for example, by vessels landing at least 50 per cent. by weight of their quota catch into the UK or by employing a crew of whom at least 50 per cent. are normally resident in a UK coastal area.

  In 2002, 1,362 vessels caught more than 2 tonnes of quota stocks and in each case achieved a satisfactory economic link, primarily through landings into the UK.

  The arrangements have also resulted in UK registered but foreign-owned vessels continuing to land and incur expenditure at UK ports or making quota available for re-distribution to the inshore fleet. Compared with 1998, benefits have included:
  a 40 per cent. increase in the volume of quota stocks landed into the UK by foreign owned UK registered vessels. This figure is proportionally higher when viewed against cuts in TACs since 1998;
  a significant increase in the number of landings into the UK by Anglo-Spanish vessels, resulting in additional expenditure at our ports of some £3 million; and
  the provision of almost 500 tonnes of quota for redistribution to our inshore fleet, notably nephrops, North Sea sole and North Sea cod.

  A full report by the fisheries departments in the United Kingdom on the operation of the economic link measures in 2002 and their impact has been placed in the Library of the House.

WORK AND PENSIONS

  Pension Protection Fund
  The Minister for Pensions (Malcolm Wicks)
  Improving member protection is a Government priority. As outlined in the Pensions Bill, we intend to introduce the new pension protection fund, which will enhance protection for pension scheme members and improve confidence in pension provision.

  It will protect members of defined benefit and hybrid schemes by paying compensation should their employer become unable to meet their pension obligations following insolvency.

  Our intention, subject to parliamentary approval, is that we protect as many individuals as we can, from as early a date as possible. Therefore, although we have a

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  challenging timetable, our plans are to have the organisation up and running in April 2005. In order to do this we need to carry out essential activities, which will require some expenditure in advance of the legislation achieving Royal Assent.

  Parliamentary approval for additional resources of £450,000 for this new service will be sought in a supplementary estimate for the Department for Work and Pensions. Pending that approval, this urgent expenditure will be met by a repayable cash advance from the contingencies fund.

  Housing Benefit
  The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)
  On behalf of my right hon. Friend the Secretary of State for Work and Pensions, I am announcing the publication of performance statistics for local authority administration of housing benefit and council tax benefit (HB and CTB) for the third quarter of 2003–04. A copy of the quarterly statistics for all local authorities in Great Britain has been placed in the Library and has been published on the Department for Work and Pensions website at http://www.dwp.gov.uk/asd/asdl/hb_ctb/performance.asp

  Publishing these statistics is part of our strategy for reforming housing benefit and for ensuring that local authorities are accountable for their performance in administration of housing benefit and council tax benefit.

  Housing benefit and council tax benefit performance statistics show that in the third quarter of 2003–04 for those authorities that submitted data:
  155 authorities reported meeting the 36-day standard of processing new claims, compared with 134 authorities in the third quarter of 2002–03;
  the average reported number of days to process new claims reduced from 53 days in the third quarter of 2002–03 to 47 days in the third quarter of 2003–04;
  175 authorities reported the standard of processing changes in circumstances, on average within nine days, compared to 166 in the third quarter of 2002–03.

  The statistics are un-audited and are provided quarterly by local authorities to my Department.
  The audited Best Value performance information for English local authorities for 2002–03 was published by my right hon. Friend the Deputy Prime Minister on 18 December 2003 on the best value performance indicators website at: http://www.bvpi.gov.uk/home.asp.

  A copy is available in the Library.

  The most recent corresponding data for local authorities in Wales are also for 2002–03. These are published on the Audit Commission website at: http://www.lgdu-wales.gov.uldeng/Project.asp?id=SX99A1-A77F4BA8

  A paper copy of the relevant extract from this site is available in the Library.

  The most recent corresponding data for local authorities in Scotland are also for 2002–03 and are in the Accounts Commission publication "Performance Indicators 2002/2003: Benefits, Finance and Corporate Issues" a copy of which is available in the Library.

DEFENCE

  Armed Forces Personnel Administration Agency
  The Parliamentary Under-Secretary of State for Defence (Mr. Ivor Caplin)
  The key targets have been set for the chief executive of the Armed Forces Personnel Administration Agency (AFPAA) for the financial year 2004–05. The targets build upon progress made by the agency since it formed on 1 April 1997 and reflect the high level of service delivery required for pay, pensions and allowances, and a change programme to deliver new harmonised joint personnel administration for the Armed Forces.To Deliver Pay
  To make 99.9 per cent. of all pay payments by the due date (excluding late payments caused by events determined to be outside the control of the Agency).
  To keep the monthly error rate of accuracy for the volume of payments within 0.1 per cent.

  To Deliver Pension Services
  To make 99 per cent of all pension payments (including new awards) by the due date (excluding late payments caused by events determined to be outside the control of the Agency).
  To keep the monthly error rate of accuracy for the volume of payments within 0.1 per cent.

  To Support the Delivery of Joint Personnel Administration Programme
  Subject to Main Gate approval, Joint Personnel Administration Partnering Agreement to be signed, by 30 September 2004 for the Manufacture, Roll Out and Delivery.
  To commence the Roll Out of Joint Personnel Administration Core System for the Royal Air Force, Royal Navy and Army by October 2005, May 2006 and October 2006 respectively.

  To transform the Agency to Deliver the full Potential of the Joint Personnel Administration Environment
  To deliver Joint Personnel Administration Centre capability through six stages, commencing, June 2004 Stage 1 and March 2005 Stage 2.
  To deliver 100 per cent. of Key critical path milestones in Agency Transition Plan.

  To deliver a cost effective change programme in accordance with departmental priorities
  To deliver 96 per cent. of major change to ensure individual development Projects are delivered to specification and schedule.
  To deliver 96 per cent. of all minor change in accordance with Joint Change Management Team plans agreed by partner and customer.

  To Develop targets for implementation in 2005–06 that will measure the delivery of Pay. Pensions and Personnel Services against Service Level Agreements
  To achieve the agreed service levels of all Performance Assessment Indicators (levels 4 and 5 of current contract Schedule 2) not already included in Key Targets 1 and 2.

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  To meet approved efficiency targets for the delivery of core services
  To reduce the unit cost by 6 per cent. in 2004–05 which will contribute to a 12 per cent. reduction over a 4-year period from 2002–03 for the delivery of core pay and personnel administration.

SOLICITOR-GENERAL

  Crown Prosecutors
  The Solicitor-General (Ms Harriet Harman)
  My right hon. Friend the Attorney-General has made the following ministerial statement."I wish to announce the start of a review of the Code for Crown Prosecutors following the recent developments in prosecutors' powers. Section 10 of the Prosecution of Offences Act 1985 requires the Director of Public Prosecutions to issue a Code for Crown Prosecutors in order to give guidance on the general principles to be applied in prosecutorial decision making. It enables casework decisions to be made fairly, consistently and independently.
  The Code is an important public document, which allows everyone to see and understand the basis upon which prosecution decisions are made. The Code is kept under continual review to ensure that its principles remain appropriate. The current edition of the Code was published in October 2000, which involved an extensive internal, external and public consultation exercise.
  Following the public consultation process last time, every aspect of the Code was reconsidered and the basic principles were acknowledged as being sound. Accordingly, this review will not extend to any reconsideration of the basic two-test principle of prosecuting on the basis of ensuring that the evidence provides a realistic prospect of conviction and that it is in the public interest to prosecute the case.
  This review will therefore be limited in scope to the implications of a number of key recent development, which have the potential to impact on decisions made within the framework of the Code. The most significant of these is the charging initiative under which prosecutors will assume responsibility from the police for determining appropriate charges to bring against alleged offenders, introduced by the Criminal Justice Act 2003. There are also other significant changes to be considered, such as conditional cautioning.
  The Crown Prosecution Service, with appropriate consultation, is therefore to review the Code for Crown Prosecutors to take account of these recent developments. The review team has now been established and will be writing to organisations and individuals with an interest in the Code, asking for comments on the particular areas under consideration."
  I welcome this review and will be taking a close interest in its progress.

HOME DEPARTMENT

  Comprehensive Review of Parole and Lifer Processes
  The Parliamentary Under-Secretary of State for the Home Department (Paul Goggins)
  The right hon. Member for Brent, South, (Mr. Boateng), when Prisons Minister, announced the Comprehensive Review of Parole and Lifer Processes on 11 February 2000. Its remit was to examine the parole and lifer systems, identify the key issues to be faced over the next five years and recommend appropriate changes to improve the efficiency and effectiveness of the relevant procedures. The review also included a "Better Quality Services"30WS
  review and the first quinquennial review of the Parole Board since it became an Executive Non-Departmental Public Body in 1996.

  The review made 118 recommendations relating to a range of process and organisational improvements, which included: reducing the Discretionary Conditional Release (Parole) review timetable; Improving the efficiency of the mandatory lifer review process; Changing lifer oral hearing procedures to improve efficiency and quality of decision-making; Improving dossier content quality and reducing duplication and waste; Clarification of roles and possible efficiencies in decision making; Organisation of the Parole Board; some cross-cutting issues, including information for victims; Improving Secretary of State Directions for the release of determinate sentence prisoners.

  Significant achievements have been made on a number of review recommendations. For example:

  Lifer cases and oral hearings
  A new scheme for the preparation and submission of mandatory lifer dossiers has considerably speeded up the review process. A new key performance target for lifer dossier production, requiring 80 per cent. of dossiers to be sent to the Parole Board on target, is now being achieved. Oral hearings to review the recall of extended sentence prisoners have been successfully introduced.
  The Parole Board has developed a system for appraising judicial members of the Board, who currently chair most of the Board's oral hearings.
  Recalls
  New procedures to ensure timely processing of recall requests made by the Probation Service have been successfully introduced. New arrangements for handling representations against recall have been implemented and which provide for a greater input from the probation service. Furthermore, the Secretary of State has issued new Directions to the Board on considering of recalls and their representations against recall, which has clarified the Board's role and the basis on which it is asked to take decisions and make recommendations. The Directions are also now more in line with the Probation Service National Standards on licence enforcement and reflect that the aim of licence enforcement should be not only to reduce the risk of further offending, but also to make clear that the licence period is an integral part of the sentence and compliance with licence conditions is an important part of licence supervision.
  Deportees
  Improving the operational and working practices between the Prison Service and IND, which has resulted in a sharp increase in the number of parole notifications issued on target.
  Parole Board Organisation
  A Review of corporate governance, resulting in tighter terms of reference for management committees. The Board also achieved IiP status and has recently achieved re-accreditation. Members and staff development has become a greater priority for the Board, with systematic training needs analysis and evaluation mechanisms adopted. The Board is also in the process of developing a whole system approach with the Prison Service to implement change and has improved its focus upon communication, both internal and external.
  The Parole Process
  The Review provided an opportunity to raise the profile of the parole process which was achieved via the 42 area committees of the Criminal Justice Strategy Committees and the National Criminal Justice Consultative Council. A series of Parole Clerk Fora have been introduced to provide for training and topical issues to be discussed. This has given

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  parole clerks a much-needed voice to highlight areas of "best practice" and these suggestions are being taken forward in order to further improve parole performance. The Review has also led to Victim Personal Statements taken by the police at the time of the offence being included, where available, in parole dossiers. Victims are also generally more informed about the parole process.

  Of the 118 recommendations, only 18 remain to be completed. The Review is being project managed by the Early Release and Recall Section of the Sentencing Policy and Penalties Unit of the Home Office, working in conjunction with the Probation Service, Prison Service, Immigration and Nationality Directorate and the Parole Board. Their progress is being monitored by a Programme Board (which is chaired by the Head of the Sentencing Policy and Penalties Unit), in which all the relevant criminal justice agencies are represented. I have decided that the time is right formally to draw the review to a close, although the work on the outstanding recommendations will continue and I will receive regular reports on its progress.

  As a part of the Review, the Secretary of State's Directions to the Parole Board concerning the release of determinate sentence prisoners have been reviewed and a revised copy of these Directions has been served upon the Parole Board today. The purpose of the Directions is to structure the Board's discretion and require it to have regard to risk. The balance of the Directions is between public protection and the rehabilitative benefits of early release.

  In reviewing the existing Directions, a number of considerations were taken into account.

  We were concerned that the voice of the victim, when considering whether or not a determinate sentence prisoner is suitable for early release on parole, needed to be heard. The Victim's Charter and Victim Personal Statements have been in use for some time now, with the latter being a useful vehicle for victims to state how they have been affected by the offence. We were keen to build on this by requiring the Board to consider the impact of the offence upon the victim or the victim's family when assessing suitability for early release on parole.

  The existing Directions make no reference to previous record (save in the case of violent and sexual offenders and then only to previous offences of three similar nature). Previous offending (and previous custodial penalties) is the most reliable predictor of future offending, and we were concerned that the new Directions should recognise this.

  The existing Directions rightly draw attention to the relevance of previous breaches of trust. However, they fail to include the prisoner's likely compliance with the conditions of his licence, taking into account where there have been breaches of trust in the past and during the course of his present sentence. This omission has been rectified.

  The new Directions require the Parole Board to take account of an actuarial risk predictor tool, where such a tool is available.

  In conclusion, the new Directions provide a sharper focus on risk assessment and, for the first time, formally recognises the role of victims in the parole process. They will come into force on 1 May 2004.

  Copies of the Directions are available in the House Library.

TRADE AND INDUSTRY

  Equal Pay
  The Minister for Industry and the Regions (Jacqui Smith)
  I have today published a consultation document on proposals to streamline equal value tribunal cases. Equal pay cases can be notoriously slow and complex, particularly the large-scale cases concerning questions of whether jobs are of equal value. Our proposals to speed up and simplify these cases form part of a package of measures to improve the way in which the Equal Pay Act 1970 works in practice. For example, last year we introduced the Equal Pay Questionnaire and lengthened the time limits for bringing cases and for making arrears payments.

  The overall aim of our new proposals is to make the tribunal process work as effectively as possible and to tackle the lengthy delays that can occur in the more complex cases. Key features include: providing the Employment Tribunal Presidents of England and Wales, and of Scotland with the power to appoint tribunals with a specialist knowledge of equal value cases; promoting firmer case management, for example, through providing standard directions to ensure early exchange of information; streamlining complex rules of procedure; and ensuring more effective use of independent experts. The new provisions dovetail with the proposed new Employment Tribunal Regulations and Rules of Procedure. The intention is that, subject to Parliamentary approval, these measures should come into effect on 1 October 2004.

  The consultation document will be placed on the DTI and Women and Equality Unit websites so that it is available to the wider public. The consultation period will run for 12 weeks, with a closing date for comments of 10 June 2004. Copies of the consultation document have been placed in the Libraries of both Houses.

  Taxis/Private Hire Vehicles
  The Secretary of State for Trade and Industry (Ms Patricia Hewitt)
  We welcomed the Office of Fair Trading (OFT) report that was published on 11 November. It provides a useful analysis of the market impact of taxi regulations. The OFT made a number of recommendations to Government, aimed at improving services for consumers. The Government is committed to delivering better transport services and has carefully considered OFT's contribution to the debate. Taxis and private hire vehicles (PHVs) have an important role to play in the provision of public transport, especially when buses or trains are not available. As well as providing the connecting first or last trips of a journey, making it easier to use public transport, they can provide people in the lowest income groups with access to vital services and enhanced quality of life.

  We strongly support the OFT's role in conducting analyses of this kind. They are useful in considering the economic effects of Government regulations.

  That is why we have empowered the OFT and other economic regulators under the Enterprise Act 2002 to advise where laws and regulations may create barriers to entry and competition or channel markets in a particular direction, thereby holding back innovation and progress. The Government broadly accepted the conclusions of similar OFT and Competition

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  Commission investigations in to the markets for pharmacies, private dentistry and prescription-only veterinary medicines.

  In considering OFT's recommendations on taxis, the Government have consulted stakeholders and taken into account the many representations received. The Government has also taken into account the reports of the Transport Select Committee.

  I attach below the Government's action plan responding to OFT's recommendations. This action plan relates to England and Wales. Legislation regarding the taxi market is devolved in Scotland and Northern Ireland and they have responded separately.

  Restrictions on the numbers of taxis

  In England and Wales outside London, local authorities (district/borough councils or unitary authorities) have been able to restrict the number of taxi licences that they issue since at least 1847. In practice, some 45 per cent. of authorities do so at present, but the legislation allows them to control numbers only if they are satisfied that there is no significant unmet demand.

  Local authorities with quantity restrictions must be able to justify their policy in the event of an appeal by a taxi licence applicant who has had his application refused on the grounds of quantity controls. The usual method of ascertaining the level of demand is by means of a survey. The legislation does not stipulate any specific frequency for the surveys, but any licensing authority that controlled taxi numbers would want to ensure that its policy was based on up-to-date and sound information.

  The OFT recommended that local authorities should not retain this power because they considered that such restrictions can:

  reduce the availability of taxis

  increase waiting times for consumers

  reduce choice and safety for consumers

  restrict those wanting to set up a taxi business.

  The Government agree that consumers should enjoy the benefits of competition in the taxi market and considers that it is detrimental to those seeking entry to a market if it is restricted. The Government are therefore strongly encouraging all those local authorities who still maintain quantity restrictions to remove restrictions as soon as possible. Restrictions should be retained only if there is a strong justification that removal of the restrictions would lead to significant consumer detriment as a result of local conditions.

  However, the Government received a significant number of representations expressing the view that ultimately local authorities remain best placed to determine local transport needs and to make the decisions about them in the light of local circumstances. The Government believe that local authorities should be given the opportunity to assess their own needs, in the light of the OFT findings, rather than moving to a legislative solution.

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  Nevertheless the Government believe that local authorities should publish and justify their reasons for restricting the number of taxi licences issued. The Government will therefore write shortly to each district/ borough council or unitary authority maintaining quantity restrictions and ask them to review by 31 March 2005 the local case for such restrictions, and at least every three years thereafter, and make their conclusions available to the public.

  The Government intend that the letter will include guidelines on quantity restrictions, including a review of the level of service available to consumers and consumer choice. The guidelines will cover:

  effective surveys to measure demand, including latent demand, for taxi services;

  consultation with:

  all those working in the market;

  consumer and passenger (including disabled) groups; groups which represent those passengers with special needs; the police;

  a wide range of transport stakeholders e.g. rail/bus/coach providers and traffic managers.

  publication of conclusions. This will include an explanation of the particular local circumstances that justify restrictions, what benefits they deliver to consumers and how decisions on numbers have been reached. Authorities will be encouraged to make all the evidence gathered to support the decision-making process available for public scrutiny.

  This is to ensure that decisions to impose restrictions are based upon strong up-to-date evidence of benefits to consumers locally for their retention, and that the decision-making process is transparent and consultative. The Government consider that this would help local authorities with quantity restrictions to justify their policy if they were challenged about refusing to issue a taxi licence in the courts. If restrictions are not shown to be delivering clear benefits to consumers, it is the view of Government that local authorities should remove them.

  The Government will review in association with the OFT the extent of quantity controls in three years' time to monitor progress towards the lifting of controls. If necessary, the Government will then explore further options through the RRO or legislative process if insufficient progress has been made.

  The Local Transport Plan process requires local transport authorities to look holistically at how the transport provision for their area contributes to wider objectives such as economic growth, accessibility and the environment. Taxis and private hire vehicles are an integral part of local transport provision and should be properly taken into account in this process. The Government intends that the next five-year Local Transport Plans, due to be submitted by authorities in 2005, will include justification of any quantity restrictions in the wider local transport context1.
  1Those few authorities that will not be required to produce a Local Transport Plan will still be expected to justify their quantity restriction policy if any of the districts in their area have such restrictions.

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  The Government will also include guidelines on quantity restrictions in its best practice guidance on taxi licensing.

  Maintaining quality in service provision

  The OFT states that there is a strong case for regulating quality and safety both for taxis and PHVs as:
  consumers cannot judge certain standards when getting into a taxi or PHV; and
  taxi services can have a role to play in broader social welfare policy.

  The OFT concludes that quality and safety standards should be maintained and supported by effective enforcement. The Government agree.

  The OFT recognises that local authorities should be able to apply quality and safety regulations to suit their needs. In doing this, local authorities should ensure that any quality and safety specifications set do not go beyond what is required to achieve their policy aim. To help them, OFT recommended that the Department for Transport promote and disseminate local best practice in applying quality and safety regulations.

  The Government agree with OFT that quality standards have an important role to play in securing the safety of the travelling public and ensuring that they are provided with a high level of service. The Government also agree that these decisions should continue to be made by local authorities, but considers that there is scope for more sharing of best practice, particularly in ensuring proportionality.

  The Government will therefore consult local authorities and other stakeholders in order to develop and publish best practice guidance as OFT recommend. The Government intend that this will comprehensively cover licensing issues, including suitable criteria for licensed vehicles, drivers and PHV operators; driver training; safety; security and other topical issues. The draft guidance will also include sections on quantity controls; fares (see below); enforcement; taxi zones; flexible transport services; and a model taxi/PHV policy for the Local Transport Plan process.

  The aim would be to consult on draft guidance later this year, with a view to publication by the end of the year.

  Fares

  The OFT recommends that local authorities should not set fixed or minimum fares. They should only set taxi fare tariffs which represent the maximum that can be charged:

  to protect vulnerable consumers;

  to address a lack of price competition; and

  to allow consumers to negotiate lower fares in certain situations.

  The Government agree that where taxi fares are set by local authorities they should be a maximum. As the OFT notes, this is already the case in England and Wales
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  outside London. The Government agree that the situation in London should be clarified and is therefore grateful that the licensing authority for London has agreed to make clear through secondary measures that fares set in London are a maximum rather than mandatory as soon as it is feasible to do so.

  The Government also note OFT's advice that consumers should be encouraged to negotiate for lower fares, particularly when booking taxi services over the telephone. In promoting more competition in the market, the Government will ask the OFT to advise on guidance as part of the Government's best practice guidance for local authorities (which will also encompass best practice on quality and quantity controls including unmet demand surveys as outlined above). The guidance will make clear that initiatives to promote greater competition should not jeopardise the safety of consumers or drivers, or create enforcement issues. There is scope to encourage some firms to differentiate their services thereby providing a greater range of choice for consumers (for example by providing a "happy hour" of lower cost journeys for, say, pensioners).

  Further issues

  The OFT also commented on several further issues that concern taxi and PHV licensing but which are outside the remit of the report:

  Regulatory Reform Action Plan

  The Government's Regulatory Reform Action Plan published in 2002 contained a number of proposals to use the streamlined order-making procedure in the Regulatory Reform Act 2001 to amend burdensome primary legislation. The plan included four proposals for taxi and PHV legislation in England and Wales outside London, which were subject to Ministerial decision. These were:
  removing the requirement for Secretary of State approval of local authority resolutions to amalgamate taxi zones;
  standardising driver and operator licence duration;
  removing local authority powers to restrict taxi licence numbers in their area; and
  clarifying/simplifying the position on PHV cross border hirings across the borders of different licensing authorities.

  The OFT considered that these proposals represented areas of concern and recommended that they should be addressed. The issue of restrictions of taxi licences is covered earlier in this action plan. The Government are taking forward the repeal of the need for the Secretary of State to approve taxi zone amalgamation resolutions in the regulatory reform order that will repeal various local authority consent regimes. The Government will include the issues of driver and operator licence duration and cross border hirings of PHVs (and taxis) for consultation in the draft best practice guidance.

  Taxi Licensing Zones

  The OFT considers that where taxi licensing areas are divided into more than one zone, greater clarity would be brought to the market if local authorities removed the zones and established a single licensing area. The Government agree and will include a statement to this effect in the draft best practice guidance.

  Cottam Power Station
  The Minister for Energy, E-Commerce and Postal Services (Mr. Stephen Timms)
  I have today granted consent under Section 36 of the Electricity Act 1989 to EDF Energy (Cottam Power) Limited for the construction of flue gas desulphurisation plant at the 2,000 MW coal-fired power station at Cottam in Nottinghamshire. Planning permission for the plant has also been deemed to be granted, subject to 54 planning conditions agreed with the Nottinghamshire County Council and the Bassetlaw District Council.

  The consent is for the final two units with the first two already obtaining consent in August 2002 and which are currently under construction.

EDUCATION AND SKILLS

  Budget Statement
  The Secretary of State for Education and Skills (Mr.Charles Clarke)
  In his Budget statement yesterday, my right hon. Friend the Chancellor of the Exchequer set out measures to ensure stability for education, children's services and skills and the continued progress across the Department's agenda that is crucial to the economic and social well-being of the country.

  Education expenditure in England will grow by an average of 4.4 per cent. across the Spending Review period: that is by 6.0 per cent. in 2005–06; 3.6 per cent. in 2006–07 and 3.5 per cent. in 2007–08. The tables below show the plans for the Department's Expenditure Limit and local authority provision for education and children's social services; and plans for total education spending in England over the Spending Review period.

  £million

  2005–06

  2006–07

  2007–08

  Departmental Expenditure Limit

  31,105

  32,905

  35,153

  Local Authority Formula Spending Share Education

  27,963

  29,863

  31,663

  Children's FSS

  4,016

  4,316

  4,516

  £million

  2005–06

  2006–07

  2007–08

  Total Education Spending (England)

  56,529

  60,122

  63,910

  As a result of this settlement, education spending in the UK will be 5.6 per cent. of GDP in 2007–08, up from 5.4 per cent. in 2004–05.

  In every area, investment will be accompanied by reform.

  Children

  Over 1.6 million children have benefited from free part time nursery education for three and four year olds; and 400,000 children and their families in deprived area have been helped by 524 Sure Start centres.

  As a result of this settlement, the number of children's centres will rise to 1,700 by 2008, covering all 20 per cent. of the country's most disadvantaged wards. We will also announce in due course an expansion of childcare places, family support services, and an
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  expansion of extended schools, which bring together education, health, children's social services and childcare.

  This settlement will provide the funding necessary to address the agenda set out in the "Every Child Matters: The Next Steps", including the establishment of Children's Trusts to develop in each locality integrated services for children and families and improved care and life chances for children in care.

  Schools
  As a result of the Government's class size pledge, 350,000 five, six and seven year olds are no longer in classes of 31 or more. There are around 25,000 more teachers and 80,000 more support staff than in 1997. In 1997, half of all 11 year olds went to secondary school unable to read, write and count well. Now it is a quarter. And the international PIRLS study in March 2003 showed that our 10 year olds are the third best readers in the world. This settlement will enable primary schools and teachers to continue to raise standards of literacy and numeracy supported by workforce reform and the recruitment of more teaching assistants.

  In 1997, just 45.1 per cent. of pupils got five good grades at GCSE. Last year it was 52.9 per cent. And it is rising fastest in our toughest area—pupils in Excellence in Cities areas are improving at more than twice the rate of pupil everywhere else.

  Half of all secondary pupils are now taught in specialist schools—there were just 257 specialist schools in 1997. And they are getting better results—56.7 per cent. of pupils in specialist schools get five good grades at GCSE. This settlement will continue the drive to achieve excellence and to narrow the gaps in attainment between schools and between pupils within individual schools. It will make a reality of our commitment that every school that meets the standard will have the opportunity to gain specialist status; and will allow a continued expansion in the number of academies.

  The resources will also enable us to respond to the recommendations of the Tomlinson report, including ensuring that education equips young people for the world of work.

  Over the spending review period total Departmental capital spending will rise from £3.85 billion in 2004–05 to £6.78 billion in 2007–08. This will ensure that, through our Building Schools for the Future programme, by 2015 every secondary school can be refurbished or rebuilt with world class technology in every school and the best state of the art learning in every classroom.

  Accompanying this new investment, we will develop a new relationship with schools to help deliver personalised learning tailored to the talents and needs of every pupil, underpinned by a strengthened accountability framework, a simplified school improvement process and improved information and data management.

  Higher Education
  Publicly planned funding for higher education has risen dramatically under this government. Expenditure on science and research will have increased in 2005–06 by £1.25 billion a year compared to 2002–03—around 30 per cent. in real terms.

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  The settlement will allow investment in the sector to continue to grow in real terms. It will enable the Government to advance progress towards its target for 50 per cent. participation in higher education and at the same time maintain real terms student funding per head. It will provide the resources needed to deliver the reforms set out in our White Paper "The Future of Higher Education": improving and rewarding excellent teaching; increasing investment in science and research; enabling more people to enter higher education; and supporting those from disadvantaged backgrounds by restoring a grant worth up to £2,700 in 2006, and abolishing up-front tuition fees for all students.

  Lifelong learning

  In December 2003, 255,000 young people were studying Modern Apprenticeships, compared with just 75,800 in 1997. The number of working age people in England with no qualifications in 1985 was 10.5 million. In 2003 it was 4.6 million. Between 2001 and 2002 over 300,000 adults were helped to raise their numeracy and literacy skills.

  The settlement will provide for new measures—through the New Deal for Skills—to tackle the UK's large number of adults with low skills in the workforce. It will offer, in job centres, for the employed and well as unemployed, a one-stop skills service with access to personal skills advisers and training. By 2007 1.5 million adults will have improved their basic skills as part of our longer term aim of ensuring that by 2010 that the
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  number of adults in the workforce who lack NVQ2 or equivalent qualifications is reduced by at least 40 per cent.

  We will take forward the measures set out in our Skills Strategy to meet the needs of employers, employees and individual learners; including a key role for the new Sector Skills Councils.

  Efficiency
  The front-line will al so see resources freed up and cost pressures reduced through efficiency gains worth at least 2.5 per cent. each year over the Spending Review period. These will be delivered through reducing administration costs, reforming procurement and unlocking productivity gains from technology and workforce improvements. For example:
  There will be a 31 per cent. reduction in Department for Education and Skills headquarters staff by 2008–1,460 fewer staff.
  On procurement, we will take a more pro-active role to help schools and colleges achieve savings through collaboration and wider agreements—the recent agreement with Microsoft which reduces the cost of software to schools by £46 million over three years shows what is possible.
  We will work with our partners in children's services, education and training to ensure that resources—people and money—can be used as effectively as possible, for example through reduced bureaucracy and workforce reform.
  The Government's aim is to achieve excellence in standards of education and levels of skills, and to give everyone the opportunity to develop their learning. This settlement provides the necessary resources to support and deliver these objectives.

Preamble
The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Oxford.

European Constitution
Lord Owen Lord Owen asked Her Majesty's Government:
Whether they will reinsert during the intergovernmental conference the earlier wording in the draft European constitutional treaty that explicitly rules out the President of the European Commission from being elected President of the European Council.
Baroness Crawley: My Lords, the Government believe that the same person should not simultaneously hold the position of President of the European Council, as introduced by the draft constitutional treaty for the EU, and the role of President of the European Commission. We believe that the effect of Article III-251 of the treaty, as drafted by the convention, would already be to prohibit this as it stipulates that commissioners may not engage in any other occupation.
Lord Owen: My Lords, does the Minister agree that if, by a qualified majority of votes, even with the British Prime Minister voting against it, the European Council decided to double-hat the President of the Commission and the President of the Council, that would be one of the biggest possible steps to full integration of the European Union and, even if the Government then appealed to the European Court of Justice, on past precedent the court would decide that this was a political matter? For those reasons, given Recommendation 152 of the 41st report of the Select Committee of this House, will the Government make this a red-line issue and insist that a change is made? If there were no objection, it would pass easily.
Baroness Crawley: My Lords, I can only say to the noble Lord, Lord Owen, that we firmly believe that the text is already robust. We believe that the text, as drafted, already rules out that possibility. As the noble Lord will know, the article states:
"European Commissioners [which would include the President of the Commission] … shall refrain from any action incompatible with their duties … [and] may not, during their term of office, engage in any other occupation".
We are content with that text.
Lord Wallace of Saltaire: My Lords, does the Minister accept that the idea that a qualified majority would outvote Britain in an attempt to combine the two posts lies in the realms of Euro-sceptic conspiracy theories
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rather than practical European policy? Does she also accept that, in putting in place a European Union of 25, it is more important to ensure that we have a strong and effective President of the Commission and a strong and effective President of the Council?
Baroness Crawley: My Lords, I very much agree with the noble Lord. As I said, we believe that the text is robust and therefore we rule out any fantasies of an all-powerful President of Europe. We are very clear about that. The noble Lord was absolutely right in making his second point. This is a decisive time for the EU. We must rise to the challenges of enlargement to 25 member states and we must also rise to the equal challenge of bridging the gap between the citizen and Europe.
Lord Tomlinson: My Lords, does my noble friend agree that, while there are fairly persuasive reasons for not opening up further argument in the context of the inter-governmental conference, nevertheless the principle raised by the noble Lord, Lord Owen, is one of fundamental importance? Can she therefore give us an assurance that there are no circumstances whatever in which Her Majesty's Government would be prepared to contemplate any degree of support for the hypothesis put forward by the noble Lord, Lord Owen, in his Question?
Baroness Crawley: My Lords, I very much agree with my noble friend. While I am on my feet, perhaps I may thank him for the work that he, the noble Lord, Lord Maclennan, and my noble friend Lady Scotland carried out on the convention. We strongly believe that the President of the European Council should not also be the President of the Commission. Those of us who have any experience on the European front know that that would weaken both positions and fatally undermine the European Union's institutional balance.
Lord Howell of Guildford: My Lords, the British Government may be happy with the text of this unfortunate constitution, which now looks like coming back on to the agenda rather soon, and they may be happy with the idea of a strong and permanent President, but is the noble Baroness aware that a great many people in the smaller and newer countries of the European Union and those that are about to arrive are not at all happy? All along, they have questioned whether more power should accumulate to the central institutions of the European Union in the person of a permanent President, and they have questioned the vast new powers that the constitution would give to the European Union's institutions.
Is it not incumbent on the British Government, as we have ticked the boxes and said that we are happy with these things, to fight the corner of the smaller countries of Europe much more vigorously and not to condemn their attitude as scepticism, which would be quite wrong, but to work hard for a more equal Europe which is more comfortable and better for all the people of Europe?
Baroness Crawley: My Lords, I agree that we must closely consult and listen to all members and, of course, those which are set to join us in May. On that basis, we fully support the approach of the Irish presidency, which is to consult closely with all member states and those that are joining in May, building on the good work of the Italian presidency.
As to a centralising of power, I disagree very much with the noble Lord, Lord Howell. The proposal for a full-time President of the European Council would, in fact, mean greater accountability to national parliaments, as well as greater efficiency.
Lord Grenfell: My Lords, does the Minister recall that as long ago as May last year, in a preliminary report, the European Union Select Committee drew attention to the fact that there was a lack of clarity on the point that the noble Lord, Lord Owen, has just raised in his Question? Does she also recall, as the noble Lord, Lord Owen, certainly does because he gave us evidence on this point, that in our comprehensive report we then said that it was essential that the original wording be reinstated. I believe that the balance of opinion among those who have spoken this morning shows that that is what is needed. Therefore, although I accept that the noble Baroness feels that the language is robust, does she accept that we could do with some more robust language which spells out the issue for the sake of true transparency so that this matter is settled once and for all?
Baroness Crawley: My Lords, of course, I listen very carefully to what the noble Lord, Lord Grenfell, has to say on these matters and I acknowledge the extraordinary work that he and many noble Lords undertook during the course of consultation on the convention text. I shall certainly take his very strong feelings back to the department.
Lord Maclennan of Rogart: My Lords, does the Minister acknowledge that the Government had considerable success in strengthening the position of the President of the Council and that it would run entirely counter to the strategic goal of the Government, and in my judgment of the convention, to weaken it in the way suggested?
Baroness Crawley: My Lords, we would not put up with any weakening of our vision for the new role of President of the European Council, a full-time president being able to produce a strategic overview of where the European Union is going with its 25 new members.

Army: Compulsory Drugs Test
11.13 a.m.
Lord Astor of Hever Lord Astor of Hever asked Her Majesty's Government:
What action they are taking to reduce the numbers of those who are discharged from the Army for failing a compulsory drugs test.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, drug misuse is detrimental to operational effectiveness and is incompatible with military service. Our strategy for combating it is based on the twin pillars of deterrence, focused on a comprehensive education and training programme, and detection, based on the compulsory drug testing programme.
Personnel who fail a compulsory drug test risk being discharged from the service. But an individual at lance corporal level or below who has failed a test may in certain specific circumstances be retained if it is considered to be in the interest of the service. In 2003, 110 personnel were retained on that basis.
Lord Astor of Hever: My Lords, I am grateful to the Minister for that response. Is he aware that in the past five years over 2,000 soldiers have been dismissed for failing drug tests? With the Army under strength by thousands we can ill afford to lose such high numbers of people. With a seemingly more permissive public environment in respect of cannabis, is the Army ensuring that personnel are aware of the consequences of drug taking? What is it doing to detect and apprehend the drug dealers?
Lord Bach: My Lords, it is always disappointing when anyone has to be discharged from the Armed Forces but, in our judgment, drug taking in the Armed Forces is just not acceptable for reasons that I have already set out. Of course, we understand that many who enter the Army today are of a generation in which a different view is perhaps taken about the significance of using cannabis. That is why we have the comprehensive substance misuse education and training programme, which covers all phases of an individual's Army service, from recruit training to senior command. The measures include the delivery of a formal substance misuse education package to all recruits, drug awareness presentations and substance misuse training at career, leadership and management courses.
Lord Redesdale: My Lords, I support the Government's position on drugs. Obviously, drugs misuse while using heavy machinery or during weapons training is unacceptable. Can the Minister say whether counselling of individual services by an independent body is also being considered, as many young soldiers below the age of 18 will have come into contact with cannabis and will have experienced peer pressure to try it? In addition, cannabis stays in the system for a number of weeks.
Lord Bach: My Lords, in our judgment the comprehensive substance misuse education and training programme is appropriate for the exact reason that the noble Lord, Lord Redesdale, mentions, which is that some people may come in to the forces having been in an environment where drug taking takes place and may have experimented with it

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themselves. If the Armed Forces were to relax their position on this issue too much, the effect would be extremely bad.

Afghanistan
11.18 a.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
What is their assessment of the security situation in Afghanistan.
Baroness Crawley: My Lords, the security situation in Afghanistan remains fragile, particularly in the south and east. Sporadic attacks continue against both international and Afghan forces, as well as the UN and NGOs. The international community, including the UK, is responding with increased commitments of troops and resources, including the extension of the network of provincial reconstruction teams. In the long term, Afghanistan must have an effective national army and police force.
Lord Avebury: My Lords, although the NATO spokesmen, including Mr Hikmet Cetin, the senior civilian representative in Afghanistan, keep reiterating that security is their priority, does the Minister really consider that the addition of a few extra PRTs is an adequate response to the huge growth in drug cultivation and processing which is fuelling the resurgence of armed factions in the main poppy growing areas, such as Badakhshan and Oruzgan, where just last week there was a clash between the local drug mafias'? Should we not face up to that threat? Have the Government any proposals for the NATO summit in June to deploy additional forces capable of taking out the narco-terrorists?
Baroness Crawley: My Lords, the noble Lord, Lord Avebury, is right. Security remains a great concern, and it is a priority for ISAF and for the UN and NATO generally in Afghanistan, particularly in the south and east. I reiterate that the international community, including the UK, is responding. UN Security Council Resolution 1510 expanded the mandate of ISAF beyond Kabul, so that work is now in hand to plan and resource those activities beyond Kabul.
The UK is leading a PRT in Mazar-i Sharif, and the UK is now planning to run a forward support base for all PRTs in the north. The number of PRTs is increasing substantially from 10 to 15 by mid-2004, and that will improve the security environment. The United Kingdom PRT has played a major part in assisting the UN and the Afghan Government to, for instance, broker a peace agreement between two powerful local commanders after long-standing tensions flared up into violence. The PRTs are doing practical work on the ground to improve the security situation.
Lord Elton: My Lords, is the noble Baroness aware that many of us maintain a deep anxiety that Iraq is
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attaining the priority call on our armed effort and that of our allies? Afghanistan will not be rescued by five extra PRTs, but by serious co-ordinated military activity taking place and not merely being planned. Does she agree that if Afghanistan fails, if democracy does not take root in Afghanistan, the results in Iraq will eventually be catastrophic, and this ought to have priority?
Baroness Crawley: My Lords, we do not believe that Afghanistan will fail. We are extremely optimistic about the future for Afghanistan. Some 32 nations are involved, with 6,000 troops between those 32 nations involved in contributing to the operations in Afghanistan; and to building up the transitional Afghan Government's resources as far as police training, a national army and the provincial reconstruction teams are concerned. We firmly believe that the increase in real terms in the defence budget announced yesterday by the Chancellor will mean that there will not be any occasion for overstretch.
Lord Marsh: My Lords, is the Minister aware that one or two us do not know what a PRT is? It would help if we could hear what it is.
Baroness Crawley: My Lords, a PRT is a provincial reconstruction team. It is made up of approximately 100 military troops. Increasingly, the teams are coming under ISAF, which is UN sponsored—
Noble Lords: Oh!
Baroness Crawley: My Lords, ISAF stands for International Security Assistance Force. That comes under the UN, and it is contributed to by NATO. Other PRTs come under Operation Enduring Freedom. If the noble Lord would like me to continue, I will write to him.
Lord Tomlinson: My Lords, does my noble friend agree that the only major success of the Taliban was to eliminate the poppy harvest? Now, with the resumption of that harvest, something between 20 and 30 per cent of the Afghan gross national product is dependent on that drug production. What does she see as the link between the increased incidence of the growth of poppies and the lack of security in the parts of Afghanistan that we have been concerned with?
Baroness Crawley: My Lords, I very much agree with my noble friend that tackling the drugs trade cannot be separated from creating a strong economy and a secure security environment in Afghanistan. The UK is the lead nation with responsibility for co-ordinating international counter-narcotics efforts. The UK is building up a more effective state, working with the Afghan Government, so that we can develop the licit economy to create alternatives to poppy cultivation, such as fruit growing, poultry rearing, and developing traditional livelihoods such as the carpet-making industry.
Lord Bramall: My Lords, does the noble Baroness agree that whatever anyone may have thought about the war in Iraq, we must now see it through to a conclusion? That means handing over political power to the Iraqi Government as soon as possible, and leaving enough troops there to control the security situation until the Iraqis feel that they can cope. Then, as far as Iraq is concerned, all we can do is keep our fingers crossed and hope for the best. Does she also agree with the point made by the noble Lord, Lord Elton, that Afghanistan—which is far more relevant to the war against terrorism—must not be allowed to fail, and if necessary should be reinforced?
Baroness Crawley: My Lords, as I said in my first Answer, we are reinforcing both troops and resources in Afghanistan, and we do not expect either country to fail.
Lord Wallace of Saltaire: My Lords, does the Minister recognise that there have been continued complaints from those concerned with ISAF that it has far too few helicopters and it needs considerably more troops in order to be able to extend its effective operations outside Kabul? The figures of another 5,000 to 6,000 troops, and certainly another 10 to 15 helicopters, have been mentioned. Are Her Majesty's Government concerned to make sure that the American pressure for its NATO allies to provide more troops for Iraq does not cut entirely across the long-term commitment to rebuilding Afghanistan first with security, which we must maintain?
Baroness Crawley: My Lords, I do not believe that there is any danger of that happening.
Baroness Rawlings: My Lords, does the Minister agree that armed personnel engaged in humanitarian activity should be required to wear clearly visible military clothing, to avoid confusion among locals to help to avoid casualties? What steps are Her Majesty's Government taking to ensure that military and humanitarian personnel are clearly distinguishable?
Baroness Crawley: My Lords, I will write to the noble Baroness on the detail of that question about clothing. We are continuing to improve the security situation for NGOs throughout Afghanistan. We realise that some recent attacks the sporadic attacks—that I referred to earlier—have been on NGOs, and we take their security seriously.

Probation Service: Regional Offender Managers
11.27 a.m.
Lord Corbett of Castle Vale Lord Corbett of Castle Vale asked Her Majesty's Government:
What plans they have to appoint 10 regional offender managers as recommended by the Carter review.
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, the Government have accepted the recommendations of the Carter report, Reducing Crime—Changing Lives, published in January 2004, and we intend to appoint 10 regional offender managers. The timing and process for these appointments has not yet been finalised.
Lord Corbett of Castle Vale: My Lords, I thank my noble friend for that reply. I welcome the £900 million investment in the Prison Service this year and the 4,300 extra probation officers, which seems to reflect the sharper focus now being put on rehabilitation work during and after prison to try better to reduce reoffending. Can the Minister confirm that the regional offender managers will need to build strong links with local sentencers, and opinion formers such as councillors, faith groups, and business and voluntary organisations, to win better understanding of the effectiveness of community sentences in appropriate circumstances?
Baroness Scotland of Asthal: My Lords, I thank my noble friend for his welcome, and I confirm what he said in relation to the importance of building links with all of those who will be responsible for participating in sentencing and developing and delivering these projects. It will be essential for all to work together to produce a better outcome.
Baroness Stern: My Lords, does the Minister agree that the life of a probation officer in the past three years has been volatile? There was a complete reorganisation of the service in 2001, meaning a complete change in their way of working, with fines levied on the service if centrally defined targets are not met, and a large number of vacancies, so that many of them are covering for other officers as well. Then they were told on 6 January that their service would cease to exist in June, and that its work would be subject to contestability, which I understand is another word for privatisation. In these circumstances, does the Minister expect the probation officers to work as hard as they can to keep low-level offenders out of prison and to stave off the prison population crisis?
Baroness Scotland of Asthal: My Lords, I hear what the noble Baroness says about the lives of officers in the probation service, but I do not share her gloomy description. Contestability is not the same as privatisation. We will very much depend on the expertise, ability and wisdom of our probation service and its officers. The National Offender Management Service will rely equally responsibly on those services and we do not believe that they will in any way be undermined.
Lord Laming: My Lords, could an officer of the probation service become a regional offender manager?
Baroness Scotland of Asthal: My Lords, regional managers will be appointed on the basis of skill and understanding. Many probation officers are extremely

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skilled and have excellent understanding. It is not for me from this Dispatch Box to say who will or will not get those jobs.
Lord Carlisle of Bucklow: My Lords, does the Minister agree that a well motivated and properly organised staff running a properly funded system of community sentences available to the courts is far more likely to reduce the level of reoffending among young offenders than short terms of imprisonment? If she agrees, is that a message that she would care to pass on to the Home Secretary and make it clear that the Government should speak clearly on this matter?
Baroness Scotland of Asthal: My Lords, it is a message, if I may respectively say so, that my right honourable friend the Home Secretary does not need to hear. Your Lordships will know that in the different sentencing opportunities that we created in 2003 we have done just that. We have said very clearly that prison is appropriate for those who commit serious, heinous offences. However, there should be a broad spectrum of sentencing powers for those who do not need to be in prison but can properly, safely and appropriately be dealt with by other means.
Lord Acton: My Lords, in the Carter report, the section dealing with the regional offender managers states:
"The inspection regime would need to be aligned to this new structure".
What are the implications of those words for prison and probation inspectors?
Baroness Scotland of Asthal: My Lords, all those currently employed in the prison and the probation service will remain employed in the same way. Your Lordships will know that the new service does not come into being until June. If there are to be any changes in the employment structure they will be subject to the usual negotiations and consultations.
Lord McNally: My Lords, the Minister showed a degree of complacency in response to the warnings of the noble Baroness, Lady Stern. Does the Minister not fear that while this metamorphosis of the services goes on there will be a real problem about delivery? Is there not already considerable confusion about how regional managers will link into structures that are not regional? We do not have the regional structures—in the police, education or anywhere else—for them to link into. Perhaps we should look a lot more carefully at the impact at the sharp end of the dramatic changes that are in train.
Baroness Scotland of Asthal: My Lords, I am by no means complacent about the pressures that have been put on our probation service in the recent past. The probation service has really risen to that challenge and needs to be commended and congratulated on the strenuous efforts it has made to maintain a very high quality service. The noble Lord will know that the problems in relation to delivery are very much
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understood by the Government. That is why we have created not just NOMS, which is the joining up of the prison and probation service, but also the National Criminal Justice Board and the local criminal justice boards, where we will be able to assess and meet local need by providing a joined-up service throughout the whole of the criminal justice system. Probation and prison are very much at the heart of what we are trying to do. We need them to join with us in that endeavour; the great joy is that they are doing so.
Baroness Howe of Idlicote: My Lords, has the Minister seen the notice of a forthcoming BBC programme, whereby individual business leaders mentor young offenders leaving prison? Whether or not she has, will she please do as much as she can to encourage that approach?
Baroness Scotland of Asthal: My Lords, I have not had the benefit of seeing the BBC programme, but we very much welcome the work with business to try and train prisoners so that they have a proper job to go to when they leave prison. The Reading experiment that many noble Lords may know, of training welders to fill skills gaps, is very successful. If there are any businesses listening to this debate or reading it in Hansard we would very much encourage them to get involved.

Business of the House: Tuesday, 6 April
Lord Grocott: My Lords, I have a brief word about the day before the Easter Recess; that is, Tuesday, 6 April. The usual channels have agreed that the House should sit on that day at 11 a.m.

Patents Bill [H.L.]
Lord Triesman: My Lords, on behalf of my noble friend Lord Sainsbury of Turville, I beg to move the Motion standing in his name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 5,

Schedule 1,

Clauses 6 to 15,

Schedules 2 and 3,

Clauses 16 and 17.—(Lord Triesman.)

On Question, Motion agreed to.

European Parliamentary and Local Elections (Pilots) Bill
11.37 a.m.
The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Lord Filkin): My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton, I beg to move that the Commons amendments be now considered.
Moved accordingly, and, on Question, Motion agreed to.
COMMONS AMENDMENTS IN LIEU OF A COMMONS AMENDMENT AND A LORDS AMENDMENT
[The page and line references are to HL Bill 14 as first printed for the Lords.]
LORDS AMENDMENT
1 Leave out Clause 1 and insert the following new Clause—
"Piloting conduct at European and local elections
(1) An election to which this section applies (a pilot election) must be held—

(a) only by postal voting, and (for that purpose)

(b) in accordance with provision made by the Secretary of State by order (a pilot order).

(2) These are the elections to which this section applies—

(a) the European Parliamentary general election of 2004 in a pilot region;

(b) a local government election in England and Wales if the poll at such an election is combined with the poll at an election mentioned in paragraph (a).

(3) These are the pilot regions—

(a) North East;

(b) East Midlands.

(4) Postal voting is voting where no polling station is used and a person entitled to vote in person or by proxy must deliver the ballot paper by post or by such other means as is specified in a pilot order.
(5) A pilot order—

(a) may modify or disapply any provision made by or under a relevant enactment;

(b) may contain such consequential, incidental, supplementary or transitional provision or savings (including provision amending, replacing, suspending or revoking provision made by or under any enactment) as the Secretary of State thinks appropriate;

(c) may make different provision for different purposes."

The Commons agree to this amendment with the following amendment—
1A Clause 1, Line 15, at end insert—

"(c) Yorkshire and the Humber;

(d) North West."

The Lords disagree to Commons Amendment No. 1A to Lords Amendment No. 1, for the following reason—
1B Because it is appropriate to make provision for no more than two pilot regions, as recommended by the Electoral Commission.
The Commons do not insist on their Amendment No. 1A to which the Lords have disagreed, hut propose the following Amendment to Lords Amendment No. 1 in lieu of that amendment—
1C Clause 1, Leave out lines 16 to 18 and insert—

"(c) Yorkshire and the Humber;

(d) North West.

() Postal voting is voting where no polling station is used and a person entitled to vote in person or by proxy must deliver by post or by such other means as is specified in a pilot order—

(a) the ballot paper, and

(b) the completed declaration of identity form.

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() The declaration of identity form is a form which is delivered along with the ballot paper and which is completed by being signed—

(a) by the person to whom the ballot paper is addressed, and

(b) by a witness to that signing whose name and address are clearly marked on the form."

Lord Filkin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1C in lieu of Commons Amendment No. 1A to which the Lords have disagreed. For the convenience of the House I will also speak to Amendment No. 3C.
At this stage in parliamentary proceedings it is sometimes difficult for those who have not been closely following the cut and thrust of ping-pong to know exactly where we are and why we are where we are. So, in the optimistic hope that there might be one or two who are listening to our debate, I will seek to reassess or reaffirm why this issue matters and why the Government and the Commons have taken the position that they have on it.
Let me address first of all the question of why postal ballots matter. This House knows from previous discussions that we have a serious problem in our society about the reduction in the proportion of the population that is taking part in formal democratic processes. We have turn-outs in local government elections where on average the turn-out is less than one-third of the electorate. We had a turn-out in the last European Union elections in the United Kingdom when only 24 per cent of the electorate voted. We had a turn-out in the last national election when only 59 per cent of the electorate voted. In terms of turn-out in local government elections and European Union elections we had the lowest turn-out in the European Union.
I do not think that that is an issue that divides the parties. I think that there is a common concern that it is worrying; it matters, it weakens the mandate, it weakens the participation of people in formal democratic processes and there is always the anxiety that it opens the door, if only slightly, to the rise of extremist positions or parties. Therefore, for all these reasons I do not think that there is a difference of opinion that we have to find legitimate ways of trying to increase the participation of the public in our elections. Postal ballots matter because, although no one—unless he was foolish—would advance the argument that they were the only solution they represent, the only technical solution that has been found so far in a range of experiments with techniques of balloting that has been shown to have a significant impact on turnout. We have piloted postal balloting at local elections in this country for three years. As a consequence, we have acquired some good, deep experience, which shows that, on average, turnout has risen by 15 per cent in local elections in which postal ballots have taken place. Fifteen per cent may not sound like a big percentage, but when it is added to a turnout of 32 or 33 per cent, it is a very big percentage, and it means that we have raised participation in local government elections by almost a half.

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I do not think that there is an issue between the parties on that. There is open-minded and strong interest in all the parties in the potential importance of postal balloting. We also know, because the evidence from the Electoral Commission and others is clear, that the public like postal ballots, the elderly like them, and the disabled like them.
Lord Hoyle: Young people like them.
Lord Filkin: I am reminded of that as well.
The essential question before us is whether such ballots would also increase turnout in the European Union elections. We have never piloted them at European elections, and therefore I would be surprised if the issue divided us. Getting positive engagement by the electorate in European elections must matter, and it is therefore important to see whether postal ballots would have that effect. The pilots are also about testing whether pilots can be carried out successfully on a larger scale—a regional scale—even though they have previously been carried out only on a local scale. That is why it matters; and, indeed, is what the issue is all about.
So, what appears to divide us at this point in proceedings? I think that there are two issues: one is the question of which regions, and the second is the question of how big a pilot should be. The question of which regions hinges on the process by which the Government asked the Electoral Commission for advice—I stress the word "advice"—on which regions looked most suitable for conducting postal ballots at the combined European and local elections in June. The commission said that two regions were clearly and positively suitable; four were possibly suitable; and the other four were not suitable. It also said clearly that it was open to the Government, as hardly needed saying, to explore whether, having considered the areas about which there was concern, they wished to add additional regions. That is what the Government have done. While considering the list of the possibly suitable, we established from that process that Scotland was not possible, because the electoral returning officers there were not confident that they could conduct a ballot. We could not—and should not—have done one in Scotland, as there was no certainty that it could be delivered.
I shall not go into detail, because the Front Benches know the issues as well as I do. With Yorkshire and Humberside and the north-west, we considered issues of scale, commitment of returning officers, security, safety and fraud, through an active process of discussion and engagement. We came to the evidence-based conclusion that it was reasonable to carry out pilot elections in those two regions as well. In other words, we are satisfied, as are the regional returning officers who carry the legal liability for the elections, that it is safe and secure to carry out elections in the north-west and in Yorkshire and Humberside, as well as the other two. Our debate is about the north-west and Yorkshire and Humberside.
I turn to the next question that may divide us: are four regions too large for a pilot? In a sense, that issue engages with the Electoral Commission. The commission was
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asked for its advice on which regions were suitable. It was not asked for its advice on how big the pilot should be, but, as it was entitled to, it gave a view. It is perfectly positive about two regions, could probably live with three, but thinks that four may go further than is necessary for a pilot. At heart, that is what we are debating. Without pushing the point, the debate is about whether three or four regions should take pant in the process. The commission has said that it thinks that we could do what needs to be done in the pilot in three regions, without needing to go for four.
Why do the Government and the Commons feel so clearly that it is important that we have four regions? I shall summarise the reasons. The first point that I shall make, before going into detail, is relevant to the amendment that we will debate later: it is an issue for the Government and Parliament, not the Electoral Commission, to decide. I have the greatest respect for the commission and its chairman, but Parliament is there to make such judgments. They are often fine judgments about how issues should be addressed. That is as it should be, and it would be strange for this House or another place to concede that role to an external body.
Why four regions? First, as I have said, we will learn more from the complexity and diversity that we will get from those four. The four regions are not the same. There is more complexity in the north-west. The area of Yorkshire and Humberside is different, and we will have a better pilot by having evidence from those regions. Secondly, this is the last time until 2009 that we will be able to pilot postal balloting on a regional scale. As a consequence, we would be foolish not to try to maximise the opportunity for learning. Next, the two regions that we are talking about—the north-west and Yorkshire and Humberside—will have all-out postal ballots in October 2004. That is an important reason. They will have those all-out postal ballots as part of the regional referendums. That proposal has been warmly welcomed by the Electoral Commission. The commission thinks that it is a good thing that we should have postal ballots in the regional referendums for three out of the four regions that we are talking about in October 2004. It said so clearly and on the record.
It may seem to some in the House slightly bizarre that we have a position in which the commission, like the Government, is positively recommending that we use postal ballots for regional referendums but do not use them for these ballots. That might be a debating point, but there are also some practicalities involved. Many local authorities in the two regions that we are debating have until now conducted their local elections by postal ballot. If the amendment to the Commons proposal were to be carried, local authorities that had carried out their elections well and properly by postal ballot would have to revert to traditional methods in June and go back to postal ballots in October. To the Government, that seems bizarre. It also seems strange to the Electoral Commission. It argues for keeping stability in the electoral arrangements, for obvious practical reasons.

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For these reasons it seems to the Government that it is a judgment as to whether three or four regions are worth while. The judgment of the Government, supported by another place, is that on balance four is right and three is less good. In essence that is what I believe the debate is about.
There is also concern in what the Electoral Commission has said about whether the Government might be at risk of moving from pilots to universal postal balloting by a process of elision without having put in place what the commission believes to be right, which is individual voter registration. We do not intend to slide from pilots to universal application by a process of elision. We are looking very seriously indeed at individual voter registration. That is the position and the essence of the issues.
I shall now say something about Amendment No. 3C. We had a recent debate on that in this House. In another place the Government have made a concession on the point to sustain the traditional practice of individual voter witnessing on postal balloting. We do not believe that the evidence supports it, but in a spirit of seeking to narrow the differences between us and to show that we are not obdurate, we have made that concession and stand by it.
This process is obviously taking time and the delay is affecting and hurting those persons who have a real-life job to do in organising the elections. I am concerned about that as I am sure are the Opposition Benches. It would be good if we could bring this matter to a conclusion quickly and cleanly because none of us is gaining by the delay.
As a consequence of these changes we will learn more. If another place has its way, 2 million more people will vote in these regional and local government elections than would otherwise be the case. I shall not go into detail but I can substantiate that arithmetic without difficulty. Many more people will vote in the elections. Democrats that we are, that must matter to us for the reasons which I have signalled. Another place has now expressed its view twice on this issue and it has done so in the full knowledge of the views of this House. A strongly argued concession has been granted. I urge the House not to seek to frustrate the will of another place on this issue.
Moved, That the House do agree with the Commons in their Amendment No. I C in lieu of Commons Amendment No. 1A to which the Lords have disagreed.—(Lord Filkin.)
Baroness Hanham Baroness Hanham rose to move Amendment No. 1D, as an amendment to the Motion that the House do agree with the Commons in their Amendment No. IC in lieu of Commons Amendment No. 1A, at the end insert "but do make the following amendment thereto",
1D Line 3, at end insert
"but, in the case of either region specified in paragraph (c) or (d) above, a pilot may only take place if it is specifically recommended by the Electoral Commission in a report which is laid before both Houses of Parliament after the coming into force of this Act."
The noble Baroness said: My Lords, I want to make clear at the outset something which I believe I have made abundantly clear throughout our proceedings. While we are not totally engaged with the prospect of all-postal voting, we recognise that there is a rationale which says that it is necessary to see whether all-postal voting is a way of carrying out elections. We expect that there will be a number of ways of ensuring that election turn-out is increased and that all-postal voting may not be the end of the story. There is a reasonable rationale for saying that the experiment which has already been carried out on a limited basis at local elections should be tested on a slightly larger scale. We are not trying to frustrate the Government's intention to extend the experiment to a regional basis.
What we have been concerned about is the extent of that experimentation. I am not content with the way in which the Minister has put forward the view of the Electoral Commission. I say firmly and clearly that the commission was of the view that four regions was too many because it extended the vote to too great a proportion of the electorate.
Four regions will involve more than one-third of the electorate in pilot voting. I said in Committee and I say again now that I do not believe that one-third of the population can be considered as a pilot: it is almost an all-out election. We need to ensure that the test-bed areas are coherent and ones which satisfy criteria which have been laid down.
The Government have ignored the advice of the Electoral Commission that it could identify positively only two European election regions and their associated local government areas as being ready and able to hold all-postal elections in June. For the Government arbitrarily to decide that they would hold the elections in four regions despite that advice has run them into enormous problems.
The Government's original intention was to limit the experiment to up to three regions—I emphasise that that was the original brief given to the Electoral Commission—and four did not come into it. The commission was asked to identify up to three regions. The view of the commission was that there were only two regions which it was confident could carry out the pilots, with four others, as the Minister rightly said, which might be possible. But each of the remaining four had difficulties and the Electoral Commission could not possibly recommend any of them.
Despite these cautious words and caveats, the Government, without further consultation with the Electoral Commission, swung into action and declared that these experimental elections would be held in four regions, a step beyond even their own first unadvised thoughts.
While we have suspected all along that this was certainly to buoy up or dry run the elections for the regional assemblies, it has never been put, I believe I am right in saying, in such clear terms as the Minister used today. We have fenced round this, but we have never had such a clear indication that that is precisely

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what we are doing; namely, test-running the regional assembly elections. The House may want to take note of that.
Lord Filkin: My Lords, I am so sorry to intervene, but I did not say that. I was very careful not to say that because that is not a good argument. I said that the process of moving from postal ballots to traditional and back to postal is not good administration for electoral returning officers. That was the linkage I made between these elections and the regional referenda.
Baroness Hanham: My Lords, I listened very carefully. I am clear that he said that these schemes were being promoted in the regional assembly areas. I shall read Hansard and if I am wrong I shall apologise to the Minister. I am pretty clear that that was the indication.
We debated at some length the rationale behind the Government's intentions and the Electoral Commission's views which have been clear. However, it is not only that the commission has concerns about the regions proposed by the Government when it carried out its initial review, but as I have already said, it was extremely dubious about the pilots being held over such a large proportion of the electorate. It believes that it is far too large to achieve the aims of finding out the limitations and difficulties, if any—and there may not be—of scaling up the previous pilots from small local elections to regions of hundreds of thousands of electors. It seems to us clear that four regions are far too many.
But we realise now that the Government are in a serious bind. Time is running out to establish the administration of all-postal votes on such a large scale, and decisions must be made. We are therefore offering the Government an opportunity to see if there is the way out of this problem. Our amendment could help the Government. After a further review, the Electoral Commission may feel that it could recommend one or other of the regions—Yorkshire and Humberside or the north-west—to carry out the pilot in three regions. That was the Government's original intention and it would therefore be consistent with their views before they decided to ignore their own intentions and the advice of the Electoral Commission.
However, I must make it clear that the Electoral Commission could make such a recommendation only if it had carried out a thorough review, taken soundings from largely the same sources as it previously consulted, and formed conclusions against its own criteria as well as the Government's—because that is what the Electoral Commission did previously—that one or other of the two regions was now ready and capable of running a pilot. If the Government are concerned that that recommendation would not come back before Parliament, that is in their own hands, because such a recommendation could indeed be brought back to Parliament before a decision was made. There should be no question of the chairman of the Electoral Commission, who has shown remarkable independence of view and consistency, being duffed up by Ministers to reach a conclusion in which he does not believe.
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Were the amendment to be accepted, there would be a further review of both additional regions and a recommendation that one or the other could be included, that one or the other should be excluded or that neither was able to meet the Electoral Commission's criteria. In the latter case, the Government would have to resort to using two electoral regions. However, the Government could have the chance to achieve their original goal of using three regions. The commission would have an opportunity to subject the regions involved to an additional analysis, draw conclusions and, based on those, decide whether the Government should be restricted to the two regions originally recommended or could include one additional region. The electorate, being worried by the experiment, would therefore be reduced one way or another.
We have debated this matter on several occasions. As I said, time is running out, but there are valid reasons why the Opposition parties in this House have been very clear. If the Government seek advice, they should take it. They should not ignore it or seek in any way to try to influence the decision. Our amendment could enable the Government to run the pilots in three regions. We recognise that, if the Electoral Commission cannot recommend an additional region, the Government will have to stick to two. After all, that was the original recommendation. The Electoral Commission was set up by this Government to give advice. That advice has been clear and we believe that the Government can now afford to take it again and reach an outcome for this matter. I beg to move.
Moved, as an amendment to the Motion that the House do agree with the Commons in their Amendment No.1C in lieu of Commons Amendment No. 1A, at the end insert "but do make Amendment No. 1D thereto".—(Baroness Hanham.)
Noon
Lord Rennard: My Lords, I rise in support of Amendment No. 1D, in the name of the noble Baroness, Lady Hanham. Of course, at this stage of the debate, there are few new arguments to consider. Arguments about whether the Government are right or the Electoral Commission is right have been considered at some length by your Lordships, who have voted twice, heavily in favour of allowing the Electoral Commission's view—that there should not be four postal pilots—to prevail. Therefore, I will dwell on only a couple of particular arguments advanced by noble Lords opposite. The first goes back to the very role and purpose of the Electoral Commission.
The Government argued strongly for the creation of the Electoral Commission in the Political Parties, Elections and Referendums Act 2000, and for it to have a role beyond that of simply policing our existing electoral mechanics. In support of the creation of the Electoral Commission, the noble Lord, Lord Bassam, noted:
"A number of Members of your Lordships' House have long argued for such a body to reinforce the integrity of our electoral arrangements".

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He also said that,
"the electoral commission will be much more than simply an enforcement body. Another key function will be as the moderniser of our electoral system".—[Official Report, 3/4/00; col.1087–88.]
It is therefore right that this amendment, which relates to such dramatic changes to introduce postal pilots in half of England and almost half of the local authorities that have elections this year, should not be made without the express approval of the Electoral Commission.
I also remind the Minister of what he said in a Written Answer on 17 December 2003. He said that the,
"Electoral Commission was asked to recommend up to three regions or nations that might be able to pilot all-postal voting".
When the commission could recommend only two regions, he said:
"We remain keen, however, to proceed with all-postal voting in three regions",
and he added:
"it is right that we do not rush into a decision on the third pilot, given the advice from the Electoral Commission".—[Official Report, 17/12/03: cols. WA 147–48.]
It appears that the advice was valued by a Government anxious to have three rather than four pilots. The amendment would allow for some consistency of approach from the Government and for what they are often fond of calling "joined-up thinking". It seems logical, therefore, that there should not have been any further progress beyond the two agreed regions towards all-postal pilots without the proper involvement of the Electoral Commission.
As we considered on Tuesday, it is alarming that a Labour Government can engage so directly with returning officers charged with conducting the elections fairly, but who are the employees of Labour councils fearful of their re-election, and can exclude the independent Electoral Commission from those deliberations. It could not be clearer from the commission's letter of 4 March that it considers that the logistical problems and risks of fraud and so forth outweigh,
"what we might learn from four regional pilots as opposed to two".
Everyone has the right to vote by post in these elections. The issue is simply whether it is right for the Government to proceed to order that ballot papers should be delivered to every name on an electoral register, which many of us know to be wildly inaccurate, without the express support of the independent body that was established to help to avoid the appearance that any change in electoral mechanics is made only for the advantage of the party proposing those changes. I think not, and I urge noble Lords to support the amendment.
Lord Hoyle: My Lords, I shall address the House only briefly. I rise because of something my noble friend said about the difficulties that could be created in areas where there has been a postal ballot if we reach a stage when there is no postal ballot this time but there will be a postal ballot for the regional elections.
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Before moving on to that matter, I want to reinforce the message about the advantages that have been gained by postal voting. I refer particularly to Chorley, where I live. The turnout in the previous election in Chorley was about 30 per cent. With postal ballots, that went up to 62 per cent. Last year, between 58 and 59 per cent of the electorate in the area participated. What is going to happen if there is no postal ballot this time? Many of the people are going to find difficulty in knowing where the polling stations are. Indeed, many young people who did vote might not bother to vote. Coupled with that, in Chorley itself there is a large reorganisation of the wards taking place—up to 20 per cent—and that means it will be even more difficult for people to know where the polling stations are, creating tremendous difficulty for them.
Lord Rennard: My Lords, in the general election next year the voters lucky enough to vote in Chorley will presumably have to find those very same polling stations. We will revert from postal balloting in an autumn referendum to traditional voting in a general election. Or is the plan to have all-postal voting in the general election, something that we do not yet know about?
Lord Hoyle: My Lords, the noble Lord, Lord Rennard, forgets that in the north-west there will be a referendum in between, which will be a postal vote. They will be reverting to a postal vote, which will make it even more difficult. Could the noble Lord, Lord Rennard, tell me whether he is opposed to a postal vote for the referendum? Or is it in his interest that there might be a low poll? I invite him to comment on that.
Lord Rennard: My Lords, many of our concerns about the all-postal experimentation have been about fraud. It seems to me that across an entire region the margin of fraud may be a small percentage, and perhaps that is a risk you can take. I have argued on a number of occasions that in these crucial local authority elections, also taking place in June, a handful of votes will determine the outcome in a number of wards and councils. For that reason it is wholly inappropriate to have all-postal voting without proper safeguards in place. If we are dealing simply with the European elections, it might be a different matter.
Lord Hoyle: My Lords, apparently it is all right for local elections but not for European elections. It seems very strange for a democrat, particularly from the Liberal Benches, to argue in favour of a low turn-out in European elections. It means—there is no doubt about it from the figures I have given—that it will lead to a higher turn-out in European elections.
On fraud, after the postal votes had taken place there was opinion poll testing in Chorley, requested by the Electoral Commission and done by national polling organisations, that found no evidence of fraud. What the Electoral Commission said in relation to the last pilot schemes is rather interesting. It said that it has,
"no reason to believe that pilot schemes have to date resulted in an increase in the incidence of electoral offences".

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It was not just Chorley and Trafford that had taken part previously. It went further than that, because Blackpool, Bolton, Hyndburn, Salford, Saint Helens and certain wards in Preston also took part in postal voting. So it is quite a large proportion of the northwest region.
On 27 October, in Manchester, there was a meeting of all the returning officers in the north-west and, almost unanimously—except for two returning officers instructed by their local authorities—all returning officers were of the opinion that postal voting should cover the whole of the north-west. Indeed, the representative of the Electoral Commission who was there said he would report back. The returning officers gained the impression from what he said that they would be among the regions that would be favoured, because of their views. I put that to noble Lords, in the light of talk about returning officers. It was the view of independent returning officers that it would be better to do it.
Another point is that the leader of the BNP, Nick Griffin, is standing in the European elections in the north-west. It will be to the shame of this House if it turns down postal ballots in the north-west and we enable the BNP to gain a seat in Europe. The lower the turn-out, the greater the advantage to the BNP and the more likely that it will gain a seat.
I say to the Liberals that I am really amazed to hear the spokesman from the Front Bench this morning talking not about increasing the vote but about decreasing it. I say this with sorrow because, while I have had many criticisms of the Liberal Party, I have always believed they are democrats. Indeed, they join me in believing in an elected element in this House, so I do find it unusual of them. I also say to the House as a whole, surely, at the end of the day, it is for the elected House, not an unelected House, to take that decision. I find it amazing that an unelected House should interfere with making it easier—not harder, and that is what your Lordships are doing—for people to cast their vote in a democratic election. If you go down that road once more, you are storing up trouble for a House that has been elected by no one.
12.17 p.m.
Lord Thomson of Monifieth: My Lords, I would like to ask the Minister to answer a general question. I put this with due diffidence, as I have not so far taken part in these discussions but have sat, followed and read them carefully. I would like to follow up a point made by the noble Lord, Lord Rennard. I would personally like to seek an assurance from the Government that—in making their judgment and asking Parliament to make a decision on this particular issue of how far regional postal voting should go—they do not have in mind at all to introduce an all-postal general election in this country. That would be a very serious step
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indeed. I listened carefully to the Minister's very closely argued and very fair analysis of these particular proposals, but I did not hear one word about the secrecy of the ballot. It is that aspect of moving from a traditional voting system, which we fought for very hard in the previous century, to an all-postal vote that most concerns me.
My earliest memory of participating as a leg soldier in my first general election in 1945, in a rural area in Scotland, is of visiting all the potential Labour voters, to deliver the literature to them and to show that we were very anxious that they were sure to cast their vote. There were not very many of them in my particular area: the stationmaster; the postmaster; a few people in that category. I was then on duty as the Labour Party observer at the village polling booth, a first experience for me. I was a total novice. In my innocence, when the people I knew were Labour voters arrived, I went forward to say hello to them. I realised, when they walked past me, stony-faced, that I had made a dreadful error which I have never subsequently made. But I did realise how sacred is the value of this secret ballot. Many circumstances have changed since 1945, but there are new aspects to the social composition of the electorate in this country. With my experience of elections, I really have to be reassured that there is a reliable secrecy of ballot attached to a postal voting, system.
Lord Greaves: My Lords, I did not intend to speak today because I spoke at some length during the progress of the Bill. However, I am motivated to do so by my old friend—although he is not my political friend—the noble Lord, Lord Hoyle, who is now laughing at me.
I shall make three brief points. First, backing up what my noble friend Lord Rennard said in his intervention on the noble Lord, Lord Hoyle, whichever way this goes, there will be authorities that change from one form of voting to another and then back again, at fairly frequent intervals. Therefore, frankly, what the Government have given as an argument is simply not an argument. In my part of the world, we shall be moving from ordinary votes to postal votes and back to ordinary votes. People will have to cope with that, whatever happens.
Secondly, the noble Lord said that in the north-west a large or significant proportion of local authorities were affected. In fact, I believe that it is about 10 per cent that have had all-postal pilots. There is no guarantee that they will even have all-postal votes in their local elections next year. So it is backwards and forwards.
What really got me going, and what let the cat out of the bag, was when the noble Lord talked about Mr Nick Griffin. I shall be spending much of the next two-and-ahalf months doing my very best to ensure that he does not get elected in the north-west; it would be a disaster, as the noble Lord says. But the noble Lord seems to put forward the idea that one changes an electoral system in order to achieve a particular outcome—rather than on matters of

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principle. In this House we have mainly discussed matters of principle in debating this Bill but, from what I have heard about their debates, they have not done so in the other place. At least we have stuck to the issues before us. To suggest that the reason for changing to an all-postal vote in the north-west would be to stop Mr Griffin winning is actually playing to the advantage of the BNP. There is not doubt about that.
Lord Hoyle: My Lords, I did not suggest that we should change to stop him winning. What I suggested was that it would be more difficult for him to win if there was postal voting, as recommended by the returning officers of the region.
Lord Greaves: My Lords, I do not believe that changing to postal voting will make it more difficult for the BNP to win a seat. I am quite happy to discuss the matter in detail with the noble Lord to establish why that is so. Many traditional Labour voters in traditional Labour areas are apathetic about voting for the Labour Party and will not vote for it. If there is an all-postal vote, they may well use the much easier way of voting to vote for other parties, such as the BNP. In my view, the balance is neither way.
Having an all-postal ballot will not make any difference at all in the north-west to the results of the elections. I do not want to see such a ballot in the north-west, but for other reasons entirely—reasons particularly related to the widespread electoral fiddling that has been taking place in some parts of the north-west in recent years. That includes the part of the north-west that the noble Lord once represented in the House of Commons—Nelson and Colne. I believe that the motivation for such a proposal in the northwest is entirely political, because the Labour Party believes that it will do better in the elections. I do not believe that to be the case anyway; I believe that, whatever happens, the results will be the same.
Lord Filkin: My Lords, I wish to say a few words in response to the points made by those on the Opposition Front Benches. I shall not detain the House for long.
In response to the point made by the noble Lord, Lord Thomson, I assure him that the Government have no intention to carry out the next general election on all-postal ballots. We have expressed an interest in moving towards local government elections being carried out on all-postal voting, but there are clearly significant issues that we must explore and discuss. That will not be immediate.
The noble Lord is correct in saying that I did not say much about secrecy. That is not because the issue has not been an important part of our explorations on this Bill—it has been. However, in essence I sought, the last time we discussed the matter, to summarise very succinctly where I believed that progress had been made in trying to deter fraud, detect it if it happened, assess the effect on voter confidence and investigate
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proactively what level of fraud actually took place, as opposed to the levels that were reported. I have signalled those four points as the foundations, and I do not believe that there is much between us on the importance of all those measures. I am not saying that those matters are unimportant; as the noble Lord, Lord Greaves, would be the first to remind us, those issues are very important.
I turn to the points made by the noble Baroness, Lady Hanham, and the noble Lord, Lord Rennard. Much has been made during this and previous discussions about the fact that, after the Electoral Commission's report, the Government did not discuss with the commission but did discuss with regional returning officers whether they could securely and effectively carry out the elections. More is being made of that point than it merits. The Electoral Commission was itself explicit in saying that it was completely open to the Government to have further discussions to see whether the issues on which uncertainty or concern had been raised by the commission could be addressed. That is exactly what has happened.
I shall not go into detail on the question of returning officers being compliant, whether at regional or local levels. I was once, as a chief executive, offered the role of returning officer but declined it because, although the emoluments were generous, I was not sure that I could give it the amount of time that the seriousness of the issues justified. Therefore. I delegated it to the borough solicitor, who was exactly as a borough solicitor should be—utterly impartial.
I turn finally—because we have discussed those issues previously—to a further reason why I do not believe that the amendment should be carried. It is more of a technical reason, rather than to do with the fundamental issues of principle. I found that on two counts the amendment was flawed; that it was ambiguous in two respects.
If the House is asking the Electoral Commission specifically to recommend, it is not clear on what basis it is being asked to recommend. On the one hand, is it on the grounds that such elections in such a region could be delivered effectively and securely? On the other hand, is it on the basis that it would be a good idea to have four regions rather than three? There is an ambiguity in that respect.
There is a second ambiguity, which became apparent only when the noble Baroness, Lady Hanham, spoke to the amendment. She saw the word "either" as meaning "one or the other". We and our lawyers saw quite clearly that it meant, if the test was met, either the north-west or Yorkshire and the Humber, or both. There is confusion about the meaning of the amendment. Therefore, if for no other reason, I ask the House not to support it.
Baroness Hanham: My Lords, I shall not tangle with the Minister over the English language, but "either" seems to me to mean "one or". I have never heard a definition of "either" that did not say that.
Lord Filkin: My Lords, I regret to interrupt but there is a three-way disagreement on this matter. When I was giving my interpretation of "either", those on the Liberal Democrat Front Bench were strongly agreeing with how I interpreted it.
Lord Goodhart: My Lords, on the question of interpretation, I have to say that I agree with the Minister.
Baroness Hanham: My Lords, I thank the noble Lord, Lord Goodhart, for his helpful intervention. However, I made it clear in my speech what the amendment is about—and I am sure that it will be on record. It is about saying to the Electoral Commission that there is a possibility of one more electoral region—in other words, three. As things stand, that possibility can become a reality only if the Electoral Commission goes back over the ground that it covered before—
Lord Rennard: My Lords, perhaps I can help the noble Baroness. The Electoral Commission made it absolutely plain in its letter of 4 March that four pilots were too many, for all the reasons that it set out. It is open to the Electoral Commission only to consider a third pilot.
Baroness Hanham: My Lords, I thank the noble Lord for that even more helpful intervention—that one really was helpful.
The amendment would clearly provide the Government with an opportunity to see whether the Electoral Commission is prepared to recommend one more region. If it were, that would be acceptable. If it were not, then it would not. The opportunity here is for the Government to have three regions. There is no question of this amendment being used to enable the Government to go for four. I want to make it very clear that the amendment is not about that; it is there to see whether the Government can have a third region, as originally intended, but based only on a recommendation following a review by the Electoral Commission.
Lord Filkin: My Lords, I have the greatest respect for the noble Baroness, Lady Hanham, who I have known for years. I am sorry to have to say that she can state at the Dispatch Box what she believes she intends by her amendment but, as a matter of law, what I have stated is the fact. If this amendment is carried, it is open for either three, or four, or two to be the product of this process.
Baroness Hanham: My Lords, I thank the Minister for that remark. As I said, we have debated this issue at length. I have made very clear what our amendment is intended to do. I have made clear the intention behind the amendment: that there should be an opportunity for the Government to have a third region and that the Electoral Commission should review whether that is possible. This is a matter for the House. I think that it is now time to test the opinion of the House.
12.32 p.m.
On Question, Whether the said amendment (No. 1D) shall be agreed to?
Their Lordships divided: Contents, 135; Not-Contents, 106.

Division No. 2

CONTENTS

Addington, L.

Bridgeman, V.

Ampthill, L.

Brooke of Sutton Mandeville, L.

Anelay of St Johns, B.

Brougham and Vaux, L.

Astor of Hever, L.

Byford, B.

Attlee, E.

Caithness, E.

Avebury, L.

Campbell of Alloway, L.

Barker, B.

Chorley, L.

Beaumont of Whitley, L.

Clement-Jones, L.

Biffen, L.

Colwyn, L.

Blaker, L.

Condon, L.

Bradshaw. L.

Cope of Berkeley, L. [Teller]

396

Craigavon, V.

Moynihan, L.

Crickhowell, L.

Murton of Lindisfarne, L.

Dearing, L.

Newby, L.

Dholakia, L.

Noakes, B.

Dixon-Smith, L.

Northesk, E.

Dundee, E.

Northover, B.

Eccles of Moulton, B.

Norton of Louth, L.

Eden of Winton, L.

Oakeshott of Seagrove Bay, L.

Elles, B.

Onslow, E.

Elton, L.

Park of Monmouth, B.

Ezra, L.

Pearson of Rannoch, L.

Ferrers, E.

Platt of Writtle, B.

Finlay of Llandaff, B.

Plumb. L.

Fowler, L.

Plummer of St. Marylebone, L.

Freeman, L.

Quinton, L.

Geddes, L.

Rawlings, B.

Glenarthur, L.

Razzall, L.

Glentoran, L.

Redesdale, L.

Goodhart, L.

Rees, L.

Goschen, V.

Rees-Mogg, L.

Hanham, B.

Renton, L.

Hannay of Chiswick, L.

Rodgers of Quarry Bank, L.

Harris of Richmond, B.

Roper, L.

Hayhoe, L.

Seccombe, B. [Teller]

Higgins, L.

Selborne, E.

Howe, E.

Selsdon, L.

Howe of Aberavon, L.

Sharman, L.

Howe of Idlicote, B.

Sharp of Guildford, B.

Jenkin of Roding, L.

Shaw of Northstead L.

Jopling, L.

Skelmersdale, L.

Kingsland, L.

Slim, V.

Laing of Dunphail, L.

Soulsby of Swaffham Prior, L.

Laming, L.

Swinfen, L.

Linklaterof Butterstone, B.

Taverne, L.

Listowel, E.

Tebbit, L.

Livsey of Talgarth, L.

Tenby, V.

Lucas, L.

Thomas of Gresford, L.

McColl of Dulwich, L.

Thomas of Gwydir, L.

MacGregorof Pulham Market, L.

Thomas of Walliswood, B.

Thomson of Monifieth, L.

Maclennan of Rogart, L.

Tombs, L.

McNally, L.

Trefgarne, L.

Marlesford, L.

Trumpington, B.

Mayhew of Twysden, L.

Wakeham, L.

Miller of Chilthorne Domer, B.

Watson of Richmond, L.

Miller of Hendon, B.

Weatherill, L.

Molyneaux of Killead, L.

Wilcox, B.

Monro of Langholm, L.

Williamson of Horton, L.

Mowbray and Stourton, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Donoughue, L.

Ahmed, L.

Dubs, L.

Amos, B. (Lord President of the Council)

Falconer of Thoroton, L. (Lord Chancellor)

Andrews, B.

Bach, L.

Farrington of Ribbleton, B.

Bassam of Brighton, L.

Faulkner of Worcester, L.

Berkeley, L.

Gale, B.

Blackstone, B.

Gibson of Market Rasen, B.

Blood, B.

Gilbert, L.

Borrie, L.

Goldsmith, L.

Brennan, L.

Gould of Potternewton, B.

Brooke of Alverthorpe, L.

Graham of Edmonton, L.

Brookman, L.

Grocott, L. [Teller]

Campbell-Savours, L.

Harrison, L.

Carter, L.

Haskel, L.

Clarke of Hampstead, L.

Hayman, B.

Clinton-Davis, L.

Hilton of Eggardon, B.

Corbett of Castle Vale, L.

Hollis of Heigham, B.

Craig of Radley, L.

Howells of St. Davids, B.

Crawley, B.

Howie of Troon, L.

Davies of Oldham, L. [Teller]

Hunt of Kings Heath, L.

Dean of Thornton-le-Fylde, B.

Hussey of North Bradley, L.

Dixon, L.

Irvine of Lairg, L.

397

Jay of Paddington, B.

Sainsbury of Turville, L.

Jordan, L.

Sawyer, L.

Layard, L.

Sewel, L.

Lea of Crondall, L.

Sheldon, L.

Levy, L.

Simon, V.

Lockwood, B.

Strabolgi, L.

McIntosh of Haringey, L.

Taylor of Blackburn, L.

McIntosh of Hudnall, B.

Tomlinson, L.

MacKenzie of Culkein, L.

Triesman, L.

Mackenzie of Framwellgate, L.

Turnberg, L.

Massey of Darwen, B.

Turner of Camden, B.

Merlyn-Rees, L.

Warner, L.

Mitchell, L.

Warwick of Underclifie, B.

Ouseley, L.

Wedderburn of Charlton, L.

Pitkeathley, B.

Whitaker, B.

Ponsonby of Shulbrede, L.

Whitty, L.

Rea, L.

Wilkins, B.

Rendell of Babergh, B.

Williams of Elvel, L.

Rooker, L.

Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.
Motion, as amended, agreed to
LORDS AMENDMENT
3 Clause 2, page 2, line 14, at end insert—
"() The pilot order must provide that—

(a) all postal ballot papers must be accompanied by a declaration of identity, signed by the elector and by a witness, and containing in legible form the name and address of the witness;

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(b) each elector who has returned a postal ballot paper is sent an acknowledgment by the returning officer."

The Commons disagree to this amendment for the following reason—
3A Because it is not appropriate to make the requirements to which the Lords amendment relates.
The Lords insist on their Amendment No. 3 to which the Commons have disagreed, for the following Reason—
3B Because it is appropriate to impose the requirements set out in the Lords amendment.
The Commons insist on their disagreement with the Lords in their Amendment No. 3, and propose the following amendment to the Bill in lieu of that amendment—
3C Page 2, line 14, at end insert—
"() The pilot order must specify the form and content of the declaration of identity form."
Lord Filkin: My Lords, I beg to move that the House do not insist on Amendment No. 3 and do agree with the Commons in their Amendment No. 3C in lieu thereof.
I shall speak very briefly because I would hope that this is not a great issue. For the benefit of others, the Government have conceded on the issue of the witness signature but do not think it is sensible to ask returning officers to send acknowledgements for the reasons I explained when we previously debated this matter. I hope that we are at one on this issue.
Moved, That the House do not insist on Amendment No. 3 and do agree with the Commons in their Amendment No. 3C in lieu thereof.—(Lord Filkin.)
On Question, Motion agreed to.
Bill returned to the Commons with an amendment.
Lord Grocott: My Lords, due to circumstances beyond my control, I beg that the House do adjourn for five minutes during pleasure.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 12.45 to 12.50 p.m.]

Energy Bill [H.L.]
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, with apologies for the brief adjournment, I beg to move that the Report be now received.
Moved, That the Report be now received.—(Lord Whitty.)
Baroness Miller of Hendon: My Lords, the noble Lord, Lord Whitty, knows that I am going to speak on a certain matter before we discuss the Bill itself. On our side of the House—no doubt this applies to the other opposition Benches, although we have not discussed it—we are very concerned at the huge number of amendments that have been tabled to Part 1 with which we shall deal today and probably also on Monday. I believe that there are in the region of 149

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government amendments, of which more than 79 were tabled yesterday. They are all virtually new. None of us has had time to consider them—which is the appropriate thing to do—or to take advice or to decide how we intend to approach them. It has been impossible for us even to look at many of the amendments. That is discourteous and a disgusting state of affairs. It is a disgrace, as my noble friend says from a sedentary position.
I do not hold the noble Lord, Lord Whitty, personally responsible for this. I received a letter from him informing me that the amendments had been tabled on 11 and 15 March. However, the amendments had not been tabled on time and we did not receive them. If we have not had them, we have not had them. That is quite disgraceful. I do not know how this has happened but the Opposition do not have dozens of officials advising us on the amendments. We do not have the time to spend all night considering the amendments, and they have not been considered. That is a terrible state of affairs. I shall be interested to hear what the Minister has to say on the matter.
Lord Jenkin of Roding: My Lords, I support what my noble friend has said. In the years that I have spent in both Houses I cannot recall any occasion regarding a major programme Bill on which there is no immediate urgency being suddenly inundated at this stage of the Bill with a very large number of government amendments. As my noble friend said, what is perhaps more serious is that the amendments were tabled only in the past day or two. Indeed, this morning I picked up a supplementary list of government amendments. That is the first time I have seen them. Apparently, they were tabled yesterday.
I remind the House of the guidance on this matter. Government amendments for a Bill should be available at least a week before they are due to be debated. We are faced with amendments that were available one or two days before they were due to be debated. I reinforce what my noble friend said. On this Bill perhaps more than many others noble Lords rely on information, advice and guidance from the large number of extremely expert bodies outside that are involved with the industries with which this Bill is concerned. It has proved impossible to get any sort of guidance on any of these amendments. I suspect that it is for that reason that no opposition amendments are tabled to the government amendments. There simply has not been time to do so. The opposition would not have known what the government amendments comprised. The bodies outside do not know that.
I do not know whether the department of the noble Lord, Lord Whitty, or the Department of Trade and Industry is responsible for this state of affairs but it gives the impression doubly of a total incompetence regarding being unable to comply with the guidance. It also gives the impression that no doubt hard working officials are absolutely inundated with far more work than they can cope with due to the volume of the legislation with which they are confronted. Either way, as my noble friend said, that we should be put in this position is a gross discourtesy to this House. Of course,
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we shall do our best to deal with the amendments in the days that are available on Report. However, I want to ensure that the noble Lord, Lord Whitty, and his colleagues on the Front Bench are aware of the genuine anger that their conduct regarding the passage of the Bill has engendered.
The noble Lord has sought to reply by letter to a number of the points that were raised in Grand Committee. Many of the amendments that have been tabled constitute responses to arguments and debates that we had in Grand Committee. But, for goodness sake, we are entitled to receive them in sufficient time to know whether they really do deal with our points or whether they go only part of the way and we need to amend them. We have not had time to do so. I hope that in responding to this debate the noble Lord. Lord Whitty, will consider that he is justified in offering a very condign apology to the House for treating us in this way.
Baroness Miller of Chilthorne Domer: My Lords, I associate noble Lords on these Benches with the objection to the fact that the amendments that we are discussing were tabled so late. We have not had the opportunity to consider them or to table amendments to them. Indeed, the proceedings on this Bill might serve as an example when the appropriate committee of the House considers how Bills are dealt with. Given the controversial nature of the Bill all the opposition Benches felt frustrated that the Committee stage was held in Grand Committee. We felt very constrained as the Government had set out with a mindset to concede very little. Given the volume of government amendments that have been tabled, Report stage threatens to be equally unsatisfactory. I ask that the appropriate body of the House consider this Bill's progress to determine whether it fulfils the democratic opportunity that should be afforded to us.
Lord Lea of Crondall: My Lords, I should like to mention some obvious mitigating circumstances. I am not privy to what my noble friend the Minister will say. However, it is fairly obvious that among the mitigating circumstances is the fact that much attention—with all the correspondence and meetings and so on—has been devoted to dealing with matters raised in Committee. Certainly two government departments have a major interest in the matter. This is a difficult set of circumstances and it is not a particularly satisfactory position. However, I hope noble Lords opposite will note that some of us feel that it is not just for the Minister to say mea culpa, as it were, and that other matters are relevant.
Lord Jenkin of Roding: My Lords, I wish to speak again and raise two points. The noble Baroness, Lady Miller of Chilthorne Domer, said in Grand Committee:
"One of the difficulties I am having throughout the Grand Committee is that while we do not vote we are stacking up a great deal of stuff for the Report stage".—[Official Report, 12/2/04: col. GC 552.]

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The noble Baroness was exactly right. One has only to look at the Marshalled List to see just how much stuff has been, in her lambent words, "stacked up". I say to the noble Lord, Lord Lea of Crondall, that if we count up the number of amendments that he has tabled compared with the much larger number—many, many times larger—of amendments that have been tabled by noble Lords on this side of the House, both on the part of the Conservative and the Liberal Democrat Benches, I am not sure how seriously I should treat the excuse that he offered. He has had particular interests in the matter—one or two of them will arise on Report—but I do not think that any of what he said excuses the government departments and the Ministers responsible for treating the House in a thoroughly shabby way.
Lord Dixon-Smith: My Lords, the answer to the attempt at an excuse on the part of the noble Lord, Lord Lea of Crondall—it certainly was not an apology—is that all the factors that he mentioned were readily apparent before the Bill commenced its passage through the House. When the Bill was drafted and was to appear on the Floor of the House, everyone knew the timetable for its passage through the House because it is set in Standing Orders. It was known that two government departments were involved, and therefore their procedures and co-ordination should have been of the highest order. For whatever reason, that has not happened. I thoroughly support my noble friends.
1 p.m.
Lord Lea of Crondall: My Lords, far be it from me to start a dialogue about this. The fact that hundreds of amendments have been tabled while somebody like myself has tabled only two or three could be, in part, because I have been more highly focused than some noble Lords in what they think should be put down at this stage of the Bill. I will leave it there.
Baroness Byford: My Lords, in response to the noble Lord, the House has to go through the whole Bill. I accept that the noble Lord may have a direct interest in only specific parts, but it is the responsibility of every Member of this House to look through the whole Bill.
Lord Whitty: My Lords, I would like to apologise to the House—particularly to the noble Baroness and to others to whom I wrote about the timetable—that we did not entirely manage to meet the dates that we had set ourselves for tabling these amendments.
In mitigation, I would point out that we are dealing with very complex areas, some of which relate to pensions and taxation and therefore involve more than two government departments. These were raised at Committee stage. There is not a huge difference between the issues raised by noble Lords in Committee and the Government's plans to amend the Bill.
The substance of the amendments is a good indication of how a sensible discussion at Committee stage can lead
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the Government to make concessions and changes in complex areas. As we come to those areas, noble Lords will see that, in the main, their views have been taken into account in the drafting of the amendments, complicated though some of them undoubtedly are. I will not talk further on the substance of those points; I will wait until we reach them.
On the other hand, I repeat that I regret that noble Lords did not receive those amendments at an earlier stage. I take issue with the noble Lord, Lord Jenkin, about this being unprecedented. This Bill started in the House of Lords, and a lot of people's consciousness relates to Bills that come to us from the House of Commons. Bills from all parties over the past 10 years and more have frequently had a significant number of government amendments at Report. This is partly to correct the Government's drafting.
The noble Lord, Lord Dixon-Smith, may be correct—we ought always to get it perfect the first time, but no Government ever have, and nor has any energy council, despite their high level of expertise in those matters.
We tend to bring in technical and clarifying amendments at the earliest possible stage, so that the Bill is clearer in subsequent stages, both here and in another place. The number of amendments is not extraordinary. I have dealt with Bills in which there have been more government amendments, and I am sure noble Lords opposite have too. There is always a narrow period of time between the end of Committee and the start of Report. That is within the rules but is not in my control. Nevertheless, we should have met the original deadlines.
When we come to debate those amendments in detail, noble Lords will recognise that they reflect the discussions in Committee, and they should—not without reservation, but on balance—be pleased with what the Government are attempting to do with them. There will be one or two exceptions to that, which no doubt noble Lords will oppose or argue about in the normal way.
We can proceed on the basis of the government amendments and those tabled by other parties and noble Lords. We have a lot of business to do today and on the subsequent days of Report.
Baroness Miller of Hendon: My Lords, I made it clear that I did not hold the Minister personally responsible, but that it was a departmental matter.
I would like to say something very serious. The Minister started off by apologising, but said that it is no wonder the amendments have come late because they all deal with complex matters. It is because they are complex that we are concerned about how we deal with them. If they were complex for the noble Lord and the officials—who could take briefings on every single point—what on earth were we supposed to do? The mere fact that he talked about complex matters makes my case.
The Minister also said that there was a short period between Committee and Report. Who decided that?

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These are matters for the Government. The Minister said that it was not his fault. The arrangements for how these matters should be dealt with are a matter for the Government.
We never understood that we were going to have the Report stage so soon after Committee. That is not appropriate. We are in an extraordinarily difficult position. As the noble Baroness, Lady Miller of Chilthorne Domer, said, this Bill should never have gone into Grand Committee. If a Bill goes into Grand Committee, it should be uncontentious; we should not have to go through it in every detail—as indeed we did; and there should not be such a pile of government and opposition amendments.
Both the Government and the usual channels should look seriously at how we change the procedures at Report. What a state we have come to. Matters are dealt with in Grand Committee that we cannot divide on, so we cannot go into great detail on them—although we try. We then wish to deal with them at Report, where we can each only speak once. This is not the way to properly conduct a Bill if we are to give it complete scrutiny.
I have brought in other matters, but the position is extraordinarily unsatisfactory on all the points that we have made, and the points made by the noble Baroness, Lady Miller of Chilthorne Domer.
We feel very much at a disadvantage. The Minster said that some of the amendments are technical and some are concessions—I can see those right at the beginning, they concern confidentiality, which is an important matter. But unless the amendments are gone through with a toothcomb, it is impossible to know whether they are technical matters, concessions or new measures. The Minister put his hand up and said that some are new. We cannot deal with matters in this manner.
The Bill ought to have been recommitted to a Committee of the Whole House, which would have given us a chance to deal with these matters properly. I believe that we suggested that to the Government—I look to my Chief Whip for guidance. That has not happened. Here we are at Report. I do not want to take up any more of this valuable time—this short time—that we have to discuss important matters.
The Government should know that we take an extraordinarily dim view of this matter. We hold nobody personally responsible, but everyone who had any part in putting this forward is collectively responsible.
Just look at that huge groupings list of government amendments, all in one block. How could anybody deal with that properly and appropriately? It is a disgrace.
Lord Shaw of Northstead: My Lords, I have not intervened at all in this matter, but I have listened to all that has been going on. There has been an important break in our proper procedure in this House. I am astonished that the Leader of the House is not here to help us in this matter.
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I sat for many years as a chairman in the other place, and was fully aware that amendments—particularly important ones had to go down in sufficient time for all parties to consider them properly.
I remember that on occasion I stopped a government amendment from being tabled because the short notice gave the Opposition no chance to consider it.
If, as I believe is the case, there has been a break with procedure, I would expect the Government to move for an adjournment and delay consideration of the matter for another day in order to give appropriate time. That should be done and we should insist on it.
Lord Lea of Crondall: My Lords, I am sure that all the speeches made from the other side of the House are made in good faith and are based on experience. However, are we not combining the lateness in tabling amendments with two or three other questions; for instance, whether the Bill should have gone into Grand Committee?
Did not the whole House agree a procedure—it may be deemed an experimental procedure because it can be changed—whereby such Bills go into Grand Committee? I do not recall—it would be difficult to take up the point made by the noble Baroness, Lady Miller—that a contentious Bill should not go into Grand Committee. It would be angels on the end of a pin defining what should be contentious. Did the Opposition put that proposition to the usual channels? I am talking about the general principle of the procedures that we are, in the interests of the whole House, utilising. Either in the Moses Room or in the Committee room upstairs, Bills are from time to time considered in Grand Committee and it is a well known fact that we do not at that stage vote. Three or four days will therefore be spent on Report.
With great respect, those questions are different from the late tabling of some government amendments. We should not widen the discussion out of all reason relative to the matter before the House today.
Baroness Miller of Hendon: My Lords, I do not want to speak at great length about that, but I do want to make one point. We would never have widened the debate into consideration of whether the Bill should have gone to a Grand Committee or whether there was insufficient time between Grand Committee and Report.
The point is that the Government have tabled so many amendments in one go without giving us time to look at them. In other words, if the Bill had been committed to a Committee of the Whole House where we would have discussed everything and been allowed to vote, we would not have had to deal with so much now. We have tabled amendments on all the issues that are important to us and are faced with a whole load of others that we have not seen. That means that the Grand Committee stage has compounded our problems. That is it.

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I would not have dreamt of widening the issue, although it is a serious one which I hope the usual channels will discuss. That is neither here nor there. The fact is that the Bill contains many matters with which we must deal on Report but on which we have not taken advice or been able fully to consider simply because of the way it has been handled by the Government.
Lord Cope of Berkeley: My Lords, one way in which we might alleviate the difficulty is to stop our proceedings when we reach the starred government amendments. There are no starred government amendments in the first 26 clauses, although I believe that some were tabled only in the past day or so. The first starred amendments occur in Clause 27 and therefore I suggest that the usual channels should consider whether today's proceedings should conclude at that point.
I do not want to negotiate across the Floor of the House, but the usual channels might well discuss the proposal.
Lord Jenkin of Roding: My Lords, I went through the first Marshalled List yesterday and counted up all the government amendments. Seventy-nine of them were starred. That means that 79 government amendments were tabled with only one day's notice before today's debate. That is not good enough.
Lord Whitty: My Lords, clearly, we cannot debate across the Floor how far we proceed today. The amendments relating to Clause 27 are some way down the Marshalled List and therefore the usual channels will have plenty of time to discuss them. While I respect the suggestion that that may be one way out of our difficulties, I believe that we must proceed with the Bill at the normal pace and only the usual channels can discuss such matters.
If it further helps noble Lords' concerns on the issue, I can say that for reasons which are rather extraneous to this debate but have been raised by the noble Lord, Lord Jenkin, I do not intend to move the first two government amendments, Amendments Nos. 3 and 4. They do not arise from material we discussed in Grand Committee, whereas the subsequent amendments relate to earlier discussions and in many cases to amendments tabled by other noble Lords.
I do not therefore propose to speak to the first group of government amendments and it may be sensible that the usual channels discuss the suggestions made. In any event, Clause 27 is well down our proceedings for today.
Lord Jenkin of Roding: My Lords, the Minister is being disingenuous beyond what I thought would have been conceivable. The reason he is not moving Amendments Nos. 3 and 4 is because I rang him up yesterday and said
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that following the exchange at Question Time a few days ago, I referred the advertisement for the chairman of the Nuclear Decommissioning Authority to the Committee on Standards in Public Life. That committee is sitting this morning and I have not yet received a note of its conclusion. I suggested to the Minister that he would be very unwise to move those two amendments when there was a possibility that the Committee on Standards in Public Life would consider that the matter came within its remit and that it proposed to examine it, whether in the context of wider studies or whatever.
The Minister has just tried to pretend that he is somehow making a concession to the Opposition in order to smooth over the appalling business of these late amendments—79 starred government amendments yesterday. I am sorry, I cannot accept that.
Lord Whitty: My Lords, the noble Lord may have misheard me. I indicated that I was doing so for reasons unconnected with the current debate on procedure. The noble Lord correctly describes the position.
I was making the point that Amendments Nos. 3 and 4 do not relate to the debate on whether we are dealing with new material—one of the concerns expressed. However, the bulk of the other amendments—government and others—reflect discussions which took place in Grand Committee and are related to other amendments on the Marshalled List. I do not believe I was being disingenuous—I was simply explaining, and I readily concede, that some of the amendments relate to entirely separate proceedings. I am grateful to the noble Lord, Lord Jenkin, for his conversation with me, and I believe that some of the anxieties about new and contentious material being placed on the Marshalled List would be slightly relieved if those two amendments were not moved.
Lord Cope of Berkeley: My Lords, we are close to the time when the lunch break is due to commence; that is, half past one. Would it not be sensible if we drew this debate to a close, which will give time for consideration of all the matters. It would be helpful if the noble Lord, Lord Davies, would move that we adjourn for the lunch break as soon as the debate is concluded.
Report received.
Lord Davies of Oldham: My Lords, in view of that discussion, I beg to move that consideration on Report he now adjourned. In doing so, I suggest that the Report stage begins again not before 2.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
Lord Davies of Oldham: My Lords, I beg to move that the House do now adjourn during pleasure until 1.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 1.20 to 1.30 p.m.]

Social Security (Basic Skills Training Pilot) Regulations 2004
1.30 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham) rose to move, That the draft regulations laid before the House on 12 February be approved [10th Report from the Joint Committee].
The noble Baroness said: My Lords, these draft regulations are intended to support the Government's Skills for Life strategy for improving adult basic skills, which my right honourable friend the Prime Minister launched in March 2001. For too long, the scandal of adults not being able to read, write and use maths has gone unchecked. Up to 7 million people in England alone are reported to have poor basic skills and the Government are determined to address that. Improving the basic skills of 1.5 million adults by 2007 is one of our leading priorities.
Without a functional level of basic skills, people's chances of finding work are reduced. When they do obtain work, they are likely to be in low-skilled, low-paid jobs with few prospects and they are more likely to endure repeated periods of unemployment. Such adults do not have the ability to read, write or speak in English or to use mathematics at a level necessary to function at work and in society in general. The costs of unemployment for the individual are high. So are the social and economic consequences for us all. Given that about a third of people with illiteracy and innumeracy problems are parents, the issues for their children are also severe. The best way of guaranteeing that a young boy becomes functionally illiterate is to have a functionally illiterate father. Wasting the potential skills of the workforce brings significant losses in productivity, as well as higher benefit costs.
We believe that the key to improving the prospects of those people is to raise their skill levels so that they can find and keep work. Since the strategy was introduced, all jobseekers have been screened at Jobcentres for basic skills by the time they reach 26 weeks of unemployment. On previous occasions I described such screening, that involves jobseekers being asked to discuss a basic advertisement for an assistant caretaker, the hours and the pay, and to see whether people understand it and can work out how much they would earn if they worked three hours of overtime, and so on. After screening, those who are unable to comprehend or read the advertisement and are identified with possible basic skills needs are referred to specialist organisations under contract to Jobcentre Plus for an independent assessment. That professional assessment determines more clearly the individual's needs and where his current level of ability lies; it will also help to identify the most appropriate course for each individual.
Despite the considerable support that is available in the form of training and financial resources, significant numbers still refuse to take advantage of it. All of us will know of people who have spent 10, 15 or 20 years concealing their illiteracy, rather than—I am
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afraid—addressing it. From April this year, Jobcentre Plus is to introduce a number of measures designed to improve take-up of the help that is on offer and reduce attrition between the various stages of the screening, assessment and training process. The measures include a screening tool to help advisers to better identify people with basic skills needs and the payment of financial incentives. Jobseekers taking up basic skills training will receive an additional £10 per week on top of their existing benefit entitlement and a bonus of 100 for achieving a qualification that counts towards the Government's PSA target.
Alongside those incentives we propose to introduce a pilot in a number of locations across England to measure the impact of a voluntary approach against a mandatory regime. Subject to your Lordships' agreement, these regulations would enable the Government to establish a scheme imposing sanctions on people claiming jobseeker's allowance if, without good cause—I emphasise, "without good cause"—they refused or failed to take part in basic skills training. The pilot would involve jobseekers aged from 18 and 59 who had been claiming benefit for at least six months and had been assessed as needing basic skills training—in other words, unable fully to comprehend the advert for an assistant caretaker at the mythical Bowater House. Those people who refused to participate would incur a sanction involving the loss of JSA for two weeks in the first instance. The sanction for a further failure to participate within 12 months would be four weeks' loss of JSA.
We recognise that Jobcentre Plus needs to operate the pilots in a sensitive way that respects the complex problems of the disadvantaged and vulnerable. I entirely accept that someone with deep-rooted functional illiteracy may well be multiply disadvantaged and have many other problems as well as the presenting problem of illiteracy. We accept that there will also be jobseekers for whom basic skills training would be inappropriate. They may currently have mental health problems or learning difficulties and we hope to pick those up on screening. once the people have been referred for professional assessment.
We have an important safeguard in the draft regulations that are now before your Lordships' House. If a jobseeker begins a basic skills course and it becomes apparent that the course is not suitable—perhaps because the jobseeker's disabilities are such that he is not benefiting from the course—it will be possible to exercise discretion and stop attendance on that course. But, I remind your Lordships that, normally, if a jobseeker was unable to attend a course because of a disability, JSA might have been the wrong benefit in the first place and this scheme might help put that person on a more appropriate benefit.
There will be other safeguards. Jobseekers may have good cause for failing to attend appropriate training—perhaps because of illness, domestic emergency or caring responsibilities within the family. Jobseekers will have the opportunity to explain their actions before any sanction decision is taken. The decision will be taken by an impartial decision maker and benefit will continue to be paid in full in the mean time. If a

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decision maker decides that a sanction is justified, the jobseeker will have the usual right of appeal to an independent social security appeal tribunal.
Hardship payments will also be available as a safety net. Jobseekers can claim payments of JSA at a reduced rate if they can show that they, or a family member, would otherwise suffer hardship. This will provide immediate protection for vulnerable groups. For example, a couple with three dependent children, who would normally receive some £217 in benefit, would receive—after ssanction, if someone was unwise enough not to pursue the course—a hardship payment of £195. So £217 is the full sum and £195 is the sanctioned sum. If a family member were pregnant or seriously ill, the payment due would be £206.
We will, of course, evaluate the outcome of the pilot. We are committed to ensuring that evaluation results will be statistically valid and provide robust evidence of whether or not sanctions, or the threat of sanctions, for non-attendance at basic skills training has a statistically significant effect on the number of qualifications gained and people completing their courses. Analysts have chosen a sample twice the size of that strictly needed to ensure that we have sufficient numbers. I hope the result will be that we find out whether sanctions ensure that those people who most need help do not choose to walk away from that help.
Therefore, I am satisfied that the regulations are compatible with the European Convention on Human Rights, and I commend them to the House.
Moved, that the draft regulations laid before the House on 12 February be approved [10th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, the House will be grateful to the noble Minister for that explanation of the regulations. The issue is the way in which sanctions will be used to encourage—if that is the correct word—people to undertake skills training. The situation that she described, with 7 million people suffering through lack of numeracy or literacy skills, is horrifying. Therefore, it is not surprising that a much higher percentage than the national average should be among those people who are seeking to find—or rather not seeking to find—jobs, but are, anyway, unemployed at present. I am also grateful to the Minister for giving some indication of the strength of the sanction: the difference between what those people would normally receive and what they would receive under sanction, thus relying purely on hardship payments.
The three original pilots were designed to explore different approaches to identifying and improving skills. On one hand, there was a suggestion that there would be financial incentives; on the other hand, there would be sanctions; and, in a third case, both would be combined to encourage people to undergo skills courses. I shall leave on one side the basic question of whether sanctions and withdrawal of benefit are appropriate, because we have previously discussed that. However, what I found surprising in the Minister's remarks was that she did not point out that
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the Government have decided that the previous pilots were inconclusive, primarily because the number of clients at the end of the evaluation period was not enough to draw any robust conclusions.
That raises the question: who on earth designed the original pilot scheme; and, if it was consultants, have they subsequently been fired? Clearly, much wasted time, effort and money was involved in the pilots, which produced no meaningful results. As a result of that failure, the Government now find that they need to introduce this proposal. However, the proposal concerns only sanctions and does not deal with either financial incentives or, indeed, a combination of sanctions and financial incentives.
The other matter that surprised me very much was that the noble Baroness did not mention what the Government's own advisory committee on these matters—the Social Security Advisory Committee—felt about this whole issue. The committee expressed significant concerns about the proposed approach. Its view was that available research does not support the conclusion that the use of sanctions can improve training outcomes. The people on that committee are expert in this field and, if I understand it correctly, they effectively came down against these regulations and further expenditure on this kind of operation. The committee believed that much of the time was spent on dealing not with training but, rather, with personal problems and other issues. The committee expressed particular views with regard to the problems of those whose first language is not English.
In that context, perhaps I may ask the noble Baroness a question, given the general dispute about immigration and about people coming here to work. That dispute has been taking place in a wider context elsewhere in the European Union and, in particular, in the new accession states. When people arrive in this country in order to work, are they given tests to see whether they are in a position to do so? Obviously, it would be undesirable for them to say that they were coming here to work if the view of the department carrying out the tests was that they would have difficulty in doing so.
Baroness Hollis of Heigham: My Lords, is the noble Lord referring to people under the current accession arrangements or to people in the new A8 countries who may be coming here after May, or is he speaking more generally?
Lord Higgins: My Lords, I am making a more general point. I do not want to press the issue but I believe that the Government should have a view about whether one is simply adding to the number of people who are in such a situation when an earlier check would establish the nature of the problem.
At all events, if I understand it correctly, the committee firmly takes the view that no gain is to be had in carrying out further pilots and that those pilots would not represent value for money. No doubt that is a matter which the National Audit Office could look into on another occasion.

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We are up against time somewhat because we have a number of other orders to consider, but perhaps I may pose some specific questions to the noble Baroness. First, will she explain why she believes that the pilots give value for money, whereas the experts apparently do not? Secondly, what is the total budget for the pilot programmes and does that include the cost of administering and evaluating the sanctions regime? Thirdly, if the initial pilots did not provide sufficient information, which, after all, is the object of a pilot, why are the Government satisfied that this new set of pilots will be any better? I believe that we should know in advance how the pilots will be evaluated and what measures will be determined to appraise their success or failure. I have a number of other questions but perhaps I may pursue those on another occasion. However, these are the main ones that arise on these regulations at this stage.
1.45 p.m.
Baroness Barker: My Lords, I, too, thank the Minister for her explanation of the order. As I am taking the place of my noble friend Lord Russell, it will not surprise her to know that I wish to ask questions about sanctions. I concur with the noble Lord, Lord Higgins, that it is rather strange that the Government have decided, on the basis of the previous three pilots, to pursue only one—the most draconian.
I, too, consider it remarkable that the Social Security Advisory Committee, which produced a very forceful report, has been ignored. It is worth pointing out to the House that in its report the committee said:
"It is not possible to draw from the research conclusions that the use of sanctions can improve training outcomes, and we question the assumption that extending testing will prove whether the threat of sanctions does indeed have an important effect on the qualifications achieved and other employment outcomes".
I believe it is also worth noting the comments in the report about tutors who were involved in the pilots:
"Tutors who are working to engage disaffected and alienated people, and assist them towards employability, have told us that they believe that a sanctions driven regime would be wholly inappropriate for the sorts of courses they are running".
I question why the committee's advice was ignored. Can the Minister say whether an estimate has been made of the number of people who are likely to incur sanctions'? Like the noble Lord, Lord Higgins, I should like to know the cost of the sanctions regime.
I should also like to know how the results of the pilot will be reported to Parliament. It seems that a number of pilots are being carried out in the Department for Work and Pensions—a department which, we understand from yesterday's Budget Statement, is shortly to be reduced in strength. I am rather intrigued about that.
The evidence on sanctions is, at best, mixed and somewhat inconclusive. I ask the Minister why, in setting up the further pilots, no work is being done to establish whether the imposition of sanctions leads people into behaviours which are dangerous but which they feel forced into because their benefit money has been reduced.
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The noble Baroness spoke about families, and I noted the figures that she gave on those with sanctions. However, I believe it is important to note that in the kind of households to which we are referring—onethird of them with children—it is undoubtedly the case that any sanction of that kind will have a knock-on effect on children. Given that eradication of child poverty is one of the Government's main objectives, it seems rather strange to introduce something here which will have an adverse effect on that.
Finally, I understand from the report that one reason that the previous pilots were ineffective was that they were simply not long enough—they lasted for six months. These pilots are due to last for 12 months. Can the Minister say how she believes that that can conceivably be long enough to train people who clearly have a number of difficulties, which she acknowledged and set out for us, to find employers who are willing to give jobs to people with difficulties, and then to evaluate whether those jobs are sustained? Achieving all that in 12 months seems to me to be almost impossible, if not a tall order. I wonder whether, in 12 months' time, we shall find ourselves looking at yet another pilot. I should be very grateful if the Minister could answer those questions.
Baroness Hollis of Heigham: My Lords, I shall do my best. Given that we all accept that we have a great deal of business to cover, I may have to send a round-robin letter after the debate in order to pick up the questions that I am unable to address due to lack of time.
I shall run together the comments made by the noble Lord, Lord Higgins, and the noble Baroness, Lady Barker, because many of their concerns overlap. The previous pilots were inconclusive; they did not run for long enough; and the numbers were too small. Of course, they were not the responsibility of my current department because, at that time, they came under what was then the Department for Education and Employment. They became the responsibility of my department when the employment part of that department joined the old Department of Social Security and became the Department for Work and Pensions. Therefore, noble Lords will understand if I am not as familiar with the original pilots.
However, I accept that no clear findings were established from the pilots. One can argue from that that one should abandon pilots or that one should try to carry them out in a more sustained manner with greater numbers. But they are pilots and, if they do not have the effect that we expect, obviously that is something from which we shall learn.
I shall return to sanctions and the Social Security Advisory Committee in a moment. The noble Lord, Lord Higgins, asked about people coming to this country and whether they are screened. From May, under the new accession arrangements, people will come to a job only when they have a work permit; therefore, they will not come to my department at all because they will not be entitled to benefit and so we would not pick them up.

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The more general point is interesting. The noble Lord is right that something like 13 per cent of the original sample were people who had problems with spoken English and, for 18 per cent of the original sample who had basic skills problems, English was not their first language. The noble Lord was right to identify that, but they were the ones mostly likely to want to take voluntary courses because they were keen to acquire work and to come into mainstream society.
Lord Higgins: My Lords, in regard to the group of people whom the noble Baroness has just mentioned, and taking the matter overall, how will the Government ensure that those who are told that they will have sanctions applied to them are able to read the warnings that are given to them, presumably in writing or in a different language?
Baroness Hollis of Heigham: My Lords, we are talking about jobseekers—not people on income support or pensioners. Jobseekers have to sign on fortnightly. If they have enough English or competencies to get to the Jobcentre office, they will see someone there who will screen them at a certain point when they talk about their jobs in their interviews with their personal advisers. There is already outreach to people in an appropriate established procedure. I accept that there could be a problem with someone who has mental health difficulties, but in the normal course of events, when someone comes in to sign on—as they have to do in person at least once a fortnight or more often—he would be reached, so to speak, by the interview and the personal advice system.
On value for money, the total budget is £1 million, but I would not wish to judge that necessarily by saying how many jobs we shall achieve for such people with poor skills or improved skills as a result of the course. If one thinks of the rungs of a ladder as representing people's distance from the labour market, those who are one or two rungs away from going into work may be lone parents whose basic problem is childcare, which may be easy to overcome, but someone who has either deep-seated mental health issues or deep-seated illiteracy issues which they have been concealing may be many rungs away. Alongside the problems of literacy and numeracy they may have problems with self-confidence, social skills, communication skills and the like as well as lingering health problems.
It will be a slow job, but I believe most profoundly that if we do not do this, such people will remain consigned to the shadows of unemployment and of financial and social exclusion. They will not be able to read the name on the bus which says where it is going, they will not be able to take a child to a swimming pool as they cannot read the safety instructions, and they will not be able to choose the least expensive but, none the less, most nutritious food in a supermarket. One would be allowing them to live a life that would be incomplete, and I worry about the implications for their children.
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The noble Baroness, Lady Barker, spoke of child poverty. I take the point that sanctions will affect people, but the way to overcome them is to do what one is required to do as part of the JSA. It is quite simple. If one does not want one's children to experience that poverty, one conforms to the JSA requirements. Having said that, the noble Baroness will know and will agree with me that the best way out of poverty for such a family is for the parents to enter the labour market and the biggest drag on them entering the labour market is their lack of basic skills.
At the moment, if a person is on JSA we can require him to undertake a higher level course as part of getting ready to go into the labour market, but we cannot require someone to do a basic level course, which would get rid of fundamental problems of illiteracy and innumeracy. I think that that is bizarre and no kindness to anyone.
We do not know that the number of people incurring sanctions will increase but we believe that it will. If it does not, the noble Baroness will be right, but we believe that it is preferable. At the end of the day, that is why we disagree with the Social Security Advisory Committee. Its advice is advisory; we respect its views on this matter, but they are not views that the Government share. Currently, we have a huge investment in voluntary programmes for illiteracy and so on; between April 2001 and July 2004 we have another 2 million or so learners taking up 4.5 million courses. We are trying to help about half a million people to reach basic levels, but there is a group of people who refuse to recognise or to accept that they need to address those issues. As a result, the one inheritance that their children, particularly boys, can be sure of receiving is their illiteracy.
I was asked who was to conduct the survey. It is a consortium of the British Market Research Bureau and the Policy Studies Institute. We expect them—I take on board the point made by the noble Baroness, Lady Barker—to report in 2006. Clearly, every sanction is a failure. We do not expect there to be many sanctions. Even under the previous pilots there were only 24 sanctions, so it might reach three figures, but I would hope not; we do not know and cannot tell. At the end of the day, someone who has illiteracy and innumeracy problems, and does not have the reading age of a seven year-old, cannot function competently in today's society. I believe that we need to use tough love—a cliched phrase. We need to get people, professionally screened and supported, on to training courses, where they are treated with dignity and sensitivity. I hope that such courses will address problems that they have refused to acknowledge, often for 10 or 20 years—such basic incompetencies as not being able to read the medicine labels on their children's bottles of medicine. With that explanation I hope that noble Lords will accept the regulations.
On Question, Motion agreed to.

Social Security (Intensive Activity Period 50 to 59 Pilot) Regulations 2004
1.56 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham rose to move, That the draft regulations laid before the House on 12 February be approved [10th Report from the Joint Committe].
The noble Baroness said: My Lords, these draft regulations are essential in supporting the Government's efforts to increase employment among older workers as well as addressing the pensions challenge.
Evidence shows that once people reach the age of 50 there is an increased risk of becoming unemployed while the likelihood of returning to paid work decreases. Many people over 50 feel that they do not have the opportunities that they need to continue to work or to return to work if they wish to.
Currently, there are 19 million people aged 50 and over in the UK of whom 9 million are aged 50 to state pension age. The employment rate for this age group, which represents almost a quarter of the working population, is significantly lower than for other workers. Current statistics show that people aged 50 to state pension age make up 17 per cent of the total number of people claiming jobseeker's allowance in the UK. I am sure noble Lords will agree that if someone does not work in those years and runs down whatever resources he or she has, he will go into pension and retirement that much poorer and with fewer resources. The greater the ability to keep people working for as long as they are able, the more comfortable their retirement will be.
Since 1997, the Government have introduced a number of measures specifically aimed at the over 50s age group, such as the New Deal 50 plus programme and working tax credits. That has increased the employment rate for the over 50s from 64 per cent in 1997 to 70 per cent in spring 2003, reducing the gap between their rate and the overall employment rate of 75 per cent.
The pensions Green Paper, Simplicity, Security and Choice: Working and Saving for Retirement, published in December 2002, recognises the huge wealth of skills and experience that many people over 50 possess and sets out a number of proposals aimed at tackling the relatively high inactivity of 1.4 million people in that age group.
As part of the package of proposals outlined in the pensions Green Paper, we propose a pilot study to trial mandating customers aged 50 to 59, who have been claiming JSA for 18 months, into the intensive activity period of their New Deal 25 plus programme. Customers or clients aged 25 to 49 are already required to participate in that because it offers them extensive help back into work. Customers aged 50 to 59 currently have voluntary access to this provision but only 12 per cent take up that opportunity. Therefore, what these measures would do is propose to extend the mandatory responsibilities up the age group to 59, not to 60, which is the point at which the pension guarantee element kicks in for men and women alike, if that is what they choose.
We know that nearly 174,000 people have already moved from the New Deal 25 Plus into work. Many people on the programme have also moved to unknown destinations, so this figure could be much higher. Over 19,000 people aged 50 to 59 have left the New Deal 25 Plus programme to go into work. Why then go for the intensive activity period'' It offers individuals the chance to engage in a range of activities such as basic employability training, self employment support, education and training opportunities, and also benefit from flexible packages of support, which can combine work experience, work-focused training, and help with motivation and soft skills. Some 64,000 sustained jobs have been gained through the enhanced New Deal 25 Plus, of which 20 per cent have been gained by people who had participated in the I A P. By introducing this pilot, we can further increase the job prospects of those over 50.
However, evidence suggests that one reason for this lack of take up is due to so many individuals becoming demoralised about their chances of returning to work without support. There is a need to establish whether or not compulsion has a part to play and will result in more positive outcomes.
Previous pilots undertaken in 1998, though demonstrating an increase in the number of job outcomes, also showed an increased move on to other benefits, particularly incapacity benefit. A higher proportion of over-50s left for employment, compared with the voluntary programme, but the proportion leaving for other benefits was also higher compared with all leavers. It is difficult to determine the size of the employment effect precisely due to the large number of people leaving for unknown destinations. That is why we propose to run 14 pilots in a combination of seven incapacity benefit reform pilot sites and seven in non-incapacity benefit reform pilot sites. This will allow us to test the effectiveness of mandating participation and measure more rigorously the overall effects of the intensive activity period in this age group.
We propose to run the intensive activity period pilots for two years, and we will select customers to participate in the pilots on a 50:50 basis using a random assignment selection process. This will enable us to gain sufficient data comprehensively to evaluate the pilots, as direct comparisons will be made between those selected to participate and those who are not. We have designed an approach that is as robust as we can make it. The purpose of the evaluation will be to determine the impact of the initiative on individuals and its overall cost effectiveness. We aim to establish how many people have moved into work who otherwise would not have done so. We will also establish how many people move on to incapacity benefit as a result of this pilot, and we will assess whether the desired effect—that is, movement into work—is greater than the movement on to incapacity benefit. The full findings from this pilot study will be available in spring of 2008.
We recognise, however, that selecting people to participate in the pilot via random assignment may be perceived as exclusive, given that a lot of people now

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go on to it voluntarily. With this in mind, customers who are not selected via the random assignment selection process will still have the option to access the provision on a voluntary basis. By ensuring the pilots are run in this way, I am satisfied they are compatible with the European Convention of Human Rights.
The pilots will be implemented in two stages, which is why there are two sets of regulations. One group of offices is starting in April 2004 and the other in January 2005. The reason for this is that there are three areas with existing pilots, and we must prevent contamination of the evaluation evidence. This has required two separate statutory instruments, because an individual set of pilot regulations can have effect for only 12 months at a time. They are identical apart from their coming-into-force dates and the Jobcentre Plus offices listed on the schedules. We also intend to renew them both in 12 months' time, so that the pilots can run for their full planned period of two years. We must stagger them, so that an existing set of pilots will have completed its course before we introduce the new ones in these other areas.
The Social Security Advisory Committee has approved both sets of regulations. Subject to the agreement of your Lordships' House, these regulations will enable the Government to impose sanctions on people claiming jobseeker's allowance, who, having been selected to participate in the pilot, fail to comply with the requirement to participate, or to accept a place on the intensive activity period. We have also acknowledged the concerns regularly expressed by the committee regarding the extent to which there may be an increase in hardship. The sanctions in these pilots are the same as those for existing clients aged 25 to 49 who are already required to participate in the intensive activity period.
It is important to remember that jobseekers always have the opportunity to explain their actions in advance of a sanctions decision, that we train our decision makers to be experienced and impartial, and that decisions carry a right of appeal. Jobseekers can also claim reduced-rate hardship payments during a sanction period; from the outset for the defined vulnerable group, which comprises about £23 on an otherwise unsanctioned benefit of about £217, if they are a couple with three children.
Finally, the effect of any sanction can be avoided altogether by participating in the intensive activity period and thus receiving a full training allowance. The Government want to increase employment among older workers, and this issue remains a key priority as part of the pensions challenge. People cannot work for 20 years and then from 50 to 65 in the twilight period of benefits and then have possibly a further 25 years as a pensioner also on a modest income without having acquired any savings, or any second pension in the process. We need to ensure that people take the opportunity as far as possible once we have screened them for health issues, to re-enter and re-engage in the labour market. The findings from these pilots will inform the Government of the viability of a national rollout. By introducing these pilots, we are helping those who are most disadvantaged. I beg to move.
Moved, That the regulations laid before the House on 12 February be approved [10th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
2 p.m.
Lord Higgins: My Lords, I am again grateful to the noble Baroness for the explanations of these regulations. I am in sympathy with her last point, the case for people working beyond the age of 59. However, the reaction to some of these proposals from people who had senior positions in business and then became redundant, when they were asked to go out doing relatively menial jobs, was rather unsatisfactory. On the other hand, I remember well from my experience of officials in the Treasury that a number of people retired and then came back with what were known as "retreads". That worked extraordinarily well.
My first question is a technical one. The noble Baroness did not say that she was going to take both these regulations and those following, hut I understand from what she said that that is so. The relationship between the two regulations is rather strange. As I understand it, the present situation is that no regulation can last for more than 12 months. Therefore, we have two regulations, one for one lot of 12 months and one for the following lot of 12 months. I may have misunderstood that—
Baroness Hollis of Heigham: My Lords, I am so sorry; obviously I gave an incomplete explanation. Had we not had some existing pilots running, there would have been one set of regulations covering all of the areas for 12 months, and we would have come back in 12 months' time to renew the regulations for a further 12 months. Because some of the areas that we want to go into are currently running some pilots that will not expire for a further three months, we need to break the range of pilots into a two-stage process over the course of this year. Both will be renewed, all being well, the following year, should Parliament agree.
Lord Higgins: My Lords, I was going to say that I understand that, but actually I do not. I looked at the explanation that was given in another place when this matter was debated. It seems to me that the purpose of the 12-month rule is to prevent the regulations being extended beyond 12 months. However, to do two lots of 12 months at the same time seems to me to get round that arrangement. My understanding is that the first regulations that we are discussing cover one 12-month period, and then the other covers a further 12-month period. Fine, I will need to think and read carefully what the Minister has just said, and if need be I will come back to her on that point.
I am not unsympathetic to the idea of encouraging people to work longer, but my second point is that one is encouraging them by imposing sanctions. Also, the pilot will be carried out in what the noble Baroness described as a random manner. I am somewhat doubtful—no doubt the noble Baroness has taken legal advice—as to whether random imposition of sanctions is compatible with the ECHR. Perhaps we need to consider that point.

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More generally, in the light of the previous debate, I have some doubts about the efficiency of the whole series of pilots. In the previous debate, the noble Baroness sought to offload the responsibility on to the Department for Education and Skills.
Baroness Hollis of Heigham: No, my Lords, I was merely responding to the noble Lord's inquiry as to why we had failed to produce robust pilots within the Department for Work and Pensions. I said that it was not the responsibility of our department. I should not want to be seen to be casting aspersions on any other department.
Lord Higgins: My Lords, it is very difficult to interpret the remarks of the noble Baroness other than as saying that the previous pilot introduced by the Department for Work and Pensions did not work. It is important that we get the technical aspects of these pilots right, because the previous pilot clearly wasted a lot of government time and money because it was not properly designed. We must hope that this pilot will be better designed. I imagine that the Government are using consultants for these pilots. Can she confirm that the consultants employed on the pilot we are now discussing are not the same as those who failed to act efficiently at the Department for Education and Skills?
More generally, on the substance of the matter, some independent research was carried out four years into the scheme that concluded that few clients progressed to take up specific 25 Plus opportunities—that is to say, subsidised employment or full-time education or training. Nor did many progress to follow-through. Most participants left the 25 Plus scheme at the initial advisory stage and a majority simply returned to JSA, which does not suggest that the system overall is working well.
Apparently, there were 360,000 starts in the pre-April New Deal 25 Plus programme, but only about 17 per cent entered unsubsidised jobs. With regard to the enhanced New Deal for Young People and Long-Term Unemployed People aged 25 Plus to the end of December 2003, only 24 per cent entered unsubsidised jobs, which raises the question whether those schemes are working cost-effectively. In particular, what do they cost compared with the cost of those individuals being on benefits?
As has already been said, we are up against time, but I hope that the noble Baroness can cover those points. I shall seek to work out her explanation of why we need two orders.
Baroness Barker: My Lords, I, too, thank the Minister for introducing the order. As I read it, I was reminded of a meeting I attended about two years ago. I went to see the work of an employment agency in the East End of London called Wise Owls. It is an employment agency for people aged 45 and over. I listened as the man who runs that small organisation talked with great passion and conviction about its work. He firmly said three things.
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The first was that the biggest hurdle of all that the people who came to him looking for employment had to get over was to get employers to see them. Once they did, their chances of getting a job were good, but their chances of getting employers to see them were low.
His second point was that he was adamant in his belief that training was not what was needed and that it was insulting and demeaning to many people to assume that the reason that they could not get a job was because they needed training. He made the valid point that many people who were being asked to go on computer skills training courses were the people who, for the previous 20 years, had written and developed the programmes to which they were being sent. Training was not a problem, the problem was simple ageism on the part of employers.
The third thing that he said was that it does not matter how much legislation one puts in place to overcome discrimination, it will never work until there is an economic driver to do so. The moment that there is a skills shortage, ageist assumptions will disappear.
As I thought about that and read the order, one particular matter came to my mind. Is the order or is it not another example of ageism in legislation? As I read it, it was not clear to me to what extent the order has been changed to meet the needs of people aged 50 to 59 and to what extent there has been a simple read-across from programmes for people of a younger age group. Young people may well need entirely different support to help them cope with unemployment.
The noble Baroness talked at length about personal support, self-employment support and motivational skills support but, as the noble Lord, Lord Higgins, said, citing the report, people who had been in senior positions in work were being offered employment opportunities and training that they found simply demeaning. When the pilot is evaluated, will the evaluation be confined to the number of people who find themselves in work or will it tell us about the types of employment that people find? Frankly, I can understand that someone who has held a senior level of employment who is asked to work at McDonald's may well consider that more of an addition to his problems than a solution.
I, too, want to focus on the question of sanctions. Does the noble Baroness believe that sanctions will work in the same way for this age group as they do for a much younger age group? Does the department consider that someone who is 54 years old and has some savings in the bank will feel the same about the same level of sanctions as someone who is 23 and has nothing?
I also want to know whether the health-related needs of some people in that age group have been taken into account; whether the department has considered the huge contribution that men and women in that age group make towards caring, and the effect of that. People in that age group care for both very elderly relatives and children.
Finally, I must tell the noble Baroness that I wonder whether the total effect of the orders will be that we knock back people who are already feeling vulnerable

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because of their age and impose sanctions on them when there are no such sanctions against employers who were ageist in their recruitment.
2.15 p.m.
Baroness Hollis of Heigham: My Lords, again, I am grateful to noble Lords. First, I shall turn to the points made by the noble Lord, Lord Higgins. In our debate on the previous regulation, I should have said that I appreciate the thoughtful and informed tone and contributions of opposition Members, because, if I may be so impertinent as to say so, they are asking exactly the sort of questions that we as a society need to ensure that we address in the right way.
Let me have yet another go at explaining why there are two sets of regulations. The reason that there are two sets of regulations before us today is not that they run for a year and then another year; it is because we cannot do the whole bundle at once. The reason that we cannot do the whole bundle at once for the first year, as we would otherwise, is that some of the areas currently have other pilots under way that would contaminate the results.
We must therefore have one set and, three months or so later, the second set. In an ideal world, spring cleaned with no other pilots, there would be one set of pilots and one regulation. Then we will come back in a year's time—as the noble Lord rightly said, pilots run for one year—to renew the regulations for both sets of territories: those contaminated, in statistical terms, by existing pilots and those that were not. Subject to parliamentary approval, we will seek to roll them both forward for another year. That is the explanation.
Lord Higgins: My Lords, now I think I understand it. But there is a 12-month rule that says that the order should not run for more than 12 months. I thought that the Government were proposing to break the rule by having a cap of 24 months. No, apparently they are breaking the 12-month rule by running it for 15 months.
Baroness Hollis of Heigham: No, my Lords. Let us say that there are eight pilot areas where the order will commence on date X and conclude 12 months later. There may be another 12 pilots that start three or four months later. They will also run for 12 months. Then, if Parliament so wishes, they will both be renewed.
The reason that we would seek to renew them is for the very real reason that was discussed for the previous set of regulations, which is that you need results to show the longer term outcomes of your intervention. It is not just that people go through the gate, which itself can be a six-month programme; they then need to go into work that is sustainable and then we need to see what the outcomes are. I genuinely believe that we could not have robust findings after 12 months. That is why we need the pilots for two years, because it would not be right and decent to seek to roll that out nationally if we were not confident that that was the right approach.
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Are these regulations compatible with the ECHR? I am assured by our solicitors that they are. Are they the same consultants? No, they are not. What goes on in that second stage? About three-quarters of people on jobseeker's allowance find work within six months; most of the rest find work within 12 months; those who have not returned to work within 12 months have found it difficult to re-enter the labour market. After 18 months you are often working with clients who have become detached from the labour market and possibly—perhaps for reasons of fear of discrimination by employers—have given up hope of re-entering the labour market. The regulations are an effort to intervene in order to rebuild people's attachment to the labour market and to extend it, as at present is compulsory for those up to the age of 49, to those between the ages of 50 and 59.
Why are we doing this? Because we think that people of 50 to 59 have much to contribute to society. It is in their interests and in the interests of society and employers. What will the cost be? The pilot will cost £3,172,000. It is expected to break even and produce a net reduction in benefit expenditure savings of £136,000 by December 2006, but we will conduct a full cost/benefit analysis which looks at wages, national insurance, tax, levels of pay and so on, over and beyond the mere benefit savings.
The noble Baroness, Lady Barker, was right to say that is not just a problem of what people come into the labour market with, but the attitudes of employers towards them. That is absolutely right. There are real issues here. It is precisely the concern that employers may discriminate against people, unseen and unheard, that explains why the Government have introduced their age positive programme to challenge employer practices and to promote the business case for recruiting and retraining older workers as part of an age diverse workforce. We are campaigning through employer champions, events, advertising, trade and press coverage, awards initiatives and so on. I am happy to write to the noble Baroness because that is a question that I pursued. If one is dealing with a mindset in which employers remain discriminatory it is very difficult for people over 50 to break back into the labour market. The age positive campaign, together with our codes of practice and the proposals in the Budget 2004 of our new profile campaigns on that, seek to address—I agree with the noble Baroness—what could be a real deterrent to older people.
The final question raised by noble Lords comes back to sanctions. Will sanctions work? I can put it negatively. We know that the voluntary arrangement does not work because only 12 per cent of people have gone on to the voluntary programme. We know that for people under the age of 50 the mandatory programme has not only worked but has been cost effective—or valuable—in terms of job outcomes. What we see in these pilots is whether the same mandatory approach improves the job prospects and employability of older people. If it does, that is very important. The noble Baroness will know as well as any of us that since the 1950s and 1960s the employment rate of those over 50 has been declining.

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We have to seek to reverse that, particularly as people are living longer, and to seek to avoid them entering their old age in the poverty that comes from having lived a long period of their lives on benefit. I believe that that should work. If it does not, the Government will have to reconsider their policies. The point about pilots is precisely so that we get a learning loop as we proceed. I hope that on this basis your Lordships will accept these regulations.
On Question, Motion agreed to.

Social Security (Intensive Activity Period 50 to 59 Pilot) (No. 2) Regulations 2004
2.24 p.m.
Baroness Hollis of Heigham: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the draft regulations laid before the House on 12 February be approved [10th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.

Jobseeker's Allowance (Amendment) Regulations 2004
Baroness Hollis of Heigham Baroness Hollis of Heigham rose to move, That the draft regulations laid before the House on 2 March be approved [11th Report from the Joint Committee].
The noble Baroness said: My Lords, the regulations are intended to reduce the numbers of jobseekers who reach long-term unemployment and increase labour market flexibility through the intensification of the jobseeker's allowance regime.
Compared with 1997, when half of all claims lasted for more than six months, now only a third do so. Two-thirds of people come off within six months. However, nearly 300,000 current JSA claimants have been unemployed for more than six months and further support is therefore needed to ensure that a greater number of claimants find work earlier.
At present around 60 per cent of people who make a claim for JSA leave benefit within three months. But thereafter the rate at which people flow off benefit declines with duration. Of those reaching three months, about half leave in the next three months, while of those reaching six months, about 45 per cent leave before reaching nine months.
So we know that once jobseekers have been unemployed for three months, it becomes progressively more difficult to find work. Since 1997, the Government have introduced a number of programmes, such as the New Deal, that have focused help on those who most need it. Those policies have been successful in reducing longterm unemployment. But we are now seeking to intervene at an earlier stage. In particular, we want to focus more activity on people who have been unemployed for between three and six months. The intention is that, by intensifying jobsearch earlier, fewer people will enter long-term unemployment.
The Budget report 2003 therefore announced a package of changes aimed at reducing the number of people who become long-term unemployed. At the start of the claim, the emphasis will be on increasing the amount of jobsearch: jobseekers will be asked to take three weekly steps to look for work instead of two. After three months the emphasis will shift to increasing both the quality and the quantity of jobsearch—first, by asking people to search more widely for jobs, in a geographic sense, and, secondly, by requiring weekly signing for six weeks. The introduction of weekly signing is possible under existing powers. Failure to comply with these measures without good reason could result in a jobseeker losing benefit.
I could explain what is meant by the steps and by the geographic outreach, but it may be that if your Lordships accept the push of these regulations that may be unnecessary, so I will sit down, and if they wish to pursue that further I will then give the rest of the speech. I beg to move.
Moved, That the draft regulations laid before the House on 2 March be approved [11th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, I suspect that is true of the Liberal Democrat Benches as well, that we understand the points which the noble Baroness thought it unnecessary to describe. There are only two points covered here—on the minimum number of steps, on the one hand, and the change in the travel allowances, on the other.
As for the travel allowance, can the noble Baroness tell us who pays the costs of the travel? What increased costs does she imagine will be incurred, if any. on changing from one hour travel to one and a half hours? It took me over one hour to get from Vauxhall Bridge to the House this morning, so I am not sure that that is an enormous improvement. The explanatory memorandum is very helpful, except under the heading, "Social Security Advisory Committee". It says t hat the regulations refer to the Social Security Advisory Committee on 3 December 2004, and that,
"a copy of the committee's report and the Government's response is available in the Library (insert reference to the Command Paper)".
I am not clear who is supposed to insert the reference to the Command Paper. It is rather oddly drafted. No doubt the noble Baroness can tell us. Is it the case that the regulations refer to the advisory committee on 3 December 2004?
Baroness Barker: My Lords, I too understand that noble Lords are eagerly anticipating the return of the Energy Bill and I therefore will be similarly brief. I should like the Minister to explain, whether on paper or today, why if somebody spends a considerable amount of time making two good job applications in a week that is deemed to be better than them doing three cursory ones in a week. Is the expectation that somebody's travel time will be an hour and a half rather than an hour a simple indictment of our public transport system or is there a rationale for it? Has the department taken into account the effect on family life? Many people in that situation are single parents.

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Has the department taken into account the impact of increased travel expenses? Were the regulations drawn up before yesterday's announcement of reductions in staffing? Will there be knock-on consequences such as the closure of Jobcentres? Has the difference between the availability of public transport in rural areas and urban areas been taken into account?
2.30 p.m.
Baroness Hollis of Heigham: My Lords, I think that we all feel under pressure at the moment, so I shall be as rapid as I can.
The Command Paper was No. 6145, and the noble Lord may wish to pursue the matter further. By steps, we mean not just newspapers but training opportunities and the like. If the noble Baroness wants me to write to her more fully about what we mean by that, I am happy to do so. Basically, we are trying to up the flurry of activity, so that people will make a job of seeking a job and not just do so in a perfunctory way.
We know that if we have not got people back into work by six months, it becomes increasingly hard to do so. We want to concentrate effort on the period between three and six months, including, if necessary, weekly signing-in, so that people will continually see an adviser or receive guidance. We must try to ensure that they do not become long-term unemployed and, therefore, dependent on benefit.
Noble Lords also pressed me on the issue of travel. At the moment, no one is required to travel more than an hour in either direction to find an acceptable job. Of course, many people travel far more than that. If someone in Birmingham is seeking a job in Glasgow, the department would expect Jobcentre Plus to help with their travel costs, as that distance is unreasonable and disproportionate. In the normal course of events, people should expect to meet the costs of travelling to work.
We are extending the geographical range over which we expect people to be able to travel in taking up a job. That is our purpose. Most of us may travel like that already.
Lord Higgins: My Lords, the Explanatory Note says that the regulations were referred to the Social Security Advisory Committee on 3 December 2004.
Baroness Hollis of Heigham: My Lords, I shall check the misprint.
The noble Baroness, Lady Barker, asked me whether the changes would be particularly disadvantageous to people living in rural areas, where public transport is less available than in cities. The average travel-to-work times in the UK in autumn 2002 were 35 minutes by bus, and 64 minutes by rail. The time taken is less in rural areas than in big cities, oddly enough. In the east of England, travel times by bus and rail were shorter than in central London. So, one cannot extrapolate too easily.
In 1993, 22 per cent of households had no car; now the figure is just under 10 per cent. Eighty-seven per cent of people now live within six minutes' walk of a
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bus-stop. That reflects substantial investment in public transport, particularly in rural areas, by the Government since 1997. Obviously, there will still be problems, in which case the jobseeker can raise them with Jobcentre Plus staff and their adviser. If appropriate, such problems could be regarded as a good reason not to accept a job, particularly if, for example, there was also a health problem.
I will write to the noble Baroness with a fuller description of the additional steps. It would take too long to do it now. I hope that noble Lords will accept the regulations.
On Question, Motion agreed to.

Employment Zones (Allocation to Contractors) Pilot Regulations 2004
2.34 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham rose to move, That the draft regulations laid before the House on 16 March be approved [12th Report from the Joint Committee].
The noble Baroness said: My Lords, I shall not speak formally to the regulations. I have had an indication that Members on the Benches opposite are happy with that. If noble Lords are content with the regulations, we need not trouble the House with further discussion at this point. I beg to move.
Moved, That the draft regulations laid before the House on 16 March be approved [12th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.

Energy Bill [H.L.]
2.35 p.m.
Consideration of amendments on Report.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 1:
Before Clause 1, insert the following new clause—
"Part A1
UK ENERGY STRATEGY; SECURITY AND INTEGRITY OF SUPPLY
"SECURITY AND INTEGRITY OF SUPPLY
The Secretary of State shall have a duty to ensure the integrity and security of electricity and gas supply."
The noble Baroness said: My Lords, this is a totally new amendment. It is a simple amendment that I, my noble friend Lord Jenkin of Roding, the noble Lord, Lord Ezra, and the noble Baroness, Lady Miller ofChilthorne Domer, tabled because of our disappointment at the lack of any assurance in the White Paper, in our debates in Grand Committee or anywhere in the Bill that there is a clear government policy on the security of the future supply of electricity. Over the past year or more, there have been numerous debates and questions on the subject in your Lordships' House and in the other place. There has never been a clear answer.
Many of your Lordships will have seen the television programme last week. I sincerely hope that the Minister watched it carefully. In it, participants repeatedly asked who was responsible for the security and continuity of the electricity supply—in other words, "Who is responsible, if the lights go out?". Answer came there none from the Government, either in the programme itself or in the discussion that followed, in which the Government declined to participate.
I entirely agree that the Government are not at the beck and call of any TV producer who asks them to appear on a programme. Secondly, the scenario set out in the programme could have been described as a little hyperbolic. However, the fact is that nobody seems to accept responsibility for ensuring that there is no breakdown in one of the three most basic of the essential services required in a civilised and advanced country: fuel, especially electricity.
I remind your Lordships that 37 per cent of our electricity is generated from gas. By 2020, we will generate 57 per cent of our supply from that fuel. At the same time as our dependency on that source rises by a third, the amount of power generated by coal will have dropped from 35 per cent to 16 per cent. Nuclear power will have fallen from 24 per cent to 16 per cent. On the other hand, the Government hope that generation from renewable sources in particular will rise from 3 per cent to 10 per cent. We hope that that will be the case, but, even assuming and hoping that that optimistic target is met, one need not be a mathematician to realise that renewables cannot fill the gap caused by the loss of nuclear and coal-fired power stations.
Is it wise for the Government to rely mainly on gas imported from unstable sources such as Russia, Iran and Algeria, along delivery systems that are possible targets for terrorists or are subject to the political whim of governments, as we saw in 1973, when a huge rise in prices was imposed by Middle East oil suppliers? Closer to home, we need only consider what happened when the electricity interconnector between Northern Ireland and the Republic was cut by the IRA in the 1970s. I heard Mr Jeremy Nicholson of the Energy Intensive Users Group claiming that we could rely on Norway and Holland as sources for gas. In doing so, we would, in due course, be competing for supplies with other major users such as Germany.
Then there is the Government's almost evangelical belief that wind power alone might save the situation. Even the most fervent supporters of wind power, which undoubtedly has an extremely important part to play in reducing CO2 emissions, concede that it is erratic and cannot always produce what we hope. At best, a windmill will produce only 30 per cent of its notional capacity, for no reason other than that the wind does not blow continuously. Sometimes, it blows in the middle of the night, when the demand is simply not there.
While tinkering around with marginal solutions, the Government ignore the fact that new power stations are needed to replace the worn-out ones that will go
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out of service or will become increasingly unreliable over the next 10 to 15 years. That is a significant timescale. It is almost the same as the lead time to build new power stations, what with planning applications and the inevitable public inquiries.
In that case, who is responsible for keeping the security of supply? "Not us", says Ofgem. In the discussion following the television programme it was made abundantly clear on behalf of the regulator that Ofgem's role is to oversee the market on behalf of consumers and Ofgem cannot make the industry build new power plants. It was also conceded that Ofgem's policy of forcing down prices to the current benefit of consumers and the Government's policy of trying to reduce inflation, was nevertheless making it uneconomical for generators to build new power stations whatever fuel they wanted to use.
The law of unintended consequences applies to this policy because not only are no new power stations planned, much less built, but uneconomic ones are being mothballed with the consequent loss of spare capacity to meet a sudden emergency such as those which happened in North America, Italy and London last summer.
As I said before, if it is not Ofgem's responsibility and if for the reason I have just given it is not the responsibility of the generators to build uneconomic plant, then who is left? Only the Government.
We cannot have a policy predicated mainly on imported gas. Unlike France and Germany who have six to eight weeks' supply constantly in reserve and we have none—which is another matter which the Government should be looking into—we cannot rely only on windmills. As I pointed out before, apart from their unreliability, as the Royal Academy of Engineering in its recent report The Cost of Generating Electricity stated, the cost of generating electricity by offshore wind farms is substantially above the cost of either gas turbines or nuclear sources. That cost is 2.3 pence per kilowatt compared with 3.7 pence per kilowatt for onshore wind and 3.7 pence for offshore wind.
Anticipating a possible query, the academy's study group confirmed that their costing included both the cost of new, modern, simplified nuclear power stations and their eventual de-commissioning. Nowhere in the debate have we discussed the cost of the fuel we will have to import. That is extremely important. Where is the money to come from? If the cost of lighting and heating every home and factory is to come from our national income, we will eventually finish up like a third world country. We will be unable to afford what we currently consider as the normal basic requirements for the standard of life which our citizens quite rightly demand.
I do not want to take up more of our very restricted time in covering all the arguments about requiring the Government to take a clear and active line on a subject on which our whole future as a leading world economy depends. The truth is that somewhere along the line we have to say who is responsible for sorting this matter out.
We have a Government who, whenever anything seems to go wrong, blame everybody except themselves—sometimes even the secretaries in their private offices. "Not my fault, guy" is the slogan over the door, I believe, of every Secretary of State. Nobody ever resigns unlike the fictional Ministers in the television programme. I do not deny that we have a Government with plenty of energy policies, but energy strategy is very much in short supply due entirely to ministerial dithering.
The purpose of this simple amendment is to concentrate the Government's mind exactly on what responsibilities they have to this country, with no ifs and buts, to see that the lights continue and that we have security of supply. I beg to move.
Lord Jenkin of Roding: My Lords, I very much support the remarks made by my noble friend Lady Miller of Hendon. I do not want to duplicate what she said. I, too, watched the television programme last week and found it a compelling piece of television. As the producers rightly said at the beginning and emphasised again at the end, it was a work of fiction because the situations envisaged in the programme have not yet happened. I am not alone in regarding it as very plausible fiction.
There is indeed growing concern in the country about the future of our energy supplies. We are witnessing the approaching end of the North Sea oil and gas industry on which we have been relying for the past quarter of a century or more. Coal and nuclear power stations are reaching the end of their lives. As regards coal where stations are not reaching the end of their lives, the European Union large plants directive may well make them wholly uneconomic.
There was no fiction about the fact of our increasing dependence in the television programme on gas from unstable regimes coming through very long pipelines. We shall be at the end and other countries will be drawing off the gas before it reaches us. There is a widespread view that this creates new energy dangers for the United Kingdom. I could quote a very large number of authoritative reports, but I shall only quote from one, and that is from an adviser whom Ministers in the DTI know well. He is Professor M A Laughton, Fellow of the Royal Academy of Engineering and Emeritus Professor of Electrical Engineering at the University of London. He has also been an adviser to the Select Committee in another place. In his report, which has a somewhat hackneyed title—Power to the People—he says at pages eight and nine:
"It is essential that Britain's energy policy is reviewed as a matter of urgency with the primary remit of ensuring security of power supplies. Against a programme of retirements of conventional plant, the escalating dependence on imported gas and with intermittent renewable having limited ability to contribute to security, significant questions are raised concerning the increasing vulnerability of the UK electricity supply industry".
As my noble friend has said, there is a widespread view that no one is actually in charge of this. It is not the regulator, which has been stated often, and not the industry. The industry will certainly invest if it sees
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the stable prospect of profitably operating, a point properly made by the representative of the industry in the television programme. Who else, apart from the Government?
It may be said that our amendment states the obvious. The fact is that the Government have to be responsible. In the discussion between the politicians at the end Jeremy Paxman asked where the buck would stop. They all looked at each other and said that it will stop with the Government. They will be blamed, but it is far from clear that they accept that it is their responsibility.
My mind goes back to the debates which the noble Lord, Lord Ezra, will remember as regards the Utilities Bill in 2000. We were seeking to amend Clauses 9 and 13 of the Bill which set out the objectives of Ofgem. In Committee we sought to add the words that Ofgem,
"should have a duty to secure a diverse and viable long-term energy supply".
That was fiercely resisted by the Government. The matter was debated briefly at Report. There is quite an interesting quotation. The noble Lord, Lord McIntosh of Haringey, was handling the Bill. He was concerned to say in his speech that it was not a matter for Ofgem in the Bill. He said,
"amendments such as this are a distraction and would serve to confuse rather than enhance the framework of obligations and duties under the legislation".—[Official Report, 5/7/00; col.1497.]
That was the Government's line. But in the course of the debate the noble Lord, Lord McIntosh, said one very interesting sentence, at col. 1497. He said:
"However, security of supply is indeed the responsibility of government as a whole".
One wonders why that has not been trumpeted from the rooftops by the Government. Every time the security of supply is raised as an issue of concern, one would have thought that the words of the noble Lord, Lord McIntosh, speaking from the Government Front Bench, would have been strongly relied on. In fact, we went on at Third Reading to insist that we included the words,
"to secure a diverse and viable long-term energy supply".—[Official Report, 11/7/00; col. 137.]
We divided on the amendment and it was carried by three votes in this House. However, the Government decided, as they were nearing the end of the summer term, not to return to the matter. Therefore, those words are in the Utilities Act 2000. New Section 5, which deals with electricity, states:
"The Secretary of State and the Authority shall carry out their respective functions under this Part in the manner which he or it considers is best calculated

(a) to promote efficiency

(b) to protect the public from dangers"—

and (c) is our amendment
(c) to secure a diverse and viable long-term energy supply".
As we heard, successive chairmen of Ofgem have made it perfectly clear that they do not accept that duty. They cannot tell any industrialist to invest in enough plant and machinery. Their job is to protect the consumer. Indeed, the previous chairman, Callum McCarthy, told me that, because the Government had

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not wanted that amendment, he did not feel that he had to pay too much attention to it, notwithstanding the fact that it is in the Act.
Must not the Government accept the responsibility for, in the phrase used by my noble friend, "keeping the lights on'"? The amendment says that that is exactly what should happen. How will it be done? Perhaps this is not the moment to be going into such matters in detail, but last week, the Trade and Industry Select Committee in another place produced an interesting report, Resilience of the National Electricity Network. The committee argued that the,
"Regulator's concern to reduce costs to consumers should now be tempered by a greater emphasis on ensuring that electricity network owners have the financial resources necessary to secure a viable long-term electricity supply".
The committee was looking at the question of transmission and distribution, but exactly the same argument applies to the generators of electricity. If the workings of the regulator do not enable the prospect of profitable operation to be seen by industry, industry will not invest.
If the Government are going to carry the can for major disruptions, as seems to be widely recognised in political circles, they should have that firm responsibility placed on them, not necessarily to do it themselves—I totally accept that the other players on the field may actually have to act—but the Government should have the responsibility for creating the conditions. They should, as suggested by Paul Colby, who was speaking on behalf of the generating industry, create the framework in which the things that are needed may happen.
I can see that my noble friend Lord Tombs is pitching to his feet to give us the benefit of his skilled advice, so I will not quote from his powerful speech in this House on 7 January. I believe that the Government should now stand up and say quite clearly, like the noble Lord, Lord McIntosh, "We accept this responsibility". That is all this amendment requires, and I cannot see why on earth the Government should want to resist it.
Lord Ezra: My Lords, I support the amendment moved by the noble Baroness, Lady Miller of Hendon, which has received such powerful support from the noble Lord, Lord Jenkin of Roding. The noble Baroness made it clear that we face a serious and uncertain situation in our energy supplies. For the first time in our industrial history, we shall move from the self-sufficiency in energy previously provided by coal—that noble industry—and subsequently by gas and oil from the North Sea. We are now moving towards a situation in which, inevitably, we shall be subject to more and more imports and therefore uncertainties. In that situation, it is obviously essential that we are clear about where responsibility lies with regard to security of supplies, especially of gas and electricity. The Energy Bill provides the opportunity for making that clear.
I have been among those noble Lords who have asked questions about where the ultimate responsibility for ensuring the security of supply lay. My impression from the various questions that I and other noble Lords have asked is that responsibility is divided in an uncertain manner between the Secretary State, the regulator, the
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network operators and the companies, all of whom have some responsibility. However, the meshing together of that and the ultimate responsibility have not so far been made indubitably clear. This simple amendment does that.
This is an Energy Bill. We are unlikely to have an opportunity for making the matter clear for a long time ahead. Therefore, I very much hope that the Government will accept the proposition that we should seize this opportunity and make the matter clear beyond any doubt whatever, in view of the uncertain energy supply position that we face in the years ahead.
Lord Maclennan of Rogart: My Lords, I rise to support the amendment, which is necessary. There has not been a statutory statement of the position since the Government produced their White Paper, which did more to confuse the lines of accountability and responsibility than I would have thought possible. The White Paper, in examining the question of responsibility, clearly sought to fudge the issue by including in the ascription of responsibility for energy reliability the role of Ofgem. They have subsequently not been prepared to indicate where the line of demarcation of responsibility lies between Ofgem and the Government. That is wholly unsatisfactory and has been compounded by answers in this House given by Ministers who have, when asked to make predictions, given such vague answers as, "That is a matter for industry or the regulator to decide". It is always a matter for others than the Government. I t is up to us to make it entirely plain—and if the lights go out it will be made plain by the public—that the buck stops with the Secretary of State. This is a simple amendment and it fully deserves our support.
Lord Tombs: My Lords, I support this amendment, because it is arguably the most important one before us. I will confine my remarks today to electricity, because that is where my experience has some relevance.
There is no coherent view of how electricity will be supplied in five or six years' time. Ofgem operates within what it sees as its remit in operating a few months ahead—very short-term regulation—and makes no provision in its tariffs or by any other means to encourage capital investment. Both Ofgem and the Government say that market forces will deal with such matters. They say that almost as a childlike prayer. They certainly do not say it on the basis of any rational examination. I will put forward a childlike view in the hope that the Government may take it on board.
Market forces consist of investors and companies. That is what we are talking about. If we think they will solve the medium term—that is, five to eight years ahead—on the basis of short run marginal costs, then we are being very unrealistic. For them to invest in new plant on the basis of short run marginal costs means that they will dilute their earnings. It is as simple as that. I do not understand why the Government and Ofgem cannot see this. I suspect they do see it, but do not want to admit it.

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I think this is far too important a topic to be allowed to go by default. I have tried in two previous debates, which I have sponsored, to raise this question, and on each occasion I have met with very unsatisfactory, evasive answers of the type I have described as "childlike". There is lip service paid to future security of supply, in that National Grid Transco published a table of the extent by which future generation capacity will exceed demand for the next seven years. But that table is anecdotal. It is what the company says it might do. There is no commitment to doing it. It does not make any provision for the retirement of 40 year-old generating plant, and makes assumptions about interconnections which are not yet built, so it is of little real consequence. I have made that point again and again with, I regret to say, no effect.
This is such an important topic that I support this amendment, not to have somebody to pin the blame on but in the hope that it might concentrate the department's attention on the problem and make those concerned examine it, try to identify it and do their basic duty of dealing with it. The problem is that we do not have anyone effectively in control of energy policy. We have a number of departments dabbling, and a number of advisory bodies and committees also making recommendations that I have never seen. This needs to be pulled together and examined in a positive way. If not, the Government will bear a grave responsibility.
3 p.m.
Lord Whitty: My Lords, it is important we have this debate at the beginning of Report, because in Committee there were anxieties about the security of supply. Let me make it quite clear that it is a central objective of government energy policy, one of the four key policies outlined in the energy White Paper, that energy supply needs to be maintained, and the responsibilities of those operating in the market at a political and regulatory level must reflect that.
The amendment, I will argue in a moment, is unnecessary, because of the existing legislative position. Indeed, the noble Lord, Lord Jenkin, has been describing how the opposition amendment managed to convince the House. The Government, having reflected on it, decided to accept that position. It goes a very long way towards meeting the objectives of this amendment, and he is rather undermining his historic achievement in this respect.
Lord Jenkin of Roding: My Lords, the point that I was making is that the statement that I quoted from the noble Lord, Lord McIntosh, is still not in any legislation. It merely rests on his assertion. In fact, as the noble Lord, Lord Tombs, my noble friend, and others have said, I see the Government as having been trying to shuffle it off. They have not accepted that point. That is why it has got to go in this Bill.
Noble Lords: Hear, hear!
Lord Whitty: My Lords, the Electricity Act already, partly as a result of the amendment to which the noble Lord, Lord Jenkin, refers, states this pretty clearly. Legal responsibility for energy security is shared by the Secretary of State and Ofgem. The Gas and Electricity Acts require both the Secretary of State and Ofgem to exercise all their functions having regard to the need to secure that all reasonable demands for gas and electricity are met. In the Electricity Act there is also the reference to which the noble Lord, Lord Jenkin, has already referred,
"to secure a diverse and viable long-term energy supply".
which is an obligation both on the Secretary of State and Ofgem. They have complementary roles in this respect.
Lord Tombs: My Lords, the real point, it seems to me, is that the responsibility is not unique. It is shared, at best, between the Government and Ofgem. The Government are in charge of Ofgem, and they are responsible for its terms of reference, which presently preclude it from looking at the need to encourage investment. It is no good trying to say it is already there. If it is there, it is not working. It is not working because the Department for Trade and Industry is not accepting its responsibilities. That is why there has to be a categorical requirement for that to be done.
Lord Whitty: My Lords, the point of this amendment is to write a provision into this Bill which I am arguing is already, in effect, in the Electricity and Gas Acts. The responsibility already rests on the Secretary of State. Responsibility also rests on Ofgem, which is the chief regulator of this market, to ensure that the role, which is a statutory one, is exercised in order to achieve this objective.
The noble Lord, Lord Jenkin, referred to conversations with and statements by the chairs of Ofgem, but the fact remains that Ofgem is clearly under a statutory responsibility to carry out its role in relation to the duty to ensure effective security of supply. I therefore do not think this is a legislative issue between us. I think that there is an issue between us; namely, that of how the Secretary of State exercises those powers and what are the mechanisms for the Secretary of State and Ofgem—and, indeed, the private sector—to exercise their roles in order to secure security of supply.
In a sense, for those of us with long memories, I find myself in a slightly bizarre position in that I am here saying that the main mechanism for us delivering security of supply is a highly regulated market and one that is subject to very effective guidance from the Secretary of State; but, nevertheless, it is a market solution. However, the noble Lord, Lord Jenkin, appears to be veering towards what I might call a "Stalinist solution" whereby there is a requirement on the Secretary of State to prescribe what the balance of sources of electricity supply—what the level of

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investment should be many years in advance of the electricity provision, and so forth—is likely to be.
The combination of a strong regulator, strong guidance to that regulator and signals to the industry from the Government do deliver a flexible system that ensures security of supply.
Lord Jenkin of Boding: My Lords, the Minister is engaging in fantasy. In its first two or three years, Ofgem interpreted its mandate to protect consumers from high prices so far that it drove one generator after another out of business. British Energy was only one where the Government had, in the end, to pick up the tab. It made Drax uneconomic and drove TXU into administration. There were also a number of others. Ofgem did not see this as its role. I had the argument with the former chairman, and he said "No, it is not for us to tell companies whether they should invest or not". The Minister is deluding himself by imagining that that is the way it works.
Lord Whitty: My Lords, I am not saying it is the role of Ofgem to determine what investment should be required of the private sector in order to deliver a particular pattern of electricity supply. Ofgem's role—that of all government bodies with a role in relation to the DTI—is to ensure that the market is sufficiently guided and regulated to deliver the capacity that is required.
Perhaps I may take a recent example, which is certainly not fantasy. It was true that in about July there were strong anxieties about the margin of capacity expressed in this House, and elsewhere, and the excess margin of supply fell to about 16.5 per cent. This is higher than many other countries, but we have normally assumed that we need at least 20 per cent. National Grid Transco, in accordance with the way the regime works, indicated that it would bring more capacity online and very soon; indeed, within a matter of months. The margin of capacity rose to over 21 per cent. That is exactly how the market should work.
Lord Tombs: My Lords, we are continuing with delusion. I have heard this said three times in the past week by Ministers, boasting about the fact that something like two megawatts of mothballed plant was restored within two or three months. That is a short-term reaction. It is not a capital investment decision. It is not a construction decision. It is not a commitment to future resources. There is not much more mothballed plant available. You cannot go on staggering from one crisis one year to the next one next year. It takes seven years to build a decent sized power station, while a nuclear one would take a great deal longer. Nothing is being done. If the Minister cares to look at the forthcoming seven-year statement from National Grid Transco—I have not seen it yet; I am predicting what it is going to say—he will see that the commitment to future plants has vanished.
Lord Whitty: My Lords, I fully accept that there are signals, and decisions that have to be taken long-term or short-term. My point is that the mechanism worked in
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relation to what appeared to be—or what was proclaimed by many critics to be—a short-term margin problem. The market clearly worked in that respect. There are of course long-term effects of what the Secretary of State says, dealing with the longer term problem, and what is laid down in the energy strategy and the energy White Paper.
The noble Lord will find that, in the short to medium term, there is no problem about the capacity margin. In the longer term, there is a significant amount of new capacity coming on stream. The noble Lord may say that that is still not enough, but those market signals will indicate when investment in new plant is both needed and economically viable, in so far as the market—or anyone—actually identifies a potential shortfall. There are several projects that already have the necessary consent and which will no doubt commence when the commercial position is right. They will be encouraged in so doing by the way in which the Secretary of State and Ofgem operate their functions. New capacity is already under construction at Immingham and Spalding, which will increase the margin.
There is continuous monitoring of the market. The Joint Energy Security of Supply Working Group operates between the DTI and Ofgem and reports to the Secretary' of State on the assessment of the requirements of likely demand and supply of electricity and energy generally over the forward period. Its reports are publicly available. At the end of the day, the Secretary of State has the responsibility, should alarm signals begin to ring, to ensure that the mechanism works and signals are given in the right direction, to ensure that that capacity comes on stream. I am not shirking that issue.
Lord Ezra: My Lords, the Minister has come to the point of saying that the Secretary of State ultimately must decide. That is all that the amendment says, so why not let us get it into the Bill so that there is no misconception anywhere on the subject'?
Lord Whitty: My Lords, the point I am making is that the provision is already there in the electricity and gas Acts. The problem is not whether that responsibility should be there or not, because it already is there. The problem that noble Lords have voiced, which they voiced all through Committee stage, is that they do not believe that the mechanism that we have in place to ensure that that responsibility is carried out is the correct one in a large number of cases, because it is not at present reflecting a requirement for new nuclear energy. That is a difference of substance, not a difference of powers or legal responsibility.
Baroness Miller of Hendon: My Lords, the Minister is saying that the provision is already in the Act, but could he tell us where it is? Is he talking about Clause 3 in the

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Electricity Act 1989? That shares the responsibility that he mentioned before and which we said was not the same thing as our very simple amendment requires.
Lord Whitty: My Lords, it shares the responsibility because both the Secretary of State and Ofgem have direct statutory responsibilities in that area. Therefore, it has to share the responsibility.
Baroness Miller of Hendon: My Lords, they do not.
Lord Whitty: My Lords, they do. Ofgem is established in statute and the Secretary of State has certain powers in statute. Taken together, they are responsible for the delivery of security of supply.
Baroness Miller of Hendon: My Lords, that is a point of disagreement between the Minister and other noble Lords who have spoken. But if that is so and it is already there, the Government clearly have no problem with it, and the only problem is that the Government have to accept our amendment.
3.15 p.m.
Lord Whitty: My Lords, the general principle of legislation is that when legislative powers, responsibilities or duties already exist, there is no point in another Act repeating them. If the noble Baroness wants to argue that every Act should repeat everything that is in a previous Act, this House will be in business for a very long time, and the number of amendments that will have to be introduced will be rather more than the number she was complaining about earlier.
The essential point is that that responsibility already exists, but it is a responsibility in part shared with Ofgem, which also has direct statutory responsibilities.
Lord Tombs: My Lords, this seems to be continuing the same pretence. The Government have an agency in Ofgem, which it instructs. It follows therefore that the responsibility lies with the Secretary of State, whose agent Ofgem is. I cannot see why the Government cannot see that. It seems to me to be on a par with their attachment to market forces, which I must say is very strange from a Labour administration. I have never heard any political party argue quite such a blind faith in market forces.
Earl Attlee: My Lords, may I take this opportunity to remind the House that short questions of elucidation to the Minister are very effective, but also compliant with the Companion?
Lord Whitty: My Lords, I thank the noble Earl for that clarification.
I am not expressing a blind faith in market forces; I am saying that this is a market solution, subject to the statutory powers and responsibilities of the Secretary of State and the statutory powers of the regulator. Because we have an independent regulator, it is separately embedded in legislation. In that sense, the
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responsibility is shared. As I said in response to an earlier intervention from the noble Lord, Lord Tombs, if the joint surveillance committee reported concerns to the Secretary of State, it would clearly be the responsibility of the Secretary of State to take action. But also in statute are her responsibility and that of Ofgem to conduct their affairs to ensure that that contingency and danger do not arise. That is already clearly in statute.
To accept the amendment would do two things. For one thing, it would accept the rather alarmist assessment of our energy position. After all, the fact that we are a net energy importer puts us only on par with most members of the G7, which have been net energy importers for decades and in some cases for centuries—well, perhaps not centuries, but certainly decades. If managed properly, that is not a source of vulnerability. Either we are succumbing to unnecessary scares, both short term, as has been expressed here over the past few months, and long term, or we are simply trying to repeat something that is already clearly there in legislation. Neither would be a sensible decision for the House to take, so I should like the House to reject the amendment.
Lord Maclennan of Rogart: My Lords, it seems from what the Minister has said that he has confounded the existing confusion. It is not clear from what he has said about earlier statutes that he is acknowledging that the Cabinet Minister responsible for energy, or any other Cabinet Minister, has an over-riding responsibility for security of supply. Instead, he seems to be enunciating a position that Parliament has curtailed in some way, to the extent that it has delegated the responsibility for regulation, the ultimate duty to provide for security away from the Secretary of State. With respect, that is like suggesting that the security of the Tower of London rests in the hands of the Yeomen of the Guard. It is not at all an answer that will give reassurance to those concerned about the substance of the issue.
The deliberate evasion of the case, which we have witnessed this afternoon, is frankly puzzling if it is not to be interpreted as an attempt to pass the buck for future failures of supply to some body other than the Government themselves. However they may try to do that, they will not do it with the assent of the House.
Lord Davies of Oldham: My Lords, I hope that that is the last speech this afternoon that masquerades as an intervention for a short elucidation of what the Minister is saying. This is Report stage, not Committee, and we cannot have long speeches intervening on the Minister.
Lord Whitty: My Lords, this will be my final go at trying to explain. In statute, Parliament in its wisdom, and with the support of all parties, has given certain direct statutory responsibilities to Ofgem. The legislation requires Ofgem, among other things, to exercise those functions with regard to the necessity of securing security of supply. The Secretary of State—the Secretary of State is a collective term, as noble Lords will recognise—also has responsibilities. He

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cannot have a completely unqualified responsibility if there are direct, statutory responsibilities laid upon Ofgem.
Clearly, in the circumstances where a serious problem arose or was anticipated, the Secretary of State would in reality have the primary responsibility for doing something about it. But it would have to be a situation where the operation of the system as envisaged by statute had not worked. We believe that the operation that is envisaged in statute, augmented by the statements of government strategy in the energy White Paper and elsewhere, will work. Within that structure Ofgem does have certain responsibilities to exercise. Therefore, it cannot be said that the Secretary of State is responsible for everything without qualification.
Of course, politically the Secretary of State is almost always responsible for everything. But Parliament in its wisdom has by statute given some responsibilities to an independent regulator, and rightly so. To accept this amendment, in a way which undermines the independence of the regulator, does not seem to be sensible, particularly given that the main point of the interventions the responsibility of the Secretary of State—already exists in statute. This is not an exercise in buck-passing. It is an exercise in recognising how the system works, how Parliament has determined that it will work and what is already reflected in the Energy Acts and the Gas Acts.
Baroness Miller of Hendon: My Lords, clearly the noble Lord and Members on this side of the House do not agree. The amendment that we have tabled is simple and straightforward:
"The Secretary of State shall have a duty to ensure the integrity and security of electricity and gas supply".
I should have thought that the Government would want to have that. I can assure the Government that if people sit in the cold and dark they will not blame any of the divisions that the Minister talked about; they will blame the Government. Therefore the Government should take the responsibility. I wish to test the opinion of the House.
3.23 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 119; Not-Con tents, 84.
Resolved in the affirmative, and amendment agreed to accordingly.
3.34 p.m.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 2:
Insert the following new Clause—
"ANNUAL REPORTS UNDER SECTION 1 OF THE SUSTAINABLE ENERGY ACT 2003
(1) In addition to the matters specified to be included in the annual reports required under section I of the Sustainable Energy Act 2003 (c. 30), the reports shall contain information on the development of new energy sources including, but without prejudice to the generality of those words, energy derived from—

(a) clean coal technology

(b) biomass

(c) biofuels

(d) fuel cells

(e) photovoltaics

(f) wave and tidal generation

(g) hydrogeneration

(h) microgeneration and

(j) geothermal sources.

(2) The information to be given shall describe any research, development and demonstration work done in the reporting period on each of the energy sources covered.
(3) The annual reports shall set out what is being done by the Government, by government agencies, by UK research establishments, by UK Universities and by industry to ensure that the UK retains and expands, if necessary, the scientific and engineering expertise and the resources to develop effectively sources of energy enabling the UK to avoid undue reliance on imports and if the decision is taken to develop any other energy source or technology, including nuclear, the UK will have the ability to do so.
(4) The annual reports shall set out what is being done by the Government, by government agencies, by UK research establishments, by UK Universities and by industry to ensure demand is reduced and efficiency is increased in UK energy supply.
(5) Information given under this section shall exclude any information for which commercial confidentiality, within the meaning of section 43 of the Freedom of Information Act 2000 (c. 36), is claimed and upheld.
(6) This section shall apply to any annual report published after the first day appointed by the Secretary of State under section 169(2) of this Act."
The noble Baroness said: My Lords, this amendment is in my name and that of my noble friend Lord Jenkin of Roding. It is also in the names of the noble Lord, Lord Ezra, and the noble Baroness, Lady Miller of Chilthorne Domer. This amendment serves a similar purpose to the previous one. It relates to the Government's responsibility for ensuring security of supplies. It approaches the problem by requiring the Government to make specific annual reports on the progress—or otherwise—being made on the development of new energy sources. The Government have plenty of policies about energy. However, they are critically short of strategies to carry those policies into effect. With all the vacillation in which the Government are engaging, time is slipping away. We are rapidly approaching an era when for the first time in our long history, we will cease to be self-sufficient in the fuel to heat and light our homes and to power our factories. I do not speak of petrol and diesel fuel of which we have had our own supplies for only a comparatively short while. However, there too our resources are finite.
I shall not repeat the litany of dates when our coal will be finished and our gas and nuclear power gone as well. The Government are failing to take advantage of the short time that we have left before we are utterly dependent on unstable regimes such as those in Iran and Algeria, for the majority of our vital fuel supplies. Supplies from the Caspian Sea area will have to travel a long and expensive way through pipelines vulnerable to sabotage by terrorists. That has already happened to pipelines that Iraq depends on for its vital oil exports.
We need to safeguard our ability to live the normal life of an industrialised first-world country and not to descend into the regime endured by the Eastern Bloc until very recently and from which they are only just emerging. Almost certainly the Government are relying on supplies of gas. While they are also encouraging heavy wind power investment which as your Lordships know is only an intermittent and unreliable source, there are many other resources that have to be exploited and not neglected. Over these the Government are dragging their collective heels. In some instances they are positively ignoring or refusing to support other sources.
I invite the House to look at the list of nine potential sources of fuel in subsection (1) of my new clause—it contains quite a menu. One of those listed is clean coal technology. Far from encouraging this technology in which this country is a world leader, it is withering on the vine. I shall not take up our limited time in discussing all the nine fuel sources, but if everything goes perfectly well, the contribution of these nine sources will make only a comparatively small dent in our future fuel requirements, albeit a very important one.
The Government must not allow those sources to be neglected and the reporting requirements in this clause will make sure that they are not overlooked. On the basis of the Government's own optimistic estimate, renewable sources will make just a 10 per cent difference to our Kyoto commitments by 2010. It is important that a close

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eye should also be kept on progress—or lack of it—that is made in the exploitation of other renewable fuel sources. That is the reason why we have tabled this very important amendment. It will facilitate monitoring of the progress—or otherwise—in respect of the Government's policy on renewable energy sources.
In the same way, it is no less important that research into nuclear power should be kept under continual review so that the essential skills and this country's expertise as a world leader are not lost. Our scientists should not be compelled to take part in a brain drain to continue their work. The Government frequently talk about "keeping the nuclear option open". They are paying only lip service to the concept because it is perfectly obvious they are trying to kick the topic into the long grass. Or they are frightened to grasp the nettle. Your Lordships can pick whichever metaphor you think is better.
In Grand Committee, I proposed Amendment No. 12, which said:
"Within five years from the passing of this Act, the NDA shall submit a plan … to the Secretary of State on the feasibility of building and commissioning new nuclear power stations to replace those becoming or likely to become obsolete within the ensuing fifteen years".—[Official Report, 15/1/04; Col. GC 185.]
The Minister did not really understand the plain words of my amendment. It is clear that he did not really understand what my amendment said. Omitting some irrelevant words, he said in reply:
"The NDA has been given the crucial … task of carrying out the secure … clean-up of our nuclear legacy … The … estimated time-scale is 100 years. The noble Baroness suggested that after the NDA had done that, it might like to move on to something else."—[Official Report, 15/1/04. Col. GC188.]
My Lords, I suggested no such thing. I did not suggest that the NDA should wait 100 years. I suggested that, using its expertise, it should prepare a plan within five years to cover the situation for the ensuing 15 years. I do not suggest for one moment that the Minister deliberately misconstrued what I was proposing. However, it is perfectly clear that he did not understand what I was saying. I shall try and explain it again. I am not—I emphasise this—suggesting that the Government should commit themselves to a policy of new nuclear build which they clearly do not wish to do. I am just asking that as a part of—in the Government's own words—"keeping the nuclear option open", they make sure that a nuclear policy is constantly under review. This will be done, in the words of proposed new subsection (3), by ensuring that the Government and their agencies and the United Kingdom research agencies and universities maintain a degree of interest—to use the mildest word I can—in the topic of nuclear power and that the Government include in their annual report the current state of play of all these energy sources.
I repeat that I am not asking for anything more than that the issue should be kept under review. I stress emphatically that this is without any commitment by the Government to any future course of action. All they have to do is review the energy sources. As the Minister, in rejecting my previous amendment, suggested that the NDA would either be too busy to keep an eye on the future potential revived nuclear
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power industry or would not be capable of doing two things at once—cleaning up the present nuclear legacy at the same time I am proposing simply that we hand it straight back to the Government who can either do it themselves or find someone else to whom they can delegate this watching brief.
A few moments ago I used the phrase "keeping a close eye" in relation to topics covered by the proposed new clause. "Keeping a close eye" means receiving annual, accurate and authoritative reports from the Government, not spin, not waffle or mere pious hopes irrespective of the amount of actual delivery. The Government profess a belief in openness. Complying with the reporting requirements of this amendment would keep them right up to the mark and the consumers of electricity would be fully informed. I beg to move.
3.45 p.m.
Lord Jenkin of Roding: My Lords, my noble friend made a powerful case for what seems to me to be a very sensible addition to our armoury. I hope that I shall be forgiven if I concentrate on subsection (3) of the proposed new clause although I shall return to the rest of the amendment before I sit down.
First, it is useful to remind ourselves of the words in the energy White Paper issued last spring. It referred to what my noble friend referred to as—it is a kind of shorthand—keeping the nuclear option open. I have coined the acronym KNOO. However, it is not called that. Paragraph 4.68 states:
"While nuclear power is currently an important source of carbon free electricity, the current economics of nuclear power make it an unattractive option for new generating capacity and there are also important issues for nuclear waste to be resolved. This white paper does not contain proposals for building new nuclear power stations. However, we do not rule out the possibility that at some point in the future new nuclear build might be necessary if we are to meet our carbon targets".
Many people regard those as wise precautionary words. Of course, some, such as Greenpeace, herald it as the end of the nuclear age. However, that is rather absurd. We shall be depending on nuclear stations—Magnox, AGRs, Sizewell B, our pressurised water reactor—to continue to operate right through the 2020s—and Sizewell B into the 2030s. It is right to note that other countries are now investing in new nuclear capacity in a number of ways through the improved methods that are becoming available.
However, on one matter the statement in the White Paper was quite wrong when it simply asserted as a matter of fact that the cost of supplying power from nuclear was uneconomic. In this context I draw the House's attention to a very recent report published by the Royal Academy of Engineering, The Cost of Generating Electricity. A substantial piece of work was carried out for the Royal Academy of Engineering by the consultants, PB Power, who have a high reputation. One is tempted to quote large chunks of the RAE report but I shall quote two paragraphs from the press release that was issued by the Royal Academy of Engineering when the report was published:

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"'This may sound surprising', says Academy Vice President Philip Ruffles, who chaired the study group, 'especially as we have included the cost of decommissioning in our assessment of the nuclear generation costs".
The press release continues—this is the point—
"The weakness of the Government's Energy White Paper was that it saw nuclear power as very expensive. But modern nuclear stations are far simpler and more streamlined than the old generation—the latest are only about half the size of Sizewell B—and far cheaper to build and run".
I have heard a number of lectures recently from people who are—
Baroness Miller of Chilthorne Domer: My Lords, I am sorry to interrupt the noble Lord but while he is spelling out the costs of nuclear power, would he say that the costs of building and running the stations take into account the cost of disposing of nuclear waste because that, of course, is the greatest part of the bill?
Lord Jenkin of Roding: My Lords, the noble Baroness does not need to talk to me too much about nuclear waste. I served on the Select Committee of this House under the chairmanship of the noble Lord, Lord Tombs, when we considered this matter in great detail three or four years ago. I am coming to the point that the noble Baroness made. I said that I would quote again from the press release of the RAE. Secondly, the Notes for Editors give the figures for the costs in pence per kilowatt hour of generating electricity for "base-load" plants that were considered in the study. At the lower end of the scale they include gas-fired combined-cycle gas turbines, nuclear fission plant, coal-fired circulating fluidised bed steam plant and so on. All those methods cost less than three pence per kilowatt hour. The more expensive methods included poultry litter-fired bubbling fluidised bed steam plant, at over twice the previously mentioned cost, onshore wind, offshore wind—the relevant figures were supplied—and wave and marine technologies. The report makes it perfectly clear that the figures for nuclear power include the whole cost of decommissioning and their share of dealing with waste.
I agree with the White Paper that the issue of waste must now be addressed. Our report gave the Government a very clear way ahead. As the noble Lord, Lord Oxburgh, has been fond of saying in the past, they kicked it into the long grass. I hope that we shall hear more about this from the Government. They really must deal with the problem of the disposal of long-term waste. There is a later amendment on that issue.
If one looks at the figures for offshore and onshore wind, one of the problems is that you must have standby generating capacity for the periods when the wind does not blow. One of the most telling moments in the television programme the other night was when the vanes stopped going round and no electricity was produced. I recommend to the Government as a serious piece of work this work on the comparative costs produced by the Royal Academy of Engineering entitled, Can we Afford to Keep the Lights On?: Real Future Electricity Costs.
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There are, of course, new designs for nuclear. There is much experience in the rest of the world. There are ample supplies of fuel distributed across some very stable economies in the world. Those supplies are widespread and secure.
The third point is that nuclear is—as the White Paper rightly said—a carbon-free technology. Yet it is extraordinary that it does not qualify for any of the incentives for carbon-reducing measures. The noble Lord, Lord Lea of Crondall, who is not present at the moment, has tabled a very interesting amendment, Amendment No. 200, in which he proposes the end of the climate change levy as applied to nuclear generation. I have added my name to that amendment and we shall, of course, support it.
My fourth point is that in Grand Committee we moved a series of amendments to deal with skills, training, university courses, research, development and demonstration. The Government's current policy is to spend £5 million per year over four years on fission research. As I said to the noble Lords in Committee, that is regarded with complete derision by the industry as being worth virtually nothing.
We also talked about the external costs of different technologies and, again, nuclear power comes out extremely well. The new clause requires the Government to give the country regular updates. We base that on Clause I of the Sustainable Energy Act 2003, under which the Government are enjoined to provide an annual report on these matters.
In Hansard of 3 February under the heading "Energy White Paper", I was intrigued to read a Ministerial Statement (repeated by the noble Lord, Lord Sainsbury), which said:
"The energy White Paper first annual report will be published soon after the Easter Recess".—[Official Report, 3/2/04: col. WS 21.]
It goes on to note that a number of other papers will be published at the same time. I am very glad that the Government are making that a reality. We are asking for there to be a whole lot more in it.
I return to the terms of the amendment. All the new sources of energy that are listed in subsection (1) of the new clause are important, but I would like to draw particular attention to four of them.
First, clean coal technology. My son recently returned from a short visit to America, and he said that he was astounded to see huge American trains loaded with coal going through the Rocky Mountains. The Americans are spending an enormous amount on developing clean coal technology.
In this country we have almost unlimited supplies of coal, and as the noble Lord, Lord Ezra, has pointed out with great vigour over a long while, we seem to be doing extraordinarily little about it. In this amendment we ask the Government to report annually on what is being done to develop clean coal technology.
Secondly, I would like to mention biofuels. We had an interesting debate in Grand Committee on the encouragement of biofuels. These could be an example of self-sustainable development, but it seems that the Government have astonishingly little interest in them.

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As a young man, I remember being able to buy Cleveland Disco' petrol from filling stations. That was based partly on alcohol from fermentation.
Thirdly, the amendment also mentions wave and tidal generation. It would be very helpful to know what the Government and others are doing in encouraging research into that. The fourth, another particular interest of noble Lord, Lord Ezra, is microgeneration. The other forms of energy are important, too.
In subsection (2) we ask that we should be given information about,
"research, development and demonstration work done".
In subsection (3) we are looking for the development of the necessary skills and expertise, so that we will not be faced with "undue reliance on imports"; that is, imported technology. We must have a report on what the Government and others are doing to make a reality of the nuclear option. All the important considerations are there. I believe this amendment would make a notable and valuable addition to these annual reports.
Lord Ezra: My Lords, I support the amendment moved by the noble Baroness, Lady Miller of Hendon, on which the noble Lord, Lord Jenkin of Roding, has just spoken.
The purpose of the amendment it to extend the range of subjects dealt with in the annual reports under Section 1 of the Sustainable Energy Act 2003. It will enable the Government to give a fuller, more wide-ranging report than was originally envisaged, and follow up all the points raised in the energy White Paper. I will confine my comments to subsections (1),(3) and (4) of the amendment.
In subsection (1), as the noble Lord, Lord Jenkin of Roding, pointed out, there are a number of new energy technologies that need to be developed vigorously, and for which the Government have already expressed their support. It would therefore be highly desirable that, in addition to the subject of wind energy—which would be included in the annual reports as originally conceived—these further subjects should also be reported on regularly. I am sure that the Government would approve.
The point of subsection (3) is that we should be ready with the necessary resources and skills to avoid undue reliance on imports. Surely, this again is a self-evident objective. We should have regular reports on how those skills and resources are being maintained for that purpose, so that, should there be any difficulty over imports in the longer term, we can be assured that we shall have the resources to diminish our need for them.
Subsection (4) deals with the important issue of reducing demand wherever possible, and increasing efficiency. Increased energy efficiency is an important part of government policy. They have still to announce what they plan to do in the domestic sector, where, unfortunately, a great deal of energy is still wasted. It would not be unreasonable for the annual reports to include that issue. This is a reasonable proposition that
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complements what is already in the energy White Paper and covers subjects in which the Government have said they are interested.
Lord Maclennan of Rogart: My Lords, I, too, wish to support the amendment. I will be brief, as the broad arguments of principle have already been effectively deployed.
First, in the Government's White Paper on energy, paragraph 4.60, regarding new options for the longer term, says:
"Technology will almost certainly surprise us in the field of renewables as elsewhere".
That may be so, but we should not be more surprised than we need to be. If annual reports are made available on the subjects outlined in subsection (1) of the amendment, we shall be less surprised and more capable of deploying the information constructively.
Secondly, the Government's position on nuclear power is a fence-sitting one, in a somewhat pejorative sense. As the Government's White Paper says, it is true that the current economics of nuclear power make it an unattractive option for new generating capacity. The important word to emphasise in paragraph 4.68 of the White Paper in which they make that statement is "current" economics. No doubt that will change with the benefits of technological developments and the work that is being done in nuclear decommissioning. These developments ought to be made available as they become known to enable the economics of nuclear power to be reviewed.
Those that follow these matters feel that the Government would like to put such issues on one side. They want the uncertainties over waste disposal issues to be reported on not as soon as may be, but after the next general election. One recognises that there is a distinct lack of enthusiasm for open debate about these issues at this time. One can assume only that it is due to a political sensitivity of the subject as it is perceived.
That seems to me to be another solid reason why we should have factual annual reporting on the options. It would enable the eventual debate, which must involve the public as the Government have indicated, to take place in a properly informed manner. The many possible options should be fully considered and the reliance on importance is a developing issue on which we should have periodic and regular reports. The impact of what is happening in the former Soviet Union on the security of our supplies cannot be taken as a settled issue. It must be given frequent reconsideration. The obligation to report in the manner proposed in the amendment ought to be continued, particularly in a democracy where energy supplies are so much the subject of debate.
4 p.m.
Lord Tombs: My Lords, I, too, support the amendment. It is included in the annual reports required under the Sustainable Energy Act and it would make those reports more comprehensive and helpful. If, as I anticipate, the Government state that it will be difficult to collect all the information, that is

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an added reason for accepting the amendment. Doing so might bring a degree of focus into a highly defused situation—as in the case of the previous amendment.
Lord Monro of Langholm: My Lords, I support the amendment because it will keep nuclear power before the Government and the public as an important alternative to other renewables. I hope that Ministers have on their desk a Scottish newspaper because they will begin to see a mounting tide of objection to the many new wind farms now developing in Scotland.
More importantly, the public have begun to realise that the wind farms require transmission lines. Already the new national park in the Grampian area has said, "No, on no account are we going to have 300-foot pylons through the national park and down the spine of Scotland". Indeed, people in Ross and Cromarty near Beauty are complaining bitterly about the establishment of 300-foot transmission lines without any consultation at all.
Throughout Scotland, the mounting view is that enough is enough. We cannot ruin our picturesque countryside with such a large number of wind farms. After all, if one tried to erect a factory in the countryside, one would be told, "No, not at any price". But if one wanted to erect a commercial development, such as wind farms, the Government would say, "Yes, at all costs. Bring it here". They do not seem to understand the difference between the commercial development of wind farms and the commercial development in industry.
It is interesting to note that even this week, the Scottish Executive turned down the first appeal for a hydro-electric scheme at Sheildaig. Every other appeal on wind farms or renewable energy sources have been approved willy-nilly by the Executive. The public are beginning to say, "Stop, we've had enough". If we had one or perhaps two nuclear power stations in Scotland, we would be able to do away with all the wind farms and other unsightly renewables.
It is such a paradox because the noble Lord, Lord Whitty, is developing new CAP policies in order to improve the environment in the countryside while here he is doing exactly the reverse by encouraging the development of wind farms which will make it so unattractive.
I would like him to comment on the attitude of the Ministry of Defence to wind farms. It has said that there can be no wind farms within a 50-mile radius of the Eskdalemuir magnetic observatory without upsetting the scientific instruments that are operated there. That would have an enormous impact on planning wind farms in the south of Scotland.
I want to see more nuclear power. It is an exceptionally good way of providing electricity at reasonable cost without upsetting the environment. I hope that the proposed new clause will keep before the Government year in and year out the fact that there is an alternative. They are constantly running away from nuclear power, which is wrong in the present climate.
Baroness Miller of Chilthorne Domer: My Lords, it is interesting that the amendment is supported by people
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who are anti-wind power and pro-nuclear power and those, like myself, who for a number of reasons have declared themselves anti-nuclear power and pro-renewable energy. I shall not take up the time of the House by elucidating on that.
The amendment spells out the importance of diversity of supply, which goes a long way to ensure the integrity of supply. If we have substantial annual reports on all the available technologies, together with the pros and cons of each, and the costs and benefits, those of us who believe that renewables will have an increasing part to play and that fuel cell technology is an exciting part of the future, will be able to see the progress that is being made in each area. That is extremely important.
Like my noble friend Lord Ezra, I believe that we need much more information on subsection (4) of the amendment, which ensures that demand is reduced. A great deal more needs to be done and we need to see much more. Every year, we need to see exactly what is happening on that front. I strongly support the amendment.
Lord Dixon-Smith: My Lords, I, too, support the amendment and I hope that the Government will accept it. I cannot see why they do not. It does not require them to do anything that they are not already doing, apart from the fact that it requires them to report to Parliament on what they are doing. They may be a little frightened, because they may have to reveal that they are not doing what they ought to be doing, which might be slightly embarrassing. However, I do not believe that that would be the situation.
I, too, have an interest in the matter and I want to refer to the interesting report from the Royal Academy of Engineering. It is a fascinating paper but part of the problem is that it is a recent one. It was published only about a week ago, so perhaps all Members of the House have not had time to study it. It makes some interesting cost comparisons and the first point to make is that the Royal Academy was looking over a 20-year time-scale. That brings me back to the point made by the noble Lord, Lord Maclennan of Rogart, that new technology sometimes surprised us. In this field there are not likely to be many surprises in new technology, of which we are not already aware, that will greatly affect matters in the 20-year time-scale that the academy was studying. If we are already aware of such a technology, it should be reported upon regularly, together with any developments. Of course, if something new came along, that would be good.
There are two other matters that need attention. Behind the whole issue lies the question of cost to the consumer. We have already had enough discussion on that, but we need to bear in mind that we have international obligations in the energy field as well as obligations to our communities. One of those relates to carbon dioxide, where we have obligations nationally to reduce our CO2 emissions below the 1990 figure. I shall not explore that in any further detail, except to say that the question of long-term carbon dioxide emissions will become a major policy driver in everything that we do. There is not much point in having a wonderfully sophisticated and prosperous

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community if the process ruins the climate so that it is not worth living in. There have been predictions of what is likely to happen by 2080, when living in this country may become uncomfortable while other parts of the world may be becoming unable to be lived in. So the issue will become a policy driver.
Then, the problem is that if that obligation is brought hack into the fuel equation, the cost of carbon dioxide sequestration will begin to make coal a very expensive source of energy and oil will be fairly expensive. Those costs will not quite be as high as wind power, which, unfortunately, has the problem of the need for hack-up. The Royal Academy's report used a back-up figure of 65 per cent. The noble Lord, Lord Christopher, who is the Minister's noble friend, said at Second Reading that the Danish experience was that the figure probably ought to be greater than 65 per cent. That would add to the costs of wind power.
When one compares the relative costs of wind power onshore, wind power at sea, oil, and coal using CO2 sequestration, there is no question but that we must consider the nuclear option. But that is a coincidence. For the sake of absolute clarity and for the noble Baroness, Lady Miller of Chilthorne Domer, if she does not already understand, the cost of decommissioning was included in the study. I shall hand her the relevant pages afterwards.
The amendment requires the Government simply to report on what they must already be doing. If they are doing it, then, for the life of me. I cannot see why they do not agree to it.
Lord Whitty: My Lords, I thought that we were to have a straightforward debate about what should be in an annual report and how much of that should be prescribed on the face of the Bill. Noble Lords have recognised that there is already an obligation under the Sustainable Energy Act for the Government to report annually on energy. I believe that the noble Lord, Lord Jenkin, said that our statement made clear that we would publish the first report shortly after Easter and there would be a number of other more detailed documents associated with that relating to different aspects of energy policy—including energy efficiency, referred to by the noble Lord, Lord Ezra.
Other parts that might be covered by the amendment are already in the public domain—for example, the recent conclusions of the renewables innovation review, which the DTI and the Carbon Trust recently conducted. Ongoing information is provided by the DTI on its website. So, as part of a process, the Government will report on a range of topics not dissimilar to those set out in the amendment. However, the degree to which annual report requirements are prescribed in detail on the face of the Bill varies—but they are rarely as detailed as this. One has to ask why they should be set out in such a detailed manner. I am afraid that a third at least, and possibly more, of this debate has revealed the true motivation behind the amendment; that is, rather
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strangely and not immediately evidently, to provide a further Trojan horse for bringing the use of nuclear power back on to the agenda in a way which is not in line with the current energy White Paper strategy. We shall debate that at various points during this Report stage. It is not appropriate as a motivation for what should be reflected in the report and yet a large proportion of the contributions in this debate indicated just that.
I rarely accuse the noble Baroness, Lady Miller of Chilthorne Domer, of appearing naive but, in this case, I believe that she happily said, "Well, this must prove that it is a balanced requirement because I can support the amendment as well". However, the true motivation behind proposed new subsection (3) in the amendment is now revealed: it is not about information; it is about trying to change the policy. I warn the noble Baroness not to be fooled into going down that route.
4.15 p.m.
Baroness Miller of Chilthorne Domer: My Lords, with respect to the noble Lord, I considered very hard whether I was being naive and whether the amendment was, indeed, a Trojan horse. He may be right that that was the motivation for some people, but I believe that through the amendment we are asking for all the facts to be laid in the open. If, as he and I believe, nuclear power is not to have a future for a number of very good reasons, that will become apparent in the reporting.
Lord Whitty: Indeed, my Lords, or the opposite may happen. That would be reflected in the requirement which the Sustainable Energy Act already places on the Government and it will be covered in annual reports which, again, are already required. But, to say the least, this degree of prescription for an annual report is unusual in legislation and it should be seen as the motivation for a particular objective. On both counts, I believe that the House should not adopt the amendment.
There may have been other, more mild amendments under which the Government would have been required to consider spelling out our obligations in the annual report. But, in reality, the requirement which already exists covers, and will be interpreted by the Government as covering, the vast majority of the issues which have been referred to in this debate and in the amendment. We do not need the issue to be set out in a more prescriptive and perhaps slightly unbalanced way, as is the case in the amendment. Therefore, I hope that the matter will not be pursued.
Baroness Miller of Hendon: My Lords, with regard to the Minister's last point, in which Bill was it laid out so clearly?
Lord Whitty: My Lords, in the Sustainable Energy Act there is a requirement for an annual report which should cover everything raised in the energy White Paper. That includes the role of renewables, the role of energy efficiency, the role of CHP, the role of keeping the nuclear option open, and so forth. Therefore, we

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are already required to detail most of the issues in practice, probably all the issues—included in the prescription.
However, the prescription sets out the order and the method, and it is clear that what might appear to be a fairly innocuous reference to nuclear power is being interpreted by the noble Baroness's colleagues—and, to some extent, by the noble Baroness—as being the way in which we obtain a shift in policy rather than a report on the facts and the degree to which the policy is being delivered. In that sense, I do not believe that this is entirely a matter of what is reported; it is also an attempt to shift the policy.
Lord Maclennan of Rogart: My Lords, I am most grateful to the Minister for giving way. I wish to make a brief point. He said that it is unusual to take such a step in requiring annual reports to be so detailed, but surely he will appreciate that we are in an unusual situation so far as concerns energy. In a previous debate, a right reverend Prelate described the climate change phenomenon on the world as perhaps being ahead in terms of significance of even terrorism. When we are considering the security of supply and climate change, this is not unusual; it is surely prudent.
Lord Whitty: Yes, my Lords, and, in addition to a legislative requirement on reporting on energy policy, the Government are also required to report periodically on the climate change programme. That reflects the fact that the Government agree with the right reverend Prelate, the noble Lord and the chief scientist that this is, indeed, one of the most important issues—possibly the most important issue—facing the world today. However, the obligation is already in place. This detailed prescription of it is somewhat misleading and it is not particularly helpful in ensuring that the information on the delivery and deliverability of the energy White Paper, which is what should be covered by the annual report, is any clearer than the way in which the Government are already obliged to present it.
Baroness Miller of Hendon: My Lords, this amendment is in no way prescriptive. If the Minister reads the amendment carefully he will see that it says,
"if the decision is taken".
He impugns motives to me that I do not have. I made it perfectly clear in my speech that I was not saying that. I hope that the Minister will have the courtesy to read carefully what I have said and accept it. Furthermore, he impugns or suggests that somehow we have persuaded the noble Baroness, Lady Miller of Chilthorne Domer, who can speak very well for herself, that this is all right. The whole thing is—my noble friend says "outrageous"—an absolutely unbalanced view. It is unusual for the Minister to speak in that way. There is no point in saying any more. It is appropriate to test the opinion of the House.
4.20 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 110: Not-Contents, 82.

Division No. 3

CONTENTS

Addington, L.

McColl of Dulwich, L.

Anelay of St Johns, B.

MacGregor of Pulham Market. L.

Astor of Hever, L.

Attlee, E.

Maclennan of Rogart, L.

Avebury, L.

McNally, L.

Barker, B.

Marlesford, L.

Beaumont of Whitley, L.

Miller of Chilthorne Domer, B.

Biffen, L.

Miller of Hendon, B.

Blaker, L.

Molyneaux of Killead, L.

Bradshaw, L.

Monro of Langholm, L.

Bridgeman, V.

Monson, L.

Brooke of Sutton Mandeville, L.

Mowbray and Stourton, L.

Brougham and Vaux, L.

Moynihan, L.

Byford, B.

Murton of Lindisfarne, L.

Caithness, E.

Newby, L.

Chorley, L.

Noakes, B.

Clement-Jones, L.

Northesk, E.

Colwyn, L.

Northover, B.

Condon, L.

Norton of Louth, L.

Cope of Berkeley, L. [Teller]

Oakeshott of Seagrove Bay, L.

Craigavon, V.

O'Cathain, B.

Crickhowell, L.

Park of Monmouth, B.

Dholakia, L.

Phillips of Sudbury, L.

Dixon-Smith, L.

Platt of Writtle, B.

Dundee, E.

Plummerof St. Marylebone, L.

Eden of Winton, L.

Quinton, L.

Elton, L.

Rawlings, B.

Erroll, E.

Razzall, L.

Reay, L.

Ezra, L.

Redesdale, L.

Fookes, B.

Rees, L.

Fowler, L.

Rees-Mogg, L.

Freeman, L.

Rodgers of Quarry Bank, L.

Geddes, L.

Roper, L.

Glentoran, L.

Seccombe, B. [Teller]

Goodhart, L.

Selsdon, L.

Goschen, V.

Sharp of Guildford, B.

Hanham, B.

Shaw of Northstead. L.

Harris of Richmond, B.

Simon of Glaisdale, L.

Hayhoe, L.

Skelmersdale, L.

Higgins, L.

Skidelsky, L.

Hodgson of Astley Abbotts, L.

Swinfen, L.

Howe, E.

Taverne, L.

Howe of Aberavon, L.

Taylor of Warwick, L.

Howe of Idlicote, B.

Tebbit, L.

Howell of Guildford, L.

Tenby, V.

Hurd of Westwell, L.

Thomas of Gresford, L.

Jacobs, L.

Thomas of Gwydir, L.

Jenkin of Roding, L.

Thomas of Swynnerton, L.

Jopling, L.

Thomson of Monifieth, L.

Kingsland, L.

Trumpington, B.

Laing of Dunphail, L.

Wakeham, L.

Laird, L.

Watson of Richmond, L.

Laming, L.

Weatherill, L.

Livsey of Talgarth, L.

Wilcox, B.

Lucas, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Boothroyd, B.

Ahmed, L.

Borrie, L.

Amos, B. (Lord President of the Council)

Brennan, L.

Brooke of Alverthorpe, L.

Andrews, B.

Brookman, L.

Bach, L.

Campbell-Savours, L.

Bassam of Brighton, L.

Carter, L.

Berkeley, L.

Christopher, L.

Blackstone, B.

Clarke of Hampstead, L.

Blood, B.

Clinton-Davis, L.

411

Corbett of Castle Vale, L.

Lea of Crondall, L.

Crawley, B.

Levy, L.

Davies of Oldham, L. [Teller]

Lockwood, B.

Dean of Thornton-le-Fylde, B.

Macdonald of Tradeston, L.

Dixon, L.

McIntosh of Haringey, L.

Donoughue, L.

McIntosh of Hudnall, B.

Dubs, L.

Mackenzie of Culkein, L.

Evans of Temple Guiting, L.

Massey of Darwen, B.

Falconer of Thoroton, L. (Lord Chancellor)

Merlyn-Rees, L.

Mitchell, L.

Farrington of Ribbleton, B.

Moser, L.

Faulkner of Worcester, L.

Ouseley, L.

Finlay of Llandaff, B.

Pitkeathley, B.

Gale, B.

Rea, L.

Gibson of Market Rasen, B.

Rendell of Babergh, B.

Goldsmith, L.

Rooker, L.

Gould of Potternewton, B.

Sainsbury of Turville, L.

Graham of Edmonton, L.

Sawyer, L.

Grenfell, L.

Sewel, L.

Grocott. L. [Teller]

Sheldon, L.

Harrison. L.

Simon, V.

Haskel, L.

Temple-Morris, L.

Hayman, B.

Triesman, L.

Healey, L.

Turnberg, L.

Hilton of Eggardon, B.

Turner of Camden, B.

Hollisof Heigham, B.

Warner, L.

Howells of St. Davids, B.

Warwick of Undercliffe, B.

Hughes of Woodside, L.

Whitaker, B.

Hunt of Kings Heath, L.

Whitty, L.

Irvine of Lairg, L.

Wilkins, B.

Jordan, L.

Williams of Elvel, L.

Layard, L.

Woolmer of Leeds, L.

On Question, amendments agreed to.

Resolved in the affirmative, and amendment agreed to accordingly.
4.31 p.m.
Clause 2 [Constitution of NDA]:
[Amendment No. 3 not moved.]
Schedule 1 [The Nuclear Decommissioning Authority]:
[Amendment No. 4 not moved.]
Clause 3 [Designated responsibilities]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 5:
Page 3, line 11, at end insert—
"() where the primary purpose of a designated installation has been the generation of electricity, to ensure that the decommissioning does not preclude the future use of the site for the generation of electricity;"
The noble Lord said: My Lords, I suspect that the Minister will be glad to move into somewhat calmer waters. Clause 3 sets out the principal functions of the Nuclear Decommissioning Authority. I will begin simply by reading the start of Clause 3(1)
"The principal function of the NDA shall be to have responsibility for securing—

(a) the operation, pending the commencement of their decommissioning, of designated nuclear installations;

(b) the decommissioning of those and other designated nuclear installations;

(c) the cleaning-up of designated nuclear sites".

My concern is that, at some point in the future, electricity generation in power stations will be required to be constructed in this country. It is never uncontroversial to put in a planning application for a power station. Where we have existing power stations that are going to be decommissioned, in planning
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terms there is an existing user, so that another generating station, not necessarily nuclear—it could be gas or coal—could be constructed on that site without causing any planning difficulties. This would therefore be a prudent step. There are also other reasons: all the infrastructure is already there; the high-powered transmission lines are there—they do not have to be run across new areas of countryside, as I heard from my noble friend earlier in the debate. So there are very positive reasons why we should secure that situation.
One has to make a good many assumptions in this amendment before one gets to this situation. We do not know from the Bill how far the decommissioning process will go. There is the whole question of the future of the sites and of the communities around, all of which are mentioned subsequently in the Bill. When British Steel, for instance, was running down, I well remember that it invested enormous sums in bringing new industries into former steel communities in order to diversify their economies and to replace the steel industry. It had government help for that, of course. I infer that there will be a similar process.
The amendment does not call for action by the Government but it does call for thought. It may be that, in the future, new generating plant will be more sensibly sited, close to major urban areas, where not only will they generate electricity but the heat that they use in the generation can be piped off and used by the community, instead of being run out to sea or cooled down in cooling towers. We have not reached that stage.
Lord Brookman: My Lords, I could not help but rise to make a comment about the steel industry. The noble Lord is correct in saying that tremendous help was given to communities at the time of the steel closures, but that was also part of the European Coal and Steel Community funds. European funds played an enormous part in helping those troubled areas. The Conservative government stopped us being members of that fund because it required government support, as well as a levy from employers.
Lord Dixon-Smith: My Lords, I am grateful for being pulled up over the European Coal and Steel Community, but that does nothing to weaken the argument. In fact, it supports it.
Planning will always be a controversial matter, where energy supply is concerned. The Minister probably knows better than anybody that generating plant and transmission lines are immensely difficult to slot in across the country, despite the rather easier regime that they appear to enjoy in Scotland, for whatever reason. I hope that the Minister will assure me that I need not be concerned about the matter and that the decommissioning process would not go so far as to rule out the possibility that the sites might subsequently be available for the generation of electricity in whatever form the times required, when the situation arose. If the Government can give me

413
some assurance on that, I may be freed of the obligation to press the amendment, which would relieve me enormously. I beg to move.
Lord Maclennan of Rogart: My Lords, may I say how welcome is the debate stimulated by the amendment? In the community of Caithness around the establishment of Dounreay, there is some concern that the tight focus on the decommissioning of the site by the Nuclear Decommissioning Authority to restore it to a greenfield situation may mean that we miss an important opportunity to develop there or close to it and under the umbrella of one management alternative energy sources that are proximate.
The north Caithness coast is already viewed as a potential location for experimentation with tidal power and wave power. One experiment proved abortive, but it took place. It would be a great mistake if the technological facilities and skills in the area and the physical location, along with the availability of transmission lines, which the noble Lord, Lord Dixon-Smith, mentioned, were not considered as a source for experimentation and for the development of alternative energy. It would be unfortunate if the principal function of the NDA is to be regarded as excluding responsibility for that kind of development. Partnerships may be appropriate for the development of such alternatives. It would seem desirable that the NDA should have a responsibility not to preclude those developments. I hope that the Minister will find the opportunity during the course of the debate to clarify how he and the Government see the position.
Earl Caithness: My Lords, I support my noble friend Lord Dixon-Smith on this amendment, particularly in view of what has just been said by the noble Lord, Lord Maclennan of Rogart, who knows the Dounreay situation better than I. He has put the matter in a far better way than I could. It is a crucial issue for the north of Scotland where there is good access to the grid system. It takes me back to a point raised on earlier amendments. It took a long time for it to dawn on people in Caithness, which is a fairly flat landscape, that one of the problems of wind farms, although extremely beneficial in many areas, is connecting them to the grid. Where one has a site which is part of the base of the grid it would be foolish not to give it flexibility for use in the future.
I wish to ask the Minister two questions. I gave him notice of one of them in connection with Amendment No. 3, but as the noble Lord did not move it, I told him that I would raise it on Amendment No. 5. Before I do so, I wonder whether the noble Lord would like to comment as to whether one of the designated responsibilities of the NDA should be to make a centre of excellence for decommissioning. If that is the case, would it not be right that the centre should be at Dounreay where the decommissioning process is going to the front of modern technology which can then be sold and distributed around the world for the benefit of all?
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The second point I mentioned to the Minister concerns the constitution of the NDA and whether further thought has been given as to the members of that organisation and whether in particular there will be a representative from Caithness who know Dounreay well. It is the second largest establishment and given the contribution it has made and the expertise there, it would be extremely wise of the Government to include somebody with knowledge of that area.
Lord Monro of Langholm: My Lords, I wish to add briefly to what the noble Lord, Lord Maclennan, said. I live very near the plant at Chapel Cross, about two miles away, and I have been there throughout the life of the plant. What may happen there is exactly what may happen at Dounreay. There is very good reason that we should look to securing the site for possible future reactors. There is a tritium plant at Chapel Cross, but whether that can operate without a nuclear reactor I am not technically knowledgeable to say. We want to keep these sites available until final decisions are made about nuclear reactors. That is why I support the amendment.
Lord Davies of Oldham: My Lords, I hope to reassure the noble Lord, Lord Dixon-Smith, on the main thrust of his amendment that nothing precludes the NDA from pursuing a policy where a site would be designated in the way he identified. The Bill does not preclude any decision in those terms. It is open in that respect. Therefore, if a particular site appeared as though it should be preserved for nuclear generation that may well be so. The Bill does not preclude it and that is why the amendment is unnecessary.
I am in greater difficulty in responding to what I recognise are the extremely precise representations as regards Dounreay. The noble Lord, Lord Maclennan, would not be his true self if he participated in a debate of this kind without representing that area, which he has done in another capacity for so many years. I recognise the significance of the point that he made. Obviously, the Nuclear Decommissioning Authority will be a centre of excellence. It will pursue a strategy that will require an enormous amount of expertise at the highest levels that we can command. There is no decision about where the NDA will be located at this stage. We could not possibly think in terms of putting that in the Bill. However, the representations of the noble Lord and those of the noble Earl, Lord Caithness, have been heard.
I will make an obvious point: we are not expecting local representation on the NDA. We are expecting expertise and it may be—as I am sure both noble Lords would contest—that there is a level of expertise at Dounreay that would be enormously advantageous to the NDA. That may well prove to be the case, but I am not in a position to pre-judge any decision now. However, we do not look upon the NDA as having a board that is representative of local communities that may have experience, expertise and a long association with nuclear generation.
I turn to the question of whether it is advantageous for certain sites, which have been the centre of significant power generation in the past, to be

415
preserved with a perspective on the future. The overall policy with regard to the NDA leaves that option entirely open. That is exactly the line that it may take with regard to a particular site. There is nothing in this Bill that precludes the NDA having that perspective. That is why, in a real sense, the amendment is unnecessary. There are no statutory constraints on what the end point might be in terms of the NDA's objectives. Objectives are, in any case, subject to ministerial approval. If the Minister had an opinion in his or her wisdom about the preservation of the site in the terms expressed in the amendment and in the way in which the noble Lord presented his position, the NDA would take that case on. The decisions will be taken on a site by site basis having due regard to the obvious points of government policy to which we have already attested.
I hope that the House forgives me if I dare to tread upon the two long debates that we have already had, but I wanted to emphasise the obvious fact that the Secretary of State has clear responsibility, as does Ofgem, for ensuring electricity security over a long period of time. We will live to see whether that follows the lines that some noble Lords have suggested in previous debates. I assure the noble Lord that nothing in the way in which the Bill is drafted in any way inhibits the basis of the arguments that he has put forward in his amendment.
4.45 p.m.
Baroness Byford: My Lords, before the noble Lord sits down, I listened carefully when he said that nothing precluded the NDA from doing exactly what my noble friend wanted. However, having read through the relevant pieces, I cannot see where it encourages that either. Perhaps the Minister can point me in the right direction.
Lord Davies of Oldham: No, my Lords, because we have not set out to detail all the potential objectives that the decommissioning authority might have with regard to the significant number of sites with which it has to deal. I mentioned that they are to be dealt with on a site by site basis. The kind of arguments that have been advanced so ably by the noble Lord, Lord Maclennan, are not arguments that would easily be adduced in favour of one of two other sites that I can think of in the country. The value of that representation is to identify its uniqueness. I am merely saying that, on the face of this Bill, we are not setting out to be specific about the NDA's objectives. We are saying that, within those broad objectives, this could certainly be one in relation to any particular site.
Lord Dixon-Smith: My Lords, I think I am grateful to the Minister for his reply, and the reason I think that is something I shall come to. I should make it very plain that I was careful not to mention the word "nuclear", in my remarks because, if developments go on, it may well be possible to avoid using these sites for nuclear, and they may be required for some other form of generation. That is my first point: we should get right away from the nuclear issue.
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My second point is that if one looks at the history of the rundown of major industrial sites, by and large they soon began to develop some other industrial use on them. I can well conceive that some of these sites would be very attractive to other industries. There would also be reasons for the Government to try to persuade industry to locate on those sites if they were otherwise vacant. For a start, there is a site there that has a planning use. It could be shifted from electricity generation to industrial or whatever. The communities involved will obviously be looking to have their employment base changed, and it will be very tempting. So some of these sites should be used for other purposes.
Of course, I would be the first to recognise that what we are discussing with the Nuclear Decommissioning Agency is a programme of work that is going to go on for 10, 20 or 30 years. None of us can predict exactly what is going to happen in that time. We cannot say what the pressures will be, what other developments there will be, and so on. I entirely accept the Government's position that they should not prescribe this at this point. That is fair enough. But we should recognise as a matter of reality that, as a site is closed down and decommissioned, it will very tempting to try to move other employment into that place relatively quickly. It might be that the strategic need is for the site to stay vacant for a few years, but there will be pressure to get it into some other use. So I am half, but not totally, reassured by what the Minister said. It will come back to a lot of factors in the reports that we are now going to call before Parliament annually, as a result of previous amendments. For now, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Attlee moved Amendment No. 6:
Page 3, line 15, after "disposal," insert "including long term disposal"
The noble Earl said: My Lords, I move this amendment on behalf of my noble friend Lady Miller. There is some confusion outside your Lordships' House, and even down the other end of the corridor, about the NDA. Some believe that the NDA will be responsible for final disposal of all radioactive waste. As drafted, the Bill does not provide for that. This amendment proposes that the NDA will be responsible for final disposal. Some mischievous noble Lords—perhaps the Minister might suggest that my concerns are predicated upon the needs of new nuclear build. Of course, they are absolutely right. Equally, the noble Baroness, Lady Miller of Chilthorne Domer, is not naive in supporting me, because there are other very good reasons for making progress on the final disposal of nuclear waste.
First, post 9/11, it is no longer safe to keep waste on the surface, in temporary storage and vulnerable to attack. Even some environmental NGOs recognise that. Secondly, I believe that there is a risk of societal breakdown, possibly because of the rapid onset of a biological disaster. If that happened, who would look after the facilities at Sellafield? How would a future

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primitive society identify the risks of what we have negligently left behind? That would not be a pleasant leaving present.
At Second Reading, I suggested that the issue of nulcear waste had been put into a deep geological depository. Ministers have given CoRWM, the Committee of Radioactive Waste Management, the mission to report on the options by the end of 2005. I understand that the committee has exceeded all Ministers' expectations and that it now intends to report at about the end of 2006.
Why the delay? As your Lordships would expect, the committee has undertaken a very rigorous examination of all—I repeat, all—the possible options. For instance, the committee will examine the option of launching and ejecting the waste into space. The 1999 Select Committee of your Lordships' House, examining the management of radioactive waste, rejected the space option due to the obvious risk of launch failure. Your Lordships' Select Committee also rejected all other options, with the exception of deep geological depository.
The amendment does not provide for deep geological depository but merely gives NDA responsibility for longterm disposal. I believe that CoRWM is designed to create unnecessary delay by examining every disposal option, even those that are not remotely viable. I have asked this question before, but I shall repeat it. Can the Minister identify any option other than deep geological disposal that does not have insuperable difficulties? It may be that very careful independent analysis shows that deep geological depository is not viable either, but it is the only option that we know about that is without obvious defects at the moment. However, that does not mean that it is necessarily perfect. There may be insurmountable difficulties. If so, we need to find out quickly not slowly, because the implications for the NDA are very serious indeed. That is why the NDA is best placed to manage final disposal. I beg to move.
Baroness Miller of Chilthorne Domer: My Lords, I rise briefly to support the amendment. I do not believe that the Bill adequately defines "disposal", and long-term disposal is the crunch issue for nuclear waste. It is very important to define in the Bill, as suggested by the amendment, exactly what the NDA will be responsible for when it comes to the word "disposal". For that reason, I support the amendment. We cannot have any more short-termism or any more waste stored without planning permission on sites throughout Britain. We need to consider a long-term solution, difficult though that is, and the NDA will be the body best placed to do that.
Lord Jenkin of Roding: My Lords, I have collected a mass of material about what other countries are doing in this respect, but it will please the House to know that I do not propose to say anything about that. Before CoRWM reports, at the end of next year, will it have covered what is being done in such countries as Japan, Sweden, Finland, France and the United States, all of which seem much further ahead with this matter than we are? I entirely agree with the noble Baroness,
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Lady Miller of Chilthorne Domer, that it is now incumbent on the Government to get ahead with this. They had the report some years ago from the House of Lords Select Committee, and it is a signal of lack of will that nothing has been done so far except to continue to report. We must get this dealt with.
Lord Campbell-Savours: My Lords, I hope that my noble friend the Minister rejects the amendment fiercely, because all that it will do is to take us right down the Nirex route, which on a previous occasion proved so utterly disastrous.
Lord Davies of Oldham: My Lords, I reassure my noble friend that I shall propose that the amendment should be withdrawn, although not in quite such cataclysmic terms perhaps. I respect the motivation of the noble Earl, Lord Attlee, in introducing the amendment. I assure him of the absolute cardinal point, addressed by both him and the noble Baroness, Lady Miller of Chilthorne Domer, that "disposal" means "the act or means of getting rid of something". That is its usual meaning, which certainly embraces the long term as much as it embraces the short term. In the nuclear context, this means that there is no intention subsequently to retrieve what has been disposed of. So in the terms of the Bill, disposal is, by its very nature, a long-term solution. This is contrasted with the word "storage" that we use elsewhere in the Bill to indicate an interim solution before further treatment or disposal. Disposal is the long-term concept. That is why I hope that the noble Earl will recognise that his amendment is not necessary because it does not add any substance to the Bill.
5 p.m.
Baroness Miller of Chilthorne Domer: My Lords, will the Minister say whether spent plutonium is included among the substances that will be considered for long-term disposal? Is it classified as waste? Will it therefore fall within the long-term disposal solution that the Minster has just mentioned?
Lord Davies of Oldham: My Lords, we are referring to high-level waste for treatment. I recognise the chiding given on more than one occasion by the noble Earl, Lord Attlee, and the noble Lord, Lord Jenkin, about aspects of the time-scale on which we have made progress. The House will know that the committee is due to report in 2006. I can assure noble Lords that the Government expect it to comment upon international dimensions. We believe that we could usefully learn lessons from Finnish activity in this area. We expect the fullest range and quality in the report and have every confidence that it will be so. The committee is due to report in 2006.
On the general issues that have been raised, the noble Earl, Lord Attlee, asked me to be a little more explicit about which strategies might be pursued. I am not in a position to do that. I would prefer to wait for the deliberations of the committee. Secondly, it would be an extraordinarily slender thread on which to hang such a substantive debate. I would be asking the noble

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Lord, Lord Jenkin, to forsake his resolution not to dwell at great length on these issues in this amendment. I know he could do so with good effect, but it would not be appropriate here. I hope that the noble Earl will forgive me for not pursuing that route at this time. But I assure him that when we refer to disposal in this part of the Bill, we are taking account of very long-term, strategic, complex and important issues about how we deal with the issue of high-level waste.
Lord Maclennan of Rogart: My Lords, before the Minister sits down, will he clarify something? I was surprised that he suggested that there was no need to have this amendment because disposal included longterm disposal. In that case, is he saying that there will be no need to create new institutional arrangements for handling long-term disposal separately if that is a recommendation of the committee that is currently sitting? Will the Government simply pass the committee's recommendations to the NDA to give effect to them if they agree with the recommendations?
Lord Davies of Oldham: My Lords, I think that the noble Lord might be presuming too much in those terms. He will recognise that these are challenging and difficult issues. That is why the committee is one of the longer lasting committees. It has developed its deliberations over almost a decade. I was merely seeking not to pre-empt any position with regard to it. As far as the Bill is concerned, I reassure the noble Lord that what we mean by disposal will not inhibit the responsibility of the NDA in any way. Therefore, we do not need the amendment that spells out responsibilities in this slightly more extended way.
Baroness Miller of Chilthorne Domer: My Lords, I did not actually hear the Minister's response as to whether or not spent plutonium was a substance covered within the designation of disposal or longterm waste.
Lord Davies of Oldham: My Lords, I understand that plutonium is not currently classified as waste. The noble Baroness asked me quite specifically whether it was in the category. It is not.
Lord Jenkin of Roding: My Lords, the Select Committee recommended that a decision should be taken as to how much plutonium would be needed for future use and that the rest should be designated as waste. That responsibility rests upon the Government.
Lord Davies of Oldham: My Lords, I understand that. I am not able immediately to verify that position. However, I am grateful to the noble Lord for indicating that plutonium could fit into two categories.
Earl Attlee: My Lords, before the Minister sits down, is he content for surface waste to stay there at Sellafield indefinitely?
Lord Davies of Oldham: My Lords, no. I am as anxious as everyone in the country is for us effectively
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and adequately to solve these difficult problems. However, because the issues are so difficult the noble Earl will recognise why it would be superficial in the extreme for me to make some kind of gesture of response to a question of that magnitude at this moment.
Baroness Miller of Chilthorne Domer: My Lords, before the Minister sits down, will he be in a position by Third Reading to say what proportion of spent plutonium will be classified by the Government as waste?
Lord Davies of Oldham: My Lords, as the noble Lord, Lord Jenkin of Roding, indicated with his helpful intervention, as we have not yet taken such a decision, we have not yet decided on the proportion.
Earl Attlee: My Lords, I am grateful to all noble Lords who have taken part in this short debate. The noble Lord, Lord Campbell-Savours, mentioned the problems of Nirex. The Select Committee touched on that and recommended a long period of public education about the problems of waste disposal. I am not very happy with the Minister's answer. I do not propose to test the opinion of the House because we need to make progress on other matters. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 7:
Page 3, line 18, at end insert—
"through the employment whenever reasonably possible of appropriately qualified and experienced persons having regard to the safety, health and environmental expertise of those persons"
The noble Baroness said: My Lords, I shall deal with Amendments Nos. 7 and 15 together. I shall do so briefly. When I moved them in Grand Committee with the support of the other opposition party I pointed out that I found it strange that in all the directions given to the NDA, the Bill does not require the NDA to have regard to the importance of a strong safety culture among companies competing for and receiving contracts, or individuals seeking senior managerial positions.
I do not intend to repeat the same arguments that I used in Committee. I thought that they were self-evident but obviously not. The reply of the noble Lord, Lord Davies of Oldham, was far from satisfactory. He failed to give me any assurance that the all-important culture of safety would be impressed upon the NDA and more particularly that it would be the responsibility of the NDA to ensure that those to whom it awarded contracts and those to whom it delegated its duties were all duly qualified.
The noble Lord told us about the general duties of the NDA as specified in Clause 9(1). That is okay as far as they go. However, what needs to be explained is the objection to spelling out this important facet—-the employment of suitably qualified persons in an area where safety is a matter of serious public concern.
What we do not want to see is some serious accident, however small, followed by crocodile tears from the Minister and the regulator. We do not want to see an exercise in buck-passing by the Government and the regulator on "failures in management", capped by the usual promise, "we will learn useful lessons from this".
No one can get a job as a doctor, as an airline pilot, as a bus driver, or any other skilled job, without having the necessary qualifications. It is essential that in this field we are protected by the NDA. That body should have the responsibility for seeing that only qualified persons are employed. There can be no possible logical or reasonable objection to this duty being made abundantly clear on the face of the Bill. I beg to move.
Noble Lords: Hear, hear!
Lord Triesman: My Lords, I thank noble Lords profoundly for such a warm reception.
Amendments Nos. 7 and 15 impose an additional requirement on the NDA to employ appropriately qualified persons in respect of its principal functions, although as drafted the amendment would in fact apply only to the decommissioning NDA facilities in Clause 3(l)(f)). There is a corresponding addition to the NDA's duties in this regard.
I hope that the noble Baroness, Lady Miller of Hendon, will not take offence at what I am about to say, as certainly none is intended. As I think that she may have hinted, the amendments do not—I went back over what was said on 15 January—say anything about the duties of the contractors. They are limited to the responsibilities and duties of the NDA in relation to the health, safety and environmental record of site management contractors. It is right to ensure that people are properly qualified to do the work and have the ability to do it. No one would want anything else to be the case. It must be an extremely important part of the competitive tendering process for the NDA to make an assessment of the viability of the bidders for site management contracts in these terms—it would be negligent were it not to do so—especially whether the environmental and safety record of potential contractors will meet the strict terms of a nuclear site licence. There will no doubt be informal contact between the NDA and regulators on this matter, and the regulators will certainly play a significant role in the licensing of the successful bidder. It is the regulators who will need to agree any change in the organisational arrangements at nuclear sites under the terms of the licence, which in terms of safety is specifically covered by the Nuclear Installation Inspectorate's licence condition 28.
Clearly, the NDA will want as much comfort as possible that a contractor it is minded to appoint will be acceptable to the regulators. It is hard to imagine the process going ahead were it to do other than that. This is addressed in the memorandum of understanding which will be put in place between the NDA and each regulator, and which has been agreed in generic form as a draft document. But the regulators
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will not want to be drawn into a detailed consideration of the merits of individual bidders in advance of the selection of a preferred contractor by the NDA which might compromise their independence in sanctioning the organisational change which would be necessary on the appointment of a new contractor.
Finally, the NDA is also under a duty to ensure that it has the necessary expertise in place, now and in the future, so that it can successfully carry out its decommissioning task. Specifically Clause 9(2)(a) puts the NDA under a duty to ensure the maintenance and development of a skilled workforce able to undertake clean-up. But that is a means to an end. The NDA's role will be to set the strategic direction for clean-up across the UK, manage the framework for delivering it and ensure the necessary conditions are in place for it to be carried out successfully.
So in the final analysis it is not just a matter of employing the right sort of people, although we expect this to be a very important element, and enshrined in ways which I hope I have persuaded noble Lords are present. For the step change in nuclear clean-up we are seeking to achieve, we cannot detract from the NDA's focus on actually delivering on clean-up.
It is, of course, essential that the NDA's contractors have the appropriate credentials in this respect. It will be one of the acid tests for involvement in nuclear clean-up. Indeed, not being appropriately qualified to do the job is simply not an option. All bidders will have to show that they can meet the requirements of the nuclear site licence, and if they cannot do so they will be excluded.
I urge noble Lords to think about what I have said about withdrawing these amendments. We accept the need for the kinds of expertise and ability that the noble Baroness laid out in her proposals on this amendment. We believe that all the conditions that she seeks to achieve arc already in the legislation, the documents and the memoranda to which I have referred.
5.15 p.m.
Baroness Miller of Hendon: My Lords, I thank the noble Lord for that fuller answer. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 8:
After Clause 3, insert the following new clause—
"Confidentiality
(1) The Secretary of State shall exclude—

(a) from what he lays before Parliament and publishes under any Part of this Act, and

(b) from what is to be laid before the Scottish Parliament, any of the material referred to in subsection (3) of this section.

(2) The NDA shall exclude from any report that it is required to make public any of the material referred to in subsection (3) of this section, but nothing in this subsection shall entitle or require the NDA to withhold from the Secretary of State any information which he is reasonably entitled to require to be disclosed to him or

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which he may require to be disclosed in confidence or for the purpose of the performance of his duties under this or any other Act.
(3) The material referred to in subsections (1) and (2) is any of the following—

(a) anything, the publication of which (otherwise than under any enactment) would constitute a breach of confidence by any person;

(b) anything which constitutes a trade secret;

(c) anything which would be prejudicial to the commercial interests of any person.

(4) In relation to any information which the NDA is entitled to have disclosed to it under any Part of this Act and which the NDA considers that the requirements of this Act, and in particular Schedule 3, would require it to disclose to any other person (otherwise than under any enactment) anything which would normally either constitute a breach of confidence by any person or the disclosure of a trade secret or which would be prejudicial to the commercial interests of any person—

(a) the NDA shall consider whether the disclosure of such information is strictly necessary in order to fulfil such requirements and shall not disclose the information unless it is strictly necessary; and

(b) the NDA shall not disclose the information unless or until the person to whom it is disclosed has agreed to be bound by confidentiality obligations in substantially the same terms as those which are binding on the NDA in relation to the information, and otherwise shall exclude it from disclosure."

The noble Baroness said: My Lords, this amendment, which deals with confidentiality, is grouped with Amendment No. 26 and Amendments Nos. 31 and 33, which are government amendments.
I have read those government amendments carefully. Although they do not cover every point exactly, both we and the companies involved would be satisfied with them. I intend to listen to what the Minister says on those amendments, and if necessary we will not press them. I beg to move.
Lord Whitty: My Lords, I am grateful to the noble Baroness for giving me the opportunity to explain the later amendments. There was considerable discussion on the issue of confidentiality in this and other contexts in the Grand Committee, and the Government recognise that there are concerns here.
Although we consider that a number of these issues cart be dealt with by contract rather than by legislation, we have brought forward our own amendments to address those valid concerns.
Our amendments relate to the exclusions that the Secretary of State can make in respect of the publication of the NDA's annual report, and the NDA in respect of the publication of its strategy and annual plan. The key differences between our approach and that of the noble Baroness, Lady Miller of Hendon, are that our amendments are targeted on the publication of documents, for which, under provision of the Bill, the requirements of disclosure might otherwise outweigh the contractual protections.
The information to be protected relates to information in respect of an individual, or body of persons, which would "seriously and prejudicially affect" their interests.
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That is necessary because there has to be a balanced test on whether the information should be disclosed. The amendments would enable the Secretary of State and—subject to a suitable cost/benefit analysis—the NDA, to decide that the information should be disclosed. This is an important dimension.
The NDA and the Secretary of State need to be able to make a decision in favour of disclosure where they consider it necessary. Because of the general provisions of these amendments, such decisions would be taken only with the greatest care and would not detract from the NDA's financial and natural responsibility to stand behind site companies, should they be exposed to claims for damages as a result of the site licensee providing the information required.
As a consequence of discussions that we have had with both the NDA and the companies concerned, we believe that they are now reasonably happy that the Government's amendments meet at least the bulk of their requirements. They have probably conveyed that view to the noble Baroness as well.
Our amendments meet the main anxieties previously expressed here, and those of the companies themselves.
Baroness Miller of Hendon: My Lords, I have listened carefully to the Minister. That is what I thought his amendments meant when I first read them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer moved Amendment No. 9:
After Clause 3, insert the following new clause—
"PRINCIPAL DUTIES OF THE NUCLEAR DECOMMISSIONING AUTHORITY
(I) It shall be a principal duty of the NDA, in carrying out its functions, to have particular regard to each of the following—

(a) relevant Government policy;

(b) the need to safeguard the environment;

(c) the need to protect persons from risks to their health and safety from activities involving the use, treatment, storage, transportation or disposal of hazardous material;

(d) the need to preserve nuclear security;

(e) the need to promote, and to ensure, the maintenance and development in the United Kingdom of a skilled workforce able to undertake the work of decommissioning nuclear installations and of cleaning up nuclear sites; and

(f) the need to secure the adoption of what it considers to be good practice by the persons with control of designated installations, designated sites and designated facilities."

The noble Baroness said: My Lords, the amendment moves towards the front of the Bill what the Government have in the Bill as drafted "general duties" of the NDA at Clause 9. Here they are made the principal duties of the Nuclear Decommissioning Agency.
We moved the amendment in Committee and the Minister's reply prompted us to return to the matter on Report. We believe that the principal duties of the Nuclear Decommissioning Agency should be laid

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down in legislation. Yet the Minister, in reply on 15 January, said that the proposed new clause was more or less a mission statement laying down the objectives of the NDA. He went on to say:
"It is not appropriate to cover a mission statement in legislation. It will properly be for the NDA itself, once established, to determine how it will frame its objectives in line with legislation".—[Official Report, 15/1/04; col. GC 138.]
I believe that it is for the legislation to lay down the objectives for the NDA. I am grateful to the noble Baroness, Lady Miller of Hendon, and the noble Lord, Lord Jenkin of Roding, for adding their names to the amendment.
It is of critical importance that the NDA has clear principal duties. Besides those laid down as general duties, we have added two more in paragraphs (e) and (f) so that in its principal duties it shall have all the important aspects which it can go on to draw out for itself as a mission statement. At least the legislation refers to those important duties so that the NDA can check that it is going in the right direction.
I hope that between the Committee and Report stages the Government have had time to reflect on the importance of legislation laying down an organisation's objectives. I hope that the noble Lord, Lord Whitty, who replied in Committee, will today be able to tell me whether it is the practice for public bodies to frame their own objectives. In Committee he said that it was, but that surprised me. Perhaps it goes some way to explaining why public bodies do not always seem to have the focus we believe they should. I believe that objectives should be framed for public bodies so that they are extremely clear on what they are supposed to be achieving. I beg to move.
Baroness Miller of Hendon: My Lords, I support the amendment. The focus and importance of Amendment No. 9 is reflected in its new position in the Bill after Clause 3. I can see no problems that the Government may have with it. Paragraphs (a), (b), (c) and (d) in the amendment and in Clause 9 of the Bill are the same. Paragraphs (e) and (f) appear in subsection (2)(a) and (c) of Clause 9. There is nothing new and we have tabled the amendment to demonstrate its importance and focus at an earlier part of the Bill.
Lord Jenkin of Boding: My Lords, the origin of putting such objectives into a Bill came from the Select Committee in another place. I confess that when the noble Baroness, Lady Miller of Chilthorne Domer, moved the amendment in Grand Committee and I listened to the Government's reply, I had more sympathy with the Government. Her amendment reflected what the other place had said, but it was not an appropriate addition to the Bill. But, as my noble friend Lady Miller, has now said, this is a different situation. It is useful for those duties to be given such
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prominence in the amendment and I hope that the Government will feel able to smile upon it. I was happy to add my name to it.
Lord Triesman: My Lords, I am sure that all Members of your Lordships' House will understand the reasoning that lies behind the amendment and the arguments put in support. We discussed the matter in some detail—admittedly in a somewhat different format—when we looked at the restructuring of the Bill in response to the noble Lord's preference to give greater prominence to some of the NDA duties currently found in Clause 9.
I hope that my reasons will be cogent, but we stand by the position set out by my noble friend Lord Whitty at that time. From their comments, it would seem that noble Lords have read Hansard on the matter, so I shall not repeat all of the arguments made by my noble friend on 15 January. I shall pick out what I believe are the key points.
A clause of this kind would be unusual. We have tried in the Bill to make clear what public bodies are expected to do in the following way: public bodies have functions and the proposed legislation sets out the functions of the NDA—decommissioning and cleanup. The Bill then sets out the duties that flow from those functions and how they should be carried out. The more over-arching statement—the objectives that are the NDA's functions—is set out in Clause 3. That follows a pattern of expression and a structure of legislation that is common for public bodies. In that sense, this one is no different.
The Bill has been structured in such a way for good reasons. Clause 3 sets out those principal functions and Clauses 4, 5 and 6 are intimately related, because they identify the additional functions and provisions relating to the designation process. Once a principal function in respect of a site, installation or facility is identified under Clause 3, additional functions are attached to the designation under Clause 4. The process of designation is carried out and the duties of the NDA follow that.
I ask noble Lords to consider that those clauses be taken as a whole. If a clause on duties is inserted into the group, we are fearful that it may be confusing, despite the undoubted intention to make the matter clear. I hope that noble Lords will accept that point on the location of such a clause. We are left to consider whether the clause proposed should be inserted somewhere else in the Bill—most obviously after all of the provisions on functions, which run to Clause 8 and before Clause 9.
When considering the principal functions set out in Clause 3, it is not clear what the effect would be of the concept of the "principal duties" proposed in Amendment No. 9. For example, is the NDA to pay less heed to the remaining general duties left in Clause 9? As a distinction, that would create an unnecessary source of confusion. It is important that all the duties are treated with equal seriousness, because duties are duties for a public body.

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I understand the motivation of noble Lords opposite who seek greater prominence for what are, in some ways, the key considerations that should govern how the NDA pursues its functions. But I ask noble Lords to reflect on whether the amendment achieves that purpose. It confuses issues which, although important, arc matters that the NDA is only able to have regard to, rather than matters which we consider that the NDA should do itself. For example, the NDA is not responsible for setting government policy; it can only, as set out in the Bill, have regard to government policy. That is contrasted with the things which it can, and indeed should and must, do; for example, to promote and ensure the maintenance and development of a skilled workforce and to secure the adoption of good practice. Moving those duties into the "have regard to" category would, in practice, dilute their impact. All that would create greater confusion than is perhaps prudent, and I urge noble Lords to think carefully about that with a view to withdrawing the amendment.
5.30 p.m.
Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. I shall read it very carefully in Hansard because, at present, it does not seem to have given me a clearer indication of why a public body should not have its principal duties laid out in legislation in the way that we have proposed. I heard the Minister describe the process several times and I shall look carefully at the points that he made concerning whether having a principal duty to pay particular regard to something is weaker than having a general duty to do so. I do not believe that it is.
We may wish to return to this matter because, although, as the Minister said, this type of clause would be unusual in legislation, perhaps that is one reason that public bodies sometimes become unfocused—that is, legislation is not sufficiently clear about what their principal duties should be. Just because such a clause would be unusual is no reason not to consider it in this Bill. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 [Designations relating to Scotland]:
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 10:
Page 6, line 23, at end insert—
"() gives it responsibilities not falling within subsection (2)(f) for the non-processing treatment or the storage of hazardous material the treatment or storage of which, in the discharge of those responsibilities, may take place in or on a site in Scotland;"
The noble Lord said: My Lords, in moving Amendment No. 10, I shall speak also to government Amendments Nos. 19, 20, 24, 25, 29, 30 and 32 in this group. I hope to produce such compelling arguments that the noble Lord, Lord Dixon-Smith, will feel that he does not wish to move his Amendment No. 18 as and when it is reached. As he will have recognised, we are on something of a collision course with the government group of amendments and Amendment No. 18, which is in his name.
The settlement on devolution as regards nuclear matters set out in the Scotland Act 1998 is complex. Consequently, the provisions in the Bill are similarly complicated. As I mentioned in Grand Committee, the effect of the provisions has been subject to further detailed analysis because we discussed with our Scottish colleagues the significance of the provisions in the Bill. In the light of that analysis, it has proved necessary to propose these amendments to the Bill to ensure that the legislation properly reflects the mutually agreed position of the Secretary of State and Scottish Ministers.
In brief, the main circumstances which were found to be missing from the Bill were: first, the non-processing treatment or storage of hazardous material in Scotland, which is rectified by Amendment No. 10; and, secondly, proposals in the NDA's strategy or annual plan for the non-processing treatment, storage or disposal of hazardous material which would have an effect in or as regards Scotland. Those issues are addressed by Amendments Nos. 24, 25, 29 and 30. They are matters on which we believe Scottish Ministers should rightly be consulted, and the government amendments give effect to that provision.
In addition, Amendments Nos. 19 and 20 provide for the NDA to have regard to policies notified to it by devolved administrations and Amendment No. 32 requires the Secretary of State to consult Scottish Ministers before making directions on the matters which are to be covered by the NDA's annual report.
Noble Lords will recall that in Grand Committee the Government were probed on the arrangements in the Bill for the involvement of Scottish Ministers. The amendment tabled by the noble Lord, Lord Dixon-Smith, presses that issue further. I can confirm to the House that with the changes proposed by the Government, the Scottish Ministers have the appropriate powers of joint action over devolved matters and consultation over other matters which are reserved but which might impact on their devolved responsibilities. Therefore, the noble Lord will see from that argument, justifying the Government's amendments, why I hope that, in due course, he will not move Amendment No. 18. I beg to move.
Lord Dixon-Smith: My Lords, I am grateful to the Minister for his invitation. I shall not tell him my conclusion for a while; it will be nice to keep him in suspense. I was moved to table my amendment because of the way in which Clause 9, particularly subsection (4), is constructed. Clause 9 begins with the words,
"General duties when carrying out functions".
That refers to the Nuclear Decommissioning Authority. It states:
"(1) It shall be the duty of the NDA, in carrying out its functions, to have particular regard to each of the following—
"(a) relevant Government policy".
Subsection (4) states—I shall not read it all:
"In this section 'relevant Government policy' means all current policies which—
(a) relate to the decommissioning of nuclear installations … and
(b) have been published by or on behalf of Her Majesty's Government in the United Kingdom or a devolved administration".

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I shall now tell the Minister my conclusion. I believe that some words here do not need to be in the Bill at all. The clause refers to a "relevant government policy" published in the United Kingdom, but surely the devolved administrations are part of the United Kingdom. They are not separate nations; they are not separate states; and it seems to me that they cannot announce a relevant government policy. I certainly accept that the Scottish Parliament and the Scottish executive are to a large extent the government of Scotland, but they are not the government for the purposes of this clause, judging by the way in which it is constructed. I am absolutely sure that the Welsh Assembly cannot announce a relevant government policy. It seems to me that we cannot talk about it announcing a relevant government policy.
Those words are completely redundant. We need the clause to read "'relevant Government policy' means all current policies which have been published by or on behalf of Her Majesty's Government in the United Kingdom". That would cover the situation, particularly in the light of the other amendments that the Minister has just announced and which I am delighted to see. The Minister will be delighted to hear that I do not intend to press my amendment today because we are dealing with what I would call a battle of semantics. I seriously suggest, particularly in the light of the amendments that he has proposed, that that phrase is not necessary any longer and that the Bill would be better without it. It seems to me that it confuses the situation.
Lord Monro of Langholm: My Lords, following on from my noble friend Lord Dixon-Smith—he highlights how complicated this matter is—I want to put a couple of points to the Minister. First, does any issue in this clause or in the Bill require legislation in Scotland? The Scottish Executive seems to have been notoriously sluggish in carrying out legislation that affects Scotland when it also affects England and Wales. This can be noted particularly over foot and mouth. I do not know what happened in Edinburgh today. There is an argument about GM crops, that the Government have consulted and have taken steps to allow limited development in England, whereas the Scots have not yet agreed except on a voluntary basis. We will vote on it today. Much depended on whether the Liberal Democrats were going to support the Scottish Executive, because they seem to be doing so in Scotland if they disagree here at Westminster.
My second point, which follows on from that, is on the word "consultation", which is in Amendment No. 24 and elsewhere in these amendments, which I am glad that the Minister has put before the House. How far does consultation mean agreement? As the Bill is written at the moment, Ministers in England could inform Scottish Ministers what they intended to do, and could go ahead and do it. Does the Scottish Executive have a veto, or must agreement be involved? If so, why is the reference only to consultation and not also to agreement? We want to be clear on these points, because it is amazing how simple things like this can
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get blown up into almighty international situations. I hope that the Minister can clarify what I have put to him.
Lord Maclennan of Rogart: My Lords, like those noble Lords who have already spoken in this debate, I acknowledge the extraordinary complexity of the devolved arrangements. I simply wish to ask not how the Minister's conclusions have been arrived at, but what the practical impact is, particularly on the authority, if any, of the regulatory bodies in Scotland that are answerable to the Executive and not to the Secretary of State. I have in mind particularly the Scottish Environmental Protection Agency.
Baroness Byford: My Lords, before the Minister responds, I add my concern. I read carefully the amendments proposed by the noble Lord, Lord Whitty. Amendment No. 24 states:
"The Secretary of State must also consult the Scottish Ministers before approving".
My noble friend Lord Monro of Langholm was right to raise the question of whether consulting means having an agreement, or just consulting, and whether the Scottish Parliament has the right to say "no". I speak briefly only to add weight to that argument, but certainly I do not think that the amendment proposed by the noble Lord, Lord Whitty, clarifies the position from where we were in Committee.
Lord Davies of Oldham: My Lords, as I indicated in my opening contribution, the issues are somewhat complex, and therefore I will have considerable difficulty in replying to the contributions that have been made in this short debate and in maintaining clarity. I will deal with the points of clarity first, and then I will try to meet some of the more difficult points later.
The question of consultation is obvious and best exemplified by the amendment that is concerned with the annual report. Consultation means consultation. It does not mean that the other side has a veto. It means that Scottish Ministers will be consulted about what should be contained in the eventual annual report. They do not have a veto on it, because they do not have parallel powers to the Secretary of State in that area. It makes sense that they should be consulted, and that is what the consultation areas of these amendments refer to.
Where the issues become more difficult is that the Scottish Administration, and the Scottish Parliament. have powers. We recognise that they have powers with regard to environmental protection. It would have been an odd state of devolution if we devolved issues to Scotland but we had not devolved environmental issues, so of course they have responsibilities with regard to the environment. The noble Lord, Lord Maclennan of Rogart, earlier invited me to consider the future of the community around Dounreay. The Scottish Administration and the Scottish Parliament will have considerable views on

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that, which would be taken into account by the NDA when it is involved in that site-by-site decision taking that we referred to in our earlier debates.
Clearly there are powers for the Scottish administration there, and these powers need to be taken into account and recognised by the NDA when it is involved in its crucial decisions on national policy. All that I sought to emphasise in the amendments that I have spoken to in this short debate is that in areas where it is appropriate that consultations should take place, the amendments will ensure that they do so; and in areas where there are Scottish powers, then those issues for which the NDA is responsible will need to take account of where the boundary is between its powers and those properly devolved to Scotland in the 1998 Act.
The purpose of these amendments was to give effect to what the whole House will recognise as detailed and complex discussions over a number of months, so that we could arrive at this position on Report which was not previously the case. I could not give these answers in Committee but am in a position to do so now. The interests of Scotland need to be properly taken into account so that it is satisfied, while at the same time we reassure the noble Lord, Lord Dixon-Smith, that the broad thrust of this policy—as he will recognise—is overwhelmingly a government policy which covers the whole of the United Kingdom.
5.45 p.m.
Lord Dixon-Smith: My Lords, it is not the direction of government policy that concerns me; it is the direction of the construction of Clause 9(4). With respect to the Minister, he has not really answered that point. He might prefer to leave that to Third Reading when he will see with even greater clarity—because, by then. his amendments will all be on the face of the Bill—that those particular words are unnecessary.
Clause 7 [Supplemental functions]:
Lord Whitty moved Amendment No. 11:
Page 6, line 44, leave out "benefiting" and insert "that benefit"
The noble Lord said: My Lords, in moving Amendment No. 11, I shall speak to the other amendments in this group.
These amendments are a direct response to requests from noble Lords opposite to raise the profile of the environment in the NDA's responsibilities, particularly in the localities. Specifically, they emphasise that its function in encouraging and supporting activities that would benefit the social and economic life of local communities could be extended and include activities that would bring environmental benefits.
The Government recognise the concerns expressed in Committee, particularly by the Liberal Democrat Benches, that this was not clear and that it was important that projects for environmental benefits were included. We understand those concerns and that, on reflection, it would be useful to add that to the Bill. Therefore, Amendment No. 11 addresses that issue in Clause 7. The subsequent amendments are
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drafting amendments to reflect that point in relation to the powers of the NDA in Clause 10 and the contents of the NDA strategy in Clause 12. I beg to move.
Baroness Miller of Chilthorne Domer: My Lords, I am very grateful to the Minister for bringing forward amendments which answer our question as to whether communities around stations to be decommissioned should be able to profit from environmental projects that are grant aided by the NDA, as well as social and economic ones. It is a particular pleasure to be able to agree with him today on something. I am very grateful.
Lord Whitty Lord Whitty moved Amendment No. 11A:
Page 6, line 46, at end insert "or that produce other environmental benefits for such communities.
Clause 9 [General duties when carrying out. functions]:
[Amendments Nos. 12 to 18 not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 19 and 20:
Page 9, line 7, leave out second "or"
Page 9, line 8, at end insert "or have been notified both to the NDA and to the Secretary of State by a devolved administration."
Clause 10 [Powers for carrying out functions]:
Lord Whitty Lord Whitty moved Amendments Nos. 21 to 23:
Page 9, line 37, leave out from "hold" to second "and" in line 38 and insert "nuclear site licences, registrations under section 7 of the 1993 Act"
Page 9, line 41, leave out "benefiting" and insert "that benefit"
Page 9, line 42, at end insert "or that produce other environmental benefits for such communities.
Schedule 2 [Procedural requirements applicable to NDA's Strategy]:
Lord Whitty Lord Whitty moved Amendments Nos. 24 to 26:
Page 141, line 34, at end insert—
"() The Secretary of State must also consult the Scottish Ministers before approving anything relating to proposals for the non-processing treatment, the storage or the disposal of hazardous materials if it appears to him that the proposals would have an effect (notwithstanding that they relate only to England and Wales)—

(a) on the management of hazardous materials located in Scotland; or

(b) on the use of a site in England and Wales for the non-processing treatment, the storage or the disposal of hazardous materials that could be brought to that site from Scotland."

Page 142, line 36, at end insert—
"() In this paragraph "non-processing treatment" has the same meaning as in section 6."
Page 143, line 2, at end insert—
"(5) The NDA may also exclude from what it publishes under this paragraph—

(a) anything relating to the private affairs of an individual the publication of which the NDA considers would seriously and prejudicially affect the interests of that individual; and

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(b) anything of a commercial nature relating specifically to the affairs of a particular body of persons the publication of which the NDA considers would seriously and prejudicially affect the interests of that body.

(6) In determining whether to exclude anything from publication under sub-paragraph (5) the NDA must have regard to whether the harm that would be caused by publication is likely to outweigh the benefits.".
Clause 12 [Contents of strategy]:
Lord Whitty Lord Whitty moved Amendments Nos. 27 and 28:
Page 11, line 16, leave out "benefiting" and insert "that benefit"
Page 11, line 17, after "facilities" insert "or that produce other environmental benefits for such communities.
Schedule 3 [Procedural requirements applicable to NDA's annual plans]:
Lord Whitty Lord Whitty moved Amendments Nos. 29 to 31:
Page 144, line 8, at end insert—
"() The Secretary of State must also consult the Scottish Ministers before approving anything relating to proposals for the non-processing treatment, the storage or the disposal of hazardous materials if it appears to him that the proposals would have an effect (notwithstanding that they relate only to England and Wales)—

(a) on the management of hazardous materials located in Scotland; or

(b) on the use of a site in England and Wales for the non-processing treatment, the storage or the disposal of hazardous materials that could be brought to that site from Scotland."

Page 144, line 34, at end insert—
"() In this paragraph "non-processing treatment"" has the same meaning as in section 6."
Page 144, line 46, at end insert—
"(5) The NDA may also exclude from what it publishes under this paragraph—

(a) anything relating to the private affairs of an individual the publication of which the NDA considers would seriously and prejudicially affect the interests of that individual; and

(b) anything of a commercial nature relating specifically to the affairs of a particular body of persons the publication of which the NDA considers would seriously and prejudicially affect the interests of that body.

(6) In determining whether to exclude anything from publication under sub-paragraph (5) the NDA must have regard to whether the harm that would be caused by publication is likely to outweigh the benefits.".
Clause 14 [Annual reports]:
Lord Whitty Lord Whitty moved Amendments Nos. 32 and 33:
Page 14, line 35, at end insert—
"() Before giving a direction for the purposes of subsection (3)(j) the Secretary of State must consult the Scottish Ministers."
Page 15, line 5, leave out from "anything" to end of line 6 and insert "falling within subsection (9).
(9) The following falls within this subsection—

(a) anything the publication of which the Secretary of State considers to be against the interests of national security;

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(b) anything relating to the private affairs of an individual the publication of which the Secretary of State considers would seriously and prejudicially affect the interests of that individual; and

(c) anything of a commercial nature relating specifically to the affairs of a particular body of persons the publication of which the Secretary of State considers would seriously and prejudicially affect the interests of that body."

Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 34:
After Clause 14, insert the following new clause—
"SCHEMES FOR SOCIAL AND ECONOMIC ASSISTANCE WITH RESPECT TO DECOMMISSIONING
(1) Where the Secretary of State makes a direction under section 3 which specifies paragraph (b) or (f) of section 3(1) as the purposes for which an installation is designated, unless he considers that the decommissioning of the installation will not cause adverse economic and social effects on communities living near it, he shall also make a direction to the NDA and any relevant development agency within whose area any communities so affected are situated, requiring the NDA and any such agency to prepare together a scheme for mitigating those effects.
(2) A scheme prepared under subsection (1) shall include the following—

(a) particulars of the way in which the powers conferred by section 10(2)(c) and (as the case may be) by—

(i) Part 1 of the Regional Development Agencies Act 1998,

(ii) the Welsh Development Agency Act 1975, or

(iii) Part 1 of the Enterprise and the New Towns (Scotland) Act 1990,
are proposed to be exercised, and

(b) such other particulars and information as the Secretary of State may from time specify.

(3) Particulars and information may be specified by the Secretary of State under subsection (2)(b) either generally, or with respect to a particular scheme or description of scheme.
(4) The NDA and a relevant development agency to which a direction for the preparation of a scheme under paragraph (1) is made shall as soon as reasonably practicable submit the scheme to the Secretary of State for his approval; and the Secretary of State shall either—

(a) approve the scheme submitted to him with such modifications, if any, as appear to him to be appropriate; or

(b) give notice to the NDA and the agency specifying the matters with which he is dissatisfied and requiring the NDA and the agency to revise and resubmit the scheme to him for his approval.

(5) The Secretary of State may from time to time require the NDA and a relevant development agency to review a scheme approved by him; and upon such a review the NDA and the agency shall consider whether to submit proposals to the Secretary of State for the modification of the scheme.
(6) Subsection (4) shall apply to—

(a) any scheme resubmitted in consequence of a notice given under paragraph (b) of that subsection, and

(b) any proposals for modification submitted under subsection (5),
as it applies to a scheme submitted pursuant to a direction under subsection (1).

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(7) If the Secretary of State considers that the NDA or a relevant development agency has failed properly to implement a scheme or modifications of a scheme approved by him under this section, he may give the NDA or the agency directions about the steps that it is to take for the purposes of securing such implementation.
(8) Each of the following is a relevant development agency for the purposes of this section—

(a) a regional development agency within the meaning of the Regional Development Agencies Act 1998;

(b) the Welsh Development Agency;

(c) Scottish Enterprise; and

(d) Highlands and Islands Enterprise.

(9) For the purposes of this section, the area of Scottish Enterprise shall not be treated as including the Highlands and Islands within the meaning of section 21(1) of the Enterprise and the New Towns (Scotland) Act 1990 unless the Secretary of State directs otherwise."
The noble Lord said: My Lords, the amendment stands in my name and in the names of noble Lords from various parts of the House. I recognise that the noble Lord, Lord Campbell-Savours, has sat patiently while we have dealt with earlier parts of the Bill. The amendment also stands in the name of the noble Lord, Lord Maclennan of Rogart, who has taken part in the debates.
The amendment has been promoted by some of the local authorities in the areas likely to be seriously affected by decommissioning and, therefore, by the activities of the Nuclear Decommissioning Authority. The closure of nuclear installations or the substantial reduction of activity at such installations arising from the NDA's activities could—and almost certainly will—have serious adverse consequences for some of the communities around them.
A good deal of anxiety is being expressed about future employment prospects in those areas. One thinks particularly, but not exclusively, of Sellafield. Sellafield will be affected, if there is a cessation of reprocessing activities, which could mean the loss of thousands of jobs in an area that is otherwise of high deprivation and where any restructuring of the economy will be particularly difficult. Those of us who have over the years, had the privilege of visiting the remarkable installations at Sellafield know that it is a considerable trek. The roads are not good, and road transport is slow. That is the kind of thing that will make it difficult to attract other industries quickly to the area.
With regard to the economic impact of the NDA's decommissioning activities, the Bill includes several supplemental functions to the principal task of the NDA, which is to decommission and clean up the designated installations. I do not quarrel with that for a moment; that is its principal task. However, Clause 7(1) states that,
"the NDA shall have the function, to the extent that it considers it appropriate to do so, of … giving encouragement and other support to activities benefiting the social or economic life of communities living near designated installations, designated sites or designated facilities".
It is clear that that function or power gives the NDA the capability to work with other government agencies and local authorities to provide economic support to affected
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communities. However, the communities and their representatives, who live in those areas, are concerned that the function, as set out in the Bill, is discretionary. The NDA may or may not do it. There is nothing contained in the Bill as it stands to give a clear assurance that affected communities, which may suffer severely the impact of decommissioning activities, will receive the necessary support to restructure their economies because of decommissioning and reductions in employment. One might well ask the question, what provision is being made for social and economic support in the anticipated expenditure of the NDA'? It may be too early to answer it, but are there going to be budget heads which will deal with this for the NDA's activities?
Given the overwhelming importance of the activities of the NDA in these areas as it works on its decommissioning duties, it should not be left to others to deal with economic consequences. I believe that it should be an integrated and required part of the NDA's duties. What we are seeking in these amendments is that instead of it simply being a power for the NDA to give economic support, there should be a clear duty laid on it. The amendment would give the assurance to the affected communities that support to mitigate the economic and social effects would be forthcoming by requiring that support be set out in a scheme and then approved by the Secretary of State. Without a statutory requirement for a scheme that commits to mitigate the economic and social effects, how can local communities be assured that the help they will certainly need will be forthcoming?
The burden of this amendment is that it should be a requirement, a duty, and not merely a power. I shall be interested to hear the Minister's answers on this. There are many worried people around the country, not only in Sellafield and Dounreay, but in a number of other areas where the NDA will have its activities. I hope that the Government will be able to give them the assurances that we seek with this amendment. I beg to move.
6.00 p.m.
Lord Campbell-Savours: My Lords, I shall try to truncate what I was going to say because I do not want to repeat what the noble Lord, Lord Jenkin of Roding, has said. I am grateful to him for moving this amendment. It provides us with a peg on which to promote the discussion on decommissioning and regeneration currently under way in Cumbria where I live and where I have spent most of my life.
My noble friend will know that the decommissioning of nuclear plants will have a significant effect on local economies. The noble Lord, Lord Jenkin, set out the legislation which deals with this particular issue and draws specific attention to the words,
"to the extent that the NDA considers it appropriate to do so".
Those words worry us.
This capability outlined in Clause 7 coupled with Clauses 10(2)(c) and 12(2)(e) clearly gives the N DA the power to work with other Government agencies and local authorities in providing economic support to communities likely to suffer adverse consequences from reduced activity at nuclear installations.

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At first glimpse it is very helpful. But there are profound concerns in West Cumbria as to whether the capability will actually deliver the benefits required if decommissioning of aspects of the work at Sellafield is to proceed. The Bill does not specify the support that we believe is required. For example, in West Cumbria the impact of a reduction in reprocessing activities at Sellafield may mean a significant reduction in employment in areas of high deprivation and all exacerbated by the relative remoteness of the communities involved.
Given that efforts to ensure balanced economic regeneration in that area over the past 20 years have failed to reduce West Cumbria's dependency on the nuclear industry, it is clear that a far more coordinated approach will be necessary now that the Sellafield site is moving into a period of uncertainty. When I was one of the local MPs, I always believed that the dependency on nuclear employment, which had increased in recent years following a reduction in other manufacturing activity in West Cumbria, was not conducive to the development of a balanced economy, despite my very strong support for nuclear power. That was also the expressed view of many in the nuclear industry itself. All that gives a greater importance to the need for co-ordinated, socioeconomic regeneration programmes, not only in West Cumbria but in other parts of the country affected by the NDA. It is therefore vital that the NDA is required to ensure that the impact of its decisions and actions as they affect communities living near the,
"designated installations, designated sites and designated facilities",
is not left to others to deal with, but is an integrated and required part of its duties.
Regeneration on the scale required will require substantial investment of funding and support from relevant bodies. To encourage innovation, enterprise and commitment, a community needs to have confidence in its future. In the absence of a clear assurance in the Bill as it stands, will that support be provided?
How will the affected communities be assured that their future in terms of economic stability will be properly addressed? Through its organising of contractual arrangements for cleaning up sites and other responsibilities, the NDA has a vital role to play in facilitating regeneration. Economic benefits to be realised from the contractual arrangements should be optimised by the NDA as should those from the re-use of the same cleaned-up sites. Additional to these are its capabilities through the Bill to provide assured funding in the form of grants and loans. Accountability to maximise these opportunities and clarity as to what is to be provided is vital to help to reassure local communities. My noble friend gave the noble Baroness a very positive answer on the question of support for environmental projects. I hope that he can reassure me in the same way on this matter.
Clause 11 of the Bill requires the NDA to prepare a,
"strategy for carrying out its functions; and … from time to time to revise that strategy".
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The strategy would be required to set out how the NDA proposes to exercise its functions under Clause 7 (1)(e). Given that this is a supplemental function, will affected communities be sure that economic support is prioritised by the NDA and adequately resourced'? If not, will the Government require that it is?
On behalf of people in West Cumberland, in the absence of this amendment, how would the NDA be made accountable for ensuring that the socioeconomic impact of its activities is dealt with in a manner acceptable to the communities affected? For the purposes of enabling the NDA to carry out its functions, the Secretary of State may make grants to the NDA. I understand that it will be the duty of the Secretary of State to establish and maintain an account to be known as the nuclear decommissioning funding account, which would be the source of funding for the NDA to exercise its functions under Clause 7(1)(e) of,
"giving encouragement and other support to activities benefiting the social or economic life of communities living near designated installations".
What allowance has been made in the estimates produced for the anticipated expenditure of the NDA for the funding of measures to offset the socioeconomic impact of its activities? As the Bill is drafted, there is considerable uncertainty about what socioeconomic support affected communities can expect. People want to know whether it would be additional to existing funding sources. Who will provide such support and how will it be guaranteed in the long term? This lack of clarity is a matter of some concern for those communities.
That is the case from Cumbria for the proposed amendment. It would require the NDA and the relevant regional development agency—as the Government's agent for delivering economic assistance—to prepare schemes for mitigating socio-economic effects on local communities. Setting these out in detail, underpinned by legislation, will go a considerable way to giving the clarity and guarantees that would be needed.
I welcome the Secretary of State's plans, announced in December 2003, to establish a strategic task force for West Cumbria. This is an important statement that the Government will work with representatives of the community and other relevant bodies, to draw up and implement a vision for the future. While supporting this important initiative, I believe it complements—and does not remove the need for—the proposed amendment. Clearly, it is primarily relevant to West Cumbria as far as we are concerned. As the Bill stands, there is no commitment to provide additional, long-term economic support. Obviously, there cannot be a guarantee that the task force would be operational in the long term. As we are all aware, priorities—and, indeed, administrations—change. Nevertheless, a commitment bound into the legislation would give the necessary reassurances, and be very helpful to all those involved in regeneration.
Without a commitment to a scheme of support as set out in the amendment, or a very clear statement by the department guaranteeing a commitment outside the legislation, how can local communities be assured

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that the required level of economic support will be provided? This brings me to my final question. In the absence of this proposed amendment, could the Minister advise how the financing of necessary socioeconomic measures will be guaranteed in future years?
I hope to get a very positive response from Ministers to each of my questions today, as they will be pored over by lots of people in the county of Cumbria.
Lord Maclennan of Rogart: My Lords, the noble Lord, Lord Davies of Oldham, in an answer in an earlier debate, drew attention to my long-term concerns about the community in which Dounreay is situated. The arguments which have been eloquently deployed by the noble Lord, Lord Campbell-Savours, for Cumbria, may be thought to apply a fortiori to Caithness in the north of Scotland.
The concerns which he has described as being considerable in West Cumbria have, to some extent, been answered in principle by gestures, and even by important decisions, of the Government. To locate the headquarters of the new agency there, for example, might well be thought to have been against the sense of those who were simply concerned about economics. But it was no doubt a welcome decision. So far as Caithness and the Dounreay community are concerned, I think it is important, although the issue is not pressing in the sense that a downturn in employment is not anticipated in the short term. To address these issues now is important, because we are setting up a statutory framework within which these issues will have to be addressed at some point. It is almost impossible to exaggerate the significance of the employment offered, directly and indirectly, in the far north of mainland Britain because of the experimental reactor and establishment at Dounreay. More than 3,000 people are directly employed on the site at present, but the ripple effect is enormous; it involves the service industries, in other related manufacturing and supply industries.
It is also very important to recognise that the infrastructure needs of a community of that kind have to be sustained and will require continuing expenditure by local government and other public agencies. If there is nothing but a prospect of decline, it becomes much more difficult for those bodies to justify expenditure. Therefore, it is necessary to recognise that there is no natural alternative employment in such areas, notwithstanding all the considerable efforts made to diversify the local economy, which have been to some extent remarkably successful, against a background of pressure on the fishing and agricultural industry flowing from structural support and a greater extensification of agricultural enterprises. Employment needs to be encouraged through the recognition of what can be done in conjunction with the developments for which the Nuclear Decommissioning Authority will have responsibility.
The Government will no doubt point again, as they already have, to the empowering clause of the Bill, which the noble Lord, Lord Jenkin of Roding, quoted in lull. I refer simply to Clause 7(1)(e). Empowerment is not enough, because it is quite clear that the reason for the establishment of this authority is to accelerate
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and make more effective the decommissioning process as part of the environment and energy requirements of this country, and also for reasons of economy. It is being set up not as a development agency but for the specific tasks to which I referred. None the less, it will deploy resources which, if used with the additional purpose of extending the skills in the community, could allow it to do much more than any other existing agency.
The body will have a far larger budget than the regional development agency in the area and than the total budget of the Highlands and Islands Enterprise, which must be deployed throughout the whole half of Scotland in which it is operative. While it is clear that the budget of the NDA will not be directed principally to the schemes of social and economic development, if the budget is spent in a manner consistent with agreed schemes to develop local skills, for example, and to assist in the development of spin-off technology from research work being done on the site, that could be highly beneficial.
There is a particular problem about the position of the Scottish sites in the compass of the Bill. Much of the responsibility for economic regeneration is devolved, and I am not entirely certain that the drafting of the proposed new clause to which I have put my name adequately addresses those points. However, I have little doubt that it would be the wish of the Scottish executive to ensure that the Scottish sites under the NDA's authority will be no less advantageously treated than those south of the Border. Will the Minister who replies to the debate engage in discussion with the Scottish Executive between now and Third Reading to ensure that the wishes and support of the Scottish Executive for what is being done in the Bill is made explicit? I do not think that it would appropriate to second-guess the approach that they might wish to take but I believe that the primary duty will remain with the Secretary of State. The NDA will be accountable to him for schemes that will have to be worked in conjunction with bodies that are otherwise accountable to the Scottish Executive. That does not seem to me to be an insuperable problem to manage. I hope that in their answer to this debate the Government will show their readiness to engage in that dialogue. I have no doubt that they are as aware as anyone of the seriousness of the problems that will be faced in the future by these communities.
Lord Woolmer of Leeds: My Lords, I should briefly explain why I have an interest in this matter. Many years ago I worked for a number of years as a consultant with BNFL and got to know West Cumbria very well as a result. With another hat on, many years of my political life have been spent in Yorkshire where we saw the run-down of the mining industry and the problems that had to be tackled there.
When I look ahead to the next few years and the possible major changes in West Cumbria, in which I have a long-standing interest, it causes me concern. For people from outside West Cumbria or Dounreay, it is often impossible to understand how far away

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people can feel. Remote is probably the wrong word nowadays, but noble Lords will know what I mean. They are intensely, remarkably, dependent, directly and indirectly, on one industry. This is not just special pleading for an industry or for people in an industry, these are very special circumstances.
The local authority in the area has had to cope with one of the largest and most complex nuclear installations in the United Kingdom, if not in the world. It has coped with that on its own. It is a tiny local authority. It has put not only local interests at the forefront, but national interests too. The nuclear industry has not always been popular but the local authority has stood by it. It has stood by the industry and I hope that now that the Government will look after the area and help with the consequences of a rundown in part of that industry.
As my noble friend Lord Campbell-Savours said, last December, following representations by Dr Cunningham, Member of Parliament for Copeland, and the trade unions, the Government announced a cross-cutting departmental taskforce to look at future prospects for industry and employment in West Cumbria. It would be helpful to the House and to people in West Cumbria to know what is happening with that task force. Is any progress being made? What progress can we look forward to?
In my experience, BNFL has taken its wider responsibilities in West Cumbria very seriously for many years. We are asking that the new decommissioning agency follows in that tradition. BNFL provided the original funding for the West Lakes Science and Technology Park and funding for the West Cumbria Development Agency. So this is not a new matter and I hope that that example can be followed by the new agency. With the taskforce, the Government appear to recognise that West Cumbria is a very special case. BNFL has shown that one can invest in the wider community and the Bill gives the NDA power to provide economic support.
People in West Cumbria feel very exposed to the changes that face them. Naturally, as changes hit them, they seek maximum reassurance that actions will be taken to secure economic stability in their area. I understand that the Government may have an alternative approach in mind—a memorandum of agreement or similar arrangement. I should be extremely interested if my noble friend could tell us more about what the Government have in mind. I should also be interested to hear more about the terms of reference and the action time scales of the cross-departmental review.
Above all, I believe that communities like West Cumbria and Dounreay will seek a clear statement today that the Government recognise the size of the possible problems ahead and the very special circumstances of the communities involved. They seek reassurance that a memorandum of agreement and task forces really will produce firm, committed and timely action to meet the employment needs of communities that have been critical to the energy needs of this country. Speaking as a nuclear industry
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supporter, I hope that it will still have a substantial life but there will be changes. I hope that the Government will stand by those communities as they have stood by this country at a time of need.
Baroness Byford: My Lords, as an outsider coming from the Midlands and not being directly connected with any nuclear plant, I should like to add a few words. Two years ago the foot-and-mouth outbreak had dire consequences for many communities of which Cumbria was one. Following the outbreak I went up to Cumbria and stayed in West Cumbria, although I did not have a chance to make a site visit to Sellafield.
However, one of the points that was made very clear to me then was the dependence of that community on Sellafield for employment, not only directly at the site, but also in other industries and businesses which support it directly and indirectly. On my tour around the area staying at bed-and-breakfasts and places that put people up who came to the site, I found that they were very dependent on that industry. There is not a tremendous amount of alternative work up there.
The noble Lord, Lord Woolmer of Leeds, is quite right to say that there is a feeling that "Nobody cares for us. We're a long way away". I got the feeling from the communities themselves that they try to support and encourage each other. While the industry is thriving, that is all right. But my noble friend was quite right in his opening remarks to refer to the degree of uncertainty existing within the industry.
Therefore, although I have no direct interest or expertise in this field, I can only reflect that my three days up there underline the expressions of concern that have been expressed by noble friends from every side of the House. Accommodation, small shops, and other businesses will suffer. Many people who are skilled in various fields will suffer. I suspect there are not many other fields that they can diversify into. It is a huge problem that needs to be addressed.
I will not go through the individual questions that the noble Lord, Lord Campbell-Savours, raised as the Minister will respond to them. However, as a Midlander, I was quite struck by the degree of reliance of the area. I am sure that the same is true of other areas. The only other experience I have is of Sizewell B. At the moment, that is very much ongoing and, one hopes, will be so for some time. But for those areas that are very remote, I just wanted to add an outsider's point of view in support of the communities affected. I know how concerned they were even when I was in West Cumbria two years ago.
As the noble Lord, Lord Maclennan of Rogart, mentioned, the farming community at that time was experiencing difficulties in trying to get re-established. My point is that if the farming side is experiencing problems and there is uncertainty about Sellafield, what else is left?
It was drawn to my attention that it is all very well to talk about tourism—the centre of Cumbria tends to be a honey-pot area—but not many people venture up the west side of Cumbria. That area is more remote than central Cumbria. I hope that the Government will

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answer the questions that have been asked. The amendment is hugely important. I hope that the Government will accept it. If they do not like parts of it, I hope that they will say so and enable us to propose a measure at Third Reading that is worth while and will help people in the vulnerable communities that we are discussing.
Lord Davies of Oldham: My Lords, it is a pleasant task to reply to such an impressive debate. I am very glad that the noble Baroness, Lady Byford, joined in and spoke of the trials and tribulations that Cumbria has suffered in recent years. Cumbria has, indeed, experienced very real difficulties. Before the noble Baroness entered the debate I felt that it was just like old times with the noble Lord, Lord Jenkin, making representations of a more general nature based on his expertise. In the speech of my noble friend Lord Woolmer I thought that I heard echoes of constituency representations and economic representations from the past. I appreciate very much that this debate is of great importance to a number of communities of which clearly Cumbria is one. However, I shall refer also to Caithness and Dounreay.
I hope that we can reach agreement on this matter. I believe we all recognise that the crucial responsibility of the N DA is to secure nuclear decommissioning and clean-up for the benefit of the nation. It is important that that task is carried out safely, securely and in ways which protect the environment. It is a programme that we all recognise will span many decades and will cost many billions of pounds. It is a huge commitment for the nation. The NDA is the organisation charged with this most significant task.
The NDA will certainly need to focus all its attention on the task to ensure that it is carried out effectively and as swiftly as possible, and to ensure best value for the taxpayer in what we recognise is a very substantial commitment of the nation's resources. The Bill clearly identifies the NDA's principal functions in Clause 3 quite separately from the other supporting and supplementary functions. The Bill is drafted in that way because those prime obligations of the NDA are of such importance to the nation.
Although I understand the motivation behind the amendment of the noble Lord, Lord Jenkin—that was reinforced by the contributions of other noble Lords—I do not think that we can accept it. This is a very important subject and I shall return to it in a moment. I want to reassure noble Lords that the issues which have been raised today will be tackled constructively. However, it would not be appropriate to deflect the NDA from its main task. The measure would turn the NDA into a vehicle for social and economic regeneration. It would make the NDA equivalent to a regional development agency when dealing with the economic consequences of nuclear decommissioning, and it would place on the NDA a very considerable burden in terms of resources and expertise in ensuring that it could carry out such responsibilities.
I venture to suggest that, as the amendment implicitly recognises, the duty of promoting regional development properly belongs to other bodies—to the regional development agencies and the equivalent bodies in
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Scotland. It is a well established framework for addressing the social and economic needs of the individual regions. It will be recognised that this Government have sought to strengthen the role of the RDAs. There is no reason why the relevant agency could not address the impact of nuclear decommissioning in the same way that it may have to address the closure of any other significant employer in a region. I recognise that there are particular issues that are associated with the location of nuclear plants, and why it is of such significance for the local communities when they go.
It is difficult to measure the economic consequences for a region in such cases. When one or two of our other great industries have gone sharply into decline—shipbuilding, steel making and particularly coal mining—the devastating effects on local communities have required governments to respond. They have done this with different levels of commitment, but I do not wish to make political points on that score at this time. When governments have responded to such situations, they have recognised that resources need to go into proper and appropriate channels, and that the responsibility for those needs to reside with local or regional bodies. The NDA does not have, and will not have, such responsibility.
The amendment would give the Secretary of State for Trade and Industry sweeping powers to direct detailed action by the NDA, as well as by the relevant regional development authority—for which other Ministers, including Scottish and Welsh Ministers, have responsibility. That is unlike any of the powers provided by the RDAs, who clearly have prime responsibility for this kind of operation and for meeting these issues.
As we considered other issues raised earlier in the Bill, I hope that I have convinced the House that the NDA is not the right body to have this responsibility. That is not to say—and I hasten to make this point—that we do not recognise the particular problems that will be faced by regions that are heavily dependent on the nuclear industry. The examples of West Cumbria and the north of Scotland have been graphically expressed this evening.
Nor does it mean that the NDA will have no role to play in this regard. It clearly has a contribution to make. Like any significant employer—such as BNFL before it—the NDA will play an active role in encouraging and supporting activities and initiatives that bring social and economic benefit to local communities. We have provided for that in the Bill. We are not prepared to see the NDA transformed into a super regional development agency, when it has a very important and significant national role that is related to its prime purpose.
I listened to the detailed representations that have been made this evening. As I have already acknowledged, in a number of cases they have been infused by both the expertise and experience that comes from elected members for such areas, and their insight into the impact on these communities. The Government are seized of these problems, in particular those of West Cumbria, where the nuclear industry has played a large role in the region's economic life.

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My noble friend Lord Campbell-Savours referred positively to the strategic task force for West Cumbria that was announced by the Secretary of State last December. It is our intention for this to play a substantial role in the long-term regeneration of the region.
The success of the Dounreay decommissioning strategic response task force established in 2001 and the co-operation between the UKAEA and Highlands and Islands Enterprise and its network of local enterprise companies shows what can be achieved and what needs to be done. I have not the slightest doubt that a great deal more needs to be done, as was eloquently expressed today by the noble Lord, Lord Maclennan. But there we have an indication of work in progress with encouraging results. We will want to build on that experience as regards West Cumbria.
The Government have agreed to conclude a memorandum of agreement with the West Cumbria local authorities which will establish a framework for the roles and responsibilities of various stakeholders and a mechanism for the needs of the region to be given consideration by the Government. This is in the early stages of preparation, but it will be in place before the NDA takes up its responsibilities for sites in April 2005.
My noble friend Lord Campbell-Savours said that he is more than well aware that Furness in West Cumbria is one of the three priority areas in the north-west regional strategy. The North West Development Agency is working with local partners to co-ordinate funding schemes, including regional selective assistance, the European structural fund, the single regeneration budget and neighbourhood renewal funding. Under this Government, those programmes have contributed many millions of pounds and created or safeguarded thousands of jobs.
As I indicated earlier, it is not right to dilute the focus of the NDA by giving it direct responsibilities for regional development. It must make decisions on decommissioning and clean-up on their own merits. No other industry has obligations placed upon it such as the amendment would place on the NDA. There is no reason why the NDA should be required to take on responsibilities that others have not. This role belongs to the RDAs and to the local authorities.
6.30 p.m.
Lord Maclennan of Rogart: My Lords, I understand what the Minister says and I do not want to delay him because he is trying to be as positive as he can. However, there are things that can be done by bodies such as the NDA which cannot be done by development agencies. For example, they could allow a higher proportion of apprenticeships to be established at their sites. They might be strictly justified by a purely commercial lean organisation, but that could have the kind of benefits that would enable roots to be put down in the community. Those are the sort of initiatives one wants to see.
Lord Davies of Oldham: My Lords, I am grateful for that positive suggestion. The noble Lord,
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Lord Maclennan, is ploughing fertile ground. Where the NDA is the employer and where it is involved in taking responsibility for action, of course we must look at the way in which we can use its resources to support and buttress the local economies as best we can. That is why, as my noble friend will readily acknowledge, there has been an indication that West Cumbria is the preferred location for NDA headquarters.
That clearly demonstrates the Government's confidence in West Cumbria and our commitment to generating new growth and opportunities for the region. I realise that that example is no immediate solace to the noble Lord, but I hope that it meets some of his anxieties.
Lord Maclennan of Rogart: My Lords, the Minister could easily give me comparable solace by indicating that he would welcome the extension of the role of the pensions office in Thruso, currently run by the AEA, and allow it to take on other public pensions. We may want to return to that matter later.
Lord Davies of Oldham: My Lords, I have recognised that there is an opportunity later in the Bill for us to engage in that debate and I now see the one dimension that the noble Lord will introduce. Of course we must look at all constructive ways in which we can see such an important body contribute its significant resources. The Government's indication of where they prefer the headquarters to be shows our earnest intent to follow exactly the thinking of noble Lords who have contributed to our debate.
I was asked about the level of funding that the NDA will feel appropriate to commit to supporting local communities. That will be a matter for the NDA, subject to ministerial approval. We must allow the NDA to be established before expecting us to reach a view—it is early days. The estimates for the whole of the NDA's activity, a total budget in the order of £2 billion a year initially, are under consideration in the current public spending review process for the three-year period from 2005–06. That £2 billion is substantial and, as the noble Lord, Lord Maclennan, has spotted, indicates that there may be margins for discretion and judgment which may help the issues that he has identified.
My noble friend Lord Campbell-Savours will not be surprised that I cannot give him much solace regarding guarantees on longer-term spending levels. Decisions on public spending are taken at the appropriate time through the appropriate process and noble Lords will recognise that this is not quite that time and I am not quite the government representative to make commitments along those lines.
Baroness Byford: My Lords, I seek some clarification. The Minister kindly mentioned that he sees the role of the RDAs helping in this area. But the RDAs will have many other demands on their money. So, I am still concerned that the Minister is trying to

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pass responsibility to the RDAs to do what most of us consider to be the responsibility of the authority that is being established.
Lord Davies of Oldham: My Lords, the RDAs are equipped to deal with the significant social and economic issues that emerge in their areas. I already have evidence of the way in which the north-west RDA is addressing a clearly identified and significant problem in its area. It will be making both constructive suggestions and the strongest representations about the budgetary implications for tackling a problem—mentioned by the noble Baroness regarding her Midlands interests—which might not show itself with quite the same degree of force in any particular industry in the Midlands. I believe that she will recognise the salience of the issue. I am merely saying that, within the current framework, that is the role of the RDAs. The role of the organisation that we are considering in the Bill is of such importance that it would not be right for us to seek to translate it into the same vehicle for social and economic regeneration that is indicated in the amendment. I am not saying that the NDA has no role to play or that there are not substantial resources at stake. There are many opportunities that can be exploited as regards the work of the NDA and the RDAs, local employers and local authorities in addressing the situation.
However, the prime task of the NDA, with such substantial resources, is to tackle a national task on behalf of the whole of our community. Although I recognise that significant issues have been raised and noble Lords have identified what needs to be tackled in the areas mentioned, that is why I hope that the noble Lord, Lord Jenkin, will recognise that we cannot accept his amendment and I trust that he will withdraw it.
6.45 p.m.
Lord Jenkin of Roding: My Lords, I am immensely grateful to all those who took part in this debate. It has been a valuable occasion. Not only have we been able to explore the Minister's mind on how these problems should be dealt with but I believe that it will also be of some comfort to those who are following these events outside and who feel the threat as acutely as has been stated by noble Lords who have strong knowledge of particular areas.
For me, rather interestingly, this has been a trip down memory lane. It is 20 years since I was Secretary of State for the Environment in the mid-1980s, when I found myself intimately concerned with the problems about which a number of noble Lords have spoken—that is, the decline of heavy industries, sometimes concentrated very much in particular areas. I shall never forget my regular fortnightly visits to Liverpool and Merseyside, which was perhaps one area most hard-hit by the decline of what was then the shipping industry.
We had a number of instruments at our disposal then. Local development agencies could be a channel for central government money and a focus for activity. However, I entirely recognise that all that has now
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moved on. The Minister made frequent reference to regional development agencies and, in particular, to the activities that they are now conducting in the areas for which they are responsible. I took some comfort from what he said because I was unaware of how focused the RDA in the north-west of the country is. It recognises the need for activity.
As the noble Lord spoke, it seemed that one feature of this situation was, in a sense, the reverse of what one saw in other parts of the country in relation to other industries. The activity of the NDA in undertaking decommissioning means that it is itself a substantial employment user. There will be no sudden cut-off from that point of view. I would probably exempt from that the problems of reprocessing at Sellafield, but I do not believe that a final decision has yet been taken on that.
Normally, decommissioning plant—my noble friend Lady Miller and I had described to us by UKAEA and others what has been going on in various parts of the country in that respect—involves a fairly gradual rundown, whereas in respect of the earlier industries the problem was the catastrophic closure of a steel works, a shipbuilder or mines in a mining village in Yorkshire. I listened with interest to what the noble Lord, Lord Woolmer of Leeds, said about that. Then, one was dealing with a crisis situation, whereas, here, it will be somewhat different. Those who will have to deal with such problems in the area of nuclear decommissioning will have to recognise that they will probably require somewhat different solutions.
When we visited Harwell, we heard what UKAEA has been doing in the areas where it has been decommissioning. Winfrith in Dorset may be a very different kettle of fish from Dounreay or Sellalield; nevertheless, it is a fairly substantial nuclear facility and it has been wound down. With the creation of an industrial estate to bring in new works, those involved were quite proud of what they had been able to achieve. However, the situation is different from what one has been used to in the past, and I believe that that is something of which we shall have to take account.
The noble Lord, Lord Davies of Oldham, made frequent references to the fact that he did not want to see the NDA, the Nuclear Decommissioning Authority, turned into an NDA—that is, a national development agency. I can understand that. It has its primary task and I acknowledged that at the beginning when I moved the amendment. Of course, that is its primary role. It has to go ahead with decommissioning and clean up. But is it sufficient that they shall merely have the power to collaborate with other agencies, the local authorities, the regional development agencies, the task forces and so on that have been set up? I am not sure that it is.
We shall need to look carefully at what the Minister has said. We shall have to consult those who have supported the amendment. It may be possible to come back at Third Reading with a somewhat different amendment which may take account of the anxieties that the Minister has expressed in his reply. I hope that those who have spoken to the amendment will feel that

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that is a reasonable response. It would be difficult to go charging through the Lobbies at nearly seven o'clock on a Thursday evening—I am not sure how many noble Lords are here.
We have to take account of what has been said. We shall consider returning with something more than just the power provided for in the Bill, something which recognises, quite clearly, the arguments that the Minister has made, while at the same time giving more reassurance to the communities who feel themselves so threatened at present. I am also sure that this issue will be dealt with at some length in another place. Ours will not be the last words spoken on the matter. Having said that, I hope that those who have supported the amendment feel that a reasonable response is to say that I shall withdraw it, with a clear undertaking that we shall try to return with an amendment at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 [Duties to operate installations and to provide treatment etc.]:
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 35:
Page 16, line 9, at end insert—
"(5) In discharging that responsibility and in performing its designated responsibilities under section 3, the NDA shall place no restriction on the UKAEA or BNFL or any other suitably qualified and experienced British or other European Union company from tendering for and (if appropriate) being awarded contracts for the decommissioning of installations or the cleaning up of sites."
The noble Baroness said: My Lords, I introduced an identical amendment in Grand Committee. I have no hesitation in bringing it back for consideration by the whole of your Lordships' House because of the unsatisfactory and partly contradictory reply that I received; because it is a very important issue; and because of the well intentioned, but equally unsatisfactory explanatory letter that I received from the Minister about two weeks later.
Contradiction appears to be a feature of the Government's approach to our two major and world leading companies which compete for decommissioning and clean-up work, even on the sites that they occupy or have been operating. I would have thought that this topic was one that was not even open to question. I would have thought that the Government would have accepted it at the beginning. Initially, the view of the Government seems to have been that it was not open to question. On page 13, paragraph 1.23 of the White Paper, Managing the Nuclear Legacy, the Government said:
"Whilst UKAEA and BNFL will have the opportunity to demonstrate that they should be suppliers of choice to the LMA"—
that is now the NDA—
"the management of clean up will be opened up to competition".
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Thirty-seven pages later at paragraph 5.39 the Government contradicted themselves in a massive U-turn when they said:
"The Government does not consider that it would be appropriate for UKAEA as a public sector body to compete for additional site management contracts against firms from the private sector".
That contradiction and the arbitrary, capricious and inexplicable decision of the Government, prompted the amendment in the first place. In the debate in Committee I asked for the origin of what I thought was a novel doctrine. I also asked why it was inappropriate for public sector companies to compete for publicly funded contracts. Indeed, the White Paper highlighted the guiding principles to be followed by the NDA in awarding contracts. Again, I quote the Government's words:
"getting the job done to high safety and security standards … best value for money consistent with safety, security and environmental performance … openness and transparency … competition—so as to make the best possible use of the best possible skills".
While I hesitate to quote myself, I cannot resist repeating what I told the Committee, namely, that that specification might have been written with UKAEA and BNFL in mind. Those two companies are world leaders in their fields. With the advantage of being established on the nuclear sites, it is likely that they will be able to offer the best value for money. By invoking this specious and hitherto unknown doctrine that it is inappropriate for public sector companies to tender for publicly funded contracts, the Government are simultaneously negating both openness and transparency, and depriving themselves of the services of two of the world's leading companies.
I also suggested that the policy would be in breach of the anti-competition provisions of Article 85 of the Treaty of Rome. The Minister gave a wholly unsatisfactory explanation for rejecting that amendment. First, he said that it would threaten the ability to exclude people from the pre-selection process. We are not talking about regiments of people—we are only seeking to ensure that UKAEA and BNFL are not arbitrarily excluded. Secondly, he suggested that while the two companies would remain in place as site licensees, it is only the strategic and senior management function that would be open to competition. Even assuming that these two leaders in their field need senior and strategic management, this is a sure way of paying for the same job twice.
The Minister suggested that contrary to my view about Article 85, there was some restriction in European law that prevented them from being allowed to compete. From a sedentary position, I must have facially expressed some surprise at this extraordinary suggestion, because the Minister was good enough to write to me subsequently to say that he,
"realised that his remarks were too sweeping in nature and could be confusing".
Well, he certainly got that right.
This amendment does not in any way inhibit the right of competitors to bid for contracts, in conformity with EU law. Indeed, the two companies say that they welcome competition, but I suppose they would say

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that. That the two companies have an inherent advantage of being on site is not a valid objection. Any successful bidder in any contract competition has some sort of advantage. In a convoluted argument in the same letter, the Minister suggested that having lost the clean-up contract, would somehow,
"hold the operational skills and expertise necessary to operate the sites".
As if the workers would just stand still and watch their jobs disappear from beneath their feet rather than take off elsewhere, perhaps abroad.
In his letter, the Minister denied that UKAEA and BNFL are uniquely placed as incumbents to provide a competitive clean-up service. Maybe not uniquely, but they must be at least as qualified as any other contractor to do this job. The Minister told me in his letter:
"There are a number of potential site management contractors who could manage nuclear sites safely and effectively."
That is good news. Let them come and try for the contracts, and hopefully the best company will win, and we shall benefit from the best expertise and the best value for money. In Grand Committee, I said that I did not know what hidden agenda the Government had in imposing this unnecessary, and as it happens illegal, restriction on these two companies. On reading the Minister's letter, which I have quoted only in part, I am far from reassured that there is not some ulterior motive in leaving the field open to foreign competition and depriving our national companies of valuable contracts and depriving our skilled work force of jobs. Goodness knows, listening to the previous amendment, how well it was moved and the concerns of people from across the country, it is inappropriate that they should not even be allowed to compete for work.
This amendment does not require the NDA to award the contracts to UKAEA or BNFL. What it does is to prohibit the NDA from deliberately not even allowing them to compete. That is the issue. I shall certainly want some much better explanation for the Government's obstinate stance of keeping them out of the market than the feeble non-arguments that the Minister has made so far. I sincerely hope that, given the time that the Minister has now had to think about it since we last debated the point, he will have reconsidered his position and will not simply continue to repeat the Whitehall doublespeak that he previously passed on to the Committee. It is late in the evening. It would be appropriate for the Minister to simply stand up and say that he agrees with and accepts my amendment. I beg to move.
Lord Jenkin of Roding: My Lords, the kindest thing that I can say about the long letter that the noble Lord, Lord Whitty, sent to my noble friend Lady Miller of Hendon, with copies to several of us, is that I found it very difficult to believe that he had read it before he signed it. I, too, look forward to hearing his response to my noble friend.
7 p.m.
Lord Whitty: My Lords, the letter attempted to find a way through what is a complex area. The central point is that Members of the Grand Committee felt that there
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was a hidden agenda to squeeze BNFL and UKAEA out of tendering for NDA sites, or even those sites that they currently occupy. I shall therefore try to set out the position on competition and site management in a slightly shorter style, so that noble Lords will understand it.
One misunderstanding arises from the fact that we must distinguish between the site licensee companies, BNFL and UKAEA, on the sites that they occupy, which will remain in place, and the contractors, the senior strategic management, which is what we are dealing with here with the competition that we are discussing. In other words, much of the anxiety about expertise and the skilled workforce employed in that area relates to site licensees, rather than the senior strategic management. The reference in the letter and in our previous debate to internationally competitive companies relates to the ability to deliver strategic management of such sites.
The amendment would require the NDA to refrain from restricting BNFL, UKAEA or other suitably qualified or experienced UK or EU companies from tendering for contracts to manage NDA sites.
Baroness Miller of Hendon: My Lords, the amendment would not restrict them; it would ensure that they had no restriction.
Lord Whitty: My Lords, I said, "refrain from restricting". Clearly, competition for strategic management will be subject to EU procurement rules, as the noble Baroness said—that was a slightly misleading part of my reply to the debate—and other international agreements on procurement, which is why restriction to UK or EU companies may not be appropriate here, which is a subsidiary point about the amendment. Fair and open competition is essential to ensure that the NDA gets the right skills mix in to double site management.
That is regardless of which company is involved or its nationality—although we must here bear in mind the national security situation. We want the company and the management personnel who can best deliver the NDA's objectives for a particular site. That is why we have chosen to test the market and why we are opening up the competition. Restricting people who a priori clearly already have that expertise and knowledge of the site would defeat the purpose of that competition.
We certainly do not intend, therefore, to restrict UKAEA or BNFL from competing for contracts to manage their own or other sites. Indeed, provided that they comply with the terms of EU procurement rules, we want them to continue to improve the efficiency of their own organisation and to benefit from the sharpening up that competition will bring. In order to assist that, we tabled our own amendment towards the end of Part 1 of the Bill—I think it is Amendment No. 171—which will clarify that the UKAEA can itself play a full role in the competitive process. Those amendments have been discussed with UKAEA and we are working very closely with both the UKAEA

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and BNFL to help their managements create a viable contractor capability so that they can compete in these contracts.
Lord Maclennan of Rogart: My Lords, will the Minister clarify that point? There seems to be a possibility that some of us are operating at cross-purposes simply through lack of understanding. Is the Minister saying that the Government are ready to entertain the possibility of the UKAEA being an operator of choice for the first period and having a single contract with sufficient duration to enable it to get on with the job—say, for five years? If that is what he is saying, then that is a matter of great reassurance.
Lord Whitty: My Lords, I am not sure that I am saying that. I am not specifying a time scale, but the part of the contract that could subsequently be subject to competition would be the strategic management of the site. Therefore we are not talking about the role of the vast majority of current employees of BNFL and UKAEA on those sites. There is then a separate question of whether sites which are not UKAEA or BNFL at the moment could come under the responsibility of the NDA, where the UKAEA and BNFL could compete for the strategic management of those sites as well, subject to certain constraints. It is not the Government's intention to exclude them from that site. That is the central point, which the amendment was intended to correct—in other words, to prevent the exclusion, from being able to compete for other sites as well as for their own sites. The intention is that competition will apply at the strategic management level on all such sites.
Lord Campbell-Savours: My Lords, if they are not to be excluded then we can presume that in terms of the discussion that has taken place they are going to be satisfied?
Lord Whitty: My Lords, the UKAEA and BNFL understand that position and are in support of what will, it is to be hoped, become an amendment adopted by this House at a later stage in relation to clarifying some slight complexities of the UKAEA position. It recognises that it will be able to compete. That does not necessarily mean that it is happy with the fact that it will have to compete for the strategic management. Clearly there are anxieties that there will be knock-on effects in relation to UKAEA and BNFL and its workforce by opening it up to competition on those sites that they currently control. It would be wrong to give the impression that BNFL and UKAEA are utterly happy with that position, but they are happy that they will not be excluded from competing, given that we recognise the need to ensure that such experienced companies do have the opportunity to compete.
Clearly it is important for those companies to have clarity where the noble Baroness accused us of having a hidden agenda. There is no hidden agenda to exclude BNFL and UKAEA from being able to show that they
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were best placed to provide the services on that site. If we were to adopt this amendment, so that there was a specific reference to incumbent site operators in that respect, then we would get into the area where it would appear that we were giving them a competitive advantage over other potential contractors for running the strategic management of that site. That is one of the reasons why, even though the amendment is in a sense reflecting what would be the position anyway, it could be interpreted as being protective of site managers—certainly on those sites they currently run themselves—when the whole point of the changed approach is to make the strategic management of those sites subject to open, fair competition and issues of security and technical competence, and to competition internationally in this field. I hope, of course, that the UKAEA, BNFL and other British contractors would be able to benefit from the sharpness of competition in this country by competing elsewhere.
The complexity of the position has, perhaps, led to the belief that we were doing down BNFL and the UKAEA in that respect and with regard to their perhaps understandable resistance to changing and opening up to competition the sites that they control. It is not our intention to exclude them from the process, but it is our intention to make the process open to competition, which should be free, open and, if necessary, international. For those reasons, I cannot accept the amendment.
Lord Jenkin of Roding: My Lords, I have one question. The Minister has talked repeatedly about the strategic management of sites. What has happened to the phrase "site licensee"? I thought that we had the NDA, the site licensee and the contractors. What is the new entity "strategic management of the site", if it is not the site licensee?
Lord Whitty: My Lords, the site licensee will be managed by the senior strategic management. The site licensee may continue to be BNFL or the UKAEA, even if the strategic management were to be allocated through competition elsewhere. It most circumstances, that probably would be the case, certainly for the immediate period. That distinction has been there since the Bill was produced and, in essence, it was in the original White Paper.
Baroness Miller of Hendon: My Lords, we have ended up exactly as we started. The first answer that the noble Lord gave me in Committee was totally unsatisfactory and misleading. The letter was so convoluted that there was no way that anyone could understand it. With the greatest respect to the Minister, I am by no means certain that I understand the position one bit more or consider it one bit fairer.
All that I knew at the beginning was that anyone could compete for the licences of BNFL and the UKAEA but they were not able to compete for somebody else's licence. I may have misunderstood, so I will test the opinion of the House. The Minister will not mind if we win, because we will have what he says he wants.
7.12 p.m.
On Question, Whether the said amendment (No. 35) shall be agreed to?
Their Lordships divided: Contents, 31; Not-Contents, 53.

Division No. 4

CONTENTS

Anelay of St Johns, B.

Mancroft, L.

Attlee, E.[Teller]

Miller of Hendon, B.

Barker, B.

Newby, L.

Beaumont of Whitley, L.

Newton of Braintree, L.

Bridgeman, V.

Noakes, B.

Byford, B.

Northesk, E.

Cope of Berkeley. L. [Teller]

Northover, B.

Courtown, E.

Norton of Louth, L.

Dixon-Smith. L.

Pilkington of Oxenford, L.

Roper, L.

Elton. L.

Seccombe, B.

Falkland, V.

Selsdon, L.

Jenkin of Roding, L.

Skelmersdale, L.

Lucas, L.

Tugendhat, L.

Maclennan of Rogart, L.

Wilcox, B.

McNally, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Borrie, L.

Amos, B. (Lord President of the Council)

Bragg, L.

Brooke of Alverthorpe, L.

Andrews, B.

Brookman, L.

Bach, L.

Campbell-Savours, L.

Blackstone, B.

Carter, L.

456

Clarke of Hampstead, L.

McIntosh of Haringey, L.

Clinton-Davis, L.

MacKenzie of Culkein, L.

Corbett of Castle Vale, L.

Mackenzie of Framwellgate, L.

Crawley. B.

Massey of Darwen, B.

Davics of Oldham, L. [Teller]

Pitkeathley. B.

Dean of Thornton-le-Fylde, B.

Rendell of Babergh, B.

Dubs, L.

Rogers of Riverside, L.

Evans of Temple Guiting, L.

Rooker, L.

Farrington of Ribbleton, B.

Sainsbury of Turville, L.

Faulkner of Worcester, L.

Sewel, L.

Gale, B.

Simon, V.

Gibson of Market Rasen, B.

Temple-Morris, L.

Goldsmith, L.

Triesman, L.

Grocott, L. [Teller]

Turnberg, L.

Haskel, L.

Hayman, B.

Warner, L.

Hilton of Eggardon, B.

Warwick of Undercliffe, B.

Hollis of Heigham, B.

Whitaker, B.

Howells of St. Davids, B.

Whitty, L.

Hunt of Kings Heath, L.

Wilkins, B.

Lea of Crondall, L.

Woolmer of Leeds, L.

Macdonald of Tradeston. L.

Moved accordingly, and, on Question, Motion agreed to.

Lord Triesman: My Lords, I beg to move that consideration on Report be now adjourned.
House adjourned at twenty-three minuted past seven o'clock.

Official Report of the Grand Committee on the Child Trust Funds Bill
(First Day)
Thursday, 18 March 2004.
The Committee met at quarter past three of the clock.
[The Deputy Chairman of Committees (Lord Brougham and Vaux) in the Chair.]
The Deputy Chairman of Committees (Lord Brougham and Vaux): Before I put the Question that the Title he postponed, I remind your Lordships of two points of procedure: noble Lords will speak standing, and the House has agreed that there will be no Divisions in Grand Committee. Unless, therefore, an amendment is likely to be agreed, it should be withdrawn.
If there is a Division in the Chamber—and I believe that there will be—I ask the noble Lord who is speaking to come to the end of his sentence very quickly. The Committee will adjourn and then resume after 10 minutes.
Title postponed.
Clause I agreed to.
Clause 2 [Eligible children]:
Baroness Noakes moved Amendment No. 1:
Page 1, line 13, leave out "2002" and insert "1988"
The noble Baroness said: It is my pleasure to start this Grand Committee, which we hope that we will get through with as much dispatch as possible. In moving Amendment No. 1, I shall speak also to the other amendments in the group. They all concern the position of children born before 1 September 2002 who are therefore ineligible for child trust funds under the Bill.
In another place the issue of children who will miss out by being born too early was debated extensively. Although the Government have provided a power in Clause 2(7) for the date to be amended later, it is clear from their more recent response to the report of the Treasury Committee in another place that they have no intention of using that power in the near term. That means that child trust funds will be launched without the ability to provide similar savings vehicles for older children. We do not know what evidence of unmet demand the Treasury will require before it moves its position.
We fully accept that child trust funds should not qualify for the Government's contribution. The policy is already expensive enough without that. We do not believe that all families will want to open an account
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for their ineligible children, but we think that those families that want to treat their children equally so far as savings are concerned should be allowed to do so.
The Children's Mutual has provided much helpful briefing to many noble Lords, I am sure, for our consideration of the Bill. It told us of its concern about families who do not like to differentiate between their children. It believes that those families are just as likely to ignore the savings opportunity created by child trust funds if they cannot contribute in a similar way for all their children. The Minister may say that that is an irrational response, if similar look-alike products can be created, but families are not always motivated by the cold logic of economics. They will be influenced as much by perceptions as anything else.
The amendments would extend the scheme a further 14 years so children of around 16 and a half will be covered when the child trust funds are introduced. In practical terms, that is about as far as one would go to make the child trust fund in any way worth while. Amendments Nos. 24 and 35 allow parents to open an account and do not require the Inland Revenue to send out masses of vouchers that are not needed—that was one of the objections made in another place. Amendments Nos. 46, 50 and 57 ensure that no government contributions need be made to the accounts. I beg to move.
Lord Newby: As noble Lords will know, the Liberal Democrats oppose the Bill. Therefore, in dealing with the amendments, I shall try to follow two principles. No doubt noble Lords will trip me up if I get them wrong. First, I shall oppose amendments that increase the scope of the Bill. Equally, however, I shall support and move amendments that I hope will make it easier for families, particularly poorer ones, to invest. In that way, to the extent that we will have child trust funds, they will work to the benefit of poorer families in particular, who are most in need of additional investment products. Therefore, in following my principles for at least the first group, I do not support these amendments.
Lord MacGregor of Pulham Market: As I made clear on Second Reading, I am very doubtful about the efficacy and cost-effectiveness of the whole proposal in achieving two objectives on which we all agree; namely, greater financial education and the encouragement of many more young people to save, particularly in the longer term. Having said that, I accept that the Bill will be enacted, so what one is trying to do in Committee is to improve it wherever possible, even if one is somewhat diffident about the proposal as a whole.
I think that I declared an interest as a non-executive director of a financial provider at Second Reading, but I have not talked to anyone in the company about the Bill. I want to make it clear that, although that helps me to have some knowledge in the way in which I approach the matter, I express entirely my own position and views.
I support the amendments. I would add only two points to those made by my noble friend Lady Noakes. The first is that, as I recall, during the Select

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Committee inquiry on the Bill in the other place, a Treasury spokesman indicated that to extend the measure in such a way would have negligible cost. Will the Minister say a bit more about exactly what "negligible" means? It would certainly be helpful. If the cost is negligible, there is a strong case for the measure; clearly, it could have only a favourable impact on families.
Secondly, it has been said that there are other ways in which parents, and particularly grandparents, can save for their children and grandchildren, but no other product can offer quite the same wrapper as the one about which we are talking, in terms of tax. Therefore there is a clear advantage. I agree with my noble friend Lady Noakes that families will be concerned not to put additional money into the scheme. Those who have children eligible for the £250 of government money will not wish to put money into the scheme to advantage one child over the other older children.
I therefore support the amendment, and hope that the Minister will now look on it favourably.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): The noble Baroness, Lady Noakes, has very fairly stated the purpose of the amendments. They indeed take the initiative that we propose of the child trust funds and apply it retrospectively, in effect, for a period of 14 years. There is nothing wrong in principle with that, but we take the view that we have put forward a proposal that, as the noble Lord, Lord MacGregor, rightly said, is an innovative approach to financial planning, education and saving. We think that what one does with a new proposal is take a deep breath and start; one does not take 14 steps backwards and then start.
I acknowledge that there was some support for the idea at Second Reading; the noble Lord confirmed that. I acknowledge that the proposal is not expensive, in the sense that it is not proposed that there should be an initial payment from the Government.
[The Sitting was suspended for a Division in the House from 3.23 to 3.31 p.m.]
The Deputy Chairman of Committees: As all noble Lords are present, we may as well carry on.
Lord McIntosh of Haringey: I was about to say in response to the noble Lord, Lord MacGregor. that there is no enormous expenditure immediately because the amendments do not provide for the initial government payment of £250 to £500. However, Amendment No. 4 provides that there could be later payments. It may not intend to, but it does because it allows the possibility of seven year-old payments, for example. It had to be put in that way in the Commons because otherwise the amendments would not have been accepted. So there could be substantial costs if Amendment No. 4, which seeks to remove subsection (2), was interpreted in that way.
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But that is not a significant point in my argument. I question whether these proposals would provide a strong incentive to parents to save on behalf of their children. The IPPR research into child trust fund payments was positive about starting the ball rolling because there is an initial payment by the Government. However, under the proposals in this group of amendments, the only incentive would be the tax advantage—and that would be only for parents with higher incomes. I do not believe that that is a particularly desirable way of approaching an initiative which is intended specifically to encourage saving among those families which are less likely to save—in other words, poorer families.
In any case, there are plenty of savings and investment plans for children already available, many of them with tax incentives. There could be more if there were a greater demand. Even so, there is only about a 50 per cent take up for them and it is difficult to see how these proposals would stimulate a much greater demand.
In addition, these amendments would add substantial complexity and costs for the Inland Revenue. Amendment No. 3 would remove the flexibility in the Bill to build on the foundation of the child trust fund. So the amendments are undesirable for those reasons as well.
It sounds as though I am 100 per cent against these amendments, but I am not quite. The Financial Secretary said in the Commons that we will monitor the demand for child savings against the existing provision. If there seems to be a gap in the market, and if further regulation is needed, we shall consider what to do about it.
I thank the noble Baroness, Lady Noakes, for introducing the amendment as she did. It has not fallen entirely on stony ground. There is the possibility of reconsideration which would not require amendment to the Bill at a later stage if necessary.
Baroness Noakes: That felt fairly stony to me. Perhaps I may probe the Minister on what the Treasury would have to be convinced about if it was to activate the power in subsection (7). It has been left rather vague. The Minister referred to a gap in the market and unmet need was referred to in another place. I am unclear as to what would convince the Treasury that it was worth extending the vehicle in the way that I suggested—that is, without a government contribution.
Lord McIntosh of Haringey: The fundamental point is that there is already a range of products available for savings for children. As someone involved in the area, the noble Lord, Lord MacGregor, is more expert on this subject than I. Many of those products, including more obviously National Savings and premium bonds, have tax advantages no greater or less than the tax advantages which would be available from a shell CTF fund, but the take-up of those products is only 50 per cent.

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If the market were to change in such a way that no longer were there vehicles available to make tax-advantageous savings for children, at that point we would think about it again.
Baroness Noakes: I thank the noble Lord for that additional information. I shall not prolong the debate, but the noble Lord referred to Amendment No. 4—
Lord McIntosh of Haringey: I am sorry, I meant to refer to Amendment No. 3.
Baroness Noakes: The noble Lord spoke of the amendment involving a cost. I am afraid that I do not understand that because Amendments Nos. 46, 50 and 57 have been designed to ensure that the Government do not have to put any money into these funds. It they do not cover all the possible ways in which the Government could make a contribution, then we shall look at that again.
Part of the problem is that the Government see this as a matter of creating a fiscal advantage even though it has been accepted that the pot would be relatively small; that is, the amount of additional savings going into this route would not generate very much income able to escape tax, given the child's personal allowance. The point made by organisations such as Children's Mutual is not a fiscal one, rather it is for having an identical vehicle. The child trust fund will exist for post-2002 children. The Children's Mutual and others believe that parents like to treat their children equally. If they have pre-2002 and post-2002 children, the question is whether they would be able to put in equal amounts. The Children's Mutual believes it likely that parents will choose not to use the child trust fund at all if they cannot treat their children equally, which would be disappointing for the Government. So I do not want us to become hung up on the apparent fiscal advantages because I am not sure that I am trying to argue for that. Rather, I am arguing for an equivalent savings vehicle. I am not persuaded that either premium bonds or National Savings come close to offering that.
The other products often advanced as possibilities, such as ISAs and stakeholder pensions—an extraordinary proposition—simply do not meet the case either. There are a number of features about the child trust fund, in particular locking the money in until the age of 18, which are attractive for generating savings from grandparents and non-parent donors.
I shall not press the amendment—I could not do so in Grand Committee anyway—but I hope that the Government are prepared to look at this again because there are real reasons, not tax-avoidance reasons, for trying to extend this scheme. That is why we have put forward this proposal. It is a genuine attempt to widen the scope for encouraging savings.
Lord McIntosh of Haringey: I do not want to prolong the debate any more than does the noble Baroness, but has it occurred to her that the market could well introduce savings or investment plans
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which would mimic the child trust fund, thus providing equity between older and younger children in families looking for such a product?
Baroness Noakes: We will have to watch what the market chooses to produce to see if that happens. However, I have been advised that it is difficult to mimic all the features of the child trust fund, in particular the lock-in until the age of 18, which is regarded as an especially important feature. That has been my advice, but if the Government have other advice and providers come in with products, then we shall see.
Lord MacGregor of Pulham Market: Is not another advantage the £1,200 per year limit attached to the child trust fund, which I do not think is available elsewhere.
Lord McIntosh of Haringey: Perhaps not, but it could be.
Baroness Noakes: We believe, on all kinds of grounds, particularly that of making sure that savings are properly encouraged among families—an aim, as the Minister will be aware, that is deeply ingrained in my party—that this is an important issue. However, for today, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Noakes moved Amendment No. 2:
Page 1, line 14, after second "child" insert "or would be so entitled if a claim were made"
The noble Baroness said: In moving Amendment No. 2, I shall speak also to Amendment No. 26. They concern the position of children whose parents do not claim child benefit. Under Clause 2, one of the ways in which a child becomes eligible is if someone is
"entitled to child benefit in respect of a child".
I understand from the Explanatory Notes that "entitled to" means that child benefit has been claimed—it does not mean that you are allowed to claim it but that you have actually claimed it.
I understand that the take-up of the child benefit— one of the very few non-means-tested benefits—is high, at around 98 per cent. That still leaves 2 per cent of children born each year—around 1,400—who would be deprived of child trust funds if their parents had not, for one reason or another, claimed child benefit. My amendment probes why that is the case.
I am sure that it is much simpler for the Inland Revenue to drive the child trust fund system from child benefit claims, but is it right? Why should children lose out because their parents, whether through ignorance or otherwise, have not put a claim in for child benefit? In other respects, the Bill falls over backwards to make sure that children get their funds, so this rigid adherence to the child benefit element is rather difficult to understand. Can the Minister say something about the categories of children who are likely to be excluded by this rule? I beg to move.
Lord McIntosh of Haringey: In answer to the last question, our understanding is that the 2 per cent who

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do not claim benefit are virtually entirely wealthy parents who do not consider it worth while to claim benefit, those for whom the difference is not significant. That really goes to the heart of the argument. The noble Baroness, Lady Noakes, is right that "entitled to" means that child benefit has actually been claimed, and she is right that that applies to 98 per cent of children. So, clearly, to replace the phrase "entitled to" by "eligible for" would add only, or almost entirely, wealthier families. I would not worry so much about that except that it would do so at very considerable administrative effects for a very small purpose.
Under the "entitled to" regime, there is no need for any claim to be made because the voucher is issued to the parent with the child benefit itself. That becomes an automatic procedure. The publicity—the marketing—for the child trust fund will take place together with the publicity for child benefit, which has been enormously successful.
How would the system work under the amendment? How would the Inland Revenue contact parents who had not claimed child benefit? You would need to have a separate claims process and a separate inquiry process, all for the benefit of 2 per cent of parents who do not really need it. On this issue, both on principled and on practical grounds, this is stony ground.
Baroness Noakes: I thank the Minister for his response which was not, of course, surprising. I was probing to see whether there was evidence that it was wealthy rather than ignorant parents who did not claim child benefit. I do not think I have ever seen any evidence or research into that, which was why I was probing, although I have heard assertions. I will allow the Minister to consult with his officials.
Lord McIntosh of Haringey: If I have anything I can say to the noble Baroness about evidence, I will certainly do so.
Baroness Noakes: That is extremely kind of the Minister. I look forward to seeing anything that his officials can dredge up for him, because that would be interesting.
I can imagine a scheme, which would not be particularly difficult, in which registrars of birth would be given a notification of child trust funds. But we did not design the scheme, and if the Government wish to confine the system in this way, I do not think we will be pressing this amendment at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
3.45 p.m.
Baroness Wilcox moved Amendment No. 4:
Page 2, line 27, at end insert—
"( ) No regulations may be made under subsection (7) unless a draft of the regulations has been laid before and approved by both Houses of Parliament."
The noble Baroness said: In moving Amendment No. 4, I shall speak also to Amendments Nos. 48, 49, 59 and 91. These reflect the recommendations of the Select Committee on Delegated Powers and Regulatory Reform report on the Bill. All the amendments refer to specific subsections of the Bill where the regulations are to be made by negative procedure. In these circumstances, the Delegated Powers Committee has been of the opinion that the issues in question are of significant importance and that the affirmative procedure is therefore preferable.
I shall briefly outline the specific issues, the first of which is the power under Clause 2(7) to substitute an earlier date for 31 August 2002 in Clause 2(1). It concerns which children will be eligible to receive CTFs. The Delegated Powers Committee considered that this power should be constrained by an affirmative procedure because of the,
"implications for public expenditure and the political sensitivity of the issue of eligibility".
We thoroughly agree with that conclusion and are happy to see it included in the government amendment to Clause 28.
The second and third amendments focus on the initial Inland Revenue contribution to the fund under Clause 8(1 ) and the supplementary Inland Revenue contribution for children from low-income families under Clause 9(2). Again, the amount of money to be made available should be a matter for affirmative procedure, especially in view of the fact that it can be altered. The Delegated Powers Committee commented that only a future change in the amount should be subject to affirmative procedure, and the Minister has picked that up in the government amendment to Clause 28. We would prefer, however, for any regulation setting out the amount for contribution to be subject to affirmative procedure. At the moment the regulations that we have are only in draft form and could therefore, in theory, be changed when laid before the House as regulations. We see no reason why any regulation under Clauses 8(1) and 9(2) should not be subject to the affirmative procedure.
Our fourth amendment in this group makes clear that any regulations under Clause 10(1) or (2) should also be subject to affirmative procedure as recommended by the Delegated Powers Committee. These subsections propose regulations providing for any additional payments on top of the initial government contributions. We know that the Government intend to make a further contribution at seven, but that is not made explicit either on the face of the Bill or in the regulations. There may also be supplementary provisions for children on low income within this secondary contribution, but again the details are as yet unspecified. We strongly support the recommendation that these regulations be by affirmative procedure. That has been reflected in the government amendment to Clause 28, for which we are grateful.

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Our final amendment in this group picks up the point made by the Select Committee on Delegated Powers and Regulatory Reform at paragraph 15. Subsection (2) of Clause 28 states:
"(2) Any power to make regulations or an order under this Act includes power to make any incidental, supplementary, consequential or transitional provision which appears appropriate for the purposes of, or in connection with, the regulations or order".
That is not strictly a Henry VIII power, because the power is in relation to regulations and orders under the Bill. This power is significantly wide-ranging, however, as it refers to any regulation which makes,
"incidental, supplementary, consequential or transitional provision";
and that may include commencement orders which are subject to no parliamentary procedure.
This is a framework Bill, and we must take in good faith the draft regulations that fill out the detail, and which we will later have no power to amend. That is not an ideal situation, therefore I do not think it is too much to ask for any regulations which exercise the power under subsection (2) of Clause 28 to be subject to affirmative procedure.
I thank the Minister for his comments on Second Reading, where he stated:
"This morning, the Select Committee on Delegated Powers and Regulatory Reform published a report on the Bill, for which I am grateful. I understand, on first reading, that it has made a number of suggestions for substituting affirmative for negative resolutions in the Bill. At this stage, I see no difficulty in our complying with its proposals".—[Official Report, 26/2/04; col. 352.]
However, we feel that the amendments which the Government have subsequently tabled under Clause 28 do not go quite far enough in meeting our concerns. They have picked up the recommendations on Clause 2(7) and Clause 10(1) and (2). We believe, however, that there is considerable merit in extending affirmative procedure provisions further, to all orders under Clauses 8(1) and 9(2) and to any orders which use the broad power to make any incidental, supplementary, consequential or transitional provisions. I beg to move.
Lord Newby: We are sympathetic to the amendments, but, with affirmative resolutions or any kind of secondary legislation, the key is an ability to see the regulations in draft. As we know, having an opportunity to vote them down in the House is a very rarely used sledgehammer. It has been extremely useful and helpful to see draft regulations so far on the operation of the CTFs. I would be grateful if the Minister could assure us that, as the scheme is rolled forward, that principle will be followed. Draft regulations should be published in good time, so that all those who will be affected by them—particularly the CTF providers, which made a lot of very sensible comments on the draft regulations that we have seen to date—have a chance to see them in future.
Lord McIntosh of Haringey: That last remark looked a gift horse in the mouth. I thought that we were doing pretty well to have published the regulations in advance of Committee. Of course we
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will publish future regulations as soon as we can, but it is a requirement that we should consult on regulations before they are finalised. What the noble Lord, Lord Newby, is asking for will be achieved anyway; we always consult on the content of regulations with everyone concerned. One cannot consult unless one has made the regulations public in the first instance.
I shall respond to the opposition amendments and speak also to my amendments in the same group. I am grateful to the noble Baroness, Lady Wilcox, for the way in which she introduced her amendments. However, as she reminded us, the Select Committee on Delegated Powers and Regulatory Reform published a report on the Bill on the morning of Second Reading. She rightly said that I saw no difficulty in complying with its recommendations. That is precisely what we have done. The report recommended that the regulations relating to extending the category of eligible children, the level of the subsequent. initial and supplementary contributions, and the amount of any further contributions should be subject to affirmative procedure. That is precisely what Amendments Nos. 93 and 94 do.
The noble Baroness acknowledged that her amendments go further and state what she would want to be subject to affirmative procedure. It has been—all credit to the Delegated Powers Committee—the practice of government ever since the committee was set up that we should comply with its recommendations. For the sake of good order and the procedures of the House, to add unnecessarily affirmative procedures that have not been requested by the committee is not a particularly good idea. I hope that we will be satisfied with compliance with the committee's recommendations, rather than extending them.
Baroness Wilcox: I thank the Minister for his reply. Of course, I am disappointed that the power of my argument did absolutely nothing to move him forward. I feel rather sorry to have lost so early in the game. I cannot really understand why he has not agreed to extend the affirmative procedure provisions. The fact that it has not been recommended by the committee is not enough. I feel that I shall go back and see whether I can phrase my arguments better next time round.
Lord McIntosh of Haringey: No—they were very well expressed.
Baroness Wilcox: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Requirements to be satisfied]:
Lord Newby moved Amendment No. 5:
Page 2, line 31, at end insert—
"( ) Regulations shall not require account providers to provide equity-based accounts, and shall make provision for cash deposit accounts, including provision for such accounts provided by building societies."
The noble Lord said: Under Amendment No. 5, child trust fund account providers will not be required to provide equity-based accounts and building societies, in particular, will be able to offer cash-based accounts.
The reason for the amendment is that the Government have required all bodies which offered CTFs to offer stakeholder equity-based CTFs. At the moment, more than a quarter of all building societies, mainly the smaller societies, do not have the authorisation from the FSA to offer regulated investment products. Therefore, as things stand, they cannot offer the equity-based CTFs without taking action.
The building societies affected by this are regionally based societies with a good reputation and, typically, a very substantial market share in their local areas. They are leaders in the provision of accounts for children and, as mutuals with no shareholders, they tend to pay higher than average interest rates. They are the logical places where many less well off families might go to open CTFs but, as matters stand, those families will be deprived of the opportunity.
Why is this? It is because in order to offer the stakeholder CTFs—which, by definition, will be provided not by the mutual but by another financial institution—the mutual will have to apply to the FSA to extend the regulatory permissions under which it operates. This will impose additional costs and an ongoing burden of compliance which, given the 1.5 per cent charge cap, will mean for these societies that it will not be worthwhile incurring the additional regulatory burden. I understand that of the 17 societies in this category, as matters stand today, only one is planning to extend its permissions.
In the debate at Report stage in another place, on 3 February, the Financial Secretary to the Treasury said that this problem would be dealt with by "depolarisation". She subsequently confirmed that in a letter to the Building Societies Association on 18 February. The letter basically said that the FSA is considering the proposals for demutualisation and is consulting on it, and that this will solve the problems of these building societies.
Unfortunately, that is not the view of the building societies themselves. They believe that they will still have significant additional compliance costs and that they will be unable to make financial sense of offering the stakeholder equity-based products, and therefore will not offer any CTFs at all.
What I find bizarre about the situation is the Government's obsession with equity-based CTFs. Although as a parent you can choose one or the other—an equity-based or a cash-based CTF—such a choice is, in a sense, denied to the provider who has got to offer an equity-based CTF.
I know the arguments only too well that, over an 18-year period, cash invested in shares in the UK will do better than an investment in a deposit account, but one has to consider the motivation of parents and grandparents, particularly those from lower income
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households, who are not familiar with the Stock Exchange and read horror stories about boom and bust. They do not necessarily have in their minds an 18-year rolling average and are content to put their money in a cash-based deposit.
I remind the Committee of a point that my colleague David Laws made in another place: although shares have done very well in the United Kingdom over the past decade, it is not a uniform and inevitable situation. In Japan, for example, the NIKKEI index peaked in 1987 at 38,000, while this morning it was under 11,500. Therefore, in the unlikely event that you had invested a child trust fund in Japan in 1989, you would still feel pretty sick. Your child, who would be reaching payment age in three to four years, would feel that something had gone seriously wrong.
I do not suggest that we will have the kind of inflation and depression that has prevailed in Japan. However, the argument that what goes down must come up within a set timeframe so far as concerns the Stock Exchange is not an immutable law of nature. It is a subsidiary argument as regards why we believe that the requirement that all providers should offer an equity-based product is misguided. I hope very much that we might persuade the Government to think again on the issue. I beg to move.
4 p.m.
Baroness Noakes: We support the sentiments expressed by the noble Lord, Lord Newby. We have a great attachment to equity markets. We think that they should be encouraged and promoted, but not that they should be compulsory sources of investment. The thinking behind the amendment is similar to our Amendment No. 7, which would remove the requirement to offer a stakeholder account as defined in the regulations. It is a serious flaw that there should be such a compulsion to have a stakeholder account, which has some disadvantages, and that such an account is defined by reference to equity. To that extent, we support the noble Lord, Lord Newby.
I wish to raise one specific question that has been put to me. It relates to single pricing, which is within the equity component of a child trust fund. This may not be the right place to raise the matter, but it is as good a place as any that I could find to discuss single pricing with the Minister. It has been put to us that stakeholder child trust funds cannot offer investment trusts that are traded, because, when they are traded on the stock market, they are by definition dual-priced. The Association of Investment Trust Companies is particularly concerned about that. It believes that, if the equity component remains as currently drafted—that is, using single pricing—CTFs will have to exclude investment trusts. It would be helpful to know whether the Government accepted that interpretation. If not, could they explain how investment trusts could fit into the draft regulations for stakeholder child trust funds? The industry is particularly concerned about that matter and hopes that the Government would be prepared to reconsider it. Investment trusts, because of how they spread risk and involve an element of gearing, provide a vehicle

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that should be considered by those putting together investment portfolios for vehicles such as child trust funds.
Lord McIntosh of Haringey: The issue is not choice or no choice. but whose choice? We provide that parents should have the full range of choice, whether stakeholder funds, equity-based funds or cash funds, from any provider that they choose to go to. The noble Lord, Lord Newby, appears to be concerned about the choice available to providers; we are concerned about the choice available to parents.
It is the case that the draft regulations for the child trust fund require that child trust fund account providers include a stakeholder pension, which is equity-based, as part of their product range. The stakeholder account will be equity-based, as the Government want all children to have the opportunity to benefit from the generally higher return on equities over the longer term. We debated this on Second Reading. I said that in any given 18-year period since 1918, equities had done better than cash. The noble Lord, Lord Newby, used the word "fanciful" about his Japanese example, and I must say that I take it as a little fanciful.
There is, of course, the risk of a loss in value, but there will be a requirement to diversify funds and to move them out of equities to less risky assets as the account nears maturity. We can debate that when we are considering later amendments.
The fact that we require all CTF providers to offer a stakeholder account should reduce the chances of providers automatically providing only cash deposit accounts to lower income families. You have a choice—you cannot have all choices available to everybody without some building societies offering a more limited range of options to parents. The noble Lord, Lord Newby, confirmed that, saying that all but one of the building societies that he is concerned with would not wish to offer stakeholder pensions. The parents who go to these providers because they know them or for whatever other reason will have less choice than others who go to providers who offer the full range.
I think it is more important for parents to have choice than for providers to be marginally inconvenienced. I have made it clear that the CTF regulations will not preclude building societies or anyone else acting to acquire the permission if they felt there was sufficient market opportunity. That is a commercial decision for them. On those grounds, I do not support the amendment.
The noble Baroness, Lady Noakes, said that this was a good a place as any to discuss single pricing. She is right that the draft regulations currently refer to a requirement for single pricing for the stakeholder account. It is part of the overall stakeholder suite, which has key aims of simplicity and transparency. We require single pricing of the top-level fund to achieve these aims, but we are still examining whether it is necessary on sub-level funds—that is, funds investing in funds. I think that that is part of what the noble Baroness was talking about.
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We have had feedback from the Association of Investment Trust Companies, and we will be speaking to it about this in due course. If there is any feedback I can give the noble Baroness on that point, I will do so as soon as I can. Meanwhile, I am not able to accept the amendment.
Baroness Noakes: I thank the Minister for dealing with my comment on single pricing, and I will discuss it further with the Association of Investment Trust Companies, which raised the issue.
The Minister kept referring to parents having choice. If he believes in markets, there will be lots of choice out there. Surely having choice does not mean that every provider has to offer at least one product or that every provider has to offer choice. That is not what the Government have created in their scheme. Instead, each provider must offer a particular variety of funds which has some disadvantages and some unattractiveness to certain natural providers in this marketplace. So I do not understand the Government's argument about choice.
Lord MacGregor of Pulham Market: I agree. I did not follow the Minister's argument about choice—it did not seem at all logical. What matters to the parents is that they have a wide range of choice, irrespective of who the provider is. If there was a part of the country where the local building society was the only society offering a cash CTF, that may be so, but there is no part of the country where that applies. In every part of the country parents will have the choice to go for either a cash-based or an equity-based CTF and, in that sense, it does not matter to them who is the provider.
The Minister is almost saying that if you want to buy children's shoes you have to go to a shop which provides every range of children's shoes; you would not be allowed to go to a shop that provides only its own shoes. I cannot follow that argument because the choice is there.
From the provider's point of view, the Minister might argue that there would be a restriction on choice if these particular local building societies were allowed to offer only their own products. It may well be that some parents will prefer to go to such building societies because, as the noble Lord, Lord Newby, pointed out, they know the local people involved and so on. That would seem to restrict the range of choice. As far as I am aware, we do not require every ISA provider to provide every type of ISA; we give them the choice and individuals can choose.
Where are we heading on this? What is the analogy? I do not follow it. I hope the Minister will think again.
Lord McIntosh of Haringey: The noble Lords, Lord MacGregor and Lord Newby, and the noble Baroness, Lady Noakes, are certainly more sophisticated investors than I am. I am sure they will recognise that we are speaking about a very large number of parents and families who have never made any investment decisions in their lives at all. Far too few families make investment decisions. It is one thing to explain the difference between a stakeholder

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product and a cash-based product—it is a universal argument which applies to everyone, and anyone with a certain amount of financial education, which is what we are talking about here, can understand the issue—but it is another thing to say that such parents and families would welcome the opportunity to make choices between different providers when some of the providers do not have the full range. They have got to consider that as well, and that seems to raise an obstacle to choice.
Most people who have never invested before will look to someone in whom they have confidence or who has perhaps been recommended to them. Under those circumstances, the protection that they have is that whoever they go to will offer them the full range of choice. It is very different from sophisticated and mature markets. We are talking about extending investment to large numbers of families who have never invested before. What we are proposing will give greater choice to parents.
Lord Newby: I think the Minister is trying very hard but he has certainly not persuaded me in regard to choice. The more he talks about families who are not sophisticated investors and who might have one account with one building society, the less persuasive he is. If I am in that category, I have got a building society account and I have got my book. That is what I hold on to as my investment. I understand that. Suddenly along come child trust funds and I think that I can just about afford to put a little money into one of them and I go to people with whom I am familiar.
Under the current rules, 16 of the mutuals providing for these people will not offer any choice because they will not take up the equity-based products. They have made that very clear. So, in that situation, I have to look beyond that one possible account and I am suddenly faced with a huge raft of choice from unfamiliar institutions, possibly not based in the town in which I live. I would have to contact them by post and so on. In those circumstances, if I was a marginal investor I might not invest. Therefore, in reality, choice is not being extended in the way in which the Minister states.
I shall not press the amendment today but I have not been convinced by the Minister's arguments. We shall think carefully about whether we should return to this issue on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Newby moved Amendment No. 6:
Page 2, line 33. at end insert—

"(2A) An account is not a child trust fund account unless it permits subscriptions of amounts of no more than £5.

(2B) The minimum amount in subsection (2A) may be increased by regulations if the Treasury is satisfied that the increase is no greater than is required to maintain the value of the amount in real terms."

The noble Lord said: In moving Amendment No. 6 I shall speak also to Amendment No. 13. They are different, but because they deal with the same principle
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I did not degroup them. Amendment No. 6 proposes to reduce the minimum amount that child trusts funds can accept from £10 to £5. Amendment No. 13, which is probably less clear in its intent, deals with an issue relating to the charge cap.
On the question of the minimum amount, I realise that there is a trade-off between the charge cap and the minimum. If we want to make these accounts accessible to poorer families, there is no point in setting a contribution cap that is too high. It is a matter of judgment whether £10 or £5 is too high. I am sure that the Government consider £10 to be a sensible sum. From my experience of inner city institutions trying to collect funds, £10 is a substantial amount and can be a deterrent to some people I think that this view was shared by the Building Societies Association in its representations to government. The £10 minimum will prove to be a disincentive for a raft of families and it is therefore too high.
There is a specific issue concerning the way in which child trust funds will be available—and where—which relates specifically to people at the bottom end of income. Supermarkets have been very successful at introducing financial services products in recent years. I understand that, to a large extent, those products have been taken up by people who have not had bank accounts, insurance policies and so forth before. The supermarkets have been very good at reaching exactly the kind of people that CTFs seek to target.
Have the Government had specific discussions with the supermarkets—the Tescos of this world—about whether they are thinking about introducing CTFs? Would the Minister consider speaking to them about that? In terms of accessibility, supermarkets are by far the most promising. Everyone goes to the supermarket. If people have a spare fiver—under my rubric—they might put it into a child trust fund. Perhaps people could even get bonus points on their loyalty cards if they are investing in child trust funds That could be an innovative way of broadening the scope of child trust funds which I am not sure that the Government have pursued.
Amendment No. 13 relates to the 1.5 per cent charge cap. The issue is the extent to which the 1.5 per cent cap will give providers of CTFs the resources to market them as effectively as they might wish. Again, if I am that notional parent considering whether to invest in my child's CTF, the extent to which I might do so will be influenced by the effort made by the providers to persuade me. It is like any other form of marketing. The Association of Friendly Societies has suggested—even within the 1.5 per cent charge cap overall—a way of making it easier for providers to market child trust funds at the point when parents are most likely to be thinking about investing in them. That is when the child is born, when the voucher arrives or possibly when there is a top up. Instead of having a fixed rate 1.5 per cent charge for each of the 18 years, it could be skewed towards the first year or two. More costs could be chargeable then so that the providers could spend more on marketing at that point.
The great advantage of these funds is that we know exactly how long the money will be in the fund. Therefore, actuarially, the sums can be done about the maximum that needs to be got back over that period. Recently we had a discussion with the Minister and his officials. It was explained that the Inland Revenue would send out an explanation about CTFs and the scope for additional contributions when the voucher was issued, and that it would be a persuasive document.
From personal experience, the document that is least likely to persuade anyone of anything is one from the Inland Revenue. One would be predisposed not to treat it as a marketing document. Unfortunately, for many people, the predisposition would be to chuck it away unread. The idea that the Inland Revenue is best placed to market CTFs is fanciful. I beg to move.
The Deputy Chairman of Committees: There is a Division in the House. Therefore we need to adjourn for 10 minutes.
[The Sitting was suspendedfor a Division in the House from 4.21 to 4.31 p.m.]
4.31 p.m.
Lord MacGregor of Pulham Market: As far as Amendment No. 6 is concerned, I must be consistent. At Second Reading, I argued that the 1.5 per cent charge cap might deter a number of providers from coming forward. Of course, we must remember—I am sure that the Minister will deploy this argument—that child trust funds will involve a huge number of individual and small operations, such as subscriptions and so forth. They will involve a great deal more back-office work in administration than many other equivalents, such as stakeholder pensions.
Even since Second Reading, we have seen more providers pulling out of individual stakeholder pension schemes, and even threatening to pull out of group pension schemes where there are only a small number of people in the company. Now it is a very real issue even for the stakeholder pension. Even with the 1.5 per cent cap, I suspect that that could be an issue.
The noble Lord, Lord Newby, said that it was a matter of balance and judgment, but if one went down to £5 and said that it was compulsory—not voluntarily down to £5 with perhaps a compulsory at £10, but compulsory at £5—1 think that would be a considerable disincentive. We have often quoted the Children's Mutual, which is probably likely to be one of the greatest providers in this area. It accepts that it is a real challenge to get down to 1.5 per cent. This could be the straw that breaks the camel's back.
As regards Amendment No. 13, I suspect that there may be technical grounds for saying that this does not achieve the objective. However, I have a lot of sympathy with the general principle and, in particular, with the illustration given by the noble Lord, Lord Newby. He made a point about the need for marketing to parents in the early stages of an individual child holding funds.
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There is a very real problem for companies. The charge for the first year will be £3.75, which will not take companies very far in terms of the costs of setting up an individual fund or in terms of marketing. That will not be possible within that charge limit and so there will be a big cash-flow problem for individual providers over the 18 years. I have a great deal of sympathy with the noble Lord's suggestion to front load some of the charge.
The noble Lord is right about marketing. In my constituency, on one occasion I sent a congratulatory letter to an elderly couple who were celebrating their diamond or golden wedding anniversary. One does not often get thanks from constituents but when I bumped into them about two years later they said that they had been meaning to tell me how grateful they were for my letter. But I was astonished to learn that they had left it unopened on their mantelpiece for a year because the stamp on the letter made it look like an official document. They did not want to open it in case it contained something worrying.
I suspect that the comment made by the noble Lord, Lord Newby, about the use of the Inland Revenue as a marketing device falls into that category. I have sympathy with that point. I hope that the Government will monitor this issue very carefully. It may be necessary to provide greater flexibility in the charging and the phasing of the charging in order to bring in enough providers.
Baroness Noakes: We have some sympathy with the amendment's objective of reducing the minimum subscription. On the other hand, we find it very difficult to accept it because of the costs placed on providers and the currently proposed 1.5 per cent cap. Although a 1.5 per cent cap is not nearly as scary as a 1 per cent cap, as was originally mooted, the industry is not falling over itself to say that it can do what it has to do within that. As my noble friend Lord MacGregor said, the Children's Mutual says that it will be tough to do it within the cap.
The noises coming from other parts of the industry are that they are not convinced they can do it within the cap. It is a cause of some concern. I find it difficult to separate the issue of the charge cap from that of the minimum subscription. That is why, in a moment, I shall return to the issue of whether we need to have stakeholder compulsion. It is stakeholder compulsion—the compulsion element at the core of the child trust fund—that is driving all of these problems.
I have some specific points on the charge cap. The industry still has concerns about this issue, the first of which concerns the sales regime. Perhaps the Minister can say when the industry will be given details of the sales regime. It is waiting for information from the FSA. Until we have details of the sales regime, potential providers will not be able fully to cost what they are required to do in order to cope with child trust funds.
Secondly, who will decide what is and is not included in the charge cap? A number of practical issues have arisen in stakeholder pensions regarding

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what is and what is not included in the cap. There have been a number of difficult discussions with OPRA about the issue. I do not know the details, but the industry tells me that that is the position. The industry would like to know whether the rules on the charge cap will be consistent with those for stakeholder pensions; which bit of Government will decide these details; and with whom the financial services industry will have to deal in this regard.
The final specific point is again on positive money-laundering regulations. Perhaps the Minister can say whether the money laundering regulations will be applicable to, for example, third parties who contribute to child trust funds. He will be aware that onerous requirements in the money laundering regulations will have a significant impact on providers' costs and may further diminish the attractiveness of providing child trust funds. So we also seek some clarity on the money laundering regime.
Lord McIntosh of Haringey: I think and hope that the issue on Amendment No. 6 is simply a misunderstanding. Any provider can accept £5, £2 or twopence ha'penny if they want to; it is a question of what they are obliged to accept. Our understanding is that providers—to whom, clearly, the noble Lord, Lord Newby, has been talking—are very reluctant to be obliged to accept a contribution as low as £5. I think that that is the point made by the noble Lord, Lord MacGregor, and I do not think that I need to pursue that matter any further.
On Amendment No. 13, the noble Lord, Lord Newby, suggests that we should allow higher charges in the earlier years. We carried out research to consider the benefits and disbenefits of that. We will publish the results of the research once the charge cap for all stakeholder products is announced later this year, after the FSA has considered the sales regime. There will therefore be an opportunity to consider the matter again. It could be changed by regulation; an amendment to the Bill would not be needed.
The noble Baroness, Lady Noakes, asked about the publication of the sales regime. The FSA aims to publish its consultation paper on the sales regime at around the end of next month. It will need a three-month consultation period. Allowing time for analysis of the responses to the consultation, it aims to publish its final rules in October this year. At that stage, it will announce the conclusions of the research on the issue dealt with in the amendment tabled by the noble Lord, Lord Newby.
The noble Baroness, Lady Noakes, asked what was in the cap, and whether we were using the same definition as for stakeholder pensions. We are still considering what is in the charge cap, alongside the consideration of other stakeholder products. We shall clarify the matter as soon as possible.
The noble Baroness's third question was about money laundering. We are working with the FSA on how the child trust fund requirements fit into existing money-laundering rules. We do not think that it is a very suitable vehicle for money laundering. If I were
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involved in money laundering, I would not use child trust funds: the amounts are rather small; there is a lock-in until age 18; and only the child can have access to the fund. I doubt whether it is a serious problem.
Baroness Noakes: I think that the noble Lord misses the point. It is not a question of whether the trust appears attractive to money launderers; it is whether the money-laundering regulations are likely to kick in, which means getting information about people from whom you accept money.
Lord McIntosh of Haringey: I understand that, but we have a joint money-laundering steering group, which will give guidance in good time for the implementation of the child trust fund. In other words, the matter is being looked at, and we understand the problem that the noble Baroness raises, but the steering group will consider the issue.
On the original amendments, I hope that I am right in thinking that there was a misunderstanding about obligatory lower payments and possible lower payments.
Lord Newby: I am grateful to the Minister. There was not a misunderstanding. Both amendments are probing; they relate to issues covered by regulation rather than primary legislation. The point of both amendments, as I made clear, is that I fear that the child trust funds will become another way for middle-class parents to save for their children without paying tax. If the child trust funds are to achieve the Government's intentions, they must be attractive to parents not saving for their children at present— predominantly lower-income parents. If the majority of child trust funds have a £10 minimum payment, and if the majority are so circumscribed in terms of cash availability that they are not properly marketed, lower-income parents will not take them up in the numbers that the Minister wishes.
I am afraid that I do not accept the Minister's points. With those comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Baroness Noakes moved Amendment No. 7:
Page 2, line 34, leave out subsection (3).
The noble Baroness said: I will not take a lot of time in introducing this amendment because I think we have covered a lot of territory already. To summarise, it would delete Clause 3(3). These regulations, in effect, force child trust fund providers to provide stakeholder accounts. As I said earlier, we do not believe that compulsion should be an element.
We have a number of concerns, some of which we have already outlined. While we have nothing in principle against stakeholder accounts, we worry that they have come to mean something along the lines of "This is something the Government believe is good for you". With that comes the danger of undermining the basic principle of caveat emptor, which should be

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reinforced in the financial services industry. People should not expect products to be guaranteed or risk-free.
With the stakeholder element, the Government are pushing people towards accounts which have a relatively high degree of risk attached. Admittedly, they have the prospect of higher-than-average returns but they are risky. We are concerned that the way in which the legislation is constructed, with every provider having to have a child trust fund account and every trust fund account having to have the equity component, we are taking the investing public in a direction which the Government—or the one after them—may well live to rue.
We have talked about other problems such as having to provide the equity component. The noble Lord, Lord Newby, talked about some providers simply not being able to do that, thereby depriving some elements of the community of known and trusted providers. We have also talked about the stakeholder requirement which has the 1.5 per cent cap built into it. I heard what the Minister said about how some of these issues would be resolved, but what I actually heard was uncertainty. There is uncertainty about the sales regime because of not knowing until October what will happen and what that would do to costs, not knowing what was in the cap until later and not knowing whether the money laundering regulations would have to be used by providers in relation to collecting the additional funds. All those factors make the stakeholder element an extremely unattractive proposition.
The Government accept that if providers offer a stakeholder element, they can offer a non-stakeholder account side by side. As I understand it—and I hope the Minister will confirm this—that non-stakeholder element has no restrictions on what it can be invested in. It has no charge caps, no minimum subscription restrictions and is a very different product.
The industry may well develop so that there is a tiny stakeholder product in a drawer somewhere that it does not really push, while it has a variety of child trust fund accounts that it does want. Do the Government have the balance right? That is why we propose in our amendment to remove the provision which insists that a stakeholder component must be offered. I beg to move.
Lord Newby: The amendment seeks to achieve in a different way what I was discussing in Amendment No. 5, so I have a lot of sympathy with it. To reinforce the noble Baroness's point, let us say that a financial services provider has a number of child trust funds; if one is subject to a price cap and another is not, but in most other respects they are broadly similar, which will the provider market? Which will it be able to market, unless it cross-subsidises them? The noble Baroness has pointed out a number of potential pitfalls. This is unlikely to achieve what the Government want any more than stakeholder pensions have done.
Lord McIntosh of Haringey: I do not have anything very much to add to the debate on this amendment; we tried to group the two together because we thought it would save time.
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I shall remedy two omissions in my response to the previous amendment. The first is how the dreadful Inland Revenue strikes fear into the heart of the population so that official envelopes are not opened. I think that the noble Lord, Lord MacGregor, and the noble Lord, Lord Newby, have forgotten that for a very large number of people, the Inland Revenue is responsible for distributing benefits not for collecting tax. Therefore, perhaps the dreadful reputation does not apply in the sense of the brown envelopes that we receive and would prefer not to open.
I failed to reply to the point about supermarkets. For reasons of commercial confidentiality. I do not think that we can say whom we have been consulting, but the noble Lord, Lord Newby, would not be justified in assuming that we had not consulted very widely indeed on potential suppliers of the products.
The basic argument about stakeholder accounts remains the same. The decision that we are making here is not affected by the money laundering issue or the charge cap issue. We want any parent or family going to a given supplier to have the full range of options available. I shall not go into the choice argument again; it did not go down very well anyway. That is the fundamental reason that we oppose the amendment, as we did Amendment No. 5.
Baroness Noakes: Although we could have debated all the amendments as one group, it has been useful to debate the individual elements. The Minister will be in no doubt that the Opposition feel considerable unhappiness about how the Government have approached the child trust funds that have to be offered and their components. We have serious concerns about whether the Government will achieve their own aims, either because the scheme will be so difficult and expensive to operate that providers will not come forward in large number—what kind of choice would that give families?—or because providers will go out of their way to promote non-stakeholder funds. That would be in their commercial interests, so I cannot see that they would be driven in any other direction.
Therefore, for several reasons, and from almost whichever way one looks at the matter, the requirement to have a stakeholder account at the heart of the policy seems flawed. The Minister will not be surprised to learn that we shall return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Wilcox moved Amendment No. 8:
Page 2, line 44, leave out "as" and insert "in accordance with the provisions of section (Early withdrawal. etc, for disabled children) or as otherwise"
The noble Baroness said: My Lords, in moving Amendment No. 8, I shall speak also to Amendments Nos. 36, 68, 79 and 86. They focus on adapting provisions for child trust funds for children who are disabled. They would do so in two specific ways: by allowing parents access to funds for specified purposes

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before the child is 18, and by allowing a higher maximum annual contribution rate for supplementary contributions from friends and family.
In a moment, I shall look at the positive benefits that we believe the provisions would bring. First, I wish to extend my thanks and admiration to my honourable friend David Cameron, who provided the impetus behind the amendments and debates on disability in Standing Committee and on Report in another place. He has personal experience of living and caring for a young child with severe disabilities. His contribution during discussions of the Bill in another place was extremely constructive and highlighted some of the pressures and strains, both emotionally and financially, for families who care for severely disabled children.
I have listened to the well thought-out and argued points made by Members from both sides in another place on the issue. I appreciate that there was much sympathy for what my honourable friend was trying to achieve by tabling the amendments that he did in Committee and on Report. I emphasise to the Minister that I have read the discussions on disabled children, and we on these Benches have given much thought to the points raised in objection. Consequently, we have tried to hone our amendments somewhat in returning to them here.
The issues, as I mentioned in my opening comments, are twofold. We believe that parents should be able to dip into the CTFs of their disabled children for specific purposes, as listed in our proposed new clause. Those purposes are,

"(a) the purchase or hire of equipment for use by the child in respect of their disability,

(b) payment for nursing, night or child care,

(c) payment for respite care or temporary residential care, and

(d) payment for any specialist medical or palliative service in respect of the child's disability".

We expect this to be only a safety valve or backstop provision. It is not intended to replace the money that parents of disabled children can claim from the NHS and social services. However, those provisions could be an invaluable help, on one or two occasions, to improve the quality of life of parents and their disabled children.
Noble Lords are probably asking themselves two key questions. First, why should we single out disabled children for special provisions in the Bill? Secondly, are the proposals that the amendments outline actually workable? I shall endeavour to convince Members of the Committee on both the advisability and workability of our amendments.
I have consulted David Cameron and others experienced in caring for disabled children, and the statistics speak for themselves. We have roughly 360,000 disabled children whom we can identify because they claim disability living allowance. That means that they are an easily distinguishable group; we
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would not be faced with problems of fraud or wrongful claims, as we know who those children are. We also know that nine out of 10 disabled children are looked after at home. That is an immense strain and effort for working parents, who must find the time, emotional strength, dedication and money to look after their disabled children. The Barnardo's report Still Missing Out?calculated that it cost on average more than three times as much to raise a disabled child compared to an able-bodied child. Families receive statutory support from the NHS and social services; however, that provides the bare minimum, and, according to a recent report from the Audit Commission, it can often be a postcode lottery. Some disabled facilities grants, such as those for stair-lifts, hoists or refitting the house to cater for a disabled child, can also often be means tested.
Our amendments would be an added way of providing additional support to complement that provided by social services and the NHS. We believe that they would be a great extra help to parents and children. First, we would allow a higher maximum contribution rate for disabled children holding CTFs. Friends, relatives and the local community are often keen to help families with disabled children struggling to pay for essential equipment—a bath hoist, for example—or perhaps a flight to America for an expensive operation. It is true that there are already accounts that can be opened, but the joy of CTFs is that every child will have one. Why not allow flexibility for larger contributions for disabled children? It has been claimed that that will favour richer families. I do not think that that is the case. We have already mentioned means-tested facilities; even families on modest incomes may not be eligible for some grants, and being able to contribute more every month would be a massive help.
The major criticism of our amendment seems to be that it goes against the very principle of CTFs—that is, providing a considerable asset to every child at 18. In another place it was claimed that disabled children would therefore have less of a fund at 18, or that parents might misappropriate the money from their children's funds. We have tried to provide against that by ensuring that the government contributions and the interest thereof remain intact, and that parents can dip into only the extra funds that they or others have contributed. We also envisage regulations providing for a method by which parents are obliged to inform the Inland Revenue on what they used the withdrawn funds for. Parents generally want what is best for their child. Parents of disabled children give sometimes 24 hours a day to care for their children: they are hardly likely to want to steal from them.
Our amendments are not meant to provide an alternative to social services and NHS facilities. But the sad fact is that there are waiting lists for provisions for disabled children. A new wheelchair may take months to order and arrive only when the child has grown out of the current model. Moreover, parents may reach cracking point because they have not been able to take a day off. Under subsection (7) of our new clause, we have proposed four specific purposes for

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which parents may withdraw money. The NHS will still provide what it is obliged to give disabled children, but our amendments might enable children and their families to make their lives more bearable from time to time.
I should like to cover a few minor points in conclusion. It has been said that at age 18 disabled children often require significant funds to try to achieve the transition to a more independent life. That is as may be, but some disabled children will never be able to live an independent life. They do not need a fund intended to cater, in the case of able bodied children, for university fees, driving lessons or a house deposit. It is up to the parents of these children to make the decision in each individual case as to when their child might best benefit from the money in the CTF. Our amendments make explicit that all children must be consulted in any early withdrawal as far as this is possible.
We do not believe that this will be expensive to administer—we are not talking about a huge number of disabled children. Nor do we believe that the fact that CTFs are equity-based products and subject to lifestyle is an impediment to adapting the funds for the sort of early withdrawal facility which we are advocating.
We have the chance here to make a significant difference to the lives of disabled children and their families. How frustrating for them to see money sitting in a CTF when they are desperate for an extra thousand pounds to fund an expensive operation which is necessary to help preserve the life of their child. We have consulted with Mencap, Barnardo's and the Disability Rights Commission, and they support the intention behind our amendment. I beg to move.
5. p.m.
Lord Newby: Obviously we are keen, as a matter of principle, to see how the plight of disabled children might be ameliorated. However, I revert to the point which I made right at the beginning of our proceedings about our attitude to amendments. We will as a general principle oppose amendments that seek to extend the scope and complexity of the provisions. I am afraid that this amendment would certainly do that.
We should also ask what is the purpose of the child trust fund. I do not think that this amendment fits in with the four purposes of the child trust fund—to help people understand the benefits of saving; to encourage the savings habit; to provide a financial asset at the start of adult life; and to help financial education and financial choices. Unfortunately, I fear that this amendment, although it has some attractions, simply does not fit in with the Bill's purposes.
Despite the comments of the noble Baroness, Lady Wilcox, that not many people are involved and that it is not very complicated, potentially quite a few people will be involved, and the proposal would be quite complicated to administer for all involved, not least the providers of the child trust funds. Therefore, we will not support these amendments.
Lord McIntosh of Haringey: I think that we all recognise the sincerity of David Cameron's contribution to the Bill's passage in the Commons. We all recognise the constructiveness of his interventions. I start from that point of sympathy.
The new clause would allow parents or other responsible people access to the CTF account of disabled children so that they could apply the funds representing contributed funds for the child's benefit, for example, for special equipment or for nursing care. I noticed what the noble Baroness, Lady Wilcox, said about having honed the amendments. She did indeed, and I congratulate her on that. Amendment No. 68 would also allow a higher annual limit for contributions to a disabled child's account compared with that of a child who was not disabled.
At Committee and Report stages in another place, the Financial Secretary acknowledged the motives behind the proposals and the need for them to be given careful consideration, specifically with regard to Amendment No. 68. She was committed to considering further the arguments for a higher limit. I continue with that commitment. She also gave a commitment to consider in further depth the arguments for allowing parents of disabled children early access to their child's account. That is what the new clause and Amendment No. 8 would do. They set out the conditions that would have to be satisfied.
As part of our considerations we are consulting various disability representative bodies, sonic of which were mentioned by the noble Baroness, Lady Wilcox. If a consensus emerged for change, that would be considered seriously to see whether a sensible change can be implemented that would satisfy all concerned. Such a change could be introduced in regulations; it would not need an amendment to the Bill.
The debates in the Commons were extensive and helpful. Obviously this is a matter which should not be rushed through but considered with great care. Important issues need to be taken into account. The obvious one is that raised by the noble Lord, Lord Newby: would these young people be disadvantaged when they reached the age of 18 if their parents had decided to access their funds earlier? I appreciate the point that the child would be consulted when possible, but there must be a high number of cases of need where they could not be consulted.
These young people are seen to be different from other young people, so if they had either a smaller child trust fund account or none at all by the time they reached the age of 18, would that add to their feelings of being different? It is a thought which ought to be considered.
We are continuing our discussions with the leading disability groups. I am not able to give the conclusions, but I can assure the noble Baroness, Lady Wilcox, that we continue to give the provision of special arrangements for disabled children careful and reflective deliberation.
Baroness Wilcox: I am very happy with some of the comments from the Minister, in particular his

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assurance that the Government are continuing to consult Mencap, Barnardo's and the Disability Rights Commission, along with others. The idea that we could achieve a higher annual limit is quite exciting, and I know that my honourable friend in another place will be pleased to read what has been said today.
I am very sorry that the noble Lord, Lord Newby, could not break his rigid rules for his four points today because I know how good the Liberal Democrats normally are when considering disability issues. Indeed, they have shown us the way many times. I did wonder why the Liberal Democrat specialist performer on the Front Bench was not here today, and now I understand the reason. I am sorry about that.
At this stage it is only right that I should not press the amendment. I look forward to hearing what the Government have to say further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Noakes moved Amendment No. 9:
Page 2, line 44, leave out "as" and insert "in accordance with the provisions of section (Early withdrawal in case of terminal illness) or as otherwise"
The noble Baroness said: In moving Amendment No. 9 I shall speak also to the other amendments in this group. The amendments deal with the difficult issue of whether child trust funds may be withdrawn for a child who is terminally ill. They are unlike the amendments just spoken to by my noble friend Lady Wilcox, referring as they did to a child who is disabled but expected to live, certainly throughout the period of the child trust fund. The key amendment in the group is Amendment No. 37 which introduces a new clause after Clause 5; the others are consequential.
The new clause would allow the parent or other responsible person to withdraw money from the child trust fund once he has obtained a certificate stating that the child has a terminal illness. In a moment I shall come to the definition of terminal illness, which is a difficult area, but first I should like to deal with the principle involved.
The Government's detailed proposals recognised that it was entirely understandable that the,
"parents of a terminally ill child might want to withdraw funds to benefit the child in its remaining life",
whether to pay for treatment or for a special holiday. But a combination of fear of fraud and of administrative difficulties appeared to lead the Government to ignore the issue when they came to produce the Bill.
In another place the Financial Secretary gave some hope that the Government might move on this when she said on Report that,
"we will continue to examine the matter thoroughly. If there is a reasonable way to achieve the goal, we will introduce regulations to that effect".—[Official Report, Commons, 3/2/04; col. 666.]
We are returning to this issue because we think that our proposed clause provides for a reasonable way to achieve the goal. Our new clause—on two physicians
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finding that a child has a terminal illness—provides a robust way of identifying children for whom it would be reasonable to allow early withdrawal.
Our definition of terminal illness is drawn from the real world of insurance policies which pay out within 12 months of death, or assumed death. A number of insurance policies in the market pay out when there is certified terminal illness in precisely the same terms as we have included in this amendment.
It is of course possible that physicians could certify terminal illness and parents could then withdraw the money to spend on themselves, but I do not think that that is likely. In any event the child trust fund will pass to the parents on death and there seems little chance, if we have a position where the child can be certified as terminally ill, that they would worry about waiting that short period of time.
I hope that the Government will see this clause as a positive way of dealing with the issues. I beg to move.
Lord Newby: Unlike the previous amendments, we can see the point of this proposal. To put it very indelicately, by definition the purpose of the Bill will be frustrated if the child dies before they can reap the benefit of the fund at the beginning of their adult life. In those circumstances it would seem perverse to deny the child the benefit of the funds sitting in their account at a point when, it is hoped, they can derive some benefit from it.
However, having re-read what the Minister said at Second Reading, I must say that I thought the Government had agreed that they would deal with this point. I am not quite sure why there is a need for this amendment. No doubt all will now be made clear.
Lord McIntosh of Haringey: Yes, it is true, the Financial Secretary said more than what was quoted by the noble Baroness, Lady Noakes. She said that she was persuaded of the case for change. However, I am glad that the amendments have been tabled because they are a constructive contribution to the problem that we have to face. These are very painful decisions and it is a difficult area; there are sensitivities here. It is possible to be heavy-handed or to introduce upsetting interventions at what could be a very difficult time in the life of the parents of the child. Moreover, I am afraid there is also the possibility of fraud which, I agree, the amendments attempt to minimise.
Fundamentally, as the noble Lord, Lord Newby, pointed out, we have said that we are persuaded of the case for change. We are working on finding a way of achieving an appropriate means of releasing funds. We aim to have proposals in the regulations which we will be laying after Royal Assent. But the noble Baroness, Lady Noakes, is pushing at an open door.
Baroness Noakes: I thank the noble Lord for his support and the Minister for his comments. We shall have to wait for regulations to be made after Royal Assent. Will draft regulations be made available during the passage of the Bill through your Lordships' House?
Lord McIntosh of Haringey: I cannot promise that. These amendments have made a constructive

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contribution to what is a difficult problem. I cannot promise exactly when our proposed regulations will be available, but we shall get there somehow.
Baroness Noakes: I thank the noble Lord. Clearly I need to reflect on this carefully before the remaining stages to see whether we should seek to amend the Bill or trust the Government to do something after Royal Assent. However, I am grateful for what the noble Lord has said and the way in which he said it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Newby moved Amendment No. 10:
Page 2, line 44, leave out "as" and insert "in accordance with the provisions of section (Early withdrawal by young person not in full time education) or as otherwise"
The noble Lord said: This series of amendments relates to the key issue of the benefit of the child trust fund providing a financial asset at the start of adult life. The amendments address the question: what is the start of adult life? For children in full-time education, adult life starts in the economic sense when they leave it, but for children who leave school at 16, that is the point at which they reach the start of adult life. Therefore to deny them access to the child trust fund set up in their name for two years seems to frustrate the purpose of the Bill, which is to have the asset ready and available for use at the point at which they begin to move from education into "adult life". That is the phrase used, but what the Government have in mind, I believe, is economically active life.
A question arises: for what do we envisage the child trust funds being used? Something that has undoubtedly been in the minds of the Government and others is that they might be used for driving lessons. The logical time to take driving lessons, especially if one is to be in the labour market before 18, is as soon as one possibly can—at 17. Under the Bill, such young people would not be able to access the funds for that purpose even though, for many of them, the possession of a driving licence is the most significant determinant of whether they get a job.
That is one of a number of examples I could give. The principle that underlies the amendment is very straightforward. If adult life starts at 16, and if the purpose of the Bill is to provide funds when adult life starts, it should match the purpose with the practice. Those young people who have given up on school for good or ill at 16 and gone into the labour market should have access to their child trust funds. I beg to move.
5.15 p.m.
Baroness Noakes: Although we have some sympathy for what the noble Lord has said, we are concerned about what young people will do with their child trust funds. My next amendment deals with putting some restrictions on how child trust funds can be used at maturity. I would be much more comfortable about an earlier withdrawal to a 16 year-old young adult—we really should not call them children, because they are not children at 16 or 17—if
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there were some defined uses to which the money could be put. As I shall explain on the next amendment, I feel uncomfortable with an unconstrained ability to access the money at an earlier age. However, the noble Lord has made some important points.
Lord McIntosh of Haringey: I rather feel as though I am being attacked from two different directions. I do not mind that at all, because we have a rational proposal and the objections of this amendment and the next one do not really hold up.
We provide in the Bill a clear point at which young adults can access their child trust funds—when they reach adulthood at 18. There are lots of different ages of adulthood, including the age at which one can join the Army, get married, have a driving licence and vote. Another is the age of consent, which the House has debated at incredible length over the past few years. All those are different ages, but we have settled on 18 as defining young adulthood. It has the advantages of being clear, universal, and providing 18 years of investment for a child trust fund, which would be diminished if the money were taken out at I 6 or 17.
I am particularly worried about the suggestion that the money should be available for those who cease full-time education. Surely there is a risk that it might be an encouragement to cease full-time education, whereas the thrust of all our policies has been to encourage young people to stay on in full-time education beyond 16 years of age. Announcements made in the past week or so have reinforced that.
It is not desirable to allow some 16 year-olds and not others access to child trust funds before they reach the age of 18. At Second Reading, there were those such as the noble Baroness, Lady Noakes, who argued that there should even be restrictions at 18. That argument is surely stronger for 16 year-olds and 17 year-olds. Some, such as the noble Lord, Lord Northbourne, argued that the age should be even later than 18. That is like coming into an inheritance at the age of 65.
The noble Lord, Lord Newby, made the point at the beginning of our proceedings that he would support amendments that stuck to the principles of the child trust funds and oppose those that departed from them. In contrary distinction to that, his amendment departs from those principles and I am afraid that we cannot support it.
Lord Newby: I am not entirely surprised at that response. There is only one issue that I dispute. One of the principal purposes of the child trust fund is to provide the child with a financial asset at the start of their adult life. If they are leaving school, the start of their adult life is jolly well 16, not 18. However, I did not really think that I would persuade the Minister, so I am not too shocked not to have done so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Noakes moved Amendment No. 11:
Page 3, line 3, at end insert—
"( ) Regulations may provide how a child trust fund may be used once a child reaches the age of 18."
The noble Baroness said: It is with not much hope that I move the amendment, given the Minister's remarks, but I do so none the less. It adds a new subsection to Clause 3 giving a regulation-making power on the use of child trust funds when a child reaches the age of 18. We debated the matter at Second Reading, and a number of noble Lords expressed concerns about what would happen to the money when the child reached 18. In fact, the Minister was the only noble Lord at Second Reading who seemed unconcerned about the likelihood, which many of us foresaw, that the money would be squandered once the young adult had access to it.
The child trust fund policy is not based on substantial evidence. We fear that partying may well be high on a child's wish list at the age of 18. However, the Minister warned us at Second Reading that:
"We should be wary of patronising young adults by putting restrictions, which have not been very well defined, on the way in which funds should be used".—[Official Report, 26/2/04; col. 376.]
I have no wish to patronise young adults, but we should be alert to the real possibility that child trust funds will be dissipated—that they are a financial asset one day and gone the next.
The evidence on what young people will do with money saved for them is not conclusive. The trust funds will be held by everyone—that is their virtue, from the Government's perspective—including those families where there is no tradition of saving and no current value placed on holding financial assets. We need to have extraordinary faith in the transforming power of either the child trust funds or the financial education talked about at Second Reading to believe that the child trust funds, which for many young adults will comprise no more than the Government's largesse compounded for 18 years, will not simply be spent.
I confess that I do not know exactly how it would be wise to constrain the use of child trust funds. Indeed, that may change over time along with the boundaries between what the state provides and does not provide. A number of suggestions were made at Second Reading, but we do not have to decide now because there are 15 or 16 years before it actually becomes an issue. That is why my amendment creates a power to specify how the account could be used.
To create child trust funds without such a power is unwise. If evidence emerged that attitudes to child trust funds were not sufficiently responsible, or perhaps if evidence from overseas where similar products have been experimented with suggested that restrictions would be wise, my amendment would give the Government an explicit power to act accordingly. On that basis, I hope that my amendment will commend itself to the Minister. I beg to move.
Lord Newby: The amendment goes to the heart of what we see as one of the principal flaws in the Bill, which is that, for many young people, we are simply talking about a windfall 18th-birthday present. They have not contributed to it and, through no fault of their own, their parents may not have done. A dollop of cash descends. The question is whether the money
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will be used in a way in which, in normal circumstances, we would wish taxpayers' money to be used. Clearly, the way in which the money will be used will vary substantially.
I support the amendment in principle—if we are going to have these funds then ensuring that the money is used in a way which society would consider constructive clearly has a lot to recommend it—but I fear that there will be problems in defining how the money may be used. People may well disagree on this. Would you, for example, be happy that such moneys should help fund travel during a gap year? I speak with considerable personal experience of raising funds for a gap year at the moment. My 18 year-old son would consider that there is no more appropriate use for any money available to him than to enable him to go round the world in his gap year. I do not know what the answer is, but I think that helps to describe some of the problems we would have in defining what we consider to be appropriate.
The policing of the use of the money would be an horrendous task. While I am sympathetic to the amendment because one would wish to constrain the use to which the funding is put, the fact that it cannot be constrained demonstrates why this is a flawed proposal.
Lord MacGregor of Pulham Market: This is an important issue. In the Second Reading debate it was clear that it worries a number of noble Lords and it is right that we should explore it very thoroughly in Grand Committee and probe, in particular, the Government's case.
I wish to raise three issues on which to question the Minister. First, in the response to the consultation document, about 50 per cent of the respondents were in favour of limiting the end uses to worthy causes and 50 per cent were not. I should be interested to know the strength of feeling and the arguments used on behalf of those who want to limit the use.
Paragraph 20 of the Treasury Select Committee report on trust funds states:
"Research commissioned by the Homeowners Friendly Society into consumer attitudes towards the Child Trust Fund found that 'people feel strongly that the proceeds of the fund should be spent on a worthwhile purpose. Education is by far the most mentioned use for the fund, whether this be higher education or of a more vocational nature"".
Sixty-four per cent wanted that. The report continued:
"We asked the Treasury why there will be no restriction on the use of the Child Trust Funds when they mature at age 18. The Financial Secretary told us that…'we think the funds ought to be spent on worthwhile projects'…but considered that it would be difficult to design a scheme to identify what were worthwhile benefits and believed that…'the best way of encouraging the funds to be used well is to ask young people themselves what is in their best interests"".
As to the difficulty of defining worthy causes, I know that others have argued, as did the noble Lord, Lord Newby, that there could be an interminable debate on the issue. Of course there could, but it is the purpose of the debates in both Houses to come to a conclusion on such matters should we wish to do so. I shall refer to the American experience in a moment,

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but clearly the American Government were able to come to a conclusion on the three purposes to which they wanted to restrict a similar scheme.
I am not quite sure what the Financial Secretary meant by,
"the best way of encouraging the funds to be used well is to ask young people themselves what is in their best interests".
What does that lead to? That we should ask them what is in their best interests and then confine the scheme to their response? I do not see the argument there at all.
The report continues:
"We also asked the Treasury whether they had considered introducing an incentive to use the Child Trust Fund for educational purposes, to which the reply was that 'we have not ruled out some kind of benign encouragement"".
I have a great respect for Treasury officials but I am not quite sure what "benign encouragement" means. Does it mean we will not restrict the uses at age 18 but we will suggest certain areas in which it would be better to spend the funds than others? I shall be interested to hear the Minister's response on that issue. In particular, I should like to hear the arguments, not about the difficulties of defining the purposes for which the funds might be used—that is a matter for the Government to decide—but about the administrative and other difficulties involved in restricting the funds to particular purposes. What are the practical arguments that the Government find persuasive?
That leads me on to my second point. I understand that the Americans have introduced individual development accounts. Those are confined to three purposes—lifelong learning, enterprise and housing. If the US has been able to do it, could not we? What was its answer to the kind of objections that we are hearing about the administrative and other difficulties of confining the funds to those areas?
My third point relates to what the Children's Mutual, an organisation that seems much quoted in our debates, said on the issue. It is opposed to restrictions on the use of the funds for a number of reasons. One of those is its own experience that 47 per cent of moneys from maturing baby bonds helps fund higher education and that 25 per cent is used to open bank or building society accounts. That is all very splendid and worthy, but I am not sure that it answers the question for us. Inevitably, parents who subscribed to the opportunities that the Children's Mutual offered were parents who were anxious in the first place to build up savings for their children to use for such purposes when they became 18. So there was already motivation.
What we are talking about—it is perfectly worthy—is trying to encourage many others, particularly parents, who would not normally think of saving, to do so. My concern is the same as that expressed so well by my noble friend Lady Noakes. According to the Government, we are talking about only £475 at 18 if there is no parental contribution, or £911 if there is a £500 contribution in the first place. A young person aged 18 is likely to blow that £475 on all sorts of purposes if he is not used to the idea of saving for worthier purposes. The experience of the Children's Mutual is not wholly relevant to our concerns.
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I have a lot of sympathy with the principle. I suspect that the real argument against it will be the practicalities. That is what I want the Government to spell out in a way I have not heard yet. I particularly want to know why, if the Americans can do it, we cannot do it as well.
5.30 p.m.
Lord McIntosh of Haringey: I want to start by resisting the suggestion made by the noble Baroness, Lady Noakes, that I was unconcerned at Second Reading about the possible misuse of the fund by the young adult at the age of 18. I am as concerned as anyone and recognise that there will be occasions when it could go on what your chairman, in a note to me, calls a "trust fund rave". I can see the possibility that that might happen.
The problem is not so much the practicalities as the practical difficulties. We are talking about the principle of saying to people at the age of 18, "You are adults who must make your own decisions". The encouragement of responsibility is one of our objectives. That is why, for example, 16 year-olds and 17 year-olds are being given a say in the way in which their funds are accumulated and invested. That is the financial education to which the noble Lord, Lord Newby, rightly attributes such importance. It is part of the financial education process that young people of 16 and 17 should know what has been invested for them, even if it is a small amount. From that age, they should have a say in how it is invested. It follows that, at 18, they should be entirely responsible for how it is spent.
In the consultation, a very large number of people said what I have just said. Some people wanted restrictions, although I have to say that a considerable number of those wanted them not in the form of the amendment but that the age limit should be 21 or 25 rather than 18. That is like a pub giving credit to people over the age of 80 if accompanied by both parents. I am not sure that that is a particularly good idea.
The noble Baroness, Lady Noakes, said that the evidence is not conclusive. Of course it is not conclusive because we are doing something here which has not been done before. Whenever you do something that has not been tried before, you cannot anticipate all the possible outcomes. We have announced a new project; we consulted on it twice during the course of 2003 and we have come to the conclusions that are now reflected in this Bill.
I recall that the noble Lord, Lord Northbourne, said that we are patronising parents. I think that we would be patronising young adults if we attempted to implement this amendment by regulation. I can recall, as does the noble Lord, Lord MacGregor, research undertaken by the Children's Mutual which I quoted at Second Reading. He asked me why, if it can be done for independent development accounts in the United States, it cannot be done here. IDAs are very different. They are intended to encourage people to save towards further education, home buying and—I cannot recall the third one—
Lord MacGregor of Pulham Market: Enterprise.
Lord McIntosh of Haringey: Yes, and that is very good. But IDAs are administered through community groups at the local level. Over there, they are close to the people receiving the IDAs, but over here we are proposing a nationwide scheme. We would have to consider not only issues of definition, but also issues of enforcement which I could imagine being complicated and very different from those in individual development accounts.
However, it is not the practicality which is the clincher here. I think that the point is that we have to treat grown-ups as grown-ups.
Baroness Noakes: I thank the Minister for that reply and I thank my noble friend Lord MacGregor for his important contribution. He pointed out that if it can be done in the United States, then we can do it here. I am sure that, while the US may have been implementing it in a different context, it points the way to it being a practicable exercise.
I want to put one question to the Government. If, during the course of the operation of child trust funds, the Government have concerns about how the funds would be used, do they have powers under the Bill to place any restrictions when they reach maturity?
Lord McIntosh of Haringey: The answer is that the European Convention on Human Rights gives a right to a person's property. A person over the age of 18 is entitled to the enjoyment of his or her property. I did not want to raise that point because it looks like a long-stop argument, but if we were to raise it later, once the legislation had been passed, we could come up against the property rights secured under the convention.
Baroness Noakes: To clarify, if we do not take a power in this Bill, we will not be able to take a power later because there is no other power in the Bill to deal with the case. The reason I have raised this point is that it will be a long time until the money is paid out—some 16 years must elapse before it becomes an issue. Nevertheless, we are currently talking about putting in £250 million per year. By the time that has accumulated over the period, there will be around £500 million going out each year. Those are broad figures.
There could be serious societal concerns. Taxpayers' money will have gone into the fund and there will be questions about the uses to which it is put. My amendment does not require the Government to place restrictions on use at the age of 18, it gives the Government the power to do so.
Lord McIntosh of Haringey: Let me take legal advice and write to the noble Baroness, Lady Noakes, and all other noble Lords who have taken part in the debate.
Baroness Noakes: I hope that the Minister will be able to write before we reach the Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Carter): I should inform the Committee that if Amendment No. 12 is agreed to, I cannot call Amendment No. 13 on grounds of pre-emption.
Baroness Noakes moved Amendment No. 12:
Page 3, line 4, leave out subsection (5).
The noble Baroness said: I can be brief on Amendment No. 12, which concerns regulations to be made under Clause 3. The amendment would delete subsection (5) of the clause. Clause 3, rather like the Bill overall, is littered with regulation-making powers. The earlier subsections in the clause contain targeted regulation-making powers. Subsection (5) appears to be some sort of catch-all—or "catch anything we have not already thought or—clause. The Explanatory Notes say nothing about the subsection; indeed, the Explanatory Notes completely ignore it. We regard that as unsatisfactory.
In another place, the Financial Secretary failed to give a single example of why subsection (5) is needed on top of the existing regulatory powers in Clause 3—which is why, on a probing basis, we have proposed its deletion. If the Minister can give us a good reason for having this power on top of the other regulation-making powers in Clause 3, we will be entirely content to leave it. Otherwise we shall seek its withdrawal, on the grounds that we should not be creating untargeted powers to make regulations in circumstances beyond the contemplation of those who are legislating. I beg to move.
Lord McIntosh of Haringey: The power in Clause 3(5) is actually an important one. I think we have to look at the reaction of providers to this to understand it fully. The child trust fund will be based closely on the ISA model with which providers are familiar. They have asked us to use the ISA model as a precedent. The provision in Clause 3(5) gives us flexibility we would not have if requirements for an account had to be in primary legislation or indeed if it took a long time and parliamentary activity to change them. If it is necessary to change a requirement quickly, we can make that change as soon as possible without having to wait for primary legislation.
Because the child trust fund involves the interests of children, we consider it very important to have this flexibility so that if there is undesirable behaviour which would adversely affect the child's interests we could stop it straight away. I would also remind the Committee that the Select Committee on Delegated Powers and Regulatory Reform looked at this clause together with all other clauses and it did not recommend the change proposed in the amendment. We have complied with its recommendations. This goes beyond what it considers to be necessary.
Baroness Noakes: I thank the Minister for that reply. I should like to deal with his last point as I have discussed the issue quite recently with the noble Lord, Lord Dahrendorf, who does such sterling work on that committee. When noble Lords on these Benches and the Liberal Democrat Benches wish to discuss

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regulations, the Government say, "Ah, but the regulatory powers committee has not recommended any change". The opposite case also is often made, that the Government have accepted what the committee said.
The noble Lord, Lord Dahrendorf, is very clear that that is not the message from the report of the committee. Indeed, the committee sees its role as highlighting particular points that it thinks should be brought to the House's attention or dealt with differently. However, it does not thereby place an imprimatur on all the other regulatory powers in the Bill. I do not know whether the noble Lord, Lord Dahrendorf, speaks for the whole of his committee, but he felt that that would not be a helpful development for the way in which we dealt with legislation.
I return to the substance of the issue. I asked for what purpose this regulatory power might be used on top of the regulatory powers in subsections (1), (2), (3) and (4). The Minister told us about consistency with the ISA model. However, the only consistency is to try to lift out the same legislative framework, and not necessarily to say why the legislative framework is as it is. The Minister then talked about unspecified things going wrong and needing to be dealt with, but he did not tell us what might go wrong or what might have to be done under this subsection.
So while this may seem a very small and trifling amendment, it takes us into significant issues of how we approach the scrutiny of Bills. I think that we are entitled to know for what purpose regulatory powers are to be used.
5.45 p.m.
Lord McIntosh of Haringey: Perhaps I can be a little more helpful. I am taken aback by this conversation with the noble Lord, Lord Dahrendorf. If the members of his committee look at a Bill, see provisions such as those in Clause 3(5) and do not like them, I would be very surprised if they did not say so. I think that the Government are entitled to assume that they would pick out the points that they found to be objectionable and draw them to the attention of the House. But perhaps that is a wider debate than can be carried out in Grand Committee.
All the general requirements are set out in Regulation 8 of the draft regulations. The account must satisfy the requirements that it is the account for a single child, "the named child"; that the named child is or has been an eligible child; that no child may hold more than one account. Those are basic matters. It may well be that other legislation could require changes in the general requirements for an account. We would not wish any changes to be delayed where a conflict between different areas of legislation could cause damage. That is why we must have provisions of this kind.
Baroness Noakes: I thank the Minister for that further explanation. I shall certainly consider it carefully. But it seems to me that what he said on Regulation 8, which I have read, could be covered by
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the regulation-making powers that appear earlier in Clause 3. It will not profit the time of the Committee today to pursue the argument further. Having reflected on what the Minister has said I should do, I may wish to return to the issue on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 13 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 14:
Page 3, line 10, at end insert "(but subject to subsection (9A))"
The noble Lord said: In moving Amendment No. 14, I shall speak also to Amendment No. 17. The amendments allow for the appointment of the Official Solicitor in England, Wales and Northern Ireland, or the Accountant of Court in Scotland, as the person with the authority to give instructions to the account provider regarding a child's trust fund account in circumstances prescribed in legislation.
The amendments are necessary, as there are children looked after by a local authority who have no one with parental responsibility to give instructions regarding their child trust fund accounts, and it would not be possible to take action in respect of the account if that were necessary or desirable. Looked-after children, after all, are among the most disadvantaged in society, and if there is no one with parental responsibility—for example, for orphans with no legal guardian—there could be a gap in the legislation. I hope that the Committee will feel that this is an uncontroversial addition to the existing provisions. I beg to move.
On Question, amendment agreed to.
Baroness Noakes moved Amendment No. 15:
Page 3, line 14, at end insert—
"( ) Regulations must provide for the provision of information about the authority to manage a child trust fund to persons who are identified as responsible persons in respect of children for whom a child trust fund is opened under section 6."
The noble Baroness said: In moving Amendment No. 15, I shall speak also to Amendment No. 16. They are probing amendments to find out the Government's approach to two specific issues.
Amendment No. 15 deals with the provision of information to the people identified as responsible persons for children for whom the Inland Revenue opens a trust fund under Clause 6. This is where a responsible person has not opened an account for his child, or where there is no responsible person—for example, where the child is in care. The regulations would have to ensure that information about the authority to manage an account is provided to responsible persons.
Clause 6 states that the Inland Revenue must open the account for the child, but it seems to have no responsibility to inform the person responsible for the child that that has been done, and so a person may be in ignorance of the account and what follows from it. I could not find anything in the draft regulations. I am not even sure which section would allow regulations to be made in respect of a Section 6 account.

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Amendment No. 16 goes a little further, requiring the identification of a person with authority to manage all accounts opened under Clause 6(5)(b); that is, those children for whom there appears to be no responsible person. They will be largely children in care, but it will also include under-age parents.
The amendments in the previous group introduced by the Minister may overcome the issues raised by Amendment No. 16. But, do the Government intend the regulations to prescribe that the Official Solicitor will be involved in all cases where a responsible person cannot be identified? That goes well beyond the simple case of children in care. I beg to move.
Lord McIntosh of Haringey: I am entirely sympathetic with the thrust behind, and the intention of, these amendments. Perhaps it would be best if I set out what will happen. Regulation is not actually required. Where parents do not open an account for their children before a child trust fund voucher expires after one year, the Revenue will open an account for the child. It will be a stakeholder account, opened with a provider next on the list of approved providers willing to offer such accounts. In other words, the business will be spread among those who are willing to take it.
Once the Revenue has details of the account, it will write to the child benefit claimant—its point of contact with the child—to let him or her know about the child's CTF account. In most cases, the child benefit claimant will be a parent. The letter will highlight how a responsible person can take responsibility for the account and the benefits of doing that. It will be made clear that the child trust fund account and/or the provider of the account can be changed as a parent wishes. The regulations ensure that that can be done at no charge. The Inland Revenue will also send details of the child trust benefit claimant to the relevant provider so that the provider has a contact address.
One of the main messages of the information and guidance that will be produced for the child trust fund will be the importance of parents' taking responsibility for their child's account; for them to choose the account that they believe will most suit their child's needs with the provider of their choice; and to continue actively to manage that account, ensuring that it is performing well. In other words, the Revenue will do what the amendments seek to achieve and they do not need regulations to do it.
However, in accordance with Pepper v Hart, as I have said it in the process of the Bill, that is confirmation of that fact.
Baroness Noakes: I thank the Minister for that last comment, which I had worked out. I am grateful to him for explaining the process by which the Inland Revenue will inform people. Will he also confirm that the amendments that he moved in the previous group mean that, in all cases where a person cannot be identified, the Official Solicitor will be acting in? The amendment just gives regulation-making power.
Lord McIntosh of Haringey: Yes. There is no gap. Now that we have agreed to one government amendment, and we shall agree to the other one, there is no gap in responsibility.
Baroness Noakes: There is no gap in regulation-making power, but there is still a gap in responsibility. perhaps I may suggest.
Lord McIntosh of Haringey: Wait a minute; I must be quite clear: the Official Solicitor amendments and the comparable Scottish amendment apply to a child in care. The Official Solicitor would not act for a child other than a child in care. In the other cases that we are talking about, the procedure that I described means that the Inland Revenue is dealing with a provider that it has chosen according to rules and with the benefit claimant. Again, there is no gap. There is someone who is responsible.
Baroness Noakes: In relation to under-age parents, could I just clarify that they would not have authority to manage an account? How do we deal with that position? I understood that that was one of the areas where there would be a gap.
Lord McIntosh of Haringey: The Inland Revenue would wait until the parents were 16 years old when they would have the power to manage the account. It is probably best if I read out what is proposed on who will be able to make decisions on an account where both parents are under the age of 16. I think that is what the noble Baroness, Lady Noakes, asked.
There will be no one with parental responsibility for the purposes of the child trust fund if both parents are under the age of 16. Young people under 16 years old cannot administer a CTF account because the law does not allow them to enter into enforceable contracts.
The Inland Revenue can be contacted to open a child trust fund account for the child to avoid waiting a year for an account to be opened automatically when the voucher expires after 12 months. Once one of the parents reaches 16 years old, or someone above the age of 16 becomes available who is able to exercise parental responsibility for the child, they can assume responsibility for the management of the CTF account.
Baroness Noakes: That means that if a very young child had a child of her own, there would be a period of perhaps several years in which the account would not be managed by anyone.
Lord McIntosh of Haringey: Under those circumstances, I would imagine that someone else would assume parental responsibility, such as a grandparent.
Baroness Noakes: I shall consider further what the Minister said. These are complex areas. I may ask his officials for further advice on specifics or, alternatively, raise the matter again on Report. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.16 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 17:
Page 3, line 26, at end insert—
"(9A) Regulations may provide that, in circumstances prescribed by the regulations, the person who has the authority to manage a child trust fund held by a child under 16 is to be the Official Solicitor (in England and Wales or Northern Ireland) or the Accountant of Court (in Scotland).
(9B) A person who has the authority to manage a child trust fund by virtue of subsection (9A) is entitled to give any instructions to the account provider with respect to its management which appear to the person who has that authority to he for the benefit of the child."
On Question, amendment agreed to.
Clause 3, as amended, agreed to.
Clause 4 [Inalienability]:
[Amendment No. 18 not moved.]
Baroness Wilcox Baroness Wilcox moved Amendment No. 19:
Page 3, line 37. leave out subsection (2).
The noble Baroness said: Amendment No. 19 raises an interesting point on teenage bankruptcy, which my honourable friend George Osborne raised during proceedings in another place. Clause 4 deals with inalienability; the provision that one cannot assign a CTF or have an agreement to charge against a child trust fund. That includes cases where a child is made bankrupt, as made clear by subsection (2):
"On the bankruptcy of a child by whom a child trust fund is held, the entitlement to investments under it does not pass to any trustee or other person acting on behalf of the child's creditors".
Our probing amendment would leave out this subsection. Essentially, the subsection secures that where a child is made bankrupt it will not be possible for the creditors to gain access to the child's CTF account. The debate on this issue in another place brought forth some very significant arguments. While no child can enter into enforceable contracts, apparently it is possible for a child to be made bankrupt. The Minister in another place gave an example. He said:
"for example, if he misrepresents himself to be over the age of 18 and enters into contracts, those contracts may be binding on him. In ordinary circumstances, it is not possible to have an enforceable contract, but if the child has misrepresented his age, it can be possible. A child could start a business and buy stock, pretending to be 18. If he could not then pay for the stock, the supplier could sue, resulting in the bankruptcy of the child".—[Official Report, Commons Standing Committee A, 13/1/04; col. 82.]
This is a particular and probably an infrequent circumstance. However, in the case where a child has lied about his age and caused his own bankruptcy, why should his creditors not have a claim on the assets? The Government claim that the principle behind CTFs is that the assets are locked up until the child reaches the age of 18. In the example, why should the creditors not wait until the child is 18 years old and then reclaim the money which they are owed from the CTF?
I realise that CTFs are meant to be a frozen or untouchable asset which the child can access only at 18 years old. But if a child makes the mistake of misrepresenting his age and causes his own
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bankruptcy, we believe that that child should learn his lesson. It seems incongruous for a child of 17 years old to become bankrupt and then to receive a pot of money six months later on his 18th birthday—mainly, as my dear friend the noble Baroness said, to use on a whacking good party—while his creditors, who are left out of pocket because of his previous misdemeanour, cannot make a claim. I beg to move.
6 p.m.
Lord McIntosh of Haringey: Slapped wrists. Inalienability is one of the words that I cannot say, like proliferation. I will have to learn.
The aim of Clause 4, as the noble Baroness, Lady Wilcox, says, is to provide protection for young people so that they still have a financial asset when they reach 18. I guess that on that basis, it will commend itself to the noble Lord, Lord Newby. The clause is intended to prevent the assets within a child's CTF account being transferred to a third party on maturity either by assignment or by way of charge to use CTF funds as security for a loan. I think that on that point, the noble Baroness, Lady Wilcox, is with us. This is a wider point than bankruptcy.
The point of contention is that the clause also prevents the assets being taken in the rare event, as the noble Baroness says, of a child being made bankrupt. The amendment would remove the protection to the account; it would allow the CTF investments to be used for the child's creditors, leaving the child with no asset at 18, contrary to the purposes of the Bill.
As the noble Baroness rightly says, a child can be made bankrupt. If a child misrepresents himself or herself as being over the age of 18 and enters into contracts, these contracts may be binding on a child. He or she might start a business and buy stock, pretending to be 18. If that child cannot pay for the stock, the supplier could sue, resulting in the child's bankruptcy.
In practice, as the noble Baroness says, such cases are no doubt extremely rare but the possibility means that the risk of a child losing the assets we wish him or her to have at 18 exists. Clause 4 has precedent—it copies, for example, Section 45 of the Tax Credits Act 2002. It may be a fine technical point. but it is necessary to preserve the objectives of the child trust fund for all children and not to vary what is in general a fine balance in bankruptcy law between credit ors and the bankrupt person.
Baroness Wilcox: That surely is a fine technical point. The objective of the Bill is for the child trust fund to help people understand the benefits of saving and investing; surely if they do not understand that. there should be punishment somewhere. t does not seem right to me.
Noble Lords: Oh!
Baroness Wilcox: Perhaps we are not allowed to use the word "punishment" but it seems very wrong to me that a child doing something like this at 17 cannot see the results of his own actions by having his money

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taken away from him. I am sorry, but I think this is very poor. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Noakes Baroness Noakes moved Amendment No. 20:
Page 4, line 2, leave out from "factor" to end of line 3.
The noble Baroness said: I am indebted to the Law Society of Scotland for Amendment No. 20. It would delete the reference to Section 41 of the Solicitors (Scotland) Act 1980. Under Section 6 of that Act, a person can be admitted as a solicitor in Scotland only if he is aged 21 years or over. Section 41 of the 1980 Act refers to the provision of a judicial factor for a solicitor's estate and therefore cannot be applicable to a child's estate. Therefore, reference to Section 41 of the Act should be deleted. I beg to move.
Lord McIntosh of Haringey: I got the letter from Mr Drummond of the Law Society of Scotland as well. The society is very assiduous but it is always very late. I do not understand the amendment; I will try and find out what it means and what effect it has. I will write to the noble Baroness, Lady Noakes, with our conclusions before Report.
Baroness Noakes: I thank the Minister for that. It is my experience that the Law Society of Scotland is usually right on the technical amendments it puts forward. So I hope that the Minister will write to me saying that he will be introducing a government amendment to reflect that point. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Baroness Wilcox Baroness Wilcox moved Amendment No. 21:
After Clause 4, insert the following new clause—
"OFFENCES
(1) It shall be an offence for any person to induce a child to carry out an act within subsection (1) of section 4.
(2) It shall be an offence for any person to enter into any arrangement with a child the effect of which is that the child agrees to transfer to that person or any other person the proceeds of the child's child trust fund once he has attained 18 years of age.
(3) A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding 6 months or a fine not exceeding level 5 on the standard scale or both."
The noble Baroness said: Amendment No. 21 proposes a new clause after Clause 4 entitled "Offences". The point of this new clause is to address a situation which was mentioned during debate in another place whereby a malicious individual, maybe a family member, friend, relative or even a loan shark, induces a child to enter into an agreement in which the proceeds of the child's CTF are transferred to the individual when they become available on the child's 18th birthday. Subsection (1) of Clause 4 already makes sure that the funds cannot be used as a security against a loan—in effect, the funds would be made legally void as security if someone attempted to use
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them as such. Our amendment goes further by making any attempt to act in this way a civil offence subject to a fine or imprisonment.
During debate in another place the Minister argued that no civil penalty was needed because a CTF could not be used as security and the person would therefore not be able to act in this way. I do not agree that that is a sufficient argument. The issue is larger than this. We are not just talking about loan sharks where the child, at the age of 18, can challenge the use of the trust fund as security and the loan shark will then be left with nothing. There are certain to be individuals who will try, informally, to bully or pressurise a child of 16 or 17 into entering into an agreement which, though not legally binding, could be persuasively enforced by a manipulative adult. Children at 18 are vulnerable and open to such abuses.
With CTFs we have a situation where large amounts of money become available to every single child at the age of 18. We have spoken already about it being unlikely for fraud to occur on the opening of a CTF because the money is locked in until 18. However, if people are looking to get their hands on CTFs, the way to do it would be to try to get a vulnerable 17 year-old to commit the proceeds of his CTF, which would be accessible in a year's time, in return for some immediate loan or credit. How is such a 17 year-old to know that his or her fund is not viable as a security? When it is handed over at the age of 18, he can use the money for whatever he wants, and that may include giving it to the next-door neighbour to whom he promised it six months previously in return for a loan of £1,000.
Sadly, given the world we live in, it is important to look at this situation from the point of view of the worst case scenario, and imagine those people who will try to manipulate young people to get their hands on their assets. In these circumstances, I believe that there may be a great deal of merit in making such people subject to a civil penalty. I beg to move.
Lord Newby: I wonder whether the noble Baroness is not proposing a slightly too draconian measure here. It may be that my understanding of the word "arrangement" is not particularly good from the legal point of view, but it seems not unreasonable for someone to enter into an informal arrangement whereby a young person arranges with another family member to pay for driving lessons as soon as he reaches the age of 17—here I return to my earlier interest—on the understanding that as soon as he reaches the age of 18, the cost of those lessons would be taken out of the child trust fund. That does not strike me as a ridiculous waste of the money.
I accept that there will be circumstances in which children are pressurised to do something inappropriate, but I feel that this amendment goes a little too far.
Lord McIntosh of Haringey: The noble Baroness, Lady Wilcox, closed her remarks by proposing that this should be subject to a civil penalty, but her amendment would make it a criminal offence.
Lord Oakeshott of Seagrove Bay: Six months inside.
Baroness Wilcox: Even better.
Lord McIntosh of Haringey: The noble Baroness is in a tough mood this afternoon.
The aim of Clause 4—"Inalienability"—is to provide protection for the young person so that they still have a financial asset when they reach the age of 18. The clause is intended to prevent the assets within the child trust fund account being transferred to a third party on maturity of the CTF account either by assignment or by way of charge, for example, to use child trust funds as security for a loan. The clause also prevents the assets being taken in the rare event of a child being made bankrupt—a matter that we have already debated.
The amendment seeks to introduce two new criminal offences. Under subsection (1), it would be an offence for anyone to induce a child to assign, or agree to assign, the investments in their child trust fund, or to charge, or agree to a charge, on those investments. Under subsection (2), it would also be an offence for anyone to make an arrangement with a child the effect of which is that the child agrees to transfer to that person or to a third party the proceeds of the child's trust fund once he has attained 18 years of age. Subsection (3) defines the punishments attaching to the offences, including, as the noble Lord, Oakeshott, said from a sedentary position, six months inside.
The amendment is legally inappropriate. Let me explain why. Clause 4(1) tackles the practical problem at its source by providing that any assignment of the investments in a CTF, for example, by way of security for borrowing, is void—that is, legally ineffective. There is therefore no incentive for any person to induce a child to assign or charge their CTF assets. Loan providers will not attempt to use CTFs as security for loans because they would not gain any advantage from so doing. They would achieve no legal rights to the assets within the child's trust fund.
What happens within a family—for instance, in the driving licence example given by the noble Lord, Lord Newby—is something that the law would prefer not to know anything about. Subsection (2) is, in effect, the same as subsection (1). The wording in subsection (2) implies an informality to the arrangement but the legal substance is the same. By making an agreement to transfer the proceeds of a child's trust fund to another person when reaching the age of 18, the child has, in effect, assigned the assets within his or her child trust fund to that person, although in an informal way.
The Bill as currently drafted does not allow the child to enter into such agreements. No one would benefit from making such an agreement because the 18 year-old would have no legal obligation to honour the agreement at the age of majority. Creating a criminal offence for entering into such an agreement is surely overkill. It is likely that the amendment would be
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unenforceable. It is inappropriate to seek a penalty for something which has no legal effect, let alone to make it a criminal offence.
Baroness Wilcox: I was interested in the story of the noble Lord, Lord Newby, about driving lessons and the happy family that he obviously lives in and comes from. I have spent many years of my life running a fish-processing unit in Cornwall. I have seen 17 year-old girls stood up against walls and beaten to make sure that their money can be got. I am not talking about the niceties of driving lessons; I am talking about something very different.
As to the idea that loan providers will lay off because they do not think they can get at this money, I am sorry, I must have been living in a different world. I have seen how pressure can be put on children in such circumstances.
I am very sorry that the Government will not even consider the issue. I am sorry that the amendment is legally inappropriate. I shall go away and consider whether there is anything we can do to make it legally appropriate. There are areas in this country, and places in which I have lived and worked, where the idea of threatening a child is fairly normal to an awful lot of people. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Noakes moved Amendment No. 22:
After Clause 4, insert the following new clause—
"INCOME DISREGARD FOR PURPOSES OF INCOME-RELATED BENEFITS, ETC.
(1) In determining the matters specified in subsection (2), no regard shall he had of income and gains arising on—

(a) Inland Revenue contributions to,

(b) subscriptions to, and

(c) investments under,

a child trust fund.
(2) Those matters are—

(a) eligibility for,

(b) entitlement to, and

(c) levels of,

the benefits and credits specified in subsection (3).
(3) The following are specified in this subsection—

(a) child tax credit,

(b) council tax benefit,

(c) housing benefit,

(d) income support,

(e) income-based jobseeker's allowance,

(f) working tax credit, and

(g) pension credit."

The noble Baroness said: Amendment No. 22 seeks to insert a new clause after Clause 4. It deals with the interaction between the benefit system and child trust funds, and other matters that were touched on at Second Reading.
Specifically, the new clause seeks to ensure that the child trust fund is not taken into account for child tax benefit, council tax benefit, housing benefit, income support, income-based jobseeker's allowance, working tax credits or pension credit. If I have missed

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out a credit or benefit, that is not surprising, given the Chancellor's propensity for inventing, abolishing and re-inventing tax credits.
Benefits and tax credits are an extraordinarily complex area, and I do not pretend that the amendment is perfect. I am very glad that the noble Baroness, Lady Hollis, is not here because I know that she would tear the drafting of the amendment to shreds. No doubt the Minister will attempt to tear it to shreds, but I hope that he will accept it as a probing amendment in order to debate the interaction between the benefit system and child trust funds.
At Second Reading the Minister said that the Government,
"have always made it clear that there is no impact on the parents' finances while the trust fund is growing".—[Official Report, 26/02/ 04; col. 377.]
I want to put a simple question to the Minister about this. Where in child trust fund or benefit legislation will we find this rule? Will it be necessary to make new regulations? Many benefits use a reference to capital regardless of any income that is actually received. Is it quite clear that the child trust funds will never be counted as part of the family's capital?
Then we have the issue of others who contribute to a child trust fund and thereby reduce their own capital. The capital deprivation rules could easily kick in. I am aware that the application of the rules is a matter of discretion, but that will not help a grandmother in deciding whether she may safely transfer some of her capital to her grandchildren. Will the Minister say how the Government will avoid postcode benefit withdrawal, with benefit officers using their discretion and taking different views around the country? Will he say how a person could find out in advance what would or would not be accepted?
Lastly there is the question of a child who has turned 18 and has a child trust fund but applies for means-tested benefits. If the child spends the trust fund—as the Bill, with its lack of restrictions on the use of the fund, will entitle him to do, and some believe that that is what he will do—will this be treated as a capital deprivation? If that was the result, it would in effect amount to one rule for the rich and another for the poor because the rich could spend their child trust fund with impunity while the poor would be poorer in terms of benefits if they did so.
It is quite possible that a child could have more than £6,000 in his fund if his parents, perhaps in happier times, had been able to contribute to the fund. Will that automatically be used to knock down the benefits that he can receive, thus nullifying the benefit of the fund?
We know that the Government see great potential for the child trust fund to change behaviour among the poorest people. But these are the people who are living on our benefits system and who are likely to see the child trust fund as just another way in which the rules will catch them out. Will the Minister say on what basis the Government are sure that the child trust fund scheme will work effectively for those people—and we
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are talking about millions of people—who receive means-tested benefits? This is not a minor issue. I beg to move.
6.15 p.m.
Baroness Hayman: I rise to speak to the amendment moved by the noble Baroness, Lady Noakes, and to my own amendment, Amendment No. 47, which is even more grossly imperfect in its drafting than that of the noble Baroness, not least because I seem to have invented a new oxymoronic benefit—a covenant tax benefit—which was meant to be council tax benefit. It may also be in the wrong place.
However, it gives me the opportunity to deal with the issue of the death of a child with a child trust fund and the implications for parents who inherit the fund should they be in receipt of benefits. As the noble Baroness, Lady Noakes, said, assurances have been given that these funds will make no difference whatever in terms of income for parents. However, in those tragic cases where a child dies under the age of 18, if the parents are on benefits, potentially that could make a real difference to their income. One can envisage circumstances where this would happen.
There are something like 5,000 deaths among children and young people under the age of 18 every year. If, say, 10 per cent of those children come from families on benefits, which is not impossible, then we could see a situation where families have run down all their capital. For lone parents bringing up a child under the age of 18, the most likely cause of death would be an accident or long-term disability or illness. That makes it even more likely that the parent will have been on benefits.
Sadly, it also makes it more likely that this will be a fractured family where there may not be two parents; where the mother may have been left on her own to bring up a child in difficult circumstances; and, indeed, where the child trust fund may take the income over £6,000, which is the Government's solution to the problem that I think they have acknowledged regarding the interaction with benefit. In happier times the child could have benefited from contributions from grandparents or from a father who was in work. That could have built up to several thousand pounds, but then the family fractured, the child was ill and there were years on benefit. Then, at the point at which the child dies, the parent is faced with the possibility of losing benefit because of the savings made for that child.
I acknowledge that such cases will be very rare. However, they are slightly less rare than cases of bankruptcy of under 18 year-olds who have been deceptive about their age. I was rather encouraged by my noble friend's words about ensuring that every child should have access to their child trust fund regardless of very inappropriate behaviour and bankruptcy. I hope that we can have the read-across not only to those who would inherit a child trust fund. I think there will be very hard cases where it will be singularly inappropriate for the Government to give with one hand in terms of the child trust fund but take away with the other in terms of benefit.

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I would be interested if my noble friend could give me some costings on this. Obviously we are looking into the future and it is difficult to know, but I suspect that one could extrapolate. I think that the costs will be very low. The cases where this will kick in and cause real hardship are going to be very painful. I hope that the Government will look carefully at this again. They said in the initial response, in raising the threshold to £6,000, that this was the first step. I hope that there will be other steps in this area.
should like to say a word about those 18 year-olds who are themselves on benefit. Again, we have the interaction between the child trust fund and the benefit system. One's attitude to this depends on whether one starts with the social security system and says, "Why should this be any different from winning the lottery in terms of taking people out of eligibility for benefit?", or whether one starts off, as I suggest we should, with this scheme itself. My noble friend says that it is wholly new. It is up to us to decide what are the rules. In putting it forward, the Government have decided that the taxation regime for this scheme will be different from that for normal gifts to children. It therefore seems to me that, in logic, it is equally possible to make this benefit, the fund, different from other forms of finance that these children might have.
If the scheme really seeks to do what it says, to ensure that all 18 year-olds have a financial asset at a key life stage, it seems to me perverse to take that financial asset and turn it into a financial liability because of its impact on income rather than on capital—not for the richest children, those who have income from other areas and are perhaps higher rate taxpayers, but for children in the most difficult financial circumstances. They deserve a financial asset at 18 every bit as much as every other 18 year-old.
The noble Baroness, Lady Noakes, made a point about having left out some benefits. I am sure that we have both done so, particularly on disability benefit. That is an area in which even a small amount—even only the Government's amount—put into the child trust fund could mean someone losing benefits. Take an 18 year-old who had an accident at 17 and was unable to work, but received lump sum compensation of £5,000 for that accident. The money could take that youngster over the limit and mean that he loses benefits.
Some cases will be extremely difficult. I understand that there are parallels in other forms of capital that come to such children or to people on benefit, and that the loss then kicks in. I cannot say that other people suffering in such circumstances seems a terribly attractive reason to extend such suffering into the areas that we are discussing. That is especially so when we look at the purposes set out, which are to encourage saving—that may be very difficult for such families—and to ensure that all 18 year-olds have a financial asset at a key life stage.
Lord Newby: We are very sympathetic to both amendments, which seem much in line with the principles of the Bill. By giving way on raising the disregard to £6,000 in stages, and implying that that
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was a mere step towards something else, the Government have really underlined the fact that they do not feel very comfortable with the current situation either. I fear that the Minister is being uncharacteristically mean in regard to the provision. I strongly encourage him to follow the arguments made by both noble Baronesses.
Lord McIntosh of Haringey: Let me assure the noble Baroness, Lady Noakes, that I accept that the amendments are probing, so I shall not criticise the drafting at all. Of course, there are issues of principle here, and genuine conflicts between our desire that the child trust fund money should be available to as many young people at 18 as possible and the possibility of perverse incentives that might arise if we depart from the principles set out in the Bill.
I have no difficulty in reassuring the noble Baroness that the child trust fund assets, and the incomes and gains from them, do not impact on family benefits and tax credits before the account reaches maturity when the child reaches 18. In other words, they are not part of the family's capital for benefit purposes. After the child's 18th birthday, the account ceases to be a child trust fund account. The Government's intention is that when the child trust fund account matures, if the account holder wishes, the funds can be rolled over into tax-effective savings schemes available at the time. Income from investment in tax-free savings schemes does not affect entitlement to tax credits. That is a qualification to the argument that has been made.
Contributory benefits, such as invalidity benefit and the contributory element of jobseeker's allowance, are not subject to a means test, so no account is taken of savings or income from savings. The Government acknowledge, however, that there may be concern that saving in the child trust fund or any other savings vehicle may affect entitlement to income-related benefits, such as income support and income-based jobseeker's allowances when the individual is an adult. It is to that that the amendments refer.
The treatment of capital in income-related benefits needs to strike a sensible balance between providing targeted state support, incentives to work and not unfairly penalising those who have acted responsibly by saving. The Government will continue, as they always have, to keep this under review.
As a first step, the Financial Secretary announced at Second Reading in the Commons that, from April 2006, the Government will increase the £3,000 threshold above which savings reduce the amount of income support, jobseeker's allowance, housing benefit and council tax benefit payable to £6,000. That was confirmed yesterday in the Budget.
The first child trust fund accounts will not start to mature until 2020. It is unlikely that the rules on income-related benefits will still be the same then. That is why it would not be realistic for me to give costings as I have been asked to do. Nevertheless, the increase announced from 2006 will be sufficient to give parents, carers, grandparents and friends the reassurance that they need at this stage that the child will not be unfairly penalised in future for savings made now.

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When I said "as a first step", I meant that as a first step the threshold is being raised from £3,000 to £6,000. As we have 16 years to go before the first accounts mature, clearly a second step—in other words, a further review of the threshold—is a real possibility.
On Amendment No. 78, Clause 19 allows the Inland Revenue to make a payment to the parents of a child who has died before payments to which the child was entitled have been credited to a child trust fund account. The amendment seeks to ensure that payments to parents in this event do not affect their entitlement to benefits and tax credits.
Normal intestacy rules will apply if a child dies before reaching age 18. That is, the child trust fund will go to the parents—or spouse if the young person was married—and be taken into account as part of their capital as soon as it is available to them. Normal rules for income-related benefits and tax credits will still apply.
This issue is not unique to child trust funds; it applies to any assets in the estate of a dead child. We do not see a persuasive case for special treatment for the child trust fund compared to other children's savings. There is also the practical problem of specifically exempting CTF money. This is because, if a child dies, the CTF will cease to exist and it would be difficult to ring-fence the money; it could be placed in any number of savings products by the parents.
As I have said, the increase in the threshold above which savings reduce the amount of income-related benefits payable from £3,000 to £6,000 in April 2006 will reduce the number of people affected by the capital rules for all kinds of savings, not only the child trust fund. We shall keep this under review so that it strikes a sensible balance between providing targeted state support, incentives to work and not unfairly penalising those who have acted responsibly by saving. In other words, I am afraid that we cannot support the amendments.
6.30 p.m.
Baroness Noakes: I thank the Minister for that reply and noble Lords who have taken part in the debate. I particularly thank the noble Baroness, Lady Hayman, for her contribution in relation to the death of a child. It raised many important issues.
I was pleased that the Minister said that the child trust fund would not affect family capital. I would be grateful if he will let me know under what provision we will find that. It is certainly not in the Bill, and I would like to be clear about it. The noble Baroness, Lady Hollis, may have to provide that information.
Lord McIntosh of Haringey: I will certainly write to the noble Baroness.
Baroness Noakes: I thank the Minister for that. I asked about grandparents and other relatives contributing and the interaction with the capital deprival rules. In particular, how will the Government
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avoid a postcode approach, because discretion is at the heart of the capital deprival rules? How can we be sure that children in one part of the country as compared with another will not be disadvantaged because of the attitude of particular benefit officers?
I also asked how a grandparent or other relative will be able to find out what they can and cannot do. That is quite important if we are trying to get to the bottom of this.
I take the Minister's point that we have 16 years or so to sort this out. I am completely unimpressed by increasing the limit, because I think we need something much more targeted than that. However, I accept that specifying the benefits in the legislation 16 years ahead is not a particularly effective solution. For me, the general issue remains open. I do not think that the Minister really answered the points made by the noble Baroness, Lady Hayman.
I should like to receive the information that the Minister has promised. We should be finding some mechanism in the Bill to go beyond the first step that the Minister has described and to make it clearer. As the noble Baroness, Lady Hayman, said, we have the opportunity to say how we want this to be treated as part of the benefits system. We do not have to take the benefits system as a given because we are creating a new approach to savings and investment. Therefore, it is open to us to vary the interaction of existing systems if that is what we think appropriate. We will want to reflect on what the Minister has said; equally, I suspect that we will want to come back to this on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Opening by responsible person or child]:
Baroness Noakes moved Amendment No. 23:
Page 4, line 6, leave out "first"
The noble Baroness said: We come to another point raised by the Law Society of Scotland. The amendment would delete the word "first" in Clause 5(1) from the sentence:
"In the case of each child who is first an eligible child by virtue of section 2(1)(a)".
The provision does not go on to describe what "second" or "secondly" is. It is quite unclear what "first" adds in Clause 5 or Clause 6. I hope the Minister can explain what the word means in that context or, if not, that he will agree to its deletion. I beg to move.
Lord McIntosh of Haringey: Again, I have some difficulty in understanding this amendment. I am afraid that the noble Baroness, Lady Noakes, has not helped me, although I commend her brevity.
The word "first" is in the Bill to ensure that there is clarity over the basis of a child's entitlement to a child trust fund account. The child will be eligible either through a child benefit award or through the special arrangements we have put in place for looked-after children.
Without "first" in both cases, children could qualify for a child trust fund account under both the normal child benefit route and the looked-after children route.

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That would probably depend on which claim came in first—the child benefit claim or the notification from the local authority. In extreme situations, where the timing was unclear or coincided, the child would not get the government endowment to which he or she was entitled.
The inclusion of "first" in both places in the Bill ensures that there is a level playing field for all children and that their entitlement is always based on their personal circumstances. For example, a child who goes into care immediately after birth or who enters care with a child benefit claim never having been made in relation to them will have a child trust fund account opened for them by the Inland Revenue. They will receive an amount equal to both the initial and the higher rate endowment because they could never receive a higher rate through the normal rules—children qualify for that by being in a household in receipt of child tax credit and on an income below the current income threshold of £13,230 at the time the child benefit award is first made in relation to them. The potential for ambiguity over the basis of a child's entitlement is unhelpful. I hope that that message may be conveyed to the Law Society of Scotland.
Baroness Noakes: I thank the Minister for that reply, which explains the situation extremely well. I only hope that the lawyers north of the border are equally persuaded when they read Hansard. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 24 not moved.]
Baroness Noakes Baroness Noakes moved Amendment No. 25:
Page 4, line 8, at end insert—
"( ) The Inland Revenue shall not issue any vouchers under this section until after the date of the next General Election."
The noble Baroness said: In moving Amendment No. 25, I shall also speak to Amendment No. 89. Both amendments are on the theme of delaying implementation of the child trust fund scheme until after the next general election. Amendment No. 25 would do so by adding a new subsection to Clause 5 so that the Inland Revenue delayed sending vouchers to parents until after the next general election. Amendment No. 89 would delay a commencement order under Clause 27 until after the dissolution of the current Parliament.
We debated the issue at Second Reading and, predictably, there was no meeting of minds between the Government and Conservative Members. We see the scheme as having been conceived and executed with electoral advantage in mind. That can be seen in the first announcement before the most recent election, and now in the impact on parents around the time of the next election.
I doubtless have even less actual knowledge of the timing of the next general election than the Minister. However, it does not take much analysis to work out that the most likely window is next May or June, if a collision with the British presidency of the EU is to be avoided, and if the Prime Minister seeks to avoid, as most do, the inflexibility of the final months of a
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Parliament. That coincidence of timing—it is around the time at which the child trust fund vouchers will wing their way to 1.8 million addresses—is too great.
About 3 million parents could be feeling good about the windfall from that very nice Chancellor. They may even temporarily forgive him for taxing and spending and failing. The scheme is an expensive one using taxpayers' money. We feel very strongly that money should not be used for electoral advantage. I beg to move.
Lord Newby: I am appalled at the cynicism of the noble Baroness. It is shocking to think that a politician, far less a Chancellor of the Exchequer, would ever time anything to affect the electoral cycle. However, having listened to the Budget yesterday and given its overall galaxy of goodies that will descend over the next 18 months, the idea that the child trust fund should be singled out for delay gives it greater prominence that it deserves. Although I have every sympathy with the principle that politicians should act as wise, long-term guardians of the welfare of the state rather than looking for votes in the short term, I do not support the amendment.
Lord McIntosh of Haringey: I take it that when the noble Lord says that he is shocked, he is shocked in the way in which Claude Rains was shocked to find drinking and gambling going on in the bar in "Casablanca". In that sense, I am also shocked.
The noble Baroness says that the issue was debated at Second Reading, but it was not really mentioned by anyone except her. I responded to it and explained how new ideas can take affect. One puts something in a manifesto—that is clearly right; one consults on it over a considerable period; if it is new, one tries to persuade people that it is good. We did that in 2001. One produces a Bill that goes through Parliament; one implements the measure when one can. If that takes the same time as the period between general elections, so be it.
Like the noble Lord, I rather think that the impact of money that will come to children born after 1 September 2002—they presumably do not have a vote in any 2005 election—and that will come to them only in 2020 is not much of an electoral bribe. In those circumstances, cynicism is misplaced.
7 p.m.
Baroness Noakes: Well, what a surprise! The Minister has wilfully misconstrued the effect that the child trust fund vouchers might have. The effect will not be on the children, who will be toddling around and not thinking about their 18th birthday; it will be on their parents. That is why I referred to the three million or so parents who might be influenced.
I did not expect to have reached an agreement on the amendment in Grand Committee, because it was clear that the Government would not accept it. However, there is good reason for pausing on the issue of child trust funds. It is a radical departure, which will cost a significant amount of taxpayers' money over the years.

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It would be a positive step to await the result of the next election before deciding whether the scheme shall go forward. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 26 not moved.]
The Deputy Chairman of Committees: I have to tell noble Lords that, if government Amendment No. 27 is agreed, I cannot call Amendment No. 28.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 27:
Page 4, line 12, leave out from beginning to "to" in line 13 and insert—
"(3) An application may be made—

(a) if the child is 16 or over, by the child, or

(b) otherwise, by a responsible person,"

The noble Lord said: In moving Amendment No. 27, I shall speak also to Amendments Nos. 29, 30 and 33. These are technical amendments. The Bill was amended in the Commons to allow 16 year-olds to give instructions to providers on the management of their CTF accounts. An unintentional effect of the amendments made to achieve that is that, as the Bill stands, the CTF voucher would be issued to the child over 16 in circumstances where child benefit is paid not by the United Kingdom but by another European Union country. The most common example is families living in Northern Ireland where a parent works in the Republic. I could explain the drafting changes, but I hope that it will be accepted that the amendments have no other effect than that which I have described.
Baroness Noakes: Perhaps I may clarify why Amendment No. 28 could not be moved if Amendment No. 27 were accepted. That would deprive me of speaking to Amendment No. 28 in the next group.
The Deputy Chairman of Committees: It is because of pre-emption.
Baroness Noakes: I understand that, but I sought to test further what kind of pre-emption Amendment No. 27 would have on Amendment No. 28.
The Deputy Chairman of Committees: The words that Amendment No. 28 seeks to amend would have gone.
Baroness Noakes: In that case, with the agreement of the Committee, I would like to speak to Amendment No. 28 with this group. I recognise that the amendment could not be agreed today, but this is my only opportunity to speak to it. It is a point that I wish to cover.
Amendment No. 29 would remove subsection (4) from Clause 5 on a probing basis. Subsection (4) was inserted on Report in another place as one of several amendments made in response to concerns raised about 16 and 17 year-olds. The purpose of Amendment No. 29 is to find out the Government's
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intention regarding 16 and 17 year-old parents. The government amendments may have dealt with the point.
In another place, the Government accepted that 16 and 17 year-olds could manage their trust funds; however, we understand that they also accepted that 16 and 17 year-old parents could open accounts for their children. The Financial Secretary said that parents aged over 16 could manage their children's accounts. She did not say explicitly that they could open their children's accounts, but that it remains the case that, if a parent is under 16, their child's account will be opened directly by the Inland Revenue. The implication was that parents of 16 years old or over would be able to open their accounts. But the draft regulations that deal with applications provide at paragraph 13 that applications may be made only by people aged 18 or over. Paragraph 21 provides for the same in respect of transfers.
My question is whether government Amendment No. 28 will allow 16 and 17 year-old parents to apply for, open and transfer child trust fund accounts. The regulations provide that only people aged 18 or over may apply to open a trust fund account. That implies, therefore, that a 16 or 17 year-old parent may not open a trust fund account. My amendment, which is tabled on a probing basis and would delete the regulation-making power, seeks to elicit whether that is what the Government now intend as it is not what we thought had been agreed in another place. I am not sure whether government Amendment No. 27 actually achieves it.
Perhaps I may speak briefly to Amendment No. 28 which relates to the period after which the Inland Revenue opens a child trust fund account. At present, the regulations provide for a year before the Inland Revenue opens an account; my amendment would insert a period of six months. In most cases the Inland Revenue will open an account only when a parent has not opened one after one year. Potentially, the child could lose one year out of 18 years of income accrual and capital gain. If a parent does not open the account, the period until it is opened should be shorter.
There will be a number of parents who, through ignorance or negligence, do not open an account. By leaving a whole year for an account to be opened, we are creating a delay factor. Papers could go missing in the post. Given the general performance of the Post Office, we would expect several thousand child trust fund accounts to go missing every year. Is it right to wait for a year until the Inland Revenue opens the account? Amendment No. 28, which is pre-empted by Amendment No. 27, would shorten the timeframe to six months.
Lord McIntosh of Haringey: The noble Baroness, Lady Noakes, has made two points. One is a legitimate point on Amendment No. 27 and the group; the other is a quite understandable desire not to be pre-empted. The first point is very simple. Before the amendment that we are now tidying up was made on Report in another place, it was always intended that parents of

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16 or 17 could open accounts. That will still be the effect. It can be done by regulation, if necessary, so there is no problem there.
As to whether there should be a 12-month period as opposed to a six-month period, it is true that the Inland Revenue will not open an account until after 12 months. But we think that the vast majority of parents will open an account as soon as they get the voucher. There will be others, with little experience of financial products, who will wish to wait a little longer, perhaps to consult friends or relatives. We will inform all parents that early opening will give the account more time to grow. But it is also incumbent on us to tell parents that it is an important decision and that they should consider all the options carefully. Under those circumstances, in order that we should have the maximum number of parents taking an informed decision on their own account rather than leaving it to the Inland Revenue, we think it best to stick to the 12-month period.
We will monitor the number of accounts being opened within a year. There is no reason why, for example, we should not telephone parents to encourage them to open an account, if that seems necessary. On the whole, in the interests of parental responsibility, it is desirable to give them a little more time to make up their minds.
Baroness Noakes: For clarification, is the effect of Amendment No. 27 to allow a 16 or 17 year-old parent to open an account?
Lord McIntosh of Haringey: No, it is not. The effect of Amendment No. 27 is a good deal lesser. As I said, it provides for circumstances where a family lives in one country and a parent lives in another. I gave the example of Northern Ireland and the Irish Republic.
GC 196
The more important issue that the noble Baroness, Lady Noakes, raises is not covered in the amendments; it will be covered by regulation, because it can be covered in that way.
Baroness Noakes: The draft regulations say that applications may be made only by people aged 18 or over, as is the case with transfers. That is provided in the paragraphs to which I referred earlier. That seems to be the Government's intention, which is at odds with their agreement in another place.
Lord McIntosh of Haringey: It is in conflict, because the draft regulations were drawn up before we made the concession on Report. We shall now revise the draft regulations so that 16 and 17 year-olds can be given the authority to open accounts, as the noble Baroness wishes.
Baroness Noakes: I am grateful to the Minister.
Lord McIntosh of Haringey: I beg to move Amendment No. 27.
On Question, amendment agreed to.
[Amendments Nos. 28 and 29 not moved.]
Lord McIntosh of Haringey moved Amendment No. 30:
Page 4, line 16, after "made" insert—

"(a) within such period beginning with the day on which the voucher is issued as is prescribed by regulations, and

(b) "

On Question, amendment agreed to.
Lord McIntosh of Haringey: This may be a convenient moment for the Committee to adjourn until next Tuesday at 3.30 p.m.
The Deputy Chairman of Committees: The Committee stands adjourned until Tuesday next.
The Committee adjourned at two minutes before seven o'clock.

  Supreme Court
  Supreme Court
  Supreme Court (Offices) Act 1997: Repeal
  Supreme Court (Offices) Act 1997: Repeal
  National Centre for Policing Excellence
  National Centre for Policing Excellence
  Imitation Firearms
  Imitation Firearms
  War Widows
  War Widows
  Late Payment of Debts
  Late Payment of Debts
  Dental Services
  Dental Services
  TOXBASE
  TOXBASE
  Food: Country of Origin Labelling
  Food: Country of Origin Labelling
  NHS: Consultant Toxicologists
  NHS: Consultant Toxicologists
  vCJD Compensation Scheme
  vCJD Compensation Scheme
  Alcohol
  Alcohol
  Mixed-sex Wards
  Mixed-sex Wards
  Rimonabant
  Rimonabant
  Genetically Modified Food
  Genetically Modified Food
  Data Protection Act 1998: Notifications by Agents
  Data Protection Act 1998: Notifications by Agents
  British-Irish Council: Minority Languages
  British-Irish Council: Minority Languages
  Suez 1956: Law Officers' Advice
  Suez 1956: Law Officers' Advice
  Cuba: Exports Credits Guarantee Department
  Cuba: Exports Credits Guarantee Department
  Playing Fields and Community Green Spaces
  Playing Fields and Community Green Spaces
  School Sport
  School Sport
  International Rail Regulator
  International Rail Regulator
  West Coast Main Line
  West Coast Main Line

  Northern Ireland Housing Executive: Accounts 2002–03
  The Lord President of the Council (Baroness Amos)
  My right honourable friend the Minister of State for Northern Ireland has made the following Ministerial Statement.

  The accounts of the Northern Ireland Housing Executive (NIA 8/03) for the year ended 31 March 2003 incorporating the reports of the Local Government Auditor and the Comptroller and Auditor General thereon will be laid before the Northern Ireland Assembly on Thursday 18 March 2004.

  Copies of the Northern Ireland Assembly paper have been placed in the House of Commons Library at Westminster and in the Northern Ireland Assembly Library at Stormont.

  Code for Crown Prosecutors
  The Attorney-General (Lord Goldsmith)
  I wish to announce the start of a review of the code for Crown prosecutors following the recent developments in prosecutors' powers. Section 10 of the Prosecution of Offences Act 1985 requires the Director of Public Prosecutions to issue a code for Crown prosecutors in order to give guidance on the general principles to be applied in prosecutorial decision making. It enables casework decisions to be made fairly, consistently and independently.

  The code is an important public document, which allows everyone to see and understand the basis upon which prosecution decisions are made. The code is kept under continual review to ensure that its principles remain appropriate. The current edition of the code was published in October 2000, which involved an extensive internal, external and public consultation exercise.

  Following the public consultation process last time, every aspect of the code was reconsidered and the basic principles were acknowledged as being sound. Accordingly, this review will not extend to any reconsideration of the basic two-test principle of prosecuting on the basis of ensuring that the evidence provides a realistic prospect of conviction and that it is in the public interest to prosecute the case.

  This review will therefore be limited in scope to the implications of a number of key recent developments, which have the potential to impact on decisions made within the framework of the code. The most significant of these is the charging initiative under which prosecutors will assume responsibility from the police for determining appropriate charges to bring against alleged offenders, introduced by the Criminal Justice Act 2003. There are also other significant changes to be considered, such as conditional cautioning.
  WS 26
  The Crown Prosecution Service, with appropriate consultation, is therefore to review the code for Crown prosecutors to take account of these recent developments. The review team has now been established and will be writing to organisations and individuals with an interest in the code, asking for comments on the particular areas under consideration.

  I welcome this review and will be taking a close interest in its progress.

  Service Personnel Process Review
  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.

  With effect from 1 April 2004 the three single Service personnel agencies will cease to have agency status. This decision came about from the Service personnel process review conducted last year and referred to by my right honourable friend for Member for East Kilhride on 17 July 2002 (Official Report, col. 277–78W).

  The review also identified that the career management and manpower planning work of the three Service manning agencies did not wholly suit agency status, because they were primarily support and enabling functions rather than concerned with the provision of a clear and discreet deliverable service. I therefore concluded that agency status for the agencies (Naval Manning, Army Personnel and. RAF Personnel Management Agency) should cease.

  I am pleased to tell the House that a considerable amount of work continues in many other areas. These include further reviews of tri-service recruiting and welfare and many of the review recommendations have been swept into a service personnel plan, parallel with and linked to the equipment programme and within the framework of the defence White Paper published last December.

  I intend to report on further progress to the House later in the year.

  Cottam Flue Gas Desulphurisation Plant
  The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
  My honourable friend the Minister for Energy, E-commerce and Postal Services (Stephen Timms) has made the following Written Ministerial Statement.

  I have today granted consent under Section 36 of the Electricity Act 1989 to EDF Energy (Cottam Power) Limited for the construction of flue gas desulphurisation plant at the 2,000 MW coal-fired power station at Cottam in Nottinghamshire. Planning permission for the plant has also been deemed to be granted, subject to 54 planning conditions agreed with the Nottinghamshire County Council and Bassetlaw District Council.
  WS 27
  The consent is for the final two units with the first two having already obtained consent in August 2002 and being currently under construction.

  Equal Pay
  Lord Sainsbury of Turville
  My honourable friend the Deputy Minister for Women and Equality (Jacqui Smith) has made the following Written Ministerial Statement.

  I have today published a consultation document on proposals to streamline equal value tribunal cases. Equal pay cases can be notoriously slow and complex, particularly the large-scale cases concerning questions of whether jobs are of equal value. Our proposals to speed up and simplify these cases form part of a package of measures to improve the way the Equal Pay Act 1970 works in practice. For example, last year we introduced the equal pay questionnaire and lengthened the time limits for bringing cases and for making arrears payments.
  WS 28
  The overall aim of our new proposals is to make the tribunal process work as effectively as possible and to tackle the lengthy delays that can occur in the more complex cases. Key features include: providing the Employment Tribunal presidents of England and Wales, and of Scotland, with the power to appoint tribunals with a specialist knowledge of equal value cases; promoting firmer case management, for example, through providing standard directions to ensure early exchange of information; streamlining complex rules of procedure; and ensuring more effective use of independent experts. The new provisions dovetail with the proposed new Employment Tribunal Regulations and rules of procedure. The intention is that, subject to parliamentary approval, these measures should come into effect on 1 October 2004.

  The consultation document will be placed on the DTI and Women and Equality Unit websites so that it is available to the wider public. The consultation period will run for 12 weeks, with a closing date for comments of 10 June 2004. Copies of the consultation document have been placed in the Libraries of both Houses.