Sitting of 9 September 2004

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

NEW WRIT
Ordered,
That Mr. Speaker do issue his Warrant for the Clerk of the Crown to make out a new writ for the electing of a Member to serve in this present Parliament for the Borough Constituency of Hartlepool in the room of Peter Benjamin Mandelson, Esquire, who since his election for the said Borough Constituency has accepted the Office of Steward or Bailiff of Her Majesty's Manor of Northstead in the County of York.—[Ms Armstrong.]

Oral Answers to Questions
  EDUCATION AND SKILLS
  The Secretary of State was asked—
  EDUCATION AND SKILLS

    Higher Education (West Cumbria)
    Tony Cunningham: What plans there are to increase access to higher education in west Cumbria. [187694]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): I begin by paying tribute to an absentee this morning—the Secretary of State for Work and Pensions, my right hon. Friend the Member for Hull, West and Hessle (Alan Johnson). During a tremendous process of reform that was fully debated in the House, he carried out an outstanding stewardship of his office with wit, friendship and courage. I pay tribute to his work, and he deserves his promotion most richly.
    The Government are fully committed to improving access for disadvantaged young people, including in west Cumbria. We welcome the work being done by University Education Cumbria to improve access. A strategic alliance of the Cumbria learning and skills council, St. Martin's college, the university of Central Lancashire, the Cumbria Institute and Cumbria county council was established in February 2003 to promote higher education throughout the county. The University Education Cumbria project board, chaired by Sir Brian Fender, worked with the alliance to promote higher education and encourage professional development. We will encourage the work of that group to develop access to higher education in Cumbria.
    Tony Cunningham: I thank my right hon. Friend for that encouraging reply. As he knows, west Cumbria has particular problems. Will he take a personal interest in
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    the implementation of the Fender report? Widening access to higher education in west Cumbria is vital to the social and economic regeneration of that area.
    Mr. Clarke: I can give my hon. Friend that assurance. I pay tribute to his work in the House and outside, campaigning for a university in Cumbria. It is the right project, it will benefit the whole of the county, and I will certainly take a personal interest in the issues, as he requests.

    Specialist Schools
    Linda Perham: If he will make a statement on the performance of specialist schools. [187695]
    The Minister for School Standards (Mr. David Miliband): There are now 1,950 specialist schools in England. In 2003 the percentage of pupils achieving five or more GCSEs or GNVQs at grades A to C was 56.7 per cent. in specialist schools, compared with 49.2 per cent. in maintained, mainstream non-specialist schools. Our value-added performance data for key stages 3 and 4 was also higher in specialist schools compared with non-specialist schools. Full data for specialist schools' GCSE performance in 2004 will be published as a statistical first release in October.
    Linda Perham: Will my hon. Friend recognise the achievement of Hainault Forest high school, the local comprehensive that my daughters attended, in winning specialist school status in business and enterprise? From being in special measures since last December, it has now attained its best ever SATs results. Will my hon. Friend join me in congratulating head teacher Ian Wetherell and his team and wish them the success of other specialist schools in achieving their promise, with the increased investment that the Government have put into education?
    Mr. Miliband: I am delighted to do so. I wrote to Mr. Wetherell in June and July, and it is fantastic that his good work and that of his staff is reflected in the results. I hope that the whole House will join us in saying that the GCSE, age 14 and age 11 results, which all showed progress in the right direction, are a tribute to good teaching in our schools. That progress is fastest in some of our toughest areas and historically weaker schools and is cause for celebration.
    Mr. Phil Willis: Liberal Democrat Members congratulate not only the specialist schools, but all schools and further education colleges both on the outstanding GCSE, A and AS level results and on the vocational results, which are often not mentioned in this House or elsewhere. Does the Minister agree that the extra £500,000 that specialist schools receive enables them to do two key things: first, to lower class sizes; secondly, to recruit and retain high quality specialist teachers? Since the Government came to power in 1997, 375,000 more secondary school students are being taught in classes of more than 30. Given that many non-specialist schools struggle to provide teachers, that one in five teachers is now recruited from abroad and that key subjects such as

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    literacy, numeracy, maths, English and science are taught by non-specialist staff in many non-specialist schools, when will the Minister get a grip on teacher recruitment?
    Mr. Speaker: Order. That is enough.
    Mr. Miliband: On the first part of the hon. Gentleman's question—I think it was a question—I am, of course, happy to associate myself with his remarks. When I used those words previously, however, he described them as "baloney", so I am glad that he has changed his opinion and is willing to congratulate the schools. Teacher recruitment and teacher retention have never been better in this country. Our specialist and non-specialist schools now employ 28,000 more teachers; primary school teacher recruitment is up; secondary school teacher retention is up; and maths and science teacher retention and recruitment are up too. The hon. Gentleman would do better to join the consensus rather than trying to stand outside it.
    Mr. Barry Sheerman: Does my hon. Friend agree that specialist schools are the most important Government policy for secondary schools? As such, it is important that we monitor it, evaluate it and get the basics right. Many educational researchers in this country, who have been hit hard by the Government's changes to research funding, are worried that they will not be able to track the success or performance of specialist schools because of the cuts in funding to their departments? Will he talk to the British Educational Research Association, which recently came to see me as Chairman of the Education and Skills Committee to express its concerns?
    Mr. Miliband: I am happy to examine the points raised by the BERA. My primary responsibility is to teachers and, above all, pupils in schools, but the fact that the specialist schools programme has increased from 100 schools in 1997 to nearly 2,000 schools today means that the research base is outstanding. As we move forward with the Government's five-year strategy, by which every school in the country will become a specialist school, we will have a full test bed to see how that work goes. The ground for researchers is fertile, and I hope that they will add to the existing research to show the success of the specialist schools movement.
    Mr. Adrian Flook: The town of Taunton contains five secondary schools, every single one of which is a specialist school. Two of those schools are heavily and annually over-subscribed, and the local education authority has implemented a strict zoning policy, which means that some pupils from one side of town who show aptitude cannot get into a specialist school to help them with that aptitude. Is that fair and just?
    Mr. Miliband: I am delighted to hear that pupils in Taunton are benefiting from the Government's education policies. Allocating pupils to schools according to distance is objective, independent and fair, and it commands confidence. In contrast, the Conservative policy to abolish the right of schools or LEAs to use distance as a criterion in determining
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    admissions would take us backwards. Over the next eight or nine months, many discussions will occur around the country on whether it is sensible to abolish the right of LEAs and schools to use the independent and objective criterion of distance from a school to govern admission. If one believes in community schools, how can one believe in abolishing the right of those schools and LEAs to use distance as the basis for admission?
    Mrs. Lorna Fitzsimons: Will my hon. Friend join me in congratulating Wardle high school, which was opened as a specialist arts college by his right hon. Friend the Secretary of State on Monday? Further to that, will he note that one of the boroughs with the most improved exam result statistics was Rochdale borough, and add congratulations from the Front Bench to our congratulations locally on one of the most improved boroughs in the country?
    Mr. Miliband: Of course I join my hon. Friend in congratulating the teachers, the pupils and the local education authority in Rochdale. As a high-performing and fast-improving local authority I hope that it will receive a letter from me congratulating it on its performance, but I am sure that the appearance of my right hon. Friend on Monday will have given those people a boost that a letter from me could not hope to match.
    Mrs. Claire Curtis-Thomas: My hon. Friend will know that I have a number of specialist schools in my constituency. One of the great aspects of these schools is the fact that they are opening their doors to the general public. What is my hon. Friend doing to ensure that the investment that is placed in them equally benefits the community within which they appear?
    Mr. Miliband: I am glad that my hon. Friend has given me the chance to deal with that, because in my excitement at the question by the hon. Member for Harrogate and Knaresborough (Mr. Willis) I forgot to point out to him that the extra money that goes to specialist schools is not intended only for the pupils in those schools, but to build key links with six partner primary schools and another secondary school, and to open up opportunities to the adult community. It is a requirement on every specialist school that it not only does right by its own pupils, but by the wider community of adults and pupils. I have been in touch with my hon. Friend about how schools in her constituency can fulfil that aspiration for the specialist schools movement, which is designed to bring wider opportunity right across an area, not just to individual schools. That is something that we are pursuing very hard.

    Schools (Health and Safety)
    Mr. Jim Cunningham: How often the (a) primary and (b) secondary schools in Coventry, South are monitored for health and safety standards. [187696]
    The Minister for Children (Margaret Hodge): Like all local education authorities, Coventry LEA has health

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    and safety responsibility for its secondary and primary schools. It formally audits its schools' compliance with the law and routinely provides advice. It considers and acts on returns made to the health and safety team. In 2000, Ofsted reported that the LEA had a clearly defined health and safety policy monitored by members and officers.
    Mr. Cunningham: I thank my right hon. Friend for that answer, but can she say how Coventry compares with the rest of the country on health and safety matters?
    Margaret Hodge: I do not have that comparison here, but I am sure that Coventry LEA, like all other LEAs, does extremely well in ensuring the health and safety of its staff and pupils in all its schools.

    National Literacy Strategy
    Mr. Nick Gibb: If he will make a statement on the national literacy strategy. [187697]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): The introduction of the national literacy strategy in 1998 has brought about dramatic improvements in standards across the ability range. This year, a record 77 per cent. of 11-year-olds achieved level 4 in English. Compared with 1997, there are now around 84,000 more 11-year-olds achieving the expected level for their age in English.
    Mr. Gibb: But is it not a disgrace that 17 per cent. of all 11-year-olds—nearly one in five—are going to secondary school unable to read properly after six years in primary schools, and that 37 per cent. are going to secondary school unable to write properly? Does the Minister accept that the problem lies in the way in which reading is taught in our schools and the way in which the national literacy strategy has been implemented, with too much emphasis on whole language teaching methods and not enough concentration on phonics? Does he accept that it is the role of education Ministers, whether Conservative or Labour, to challenge the teacher training colleges and the profession over this clearly failed methodology, rather than simply to say that this is a matter for the profession?
    Mr. Twigg: I totally accept the hon. Gentleman's point and would like to put on record a tribute to him for the campaigning efforts that he has undertaken on the question of phonics. We have placed phonics at the centre of the literacy strategy, and in this academic year we are providing new training about phonics for teachers in key stages 1 and 2. That challenge needs to be there alongside the other changes that are necessary to ensure that we continue to build on the progress that I described.
    Mr. Peter Pike: Does my hon. Friend agree that Rosewood school in Burnley, which he visited earlier this year, is an example of a new primary school showing what is being done throughout Burnley as a result of this Government's policies, which are, through
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    the literacy strategy and in many other ways, delivering much better education than under the previous Tory Government?
    Mr. Twigg: I am happy to agree with my hon. Friend. It is worth reminding hon. Members that, when we came to power in 1997, only 63 per cent. of 11-year-olds achieved the expected level in English—in other words, 37 per cent. went to secondary school without achieving it. The 14-point growth constitutes remarkable progress. I pay tribute to my hon. Friend. I greatly enjoyed my visit to the school and I am delighted that Burnley is now part of wave one of the building schools for the future programme. That means that its secondary as well as its primary schools can be renewed.
    Mr. Mark Hoban: In the Under-Secretary's reply, he said that 77 per cent. of children achieved level 4 or above this year. Does he accept that the original target was 85 per cent.? It has slipped to 2006. Is he confident that the target will be reached then? Will it slip again or become simply an aspiration?
    Mr. Twigg: We have made it absolutely clear that 85 per cent. remains our target. We will do everything that we can to ensure that this year's improvement, about which I was delighted, continues.
    I return the challenge to the hon. Gentleman and his colleagues. The Conservative party has talked about abandoning targets. Is he saying that we should not aim to get the majority of our 11-year-olds to achieve the expected level so that they are equipped to go on to secondary school?
    The 14-point improvement in the past seven years is remarkable because the greatest improvement has happened in schools that served the most deprived communities. That is a cause for celebration, certainly for Labour Members.

    University Access Agreements
    Mr. Piara S. Khabra: How many university access agreements have been agreed; and if he will make a statement. [1876981]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): We expect that institutions will start to submit their access agreements for the approval of the director of fair access later this autumn.
    Mr. Khabra: I recently received a letter from a college in my constituency, which raised concerns about a recommendation by the Learning and Skills Council to increase tuition fees for access and professional courses. That will affect my constituents, especially young people. The courses offer many of my constituents a second chance to enter higher education. Will my right hon. Friend reassure my constituents that the courses will remain affordable?
    Mr. Clarke: I think that I can offer that reassurance but I shall examine the specific case that my hon. Friend raised and write to him about the detail of the Learning

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    and Skills Council's proposals. I am not familiar with the details that he mentioned but I am happy to consider them and come back to him.
    Mr. David Chaytor: Has my right hon. Friend had the opportunity to consider the impact on access to higher education of the alternative funding plans that the Conservative party published yesterday, especially—
    Mr. Speaker: Order. I have told the hon. Gentleman previously that it is not for the Secretary of State to answer such questions. The hon. Gentleman can always write to Conservative party headquarters.
    Mr. Tam Dalyell: While the Secretary of State could be forgiven, at least in my opinion, a certain impatience with the Scots, does he acknowledge that there is a delicate problem of access, especially to the university of Edinburgh, given the different regimes for tuition fees? Has that been considered in the Department and is it in contact with the Scottish Executive on that awkward matter?
    Mr. Clarke: Mr. Speaker, I have no impatience with the Scots, especially your good self, on any matter.
    We are in close discussion with colleagues in Scotland about the issues. We accept the devolution settlement, under which Scotland makes its own policy on such matters. We also accept that it is important to have a proper dialogue so that the consequences can be properly considered. There is dialogue about those questions at political and official level. As my hon. Friend knows, the higher education and political systems in Scotland are currently actively considering them.

    Higher Education
    Mr. David Rendel: If he will make a statement on the proportion of 18 to 20-year-olds applying for higher education entry this year. [187699]
    Mr. Colin Challen: What the latest figures are for higher education applications; and if he will make a statement. [187700]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): The latest figures published by the Universities and Colleges Admissions Service at the beginning of the month showed that 466,222 people had applied through the UCAS system to UK universities and colleges for 2004 entry. That represents an increase of 2.8 per cent. on the same time last year. The number of people accepted so far represents an increase of 3.4 per cent.
    Mr. Rendel: Does the Minister accept, as the Prime Minister did in his letter to me of 6 August, that over the past year the percentage increase in the number of English student applicants under 21 has fallen as compared to the increase in the cohort of that age group? Can he give any reason for that—as the Prime Minister did not—other than the one I suggested: that people were being put off by the top-up fees with which
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    they are now threatened? Does he agree that if there is a fear putting people off applying to university, an increase in the interest rate to a commercial rate would only make the position far worse?
    Mr. Lewis: I only agree with the last point. The hon. Gentleman should actually be celebrating the fact that, year on year, an increasing number of young people in this country want to go to university. The real scandal is that Liberal Democrats want to scaremonger, and imply to young people—especially those in low-income families—that university education is somehow unaffordable. That approach will not work, and is not working, for a number of simple reasons: rising school standards, improving GCSE and A-level results, educational maintenance allowances and Aimhigher, as well as the growing confidence and aspirations of hard-working families.
    Individual young people will want to continue to enter higher education. The Liberal Democrats' policy is different from ours. While they prefer to increase subsidies to graduates, we prefer to prioritise provision for under-fives. Those are the real foundations of a fair and successful society. The Liberal Democrats are opportunists; we face up to the real challenges and choices facing our country. I am content for the British people to decide which approach is appropriate for a responsible political party.
    Mr. Challen: I welcome my hon. Friend's statement, which shows that the Government are committed to getting more young people into higher education. That is essential for the country's economic future.
    Maths and physics are two key subjects. Since the publication of Professor Adrian Smith's report on post-14 mathematics education, what progress has been made in persuading more young people—at an early age, when they are choosing school subjects—to take up maths and physics? When the Government respond to the report from the Qualifications and Curriculum Authority, will Ministers involve people from the private sector—it has happened before: for instance, in March we met members of Pintronics plc—in encouraging young people to take up those subjects?
    Mr. Lewis: I entirely agree. It is important for us to engage employers in inspiring and enthusing young people about science. We have made it absolutely clear that we intend to implement the Smith inquiry's recommendations. As my hon. Friend knows, there are no quick-fix solutions, but we think it is essential to apply our strategy to inspire young people about maths and physics early in their school careers.
    Mr. James Clappison: Is not the system that the Government are introducing placing substantial extra costs and indebtedness on families with quite modest means? Should we not consider the effects of it? Whether or not there is an effect on the number of people applying to universities, will the system not result in years of extra indebtedness for young people from modest backgrounds? Whatever else may be the case, is it not a fact that the Government hardly led those people to expect this at the last general election?
    Mr. Lewis: It was the hon. Member for Wantage (Mr. Jackson), a former higher education Minister, who

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    described the policies announced this week by the Conservative party as regressive—almost as regressive as the return of the right hon. Member for Wokingham (Mr. Redwood) to the Shadow Cabinet.
    If we want dividing lines, we should bear in mind that those on the lowest earnings take the longest to repay and therefore, under the Conservatives' proposals, will pay the most. The worst effect is on those taking a career break, for example to start a family. The hon. Gentleman should speak to his Front Bench more often, because he is, I believe, one of the more sensible members of his party. Let me give him an example. A medium earner, such as a teacher, with a loan of £10,000 would repay something approaching £30,000, whereas a higher earner working in the City—[Interruption.]
    Mr. Speaker: Order. I will stop the Minister.
    The Minister should stop now, and he should refrain from referring to Conservative policy. [HON. MEMBERS: "Why?"] I will tell the House why. The Minister should give an account of his stewardship, not the stewardship of the Opposition. We will leave it at that.
    Chris Grayling: May I begin by associating myself with the Secretary of State's earlier remarks about the right hon. Member for Hull, West and Hessle (Alan Johnson)? He has been a good-humoured opponent and we wish him well in his new role.
    I look forward to campaigning on the doorstep in the next general election to abolish tuition fees, but as I listen to the Government covering themselves with plaudits about the education system, I ask myself one question, to which I shall be very interested to hear the Minister's response. Can he explain why, during the summer recess, almost eight years into a Labour Government, the leading and eminent historian Dr. David Starkey warned that some students need remedial teaching in basic literacy, and that there is a growing need for four-year degrees to make up for the poor quality of first-year undergraduates?
    Mr. Lewis: I can explain. None of the young people at university or in the labour market today benefited from this Government's literacy and numeracy strategy in primary schools, none benefited from the key stage 3 strategy in secondary schools, and none benefited from the 14 to 19 reforms that are already under way. But all experienced cuts, cuts and more cuts to school budgets, and neglect of the most disadvantaged in our communities. Nor was there a programme for the millions of adults in this country who lack basic numeracy and literacy skills. I am pleased to report to the House today that 750,000 of the adults who did not have such qualifications before this Government came to power have now achieved them. Those are the dividing lines on which we will campaign on the doorstep at the general election.

    Schools Admissions Policy
    Miss Anne McIntosh: What recent representations he has received on schools admissions policy; and if he will make a statement. [187701]
    The Minister for School Standards (Mr. David Miliband): The Education and Skills Select Committee has recently published a report into secondary school admission arrangements. It is under consideration and we will issue our response in due course.
    Miss McIntosh: Is the Minister not embarrassed at the fact that appeals by parents who did not secure their first choice of school for their children against such decisions have recently risen by 50 per cent.? Does he not agree that it should be left to head teachers, governors and parents to decide which school should accept which child?
    Mr. Miliband: If I understand the hon. Lady correctly, she is suggesting that every school in the country should have its own admissions policy, with no possibility of appeal against it. Indeed, that is a further development. Last term, we heard that the Conservative party believes that there should be no distance criterion for admission to schools; that would throw into chaos the whole admissions system. Now, the hon. Lady says that every school should be able to invent its own admissions policy without an appeal system; that would be much worse than the current system. The latest research shows that approximately nine out of 10 youngsters get their first choice, and the best way to increase that number is to have more good schools. I would have expected the hon. Lady to applaud the rising attainment levels, especially in previously weak schools that have struggled to get first choice preferences. That is what this Government have pledged to do.
    Jonathan Shaw: Does my hon. Friend accept that, as evidence from the Education and Skills Committee shows, appeals processes and admissions systems work most smoothly when there is a single, local authority-based admissions authority? So rather than prescribing myriad different admissions authorities, we should consider the Committee's evidence, which shows that when there is a single admissions authority, everyone, including parents, understands the rules. Such a system creates fairness and leaves parents feeling more satisfied than the alternative, which leads to great frustration.
    Mr. Miliband: I was able to discuss this issue with the Education and Skills Committee when it questioned me in July. It is important to note that the co-ordinated admissions system that is being introduced means that no longer will parents send different forms to different schools in different authorities; rather, there will be a single admissions process. Schools will continue to have rights over their admissions where appropriate—Church schools are an example—but there will be a co-ordinated process. Early evidence from the work in Enfield and elsewhere shows that a co-ordinated admissions process makes a big difference to the satisfaction felt by parents, and brings greater clarity to the system. I hope that my hon. Friend recognises that.
    Ann Winterton: Has the Minister noted the conclusions of recent research showing that very bright pupils will do well in any secondary school, whether grammar or comprehensive, but that children at the margins—those who have only just passed the

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    11-plus—achieve considerably more in grammar schools than their equivalent cohorts in comprehensive schools? Does the Minister believe that there are any lessons to be learned about the ethos of those schools and the sort of teaching carried out in them, and will he learn some of those lessons and apply them to the whole of the secondary sector?
    Mr. Miliband: There are some lessons to be learned from the evidence. Unfortunately, we disagree about what those lessons are. On this side of the House, we do not believe that selection at five and 11 provides the right way forward. Conservative Members are proposing that every school, primary and secondary, should be able to have its own selection criteria for admissions, but we do not believe, as I said, that having a five-plus or an 11-plus is the best way forward for this country. Over the past 30 years, since the introduction of mass comprehensive schooling, there has been a doubling of GCSE performance, especially among girls. I would have thought that that would be a source of pride and, indeed, a source of evidence that the hon. Lady should take into account.
    Angela Watkinson: Will the Minister acknowledge the importance of admissions interviews in denominational schools? Such interviews not only enable schools to assess the credibility of references, but have a pastoral benefit in enabling those schools that wish to continue with interviews to gain a better understanding of the child's needs and personal circumstances. Under the co-ordinated system, schools have to rely solely on the local education authority to relay information to parents about the ethos of each school, how it differs from other schools and whether it offers what they want for their child. With the banning of admissions interviews, that valuable link between schools and prospective parents and pupils has been lost.
    Mr. Miliband: The House really needs to understand the extraordinary spectacle that we are seeing this morning. The hon. Lady has divorced her party from the position of the Churches on this issue. Both the Church of England and the Catholic Education Service made strong representations that the old mechanisms were not the right ones to use and that the testing of religious affiliation should not be done by interview, but on an objective basis. I am very sorry that the hon. Lady has decided that now is the time for a split between her position and that of the Churches on this matter. We have followed the strong representations made by the Churches and introduced an objective approach—not based on an interview. The hon. Lady would do well to follow the Churches and us in that respect.

    Higher Education Act
    Mrs. Anne Campbell: What assessment he has made of the effects on the current cohort of university students of the Higher Education Act 2004. [187702]
    The Secretary of State for Education and Skills (Mr. Charles Clarke): The current cohort of students will not pay the new variable fees, but will benefit from the abolition of up-front fees in 2006, from an improved system for student complaints and from better
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    arrangements for research in arts and humanities. The current cohort of students will also benefit from the introduction of the higher education grant of up to £1,000 this year and from the increase in the repayment threshold to £15,000 in 2005.
    Mrs. Campbell: I thank my right hon. Friend for that reply. I add that the current cohort of students will continue to benefit from the high standards offered by the university system in the UK. I hope that he will take the opportunity to congratulate Cambridge university on coming third in the world league of universities, as well as coming first in the world league of teaching excellence. Will the Secretary of State ensure that he publicises the changes and effects of the Higher Education Act 2004 for the present cohort of students, most of whom are completely oblivious to the advantages that it will bring?
    Mr. Clarke: First, I am happy to congratulate Cambridge university on its achievement. I took the opportunity of having a conversation with the vice-chancellor yesterday in which we discussed what had led to the university's great success. I am indeed happy to place on record my congratulations on its achievement. I also agree with my hon. Friend's point that publicity about the precise meaning of the changes as they affect each individual is very important, and it will continue to be important as people consider applying for university education in the future. We have a substantial programme of public information to get that across. It has already started to be rolled out, but will be rolled out more fully in order to meet the point that my hon. Friend has raised.
    Hugh Bayley: When the Higher Education Funding Council considers bids from universities to expand their student numbers, will it have regard to whether a particular institution meets the Government's access requirements? Will it give favoured consideration to high-performing universities, such as the university of York, that meet the Government's requirements on access to people from all walks of life?
    Mr. Clarke: I cannot commit myself on the university of York's bid, although before the recess my hon. Friend arranged for me to visit the university to discuss with senior people there the meaning of their bid. However, I can tell him that, when it makes such decisions, HEFC must take into full account the contribution made by particular universities to the policies on improving access to higher education that both it and the Government espouse.
    Paul Farrelly: My right hon. Friend will recall that, during the debate on the Higher Education Act 2004, we were on opposite sides of the argument about variable fees. However, we were on exactly the same side when it came to the importance of improving financial support for poorer students. Will he therefore remind the House why, in his reforms, he quite rightly ruled out charging a commercial rate of interest on student loans? Was it

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    because that policy would have been regressive and unfair in its effects on poorer students and lower-earning graduates?
    Mr. Clarke: My hon. Friend is entirely right. In 2002, for the benefit of the Select Committee on Education and Skills, we set out our detailed analysis of the impact of real rates of interest. Unlike the Opposition, we rejected the possibility of charging a commercial rate of interest on student loans. First, that was because we did not want people to be penalised if they decided on a career—for example, with a charity or a Church—that was low paid. We thought that ability to pay was important. Secondly, we did not want to penalise women who decided not to work for a period of time after university so that they could bring up a family, as they could find that they would be hit by a real rate of interest of 8 per cent. Thirdly, we did not want people to have to pay back up to £60,000 on a loan of £10,000, which is what a real interest rate of 8 per cent. would add up to.
    Those issues arose during our stewardship of education, and those were the decisions that we took. We need to see how others would seek to conduct their stewardship.

    Mathematics Inquiry Report
    Patrick Mercer: If he will make a statement on progress in implementing his Department's response to the mathematics inquiry report published by Professor Adrian Smith. [187704]
    The Minister for School Standards (Mr. David Miliband): Since publication of the Government response to the Smith inquiry on 28 June, the Qualifications and Curriculum Authority has begun work on curriculum and qualification reforms. The School Teachers Review Body has been asked to advise on pay for senior mathematics teachers. The hon. Gentleman will know that the Government have announced increased training bursaries, and that golden hello incentives for mathematics teachers will also be introduced.
    Patrick Mercer: I am grateful to the Minister for that reply. From what I have seen in schools across my constituency—in Newark, Retford, Tuxford and Southwell—it is clear that technical qualifications are falling off sharply, especially in maths. That is despite the excellence being achieved in many other fields. The Smith report suggests that there is a shortage of 3,500 specialist teachers. May I emphasise to the Minister how important it is that we get those specialist teachers into the classroom? In that way, children from north-east Nottinghamshire can take their places in the hi-tech industry that is springing up in that part of the world.
    Mr. Miliband: I completely share the hon. Gentleman's commitment to making that a priority. He will be pleased, as I am, that more youngsters did GCSE maths this year, and did well in it. That is an important building block for the future, as the Smith inquiry noted. He will be pleased also that there are now 152 specialist schools with a specialism in maths and computing. That is also important.
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    However, the hon. Gentleman can take direct comfort, and a sense that things are moving in the right direction, from the startling figures on the numbers of people being recruited into teacher training who want to teach maths, and who then go on to work in schools. I shall write to the hon. Gentleman with the figures on maths teacher recruitment both in initial teacher training and as a result of the graduate teacher programme, which brings people in mid-career into teaching. The problem has not been cracked fully, but I think that he will be very impressed by the direction in which the figures are going.
    Mr. Kelvin Hopkins: I congratulate the Government on being the first in generations to take mathematics education seriously. Does my hon. Friend agree that we are still suffering a hangover from the years of Tory neglect of mathematics education?
    Mr. Miliband: I am tempted to blame my grades in maths and further maths on the previous Government, but I might be pushing my luck a bit too far. I tried to take maths seriously at school, but found that it was not quite my forte. I hope that it can be a source of cross-party commitment that maths and technical studies are essential to the future of the country, and that the recruitment of teachers and the development of the right curricula are critical to that.

    Sports Facilities
    Mr. Michael Jack: In what ways his Department is assisting schools to develop their sports facilities. [187705]
    The Parliamentary Under-Secretary of State for Education and Skills (Mr. Stephen Twigg): We are investing £686 million in school sports facilities in England. More than 3,000 schools are benefiting from those programmes. The Department is also supporting capital investment in schools of £4.5 billion this year and more than £5 billion in 2005—06, much of which will be directly allocated to local authorities and schools for them to address their priority needs, including sport facilities.
    Mr. Jack: The Minister has indicated that substantial sums in capital funds are available for schools that wish to develop their sports facilities. Sadly, however, following an Ofsted recommendation, St. Bede's school in my constituency was unsuccessful in bidding for money under the targeted capital fund arrangements and, although it wishes to reapply under that scheme, it has been told that it cannot. Will the Minister look carefully at the school's case to see whether St. Bede's could reapply under the fund, or, if that route to capital funding is not available, can he recommend another route, given that the school has already raised £250,000 of its own money to put towards its much-needed sports facilities?
    Mr. Twigg: I am aware of the situation at St. Bede's. It received a good Ofsted report, and Ofsted made a recommendation about sports facilities. The target capital fund was heavily over-subscribed and the next

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    round is also very highly subscribed. If St. Bede's is unsuccessful in that round, there will be a further round early next year. It may also be possible to secure a grant from the formulaic capital programme allocated through the Lancashire local education authority. It is possible that there could be scope for progress by St. Bede's under the building schools for the future programme. I will write to the right hon. Gentleman setting that out in detail.
    Judy Mallaber: Will my hon. Friend look at the success achieved in Amber Valley by developing the key sports facility of having hundreds of young people acting as sports leaders through the community sports programme, which is working with schools, Connexions and the Learning and Skills Council? Because that programme promotes sport and good health and also gives confidence to young people to be engaged in such activities, including their education, will he also consider the associated NEET programme, which brings in and re-engages in sports 16 to 19-year-olds who are "not in employment, education or training"?
    Mr. Twigg: I am happy to commend those programmes in my hon. Friend's Amber Valley constituency. She will be aware that my right hon. Friend the Secretary of State for Education and Skills launched the healthy living blueprint earlier this week, setting out some of the challenges for schools and the wider community in promoting healthy living. Good quality physical education and sport is at the heart of our efforts to ensure that children and young people have the healthiest lifestyles possible.
    Charles Hendry: Does the Minister agree that it is not just sports facilities in school that are important, but how students are encouraged to use them in the wider community? Is he aware that in other European countries, particularly France and Holland, where there is a much higher involvement of young people in sport, sports facilities tend to be located in local clubs, rather than attached to schools, and are properly co-ordinated to bring a range of sports together on one site? What discussion is the Minister having with UK Sport and Sport England to ensure that sports facilities are developed in a way that will be of the greatest overall community benefit?
    Mr. Twigg: The hon. Gentleman raises a reasonable point. We work closely with our colleagues in the Department for Culture, Media and Sport to ensure that our efforts are coherent. It works in both directions. It is, as the hon. Gentleman rightly says, about ensuring that we have facilities in the community for young people, but it is also about facilities in schools being accessible to the community outside traditional school hours, including for young people. We need to do both. A lot of money is going into that and I am sure that the hon. Gentleman will welcome those additional resources. We want to ensure that they have maximum impact on young people from all backgrounds in all our communities.
    Andy Burnham: Does the Minister agree that the British state school system has traditionally
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    undervalued the role of after-school competitive sport between schools, particularly its value in raising the self-esteem of young people who may lack confidence in the classroom? To ensure that we get maximum benefit from the new facilities that the Government are putting in, will he consider a proper system of rewarding teachers who take after-school or weekend sport and work with the governing bodies to get an extensive league structure for schools in all the main sports?
    Mr. Twigg: I pay tribute to my hon. Friend, who has campaigned on these issues for some time. Competitive sports are an important aspect of our work on physical education and sport in schools. I am happy to look into the specific suggestion that he has made today and to write to him. We have said that we want every school to be part of a school sports partnership by 2006. More than half are now in such partnerships, and competitive sports will be an important element in the work of those partnerships.

  The Solicitor-General was asked—
  SOLICITOR-GENERAL

    Guantanamo Bay
    Mr. Gordon Prentice: If the Attorney-General will act for the four UK citizens held in Guantanamo Bay in challenging the legality of their continued detention in the US courts. [187719]
    The Solicitor-General (Ms Harriet Harman): No. Those holding the office of Attorney-General gave up the practice of acting as private counsel in the early 19th century. Since then, Law Officers' duties have been exclusively to act as advocates and legal advisers to the Crown. Government and Parliament.
    Mr. Prentice: This is very dispiriting indeed. We have four British citizens who have been in legal limbo for years now. Ten months after the Prime Minister said that the matter would be resolved soon, we are no further forward. It is just not satisfactory, and we need to do something about it. May I press my right hon. and learned Friend on this point? The Foreign Secretary has intervened on behalf of Kenny Richie, a British citizen who has been in prison in Ohio for the past 17 years. He is on death row for a crime that he says he did not commit and the British Government are standing behind him. Will the British Government do the same for the four British citizens in Guantanamo Bay?
    The Solicitor-General: We have strongly stood behind the rights of those detainees either to have a fair trial or be brought home. We have made that position clear. That is why the military commissions that were proposed by the US authorities in respect of those particular UK detainees have been suspended. I ask my hon. Friend to distinguish between whether, as he requests, the Attorney-General should represent those detainees in the habeas corpus applications and whether we are making all efforts to ensure that they either have a fair trial or are brought home. In addition the Foreign Office is considering a request by the detainees'

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    representatives to put in an amicus brief at the hearings of the habeas corpus applications, and that is still under consideration.
    Mr. David Heath: I am glad it is under consideration, but when the original case was put before the US Supreme Court, it was supported by lawyers, Members of this Parliament and others, and the Government did not lift a finger to help. The fact is that the detainees are seeing a lawyer for the first time in two years. Their lawyer and Government officials are apparently not allowed to tell the detainees' families of the treatment that those detainees have received, which we believe to be similar to that handed out in the prison in Baghdad. The families have been told that the information cannot be divulged because of, variously, consular confidentiality or the Data Protection Act. Is it not the case that American justice is besmirched by this episode, and that there is a real danger that British justice is also besmirched by the fact that the British Government are prepared to allow this to happen to British citizens and will not lift a finger in their support?
    The Solicitor-General: It is not the case that we have not lifted a finger in support of the detainees; such has been the pressure of our representations that five of them have been returned. We have made clear our concerns about the circumstances in which the detainees have been held, including the question of legal advice and the fact of their detention. Discussions are under way. The Prime Minister has made it clear that he thinks that the detainees should either be brought back to this country or given a fair trial. We have said that a trial before a military commission is not one that we would consider fair. We are therefore pressing forward with arrangements for them to be returned home. I ask the House to understand the important efforts that have been made by the Attorney-General, the Foreign Secretary and the Prime Minister on behalf of those detained.
    Mr. Douglas Hogg: If the Solicitor-General will not agree to the proposition that the Attorney-General should represent the four detainees, what about seeking to persuade the American Government to accept an amicus before the military tribunal so as to ensure that the constitutional rights of the detainees are properly respected?
    The Solicitor-General: The right hon. and learned Gentleman suggests an amicus brief before the military commission. We are not appearing in any form before the military commission, and nor are the detainees who are UK nationals, because we do not believe that the commission guarantees a fair trial. In respect of appearance before the district court in Washington DC, which is set to hear the applications for habeas corpus, an application has been made by the detainees' representatives for the UK to put in an amicus brief. As I have told the House, that is under consideration. However, the right hon. and learned Gentleman says that the problem is that I will not agree that we should represent the detainees. I would remind him that not since 1830, when there was a row about the Attorney-General and the Law Officers acting for private clients, have they acted for anyone other than the Crown, Parliament and the Government.
    Mr. Dominic Grieve: I wish to return to the important issue of the amicus brief in front
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    of the district court. I appreciate that the Government are considering their position, but time is moving on. The question of possible representation on the amicus brief has been around for six or seven weeks, if not longer. When will the Government give us a definite lead on the matter? It is important, and many hon. Members will have been approached individually to lend their names to such a brief. On the basis of what the Government have said about the importance of observing proper constitutional proprieties in the United States, there would seem to be overwhelming reasons why it should be signed.
    The Solicitor-General: The hon. Gentleman is right. It is important that we give serious consideration to the question whether to proceed with an amicus brief. He is right that time is moving on, and we are acting as expeditiously as we can. Although the request was made some time ago for us to put in the brief, we did not receive the papers until recently. We will inform the House as soon as a decision has been made.

    Domestic Violence
    Linda Gilroy: What discussions she has held with Cabinet colleagues on improving the way in which the Crown Prosecution Service deals with court cases involving domestic violence. [187720]
    The Solicitor-General: I am in continuous discussions with ministerial colleagues about improving the way in which the CPS deals with court cases involving domestic violence, principally through the interministerial group on domestic violence chaired by the Home Office Minister, Baroness Scotland.
    Linda Gilroy: I thank my right hon. and learned Friend for that reply. It will not surprise her to learn that, at a seminar I chaired for people working to support those facing domestic violence in Plymouth this time last year, one of the key concerns was the delays in bringing cases to court. It is vital to speed things up. Will she continue her drive to join up government to achieve that and will she remind Baroness Scotland, who will visit my constituency next week, of the importance of doing everything we can to do so?
    The Solicitor-General: I certainly will and I pay tribute to the work that my hon. Friend has done in her city of Plymouth on the issue of domestic violence, not least conducting a survey that has highlighted existing concerns. It is important that all the agencies work together and that cases are brought to court as swiftly as possible. However, protective orders should be made in the meantime, so that women can know that they and their children are safe before cases come to court.
    Chris Bryant: My right hon. and learned Friend will know that on average two women are killed every week in this country by their spouse or partner. Indeed, in the Rhondda in the past two years, we have had five domestic murders. Is it not vital that the CPS acts as sensitively as possible as early as possible in cases of domestic violence, so that they do not lead to domestic murder?
    The Solicitor-General: It certainly is, and one of the objectives of the Domestic Violence, Crime and Victims

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    Bill, which is going through the House at present, is to enable early intervention. If early intervention does not take place, domestic violence can escalate and end up in homicide. In addition to early intervention, we have set up homicide reviews so that we learn the lessons when agencies have not been able to prevent homicides. The Law Commission has recently reported on homicides in cases of domestic violence, and we are considering what further action to take.

    Corruption (Prosecutions)
    Mr. Andrew Turner: What steps she is taking to ensure consistency of decision making in prosecutions for corruption. [187721]
    The Solicitor-General (Ms Harriet Harman): Consistency of decision making in prosecutions for corruption is ensured by the Crown Prosecution Service following the code for Crown prosecutors, which requires them to consider the sufficiency of evidence and whether a prosecution would be in the public interest,
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    and, secondly, by the requirement in all cases of corruption that a Law Officer consent to the prosecution.
    Mr. Turner: I understand that the common law offences of corruption and that of abuse of public office are more or less a dead letter and that it is very difficult to secure a successful prosecution under the Prevention of Corruption Act 1916. Are Ministers looking at how effective that legislation is and at whether it should be more effective?
    The Solicitor-General: The hon. Gentleman puts his concerns well and we agree with those views. There are great difficulties in prosecuting and that is one of the reasons why the Government have been considering new laws on corruption. There has been pre-legislative scrutiny based on a draft Bill produced by the Law Commission in 1998, and in due course a new Bill will be brought forward to deal with the important issue of tackling corruption that the hon. Gentleman rightly raises.

Business of the House
12.30 pm
Mr. Oliver Heald: Will the Leader of the House please give us the business for next week?
The Leader of the House of Commons (Mr. Peter Hain): The business for next week will be as follows:
MONDAY 13 SEPTEMBER—Second Reading of the Children Bill [Lords].
TUESDAY 14 SEPTEMBER—Opposition Day [17th Allotted Day]. There will be a debate on higher education, followed by a debate on pensions. Both debates will arise on motions in the name of the Liberal Democrats.
WEDNESDAY 15 SEPTEMBER—Procedure motion relating to the Hunting Bill, followed by proceedings on the Hunting Bill—[HON. MEMBERS: "Hear, hear"]. I think it would assist the House if I gave notice that we will be sitting later than usual in order to complete those proceedings.
THURSDAY 16 SEPTEMBER—Second Reading of the Civil Partnership Bill [Lords].
FRIDAY 17 SEPTEMBER—The House will not be sitting.
The provisional business for the week following the conference recess will be as follows:
MONDAY 11 OCTOBER—Second Reading of the Mental Capacity Bill.
TUESDAY 12 OCTOBER—Remaining stages of the Domestic Violence, Crime and Victims Bill [Lords].
WEDNESDAY 13 OCTOBER—Opposition Day [18th Allotted Day]. There will be a debate on an Opposition motion. Subject to be announced.
THURSDAY 14 OCTOBER—Motion to take note of a European document relating to justice and home affairs work programme, followed by consideration of Lords amendments to the Horserace Betting and Olympic Lottery Bill.
FRIDAY 15 OCTOBER—Private Members Bills.
The House will wish to know that the date of the state opening of Parliament will be Tuesday 23 November.
Mr. Heald: The Leader of the House will recall that I have been pressing him for a debate on the draft Regional Assemblies Bill. He knows our views about the referendum in the north-east, but surely he would acknowledge that the details of the regional assembly to be approved by the referendum—
Mr. Andrew Turner: Or not.
Mr. Heald: Or not. The details should be debated before the ballot papers go out, so may we have a debate in Government time, either next week or the first week back, so that Ministers can explain their plans before the electors receive their ballot papers?
The Leader of the House will realise—as was apparent when he announced the business—that there are differing emotions in all parts of the House and in the country about his announcement on the Hunting Bill,
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but may I press him on a number of matters? Surely, a Bill of that kind needs more than one day's consideration—[HON. MEMBERS: "Hear, hear"]. Will he think again about the time allowed?
When the Bill was sent to the other place last time, there were outstanding issues concerning compensation and the breadth of the offence. Can the Leader of the House assure us that the procedural motion next Wednesday will allow us to debate amendments on those issues? He may say that under the Parliament Act the Bill has to leave this place in the same form as last time and that a Committee stage is therefore inappropriate, but is not it correct that the House is able to put forward suggestions for amendments to the Bill in a separate motion to accompany it to the other place even under that procedure? Can he confirm that after the Second Reading debate there will either be a Committee stage or that more time will be allowed before Third Reading for suggested motions to be considered—and not just Government motions? Can he also explain how much time is to be allowed for each stage of the Bill?
Finally, will the Leader of the House accept that there are concerns about the way in which he is proposing to deal with this matter? The Government have been up hill and down dale over hunting for seven years, yet now we are being told that it is so urgent that the Parliament Acts have to be invoked, but at the same time that the ban can be delayed for more than two years.
The Bill involves taking away an aspect of liberty from people in rural areas. Surely time must be made available for proper debate of the issues involved. Will the right hon. Gentleman think again about the use of the Parliament Acts? It is wrong to use what is, in parliamentary terms, the nuclear option when it is not necessary and there is plenty of time available.
Mr. Hain: I am delighted that the hon. Gentleman survived his reshuffle—or his leader's reshuffle—yesterday. I see that he now has an expanded portfolio, as shadow Secretary of State for Constitutional Affairs; I congratulate him on that, but I notice that even with that expanded portfolio he has still not been able to get into the shadow Cabinet. So the Leader of the House of Commons is in the Cabinet, but the Conservative party treats the House with such derision that it will not even appoint the shadow Leader of the House of Commons, with his expanded portfolio, to the shadow Cabinet.
On the hon. Gentleman's specific points, I had hoped, and I had been promising him, to publish the draft Regional Assemblies Bill by now. We will publish it just as soon as we can. The referendum is some weeks off—just under two months away—so there is plenty of time for that. On Monday, there will be a statement by the Minister for Local and Regional Government about this referendum, in which he will specifically address the issue of postal voting as well as other issues, and the hon. Gentleman will have an opportunity to put his questions to him then.
I accept that there are differing emotions on hunting; there is no question about that. Within the hon. Gentleman's own party there were Members who voted for the ban on hunting, and the same applied on the Labour Benches. On the question whether there should be more than one day for debate, may I remind the hon.

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Gentleman how many times the issue of hunting has been debated in the House? The Bill, which is about to come before us again next week, was debated fully, in detail—in the House, in Committee, on the Floor of the House—and if we look back over the past seven years of Labour Governments, and indeed throughout the 1990s and the last phase of the Conservative Government, we see that this issue came up time and again. Time and again the House expressed its absolutely clear view that there should be an end to cruelty to animals through such a ban, and that view has been thwarted and denied by the House of Lords, which filibustered on the Bill in the last Session.
At issue is how we take this matter forward and how the will of the House of Commons to implement a policy that has been agreed on overwhelmingly by the House of Commons can be exerted. I should have thought that the hon. Gentleman, as shadow Leader of the House of Commons, would be standing up for the rights of the House of Commons in this matter.
May I first deal with the timetable and then deal with the specific points that the hon. Gentleman raised? I am sorry to take so much time to answer this question, but I know that the issue is very much on Members' minds. The intention next Wednesday would be to move the business motion at half-past 12. That could run till any hour—unless a closure motion is moved and you accept a closure motion earlier, Mr. Speaker. The Second Reading debate will run for five hours from half-past 12, so a vote would be expected at around half-past 5. Then the debate on the motion on the suggested amendments that the Government will be tabling early next week, to postpone commencement of the legislation in respect of hunting, will run for three hours. I accept that if other amendments to the Government's motion are tabled and are in order, they could be taken at that time too, so we would expect votes on that motion at around 8.45—certainly before 9 o'clock. Then debate on Third Reading can run for half an hour following a Division, and it would then be possible to send the Bill through to the House of Lords, accompanied by a message hopefully suggesting the amendments, and the Bill would then get its First Reading in the Lords probably next Thursday. That is the procedure that we have suggested.
There are three common-sense reasons for a delay in the commencement of the legislation, which I should have thought everybody would understand.
First, all of us are concerned with animal welfare, and we should all wish to do all that we can to provide time for the re-homing of dogs used in hunts or their humane dispersal if that is required. The Royal Society for the Prevention of Cruelty to Animals has offered—[Interruption.] The hon. Member for North-East Hertfordshire (Mr. Heald) asked me these questions; I am giving him the answers. The RSPCA has offered to help, based on its experience of re-homing greyhounds, and we hope that hunts will be able to work with it to achieve that.
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Secondly—[Interruption]
Mr. Speaker: Order. Let the Leader of the House reply.
Mr. Hain: The RSPCA is the expert authority on this matter. [HON. MEMBERS: "No, it is not."] Oh, I see. [Interruption.]
Mr. Speaker: Order. Let the Leader of the House reply.
Mr. Hain: Conservative Members are arrogating expertise over that of the RSPCA.
Secondly—I should have thought that the House would want to understand this reason and support it—the delay in the commencement will give those involved in hunting time to cease the activities that are to be banned and to refocus any business activities on alternatives, such as drag hunting, or finding alternative employment. For example, the horse industry in the country is buoyant, with increasing activity in a variety of leisure and sporting activities.
Thirdly—this is my final point—the Government condemn the threats of illegal action by some supporters of hunting. We believe that most of those involved in hunting are law-abiding people who are prepared to respect the will of Parliament. Extra time for implementation will make it even clearer that illegal actions and threats of intimidation are totally unjustified. Of course, in the meantime, there will be a general election, and the supporters of hunting are free to vote for Conservative candidates, if that is what they want, and the opponents of hunting are free to vote for Labour candidates to ensure that the commencement date goes ahead as decided. So a general election will finally decide this matter, and the will of Parliament will be upheld.
Mr. Paul Tyler: May I turn to an issue that is of real and urgent significance to the countryside and rural communities, in contrast to hunting? May I ask the Leader of the House whether we can have an early statement—preferably next week, but if not, when we return in October—on the Bellwin formula for providing funds to areas devastated by flooding and other natural disasters? I have in mind, of course, particularly the floods that hit Boscastle and the immediate area in north Cornwall just a few weeks ago, but there is a general national issue, which I think that the Leader of the House will agree is of importance and urgent significance to other areas that might be similarly affected at any time.
I pay tribute to the Deputy Prime Minister and his Department for their prompt and very positive response to the calamity that hit us in Cornwall, but there are issues that affect other areas. For example, York, some three and half years after the flooding, still cannot be absolutely certain how the Bellwin formula will operate in its case. As the Leader of the House will know, the Bellwin formula is the way in which central Government assist local government in such circumstances, but there is real difficulty with its complexity, with the very long-winded, slow processing of its bureaucracy and, indeed, with its exclusions. We need an urgent statement to clarify those matters.

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I shall give a couple of quick examples. Local authorities are reasonably clear about how eligible they are, but the Environment Agency is not at all clear about how it can satisfy the requirements of the Bellwin formula. Business support is unclear, particularly in case of loss of income. Car parks have been swept away in Cornwall, and people are finding it extremely difficult to restore their businesses. That is not covered by the Bellwin formula. In particular, the general issue of capital expenditure is extremely important.
We need such a statement. The Cornish example is just one of many: it could happen to any constituency at any time, and anyone could be affected similarly. The Bellwin formula needs to be updated; it needs to be very clear; and people's confidence in that system needs to be restored. I hope that we can have such a statement.
Mr. Hain: I will certainly carefully consider the hon. Gentleman's request, and the Secretary of State for Environment, Food and Rural Affairs and the Deputy Prime Minister will want to study very carefully what he has said. I acknowledge the tremendous amount of work that he has done on flood protection measures, especially in Cornwall. I understand that he recently opened the flood prevention project in Bude. I also acknowledge the terrible suffering and hardship that his constituents have suffered in Boscastle. We all watched those pictures on television with absolute horror. As he said, although there were special circumstances in which he is well versed, with climate change, such flooding could happen elsewhere in the country. That is why his point is very pertinent.
I was grateful that the hon. Gentleman paid tribute to the Deputy Prime Minister—he generously did so in the media, which was appreciated—and his Department, which acted speedily on the matter. He will be pleased that York Members have met the Deputy Prime Minister regarding the situation there, so his concerns are being addressed. Government spending on flood defence has increased significantly over recent years, as the hon. Gentleman knows. Total annual expenditure is expected to be £478 million in 2004—05 and at least £564 million in the following year, so we recognise that the issue is serious.
Mr. Dennis Skinner: Is the Leader of the House aware that many Labour Members welcome the fact that we will deal with hunting next week, albeit some of us are not too happy about the two-year delay? There might be a special delight in seeing Tory MPs encouraging lawbreakers in mining communities and elsewhere in the middle of a general election campaign, so that is another side of the argument just in case he wants to change his mind. We have debated this thing ad nauseam and as many as 400 MPs have voted for it time and time again. The third way was tried, but it did not get anywhere. We have seen a massive majority again, and that shows the democratic will. We should take no notice of the House of Lords at the other end, but get on with dealing with the matter because at the end of the day we made a promise and now we must keep it.
Mr. Hain: I agree with my hon. Friend that we made a promise and now we are indeed keeping it. The will of the House can prevail through the Parliament Acts, if necessary, although I hope that the House of Lords will
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act reasonably. On the delay to the commencement date, the sport is inhumane, but it is important for us to deal with it in a humane way. The decision to delay commencement will allow those businesses involved to adjust and the re-homing and dispersal of dogs to be done sensibly. I should have thought that everyone would see that as a common-sense approach. It shows that the Government are acting in a reasonable fashion to uphold the will of the House of Commons. It is the outright opponents, including many Conservative Members, who are the unreasonable extremists on the matter, to the extent that they seem willing to countenance lawbreaking.
Sir Patrick Cormack: Is the Leader of the House aware that he has demonstrated today his ignorance of rural affairs and intolerance of the legitimate activities of minorities? Will he tell the House when the Parliament Act was last invoked in respect of a Bill that had not completed its passage through the House of Lords in the previous year?
Mr. Hain: I have a great deal of respect for the hon. Gentleman and his role as a senior parliamentarian, but I cannot accept that I have displayed ignorance of rural affairs. All the opinion polls show that there is majority support in countryside areas for such a ban, as there is throughout the country. We would hope to avoid using the Parliament Acts by the House of Lords taking its responsibilities seriously as a revising and improving Chamber, rather than a vetoing Chamber, which is what it was during the past Session, thus bringing us into this predicament. We are acting to fulfil a manifesto commitment and the will of the House of Commons, which is why we are on a track that could end in the Parliament Acts being used, as they have been used before.
David Taylor: There will be some weeping and gnashing of teeth on these Benches and great joy in other areas, not least the City of London, at the decision of the right hon. Member for Darlington (Mr. Milburn) to spend more time with his Government. Does the Leader of the House plan to insert into the parliamentary timetable an opportunity for the Chancellor of the Duchy of Lancaster—not unlike that of the Chancellor of the rest of the country—to describe and explain his policies and activities, not least his touching belief that great amounts of private money and influence are necessary to drive up standards in public services?
Mr. Hain: I am grateful for that constructive question, but not sure that I can help my hon. Friend.
Mr. Edward Garnier: As someone who has served on every Standing Committee to consider hunting Bills since 1992—when I was first elected—I do not think that I am going to persuade the Leader of the House to change his mind about the procedures that he wishes to adopt next week. May I follow the hon. Member for North-West Leicestershire (David Taylor) by asking a question about the new Chancellor of the Duchy of Lancaster? It is apparent that he will be performing a Labour party function, so who will be paying his salary?
Mr. Hain: The position is a Crown appointment, and my right hon. Friend has been given important

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responsibilities in co-ordinating the strategy unit and the No. 10 policy unit. That is important to make sure that the Government can meet future challenges facing the country, whether competitive threats from the likes of China, issues arising from climate change, or the problem of antisocial behaviour. My right hon. Friend will be pivotal to those operations, and will work on behalf of the Government.
Julie Morgan: I welcome my right hon. Friend's statement about hunting, but I, too, regret the two-year delay. However, my question is about the Children Bill. I am pleased that that important Bill is coming back to the House on Monday, but will my right hon. Friend do his best to ensure that there is a free vote during its passage on any proposal to change the law on the corporal punishment of children, which is a matter of conscience? If there is a proposal to change it, we should be allowed a free vote.
Mr. Hain: I will certainly look at my hon. Friend's request. I acknowledge her expertise and her admirable persistence in making sure that children's rights are constantly defended and, where they are not, exposing that. I therefore take particular note of what she said.
Briefly, on her reference to the commencement delay, I am sure that Labour Members and others will understand the practical reasons for that delay, which is needed to deal with the re-homing and dispersal of the hounds, as well as the business consequences for people involved in the industry. It is also needed to give people time to adjust, so it is a reasonable position for the Government to adopt, and I should have thought that on reflection she would want to support it.
Mr. Adrian Sanders: On 2 September, the European Commission responded to a submission from the Department for Environment, Food and Rural Affairs to close the sea bass fishery this winter to reduce the by-catch of dolphins and other cetaceans. DEFRA claims that the EU Commission said that the evidence was not sufficient. There is not much time before the winter sea bass fishery begins, so there is an urgent need to debate what the lack of evidence was and what other mechanisms exist for achieving a closure of that sea fishery, and to confirm whether the UK Government will close the fishery for the part of the waters over which it still has rights.
Mr. Hain: I acknowledge the hon. Gentleman's evident expertise, which is far superior to mine. He has raised an important issue, and the Secretary of State for Environment, Food and Rural Affairs will wish to take close note of what he said and respond accordingly.
David Winnick: I warmly welcome my right hon. Friend's statement on hunting, but is he aware that if there is any criticism by most people in the country it is simply about why we have taken so long to do this. Is not a constitutional point involved, as the decisions of the House of Commons, certainly on a free vote, cannot be treated with contempt
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time and again by the unelected Chamber? If the Tories are in such fury about such an important issue we can conclude that we are doing right at long last.
Mr. Hain: I very much agree with my hon. Friend, and am pleased that his constant harrying of me at the Dispatch Box has properly produced the result that he wanted.
Mr. Richard Shepherd: The Under-Secretary of State for Trade and Industry, the hon. Member for Edinburgh, South (Nigel Griffiths), told the House on 11 February that there would be a debate in Parliament on any final proposal to remove from the public domain information about claims registered in employment tribunals. The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004, which were laid before the House on 20 July, remove all such information from the public record. As they come into force on 1 October, when will the right hon. Gentleman honour the Government's undertaking to give the House time to debate them? There is one week to go, but an announcement has not been made about such a debate.
Mr. Hain: I apologise to the hon. Gentleman for being unsighted on this matter. However, I shall certainly make sure that it is followed up speedily, and that he receives a response as quickly as possible, as he has raised an important issue.
Mr. Tam Dalyell: Has the Leader of the House reflected on early-day motion 1627, in the name of my hon. Friend the Member for Islington, North (Jeremy Corbyn)?
[That this House expresses grave concern at the decision of the Iraqi Interim Government to ban Al Jazeera from reporting in Iraq; and calls upon the Foreign Secretary to express this concern.]
What would our reaction be if the "Today" programme, the "World at One" and "The World Tonight" were all closed down by an occupying power?
Mr. Hain: It is very tempting to give an answer to that question, but on the serious issue of al-Jazeera, I believe in free media and their operations. Iraq and the Interim Government are in a difficult position, as they face constant terrorist attacks. I understand that al-Jazeera—I have been interviewed on the channel a number of times, and was happy to appear, as it was fair and straight coverage—broadcast proceedings from the Republican convention, apparently including extracts from President Bush's speech, so it seems to have a liberal attitude on these things.
Mr. Andrew Mackay: Returning to the new Chancellor of the Duchy of Lancaster, surely we should have a debate on his role in the House? A precedent has been set by a number of people who have held that position and done mostly party work that was paid for by the party, not the taxpayer. I am afraid that the answer given by the Leader of the House to my hon. and learned Friend the Member for Harborough (Mr. Garnier) did not offset our concerns that most of the work that the right hon. Member for Darlington (Mr.

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Milburn) will do is entirely party work for the forthcoming election, so should not be paid for by taxpayers.
Mr. Hain: If someone undertakes party functions—this applies to myself as a Cabinet Minister as well as any other Minister, as the right hon. Gentleman will know from his days in government—the normal ministerial support does not apply. My right hon. Friend the Chancellor of the Duchy of Lancaster, however, is undertaking important forward co-ordinating policy work for the Government, with responsibility for the strategy unit which, as I can attest from my experience of working with it, consists of a group of very bright people who are looking ahead to the challenges facing the country, as well as the Downing street policy unit. That is an extremely important task.
Mr. Mike Wood: During the recess, yet another authoritative report was produced pointing to the dangers of the use of CS gas spray, which is currently used by all but three police forces in the country. It seems that the health not just of people who are sprayed but of police officers using the equipment is under considerable threat, so could we have a statement?
Mr. Hain: The Home Secretary will obviously look closely at what my hon. Friend said. However, he will be aware that CS spray has been available to the police as self-defence equipment since 1996. The physical effects of the spray are unpleasant, but it has been used in circumstances where there might otherwise have been serious injury to the police or the public. Work is continuing to identify suitable alternative solvents.
Adam Price: When the Leader of the House chaired the Young Liberals he supported a campaign to impeach the then Lord Advocate of Scotland. Does he still believe that impeachment is a sanction available to the House when seeking to hold Ministers to account, or will he oppose any moves to introduce a motion for debate under that procedure?
Mr. Hain: The hon. Gentleman is an admirable researcher who digs up all sorts of facts, some of which are uncomfortable for the Government. I cannot for the life of me recall that campaign, which was over 30 years ago. However, he has dug it up from a file somewhere, so I acknowledge his research expertise.
The House of Commons has already voted overwhelmingly to back the Government's position on Iraq. That was the House's clear decision. For the first time, the Government brought to the House a motion on a decision to go to war, and gave it an opportunity to authorise it or not. That decision was made, but the hon. Gentleman is seeking to circumvent it.
I am advised by the Clerk of the House that impeachment effectively died with the advent of full responsible parliamentary government, perhaps to be dated from the second Reform Act of 1867, and a motion of no confidence would be the appropriate modern equivalent. The Joint Committee on Parliamentary Privilege in 1999 concluded that
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"The circumstances in which impeachment has taken place are now so remote from the present that the procedure may be considered obsolete."
Perhaps the hon. Gentleman should research the matter more carefully.
Mr. Gwyn Prosser: The investigation into the way that the NHS in east Kent handled allegations against the disgraced general practitioner, Dr. Ayling, was published this morning. In the absence of any oral statement to the House about the failings that were found in the system, and given the failure of the Department to hold any press launch on that document, my constituents and others who were victims of Dr. Ayling are holding their own press conference today in east Kent. Does my right hon. Friend think that a matter of such importance should be aired on the Floor of the House? Will he look for time to hold a debate on the subject?
Mr. Hain: Having visited my hon. Friend's constituency with him, I know how much his constituents admire him and how hard he works on their behalf. This is another example. He will have the opportunity at questions to the Secretary of State for Health on Tuesday to raise the matter. It being an important local issue, no doubt he will take the opportunity to catch Mr. Speaker's eye.
Sir Nicholas Winterton: I must express sadness to the Leader of the House that prejudice and the denial of the rights of rural communities are being given such priority by the Government in parliamentary time. Will he give some priority to the two reports of the Procedure Committee which were published more than 10 months ago, and to which the Government, I am pleased to say, have replied? They are of considerable importance to the House because they deal with procedures, the role of the Speaker, private Members' Bills, and Sessional Orders and resolutions, which have a direct connection to the security of the Palace. Will the right hon. Gentleman please indicate that before the end of this Session of Parliament, those two reports will be debated on the Floor of the House?
Mr. Hain: As soon as I can, I intend to announce dates for the debate on that issue, on which the hon. Gentleman has quite properly pressed me repeatedly, as it has been delayed for some time. It is intended to have a debate before this Session of Parliament ends. I can give him that assurance.
I always admire the way in which the hon. Gentleman upholds the sovereignty of the House. What I am doing in the role of the Leader of the House by bringing back the Hunting Bill next Wednesday is precisely that. To do otherwise would be a denial of the sovereignty of the House and the decision of the House. It is not a question of giving the matter priority over other issues that are more important in a daily sense. It is a statement that the will of the House ought to be respected and that, when the House votes overwhelmingly and repeatedly on a matter, it should have an opportunity to resolve the matter. That is what we intend to do now.
Mr. Harry Barnes: The main reason for the House returning for two weeks

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in September is so that constituents' concerns during the summer can be raised with the Government, as the spokesperson for the Lib Dems did by raising the matter of the floods in Cornwall. We need such an opportunity, but should we not make these two weeks more user-friendly? At least the business of the House will pick up next week with some dramatic discussions, but the initial week has been dull, with too many Adjournment and Opposition day debates, rather than debates that get to the meat of issues. Then there is the problem that we are working in a building site, so the power is out in certain MPs' rooms, I cannot get access to my computer and I cannot get into the Library to get access to the computer there. How on earth can I be a moderniser if I cannot get to modern technology?
Mr. Hain: My hon. Friend makes a powerful point. There will be a vote early next year on the sitting times of the House and September sittings will be for the decision of the House. There are arguments to and fro on that. My hon. Friend properly pointed to the opportunity that Members now have to raise issues in September as a result of the sittings. I note that the ritual demands for the recall of Parliament that always happen in the summer have not occurred this time, for the obvious reason that we are meeting. On the work that we are undertaking, there are three Second Readings next week. That is serious business. There is serious business this week as well, including consideration on proceedings of Bills, and this afternoon we have a European Union policy debate, as we promised. These are all important matters and our time is being used effectively.
Gregory Barker: Will the Leader of the House admit that, far from a ban on hunting being the overwhelming view of the House or of this Parliament, when the vote was last taken in the Chamber the majority of the 659 Members of Parliament were either absent or voted against? There was no absolute majority of Members for a ban. Does he accept that only a minority voted for a ban, and that there is substantial opposition in the second Chamber, so to speak of it being the will of Parliament is nonsense?
Mr. Hain: This is a new constitutional convention—that when there is a clear majority in Parliament, there must be a threshold or quorum in order to satisfy the hon. Gentleman. The truth is that, if the House of Commons votes clearly for a particular policy, as it has repeatedly done—overwhelmingly, as happened earlier this year—the will of the House of Commons ought to be respected. That is an elementary democratic principle. Or are the Conservatives inventing new rules for Parliament on the hoof to satisfy their own prejudices on the issue?
Huw Irranca-Davies: Like me, my right hon. Friend will be aware of the importance of the miners' compensation scheme to constituencies such as ours. In Ogmore, more than £40 million has been paid out in vibration white finger and chest disease payments. Although I appreciate that time for a debate is tight, will
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he find time for a statement at least on the effect of the abolition of the Department of Trade and Industry on industrial injuries schemes and miners' compensation?
Mr. Hain: I was hoping that the Liberals might table an Opposition motion on the subject to have their policy tested. It is an extraordinary policy, as the Prime Minister pointed out yesterday, and would lead to the abolition of the science budget and other things, including the miners' compensation fund, which has brought hundreds of millions of pounds—£2 billion across the country—to my hon. Friend's constituency, to sick miners in my constituency, that of my hon. Friend the Member for Bolsover (Mr. Skinner) and those of scores of hon. Members right across the nation. If the DTI were abolished, that fund would become insolvent, along with many other functions including the protection of women, the Low Pay Commission, promoting exports and inward investment, and the Small Business Service. All those vital supports for our economy and for the pursuit of justice would disappear as a result of a cack-handed Liberal Democrat policy, of which we see so many.
Alistair Burt: May I remind the Leader of the House that it is now two years, seven months and 26 days since the fire at Yarl's Wood detention centre in my constituency, which almost cost scores of lives and cost more than £100 million? It had profound implications for the conduct of the Home Office and the immigration service and for the Group 4 custody protection team that was in charge of Yarl's Wood at the time, yet we still have no report to the House of the inquiry that was promised by the Home Secretary the day after the incident. Can the Leader of the House explain why the Government are not pursuing the prisons ombudsman Stephen Shaw, to get the report out to the House as quickly as possible, and will he arrange for the Home Secretary to explain to the House why the Government are not seeking to bring the results of the inquiry here as soon as possible? The delay seems like an insult to all those who were concerned by the implications of the fire.
Mr. Hain: The hon. Gentleman has a well-deserved reputation in the House for raising issues seriously, and not in a flippant or causal fashion. The fact that he has chosen to do that on this issue underlines the seriousness of the point that he raises on behalf of his constituents about the Yarl's Wood report and when it will be published. I will makes sure that the Home Secretary is aware of the matter that so that he may have a proper response.
Ian Lucas: At a time when British manufacturing is, thankfully, performing increasingly strongly, does my right hon. Friend know about this particular area of concern for an important industry for the future? Renewable energy manufacturers are waiting for a decision by the DTI on the future grant funding for products such as solar cells because the present regime ends next spring. Will he have a word with his ministerial colleagues in the DTI about making an announcement on that long-term investment programme as soon as possible?
Mr. Hain: I will speak to my right hon. Friend the Secretary of State for Trade and Industry. I share a

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passion for renewable energy with my hon. Friend the Member for Wrexham (Ian Lucas), who was kind enough to invite me to the opening of Sharp's wonderful new plant in Wrexham, which builds photovoltaic panels. Unfortunately, most of those panels are exported to Germany and elsewhere in Europe, but I would like to see them included in new build and installed on roofs right across the country. His point about grant funding for solar cells is important, and I am sure that the Secretary of State will want to respond to it positively.
Mr. Owen Paterson: Last Wednesday, the Prime Minister said that every policy decision must pass this key test:
"Does it, in practical terms, advance and improve the lives of Britain's hardworking families in the future?"
A hunting ban in Shropshire will cause people to lose their jobs, damage businesses, do nothing for animal welfare and place intolerable pressure on an already stretched police force. Will the Leader of the House stand up and give us three areas of daily activity in which, in practical terms, a hunting ban will advance and improve the lives of Britain's hard-working families?
Mr. Speaker: Order. The Leader of the House should not stand up and do that because he has announced that a debate will occur on Wednesday, when the hon. Member for North Shropshire (Mr. Paterson) should put such questions to the Minister responsible.
Mrs. Anne Campbell: My right hon. Friend the Leader of the House knows that research is an important activity in my constituency. Has he assessed the effect of the abolition of the DTI on business, universities and my constituency?
Mr. Speaker: Order. Once again, that question is not about next week's business.
Richard Younger-Ross: Can the Leader of the House find time for a statement on the so-called urban regeneration of post offices, which seems to be the urban closure programme? Two post offices in Teignbridge and nine post offices in the adjoining area of Torbay are under threat, and the consultation closed on 8 September. Rural post offices can claim money for social need, but urban post offices cannot. I chaired a public meeting in Decoy about the closure of the post office, the clear social need for which was demonstrated by the elderly people, mothers, teachers and local businesses who attended. Can we have an explanation why no social need programme exists for urban post offices?
Mr. Hain: Given the nature of the hon. Gentleman's constituency, he understands the importance of small post offices in rural areas and villages, which is why they take priority for support. The Government have made several hundred million pounds available to support local post offices, despite the fact that people's changing lifestyles and shopping habits mean that they are depriving local post offices of their traditional custom. The Government and I want as many local post offices
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as possible to survive and the Minister with responsibility for the matter will take note of the hon. Gentleman's point.
Mr. Gordon Prentice: My right hon. Friend mentioned the Royal Society for the Prevention of Cruelty to Animals, which is against deferring the implementation of the Hunting Bill, as are all other animal welfare organisations. We will have a free vote on the Hunting Bill, but will we have a free vote on the accompanying motion that deals with the commencement of the Act? Many people believe, as I do, that we cannot afford to hang around for two years before implementing the Act.
Mr. Hain: My hon. Friend and I take the same position on the matter and always have done. We want to see the Bill go into law and the banning of that inhumane sport. I hope that he supports the Government's position of seeking to allow a reasonable interval between Royal Assent and commencement, so those involved in hunting can adjust their lifestyles and the dogs can be re-homed and dispersed humanely. It would be wrong if an inhumane sport were followed by the hounds involved being dealt with inhumanely, and I hope that my hon. Friend changes his mind and supports the Government.
Several hon. Members rose—
Mr. Speaker: Order.

Points of Order
1.15 pm
David Davis: On a point of order, Mr. Speaker. I want to raise the matter of the writ laid today for the Hartlepool by-election. From the issuing of the writ until 30 September, the political broadcast coverage is governed by a series of Acts of Parliament, including the Representation of the People Acts, a number of broadcast codes and the responsibilities laid on the BBC and Ofcom to ensure the impartiality of broadcast coverage. Between now and 30 September, two of the three major political parties will hold their party conferences, normal coverage of which will make it impossible for the BBC and Ofcom to meet their responsibilities for fair and impartial coverage. Have you received any indication that the Secretary of State for Culture, Media and Sport or the Home Secretary will come to the House to explain how the broadcasters can meet their legal and moral responsibilities?
Mr. Speaker: That is a matter of law, and it is not for me to rule on it from the Chair.
Mr. James Gray: On a point of order, Mr. Speaker. I raised a point of order in the House last night on the two-year delay in implementation the Hunting Bill and was informed that a written answer outlining it would be available today in

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Hansard. However, I have checked Hansard and the information is not available, presumably because of a printing glitch.
The complex procedures that we will use next Wednesday are available in the Table Office this afternoon, but they will not be available to hon. Members until the next Order Paper is printed on Monday, which means that hon. Members who seek to take part in next Wednesday's debate will not be aware of the complex nature of the procedures until Monday. On this occasion, can hon. Members be given a copy of the procedural order, which is complex and abstruse?
Mr. Speaker: Any hon. Member can visit the Table Office—I used to enjoy going there myself when I was a Back Bencher. On his other point, the hon. Gentleman should be patient because the written answer will be printed in Hansard in due course in the next edition. Hansard is available in the Vote Office too, so it is good news all round for the hon. Gentleman.

BILL PRESENTED
  HUNTING BILL
  Mr. Alun Michael, supported by the Prime Minister, Mr. Secretary Prescott, Mr. Secretary Blunkett, Secretary Margaret Beckett, and Peter Hain, presented a Bill to make provision about hunting wild mammals with dogs; to prohibit hare coursing; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Monday 13 September, and to be printed. Explanatory notes to be printed.
DEREGULATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 18(1) (a) (Consideration of draft deregulation orders),
DEREGULATION

  LOCAL GOVERNMENT (WALES)
  That the draft Regulatory Reform (Local Commissioner for Wales) Order 2004, which was laid before the House on 24th June be approved.—[Vernon Coaker.]
  Question agreed to.

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

  CRIMINAL LAW
  That the draft Penalties for Disorderly Behaviour (Amendment of Minimum Age) Order 2004, which was laid before this House on 14th July, be approved.—[Vernon Coaker.]
  Question agreed to.

European Constitution
Motion made, and Question proposed, That this House do now adjourn.—[Vernon Coaker.]
1.19 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): The subject of this afternoon's Adjournment debate is the draft constitutional treaty. Before I come to that, I should like to place on record, on behalf of the House as well as the Government, our abhorrence at the latest terrorist attack, which took place this morning in Jakarta in Indonesia, where a car bomb went off outside the building housing the Australian embassy and the Greek embassy, leading to at least eight people being killed and a large number of casualties, including diplomatic staff from Australia and Greece. Of course, we in this House remember how terrible it was when a car bomb went off inside the compound of the consulate general in Istanbul on 20 November last year. Whenever they go off, they are terrible.
I am sure that I speak for the whole House in expressing our outrage at this atrocity and in sending our condolences to the families of those who were killed and our sympathy to those who are injured. That message should go to the Government of Australia.
With this debate and to assist the House, I have today published Cmd. 6309, a White Paper on the treaty establishing a constitution for Europe.
Today is the first opportunity that the House has had for a full debate on the treaty since it was agreed at a political level at the European Council summit on 17 and 18 June. The origins of the constitution lie in the European Union's expansion with 10 new members, which was completed on 1 May. EU enlargement was an historic success and the fulfilment of a goal pursued by successive British Governments. It has created a single market of 450 million consumers, helped to entrench democracy and stability across the continent and given us new partners in the fight against drugs, illegal immigration and crime. However, it has been clear for a long time that the EU had to reform its institutions and procedures, for those were originally designed for just six members, but now have to work and to become effective with 25. In our judgment, the European constitution is a necessary counterpart to the enlargement of the European Union.
I remind my hon. Friends and Conservative Members that that is also the view of the chairman of the new European People's party group in the European Parliament, to which the Conservative party has just signed up. One of its vice-chairmen is the MEP and former Member of this House, Timothy Kirkhope. As is so often the case, there is an internal argument among the Conservatives about whether they have really joined that body, because they have not agreed to its terms. Mr. Roger Helmer, a Conservative MEP who is four-square at the centre of opinion so far as the Conservative party is concerned, has said, on whether they have to accept the terms for joining the EPP, that "HGP"—Hans-Gert Poettering, the chairman of the EPP—is right and Conservative central office is wrong.
In June last year, the Convention on the Future of Europe produced proposals for discussion by the EU's member states. Four Members of this House and of the

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other place were members of the Convention—the right hon. Member for Wells (Mr. Heathcoat-Amory), my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart), and two of their noble lordships.
Last September, I published a White Paper analysing the Convention's proposals and setting out the Government's objectives and negotiating position for the intergovernmental conference that followed. Throughout the IGC, just as during the discussions in the Convention, the Government benefited from an unprecedented level of parliamentary and public debate and discussion. Altogether, we have had 24 debates and statements in both Houses and in Westminster Hall since the beginning of the IGC last October, and Ministers have attended 15 Committee sittings in both Houses. Britain's negotiating position was greatly strengthened by that parliamentary discussion and involvement.
The EU's Heads of Government reached agreement on the new treaty at the European Council on 17 and 18 June. The provisional text was put before the House as Cmd. 6289 on 19 July. The final texts in all the EU's 21 official languages are being prepared for the signature of the treaty in Rome on 29 October.
To assist this debate and wider discussion in the country I published earlier today a White Paper that sets out the main elements of the new treaty and analyses how the Government delivered on the negotiating objectives that we outlined here in September last year.
As today's White Paper makes clear, we achieved an excellent result. The new treaty incorporates all those proposals from the Convention that we welcomed, such as a clear definition of the EU's competences, but modifies the Convention's draft text in 80 areas. Thirty-nine of those 80 areas involved amendments that were advocated by the United Kingdom—a measure of the impact that we made on the negotiations. On 38 more areas, we were neutral on amendments proposed by others that were of no substantive concern to us. On the remaining three of the 80 areas amended, we secured changes at the European Council that made the proposed amendments acceptable to us. The details of all those amendments are set out in an annexe to the White Paper.
We now have a new treaty that achieves the objectives that we set out from the very beginning of the process. It gives us a European Union that is more coherent and logical in structure; that is more effective and efficient; that is a union of nations, not a federal superstate; that is more accountable and more flexible; and in which we have the right results on policy areas of particular importance to the UK, including in respect of the charter of fundamental rights and the veto on areas such as foreign policy, defence, tax, social security, criminal law and treaty revision.
Let me take those points in turn. First, the new treaty will clarify the EU's organisation, which has grown in complexity over time. It brings together successive EU treaties into a single, coherent text. The so-called three pillars of the EU, which had no basis within the treaties, will be replaced with a single framework that makes rational provision for the separate arrangements in respect of, for example, common foreign and security policy. The treaty reduces the number of legal instruments that the EU can use. It was rightly a
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criticism of the existing overlay of treaties that we ended up with 10 different legislative methods—now, they are reduced to three. Next, the treaty will make the process of decision making more effective and efficient by adapting procedures originally designed for six members so that they work effectively with 25 or more.
One of the many charges made by the Conservatives against the new constitution and our approach to it is that—shock, horror—there is going to be a president of the European Council. I hope that the right hon. and learned Member for Devizes (Mr. Ancram) has by now realised that there has been a president of the European Council ever since the European Union and its predecessors were formed. We have sought a full-time president of the European Council in order to ensure that the opinions and decisions of member states are better effected through the institutions of the EU than they have been up until now. At 25, each member state can hold the presidency only every 12 and a half years. That is a totally different situation from when the EU was formed—then, with six countries, the rotation took only three years. The Conservatives have rightly complained that as the EU has grown there has been a shift, in terms of the implementation of decisions, from the presidency and the European Council to the Commission. We are pulling that influence back. For the life of me, I cannot understand why the Conservatives object to that, unless, as seems to be their position, it is because they want to keep the old system with its increasingly bureaucratic approach.
Mrs. Angela Browning: The Foreign Secretary mentioned the charter of fundamental rights. Will that be legally binding?
Mr. Straw: The legal position of the charter of fundamental rights is set out very clearly in articles 52 and 53 and in the explanations. In certain circumstances it will be legally binding, but in most circumstances it is simply a restatement of what is in existing EU law. As a result of our negotiations, the extent to which it can be legally binding in practice is very limited indeed.
The change that I have outlined in respect of the presidency illustrates a third point: this is a treaty for an effective European Union of freely co-operating nations, with national Governments firmly in control. We have heard all sorts of rants from Conservative Members, including those who have been accepted again on to the Front Bench, not only about the consequences of the treaty that we are considering but about those of previous treaties.
The right hon. Member for Wokingham (Mr. Redwood), for whom I have great personal affection, but who is slightly off the wall even by Conservative party standards on EU matters, has been taken back into the shadow Cabinet. I therefore presume that the leader of the Conservative party and the deputy leader, who speaks on foreign policy, find the right hon. Gentleman's views on all subjects comfortable. Seven years ago, in May 1997, he said in The Times:
"If we sign the Amsterdam treaty, we will abolish our country."
We signed the Amsterdam treaty, which has been implemented, yet there has been no sign of the nation of the United Kingdom being abolished. The right hon. Gentleman said in April 2000:

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"The proposed Nice treaty would do what Guy Fawkes failed to do—blow up parliamentary government in Britain."
We signed the Nice treaty, which was ratified, and it has done nothing of the kind.
The new constitution clarifies the nature of the EU and states explicitly that it is an organisation that exercises only those powers that its member states have chosen to confer on it. It is an end to the nonsense about drifting towards a federal superstate. For the first time, it states in terms that the basis of the EU's powers is conferral by member states on the EU. The EU can act only on those matters for which powers are conferred. In addition, there are arrangements for shared powers to be transferred back.
Mr. Michael Ancram: The Foreign Secretary spoke about our views on the presidency. He knows that we were against having a president for five years because we believed that that was a centralising feature of the constitution at a time when we should be trying to restore confidence to the citizens of Europe in their institutions by moving power in the other direction. We proposed team presidencies, which the Foreign Secretary mocked and described as unworkable. He said that they could not answer the needs of Europe. Why, then, does the White Paper highlight with great praise, and the constitution provide for, team presidencies of three nations, just as we suggested, in all the Councils other than the Foreign Council? We are grateful to the right hon. Gentleman for taking up at least that suggestion.
Mr. Straw: Although it would be wholly inaccurate to do so, the right hon. and learned Gentleman is welcome, if he wishes, to claim authorship of the idea of team presidencies. We have proposed it on many occasions. However, he fails to grasp that, although there is a need for team presidencies because of the difficulty of running the existing sixth-monthly presidencies—in a sense, he accepts our point on that—in addition, there is a profound need for the appointment by the European Council of a single individual to represent nation states in Europe for five years, to ensure that they, rather than the permanent Administration in Brussels or the Commission, direct the EU's agenda. I remain astonished that Conservative Members resist that idea, because it ensures not centralisation, as the right hon. and learned Gentleman suggests, but that the 25 nation states exercise power, as is proper.
Mr. Tam Dalyell: Years ago, when I was a member of the indirectly elected European Parliament, a talented Frenchman called Emile Noel was its secretary. He said that it was crucial to overcome the problem of having to balance out nationalities rather than select talent. If the President's office is set up, will he be able to choose on the basis of talent rather than nationality the key people serving the presidency?
Mr. Straw: Yes, I believe so. I am pleased to report to my hon. Friend that one of the other changes that the constitution, once approved, would effect is that each individual state will no longer have its national representative in the Commission. The Commission will
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be two thirds the size of the total number of states. That means that any member state will have two out of three college periods of five years with a Commissioner. As my hon. Friend says, it is important to get away from having people there simply because they represent some sort of national quota.
Mrs. Gwyneth Dunwoody: Will the Home Secretary—sorry, Foreign Secretary—give way?
Mr. Straw: I have changed jobs but I shall give way.
Mrs. Dunwoody: I beg his pardon. Are we to assume that the rule will apply throughout the Commission and that the existing practice of not only appointing people on a national basis but parcelling out the jobs in suitable levels of seniority will not continue?
Mr. Straw: It will take time before such reforms to existing arrangements are effected. If my hon. Friend wants the winds of reform to blow through Brussels, we are more likely to achieve that through the constitution than the alternative. If we do not get the constitution through, the only alternative for this country is the existing ramshackle arrangement under the current treaties, which overlay treaties of the EU and those of the European Community in a less than satisfactory manner.
The treaty also makes the EU more accountable. It establishes, for the first time, a practical mechanism for involving national Parliaments in EU decision making. To ensure that the EU respects the principle of subsidiarity in practice—in other words, that it acts only where it can add value to national or regional action—national Parliaments will gain the power to send legislative proposals back for review, if one third of them object. It is, of course, for Parliament, not the Government, to decide how it will make use of the new power and I greatly welcome the Modernisation Committee's review of the scrutiny of EU business and the discussion in the scrutiny Committees on how the new provisions can be made to work effectively, in consultation with the devolved Parliaments and Assemblies.
Last night, sadly with little notice, the Conservative party published an alternative to our White Paper. It is entitled "The Truth about the European Constitution". We shall consider some aspects of the truth as Conservative Members perceive it later, but the document includes some proposals under which a future Conservative Government would try to change the EU's constitution. One proposal is not to tie in the yellow card procedure for national Parliaments to a change in voting systems, as we proposed: 55 per cent. of member states and 65 per cent. by population before new regulations or laws can be agreed. Conservatives propose that if only five national Parliaments object to any new or existing European legislation on the grounds of subsidiarity or proportionality, it should be withdrawn or repealed immediately. That is a good example of the Conservative party's incoherence.
Currently, one third of member states—nine—can exercise the yellow card. The Conservatives propose almost to halve that to five. They then decide that,

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instead of providing national Parliaments with a yellow card, thereby forcing the Commission and the Council to think again, they will give five member states, with no population quota, a total veto not only over proposed but over existing legislation.
The Conservative party claims to be in favour of the single market and reform of the common agricultural policy. Yet such an approach, which the right hon. and learned Gentleman has set out and approved, would prevent any further move towards opening up the single market and any further attempts, which we are leading, to implement the Lisbon agenda. He prattles on about the need for reform of the CAP, but his proposal would prevent any possibility of that. The Conservative party proposes that only five member states—Poland, France and two or three other small member states—could block any change. I see that the right hon. Gentleman is now trying to get hold of the document—he is reading it for the first time. I look forward to taking the debate to the country.
At least I have read the document properly—all of it—which is more than can be said of the right hon. and learned Gentleman.
The new treaty will make the European Union more flexible. In some areas, such as the single market, we obviously need common rules applying to all; but in others, such as the euro or the development of a European crisis management capacity, it makes sense to allow member states that want to co-operate more closely to do so. However—and here is the difference between what we want and the free-for-all Europe advocated by Conservative Members—we must also ensure that such co-operation works fairly, under agreed rules that protect every member's interests. The new treaty will give us that.
The enhanced co-operation will require the participation of at least a third of member states, which will need to work towards the EU's objectives in a way that does not undermine the single market. That, too, would be impossible to achieve if the right hon. and learned Gentleman's proposals for a veto to be given to any five member states, regardless of size, were implemented. It will be open to others wishing to join, but in foreign policy and defence such co-operation can begin only if all member states agree. That is one of the many beneficial changes that we have made to the draft constitution.
Mr. David Heathcoat-Amory: The Foreign Secretary mentioned flexibility. One of the "red lines" of which the Government made so much in last year's White Paper was exclusion of the compulsory co-ordination of employment policy. In evidence to the European Scrutiny Committee, the Foreign Secretary described that article as "unacceptable". Why, then, is it unaltered in the final draft, and why does the White Paper that the Foreign Secretary published today make no reference to the red lines? Is it because it is an unfair and incomplete record of what actually happened in the final negotiations?
Mr. Straw: It is an entirely fair record of what happened. What we were able to achieve, which is spelled out in annexe 2 of the White Paper, is a fundamental change in the structure of what was—I
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speak from recollection—article I-11, which originally stated that it was for the Union to co-ordinate economic and employment policies. The new treaty says that it is for member states to do so. If the right hon. Gentleman feels quizzical about this, let me say that the Government as a whole were entirely satisfied with the result as a whole.
Mr. Heathcoat-Amory rose—
Mr. Straw: I have already given way to the right hon. Gentleman.
Mr. Heathcoat-Amory: On a point of information—
Mr. Straw: No.
Mr. Heathcoat-Amory: On a point of order, Mr. Deputy Speaker. Surely it is against the rules of debate to claim the direct contrary to what is in black and white. Article I-14.2 of the constitution clearly states that employment policies shall be co-ordinated by the Union, not by member states. Does it not breach every rule of this place to mislead the House in such a way?
Mr. Deputy Speaker (Sir Michael Lord): Order. I understand what the right hon. Gentleman is saying, but I think that such matters are more for debate than for the Chair.
Mr. Straw: I know what the article says. That part of it must be seen in the context of the rest, which says that member states have the power to co-ordinate. As the right hon. Gentleman is so worried, let me promise him that this will not affect the competences of the European Union, or the balance of powers between it and member states.
The new text delivers on the commitments that we set out in last September's White Paper in respect of certain specific policy areas. We have fulfilled our commitment to maintaining the veto for treaty change, for the system of own resources including the United Kingdom's rebate, and for the areas of vital national interest that we identified in paragraph 66 of that White Paper: tax, social security, defence, and key areas of criminal procedural law.
This time last year the right hon. and learned Member for Devizes was worried about that. He said that it would constitute a key test, deciding whether or not the Conservatives would approve the proposed treaty. The so-called Passerelle clause—I think it was I-24—was completely unacceptable to us. It would have allowed elements of treaty change in part 3, the detailed part, to proceed without the approval of national Parliaments. That has been changed altogether. The treaty also carries over provisions on immigration, asylum and civil justice issues which allow the UK to decide, case by case, whether to opt into individual measures.
Ms Gisela Stuart: The Foreign Secretary mentioned what used to be clause 24–4 and is now contained in article IV-7(a). It refers to what happens if a national Parliament objects. What if,

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in a bicameral Parliament like this, the two Chambers do not agree? There is no mechanism for defining what "Parliament" means in that context.
Mr. Straw: In this case the House of Commons would decide, but I take my hon. Friend's point, which may need to be sorted out. That could be done by means of a detailed declaration by the Council, or EU legislation. I do not foresee any difficulty; all national Parliaments have arrangements for dealing with differences between their two Chambers. Every Parliament has two Chambers. I suspect that there will be no such difficulty as my hon. Friend anticipates, but I shall certainly come back to it if there is.
Sir Menzies Campbell: It would be a simple matter, would it not, to provide in the legislation which is generally expected that in the circumstances referred to by the hon. Lady, the House of Commons should be the determining Parliament.
Mr. Straw: We intend to make such provision. I thought that my hon. Friend was referring to the position across the EU, but if draft legislation applying to this Parliament and this country is unsatisfactory, she and every other Member will have plenty of opportunities to change it.
On common security and defence policy, the constitution fulfils our objectives by ensuring that co-operation is flexible, inclusive and complementary to NATO, and is focused on the development of military capabilities. It keeps unanimity as the rule for launching operations and determining policy, and—again, as a direct result of changes led by us—states that NATO is
"the foundation for collective defence"
of its members.
The treaty includes safeguards to ensure that the charter of fundamental rights creates no new EU powers, alters no existing powers, and applies to member states only when they are implementing EU law. Given that change, we were content to see the charter incorporated in the treaty text. At the back of Cmnd. 6289, Members can find explanations of the full background of the charter provisions. The changes must now be taken into account by the European Court of Justice, as is set out in full.
Mr. Robert Walter: If, as the Foreign Secretary says, the charter applies only to the relationship between the EU and its member states, and if, as the treaty states, the EU will accede to the convention on human rights—and all the member states are party to the convention—why do we need a separate charter of fundamental rights?
Mr. Straw: That was a matter for debate when it was first proposed, five or six years ago, that a charter of rights should be part of the EU constitution. We accepted the principle in the end, although we had reservations at the beginning, because we thought it sensible to set down in black and white a statement about the rights that anyone in Europe should be entitled to enjoy. I have no difficulty with that, especially
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given that most of the statements involved are the most obvious of all. In all cases, if there is a clash between the interpretation of the rather bald statements of rights in the EU charter and the convention on human rights, and the Council of Europe and its jurisprudence, the jurisprudence of the convention will apply.
The hon. Gentleman's question gives me an opportunity to ask a question of the right hon. and learned Member for Devizes. I read "The Truth about the European Constitution" with exceptional care. On page 16, the authors express concern about the new European charter of fundamental rights, saying that some of the key articles have ramifications for business, as shown in the table that follows. The first is equality. Article 23 states—I ask my hon. Friends to listen carefully to these shocking words—
"Equality between men and women must be ensured in all areas, including employment, work and pay."
I read that with incredulity. What is the point that the right hon. and learned Member for Devizes is trying to make? Are the Conservatives in favour of this part of the charter or not?
At the bottom of the Conservative pamphlet, it says that, of course, some of the articles are fine, but we know what the Conservatives are up to: they are trying to raise the concern that the charter will somehow undermine Britain as a nation state. If certain elements of it are acceptable, why does the right hon. and learned Gentleman not say, "We believe in the equality of men and women in terms of employment, work and pay. We think that an exceptionally good idea, and it should be proclaimed across Europe, rather than shrunk away from." Why the devil did he not say that? Indeed, there are many other such elements, including health care, and dignity and the right to life.
Several hon. Members rose—
Mr. Straw: I give way to my hon. Friend the Member for Rhondda (Chris Bryant).
Chris Bryant: I am grateful to the Foreign Secretary. Is there not also the most extraordinary objection on the part of the Conservatives to the prohibition of child labour and the protection of young people at work?
Mr. Straw: This is another example of the Conservatives adopting a position without reading the text. They claim that the charter will somehow undermine the right to strike, but that is complete and utter nonsense. They should know that the right to strike has long been a matter for national Governments under existing European Union acquis, and it is unaffected by the charter of fundamental rights.
Mr. Ancram: Perhaps the right hon. Gentleman should return to wearing spectacles, because he is obviously not reading our pamphlet very carefully. If he does, he will see that we are talking about the way in which this charter, under the constitution, will inevitably influence the European Court of Justice's adjudications on employment law. It will mark a significant transfer of power from elected national politicians to unelected judges, who will sit in the ECJ in

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Luxembourg. We also give examples of the powers that will be subject to that jurisdiction. The right hon. Gentleman knows that that is so, but he is trying to distort matters in order to avoid the fact that the Government have broken their word that this provision would not be legally enforceable.
Mr. Straw: To the extent that the ECJ does take into account the principle of equality between men and women in all areas—including employment, work and pay—I say, "Hurrah!" That seems to me like a very good idea. What is wrong with it? The right hon. and learned Gentleman is entirely wrong, however, to pretend that the charter will extend the European Union's and the ECJ's existing jurisdiction. Article II-52 makes it absolutely clear that the provisions apply only in respect of European Union laws. It states:
"The provisions of this Charter which contain principles may be implemented by legislative and executive acts taken by Institutions and bodies of the Union, and by acts of Member States when they are implementing Union law, in the exercise of their respective powers. They shall be judicially cognisable only in the interpretation of such acts and in ruling on their legality… Full account shall be taken of national laws and practices as specified in this Charter."
Mr. Peter Lilley: Will the Foreign Secretary give way?
Mr. Straw: No, I want to make some progress.
In the new treaty, we have agreed the framework for a reformed, more effective European Union of freely co-operating nations, in which Britain can prosper and increase our influence in the world. The Government have been more open than in any previous treaty negotiation about our objectives and what we cannot accept. By engaging with our partners and shaping the debate in our interests, we have delivered on those commitments.
But there is another important achievement of this treaty: the demolition of the myths put about by the Conservative party. Few issues over recent years have produced so much deliberate misinformation as the EU constitution. We have heard that it would mean giving up control of our armed forces; that border controls would be dismantled; that we would lose our rebate; that fundamental aspects of our criminal law, such as trial by jury and habeas corpus, would be surrendered; that the UK would lose its permanent seat on the UN Security Council; and that Brussels would be able to seize Britain's oil and gas supplies. All of that, as always, is complete and utter nonsense.
Indeed, when the right hon. and learned Member for Devizes responds, perhaps he can explain why, if the EU nations are about to lose their right to sit on the Security Council, Federal Germany is campaigning so hard for a permanent seat for itself. Perhaps he can also explain why the constitution, which he called "irreversible" during the equivalent debate on 16 September last year, is in fact the first EU treaty to include specific procedures for repatriating powers to the member states, or for withdrawal from the EU by any member state that wishes to leave. Even more bizarre is the fact that the Conservative party reserves its fiercest attacks for those aspects of the constitution that have been accepted elements of the way the EU operates for
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decades. We in this House have been told time without number that the treaty is the end of civilisation as we know it, because it includes the notion that EU law has primacy over domestic law. Yet primacy has been an accepted principle of British membership of the EU and of British law since a Conservative Government took us into the Common Market in 1973.
Mr. William Cash rose—
Mr. Straw: The hon. Gentleman always stands up on cue, and I am always happy to give way to him.
Mr. Cash: I am grateful to the Foreign Secretary. On primacy, he is of course referring to article I-5a. I note that the word "constitution" was eliminated from the previous text. The text now makes it clear that
"the Constitution and law adopted by the Union's institutions in exercising competencies conferred on it, shall have primacy over the law of the Member States".
Does the Foreign Secretary deny that the expression
"the law of the Member States"
includes the constitution of the United Kingdom?
Mr. Straw: Of course it does, in so far as laws of this Parliament lay down our constitution; but part of our constitution—like the primacy of Parliament itself—is not laid down by any law of the constitution. Because we are a sovereign nation, Parliament itself will have the final right to decide, at any stage, whether it wishes us to remain a member of this treaty-based organisation. If the hon. Gentleman wants to persuade his party to propose that we leave the European Union as a whole, he is entitled to do so; and under the new constitution, there is good provision through which countries will be able to leave the EU.
As part of the wittering nonsense of the "alternative White Paper" that was published yesterday, the hon. Gentleman is trying to argue that the new primacy arrangements can somehow change other countries' constitutions. In any event, we do not have a written constitution that is superior to our law passed in Parliament. I should point out that there has been a long argument in Germany—the "Kompetenz-Kompetenz" argument—about whether the supreme court of Germany, the constitutional court in Karlsruhe or the ECJ takes precedence. It is irresolvable at the moment, and I suspect that it will remain so. No one on either side of the argument in Germany has said that this change will affect that situation.
The House of Lords European Union Select Committee, which includes many Conservative members, observed:
"It is not surprising that … the Constitutional Treaty includes a statement of the primacy of Union law. The doctrine is a well established and key element of the Community's legal order".
We are told that qualified majority voting is a fundamental dilution of our national sovereignty, yet it was a Conservative Government, under Margaret Thatcher, who provided for the first widespread use of QMV and extended it to major parts of national life that were previously the domain of member states alone. We are told that a statement of loyal co-operation with our European allies and the operation of a common foreign and security policy would prevent us from engaging in

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military action without the agreement of Brussels; yet it was a Conservative Government who signed up to both of these provisions, at Maastricht. They are virtually unamended in those particulars, and we remain able to decide where and how to deploy our troops at any time. That situation will remain under the new treaty.
Mr. Richard Shepherd: A cardinal principle of debate and of our constitution is, "That was then, this is now." [Interruption.] Well, it is the truth. For the Government to rest their case on past events—events that I fiercely opposed, as did Members of the current Government, in some instances—is an absurdity. We are considering the constitution before us, so we should not try to score silly points about the past. We are in the here and now, and this issue is of vital importance to most of us, and to the future of this country.
Mr. Straw: I am deeply grateful to the hon. Gentleman, who makes the point that I was about to make. Essentially, most of the arguments that the Conservatives are now seeking to fight concern not what is in the new treaty, which includes some sensible organisational changes to how the European Union operates, but Maastricht.
The hon. Gentleman is right to say that he has been consistent in opposing Maastricht, as he was in opposing the Single European Act and our membership of the Common Market before it. However, he cannot say, "That was then; this is now" with any degree of seriousness.
What we are debating here is whether or not the new draft treaty is an improvement on the existing arrangements. In the real world inhabited by the rest of us, I predict that if the new draft constitution does not go through, there will be no appetite in the UK for leaving or withdrawing from the EU. Instead, we would have to fall back on the existing treaties, including those Maastricht provisions to which the hon. Gentleman takes such objection. They—the objectionable bits—would still be in place, and those parts of the new treaty that even the hon. Gentleman would probably support, including stronger powers for national parliaments and a more accountable presidency, would be lost. That would be a bad bargain for the British people and the House.
Mr. Dalyell rose—
Mr. Straw: If my hon. Friend will excuse me, I am about to wind up.
Logically, the new constitutional treaty is one that the Conservatives should support. As the noble Lord Heseltine has said—[Interruption.] I note the mocking laughter with which the name of Lord Heseltine is now treated by Conservative Members in the House. I have my arguments with Lord Heseltine, but I would say on his behalf that he was a damned sight more successful at winning elections for the Conservative party than the current rabble have been, so it would be wise for the hon. Member for Tiverton and Honiton (Mrs. Browning) to bear his record in mind. Lord Heseltine rightly said that
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"any Conservative Prime Minister since Harold Macmillan would have signed"
this EU constitution.
The Conservatives say that they want a Europe of nations, not a superstate. So do we, and that is what the treaty sets out. They say that they want a more flexible Europe and again that is in the treaty, without being in the existing arrangements. They say that they want more efficient and effective European institutions. That is what the treaty will deliver. They are unhappy with having negotiated Maastricht a decade ago and now they are opposing a treaty that in many ways reforms the EU of Maastricht for the better. What the Conservatives cannot bring themselves to engage with are the issues or serious debate about Britain's future within the EU. The Conservative party is being forced ever further into more and more extreme positions that would marginalise and weaken this country's influence.
The European elections painted a dismal picture of a Leader of the Opposition desperate to pander to those who would betray our national interests by taking Britain out of the EU, but if that campaign teaches the Conservative party anything, it is that the hard-line rejectionists can never be appeased.
Mr. Ancram: Before the Foreign Secretary sits down, will he clarify what his Government's policy will be if the British people do, as we expect, vote no?
Mr. Straw: We are going into the referendum campaign in order to win, so our policy is to gain a yes vote, and I very strongly believe that we will gain it. If there is a no vote, it is perfectly obvious what the circumstances will be—and the existing treaties will apply. What the right hon. and learned Gentleman should apply himself to is why the existing ramshackle treaties, which give European nation states less power than the new treaty, will somehow be beneficial for Britain.
Now that the final text of the draft treaty is agreed, Parliament and the British people can debate it on the basis of facts, not the myths and scare stories of the party opposite. [Interruption.] In Parliament and to the British people, who will have the final say on its ratification in a referendum, the Government will make their case on the basis of the result that we have achieved—not by some stroke of chance, but because the Government have put Britain at the heart of European decision-making and shaped the debate in our favour.
Engagement in Europe pays. It was by engaging with our partners that the Government delivered what we set out to do with the new constitution. It was by building alliances and winning the arguments that we got the right choice for the new European Commission President—José Manuel Barroso, who has the stature, drive and global outlook to drive through reform in the EU—and with our former right hon. Friend Peter Mandelson, we have an outstanding British appointment who has now acquired the key trade portfolio. [Interruption.] That will benefit this country and the EU as a whole.

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We will need the same engagement in the months ahead as we work to push through economic reform, to complete the single market in services and to build the EU's capacity to act globally against the threats from conflict, proliferation and terrorism. Britain cannot afford to retreat to the sidelines, as the Conservative party would have us do. The Government will continue to engage in Europe to shape the debate and get the right results for Britain, and we will continue to make the case for this new treaty on the basis of fact, not myth. It is a treaty that sets out our kind of Europe, an effective, flexible and reforming EU of nations in which Britain is more prosperous and more secure.
2.5 pm
Mr. Michael Ancram: I think that it was Sir Winston Churchill who once wrote a note alongside the text of his speech saying, "Argument weak; must shout." The last five minutes of the Foreign Secretary's speech fits very well into that category. I am delighted and relieved, however, to see him here today after the poisonous briefings against him that we have seen in the newspapers. We were all concerned that there might have been a career move on his part, so we are all pleased that he is in his place today.
I begin by associating myself with the remarks that the Foreign Secretary made about the terrorist incident in Jakarta. We join him in sending our condolences and sympathies to those who were injured.
I welcome this debate on the European constitution—
Sir Teddy Taylor rose—
Mr. Ancram: I could hardly fail to give way to my hon. Friend after our many years of friendship.
Sir Teddy Taylor: My right hon. and learned Friend is courteous, as always. I want to make a serious point. Is it not absolutely disgraceful that the Foreign Secretary gave a speech that was full of propaganda, but failed to make one reference to the appointment of a new European Foreign Minister as one of the fundamental parts of the new treaty? That will affect this and other countries. It is a matter of real significance and massive cost, yet he did not make a single reference to it in his speech. Would it not be better if we talked about the real issues instead of exchanging propaganda?
Mr. Ancram: I am grateful to my hon. Friend, who has taken the words out of my mouth. I was going to refer to the fact that the Foreign Secretary spends more time attacking what he thinks is our policy but is not, rather than explaining his own policy. I asked him what would happen if the people of this country voted no, and he said that we would simply go back to the existing treaties. If he had bothered to read his own White Paper, he would see that it states on page 11 that, in those circumstances,
"the Union would obviously be faced with a considerable political crisis. The member states have agreed that … there would need to be further European Council discussion."
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We want to know what that discussion will be about. Once again, the right hon. Gentleman, who always talks in terms of black and white—that we are either in or out of Europe—has to face up to his own words in his own White Paper. I hope that before the debate is over, the Minister for Europe will offer us some explanation.
Mr. Ian Davidson: Does the right hon. and learned Gentleman agree that the statement in the White Paper means that if the constitution is rejected, as I hope it will be, there will be no question of losing British jobs associated with trade in the EU or the even greater number of EU jobs associated with trade with Britain, because there would be no adverse economic impact resulting from the rejection of the constitution?
Mr. Ancram: The hon. Gentleman is absolutely right and, funnily enough, that was the position adopted by his own Government when the constitution seemed to have run into the buffers last December. We were then suddenly told that it was not necessary and that we could manage without it. The hon. Gentleman therefore makes a valid and valuable point.
Unlike the Foreign Secretary, most hon. Members have not had much time to study the White Paper in detail. It was certainly not available in Portcullis House until 11.30 this morning. I will want to read it in greater detail before dealing analytically with all the points in it. At first glance, it carries assertions that are at best questionable and in some cases plain wrong. I will come on to those points in due course. Once again, it mixes fact with spin, though I suppose that that is not surprising from the present Government.
I shall give an example of how extraordinary this document is. On page 27, it describes the energy chapter as "a good outcome". The truth is that the Government tried at the Convention to delete the whole of that chapter, but failed. If this defeat is a good outcome, what on earth is a bad one?
To my surprise, the White Paper deals with the question of a European constitution. I welcome that, and am delighted that the Government are at last prepared to accept that that is what we are talking about. There have been months of studious attempts to avoid the C-word. The document has been called a constitutional treaty, a tidying-up exercise, and a consolidation of existing treaties. All along, we have said that we could not have a proper debate on the matter until it was accepted that this was a constitution for the EU. That is what this document is, what it now says that it is, and what the Government now admit that it is. We are talking about a constitution of primacy and integration, and of a political entity in its own right.
Article I-5a says, not that European law shall have primacy over the law of member states, but that the constitution—this document—shall have that primacy. What is remarkable about the Government's attitude is that nowhere else in Europe are people, let alone

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politicians, in such denial about the fact that this constitution is a hugely important part of the European integration process.
Mr. Straw: Does the right hon. and learned Gentleman accept that, in international law, this document is a treaty like any other, and that it can be revoked by this country, if that is what we wish?
Mr. Ancram: This is a treaty that sets up a constitution. We are debating the constitution that it seeks to set up, and the effect that it will have on this country's sovereignty. The Foreign Secretary is playing with words. We are talking about a constitution that will operate as such if it goes through. Unless he accepts that, we are in danger of misleading the people of this country.
Mr. Cash: My right hon. and learned Friend is making some sensible remarks but, in respect of primacy, will he accept that, if and when the UK Parliament implements this constitution, it will confer on the European Court of Justice powers to acquire jurisdiction over our constitution? In effect, through conferral, it will be asking Parliament to abdicate.
Mr. Ancram: Article I-5a states that the constitution
"shall have primacy over the law of member states."
I think that what my hon. Friend says must follow from that.
I was talking about the integrationist nature of the constitution. The Foreign Secretary recently has begun to try to argue the opposite: the other day, he talked about the constitution returning powers from the EU to nation states, and he repeated that assertion today. In fact, the constitution refers once, and obliquely, to the possibility that, in certain rare circumstances at the dispensation of the EU, shared powers might be transferred back to member states. That is all: no mechanism is provided to return powers to member states, and no powers are so returned.
If the Foreign Secretary wants a less integrationist Europe, the White Paper gives no idea of the powers that he would want to be returned. That would be the great test of his sincerity, but he is again merely playing with words because he knows that the British people are frightened of integration. He is trying to persuade them that this constitution is what it is not.
Keith Vaz: Will the right hon. and learned Gentleman give way?
Mr. Ancram: In a moment.
This is not only an integrating constitution, it is an unnecessary one. We do not need or want it. Constitutions of this nature are not for partnerships or associations, but for countries. This document is the gateway to a country called Europe, as I have said before, and we do not want to be part of that.
That it creates such a country is not just my view. It is the considered view of many leading Europeans. Romano Prodi described the constitution as
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"a big change from the basic concept of nation states. It is a change of centuries of history."
The Belgian Prime Minister Guy Verhofstadt said:
"Those who are afraid do not appear to have grasped what is happening at the moment. We are creating a political union."
In case there was any doubt, he later added:
"The European Union acquires all the instruments of a federal state. The capstone is the constitutional treaty."
That is what the leaders of Europe believe. That is the truth, and the Foreign Secretary should have the courage to come forward and argue his case on that basis.
Keith Vaz: The original position of the Conservative party was to block enlargement. The Opposition wanted a referendum on the Nice treaty, but changed their position subsequently and supported the accession of the applicant countries. How does the right hon. and learned Gentleman expect a Europe of 25 nations to cope with an organisational structure created to deal with only six member states?
Mr. Ancram: First, I remind the hon. Gentleman that it was my party that first backed the idea of enlargement in 1991. We have always backed enlargement, and the countries that acceded to the EU this year recognised that. Secondly, he is using the normal argument and asking whether we need changes as a result of enlargement. The answer is yes, we need changes, as we have always accepted. Some of our proposals are contained in our pamphlet. However, the argument for change is not one for creating something totally different—an integrated constitution as described by Guy Verhofstadt.
This constitution creates a legal personality, a President, and a Foreign Secretary. It creates a European diplomatic service, fundamental rights that will be legally enforceable, and a more coercive foreign and security policy. It creates the more explicit primacy of European law, and gives it an increasing role in criminal law, including new powers in criminal investigation. It gives the EU powers in transport and energy. It is the constitution of the European superpower that the Prime Minister has declared twice—in Warsaw, and in Cardiff in November 2002—that it is his intention to create. We want to have no part of that type of Europe.
Mr. Mark Hendrick: The right hon. and learned Gentleman claims that the constitution will turn the EU into a superstate. Why does he not consider that the UN constitution makes that organisation into a global superstate? If he was opposed to the ratification of the Nice treaty—as he was—why did he push for a referendum if he was in favour of enlargement? Enlargement would not have taken place without the Nice treaty.
Mr. Ancram: The hon. Gentleman is avoiding the issue. This is a constitution of a particular type. I have just set out what it includes. I repeat that it will deliver a European superpower. I did not use the phrase "European superstate". I used the word "superpower", as that is the word that the Prime Minister used deliberately on the two occasions to which I referred

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earlier. Since then, the Government have tried to back away from that position because they know that it offends the British people.
As I said, I do not believe that the constitution was necessary to deal with enlargement. The Government now say that it is, but they have not always said that. In 1999, the then Foreign Secretary said:
"For the record, we are not proposing a constitution of Europe."—[Official Report, 25 May 1999; Vol. 332, c. 184.]
The following year, the Prime Minister said that the EU did not need a constitution, so what has changed? We were told that Nice was needed to make enlargement work. After that, the Prime Minister suddenly told us that the constitution was
"necessary to make accession work."—[Official Report, 14 May 2003; Vol. 405, c. 306.]
However, when the constitution appeared to hit the buffers last December, it apparently was not necessary after all. Consistency has not been the Government's strongest weapon in their battle for the constitution.
Nor has consistency been the Government's strongest card in relation to a referendum on the constitution. Last year, the Leader of the House announced that
"those who are starting off on a campaign for a referendum might as well put their placards away and stop wasting their money—because we are not going to do it."
In several debates in the House, the Foreign Secretary castigated me for supporting and promoting the concept of a referendum. In March, the Prime Minister flip-flopped and conceded one. That was not the Government's only flip-flop—nor even the greatest—on the way to this wretched constitution. Before it came to power, the Labour party said that it would keep home and foreign affairs intergovernmental and preserve the three-pillar structure on which the previous Conservative Government had insisted at Maastricht.
Today, we are told, almost with pride, that that three-pillar structure has been removed with the connivance of this Government; certainly, the constitution puts an end to it. The Prime Minister said that the charter of fundamental rights would be only a political declaration. A former Minister for Europe, sitting in his place as usual, said that it would have the legal weight of the Beano. I do not know whether he has consulted the lawyers of the Beano since then to find out how much legal weight it has in comparison to the charter of fundamental rights. Now the charter forms part II of the constitution and will be legally binding. It will have full legal status and will be enforced through the European Court of Justice.
EU lawyers have already made it clear that they intend to use the charter to change national laws. The Foreign Secretary tells us that we do not have to worry, and that the constitution covers all that. However, Vassilios Skourios, the president of the European Court of Justice, said that the constitution
"will bring new areas and new subjects under the court's jurisdiction."
He refused to confirm that the charter would not change national laws. Despite the assertions in the White Paper, the Minister for Europe boasted in Le Monde recently—I think it was last week—that the charter would strengthen British trade union rights, which is a view that is, surprisingly, supported by Professor Brian
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Burcusson of King's college. That is not so much trade union power by the back door, or even through Parliament, but through the pages of the European constitution. In 1997 the Prime Minister boasted that he had seen off a proposal to give the EU its own legal personality; he called it potentially damaging. Now, under the constitution, the EU has been given a legal personality.
Those are not the only flip-flops. During the constitution negotiations, the Leader of the House of Commons tabled 275 amendments and the Government succeeded in only 27. The Foreign Secretary laughs as usual at that, but those amendments were not trivial. The Government called for the deletion of the new EU power to ensure the co-ordination of member states' employment policies. The amendment was ignored, and the Government caved in, arguing that it was undemocratic for member states to keep power only in those areas where the EU did not want it. They called that the "worst of all worlds". They were ignored, and once again they caved in. The Government opposed making the charter of fundamental rights legally binding and, as we have seen, they caved in on that, too. That is not so much flip-flopping as straightforward surrender, which is why they are so keen to disguise the reality of this constitution in a thicket of weasel words and good, old-fashioned bluster.
Chris Bryant: I am deeply grateful to the right hon. and learned Gentleman for giving way. On every occasion that there has been any discussion about the constitution, he has used the argument that the Government tabled lots of amendments and only some were successful. The truth is that his party tabled more than 400 amendments to the Communications Bill, but ended up voting for it—does that mean that the Conservatives flip-flopped, or is it true that amendments are sometimes also tabled by others, and theirs get through?
Mr. Ancram: I wish that the Prime Minister would give the hon. Gentleman a job and put him out of his misery, because he tries so hard on behalf of his party. Even he cannot believe that an amendment to an existing provision that the Government themselves call the worst of all worlds is trivial and, once you fail in that amendment, it suddenly does not matter any more. The Government were defeated on serious amendments and, having been defeated, they caved in. Now we have the constitution, which will do so much damage to this country.
We opposed the constitution in principle and in practice. Let us consider the constitution and what it will mean in terms of the economy and jobs, and the way that we have traditionally regulated ourselves. It has provision for more regulations. We have already talked about the meddlesome charter of fundamental rights, but there will be more EU powers over social security and co-ordination of employment policy. There will be more powers on competition policy, and to co-ordinate our economic policy. There will be more powers in trade policy, more powers over energy and greater EU control over asylum and immigration and criminal justice.
Under article I-15 the constitution seeks to enshrine the principle of a common foreign and security policy, including

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"the progressive framing of a common defence policy, which might lead to a common defence."
The breach of that policy will be justiciable, whatever the Foreign Secretary says. These are some of the practical reasons why we oppose the constitution. In doing so, we are looking for a better Europe—one that is more suited to the challenges of the 21st century.
Mr. Straw: Does the right hon. and learned Gentleman accept that in every material particular, the articles relating to common foreign and security policy in the new treaty are a replication of those in Maastricht?
Mr. Ancram: Can I refer the Foreign Secretary—[Interruption.]
Mr. Straw: Answer.
Mr. Ancram: I will. I refer the right hon. Gentleman to the written evidence from Professor Arnull's submission to the Lords Constitution Committee in October 2003.
Mr. Straw: Answer.
Mr. Ancram: This is the answer. The professor points out the differences between those two clauses and says:
"The power of the Court of Justice to review compliance by Member States with the second subparagraph of that provision is particularly significant. It may lead the Court to be called upon to consider whether action by a Member State complies with an act adopted by the Union in this area or is contrary to the Union's interests or likely to impair its effectiveness. The Court would be likely to regard at least some of these issues as justiciable."
That is a significant point. It could allow the ECJ to impose penalties on a member state for its foreign policy actions. A similar passage in the Maastricht treaty was not under the ECJ's remit—the professor mentions it and shows why that is so. If the right hon. Gentleman wants to challenge that opinion, I would like him to do so on that basis.
Mr. Straw: It is palpable nonsense for whoever that person was to claim that, because the right of the ECJ to have any power over operations and policies determined under the European foreign and security policy is specifically excluded by the draft treaty.
Mr. Ancram: The right hon. Gentleman should read this serious opinion given by a serious academic.
Mr. Heathcoat-Amory: Perhaps I can assist my right hon. and learned Friend. What he said was right. The Foreign Secretary is wrong, yet again, because article III-282, which purports to rule out the jurisdiction of the ECJ over foreign policy, does not cover article I-15, which says clearly:
"Member States shall actively and unreservedly support the Union's common foreign and security policy in a spirit of loyalty and mutual solidarity".
Therefore, if we deviate from that part in any respect, that would be justiciable by the European Court of Justice under the final text.
Mr. Ancram: I am grateful to my right hon. Friend, who supports what Professor Arnull said. The Foreign
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Secretary can continue to make claims from the Dispatch Box, but he really should check his facts before he makes that type of statement.
Mr. Straw: An old saw has been running around, saying that because article III-282 does not specifically refer to article I-15, the whole common foreign and security policy is justiciable. It is not. There is nothing about that in article I-15.
Mr. Cash indicated dissent.
Mr. Straw: No. That is not just my opinion. It is also the opinion of the head of the Council legal secretariat, which whom we have discussed the matter on many occasions. Article III-282 spells out that the European Court of Justice shall not have jurisdiction with respect to articles I-39 and I-40 and the provisions of chapter 2 of title V concerning common foreign and security policy, and article III-194 in so far as it concerns common foreign and security policy.
Mr. Lilley: What about article I-15?
Mr. Straw: The court does not have jurisdiction over common foreign and security policy; it is not necessary because the operational articles are I-39 and I-40 and those referred to in part III. It is a canard—[Interruption.]
Mr. Deputy Speaker: Order. I am getting rather confused about who is addressing the House. I think that it is probably Michael Ancram.
Mr. Ancram: I am grateful, Mr. Deputy Speaker. I was wondering whether the Foreign Secretary was trying to make a second speech. This is an important point, and I hope that he will go back and check it, because although he has told us what articles are not justiciable, the one to which I referred was I-15. That is the one that Professor Arnull talks about, saying:
"It could allow"—
although not in every case—
"the ECJ to impose penalties on a member state for its foreign policy actions."
That is a very serious assertion that flies in the face of what we have been told again and again is one of the triumphs of this Government's negotiation—a claim that is, at best, highly questionable.
As I was saying, we are looking for a better Europe, one which is more suited to the challenges of the 21st century. It will not happen of its own accord. It will take a no vote in any of the forthcoming referendums to send the leaders of Europe back to the drawing board—what in the White Paper is described as
"a meeting of the Council of Ministers for further discussions."
A no vote will allow them, I hope, to return to the sidelined principles of the Laeken declaration of 2001, which actually recognised some of the real problems that the EU faces and asked some of the right questions. That declaration recognised that the EU was too distant from its peoples. It rightly said that the EU should not intervene too much in the details of national lives. It said that the EU was too bureaucratic. It asked both whether

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some powers currently held by the EU should be returned to the nation states and whether some powers still held by member states should be given to the EU. Sadly, the only suggestion that the constitution took up was that more power should be given to the EU.
This time, there will be a real chance—in many ways, the first chance for a generation—to move towards a healthier, more flexible, more decentralising Europe. The EU needs real reform. Europe's member states need to recognise that not all countries want the same things from the EU or want to go in the same direction. Some member states want deeper integration; some do not. Our view is that we should let those who want to pool ever more sovereignty do so. We should not stand in their way. But in return, they should not expect those who do not want to follow them to do so either. Schengen and the euro are good examples of how this can be achieved without breaking the European Union. Experience tells us that there are powers that are currently held by the European Union that would be better exercised by national Governments. We want to see the current ratchet reversed and powers returned from Brussels to Britain.
Of course there are some powers that all countries must sign up to—the single market being the most obvious. The single market was intended by Britain to be a vehicle for liberalisation that would benefit business. It has brought real benefits to countries across Europe, but it has also been used to justify unnecessary rules and regulations. This is partly what has caused the recent steep decline in support for the EU among British business.
So we need to look closely at how the single market is working in practice. We need a simple set of rules that will facilitate and stimulate trade within the European Union. A reformed single market must be the bedrock of a transformed EU. It would deliver the great gains in productivity and growth that Europe so desperately needs. It would end the steady creep of bureaucratic power. Perhaps most important, it would re-engage public support for the European Union.
The Minister for Europe (Mr. Denis MacShane): Will the right hon. and learned Gentleman give way?
Mr. Ancram: No, I will not give way again. I have given way too many times.
Mrs. Browning: Will my right hon. and learned Friend give way?
Mr. Ancram: I give way to my hon. Friend. [HON. MEMBERS: "Ah."]
Mrs. Browning: My right hon. and learned Friend is generous. Does he care to reflect on the fact that if we had gone down the route of mutual recognition of goods and services rather than harmonisation when we entered the single market we would not have the problems that we have today? It is of course on that basis that the EU trades in quite a harmonious way with many countries outside the EU.
Mr. Ancram: Obviously this is a matter of debate, but one of the main problems facing the single market has
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been the failure to implement the Lisbon criteria, which largely related to deregulation. The French were less keen to deregulate some of their industries and businesses in a way that would have helped the single market. I hope that that is one of the things on which we can make progress.
Mr. MacShane: Will the right hon. and learned Gentleman give way? We are in a debate.
Mr. Ancram: I have given way an awful lot; at least as many times as the Foreign Secretary. The last time that I gave way to him I was in a seated position for some time thereafter while he tried to make his second speech.
Mr. Straw: Will the right hon. and learned Gentleman give way?
Mr. Ancram: As long as he is not going to make his third speech, I will give way to the Foreign Secretary once more.
Mr. Straw: The right hon. Gentleman speaks about the importance of pursuing the Lisbon reforms. How would the change in the constitution that he proposes, by which any five member states—however small—could veto existing reforms as well as block all changes, ensure progress towards a really well-functioning internal market?
Mr. Ancram: Again, if the right hon. Gentleman is going to use something, he must read it correctly. What we are talking about is legislation where subsidiarity is at stake. In our manifesto, on which we fought the European elections successfully, we made it clear that the single market would have to be treated in a different way due to the need for uniformity in that market.
Allied to the need to reform the single market, we also need to look frankly and sincerely at what is done well at the European level and what is done badly. The common fisheries policy has been a total failure. Jobs have been slashed, our fisheries have been plundered, and our fishermen find that there is little that national politicians can do about it. That is the European democratic deficit in action. That is why we intend to restore our fisheries to local and national control. It is also why we want to restore our opt-out from the social chapter, so that we here in this Parliament, not the European Council or Commission, can decide what is and is not right for our country and our employment laws.
I want Europe to succeed, but as a partnership of sovereign nations, not as an emerging superpower. I want Europe to be reformed so that it delivers better what the people of Europe want from it—peace and prosperity. That is another reason why we reject this constitution. Its provisions are rooted in an outdated concept of a social Europe that will damage Europe's prospects for prosperity. That is why the director of the Confederation of British Industry has said that:
"this constitution does nothing to make Europe more globally competitive."
That is why the director of the Institute of Directors said of the charter that

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"far from clarifying employment rights, this leaves business facing worrying uncertainty".
That is why the Federation of Small Businesses has said:
"we are concerned that the constitution may lead to a surge in red tape."
Now that we will have a referendum—I am grateful for that—the people of Britain will decide. I believe that the constitution speaks for itself. I therefore challenge the Government in the run-up to the referendum not to write propagandist White Papers but to send every household in Britain a full copy of the constitution so that people can read it for themselves. [Laughter.] Labour Members laugh, but that is what the French did when they held a referendum on the Maastricht treaty. They obviously take the view that French people are better able to comprehend constitutional treaties than the British. I do not take that view because I believe that if the British people read the constitution they would see clearly where the truth of this issue lies, which is why I suspect that the Government will duck my challenge.
Nor can I see any merit in delaying the promised referendum. The information is now all there. We will fight this constitution tooth and nail. The Conservatives are ready to accept the Prime Minister's challenge. Let us get on with it and let battle be joined now.
Several hon. Members rose—
Mr. Deputy Speaker: Order. Before I call the next hon. Member, I remind the House that Mr. Speaker has placed a 10-minute limit on all Back-Bench speeches, and that starts from now.
2.38 pm
Ms Gisela Stuart: We now for the first time have an actual text, so theoretically the debate that everyone has been calling for—one free of myth and distortions—can start to take place. From what we have heard so far, I do not think it has quite started yet. Both sides seem to be creating their own fantasy world, which they then defend. If our debates are to be enlightened, it is incumbent on us all to support any assertion as to what is in the treaty by making a reference to where it is in the text.
In that context, I hope that, in his winding-up speech, the Minister for Europe will point to two areas about which I have been puzzled in the last hour or so. One is where the treaty specifies that if there is a conflict between a European Court of Human Rights judgment and the charter, the ECHR will take precedent. It is my clear recollection that one of the arguments employed as to why it was not sufficient for the European Union once it had acquired single legal personality simply to sign up to that convention was that the charter of fundamental rights was creating a new kind of human rights which went beyond what we had before. I shall be happy and grateful to accept the argument that that has been settled, but I have not found it in the document.
The second matter, which again I hear repeated time and time again, was not in the White Paper, although the Foreign Secretary referred to it in his speech. He referred to a specific procedure for repatriation of competences. There is a chink that would allow for that
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to happen, as I read it, but I have not yet found a specific procedure. I would have expected it to be at least a separate article. Because of the sequence in which we have been called, I shall also be interested at some stage to know the view of the Liberal Democrats, who as I understand it are now in favour of the possibility that competences might, if appropriate, be repatriated to member states. Are they happy with the provisions in the constitution?
Konrad Adenauer, a great European, was once challenged about something that he had said in the past. He told the journalist that he was not the slightest bit interested in what he had said last week. We could go on for weeks reminding each other about what we have said in the past, but that is not the point. We now have one document that brings together the past in a new form, and we need to look at the merits of what is in front of us. All sides have changed their mind at some time in the past 50 years, because the facts have changed, so we should focus on what is now before us.
I shall examine the specific issue of the role of national Parliaments. The language in the White Paper is modest and appropriate. It refers to involving national Parliaments much more in EU debate. That is a neutral statement, but I keep hearing that it has been strengthened. I wonder whether that has happened and, more to the point, whether we are capable of rising to the challenge as our institution stands. I chaired a working group on the role of national Parliaments and I gave evidence in France, Portugal and Scandinavia. I also attended the Western European Union. I have given considerable thought to the issue.
Let us consider what the constitution says. Article I-9 says that national Parliaments shall "ensure compliance" with the principles of subsidiarity and proportionality. Article I-17 is a flexibility clause that requires that the European Commission
"shall draw Member States' national Parliaments' attention to proposals".
Article I-57, on applications for membership by states, says that national Parliaments shall be "notified of this application". Article III-161 states that national Parliaments
"shall be informed of the content and results of the evaluation".
The language is important. However, information and notification do not amount to power or a strengthening of the position of national Parliaments unless we are capable of using that power. There is some very good news for national Parliaments. For example, article I-23 requires that the
"Council shall meet in public when it deliberates and votes on Union legislative and non-legislative activities."
That is important because for the first time we will know what positions Ministers have taken.
Article IV-7 looks at simplified ratification procedures. That was the old 24(4) clause to which I violently objected. On its own, it would have been sufficient to cause me to reject the constitution. It has been strengthened, but it means that the move from unanimity to qualified majority voting can only happen provided that national Parliaments do not disagree. I tried to make the point when I intervened in the speech

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by my right hon. Friend the Foreign Secretary that we must be much more precise about the mechanism that this House will use to form an opinion.
Mr. Straw: I agree with my hon. Friend. Bearing in mind this debate, I hope that we can come forward with proposals in the new Bill that will take account of her remarks.
Ms Stuart: I am grateful to my right hon. Friend. The heart of the decision that the House has to make is whether it seeks simply to receive more information so that it can then play a part in explaining to the public what other institutions in the European Union are doing on our behalf. That is an honourable way of proceeding, but we need to be clear about it if that is what we are doing. Or does the House seek to find a way of having a voice that may at times be independent of Government? That would be unusual, in terms of parliamentary procedure, but if that is what we wish to achieve we would have to be clear about what would be required in order to do so. We would be fooling ourselves if we claimed that our role had been strengthened by the requirement that we should receive more information and pass it on. We will open ourselves to accusations such as that made by Digby Jones recently, when he said that Parliament was asleep on the job because 40 per cent. of domestic legislation that emanates from the EU is not discussed or debated here. Depending on the choice that Parliament makes, we need to look at our procedures.
The constitution also contains a provision that will be bad for national Parliaments and will undermine them. Article 1–46, under the heading "Principles of participatory democracy", allows for a European law to be created that gives the right of petition. If more than 1 million citizens across a significant number of member states request the Commission to initiate legislation, it will do so. In itself, that provision is innocuous, but the principle means that we will concede a right of initiative that circumvents national Parliaments and Governments. We were not prepared to give that right to national Parliaments, and that troubles me. People need to know the totality of the provisions in relation to the role of national Parliaments.
Mr. Cash: I agree entirely with the hon. Lady's problem about this place merely being provided with information. However, the underlying question is not merely a procedural question. It is about the sovereignty of Parliament. Will we be able to do anything about the legislation presented to us if we do not like it?
Ms Stuart: Let us work on the assumption that Parliament wishes to form a view independent of the Government. What would we require, on top of what is in the constitution, to enable us to do that? My argument is that what is in the constitution would not be sufficient to enable us to exercise such a power. For a start, we would require a much clearer framework for passing legislation in the EU and Commission proposals that would allow the House to take part in those debates. A Commission proposal can go on for years, sometimes for 10 years, before becoming law. The House of Commons lacks what one might call a collective memory to enable it to key into the making of
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such decisions. A fundamental change would be for a Commission proposal to have a delete button, as we have in the form of the end of a parliamentary Session or the calling of a general election.
We also need—and I know that my right hon. Friend the Foreign Secretary will not like this proposal—much stronger co-ordination of domestic policy that is decided at a European level. I strongly advocate the introduction into the Cabinet of a Minister for Europe—of the status of a Deputy Prime Minister—who has that function.
Mr. Quentin Davies: Does the hon. Lady agree that it has always been assumed at European level that Ministers at Council of Ministers meetings have the authority of their Parliaments and are accountable to them? In practice, it has always been open to us to exert more influence over the line taken by Ministers at Council of Ministers meetings. It has been a great failure on our parts that we have not done so. It has happened over many years and is nothing to do with the new constitution. There is no point in protesting about the new constitution if we are not prepared to exert effectively the authority that we already have. Other countries, such as Denmark, have succeeded in doing so and we should learn lessons from them, irrespective of our views on the constitution.
Ms Stuart: Within the constraints of the time available, I shall give one example of the problem. As a Health Minister I had to give evidence on new regulations for abattoirs at the time we wanted the beef ban to be lifted after BSE. Agriculture and Health Ministers had negotiated a whole package. By the time it came to the House and before the Special Committee, it could not be unravelled. The House was unaware of the package as it was being put together, and it came before the House as a fait accompli. That is why I argue that we need a Minister at Cabinet level to co-ordinate the process when various Departments are involved. I cannot give a single example of an occasion on which the current process of scrutiny has changed Government policy. When I challenged the Commission, I could not find one example of it changing a legislative proposal because it was a breach of the principle of subsidiarity.
Let us look at what is in the constitution on the basis of what powers we will have and what changes we would have to make here if we really wanted to exercise them. The fundamental mistake, which we must not make, is to mistake activity for achievement. Nor should we confuse having more information with having more power. There are choices to be made, and the House must decide which route it wishes to take.
2.50 pm
Sir Menzies Campbell: Both the Foreign Secretary and the right hon. and learned Member for Devizes (Mr. Ancram) began by making proper reference to the horrific events that have taken place in Jakarta. If those events represent some change of tactics on the part of terrorists, to seek to influence the domestic elections of Governments who have been prominent in the campaign against terrorism, it is a most sinister change of tactics and one that we must be concerned, anxious and indeed determined to resist. On behalf of my right hon. and hon. Friends I associate

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myself with the expressions of sympathy given by both the Foreign Secretary and the right hon. and learned Gentleman.
The Foreign Secretary and I are now in substantial agreement on the topic of this debate. For a long time, we agreed about the substance but not about the process. We were at odds on the question of a referendum, but common sense has prevailed and I look forward—perhaps with the right hon. Lord Heseltine—to campaigning in the country on behalf of the constitutional treaty, as I believe that it is a campaign that can be won. In due course, I shall say a little more about how it should be conducted in order to be won.
Our debate today has contained more than a few echoes of the several debates that we have held on the topic in the course of this parliamentary Session. I have the feeling that we are to some extent engaged in the preliminary skirmishing that goes before the legislation that we anticipate in the Queen's Speech. I shall come back to the question of the constitution, but another White Paper was issued recently, Command 6310, on the prospects for the EU for 2004. I do not think that it has been referred to so far, so I should like to make some observations about it.
I note with some pleasure, as indeed must the whole House, that Commissioner Mandelson, as we must now learn to call him—it will not be difficult; the words have a certain ring to them—has been invested with responsibility for trade and the international dimension of competitiveness. In that role, I hope he will fulfil two important and pressing responsibilities. First, I hope that he will ensure that there is sufficient vigilance to prevent an enlarged European Union from being prejudiced by anti-competitive practices wherever and from whomever they may arise. Secondly, I hope that he will ensure that genuine progress is made on access to the EU for developing countries, particularly for agricultural products.
The White Paper refers to enlargement. I certainly share the Government's hopes that Bulgaria and Romania will continue to make progress towards accession in January 2007. I certainly support the contention that the closer integration of Turkey into Europe would enhance our security and prosperity. I hope, too—as the White Paper records—that negotiations for Croatia can open in early 2005. I want to enter a caveat, however: there must be no compromise either on economic standards or on standards of good governance, democracy, the rule of law and human rights—all as laid down by the Copenhagen criteria.
The United States in particular has pressed the case for Turkey. I assert as strongly as I can that accession must depend on the standards reached, not upon the calibre or vehemence of support. Many people will be dismayed by the proposal, apparently emanating from the Turkish Government, to criminalise adultery. It will serve only to encourage those in the European Union who are opposed to Turkish entry.
In relation to Romania, it is right to draw attention to the report released in January by the European Parliament, of which Baroness Nicholson was the author, which was critical of corruption, the violation of
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human rights and the failure to observe the rule of law. To those who wish to accede to the European Union and who have a programme of reform to meet, we are entitled to say that cosmetic reform will not do; it must be reform in substance.
Chris Bryant: Before the right hon. and learned Gentleman moves on from the issue of Turkey joining the EU, will he also reject the opinion voiced in some European countries that there should be a principled objection to Turkey joining the EU because that would increase the Islamicisation of Europe?
Sir Menzies Campbell: I agree entirely. Some people—as the negotiations over the Convention gave some indication—wanted to assert that the European Union be based on Christian principles and, by inference, to exclude the possibility of Turkey's accession. I was certainly resistant to that and am glad that the issue was resolved so as to allow for the accession of Turkey.
Mr. Hendrick: I thank the right hon. and learned Gentleman for giving way, but I feel that he was rather harsh on the Romanian Government. Yesterday, I was fortunate enough to speak to the Romanian President, who told me a great deal about the work that is going on in that country to stamp out corruption. Indeed, the report written by the right hon. and learned Gentleman's colleague in the European Parliament—a former Member of the House, Miss Emma Nicholson—was quite a harsh one and was seen in the context of Romanian national elections this year, in which his sister party will be looking to do well.
Sir Menzies Campbell: The hon. Gentleman should pay some regard to the conduct of those elections and the extent to which opposition parties are being allowed the sort of opportunities that he and I would think a necessary part of a fully democratic system.
The White Paper also refers to external issues and I certainly welcome the fact that the European Union is to assume responsibility for the military mission in Bosnia. That is an opportunity for the EU but it is also a test, and the EU must neither squander the opportunity nor fail the test. If the treaty provisions on common foreign and security policy are to mean anything, there must be far greater acceptance than there has so far been of the need to provide capability in the EU.
Finally, the White Paper talks about future financial arrangements. Here, I believe that the Government are perfectly correct to take the view that 1 per cent. of EU gross national income is a suitable budget ceiling. What is notable is that support for that position comes from France and, more particularly, from Germany. German support is of considerable significance because of Germany's history as a substantial net contributor to the European Union.
Let me turn to the question of the constitution. I have followed the debate about the primacy of law, and thought that for my own better understanding I would try to set out some propositions. The first is that Parliament is sovereign. A sovereign Parliament passes legislation to give effect to the obligations that are imposed on us by entering into a treaty. A sovereign

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Parliament can repeal that legislation and, as a consequence of doing so, can revoke the terms of the treaty, so arguments about where the constitution lies in relation to our domestic law seem capable of resolution on first principles. We enter into a treaty. We effect legislation, such as the legislation that followed the Maastricht treaty, but at any time this Parliament, which, by our constitutional doctrine, cannot bind its successors, can withdraw from those obligations and repeal the legislation.
Against that background, it seems that many of the anxieties and apprehensions are simply not justified in the way in which they are being expressed—as if they constituted some enormous break, hindrance or, indeed, derogation from the essential sovereignty of this place.
Mr. Heathcoat-Amory: The right hon. and learned Gentleman is aware, however, that that is not the view of the European Court of Justice, which has stated explicitly that EU law has primacy over national constitutions and national laws.
In the document to which we are being invited to sign up, we are putting into a European constitution that case law of the European Court of Justice. If this Parliament voluntarily assents to a primacy clearly stated in a different document—a European constitution—does that not create a quite unnecessary conflict between our understanding of our constitution and what we shall be agreeing to?
Sir Menzies Campbell: If I may say so, I think the right hon. Gentleman, who I freely acknowledge has spent a lot of time on this subject and is very knowledgeable, is over-complicating the issue. That is why I tried to set it out in a series of simple propositions. We accepted, by the Act of 1972, that European law had primacy. This House, subject to its own procedures, could repeal that provision tomorrow and that would be the end of the matter.
There are arguments about this. The right hon. and learned Member for Devizes and I had an argument earlier in the process about whether sovereignty rested with the people or with Parliament, but we need not retrace our steps in that regard. There is, and need be, no confusion. A sovereign Parliament can repeal legislation, can act to withdraw from treaties, and—if I may be forgiven a colloquialism—the European Court of Justice can go hang. That is the position. We have agreed by virtue of the 1972 Act that for so long as that Act is in force, European law should have primacy, but that is something that we have within our power to withdraw, and nothing contained in this treaty detracts or departs from that fundamental principle.
Mr. Quentin Davies: Will the right hon. and learned Gentleman give way?
Sir Menzies Campbell: I will make some progress, if the hon. Gentleman will allow me.
It is unfortunate that the White Paper was not published a couple of days earlier, to allow us the opportunity for a more detailed look. I hope to spend some time examining it in detail. I also want to get my
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own personal copy—perhaps even autographed—of the Devizes document, which looks as though it will prove to have some political significance in the future.
My message to the Foreign Secretary is that documents will not win this referendum. What is necessary, if the referendum is to be won, is a campaign to inform and persuade the people of the United Kingdom. One thing is certain: the campaign against has begun. The campaign for has not, however, and those of us who think that an affirmative voice of the British people is essential must accept that we have given away rather a lot of ground so far, and that that ground will have to be made up.
I have what I suppose amounts to a compulsion to remind myself and the House on such occasions that the founding principles of the European Union, as set out in the preamble to this document, are a commitment to peace and prosperity, to building a common future and to burying the differences of the past, in particular the two world wars. We must never allow ourselves to forget that twice within 30 years, the continent of Europe was riven by wars, which caused enormous loss of life and enormous adverse economic effect, and part of the success of the European Union and of NATO has been the fact that is now inconceivable that the hostilities that characterised that period in the history of Europe would ever be reopened. That is of enormous value to us and we must not allow our natural anxiety about the common agricultural policy or things of that nature to deflect us from the understanding of the enormous importance that first the European Community and now the European Union have in preserving that peace, and also the extraordinary enthusiasm of those formerly part of the Warsaw pact for joining the European Union and for becoming part of all that it signifies.
Mrs. Browning: I am grateful to the right hon. and learned Gentleman for giving way, and I know that many people share his view that the EU was somehow responsible for peace in mainland Europe in the last century. Does he not concede that it was not the EU that stopped France and Germany tearing themselves apart as they had done in previous wars and centuries; it was the new threat, the cold war, of Russia and the Warsaw pact, and the combination of the US, through NATO, with western Europe that kept the peace in the last century? It was nothing to do with the EU.
Sir Menzies Campbell: Well, it is a pretty strong proposition to say that it was nothing to do with the EU. I think that the ghosts of Monnet, Schuman, Spaak and many others will be circling a little if they hear the hon. Lady's confident assertion.
I mentioned NATO. I am in no doubt that the contributions to the peace I described came from more than one source, but I am firmly of the view that the fact that the French and the Germans managed, in the immediate aftermath of the second world war, to form the European Coal and Steel Community was at the time regarded as the most extraordinary political development of that century.
Mr. Davidson: Will the right hon. and learned Gentleman give way?
Sir Menzies Campbell: I shall move on, if I may.

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On subsidiarity, I am one of those who is supportive of the so-called yellow card—the early warning mechanism. Here the Foreign Secretary and I may part company. I am not convinced that five countries is necessarily the basis upon which to have a red card, but I do think that that principle would have been worth exploring a little further. Indeed, on a previous occasion I may have put forward the suggestion that two thirds of the Parliaments, if they took the view that what was being proposed was unacceptable, ought to have the ability not just to hold up their hand and issue a warning but to say, "This is legislation emanating from the European Union, which should be stopped in its tracks".
Mr. Straw: The right hon. and learned Gentleman is making an important point. I have thought long and hard about this. There is a point where the formula for the intervention of national Parliaments collides with the arrangements for qualified majority voting or indeed for the veto, and if there were a formula by which two thirds of national Parliaments could prevent a move, that would actually change the nature of majority voting.
Mr. Cash: Make it democratic.
Mr. Straw: No, because under these proposals, 46 per cent. of national Governments will be able to block a proposal in any event. I happen to think that that is a satisfactory way of proceeding.
Sir Menzies Campbell: There has been some emphasis on the role of Parliaments rather than the role of Governments, and I am one of those who in such matters rather believes that the more national Parliaments have responsibilities in this area, the better it will be. Here I to some extent agree with what the hon. Member for Birmingham, Edgbaston (Ms Stuart) said about the extent to which our enthusiasm for scrutiny, and our consciousness in this Parliament of what comes out of the European Union, falls a long way below the standard to which we should aspire. I do not for a moment excuse myself from that stricture. As a Parliament, we have certain mechanisms for scrutiny, but I doubt whether there is anyone in the House who imagines that they are as good as they might be, and I think the suggestions that the hon. Lady made for their enhancement are entirely sensible. Perhaps, as the Foreign Secretary has agreed, it will be possible to consider the matter when we come to the legislation that we are all anticipating with so much enthusiasm.
Certainly, as far as the proposals relate to the running of the European Union, fewer Commissioners, clearer legislation and freedom of information must all be regarded as positive measures.
On competences, the treaty contains a definition of the limits of competences, and the stipulation that competences not conferred remain with the member states is a necessary, helpful and welcome clarification. Previously there was a presumption in favour of member state competence, but now there is an express statement.
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On a common asylum policy, we in the United Kingdom have opted out of the Schengen agreement, and therefore we maintain control of our own borders. However, it is in no way against our interests—indeed, one can argue that it is most certainly part of our interests—to seek common standards and rules for asylum seekers to achieve two things: first, to prevent asylum shopping and, secondly, to enable greater burden sharing between member states.
On the common foreign and security policy, the reform proposals in the constitution are entirely sensible and much needed—not all hon. Members would necessarily agree—in the wake of Iraq and the circumstances in which military action was taken, and as a recognition of the fact that the United States is increasingly willing to adopt independent action in foreign affairs. I do not think that anyone can challenge the proposition that the United Kingdom, acting with other nations, is likely to achieve more. I believe that a dedicated foreign representative, combining the roles of the external relations commissioner and foreign envoy, is needed. I always thought the distinction between Mr. Solana and Chris Patten was artificial. Indeed, that was demonstrated on many occasions because it seemed necessary for both of them to have some part in the activities carried on by the European Union.
Also on the common foreign and security policy, not only is the United States more anxious and more willing to take independent, even pre-emptive action, but as President Bush's announcement on the withdrawal of troops shows, perhaps the United States will not in future regard providing men, women and materiel on the European continent as an overwhelming obligation to deal with any security issue or action of that kind.
Of course, a number of myths are attached to all this. One of the most extraordinary myths is the idea that the United Kingdom seat on the Security Council is somehow at risk. The Foreign Secretary cited the example of Germany, which is running a most robust and vigorous campaign for its own seat, but of course, he might have cited the example of France. Can one envisage President Chirac voluntarily saying that, as part of the necessary reforms to the United Nations, France is willing to step aside to ensure that the EU has a permanent seat on the Security Council? There is not a hope in hell of that, frankly. Therefore, the notion that the United Kingdom's seat would be at risk is wholly unfounded, not least, of course, since we are talking about constitutions, because the UK's seat is a product of the constitution of the UN—a product of the charter. Whatever responsibilities the EU, or even the European Court of Justice, may be thought to have, modifying the charter of the UN, so far, is not one of them.
Ms Stuart: We must be really careful when we try to predict the future. An equally good argument can be made that serious reform of the UN is on the books and that America may decide on such a reform to give Europe a seat and India or China a seat. It is easy to dismiss such things as nonsense, but the world is changing and such changes are possible.
Sir Menzies Campbell: I guess that all hon. Members would subscribe to reform of the UN, but people will remember that, for a long time, discussions about reform were stalled on whether the Security Council

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should have 23 or 24 members. The likelihood of early reform is pretty remote, even though Kofi Annan, as we all know, has established a high-level group of senior and experienced politicians and diplomats, all of whom are due to report by the end of the year. However, one thing is certain, and let me put it in the framework of this document: the idea that the constitutional document puts at risk Britain's permanent membership of the UN simply does not ring true; it holds no water whatsoever.
Let me deal quickly with defence. No European army will result from what is proposed. There is no suggestion that we cannot do other than deploy our own forces according to our own determination of what constitutes our own interests, but greater co-operation in defence matters is obviously of advantage for the countries of the EU. As I have said, the proposed operations that provide the EU with both an opportunity and a test are a clear illustration of what can be achieved.
As I have said, I find little with which to disagree with the Foreign Secretary on. I do not think it likely that we will have a referendum before the general election, which, although not fixed finally, may come in May or the spring of next year.
Mr. Straw: In 2006.
Sir Menzies Campbell: It need not come until 2006, but I doubt whether some of those who have found themselves called back to the colours have taken on their new responsibilities on the understanding that they will be co-ordinating a general election campaign between now and 2006. It would have been interesting for a whole variety of reasons—not least the date—to be party to those discussions.
Mr. MacShane: Hear, hear.
Sir Menzies Campbell: That is a cri de coeur.
When the document is finally put before the people of the United Kingdom, I hope it will be done on a properly informed basis. I am not sure whether we can send everyone a copy of the constitution, but I recall the referendum of 1975 when proper arrangements were made for documents illustrating both sides of the argument, and it certainly would be incumbent on any Government who seek an affirmative vote in such a referendum, as we understand that this Government will, to ensure that the principles of fairness, proper understanding and information about what is proposed are applied during the referendum.
I suspect that the issue will be not about the detail of those matters that concern us, such as the terms of titles and the role the European Court of Justice. I suspect that the debate will be about whether people are for Europe or against Europe.
Mr. Davidson: No.
Sir Menzies Campbell: I hope that the hon. Gentleman is successful in achieving the degree of detail that he thinks he will impose on the debate, but I find it difficult to believe that the capacity of the British people in these matters is so unlimited that, for example, the kind of discussions that we have had today and on
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previous occasions will be the sort of discussion that they have in their own minds before they come to cast their votes.
Mr. Davidson: Will the right hon. and learned Gentleman give way?
Sir Menzies Campbell: No. I am about to finish.
The choice will be pretty clear: to stay in the EU and be part of its modernisation, or alternatively, to take a step that would ultimately result in leaving it. My belief is that the people of the United Kingdom can be persuaded that the former course of action is in their interests, and it is that course that I will be happy to urge on them, particularly in the company of the Foreign Secretary.
3.18 pm
Mr. Tam Dalyell: I will be succinct and address questions to the Minister for Europe, who will respond to the debate.
I am the last in the House of Commons of the so-called Jenkinsites, although that is not the term that we would have chosen for ourselves: the 69 Labour MPs who voted to go into the Common Market in October 1971. I am also, with my right hon. Friend the Deputy Prime Minister, the last of the first Labour European delegation that went to Strasbourg and Luxembourg. I say that because I am very interested in a question that I raised with the Foreign Secretary, and I hope that my hon. Friend the Minister for Europe will address it. With the new set-up, will we really get away from the sort of nation-state Buggins's turn that so plagued the Community at various stages?
I shall never forget—this is partly why I set out the background—that when we arrived under the leadership of Michael Stewart, one of our Dutch colleagues, Schelto Patijn, later to become mayor of Amsterdam said, "Of course, things were so much easier before you British arrived." I do not think that the difficulty was caused wholly by the British, although we were difficult enough, but because of the increase in numbers.
I could not agree more strongly with the Foreign Secretary that the idea of having presidencies every 12.5 years is absolutely preposterous. That might be agreed, but we would like to know a little more about how the presidency will actually work, especially in terms of official back-up, the authority that it will have and the basis on which it will be chosen. Managing 25 is difficult enough, let alone when one considers the real problems of translation. I know that there is not a question of translating Latvian into Portuguese, but if people are going to get on pedestals and talk about the rights of their own languages, there will certainly be difficulties.
Is the White Paper right to emphasise, as it does on page 15, that there will be no powers over defence and the Army? I cannot resist saying that some of us would have liked far greater co-operation with our European colleagues in the lead-up to the Iraq war, so it might be better if there were closer relations, rather than putting an emphasis on keeping things separate.
There is a problem with having a truncated debate that ends at 6 o'clock because a lot of people want to speak, so I ask the Minister for Europe a final question

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of which I have given him rather short notice about the specific matter of the Baltic states. Incidentally, the all-party group on arts and heritage is going to Lithuania, Latvia and Estonia at the end of the month. I ask for guidance on what the Community's attitude should be—constitution or not—towards the real problem of those countries' relations with the Russians, given that there are serious problems involving Russian minorities in Latvia and Estonia. I leave it at that, and hope that I will receive some answers in the Minister's winding-up speech.
3.22 pm
Sir Teddy Taylor: Like the hon. Member for Linlithgow (Mr. Dalyell), whom I greatly respect, I have been around for a long time and have heard all the debates on European affairs, including the treaty of Rome, the Single European Act and the others. I am worried that every single debate seems to have the same characteristics. In the case of every treaty, we are told that there is nothing much in it and nothing to worry about. If something is identified as a problem, we are always told that it is not new, but that it existed under previous legislation.
I think that the hon. Gentleman will agree that there is an additional problem. This is the first time that I have criticised the Foreign Secretary, but it is terrible when significant and important issues are not mentioned at all, which happened today. The creation of a European Foreign Minister is important because it could be costly and would lead to some loss of sovereignty, but the right hon. Gentleman did not mention it at all—that happens a great deal.
There are a few things about which the least we should do is to try to tell people what is going on. Is the Minister for Europe aware that there has been a substantial change to sovereignty? I mention that only because we had a visit from pensioners yesterday, and several told me that it was appalling that we were spending £10 million this year because the European Union had instructed us to pay pensioners' winter fuel payments to British residents in the overseas territories of Europe, including Guadelupe, Martinique and the Azores. Although those places have sunshine all the time, we must pay people there the winter fuel allowance of £200, yet people living in Iceland or north Canada, where it is cold, do not get it. The pensioners said, "Isn't that shocking and terrible?" and I said, "Of course, it's nuts". They asked what I could do about it, and my answer was, "Nothing."
I was also visited by retailers from Southend who complained that they were worried about breaking the law. They had heard that a new European law said that if they sold carrots of less than 1.9 cm at the thick end, they could get a penalty. They asked me to find out whether that was true and what the penalty was, so I tabled a question, which was answered on 4 February. In fact that is the new law, and people can be sent to prison for three months or fined £5,000. If such a law is wrong and foolish, what can we parliamentarians do about it? The answer is of course nothing, which is a big worry.
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What is the right of Britain to withdraw from the European Union now, and what will be its right after the new treaty comes into effect? I felt so strongly about the matter that I wrote to the Prime Minister, who sent me a lovely letter on 26 April. He said:
"if Parliament were to repeal that Act and withdraw from the EU, the UK would be in breach of its community Treaty obligations"—
I hope that the Liberal party has noticed that—
"and the Government would therefore have to negotiate the terms of its departure. Nevertheless, withdrawal…always has been legally possible".
The House of Commons Library is terribly good and by and large more reliable than some Departments, and it says:
"The Treaty of Rome … is concluded for 'an unlimited period' … and there is no provision for withdrawal."
There is no apparent legal provision for Britain to withdraw at present, and the only test case that we have is Greenland, which withdrew only with the permission of all member states, which had to pass appropriate legislation. However, the new, exciting treaty sets out a new arrangement on page 25, which I hope that all hon. Members have read. [Interruption.] It is introduced on page 25 and goes on to page 26. The heading "Voluntary withdrawal from the Union" is at the foot of page 25, so whether the arrangement is on page 25 or 26 is a matter of judgment.
The provision seems to imply that if a member state wishes to withdraw, it may enter into negotiations on that. With the agreement of the European Parliament arid European Council, it may try to get agreement to withdraw. If there is no agreement at the end of two years, however, things come to an end. Is the way in which I have set out the arrangement the case? If a country wishes to withdraw, which is a matter for its domestic Parliament, does it simply enter into negotiations and then, if there is an agreement, withdraw? If there is no agreement of any sort and the bodies say that they do not want a country to withdraw, is it possible to withdraw after two years? I ask whether that is the truth because one problem with such treaties is that we can sometimes find that what we think is the law is not the law at all.
I should be grateful if the Minister could provide guidance on something terribly important on page 29—the way in which legally we deal with people who have got into trouble. At present, under the Convention, Britain has the power to decide not to implement certain proposals. On the problems in Northern Ireland, for example, we said that we did not like what was proposed and wanted to keep certain powers for ourselves. However, the inclusion of things in a treaty makes them sovereign law, which could affect alleged criminals, vagabonds, rogues, terrorists and murderers from abroad in this country. The American Government, for example, could phone the Foreign Secretary or the Minister to say that they believe that two people responsible for the appalling attack on the twin towers and the 9/11 massacre have been seen in Birmingham or Manchester. However, according to page 25, we cannot send them to America if the death penalty is in force there. Is that the truth or not? I have read the treaty several times, and my understanding is that we cannot extradite terrible terrorists convicted of mass murder or

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murdering children if the country to which we have been asked to send them has the death penalty and there is a danger that they will be subjected to it. That is an appalling situation. If I am right—the Government may say I am wrong—what on earth do we do with those alleged terrorists? Do we simply allow them to stay here?
The Foreign Secretary said that there is nothing in the constitution that affects strike action. However, if the European Union believes that things in the United Kingdom are contrary to the statement on page 30 it could intervene and tell us to change our ways. In Britain, we have an arrangement whereby strikes usually take place after a vote. However, could a union go to the European Court under article II-28 and say that in its opinion British law contravenes its rights as a trade union, so the requirement to hold a ballot is unjust?
Page 32 outlines an unusual procedure on the severity of sentences and says:
"The severity of penalties must not be disproportionate to the criminal offence."
If a criminal were given a two-year prison sentence in Britain, and if he thought that the sentence was too severe, could he go to the European Court and argue that the penalty should be overturned? If the Minister says that he cannot, why on earth is that astonishing statement included in the treaty?
Page 15 says that we have an obligation to co-ordinate economic, employment and social policies. How far does that extend, and will we be obliged to go in the same direction in those three policy areas? Finally, page 19 says that
"the Court of Auditors … shall ensure good financial management"
of the European Union. Is it true that the Court of Auditors has refused to sign the European Union's accounts for eight years?
Mr. Kelvin Hopkins: Nine years.
Sir Teddy Taylor: I apologise for my mistake.
What can be done? If the Court of Auditors is being asked to do something—
Mr. Deputy Speaker: Order. The hon. Gentleman has had his time.
3.32 pm
Mr. Mark Hendrick: The Irish presidency inaugurated on 1 January strove to complete negotiations on the treaty by June 2004. On 1 May, the EU expanded to 25 member states—another major EU milestone. After heated negotiations the draft constitutional treaty or constitution was finally agreed on 18 June.
The aim is to sign the constitution on 29 October, and it is to be ratified in due course by all 25 member states. It will result in the largest ever recourse to citizens' opinions in open referendums across the European Union. The Prime Minister's announcement of the decision to consult British citizens has created widespread concern about a possible rejection of the constitution in the UK. As I have said in the House
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before, I do not believe that a referendum is necessary, but it is nevertheless important in the eyes of the public, particularly if the single currency is to be introduced here, that arguments about our role in Europe and the ratification of the constitution are settled, and a referendum is probably the best way of doing so.
Although, as I said, a referendum on the draft constitutional treaty may not be a necessity, we are where we are. The countries that have decided to hold a referendum are those like Belgium, France and the United Kingdom. Many more countries are undecided or have decided not to hold a referendum. In terms of UK traditions, many hon. Members—I am one of them—take the view that the general public elect politicians to make decisions on their behalf.
Much of the detail and the minutiae that are bread and butter to Members of the House are not of great interest to the general public. There has been a fall in turnout at successive elections and a general lack of interest in many of the issues that we discuss. Nevertheless, now that a referendum is to be called, we have a duty to try and reinvigorate debate and get the public interested in subjects that are very important to their future and which have had a huge impact on their lives over the past 50-odd years, although many of them may not have noticed it.
Belgium's referendum will be consultative, not binding. Perhaps we should introduce some sort of threshold for our referendum, so that if the turnout falls below a certain figure—for example, 50 or 51 per cent.—the outcome will not be seen to be binding. It is important that any serious changes that are made as a result of a referendum be carried out with the support of the majority of the British people.
On the need for a constitution, other speakers have alluded to the succession of treaties that we have seen. The draft constitution is a consolidation of existing treaties. Some have called it a rulebook. Colleagues have referred to it as a tidying-up exercise. It is indeed a very big tidying-up exercise. To consolidate all those treaties in a document of just over 100 pages is a huge achievement and a considerable simplification. For the life of me I cannot understand why the official Opposition should object to producing a document 100 pages long that will make the operation of a European Union of 25 member states far more efficient than do the existing rulebooks, which must constantly be cross-referenced.
Mr. Walter: I do not know whether the hon. Gentleman has a different copy of the treaty, but mine has 164 pages.
Mr. Hendrick: Including the protocols and so on would bring the number of pages to about 160, but as regards the substantive issues that will concern people in a referendum, we can safely say that not all 160-odd pages will be considered by the general public.
The simplification is extremely important. For an effective Union of 25 member states, it is essential that we get the treaty through. The campaign needs to reflect that. The constitution will make possible a far better division of Union and member state competences. We will see the attribution of a legal personality to the Union. The instruments of action will be greatly

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simplified. There will be measures to increase EU democracy, transparency and efficiency. The contribution of national Parliaments will be extended, as those of us who were involved with the Scrutiny Committee appreciate. Opposition to the constitution seems strange, given that the constitution gives national Parliaments a greater role than ever before.
Improving the structure, enhancing the role of institutions and, in particular, taking into account the consequences of enlargement will be a huge boost to the EU's future operation.
Enlargement is important to the development of the EU, which is why the Nice treaty was negotiated. I shall reiterate the point that I made earlier to the right hon. and learned Member for Devizes (Mr. Ancram): holding a referendum on the Nice treaty, which the Conservative party proposed, with a view to voting down that treaty would not have been conducive to EU enlargement to 25 member states.
The constitution will bring the EU closer to the citizens. By its very nature, the single document is more understandable for those who want to take the time to read it before casting their vote in the referendum. A recent Eurobarometer poll shows falling support for EU membership—nowadays, support for EU membership is below 50 per cent.—and we must make the case for Europe, which has not happened in this country for nearly 30 years.
A YouGov poll for The Sunday Times on 20 June shows the widespread misconceptions about the constitution's meaning. For example, 51 per cent. of respondents thought that the constitution would give the EU the power to control UK taxes, which is not the case, and 47 per cent. thought that we would be forced to join the euro, which is also not the case. Some 58 per cent. thought that Britain could no longer have its own independent policy on asylum seekers under the constitution, but the Conservative party has not mentioned that that matter would be subject to majority voting by which Britain could effectively opt out, and the press have not caught that point either. In that poll, 61 per cent. thought that the constitution means that the UK must change its laws on trade unions and strikes, and 46 per cent. thought that Britain would need EU approval before fighting a war. We know that all those points are false.
The poll also shows that although the public are against the constitution—asked how they would vote if the referendum were held now, 23 per cent. of respondents said that they would vote in favour and 49 per cent. said that they would vote against—that view is clearly based on misinformation. As elected politicians, we have a duty to challenge and dispel those myths. Certain newspapers do not want to let the facts get in the way of a good story and to make sure that the constitution is defeated.
Mr. Hopkins: Is my hon. Friend not making light of the public's opinion and common sense? I shall vote no
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in the referendum, and I do not think that I am ill informed. Indeed, certain newspapers support my hon. Friend's view.
Mr. Hendrick: I am sure that my hon. Friend is well informed, and I hope that the public are well informed by the end of the campaign.
Returning to the YouGov poll, when the public were asked to identify the things that matter most about the constitution, 60 per cent. said deciding tax rates, 52 per cent. said not being forced to join the euro, 38 per cent. said deciding policy on asylum seekers, 33 per cent. said deciding on military action and 32 per cent. said the right to leave the EU. Although debating individual articles or clauses may be the bread and butter of our intercourse in this Chamber, what is said in the Dog and Duck is different from our discussion.
Once the debate begins among the general public, I want to see an informed discussion. One of my hon. Friends made the point that factual documents based on the arguments for and arguments against should be made available so that genuine criticism, rather than misinformation and myths, can be levelled against the constitution. The case against the constitution is weak and it should not win the argument, but it is our job to defeat it and not to let people peddle myths and lies.
3.45 pm
Mr. Robert Walter: Some of my right hon. and hon. Friends may be a little surprised by what I say in the next 10 minutes. However, they will not be surprised by my reasons for saying it, because they are the same as those that I advanced in favour of a referendum on the constitution.
I have been a great supporter of our membership of the European Union ever since we joined, but I am seriously concerned that in those 30 years we have failed to take the people with us on the journey that we have made in its development and evolution. We have now reached a stage where the people as a whole have little understanding and little confidence in what is being done in their name. That Euroscepticism is not unique to Britain—it exists right across Europe. The democratic deficit seems worse in some other European states because people feel that it is inevitable and that they can do nothing about it. With the draft constitution, they will have the opportunity to send a message to the political elites of Europe that they would like somebody to stop and explain what is going on and what has been done in their name over the past 30 years, in our case—somewhat longer in the case of some other member states.
For all the spin that the Foreign Secretary put on the draft treaty, neither it nor the 50 pages of the White Paper provide the answer. When I read the Laeken declaration in 2001, I thought that we were beginning to go in the right direction and to pose some of the right questions. When I read the treaty—all 164 pages of it—I remembered that the one phrase in the Laeken declaration that stands out is
"simplification of the Union's instruments".
There is no simplification in this document. It has so much detail that one could hardly describe it as a constitution—it is a management textbook. Section 2, on page 65, deals with policies on border checks, asylum

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and immigration. It goes into great detail about "integrated management systems". I love this phrase about the European Parliament in article II-38:
"It shall meet, without requiring to be convened, on the second Tuesday in March."
That is not what one would expect in a simplifying treaty—it is the sort of minutiae of management detail that one would expect those who are responsible for looking after our interests to be able to come up with as a modus operandi.
Much of what is in this document could soon be out of date and we will be back in another intergovernmental conference debating yet another constitutional treaty to bring all the verbiage up to date. What we need is what Laeken talked about—to be able to create European institutions that
"must be brought closer to"
their
"citizens. Citizens undoubtedly support the Union's broad aims, but they do not always see a connection between those goals and the Union's everyday action."
We all know that Europe has changed and is changing. It now has 25 member states, with the 10 new countries that joined this year.
We all face new challenges, not least securing Europe's borders against terrorism, illegal immigration and international crime. However, in the spirit of the Laeken declaration, we need a treaty that will make the enlarged European Union of 25 countries more effective, thereby allowing us to achieve more together than we can alone, without giving up our independence. It should make the EU more democratic, put national Governments firmly in the driving seat and give national Parliaments more say over European decisions.
The enlarged Europe needs to be more effective and democratic and we therefore need a simple and transparent constitutional treaty. The constitution was supposed to consolidate the existing treaties into a single document, with the aim of clarifying the EU's rules and making them more accessible to voters.
I believe that an effective EU is in Britain's interest and that it is also in our national interest to be a member of the EU. We have many aims in common and can achieve more together than alone, making us all richer, safer and more influential. However, even before the recent enlargement, we were struggling to cope with the rules and institutions because, as has been said, they were those of the six. The EU desperately needs modernising and we desperately need a new treaty that simplifies matters and makes the EU more effective, without the sacrifice of our national independence.
A new treaty should spell out in black and white the powers of the various parties. It should explicitly state that the EU has only the powers that member states choose to grant it. It should clarify what the EU can and cannot do.
Mr. James Plaskitt: Has the hon. Gentleman read and noted article 9, which would do exactly what he seeks?
Mr. Walter: Of course I have read and noted article 9 as well as all the other articles in the treaty. The problem is that it contains so many articles that it provides no
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clarification of what the EU can and cannot do. It complicates the decision-making processes between the institutions of the Union and the member states. The treaty should be crystal clear about countries' retention of the veto in key elements of national sovereignty such as tax, foreign policy and defence. That is not clear in the document. Although it goes some way towards removing the open-ended commitment to ever closer union, it does not make it absolutely clear.
I would support a treaty that made the EU more open and accountable. I pay tribute to my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) and the hon. Member for Birmingham, Edgbaston (Ms Stuart) for their work on the Convention and their subsequent comments. However, despite their efforts, we have not got that sort of treaty. As we move towards a referendum on ratifying the treaty, we should be clear that conveying a message to the leaders of Europe that the document is unacceptable in no way means that we are anti-European or that we do not want the European Union to succeed. I stress that we want it to succeed.
There is a danger of overreacting to the undoubted success of the UK Independence party in our recent European elections. We must make it clear that withdrawal is not an option and that rejection of the treaty does not imply any such action. The anti-Europeans often tout the examples of Norway or Switzerland as attractive alternatives. We must make it absolutely clear in the debate on the constitution that those alternatives are not acceptable to the British people. We must reject such a fantasy. To gain full access to the single market, Norway has to implement all the EU regulations that we must with no say in the way in which they are set. Norwegians often refer to their country as a fax democracy because the laws by which they live arrive on a fax machine from Brussels.
Switzerland is bound by the same laws. Recent figures from the European Commission show that Norway has a better record of implementing EU regulations than the United Kingdom and—indeed, a better record than 14 member states. It has failed to implement only 0.7 per cent. of the regulations; the UK has failed to implement 1.5 per cent.
Mr. Hopkins rose—
Mr. Walter: I am sure that the hon. Gentleman will add to the list.
Mr. Hopkins: Is not the crucial point about Norway that it is free to choose its own economic and social policies, and need not abide by the rules of, for instance, economic and monetary union?
Mr. Walter: It need not abide by those rules, but when it comes to access to the single market—the most important aspect of the EU—it must comply with the rules and regulations laid down in Brussels. I consider one option suggested for the United Kingdom, whereby we would take a step back and adopt the same status as Norway or Switzerland, to be totally unacceptable.
Both Norway and Switzerland, moreover, must contribute to the EU budget. There is a myth about that as well. I think that the Norwegians are committed to

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paying some €1.1 billion over the next five years, and in May the Swiss agreed to pay some €650 million over the same period. That too is not an option.
We need a tidying-up, simplifying treaty—a short document that merely lays down the competences and makes the institutions and processes of the EU both transparent and accountable. This constitution does not do that. I believe that it should be rejected by the people in a referendum, and that we should renegotiate to bring about something more in line with the Laeken declaration.
3.57 pm
Chris Bryant: I am grateful for the opportunity to speak, and grateful for the debate itself. It marks an important moment in the EU's transition from one phase of its life to another.
The hon. Member for Rochford and Southend, East (Sir Teddy Taylor) referred to article 19 of the charter of fundamental rights. He asked for clarification of paragraph 1; as I am sure he will understand, it is self-evident. Paragraph 2 merely incorporates case law from the European Court of Human Rights dating from 1989 to 1996. I thought it obvious that for many years we in this country had pursued the policy of not extraditing people to countries in which they were likely to suffer the death penalty for crimes that they might or might not have committed.
Sir Teddy Taylor: What does the hon. Gentleman think we should do with, for instance, terrorists who have done some jobs in America—blown up 3,000 people, perhaps?
Chris Bryant: The hon. Gentleman said earlier that the charter of fundamental rights was bringing about a significant change, which would affect the UK. There is no such change, however: the provisions are already established in European law and, indeed, in our own law. The hon. Gentleman's point was poorly made.
We have reached an important moment, not least because by virtue of the constitution we have changed an ambition that until now the European Community—the European Union—has always claimed to have. I refer to ever-closer union. Article 1 of the original treaty stated that that was its aspiration, but the new article I of the constitution contains no such phrase. Indeed, it explicitly states what has never been stated before: that member states confer competences on the European Union to attain objectives that they have in common. In other words, it is not the European Union of itself that determines what competences it has.
Opposition Members have tried to suggest that this is a federalist document. How, in that case, could one of the leading federalists of Europe, Giuliano Amato, say on reading the final draft "I want to die"?
It is clear that the proposition before us flies in the face of anyone who wants a federalist agenda for Europe, so there is a changed ambition for Europe.
Of course, there is also a changed Union. We know that, by virtue of this year's enlargement—10 new members have joined the European Union, which marks
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a very significant change in the number of seats round the table, if not as significant a change to Europe's economic ability—we are no longer the gentlemen's club that we once were. When six members could all sit round a dining table and agree the future of Europe, the proposition was very different, and one needed a very different set of rules in order to make the Union operate effectively and efficiently.
It is not only the number of members that has changed; the international political environment has also changed radically in the years since the European Economic Community was founded. The collapse of communism has changed significantly the bipolar relationship into which Europe tried to fit itself; indeed, many of those who once fell under the shadow of communism have now entered the European Union. We must take seriously the rising tide of international terrorism, but we can do so only if we co-operate more fully. It is clear that countries that opposed the war in Iraq, such as France, and countries that supported it, such as Spain, are equally likely to face the wrath of international terrorism.
We also need to face down an argument advanced by many people since the constitution was published. Both Robert Kilroy-Silk and Tony Benn were arguing the other day that Britain has been lied to over the years. The argument is that when we originally joined the EEC we were told that it would be only a common market and an economic venture. But the truth is that, from the outset, the vision for the Common Market involved a political objective—not least, trying to ensure a peaceful continent for ever. I say to Conservative Members and others who argue that we should return to simply an economic union—a single market and nothing more—that the economy is never hermetically sealed. I do not believe in laissez-faire politics; I believe that the economic is political. One cannot split the two into a false dichotomy.
This is also an important moment because it marks a changed rulebook. The old amalgamation of treaties, which I knew to be an imponderable set of proposals when I worked for the BBC in Brussels—[Interruption.] That is all the bêtes noires of the hon. Member for Stone (Mr. Cash) combined into one. When working for the BBC in Brussels and trying to make sure that Rupert Murdoch did not win his fight against BBC News 24, I knew that the old amalgamations of treaties—the "TEC" and the "TEU", as people used to call them—with their layer upon layer of different obligations on member states and the Commission, were simply unworkable. Because of the complex arrangement of "pillars", they made no sense to the ordinary citizen—or, for that matter, to the ordinary lawyer, many of whom were making a very good living out of trying to explain the treaties to the various officials.
The old system offers no clear delineation of the Commission's powers, which is a major reason why we have witnessed Commission creep over the years. At one point, the Commission was trying to tell Europe what public service broadcasting should be like in every country in Europe. That was possible because given the treaties' current form, it can be argued that the Commission has a competence in that area. The new delineation of competences makes it extremely clear that the Commission does not have that power. The new structure, involving five areas of exclusive competence, is much better and will put an end to Commission creep.

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Contrary to what the shadow Foreign Secretary said earlier, a constitution is a good thing. A constitution provides what many Conservative Members have clamoured for for years: some clarity about what the Commission does, what the Council does, what member states do and what the European Parliament does.
None of those things have been clear in the past and it is precisely such vagueness that will be abolished by the constitution. That is why I do not reject the idea of a constitution per se, as the Conservative party seems to do: indeed, I welcome it.
I believe that the status quo—what one is effectively arguing for in voting against the constitutional treaty—will simply not hold and that a no in the referendum would effectively be a yes to the vagueness, complexity and bureaucracy of the present system. In short, it will be a yes to Maastricht.
We have heard a lot from the Opposition over the last few weeks about why this particular constitutional treaty is not right and about how they might be enticed into voting for a different constitutional treaty. One of their arguments is that the present treaty is simply not flexible enough and does not allow for a flexible Europe. I want a flexible Europe and I would like, in the words of the Conservative party, a live-and-let-live Europe. That is why article I-43 provides an admirable way of allowing for enhanced co-operation, but I also believe that we need provisions to ensure that, when other countries co-operate, it does not worst the other members who are not taking part. Otherwise, it would be failing to allow live-and-let-live and allowing only live-and-let-die.
Another argument sometimes advanced relates to the primacy of EU law, particularly as expressed in article I-5. Of course there should be primacy of European law in certain areas where it is right for Europe to have the competence. European Court of Justice case law has applied since 1964, and I have to say that it is in our best interests. If something has been agreed around the table and it is within the competence of the Union to decide something, it is in our interest that all the other countries in Europe are signed up to it. Otherwise we would be cutting off our economic and trade noses. Many of this country's businesses have desperately wanted internal market provisions, for example, to be enforced effectively across the other European countries so that British businesses can do better business in Europe.
The truth is that Conservative opposition in that respect is contrary to the best interests of British business. That is undoubtedly why the Lords European Union Committee said that that doctrine was a "well established" and "key element" of the Union's legal order. The Conservatives are working against the interests of business in this matter and in favour of legal disorder in Europe. This is not a "new legal order", as the Conservatives state in their document published yesterday, and I have to tell them that hyperbole may make good campaign slogans, but it makes for poor politics and, even worse, poor government.
Much has been said about the co-ordination of economic and employment policies, where articles I-14 and I-11(3) are particularly relevant. In actual fact, contrary to what the shadow Foreign Secretary said earlier, there has been a change from the original document, because it is now the member states that
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"shall coordinate their economic policies within the Union".
Paragraph 3 of article I-14 also states:
"The Union shall adopt measures to ensure coordination of the employment policies"
of the member states.
I hope that the UK will vote yes. The status quo is unsustainable and the present treaties are too complex and labyrinthine. The present structures of the EU with its pillars and its rotating presidency may be a good fairground attraction, but its cumbersome bureaucracy is not fit for the purpose—
Madam Deputy Speaker (Sylvia Heal): Order. The hon. Gentleman's time is up.
4.8 pm
Mr. David Heathcoat-Amory: I was intrigued to learn that the hon. Member for Rhondda (Chris Bryant) used to work for the BBC in Brussels; I thought I had heard that speech before somewhere. His legacy lives on in some of our national broadcasting editorial departments. Unfortunately for them and for the hon. Gentleman, this matter is to be decided by the people, and I expect an entirely different outcome.
To start on a note of agreement, the coming of a written constitution is a big event for any country. We have not had a written constitution in this country since after the civil war, in 1653. It did not last for very long, but at least it was drawn up in this country, whereas the European constitution has been drawn up by others, in a contorted series of negotiations during which the Government conducted a long series of retreats.
The result is a document of truly fantastic complexity. Contrary to assertions made earlier, especially by the hon. Member for Preston (Mr. Hendrick), the result is longer than the treaties that it replaces. There are more pages, articles and protocols than in the existing treaty. Quite simply, the simplification drive has failed.
Mr. Hendrick: Will the right hon. Gentleman remind the House that he was one of this Parliament's representatives at the Convention? The right hon. and learned Member for Devizes (Mr. Ancram) said that only 10 per cent. of our amendments to the Convention were accepted, but will the right hon. Gentleman say how many amendments he put forward, as it is obvious that this document bears no relation to anything that he would want?
Mr. Heathcoat-Amory: I freely concede that the Convention failed utterly in its aims. It was told to create a simpler, more democratic Europe that was closer to its citizens, but it failed on each and every count. That is why I did not sign the final document. Instead, I submitted a four-page minority treaty, which was signed by a number of other conventioneers. I think the people of this country would far rather have that as their governing treaty in Europe.
The document's complexity does not disguise the awesome nature of the changes that it introduces. In this country, we are debating matters such as the future of the judiciary, the establishment of a supreme court and the future of the Lord Chancellor. However, the reality is that the supreme court in this country will be the

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European Court of Justice, as is made practically explicit in the document. That court, to which this there is no appeal, will decide on the interpretation of the constitution.
I was interested to note that the House of Lords report on the ECJ—which was compiled by a Committee dominated by those in favour of more European integration—pointed out that
"if the Court is the ultimate arbiter on the extent of the Union's competence, it follows that the Court also has the final say in defining the extent of Member States' powers."
We are therefore handing over, explicitly and formally, the powers of this House to another jurisdiction. No other interpretation is possible.
My hon. Friend the Member for North Dorset (Mr. Walter) mentioned the complexity and confusion of the provisions governing the allocation of powers. He is absolutely right: the concept of shared powers does not advance the distinction at all, especially given that the definition of sharing means that, when the EU legislates, member states lose altogether the right to do so themselves. However, the additional point is that, in any difference of view about exactly who does what, this House and any court in this country will be literally powerless. Such matters will be decided by the ECJ.
When we hand over more powers whose definition and enforcement are in the hands of another court, what will be the point of holding elections in this country? That is where the democratic imperative comes in. There is already widespread disillusionment about politics in this country. Fewer and fewer people vote in elections, and the turnout across Europe in the recent European Parliament elections fell for the fifth time running, reaching an all-time low. People do not see that Parliaments have any relevance when it comes to the political choices facing them.
A crisis will arise if the matters that we put before the people in general elections—all those policy issues that we debate and divide on in this House—are no longer for this House to decide because the constitution has transferred them to the EU. In many cases, those matters will be decided, and initiated, by those who cannot be voted for by the people of this country, and who certainly cannot be removed by them.
The Government are now trying to sell this wretched document to the public at large. They have repeated the rather stale hope, as we heard the Foreign Secretary do, that the House—the national Parliament—gains some addition leverage on subsidiarity. As the hon. Member for Birmingham, Edgbaston (Ms Stuart) said, that is not true. The Government tried to give additional powers, including a kind of veto power, to the national Parliament over measures that breach the subsidiarity principle, but they comprehensively failed in that, as they did in most of the rest of their amendments. We can do no more than raise the issue; the final decision will, as always, be with the European Commission and the European institutions.
I am afraid that the Government are resorting to cruder techniques with the public. I was disappointed to read during the recess that the Europe Minister, who is sitting on the Treasury Bench, was suggesting that those who criticised the constitution and the European Union
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were motivated by xenophobia and even racism. This is the same Europe Minister who called the President of Venezuela, Senor Chavez, "a ranting populist demagogue". The President has been reconfirmed in his position in a recent referendum. The new Foreign Office doctrine seems to be that it can be personally abusive and rude about the elected leaders of non-European countries, while at the same time criticising Members of Parliament who criticise the European Union and its institutions. If this is how they are to conduct the debate about the constitution, we have been warned.
I was further disappointed on reading—at least in outline—the White Paper published this morning, to see that there was no mention of the red lines. We all remember the red lines in last year's White Paper—issues on which the Government were absolutely not going to give way under any circumstances. Those red lines have been completely forgotten in this White Paper. Why are they not mentioned? Because the Government gave way on them.
Criminal justice procedures, including sensitive issues governing the rights of the accused and rules of evidence that form the basis of many criminal justice Bills going through the House, are now to be decided by qualified majority voting. That is why elections will not make any difference. If a shadow Home Secretary proposes a change in the law on criminal justice procedures and wins an election, he will not be able to do anything: decisions will be made over his veto, by the European Union and qualified majority voting. That was a red-line issue to be reversed, and the Government failed.
All we have now is an emergency brake, whereby if some measure fundamentally alters the entire legal system of the country, we can insist on a veto. However, that is not how the European Union works. I am a member of the European Scrutiny Committee. We considered 1,000 measures last year. An emergency brake cannot be pulled on each one. It is the incremental build-up of laws and directives that constitute the acquis communantaire—all 97,000 pages of it. An emergency brake, which may be used in some supreme eventuality, is irrelevant.
The red line on criminal justice was overridden. The same is true of social security, on which there is some emergency brake. Meanwhile, social security payments for migrant workers and the self-employed and their families, are to be decided by majority voting, which is contrary to all the assurances given to the House in the run-up to the final negotiations. The same is also true of the European public prosecutor and the compulsory coordination of employment policies. All those were promises that were given to us solemnly—and given to my Committee—in the run-up to the negotiations, but they were simply ignored.
What we require from the Government, and what we have not had today, is an explanation of how that advances democracy. How can it be that transferring more powers away from this House, upwards to the most remote tier of Government of all, in any sense brings those European decisions closer to the people, as we were instructed it would?
This document is an outrage. The only redemption is that we are to have a referendum on it: that is to say, we will if the Government do not do the same as they did with the referendums on the regional assemblies; it

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looked as though they were losing in the north, and so now they will not be held. I would like an explicit undertaking and assurance from the Minister replying to this debate that we will have a referendum, because if we do, people will vote for self-government, not this document.
4.20 pm
Mr. James Plaskitt: The constitution is undoubtedly seen by some of its opponents as part of a plot to create a European superstate or as part of some conspiracy. I know that not all of its opponents see it that way—there are some reasoned, perfectly respectable arguments to use against the constitution, or parts of it—but we have heard quite a bit this afternoon from the former category. I am surprised that the right hon. and learned Member for Devizes (Mr. Ancram) comes in that category. We certainly heard some more of the conspiracy arguments from the right hon. Member for Wells (Mr. Heathcoat-Amory), who seemed to think that the constitution was something driven by a sinister force in Brussels seeking to foist something terrible on the unsuspecting people of Europe. One certainly gains that impression from certain sections of the British media, who seem unable to say anything objective or truthful about the draft constitution.
The truth of the matter is that there is no plot here. There is nothing sinister going on at all. There is no stealthy move to impose some European superstate. This is a process. It is a process that is being driven by a simple and clear logic. It is being driven by what is happening inside the European Union, which is undergoing enormous change, partly or largely as a result of the expansion that has just taken place and the further expansion to come. Expansion fundamentally changes the nature of the Union. The process is also being driven by what is happening in the rest of the world, with the acceleration of the move towards a global economy. In the most fundamental sense, Europe is simply responding to those pressures.
It is important before going into the detail of the constitution to step back for a moment and look at the context and the EU's fundamental achievements since it was created almost 50 years ago. It has brought about a powerful grouping of nations that constitutes the world's largest trading bloc. It has brought about political stability not previously seen in Europe. It is worth reminding ourselves that three of its established members are pretty new democracies and eight of the members that have just joined are extremely new. Some of the countries on the applicant list will also be very new democracies. We should not disregard the EU's contribution to spreading and reinforcing the democratic guarantee in Europe.
The EU has also brought about a structure that delivers co-operation and joint working on a range of transnational issues which now dominate our age. How do we sort out global communications? How do we tackle environmental protection? How do we deal with mass migration? How do we organise trade flows? How do we tackle cross-border crime? How do we reinforce human rights? We have to address those issues not as separate nation states that never co-operate with each other. They are forceful issues to which countries and Governments must respond.
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The European Union has also brought about an unprecedented period of economic stability and steadily growing prosperity in Europe. Let us consider for a moment rolling back the whole enterprise. Imagine that it was not there. Go back to before the treaty of Rome; to a Europe of 25, 30 or 35 totally autonomous separate nation states. It is inconceivable that that arrangement would be able to endure into today's world. There would be no instrument of authority on the scale required to deal with many of today's economic and political issues. We would have Balkanisation right across Europe, with impoverishment as the only result. I do not accept for one minute that some sort of loose basic trade association could possibly be a viable alternative.
As I said, the process is driven by simple logic, the real nature of economic activity and the transnational nature of the dominant issues of our time. If that is the case, why is there so much Euroscepticism, which we have heard in the debate and which we hear in our media? There is a fairly simple answer to that. The more the European Union acquires powers and influence, and the more its competence expands, which it unquestionably has, the greater demands are placed on it in relation to accountability, and the more questions are asked about its structures. Who is in control? Who is setting the course? Who takes the blame when things go wrong?
When we ask those questions of the European Union, its present structure is found seriously wanting. The EU's house is not in order.
The dominant fear is of a steady, continuous, unstoppable process of integration, with no defined finishing point. Because there is no defined finishing point, critics conclude that the only conceivable finishing point is a big, federated political union—a European superstate. Indeed, the EU's structure provides some support for such fears. Its rulebook is a maze of four treaties with three pillars. It has a bizarre executive structure, which gives a considerable degree of permanence to the motor—the Commission—but ensures constantly changing occupants of the driver's seat. It also has a peripatetic Parliament. If someone were designing a grouping of nations from scratch, they would not come up with the present design.
The constitution is proposed as a means of addressing the weaknesses in the EU's structure. Other hon. Members have mentioned the Laeken declaration, and I shall quote a short section of it. It says that people
"want the European institutions to be less unwieldy and rigid and, above all, more efficient and open. Many also feel that the Union should involve itself more with their particular concerns, instead of intervening, in every detail, in matters by their nature better left to member states' and regions' elected representatives. This is even perceived by some as a threat to their identity. More importantly, however, they feel that deals are all too often cut out of their sight and they want better democratic scrutiny."
Those observations do not come from a Eurosceptic document from a political party: they were made by the elected Heads of Government of the EU in December 2001.
The constitution fulfils the aspirations set out in the Laeken declaration. It will do away with the encyclopaedia of treaties and their supporting pillars and replace them with one simple rulebook, 80 per cent. of which is distilled from the existing treaties. The

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constitution also sets out clear rules about who does what, and puts a stop to the competence creep that has characterised recent EU history. It establishes for the first time in the EU's history who has which competence. Article 235 of the Rome treaty will be replaced by new article I-9, which inverts the assumption in the original treaty. New article I-9 states that
"the Union shall act within the limits of the competences conferred upon it by the Member States … Competences not conferred upon the Union … remain with the Member States."
In other words, that is a complete reversal of the principle enshrined in the Rome treaty. But I have not seen a single Eurosceptic newspaper in the UK report that fact. The constitution also corrects the imbalance in the Executive by creating a comparable permanence between the Council and the Commission. It strengthens the role of the member state Parliaments and gives them for the first time the right to send back proposals for rewriting.
The constitution marks a profound rebalancing of forces and powers within the EU in favour of the citizen, and in favour of the member states, as requested in the Laeken declaration. It is the decisive rejection of the alternative vision—a Europe that is centralised, uniform, bureaucratic and destined to become a superstate. The fact is that a European superstate cannot be built on this constitution. In fact, we would be much more likely to get a superstate, by stealth, if we persevered with the current mishmash of treaties and the current imbalances of power. The constitution is a far better defence against a superstate than the current bundle of treaties.
The EU's processes have become opaque. It is not clear to most of the people of Europe where the Union is headed. It is not clear who does what. In that context, it is not surprising that public confidence is low. The EU urgently needs to put its house in order. That is what this constitution does and that is why it should be welcomed and supported.
4.29 pm
Mr. Elfyn Llwyd: We know that the constitution is meant to roll into one the treaty of Rome, the Single European Act, the treaty of Maastricht and so on, and many people think that it is purely and simply a tidying-up exercise. However, it is probably more than that; it certainly contains some important new provisions. Common sense dictates that a European Union of 25 is quite different from one of 15 or of six.
It is obvious from reading the document that, where EU member states choose to co-operate, EU law takes precedence over national law. That is nothing new; it has been the case since 1973. The document reaffirms that the Union is meant to be a union of nation states and not a European superstate. According to a recent House of Lords report,
"there is considerable reassurance in the draft Treaty for those who fear that the EU is becoming too like a State."
That is a clear statement; the document is not the precursor of a superstate. It clarifies—albeit not perfectly—what the EU can and cannot do, which is extremely important.
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A cursory reading suggests that the constitution enhances the role of national Parliaments. Whether that will be true, I know not, but that is what the constitution is meant to do. It states that if a third of national Parliaments oppose an EU law they can insist that the Commission review it. However, I listened carefully to what was said earlier on: the scrutiny processes in this place are abysmal and they need to be addressed.
I do not see the presidency of the European Council as a true presidency, but it makes more sense for the person to hold office for two years rather than six months if there is to be the policy cohesion and continuity that there should be. Reference to a Foreign Minister is not a precursor of a superstate either. There is a genuine role for the EU on the world stage and such a position is one way of assuring that role.
There is to be a simpler, more efficient voting system. That is a good idea. A simpler system would make it easier for Governments to make decisions. One proposal is that decisions would require the approval of a majority of member states, representing at least 60 per cent. of the EU's population. Such a system could be more democratic because power would be better spread throughout the Union.
There are various responsibilities. The EU already has competence in competition policy, the single market, common trade policy, customs union and marine biological resources under the common fisheries policy. It has sole responsibility for monetary policy in countries that have adopted the euro. That is known and none of it is new; it has simply been restated.
On asylum and immigration policy, it seems that member states would keep the right to decide how many work visas to issue and of what type they should be. The treaty simplifies the legal basis of Europol, which is important, especially given what was said earlier about cross-border crime and the smuggling of drugs, guns and so on. Such a measure is not a bad thing; it is entirely reasonable and there is nothing drastically new about it. We discussed the issue in a separate debate last year.
It is welcome that member states will retain their national veto over foreign policy. That is perfectly acceptable and will not lead us into any kind of superstate.
I want to mention some of the things that concern Plaid Cymru. We were the first party in the UK to call for a written European constitution and a binding charter of fundamental rights, so in principle we welcome the current move.
The charter of fundamental rights had already been agreed by the European Union, but only as a voluntary measure. Now it will probably have legal force. It includes the right to join a union, the right to strike and more specific rights such as rights to information and consultation. However, it is unclear what actual legal status the charter will have. The British Government need to make that more explicit, because the Foreign Secretary did not answer that question when he opened the debate. I believe that legal opinion is that the European Court will be able to use the charter in all its decisions, and the European Court has often produced decisions that were deemed friendly to workers. However, we should like to know whether the charter will be binding as a legal document, and to what degree.

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I would like to see the National Assembly for Wales being consulted at a better level and more often than it is at present. I understand that the state Parliaments will have rights of consultation and so on, but I would hope that the devolved assemblies and Parliaments also will have a real function in all of this. I say that because, if devolution is to work, the principle of subsidiarity must surely be embedded there as well, not only in European parlance.
I welcome article 1-3.3 on sustainable development, one of the EU's overriding objectives, with the environmental protection measures at its core.
I want to mention three or four points that are very important to us as a party. First, we believe that the National Assembly should be consulted by the UK Government before the Commission publishes proposals relevant to its powers, as will the national state Parliament of member states. Secondly, I ask that the devolved territories or Administrations have real representation on all relevant UK delegations in the Council of Ministers and in the preparatory meetings of COREPER. When deciding whether a proposal infringes the jurisdiction of a national or regional institution under the protocol on subsidiarity, we believe that the House of Commons should exercise one of the UK's votes and the other should be decided by the legislative assembly of the devolved territory affected, on a rotational basis if necessary.
Finally, we read this week that the Irish Government have said that they believe that the Irish language should become an official language of the EU. I heard the Father of the House say that if everybody is going to fight for their language—[Interruption.] Yes, the Minister knows what is coming next, but let me just say this. If we are to engage in a meaningful discussion on the constitution, at the very least the Welsh language should be in there. If we are to have a meaningful dialogue during the referendum campaign, which we all sincerely hope will happen, at the very least the constitution should be translated into Welsh. I would hope, and our party would hope, that in due course Welsh does become an official language of the EU. We have always been pro-integration and frankly, with great respect to our Irish colleagues, more than three times as many people speak Welsh as speak Irish. That is not meant to be one-upmanship, but clearly—
Mr. Dalyell: I should like to ask the hon. Gentleman how many Welsh people likely to take an interest in these documents cannot read English as well as he or I?
Mr. Llwyd: With great respect to the Father of the House, that is not the issue. I speak Welsh as my first language. I am a barrister by profession and I can do court cases in either language, but I would prefer to speak my first language when I am able and wish to do so. The House passed the Welsh Language Act 1993, and the spirit of that Act is that every person in Wales who has a public service delivered to him or her should, if he or she opts for it, have it delivered through the medium of the Welsh language. If I may say so to the hon. Gentleman, for whom I have a high regard, the Father of the House makes a rather empty point there.
At the end of the day, these points having been considered by Governments, it is likely that our position will be that we will support holding a referendum and
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that we shall be positive and that we shall work hard in that campaign. It is likely to be a similar position to our 1997 devolution referendum position. The plan that is being put before us is not really a stark and awful Kafkaesque version of Europe. It does not, I believe, radically alter the face of the European Union beyond the principle of being a written constitution and it is not as radical as the Maastricht treaty or indeed the 1986 Single European Act.
However, the proposal leaves considerable power in the hands of member states. It is a tidying-up, but there are new provisions. I, for one, do not fear them. I will take part, I hope, in a rational, reasonable discussion during the referendum campaign. I believe that this is a step in the right direction. This is the first time that the Union's powers and structures will be set out in a single document, and I believe that the institutional reform is highly necessary for a growing Union.
4.40 pm
Mr. Kelvin Hopkins: First, may I say how strongly I support the point made about the Welsh language by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who speaks for Plaid Cymru? It is very important that minority languages are preserved as creations of humankind—but that is not the main point of my speech.
I congratulate the Government on deciding to hold a referendum. I understand that congratulations are due to my right hon. Friend the Foreign Secretary on persuading the Prime Minister about that sensible course of action, and I wish that he was here to hear my congratulations; perhaps another time.
It will be no surprise to some of my hon. Friends and, indeed, other hon. Members that I will not vote in favour of the treaty—I shall come to my reasons later—but the doubts about the treaty are widespread across Europe among those on the left. I say that because the issue is sometimes portrayed as a left-right argument, but I do not think that it is: the left in Europe is profoundly concerned about the treaty and what it entails.
Today, I understand that Laurent Fabius, the former French Prime Minister, is about to express his doubts about the treaty. I do not know whether he will vote for or against it, but his supporters are certainly saying that they should vote no, and others on the left in France feel equally strongly. The French have decided to go for a referendum. Indeed, it is possible that the French may have a close-run referendum, as they did over the Maastricht treaty.
Others have doubts. Doubts may be growing among those on the left in Germany because of high unemployment. There are serious disturbances, particularly in the east, where unemployment is high and there are threats to cut benefits. When German working people start to make the strong connection between the rules of the eurozone and, indeed, the rules imposed by the EU on their economy, they may have some serious doubts about pursuing the constitutional treaty. There is a direct connection.
The poor East Germans, in particular, have suffered a double whammy. First, the one Ostmark for one Deutschmark overvaluation of their currency led effectively to the closing down of all East German

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industry. Fortunately, the recycling of billions of Deutschmarks helped them to survive that trauma. Secondly, the Deutschmark was overvalued when it entered the euro, causing the same deflationary problem that the East Germans faced. Although the problem is perhaps not so extreme, it has had a similar effect.
Mr. Hendrick: My hon. Friend refers to the French referendum and expresses views on whether the Germans should have one, but in an interview with the Financial Times, the German Chancellor, Gerhard Schröder, said:
"The German constitution does not allow for a referendum. We will have a parliamentary process".
I sometimes wish that that were the case here. What is my hon. Friend's view on that?
Mr. Hopkins: I understand that, only a week or two ago, the German Chancellor proposed changing the law in Germany to permit referendums, although not specifically in relation to the treaty. Of course, German Governments change. Sadly, there might be a reversion to the right, which I would very much regret, and a change in the German constitution and position.
Chris Bryant: In fact, the Christian Democrats in Germany are arguing very passionately against introducing a referendum provision. That almost certainly makes such a change in the German constitution impossible, because it would need a significant majority in both Houses. Of course, it is interesting to note that that is the sister party of the Conservatives in this country, with which they share operations in the European Parliament.
Mr. Hopkins: My hon. Friend makes the point that the politics of Europe are confused in every country. Indeed, there are divisions in almost every party, and I know that several Social Democrats in Germany have a profoundly anti-eurozone view.
Doubts have also been expressed by euro-enthusiasts. During the negotiations on the treaty, John Monks said that the support of the European Trade Union Confederation could not be guaranteed if Britain successfully reduced the effect of the Human Rights Act 1998 on employment legislation, although I think that that has probably now been overcome. That illustrates the struggle between social democracy and neo-liberalism, which is what underlies the European debate. I am a profound supporter of social democracy and think that post-war social democracy has led to the peace that we have enjoyed for the past 50 years—most of my lifetime. The full employment, the redistribution of income and wealth, the welfare state and the social justice embodied in post-war social democracy, together with Keynesian economics, have led to the peace that we have enjoyed in western Europe, not the European Union. Recently, a report by Ian Milne entitled "A Cost Too Far" suggested that growth in EU countries had been slower than that in comparable countries outside because of the deflationary impact of the eurozone especially and European economic policies in general. There are worries on the left as well as the right.
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It was interesting that, when the combined opposition of Spain and Poland brought down the last proposal for a treaty, there was palpable relief in Whitehall because it meant that Britain would not have to face the agonising task of persuading its people to vote for it. Indeed, it was thought that the treaty would not be brought back for many years and that we could forget about it—thank goodness for that—and concentrate on joining the euro, which the Government were perhaps more interested in. The treaty has come back, but as has been reported widely in the newspapers, there is even now a sense that the Government would be grateful if another country voted no before our referendum so that we would not have one. Are Governments more concerned about losing face than the treaty itself?[Interruption.] Well, the Government are committed to holding a referendum, which I support strongly, and I have said before what my position will be. However, if another country votes no before then, I suspect that champagne corks will pop in certain Departments of State in Britain. I shall certainly pop my champagne cork on that day.
There is still a grave doubt surrounding precisely what Europe is about. We hear almost daily of debates about whether we will have a Christian commonwealth of some kind—Giscard d'Estaing's view is that it is really about Christianity. There are severe worries that that might exclude Turkey, but the Americans want Turkey to join because it would tie a Muslim country into the European Union. The membership of such a country, especially one that borders on the oil lands of Iraq and beyond, would be interesting for western strategic reasons.
The right hon. and learned Member for Devizes (Mr. Ancram) tried to assert that the Conservative party had always supported enlargement, but I heard Sir Edward Heath oppose it in one of his last speeches in the House. He believed in a tightly drawn group of heavily integrated western European nations and thought that enlargement would loosen that arrangement. The European Union was originally a bloc of western European nations of similar economic standing that could work well together. As soon as one goes for enlargement, the bonds start to loosen and the arrangement becomes more sensible, so I strongly support it on those grounds.
Retiring Commissioner Frits Bolkestein referred this week to the possibility that we will have an Islamic European Union. That is nonsense. However, we should not be a Christian European Union, but a Union that embraces all beliefs, whatever they are, with democracy at its core.
I return to my main point that the essence of a modern democracy is control over one's economy. If one does not have that control, one has democratic control of hardly anything. Economic power should therefore be retained by member states. We should co-operate voluntarily with other member states, but economic policy should not be decided at a level above the member states.
Mr. Mark Lazarowicz: What is my hon. Friend's assessment of

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the extent of the control that Switzerland and Norway enjoy over their domestic economy compared with EU countries?
Mr. Hopkins: I am glad that, like us, Norway, is not a member of the eurozone. It has close relations with EU countries, adopts European rules and, like us, is closely involved in the European Union. It is not, however, a member of the eurozone—that is the core of the issue—and can choose its economic policy. We are all part of the world economy and are all buffeted by global economic forces, but we can at least choose our own interest rates, exchange rate and fiscal policy, and we can decide to reflate or deflate. That is not possible for members of a union in which policies are decided by unelected central banks. That is of fundamental significance. Norway, like us, is free of that control at the moment. [Interruption.] My hon. Friend the Member for Rhondda (Chris Bryant) asks about Britain, which has handed power over interest rates to our central bank to control inflation. However, if the Bank of England started to deflate heavily before an election the Chancellor would have a few words to say about that, and we can always take back that power if we choose. [Interruption.] I would be happy to do so, but I have no criticisms of the Bank of England at this stage, as it is doing an excellent job on interest rate policy. Indeed, I am pleased that its previous Governor has similar views to mine about the eurozone and our membership, or not, of it.
There are serious worries across the European Union, particularly in labour movements, about its direction and the way in which we govern our economies. The best example is the Swedish vote on the euro last year, when the left, including the trade unions and the social democrats, was worried about the threat to the welfare state and voted against membership of the eurozone. We, too, should continue to oppose membership.
Finally, the treaty makes inappropriate reference to the institutions of the eurozone, which is a major reason why I do not support it. There should be a separate document on the eurozone that has nothing to do with the treaty, if we vote in favour of the treaty at all. Only a minority of member states belong to the eurozone. We do not belong to it and neither do most other members, so why should we support a treaty that governs its essential components? That is wholly inappropriate, as the hon. Member for Rochford and Southend, East (Sir Teddy Taylor) said. He was going to make a strong point about keeping the economic components of the treaty separate. As and when we vote on the treaty, we should vote on a document that does not cover the eurozone and does not deal with economic matters.
4.53 pm
Mr. Richard Shepherd: We often puzzle about constitutions and what they are. During our debate, the hon. Member for Rhondda (Chris Bryant) said that if we vote down the proposed constitution that would be an affirmation by the people that they were satisfied with Maastricht, Nice and everything that preceded them. That spin is almost worthy of the new European Commissioner, as the hon. Gentlemen knows in his heart of hearts. Four months ago, he voted against the holding of a referendum, on the insistence of the Whips, in an Opposition debate on
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the subject. Four weeks later, however, the Prime Minister decided on a lilo in Bermuda that the will of Parliament, as expressed by the Members of Parliament marching through the Lobby, was to hold one.
So when I listen to the attestations as to whom we represent and what we represent, I see a party turned on its head. The last vote by the party controlling the House of Commons was that there should be no referendum, but that changed, just like that.
I pose that point because at the heart of it lies the concept of representative government. It took us a long time to form a democratic institution. Is it not interesting that in the course of the Foreign Secretary's speech and in the speeches of all those who have spoken, with the exception of my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), that dangerous word "democracy" did not creep in? Over the 25 years I have been a Member of the House I have come to understand that that is the essential trust that forms the basis of the questions that intelligent people ask about how they are governed.
The document is undoubtedly grandiloquent. In its preamble establishing a constitution for Europe, it quotes Thucydides, no less, in both Greek and English. It states:
"Our constitution…is called a democracy because power is in the hands not of a minority but of the greatest number."
There is nothing in the document that evidences that—not a word. The institutional arrangements are devoted to ensuring that power is not in the hands of the greatest number. Of course, being a European document, or a Union document, what does it say—timbals, cymbals and bells—in part IV, "General and Final Provisions"? I know it is easy to mock such a construction. How could it be difficult, with 147 pages of management consultancy, as my hon. Friend the Member for North Dorset (Mr. Walter) called it? What are the important things that make the Union?
"The flag of the Union shall be a circle of twelve golden stars on a blue background.
The anthem of the Union shall be based on the Ode to Joy from the Ninth Symphony by Ludwig van Beethoven.
The motto of the Union shall be: United in diversity.
The currency of the Union shall be…"
and so on.
The substance of the constitution is what we are concerned about and that is why the document is not suitable for the British people. Britain has come to understand that. We will reject it. It was Mr. Giscard d'Estaing, the former and disgraced President of the Republic of France who, in another grandiloquent gesture, tried to compare himself to those in Philadelphia who began the process of forming the United States of America. What is the language? What is the length? Sixteen pages in its original form, as opposed to more than 100 pages of management consultancy in the European document.
What is the core message? "We the People"—Jefferson's words, reissued in the mid-19th century with the greatest statement, perhaps, of democratic government. We the people govern ourselves. The Government are formed from ourselves and held accountable by ourselves. That is the essence of it, and a constitution tries to settle the matter. Ours does. In our

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own history in this long march to seize control over an Executive, it became evident, as Churchill himself said, that the people are sovereign. For 25 years a political class sees itself as an elite, but a Prime Minister can insist that the House votes one way one day and then, on a lilo in Bermuda, can change that.
We have brought it upon ourselves that we are so reduced. It is cheering, though, that Labour Members are beginning to understand that the purpose of Parliament is wider than the vanities of those who only temporarily govern us. As I have said before, we are here for only a brief season. Among the important elements of our own constitution, the one that I will not give up easily is the idea that we cannot bind our successors.
Again, Jefferson passionately believed that dead men should not rule for ever, yet how can one change a constitution of this nature?
Who can change such a constitution? Is it the British people? Is there a polity called Europe? No. To whom do I owe allegiance? Is it Europe or is it this House, this Chamber and this people, who sent me here and whom I represent. I am told, as if it were a banality, that there is nothing unreasonable about a foreign court, of which we know too little, having absolute control of our constitutional arrangements through this blue document, with its grandiloquence. This is what is so vital: the constitution is beyond the reach of the people, yet it is promoted as an ever-closer union of the people.
Chris Bryant: No.
Mr. Shepherd: The hon. Gentleman says that, but the grandiloquent preamble refers to the consummation of closeness. The theme is ever-closer union, but a union of what and of whom? This nation believes in the comity of nations and openness. We have characterised those beliefs in the course of our history in an attempt to ensure that the people of this country determine the laws under which they shall live and know the people whom they shall remove if those laws are unsatisfactory.
These are the questions that I ask of the European constitution. Who governs us and makes the laws, and, importantly, how can we get rid of them? Where does this document state how I can get rid of them? How can I change them? Who appoints them and who chooses them? It is not the people who sent me here to represent them. This constitution could never have been brought forward by previous generations, who understood the sheer necessity and the difficulty of capturing power. Who is the sovereign? Let the document tell us, which it does—the answer is dire: it is not us. That is what the struggle and argument are about.
I am convinced that the British people will reject the constitution. The constitution is an accumulation of treaties on which the British people have never had an opportunity to express a view. This is the first time that the British people can say whether those arrangements for government are satisfactory, and I believe that they will say no.
Central to the Conservative position is the declaration by the party leader, who acknowledged the sovereignty of Parliament in a letter to my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale):
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"the British Parliament is supreme and we would introduce the necessary legislation to bring about full national and local control."
That is central to what we are about.
The second section of the constitution should go. The European Court should not override anything that this House wants to do, because in the end we are responsible to the people, not to anyone beyond this polity. I shall argue and vote against this constitution.
5.03 pm
Mr. Mark Lazarowicz: I disagree with everything that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) said, except for one point—his criticism of what he described as the grandiloquent nature of the constitution is fair. The complexity of the constitution, as drafted, does no service to those of us who want to see the type of relationship with our European friends and partners that the hon. Gentleman wants to avoid.
If the document were 16 pages long, like that produced by the founding fathers of the United States, the hon. Gentleman would be against it anyway. His opposition to the European Union is honest, but Conservative Front Benchers would also oppose anything that the Government brought back from negotiations in Brussels.
Even if my hon. Friend the Minister had come back and announced that the other European states had decided to give up the euro in favour of the pound and to appoint the hon. Member for Rochford and Southend, East (Sir Teddy Taylor) as the European Foreign Minister, or even if they had agreed that President Chirac would do feudal homage to the Queen for the possession of Calais, the Conservatives would have been against it. They would not have agreed to anything that the Government came back with. That is because they have made an assessment that the right short-term political choice for them as a party is to go along the Eurosceptic road because there are votes in it. There may be some votes in it, although the experience of the European elections suggests that there are not as many as they might have thought.
In trying to concentrate on their Euroscepticism, the Conservatives no doubt hope that their own policies will not be scrutinised too closely. Although the right hon. and learned Member for Devizes (Mr. Ancram) quoted his party's document "The True Paper", he was not exactly forthcoming about his alternative. That is not surprising, because that document is full of internal contradictions that reflect the confusion in the Conservative party in trying to steer between outright Euroscepticism and recognition of the damage that would be done to our national interests if we drew further away from our membership of the European Union, as we inevitably would as a result of its policies.
I do not have time to go into a detailed textual analysis of the Conservative position. To give an example, mention has already been made of the proposal to allow any five national Parliaments to repeal not only new but existing European legislation. Conservative Front Benchers suggest that that is restricted to certain areas, but they well know that their proposals could apply very extensively. In practice, they would mean that the national Parliaments of Latvia,

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Estonia and Lithuania, or Malta and Cyprus—which, although I have nothing against Balts, Maltese or Cypriots, represent about 1 per cent. of the population of the European Union—would be able not only to block new legislation, but to repeal, or at least to challenge, every piece of legislation that has been adopted over the past 47 years.
Similarly, the Conservatives suggest elsewhere in their document that it would be possible for the European Parliament to repeal any European legislation. Some of us might think that there is merit in giving greater powers to the European Parliament, but the Conservatives' suggestion is that MEPs from other countries in the European Parliament should be able to overrule decisions taken by member state Governments—our national representatives—in the European Council.
The Conservatives are torn between Euroscepticism and recognising that there are certain realities in the way in which Europe is run that even they cannot avoid. The fact is that nobody except those in the Conservative party and the more raving elements outside it in the Eurosceptic ranks believe that the draft constitution is the shortcut to a European superstate and the transfer of powers to Brussels.
Mr. Davidson: As someone who is neither a Conservative nor a member of the UK Independence party, I assure my hon. Friend that I and many people in the Labour party and the trade union movement do believe that this document is a substantial step towards a European superstate, as it gives a substantial number of additional powers to the European Union. Furthermore, is he not embarrassed to support a constitution that makes a virtue of denying workers and trade unions in Britain the sort of rights that our colleagues in European countries have?
Mr. Lazarowicz: I assure my hon. Friend that I do not suggest that raving Eurosceptics are confined to the UK Independence party although, of course, I do not include him in that category. However, surely the logical position is not to oppose a European constitution but to argue for even more powers to be transferred to the EU.
As was discussed earlier, one of the strengths of the document is that it gives added rights to member state Parliaments. The power that it will grant member state Parliaments, if we choose to exercise it, could be significant in ensuring that the debate about European policy is brought home to the peoples of the various member states and that the benefits of EU membership are shown more clearly.
Another welcome innovation in the constitution is the right for the various devolved legislatures to be consulted on matters that relate to a devolved competence. I am surprised that no representatives from the Scottish National party are present to discuss an issue that is so important for Scotland. Doubtless the difficulties of leading a party 400 miles away sometimes affect that organisation.
Sir Teddy Taylor: To avoid misunderstanding, does the hon. Gentleman accept that the constitution
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contains no procedure to give the Scottish Parliament or the Welsh Assembly the power to stop anything? It grants the right to talk and consult but nothing else.
Mr. Lazarowicz: The hon. Gentleman is correct that there is no power to stop anything absolutely, but he well knows that there is a power to request review. He knows far better than me, because he has been in this place for so many years, that the power to delay and review can be effectively exercised by a second Chamber, as the House of Lords has shown frequently.
Chris Bryant: Is it not also the case that, since we are in a parliamentary democracy, the Government are formed only by virtue of their majority in the House and that, consequently, we have a direct ability to use our powers?
Mr. Lazarowicz: That is a good point.
It is time to get away from the debates about our negotiations in Europe that contend that we are successful only if we can show that we have managed to extract even more concessions out of those conniving, evil Europeans. I am not naive about negotiations and I accept that conniving takes place in international negotiations from time to time. However, I have no objection to the idea that to achieve better results for our people and to promote our national interest, we should be prepared to transfer more powers to the EU. I do not mean more powers than the constitution proposes, but I do not find the principle of working together at a European level difficult. I do not want to draw back from that.
I want a European Union and EU institutions that allow us to tackle effectively the problems of our time. I want Europe to work effectively to deal with the problems of international terrorism. I want a more effective European voice in world affairs, and that is why I support the proposal in the constitution for a European Foreign Minister. I want us to tackle the environmental problems more effectively. That is why I welcome the constitution and hope that the British people will accept it in a referendum. I accept that those of us who support it will have to fight the campaign strongly, but I believe that its merits and those of our active membership of the EU will come through.
Clearly, if the British people do not approve the constitution in a referendum, it will not mean the end of our EU membership. However, it will mean that the EU will be gradually less able to tackle its challenges effectively. It would thus become less effective and less efficient. That is probably why Opposition Members and a few Labour Members will campaign against our ratification of the constitution.
5.14 pm
Mr. William Cash: For centuries, we have made and unmade treaties. I listened with interest to what my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) said about Jefferson. I have just returned from Jefferson's home, Monticello in Virginia. He was the man who devised the declaration of independence. These people knew what they were talking about.

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Over the past 300 years, we have made vast progress towards democracy and consent. This constitution will take that away. The reality is that we are now moving away from parliamentary government. We must bring back effective power to the voters of this country, as I said in a pamphlet that I wrote last year. I am glad to say that my right hon. and learned Friend the Member for Devizes (Mr. Ancram) was on the platform with me this time last year when we issued that pamphlet at the party conference
The issue of primacy, which I have already dealt with today, is the issue of sovereignty, which in turn is the issue of democracy and consent. That is why I insist that my Sovereignty of Parliament (European Communities) Bill, which is still listed on the Order Paper, is needed. Through it, we would be able to reassert our power to repeal or amend any legislation, including the European constitution and, if necessary, the existing treaties. As the Foreign Secretary himself conceded after six months of torrid discussion with me across the Floor of the House last year, that would include the European constitution, though the European Communities Act 1972.
We will only resolve this question, however, if we have the political will to do so. There has been a huge accumulation of treaties for decades. As I said to the Prime Minister some time ago, this constitution makes specific provision for the revocation of those treaties. There is a new clause IV. It is in this constitution, and it refers to the fact that the treaties will be consolidated, but all the existing treaties will also be repealed. The primacy of this constitution over our constitution and our laws will be introduced, and the whole ball game will change.
There has been much talk of conferral. As I said earlier in an intervention, conferral equals an abdication of sovereignty, and handing over to the European Court of Justice what truly belongs to this House of Parliament—and not just this House of Parliament, for we are but players in the matter. The real power belongs to the people: the real power belongs to the voters in our constituencies. That is what we have been betraying over the last few decades, in terms of what has now accumulated into a European constitution.
The greatly expanded functions belie the Foreign Secretary's argument about the question of primacy. Yes, in 1972 there was a principle of primacy that was conceded, but with respect to extremely confined functions. Now we are moving into completely different territory, which is why I forced the rebellion on the Maastricht treaty. That treaty was the genesis of this. I make no apology for having entered into the rebellion on that occasion—or for what I have done in regard to the Amsterdam and Nice treaties, and will do again in regard to the European constitution.
Yes, I support our party 100 per cent. on the question of rejecting this constitution and fighting for a no vote in the referendum, but I am bound to say that a number of matters will not be resolved simply by words. There is deregulation, for instance. It is impossible to deal with deregulation without dealing with the central question of the sovereignty of Parliament. People may or may not know of my altercations with Digby Jones of the CBI, but so many of the laws are based on adversely affecting
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British business. Then there is the question of fraud, the failure of the common agricultural policy, and low growth and high unemployment in Europe. Do we want to emulate that? Europe is not working.
Furthermore, the relative success of the British economy recently has only taken place because we have been outside monetary union and the exchange rate mechanism.
As I said to the Chancellor the other day, it is despite, and not because of, the Government's policies that we have a relatively stable economy compared with, say, Germany or France.
As we in the European Scrutiny Committee know, behind-the-scenes deals are going on between the European Commission, the European Parliament and the Council of Ministers. We will be following that issue up. Their objective is to bypass national Parliaments, but we shall get to the bottom of those behind-the-scenes deals. We must also consider the issues of the arrest warrant, the evidence warrant, and defence and the common foreign and security policy.
So when my right hon. and learned Friend the shadow Foreign Secretary says that we want real reforms, let us spell out what they will be. There are dangers in letting other countries go ahead with this variable geometry. It will create a hard core in Europe, which could prove very counter-productive. Nor would I want our radical reforms to be confined just to fisheries and aid; we have to examine the existing treaties.
The perception is that our own policies are not clear enough, so we must make them clearer and base them on the principle of democratic consent. We should also accompany our policies with a real threat of withdrawal. The fact is that without such a threat, other member states will not know that we seriously intend to deliver on our policies. We need to restore parliamentary sovereignty, but we cannot do so without showing that we mean business.
It is also necessary to adopt a policy of associated status, which would be popular with most people in this country. We need not a total rejection of the European idea or of the European Community, but a serious and radical reform, combined with the threat of withdrawal if they will not listen. We gave them the opportunity to impose their ideas on us, and they have done so. We in this House have the right to make up our minds about how we are going to respond, and we will respond effectively only if we are seen to be determined, clear and strong. That is my message.
5.22 pm
Mrs. Angela Browning: I spoke—
Mr. MacShane: Follow that!
Mrs. Browning: I know—the Minister will not be disappointed. As he will recall, I spoke in the House on 16 June; indeed, he was very kind about my comments on that occasion. I will not reiterate what I said then, but I should like to pick up on one of my central themes. This constitution is the last piece in the jigsaw in creating what is not necessarily a superstate. Indeed, as a trading bloc the EU is certainly not superstate in nature. As we

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have heard, it has high unemployment, and declining trade and gross domestic product are forecast. In fact, if we were starting from this point the EU would be an economic bloc that we would not want to join.
However, we have to be realistic about what the agenda of other countries has always been. The direction in which they are now going is not in the British interest, which is why I oppose the constitution in principle and in detail. Indeed, I hope to spread the word and to persuade people to look at this issue much more seriously, and then to vote no in a referendum.
Mr. Hendrick: Will the hon. Lady give way?
Mrs. Browning: No. Whatever people's views—whether they share mine or they share in the European dream—let us have some honesty in this debate. Those who make the case for that dream should be prepared to stand their corner and be totally honest about what is involved.
When the Prime Minister returned from the intergovernmental conference on 21 June, he told us what he had signed up to and I asked him an oral question. I asked whether he had changed the way in which voting takes place, and about our use of the veto in co-ordinating economic policy across the EU. He did not answer my question. My hon. Friend the Member for Congleton (Ann Winterton) repeated the question about 10 minutes later.
He did not answer her question either, so I tabled a written question to the Prime Minister asking him whether that policy would be determined in future by qualified majority voting.
I received a reply from No. 10 Downing street on 23 June saying that the Prime Minister had passed my question to the Minister for Europe, who is now in his place on the Treasury Bench. The Minister then replied by referring me to part 3 of the treaty. When I read it, I discovered that change in the voting mechanism on economic policy was not stipulated, that the default applied and that it therefore became subject to qualified majority voting. In other words, we have given up the veto. I then tabled a supplementary question to the Minister asking whether that was right. I received a reply saying that he believed that I had already received a substantial reply—end of story.
I repeat to the Minister today what I said to him then. If the Government believe that this is in the British interest, let us have some honest and straight answers to some straight questions about important issues. Have we given up the right of exercising a veto in respect of our economic policy—yes or no? I asked the Foreign Secretary earlier in the debate whether the charter of fundamental rights was legally binding. In similar fashion, he referred me to a part of the treaty. I want some straight answers from the Minister about whether the Government have made any concessions. We know from the debate that they certainly have: they have given up on many red lines, forfeiting our case on a range of important issues. We have seen EU institutions expand their power in key areas—not just over the economy, but over criminal justice and other matters—and we have seen legal personality given to the constitution itself.
I must tell the Minister that the debate is going nowhere, especially when we have the sort of patsy-like material that I see in the White Paper placed in the Vote
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Office. It beggars belief that we are talking about a constitutional matter, but the Government devote the opening part of the document to telling people what a better deal they get on holiday by being part of the EU and its constitution. [Interruption.] I hear a sedentary comment saying that it is true, but let us be quite clear about this. We are talking about the constitution of this country and about democracy. We are not talking about a few people who think that they get a good deal changing pounds into pesetas when they go into Europe. That sort of trivialisation—
Chris Bryant rose—
Mrs. Browning: I am certainly not giving way to the hon. Gentleman. Someone should put him back in the teapot over there; he has had more than enough to say today.
I really believe that if we are to have a sincere debate for the British people, it must deal with the core elements of what the constitution is about. As my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) and my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) so clearly explained, it is all about democracy, the representation of the people and their ability to call to account those whom they vote for every four or five years. That is why this is the last piece in the jigsaw and the watershed in our relationship with the EU.
If we as a country are not going to be part of this constitution, we have to look for an alternative constructive relationship with the EU. I believe that it should be quite different from the one that has obtained before. It has to be that way, because this constitution rolls up previous treaties. As a customs union, we have to look outwards as a global trading nation, so we need agreements with the EU and with others. That is what the EU itself has been trying to do. It has a trading relationship with Mexico, for example, so there should be no sense of shock horror about my suggestion to take advantage of the changes.
We are shackled by the EU in respect of economic performance and we are shackled by its democratic deficit. We are also shackled by an EU that is rife with fraud and unable to audit its accounts, yet we are asked to have still more of the same and to concede more of our powers. I say no. Vote no in the referendum.
5.29 pm
Mr. Gary Streeter: As usual when we debate Europe in this Chamber, we hear a rich variety of views. This has been an important debate, with many fine contributions from all sides. It has been a pleasure to take part in it, and to listen to what has been said.
I shall deal with some of those contributions, but I shall begin by referring briefly to the White Paper that we received this morning. I congratulate the Minister for Europe on producing it, although at first glance it seems to lack balance, as we expected. It is silent about the murky genesis of the constitution and the many governmental negotiating failures, but we look forward to examining it in detail and making our response in due course.

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In debates on Europe, it is important to recognise that the Conservative party speaks for the mainstream and the majority in this country. We are against the single currency, as are most British voters. For a long time, we have been in favour of a referendum on the constitution, as have a majority of the British people. We are against the constitution, and so are the vast majority of the British people.
However, if he runs true to form, the Minister for Europe will stand at the Dispatch Box and accuse anyone who opposes the constitution of being anti-European, xenophobic and in favour of withdrawal. I do not need to be clairvoyant to predict that, as I have heard him speak on this subject on a number of occasions, and that is what he does every time.
The Minister's approach conveniently ignores the fact that several of his colleagues are against the constitution, as we have heard today. It also ignores the fact that his Government originally opposed the constitution, and it takes no account of the powerful arguments presented in the debate. For example, my hon. Friend the Member for North Dorset (Mr. Walter) described himself as a passionate pro-European, but he also opposes the constitution. Moreover, the Minister's approach ignores the fact that the majority of the British people are against it too.
If the constitution is so good for our country, and if those who oppose it are so misguided, will the Minister explain what the Prime Minister said only five years ago—namely,
"for the record, we are not proposing a constitution of Europe."?
Will he also explain why, just four years ago, the Prime Minister said that we did not need an EU constitution? I hope that the Minister will explain when the Government changed their mind about that, and why.
In the end, whether we sign up to the constitution is a decision of the utmost significance. It must depend on a dispassionate assessment by each and every one of us of the impact of this document on our laws, sovereignty and way of life.
In the debate, many assessments and arguments were presented, both for and against the constitution. Early on, we were treated to a speech from the Back Benches by the hon. Member for Birmingham, Edgbaston (Ms Stuart), who made her usual measured contribution and asked some important and specific questions about whether the role of the national Parliaments would really be strengthened by the constitution. She also sought clarity about how that would happen, and called for an informed debate in the run-up to the referendum, and that is surely a crucial matter. I hope that the Minister will be able to answer some of those very important points.
The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) set out his party's position in his usual measured. Rolls-Royce tones. I do not believe that he is sufficiently mindful of the risks and dangers inherent in the constitution, but I respect his conviction and consistency.
The hon. Member for Linlithgow (Mr. Dalyell) asked some important questions, and I hope that the Minister will answer them.
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My hon. Friend the Member for Rochford and Southend, East (Sir Teddy Taylor) pressed the Government about exactly how the provisions for withdrawal would operate. He asked some very legitimate questions that require answers, and I hope that the Minister will respond to some of them tonight.
The hon. Member for Preston (Mr. Hendrick) spoke about the need to reinvigorate public interest in this issue. We have noticed that eyelids droop whenever Europe is mentioned, and that will not do in the run-up to a referendum, but the hon. Gentleman made the mistake of describing the process as a big tidying-up exercise. Of course, some tidying up is involved, but the constitution is much more than that, as it contains many new provisions.
I have already referred to my hon. Friend the Member for North Dorset, who presented a passionate explanation of why, as a pro-European, he does not agree with the constitution. He said that the treaty does not simplify matters or make the EU more democratic and effective.
The hon. Member for Rhondda (Chris Bryant) treated us to his usual display of passionate support of, and loyalty to, his Government. We applaud him for that, and hope that it bears reward in the near future—although I am sure that it is reward enough for him still to be here with the Foreign Secretary.
The hon. Gentleman spoke vigorously in favour of the constitution. We have heard him do that before, and I am sure that we will in future.
We were treated to a masterful presentation from my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), who said that Laeken failed to deliver on its stated aims. He referred particularly to the fact that the European Court of Justice will become the supreme court of this nation and will be the final arbiter of interpretation of the constitution.
The hon. Member for Warwick and Leamington (Mr. Plaskitt) recognised the need for reform of EU institutions, but concluded that the constitution is the right solution. That is misguided.
The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) called for the Welsh language to be remembered in the constitution and made a passionate case for that for Plaid Cymru—[Interruption.] It was better pronounced by him. I apologise to him, as I have in the past; he always forgives me. He asked about the legal status of the charter of fundamental rights. We need to hear a clear answer on that from the Foreign Secretary and the Minister. We want it put on the record, boiler-plated and made clear.
The hon. Member for Luton, North (Mr. Hopkins) made the point that widespread concerns about the constitution are not just confined to the right of politics in Europe, but are legion throughout the left of political opinion, too. He spelled out some of his concerns about the constitution. It is important that those on the Government Front Bench recognise that many Labour Members have profound concerns.
My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) spoke with his usual passion and conviction about the undermining of democracy that has already happened and the further undermining of real democracy that would take place if the constitution were agreed.

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The hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) rather wasted most of his 10 minutes attacking our party and policies, but he just managed to let slip that he wanted to transfer even more powers to Brussels: at least we know where he is coming from.
My hon. Friend the Member for Stone (Mr. Cash) hammered home the point that we need to claw back and protect national sovereignty and indicated, in his usual, powerful way, the many dangers of the constitution.
Finally, my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) called for honest, straight answers to some of the most important questions. In the run-up to a referendum, it will not do for the Government to hide behind confusion, obfuscation, long words and legal phrases. We must have clear, simple answers to these important questions.
It has been a good debate. In the few moments that remain to me, I should like to summarise why we Conservatives believe that the constitution is wrong for Britain and the EU.
I should like to make three crucial points. First, the Laeken mandate for the Convention in 2001 was to design a blueprint for the EU that would bring the institutions of Europe closer to the people. Many contributors made that point, and we have seen the importance of that in the dismal turnouts across the continent in the European elections earlier this year. Sadly, however, this document does nothing of the kind. In fact, the proposals to give more power to institutions with which people feel no connection whatsoever is taking matters in the opposite direction.
The growing gap between the governed and Governments, whether within nations or transnationally, is one of the most serious issues facing us, and threatens our democracy as we look forward and could have dire, long-term consequences. We have to deal with people's sense of disconnection with European institutions. The constitution—clumsy and misguided as it is—will only make matters worse.
Secondly, the charter of fundamental rights, contrary to everything that the Government have said about it—and they have twisted, spun and turned on this in the past few years—will have full legal status, and the European Court of Justice will sit in judgment on it. More and more experts and commentators agree on that point and recognise that it could have a profound impact on our laws. Most recently, Professor Brian Bercusson of King's College London, to whom my right hon. and learned Friend the Member for Devizes referred, said that the constitution could boost employment rights in this country. I have no problem with that. If the Government believe that employees in this country require better protection, with all the impact that that would have on productivity and business, let them bring forward their own domestic legislation through the front door. It is not acceptable to sign up to a document that will bring these measures in through the back door.
Most people in this country—and most of those I speak to in my constituency—believe that there is already too much interference from Brussels. This charter would be a gateway to yet more centralisation and interference from Brussels.
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It is almost certain, given its track record, that the European Court of Justice would push its nose into domestic nooks and crannies where it simply will not be welcome.
The third reason why we oppose the constitution is that we believe, from a close analysis of its contents, that it will transfer more powers away from national Parliaments and hand them to EU institutions. That case is utterly made by a close and careful reading of the document. It would give more power to Brussels over social security; more power to co-ordinate employment policies; more power on competition policy; more power to co-ordinate our economic policy; more power on trade policy; more power over energy policy; more power over immigration and asylum; more power over domestic criminal law. That is what the constitution says and that is what would happen. So rather than reconnecting with the peoples of Europe by bringing home powers to their national institutions with which they feel more in tune and in which they have confidence, the new constitution will take powers from the nation states and hand them to Brussels. It will set in place a new framework for more unwanted and unwarranted interference from the centre. That is bad news.
Our critics are entitled to ask what we as Her Majesty's loyal Opposition would do instead. We certainly would not have agreed to this constitution. We will continue to call for a Europe that better reflects 21st century realities; a Europe based on co-operation, not coercion; a competitive, free-market and flexible Europe that will give individual member states the space to be different and room to breathe; a Europe in which powers are genuinely returned wherever possible to member states; a Europe that is flexible; a live-and-let-live Europe in which those who wish to forge ever closer union can do so and those who do not can remain more independent. That is the kind of Europe that the vast majority of citizens want, and the constitution is a quantum leap in the wrong direction and must be opposed.
After months of denial and insisting that there would be no referendum on the constitution, after months of intense pressure from the Opposition and from the court of public opinion, the Prime Minister finally caved in and agreed that there would be a referendum. Sometimes the Foreign Secretary is credited with putting on that pressure and bringing about that decision. If that is true, we congratulate him. This is an important U-turn and a decision that is fundamentally important to the future of Britain. Giving the people of Britain the final say is something that we welcome.
As several right hon. and hon. Members have said, it is important that an informed and measured debate now takes place not only in the media but in Parliament to enable people to vote in the referendum, whenever it comes, on an informed basis. But why the delay? Having made the decision to have a referendum, let us get on with it. If the people of this country vote no, there will be no crisis. As my right hon. and learned Friend the Member for Devizes said, the answer is contained in page 11 of the White Paper. The heads of state of Europe will have to think again, go back to Laeken and come up with a different way forward that is more acceptable to the peoples of Europe.

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Next time, the policy makers will have no choice but to listen to the voice of the people. The country that votes down this misguided constitution will do the whole EU a long-term favour. So let the Prime Minister bring on the referendum without delay; let the people of Britain have their say; and let the honour of creating a more attractive European Union fall to us.
5.43 pm
The Minister for Europe (Mr. Denis MacShane): I congratulate the hon. Member for South-West Devon (Mr. Streeter) on his speech and the moderate terms in which he presented his case. I will try to emulate him. Will he pass my thanks to the hon. Member for West Suffolk (Mr. Spring), who has moved on to higher things on the Opposition Front Bench. We had a good relationship when he was shadow Minister for Europe and I wish him all the best.
Mr. Straw: There is nothing higher.
Mr. MacShane: My right hon. Friend says that there is nothing higher than the Foreign Office. No doubt other of his right hon. Friends will be interested to hear that statement.
I welcome the suggestion made by the right hon. and learned Member for Devizes (Mr. Ancram), the shadow Foreign Secretary, that a copy of the constitution be sent to every household.
There are some 30 million households in the UK, so that would be an expensive project. However, I can now tell the Prime Minister and the relevant authorities that it is an all-party proposition and that the Conservatives will not object. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) shakes his head. It is an important point because so often in the past when it has been a case of putting the facts and the documents about the EU in front of the people, the cry has gone up that we are indulging in propaganda and spending taxpayers' money on advancing the European cause. I am grateful for the reassurances from the Opposition in this instance.
Mr. Cash: Will the Minister give way?
Mr. MacShane: No, I wish to start my speech, at least. I commend to the House the new initiative launched by my right hon. Friend the Foreign Secretary on providing an update on the advance programme of the EU, which has now been reported to the House in the form of a Command Paper. It is important that we use accurate terms of reference. The hon. Member for Aldridge-Brownhills was right to draw attention to the extraordinary events in Philadelphia some 230 years ago. However, the document before us does not start "We, the people". It starts:
"HIS MAJESTY THE KING OF THE BELGIANS, THE PRESIDENT OF THE CZECH REPUBLIC, HER MAJESTY THE QUEEN OF DENMARK".
The last name on the list is
"HER MAJESTY THE QUEEN OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND".
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It continues:
"Who having exchanged their full powers, found in good and due form, have agreed as follows".
What follows, as has rightly been pointed out, runs to many pages. It is a solemn international treaty—nothing more and nothing less. Yes, it has been given the noble term of constitution. Indeed, in the Spanish press it has been called the Magna Carta. Goodness only knows why a constitutional treaty becomes the Magna Carta in Spanish, although I do not know whether that is an argument for or against it. It is a bit worrying.
We must explain to people the fundamental fact that the constitution is an international treaty. We can withdraw from international treaties. We can withdraw from the NATO treaty, from the World Trade Organisation treaty and from the laws of the sea treaty. The hon. Member for Aldridge-Brownhills referred to the now famous letter to the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) from the Leader of the Opposition, in which he confirmed that it would be the policy of a Conservative Government to pass national law in this House to take back control of the common fisheries policy. The consequence would either be accepting huge fines for breaching the treaty or leaving the EU. Let it be said, clearly and openly, that that is the official policy of the Opposition.
There was a difference in this debate. On this side of the House, we heard discordant voices, including my hon. Friend the Member for Luton, North (Mr. Hopkins), who spoke, and my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson), who intervened in the debate. However, on the other side of the House, there was complete and utter unity—[Interruption.] I meant the contributions from the main Opposition party—I did not mean to discredit the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd). That unity was expressed in favour of the existing constitutional treaties of Europe, such as Maastricht, Amsterdam, Nice, Rome and the Single European Act. They will remain in place if this constitutional treaty is defeated. We will have to live with the existing constitutional treaties, unless the UK chooses to withdraw. That would send an enormous signal around the world that Britain has, as it did in the 1930s, chosen the isolationist path. It would send a message to every business in Britain that we had decided that we did not want to support this reforming constitutional treaty.
It will send a message to every parliamentarian that for the first time—
Sir Menzies Campbell: Has the hon. Gentleman read it?
Mr. MacShane: Have I read it? Oh, I have read it.
We will be sending a message that, for the first time, we have a European treaty that writes in specific powers for our Parliament.
I am grateful to my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) for sloughing her way through the provisions and finding the various references to Parliament in the new treaty. She was right to say that it will be up to us to make of it what we will. That is the very point for which the House exists. We are sent here to represent our people and collectively to decide what we want to do with the powers conferred on

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us. If we choose to take seriously the idea of national parliamentary accountability under the treaty, we can make something of it.
For the first time in British history, my right hon. Friend the Foreign Secretary set up a Standing Committee on an international treaty to have Ministers and the Executive report to sovereign parliamentarians on the passage of the treaty and on the negotiations as they took place. Never before in our history has that happened. Did even one Conservative Front-Bench Member turn up to take part? Of course not.
Mr. Cash: Will the Minister give way?
Mr. MacShane: I shall pass on if I may.
Several Members referred to economic competences—an important point. However, as my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) so well pointed out, the original treaty—the treaty of Rome—hands the European Community the responsibility of undertaking such co-ordination, whereas under this treaty the member states co-ordinate their economic and employment policies. My hon. Friend made a moderate and calm speech—he did not rant and shout—and he made a very, very important point: in a sense, we have turned the rules around, returning more authority to member states.
The hon. Member for Stone (Mr. Cash) referred to the pamphlet that he wrote last year and which was launched by the shadow Foreign Secretary. It has now almost become official Conservative policy. I think I quote the hon. Gentleman rightly—if not, I shall certainly take a correction intervention from him. He said clearly that the only way we would be able to make our point in Europe was by threatening to withdraw. Threatening to withdraw—that is the language of today's Conservative party. It will not be long before the hon. Gentleman is back in the shadow Cabinet. I will not repeat the wonderful remarks of the right hon. Member for Wokingham (Mr. Redwood) who said that to sign the treaty of Amsterdam would be to finish Britain as a sovereign country and that to sign the treaty of Nice would be to blow up Parliament. He has been brought right back to the heart of the governing council of the Conservative party.
The hon. Member for Buckingham (Mr. Bercow), who called for the EU to intervene in Sudan, was dismissed. I thought that he was going too far, but any Member on the Conservative Front Bench who has anything good to say about the EU goes straight to the Back Benches.
I want to turn to the points made by my hon. Friend the Member for Birmingham, Edgbaston on the European convention on human rights and the question of what will have supremacy. I refer her to article II-53, which deals with that, but I will write to her in more depth because her point is important.
Let us put ourselves for a second in the position of other Parliaments and Governments. All Governments are as sensitive to their definition of their national law and to their version of human rights as we are. For
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example, Germany, in the past, was very unhelpful on parents' access to their children in divorces of German nationals and nationals of another country, although things may now be further forward. I believe that the Germans are wrong, but they will not be told by any supranational body what their national policy is to be. Similarly, Germany denies the right to strike to millions of public sector workers—[Interruption.] The right hon. and learned Member for Devizes asks what that has to do with it. I was asked about the ECHR and I am making the point that other Governments will not accept being told what to do by Brussels.
I am making the point that the charter of fundamental rights indeed has a reference to the right to strike in it—
Mr. Cash rose—
Mr. MacShane: Let me finish this point; then I will give way.
The charter has a reference to the right to strike in it, but it is limited by national laws and traditions, and that was not put in—this is the point that I have had to make again and again to friends in the TUC, and I wish that my hon. Friend the Member for Luton, North, with his trade union connections, would make it as well. It was Germany that insisted on that because the German constitution bans the right to strike for 2 million or 3 million public sector workers. We are not proposing that, I think, in our country, but it is the same reasoning about the single seat, on which—
Mr. Cash rose—
Mr. MacShane: I said that I would give way to the hon. Gentleman.
Mr. Cash: I am most grateful.
The Minister, in an intervention, made a reference to something called Kompetens-Kompetens, which I have pursued for a couple of years now. Does he agree that in fact in Germany, the issue of Kompetens-Kompetens is an extremely important matter, and furthermore, that the adoption of the principles that he has put forward would suggest that the German people would not accept the rulings of the European Court of Justice if they interfered with the German constitution?
Mr. MacShane: Yes, but the German Government and the main German parties are supporting this constitutional treaty, although of course there are debates. The primacy of the ECJ was established in British law in 1972; it is there in the original treaties. If we want a single market and a common rule book, we need an arbitrator, and that is a good argument for lawyers. I have dozens of quotes here; I can quote them if hon. Members like. The chief judge of the European Court of Justice, Mr. Skouris, said:
"I do not believe that the integration of the Charter into the Treaty will alter the allocation of powers between the EU and the Member States".
The Opposition Front-Bench team can produce their own lawyers who say something different.

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[Interruption.] No, the right hon. and learned Member for Devizes quoted Mr. Skouris once, in an intervention that he made before all the explanations were written into the treaty, before it got quite technical. This is one of the difficulties—the moment we get technical, the Tory party tends to go away because it has very few arguments.
May I reply to the question asked by my hon. Friend the Member for Linlithgow (Mr. Dalyell)? The Baltic states are now a very important part of the network of 25 states, with special insights on Russia. As he rightly said, there are problems in at least two of them about Russian minorities, but equally they have to respect the collective views of existing EU member states prior to enlargement about tolerance and about treating Russia as a serious partner, with very serious internal problems. That is a completely different issue, but I welcomed their input and, equally, I welcomed the fact that they have to listen to the perspectives of other countries that have a long relationship with Russia as well.
Mr. Dalyell: I thank my hon. Friend.
Mr. MacShane: I completely agree with the hon. Member for North Dorset (Mr. Walter) that we have failed to take the people with us, but may I gently say to him that it does not help for the leader of his party to tell the "Today" programme on 9 June that, under the proposed treaty, Tony Blair would not be at the G8 meeting as Prime Minister because we would have given up our seats on the G8 and the Security Council of the United Nations? That is completely untrue. Only the most profound Eurosceptic in France or anywhere else talks such complete and utter gibberish.
Mrs. Browning rose—
Mr. MacShane: Last year, the right hon. and learned Member for Devizes told us that the new treaty
"for the first time explicitly enshrines the primacy of EU law."—[Official Report, 16 September 2003: Vol. 410, c. 779.]
That is not true. Will he tell that to his constituents? [Interruption.] The quote is from Hansard.
Finally we come to this point. We shall have votes before this referendum. We shall have votes in Parliament on the treaty as we debate it in a Bill to be put before the House later this year. We shall have a vote next year in a general election. Those of us who oppose isolationism will win. Those of us who want us to be in a Britain leading a reform process will win. Those of us who believe that the old treaties and the old constitution are deeply flawed and this new constitution helps Britain and helps Europe will win. I invite all hon. Members, when those votes come, to support those who support Britain, defeat isolationism and speak up for Britain in Europe.
It being Six o'clock, the motion for the Adjournment of the House lapsed, without Question put.

PETITIONS

  Endometriosis SHE Trust
  6 pm
  Miss Anne Begg: As chairman of the all-party parliamentary group on endometriosis, I beg leave to present the petition from the Endometriosis SHE Trust (UK). The SHE Trust has collected more than 2,000 signatures from people asking that the Government review their policy on the care and treatment of endometriosis suffers and give the condition a higher priority for funding. Endometriosis is a chronic cyclical condition suffered by 2 million women in the UK. This devastating condition is often not diagnosed or misdiagnosed, leaving many women suffering excruciating pain.
  The petition reads:
  To the House of Commons,
  The Petition of the Endometriosis SHE Trust (UK), formerly known as the SHE Trust,
  Declares that endometriosis is the only long-term chronic cyclical condition suffered by women and that this devastating disease should receive higher priority for funding and treatment.
  The Petitioners therefore request that the House of Commons urge the Secretary of State for Health to review the Government's policy on the care and treatment of endometriosis sufferers.
  And the Petitioners remain, etc.
  To lie upon the Table.

  Ryan Franklin
  6.1 pm
  Mr. Robert Walter: Baby Ryan Franklin died at the hands of his father in May 2002, aged two. His body lay in a mortuary for a further 18 months, awaiting a second post mortem, which never took place—until a trial resulted in his father, Lee Khair, being convicted of his manslaughter. The child's mother, my constituent, Cathy Franklin, of Blandford, was outraged that she could not lay her baby to rest and has collected a petition, with 1,000 signatures, demanding a change in the law, as well as many hundreds of e-mails.
  The petition reads:
  To the House of Commons,
  The Petition of Cathy Franklin and others,
  Declares that after the death of Ryan John Franklin his family was unable to bury him for nearly two years while time was made available for two post mortems to be carried out, and that the delay to his burial was the cause of great suffering.
  The Petitioners therefore request that the House of Commons pass legislation to make provision for post mortem arrangements in cases of violent death; and to limit to three months the time allowed for a second post mortem to be carried out before the body is released for burial.
  And the Petitioners remain, etc.
  To lie upon the Table.

Miners' Compensation
Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]
6.3 pm
Jeff Ennis: I am delighted to have the opportunity to sponsor today's extremely important Adjournment debate. I thank hon. Members, especially my hon. Friends, for being in the House at this late hour to give me their support.
I suppose that I ought to begin by declaring my personal interest in this matter: both my grandfathers were former miners who unfortunately passed away suffering from lung-related mining diseases. I guess that anyone who was brought up like me in a mining village, such as Grimethorpe, would probably have to declare a similar interest.
Whenever I speak in the House on either of the two mineworkers' compensation schemes, I always begin, and rightly so, by congratulating the Government on having the courage of their convictions to implement what, after all, are the biggest industrial compensation schemes of their type in the world. Money is flowing into the pockets of former miners and their families in mining communities, and it is making a big difference.
Indeed, in my constituency, if we look specifically at the Department of Trade and Industry statistics for chronic bronchitis and emphysema up to the end of June 2004, we see that more than 6,200 claims were submitted from ex-miners still alive and more than 6,200 claims from deceased miners' families, totalling almost 12,500 claims. I think that those figures reflect the current national statistics for CBE claims, because roughly 50 per cent. come from miners who are still alive, with 50 per cent. from deceased miners' families.
Of the 12,500 claims submitted in Barnsley, East and Mexborough, there have been 3,942 full and final settlements and 2,137 interim payments, with 1,091 full and final offers outstanding. A total of more than £34.5 million has already been paid out for just CBE, which is excellent news for my constituency.
We start from the premise of a good news story for mining communities as far as the Government are concerned. Six years after both schemes were agreed, they have paid out more than £2 billion. Many ex-miners and their families have received compensation and they were satisfied with the outcome in many cases. However, there is no doubt that there are enormous difficulties with delivering such gigantic schemes, so it is not surprising that problems have arisen.
In my contribution to this important debate, I shall focus almost exclusively on putting forward the case for a minimum payment to settle CBE claims, as I did in my early-day motion, ominously numbered 666, which was tabled on 24 February 2004 and said:
"That this House notes with sadness that solicitors dealing with Miners Compensation Scheme cases for chronic bronchitis and emphysema (CBE) are currently receiving an average fee of £2,143 per case whilst at the same time almost half the former miners so far compensated have received final settlements of less than that amount, and that over 3,100 former miners have received less than £200; and calls upon the Secretary of State for Trade and Industry to undertake an urgent review to consider implementing a minimum compensation payment to former miners suffering from CBE of £1.500."
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I am pleased that more than 70 hon. Members from across all political parties have so far signed the early-day motion.
The main reason why I am putting forward the principle of a minimum compensation payment is primarily that it makes common sense and would drastically speed up the current process, which can be time consuming and wasteful. Of about 610,000 claims registered at the Department of Trade and Industry, only between 130,000 and 140,000 have been settled in the six years since the scheme began. That means that almost 500,000 claims are still in the system, yet only about 5,000 claims are settled each month. That implies that it could take a further nine or 10 years to settle all the claims.
Approximately two thirds of the offers that have so far been accepted were for less than £5,000. Information that I retrieved from the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), in January 2004 allows us to examine that statistic more closely. Many of the settlements were for less than £1,000. As the figures go back to January, they will have increased by this month, but at that time, 21,418 miners had received less than £1,000 as a full and final settlement. Some 9,475 miners had received less than £500 and 3,413 had received less than £200. When all the claims have been finally dealt with, low-value settlements could represent a significant proportion of the total, which raises an important question.
How can an ex-miner whose health has been damaged as a result of working in the coal industry be offered less than £200, no matter what the other contributory factors are? The Department of Trade and Industry itself knows that there is a problem with turning offers into settlements, as it is repeatedly raised in its six-monthly reports to court. At the end of 2003, there were 23,133 outstanding offers, of which nearly 4,000 had been with solicitors for more than a year. As I have already said, there are more than 1,000 outstanding claims in my constituency alone.
The huge influx of claims immediately before the 31 March 2004 deadline reinforces the argument that every effort should be made to turn offers into settlements and free up valuable resources. How many outstanding offers will there be this time next year or the year after? When low offers or settlements are made, the main consideration is often what proportion of the respiratory disease is the fault of the employer—in this case, British Coal—and how much is due to other factors such as smoking, which the Under-Secretary of State will know is one of the biggest considerations. The DTI believes that the calculations are fair and accurate, and entirely in keeping with the handling agreement. However, claimants and solicitors rightly argue that derisory offers do not reflect the levels usually agreed in similar common law cases.
The felony is compounded by the fact that for every CBE claim that a solicitor takes on he receives in excess of £2,100 in fees, even for cases such as three outlined in "Miners' Health Compensation", an excellent document published by the Coalfield Community Campaign in June 2004. Those cases highlight the problem facing the Government. For example, in the first case, an ex-miner with 13 years' experience of the coal industry in Derbyshire was found to have chronic

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bronchitis. His unapportioned award was assessed at £5,304, but using the handling agreement calculator, the recoverable proportion, after taking his smoking into account, was just 0.31 per cent. of the total, resulting in an offer of £17.64. I remind the House that, on average, the solicitor receives £2,100.
Secondly, the widow of an ex-miner with 35 years' experience in the industry was offered just £77.76 because of her husband's history of smoking. Finally, an ex-miner who worked in Seaham colliery in County Durham for more than 50 years died at the age of 78. He was a non-smoker, but because most of his service was completed before 1954, his widow was offered £146.50, even though he worked down the pit for 50 years. That case highlights two main causes for concern about the scheme. Many families find it difficult to understand why it only covers employment after 1954. An added complication is that in Scotland it covers employment from 4 June 1949, while in England and Wales it only covers employment from 4 June 1954, which many former miners and their families cannot understand.
The three cases that I have quoted underline how derisory the offers are, compared with some of the awards made through the courts under common law, where injuries are often far less serious but result in much higher compensation levels. It was never the intention that the handling agreement should result in payments lower than in a normal court of law. A minimum payment would restore fairness and clear the system of stalled claims.
Regardless of the mechanical nature of the handling agreement calculations, compensation must be seen to be fair. Damage to the lungs, according to organisations such as the British Lung Foundation, is a serious matter, and if British Coal is proved to be in any way responsible, very small amounts of compensation will not be seen as acceptable. A sensible approach would be to make a minimum offer of £1,500 to claimants who are unlikely, on the basis of medicals and other evidence submitted, to be entitled to any more compensation after years of costly administration.
I am aware that the British Coal Respiratory Disease Litigation Solicitors Group—the group of solicitors acting on behalf of the miners—has been in discussions with the Department of Trade and Industry about a minimum settlement based on a top-up from a proportion of the solicitors' fees, which are enhanced every year by inflation. I am also informed that some solicitors are offering top-ups from their fees to help settle cases more quickly. I hope that in his response to my contribution, the Minister will enlarge on that. In principle I am not against the solicitors helping, but the Government should initiate a universal agreement so that everyone is treated equally. The system is weighed down by the huge influx of claims submitted before the March deadline, and something must be done. If one of the justifications for a minimum payment is to reduce transaction costs and lift the burden on resources, both the Government and their contractors, and the solicitors, stand to benefit and both should therefore help to cover the costs.
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It is recognised that there may be difficulties in introducing a minimum payment at this stage, with so many claims already settled. An ex gratia payment from the Government would be money well spent. I know that is a difficult concept to consider, but I ask the Minister to carefully consider implementing it. The issue is one of social justice, and the Government have always believed in promoting policies that support the principle of social justice.
There is a moral and practical case for a minimum payment of £1,500 for all ex-miners who have suffered from chronic bronchitis and emphysema as a result of working in the coal industry. I urge the Minister to give that his urgent consideration.
6.17 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): I congratulate my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) on securing the Adjournment debate and on the clear way in which he set out the case. I welcome my hon. Friend the Member for Bolsover (Mr. Skinner), my right hon. Friend the Member for Rother Valley (Mr. Barron), my hon. Friends the Members for Mansfield (Mr. Meale) and for Bassetlaw (John Mann) and my hon. Friend the Economic Secretary, all of whom, along with a large number of other colleagues representing coalfield communities, have taken a close personal interest in the matter on behalf of their constituents.
I am pleased that in the interests of fairness, my hon. Friend the Member for Barnsley, East and Mexborough congratulated the Government on what has been done so far. It is good that in his constituency some 12,500 claims have been registered for respiratory diseases and some 5,700 claims for vibration white finger. Across both schemes, more than £72 million has been paid out in his constituency. That, of course, can never be full compensation to miners who were deceased before payment was made, which was then left to their widows. In often tragic cases, the widow, too, has passed on and the compensation has been paid to the relatives.
Nothing can bring back a sick miner's health or restore years lost to ill health, and no sum can be traded for the loss of good health.
I know that the issue concerns all hon. Members, and particularly those whose constituencies are in coalfield areas. I fully understand those concerns, not least because of the excellent advice that I receive from members of the Gilmerton miners' welfare club in my Edinburgh, South constituency, and am pleased to have the opportunity to update the House on the issue.
The House wants to know about the background to the levels of settlement. In a 1990 High Court judgment, Mr. Justice Turner instructed the parties to negotiate a handling agreement to reflect the aspects of his judgment and the damages awarded. I thank Mr. Justice Turner for dedicating his life over the past six years to bringing his fantastic legal expertise to the matter, and a more knowledgeable or fairer judge could not serve on the scheme.
Mr. Justice Turner found many factors that defy precise attribution of effect to one cause or another, and he therefore found that compensation should be apportioned or discounted to take into consideration the fact that some claimants were exposed to non-

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tortuous dust, which cannot be suppressed by technology. Some claimants had smoked, and the extent of their smoking is relevant. British Coal is not liable for claims made by miners who were exposed to dust before 1954—the relevant date is 1949 in Scotland, as my hon. Friend just outlined.
Of the eight test cases in the High Court judgment, six were apportioned. The apportionment ranged from reducing a £40,000 general damages award to £7,000, to reducing a £32,500 general damages award to £10,500. There was no doubt in Mr. Justice Turner's mind when he examined the nature of compensation schemes, claims and settlements in court. I pass no judgment from the Dispatch Box on how fair those settlements might be, but I know that my hon. Friends are critical of them. None the less, Mr. Justice Turner was properly constrained to examine the evidence and the precedents.
The apportionment affects the settlement. The Government's policy has been to take account of individual circumstances—medical records, and the type of pit and dust to which the miner was exposed—and personal circumstances such as smoking. I know from miners clubs both inside and outside my constituency that that principle is not in dispute, but today's complaints are not uncommon.
The Government's policy has always been to pay the full compensation due under the scheme, however low it might be—it has been as high as £368,000. At the end of August, the average figure for full and final settlement is £7,466. The average settlement for a claim for chronic bronchitis only is £1,105, so I know the background to the debate.
I am also aware of my hon. Friends' concern about the money that has been paid to solicitors, and they know that I have taken a robust stance. I will never be the judge of my own effectiveness, but we have been pressing.
To date, we have paid solicitors more than £300 million to process claims under the coal health scheme in relation to payments to sick miners, their widows and families totalling about £2 billion. Of course, the vast majority of firms have taken the tariff cost paid by the Department, but I have made it clear that I consider that a minority have unethically and immorally taken a percentage of a claimant's compensation in addition to that paid under the agreement.
I was grateful to 20 of my hon. Friends who joined me to quiz the Law Society about that. Even the harshest critics of the lawyers whom we believe to have acted improperly recognise that the Law Society has taken this matter very seriously. We are grateful to it for reinforcing our actions, particularly those that I initiated towards the end of last year.
I said that several factors affect the tariff on a settlement, but I should add that a difference can be made to a claim that might be as high as £300,000-plus by the level of disability that is assessed, the relative length of time that somebody has been working in a pit, and the reduction that is made for smoking or other disabling conditions for which British Coal was not liable. The claimants' solicitors have put forward a proposal whereby claimants' representatives would fund a minimum payment from their fee to a value of £500. I can tell my hon. Friends that the Department is in discussion with solicitors with regard to that
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proposal, in particular to establish that there will necessarily be full take-up of any minimum payment by all claimants' representatives.
The problem is that it would be unacceptable for there to be inequitable treatment between different claimants depending on the representatives who are handling their claim. That is one of the practical hurdles that we are endeavouring to overcome before a minimum payment can be introduced. Active discussions between the parties are taking place, and it is important that we let those proceed. I know that they will read my hon. Friend's speech with care and hope that they will take it fully into account.
We had a brainstorming session with the claimants' solicitors group on 27 July, and we are reviewing its outcome with a view to putting proposals to the judge in September when he visits the Department's claims handlers. We are particularly concerned to ensure that solicitors groups and claimants' representatives have access to our records. As my hon. Friends will know, I have given that access. I have met the claimants' group that is going through records to try to find evidence that would help their case, especially in formulating test cases in areas that are not currently covered by the scheme.
I do not believe that any hon. Member, or anyone who listens to or reads the debate, should be in doubt not only about my commitment but that of the Government to securing justice and doing more to secure it. We are better informed about remaining grievances through debates such as this and the meetings that hon. Members regularly have with me. Although I should like to assure hon. Members that we shall resolve all outstanding grievances, I fear that that will not be possible. However, it will not be through lack of effort. If we can legally go down the proposed route, we certainly shall.
Mr. Alan Meale: I am grateful to my hon. Friend the Under-Secretary for giving way and I congratulate my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) on the excellent debate. I know how hard the Under-Secretary has worked to try to get some justice, but surely we must consider ways of getting more moneys and minimum payment to those who are suffering.
Only two weeks ago, the widow of a miner in my constituency came to see me. He had been rushed into hospital some time ago. Although he had been offered £200 compensation, when he was in the hospital where he later died, his lungs were found to be full of emphysema and bronchitis. Clearly, he died because of that. A figure of £200 or even £500 that solicitors might contribute towards the offer is not enough. As my hon. Friend the Member for Barnsley, East and Mexborough said, £1,500 should be the bottom line in all cases. Why cannot we take a little of the millions—indeed, billions—of pounds that we get out of the coal mining compensation scheme and that go back into the Treasury and pay back those people?
Nigel Griffiths: My hon. Friend makes a powerful point. My hon. Friend the Member for Bolsover

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(Mr. Skinner) reminded me earlier that the tremendous work of Department of Trade and Industry staff would be put at risk if the Liberal Democratic policy came to pass and the Department were abolished. It is important to realise that all the expertise and commitment that has allowed us already to pay out a world record amount for a public compensation scheme would be jeopardised by such a policy. We are determined to resist that and to allay the fears of miners, their widows and families that the scheme would not have the staff to continue it. We shall ensure that it continues.
The sort of case that my hon. Friend the Member for Mansfield (Mr. Meale) raised shows that no scheme is perfect and we must learn from those experiences, too.
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We therefore have independent medical experts who are examining medical records. Again, we accept that they can often be inaccurate or inadequate and that is a source of concern.
I know that hon. Members will revisit the issue. I keep it under constant surveillance and I am grateful to all my hon. Friends who raise individual cases with me or make thoughtful points to me almost every day. Again, I congratulate my hon. Friend the Member for Barnsley, East and Mexborough on securing the debate and thank my hon. Friends for their attendance and interest in such an important matter.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes to Seven o'clock.

Preamble
[MR. JOHN MCWILLIAM in the Chair]

REACH
[Relevant documents: Within REACH: the EU's new chemicals strategy—Sixth Report from the Science and Technology Committee, Session 2003–04, HC 172-I, and the Government's response thereto, Seventh Special Report, Session 2003–04, HC 895.]
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Heppell.]
2.30 pm
Dr. Ian Gibson: I am very pleased and proud to present the sixth report of the Select Committee on Science and Technology, "Within REACH: the EU's new chemicals strategy". This was an intensive inquiry into a very serious issue. The Select Committee has deliberated, agitated and cogitated on this European initiative and draft regulation, which seeks to register, evaluate and authorise the use of chemicals—REACH—and to establish a European Chemicals Agency. We want a fast, efficient and workable process to test and screen chemicals, about which we will say more soon. The Committee has added to that, and the Government support, a one substance-one registration scheme. We also want compulsory information from companies about consortiums, which we will also say more about, and to ensure that we have the mechanisms to give serious consideration to the use of animals in tests. We also want to have a really effective and functional European chemicals industry.
First, let me say something about the inquiry, which was announced on 29 October 2003. We wanted to examine the principles behind the legislation, which we believe to be important, and we believe that our Government should play a major part in taking that forward. We wanted to see what amendments we might need to make to the legislation, and what the implications of those amendments would be. We also wanted to examine the significant role that the Government have played and what action they might take as we enter the final stages of the legislative process.
We published our report on 12 May 2004, and held four evidence sittings, which were all important and interesting. One sitting involved the World Wildlife Fund, the British Retail Consortium and the British Union for the Abolition of Vivisection. We talked to Dr. Delbeke, the European Commission's director-general of environment, and to Mr. Liikanen, the European Commissioner for Enterprise and Information Society, on their home pitch in Brussels. We also talked to the Chemical Industries Association and to the Minister for Rural Affairs and Local Environmental Quality, whom I am very pleased to see in the Chamber today and who has played a significant part in the development of the British response. The Committee held meetings in Brussels with WWF and CEFIC—the European Chemical Industry Council—and had the oral evidence sittings that I mentioned.
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Chemicals are all around us: in our cosmetics, in our food and in our homes. Each year, some 400 million tonnes of chemicals, including thousands of new concoctions and conglomerates of chemicals, come on to the market and into our lives. For a very long time, there has been concern that the combined effect on our lives of so many chemicals may have detrimental effects on our health and our environment. That, I believe, is where the Europeans are coming from and the reason for the legislation. Indeed, many of us have been concerned about this issue for many years. More will be said about particular concerns as today's debate develops.
Chemical technology does, of course, move on. Nanotechnology is the buzzword of the minute, and the Committee produced a report on it. There are many new skin care compounds to improve our skin and our beauty, although the latter is not something that any of us here today have to worry about—beauty is not a word that is associated with anyone in this place.
Dr. Desmond Turner: My hon. Friend will get into trouble if he carries on like that.
Dr. Gibson: My beautiful hon. Friend has identified trouble immediately, which is good.
Nanotechnology is still partly non-regulated, so today's debate will filter into that field as well. Our Government and other Governments have identified that as a fast-growing area in terms of the needs of those who inhabit this world and the development of new products.
I enjoyed reading a book this summer—it is not often that we in this place have the chance to read a real book. It is by Bill Bryson and is entitled "A Short History of Nearly Everything". It should be compulsory reading in every school. He asks the sort of questions about science and technology that are so important to young people—"Why doesn't the sun fall out of the sky?" or "What is the weight of the earth?"—all questions that are never answered because the curriculum gets in the way.
Bill Bryson took three years to do research on the book, including on chemicals. He said that by the beginning of the 20th century, many consumer products involved the use of chemicals and that caused problems. He makes particular mention of lead, a compound that featured in many people's lives, and still does. There are lead solders and lead-lined tanks; there are pesticides that contain lead; and toothpaste tubes and motor fuel both contain lead. We have known for some time about paints containing lead. Bannisters have been painted with such paint, and young people have been known to chew them. I have never chewed a bannister, but many young people find bannister-chewing important, and lead gets into their bodies as a result.
There have been many important epidemiological studies, in which people have looked at the IQ of pupils in schools near places such as Spaghetti junction, where the lead in the air pollutes young bodies—and old bodies, too. It seems to have an effect on behavioural patterns, although some argue against that.
Tetraethyl lead has the advantage that it stops engines knocking. Industries in the United States, and particularly General Motors, Dupont and Standard Oil,

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joined together and skilfully managed to keep the market going for lead by naming it ethyl—despite the pronunciation, it is not a woman's name—which kept lead out of the headlines. The health effects of lead in the air were known, including its effect on the brain—it causes delusions of grandeur and the kind of stuff often seen around here—and on IQ, behaviour and so on. The industry's answer, with a skilful campaign, was to say that workers who were shown to have lead in their blood samples and in their bodies had been working too hard; it was suggested that it was the cause of their mental health problems and that they should slow down a little.
We know more now; we have moved on in the last 50 or 60 years. The Clean Air Acts have allowed us to remove lead and so on from the air, and later from our paints; in 1986 it was taken out of solder in the United States, and in 1993 it was taken out of paints in the US. However, even in February 2001, industry was saying that lead had no ill effects on health; industry was defending it and was still using it in various products. The use of lead has benefits, such as producing petrol that prevents engines knocking, but it also has a downside in its effects on health. That is the paradox that is faced by science, as new products and new technologies come on to the scene: we need to balance the benefits and the problems in our attitude to the use of lead.
The report, and the work done by various other groups, is about chemicals and their effect for good or bad. REACH abolishes the distinction between new and existing chemicals, but that will result in a huge backlog of testing. A 1 tonne threshold has been mentioned as a starting level for testing. If that is the criterion, it is estimated that something like 30,000 substances will enter the REACH process. That huge body of work will involve an awful lot of people and resources.
As for registration, we would have to attempt to include data on chemicals manufactured in or imported into the EU. On evaluation, we would consider establishing whether tests were required and what chemicals should be subjected to the authorisation process. Substances could be banned or their use restricted, or they could continue in production if they were adequately controlled, no suitable alternatives existed or there were socio-economic implications. A huge debate revolves around all the information that we are trying to access.
A balanced approach has had to be taken and nothing has been written in tablets of stone. We all know that asbestos is a substance that was considered safe—indeed, many people still think that it is safe. We have now moved on and even this week I heard that people can now take asbestos and turn it into less unhealthy compounds that might be beneficial to people's lives, but that remains to be seen. I stress that the 30,000 substances need to have a priority of registration under which they are scrutinised. We must examine the intrinsic hazard of the substance. The industry and science community often prefer a risk-based system that takes into account the exposure levels in respect of the
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substance but, to begin with, the Committee regards the volume measures as a proxy for looking at exposure. We cannot start on day one examining 30,000 substances.
Bob Spink: Does the Chairman of the Committee recall that the exact words used were not "proxy" but "crude proxy"?
Dr. Gibson: I accept that it was a crude proxy system.
We recommended that the approach remain, but that it should be refined with the introduction of a single pre-registration phase, so that highly toxic, low production volume chemicals could be dealt with more quickly and high production volume chemicals of lower risk dealt with later by, for example, employing advanced computational techniques. We talked about one substance-one registration—a key element in the Government's position—that encouraged the formation of consortiums to share testing data. I am aware that this week in the health service we found out that much information was skulking away in the undergrowth, hidden by companies that will not divulge it and which devoted their energies to giving it to other people to save a lot of time. Consortiums are the way ahead. We want them to share animal test data, for example.
For goodness sake, the issue of animal testing is a real up-front problem in science. We examined animal testing. I shall not talk about terrorism and other aspects of it. But if we are serious about animal testing, we must bear it in mind that there is no evidence in the REACH proposals about how many animals might be involved, whether they be fish, birds or vertebrates, and that there has been no hard-line assessment of what might accrue from such regulations. Moreover, sometimes it seems that we pay lip service to alternative methodology. Groups such as the Fund for the Replacement of Animals in Medical Experiments have been bashing away for years with alternative ways of assessing chemicals—from the chemical formula, the nature of the compound and what we know from past similar compounds and data. By doing so, they have saved a lot of hard-line animal experimentation, which is not only costly, but not popular with many people in this country and throughout the world.
Bob Spink: Does the Chairman accept, that subsequent to the Committee's investigations, questions in the House and investigations by other bodies revealed that as many as 5.4 million additional animals could be tested under the REACH proposals in the phasing period of REACH alone?
Dr. Gibson: I am grateful for that information. I am not sure that 5.4 million is the final figure. There are many arguments about that. I am certain, however, that the figure is not in the 10s, 20s or 30s. Science moves forward and we are proud of the information from Sir John Sulston and others in the Cambridge laboratories about the human genome, in which Britain has been at the forefront for many years now, and for which we have won Nobel prizes. Understanding how those genes work in animal models necessitates work in the scientific community with animals. We need to assess that with an open, honest appraisal of how many other animals and what types of animals will be involved.

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The British public still, in general, support such experiments where information is found out that will improve people's health. However, if they think that it is being done willy-nilly just because it is part of some process that has to be gone through, we will soon lose the argument, and not merely in terms of the current issues: the movement will grow and will make it difficult to handle the new information that comes forward.
I feel that we have to do a certain number of animal experiments. However, I know from practical experience that although we say that we look for alternatives before we approve research, it is halfhearted. It is not a full-fledged development of new computational techniques, tissue culture experiments and so on. During our inquiry, we talked to people who vehemently, passionately and enthusiastically believe that we do not need to use any animals at all. There is a huge spectrum of opinion about the subject, and if we fail to address it we do so at our peril: not only in terms of the REACH legislation, but in terms of the whole scientific progression in genetics and human health, and the improvements that we hope to make.
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): This is an important issue, which needs to be kept clearly in perspective. If there are to be alternatives to animal testing, and we are to keep animal testing to a minimum, there needs to be the sort of engagement to which my hon. Friend has referred. When I have had correspondence from people promoting ideas, I have asked officials immediately to engage with them and to consider the options proposed.
I should make it clear that part of the Government's overall objective in negotiating the regulation is to ensure that animal testing is kept to the minimum necessary to protect human health and the environment. One of the ways in which we aim to do that is by applying an intelligent approach to testing. I very much welcome the Committee's views on that and the engagement that my hon. Friend is arguing for, in order to ensure that every opportunity is taken to develop and promote the use of alternatives.
Dr. Gibson: I thank my right hon. Friend. I am glad that we are in harmony, but such action has to be seen to be done. We need to be able to sell it to the public, as it were. We have to get John Humphrys and company on side, too. They are almost always too ready to knock science when they get an opportunity. I am pleased that the Government have put money into alternative research, taking us away from animal experimentation. We must ensure that more goes into that, and that the centre of such action is not just a token but is well staffed, well funded and committed, so that soon we have something to sing about when it comes to the alternatives that might be available.
Geraint Davies: We would all like a minimisation of animal experiments. Does my hon. Friend agree that one of the key drivers of REACH is the protection of animals, whether it concerns endocrine disruption in polar bears or whatever? The whole point of the proposals is the future of the environment and all our species. Those who say, "I am
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for saving animals" should be thinking about the bigger picture of the future of the planet and safe chemicals for the world.
Dr. Gibson: I thank my hon. Friend. He makes a good case for appearing on Radio 4 to make that very argument. Many people do just that; the chief executive of the Medical Research Council has appeared and others have done so this week, for example, to explain why the legislation will help to deflect the problems concerning not just animals but humans. He mentioned endocrine disruptors. I do not think that any of us want to change sex overnight, but there is plenty of evidence that molluscs and other organisms in our environment do so. That is not natural, and is prompted by chemicals. I read today, for example, that even bracken releases chemicals into the water that may have cancer-inducing effects.
The vigilance that we are beginning to show is to be welcomed; research into the environmental arena is growing apace, and must be carried out. We must be able to assess chemicals, not on the basis of the suffering that they cause in the world, but in an environment where they are under control. We can then make balanced judgments and ensure that we have hard evidence that will stick when it is presented to the public. As my hon. Friend the Member for Croydon, Central (Geraint Davies) explained very well, we are moving in that direction.
The chemical industry has outlined several problems with the one substance-one registration approach. There are problems with getting consortiums together, cost-sharing, confidentiality, different risk assessments, chemical identity and so on. I sometimes feel that it is easy for people to prevent things from happening, but the Chemical Industries Association has, on balance, been positive and has welcomed the proposals while trying to identify mechanisms for assessing the process and putting it into practice. Working in industry and getting industries to work together is not the easiest thing in the world given the handle of confidentiality that they always use to prevent things from happening.
There is much to be gained from promoting the one substance-one registration approach. The legislation could provide incentives and encouragement to form consortiums, although not enough has been done to address that. However, if data-sharing is to be the norm and the formation of consortiums is to be mandatory, the system will not necessarily be workable. In saying that, I am not bowing down to industry; I am talking about the difficulties involved in making things happen.
As I said, this is not a once-for-all piece of legislation, and we will not simply lie back afterwards. I hope that the legislation will be evolutionary and that we will learn. If bad practice goes against the spirit of REACH, we will take it up and make sure that we move the legislation on. I hope that people will see that we have a great opportunity to benefit the world.
What a chance this is for industry to show that it really cares. MPs are always asked whether they think that this or that company does enough for the environment. I do not know what other right hon. and hon. Members in the Chamber say, but I sometimes say, "I don't know" or "Certainly not." However, I know of companies that have taken environmental issues on

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board and that are much more open about not only producing their data at open days in towns and cities, but engaging with schools and helping young people to understand problems.
Geraint Davies: Does my hon. Friend think that some of the industries and companies that do not participate in a data-sharing consortium might be hiding information and research that suggests that some of the chemicals that they produce are hazardous? If so, should the Government act to elicit that information compulsorily for the public good?
Dr. Gibson:: I live for the day when we have open access to information. The Committee has just produced a report, which is yet to be debated, about open access to information. Such access would mean that nobody had to pay astronomical sums to get data through subscriptions to journals in libraries. It is up front, on the internet, where people should be able to look at publicly funded research. I am talking not about people such as MPs, but about the public accessing open information. A major cancer research charity, Cancer Research UK, challenged pharmaceutical companies this week to produce data on their websites to stop duplication of information and to empower individuals and the public to understand what is going on in that arena. That is an important concept, and it would be one of the most important things we put in a political manifesto.
People want information about drugs, and I do not know why companies hide behind confidentiality so much. Even negative results are worth knowing about, because it is important to know if something does not work. Many people here have probably produced and published negative results. When done well, it will have prevented other people from proceeding, raising questions about why a technology did not work and how it could be modified to make it work.
Richard Ottaway: I am following the hon. Gentleman's arguments with interest; I am always attracted to anything that has electoral popularity. However, is the issue not that the pharmaceutical companies want to be reimbursed for their research? If there were full disclosure, they would lose their investment and the net effect would be that less research would be conducted by such companies. That is a circular argument, but I would be interested to hear the hon. Gentleman's response to it.
Dr. Gibson: I am always sympathetic to people in the pharmaceutical industry, whom I have worked with, when they tell me about the money put into research and development. On the other hand, the industry gets young—and older—people from the public sector to do its work and puts very little back into the educational process that produces those people.
The balance between how much money the industry gets and puts in has to be seriously considered; often there is a one-way transit of support. We have to think about balancing the act and making sure that the industry puts much more back into research. I do not believe that a lot of the industry's information cannot be
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divulged. Pharmaceutical companies publish research work through peer-review journals, and hopefully they will offer access soon. However, generally such companies are moving on the issue because they realise that they should not be seen to hide things. I know that that does not answer every aspect of the matter, but the political dimension is in favour of opening information up to people so that they can balance their judgment.
Every charity that I know in the health field now says that patients should be empowered and that information gives them power. The biggest threat to the general practitioner in this country is the empowered patient with six print-outs from the internet who says, "What about this treatment? What about that treatment?" about which the GP knows nothing. The movement of information is sometimes faster than industry and the health service can handle, and I welcome that. They have to adapt to that.
Alun Michael: The point about data sharing is important. Commercial confidentiality certainly concerns parts of the pharmaceutical industry and other industries in which processes are involved. Will not the benefits of one substance-one registration be realised if all available test data is shared among all EU suppliers? By and large, test data is not commercially sensitive. We need to be careful about the distinction between the type of data that needs to be shared and that for which commercial confidentiality can be maintained and respected.
Dr. Gibson: I thank my right hon. Friend, and I absolutely accept that. However, the challenge for us is to get the consortiums and the companies to talk together. They have to move out of the culture in which they have existed and to understand that the REACH proposals give them a great opportunity for advance. The point was made a few minutes ago about how important that might be.
I turn to another important aspect of the proposals: substitution. The Commission's demand for the substitution of chemicals of high concern is a very contentious area. Our friends in the environmental nongovernmental organisations are concerned that the proposals would allow companies to argue that a chemical can be "adequately controlled" and remain on the market. On the other hand, industry argues that the substitution of toxic chemicals is already taking place, but that it is a complex process requiring the involvement of all parts of the supply chain. It argues that enforced substitution would result in a significant loss of products from the market. I am sure that it believes that, but there is a serious argument to be had.
The Committee had acrimonious debates on this issue, but it did not conclude that the proposed requirements for substitution were excessively onerous. If a substance of high concern is involved, it seems reasonable to argue that authorisation should require that attention should be given to the use of alternatives. We do not contest the fact that that would impose a burden on companies, but nor should they contest the importance of ending the production of substances of high concern. We say that substitution is acceptable, provided that adequate control is interpreted so that the

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risks of exposure to humans or to the environment are remote, during and after the lifecycle of the product.
Substitution is an essential element of the legislation and it must be encouraged, but the issue is whether we enforce it or whether we have a pragmatic trust, as it were, that it will happen. That is why we have come down in the middle way—a phrase that my right hon. Friend will recognise from other aspects of his political endeavours.
Alun Michael: May I ask my hon. Friend to protect his political respectability by referring to the third way rather than the middle way?
Dr. Gibson: I apologise; I get muddled with the hunting with dogs debate—after all this time.
Dr. Brian Iddon: Does my hon. Friend agree that substitution does not always work? The outstanding example is the replacement of ammonia in domestic refrigeration with Freons. We all know what damage to the environment Freons have caused, and we are now substituting them in turn. It is not a simple issue.
Dr. Gibson: I thank my hon. Friend for that. Of course what he says is true. The substitute must be as adequately and thoroughly tested as anything that it replaces. The REACH proposals give us the opportunity to do that. We do not want to substitute something with something worse.
I do not want to go on about the European Chemicals Agency. We are all in favour of it. We want it to be tough and rough, and to ensure that things happen—I am sure that it will.
Geraint Davies: Does my hon. Friend agree that without lowering cost or legislative compulsion there is no incentive for a producer of hazardous chemicals to make a substitution once that has been deemed advisable for public health, and that therefore we should move towards a mandatory and precautionary stance and not dilly-dally?
Dr. Gibson: My hon. Friend is much more radical than the Committee was on the issue. My instinct is with him; I think that the stance will have to be like that in certain quarters. In some industries—not necessarily in all—we will have to impose some mandatory condition. I look forward to hearing what my right hon. Friend the Minister says in reply to the debate, because some industries are much further advanced and innovative in developing substitutes. It is part and parcel of their innovation culture, to which I now turn.
Innovation is a challenge for all industry. It is part and parcel of the trade policy in this country to innovate in all aspects of technology, science and so on. We are aware of the increased money that the Chancellor has provided in the comprehensive spending review and how he has accentuated innovation. Innovation is a simple word that trips off the tongue rather easily, but it is a complex process. We must examine the chemical industry and ask ourselves how successful it has been in innovating, because there cannot be substitution without an innovation process that is encouraged,
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supported and works. We think that the challenge is there for the industry and that innovation should be encouraged. We know that resources have been invested in innovation; many people feel that more should be put in. It will be interesting to see how the industry handles the matter.
Incidentally, given that the young and bright people—as well as some older people—enter the industry from academic chemistry, it is important that we do not allow chemistry departments and, indeed, physics departments to close down, as has been happening during the past few years. Steps are being taken by the Government to examine that process so that such places cannot be closed down without a thorough annual examination of what is happening in the community.
More than that, in our schools and education we need to extol the virtues of chemicals—we should consider their benefits, how we assess them, and the kind of problems that we have been discussing and that we will hear more about today—so that young people get excited about inventing new chemicals and substitutes, and so that they know about how they are tested and developed, and how one gets into the markets. Such education in this country needs a radical rethink, yet we stutter towards it in politics. We address an issue here and an issue there, we move forwards and say the right things, but here is a great chance for the chemicals industry to move forward a strategy that is so needed for science and technology, in order to promote interaction between academia, industry and all the other groups that parade around this vital area for our development. What a chance for innovation—absolutely vital to making inroads into chemical developments.
The Department of Trade and Industry's chemical innovation and growth team concluded that innovation is essential to the future success of the chemicals industry. The industry has a long tradition of innovation, but in recent years its record of product innovation has been less strong: much of it is characterised by incremental change and it spends below the international average. The DTI research and development scoreboard points to under-investment by the United Kingdom chemicals industry. In 2001, average spend was 2.2 per cent. of sales compared with an international average of 4.2 per cent. Furthermore, spending is only a proxy for innovation, as it covers more than just research and development. Such under-investment has been a persistent finding over the years, which the CIA recognises.
The UK would be expected to meet the international average, given that speciality consumer products form a large part of the UK industry. We have bright people and good industries, and we need encouragement for that. We certainly should not have a youth policy that is based on the closure of departments in our educational establishments.
In recognising the difficulties and problems, the CIA must impact on innovation in its sector. There have been comparisons with other countries such as Japan. We produce some wonderful scientific papers, such as the recent paper by David King, the Government's chief scientific adviser on nature, and we hold our own in Europe, but if we look beneath the surface at what we are producing for the benefit of our people, we see that this country does not punch its weight. The CIA made

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strong arguments about its problems, but it seems to be weeping and whingeing a little rather than getting on and showing strong initiative.
I sympathise, as does the Committee, with the environmental NGOs that argue that REACH will be a strong driver for innovation, and that if the substitution of chemicals of concern becomes mandatory, as they would like, a demand for new and safe chemicals would be created. That is a challenge. I look forward to the chemicals industry's response to that, not just in paperwork but at the coalface. We need support from the Government and the chemicals industry working together to produce innovation. The Committee agrees that REACH will be very supportive of that.
The Committee welcomes REACH, which is so much better than what has gone before, because it recognises the problems and hazards for our environment, individuals and so on. It will not necessarily be an all-encompassing solution, but we have come a long way in a few years. I welcome the fact that the Government have spent time on this area, have made suggestions, and have shown real commitment to taking up the issue to move things forward. It is exciting, but we have to make sure that things happen and that we are not left with a piece of paper gathering dust.
3.9 pm
Bob Spink: I thank the Committee and its civil servants for all their efforts on this important subject, which will affect all our lives over the coming years. I suspect that I shall take a different line from those on the Government Front Bench, and perhaps from those on my own Benches—I have certainly done so in the past, such as with the common fisheries policy throughout the 1990s.
REACH comes from a questionable stable: the European Commission. It is a new European regulatory framework for chemicals. The European Commission has produced some crazy ideas in the past. I refer hon. Members to the common fisheries policy, which was set up with three basic objectives 20-some years ago. The first was to help fishermen and the second was to conserve fish stocks. It was also intended to help fishing-related onshore industries.
We can see what has happened: the number of fishermen has been decimated, our fleet and onshore industries have been destroyed, and fish stocks have been destroyed, to the clear detriment of our environment and food chains. Why should we now have confidence in REACH to help our industry or to achieve its pre-eminent objective of improving safety? Looking back on our experience, we must ask questions, and that is what I want to do.
The UK chemical industry is very important to our economy. It is the third largest in Europe and the sixth largest in the world. The UK operates in a global, not a European-focused, market. The industry supports many jobs in the UK and it has for many years provided great innovation, which has in turn brought great benefit to mankind in general, and to the environment. Innovation has of late slowed down, and part of the impact of the REACH proposals will be to slow it down even further. My hon. Friend the Member for Croydon,
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South (Richard Ottaway) was involved in an exchange on that matter, so I shall not pursue it now.
The REACH proposals are a potential nightmare of massive proportions. The 10 commandments have 94 words, the American declaration of independence has 634, but the EU REACH legislation has 498,124 words. [Laughter.] That may be amusing, but it is extremely dangerous.
Alun Michael: Will the hon. Gentleman give way?
Bob Spink: I shall in a moment.
The legislation is highly complex. It comes in six volumes covering 1,328 pages, and I doubt whether many people understand it or its full implications and potential. It will be a lawyers' and environmental campaigners' charter for mischief. I give way to the Minister, but not before asking him whether he has read all the REACH proposals.
Alun Michael: I spent a good deal of time in recent months reading a great deal about the REACH proposals, their full content and their implications. I do not pretend to be a chemist or a technocrat, but I want to bring people together on important issues such as this.
The hon. Gentleman said at the outset that he intended to make an idiosyncratic speech—those can be attractive contributions in debate—but does he agree that it is not the number of words that is important, but whether they are the right words, taking us in the right direction? Does he acknowledge that the UK chemicals industry, which is extremely important and innovative—a leading industry—has engaged positively with the REACH proposals? It has engaged with those who have various other concerns, and is showing maturity in trying to ensure that REACH will be practical and will achieve the Government's objective of protecting human health and the environment without undermining its own competitiveness.
Bob Spink: I am grateful for that intervention. I accept that the chemicals industry has been mature and responsible in its response. It has little choice, after all. It is a responsible industry, which adds much to our society and our economy and will continue to do so in future, given the opportunity.
I do not accept that my contribution is idiosyncratic. I have a duty to explore the issues and expose the problems and I will try to do that. If that gives discomfort to people who do not seek to look fully at the issues, that is their problem, not mine. I am also concerned that the legislation will lead to massive claims against the industry because of the shift of burden of proof. That may not be in the best interests of society at large, but only time will tell.
I shall take Members through the seven claims and objectives of the enormous regulatory framework that we face. The first objective, a substantial one, is the
"Protection of human health and the environment".
That is key and laudable. We all want to do that, but no evidence has been adduced that REACH will achieve that. In fact, anything that is toxic or damaging to the environment or human health or which is likely to cause a problem will be dealt with, can be dealt with and must

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be dealt with under current regulations. If the Minister, any member of the Science and Technology Committee, anyone in the industry or any environmental non-governmental organisation is aware of any substance that may be causing a problem, such as lead or anything else, they have a duty to bring it forward now and have it dealt with under current rules and regulations. Those mechanisms are quite capable of dealing with the problem and will do so firmly. There is no evidence that there are issues waiting to be discovered by such a massive burden of legislation, which may be detrimental to that purpose in the longer run.
Sue Doughty: As the non-scientist in the Chamber, I suspect that I speak on behalf of ordinary people. Is the hon. Gentleman really suggesting that we must wait until we find out that something is toxic and allow it to accumulate in the environment before we discover which chemical causes the problem? Surely the objective of the proposals is to introduce an element of precaution, as so much damage has been done in the past by waiting to see what turns up.
Bob Spink: The hon. Lady is right that it is necessary always to be one step ahead of the game and to look for toxicity, bioaccumulation and other things, but that is what scientists do now. Nobody has their head buried in the sand waiting for the legislation in question to rescue the world. Perhaps the proposals will deliver that objective, but perhaps risk-based legislation would do so more effectively. That is the thesis of my argument, and I am grateful to the hon. Lady for giving me the opportunity to outline it.
The second objective of the REACH proposals is to
"Maintain and enhance the competitiveness of the EU chemical industry".
There is no evidence that REACH will do that, although the Committee received lots of evidence that the proposals would do the opposite. In fact, one study predicted the loss of more than 2 million jobs in Germany alone. The evidence is quite contrary to the achievement of the second objective, which is a trend that we shall see as I go through the rest of the objectives.
The third objective is to
"Prevent the fragmentation of the internal market".
REACH may well achieve that: it may bring the UK operation more into line with the European operation, which I would interpret as levelling down the UK industry's competitiveness to EU average levels. I do not know whether there is a conspiracy to level down competitiveness in the UK or whether that result will be an instance of the law of unintended consequences, but much EU legislation has removed the UK's economic and competitive advantage over Europe. I simply place that in front of those in this Chamber.
The fourth objective is to "Increase transparency", which in some ways REACH will do, although at the cost of competitiveness and, possibly, innovation. Certainly, in bringing forward the proposals there has been a great lack of transparency about costs, the numbers relating to animal testing and other things, and that does not bode well for the objectives.
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The fifth objective is to "Integrate with international efforts". The proposals certainly will not do that, because the REACH regulations are different from the regulatory systems applied in Japan and the United States of America; those systems are risk-based, unlike the REACH proposals.
The sixth objective is to "Promote non-animal testing". In including that, I think that the Commission was having a laugh. The proposals would increase animal testing, and no one argues that they will not. The Commission talks about "minimising" animal testing, for example, but even the Minister will not say that the proposals would reduce it. It has been variously estimated that 500,000, 2.6 million or 5.4 million additional animals will be tested on in REACH's phasing period alone, as the Committee is well aware. I was deeply saddened that Ministers and the Commission were not prepared to come clean about that fact. That does not bode well for their fourth objective, which, as I said, is to increase transparency.
The seventh and final objective is to
"Conform to EU international obligations under the WTO".
Well, REACH may well do that; we do not know, although we do know that the proposals are massive and probably unworkable.
I therefore put it to the Chamber that the objectives and claims fail miserably. They have little communion with the truth, evidence or even common sense. However, I can confirm that the legislation will have one impact that will please Ministers: the proposals will generate thousands of new jobs for bureaucrats, bean-counters, pen-pushers and wealth-absorbers across Europe, albeit at the expense of tens of thousands of jobs among wealth-creators.
Paragraph 3 of the introduction to the report says:
"Our inquiry took as its starting point the acceptance that REACH was the only system under discussion at this stage in the legislative process"—
in other words, REACH was the only game in town. That may be so, but I hoped that we would say that there were other options available for regulation, such as the systems used in Japan and America, and that it would have been more useful to investigate other areas, too.
Dr. Iddon: I am a little puzzled, because the hon. Gentleman is a member of the Science and Technology Committee and could have made a minority report if he wished. Why did he not do so?
Bob Spink: I did not submit a minority report because I thought that there were some good things in the Committee's report that should come through—
Dr. Gibson: What are they?
Bob Spink: If the Chairman of the Committee can contain himself for a moment, we may come to them. Also, I thought that it was appropriate for the Committee to remain unified.
I am approaching the issue from the viewpoint that past European legislation has gone wrong. I fear that more such legislation will go wrong if we do not address the issues. I am not criticising the report so much as

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encouraging the Minister to review thoroughly what is happening and to think carefully before signing up to something that will—
Alun Michael: Will the hon. Gentleman give way?
Bob Spink: I will when I have finished answering the previous intervention. I want to encourage Ministers not to sign up to something that could be extremely detrimental to this country, as the common fisheries policy proved to be.
Alun Michael: I am rather puzzled, because I thought that the report was thoughtful, constructive and agreed unanimously, across parties, by the Select Committee. In his contribution so far, the hon. Gentleman has used the type of language that is quite good at attracting headlines. It appears to be a bit of a Eurosceptic rant, rather than a development of the thoughts of the Committee. As I understand it, he is saying that he does not agree with the Committee, of which he was a member. Therefore, it is difficult to see what the relationship is between his remarks and the Committee's report.
Mr. Deputy Speaker: Order. If the hon. Member for Castle Point (Bob Spink) wants to make a Second Reading speech against legislation that is not in front of us, it must be in the context of the debate that we are having.
Bob Spink: I am grateful for that explanation, Mr. Deputy Speaker.
I accept that some of my comments will be seen as Eurosceptic, but that does not necessarily mean that they are inappropriate. I was called a Eurosceptic when I said that the common fisheries policy would end up destroying our fish stocks rather than conserving them, and I was proved right. However, I trust that I will not be proved right on this occasion. I am encouraging the Government to improve the legislation, so that I am eventually proved wrong. That will be in the interests of the country.
Paragraph 11 of our report states:
"Useful comparisons can be made with the chemical regulatory systems in the USA and Japan."
The paragraph goes on to state that both of them
"employ a risk-based approach to regulation and are cheaper than those currently in operation in the EU."
Colleagues will recall that I said when we were going through the report—and I remain convinced today—that we should not accept this monster legislation en bloc and simply try to make the best of it. That was the starting point of our approach. Paragraph 3 states that
"our energies could best be directed at identifying areas where the legislation could be modified to make it more workable and more effective."
I never accepted that. I strongly encouraged the Committee to look at alternative models and to put them forward for consideration, but it did not accept my view. I acknowledge that I may be wrong and the Committee may be correct, but I reserve the right to stand up and report what actually happened.
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I believe that the Committee should have told the Government that REACH is wrong for the UK, and that we should have looked at other more proven systems that are in use in some of our main international markets. That would have been anathema to people such as the Minister, who thinks that all things EU are good and everything else is bad.
As in Japan and the USA, we should remove substances of low and known risk from further study and focus on substances of greater risk, where persistence, toxicity, bioaccumulation and real threats to mankind, animals and our environment are more probable. Sadly, we have failed to take that approach.
Dr. Gibson: Does the hon. Gentleman agree that the Committee did not look at this legislation entirely from the European perspective? We looked at it from the perspective of science and technology and of benefiting the world and the communities that we serve. We did not look to say that, because it came from Europe, it must be wrong. That was never part of the discussion, but he is implying that it was.
Bob Spink: I am not implying that. The hon. Gentleman is absolutely right in what he says about what the Committee did. I also accept the charge that he has made against me from another angle—I am Eurosceptic. It is necessary to question what is coming out of Europe and to challenge whether it will be in the best interests of this country, because so much of it is not in our best interests.
I will draw attention to some of the findings in our report to cast light on the weaknesses in the massive REACH proposals. Paragraph 32 states:
"We recommend that the scope of the legislation should be set out clearly and comprehensively to enable unambiguous understanding of what the legislation does and does not cover."
That is a Committee recommendation. Clearly, therefore, the Committee believes that the REACH legislation is ambiguous. It is self-evident that the UK should not proceed with legislation or give competencies to the European Commission where there is obvious ambiguity. The Committee found that there was ambiguity. Paragraph 40 on page 18 states:
"While production volume is a crude proxy for risk, it is a useful starting point."
What a strange statement. I agree with the first part, although production volume is not just a crude proxy—it is no proxy at all. The most dangerous substances are mostly in very small volumes, so volume is not a proxy for risk. I cannot agree with the second part of that statement, which is that volume is useful as a crude proxy, because it is incompatible with the first part of the statement. Risk should have been the criterion that was used.
Paragraph 50 on page 22 states:
"There is much to be gained from the promotion of one substance-one Registration."
I agree, although there must be a safer and easier way of achieving that than this 500,000-word piece of legislation.
Chapter 6 on page 30 addresses the testing requirements. We see that the Commission and the Government are very reluctant to reveal the number of animals that will be tested, in addition to those that

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would otherwise be tested as a direct result of the REACH proposals. I can see why the Commission and the Government should be reluctant to give out that information, but what does that tell us about REACH objective 4, which is to increase transparency? The lack of honesty about the number of animals to be tested can give no confidence at all to anyone about REACH or about the intentions of those who are trying to drive it forward without properly revealing what the circumstances will he.
What are the Government doing to promote non-animal testing? The answer is not very much. They are doing little to develop new methodologies, to carry out research into non-animal testing techniques or to invest money in the sector. This is a very important area, but the Government are doing very little. The token approach is simply warm words, but that will not wash with the British public. We have assertion without foundation and warm words but no action, so there is no change there from this Government.
I am deeply worried that the regulators of the highly complex and contentious area of substitution—the new centralised and powerful agency—and REACH will make undue and very damaging demands on the industry. The Chemical Industries Association is also worried about the matter and has rightly called for a pragmatic approach to substitution. Whether it gets it is open to conjecture. We will see, but I raise that important issue now.
It would, of course, be wrong for the legislation to be affected by political self-interest or used as a bargaining counter, which is often the case in legislation and pan-European politics. We all know what happens then—we get an expensive, ineffective, nonsense solution, such as EU Parliaments sitting in Brussels for three weeks, moving to Strasbourg every fourth week and then going back to Brussels. Why has the REACH HQ been put in Helsinki, rather than where the centres of chemical engineering excellence are? That will affect its operation, costs and effectiveness. Paragraph 112 of the report says:
"Without the necessary skills and experience, the EU's new chemical regulation cannot be fully effective. It is also vital that the European Chemicals Agency attains the confidence of all stakeholders. To achieve this, it must operate in a transparent fashion and decisions must be consistent."
Dr. Gibson: What exactly do the hon. Gentleman's last remarks have to do with Helsinki?
Bob Spink: The decision to place the HQ in Helsinki will remove it from Europe's centres of excellence, which are mostly based around Ispra in Italy. If the hon. Gentleman reads the Committee's recommendation in paragraph 112 on page 40, he will find that it says exactly that.
There are many other issues. For example, the report's conclusion states:
"The Commission has made great strides in its openness".
Clearly, it has not made great strides in openness on costing, animal testing and many other issues—quite the opposite.
The Government's response is inconsistent and gutless. The people of this country want a Government who will stand up for their interests in Europe. They
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want to resist ambiguous, ineffective, politically motivated, politically correct and EU-driven legislation. The Government are simply rolling over on REACH, as they have done on so many other EU issues. I get the strong feeling that the Prime Minister, who personally promoted the REACH legislation in his trilateral letter, has a personal agenda on the issue, as on other European issues, and it has little to do with improving the safety of chemicals for this country.
The Committee's report is honest, and I thank the other members of the Committee for it. As hon. Members will have gathered by now, I was not in attendance when it was finally approved and passed through. I think that it bows too much to the Government and the Prime Minister's wider European political ambitions. It raises questions to which the Government have given no real answers. The Government should reject REACH as it is currently proposed and seek, on a wider front, to renegotiate the UK's position in Europe for the benefit of our people and our country. REACH will be to our chemicals industry what the common fisheries policy, which was much lauded at the time, ended up being to our fishing industry unless the Government get their act together and dramatically improve these half a million words of legislation.
3.39 pm
Dr. Brian Iddon: As a professional chemist, the chairman of the all-party group on the chemical industry and a member of the Select Committee, I regret to say that, in some quarters, the word "chemical" has almost become synonymous with nasty. Yet, as the Chairman of the Committee said, life would not function without chemicals. Whatever we eat, drink, touch or see is built of chemicals; indeed, we ourselves are built of chemicals. Fortunately, medicines are considered to be good on the whole, although they, too, are chemicals. As pharmaceutical products, they are not covered by the legislation, although the chemicals that go into them are.
In Europe today, approximately 100,000 chemicals are in circulation, but only about 30,000 of them are produced on a scale larger than 1 metric tonne. A relatively small number of those—as far as I know, about 140 so far—have been identified as requiring immediate attention since 2002, either because they possess carcinogenic, mutagenic or reprotoxic properties, or because they accumulate in the natural environment and cause environmental problems. Friends of the Earth, Greenpeace, WWF, other NGO and consumer groups and, in particular, the scientists working for those organisations have alerted us all to the problems for many years. However, those problems have persisted without Governments or industry taking the notice that our Committee believes that they should have taken.
Chemicals manufactured since 1981 are regulated by 67/548/EEC and those produced before that date are regulated by the EU existing substances regulation—793/93. As a result of the 1981 legislation, about 3,000 chemicals marketed since that date in volumes greater than 10 kg—a significant amount—have been assessed for possible risks to human health and/or the environment. Industry undoubtedly holds much unpublished data that it could share with society without compromising its intellectual property rights.

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The United Kingdom Government brought the lack of effective legislation to the fore at an informal meeting of the European Union's Environment Ministers that was held during the last UK presidency in 1998 in Chester. That resulted in a White Paper entitled "Strategy for a future Chemicals Policy", which the Commission published in February 2001. It published its legislative proposals for the registration, evaluation and authorisation of chemicals on 29 October 2003. Those have, of course, become known as the REACH proposals.
The REACH proposals will enter EU law as a regulation rather than as a directive. That means that member states cannot, for any reason, be exempted from the regulations as they are from directives. That is the first difficulty that I want to flag up. It could cause problems for the accession countries that are not, for various reasons, at the same stage of technical development as other member states.
The key principles of REACH are to protect human health and the environment, to encourage innovation and to improve the European Union's industrial competitiveness. REACH also aims to remedy the accepted weaknesses in the regulatory framework and increase its focus on substances that are of real concern.
The original REACH proposals, which were subjected to an eight-week internet consultation in May 2003—probably the most extensive consultation ever carried out by the EU—met with much opposition from Governments and from the chemicals industry throughout the Union. As a result, modified proposals are to be put to the European Parliament in the spring of next year—had it not been for the elections on 10 June 2004, they would probably have been put by now. Implementation of the REACH proposals is planned for 2008–09.
The importance of the REACH proposals to the Union is reflected in the fact that not one but three Committees are dealing with them—the Environment, Public Health and Consumer Policy Committee, the Industry, External Trade, Research and Energy Committee and the Legal Affairs and Internal Market Committee.
One of the advantages of the REACH proposals is that they bring together 40 pieces of existing legislation. Governments and industry alike can only welcome that. However, 20 other pieces of relevant legislation have not been consolidated into the REACH proposals. I ask my right hon. Friend the Minister why that is. Indeed, our Committee has recommended that the REACH proposals should also cover the emission of hazardous substances.
Alin Michael: I am afraid that I will not be able to answer my hon. Friend's question, as I am not sure what he was referring to. Will he clarify what he is referring to by the consolidation of legislation?
Dr. Iddon: I cannot today give the Minister a list of the 20 items of legislation that are not consolidated. However, we took evidence and I have it in my office somewhere.
Alun Michael: In that case, I offer to answer the question when it is clarified. I shall be happy to follow it through with my hon. Friend.
Dr. Iddon: I thank the Minister for his offer, and I shall certainly pursue it with him.
The Committee recommended that the REACH proposals should cover also the emission of hazardous substances, currently provided for by one piece of legislation that is not consolidated—the EU integrated pollution prevention and control directive, the IPPC directive.
Clearly, a lot of problems remain to be dealt with, as hon. Members have said, and the new legislative proposals are not tough enough to satisfy the demands of the greener organisations. Indeed, striking a balance between the demands of the chemicals industry and the green organisations is creating tensions, and some compromise will have to be reached. As the hon. Member for Castle Point (Bob Spink) indicated, the UK chemicals industry is the sixth largest in the world and the third largest in Europe, with approximately 3 per cent. of global production. Its sales were worth £26.1 billion in 2000, or 1.2 per cent. of GDP. Many of its products end up in pharmaceuticals, the most successful of all United Kingdom industries. The UK chemicals industry employs 1.7 million people directly, and a further 3.3 million people are dependent on it. We must ensure that the industry's productivity and efficiency are not damaged.
The hon. Member for Castle Point pointed out that regulatory systems exist in the United States and Japan, the two main competitors of the European chemicals industry. They have adopted a risk-based approach that makes them cheaper to implement than REACH will be in the European Union, which is a worry. Their chemical testing is subsidised, which is a further worry. However, the United States high production volume system was criticised even by the United States General Audit Office in 1994 for providing ineffective protection to United States citizens.
It will be hard to devise a European system that allows us to remain competitive in the world market, and that is another major concern for our chemicals industry. To provide a level playing field, worldwide international agreements appear to be extremely necessary. The green organisations claim that Europe will gain an advantage in the worldwide market if we can prove to the rest of the world that the chemicals and chemical products that we are selling are the safest in the world and do not damage the natural environment. In my opinion, that is a worthwhile target, but my worry is that it will take some time and that the European chemicals industry could be put at a serious disadvantage as a result.
Although the European Union has carried out an extended impact assessment of the REACH proposals on the chemicals industry, it was based on the proposals originally put out to consultation. It is felt by many, including the Committee, that further impact assessments should be carried out before implementation. Implementing the proposals will give rise to considerable costs for the industry, but there will be offsetting benefits to society. According to the European Commission, some £50 billion might be saved over 30 years by reducing our exposure to chemicals that currently cause health problems.
I turn to the registration process—the R of REACH. A European Chemicals Agency is to be set up at Helsinki in Finland. Companies that produce or handle [20000-b]

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chemicals will have to submit technical dossiers to the agency on the chemicals or the products containing those chemicals, including safety data obtained by testing. The REACH proposals will apply equally to all chemicals produced in the EU, as well as to those imported from outside the EU. The major concern is therefore that it will be difficult to police the imported chemicals. I am interested to know whether the Minister has considered that aspect.
Within three years of the implementation of the REACH regulations, all carcinogenic, mutagenic and reprotoxic chemicals will have to be registered with the European Chemicals Agency, along with high-volume chemicals produced in amounts of 1,000 tonnes or more. It is important to note that high-risk substances will have to be subjected to the authorisation process irrespective of the production volume. Within six years, chemicals produced in amounts of 100 tonnes to 1,000 tonnes will have to be registered. By the 11th year, all low-volume chemicals produced in amounts of 1 tonne to 100 tonnes will also have to be registered. However, there are exemptions for substances whose risks or properties are considered to be well known, such as vitamin C, sucrose, limestone and water—and water is a chemical.
There are also exemptions for some natural products, including minerals and ores, if they are not technically modified during their manufacture and are not classified as hazardous substances according to EU directive 67/548. Cement manufacturers are also pleading for exemption, although the properties of cement are so well known that it should not be difficult for that industry to submit a technical dossier.
There are exemptions for chemicals covered by other EU legislation, such as medicines, radioactive materials, pesticides and biocides. The non-isolated intermediates of chemical processes are also exempt from registration. It has recently been agreed by the Commission that polymers will be exempted, too. However, a fact that is not often quoted is that, in addition to 30,000 production chemicals, a large number of isolable intermediates produced in the chemical industry will also have to be included in the REACH proposals. The figure of 30,000 could even be doubled if the isolable intermediates are transported between one company and another.
Sue Doughty: Perhaps the hon. Gentleman, with his experience, has good ways of explaining such technical terms as "isolable" to non-scientific Members. Will he give a layman's description of what he is talking about?
Dr. Iddon: I will; it is a fair point. In the production of an end saleable chemical, there are various stages in the chemical process. The initial chemical is turned by one chemical reaction into another, then by another chemical reaction into another, and finally into the product that is sold. The intermediates are sometimes isolated and are therefore called isolable intermediates.
The Committee asked for clarification on the use of recycled materials. In the Government's response to our report, which was published on 12 July, they have made it clear that recycled materials will also be outside the scope of the REACH proposals, and will be regulated instead through the waste management legislation.
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It makes sense to register first all chemicals, including endocrine-disrupting chemicals, with a known high risk to health and/or the environment. However, there is a lot of criticism of the prioritisation by registration of all other chemicals by their volume of production over the 11-year period.
Industry and some learned societies such as my own, the Royal Society of Chemistry, strongly believe that the registration process should be risk based. Other organisations, such as WWF and the royal commission on environmental pollution, are scathing about the risk-based processes. I believe, and it was the Committee's opinion, that a risk-based process would be preferable. Will the Minister explain why risk-based processes have been excluded from the REACH proposals?
The Committee expressed concern about the shift from the 10 kg production trigger that is applicable to new substances to a figure of 1 tonne for existing substances, although we understand why the shift was accepted after consultation with industry and others. In particular, the burden that might be imposed on some small and medium-sized enterprises was lifted by the change.
Some chemicals produced in low volumes are extremely hazardous, whereas others produced in large volumes are known to be benign. The Committee, as my hon. Friend the Member for Norwich, North (Dr. Gibson) mentioned, recommended a single preregistration phase for all chemicals in commercial production, so that highly toxic low-volume chemicals can be dealt with quickly and high-volume low-risk chemicals can be left until the end of the process.
The Committee has some concern over the Government's insistence on a one substance-one registration process that would require companies to share their existing data. We understand the reasons for the requirement—in particular the minimisation of animal testing and the reduction of costs to industry—but the Committee believes that it is unworkable.
The Government are recommending the mandatory formation of consortiums of companies producing or using the same chemical, so that a single technical dossier can be submitted to the ECA. There are several problems with that apparently attractive proposition, which are detailed in our report, including the questions of commercial sensitivity and product purity and the problem caused by companies joining the consortiums after their initial formation—freeloaders, as they are often described. How much would such late joiners have to pay to join an already existing consortium? For all those reasons and others besides, the formation of consortiums might prove extremely unwieldy and therefore unworkable.
Although larger companies are expected to carry the costs of the REACH regulations relatively easily, there is a major concern about the impact of the proposals on downstream companies—small and medium-sized enterprises.
Alun Michael: I am a little concerned that my hon. Friend appears to suggest that some of his points challenge the basis of the one substance-one registration approach. They are genuine concerns and we have spent time talking about them with industry and other member states to try to ensure that we can overcome

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them. To take the example of late entrants, there clearly needs to be some means by which a fair contribution can be made. There may be alternatives to compulsory consortiums, such as a lead organisation, that would achieve the same ends. I hope that he will accept that those are challenges to getting an effective system into place and not fatal to the approach that the Government propose.
Dr. Iddon: I hope that I am making it clear that I am not against the REACH proposals; I am trying to flag up the difficulties. Clearly, I am aware that the Minister has discussed such issues with the industry and others, and I thank him for his remarks.
Under the REACH regulations, manufacturers or importers will have to provide downstream users with a safety data sheet for each chemical in the manufacturing process. Alternatives to the REACH proposals have been formulated by a number of organisations; I cite the royal commission on environmental pollution's report, the article by the Fund for the Replacement of Animals in Medical Experiments and the more recent report by the British Chemical Distributors and Traders Association. However, the sad thing is that those reports were produced after, rather than before, the event, which makes REACH the only act in town.
All member states will be expected to share the burden of the evaluation of the technical dossier submitted to the ECA in Helsinki. Each member state will check whether the dossier complies with the requirement of the REACH regulations and will evaluate the testing procedures proposed in the dossier to minimise the risk to animals. They will also be required to prioritise their evaluation timetable according to the principles of REACH. The main concern expressed by chemical companies about the evaluation of dossiers and substances by member states is that there should be a level playing field across all the member states in the Union. Our Committee has recommended that the ECA should monitor that process very closely.
An authorisation may be granted by the ECA in Helsinki even for chemicals with known risks if it is shown that the socio-economic benefits arising from the use of those substances outweigh their risk to human health and/or the environment, and if there is no suitable alternative technology available. However, authorisations for chemicals with a known risk will be time-limited and they will be subjected to review. A company submitting such substances for authorisation will be expected to take into account proposals for the substitution of that chemical with another of lesser or zero risk to human health and/or the environment.
The balance in the authorisation process between risks to health and/or the environment, and the benefits to be gained from the use of a chemical or substance will be very difficult to weigh in some cases. I will give an obvious example: DDT—dichlorodiphenyltrichloroethane—the well-known insecticide discovered decades ago. Undoubtedly, that substance has destroyed countless mosquitoes, not to mention other insects. Mosquitoes are the deadly malaria vectors that currently kill more than 4 million people worldwide. The other known fact about DDT is that it is very persistent and very bio-cumulative in the environment.
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How will the ECA and the REACH proposals be used to weigh factors such as those? It will be extremely difficult in such cases.
I am also concerned about flame retardants, about which, as a chemist, I have done some research. Those who understand anything about the technical process of a flame retardant quelling or killing a flame will know that an extremely limited number of chemicals are able to do that—I could explain the process, but it is too detailed to do so now. They are mainly polybrominated organic compounds and derivatives of phosphorus and antimony—just the sort of compounds the green organisations love to hate.
When coal fires were common in the United Kingdom, hundreds of children caught fire in front of them wearing various items of clothing, especially nightwear. Using the Consumer Safety Act 1978, the UK Nightwear (Safety) Regulations 1985 were introduced. They continue to save children's lives today, despite the reduced risk resulting from not having coal fires; we still have gas fires. The regulations require that textiles used in the manufacture of children's nightwear, but, ironically, not adult nightwear, are flame retardant.
On Tuesday 8 May 1979, a fire occurred at the Woolworth's department store in Piccadilly gardens, Manchester. It resulted in the deaths of 10 people and injured 48 others. It was caused by the introduction of polyurethane foam furniture. That was followed, on 13 September of the same year, by the M6 coach disaster, which resulted in a fire at Thelwall in Cheshire. It was caused by a collision, in fog, of 200 vehicles. It left 10 people dead and 60 others injured. Then, on 22 August 1985, the infamous Manchester airport disaster took place. A Boeing 737–236 bound for Corfu with 131 passengers and six crew on hoard caught fire on take off, with the loss of 55 lives.
Those of us who are old enough to remember those important and tragic incidents will also remember that there was a demand at the time for the introduction of flame-retardant materials in contact in domestic and travel situations. The connection between those three disasters is obvious: many of those people who lost their lives did not do so because, for example, of the collision, but because of the emission of toxic fumes resulting from the burning of synthetic materials, including plastics, polymers and textiles. I submit—and others have done so before me—that if those materials had been flame retardant, many of those lives could have saved.
Dr. Gibson: Casting my mind back, I seem to remember that the problem in relation to nightdresses and flame retardants was that young people tended to chew nightdresses and there was the implication that these nasty chemicals were causing cancers. That was the reason that Marks and Spencer had to withdraw them. Is that my hon. Friend's recollection?
Dr. Iddon: There is truth in that statement. This is a typical example of where substitution has played an important role.
In my opinion, the use of flame retardants has saved innumerable lives and if we carry on using them, they will continue to do so. Much could be done to save the environment. Better management of the end of life of

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flame-retardant goods, such as computers, televisions and other electrical equipment, might reduce the accumulation of flame retardants in the environment. We need to do research to look for substitution products. I am very pleased to tell hon. Members that the university of Bolton, as it has become known this week, has an important research group working in that area. I speak to the people involved quite regularly.
Finally, I want to examine some of the impact of the REACH regulations.
Geraint Davies: My understanding is that nobody is arguing against flame retardants. People are simply arguing that, if safer substitutes exist, they should be used.
Mr. Deputy Speaker: Order. Can I advise hon. Members that, if they keep intervening, that is fine, but we are now in danger of not being able to fit everybody in?
Dr. Iddon: I take the hint, Mr. Deputy Speaker, and I accept the point that you have made.
Many of my constituents work for a firm called Leigh's Paints in Bolton. It makes intumescent paints, which protect steelwork in buildings, which is no longer protected by concrete blocking-in. Architects use exposed steelwork more and more in rather beautiful modern buildings. As well as intumescent paint, Leigh's Paints produces marine paints. The coatings industry is worried about the REACH proposals, as it is a downstream user of chemicals and uses 10,000 chemicals to make 500,000 different products, particularly paints. Leigh's Paints estimates that each of its many different products will require a risk assessment document of approximately 150 pages. The firm is medium-sized and producing such documents will be a particular burden for it as it fights for survival in a competitive world market.
Leigh's Paints also believes that REACH will result in the withdrawal from sale of many useful products that are made in small quantities. I cite the EU's biocidal products directive, which has been associated with a decrease in the number of biocides available to industry from 1,600 before its introduction to only 350 and declining today. The industry has warned me that it may suffer a similar rapid loss of products under the REACH proposals.
The Society of Motor Manufacturers and Traders Ltd. has pointed out that an average vehicle can be made up of 10,000 different substances containing chemicals that all require REACH documentation. One can imagine the burden placed on that industry by REACH. There are serious worries about the proposals, even among those of us who are chemists and who support them. I hope that in the end we can get them right.
I was going to say a lot about animal testing, but you will be pleased to hear that I will not, Mr. Deputy Speaker, and the hon. Member for Castle Point has already referred to the loss of jobs, so I will conclude.
Bob Spink: We all hope that we can make the REACH proposals better, but does the hon. Gentleman acknowledge that work needs to be done on them, that they should not be swallowed whole, that nowhere in the
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report does the Committee welcome them—I have just double checked that—and that the vast majority of the report's 34 conclusions and recommendations imply criticism of them?
Dr. Iddon: If I were beginning today, I would not start from this point, but it is now too late to go back over years of negotiations. As I said, the REACH proposals are the best act in town, but we must amend them to make them work. I understand that a lot of work is being done on that and I look forward to the Minister's reply.
In conclusion, the proposals are welcomed by all in principle, but there are so many uncertainties that we have to be careful. In an ideal world, the proposals would be adopted internationally and we would all play on a level playing field in chemical production. We have tried to achieve that through such agreements as the Kyoto protocol, and we know how difficult that has been. Fortunately, the Government's aim is that
"REACH must be streamlined, workable and place the minimum regulatory burden on industry necessary to ensure the adequate protection of human health and the environment."
Fine words, and let us hope that the legislators can deliver. The British Chemical Distributors and Traders Association believes that those objectives cannot be reached by the current proposals, but I hope that it is wrong.
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Geraint Davies: I, too, welcome the REACH proposals and the work of the Committee and the Government, but they do not go far enough.
We are at a crossroads. Chemical production globally is growing at 7 per cent. a year, the value of the global industry is some $2 trillion, and in 2000 production exceeded 400 million tonnes. However, the interesting point is that EU trade constitutes half of the global total and the EU is the world's biggest exporter and importer. The REACH proposals can influence the shape of the markets now emerging in places such as China and the rest of the developing world. At some point soon, we will no longer have the whip hand when it comes to determining the composition of production in new markets that rely on our imports to determine the safety standards that they will then employ.
For that reason alone, I urge the Government and the European Union to adopt a precautionary principle and a mandatory substitution approach rather than a hands-off approach, which in my view is more short-term. Industry is doing what it thinks is good for it, but it is not erring on the side of public health and the needs of our local and global environments. In essence, the idea of relying on adequate control of substances by industry has failed in many instances in the past—lead has been mentioned, as has asbestos. We now know that asbestos will claim the lives of 10,000 people a year by 2010. If a precautionary approach had been taken with asbestos on the known problems at the time, many fewer people would be dying now.
In May, I introduced my own small Bill, the Regulation of Hormone Disrupting Chemicals Bill. It was supported by some 50 Labour MPs, but did not go to an all-out consultation. I was calling for the phased

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substitution of hazardous chemicals with known safe alternatives, based on a precautionary approach and mandatory substitution. The report does not go far enough. The reality is that those people who are producing chemicals and making money out of them and are told that it would be advisable to have a safer substitute, will not do that if the substitute is more expensive or is not more profitable, unless there is a legal requirement or market reason, such as consumer awareness. One cannot rely on consumer awareness of a sophisticated nature of the long-term damage of endocrine disruption, persistence or bioaccumulation. We cannot assume that the general public will know about that.
The key opportunity is to shape the future market that China and others will grow into, to be the first there with innovation, winning a place as the leader of the future. For example, when the Japanese introduced catalytic converters to their car manufacture, making it compulsory, while British manufacturers said, "Oh no, we don't want to do that," who won out in the long term? Obviously, it was the Japanese. There are many other similar examples that I will not use, but what might appear to be a short-term tough approach on the industry, given the state of the global market, may well end up in the interests of British manufacturers.
British manufacturers should move to safer alternatives where the balance of evidence points in that direction. If we do not move towards a more mandatory approach, liability lawsuits will be jumping up downstream. Following recent history, with BSE, GMOs and other areas of concern—some of which are more rooted in real scientific evidence than others—the consumer would have greater trust and confidence in the future.
The emerging evidence from many sources, including the World Health Organisation and WWF, about the accumulation of problems in human beings and various animals points towards a precautionary pre-emptive approach, rather than waiting for such time as we have concrete evidence and the damage has already been done. It is in the interests of our children, our children's children and their rights that we protect them with the environmental regime that we put in place for the future and with the duties that we put on Governments.
The reality is that there is more and more evidence of possible links with cancers, birth defects, genital deformities, reproductive problems, and effects on children's neurological and brain development and immune systems. Some of that evidence is from existing marketed products, about which there are deep and growing suspicions but which are not banned under the current legislative regime. We should be listening to the public and examining accumulated evidence. We all have concerns about the productive efficiency and competitive capabilities of European industry, but there is reason to think that stepping ahead of the marketplace with more visionary consumer protection and factoring in the needs of the environment is the right route for industry, as well as for public health.
If one studies the legal precedents for what has happened in Britain and the European Union, there are cases to be made for the rights of children to a safe environment, the use of the precautionary principle and
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mandatory substitution. The European convention on human rights and our own Human Rights Act 1998 obviously protect the health of the environment in which we operate and the rights of the family and private life. It is one of the reasons that we have seen various individual countries taking a stronger line than us on the rights of children and their environment.
We have seen action taken in the EU on a precautionary basis. In particular, there have been cases of banning animal antibiotics because public health had a priority over economic considerations. In the case of BSE, the European Court of Justice said that there is an uncertainty as to the existence or extent of risk to human health, and that institutions may take protective measures without having to wait until the reality and seriousness of risks become fully apparent. The European Court of Justice has therefore used the precautionary principle in the case of BSE.
In the case of genetically modified organisms, the European Court of Justice said that member states are not obliged to release GMOs if information is received that leads them consider that the products may—I emphasise "may"—constitute a risk to human health and the environment. In the UK, the Control of Substances Hazardous to Health Regulations 2002 have led to the substitution of less harmful products. In 2001, the UK High Court rejected on the precautionary basis a judicial review—a challenge against the Government—on a fly-control product. If one examines European and British case law and statute, there are reasons to support a precautionary mandatory substitution approach in REACH.
My simple intention today is to encourage the Committee, the Government and REACH to go one step further to make a safer regime for our children and our children's children. They must acknowledge the fact that despite the current dominance of the EU and the US our chemicals industry will soon become much smaller and our share of the market will inevitably go down. It is incumbent on us to take every precaution to shape the future of this massive industry for the safety of future populations and the environment of the world.
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Dr. Desmond Turner: Having heard the comprehensive contribution from my hon. Friend the Member for Bolton, South-East (Dr. Iddon), I am not going to try to cover the entire technical spectrum of this complex subject; I shall focus on just a few points.
It is clear that there is a need for legislation, and pan-European legislation at that, to regulate the chemical industry and the use of chemicals. There is no doubt about that. Neither is there any doubt that the proposals, as first put by the Commission in 2003, were over-burdensome and cumbersome and would involve massive numbers of animal experiments. There was a need to find a third way that would not create unnecessary burdens on industry but would protect the public and the environment. That was why the Committee undertook the investigation and made its recommendations.
I am happy to say that the Government largely agreed with the recommendations. I cannot remember any major point of disagreement between the Committee

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and the Government on the approach to be taken in modifying the REACH proposals to get a workable compromise. We are quite happy on that score.
The Committee agreed with the Government that large-scale products, such as cement, that appear to be fairly innocuous should not be totally eliminated from the REACH proposals. The Government were quite right in resisting industry's calls for that—after all, we have before us the history of asbestos. If we had been developing REACH legislation 50 years ago, we would have said, "We use millions of tonnes of asbestos; no harm there." Now, of course, we know different. We know that it is causing thousands of deaths a year. Although cement, when standing in the form of a concrete building, cannot hurt anybody, I suspect that someone might one day find that the constant inhalation of cement dust is damaging to health and can be positively toxic.
Dr. Gibson: Does my hon. Friend agree that cement sometimes attracts radon into it? Together, they can be quite obnoxious and cause health problems.
Dr. Turner: That is a technical point of which I was not aware, but if true it is a very valid point. I am glad that I do not live in Cornwall and that we do not have radon problems in our houses.
I am happy that the Government are being cautious, are not going too far down the line and are leaving the door open to the possibility of things that seem safe being discovered to be not so safe under certain circumstances.
Another issue of concern that we never quite resolved was that of process impurities. I am very happy with the one substance-one registration principle, but a product is not necessarily produced by just one process, and different processes will result in different impurities, some of which may be toxic. In applying the principle, it may be important to take notice of the process that has been used to arrive at the product, as well as the product itself, just in case we overlook some highly toxic impurity that is present in small quantities and is sufficient to cause a great deal of harm.
Also, we did not quite resolve the matter of the treatment of imports. We are covering what happens in European industry, and that is fine, but what happens with finished imported products that contain chemicals that have not been through the REACH process? To the best of my knowledge, that is not covered by the REACH proposals, and I would like the Minister to reassure us that imports will be regulated, too.
I want to explore the other possibilities for which REACH could be a starting point. In our discussions of REACH, we have been talking in terms of direct toxicity to humans, to animal species or to plant species in the environment. We have not really discussed direct effects on the environment that may themselves then have deleterious effects on humans and other species. It is in this context that it is possible to build on REACH to address the climate change issues that we face.
I have in mind the example of refrigerant gases. As my hon. Friend the Member for Bolton, South-East mentioned, we long ago replaced ammonia with CFCs, and we then found that CFCs were destroying the ozone
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layer, and they in turn have largely been replaced with HFCs—hydrofluorocarbons. Unfortunately, there is now a problem with them.
I read with interest a report of some recent research showing that there was a very drastic climate change event in the eocene period—I cannot remember exactly when that was, but it was several tens of millions of years ago—which involved large-scale extinction of species and very considerable global warming. The researchers were able to analyse the atmospheric content at the time. The CO2 levels were about the same as they are now, and we think that that is too high and rising. Whatever caused this event, it was not CO2. They also found very high levels of nitrogen dioxide and methane. The explanation for the methane is simple, because wetlands produce methane. Non-CO2 gases in the atmosphere could therefore be just as important as CO2 when it comes to climate change.
Nowadays, we release a lot of nitrogen dioxide into the air, in addition to the natural production of oxides of nitrogen by thunderstorms and so forth. On top of the release of methane from wetlands, which is rapidly increasing with the melting of arctic tundras, we also release a lot of methane through the keeping of many more cows.
Dr. Gibson: And sheep.
Dr. Turner: Yes, and even a few MPs, I have to say.
We also use and permit the emission of gases, such as the refrigerant hydrofluorocarbons, that can absorb more than 3,000 times as much infrared radiation per mol as carbon dioxide. We are adding very potent greenhouse gases to the atmosphere, on top of the carbon dioxide. We spend a lot of time and effort developing policies to deal with CO2 emissions, but we have not addressed non-CO2 greenhouse gas emissions.
Richard Ottaway: What does the hon. Gentleman suggest we do about it?
Dr. Turner: I was coming to that. We could use REACH as a starting point for dealing with chemicals that are indirectly toxic because of their environmental effects. This is only a suggestion, but we could extend REACH to chemicals such as the hydrofluorocarbons; we might decide not to authorise them, or to limit their authorisation, or to set a time limit on it, so that they would cease to be authorised for use in these circumstances unless they could be rigorously controlled in terms of the destruction of refrigerating equipment and so forth. It is important to remember that we are using more and more refrigeration equipment. Nearly all of us have cars with air conditioning, which contains hydrofluorocarbons, and when those cars are scrapped it is more than likely that those gases will be released and accumulate. REACH has the potential to be used as an early stage in getting a fix on non-CO2 greenhouse gases. I merely offer that as a proposition to which I would be interested to hear the Minister's response.
I welcome REACH, and the Government's intentions for the final negotiations on the form that REACH will take are sensible. Some angles must be dealt with, but I

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would be interested in the possibility of using it in a wider context than that of the direct toxicity of chemicals to organisms.
4.31 pm
Sue Doughty: I congratulate the Committee on its examination of the REACH proposals, which was a very useful piece of work. I will not go through all its points, as they have been clearly set out already. This debate has provided a useful opportunity to examine the proposals.
REACH is an important proposal from Europe. It will improve the protection of human health and the environment, and provide more information on the developing risk from harmful and persistent chemicals, which is essential if that risk is to be managed. As the hon. Member for Bolton, South-East (Dr. Iddon) said, 100,000 chemicals in use have not been subjected to the testing processes required since 1981 for new chemicals. There are huge benefits to human health, but that is almost offset and dwarfed by the phasing out—one hopes—and the eventual elimination of exposure to the persistent and bioaccumulative chemicals of very high concern that are increasing throughout the environment. One extreme example is of polar bears absorbing endocrine disruptors that are so far away from where they were released into the environment.
It is important that we study and take a precautionary and protective view of the environment. The degradation of this planet over the past 100 years, as a result of ignorance and self-interest, has been enormous. At last, through a positive approach to learning more about the chemicals in use, we can start reducing man's impact on the environment. The hon. Member for Brighton, Kemptown (Dr. Turner) made some important points about the intricacies of climate change and of the interaction between naturally occurring processes and those initiated by man.
The Commission estimates industry costs for testing and registration, combined with its highest estimate for downstream users, to be €7.5 billion. That estimate is disputed, and we must know more about the size of the problem, but this project will further clarify those costs. There will be not only environmental but economic benefits, so although we cannot ignore those costs and we should minimise them as far as is sensible and practical, we must ensure that we receive benefits from the project.
REACH sends out an important message to countries outside the European Union about the high environmental standards that can and should be met. That approach is important, and we must also encourage the Government to continue their positive and leading approach. The Liberal Democrats are pleased to see a joint proposal with Hungary for the one substance-one registration approach. There is a lot of common sense in that approach. It has received support from environmental groups and from industry, and is an effective way of limiting the overall impact on businesses, and particularly small businesses.
It is especially exciting that the approach involves a partnership with central Europe, which has an industrial background that is different from ours, and where we
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need the cohesion that has to come with European enlargement. As the joint approach gets under way, I look forward to receiving updates from the Minister about how it is seen by other member states and whether they are working towards similar joint approaches.
The subject of animal testing has rightly had quite an airing today. We take the approach that we will reduce the amount of animal testing by using the one substance-one registration path, but much more needs to be done to decrease the amount of animal testing that will be associated with REACH. Hon. Members have referred to the irony of the fact that, in trying to reduce the harm done to animals, we are requiring more animal testing. It is understandable how we have got ourselves into this situation. This week we learned that animal testing went up by 2.2 per cent. at a time when we want to reduce it. I am concerned about what the Government have said about decreased use of animal testing. I have a number of thoughts on that.
Alun Michael rose—
Sue Doughty: I hope that the Minister will not jump up and down at this stage. I was going to welcome the comments that he made earlier in the debate and make some further comments.
Alun Michael: The hon. Lady is making some sensible points. I just wanted to suggest that the counting of procedures does not necessarily mean an increase in testing of the sort that is detrimental to animals. That point was made when the statistics were mentioned earlier this week. We ought to be a little careful about such statistics.
Sue Doughty: I am coming to that point. It is quite right that we consider that issue. I understand and accept the point that the Minister makes, but we must understand that the increase could be substantial as a result of REACH, and we must consider that.
In May, there was an announcement about the National Centre for Replacement, Refinement and Reduction of Animals in Research. We have concerns about the amount of money that will be going into that centre. It is important that we minimise the use of animals in research, while getting satisfactory outcomes from that research. Already we know that the spectrum of opinions on how much use we can make of animals ranges from zero to an awful lot.
We must get the best, most humane results in the context of the steps that we propose to take. We welcome the recommendation of the Select Committee that the Commission should provide an estimate of the amount of animal testing that will be needed. Hopefully, identifying that will provide a trigger to decrease use of animals in testing further. The sheer number of tests should be alerting us to the problems that we have. We want to ensure that REACH has public support. We do not want to lose the baby with the bathwater, as we might if we came out with unwelcome statistics. We do not want the numbers to be any higher than they should be.
Animal rights groups will give the worst-case-scenario result and numbers to the media, and we have to prevent the public from taking against REACH on

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spurious grounds. It is essential that the public understand what is happening from the beginning, and that they are aware of the difference between the production of animals for testing, as one statistic, and the use of an animal during a test, as the Minister said. They need to be aware that animals are tested under very strict controls to eliminate suffering and that those controls can be monitored. The public want to know that, and, indeed, I am sure that each and every hon. Member here today wants to know that. We need to be transparent, because of the problems. We have extreme animal rights groups and we need clear information so that when the unacceptable element of those groups is making its protests, the public have clear and factual information and can lobby on behalf of animals without being seduced by that very attractive, but unpleasant, element. What that element has been doing and what it proposes to do is unacceptable. We must find all ways to counter such action, and information is one such way.
We must also ensure that we do not only say that transparency is essential. We must use methods that eliminate the use of animal testing, such as computer modelling. That is why investment in alternates by the Government and others is so important. Money can be made for that; there are patents for such activities. It is not only that we want the Government to seek them out; we want industry to do so and the universities to receive funding. We want spin-off companies to develop techniques. Given the many opportunities that exist, there should be business in the replacement of animals.
We should be considering techniques that use cell lines to express enzymes to test toxicity and other biotechnological solutions. We should always be examining tests in which animals have been specified and asking whether such a use will give the results that are expected. I draw attention to reproductive health, for example, and to the testing of feeding borates to rats. If borates are fed to rats, rats will experience damage to their reproductive organs. If borates are fed to humans, humans do not ingest them; they expel them and, thus, such damage does not occur. We must therefore eliminate tests on animals that do not even stand up to the test of logic and prove that a chemical is harmful to humans. So many such tests do not read across into the human situation. We must consider such matters. There must be rationale in the use of animals.
We want a timetable embedded into the legislation for the reduction of animal tests. The Committee called for a framework and a timetable, and I support that wish. I expressed concern about such matters on 16 June in European Standing Committee A when they were debated. When the Government say that we need to get on with something, I always respond by asking about the timetable, because it often comes far too late in the process. We now have an opportunity to take action and it is not too late for us to do so. It will mean that the sharing of tests will be reduced, because we know what is available under the timetable. Only good can come from that.
We are worried about substitution. Environmental organisations are not satisfied with the current wording of the proposals on substitution. The Committee and the Government agreed that a clear definition of adequate controls for dangerous chemicals is necessary to ensure the success of the legislation. Some campaigners are particularly worried about the issue
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and have suggested that it is not possible to guarantee the full control of substances that are of immediate concern. I am not qualified to make a blanket statement to the effect that there is a danger, but the matter needs investigating. The problem merits attention. We do not want loopholes to be caused because of wobbly wording. I am pleased that not only scientists but lawyers are examining such matters to make sure that we do not become hostages to fortune because of loose wording. We do not want a situation that prevents the legislation from achieving its ends or that falls short of the maximum benefits that could be gained. I welcome anything that the Government have to say about provision and the definition of adequate controls.
We must examine—again using substitution—the controlled use of substances, especially those for which there is not an adequate alternative straightaway. We must ensure that adequate provisions are in place to revisit the matter so that we do not have open-ended agreements to possibly harmful chemicals, when the matter has not been reassessed. The REACH proposal states that authorisations
"may be subject to conditions, including review periods and/or monitoring",
but I would much rather see the word "must" than "may". We must ensure that there are incentives to stop industry and business from delaying investment or failing to invest in alternatives.
I have spent quite some time on these matters and do not want to take up time that others want to use. My final point is that we must ensure that there is investment in the greener chemicals. We are talking about substitutions, which offer huge opportunities for business and the universities.
Dr. Iddon: Is it of as much concern to the hon. Lady as it is to me that one of the chemistry departments in one of the universities of this country—at University college Swansea—is facing closure?
Sue Doughty: I thank the hon. Gentleman for raising that matter. I was not aware of it. Certainly the points that were made earlier by the Chairman of the Select Committee about the threat to chemistry in this country—I also have a technology-based university in my constituency that has concerns—are deeply worrying. If we are to undertake tests, we need students and research. We need a structure in which we can do the tests but develop spin-off industries. We should take the opportunity to develop alternative products.
We really must take a radical view of the place of science in education and onwards, and we must take a much tougher line, not just in assessing the impact of closing a chemistry department but in determining what we can do to revitalise chemistry and the other sciences. We must take the opportunity to say to young people, "If you care about the environment, do not turn your back on chemistry. Do not say that chemicals are a polluting industry and that you do not want to know anything about them. Turn the industry around, change it from within." That is the message that we should be giving to students.
We must ensure that we get international agreements that recognise what is happening not only in Europe but in China and the developing countries so that we do not

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have a Trojan horse and that one part of the world has standards that are different from our own. I welcome any comment from the Minister on that serious issue. We could take steps in Europe and close down our industries only to see them opening in other parts of the world that are not subject to the same conditions.
REACH is an example of the good work that can be done in Europe. This examination gives the lie to some of the criticisms that Parliament does not scrutinise European proposals efficiently. In this case, excellent and important contributions have been made to the debate.
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Richard Ottaway: My party welcomes the Science and Technology Committee's report. It is a well researched and effective contribution to the debates, of which there have been several. The hon. Member for Guildford (Sue Doughty) reminded us of effective European scrutiny, and of course we debated the matter only a few weeks ago in European Standing Committee A. REACH is one of the more serious matters being considered by the Government, and this is an excellent opportunity to hear from the Minister how things are progressing.
Some of us do not have the back-up of either a Select Committee or officials. I would like to thank those who have given me support in preparing for these debates, particularly the Parliamentary Office of Science and Technology for its constructive note, the Library, various environmental groups including Greenpeace and WWF, and the European Commission, which provided me with information.
My party shares the view of the Select Committee that the current legislative framework for chemicals is inadequate. I found the report slightly curious in just one respect—the point was rather forcefully made by my hon. Friend the Member for Castle Point (Bob Spink)—in that the Select Committee does not actually welcome the set of proposals anywhere in its report. I do not know whether that is a drafting omission or whether it is intentional, but the best that we can do is the remark:
"We share the view that it is better than the current EU legislation."
I do not believe that anyone would quarrel with that.
Dr. Gibson: Does the hon. Gentleman agree that Select Committees have a reputation to maintain?
Richard Ottaway: Having spent many years on various Select Committees, I believe that that could be described as an ambiguous intervention, as it leaves me little wiser.
When one considers the remark that I cited, the phrase "damned by faint praise" comes to mind. All I can construe from the report is that the Select Committee does welcome the proposals, but most of us in this debate, particularly my hon. Friend the Member for Castle Point and, indeed, the hon. Member for Bolton, South-East (Dr. Iddon), have also had quite a lot of constructive criticism to make. The hon. Member
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for Bolton, South-East made a very effective contribution but not one that could be said wholly to support the proposals.
Bob Spink: Of the 34 recommendations, four were neutral and eight were broadly positive towards REACH, while 22 were broadly critical of it.
Richard Ottaway: That enhances the Committee's reputation of providing constructive criticism.
Alun Michael: It seems rather odd that we should indulge in critical exegesis of whether the Committee is for or against something. REACH constitutes a set of proposals that can be improved. The fact that the Committee focused on how the proposals could be improved, rather than being for or against a set of proposals at a particular stage in their development, has enhanced the Committee's reputation. The Committee has impressed me in that regard. I do think that the characterisation by the hon. Member for Castle Point is a dumbing down of assessments of Select Committee contributions.
Dr. Gibson: The hon. Gentleman is a sourpuss.
Mr. Deputy Speaker: Order. Hurling imprecations across the Chamber is not a good idea at the best of times, and that one should be withdrawn.
Richard Ottaway: I confess that I did not hear it.
Mr. Deputy Speaker: Order. I did.
Richard Ottaway: We are, of course, debating the Select Committee's report, not the Government's or the Commission's proposals. We shall come to the Government's position in a second.
As I was saying, the Opposition share the Committee's view that the current legislative framework is inadequate and has not produced sufficient information about the effects of chemicals on human health and the environment. Where risks are identified, it is slow to assess them and to introduce risk management measures. Those shortcomings could have put human health and the environment at risk. The current system has also hampered research and innovation, which has caused the EU chemicals industry to lag behind its counterparts in the United States and Japan in this regard. Although the proposed policy is, in principle, the right way to go, we agree with the Committee that constructive criticism is very necessary.
The new chemicals policy will create a single regulatory system for existing and new substances. We welcome that, and the Government have our support in achieving that objective. In principle, we also agree with the Government's three objectives to streamline the system, minimise animal testing and maintain or enhance the competitiveness of the sector. While we agree with the aims, however, the question is whether the Minister is achieving them. It would be fair to say that he has not been short on advice today. As the Government are still negotiating these very difficult aspects, however, we wish them well in their endeavours.

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We shall examine the finished product with interest in due course, but today we will examine in some detail the progress made so far.
There has also been considerable concern that the Government have not made the protection of public health and the environment a priority or a key objective. Having heard the Minister on this subject before, however, I expect he would say that it was implied in his objectives. None the less, such concerns are at the heart of issues such as animal welfare and substitution.
The measure will clearly have a profound effect on the chemicals industry, which is not altogether unsurprising given that few, if any, environmental measures have no impact on business. However, it is significant that the uproar after the Commission's impact assessment was such that it felt that it had to have another one that included the impact on new member states—a Select Committee recommendation.
It is essential that business has a level playing field. Given that the proposals apply equally to all chemicals that are produced in the EU and—this relates to the point raised by the hon. Member for Brighton, Kemptown (Dr. Turner)—to those that are imported, the playing field is as level as the industry could hope for. The overriding principle for business is that it must be given adequate time to prepare for the new regime, which must be phased in in a way that it can cope with. It should also have certainty; the measures must be transparent, and it must be made clear to industry what is expected of it.
The cost of implementing the proposals, with their extra regulatory burden, must be dealt with under the "polluter pays" principle. In the downstream use of chemicals, it is a moot point as to precisely where the cost burden should fall. There is a difference between the chemicals in the final product and those used by the manufacturer in the process, without them appearing in the final product. Either way, the cost of the new chemicals regime should be included in the price of the finished product and it should be met by those who register, not by the taxpayer. That principle should apply at national and European levels. However, given that a further impact assessment is being conducted, the true cost to business remains to be evaluated. I would be interested to hear about any provisional conclusions that the Minister may have reached about the further impact assessment.
I turn now to the issue of bureaucracy, with which my hon. Friend the Member for Castle Point dealt in some depth. The current regime is covered by 40 pieces of legislation, and enforcement is the responsibility of several different organisations, so it should not be hard to achieve a more streamlined, efficient structure. Given the widespread European trade in chemicals, this is clearly one instance in which a pan-European approach is desirable. However, we have grave reservations about whether it is absolutely necessary to establish a separate European Chemicals Agency and an ombudsman. Clearly, a substantial amount of the registration, evaluation and authorisation can be done at a national level, with co-ordination carried out by the Commission, without the added bureaucracy of yet another independent agency.
I deal now with the Government's core proposals for one substance-one registration, which they are putting
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forward as their approach to the debate. Whether they will reduce costs remains to be seen, but, as they stand, they are hard to evaluate. It is not clear whether the finished product will result in effective registration, because the proposals seem incompatible with the registration of all chemicals and, more importantly, all users. As I have told the Minister before—he did not really respond then, although he might now—one substance-one registration looks suspiciously like an approved list of chemicals, rather than a register. There is merit in allowing registration by consortiums: it obviously makes sense. However, we find it hard to conceive of an effective way for late entrants to join an existing consortium, particularly if they are small or medium-sized enterprises—a point raised by several hon. Members.
On the issue of substitution, one of the goals of REACH is to ensure that chemicals that cause great concern are phased out and replaced with suitable alternatives. However, I have some sympathy with the submissions made by Greenpeace, the Royal Society for the Prevention of Cruelty to Animals and WWF to the effect that the proposals will not make it an obligation to replace a chemical concern with a safer alternative. That is the substitution principle, and I agree with the Select Committee that the proposal is not excessively onerous. The Government have had plenty of time to consider that, in response to the Select Committee's comments, and I find their response to the Committee vague and ambiguous.
As for animal welfare, it should come as no surprise that the proposals are of the gravest concern to all who are against the use of animals in the testing of chemicals. The inference that the proposals will result in an increase in the use of animals in testing has, unsurprisingly, caused alarm. To judge from a reading of the figures in the report, to which my hon . Friend the Member for Castle Point referred, there will clearly be a substantial increase in animal testing—a point that was acknowledged by the Minister in European Standing Committee A. That is one of the reasons that we are watching the Government's efforts on single-substance registration proposals with interest.
We believe that, wherever possible, existing data should be used, and we support the principle of dossier evaluation, which would minimise the need to use animals for testing. However, the truth of the matter is that animal testing will increase, and we agree with the Select Committee that the scale of animal testing has not been properly communicated or justified. Having acknowledged that there will be an increase in animal testing, the Government's response—passing the buck to the Commission—is, frankly, a cop-out. We agree with the proposals in paragraph 103, which calls upon the European Chemical Agency, once it is established, to play a role in driving forward change in animal testing.
One further point, which was raised by the European Standing Committee, is the distinction between the intrinsic hazard of a chemical and the risk-based approach. On close reading of the proposals, it seems that the Government are flip-flopping between those two approaches, and greater clarity from the Minister would be appreciated.

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In conclusion, the Government still have a long way to go in achieving their three objectives of streamlining the system, minimising animal testing and maintaining or enhancing competitiveness. Far from streamlining the system, bureaucracy is growing; animal testing will probably increase; and because another impact assessment is being carried out, they have no idea where they stand on the industry's competitiveness. In those circumstances, there is still a long way to go, and we look forward to hearing a progress report from the Minister.
5.4 pm
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): I was pleased to hear the official Opposition spokesman, the hon. Member for Croydon. South (Richard Ottaway), accurately summarising the Government's three prime objectives, although he gave less credit than is deserved to the way in which we have sought to pursue those objectives, not least because he is right to say that there is some way to go. This is a process, rather than a question of suddenly coming up with a new set of proposals in response to the European Commission proposals. It is a question of working through a complex process in order to get the best possible outcome, which will have serious implications for the long-term benefit of the European Community—for its people, its health, its environment and its industry.
I am most impressed by the thoughtfulness and expertise shown by many contributors to the debate. In many ways, it shows Parliament and a Select Committee at their best, seeking not to endorse or criticise a Government position but to engage constructively with the issues with which the Government are grappling, to make serious points, to set tests for the Government and to comment on the Government's process. To that extent, the Committee's report is impressive and most welcome, and I hope that the responses that the Government and I have given are as balanced and constructive as it is.
First, we must accept that these issues are complex—there is no quick fix. Secondly, I share the concern expressed by my hon. Friend the Member for Norwich, North (Dr. Gibson) in opening the debate, that we should understand what we are doing in expanding the number of chemicals in use. He referred to the dawning realisation of the impact of substances such as lead and of complex chemicals in a variety of ways, and colleagues have referred to the different impacts on air quality and human health. There has indeed been a massive expansion in the understanding of how chemicals can impact on human health, which has resulted in serious efforts to reduce pollution.
The example that was given, of flame retardants, is an excellent example of the difficulty of balancing different types of benefit and damage. There are no straight-line comparisons things are not all good on one side and all bad on the other—so we must ensure that we have a balanced method of assessing and dealing with these issues.
The impact on industry also needs to be understood as complex. Reference was made to the chemicals industry, which is clearly directly affected, but so are
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many others. The retail industry has responded very positively in its contribution to our deliberations so far, and the motor manufacturing industry has also engaged with the process. I have met people from Ford and talked to various people at senior level in industry. One concern was the timing of impact. My hon. Friend the Member for Bolton, South-East (Dr. Iddon) was right to refer to the complexity of the manufacturing process in the motor industry. One of its concerns was that the timing of controls should be such that it can do things at the start of a new production process, rather than constantly having to stop processes in order to take things forward. We need to consider these important issues in deciding the timing of changes.
One simple point, which was made in the debate, is that anyone who portrays chemicals as evil or threatening is being criminally simplistic. Many chemicals are useful and even essential to life. Chemicals of concern need to be tackled in a way that is clear, decisive, proportionate, effective and precautionary. We must have an evidence-based approach that deserves public confidence. That is why REACH is arguably one of the most important proposals to emerge from the European Commission for a long time. We protect human health and the environment from hazardous chemicals, but we must also ensure that the chemicals industry and downstream users continue to be able to serve the public and to be competitive in the global marketplace. It must be remembered that the UK opened up the process during our presidency in 1998, and we will help to carry it forward during our presidency in 2005. That is leadership in action.
The Co-operative bank makes a good point in its latest advert. At first glance, the image of three polar bears sharing a cup of tea is a trifle odd, but it makes the point that some chemicals affect even the environment and wildlife of the Arctic, and that we cannot deal with chemicals of concern only by controlling what we buy in a local chemist or supermarket. Similarly, the WWF campaign on blood tests should not frighten us—I have had my blood tested—but encourage us in developing an intelligent understanding of these difficult issues and the time scale of impact on human health and the environment.
The Government have not been constrained by the idea that those involved come from the narrow perspective of vested interests. That has been encouraging to me in the relatively short time during which I have had responsibility for these issues.
Listened to separately, the chemical industry will express fears about bureaucracy and over-regulation, campaigners on the environment or health will have fears about limp under-regulation, manufacturers and retailers will pose practical issues and express concern about public confidence, and animal welfare organisations will fear an increase in animal testing. Taken together, those cease to be narrow interests and become serious issues to be reconciled and resolved.
All the groups to which I have referred have made a positive contribution to the debate and have joined us around the table at meetings and in conferences. However, more importantly than just engaging with the Government, they have listened to one another and taken part in a genuine debate. I have also valued the cooperation between my Department's officials, with a

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focus on environment and health, and the officials of my noble Friend Lord Sainsbury, with a focus on industry and productivity.
More than any other country, we have tried to say that there should be a single approach, with integration of the different issues, rather than an argument between different interests. I am impressed by the way in which many of the organisations to which I have just referred have been willing to engage with one another. Indeed, when we held a major conference in Birmingham, to which all stakeholders were invited, it was significant that industrial contributors were speaking about concerns on areas such as animal testing, and the voluntary organisations—the NGOs that were involved—were speaking about industrial concerns. That is a healthy development, and reflects the inclusive way in which we have sought to pose the debate.
I echo the comments of the hon. Member for Guildford (Sue Doughty), who thanked the Committee for its report. I agree with her that it is a constructive report. She made a number of sensible points, including one about the need to get to grips with the meaning of the estimates on animal testing. Many of the estimates concern the downside if we are not able to undertake more intelligent approaches to the use of testing and information.
Reference was made to the problems of testing. I pay tribute to organisations such as the British Union for the Abolition of Vivisection and the Royal Society for the Prevention of Cruelty to Animals, which have been involved in the discussions and have made constructive contributions that were much wider than their particular organisational interests.
A number of contributors to the debate referred to the issue of substitution—the idea that the chemicals of most concern should be systematically replaced by safer alternatives. That concept is strongly supported by the UK. However, the point must be made that substitution is not a straightforward process. There are a number of examples of situations in which apparently safer substitutes were introduced in response to human health or environmental concerns only to turn out to have unintended effects of equal concern, albeit on a different front. We must therefore be careful, in encouraging substitution, that we are not too narrow in our approach.
REACH should be designed to create a framework to stimulate innovation in finding safer substitutes to complement, as far as possible, the commercial pressures that already exist within markets. We are considering the provisions relating to substitution to see whether they are likely to achieve the desired effect of acting as a sufficiently strong incentive for industry to innovate and to develop new and safer substitutes. We understand, and to some extent share, the concern of some who feel that they might not drive innovation sufficiently, and we are examining what can be done to strengthen them.
I understand that, following the stakeholder round table chaired by David Sainsbury and me, the Chemical Industries Association, the Confederation of British Industry and Greenpeace started to work together to develop a joint position on substitution. That is another example of the sort of constructive approach that has been encouraged, in the UK more than anywhere else. I pay tribute to those organisations for their responses.
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A number of hon. Members have raised the issue of adequate control. We believe that the aim of the authorisation process should be to ensure both that the risks from substances of high concern are properly controlled and that those substances are eventually replaced by suitable alternative substances or technologies, with the aim of reducing the risk to human health and the environment. Given that authorisation will apply to chemicals of most concern, it will be essential that the definition of adequate control is clear and precise, and reflects commitments under existing occupational health, public health and environmental legislation. Otherwise, such authorisation decisions could be undermined. We are considering how time-limited reviews could be applied to authorisation. We welcome the Committee's comments on the issue and its support for the view that in such an approach a balance must be struck between incentives and costs.
Although some countries have seen the issues in terms of tensions between industry and the environment or health, we have seen them in terms of reconciling, balancing and interpreting genuine concerns in a most effective system. This week at the ad hoc working group established by the Council of Ministers we urged amendments for one substance-one registration. I am pleased to say that there was strong support from other member states. We are confident that we have made a workable proposal, with which we hope member states will agree, and we now seek continued development. I am confident that REACH can be developed in a workable and proportionate way to ensure that we achieve the desired level of protection without placing unnecessary burdens on industry.
I understand the concerns that have been expressed, but as I said earlier, we have been involved in a process and there have been improvements as a consequence of discussion. The Government will continue to work with member states, the Commission, the European Parliament and all our stakeholders to achieve the three key objectives. That reflects the opening comments of the hon. Member for Croydon, South. The first aim is to achieve a rapid, efficient system for collecting the necessary information on chemicals and for tackling those of most concern. That is easy to say, but we are trying to be as precise as possible in ensuring that the system will achieve that conclusion. The second aim is the minimisation of animal testing. The third is to maintain the competitiveness of the chemical industry and downstream users.
The hon. Member for Castle Point (Bob Spink) made a number of comments about the process and the Committee's report that were, depending on one's choice of word, trenchant or strident. I tell him gently that I am not sure what the point is of being a member of a Select Committee if one's views appear not to have contributed to the process of producing that Committee's report. The thing that I understand least about his contribution is why he seems to see no advantage in British industry being on a level playing field across Europe and on a wider international stage. That would result from our involvement in a process in which, together across Europe, we engage in protecting human health and the environment.
There is a need for REACH, but the hon. Gentleman seemed to question even that. We must remember that we lack basic information on the possible risks that

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continued use of the majority of the approximately 30,000 chemicals on the EU market may pose. It is therefore important to have a workable, efficient and streamlined system that focuses on the chemicals of most concern first. An enormous amount of duplication would be avoided if that were done collectively across Europe and if a system such as the one substance-one registration system were used, in order to share costs and information and to guarantee consistency across Europe.
A number of hon. Members asked about the risk basis of our judgments, which is important. REACH employs a risk-based approach. Industry is required to identify the hazards of the chemicals that it produces and to introduce appropriate risk management to protect health and the environment based on the risk assessment.
Prioritisation is also risk based. We agree that tonnage is a crude proxy for risk—"crude proxy" was the term used by the hon. Member for Croydon, South—but it is a useful starting point for the purpose of registration. It should also be remembered that risks to the environment are often closely linked to tonnage. We ought to bear it in mind that we are dealing with human health and the environment. There are points where the two run together and points where there are separate considerations.
We recognise the potential benefits of a prioritised approach to registration, but are concerned that it could introduce an additional layer of bureaucracy. We would not want a delay in registrations while substances were prioritised and the order of registration agreed. That could delay a great deal of work. We are open to considering further prioritisation tools if it can be demonstrated that they are workable and will not result in a delay in registration.
Although registration is limited to substances weighing more than 1 tonne, no threshold is proposed for substances subject to the authorisation procedure—the substances of high concern. We particularly welcome the recommendation that there be a process of spot checks and are giving further thought to how a workable system might be developed.
My hon. Friend the Member for Bolton, South-East raised a number of serious issues. I offered to answer some of his detailed points after the sitting. I will read the Official Report and, if I have failed to deal with all the points that hon. Members have raised, I will write to those who have contributed to the debate.
My hon. Friend referred to the imports issue. It is difficult to tackle and I suggest that it is impossible to tackle it other than on a Europe-wide basis. There are two separate elements—the import of chemicals and the import of products and the chemicals contained in them. It is vital to ensure that the new regulatory regime is compatible with World Trade Organisation and other EU international trade commitments. We intend to ensure that that is the case.
We agree that there is a strong case for tackling the issue of finished products and articles imported into the EU that, potentially, contain hazardous substances. However, we need to consider further whether the Commission proposal is workable. It is an important area.
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On the issue of chemicals in products, the retail trade has made the point that its customers need assurance from the industry about the safety of what is on the shelves. I am pleased to see that some elements in industry are starting to work together to ensure that the requirements for products commissioned by that industry are specified. I recently heard from people in the co-operative movement that they sought to place some criteria and found that it was difficult because, if their expectations were met, there would have to be such disruption of production processes that costs would increase considerably.
Therefore, it needs industry as a whole, as it needs Governments as a whole, to improve. That is something for which Governments have a responsibility. EU regulation is important, but it is important to have co-operation in individual industries and, as I said, co-operation with organisations such as the Chemistry Industries Association, the British retail trade and others.
We agree that there are serious considerations about impact assessment and the impact on downstream users. We agree that the costs of REACH must be fully assessed. That is why we recently consulted on our partial impact assessment and why we are carrying out further work on the impact costs on downstream users such as the coatings industry, which was referred to. We hope to have the results of that work in January.
It is clear that several of the issues to which I have tried to respond are inter-related. That underlines the complexity of the issue that we are trying to deal with. I am sure that, as a result of its meetings, that information is not new to members of the Committee. The Commission is also carrying out a further study of supply chains involving the EU-wide federation of chemical industries and the employers federations. We welcome that further work. To some degree, work done by individual countries, including the UK, which has done as much as any other country, needs to be complementary. We need to share information across Europe.
Contributions were made by several hon. Members, to which I clearly will not have time to reply in detail. My hon. Friend the Member for Croydon, Central (Geraint Davies) introduced a Bill earlier in the year and has made clear his intention to keep a close eye on issues such as endocrine disruptors. Those are issues on which there is no simple and straightforward answer.
On the issue of the removal of substances from the market, we are concerned about the withdrawal of substances on cost grounds alone, but the European Commission's extended impact assessment suggested that a far smaller percentage of chemicals might be withdrawn from the market than earlier estimates—1 to 2 per cent. The Government's proposals for one substance-one registration will help to drive the cost of registration down by sharing the costs on a proportionate basis. We hope that that will increase registration and therefore the range of options available to industry. In addition, we are carrying out the further impact assessment to which I referred to assess the indirect impact on downstream users.
My hon. Friend the Member for Brighton, Kemptown (Dr. Turner) referred to impurities. I assure him that impurities are not overlooked under the one

369WH
substance-one registration approach. If different impurities lead to different toxicity, those substances will be treated separately, even if they have the same major component.
My hon. Friend asked whether global warming potential should be added as a test in REACH. Unfortunately, there are no ways of routinely undertaking tests that could be used to screen the 30,000 chemicals to which we have referred for global warming potential. In fact, once there is an identification of chemicals in relation to global warming, they can be regulated under the Montreal protocol and therefore it might be a duplication to seek to bring those into the REACH proposals.
Dr. Turner: The only information that is needed is the molar infrared absorption.
Alun Michael: I shall certainly look at that point if I have misunderstood the narrowness of what my hon. Friend was saying and I will respond to him again.
The hon. Member for Croydon, South said that we must avoid creating an agency that increases in size. We do not want to see an agency that is big and bureaucratic. We want an agency that is strong enough to hold the ring and to enforce consistency. Without that, there would not be the level playing field that is in
370WH
the best interests of our industry. It would also ensure that there was effectiveness in the protection of human health and the environment.
Several hon. Members referred to the objective of reducing animal testing. There are some difficulties here because some of the assessments are crude in terms of the overall numbers to which they refer. We would welcome a view on the estimate of numbers of animals likely to be used under REACH. We recognise that that is not a straightforward task. The process of developing and validating alternatives to animal tests is inherently slow, partly because it needs to be robust enough to ensure the delivery of meaningful and reproducible data.
As a member of the interdepartmental group on the three Rs—replacement, refinement and reduction—DEFRA has a role in influencing activities on issues relating to the minimisation of the use of animals in experiments. We supported the setting up of the center for the three Rs. We will be developing policy to influence that area and considering how research funding might best be channelled to meet environmental objectives. DEFRA will be looking into prioritising requirements for research in both the short and long-term goals for the three Rs—
It being half-past Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

ENVIRONMENT, FOOD AND RURAL AFFAIRS

  Waste Management
  Mr. Hancock
  To ask the Secretary of State for Environment, Food and Rural Affairs what the latest figures are for the amount of compostable material disposed of each year in England; how much is reclaimed and recycled as compost; and what plans she has to increase this figure. [187547]

  Mr. Morley
  The Municipal Waste Management Survey of local authorities in England for 2002–03, shows that 14.28m tonnes of biodegradable municipal waste was disposed of to landfill, and 1.2m tonnes composted. In addition 1.1m tonnes of paper and card were recycled. As yet there is no method of measuring the amount recycled through home composting.

  From the Environment Agency's National Waste Production Survey of a sample of 40,000 businesses, conducted in 1998, it is estimated that 2.78m tonnes of biodegradable industrial and commercial waste was disposed of to landfill, 0.85m tonnes composted and a further 4.75m tonnes of paper and card recycled.

  The Government are taking a number of steps to increase the amount of biowaste composted. For example, we have established the Waste Implementation Programme (WIP), to support local authorities in achieving the UK's Landfill Directive targets to divert biodegradable municipal waste from landfill. The Government have also established the Waste and Resources Action Programme (WRAP) to create stable and efficient markets for recyclates, including organic material. WRAP is also running a home composting programme and has already organised distribution of over 60,000 composting bins to households in England. In addition Defra, through the Environmental Action Fund (EAF), has provided the Composting Association with £282,000 over three years to raise awareness of composting.

  These and other measures have seen the proportion of municipal biowaste composted rise to 32 per cent. of all municipal waste recycling in England in 2002–03.

  Mr. Wiggin
  To ask the Secretary of State for Environment, Food and Rural Affairs what recent steps she has taken to improve the United Kingdom's recycling performance. [186939]

  Mr. Morley
  Waste is a devolved issue. The Government have taken numerous steps to increase recycling in England. For example, national household waste recycling targets have been set, supported by statutory recycling and composting targets with an increase in funding for local government waste activities for each local authority. Government have also 1332W
  established the Waste and Resources Action Programme (WRAP) to create stable and efficient markets for recycled materials across the UK.

  This specific action on recycling is supported by steps to move municipal waste management up the waste hierarchy. For example, in England, a Landfill Allowances Trading Scheme for local authorities is being developed and the Waste Implementation Programme (WIP) has been established, to support authorities in achieving the UK's Landfill Directive targets to divert biodegradable municipal waste from landfill. In addition, the Government have committed to increasing the UK Landfill Tax rate to £35 per tonne of active waste in the medium term.

  As a result of these and other actions the proportion of municipal waste being recycled in England has increased to 15.6 per cent. in 2002–03 and we expect to meet our 2003–04 national household waste recycling target of 17 per cent.

  Steps taken to increase recycling of non-municipal waste include amending the Producer Responsibility Obligations (Packaging Waste) Regulations 1997: new UK targets were set last year to raise overall recovery by obligated companies from 59 per cent. in 2003 to 63 per cent. this year and 70 per cent. by 2008, with the percentage to be achieved through recycling rising to 95 per cent. in 2007–08. We will also be announcing shortly a package, funded by Landfill Tax escalator receipts from business more resource efficient, to help business in England become more resource efficient.

  Energy Efficiency Implementation Plan
  Mr. Rosindell
  To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the Energy Efficiency Implementation Plan. [185904]

  Mr. Morley
  "Energy Efficiency: The Government's Plan for Action" was published on 26 April 2004. The Government estimate that the measures in the Plan will save over 12 million tonnes of carbon by 2010, saving consumers over £3 billion annually. Key measures in the energy efficiency plan include:A new aim to save 4.2 million tonnes of carbon from households by 2010;
  Double the level of Energy Efficiency Commitment (EEC) activity from 2005 to 2011, subject to a review in 2007;
  New fiscal measures announced in Budget 2004, including a tax allowance to encourage domestic landlords to invest in their properties;
  New energy services pilots, through which energy suppliers can offer innovative energy efficiency packages to customers;
  Information, advice and support through the work of the Energy Saving and Carbon Trusts;
  Incentives to improve efficiency in industry including revised targets and extension of the scope of the Climate Change Agreements, together with the forthcoming EU emissions trading scheme;
  Committed leadership by Government including a new commitment by central government to use only the best energy performance buildings; More emphasis on communicating with people about climate change.

  Flooding (Insurance)
  Mr. Liddell-Grainger
  To ask the Secretary of State for Environment, Food and Rural Affairs how many(a) homes and (b) farm holdings have been unable to obtain insurance policies against flood damage in the last year for which statistics are available; and if she will make a statement. [186685]

  Mr. Morley
  Firm statistics will not be available from the Association of British Insurers (ABI) until later this year.

  Initial indications from the ABI are that insurers are maintaining cover for homeowners in high flood risk areas in all but a handful of cases.

  The ABI are not aware of any instances where renewal has been refused on farm holdings. Farm buildings in general do not tend to have flood insurance due to the nature of their construction and lack of foundations.

  GM Crops
  Joan Ruddock
  To ask the Secretary of State for Environment, Food and Rural Affairs what thresholds for GM contamination of non-GM seeds the Government intends to support within the EU. [187620]

  Mr. Morley
  We are awaiting revised proposals from the EU Commission on labelling thresholds for approved GM seeds in non GM seeds. The UK Government position on the proposals will be based on scientific advice, the practicability of the measures that would need to be applied to ensure that we could enforce the regulations, and recognition that any thresholds set for seeds must be achievable by seed producers.

  Flood Defences (Efficiency Savings)
  Norman Baker
  To ask the Secretary of State for Environment, Food and Rural Affairs whether changes to flood defence provision will be made to achieve efficiency savings as announced in the Spending Review, broken down by financial year. [185892]

  Mr. Morley
  The Environment Agency has agreed to deliver efficiencies in its flood defence activities of £15 million for each of the financial years covered by the 2004 Spending Review (2005–06 to 2007–08). These efficiencies will be achieved through better procurement practices, greater use of new technology and a reduction in the process costs of delivering the capital programme. These savings will offset the effects of inflation and increases in construction costs currently estimated at 4 per cent. per annum.

  Warm Front
  Ms. Drown
  To ask the Secretary of State for Environment, Food and Rural Affairs if she will change the Warm Front scheme by(a) not time-limiting a second application where it is for heating which had not previously been claimed for and (b) allowing old and inefficient boilers to be replaced before they break down. [186062]
  1334W
  Mr. Morley
  The Department is currently developing a Fuel Poverty Implementation Plan which will consider options for better targeting and will review the eligibility criteria and effectiveness of current measures offered under Warm Front.

  In response to the recommendations of the Public Accounts Committee and the National Audit Office we have introduced a pilot to establish how best households with intermittently and ineffective working boilers can be assisted by the scheme. The results of this pilot will be assessed later in the year.

  Watervoice (Exeter Office)
  Ms Atherton
  To ask the Secretary of State for Environment, Food and Rural Affairs what criteria were used in making the decision to close the Exeter office of Watervoice; and what process was followed. [185771]

  Mr. Morley
  The original decision to close the Exeter office was based on a recommendation made by PricewaterhouseCoopers (PwC) in its report on the organisation and regional structure of the Consumer Council for Water. PwC recommended that the offices in Exeter and Bristol currently serving the south west and Wessex regions should be merged into one office and located either in one of the existing offices or at a new site in Taunton.

  However, we have since given very careful consideration to a number of representations received and reviewed the decision to close or relocate regional offices. We concluded that against the background of the representations and the current periodic review of water prices, the benefits for water customers in maintaining the existing regional system of consumer representation outweighs the benefits of rationalisation at this time.

  We now intend to leave it to the new CCW to consider PwC's recommendations and to decide, in the light of future circumstances what changes, if any, it wishes to make to its regional structure.

TRANSPORT

  Mobile Telephones
  Mr. Oaten
  To ask the Secretary of State for Transport (1) what discussions he has had with(a) mobile telephone manufacturers and (b) car manufacturers on the safety of mobile phones in cars; [186393]

  (2) what research his Department has carried out into technical solutions for blocking the use of hand-held mobile phones in cars. [186394]

  Mr. Jamieson
  Representatives of mobile phone and bar manufacturers have been involved in discussions with the Department for Transport on a new European Directive that will replace the current Directive 95/54/EC on electromagnetic compatibility. This requires cars to have a minimum level of immunity to interference such that electronic devices, including mobile phones, do not cause malfunctions of the vehicle's electronics.
  1335W
  The Department has not carried out any research into technical solutions for blocking the use of hand-held mobile phones in cars. A driver can use a hand-held phone when he is not driving and a passenger can use a mobile phone at any time and for emergencies.

  Aircraft (Medical Equipment)
  Mr. Ruffley
  To ask the Secretary of State for Transport if he will make a statement on measures to improve the provision of emergency medical equipment on all UK aircraft. [187177]

  Mr. McNulty
  UK Airlines carry first aid and emergency medical kits in accordance with common requirements established by the Joint Aviation Authorities (JAA). The content of these kits is being reviewed following a proposal from the European Civil Aviation Conference for considering several improvements to the kits but granting some flexibility to meet an operator's route specifications. The UK supports these changes and will implement them once they have been adopted by the JAA following public consultation.

  Cross-Channel Rail Subsidies
  Mr. Yeo
  To ask the Secretary of State for Transport what subsidies are paid to(a) Eurostar and (b) the Channel Tunnel Rail Link for the provision of their services; and where such subsidies are spent. [186765]

  Mr. Darling
  Information requested is as follows:

  No subsidies are paid to Eurostar.

  Government are providing grant support for the Channel Tunnel Rail Link project which is estimated to total £2.0 billion in present value terms (discounted at 6 per cent. real to January 1997) to support the costs of construction of the link and the provision of capacity for domestic services. This figure does not include possible amounts which may be provided by way of loan support or recovered in respect of land rentals and proceeds from property developments.

  Disabled Parking
  Mr. Colman
  To ask the Secretary of State for Transport if he will make a statement on the Blue Badge parking scheme entitlement for those diagnosed with myasthenia gravis. [187754]

  Mr. McNulty
  The Blue Badge Scheme is designed primarily to assist people with severe difficulty in walking, whatever the cause of their disability. People who are registered blind also qualify under the Scheme. Drivers with a severe disability affecting both arms may also be eligible. Local authorities, which are responsible for administering the Scheme, will decide on an individual's eligibility on the basis of these criteria. People with myasthenia gravis will be eligible for a badge if they meet the criteria.

  Office Furniture
  Mr. Damian Green
  To ask the Secretary of State for Transport how much his Department spent in the last year for which figures are available on office furniture. [186404]
  1336W
  Mr. McNulty
  The Department spent £1,506,715 on furniture during 2003–04 financial year.

  This expenditure included:
  Fitting out the Department's new HQ building—Southside in Victoria Street London;
  and providing furniture for:
  the pilot introduction of Flexible Working;
  responses to requests under 'Children Under 6 and DDA legislation;
  replacing furniture in other offices which has exceeded it's design life (over 10 years old) and is causing H and S issues.

  Post Office
  Mr. Boris Johnson
  To ask the Secretary of State for Transport what assessment he has made of the likely effects of the closure of sub post offices at Newtown and Northfield End on the(a) flow and (b) volume of traffic passing through Henley. [187504]

  Mr. McNulty
  None. The closure of sub post offices is in operational matter for Post Office Ltd. In terms of traffic flow and volume the local highway authority, in this case Oxfordshire County Council, will be required to take account of the impact on accessibility to public services, including post offices, during the preparation of their Local Transport Plan.

  Public Transport (Pensioner Access)
  Sandra Gidley
  To ask the Secretary of State for Transport what measures he has taken to improve access to public transport for pensioners. [186461]

  Mr. McNulty
  We have significantly improved the concessionary fares scheme for older and disabled people who are now entitled to at least half-fare travel on local buses. We have also introduced a half-fare for people aged 60 and over on many long-distance scheduled coach services.

  Given the close correlation between disability and age, the regulations we have introduced to require new trains, buses and coaches to provide a range of features to improve access are also benefiting many older people. During the last three years over 1,400 new fully accessible rail vehicles have entered service and there will be over 1,000 more within the next year. Around 29 per cent. of buses seating over 22 passengers are already accessible, and in major cities the proportion is much higher.

  Rail Services
  John Thurso
  To ask the Secretary of State for Transport what timetables are in place following publication of The Future of Transport for(a) the start of construction and (b) completion dates of (i) Thameslink 2000, (ii) East London Line Extension and (iii) Crossrail. [187539]

  Mr. McNulty
  The timing of Thameslink 2000 depends on whether and when the necessary Transport and Works Act and associated powers are secured. Network Rail submitted revised applications in June 2004 which are likely to be considered by a public inquiry next year.
  1337W
  Responsibility for the East London line extension project is transferring to Transport for London and its timing will be a matter for the Mayor.

  The Secretary of State announced to Parliament on 20 July 2004 that he intended that appropriate powers for the construction of Crossrail should be sought by means of a hybrid Bill to be introduced in Parliament at the earliest opportunity. Previous experience, with the Channel Tunnel Rail Link Bill, suggests that the Bill might take around two years to complete its passage. Construction could only start after this date.

  Transport Projects
  Mr. Wiggin
  To ask the Secretary of State for Transport how many transport-related projects on the(a) railways and (b) roads are running (i) on schedule and (ii) behind schedule. [186801]

  Mr. McNulty
  There are nine major programmes of enhancement work currently contracted on the railways, each comprising many individual projects. Of these, eight are on schedule in line with the agreed works programme, and one is behind schedule.

  There are 16 major new road schemes currently contracted on the Strategic Road Network. 13 are on schedule to complete in line with the programme planned at Works Commitment stage, three schemes are behind schedule, one by several months and two by no more than six weeks.

  There are 27 major road and road maintenance schemes which are currently fully accepted within the local transport programme. Of these, 13 are on schedule to complete in line with the timetable planned at full acceptance stage. 14 schemes are behind schedule, some only marginally.

  Transport Funding
  John Thurso
  To ask the Secretary of State for Transport how planned funding in the Government's transport strategy The Future of Transport will be allocated between transport modes. [187538]

  Mr. McNulty
  Because of the timing of the Olympic bid the Secretary of State announced a funding settlement for the GLA transport grant through to 2009–10 in his statement to the House of Commons on 20 July.

  Year

  £million

  2005–06

  2,161

  2006–07

  2,383

  2007–08

  2,544

  2008–09

  2,528

  2009–10

  2,651

  It is up to the Mayor to decide how to allocate the GLA Transport Grant between different modes. Other decisions relating to the 2004 Spending Review Settlement will be taken in due course.

HOUSE OF COMMONS COMMISSION

  Retirement Age
  Mr. Andrew Turner
  To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission what the(a) set retirement age applying to all or most personnel and (b) maximum age beyond which applications for employment will not be considered is for each department of the House. [186374]

  Sir Archy Kirkwood
  General conditions of service are House-wide rather than on a departmental basis. House of Commons staff normally work until the age of 65, which is currently the maximum retirement age. They may, however, retire at any time between 60 and 65 if they wish. Applications for most posts are accepted up to the age of 65 with the exception of casual appointments, where applicants may be appointed over the age of 65. House policy will be reviewed in the light of the age discrimination regulations, which we understand will come into effect in October 2006.

  September Sittings
  Mr. Key
  To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what estimate the Commission has made of the marginal cost of recalling the House this September, and if he will make a statement. [186359]

  Sir Archy Kirkwood
  The daily costs of sitting days in September are similar to those of sitting days at other times of year. Such costs include staff overtime, telecommunications and postal costs, together with infrastructure costs such as heating.

  As a result of having a shorter summer recess than in some previous years, some additional costs may arise from the need to interrupt some elements of the summer works programme. However, as the September sitting was taken into account when the programme was planned, the additional costs are relatively modest, estimated at around £88,000 against a total works programme spend of £19 million.

  Serjeant at Arms
  Mr. Ben Chapman
  To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission if he will make a statement on the methodology involved in the appointment of a new Sergeant at Arms. [187403]

  Sir Archy Kirkwood
  The Serjeant at Arms is a Crown appointment, made on the recommendation of the Speaker. Following the announcement that the current Serjeant at Arms, Sir Michael Cummins, would shortly retire, the Speaker decided that the post should be advertised both internally and externally, in the national press. A recruitment board was set up under the chairmanship of the Clerk of the House. It included an external member, drawn from the Office of the Commissioner for Public Appointments' central list of independent assessors, and the hon. Member for North East Hertfordshire (Mr. Heald) as a representative of the Commission. The board agreed a long list of candidates for preliminary interviews by external recruitment consultants and, subsequently, a short list for final interviews, conducted by the board. As a result
  1339W
  of this process, the Speaker recommended the appointment of Major General Anthony Peter Grant Peterkin, CB, OBE. His appointment was announced to the House on 20 July and he will take over from Sir Michael on 1 January 2005.

TRADE AND INDUSTRY

  Amyl Nitrate
  Mr. Edwards
  To ask the Secretary of State for Trade and Industry what measures she proposes to take against shops illegally selling amyl nitrate in the form of poppers, with particular reference to the products(a) Pure Gold, (b) Liquid Gold and (c) TNT. [178805]

  Mr. Sutcliffe
  I have nothing further to add to the answer given by my hon. Friend the Parliamentary Under-Secretary of State at the Home Office on 22 July 2004,Official Report, column 573W.

  Credit Card Fraud
  Mr. Bellingham
  To ask the Secretary of State for Trade and Industry if she will make a statement on the current levels of consumer credit card fraud; and what steps her Department is taking to tackle it. [186354]

  Ms Blears
  I have been asked to reply

  The Government do not collect figures on the cost of credit card fraud but the Association for Payment Clearing Services (APACS) estimates the cost of plastic card fraud on UK-issued cards in 2003 to have been £402.4 million, a decrease of five per cent. over the previous year.

  The Home Office provided £1.4 million over two years (towards a total cost of £5.6 million) to fund, jointly with the banking industry, a specialist police unit, the Dedicated Cheque and Plastic Crime Unit (DCPCU). The pilot, which ran from April 2002 to April 2004, was successful in detecting or preventing significant fraud on the banks and card issuers. The Unit is continuing with full financial support from the industry. The Home Office continues to chair the Steering Group.

  We are also providing significant extra resources for fraud policing more generally. The Home Office and the Corporation of London have each agreed to contribute £1 million towards the cost of an expanded City of London Police fraud squad. The Home Office has also met capital start up costs of the new unit. This funding will enable the City of London Police to expand its fraud squad significantly and take a lead role in the investigation of fraud in London and the south east, including providing police resources for the majority of Serious Fraud Office cases.

  A great deal of fraud can be prevented if organisations have proper fraud prevention measures in place. Prevention initiatives therefore complement fraud investigation and prosecution.

  We have encouraged the financial and retail sectors to work towards early implementation of more secure systems to combat fraud, including the introduction of microchips into payment cards to help authentication, and the use of PIN codes in place of signatures.
  1340W
  The Home Office has launched a website to combat internet fraud. The "e-tailing mini site" (part of the Crime Reduction Website) provides information to help both businesses and consumers protect themselves when using the internet.

  We have also recently published, jointly with the Association of Payment Clearing Services (APACS), a leaflet for members of the public about safe credit card use. Supplies of the leaflet have been sent to all police forces and Crime and Disorder Reduction Partnerships in England and Wales.

  Gay Discrimination
  Keith Vaz
  To ask the Secretary of State for Trade and Industry what plans she has to end insurance discrimination for gay men based solely on sexual orientation. [187135]

  Ms Hewitt
  The Government are aware of concerns about current imbalances in legislative provision for the different groups protected by discrimination legislation, which include gay men, and one of the first tasks of the proposed Commission for Equality and Human Rights will be to review the legislative framework to ensure that it meets the needs of a modern Britain.

  The Government are committed to improving equality and human rights for all in our society. This underpins our vision of a modern, fairer and more prosperous Britain. The creation of the Commission for Equality and Human Rights will help create a more equal and cohesive society.

  Equality Bodies
  Peter Bottomley
  To ask the Secretary of State for Trade and Industry what views she has received from publicly funded equality bodies on(a) the Government's proposal for a single equality body and (b) the proposals in the document Fairness for All. [187154]

  Ms Hewitt
  The Government are currently assessing the response of the three public funded equality bodies and all the responses they have received in detail and will publicly respond in due course. Government will be assisted in this task by their independent advisory Task Force, which discussed the consultation responses on 7 September.

  The consultation following the release of Fairness for All officially closed on 6 August. Over 450 responses were received from a wide variety of stakeholders, interested groups and individuals, including those from the publicly funded equality bodies—the Commission for Racial Equality, the Disability Rights Commission and the Equal Opportunities Commission.

  Shares (Tax Rules)
  Mr. Bellingham
  To ask the Secretary of State for Trade and Industry if she will make a statement on her assessment of the effect of new tax rules on shares held by academics set out in the Finance Act 2003 on the number of university spin-off companies being set up. [186332]
  1341W
  Mr. George Osborne
  To ask the Secretary of State for Trade and Industry what assessment she has made of the impact of schedule 22 of the Finance Act 2003 on university spin-out companies. [186452]

  Ms Hewitt
  The Government recognise the contribution that research-based entrepreneurial activity makes to this country and are committed to creating a clear fiscal environment that enables universities, public sector bodies and their researchers to grow companies based on their research.

  Inland Revenue, DTI and Treasury officials have been engaged in constructive dialogue with university and public sector spin-out sector representatives to provide certainty around the tax treatment of university/public sector employees who acquire such shares. This dialogue between officials and sector representatives has led to a joint Memorandum of Understanding regarding the tax treatment of one type of spin-out company shareholding structure and some companies are understood to have taken advantage of this model. Officials will continue negotiations with interested parties to ensure that an appropriate solution to the sector's difficulties is identified and ensure that there is no long-term adverse impact on spin-out activity.

DEPUTY PRIME MINISTER

  Community Forum
  Mr. Edward Davey
  To ask the Deputy Prime Minister what the(a) total budget, (b) departmental funding and (c) total cost to his Department of the Community Forum (i) is for the financial year 2004–05 and (ii) is estimated for financial years 2005–06 to 2007–08. [187563]

  Phil Hope
  The total departmental budget for the Community Forum is £186,000.000 per year. This incorporates an annual budget of £150,000.00 and £36,000.00 for administrative support and management.

  This amount has been allocated for 2004–05 and will be made available for 2005–06 to 2007–08.

  Actual expenditure for financial year 2003–04 was £155,489.00. The estimated expenditure for 2004—05 will be £183,000.00.

  Fly-posting
  Harry Cohen
  To ask the Deputy Prime Minister what effect his Department's good practice guide to fly-posting has had on the residents of Leyton and Wanstead. [187744]

  Keith Hill
  The Office of the Deputy Prime Minister's Good Practice Guide, "The Control of Fly-Posting", offers guidance to local planning authorities on how best to deal with the problem of fly-posting. No assessment has been made on the effect the guide has had on the residents of Leyton and Wanstead. This is a matter for Redbridge and Waltham Forest borough councils.

  Suffolk Fire Authority
  Mr. Ruffley
  To ask the Deputy Prime Minister how much funding was made available for the Suffolk Fire Authority(a) in 2004–05 and (b) in each of the last nine years. [187204]

  Mr. Raynsford
  The Fire Service in Suffolk is the responsibility of Suffolk county council. Net current expenditure on the Fire Service, as reported by the authority, for the last 10 years is tabled as follows:

  Amount (£000)

  1995–96

  12,683

  1996–97

  13,667

  1997–98

  13,593

  1998–99

  14,634

  1999–2000

  15,022

  2000–01

  15,900

  2001–02

  16,533

  2002–03

  17,627

  2003–04

  17,829

  2004–05

  18,690

  The data are taken from the RS (outturn) forms for all years except 2004–05 when the data are taken from the RA (budget) form These forms are completed each year by individual local authorities.

TREASURY

  Correspondence
  Sir Gerald Kaufman
  To ask the Chancellor of the Exchequer when he will reply to the letter to him dated 2 August from the right hon. Member for Manchester, Gorton with regard to Mr. H. Broadley. [187981]

  John Healey
  I did so on 3 September.

  Green Landlord Scheme
  Sue Doughty
  To ask the Chancellor of the Exchequer what progress he has made towards the introduction of a green landlords scheme as announced in the Budget. [187384]

  John Healey
  The Chancellor announced in his last Budget the possible introduction of a "green landlord scheme" which would aim to incentivise landlords to invest to improve energy efficiency. The Government are considering the options available.

CULTURE, MEDIA AND SPORT

  Departmental Employees
  Miss Kirkbride
  To ask the Secretary of State for Culture, Media and Sport how many civil servants were employed by her Department and its related agencies in each year since 1997. [187276]

  Mr. Caborn
  The table shows the number of staff in post on 1 April of each year since 1997.
  1343W

  DCMS

  Royal Parks

  Historic Royal Palaces Agency1

  Total

  1997

  352

  246

  220

  818

  1998

  365

  231

  n/a

  596

  1999

  359

  233

  n/a

  592

  2000

  407

  220

  n/a

  627

  2001

  403

  230

  n/a

  633

  20022

  469

  230

  n/a

  699

  2003

  488

  230

  n/a

  718

  2004

  490

  231

  n/a

  721

  1 Historic Royal Palaces ceased to be a DCMS Agency when it became a Royal Charter Body on 1 April 1998.

  2 Staff in post rose significantly in between 1 April 2001 and 1 April 2002 reflecting machinery of government changes after the last election, which saw a transfer of staff from Cabinet Office and Home Office.

  Olympic Games
  Miss Kirkbride
  To ask the Secretary of State for Culture, Media and Sport how many Government officials will attend the Athens Olympic Games. [183552]

  Mr. Caborn
  [holding answer 12 July 2004]: The Secretary of State for Culture Media and Sport and myself attended the Olympic Games and both our Private Secretaries accompanied us on our visit. One press officer from DCMS was also present in Athens during the Olympics.

  Miss Kirkbride
  To ask the Secretary of State for Culture, Media and Sport how many Members of the Government will attend the Athens Olympic Games. [183553]

  Mr. Caborn
  [holding answer 12 July 2004]: The Olympic Games in Athens was officially attended by four Members of Government—the Prime Minister, the First Minister for Scotland, the Secretary of State for Culture, Media and Sport and myself.

  Miss Kirkbride
  To ask the Secretary of State for Culture, Media and Sport what class of hotel Ministers and officials will stay in while attending the Athens Olympic Games. [183554]

  Mr. Caborn
  [holding answer 12 July 2004]: Ministers and officials stayed at the following accommodation in Athens:
  The British embassy;
  A four and three star hotel;
  The campus of the British School of Archaeology.

  All arrangements were made with the BOA, benefiting from their negotiated tariffs.

  Tote
  Mr. Amess
  To ask the Secretary of State for Culture, Media and Sport whether the Government are prepared to sell the Tote to a body other than the Racing Trust. [188287]

  Mr. Caborn
  It remains the Government's policy to sell the Tote to the Racing Trust. Only if it proves impossible to effect such a sale on fair terms will the Government pursue other options.

DEFENCE

  Detainees (Transfer to United States)
  Mr. Tyrie
  To ask the Secretary of State for Defence what the locations are of the detainees captured by British forces in(a) Iraq and (b) Afghanistan and handed to the US. [183783]

  Mr. Ingram
  All persons apprehended by United Kingdom Forces in Iraq and transferred to United States forces, and who are still in custody, remain in Iraq.

  The UK has not handed over to the US any persons apprehended in Afghanistan.

  Human Rights Act
  Mr. McNamara
  To ask the Secretary of State for Defence what instructions he has issued to the Royal Military Police on the application to them of the Human Rights Act 1998(a) in the United Kingdom and (b) abroad. [176324]

  Mr. Ingram
  Training provided to the Royal Military Police on the Human Rights Act relates directly to the exercise of their powers of arrest, search and seizure etc., as members of the service police. These powers, applicable only in relation to persons who are subject to the Service Disciplinary Acts, are exercisable wherever the RMP serve, whether at home or abroad.

  During 2000, all RMP units received training on the implications of the Human Rights Act 1998, and changes in RMP arrest and custody procedures. Individuals joining the RMP since October 2000 have covered the same subject during their basic training, which includes relevant European Court of Justice (Strasbourg) Case Law.

  Typhoon/Eurofighter
  Miss McIntosh
  To ask the Secretary of State for Defence when the Typhoon/Eurofighter will enter into service at RAF Leeming. [186621]

  Mr. Ingram
  The first two Typhoon bases will be RAF Coningsby and RAF Leuchars, the stations from which the Quick Reaction Alert (Interceptor) aircraft currently operate. No decision has been taken on a third Typhoon base.

HOME DEPARTMENT

  Antisocial Behaviour Orders
  Mr. Oaten
  To ask the Secretary of State for the Home Department what information his Department collects on the number of section 30 authorisations and dispersal orders made under the Anti-social Behaviour Act 2003. [187221]

  Ms Blears
  The powers became operational in January 2004. We are undertaking a data capture exercise on use of the powers under section 30 of the Anti-social Behaviour Act 2003. The data will be available in the autumn.

  Autistic People (Arrests)
  Mr. Wiggin
  To ask the Secretary of State for the Home Department what research he has commissioned regarding numbers of(a) arrests, (b) charges and (c) convictions of persons who are autistic or suffer from Asperger's Syndrome; and what guidelines he has issued to police forces regarding the questioning of autistic suspects. [186816]

  Ms Blears
  No research of this kind has been commissioned by my Department and the data collected on arrests, prosecutions and convictions do not distinguish persons with particular disabilities.

  No specific guidance has been issued by the Home Office relating to persons with autism or Asperger's Syndrome. However, there are currently strands of work focused on improving police practice in relation to mentally ill individuals. These are outlined in the reply to the hon. Member's question on provisions in place to increase awareness in the Criminal Justice System of the behaviour patterns of people with communication related difficulties.

  Community Support Officers
  Mr. Rosindell
  To ask the Secretary of State for the Home Department how much the community support officer scheme in Great Britain is expected to cost for the next five years; and what the expenditure was over the past five years. [186762]

  Ms Blears
  The new Neighbourhood Policing Fund has made £50 million available for recruitment of additional Community Support Officers (CSOs) in this financial year in England and Wales. This fund will allow forces to recruit an additional 20,000 CSOs by March 2008 and details of the funding which will be made available to achieve this will be published in time for the 2006–07 planning round. Government expenditure on CSOs since they were first introduced in September 2002 amounts to £49.5 million up to the end of July 2004.

  Mr. Rosindell
  To ask the Secretary of State for the Home Department how much the community support officer scheme in London is expected to cost the Government over the next five years; and what the expenditure was on the scheme in the last five years. [186764]

  Ms Blears
  The new Neighbourhood Policing Fund has made £50 million available for recruitment of additional Community Support Officers (CSOs) in this financial year and all chief officers in England and Wales have been invited to bid for a share of this. This fund will allow forces to recruit 20,000 more CSOs by March 2008 and details of the funding which will be made available to achieve this will be published in time for the 2006–07 planning round.

  Government funding for CSOs in the Metropolitan police district amounts to approximately £23.5 million since CSOs were first introduced in September 2002.

  Mr. Rosindell
  To ask the Secretary of State for the Home Department how much training is required for community support officers; and what the training involves. [186769]
  1346W
  Ms Blears
  The length and scope of training for Community Support Officers (CSOs) is decided by individual chief officers. In most forces training lasts from four to six weeks and may include the use of powers, diversity, information gathering, first aid and tackling antisocial behaviour.

  Mr. Rosindell
  To ask the Secretary of State for the Home Department how much it costs on average to train a new community support officer. [186906]

  Ms Blears
  There is no standard cost of training new Community Support Officers (CSOs) as this varies between forces. The £50 million made available this year to fund new CSOs under the Neighbourhood Policing Fund includes £2,500 per CSO as a contribution to set up costs including training.

  Mr. Rosindell
  To ask the Secretary of State for the Home Department what remuneration is given to community support officers. [186908]

  Ms Blears
  Remuneration of community support officers (CSOs) is a matter for individual forces to decide. The average amount paid to CSOs in 2003–04, including basic salary and allowances, was £19,591.

  Databases
  Mr. Oaten
  To ask the Secretary of State for the Home Department pursuant to the answer of 7 July 2004,Official Report, column 750W, on databases, if he will list the bulk information exchanges which have taken place in the last two years. [187337]

  Caroline Flint
  The Police Information Technology Information Organisation has not made any bulk exchanges with foreign Governments or agencies in the last two years. However, a list of lost/found vehicles from the Police National Computer is sent to Interpol in Lyon, France via the National Criminal Intelligence Service on a daily basis excluding weekends.

  Departmental Costs
  David Davis
  To ask the Secretary of State for the Home Department what costs his Department has incurred on advertising and communication including contracts with public relations and advertising companies in each financial year since 1996–97. [180380]

  Fiona Mactaggart
  [holding answer 28 June 2004]: The amount spent by the Home Office on communications including contracts was:

  1996–97

  £5.23 million on advertising and £8.328 million on total communications. Communication spend represents 0.13 per cent. of total Home Office public expenditure of £6,416 million.

  Campaigns included car crime, recruitment of special constables, fire safety and electoral registration.

  1997–98

  £1.4 million on advertising and £3.372 million on total communications. Communication spend represents 0.05 per cent. of total Home Office public expenditure of £6,747 million.
  1347W
  Campaigns included recruitment of special constables, fire safety, absent voting and electoral registration.

  1998–99

  £1.8 million on advertising and £4.194 million on total communications. Communication spend represents 0.00005 per cent. of total Home Office public expenditure of £7,608,178 million.

  Campaigns included smoke alarm, recruitment of special constables, crime partnerships and electoral registration.

  1999–2000

  £5.65 million on advertising and £10.08 million on total communications. Communication spend represents 0.000012 per cent. of total Home Office public expenditure of £7,996,184 million.

  Campaigns included chip pan safety, fire safety, recruitment of special constables, European Parliament elections and electoral registration.

  2000–01

  £28.36 million on advertising and £35.637 million on total communications. Communication spend represents 0.00039 per cent. of total Home Office public expenditure of £9,068,695 million.

  Campaigns included fire safety, vehicle crime and recruitment of police officers.

  2001–02

  £14.4 million on advertising and £25.1 million on total communications. Communication spend represents 0.00023 per cent. of total Home office public expenditure of £10,820,813 million.

  Campaigns included fire safety (smoke alarms), vehicle crime, internet child protection, drugs, recruitment of police officers and special constables and postal voting.

  2002–03

  £9.9 million on advertising and £18.3 million on total communications. Communication spend represents 0.00013 per cent. of total Home Office public spending of £13,493,081 million.

  Campaigns included vehicle crimes, internet child protection, drugs, firearms amnesty and recruitment of police officers.

  2003–04

  £12.487 million on advertising and £22.083 million on total communications. Communication spend represents 0.00017 per cent. of total Home Office public spending of £12,605,526 million.

  Campaigns included vehicle crimes, internet child protection, drugs, recruitment of police officers and domestic violence.

  Note

  The total public expenditure figures for 1996–97 and 1997–98 were compiled under a different accounting system to later years—and are therefore not directly comparable.

  Departmental Vehicles
  Mr. Kidney
  To ask the Secretary of State for the Home Department how many road vehicles are operated by the Department and its agencies; how many personal injury accidents involving road vehicles operated by the Department have occurred within each of the last five years; and what the Department's policy is for managing work-related road safety. [185922]

  Paul Goggins
  There are currently 1,370 road vehicles operated by the Department and its agencies. The fleet listing by Department is as follows:

  Number

  Prison Service

  910

  Forensic Science

  84

  Police

  47

  Immigration

  287

  Main HO

  27

  NASS

  15

  Information on personal injury claims lodged by staff in the Home Office and its agencies is not collated centrally, but is held by individual Departments/ agencies. However, the number of third-party personal injury claims against the Department within each of the last five years is as follows:

  Number

  1999

  7

  2000

  6

  2001

  5

  2002

  7

  2003

  4

  To date in 2004 one third-party personal injury claim has been lodged against the Department.

  Following changes in legislation in December 2003, the Department issued policy guidance on the use of hand held and hands free mobile telephones. The Home Office is reviewing the instructions and advice held in the Transport Manual to cover all aspects of the management of work-related road safety.

  Until that work has been completed, general guidance derived from benchmark codes issued by the Royal Society for the Prevention of Accidents, the Highway Code and the fleet industry continues to be provided on request.

  Distraction Burglary
  Sandra Gidley
  To ask the Secretary of State for the Home Department how many incidents of distraction burglary against adults over the age of 60 were reported in each year since 1997. [186615]

  Ms Blears
  With effect from 1 April 2003, distraction burglary became a sub-category of "burglary dwelling" under the Home Office counting rules. Prior to that, data on the number of distraction burglaries recorded by the police were not routinely collected. However, data were collected from ad hoc surveys undertaken in 1998–99 and 2001 to 2003, which were reported in the
  1349W
  reply I gave my hon. Friend the Member for the Vale of Clwyd (Chris Ruane) on 23 June 2004, Official Report, column 1415W.

  We plan to publish the figures for 2003–04 in October this year. Data broken down by the age of victim are not available.

  Drug-related Crime
  Mr. Liddell-Grainger
  To ask the Secretary of State for the Home Department what assessment he has made of the costs of drug-related crime in each year since 1997. [186555]

  Caroline Flint
  Estimates of the costs of drug-related crime are not available annually. However, a recent study published by the Home Office provides estimates of the total economic and social costs of Class A drug use and puts these in the range of £10.1 billion to £17.4 billion for the year 2000. These costs include the costs of drug-related crime, which are estimated to fall in the range £8.8 billion to £15.8 billion. The costs of drug-related crime include victim costs and those accruing to courts, prisons and other parts of the criminal justice system.

  Firearms
  Mr. Drew
  To ask the Secretary of State for the Home Department what estimate he has made of the numbers of illegal(a) guns and (b) gun certificates that were used in legal ownership in each of the last 10 years. [185909]

  Caroline Flint
  [holding answer 22 July 2004]: Details of the legal status of firearms used in recorded crimes, and the illegal use of firearm certificates, are not available.

  Mr. Gummer
  To ask the Secretary of State for the Home Department (1) how many(a) rifles and (b) shotguns that have never been legally held have been used in recorded crimes since January 2000; [186123]

  (2) how many (a) rifles and (b) shotguns that were once legally held but which have been (i) stolen and (ii) mislaid have been used in recorded crime since January 2000; [186124]

  (3) how many legally held (a) rifles and (b) shotguns have been used in recorded crimes since January 2000. [186125]

  Caroline Flint
  Details of the legal status of firearms used in recorded crimes are not available.

  Football Banning Orders
  Mr. Drew
  To ask the Secretary of State for the Home Department (1) how many banning orders were issued as a result of Euro 2004; [183785]

  (2) how many England supporters were (a) arrested, (b) arrested and charged and (c) arrested, charged and issued with banning orders with regard to Euro 2004; [183786]

  (3) what the total cost was of the UK police operations for Euro 2004; and what costs have been covered by the Portuguese authorities. [183787]
  1350W
  Caroline Flint
  As of 2 August 2004, the courts have imposed football banning orders on 38 individuals as a result of Euro 2004. Of these, 35 orders have been imposed as a result of individuals being intercepted by the police en-route to Portugal on the basis of evidence of previous involvement in violence or disorder, while three orders have been imposed on the basis of violence and disorder during the tournament. In addition, 48 individuals are currently subject to unresolved banning order proceedings as a result of being intercepted en-route to the tournament and eight individuals are subject to proceedings prompted by conviction of offences of violence and disorder in Portugal. The police may commence further proceedings in the light of evidence received from the Portuguese authorities. Updated information will be included in a detailed report on Euro 2004 to be submitted to Parliament in September.

  Race Hate Crime
  Mr. Woodward
  To ask the Secretary of State for the Home Department how many reported incidents of race hate crimes there have been against(a) people with learning difficulties, (b) people with disabilities, (c) gays, lesbians and bisexuals and (d) transsexuals there have been in (i) St. Helens and (ii) England and Wales, broken down by region, in each year since 1997; and what percentage (A) were brought to court and (B) resulted in a successful prosecution in each case. [186909]

  Ms Blears
  This information is not collected centrally.

  Police
  Mr. Oaten
  To ask the Secretary of State for the Home Department how much has been spent by the Metropolitan police on rental vehicles in each month since September 2003. [187063]

  Ms Blears
  I understand from the Commissioner of the Metropolitan police that expenditure has been as follows:

  £000

  September 2003

  668

  October 2003

  965

  November 2003

  798

  December 2003

  603

  January 2004

  890

  February 2004

  998

  March 2004

  1,143

  April 2004

  877

  May 2004

  697

  June 2004

  1,026

  July 2004

  1,108

  The monthly figures include both local (for borough operational command units) and corporate hire (covering centrally hired vehicles for special events).

  Mr. Swire
  To ask the Secretary of State for the Home Department what additional funding he will make available to Devon and Cornwall police to(a) enforce the Government's Alcohol Strategy and (b) continue funding police community support officers. [183749]
  1351W
  Ms Blears
  On 7 July 2004 the Home Office and the Association of Chief Police Officers (APC0) announced that police in England and Wales would be working with their partners in a fresh drive to tackle alcohol-related crime and disorder. The enforcement campaign takes forward one of the recommendations contained in the Alcohol Harm Reduction Strategy for England that was published on 15 March 2004. Plymouth and Cornwall and Isle of Scilly (Newquay) police Basic Command Units (BCUs) from the Devon and Cornwall police force are taking part in the campaign. BCUs can apply to the Police Standards Unit in the Home Office for funding to assist them in undertaking enforcement activity during the campaign. Provisionally £2,500 has been allocated to Devon and Cornwall police force to fund enforcement activity in Newquay.

  As part of the Spending Review 2004 the Government made a commitment to recruit 20,000 Community Support Officers (CSOs) by 2008 and forces will be eligible for funding to help them meet this target. As yet it is too early to say how the additional funding for CSOs will be allocated. However, a new Neighbourhood Policing Fund will be provided to develop local policing teams across England and Wales.

  Mr. Rosindell
  To ask the Secretary of State for the Home Department what the cost was in 2003–04 of policing in(a) Havering and (b) London. [186910]

  Ms Blears
  The Metropolitan Police Service's (MRS) net budget requirement in 2003—04 was £2,207.8 million and the net budget for the City of London was £67.2 million. Distribution of resources within the MPS is a matter for the Commissioner of Police of the Metropolis and the Metropolitan Police Authority.

  Resources are allocated directly to borough operational command units using the Service's resource allocation formula. In addition, borough units are able to call upon all-London Units (such as dog sections, Territorial Support Group, Traffic and Air Support Units) when operational priorities dictate.

  The Commissioner of Police for the Metropolis informs me that the budget for the Havering Borough Operational Command Unit in 2003–04 was £17.3 million. This reflects direct operational costs. The cost of specialist units, non-operational support units and all-London units providing service to Havering was additional and could only be calculated at disproportionate cost.

  Mr. Ruffley
  To ask the Secretary of State for the Home Department how many police officers were employed by Suffolk police in each year since 1 April 1997. [187189]

  Ms Blears
  On 31 May 2004 Suffolk constabulary had 1,293 police officers, 113 more than in March 1997. The table shows strength for each year since March 1997.

  Suffolk constabulary—strength: March 1997 to May 2004

  As at 31 March

  Police numbers1

  1997

  1,180

  1998

  1,186

  1999

  1,190

  2000

  1,145

  2001

  1,133

  2002

  1,203

  1352W

  2003

  1,253

  2004 (31 May)

  1,293

  1 Source for 1997 to March 2003 is the Home Office Research, Development and Statistics Directorate (RDS). May 2004 was collected separately outside of the normal data collection arrangements and has not been subject to the same validation as RDS data. Data collected by RDS for 31 March 2004 will be published shortly.

  Mr. Ruffley
  To ask the Secretary of State for the Home Department what central Government funding was available for CCTV in each of the last seven years for the Suffolk Police constabulary area. [187193]

  Ms Blears
  Since 2000 the Home Office has provided £960,936 to Suffolk for Close Circuit Television (CCTV) schemes, through the Crime reduction Programme's CCTV initiative.

  This breaks down as:

  CCTV Round 1 (2000–01—2002–03): £395,024

  CCTV Round 2 (2001–02—2002–03): £605,912

  Security Industry Authority
  Mr. Willetts
  To ask the Secretary of State for the Home Department (1) how his Department measures the performance of the Security Industry Authority; [187344]

  (2) what has been the budget of the Security Industry Authority in each year since 2001; [187345]

  (3) when the Security Industry Authority proposes to implement the regulation of wheel clampers. [187350]

  Ms Blears
  The Security Industry Authority (SIA) was established as a non-departmental public body on April 2003. Prior to this date the implementation unit formed part of the Home Office.

  The SIA budget for 2003–04 was £15.5 million. The expenditure incurred totalled £12.9 million.

  Full information is available in the SIA Annual Report and Accounts which is available in the House.

  The SIA expenditure budget for 2004–05 is £26 million.

  The Department has worked closely with the SIA throughout its development and a member of the sponsor department attends Board meetings. Annually the Minister agrees targets for the SIA, which are appropriate to the development stage reached. The targets for 2003–04 are included in their recently published Annual Report and Accounts together with a record of their significant achievements. The report and accounts are available from HMSO or can be viewed on the SIA website.

  The overall SIA Aims are set out in their agreed managerial and financial framework:
  Improving the performance, standards and opportunities of people working in the private security industry by introducing and achieving compliance within a licensing system.
  Encouraging business in the industry to improve their standards by creating a framework for developing, promoting and spreading best practice.

  1353W
  Creating a centre of knowledge and expertise, which enables and encourages effective industry development and investment.
  Strengthening the extended police family by encouraging and supporting further engagement of the private security industry.

  Witness Protection
  David Davis
  To ask the Secretary of State for the Home Department (1) what the average number of police officers deployed on witness protection schemes was in the last year for which figures are available, broken down by police force; [184959]

  (2) what police resources have been allocated to witness protection schemes in each of the last five years, broken down by police force. [184960]

  Caroline Flint
  This information is not currently available. The Home Office, in conjunction with the Scottish Executive, the Northern Ireland Office and the Association of Chief Police Officers, has appointed an independent consultant to carry out an assessment of witness protection arrangements nationally. The assessment is covering all cases where witness protection is afforded by UK law enforcement agencies including the police. It will provide us with valuable information about the numbers and circumstances in which witness protection is provided and the amount of police time allocated to it.

  The assessment commenced on 2 January; it was announced in the White Paper "One Step Ahead—a 21st century strategy to defeat organised crime", which I published on 29 March. The assessment is due to be completed over the summer, and a final report will be available in the autumn.

  However, even after completion of this assessment, we are not intending to make available publicly any of this information below national level. Such information broken down by individual police forces is obviously operationally sensitive and could compromise the integrity of witness protection programmes and the officers who work on them.

PRIME MINISTER

  Designated Accommodation
  Bob Spink
  To ask the Prime Minister how many rooms are set aside for(a) the use of smokers, (b) worship, broken down by religion and (c) nursing mothers and pregnant women in each building and set of offices for which his office is responsible. [187321]

  The Prime Minister
  For these purposes, my office is part of the Cabinet Office. My office has one smoking room. Rooms for worship, nursing mothers and pregnant women are shared with the Cabinet Office.

SOLICITOR-GENERAL

  Criminal Justice Board
  Miss McIntosh
  To ask the Solicitor-General what recent discussions she has had with the Home Secretary on the work of the Criminal Justice Board. [187722]
  1354W
  The Solicitor-General
  I have discussions with the Home Secretary on the work of the Criminal Justice Board at the Criminal Justice Board and also at the routine meetings of all criminal justice Ministers.

  Hate Crimes
  Mr. Dismore
  To ask the Solicitor-General what her policy is towards the prosecution of(a) anti-Semitic and (b) Islamophobic hate crimes. [187723]

  The Solicitor-General
  The policy of prosecution of anti-Semitic and Islamophobic crime is set out in the CPS' policy document of July 2003,

  In all cases there are two tests: whether there is sufficient evidence for the court to convict; and whether a prosecution is in the public interest. It will usually be in the public interest to prosecute cases of racist, Islamophobic and anti-Semitic crime.

  Animal Rights Extremism
  Mr. Ben Chapman
  To ask the Solicitor-General if she will make a statement on the role of the Crown Prosecution Service in tackling animal rights extremism. [187724]

  The Solicitor-General
  The Crown Prosecution Service takes very seriously the prosecution of animal rights extremists who commit criminal offences.

  There is now a co-ordinator for this work in each CPS area.

  The Attorney-General is a member of the inter-ministerial group tackling animal rights extremism and chairs the forum of the agencies who are engaged in dealing with this problem.

  Case Progress (Information)
  Julie Morgan
  To ask the Solicitor-General what steps she is taking to keep victims informed of the progress of their cases. [187725]

  The Solicitor-General
  The Government are working with the police, prosecutors and courts, as well as voluntary and community organisations to take steps to ensure that victims will be confident to report offences and give evidence in court where necessary. A central part of that effort is ensuring victims are kept informed at all stages of the case.

  Pre-charge Investigations
  Mr. Grieve
  To ask the Solicitor-General if she will make a statement on the progress of the pilot schemes to involve the Crown Prosecution Service in the pre-charge investigation process; and whether time savings have been identified from such pilot schemes. [175512]

  The Solicitor-General
  Following the charging pilots in 2002–3, and the legislative changes in the Criminal Justice Act 2003, the Crown Prosecution Service, in partnership with the police, arc implementing the charging arrangements.
  1355W
  Shadow Charging arrangements have been implemented in all police force areas in England and Wales, and crown prosecutors now provide charging advice at 248 of the 373 operational units during normal office hours.

  A Commencement Order (under the Criminal Justice Act 2003) was issued on the 29 January 2004, which allows the Director of Public Prosecutions to apply Statutory Charging arrangements. The statutory scheme was first applied at Longsight in Greater Manchester. The scheme has since been rolled out across West Yorkshire, Kent, South Yorkshire, Cleveland, Lancashire, Northumbria, Avon & Somerset, Nottinghamshire, Humberside and Greater Manchester.

  It is expected that the benefits will be a reduction in the rate of discontinuances to 69 per cent. guilty plea rate to increase by 30 per cent. and the conviction rate to increase by 15 per cent.

  Early consultation between police officers and crown prosecutors will assist in getting the charge right first time, and reducing remedial work often required to bring cases up to appropriate quality standards. Weeding out weak prosecutions at an early stage will save further effort for both the police and the Crown Prosecution Service. In addition, an increase in guilty pleas will result in fewer trials, with benefits for not only the police and the Crown Prosecution Service, but also the courts. These improvements will result in an estimated 3.2 per cent. efficiency gain on contested cases going through the criminal justice system.

HEALTH

  A and E (Chorley and South Ribble)
  Mr. Hoyle
  To ask the Secretary of State for Health how many hours a day of consultants' time on average was spent in the accident and emergency department at Chorley and South Ribble Hospital in the last year for which figures are available. [187506]

  Miss Melanie Johnson
  This information is not collected centrally.

  As at 31 March 2004, there were seven accident and emergency consultants within Lancashire Teaching Hospitals Trust.
  Source:
  Department of Health medical and dental workforce census.

  Age-related Disease
  Sandra Gidley
  To ask the Secretary of State for Health what public funding has been made available over the last three years for research into age-related disease; and what funding plans he has for the future. [186830]

  Miss Melanie Johnson
  The main agency through which the Government support medical and clinical research is the Medical Research Council (MRC). The MRC funds basic and clinical studies on health ageing and on the causes, prevention and treatment of a wide 1356W
  range of conditions that affect the elderly in particular. Details of MRC expenditure in this area are shown in the table.

  Amount (£ million)

  2001–02

  18.7

  2002–03

  27.9

  2003–04

  Not yet available

  The Department funds research to support policy and to provide the evidence needed to underpin quality improvement and service development in the national sealth service. Spend by the Department's national research programmes on projects specifically related to the health of older people is shown in the table.

  Amount (£ million)

  2001–02

  1.7

  2002–03

  1.9

  2003–04

  1.9

  In addition, the NHS reported spending £36.7 million in 2001–02 and £34 million in 2002–03 on research relating to older people from research and development support funding allocations. Information for 2003–04 is not yet available.

  Each of these areas of research activity is ongoing.

  Alzheimer's
  Jane Griffiths
  To ask the Secretary of State for Health (1) what the expenditure was on drug treatments for Alzheimer's disease patients in Reading, East for the latest year for which figures are available; [187015]

  (2) how many patients are being treated for Alzheimer's disease in Reading, East; and how many of these are receiving drug treatment. [187016]

  Ms Rosie Winterton
  Information on the number of patients treated for Alzheimer's disease by individual primary care trusts (PCTs) is not collected centrally. Data on the number of prescription items dispensed in the community, and the net ingredient cost is collected by the Prescription Pricing Authority. The total number of prescription items dispensed for dementia drugs, and the net ingredient cost of these drugs, in the area covered by Reading PCT in 2003–04 is shown in the table.

  Total number of prescription items and net ingredient cost for "Drugs for Dementia" (BNF 4.11, treatment of Alzheimer's Disease) dispensed in the community for Reading PCT in 2003–04

  Number of prescription items

  Net ingredient cost(£)

  Reading PCT

  96

  8,278

  England total

  392,652

  34,217,012

  Notes:

  1. Prescription cost analysis (PCA) data covers all prescriptions items that are dispensed in the community in England. PCA data does not include items dispensed in hospitals or private prescriptions.

  2. Drugs for the treatment of Alzheimer's disease are classified in the British National Formulary section 4.11 (Drugs for Dementia) and include the drugs Donepezil, Rivastigmine, Galantamine and Memantine.

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  3. Information on the number of patients receiving prescriptions for these drugs is not available, but numbers of prescription items of all prescriptions dispensed in the community in Reading PCT (this is not necessarily the same as where the drugs were prescribed) and the net ingredient cost (NIC) is provided.

  4. Prescriptions are written on a prescription form. Each single item written on the form is counted as a prescription item.

  5. The NIC is the basic cost of a drug. This cost does not take account of discounts, dispensing costs, fees or prescription charge income.

  Source:

  PCA data from the Prescription Pricing Authority.

  Dr. Stoate
  To ask the Secretary of State for Health (1)what the total expenditure on drugs available on the NHS for Alzheimer's disease was in Dartford in the latest year for which figures are available; [187025]

  (2) how many Alzheimer's disease patients are being treated by primary care trusts in Dartford; [187026]

  (3) how much was spent by the NHS on drug treatments for advanced Alzheimer's disease patients in Dartford in the latest year for which figures are available; [187027]

  what assessment his Department has made of the availability of drugs for patients with moderately severe to severe Alzheimer's disease in Dartford. [187030]

  Ms Rosie Winterton
  Information on the number of Alzheimer's disease patients being treated by individual primary care trusts (PCTs) is not collected centrally. Data on the number of prescription items dispensed in the community and the net ingredient cost are collected by the Prescription Pricing Authority. The total number of prescription items dispensed for dementia drugs and the net ingredient costs of these drugs, in the area covered by Dartford, Gravesham and Swanley PCT in 2003–04 is shown in the table.

  Total number of prescription items and net ingredient cost for "Drugs for Dementia" (BNF 4.11, treatment of Alzheimer's disease dispensed in the community for Dartford, Gravesham and Swanley PCT in 2003–04

  Number of prescription items (Thousand)

  Net ingredient cost (£000)

  Dartford, Gravesham and Swanley PCT

  1.2

  105.5

  England total

  392.7

  34,217.0

  Notes:

  1. Prescription cost analysis (PCA) data covers all prescription items that are dispensed in the community in England. PCA data does not include items dispensed in hospitals or private prescriptions.

  2. Drugs for the treatment of Alzheimer's disease are classified in the British National Formulary section 4.11 (Drugs for Dementia) and include the drugs Donepezil, Rivastigmine, Galantamine and Memantine.

  3. Information on the number of patients receiving prescriptions for these drugs is not available, but numbers of prescription items of all prescriptions dispensed in the community in Dartford, Gravesham and Swanley PCT (this is not necessarily the same as where the drugs were prescribed) and the net ingredient cost (NIC) is provided.

  4. Prescriptions are written on a prescription form. Each single item written on the form is counted as a prescription item.

  5. The NIC is the basic cost of a drug. This cost does not take account of discounts, dispensing costs, fees or prescription charge
  income.

  Source:

  PCA data from the Prescription Pricing Authority.

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  It is not possible to provide a breakdown for expenditure on drug treatments for advanced Alzheimer's patients for Dartford, Gravesham and Swanley PCT.

  The Department has not made an assessment of the availability of drugs for patients with moderately severe to severe Alzheimer's disease in Dartford. It is for PCTs, in conjunction with strategic health authorities to ensure that services meet local needs.

  Chronic Fatigue Syndrome/ME
  Mr. Pike
  To ask the Secretary of State for Health (1)what access(a) primary care trusts and (b) NHS trusts who failed to secure local multi-disciplinary team status for chronic fatigue syndrome/myalgic encephalomyelitis services within their zone have to these services; and if he will make a statement; [186743]

  (2) what plans he has to extend specialist services and local multi-disciplinary teams for people with chronic fatigue syndrome/myalgic encephalomyelitis to other areas; and if he will make a statement. [186746]

  Dr. Ladyman
  A central budget of £8.5 million for chronic fatigue syndrome/myalgic encephalopathy (CFS/ME) service; runs from 2004 to 2006 and is intended to pump prime service development and start developing clinical services where none previously exist.

  In addition to providing this extra funding, we have also asked the National Institute for Clinical Excellence to develop guidelines for the diagnosis and management of CFS/ME.

  We have invested heavily in improving national health service services. Up to 2003–04, expenditure on the NHS has increased by an average of 6.2 per cent. in real terms each year since this Government came to power. NHS expenditure is set to further increase by an average of 7.2 per cent. in real terms over the five year period 2003–04 to 2007–08. Over three years, this will take the total spent on the NHS in England from £69 billion in 2004–05 to £92 billion in 2007–08.

  It is the responsibility of primary care trusts to decide how to use this extra funding to meet the needs of their populations, including those with CFS/ME.

  Mr. Rosindell
  To ask the Secretary of State for Health (1) how much money the Government has invested in the study of myalgic encephalomyelitis since 1997; [186833]

  (2) how much money the Government plan to invest in the study of myalgic encephalomyelitis over the next five years. [186835]

  Dr. Ladyman
  The information requested is shown in the table.

  Actual and forecast expenditure on chronic fatigue syndrome/myalgic encephalomyelitis since 1997

  £ million

  Completed research projects

  0.3

  Current research

  4.3

  £4.2 million of the current research total has been allocated to two five year Medical Research Council trials announced in 2003.
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  Over 75 per cent. of the Department's total expenditure on health research is devolved to and managed by national health service organisations. Details of individual projects, including some concerned with myalgic encephalomyelitis, can be found on the national research register at www.dh.gov.uk/research.

  Cotton Nappies
  Mr. Hancock
  To ask the Secretary of State for Health if he will make it his policy to make a financial contribution towards the start-up costs of(a) the provision of free cotton nappies for in-house use and (b) an awareness campaign to promote use of cotton nappies in the Portsmouth Hospitals NHS Trust; and if he will make a statement. [187480]

  Ms Rosie Winterton
  It is for individual units and trusts to decide on the practicalities of promoting the use of cotton nappies in their own maternity units. In line with our policy to devolve decision making to those at the front line of national health service provision I do not see a role in these decisions for a central Government Department. I understand that Portsmouth Hospitals NHS Trust does not provide any nappies at present unless it is an emergency situation.

  Cystic Fibrosis
  Bob Russell
  To ask the Secretary of State for Health if he will introduce testing of all newborn babies for cystic fibrosis. [186977]

  Miss Melanie Johnson
  Ministers have agreed to the implementation of a new national programme for newborn cystic fibrosis screening. About a fifth of babies born in England are currently offered screening for cystic fibrosis. At the request of the United Kingdom national screening committee, an implementation plan to support the national health service is being developed by the UK newborn screening programme centre, a collaboration between Great Ormond Street Hospital for Children, the Institute of Child Health and the Institute of Education.

  Device Evaluation Service
  Mr. Oaten
  To ask the Secretary of State for Health what are the long-term plans for the device evaluation service; and which agency will be responsible for its day to day management. [187119]

  Ms Rosie Winterton
  The device evaluation service is actively involved in both the Health Industries Task Force (HITF) and the review of the Department's arm's length bodies. A formal announcement about the service will be made together with HITF recommendations later this year.

  Diabetes
  Tim Loughton
  To ask the Secretary of State for Health what the proven side effects are of long-term consumption of analogue human insulin. [187054]

  Ms Rosie Winterton
  Clinical trials submitted at the time of licensing have examined the safety and efficacy of the human insulin analogues (insulin glargine, insulin aspart and insulin lispro) in diabetic patients treated for up to 12 months. Generally, the side effects observed 1360W
  with the human insulin analogues were similar to those seen with existing human insulins, with the most commonly observed side effects being hypoglycaemia, visual disturbance and injection reactions.

  The longer term safety of the use of human insulin analogues in routine clinical practice is closely monitored by the Medicines and Healthcare products Regulatory Agency. Any possible new safety issue to emerge is evaluated and, if necessary, product information for prescribers and patients is updated.

  Full guidance on prescribing and use of human insulin analogues, including possible side effects is provided in the summary of product characteristics (the product information for prescribers) and the patient information leaflet. Key prescribing information is also included in the British National Formulary, which is made available by the Department to doctors and pharmacists.

  Free Health Tests (Pensioners)
  Sandra Gidley
  To ask the Secretary of State for Health what estimate he has made of the cost of providing pensioners with a free annual(a) eye test, (b) dental check and (c) hearing test. [186455]

  Ms Rosie Winterton
  We restored entitlement to free sight tests for people aged 60 and over in 1999 and hearing tests have always been available free of charge for patients referred to a national health service audiology department. People on low incomes may be exempt from dental charges or may only have to pay a reduced charge. We estimate that patient income of some £23 million per year would be lost if dental examinations were made free to all people aged 60 and over.

  Free Prescription Scheme
  Ms Walley
  To ask the Secretary of State for Health what estimate he has made of the percentage of people who will claim under the free prescription NHS low income scheme; and if he will make a statement. [187490]

  Ms Rosie Winterton
  No such estimate has been made. In 2003–04, the Prescription Pricing Authority (PPA) received 731,000 claims for help from people in England, Scotland and Wales. Claims can cover more than one person and successful claims may confer entitlement for more than one year. Based on recent trends, the PPA expects the number of claims in the current financial year to be lower than last year.

  Ms Walley
  To ask the Secretary of State for Health what plans there are for arrangements to promote public awareness of the changes in free prescriptions from 6 April. [187542]

  Ms Rosie Winterton
  The leaflet, "Help with Health Costs HC11 Quick Guide", which has been placed in the Library, notes that the threshold for full help with health costs has been increased. In addition a poster, prepared in conjunction with Citizens Advice, is currently being printed and Department of Work and Pensions staff have been told of the change via a joint income support/jobseekers allowance bulletin.

  GP Surgeries
  Mr. Ruffley
  To ask the Secretary of State for Health what plans he has for additional general practitioner surgeries in(a) the constituency of Bury St. Edmunds and (b) Suffolk. [187199]

  Dr. Ladyman
  We have no current plans for additional general practitioner surgeries in the constituency of Bury St. Edmunds or Suffolk and there are currently no applications in the fourth wave for national health service local investment finance trust schemes in either Bury St. Edmunds or Suffolk.

  It is now for primary care trusts, in partnership with strategic health authorities and other local stakeholders, to determine how best to use their funds to meet national and local priorities for improving health, tackling health inequalities and modernising services, based on the specialised knowledge they have of the local community.

  Hepatitis B
  Dr. Gibson
  To ask the Secretary of State for Health (1) when the Joint Committee on Vaccination and Immunisation sub-group on hepatitis B is next planning to meet; and when it plans to make a decision on hepatitis B immunisation policy; [187169]

  (2) when the Government plan to implement the World Health Organisation recommendation that all countries should adopt a hepatitis B universal mass vaccination programme. [187170]

  Miss Melanie Johnson
  A working group of the Joint Committee on Vaccination and Immunisation (JCVI) is currently reviewing the United Kingdom's hepatitis B immunisation programme. The group is planning to meet later this year and will report to JCVI early next year.

  Home Births
  Mrs. Helen Clark
  To ask the Secretary of State for Health (1) what estimate he has made of the effect on(a) numbers of beds available and (b) other resources of women having home births; [187556]

  (2) what assessment he has made of the relative costs of an uncomplicated natural delivery at home and an uncomplicated natural delivery in hospital; and what assessment has been made in respect of individual hospitals. [187557]

  Dr. Ladyman
  The proportion of deliveries that takes place at home has been around 2 per cent. since 1995, having risen from less than 1 per cent. in the late 1980s. This is so small that it will have little effect on the availability of hospital maternity beds. The resource implications of women having home births will vary and are a matter for local national health service bodies.

  We have not made any assessment of the costs of deliveries in respect of any individual hospital. The average overall cost of a hospital and home birth normal delivery without complications or co-morbidities is shown in the table.
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  Type of delivery

  Number1

  Average cost (£)

  Non-elective in-patient (hospital births)

  314,683

  817

  Day case (hospital birth)

  1,071

  386

  Community midwifery services (home births)

  6,855

  541

  1 Data source: reference costs 2003 data (relating to financial year 2002–03), as published in appendix SRC1 of the "Payment by Results Core Tools 2004" document (Department of Health).

  Hospital Infections
  Mr. Liddell-Grainger
  To ask the Secretary of State for Health what the estimated cost of the cleanyourhands campaign is for 2004–05. [186511]

  Miss Melanie Johnson
  The estimated cost of producing and distributing the campaign materials is about £370,000. Alcohol hand gels will be an extra cost. An economic assessment of the campaign suggests that if the success of the campaign pilot is replicated, £140 million will be saved.

  Organ Removal
  Chris Ruane
  To ask the Secretary of State for Health if he will list the new measures and procedures that have been introduced to stop the illegal removal of organs from deceased adults and children. [187082]

  Ms Rosie Winterton
  We are taking the following measures to stop the illegal removal of organs from deceased adults and children.

  The Retained Organs Commission (ROC) was set up in April 2001 to oversee the return of organs and tissues to families, and where requested, to provide advocacy to families and to advise trusts. The ROC issued its final report in March 2004 and this can be found at http:// www.nhs. uk/retainedorgans.

  The Government's Human Tissue Bill, which had its second reading in the House of Lords in July 2004, provides the regulation of removal, storage and use of human organs and tissue. The Bill also makes provision for the creation of a new body, the Human Tissue Authority (HTA), which will prepare statutory guidance on all matters within its remit, as set out in the Bill.

  Pending completion of the Bill's passage through Parliament and the establishment of the HTA, the Department published two documents in April 2003: "The Use of human organs and Tissue, An Interim Statement" and "Families and post mortems, A Code of Practice". These provide guidance on the use of human organs and tissue and recommended practice for ensuring consent is obtained for hospital post-mortems and for the retention and use of organs following a hospital or coroner's post-mortem. These publications can be found on the Department's website.

  The Department has also provided Section 64 grant funding to the National Bereavement Partnership to set up a helpline to support families and the general public affected by issues around post mortems and the possible retention of organs or tissues. This helpline will be able to provide essential information and advise those affected how they might take an inquiry forward with their local national health service trust.
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  Chris Ruane
  To ask the Secretary of State for Health what representations he has received from the parents of deceased children whose organs were retained without permission concerning the sensitivity of questions they have had to answer in pursuit of compensation. [187080]

  Ms Rosie Winterton
  The Department has not received representations from the parents of children whose organs were retained without permission concerning the sensitivity of questions they have had to answer in pursuit of compensation.

  Chris Ruane
  To ask the Secretary of State for Health if he will make a statement on the length of time that it has taken to compensate the relatives of those whose organs were retained without permission. [187081]

  Ms Rosie Winterton
  An offer of compensation was made in November 2002 to all relatives claiming in relation to organ retention. The offer was rejected and the case proceeded to court. Mr. Justice Gage decided on three test cases in a group litigation on 26 March 2004. A mediation date of 27 September has been set for further discussions with the NHS Litigation Authority and the claimants lawyers with a view to settling the claim.

  Intensive Care (Babies)
  Mrs. Helen Clark
  To ask the Secretary of State for Health in how many National Health Service trusts there has been a reduction of intensive care Special Care Baby Unit beds over the two years to August. [187559]

  Dr. Ladyman
  Data on the number of intensive care special care baby unit beds are not available.

  Life Expectancy
  Mr. Burstow
  To ask the Secretary of State for Health what progress has been made in reducing inequalities in life expectancy in each(a) local authority and (b) primary care trust area. [180276]

  Miss Melanie Johnson
  We are committed to achieving our public service agreement target on health inequalities:"By 2010 reduce inequalities in health outcome by 10 per cent. as measured by infant mortality and life expectancy at birth".

  The life expectancy aspect of the target is underpinned by a more detailed target:
  "Starting with local authorities, by 2010 to reduce the gap in life expectancy by at least 10 per cent. between the fifth of areas with the worst health and deprivation indicators and the population as a whole".

  Information on the progress made in reducing inequalities in life expectancy within each local authority and primary care trust is therefore not collected centrally.

  We are also looking to reduce substantially the health inequalities gap from heart disease, stroke and related diseases and cancer by at least 40 per cent. and six per cent. respectively between the fifth of areas with the worst health and deprivation indicators and the population as a whole. As part of this effort, we have set a target for reducing smoking prevalence among routine manual groups to 26 per cent. or less by 2010.

  NHS Dentistry
  Mr. Liddell-Grainger
  To ask the Secretary of State for Health how many dentists left the NHS in each year from 2000–01. [186477]

  Ms Rosie Winterton
  Information on the total number of dentists leaving the general dental service (GDS) or personal dental service (PDS) is shown in the table. The main reasons for the dentists leaving were retirement and short-term career breaks.

  General dental service and personal dental service: number of leavers at 30 September each year, England and Wales

  Exits

  2000

  1,228

  2001

  1,257

  2002

  1,374

  2003

  1,256

  Source:

  Dental Practice Board.

  The numbers of GDS and PDS dentists have increased from 16,722 at December 1997 to 19,278 at December 2003; an increase of over 2,500.

  Keith Vaz
  To ask the Secretary of State for Health what the latest average waiting time to have an infected wisdom tooth removed on the NHS is; and what targets he has set to improve waiting times for the removal of wisdom teeth. [187136]

  Ms Rosie Winterton
  In 2003, the mean waiting time was 91 days for extractions at national health service hospitals. In year 2000, the National Institute for Clinical Excellence advised that the surgical removal of impacted wisdom teeth should be limited to patients with evidence of pathology. Implementation of this advice and the expansion of the dental workforce announced by my right hon. Friend, the Secretary of State for Health, on 16 July should reduce the pressures on hospital dental departments.

  Mr. Burstow
  To ask the Secretary of State for Health how much his Department spent on NHS dentistry in each year since 1997; and if he will make a statement. [187293]

  Ms Rosie Winterton
  The general dental service (GDS) is currently managed on a national basis as a non-discretionary service. Expenditure is not predetermined by allocations but is driven largely by patient demand and the activity of dentists. At present, neither primary care trusts nor dentists are allocated any specific GDS budgets or quotas. Actual spend since 1997 to date has been:

  Expenditure (£ million)

  1997–98

  959

  1998–99

  1,022

  1999–2000

  1,058

  2000–01

  1,130

  2001–02

  1,202

  2002–03

  1,263

  Expenditure figures represent the Government's net spend on GDS after taking account of the contribution to costs from dental charges paid by patients. Figures from 1997–98 to 1999–2000 are cash based. Figures for

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  2001–02 onwards are resource based. Figures from 1998–99 include expenditure on new personal dental service pilot schemes.

  Expenditure figures for 2003—04 are not yet available.

  Tom Cox
  To ask the Secretary of State for Health what proposals his Department has to ensure that when a person requires dental treatment they are clearly informed(a) whether a dental practice provides NHS treatment and (b) what the cost of non-NHS treatment they require will be; and if he will make a statement. [187606]

  Ms Rosie Winterton
  Since publication of the Office of Fair Trading's report, "The private dentistry market in the UK" (March 2003), we have been working with the General Dental Council (GDC) to strengthen the regulation of private dentistry. The GDC has published "Standards of Dental Practice", which requires that dentists give full information on proposed treatment and costs to patients to enable them to make well-informed decisions on the type of treatment they are to receive. We will also be amending the Dentists Act 1984 to give the GDC new powers to ensure the fitness to practise of dentists and to establish a scheme to investigate and resolve complaints about private dental treatment. The amendments will come into effect early in 2005.

  Keith Vaz
  To ask the Secretary of State for Health what plans he has to improve orthodontic departments at NHS hospitals. [187137]

  Ms Rosie Winterton
  We are undertaking the most fundamental reform of national health service dentistry since the inception of the NHS. The Health and Social Care (Community Health and Standards) Act 2003 provides the commissioning of general dental services is to be delegated to primary care trusts from October 2005. This will ensure that the developing dental specialities in primary care, including orthodontics, are given the right opportunities to contribute more to NHS patient care. Provision of more specialist dental care in a high street setting will mean that practitioners no longer need to refer patients who could be treated in a primary care setting to hospital. In this way, staff at hospital dental departments will be able to concentrate on more complex treatments.

  Out of Hours GP Cover
  Mr. Simon
  To ask the Secretary of State for Health whether the NHS Litigation Authority will be liable in cases of clinical negligence where the negligent treatment was provided by a private or foreign healthcare provider under contract for the NHS. [187382]

  Ms Rosie Winterton
  The NHS Litigation Authority administers the clinical negligence scheme for trusts (CNST) in England. The CNST provides indemnity against claims for clinical negligence for member organisations, which include national health service trusts and primary care trusts (PCTs).

  Indemnity for cases arising from clinical negligence is as follows:
  Before July 2004, indemnity for clinical negligence for independent sector treatment centres (ISTCs) was covered by commercial insurance arrangements. Subsequently, on a
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  progressive basis, indemnity is now provided through the CNST cover provided to PCTs. The arrangements between ISTCs and PCTs are covered in their contracts.
  For patients referred to foreign healthcare providers, indemnity for clinical negligence is usually covered by the CNST arrangements of the referring PCT or NHS Trust.
  For other private organisations the liability depends upon the terms and conditions of the contract between the PCT, NHS Trust and the private body concerned.

  Variant CJD
  Mr. Wiggin
  To ask the Secretary of State for Health what recent research his Department has commissioned on the treatment of variant CJD. [186670]

  Miss Melanie Johnson
  The Department is currently funding a £3.5 million research programme designed to identify and evaluate potential treatment for Creutzfeldt-Jakob Disease. Potential therapies arising from that research will be assessed using a clinical trial protocol the Medical Research Council has developed in conjunction with the Department.

  Waiting Lists
  Mr. Anthony D. Wright
  To ask the Secretary of State for Health what changes there have been to NHS waiting list times for residents of Great Yarmouth in the last seven years. [186703]

  Dr. Ladyman
  The changes to national health service waiting times for the residents of Great Yarmouth over the past seven years, the latest data available, are shown in the following table.

  Count of elective in-year admissions (waiting list and booked cases) with mean and median time waited, 1996–97 to 2002–03 primary care trust (PCT) code (PCT of residence) = 5GT (Great Yarmouth)–NHS hospitals, England

  In-year admissions

  Days Mean time waited

  Median time waited

  1996–97

  10,171

  70

  28

  1997–98

  9,933

  78

  28

  1998–99

  10,280

  79

  33

  1999–2000

  9,792

  68

  31

  2000–01

  9,563

  71

  33

  2001–02

  7,501

  78

  33

  2002–03

  8,211

  93

  36

  Note:

  1. An in-year admission is the first period of in-patient care under one consultant within one healthcare provider, excluding admissions beginning before 1 April at the start of the datayear. Periods of care ongoing at the end of the datayear (unfinished admission episodes) are included. Please note that admissions do not represent the number of in-patients, as a person may have more than one admission within the year.

  2. Figures have not been adjusted for shortfalls in data (i.e. the data are ungrossed).

  3. Time waited statistics from hospital episode statistics (HES) are not the same as the published waiting list statistics. HES provides counts and time waited for all patients admitted to hospital within a given period whereas the published waiting list statistics count those waiting for treatment on a specific date and how long they have been on the waiting list. Also, HES calculates the time waited as the difference between the admission and decision to admit dates. Unlike published waiting list statistics, this is not adjusted for self-deferrals or periods of medical/social suspension.

  Source:

  HES, Department of Health.

CONSTITUTIONAL AFFAIRS

  Magistrates Court Cells (Aberystwyth)
  Mr. Simon Thomas
  To ask the Parliamentary Secretary, Department for Constitutional Affairs what the minimum health and safety requirements are for magistrates court cells. [187076]

  Mr. Leslie
  Health and safety requirements of cell areas are not measured in a way that an overall minimum standard could be determined.

  Each aspect of a cell area (e.g the custody suite, interview rooms and vehicle access) is individually assessed and rated. From this an over all risk assessment is compiled and the consequent recommendations are made.

  Mr. Simon Thomas
  To ask the Parliamentary Secretary, Department for Constitutional Affairs what the basis was for the decision to stop using Aberystwyth Magistrates Court cells for the holding of offenders; and if he will make a statement. [187077]

  Mr. Leslie
  Aberystwyth Magistrates Court is still used for custodial cases, but on a limited basis (for cases for trial or sentence only).

  Following the Prisoner Escort and Custody Services (PECS) audit on 2 June 2004, an agreement was reached to keep the cells open. This was on the basis that occupation of the custody accommodation can be controlled in respect of numbers and length of time held and that potential risk can be assessed in each individual case.

  Mr. Simon Thomas
  To ask the Parliamentary Secretary, Department for Constitutional Affairs what estimate has been made of the cost of bringing the cells in Aberystwyth Magistrates Court up to the health and safety standard required to allow them to be used to hold offenders. [187078]

  Mr. Leslie
  Aberystwyth Magistrates Court is still used for custodial cases, but on a limited basis (for cases for trial or sentence only).

  The local authority has responsibility for Aberystwyth Magistrates Court until is transferred to my Department on 1 April 2005. An assessment of the cell area has been made by the Magistrates Court Committee, which concluded that the cell area could not be adapted to the extent that it would meet all the standards. This is due to structural issues, which prevent the required level of work. Consequently, no estimate has been prepared.

  My Department is currently considering proposals to provide alternative facilities in the Aberystwyth area.

EDUCATION AND SKILLS

  University Examinations
  Mr. Luff
  To ask the Secretary of State for Education and Skills what recent assessment he has made of the integrity of the results of university examinations. [187706]
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  Mr. Charles Clarke
  The Department has made no such assessment. As autonomous, independent bodies, universities are responsible for ensuring the integrity of their assessment processes and outcomes. Institutions are assisted in this by guidance from the Quality Assurance Agency, and by independent external examiners who verify the standards of assessments and of the results achieved by students. The Quality Assurance Agency audits the management of quality in universities, and from this year onwards, the judgments of External Examiners will be published.

  School Security
  Mr. Wiggin
  To ask the Secretary of State for Education and Skills, if he will make a statement on security in schools. [187707]

  Margaret Hodge
  Schools should be both secure and open for community use. Balancing these needs can be difficult, so we issued guidance with the Home Office to advise schools and local authorities on how to deal with intruders and prevent intrusion in the first place. The Government also provided funds—£10 million in 2002–03—and evaluation of that programme shows schools are improving their security and getting the balance right.

  Education Maintenance Allowances
  Mrs. Betty Williams
  To ask the Secretary of State for Education and Skills, what assessment he has made of the take-up of education maintenance allowances. [187708]

  Mr. Ivan Lewis
  At the start of September, around 150,000 young people in England had already applied for an EMA. This already represents around 50 per cent. of young people eligible for the scheme and we expect more applications over the coming weeks. The EMA scheme has proved its effectiveness in the pilots we have run, and it will allow young people from poorer households to succeed in a wide variety of vocational and academic courses.

  School Sport
  Mr. Love
  To ask the Secretary of State for Education and Skills what plans he has to increase participation in sport in schools. [187712]

  Mr. Stephen Twigg
  The Government are investing over £1 billion in England to transform school sport. This is delivering an ambitious Public Service Agreement target to increase the percentage of 5–16 year olds who spend a minimum of two hours each week on high quality PE and school sport to 75 per cent. by 2006 and to 85 per cent. by 2008.

  Children's Commissioner
  Julie Morgan
  To ask the Secretary of State for Education and Skills what mechanisms will be put in place for the Children's Commissioner to liaise with the Children's Commissioners in Wales, Scotland and Northern Ireland. [187713]

  Margaret Hodge
  I hope that the four United Kingdom Commissioners will draw up their own cooperation arrangements so as best to serve the children
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  for which they are responsible. We are currently examining across Government how the Children Bill could best enable or assist them to do this. To this end, I have arranged to meet colleagues from Northern Ireland, Scotland and Wales next week.

  Bullying
  Norman Baker
  To ask the Secretary of State for Education and Skills what steps he is taking to tackle bullying in schools. [187710]

  Mr. Ivan Lewis
  We take all bullying seriously and attach great importance to tackling it.

  In November 2003, I launched the "Make The Difference" campaign at the first of a programme of conferences for headteachers. The campaign includes a public information film, "Tell Someone", to encourage children who are being bullied to tell someone and the Anti-Bullying Charter for Schools. We have also funded the Anti-Bullying Alliance to maintain the momentum of the campaign.

  The Anti-Bullying Alliance will:
  work with teachers, schools and local education authorities to promote anti-bullying best practice across all schools, including the use of peer support schemes;
  develop innovative, practical approaches to tackling bullying, including the modern menace of bullying by text messaging, email and Internet chat;
  provide support for parents in severe cases of bullying, including referrals across the Alliance's regional and national network, where all other avenues to resolve the bullying have been exhausted;
  develop and oversee anti-bullying resources and information for schools and parents, including an anti-bullying website containing practical support and advice; and
  run an annual national anti-bullying week of events and activities to teach young people that all forms of bullying are wrong and promote active ways in which to show no tolerance to it.

  Capital Funding
  Mr. Hopkins
  To ask the Secretary of State for Education and Skills pursuant to the Answer given on 14 June 2004,Official Report, column 771W, on Building Schools for the Future, what specific action his Department has taken to encourage local authorities and local learning and skills councils to consult each other in formulating their proposals and plans for priority capital funding. [187037]

  Mr. Miliband
  The Department encourages local authorities and local Learning and Skills Councils to consult each other in formulating their plans for capital investment. Specific action includes: guidance to local Learning and Skills Councils and further education providers requires them to discuss their plans with the relevant local authority; guidance to local authorities on asset management planning requires consultation with the relevant local Learning and Skills Council; guidance on the Building Schools for the Future (BSF) programme requires proposals for BSF projects to include the local Learning and Skills Councils, among others, as active partners; guidance for local Learning and Skills Councils on taking forward Strategic Area Reviews of post-16 provision requires that local authorities must be represented on their stakeholder 1370W
  groups and actively involved in carrying out the reviews. In addition, the Department and the Learning and Skills Council are looking at ways to forge closer links between the Council and the new Partnerships for Schools (PfS) body, set up to assist the delivery of the new Building Schools for the Future programme.

  Mr. Hopkins
  To ask the Secretary of State for Education and Skills pursuant to the Answer given on 14 June 2004,Official Report, column 771W, on Building Schools for the Future, what specific action his Department has taken in conjunction with the Learning and Skills Council to join up capital investment for schools, sixth-form colleges and further education. [187038]

  Mr. Miliband
  Where proposals brought forward under the Building Schools for the Future programme include a local vision for the delivery of 14–19 education in association with a further education institution requiring capital investment, the Learning and Skills Council will take this factor into account in determining its priorities for capital support. This is subject to overall pressures and funding constraints. In addition, the Department and the Learning and Skills Council are in discussion concerning a proposed new joint 16–19 capital budget for schools and further education establishments.

  Departmental Expenditure
  Mr. Hoban
  To ask the Secretary of State for Education and Skills how much his Department spent in the last year for which figures are available on(a) refurbishment and (b) office furniture. [186684]

  Mr. Stephen Twigg
  During 2003–04 my Department has spent £2,106,720 on refurbishment and £2,122,428 on office furniture.

  Mr. Hoban
  To ask the Secretary of State for Education and Skills what the cost of satellite and cable subscriptions in his Department's buildings was in the last year for which figures are available; and if he will list the premium channels that his Department subscribes to. [186677]

  Mr. Stephen Twigg
  During 2003–04 the cost to my Department for satellite subscriptions was approximately £5,700. Apart from receiving the Parliamentary Broadcast Package via the House of Commons, which is for use by Ministers and their Private Offices, my Department does not subscribe to any premium channels.

  Further Education Colleges
  Mr. Hopkins
  To ask the Secretary of State for Education and Skills what proportion of provision in further education colleges, measured by(a) hours taught and (b) funding allocated, was graded 4 or 5 in Ofsted inspections during (i) 2003 and (ii) 2004 to date. [187074]

  Mr. Ivan Lewis
  These matters are for Ofsted. HM Chief Inspector, David Bell, will write to my hon. Friend and place a copy of his letter in the Library.

  School Meals
  Helen Jones
  To ask the Secretary of State for Education and Skills what guidance he has issued on the role of school governors in ensuring the provision of healthy school meals. [187709]

  Mr. Stephen Twigg
  On 6 September the Secretary of State launched the Healthy Liking Blueprint for schools. The blueprint, and supporting website (www.teachernet.gov.uk/healthyliving), bring together all the elements that contribute to a whole school approach to food and nutrition: the curriculum; food/meals available; pupil views; partnership working; the role of heads, governors and other staff. In addition to the blueprint the Food Standards Agency is working closely with the National Governors' Council to encourage school governors to promote a high quality approach to food and nutrition in their schools.

  School Sixth Forms
  Mr. Hopkins
  To ask the Secretary of State for Education and Skills how much funding was provided by each local Learning and Skills Council to school sixth forms in(a) 2002–03 and (b) 2003–04; and how many students each of these school sixth forms has on its roll. [187073]

  Mr. Charles Clarke
  The Department allocates funds for the provision of education in school sixth forms to the Learning and Skills Council (LSC). Information about these allocations at local level is not collected by the Department. This is an operational matter and the responsibility of the LSC. Mark Haysom, the LSC's Chief Executive, will write to my hon. Friend with this information, including the pupil number data and a copy of his reply will be placed in the Library.

  Specialist School Status
  Andrew Selous
  To ask the Secretary of State for Education and Skills if he will make a statement on the eligibility criteria for specialist school status. [187703]

  Mr. Charles Clarke
  All maintained secondary schools in England are eligible to apply for specialist schools status. We lifted the funding cap in 2002 and expect all secondary schools to become specialist as and when they are ready. Specialist schools now account for 62 per cent. of maintained secondary schools. The eligibility criteria for specialist schools has been placed in the library.

  Vocational Education
  Ann Winterton
  What recent meetings he has had with employers to discuss vocational education. [187711]

  Mr. Ivan Lewis
  I hold regular meetings with the CBI, the TUC and educationists about skills and vocational education. We have established a new Skills Alliance which Charles Clarke chairs jointly with Patricia Hewitt. This Skills Alliance brings Ministers from four Departments of State, the CBI, the TUC and Small Business Council together on a twice yearly basis. I also meet regularly with representatives of the 19 employer led Sector Skills Councils. I visit individual employers to discuss their workforce development plans and needs.

WORK AND PENSIONS

  Employment Zones
  Mr. George Osborne
  To ask the Secretary of State for Work and Pensions whether he plans to extend the number of Employment Zones. [186424]

  Jane Kennedy
  There are no current plans to extend the number of Employment Zones.

  Housing and Council Tax Benefit
  Mr. Webb
  To ask the Secretary of State for Work and Pensions how many households containing a person aged 60 years or over were in receipt of council tax benefit in each of the last 12 months. [187164]

  Mr. Pond
  The information is not available in the format requested. At May 2002 the number of council tax benefit recipients aged 60 years or over in Great Britain was 2,363,000.Notes:

  1. The figure is based on a 1 per cent. sample and therefore subject to a degree of sampling variation.

  2. The figure is rounded to the nearest thousand.

  3. Council tax benefit totals exclude any Second Adult Rebate cases.

  4. The figure refers to cases where the claimant and/or partner is aged 60 or over.

  5. The figure refers to benefit units, which might be a single person, couple or family.

  Source:
  Housing Benefit and Council Tax Benefit Management Information System, Annual 1 per cent. sample, taken in May 2002.

  Mr. Webb
  To ask the Secretary of State for Work and Pensions what proportion of local authorities have produced a written take-up strategy of a sufficient standard to satisfy his Department's performance standard on take-up of housing and council tax benefits; and which local authorities have failed to meet this standard. [187163]

  Mr. Pond
  The Performance Standards for housing benefit and council tax benefit set out the standards of performance the Department expects local authorities to achieve over a period of time. Self-assessment is voluntary so local authorities are not required to report performance against them to the Department, although we encourage them to do so. Of the 64 local authorities who have so far supplied information about their performance, 49 (77 per cent.) have a written take-up strategy which meets the standard. Insufficient data are available to provide a comprehensive list of all the local authorities who do not meet this standard.

  Long-term Unemployed (Over-50s)
  Mr. Woodward
  To ask the Secretary of State for Work and Pensions what estimate the Government have made of the cost to the Exchequer of men and women over the age of 50 who are long-term unemployed in each year since 1997. [186937]

  Jane Kennedy
  Figures on the direct benefit costs for long term unemployed people aged over 50 are in the following table. Official estimates are not available for wider aspects of cost such as tax payments forgone.
  1373W

  Benefit expenditure on men and women over the age of 50 who are long term unemployed1

  £ million

  1997–98

  405

  1998–99

  378

  1999–00

  333

  2000–01

  316

  2001–02

  239

  2002–03

  235

  2003–042

  232

  Notes:

  1Figures include expenditure on Jobseeker's Allowance (Income Based), and on Housing Benefit and Council Tax Benefit paid with JSA(IB). Figures are expressed in nominal terms and are rounded to the nearest million.

  2 Estimated outturn.

  Source:

  Figures are based on four quarterly averages from DWP IAD Information Centre. "Long term unemployed" has been taken to mean greater than or equal to 52 weeks.

  Pensioners
  Mr. Willetts
  To ask the Secretary of State for Work and Pensions how many pensioners in receipt of pension credit also receive(a) housing benefit, (b) council tax benefit and (c) other means-tested benefits. [186780]

  Mr. Pond
  The most recent housing benefit/council tax benefit data analysed by age and reference to other benefits is at May 2002, which predates the introduction of pension credit.

  With the introduction of pension credit, around 2 million pensioner households will now qualify for more help, or qualify for help for the first time, with their council tax and/or rent.

  Mr. Willetts
  To ask the Secretary of State for Work and Pensions what the rate is at which a pensioner with average housing costs and council tax costs would have(a) housing benefit and (b) council tax benefit withdrawn if they were in receipt of pension credit and had a total gross weekly income of (i)£80, (ii)£100, (iii)£120, (iv)£140, (v)£160, (vi)£180, (vii)£200 and (viii)other incomes as are available. [187343]

  Mr. Pond
  The answer is in the table.

  Rates of withdrawal of housing and council tax benefits for pension credit recipients with varying incomes

  percentage

  Gross weekly income

  Net weekly income

  Housing benefit withdrawal rate

  Council tax benefit withdrawal rate

  £80.00

  £80.00

  0

  0

  £100.00

  £98.14

  0

  0

  £120.00

  £113.94

  39

  12

  £140.00

  £128.55

  39

  12

  £160.00

  £141.95

  39

  12

  £180.00

  £155.35

  65

  20

  £200.00

  £168.75

  65

  20

  £220.00

  £182.15

  65

  n/a

  £240.00

  £195.55

  n/a

  n/a

  Notes:

  1. An "average pensioner" has been interpreted as being single, aged 65 or over with no dependents, no severe disabilities and no additional income or costs (such as annuities, trust fund payments, mortgage interest payments, etc.).

  1374W

  2. In order to make the above calculation, it has been assumed that rent and council tax levels for the average pensioner are £44 and £12 respectively. These are the average amounts used in the DWP Tax Benefit Model Tables.

  3. Withdrawal rates do not include the impact of tax i.e. tax withdrawal is not included in total withdrawal rate figures.

  4. N/a indicates there is no title to this benefit at, or above, this level of income.

  Departmental Staff
  David Taylor
  To ask the Secretary of State for Work and Pensions what guidance is available for assisting employees suffering from(a) stress and (b) depression from the human resources department of his Department. [187165]

  Maria Eagle
  Comprehensive advice surrounding managing attendance in the DWP is contained in the Department and You—the Corporate HR guidance. This is accessible via the Department's intranet and contains practical guidance for the Departments human resources (HR) practitioners and line managers to follow.

  In cases of stress or depression affecting employees, HR is able to offer a range of guidance to help individuals. This includes referral to our occupational health service and/or to our employee assistance service. Both providers offer a professional service and would discuss, separately with individuals affected by stress or depression ways in which both conditions might be addressed and overcome. The Department has recently launched a Well-being at work policy to offer assistance to people affected by stress.

FOREIGN AND COMMONWEALTH AFFAIRS

  British Culture
  Mr. Rosindell
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps the Government are taking to promote British culture. [186952]

  Mr. Mullin
  The British Council is our principal agent for promoting British culture overseas. It aims to promote the UK's creative ideas and achievements through a range of programmes in the fields of arts, science and education.

  The Foreign and Commonwealth Office also funds the BBC World Service and the Chevening Scholarship Programme, both of which play a part in promoting British cultures and values.

  Burma
  Dr. Pugh
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether(a) the British ambassador to Burma and (b) other British embassy staff in Burma have attended events in Burma hosted by Orient Express or its regional representatives. [187229]

  Mr. Mike O'Brien
  We have no record of the British ambassador to Burma, nor other British embassy staff in Burma, attending any events hosted by Orient Express or its regional representatives in 2003 or 2004.

  Consular Services (Employment)
  Lynne Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs what key jobs in consular services(a) are vacant and (b) have been unfilled for more than three months in the last 12 months; and if he will make a statement on the reasons for difficulties in filling key jobs. [187397]

  Mr. Mullin
  There are no key consular jobs unfilled in the Foreign and Commonwealth Office's (FCO) Consular Directorate at the present time. To provide information on possible vacant consular jobs overseas could be provided only at disproportionate costs. However, the FCO's Human Resources Directorate endeavours to ensure that UK-based consular officer replacements arrive to coincide with UK-based departures from posts overseas. When this is not possible it is Consular and Human Resources Directorates' policy to ensure that temporary cover is provided during the interim period. We also endeavour to provide temporary cover for key locally engaged consular slots.

  During a consular emergency overseas Rapid Deployment Teams are sent out to assist the post(s) concerned. The most recent deployment was to Salzburg following a serious coach crash in August.

  Conventional Forces in Europe Treaty
  Harry Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is the latest position in respect of the adapted Conventional Forces in Europe Treaty; which countries have signed and ratified it; when he expects it to come into force; and if he will make a statement. [187131]

  Mr. MacShane
  The Adapted Conventional Forces in Europe Treaty (CFE) was signed 1)} the following 30 States Party at the OSCE Summit in Istanbul on 19 November 1999; Armenia, Azerbaijan, Belarus. Belgium, Bulgaria, Canada, Czech Republic, Denmark, France, Georgia, Germany, Greece, Hungary, Iceland, Italy, Kazakhstan, Luxembourg, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Slovak Republic. Spain, Turkey, Ukraine, United Kingdom and the United States. Of those States Party only Belarus, Kazakhstan and Ukraine have ratified the Adapted CFE Treaty. The Russian Duma voted to ratify the Adapted CFE Treaty on 25 June 2004, but to date documents of ratification have not been submitted by the Russian Federation to the Treaty Depository (the Netherlands).

  The Adapted CFE Treaty cannot come into force until all 30 signatories have ratified it. We, along with NATO allies, are fully committed to the entry into force of the Adapted CFE Treaty. But we will not ratify until the Russian Federation has met the commitments it made, when the Treaty was signed, concerning Russian armed forces in Georgia and Moldova. Once those commitments have been met we would hope for a speedy ratification and subsequent entry into force of the Adapted CFE Treaty.

  Cuba
  Mr. Drew
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations 1376W
  he has made to the Cuban authorities concerning their treatment of (a) Dr. Oscar Elias Biscet and (b) Jorge Luis Garcia Pérez (Antúnez). [185768]

  Mr. Rammell
  We regularly raise human rights cases—including these two—with the Cuban authorities in London and in Havana. We have been monitoring their situation and health, and embassy staff maintain close contacts with local human rights groups involved in their cases and with friends and family of the individuals. Dr. Biscet visited the British embassy in November 2002 shortly before his arrest, and our embassy staff last met his wife, Elsa Morejon, on 14 July. We are aware of considerable public interest in the fate of both prisoners.

  UK policy on Cuba is governed by the EU Common Position, which has human rights enshrined as its key principle and which was reaffirmed on 14 June. The EU regularly issues statements condemning the imprisonment of human rights activists and other political prisoners. Mostly recently, on 15 July 2004, we again called on the Cuban Government to release all political prisoners.

  British Indian Ocean Territory
  Mr. Salmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs how the government of the British Indian Ocean territory is funded; and if he will make a statement. [187614]

  Mr. Rammell
  The government of the British Indian Ocean territory is funded mainly by the sale of fishing licences, although there is also a small amount of revenue from the sale of stamps, fines and related charges, and administrative fees.

  Mr. Salmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs what(a) monetary payments and (b) monetary discounts were received by the UK Government from the US Administration or affiliated bodies in return for the agreement governing the joint use of Diego Garcia by the two countries in (i) 1966 and (ii)1976; and if he will make a statement. [187611]

  Mr. Rammell
  The United States Government agreed in 1966 to contribute half of the total cost, up to a limit of £5 million, of setting up the British Indian Ocean Territory by waiving to that extent research and development surcharges for the United Kingdom purchase of the Polaris missile system. No payments or discounts were made in respect of the establishment of the United States Defence Facility in Diego Garcia in 1976.

  Mr. Salmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will place a copy of the US Administration's Natural Resources Management Plan for Diego Garcia in the Library. [187612]

  Mr. Rammell
  The US Natural Resources Management Plan for Diego Garcia, currently under revision by the US authorities, is not a public document.

  Mr. Salmond
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans have been made to allow tourists travelling with the Wexas travel company to visit the waters of the Chagos Archipelago; and if he will make a statement. [187609]
  1377W
  Mr. Rammell
  A visit to some of the outer islands of the British Indian Ocean Territory has been arranged under the auspices of Wexas International primarily in order to monitor the natural environment of the islands.

  Drug-related Arrests (Overseas)
  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many British citizens have been detained overseas for drug-related offences in each of the last five years. [187592]

  Mr. Mullin
  According to consular records the number of British citizens detained overseas for drug-related offences in the following years was:

  British citizens detained

  1999–2000

  1,156

  2000–01

  1,054

  2001–02

  1,268

  We then ceased to collect this information in this way, and now collect data each year on the total number of those in prison for drugs offences. The totals are:

  On 31 March

  Total number imprisoned

  2003

  1,290

  2004

  1,312

  These figures therefore do not refer only to new detentions.

  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many British citizens were detained overseas for drug related offences in the last year for which figures are available, broken down by country. [187593]

  Mr. Mullin
  As at 31 March 2004, there were 1,312 British Nationals detained overseas for drug related offences, who had requested consular assistance. The following table breaks down this figure by country in alphabetical order:

  Country

  Drugs

  Antigua and Barbuda

  10

  Argentina

  4

  Australia

  60

  Austria

  4

  Bahamas

  2

  Barbados

  21

  Belgium

  16

  Brazil

  31

  Canada

  3

  Chile

  1

  China

  8

  Colombia

  7

  Costa Rica

  4

  Cyprus

  3

  Denmark

  5

  Dominican Republic

  3

  Ecuador

  8

  Egypt

  3

  Finland

  1

  France

  122

  Gambia

  2

  Germany

  29

  1378W

  Ghana

  4

  Greece

  4

  Grenada

  9

  Guyana

  9

  India

  24

  Indonesia

  6

  Ireland

  8

  Israel

  1

  Italy

  16

  Jamaica

  138

  Japan

  40

  Kuwait

  2

  Madagascar

  1

  Malaysia

  2

  Malta

  4

  Mauritius

  2

  Mexico

  5

  Morocco

  3

  Nepal

  1

  Netherlands

  35

  New Zealand

  8

  Nicaragua

  1

  Norway

  20

  Oman

  1

  Pakistan

  6

  Panama

  7

  Peru

  23

  Philippines

  14

  Portugal

  8

  St. Lucia

  7

  St. Vincent

  2

  Saudi Arabia

  1

  Singapore

  1

  South Africa

  9

  Spain

  138

  Surinam

  3

  Swaziland

  1

  Sweden

  13

  Switzerland

  3

  Taiwan

  25

  Thailand

  27

  Trinidad and Tobago

  32

  Turkey

  4

  United Arab Emirates

  18

  USA

  255

  Venezuela

  24

  Grand Total

  1,312

  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs what the(a) age group and (b) sex was of each British person detained overseas for drug-related offences in the last year for which figures are available. [187594]

  Mr. Mullin
  The Foreign and Commonwealth Office does not currently keep figures according to the age and sex of British Nationals detained for drug-related offences overseas. But the total number of British Nationals detained overseas for drug related offences, who have requested consular assistance was, as at 31 March 2004, 1312.

  Equatorial Guinea
  Angus Robertson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has(a) received and (b) made concerning the (i) economic and (ii) political situation in Equatorial Guinea since 2002; and if he will make a statement. [187275]
  1379W
  Mr. Mullin
  We receive occasional requests for information on the political and economic climate in Equatorial Guinea from UK companies interested in investing there and from members of the public. We have a regular dialogue with the Government of Equatorial Guinea on economic, governance and human rights issues. We also discuss the situation there with our EU partners and the US.

  Iraq
  Joan Ruddock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what voting system will be used for the parliamentary elections in Iraq. [187617]

  Mr. Rammell
  The upcoming election for an Iraqi Transitional National Assembly will be based on a Single Constituency Proportional Representation Closed List system. The whole of Iraq will be a constituency and voters will not necessarily need to register in their home town or area. The choice of system for subsequent elections will be for the Iraqis to decide.

  Israel
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Israeli Government concerning the deaths of children at the entrance to the Balata refugee camp in July. [187463]

  Mr. Rammell
  Israeli Defence Force action which results in the death or injury of children is deeply disturbing. We have frequently called on the Israeli Government to stop such action, and continue to raise our concerns at the highest level. We have not made specific representations concerning the deaths at Balata refugee camp in July.

  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what action he proposes to take in response to the ruling of the International Court of Justice on the separation barrier erected by Israel. [187498]

  Mr. Rammell
  On 20 July the UK, along with our EU partners, voted in favour of UN General Assembly resolution ES-10/15, acknowledging the ICJ Opinion and calling on Israel to re-route the barrier away from occupied land.

  While we recognise Israel's legitimate security concerns, it must act in accordance with international law. We continue to press the Israeli Government to reroute the barrier away from occupied land, in line with international law.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Israeli Government concerning the attack on a UN convoy delivering aid to Beit Hanoun in the Gaza Strip on 15 July. [187515]

  Mr. Rammell
  As I said in my reply to the hon. Member on 22 July 2004,Official Report, column 551W, although we have not made specific representations regarding the 15 July incident, we have urged the Government of Israel to ensure aid agencies are able to provide humanitarian assistance to the Palestinian population.
  1380W
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Israeli Government concerning killings of and injuries to Palestinians in the Gaza town of Beit Hanoun. [187516]

  Mr. Rammell
  We are extremely concerned at the casualties and at the humanitarian impact of the Israeli Defence Force actions in Beit Hanoun.

  Officials in Tel Aviv have visited the areas affected and raised with the IDF both the action taken in July and the continuing closure of Beit Hanoun.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Israeli Government regarding the treatment of Palestinian prisoners by the Israeli authorities. [187562]

  Mr. Rammell
  On 1 September officials in Tel Aviv raised with the Israeli Prison Service (IPS) a number of our concerns about the demands that inspired the Palestinian prisoners' hunger strike. These included: that Israel should meet its obligations towards prisoners; that prisoners, including during the hunger strike, should be treated with dignity; and a failure to separate juvenile and adult prisoners, as provided for in The Convention on The Rights of The Child.

  On 2 September the IPS informed our Tel Aviv Embassy that the hunger strike had ended.

  Richard Burden
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he made to the Government of the USA in July and August about the USA's interpretation of the Road Map in respect of the expansion of settlements in the west bank announced by Israel; and if he will make a statement. [187576]

  Mr. Rammell
  My right hon. Friend the Foreign Secretary discussed a number of the middle east peace process issues with Condoleeza Rice, the US National Security Adviser, on 16 August, including Israel's announcements of expansion of settlements. Officials have also discussed the issue in Washington.

  Our view remains that Israel should freeze all settlement activity, including the natural growth of existing settlements, and dismantle all outposts built since 2001, in accordance with phase one of the roadmap.

  Richard Burden
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he made to the Government of Israel during July and August in respect of Israel's announcement that it is to proceed with the further expansion of settlements in the West Bank. [187577]

  Mr. Rammell
  On 2 August my noble Friend the Baroness Symons of Vernham Dean issued a strong statement of concern following reports that Israel had approved further construction in the Ma'ale Adumim settlement calling on Israel to freeze all settlement activity, including natural growth, and to dismantle all outposts built since 2001, in line with its Roadmap commitments. A copy of the statement is available on the Foreign and Commonwealth Office wet site: www.fco.gov.uk/policy/news/press-releases.
  1381W
  On 18 August our Ambassador in Tel Aviv raised the issue with the Acting Israeli Minister for Construction. Tzipi Livni.

  We continue to press the Israeli Government to reconsider their decision to issue tenders for new homes in a number of West Bank settlements, including Ma'ale Adumim.

  Richard Burden
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with each of the Quartet partners during July and August about Israel's announcement that it intends to expand settlements in the west bank; and if he will make a statement on the options for action by the Quartet in response. [187575]

  Mr. Rammell
  My right hon. Friend the Foreign Secretary has discussed Israel's recent announcements on settlement expansion with both the US and EU partners.

  The Quartet (UN, US, EU, Russia) continues to play a vital role in leading the international community's involvement in the Middle East peace process. Through the EU, the UK will seek to ensure the Quartet's next meeting, scheduled to take place in New York on 23 September, continues to provide leadership in the effort to stimulate positive steps from both sides.

  Moldova
  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent efforts he has made to assist Russia to withdraw its troops and ammunition from the Republic of Moldova. [187739]

  Mr. MacShane
  We continue to encourage the Russian Federation to withdraw forces and ammunition from Moldova in line with the commitments Russia made at the OSCE Summit in Istanbul in November 1999. We, along with NATO allies, will not ratify the Adapted Conventional Forces in Europe Treaty until the Russian Federation has met their commitments concerning Moldova, and other commitments concerning Georgia made at the same OSCE Summit.

  UK military personnel are on a standby roster as part of the OSCE Monitoring Mission, to verify the removal of Russian ammunition from Moldova. But only one trainload of ammunition has been removed in 2004 and an estimated 35–40 trainloads of Russian ammunition remains in Moldova. We hope that Russia will accelerate the withdrawal process and will continue to offer our support to verify the removal of ammunition from Moldova.

  Pakistan
  Mr. Bill Wiggin
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on(a) the UK's diplomatic relations with Pakistan and (b) the state of democracy in Pakistan. [186749]

  Mr. Mike O'Brien
  The UK enjoys a close and warm relationship with Pakistan which is strengthened by our historical links, and by our having more than 800,000 British Citizens of Pakistani origin. Pakistan is a key ally 1382W
  in the global war against terrorism and the UK continues to work closely with the Government of Pakistan to counter this threat.

  We engage with Pakistan at all levels on a wide variety of subjects including defence, drugs, judicial cooperation, migration, and economic and development issues. The UK and Pakistan have formalised some of these engagements through the Joint Judicial Cooperation Working Group and the Defence Cooperation Forum. During the current three year period (2003/04—2005/06) we expect to give over £200 million in aid to Pakistan. There have been several high level visits to and from the UK.

  We warmly welcome the ongoing progress in Pakistan's transition to democracy. The decision by the Commonwealth Ministerial Action Group in May this year to readmit Pakistan to the Councils of the Commonwealth was taken in recognition of the progress made in restoring democratic principles. The recent election of Shaukat Aziz to the National Assembly and his subsequent confirmation as Prime Minister is a further positive development. We look forward to working closely with the new Prime Minister of Pakistan and his government.

  Qualified Majority Voting
  Mr. Heathcoat-Amory
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether provisions concerning structured co-operation within the Common Foreign and Security Policy are to be decided by qualified majority voting under the European constitution. [187035]

  Mr. MacShane
  The voting procedures for Structured Cooperation are laid out in article III-213 of the constitutional treaty. Qualified Majority Voting in Structured Cooperation is only for procedural issues—how member states join and leave the group. The text makes clear that unanimity of participating states will be required for all other decisions.

  Mr. Heathcoal-Amory
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether intellectual property or foreign direct investment moves from unanimity under article 133 TEC to qualified majority voting under article III-217(1) and III-217(2) of the European Constitution. [187036]

  Mr. MacShane
  Article 133 TEC established the Common Commercial Policy (CCP), allowing the Community to make trade agreements on behalf of the member states, covering trade in goods, services, and the commercial aspects of intellectual policy. Apart from a limited range of exceptions, decisions under it are taken by QMV.

  Its successor in the European constitution, III-217, allows the EU also to make agreements covering foreign direct investment, and narrows slightly the scope of the exceptions from QMV covering intellectual property and trade in services.

  The Government are content with this. They made clear in the White Paper published in September 2003 (Cm 5934) that they favoured moves to reduce barriers in international trade, provided that this did not lead to an increase in the internal powers of the Union, and

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  that, as now, voting arrangements for such agreements mirrored those required for the adoption of equivalent rules internally. Both principles are set out in the treaty. The latter principle is set out at III-217(4). III-217(6) makes clear that the CCP does not affect the division of competences between the Union and the member states, and cannot in itself lead to legislative or regulatory harmonisation among the member states.

  Sudan
  Angus Robertson
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) what assessment his Department has made of Amnesty International's report of 19 July entitled "Darfur: Rape as a Weapon of War: sexual violence and its consequences"; and if he will make a statement; [187270]

  (2) what assessment his Department has made of the charge of culpability levelled against the Government of Sudan by Amnesty International's report of 19 July entitled, "Darfur: Rape as a Weapon of War: sexual violence and its consequences"; and if he will make a statement. [187271]

  Mr. Mullin
  We read with grave concern reports by Amnesty International of rape being used as an apparently deliberate tactic in the Darfur region. Medecins Sans Frontieres, the UN High Commission for Refugees and the UN Office for the Co-ordination of Humanitarian Affairs have also reported cases of rape. These reports underline the urgent need to improve the security situation in the region, in order to prevent these abuses from continuing.

  We have also made clear that those responsible for such atrocities must be brought to justice. UN human rights monitors, whose deployment we helped finance, are now in Darfur investigating allegations of human rights abuses, including rape. We have made clear to the Government of Sudan that they must do all they can to facilitate the work of these monitors. The Government of Sudan have established three committees on rape allegations. We will follow their investigations closely During his recent visit, my right hon. Friend the Foreign Secretary also secured the agreement of the Sudanese Government to grant Amnesty International and Human Rights Watch visas to visit Darfur.

  Angus Robertson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what reports he has received regarding the Sudanese Air Force's activities in Darfur; and if he will make a statement. [187272]

  Mr. Mullin
  My right hon. Friend the Foreign Secretary raised this issue with the Government of Sudan during his visit to Khartoum in August. He also raised it with African Union monitors in Darfur who said that they had no evidence of air strikes by the Government of Sudan air force since June. We will continue to monitor the situation and to press all sides to respect the ceasefire.

  Taiwan
  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to 1384W
  support Taiwan as (a) a member and (b) an observer of the (i) World Health Organisation and (c) World Health Assembly; and if he will make a statement. [187600]

  Mr. Rammell
  There are difficulties over Taiwanese involvement in a UN forum where statehood is a prerequisite for full membership. We would consider with our EU partners any proposals for Taiwanese involvement in the World Health Organisation which took account of these difficulties.

  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to promote within the EU Taiwan's case for deeper involvement in the(a) World Health Organisation and (b) World Health Assembly. [187601]

  Mr. Rammell
  Ireland, speaking on behalf of all EU Member States at this year's World Health Association, expressed the EU's hope that the WHO Secretariat, and others organising technical meetings and working groups under WHO auspices, would show flexibility in finding mechanisms to allow Taiwanese medical and public health officials to participate in these activities. The Government fully endorse this view and will continue to look at ideas for finding that flexibility.

  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs what his policy is on the efforts of Taiwan to play a constructive and appropriate role in(a) international health affairs and (b) international humanitarian issues; and if he will make a statement. [187602]

  Mr. Rammell
  I refer the hon. Member to the reply I gave to him today (UIN 187601).

  The Government welcomes Taiwanese assistance in international humanitarian issues through appropriate channels and in keeping with Taiwan's status.

  Teodoro Obiang Nguema
  Angus Robertson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with his counterparts in(a) Spain, (b) the United States of America and (c) Equatorial Guinea, concerning allegations of corruption and money laundering levelled against Teodoro Obiang Nguema and his family; and if he will make a statement. [187274]

  Mr. Mullin
  We are aware of the allegations against President Obiang and his family. We take all such allegations seriously and have raised our concerns on governance with the Equatorial Guinean authorities. We discuss developments in Equatorial Guinea with a range of international partners.

  Transnistria
  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his recent efforts to find a peaceful solution to the problem of the region of Transnistria with reference to his actions within(a) the EU, (b) NATO and (c) the OSCE. [187740]

  Mr. MacShane
  We remain concerned about the situation in Transnistria, and together with EU partners continue to call on the two parties in particular the Transnistrians, to negotiate constructively and in good
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  faith. After Transnistrian moves to force the closure of Latin script schools in the region, which has raised tensions significantly, the EU imposed a travel ban on 26 August against ten individuals within the Transnistrian administration responsible for the measures. Along with our EU partners, we are supporting Organisation for Security and Cooperation in Europe mediation in the settlement talks, and continue to look for ways to bolster this support. We also regularly raise Transnistria with the other mediators, Russia and Ukraine, both bilaterally and through the EU. I raised our concerns with the Ukraine Defence Minister on 6 September.

  We want Russia to fulfil commitments made when signing the Adapted Conventional Forces in Europe (ACFE) Treaty at the OSCE Summit in Istanbul in 1999, including full withdrawal of arms and ammunition from Transnistria. or their destruction in situ, and the withdrawal of Russian forces. Together with NATO allies we have stated that we will not ratify the ACFE Treaty until the Russian Federation has met their commitments concerning Moldova and Georgia.

  Vietnam
  Angus Robertson
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) what assessment his Department has made of the treatment of the Montagnards in Vietnam; and if he will make a statement; [187260]

  (2) what representations he has made to the Government of Vietnam concerning the treatment of the Montagnards in Vietnam; and if he will make a statement. [187261]

  Mr. Mike O'Brien
  We remain concerned about the situation of the Montagnards in the Central Highlands region of Vietnam.

  We raise human rights concerns regularly with the Vietnamese Government, both bilaterally and with our EU partners. These include the problems faced by the Montagnards in the Central Highlands, particularly with regard to land and religious freedom. I raised these issues during my visit to Vietnam in March and with the President of Vietnam during his official visit to the UK in May. On the same day, my right hon. Friend the Foreign Secretary raised our concerns about human rights in Vietnam with the Vietnamese Foreign Minister.

  With our other EU partners, we participate in a regular human rights dialogue with Vietnam. The most recent meeting, attended by our ambassador in Hanoi, took place on 22 June. We raised the situation of the Montagnards at this meeting and expressed our deep concern at unrest in the Central Highlands over Easter 2004.

  We will continue to raise our concerns and press the Vietnamese Government to adhere to their obligations at every suitable opportunity.

  West Papua
  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make it his policy to urge the United Nations to instigate a1386W
  review of the UN's conduct in relation to the Act of Free Choice in West Papua in 1968–1969; and if he will make a statement. [186379]

  Mr. Rammell
  The Report of the Special Representative who oversaw the implementation of the UN backed 1969 Act of Free Choice resulting in West Papua becoming a province of Indonesia was accepted by a majority vote of the UN in November 1969.

  The British Government, together with other members of the international community, have continued to stress to the Indonesian Government at the highest level the need to implement fully the 2001 Special Autonomy law for Papua. This law allows for the establishment of a Truth and Reconciliation Committee to look at the incorporation of Papua into Indonesia in the 1960s.

INTERNATIONAL DEVELOPMENT

  Afghanistan
  Mr. Liddell-Grainger
  To ask the Secretary of State for International Development (1) if he will make a statement on the progress of reconstruction in Afghanistan. [186441]

  (2) what recent representations he has received regarding the progress of reconstruction in Afghanistan; and if he will make a statement. [186442]

  Mr. Gareth Thomas
  The Secretary of State and I continue to regularly receive representations on Afghanistan, from members of Parliament, the public and non-governmental organisations. They have reflected the priorities that people attach to the reconstruction process.

  Considerable progress has been made since the fall of the Taliban in November 2001. Over 3 million refugees have been helped to return to Afghanistan. 4.5 million children are in school this year and over 30 per cent. are girls. A vaccination campaign has led to the near eradication of polio and the immunisation of 9 million children against measles saving over 35,000 lives. Progress has also been made in economic recovery with the International Monetary Fund estimating economy growing by 30 per cent. last year.

  At the international conference in Berlin, donors pledged $8.2 billion over three years to help rebuild Afghanistan. Finance Minister Ghani said donors met Afghanistan's target for this year, pledging $4.5 billion, and covered more than two thirds of its expectations over the next three years. On October 9, the first-ever direct presidential elections in the post-Taliban country will be held. Voter registration has now closed with over 10.5 million Afghans registered (42 per cent. are women). This is hugely encouraging result, which we hope will lead to the successful conclusion of the Bonn Process.

  Water and Sanitation
  Dr. Tonge
  To ask the Secretary of State for International Development what proportion of the aid budget will be spent on water and sanitation in 2004–05; and if he will make a statement. [187528]
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  Mr. Gareth Thomas
  The Department for International Development's (DFID) support for water and sanitation is predominantly channelled through our country programmes and support to multi-lateral institutions. Expenditure allocations reflect developing country governments' own priorities, and our assistance is co-ordinated with that of other donors. DFID works to assist countries to use their budgets for greatest impact on reducing poverty and achieving the Millennium Development Goals (MDGs). For these reasons, DFID has not made a forward commitment specifically for the water sector.

  However, DFID significantly supports the water sector providing the UK's bilateral expenditure of approximately £90 million (the last period for which
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  precise data are available is 2001–02 when bilateral water expenditure was £87 million), which represents approximately 6 per cent. of the bilateral aid budget. This includes programmes in which water and sanitation and hygiene promotion are the main aims, and those where water and sanitation are components associated with wider objectives such as better health or education or improved urban management. DFID's contribution to multilateral expenditure on water and sanitation is estimated to be in excess of £40 million per year. As a result, the UK was the fourth largest contributor of financial aid to the water sector in 2000 and 2001, and fifth in 2002. DFID is in the process of updating projections of bilateral and multilateral water-related expenditure through to 2007–08, taking into account the autumn 2004 resource a location round.

TRADE AND INDUSTRY

  Nuclear Industry (Decommissioning)
  The Secretary of State for Trade and Industry (Ms Patricia Hewitt)
  The Government's updated policy on the decommissioning of the UK's nuclear facilities has been published today. Copies have been placed in the Libraries of both Houses. The statement is also available on the DTI website at:www.dti.gov.uk.

HOME DEPARTMENT

  "Policing: Building Safer Communities Together"
  The Minister for Crime Reduction, Policing and Community Safety (Ms Hazel Blears)
  I have today placed in the Libraries of both Houses copies of the results from the consultation paper "Policing: Building Safer Communities Together".

  On 4 November 2003 a major consultation on police reform was launched with the publication of the above paper. A shorter questionnaire version aimed at the general public was also published on 27 February 2004. These documents set out the Government's vision for the future of police reform and posed a series of questions on how to achieve this. We want to build a modernised, truly representative police service which is more visible and accessible and which delivers core national standards of policing to all communities within a framework which enables forces to respond to local priorities.

  The response to the consultation was very encouraging and the clear message received was that, while there are areas in which debate and discussion will continue, we are heading in the right direction. In particular there was a strong appetite for greater community engagement, more visible and accessible policing and giving local people a greater say in determining local community safety priorities.

  Additional copies of the consultation results, and the original consultation paper and questionnaire are available on the police reform website www.policereform.gov.uk.

  Terrorism Act 2000 (Independent Reviewer)
  The Secretary of State for the Home Department (Mr. David Blunkett)
  Lord Carlile of Berriew QC has agreed to continue in his role as independent reviewer of the Terrorism Act 2000 for a further three years.

  I am grateful to Lord Carlile in accepting this invitation.

HEALTH

  Blood Donation and vCJD
  The Secretary of State for Health (Dr. John Reid)
  Following my statements to the House on 17 December 2003 and 16 March 2004 concerning variant Creutzfeldt-Jakob disease (vCJD) and blood, I wish to provide an update on some further developments in this area.

  My statement on 17 December 2003 informed the House of the first case of possible transmission of vCJD via blood transfusion and the precautionary actions taken. Those actions included measures to protect future blood supplies and contacting recipients of blood from donors who subsequently went on to develop vCJD. A further written statement on 22 July 2004 indicated a second case of possible vCJD prion transmission via blood transfusion had been confirmed.

  I also made reference in December to the fact that other patients, including people with haemophilia and other bleeding disorders, would have received plasma products before they were sourced from the United States of America. Although there are now two reports of possible transmission of vCJD via blood, the risk of transmission via plasma products, which will have been derived from large pools of plasma donated from many thousands of people—and therefore heavily diluted—is uncertain. But it cannot be excluded. The CJD incident panel (CJDIP) was asked to advise on a case-by-case basis (having adopted a highly precautionary approach) which recipients of plasma products will need to be contacted. This advice has been received and a programme of action has been agreed.

  In June 2004 the Health Protection Agency (HPA), on behalf of the CJD incident panel, reported on an assessment of the risk associated with each batch of product and advised my Department on:
  which patients needed to be assessed and possibly subsequently contacted, and
  managing the possible risk to public health of those patients.

  In the light of these assessments, the HPA is today initiating a process to notify relevant patients of these developments. The HPA is sending information to clinicians to enable them to trace particular plasma products. The clinicians will then notify any patients identified as "at risk" as a precaution. Any patients affected should expect to be contacted by clinicians later this month.

  Aside from patients with haemophilia or other bleeding disorders, the other main group of patients who may have received significant amounts of affected blood products are patients with primary immunodeficiency (PID).

  Throughout this exercise we have been concerned to ensure that the results of the risk assessment are communicated to patients by the clinicians responsible for their day-to-day care, so that appropriate supporting information can be provided. Further details about the risk assessment exercise will not be disclosed until after patients are informed of the outcome. I will make a further statement at a later date, if necessary.

  Richard Neale
  The Secretary of State for Health (Dr. John Reid)
  The report of the committee of inquiry into how the National Health Service handled allegations about the conduct of Richard Neale (Cm 6315) was published today and copies have been placed in the Library. This is one of the three inquiries announced in July 2001 by my right hon. Friend, Alan Milburn, the then Secretary of State for Health. The other two inquiries were to consider how the NHS handled allegations about the conduct of Clifford Ayling, a former GP; and William Kerr and Michael Haslam, former psychiatrists.

  The Government would like to thank the chairman of the inquiry, Her Honour Judge Suzan Matthews QC and the two members of her panel, Christine Funnell and Derek Caldwell, for their thorough review of the circumstances surrounding the appointments and employment of Richard Neale in the NHS. Their hard work in bringing together the relevant issues and their sympathy and understanding in dealing with them is very much appreciated. The Government would also like to thank the secretariat and legal team who provided such excellent support for the review.

  The Government are very grateful to the former patients of Richard Neale who chose to provide evidence to the inquiry, and to Richard Neale's former colleagues and other witnesses who also gave evidence, all of whom generously gave their time to assist the inquiry.

  If we are to learn the lessons when things go wrong we must ensure that systems are in place which have the confidence of patients who wish to raise concerns. All patients have the right to expect a high standard of care from clinicians. Richard Neale fell short of these standards and as a result caused the patients in his care unnecessary distress. I should like to extend my sympathies to all those patients involved who suffered in this way.

  The NHS failed many of Richard Neale's former patients and the inquiry has provided the opportunity not only for their voices to be heard, but also to ensure that their experiences will help strengthen the systems now in place to try to prevent similar incidents in the future.

  The report sets out in detail the history of Richard Neale's appointments in Canada and his subsequent employment in the UK. It charts the system failures that allowed him to be employed as a consultant without a proper understanding of his background; and a mixture of similar failures coupled with complacency that permitted him to continue practising in spite of concerns being raised about him.

  Since these events have come to light, we have taken a number of steps to help avoid similar incidents in the future. In setting out details of the failures over many years, the inquiry found that
  "…even before the inquiry began many of the wider lessons had been learnt and change implemented".

  The NHS has indeed been subject to considerable changes over the past few years, many having the specific aim of improving the patient experience, especially patient safety. But we are not complacent and we recognise the need for further improvements. The inquiry's conclusions and recommendations,
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  together with those of the Clifford Ayling inquiry also published today, will help us to ensure that the patient experience is properly at the centre of our work in the NHS.

  Many of the recommendations made by this inquiry are concerned with improvements in way that complaints are handled by the NHS. These include ensuring that patients have both sufficient and correct information about their treatment to inform their decisions as well as strengthening the role of the Patient Advisory Liaison Service (PALS) to support patients who have concerns, and some of this work is already underway. Issues around complaints are also being considered by the Shipman inquiry, which is likely to produce recommendations in its Fifth Report due later this year. They are also being considered by the William Kerr/Michael Haslam inquiry, whose report is also expected later this year. We will therefore consider these recommendations together with those of the Shipman, Clifford Ayling and William Kerr/Michael Haslam inquiries and give a detailed response in due course.

  In the meantime, the Government will consider very carefully the other recommendations concerning the appointment and employment of consultants and doctors in other grades, as well as the role of the Council for the Regulation of Healthcare Professionals (now known as the Council for Healthcare Regulatory Excellence), and will respond to these as soon as we can.

  We have made clear that patient safety is a priority and the UK has led the way in pushing forward in this area. Tomorrow, I will be talking to fellow EU health ministers about the lessons EU members can learn from one another and make clear that patient safety will be a key issue during the UK presidency of the EU next year.

  This inquiry has provided a valuable insight into a series of errors over a long period of time in the appointment processes and in Richard Neale's employment performance. It has painstakingly identified the causes of those errors and has made helpful recommendations about how best to avoid repeating them. We will review the improvements we have made in the past few years to ensure that they address the concerns raised in the report. The Government are grateful to all those whose contributions to the review will help us fulfil our commitment to patient safety.

  Clifford Ayling
  The Secretary of State for Health (Dr. John Reid)
  The report of the committee of inquiry into how the National Health Service handled allegations about the conduct of Clifford Ayling (Cm 6298) is being published today and copies have been placed in the Library. This is one of the three inquiries announced in July 2001 by my right hon. Friend, Alan Milburn, the then Secretary of State for Health. The other two inquiries were to consider how the NHS handled allegations about the conduct of Richard Neale, a former gynaecologist; and William Kerr and Michael Haslam, former psychiatrists.

  The Government would like to thank Dame Anna Pauffley, the chairman of the inquiry, and the two members of her panel, Peter Berman and Mary Whitty, for their delicate handling of undoubtedly sensitive issues. Their report is painstakingly researched and

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  provides in clear detail a history of events in the NHS that led, in December 2000, to Clifford Ayling's conviction on 12 counts of indecent assault. It charts the procedures then in place through which patients could raise concerns about their treatment; and the failures in those systems that let down many of Clifford Ayling's patients so badly. The Government are very grateful to Dame Anna and her panel for producing such a comprehensive report and to the secretariat and legal team for their tremendous support.

  The Government are also grateful to those former patients of Clifford Ayling who came forward and provided evidence to the inquiry which must, at times, have been very difficult and painful. The systems in place in the NHS to help and support these patients who raised concerns about Clifford Ayling's behaviour and treatment let them down. No patient should be left in a position where those in charge of their care are able to abuse their trust and take advantage. My sympathies go to the patients involved in this case. They will have the benefit of knowing that their evidence will help to ensure that better and more robust systems will be put in place to avoid similar incidents in the future.

  Similarly, the evidence provided by former colleagues was clearly very important to the inquiry in determining how the systems worked, or failed. Their candour in giving evidence is very much appreciated.

  Since these events have come to light, we have taken a number of steps to help avoid similar incidents in the future and the report itself recognises that considerable change has taken place in the NHS since Clifford Ayling practised, concluding …
  "The impact of the Government's plans and investment in health services has dramatically altered the landscape of the NHS. At an organisational level, it is almost unrecognisable as the NHS in which Ayling practised. The emphasis on patient safety, remedial action for poor clinical performance, closer scrutiny of untoward events and empowering patients in the management of services are greatly welcomed."

  The changes introduced in recent years have already sought to address the weaknesses found by the inquiry as being a cause for concern. For this reason the inquiry has directed its recommendations towards strengthening the systems now in place rather than offering new or alternative proposals for action.

  The Government welcome the recommendations in the report which include proposals both to address the issue of sexualised behaviour and to ensure that guidance is available for dealing with it; and that all trusts and primary care practices should have an explicit policy on the use of chaperones. These are important issues that will require detailed consideration if changes are to be implemented effectively. Likewise, the role of patient advocacy when dealing with 'sexualised behaviour' in both the hospital and the primary care setting will also require further detailed consideration.

  The report acknowledges that considerable changes have already been made. These include substantial changes to the NHS complaints procedure and the current development of guidance to trusts on how to handle untoward incidents. Further changes are in hand and planned.
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  It recommends improvements to the recording of complaints against individual practitioners and the importance of co-ordinating complaints, coupled with the need to ensure that employers are aware of other employment being undertaken by their medical staff.

  Other recommendations include requiring staff of NHS trusts and other healthcare organisations employing staff, such as deputising services, to declare concurrent employment and for this requirement to be suitably adapted to ensure that PCTs are kept informed of other professional work undertaken by GPs; the provision of better support for single-handed practitioners and their practice managers; and clarification of the roles of the respective professional and local bodies in primary care.

  The Department of Health is also asked to develop a memorandum of understanding with professional regulatory bodies and the Crown Prosecution Service; and to work with strategic health authorities to provide guidance to trusts on handling untoward incidents.

  Issues around complaints are also being considered by the Shipman inquiry, which is likely to produce recommendations in its fifth report due later this year. They are also being considered by the William Kerr/Michael Haslam inquiry whose report is also expected later this year. We will therefore consider these recommendations together with those of the Shipman, Neale and William Kerr/Michael Haslam inquiries and give a detailed response in due course.

  The Department of Health is asked to take account of the inquiry's recommendations in the development of its current work on a memorandum of understanding with the NHS, the police and the Health and Safety Executive. We shall of course ensure that the report and its recommendations are brought to the attention of the project board taking this work forward. As part of this work, guidance is currently being developed for the NHS including a strategy for involving patients and others.

  Our purpose in setting up this inquiry, as with all investigations of errors in the NHS, is to learn the lessons and put in place procedures to minimise the risk of similar errors occurring in the future. As already indicated, much work has already been done and further work is in hand. We very much welcome this report and its recommendations, and those of the Richard Neale inquiry also published today, with their emphasis on putting patients at the centre of health care. These reports will provide an important contribution to a continuing process of improvement.

  We have made clear that patient safety is a priority and the UK has led the way in pushing forward in this area. Tomorrow, I will be talking to fellow EU health ministers about the lessons EU members can learn from one another and make clear that patient safety will be a key issue during the UK presidency of the EU next year.

  It is completely unacceptable that the events described in this report were allowed to happen. In acting on the inquiry's recommendations we will be guided by the need to prevent future patients having to suffer in the same way as many patients of Clifford Ayling.

FOREIGN AND COMMONWEALTH AFFAIRS

  Libya: Future Defence Requirements
  The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Bill Rammell)
  On 19 December 2003, Libya announced that it would dismantle its weapons of mass destruction programmes, and limit its ballistic missiles to a range of less than 300km. Since then, Libya has been working to put these commitments into effect, and has been pursuing a course of reintegration into the international community. The Government welcome and fully supports this process.

  The Government recognise that Libya, following its decision to renounce weapons of mass destruction, has legitimate defence requirements. The United Kingdom has a clear interest in developing an open and co-operative relationship with Libya on defence matters. During his visit to Libya on 25 March, my right hon. Friend the Prime Minister announced the appointment of General Robin Searby as the United Kingdom Defence Co-ordinator for Libya in order to offer Libya a new military relationship with the United Kingdom. As a natural part of progress towards full normalisation of the United Kingdom's relations with Libya, the Government intend to respond to Libyan requests to discuss their legitimate defence requirements in detail.

  The Government welcome news of Libyan and German agreement on a compensation package for the victims of the 1986 La Belle disco bombing as a significant milestone in the process of rebuilding the United Kingdom's and the European Union's relations with Libya. In light of this agreement, the United Kingdom expects to revisit the issue of the EU arms embargo imposed on Libya in 1986 with EU partners over coming months. If the embargo were removed, the Consolidated EU and National Arms Export Licensing Criteria (which apply to all countries) would be the test against which any proposed export of defence equipment to Libya would be assessed.

  While the embargo remains in place, all contact with Libya in this area must fall within the terms of the EU arms embargo and United Kingdom law. This means that no commitments in relation to the actual supply of licensable defence equipment will be made while the embargo is in place.

  European Union Charter of Fundamental Rights
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw)
  At the European Council in Brussels on 17–18 June 2004, EU Heads of Government agreed to include the charter of fundamental rights as part II of the constitutional treaty. This statement sets out the Government's views on the charter of fundamental rights.
  Changes to the European Union charter of fundamental rights, which make it suitable for incorporation into the treaties.

  The EU charter was agreed at Nice in 2000 as a political declaration, not as treaty law. At the same time, the European Council agreed that
  "in accordance with the Cologne conclusions, the question of the charter's force would be considered later"—
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  conclusions of the Nice European Council reference 00/1843, deposited in the Library of the House on 11 December 2000. Her Majesty's Government made it clear that we could not agree to incorporation of the charter into the treaties without further legal clarification of its meaning and application. In the White Paper "A Constitutional Treaty for the EU", Cm 5934 of September 2003, Her Majesty's Government said we would make a final decision on incorporation of the charter into the constitutional treaty only in the light of the overall picture at the IGC.

  The charter, including its original preamble, and its own special rules of application and interpretation, is now part II of the constitutional treaty, and is introduced by article I-7(1) of the treaty. Article I-7 deals with fundamental rights generally. Besides introducing the charter, article I-7(1) acknowledges the distinction made in the charter between rights and principles. Human rights and other fundamental rights guaranteed by the European Convention on Human Rights (ECHR) and in the constitutional traditions common to all the member states remain general principles of EU law (see article I-7(3)) and insofar as the charter affirms such rights, they will be interpreted in accordance with the ECHR. Article I-7(2) enables the Union to accede to the ECHR in its own right.

  Significant amendments have been made to articles II-51 and II-52 in title VII of the charter, now entitled "General Provisions Governing the Interpretation and Application of the Charter". The charter applies to the Union—its institutions, agencies and bodies—and, though only when they are implementing Union law, to the member states. Paragraph (1) of article II-51 has been further clarified to show that the charter does not entail any extension of the Union's competences or any extension of the scope of its application for member states. Paragraph (2) of article II-51 also confirms that the charter does not have the effect of extending the scope of application of Union law beyond the powers of the Union as established in the other parts of the constitutional treaty.

  Article II-52 deals with interpretation, and significantly improves the original charter provisions. It indicates that there are four sources for the content of the charter's rights, freedoms and principles: provisions of EU law, the ECHR, the constitutional traditions common to the member states and national law. Under article II-52(2), charter articles based on existing EU law are to be read subject to the conditions and limits set out in the constitutional treaty; that is, they are effectively subordinated to their legal base in other parts of the constitution. Under article II-52(3), rights in the charter that correspond to rights in the ECHR have the same meaning and scope as given by the jurisprudence of the Strasbourg Court. Article I-7(2) on EU accession to the ECHR will help ensure consistency of jurisprudence as between the European Court of Human Rights and the European Court of Justice.

  Under article II-52(4), those charter provisions which draw upon the common constitutional traditions of the member states must be interpreted "in harmony" with such traditions.

  Article II-52(6) emphasises the respect to be given to "national laws and practices", as referred to in the charter provisions.
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  Article II-52(5) is aimed at clarifying the distinction the charter makes between legally enforceable rights on the one hand, and the principles, of an aspirational nature, on the other, which are to be found mainly in the solidarity title of the charter. Principles are designed to guide the actions of the Union institutions, and of the member states when implementing Union law. The Union must observe principles by virtue of article II-51(1) when deciding whether to exercise its competences; but there is no obligation to legislate, and the charter itself generates no additional powers to do so. Principles apply within the limitations set out in article II-51(2).

  Finally, a further new horizontal article, article II-52(7), has been added to the constitutional treaty. Article II-52(7) requires the charter to be interpreted with due regard to the official explanations, which address the legal bases for each of the charter's provisions. The explanations have been updated and strengthened and are the subject of a special declaration by the member states which ensures that they are published with the new treaty. The official explanations constitute an authoritative guide to the legal meaning of the charter's provisions and will help ensure that the charter is not misinterpreted.
  Whether incorporation of the European Union charter of fundamental rights into the treaties will increase the powers of the European Union

  Incorporation of the European Union charter of fundamental rights into the treaties will not increase the powers of the European Union. The charter of fundamental rights must be read as a whole, including the general provisions governing the interpretation and application of the charter, as set out in articles II-51 to 53 of the charter. Article II-51(2) provides that the charter does not extend the scope of application of Union law beyond the powers of the Union or establish any new power or task for the Union, or modify powers and tasks defined by the other parts of the constitutional treaty.
  The benefits to the United Kingdom of the European Union charter of fundamental rights

  Although fundamental rights, freedoms and principles are guaranteed by the Governments of the member states in accordance with national law, there was no statement of rights, etc. binding the European Union. The charter sets out such a statement for the Union. Following incorporation of the charter, the institutions, bodies and agencies of the Union will be bound to recognise those rights, etc. in exercising any of their powers. The charter should help ensure that citizens' basic rights and liberties are protected at EU level, as they are in their own countries.
  The effect of Article H-28 of the charter of fundamental rights upon the laws governing industrial relations in the United Kingdom

  In practice, article II-28 of the charter of fundamental rights will have no effect upon the laws governing industrial relations in the United Kingdom. Article II-28 states that workers and employers enjoy rights of collective bargaining and action
  "in accordance with Union law and national laws and practices".

  There is no Union law in this area, nor could there be in future. EU action on pay, the right of association, the right to strike and the right to impose lock-outs is
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  specifically excluded—see article III-104(6) of the constitutional treaty. Charter article II-52(6) provides that full account should be taken of national laws and practices as specified in the charter. As with all the charter provisions, and by virtue of article II-52(7), it is important to read article II-28 alongside the official explanation, which in this instance points out that
  "The modalities and limits for the exercise of collective action, including strike action, come under national laws and practices".

  The United Kingdom's laws governing industrial relations maintain a balance between workers' rights to pursue legitimate trade disputes and employers' rights to conduct their businesses without undue disruption from illegitimate strike action. Article II-28 will not alter that balance.

  Diplomatic Missions: Outstanding National Non-domestic Rate Bills
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw)
  The majority of diplomatic missions in the United Kingdom meet their obligations and pay the national non-domestic rate (NNDR) requested from them. The total amount outstanding from all diplomatic missions is approximately £980,000. However, as at 31 July 2004 missions listed below owed over £10,000 in respect of NNDR. Twelve additional diplomatic missions, who owe £10,000 or more in respect of national non-domestic rates, have made arrangements with the valuation office agency to clear their outstanding debts and have not been included in this list.

  Country

  Amount

  Mozambique

  £33,718,35

  Cameroon

  £32,640,33

  Zimbabwe

  £31,778,64

  Uganda

  £30,892,13

  Egypt

  £26,674,46

  Bangladesh

  £25,948,51

  China

  £25,241,49

  Côte d'Ivoire

  £20,788,06

  Senegal

  £19,198,79

  Saudi Arabia

  £ 14,400,70

  Yemen Republic

  £13,582,61

  Total

  £274,864,07

  Diplomatic Missions: Serious Offences
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw)
  From a community of around 20,000 in the United Kingdom entitled to immunity, 16 serious offences, allegedly committed by such persons, were drawn to the attention of the Foreign and Commonwealth Office in 2003. Serious offences are defined in accordance with the 1985 White Paper on Diplomatic Immunities and Privileges—that is as offences that would in certain circumstances, carry a penalty of 12 months or more imprisonment.

  Diplomatic Missions: Unpaid Traffic Fines
  The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw)
  There were 4,565 outstanding parking and other minor traffic violation fines incurred by diplomatic missions and international organisation in the United Kingdom recorded during the year 1 January
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  2003 to 31 December 2003. These totalled £407,950.00. In May this year the Foreign and Commonwealth Office wrote to all affected diplomatic missions and international organisation giving them the opportunity either to pay their outstanding fines or to appeal against them if they considered that the fines had been issued incorrectly. As a result payments totalling £49,280.00 were received, leaving a total of 3,941 (£350,170.00) unpaid fines for 2003. The table below details those diplomatic missions and international organisations that have 11 or more undisputed fines unpaid.

  Diplomatic Mission/International Organisation

  No. of fines outstanding

  Amount in £

  Libya

  365

  34,480.00

  Saudi Arabia

  264

  24,200.00

  Nigeria

  232

  15,850.00

  Georgia

  172

  16,460.00

  China

  160

  14,080.00

  Kazakhstan

  146

  13,670.00

  Turkey

  116

  10,410.00

  Egypt

  115

  10,930.00

  Ghana

  106

  9,650.00

  Greece

  94

  8,230.00

  Senegal

  93

  8,680.00

  United Arab Emirates

  92

  7,900.00

  Angola

  87

  7,380.00

  Kuwait

  85

  8,270.00

  France

  78

  6,370.00

  Afghanistan

  76

  7,370.00

  Russia

  75

  6,980.00

  Algeria

  72

  6,780.00

  Jordan

  71

  6,660.00

  Yemen

  60

  5,110.00

  Malaysia

  59

  5,720.00

  Oman

  58

  3,830.00

  Hungary

  56

  5,500.00

  Kenya

  44

  4,200.00

  Brunei

  41

  3,920.00

  Iran

  41

  3,280.00

  Sudan

  40

  3,350.00

  Rwanda

  35

  2,650.00

  Bahrain

  34

  3,400.00

  Mozambique

  34

  2,690.00

  Germany

  32

  2,980.00

  Brazil

  32

  2,660.00

  Korea (DPR)

  31

  2,450.00

  Uganda

  30

  2,950.00

  Bangladesh

  29

  2,820.00

  Ukraine

  29

  2,480.00

  Tunisia

  28

  2,590.00

  Philippines

  28

  2,380.00

  Poland

  27

  2,030.00

  Tanzania

  26

  2,370.00

  Bulgaria

  26

  2,350.00

  Romania

  25

  2,300.00

  Latvia

  24

  2,130.00

  Zambia

  23

  2,140.00

  Lithuania

  22

  2,150.00

  Morocco

  22

  2,090.00

  Cyprus

  22

  1,780.00

  Guinea

  22

  1,430.00

  Syria

  18

  1,570.00

  Cuba

  18

  1,440.00

  Belgium

  16

  1,600.00

  Fiji

  16

  1,600.00

  Pakistan

  16

  1,540.00

  Vietnam

  16

  1,540.00

  Spain

  16

  1,220.00

  Azerbaijan

  15

  1,400.00

  Thailand

  15

  1,360.00

  Sierra Leone

  15

  990.00

  United States of America

  14

  1,310.00

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  Diplomatic Mission/International Organisation

  No. of fines outstanding

  Amount in £

  Cameroon

  14

  1,300.00

  Jamaica

  14

  1,280.00

  Panama

  14

  1,240.00

  Uzbekistan

  12

  1,020.00

  Zimbabwe

  12

  710.00

  Total

  3,720

  331,200.00

  The number of outstanding fines incurred by diplomatic missions in the UK for non-payment of the London congestion charge at the end of its first year of operation in February 2004 was 1,847. The table below shows the 10 diplomatic missions with the highest number of outstanding fines.

  1

  Egypt

  250

  2

  U.A.E

  182

  3

  Angola

  126

  4

  Kazakhstan

  84

  5

  Sudan

  81

  6

  Tanzania

  72

  7

  Sierra Leone

  66

  8

  Zimbabwe

  52

  9

  Algeria

  50

  10

  Malawi

  50

CONSTITUTIONAL AFFAIRS

  Mental Capacity Bill
  The Parliamentary Under-Secretary of State for Constitutional Affairs (Mr. David Lammy)
  My noble Friend the Parliamentary Under-Secretary of State, Baroness Ashton of Upholland, has made the following written ministerial statement.

  The draft code of practice that supports the Mental Capacity Bill has been placed in the Libraries of both Houses. The Mental Capacity Bill, when it is being considered at Commons Committee stage will be informed by having the draft code available. (We are not in parliamentary terms scrutinising the code itself). The code gives a greater level of detail on many of the Bill's provisions and demonstrates how we think those acting under the Bill will need to be guided when putting these provisions into practice.

LEADER OF THE HOUSE

  State Opening of Parliament
  The Leader of the House of Commons (Mr. Peter Hain)
  The State Opening of Parliament will be on Tuesday 23 November. I plan to announce the date of prorogation as soon as I am able.

NORTHEN IRELAND

  Tourist Board
  The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Barry Gardiner)
  The Northern Ireland Tourist Board's 2002–03 annual report and accounts were deposited in the Libraries of both Houses today.

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

Clean Coal Technology
Lord Ezraasked Her Majesty's Government:
What progress has been made in setting up demonstrator plants for clean coal technology as envisaged in the energy White Paper of February 2003.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, in line with the energy White Paper's statement on support for cleaner coal technologies, I am pleased to report that the cleaner coal technology programme's fourth call is currently considering a proposal from the industry for a design and costing study for retrofitting supercritical boiler technology to an existing coal-fired power plant, which would serve to demonstrate this advance in clean coal technology. It is envisaged that a contract for government support for this study will be agreed later this year.
Lord Ezra: My Lords, I thank the noble Lord for his reply. Does he not agree that this issue has now become more important in view of the perturbation in the oil market, which is spreading to the gas market, and could last for some time? In this situation, with our abundant coal reserves, should we not be giving greater priority to clean coal technology projects rather than continuing to engage in repeated consultations, one of which has just been announced? Is not the time-scale of 2020, set in the latest consultation document, likely to deter industrial participation, whereas in the United States and Canada, such participation is being encouraged by joint funding arrangements?
Lord Sainsbury of Turville: My Lords, I agree that we should continue to give emphasis to this issue, as we have done. We made it clear in the energy White Paper that we would support R&D for cleaner coal technologies, and we are doing that. The consultation on the carbon abatement technology strategy is simply the next phase of the cleaner coal technology programme and takes that forward when the cleaner coal technology programme comes to an end.
Earl Attlee: My Lords, when does the Minister expect the supercritical boiler technology to be in operation?
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Does not the lack of a demonstration plant adversely affect the possibility of exporting this technology to China and India?
Lord Sainsbury of Turville: My Lords, we are in discussions with Mitsui Babcock Engineering, and I cannot say more about the negotiations. However, as I said, we hope to have a contract in place for this study. Because this is only a design and costing study, it will be necessary for a generator to want to go ahead with this project. That will depend on there being a customer for the technology. We are supporting this because it would be very helpful in promoting a UK transfer of technology in this area to countries such as China.
Baroness Miller of Chilthorne Domer: My Lords, my noble friend mentioned that the time-scale with which the department seems content is very long. Does the Minister not appreciate that there is huge export potential here, given that China, as the noble Earl, Lord Attlee, mentioned, has vast stocks of dirty coal, and that clean coal technology could also help in the fight against global warming?
Lord Sainsbury of Turville: My Lords, as I said, this is clearly the thinking behind our support for this project. Even before the White Paper, we supported cleaner coal technology with R&D. We will continue to do so because of the very real opportunities in places such as China where they have a lot of coal and will be using it extensively in the future to make use of this technology.

Food Labelling Regulations
11.10 a.m.
Viscount Falkland Viscount Falkland asked Her Majesty's Government:
Whether current food labelling regulations are adequate in view of current concerns about fat, salt and sugar content in foods.
The Parliamentary Under-Secretary of State, Department of Health (Lord Warner): My Lords, no. Current rules on nutrition labelling require only that the quantity of fat, salt or sugar is declared if a nutrition claim, such as low fat, is made. The Government already recommend that the labels of all pre-packaged foods should carry full nutrition information, including levels of fat, salt and sugar, irrespective of whether nutrition claims are made. Many manufacturers and retailers already follow this advice.
Future plans for food labelling will be set out in the White Paper on improving people's health, due for publication this autumn. We support and welcome the forthcoming EC proposal to improve nutrition labelling so that consumers are able to make better informed choices about the food that they buy. Meanwhile, the Food Standards Agency is developing a system of signposting foods high in fat, salt and sugar, and healthier choices, which can be used in retail and

687
catering outlets so that consumers can make healthier choices. Research to consumer test different signposting systems has been commissioned.
Viscount Falkland: My Lords, I thank the Minister for that quite lengthy and comprehensive Answer. I declare a personal interest, as one of the many people who has developed what is known as late-onset diabetes. It is common in this country, particularly among older people and many immigrant groups. It is crucial for us to avoid foods with added sugar. We spend a lot of time—many of us with failing eyesight—looking at labels to see whether the sugar levels are satisfactory. The same probably applies to people who need to avoid salt and fat. Is there not an argument for colour coding to be more widely used? Could the Government impress it upon the food industry that developing some form of colour coding would help people to avoid what is dangerous for them?
Lord Warner: My Lords, I sympathise with the noble Lord on his condition. Such conditions are why we are working with the industry to produce the signposting system that I mentioned in my Answer. That system would take account of whether there were high, medium or low provisions of particular items in food. The Food Standards Agency will undertake surveys to consider the most appropriate way in which to get a signposting system to operate which is most convenient to consumers.
Baroness Oppenheim-Barnes: My Lords, I have been putting this same Question for the past eight years, and this is one of the least satisfactory Answers that I have heard. It is an absolutely ludicrous situation, when there is a perfectly acceptable system of nutrition labelling, in which the print and the size is exactly uniform, so that comparisons can be made. It is a complete waste of time for the Food Standards Agency to keep bleating on about salt, sugar or anything else, until a satisfactory and clearly comprehensible food labelling system is imposed by law.
Lord Warner: My Lords, I am sorry that the noble Baroness is not as satisfied as the questioner was with the thoroughness of my reply, because I thought that she might have been satisfied that we were making progress, and that that was a tribute to her persistence in this area. Already 80 per cent of pre-packaged foods carry some nutrition information, although that does not always include food, saturated fat and sugar. We do need to improve the system, but we also need to have a system which consumers understand and support.
Lord Chan: My Lords, would the Minister not agree that in labelling food, not only should the words and contents of the label be clear to those reading them, but also there should be, for children's food in particular, clear guidelines as to the amounts that are safe or not
688
safe? What is given to children early on will affect them in later life—so I ask the noble Lord if he would ensure that that takes place.
Lord Warner: My Lords, the noble Lord is quite right, which is why we shall say much more about food labelling in the White Paper, as I have said. We are also concerned about food promotions in relation to children's diets, which is why we are making progress on that area. More will be said on that in the White Paper.
Lord Rea: My Lords, I was very pleased to hear my noble friend announce the work that the Food Standards Agency is doing on the signposting system of labelling foods, which is sometimes called the "traffic light system". Is he aware that the Coronary Prevention Group, with which I have been associated for many years, nearly 20 years ago proposed a very workable system of traffic light signalling of the high, medium and low contents of the various nutrients? If such a system is agreed, how long will it remain a voluntary code, and for how long will the Government remain patient in seeing whether the industry follows that voluntary code before making it compulsory?
Lord Warner: My Lords, the Government have continued to develop a good, constructive relationship with industry, and progress has been made. My noble friend is right in saying that we need a signposting system. As I said, we are conducting through the Food Standards Agency more research on the best form of that sign-posting system. I am afraid that he will have to wait and see how dirigiste we may or may not be, when the White Paper arrives.
Baroness Miller of Chilthorne Domer: My Lords, what does the Minister think of soft drinks labels that loudly proclaim "no added sugar", which suggests that they are healthy and natural, although they in fact contain large quantities of artificial sweeteners, such as aspartame, which I believe that many in the medical establishment feel are implicated in health and behavioural problems in children?
Lord Warner: My Lords, I suppose the short answer is "not a lot". That is why we want to ensure that labelling is improved, so that the contents of the package, bottle or container are accurately represented.
Lord Harrison: My Lords, is my noble friend aware that one of the major supermarket stores has this summer introduced a colour-coding system—I believe that it is Tesco? Would he undertake to consult that store on its experience of helping customers to choose the appropriate food?
Lord Warner: My Lords, good work has been done by a number of those in the retail industry, including the Co-op, in identifying foods. We should pay tribute to

689
the way in which many of the supermarkets have taken on board very successfully the "five a day" message on fruit and vegetables.
Lord Rotherwick: My Lords, do any other European countries have a signposting system for food which is enforced by legislation?
Lord Warner: My Lords, it was with reference to that point that I said in my Answer that we supported the EU work on a new directive on labelling, which will be introduced. That will pull together the threads on practice throughout Europe, with regard to producing a new directive.
Lord Dubs: My Lords, what my noble friend has said is welcome and represents real progress. However, does he agree that it is not only the percentage content of salt or sugar in a particular food that matters; what also matters is the total amount of that food that gets eaten? If one eats a large amount of low-sugar food, one ends up eating a lot of sugar. Does my noble friend agree that, in parallel with the labelling process, we also need more education and information, so that people are aware of the total amount of whatever they are consuming, and what the limits really are?
Lord Warner: My Lords, my noble friend is quite right; we need to ensure that there is a balanced diet and that people are adopting it. We need labelling systems to help them to achieve that end. I am sure that the White Paper will say a little more about public education in terms of diet, exercise and other such issues.
The Countess of Mar: My Lords, following on the question of the noble Lord, Lord Dubs, I first declare my interest as a specialist cheese maker. May I express my gratitude to the Food Standards Agency which, having started from the premise that cheese because it is high in fat and salt is bad for you, has now conceded that small amounts of cheese are very good for you?
Lord Warner: My Lords, the temptation to give a cheesy reply is extremely great.

Immigrants: Treatment
11.20 a.m.
Lord Juddasked Her Majesty's Government:
What arrangements are in place to ensure that the treatment of immigrants and would-be immigrants, including during deportation, is humane and respectful of their dignity.
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, high standards of courtesy and professionalism are required of Immigration and Nationality Directorate (IND) and Immigration Service members and others acting on behalf of the service, including detention and escort contractors' staff.
690
Guidance and training are systematically provided in all aspects of applicant care such as compliance with the Human Rights Act 1998 and the Race Relations (Amendment) Acts. Complaints about staff conduct are investigated under a formal complaint procedure monitored by the independent IND complaints audit committee.
Lord Judd: My Lords, while thanking my noble friend for that reply, does she agree that while a firm, fair and clear immigration policy is obviously essential, there is a contradiction in the age of moving towards a global market that there is no free movement of labour? In this context will there not always continue to be tensions and great anguish as people seek to improve their and their families' well-being? Must we not resist the appalling approach and hype in some of the media which make it very difficult for those working in the front line of immigration policy? Is it not essential to ensure that all those in the front line are supported in every way in the front line in ensuring that the aspirations spelt out by my noble friend are in fact carried through into practice with every single would-be immigrant?
Baroness Scotland of Asthal: My Lords, I absolutely agree with my noble friend. Those working in the front line have an incredibly difficult and often stressful job. They strive to do it in the best way they can. Any support that we can give is important together with a more supportive approach from some of our media colleagues who do not always show the sensitivity that we would most wish to see.
Lord Dholakia: My Lords, is the Minister satisfied with the existing machinery for dealing with complaints against immigration officers, whose powers in terms of arrest are similar to those of police officers? Does she consider that bodies such as the independent Police Complaints Commission are more appropriate to supervise serious allegations against the Immigration Service?
Baroness Scotland of Asthal: My Lords, the noble Lord is right to emphasise the importance of taking complaints seriously. We believe that the formal complaints procedure, which is currently monitored by the complaints audit committee, is an appropriate, robust, independent process. We are satisfied that that seems to meet our current needs.
Baroness Masham of Ilton: My Lords, what is the present situation with those immigrants who are found to be suffering from HIV or tuberculosis?
Baroness Scotland of Asthal: My Lords, that is wide of the Question on the Order Paper. I shall certainly be very happy to write to the noble Baroness in greater

691
detail. Perhaps it suffices to say today that those sensitivities are very much taken into account when dealing with the concerns arising out of any application.
Lord Clinton-Davis: My Lords, does my noble friend agree that the press has not behaved impeccably on this issue? What result has accrued regarding complaints about the behaviour of the press?
Baroness Scotland of Asthal: My Lords, I cannot tell the noble Lord the number of complaints that have been made in this regard but he is right to say that often people have been rather taken aback by the intemperate way in which some of these issues have been reported. Responsible, critical reporting is always welcome and should be encouraged.
Lord Alton of Liverpool: My Lords, did not the deaths of the Chinese cockle pickers in Morecambe Bay underline the dangers in which immigrants can be placed if they come here as illegal workers? Reverting to the question that the noble Lord, Lord Judd, put to the Minister, is not there a lot to be said for trying to devise some form of green card system along the lines of that used in the United States so that we can give people the opportunity to work legally in this country and thereby receive the kind of protection to which they are entitled?
Baroness Scotland of Asthal: My Lords, the noble Lord will know that we have done as much as we can to encourage that. The new rules that we have brought in to enable people to come here lawfully to work in a number of areas have reduced the number of illegal workers who feel that that is the only route. By making the system robust and fair we are sending a very clear message. I endorse what the noble Lord said about the tragedy that the Morecambe Bay type of incident highlights. This matter is not just about ourselves but about the poor people who come here and are abused.
Baroness Anelay of St Johns: My Lords, following on the Minister's answer to the noble Lord, what evidence does she have to back up a claim that the number of illegal workers has been reduced as a result of government policy when the Home Secretary himself made it clear that he does not know how many people are in this country illegally at the moment?
Baroness Scotland of Asthal: My Lords, what we have is based upon the figures that we had before. We are monitoring them. Our clear aspiration is that if, as I said earlier, we generate greater avenues for legitimate entry, that should suppress the need for those people who properly wish to come to this country and make a valuable contribution to seek illicit means of doing so. We have been very clear that we do not have a closed
692
door. We have a need for workers to come and assist us to build our country to make it as strong as possible. We do not encourage those people to come here illicitly.
Baroness Trumpington: My Lords, while applauding the Question that we are discussing, are gangmasters included in any legislation for the benefit of workers such as the Chinese cockle pickers?
Baroness Scotland of Asthal: My Lords, we have now passed legislation. I believe that we passed it in July.
Lord McNally: My Lords, does the Minister agree that one of the problems about the media-inspired hysteria referred to by the noble Lord, Lord Judd, is the influence not on the front-line workers but on their political masters who then have knee-jerk reactions? Would it not be better to look at the Canadian system of having an agency responsible that is somewhat more independent of day-to-day political control?
Baroness Scotland of Asthal: My Lords, of course I hear what the noble Lord says in relation to that. That debate has been ongoing and I am confident that it will continue.
Lord Brooke of Sutton Mandeville: My Lords, I know that this is an Alice in Wonderland question but if the Home Secretary was not able to say how many illegal workers there are in the country now, how did the Government know—I refer to the reply which the Minister gave to my noble fried Lady Anelay—of the previous figures?
Baroness Scotland of Asthal: My Lords, we can only know those we have identified. It would be impossible to know those we have not found.
The Earl of Sandwich: My Lords, does the Minister agree that there are immigrants and asylum seekers in detention or in removal centres who really are not aware of the reasons why they are detained? Does she agree that the form stating those written reasons is still inadequate and needs to be improved?
Baroness Scotland of Asthal: My Lords, of course I hear what the noble Earl says in relation to that but I can certainly assure him that everything has been done within the procedure to make sure that there is a clear understanding as to the reason for detention, and that advice and support are made available. I assure him that we shall continue to do all we can to make sure that information is available to those people who need it.

Public Servants: Business Appointment Rules
11.29 a.m.
Lord Goodhart Lord Goodhart asked Her Majesty's Government:
Why they are reviewing the business appointment rules for public servants.
Lord Bassam of Brighton: My Lords, the rules were last reviewed in 1996. The Government therefore feel that a review would be timely to ensure that the rules remain compatible with a public service that is keen to ensure greater interchange with the private and other sectors, which is essential for effective delivery in today's public service.
Perhaps it would be appropriate to place on record the Government's appreciation of the excellent work undertaken by the Advisory Committee on Business Appointments, of which the noble and learned Lord, Lord Mayhew of Twysden, is chairman, and the noble and learned Lord, Lord Morris of Aberavon, and the noble Lords, Lord Maclennan of Rogart and Lord Wilson of Tillyorn, are notable members.
Lord Goodhart: My Lords, yesterday a survey commissioned by the Committee on Standards in Public Life was published which reported that only 37 per cent of members of the public trusted senior civil servants and only 24 per cent trusted Ministers. Against that background do the Government realise that the relatively modest restrictions imposed by the Advisory Committee on Business Appointments on civil servants and Ministers moving to the private sector are necessary, both to prevent sleaze and to prevent trust falling even lower? If there is to be any change, it should be, as the committee recommends in its sixth report, towards greater stringency.
Lord Bassam of Brighton: My Lords, it is right that we review the rules from time to time. No doubt that will be one of the issues that are looked at in the review. The probity issue is important and the noble Lord is right to highlight the importance of retaining public trust and confidence. I am almost tempted to ask how many people trust Liberal Democrats, but perhaps that would be unfair across the Dispatch Box.
Lord Sheldon: My Lords, will my noble friend acknowledge the problems regarding civil servants' relations with business and that in the decisions that they make their independence may be at risk, not least in the light of their possible post-Civil Service career? This is a real danger that needs to be taken seriously.
Lord Bassam of Brighton: My Lords, the noble Lord is quite right to draw attention to the importance of that issue and I am sure that Sir Patrick Brown, with his extensive experience of the public service and the private sector, will be willing to draw on the experience of others in putting together his report—and focus on exactly that sort of issue.
Lord Cope of Berkeley: My Lords, in the face of increasing politicisation, would not one measure to improve the trust of the public in the Civil Service be a Civil Service Bill, such as has been proposed by the
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Public Administration Committee in another place, has been placed before another place by my honourable friend Oliver Heald, has been supported by the Deputy Prime Minister but has been left on the shelf by the Government?
Lord Bassam of Brighton: My Lords, this is not a matter that has been left on the shelf, as the noble Lord is well aware. We are committed to publishing a draft Bill for consultation during the current parliamentary Session. I have no doubt that that will happen.
Baroness Williams of Crosby: My Lords, perhaps I may declare an interest as a former member of the Advisory Committee on Business Appointments and draw attention to the work that is involved in deciding the length of time that should elapse before a very senior civil servant can take up an appointment, usually a very senior appointment, in the private sector. While I was a member of the committee that period of time began to shrink and has continued to shrink. I accept the Minister's comments on the importance of an interchange between the public and private sectors, but that is less important than the integrity of the public sector. Will the Minister ensure that the new rules do not further weaken one of the most important pillars of the integrity and honesty of our Civil Service, a value we should not put at risk at any time?
Lord Bassam of Brighton: My Lords, the Government are on record many times in making plain their belief, their confidence and trust in the public service. We do not wish to see anything happen that would undermine that in any way, shape or form. I am not sure that I agree with the noble Baroness's observation on the shortening of the period between leaving the public service and taking up appointments in the private sector. We should applaud the work that the committee undertakes and we have the utmost confidence in the members of that committee and the advice that they give, particularly to Ministers and civil servants.
Lord Armstrong of Ilminster: My Lords, perhaps I may declare an interest as having once been the victim, if that is the correct word, of the rules on business appointments. I can assure the House that six months is a very long time between one's retirement and moving into an appointment outside. It is extraordinary how quickly one becomes completely out of date in terms of what one knows about what happens in government and in terms of contacts. I take the point made by the noble Lord, Lord Sheldon. Would it be possible to say that for any civil servant whose card has been marked by a business employer before his retirement the period of delay while he has to wait to take up that appointment should be as long as possible?
Lord Bassam of Brighton: My Lords, I applaud the noble Lord's observation. I am sure that it is one on which Sir Patrick will draw in conducting his review. In a sense it is an appeal to the whole House; if noble Lords

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have evidence that they wish to draw to Sir Patrick's attention, I am sure that he will be happy to learn of their experiences.

Housing Bill
11.36 a.m.
The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Rooker.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Schedule 11 [Buildings which are not HMOs (except in Part 1)]:
On Question, Whether Schedule 11 shall be agreed to?
Baroness Maddock: It was agreed last time that we had discussed this matter enough and I have nothing else to add today, unless the Minister has something to say.
Schedule 11 agreed to.
Clause 220 [HMOs: certain converted blocks of flats]:
[Amendment No. 65 not moved.]
Clause 220 agreed to.
Clause 221 [HMOs: persons not forming a single household]:
Lord Rooker Lord Rooker moved Amendment No. 65C:
Page 167, leave out lines 4 to 7 and insert—

"(b) one of them is a relative of the other, or

(c) one of them is a relative of one member of a couple and the other is a relative of the other member of the couple.

(4) For those purposes—

(a) a "couple" means two persons who are married to each other or otherwise fall within subsection (3)(a);

(aa) "relative" means parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew or niece;"

The noble Lord said: I beg noble Lords' pardon for the short delay as my notes have had to be changed due to changes in the selections. In order for a building to be regarded as being in multiple occupation, it must be occupied by persons who do not form a single household. In other words, there need to be at least two households occupying the building. Clause 221 provides that unless persons form part of the same family or are in a relationship with one another, as prescribed in regulations—for example, carers—those persons will not be regarded as a single household. For example, a group of unrelated students or young professionals sharing a house will not constitute a multiple household. Members of the same family living together will be regarded as a single household. The family definition is in subsection(3).
Government Amendment No.65C is intended to clarify that as regards unmarried partners. A relation of one of the couples is also treated as a relation of the other partner for the purpose of defining a family in subsection (3). In effect, the amendment is intended to clear up an anomaly in subsection (3) as currently drafted, which, it could be argued, discriminates in its treatment of unmarried couples and their family relations. That would be very unfair. I beg to move.
Baroness Hanham: I thank the Minister for his description of the amendment. It looks about as opaque as a closed window. If that is the Minister's understanding of the amendment, we go along with it.
On Question, amendment agreed to.
Clause 221, as amended, agreed to.
Clause 222 agreed to.
Clause 55 [Designation of areas subject to additional licensing]:
Baroness Hanham Baroness Hanham moved Amendment No. 66:
Page 37, line 9, leave out "persons" and insert "both tenants and landlords"
The noble Baroness said: Clause 55 creates discretion for local authorities to apply additional licensing when they deem it appropriate. The clause makes specific reference to issues that may arise when a house in multiple occupation is being managed "sufficiently ineffectively"—a lovely way of using English—as to cause a range of problems for those who occupy the HMO or for members of the public.
By its very nature, additional licensing is contentious. Landlords will be mindful of the fact that Parliament is giving local authorities a significant power. Although the Bill describes the circumstances in which they might exercise that power in broad terms, it is important that the Government be more specific when the Bill is implemented.
With that in mind, Amendment No. 66 attempts to bring a greater degree of clarity to those individuals that a local authority must consult before making a decision to extend licensing. As it stands, the authority has only a requirement to take reasonable steps to consult "persons" who are likely to be affected. We believe that that is too vague for comfort. Our amendment would stipulate that the authority must attempt to consult both landlords and tenants before going ahead with an extension to its licensing regime.
Amendment No. 67 would place on an authority a duty to make public as wide as possible its decision to extend the licensing scheme to a certain property. We believe that this is a sensible and practical way forward allowing for the widest possible number of people to see the steps that the authority has decided on.
There are two further amendments in this group, Amendments Nos. 69 and 110. Clause 78 would in effect place on an authority the duty to show both to the appropriate national authority and to the authority's own local electorate that the powers that it had decided to use to extend the use of selective licensing of HMOs was in the best interests of all in tackling the problems it had so identified.
In effect this is a safeguard measure that would make an authority think twice before it was able to use the powers of extending selective licensing. For whatever reasons, we would be concerned that an authority with these new powers could in effect decide to extend the licensing regime to any property if it so wished. Perhaps the Minister can give us some reassurance that these powers would not be open to abuse. Under this amendment the local authority would have to show both upwards and downwards that its intended action was indeed merited. I beg to move.
Baroness Maddock: My Amendment No. 68 is grouped with the amendment now moved. It refers specifically to local authorities being sure that they are taking a strategic approach to homelessness when designating further areas of houses with multiple occupation to be licensed. Therefore, I support what the noble Baroness has just said because I believe that that will help it to happen. It is important that everyone knows what is going on when this provision comes into effect, particularly the tenants, and that the local authority is mindful of what may happen to tenants if it goes ahead and designates. That does not mean that we on these Benches are not in favour of licensing. The Minister knows that that is not so. It is right that we have as many safeguards as we possibly can to ensure that we are not creating unnecessary homelessness.
11.45 a.m.
Lord Rooker: I believe that I shall be able to satisfy the noble Baronesses. Clause 55 allows a local authority to designate part or all of its area as subject to additional HMO licensing for specified descriptions of houses in multiple occupation. This means that a local authority will have discretion to extend the scope of HMO licensing to HMOs which fall outside the scope of mandatory licensing.
The clause also requires the local authority to consult persons likely to be affected by the designation and most certainly to take account of any representations received before making a designation.
Amendment No. 66 proposes that local authorities consult "both tenants and landlords". In practice the amendment would actually restrict those persons to be consulted. Although landlords and tenants are obviously the people who will generally be most affected by a proposal to extend licensing, they are not the only people whose views matter. Mismanagement of houses in multiple occupation can also have a significant effect on other people such as other local residents.
It is for that reason that we require consultation with all people who would have a relevant interest in an additional licensing designation, which includes landlords and tenants in the proposed designated area. However, to prescribe narrowly the groups that should be consulted, as the amendment does, would deny local authorities the flexibility to tailor their consultation to the particular circumstances. Therefore, I hope that that particular amendment will not be pursued.
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Amendment No. 67 would require a local housing authority, in addition to consulting those likely to be affected by designation, to publicise the intent of the designation electronically outside the relevant properties and in the local media.
As currently drafted, the Bill provides that local authorities should take "reasonable steps" to consult those likely to be affected by the designation. We are confident that all local authorities over many years, particularly recently, have developed methods of consultation which are most appropriate for their particular areas. Not all areas are the same. Therefore, we do not believe that it is necessary to specify the forms that the consultation should take. We would rather leave it to the local authorities.
It is perfectly possible that the methods of publicity proposed by the amendment such as notices and electronic means, would be among those employed by various authorities. We believe that the matter should be left to the local authority based on local circumstances and the authority's own procedures and to the relevant groups with which consultation has taken place in order to find the best way to deal with the matter.
Another problem with prescribing the form of the consultation, as suggested in the amendment, is the danger that it could have the effect of limiting the consultation to those methods alone. There are always opportunities for local authorities to use their discretion. Innovative methods are very important. We shall be doing more about that as regards other legislation which has passed through the House such as the planning Bill.
I give some advance warning. All that I say as regards Amendment No. 69 applies to Amendment 110. I shall not repeat myself. Clause 56 sets out further requirements that a local authority must meet when making designations for additional licensing. They are, first, to ensure that licensing fits with the local authority's overall housing strategy: secondly, to seek to adopt licensing as part of a co-ordinated approach to deal with wider issues such as homelessness, anti-social behaviour and empty properties; thirdly, to consider whether there are other courses of action that could be used to deal effectively with the problems identified, and, fourthly, to decide whether additional licensing will, on its own or in conjunction with other policies, make a significant contribution to dealing with the particular problems from which the area is suffering.
Amendment No. 69 would require that in making designations for additional licensing, the local housing authority must be able to provide evidence to the relevant national authority and the local population to show that the designation is necessary to sort out the problems identified in the designated area. As drafted, the Bill provides that in making designations for additional licensing, the local housing authority must consider that the designation would significantly assist it in dealing with the problems identified.
Clause 55 requires the local authority to carry out a public consultation with those likely to be affected by the designation, such as local residents, landlords and

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tenants, before making the designation. As part of that process, the authority will need to demonstrate why it considers it necessary to create the scheme by identifying the problems it is intended to address and why alternative measures are not available or would be less effective in tackling those problems. The designations require either general approval or confirmation from the appropriate national authority before they come in to force.
The approval process is not about second-guessing the local authority's reasons for making the decision. We in Whitehall do not know the particular housing market conditions in great detail. The local authority is best placed to know—much better than any national authority. The approval system is concerned with ensuring that the local authority has carried out the requirements imposed on it through the legislation before making the designation. One of those requirements is to consult on the proposed designation and give local people an opportunity to make representations. So the process is about demonstrating to the appropriate national authority not the need for the designation but that it has gone through a proper, constructive consultation process.
Amendment No. 68 would require that in considering designations for additional licensing, local authorities must ensure that they adopt a co-ordinated approach to homelessness and the provision of advice and assistance to those likely to be affected by the designation. The Bill already provides that, where a local housing authority identifies a problem and wants to make a designation for additional licence in its area, it must seek to adopt a co-ordinated approach to deal with the wider issues, such as homelessness. Local authorities are already under a duty under the Housing Act 1996 to provide advice and assistance for those who are homeless.
We would expect local authorities to use the additional houses in multiple occupation licensing only where it was the most appropriate tool and where there was a problem with a particular category of HMOs. However, we are committed to providing as much flexibility to local authorities as possible on the issue and do not agree that it is necessary to include the requirement provided in the amendment, because the clause already expressly requires local housing authorities to consider the impact of additional licensing on homelessness. I hope that that satisfies the noble Baroness.
As I said, the issues raised by Amendment No. 110 are identical to those covered by Amendment No. 69, so what I have said covers them.
Baroness Hamwee: On Amendments Nos. 69 and 110, can the Minister confirm that the normal rules of reasonableness—the Wednesbury reasonableness—
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apply? Having asked that, perhaps I may ask the noble Baroness whether she is seeking something stronger than that normal reasonableness.
Baroness Hanham: Perhaps I should just say that the answer is no, from my point of view.
Lord Rooker: And I will just say that the answer is yes, from my point of view.
Baroness Hanham: I thank the Minister for his extensive response. I think it was helpful to table Amendment No. 66, because the Minister's response clarified the fact that the intention is to ensure that "persons" goes wider than tenants and landlords. By inserting "tenants and landlords", we really wanted a definition of "persons", but I see that it would be really helpful if people in an adjoining property who were complaining, perhaps, were included in that as well. I think that the Minister confirmed that that is the situation, so I am content with his response.
On designation and the inclusion of publicity by electronic and other relevant means, as far as I can see it is still for the local authority to decide how it undertakes the publication of the designation. However, again, this is a brutal provision giving wide powers and it would seem sensible that it would use at least electronic means of passing on the information and the local media. If it then wants do that in other ways, it can. At least we should lay down a baseline; it would be unfortunate if we cannot at least establish that that will be the situation.
I hear what the Minister says in response to the other two amendments, but I return to the point that the Bill provides reasonably draconian measures for extending licensing and the more that it can be demonstrated that they are taken against the background of authority that has been explained and understood, the better. I thank the Minister for his reply. He has answered Amendment No. 66 to my satisfaction; I beg leave to withdraw it but do not promise not to return to the other three.
Amendment, by leave, withdrawn.
[Amendment No. 67 not moved.]
On Question, Whether Clause 55 shall stand part of the Bill?
Baroness Maddock: We do not actually oppose the clause, but it is difficult to make general comments unless we speak to the Question. This is an important part of the Bill—the Government have also said that—because we have had disagreements about what should be designated as a house in multiple occupation. Unlike the noble Baroness, I worry that there are too many hoops through which to go for local authorities when they are trying to deal with difficult areas. I used to represent an area in the City of Southampton next to the university with a lot of houses in multiple occupation. They had been three-bedroom, two-storey 1930s family houses and created all sorts of problems. If we had been able to designate the area, we may have been able to deal with some of the more difficult problems. With those few comments, I shall not oppose the clause.
Clause 55 agreed to.
Clause 56 [Designations under section 55: further considerations]:
[Amendments Nos. 68 and 69 not moved.]
Lord Rooker Lord Rooker moved Amendment No. 69A:
Page 37, line 44, leave out "locality" and insert "vicinity"
The noble Lord said: Before I speak to the amendment, I want to go back for a moment to my first, inadequate speech on government Amendment No. 65C. It took me a while to rise to my feet and when I did, I had the wrong note, or an old version. I made a statement which, reading it now, I am surprised was not contradicted by the experts sitting opposite. I said that a house comprising unrelated students or professionals would not constitute a house in multiple occupation. I was wrong in saying that; it would indeed constitute a house in multiple occupation. I hope that that saves the need for any letters on that.
I turn to the amendment and with it will speak to government Amendment No. 131A. Clause 56(5) provides a definition of what amounts to anti-social behaviour for the purposes of the Bill. This definition refers to the conduct of occupiers of premises that might constitute nuisance or annoyance in an area surrounding the property, which is referred to as "locality".
Clause 98 provides that the appropriate national authority can prescribe a special interim management order to be made where it relates to protecting the health, safety or welfare of the occupants or others around the premises, which is also referred to as "locality" in that clause.
Elsewhere in the Bill, in particular in Part 4 relating to management orders, the word "vicinity" rather than "locality" is used. These technical amendments have therefore been tabled to ensure consistency in the Bill where the provisions relate to matters affecting persons not residing in the property.
While as a lay person I might argue that locality and vicinity would generally be held to mean the same thing—part of the neighbourhood—apparently there is a subtle difference in definition according to the dictionary. If two different words with a similar meaning are used in a Bill they can be applied and interpreted differently. All that will do is to make loads of money for lawyers in a very unjustifiable way.
Noon
It is amazing how such things occur. The Government have opted for "vicinity", since it is defined as "surrounding area"—that is, of the property—as opposed to the locality, which is wider in its meaning and refers to the area per se. I beg to move.
Baroness Hanham: I thank the Minister for making that change. It may seem arcane, but the description he has given places it finely in focus.
Lord Brooke of Sutton Mandeville: I rise to comment on the Minister's opening remarks. He reminds your
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Lordships' House of the occasion when the great Winston Churchill read—I think, to a party conference rather than to the House of Commons—the same page of his speech twice. At the conclusion of his second rendering he said that the members might be surprised by what he had just done, but he thought it was so important a passage that he really should read it out twice.
It is a compliment to the Minister that when he says something that we should have picked up as nonsense, such is our respect for him as the fount of conventional wisdom that we automatically assume that he is right.
On Question, amendment agreed to.
Clause 56, as amended, agreed to.
Clauses 57 to 59 agreed to.
Clause 60 [Requirement for HMOs to be licensed]:
Baroness Maddock Baroness Maddock moved Amendment No. 70:
Page 39, line 29, at end insert ", or
(c) it is exempt from licensing under section (Exemption where landlord is a member of an approved accreditation scheme)"
The noble Baroness said: Amendments Nos. 70 and 73 are grouped together. Amendment No. 73 is a proposed new clause. The purpose of the amendments is to exempt some properties that are already in existing accreditation schemes from the need to obtain a licence.
Under the amendments, a house in multiple occupation would be exempt if the person managing or having control of that property were already a member of an approved accreditation scheme. Local authorities would approve accreditation schemes operating within their area for those purposes so long as they complied with the requirements laid down by the appropriate national authority. The regulations would set out the criteria for deciding when accreditation schemes could be approved and when approval could be withdrawn. The exemption has to be claimed by giving notice to the local housing authority. It will cease if the person concerned is no longer a member of an approved accreditation scheme.
Many voluntary accreditation schemes have been established throughout the country in conjunction with local authorities. The Residential Landlords Association is promoting its own accreditation scheme. There is a national accreditation network with many local authorities involved. The accreditation movement has developed quickly over the past five years or so and plays a significant part in the private rented sector. We know that accreditation improves standards and increases the competence of landlords, particularly as a result of training. The amendment would cover all types of rented property.
The Government have indicated that the main purpose of licensing houses in multiple occupation is, first, to identify properties; secondly, to ensure that those involved in managing houses in multiple occupation are fit and proper people; and thirdly, to ensure the proper management of those properties.
Accreditation and my proposed amendment achieve all those objectives. As the exemption has to be claimed, local authorities will be notified about the existence of

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houses in multiple occupation. People are concerned about how they will find out where they all are. Applicants would be vetted and there could be disciplinary measures to ensure that those who break the rules are dealt with, but accreditation schemes have shown that they can ensure good standards of management and good management practice.
We are not discussing Scotland, but the Scottish experience is helpful. In the first year of licensing there, it was shown that responsible landlords applied for licences. That is true for accreditation schemes in this country.
I want to see proper control of rented properties and proper standards, particularly in houses in multiple occupation, but we do not want to create unnecessary amounts of bureaucracy and to put aside the good work that landlords have already carried out. These provisions will not work unless there is a partnership between those who rent in the private sector and the Government. One of the reasons the Government gave for limiting the definition of a house in multiple occupation is that they are concerned about numbers. Local authorities are going to have difficulty in setting up a new bureaucracy.
Finally, why do away with an existing bureaucracy that is achieving many of the things that we want? I hope that, even if the Minister does not like the wording of my amendments, he will take away the principle and ensure that we use what is already there to help us achieve our aims. I beg to move.
Lord Best: I rise to speak in support of the amendment. I spoke rather harshly about the measures for licensing houses in multiple occupation earlier because only one-fifth of those properties are covered due to the restrictions on the number of people and the height of buildings. We all know that there are appalling conditions in some of the remaining four-fifths of properties.
However, in relation to this amendment, I take a much softer line and feel sympathetic to those landlords who genuinely want to be part of the good landlord practice that is apparent in many regards in the sector by joining an accreditation scheme. Accreditation schemes are doing quite well. I agree with the noble Baroness, Lady Maddock, that they are taking off, but they still represent a tiny proportion of private landlords.
They are an extremely good way of bringing together the landlords in an area and better educating them, helping those who want to do the right thing to do so. I met two landlords in north London recently who had a good deal of trouble in speaking English. They were, however, keen not to be breaking the law and to be doing the right thing as responsible landlords. They need to be part of a club in which they will receive training and support from colleagues in an area.
It would be a huge incentive for people to be part of an accreditation scheme—which at the moment looks rather bureaucratic to many landlords, who may ask why they should want to be a part of it—if tied to membership was an exemption from at least some of the
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restrictions placed on landlords by being licensed in their HMO holdings. I have heard from the National Federation of Residential Landlords, which is very approving of such a measure and is trying to get its members to become involved with others and with the local authority in many areas. They believe that this would be a boost to accreditation schemes, and I am sure that it would. I have seen the work in Newcastle of a wonderful woman, Maggie Drury, who works with private landlords to better educate and train them. The amendment supports the good guys and sends out a message that we will not come down like a ton of bricks with all the licensing regulations if a landlord is among those trying to do better, so I support it.
Lord Borrie: I wish to indicate a measure of support for the amendment, particularly on the lines along which the noble Lord, Lord Best, has spoken. Later today we shall discuss the complexities of the provisions dealing with the licensing scheme that the Bill introduces. I will probably express my concern about the great task that local authorities will have in initiating and putting through an effective licensing scheme which fulfils all the objectives in the Bill. It will be a formidable task.
The amendment tabled by the noble Baroness, Lady Maddock, seems designed to provide an exemption, not to make it easy for some landlords or those in some parts of the country to avoid an effective licensing scheme, but to play a part in the massive job that lies ahead in achieving effective control of homes in multiple occupation.
Lord Bassam of Brighton: I have listened with great interest to the comments made in support of the amendments and can certainly acknowledge the sincerity and warmth with which the amendments have been supported. However, we need to take a hard practical look at the amendments and the way in which they might operate. For that reason, I wish to start by setting the context.
Clause 60 provides that every HMO to which this part applies must be licensed unless it is under a temporary exemption notice or subject to an interim management order or final management order. It requires that local housing authorities take reasonable steps to ensure that applications for licences are made on behalf of all relevant HMOs in their area. It explains that a licence limits the occupations of an HMO to a maximum number of people or households. Subsection (5) also provides that the appropriate national authority may make regulations setting out how licensing provisions apply in the case of certain converted blocks of flats.
Amendment No. 70 amends subsection (1) of Clause 60 to provide that a house is exempt from the requirement to have a licence if the person managing or having control of it is a member of an approved accreditation scheme. The detail of that exemption is set out in Amendment No. 73, which inserts a new clause. The proposal is that regulations would provide for the approval and withdrawal of accreditation schemes and introduce criteria for the local authority to use in

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determining whether to approve a scheme. The amendment provides that a person managing or in control would have to notify the local authority in order for this exemption to apply. It also provides that if at any time the person ceased to be a member of an approved accreditation scheme, this exemption would cease to apply.
It is only right to say that the Government applaud the accreditation movement, the way in which local authorities, landlord associations and organisations have developed the schemes and the growth of interest in the voluntary nature of such schemes. The schemes exist for a diverse array of properties in the private rented sector, which is very diverse, and I have no doubt that they will continue to be effective for properties unaffected by the licensing provisions in the Bill.
I must also emphasis that the Government believe that such schemes are ultimately insufficient to improve standards for the HMOs targeted in the Bill for mandatory or additional licensing. That is why the HMO licensing provisions have been introduced. As the noble Lord, Lord Rooker, and I have said from the Dispatch Box, we must tackle the worst problems in the sector with an appropriate level of regulation—the worst problems being most commonly with the larger HMOs with the greatest number of occupants. But we also propose to introduce management regulations that will apply to all HMOs, something on which we will consult later this year.
12.15 p.m.
One of the most important distinctions between accreditation and mandatory/additional licensing is that the latter is about licensing a landlord or manager—where a manager acting on behalf of a landlord is the most appropriate person—in respect of a specific property. This is with the principal objective of ensuring that management standards and licence conditions appropriate to that particular property are strictly adhered to. The usual accreditation route would simply not be sophisticated enough in this respect. It would not provide anything like the required level of regulation on a property-by-property basis.
It is important to point out that provisions for new accreditation schemes in respect of properties already targeted by the Bill would serve no useful purpose. At best, they could end up duplicating, and at worst, falling short of the provisions already in the Bill. To end up with a patchwork of accreditation exemptions and mandatory licences would probably add to the bureaucratic burden about which the noble Baroness, Lady Maddock, is rightly concerned. We want a bureaucracy-free system. In reading through the exemption and the way in which it might operate, I can see that it would add to and perhaps extend the bureaucracy that we want to keep to a minimum to make the scheme effective.
I understand and sympathise with the approach being adopted, but ultimately we need a universal scheme targeted at the worst properties first, rather than offering what might end up a patchwork system that is ill suited to dealing with the worst properties.
Baroness Maddock: I thank the Minister for his very full answer, and other Members of the Committee for their support for this approach.
I agree with the Government: obviously, we want to deal with the worst properties first. I suppose, to a certain extent, the Government have limited the number of properties that will be covered because the definition of what constitutes a house in multiple occupation is so limited. I would have liked to hear a little more commitment from the Government to enabling landlords and local authorities to work together and not doing away with all the good work that has been done. I hear what the Minister says, but I did not get from him the feeling that they believed that there was something useful that they could take on board in this legislation. I ask the Minister and his department to look again and see whether there is some way of avoiding throwing away all the good work that can help us to achieve what we all want. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 60 agreed to.
Clause 61 [Temporary exemption from licensing requirement]:
Baroness Hanham Baroness Hanham moved Amendment No. 71:
Page 40, line 16, at end insert "including reversion to single occupancy status"
The noble Baroness said: This simple amendment would ensure that if an owner or landlord sought to return a house in multiple occupation to a single-occupancy dwelling, a licence would be unnecessary. I recognise that most local authorities have planning policies which resist the changing back of houses in multiple occupation to single-family ownership, but it happens from time to time. It would be sensible to include this small opt-out clause to ensure that a lot of bureaucracy did not result from the sale of a property being moved back legitimately into single-family ownership. I beg to move.
Lord Bassam of Brighton: I am always a bit wary about simple amendments. If I explain Clause 61 to the noble Baroness, I hope that she will agree that it is workable and fit for the purpose that she seeks through her amendment.
The amendment seeks to clarify that an application can be made for a temporary exemption from the requirement to license the property where the manager of the property notifies the local authority of their intention to convert.
The amendment is unnecessary because Clause 61 already gives local housing authorities sufficient power in such circumstances. However, when a manager notifies the local housing authority of the intention to convert the property so that it will have single occupancy status and the authority is satisfied that steps

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have been taken to achieve this, we would expect—and this is the important point—that the housing authority would consider granting an exemption notice in those circumstances.
Clause 61 has been drafted with the intention of giving a wide discretion to local housing authorities to serve temporary exemption notices; it should not include specific instances where a temporary exemption should be granted in any event by a local housing authority.
I confirm that Clause 61(1) covers the situation that is described in Amendment No. 71, so it does what the noble Baroness is trying to do with her amendment. I hope that this explanation will assist the noble Baroness,
Baroness Hanham: It assists greatly and clarifies the position.
I hope that planning authorities and housing authorities speak to each other, because in some cases this is a planning matter before it becomes a housing matter and so it would have to be moved between the two. In the light of the Minister's comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hanham Baroness Hanham moved Amendment No. 72:
Page 40, line 18, at end insert—
"( ) An owner of a property in the process of selling that property shall be entitled to a temporary exemption until it has been sold, and the subsequent owner shall be entitled to a similar temporary exemption in which to make the necessary preparations to obtain a licence, if a licence is required under the terms of the Act."
The noble Baroness said: This is a not dissimilar matter and I expect that I may get a similar reply from the Minister.
We all recognise that the housing market is an evolving environment. It includes first-time buyers, people moving from one property to the next and properties moving in and out of the rented sector and the licensing regime. It is important that we make provision for properties in transition and ensure that landlords or freeholders who are either buying or selling properties are not unnecessarily penalised under the Bill.
As with the last amendment—which has now been nicely explained—I hope that this is a sensible amendment that would make provision for landlords to have an appropriate exemption in the case of selling or buying a property.
Amendment No. 97 works in conjunction with the lead amendment. It would allow being in the process of selling a property to be a defence for not having a licence. Some people who are buying a property and are not fully familiar with their obligations on licensing could be caught out. A suitable and reasonable period
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should be allowed so that they can be made aware of the particular requirements demanded of them. I beg to move.
Lord Bassam of Brighton: I explained in part the effect and impact of Clause 61. It provides that a person managing unlicensed property can notify the local housing authority of their intention to take particular steps to ensure that the property is no longer required to be licensed—for example, if he or she intends to sell it or convert it to single occupancy status.
The local housing authority can, if it wishes, serve on that person a temporary exemption notice which is valid for three months. That notice is renewable for a further three months if the housing authority considers that there are exceptional circumstances that justify serving a second notice. No more than two temporary exemption notices may be served.
The problem with the amendment is that it is too wide. It is conditional upon the property being sold and is consequently for an indefinite period.
This amendment was tabled and debated in another place and the Minster pointed out at that stage that the amendment would allow a potential loophole to the legislation. It could give rise to situations where unscrupulous landlords who want to avoid licensing their property could simply put their property on the market indefinitely and ensure that it was never sold. Landlords could also use the exemption to delay obtaining a licence by claiming that the property was in the process of being sold. I am sure that the noble Baroness does not intend that to be the case, but the creation of that loophole would be a consequence of the amendment.
The objective behind the amendment can be met by use of the temporary exemption notice procedure. This is valid for a period of three months and can be renewed for a further three months when a person genuinely intends to sell the property with vacant possession.
Temporary exemption is only available where genuine steps are being taken. A property transaction with tenants in situ is not in itself evidence that such action is being undertaken. When a property is transferred there should be sufficient time during the sale process for the prospective owner to take steps to obtain a licence. Clause 71(4) provides that they will not be committing an offence of operating without a licence if they have made an application for a licence which is yet to be determined or which is still subject to appeal.
If an application for temporary exemption is refused by the authority, an appeal against that decision can be made to a residential property tribunal.
Amendment No. 97 would provide that in proceedings against a person for an offence of managing an unlicensed property, it should be a defence that the owner of the property is in the process of selling it at the time that the requirement for a licence is issued. The fact that a person is in the process of selling a property is not necessarily conclusive evidence that it is no longer a house in multiple occupation or that the seller is taking serious steps to ensure that it will cease to be one and will not therefore be subject to licensing.

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Why should tenants lose the protection that is given to them under licensing simply because of a proposed change of landlord?
As I commented in relation to an earlier amendment in the same vein, the proposal would create a potentially large loophole that would allow people to avoid licensing. Landlords could claim that they are in the process of selling without ever having a serious intent to do so.
Having explained the background and pointed out the deficiencies of the amendment—although I can see the import of these matters—I hope that the noble Baroness will see the problems that it would create and withdraw it.
Baroness Hanham: I can confirm that I will withdraw the amendment today, but I cannot confirm that I will not come back to it. The Minister has demonstrated to my satisfaction that this amendment is flawed because of the potential loophole that he suggests.
There are ways in which that loophole could be addressed within the amendment by giving a time scale. It is important that people who seek to sell property in a bond fide manner with or without tenants—who may or may not at that stage have had to seek a licence or been licensed—are not then encumbered with the problem of registration and being licensed at the time when they are also trying to sell.
I hear what the Minister says. I am less satisfied with his reply about this aspect on this amendment than I was on the previous one regarding the implications on Section 61. The Minister has produced evidence of an area that we have not addressed correctly and I think it is likely that we will return to this at a later stage. I thank the Minister for his reply and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 61 agreed to.
[Amendment No. 73 not moved.]
12.30 p.m.
Clause 62 [Applications for licences]:
Baroness Hanham Baroness Hanham moved Amendment No. 74:
Page 41, line 27, leave out "maximum"
The noble Baroness said: Under the Bill, authorities will prescribe the maximum fee payable for a licence. That could cause confusion, for example, where an owner has a number of houses in multiple occupation in areas that are administered by different authorities. The amendments suggest that the Government or the National Assembly for Wales should set out in guidance what local authorities should charge so that we do not have someone paying substantially different fees in different areas and not understanding why.
While we favour local discretion on fees and other such charges, there is very real concern among landlords about the costs of such schemes contained within the Bill. Therefore, we seek to leave out the word "maximum". I beg to move.
Lord Rooker: I regret that my answer will be a little longer than that short speech because the matter is more
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complicated than the noble Baroness would have us think. As she said, Clause 62 provides that in making an application for a licence a local authority may require the payment of a fee. Currently, we are having discussions on that issue. We are making good progress with the Local Government Association on the costs of running licensing schemes. The maximum fee will be set through secondary legislation. Of course, we will consult on that in due course.
Amendment No. 74 would remove from local authorities the discretion to set their own licensing fees. In effect, it would require a fixed fee to be imposed across all local authorities. I shall seek to explain why that would not be a good idea. First, I want to make it clear to those people who would be affected that the Government are committed to ensuring that the costs of licensing to landlords are kept to a minimum. There is no question about that. We also wish the licensing regime to be self-financing through the revenue received. That of course is also important.
There is a case for a common approach between authorities. The noble Baroness made a point about landlords with properties in more than one authority, but there is a case for local discretion. The average cost of running schemes will vary in the country from authority to authority, and local fees should reflect that.
A flat rate national fee, as suggested by the amendment, would inevitably have to be set at the upper end of what would be considered to be viable. That would mean many local authorities making a profit on running the scheme. We are not in favour of that and do not want that to happen. We seek to avoid local authorities making a profit from running the scheme. Therefore, if a local authority has a lower cost base and can recover its costs, it can charge a lower fee.
Of course, local authorities might want to set lower fees in certain circumstances; for example, to landlords who are part of an accreditation scheme where, by definition, the cost of running things should be a lot less. That is inevitable. In some ways, it is almost a financial advantage for landlords to join such a scheme. That approach would reward good landlords who are part of such schemes.
Effectively, I would make the same points in relation to Amendment No. 113. It is seductive to suggest having one fee nationally in order to take account of the one example given by the noble Baroness; that is, landlords with properties in more than one authority. Here is a case for making local authorities accountable for the service that they are providing; for getting the costs of the scheme recovered by the fees; for keeping the fees as low as possible; and for using the discretion to reward landlords who, for example, are part of accreditation schemes. The cost of doing business with them will inevitably be less, which would be an incentive to keep fees lower. The alternative is local authorities making a profit, which we do not want to happen.
Baroness Hanham: I thank the Minister for that reply. The setting of a maximum fee seems to do almost everything that the Minister has described as being unfeasible or incorrect. In most authorities, the amount

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of work that has to be done for registration and licensing will be fairly similar. The only difference will be the costs in London where there are probably slightly higher salary scales. But in reality the costs ought to be fairly uniform across the base. For the Government to give an indication in guidance what those fees should be would be helpful. Although the Minister talked about local authorities not making profits, there might be a sort of leapfrogging of local authorities looking over their shoulders and saying, "Well, actually, they are charging so and so. Why do we not put it up as there is no limit?".
Here, there is an element of trying to ensure that those fees are reasonably constant and that there is not a great discrepancy between local authorities. The Minister is obviously not moved by my very short speech. I shall consider his reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 62 agreed to.
Clause 63 [Grant or refusal of licence]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 75:
Page 41, line 42, at end insert ", or
(c) grant a provisional licence in the circumstances set out in subsection (6)"
The noble Lord said: The Housing Bill as currently drafted requires local authorities to grant or refuse licences for houses in multiple occupation. The authority may grant a licence if it is satisfied that the house is reasonably suitable for occupation for the maximum number of households or persons set out in the application; that the proposed licence holder is fit and proper; that the proposed manager is either the person having control or is an employee or agent of the person having control; that any proposed manager is fit and proper; and that the proposed management arrangements are satisfactory.
Where applications for HMO licences are made local authorities will have five years to satisfy themselves that there are no Part 1 functions that ought to be exercised, although licence applications should be dealt with within six weeks.
There appears to be a presumption that local authorities will grant licences without an inspection of the property as they will identify health and safety hazards that are the landlord's responsibility and can be dealt with under Part 1 during the licence periods.
There are faults with that approach, which could lead to the following range of practical problems. Local authorities will be reluctant to issue full licences without inspection. The granting of a licence implies to tenants and landlords that the house is wholly satisfactory, therefore giving a false sense of security. No local authority will be willing to take the chance of a fatal fire occurring in a "licensed HMO" that has not been inspected, or that might contain other serious hazards.
Few, if any, local authorities know where all the licensable HMOs in their areas are, despite the duty on fire safety contained in the 1997 fire safety order. For many authorities there will be relatively few HMOs that
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have been inspected recently, prior to the licensing provisions coming into force. Local authorities cannot be satisfied that a house meets prescribed standards without inspection.
The demands on resources however will be substantial if local authorities try to inspect every licensable HMO before grant of licence. It is likely that the system will grind to a halt and thereby fall into disrepute. It would not therefore achieve the goal of securing the protection of those living in the so-called "higher risk" HMOs.
The primary responsibility for ensuring that the health and safety of the occupants of HMOs is not put at risk as the result of the housing conditions—either physical or the result of management failures—lies with the owner or licence holder. Therefore, within the licensing system there should be provision that does not rely wholly on policing and inspection by local authorities or on inadequate information provided in licence applications.
A system of provisional licences could meet those concerns and be issued where the landlord supplies evidence not only that there are in place satisfactory management arrangements but also that in all respects the house is reasonably safe, including no unacceptable hazards under Part 1. That is what Amendment No. 78 attempts to achieve in introducing such a provisional system. In effect, Amendment No. 75 would allow that to happen. I beg to move.
Baroness Maddock: My name is attached to Amendment No. 75. I wonder whether, with the leave of the Committee, I can put the groupings back and group Amendment No. 79 with Amendments Nos. 75 and 78, because Amendments Nos. 75 and 79 are virtually the same.
Lord Rooker: This is why I am gob smacked with the running of this place and the shambles that we are in. All three amendments were grouped together, and this morning they were degrouped. My staff worked until midnight, and from six o'clock this morning, reorganising all the files because of the degrouping.
It so happens that I was going to make the same speech in answer to the new two groups because the three amendments were grouped together in one speech. There was no separation.
The noble Baroness says that she wants them put back together again. Why separate them in the first place, causing untold extra hours for Civil Service staff? I shall have to register a complaint about it. I am happy to go along with what the noble Baroness wants to do because it is obviously convenient. But why degroup in the first place?
Baroness Maddock: I was unaware of how the degrouping happened. It had nothing to do with me.
Lord Rooker: Who is in charge of this place? The Government are not.
Baroness Maddock: I arrived at 10.30 a.m. and it had been changed, I am not sure how it happened, but for the convenience of the Committee, I think we agree on what we should do.

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All the amendments have been brought to our attention by the Chartered Institute of Environmental Health Officers. Environmental health officers are concerned about how they will operate and whether they will do so satisfactorily. I do not have a great deal to add to what the noble Lord has said, but I hope that the Minister will look favourably at the issues behind the amendment, which is about ensuring that the system works effectively and smoothly. In a sense, it is in line with other amendments in that we are trying to use what is already happening, and trying not to recreate new things to deal with the same problems.
I look forward to hearing what the Minister has to say, and I certainly do not want him to have to say it twice.
Lord Borrie: For many years I was the licensing authority under the Consumer Credit Act 1974, covering lenders, credit brokers, credit reference agencies, debt collectors, and so on. I am conscious of the work involved in making such a scheme a reality in terms of effectiveness and perceived effectiveness. Any licence issued by a responsible body tends to give the licensee a stamp of approval. If a licence issued by a respectable public authority is given without adequate inquiry, or without the adequate inspection of premises, which we are discussing today, it may suggest fitness of the property for various purposes, fitness of the landlord, fitness of management arrangements, and so on, which is unreal.
Local authorities must introduce timely procedures so that there are not too many bureaucratic delays. Will that mean that some licences are awarded although they are not justified in the terms of the fitness required under the Bill?
I have the consultation document published only a couple of months ago from the Office of the Deputy Prime Minster, which deals with licensing in the private rented sector. On page 7, there is a convenient executive summary of the consultation document. It uses words that are a little stronger than those used in the Bill, but it suggests what the Government believe. It states:
"Licensing will ensure that relevant landlords are fit and proper persons or if they are not that they employ agents who are. It will also ensure that the standards of tenancy relations management and property management employed by a landlord or agent are adequate."
There must be a great deal of anxiety and doubt among those of us both inside and outside the House who are concerned with the problems of multiple-occupation housing and whether the licensing proposals that we are now discussing will be as effective as they ought to be.
12.45 p.m.
Lord Rooker: I accept the thrust of what has been said, not least the remarks of my noble friend Lord Borrie. We are not in an ideal world, but I hope that I can give a satisfactory explanation as to why we would ask the Committee to reject the amendments. There are two further stages, so we may be able to explore matters further on the basis of what I say now.
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Clause 63 sets out the matters about which a local housing authority must decide before it can grant a licence. Those include the suitability of the house for multiple occupation, that the proposed licence holder or manager is a fit and proper person, and that the proposed management arrangements are satisfactory.
Clause 66 provides that a local housing authority may include conditions in licences, for example, to require facilities and equipment in good working order to be made available to meet prescribed standards for multiple occupation under Clause 64, or that necessary works are carried out within prescribed periods.
I shall give an example of what I mean, as I came across one last week. There is a house in multiple occupation in the city of Birmingham. I think that five students occupy the house, and the landlord is getting an enormous sum of money every month. They have joint facilities. I have not been inside the house, but each student has his own CD, computer, hairdryer, Uncle Tom Cobbleigh and all, with all the plugs that we can imagine. I said, "Lots of two-pin plugs?", and they said, "Yeah, lots of three-pin plugs as well".
When they are all in the house, they keep having to go to the circuit breaker because the switches keep tripping. Those are obviously not suitable facilities for five people using lots of electrical equipment as individuals. That is an example of equipment which is in good working order because they obviously need another ring main in the property.
Such conditions will be in addition to those laid out in Schedule 4 as mandatory conditions, covering specific things such as gas safety certificates and smoke alarms. A local housing authority is required as a general rule to address health and safety issues through its Part 1 functions, and not by means of the licensing conditions. This is where there is a split between the Government's approach and the amendments—between Part 1 and Part 2.
The local authority may impose conditions relating to the installation or maintenance of facilities or equipment as part of the licence.
Clause 54(5)(c) requires local authorities to satisfy themselves, as soon as is reasonably practicable, but at the latest within the period of five years, beginning with the date of the application for the licence, that no Part 1 functions ought to be exercised in respect of houses in multiple occupation for which applications have been made.
That will mean that category 1 hazards are progressively eliminated from houses in multiple occupation and, in the case of the highest-risk properties, prioritisation will ensure this happens at the earliest opportunity.
A local authority can satisfy itself through an inspection, or based on relevant previous knowledge of a property, that no action is needed to tackle health and safety problems on premises for which licence applications are made. If, following an inspection, a category 1 hazard is found, the local authority has a duty to act. If a category 2 hazard is found, the local authority has discretion to act.

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Taking them together, Amendments Nos. 75, 78 and 79 provide that a local housing authority may grant only a provisional licence in circumstances when the local housing authority has not inspected the house, and there is no possibility of an inspection being carried out before the granting of the licence. They would do this on the strength of written evidence supplied by the applicant.
We want local authorities to consider health and safety implications in high-risk properties as soon as practicable, and we do not want licensing to be delayed or made unnecessarily complicated because of this. We want a fully comprehensive licensing scheme in place as soon as possible. Not only will that improve management standards, it will ensure that the highest risk HMOs and their landlords are clearly identified as soon as possible for targeting under the provisions of Part 1 of the housing health safety and rating system.
The Bill places a duty on all local authorities to assess the housing conditions of all licensable houses in multiple occupation within five years. This is a brand new requirement since, under the existing legislation, authorities are not under any duty to assess HMOs, although they have the powers to do so. I hope, therefore, that noble Lords will agree that this is a positive obligation for the benefit of tenants which is intended to eradicate the worst hazards in the shortest possible time.
However, the Government recognise that the duty does place an additional burden on local authorities, and it is essential that they are able to plan and prioritise their workload around a sensible timeframe, dealing with the highest risk properties first. Local authorities know the properties in their area and can decide how best to carry out this duty at the earliest opportunity, and well within the maximum of five years. We do not think that central government are in a position better to judge the circumstances in individual local authority areas.
Due to the concentration of houses in multiple occupation in certain areas, it is important to bear in mind that some local authorities may not have the resources to inspect all HMOs subject to licensing within the first few years, and we would not wish to add to the burdens of all local authorities by imposing a whole new set of additional provisions and regulations for provisional licences. We are confident that the pressure on local authorities, not least from tenants and their representatives once this legislation is put on the statute book, will be to achieve the shortest possible time-scale and an adequate system.
I should make the point that, in an ideal world, all properties would be properly managed and free of hazards, but we know that we do not live in such an ideal world. We want to be able to make sure that the highest risk properties are targeted first. It cannot be done overnight. Were we to pass legislation for that, the public would think we were barmy because they know that we could not do it. The resources would not
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be available and it would be impossible. Therefore we have a phased time-scale but, notwithstanding that, one that deals with the highest risk properties first.
That is what we expect local authorities to do. We do not expect them to waste time doing the easiest properties first because they can then chalk up bigger numbers. We want to deal with the safety of tenants and ensuring that we get good management. However, we do not think that a regime of provisional licences would do anything to speed up the process. In fact, it might even slow things down.
I realise that there is a split between us on this. On behalf of the Government, I shall respond by saying that this is a practical matter. In an ideal world all these things would be linked together, but taking a practical approach and making sure that local authorities can target, and be seen to be targeting, the highest risk properties, is important. We are not able to accept these amendments, but no doubt we shall return to this matter at a later stage.
Baroness Maddock: I thank the Minister for his good and full answer. He understands the problems we are trying to deal with here, and what he has said for the record is quite helpful, in particular in guidance for local authorities. However, as he said, it is likely that when we have considered his remarks and again consulted those who work at the chalk face, we may well return to this matter to see whether we can come up with something a little more practical that the Government could go along with.
Lord Hanningfield: I too thank the Minister for that reply, but I do not think that he gave me an adequate answer to why there could not be a system of provisional licensing built into the scheme. No one wants to make the scheme more complicated or bureaucratic, but there could be a stage at which provisional licences are issued. That would not stop other measures to make certain that authorities tackle the most important and hazardous properties first.
As I said earlier, local authorities will be reluctant to grant licences without some form of inspection. We know that even now local authorities have problems in dealing with enforcement processes—just under the simple procedures now in place. At the moment, local authorities are looking for reductions of up to 20,000 staff as a result of the Gershon proposals for management, but here we are imposing new burdens. We must find systems to make the process work more productively.
I echo the comments of the noble Baroness by saying that I shall withdraw the amendment for today, although we shall certainly return to it. However, during the intervening period I hope that the Government will think again about how we can reassure some of those who are unhappy about the present scheme without introducing a provisional

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licence scheme. If they do so, I hope that we can consider these matters again at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 76:
Page 42, line 2, leave out "may" and insert "shall"
The noble Lord said: The purpose of Amendment No. 76 is to make it mandatory for a local housing authority to issue an HMO licence provided that the criteria set out in Clause 63(3) are met. Those criteria are that the house is suitable for occupation by a certain number of persons or households; that the proposed licence holder is a fit and proper person; that the proposed manager of the HMO is a person having control of the house, or an agent or employee of that person—and that he or she is also a fit and proper person; and that the proposed management arrangements are satisfactory—very much as we discussed during the last amendment.
As currently drafted, Clause 63(2) stipulates that if a local authority is satisfied with these specified methods, it may grant a licence. The use of the word "may" introduces a discretion. My amendment would substitute "shall" for "may", so that there would be a duty on the authority to grant a licence once it was satisfied that the specified criteria mentioned above had been met. Otherwise, there is a possibility that local housing authorities could take other matters into account which are not set out in the Bill, which could vary from authority to authority. That would be unfair to the applicants for licences, who would not know the full criteria they have to meet. They may discover that they satisfy one local authority, but not meet the criteria for another. All this will create uncertainty, inconsistency and confusion.
A Bill of this kind ought to set out in full the detailed requirements which have to be complied with. Once those have been met, a licence should automatically follow. In any case, a wide variety of issues already have to be considered before a licence is granted. Subsequent sections of the Bill elaborate on the various criteria and introduce further wide discretions. For example, as the Bill stands, if a house meets the prescribed criteria as regards suitability for occupation, Clause 63(3) gives local authorities the discretion to determine that the property is still not suitable. Under the fit and proper person test, while various issues such as criminal convictions are addressed, these procedures are not exhaustive.
There are restrictions in Clause 66 relating to the licensing conditions, although there is nothing on the face of the Bill to prevent the local authority refusing the licence in the first place for reasons unconnected with the criteria laid down in Clause 63(3). Although there is a right of appeal, landlords should not have to rely on that. It can be costly and time-consuming, and the outcome is uncertain.
Finally, Amendment No. 77 would allow the relevant national authority rather than the local authority to decide on the number of occupants who
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could reasonably reside in a particular household, thus achieving conformity and a standardised playing field across the country. I beg to move.
Lord Rooker: This may be arcane, but I have a good and brief reply to Amendment No. 76 which I am tempted to stick to. The clause is an example of standard drafting of statutory duty. If it will give the noble Lord some comfort, I should like to provide him with the assurance that the amendment would not affect the exercise of local authorities' discretion. If need be, I can explain in detail the background, but in effect it would not make any difference to use "shall" rather than "may" simply because once the criteria laid down in Clauses 63, 64 and 65 have been met, the local authority is basically duty-bound to issue the licence. The amendment would not make any difference.
Amendment No. 77 is slightly different in that it provides for the appropriate national authority rather than the local housing authority to specify the maximum number of households or persons who can occupy a house. There are several problems with this amendment. First, it would remove all discretion from the local housing authority to set a maximum number of households or persons for each individual property in the area. This is when it is precisely the local housing authority which is best placed to carry out this function. Central government in Whitehall is certainly not the best place to carry out that function.
The amendment also goes against the spirit of the licensing provisions elsewhere in the Bill, which are designed to provide local housing authorities with the powers they need to enable them to drive up standards of living accommodation in their area.
Secondly, by definition, the amendment would mean that the appropriate national authority would have to set the maximum number of occupants per living accommodation at a level which is achievable on a national scale. As a consequence, there would be no scope for providing for a greater amount of living accommodation per occupant in those areas of the country where higher standards can be reasonably expected and are achievable.
Thirdly, I must emphasise that the appropriate national authority is already responsible for setting national minimum standards of amenity in secondary legislation—which, incidentally, we shall be consulting on later this year. Such minimum amenity standards can include the occupant to living space ratio that the local housing authorities would, in turn, be able to use when it comes to setting the maximum number of occupants for each property.
It is also worth pointing out that under the existing provisions, licence applicants can appeal to a residential property tribunal against the terms of a licence if they consider them to be unreasonable. This would include terms relating to the maximum number of occupants. So it is not as if, by not having a national maximum number of occupants to living space ratio, the local housing authorities will be setting out the maximum numbers of occupants in licences which are unreasonable without there being any check, as there is a right of appeal in those circumstances.

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The intention of the Bill as a whole is to drive up standards in the private rented sector. We think that the amendment would do the exact opposite and drive down standards in some areas of the country. Therefore, I hope that it will not be pursued.
1 p.m.
Lord Hanningfield: I thank the Minister for his reply. With regard to "may" or "shall", I shall look at his answer and give it some further thought before the next stage. I accept that the Government believe that licences would have to be granted if the requirements were met.
The Minister's reply to Amendment No. 77 was much longer and more detailed. I note what he said and will reflect on it to see whether we need to take this matter further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 77 to 79 not moved.]
Clause 63 agreed to.
Clause 64 [Tests as to suitability for multiple occupation]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 80:
Page 42, line 34, leave out subsection (2).
The noble Lord said: This amendment would leave out Clause 64(2). It is intended that there will be nationally prescribed standards to decide whether a property would be suitable for occupation by a certain number of persons or households. It is anticipated that these standards will deal with issues such as suitability of rooms and the amenities and facilities provided—the number of toilets and bathrooms, and so on. Under Clause 64(2), the local housing authority is given a discretion to decide that the house is still not suitable, even though it may comply with the nationally prescribed standards.
This kind of provision leads to the potential for anomalies between local authorities with similar types of housing—there was a similar issue in the previous amendment. It also allows for gold-plating, allowing authorities to require unnecessarily high standards.
HMOs provide much needed accommodation, primarily aimed at the cheaper end of the market. Imposition of extra requirements will lead to increased costs, driving up rents, making this kind of accommodation less affordable. If national requirements are imposed, then there is a prospect of landlords converting HMO accommodation into self-contained flats which will not automatically require an HMO licence. These flats will then either be sold off or rented out, but at higher rents, causing further loss of affordable accommodation. This has already happened on a large scale, especially in London. That trend could be accelerated.
National prescribed standards will provide for the decent basic requirement. There is no need to give local authorities power to elaborate on these. There will be no firm criteria which landlords can work to because
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local authorities could consider a house not suitable even though the landlord has met the national standards. I beg to move.
Lord Rooker: Clause 64 provides that the appropriate national authority may, by regulation, prescribe national minimum standards of amenities or facilities which must be available to render a house in multiple occupation reasonably suitable for the number of occupants. Subsection (4) sets out the matters that may be prescribed in the regulations. These include the adequacy of number, type and quality of bathrooms, toilets, washing, cooking and other facilities. The Government intend to consult on these prescribed standards before laying the statutory instrument before the House.
Subsection (2), which is the subject of the amendment, provides that before determining that a property is reasonably suitable for occupation by a particular maximum number of households or persons, a local authority may take into consideration more than the prescribed standards for occupation. A person who has been refused a licence or is aggrieved by a condition imposed in the licence because it does not conform, or it is required to conform, to local standards, will, as I said earlier, have the right of appeal to the residential property tribunal against that decision.
Amendment No. 80, which would remove subsection (2), would remove any discretion from a local authority not to grant a licence where it may require a licensing standard higher than those prescribed by the national regulations. As I have said before, the intention of the Bill as a whole is to drive up standards in the private rented sector. We think that the effect of the amendment would, like the previous proposal, be to drive down standards in some parts of the country.
The amendment would make the regulations the maximum standard on which a local authority could insist, rather than a minimum national provision. In some areas of the country, the general standard may be somewhat higher than in the hardest pressed areas. Obviously, the appropriate national authority, in setting the minimum standards to be achieved nationally, will have to organise and pitch those standards at a level which is realistically achievable in all areas. There is no reason for this to drag down standards in areas of the country where higher standards are reasonably expected.
We want to make it clear, however, that if a local authority wished to impose standards above those which were nationally prescribed, those standards must be reasonable and, in particular, relate to the suitability of the house for multiple occupation. Authorities cannot do things willy-nilly or on a hunch. It would therefore not be appropriate for a local authority to require the taps in the bathroom to be gold-plated, for example. Surely no local authority in its right mind would require taps to be gold-plated. I am sure that even in the well heeled local authority of Kensington and Chelsea, houses of multiple occupation do not have gold-plated taps. In other

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words, local authorities must act reasonably, even where they want to set standards which are higher than those nationally prescribed.
It is entirely appropriate that local authorities should be able to set those standards, having regard to the housing stock and conditions in their area. While it is essential that there are prescribed national minimum standards, it is not the role of central government to dictate standards to be applied in every case uniformly across the country, as the prevailing market will vary from town to town and region to region.
Subsection (2) will allow the local authority to take into consideration additional factors. Local authorities are operating in a much more sensible way than they have done for years. I am slightly surprised that the leader of one of our great and esteemed local authorities should have come forward with an amendment that would remove discretion from local authorities. If they act reasonably, it is perfectly right that they should have the powers in subsection (2).
Lord Hanningfield: I thank the noble Lord for that reply. Obviously, I very much believe in local discussion. We drafted the amendment because we were worried that in some areas we could deprive the market of affordable housing because people might prescribe conditions that were too elaborate, therefore taking the houses out of the renting market. However, the Minister has answered my point, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 81:
Page 42, line 38, after second "standards" insert "relating only to health and safety"
The noble Lord said: Amendments Nos. 81 and 82 define more precisely the tests as to the suitability for multiple occupation. They identify health and safety considerations, which are at the heart of the purpose of Parts 1 and 2, at the very core of the clause.
Amendment No. 81 would require that the standards prescribed under the clause relate only to health and safety standards. The clause at present is intended to deal only with standards of facilities and equipment. We strongly believe that health and safety considerations must be at the forefront of such considerations, and should not be downgraded in our perception of such matters. We are probing to see how much the Government share our belief.
Amendment No. 82 returns us to the subject of fire, as it specifically adds the standard of susceptibility to fire hazards to subsection (4), by providing for fire safety standards to be prescribed. That matter also relates to the Part 1 health and safety regime. As was mentioned in another place, there is proper consideration of washbasins, showers and bathrooms, areas of food storage, preparation and cooking, and laundry facilities and so on, but there is no mention of the safety equipment that might reasonably be expected in an HMO to deal with a fire hazard. I hope
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that the Minister can provide us with a better reassurance, as provided during the Committee stage in another place. I beg to move.
Lord Rooker: This is another case in which matters relating to Part 1 are being transposed to Part 2. However, I am not being critical in that regard, because the Bill is long and complicated. I have a good example with which I can, I hope, satisfy the noble Lord.
Clause 64 is intended to deal with standards of facilities and equipment. It is about requiring certain minimum standards of acceptable living accommodation in multiply occupied houses in the 21st century, rather than whether the multiple occupation is injurious or dangerous in itself to health and safety, because that is covered by Part 1.
Clause 64(4)(b), which is right at the top of page 43 of the Bill, allows for standards to be prescribed,
"as to the number, type and quality of other facilities or equipment which should be available in particular circumstances".
It is our considered view, for example, that that could cover fire safety equipment, so we do not see the need for fire safety standards to be prescribed in that sense. This is a matter anyway for Part 1, and the health and safety regime, but the amendment is unnecessary because, according to the advice that I have, subsection (4)(b) could cover fire equipment.
Lord Hanningfield: If it could, why are the Government against mentioning it in the Bill? It is obviously an important part of the process.
Lord Rooker: Because we are dealing with Part 2 of the Bill, not Part 1. That is the dilemma that we face. I understand why there is an attempt to use matters relating to health and safety in this part of the Bill, because we are dealing with houses in multiple occupation. We all understand why we are coming forward with the proposals in the first place: it is not just about good management of the property. There are other matters relating to health and safety, but we believe that they are covered in the detail in Part 1.
I shall go back and check on the matter, because the advice that I have is that the provisions could cover fire equipment. What I need to know is that it does cover fire equipment, so I shall seek further advice and drop the noble Lord a note between courses.
Lord Hanningfield: I thank the Minister, particularly for the last part of his reply, and hope that he can clarify the situation for us before the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 82 not moved.]
Clause 64 agreed to.
Clause 65 [Tests for fitness etc. and satisfactory management arrangements]:
Baroness Hanham Baroness Hanham moved Amendment No. 83:
Page 43, line 7, at end insert—
"( ) On application for a licence, "P" will be required to make a full disclosure of any recorded convictions on the sex offenders register to the licensing authority.
( ) Before the local authority awards a licence it will required to validate both the identity of "P" and information supplied by "P" with the national sex offenders register.
( ) Every HMO manager within an authority's area of jurisdiction will be required to report to that licensing authority any sexual offence conviction gained since the award of an HMO manager's registration.
( ) Every year, local authorities will be required to check the names of all HMO managers within the area of their jurisdiction against the sex offenders register."
The noble Baroness said: This amendment, or something very similar, was moved in the other place, and the Minister there gave a commitment to consider the issue. That is why we are bringing it back at this stage—to see whether by any chance consideration has already been given to it.
At present the Bill does not set out anything to do with sex offences with regard to a manager's fitness to manage a house in multiple occupation, although such crimes could possibly be included under the general heading of "violence". That is not specific, and under most circumstances these days the category is written out as a separate entity. We all know that people who have responsibility for houses in multiple occupation may have vulnerable people in their properties. We are therefore probing again the Minister to explain why such offences were not included in the list of subjects in the Bill.
Amendment No. 83 sets out some of the grounds on which an authority must pay regard to the question of whether a person is fit and proper to hold a licence, were they to have a previous sexual conviction or were they to be registered on the national sex offenders register. They would not be automatically barred, but the fact should be taken into account in deciding whether to grant a licence.
Amendment No. 115 is a related amendment, and would introduce a similar requirement with regard to tests for fitness to cover the later clauses on selective licensing or other residential accommodation. I hope that the Minister has a response that will indicate that the matter has been considered in the interim between the two stages in the other place and here. I beg to move.
Lord Rooker: Clause 65(2)(a) does of course refer expressly to the Sexual Offences Act 2003. An amendment was made to that Act following the debate in the other place.
Clause 65 sets out, among other matters, the evidence that the local authority must consider when addressing the question of whether a person is a fit and proper person to be a licence-holder or manager of a house. That includes whether the person has committed an offence involving fraud, dishonesty, violence or drugs. Following debate in the other place, offences listed in Schedule 3 of the Sexual Offences Act 2003, which attract notification requirements, were
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also added to the list. To that extent, I believe that we have met the thrust of the noble Baroness's amendment.
Amendment No. 83 would specifically require a person to disclose recorded convictions on the sex offenders register to an application for a licence to act as an HMO manager, as well as requiring the local authority to verify such information. In addition, the third subsection of the amendment would require HMO managers to inform the licensing authority should they be convicted of a sexual offence since their registration as an HMO manager. The fourth subsection of the amendment would require local authorities to check the names of all HMO managers in their area, annually, against the sex offenders register.
The exact same amendment was tabled by the Opposition and debated in the other place, at which time the Minister said that we would consider the issues raised. As a result, we introduced amendments to the Bill that added offences listed in Schedule 3 to the Sexual Offences Act 2003 to the list of evidence within Clause 65(2). I hope that that satisfies the noble Baroness.
Baroness Hanham: I apologise to the Minister as I had not noticed that the Sexual Offences Act was included in subsection (2). The Minister's reply satisfied me as regards the inclusion of the measure as a result of the considerations in the other place. I thank him for drawing attention to that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hanham Baroness Hanham moved Amendment No. 84:
Page 43, line 40, leave out "and funding arrangements"
The noble Baroness said: Before it can grant an HMO licence the local housing authority has to be satisfied regarding the management arrangements for the property. One of the specific requirements is to take into account the landlord's funding arrangements. The amendment would remove this specific requirement to consider funding arrangements in each and every case.
Before granting an HMO licence the authority must be satisfied that the proposed licence holder and the proposed manager, if different, are fit and proper persons. While there is an indicative list of matters that the local authority must consider, this is not exhaustive and there is no reason why the financial position of the proposed licence holder or manager should not be considered as part of this test if there were circumstances making this appropriate in a particular case.
There may be cases where a local authority has justifiable concerns for financial reasons that a licence holder will not be able to meet his obligations. However, these are likely to be reasonably rare. The Government do not appear to have appreciated the heavy burden that is going to be placed on local authorities as well as on landlords and managers. The licensing system will be administered by

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environmental health officers. Environmental health officers have, in most cases, little experience of financial matters. Is it proposed by the Government that environmental health officers should vet landlords' accounts? Is it intended that bank references should be taken up? Anyone who deals with bank references knows that they are written in code. Environmental health officers will not necessarily have the experience to vet accounts or council references.
Local authorities have limited experience of interpreting private sector accounts and probably none at all in relation to landlords who are small businessmen and women. Their experience is limited to one-off contracts. A provision of this kind will also work to the detriment of new entrants because such landlords will have no financial track record.
The financial assessment for a landlord should be left to the financial institutions funding the borrowing on a property. If they are not convinced of the landlord's financial position, there will be no money forthcoming. The automatic requirement to consider the financial circumstances of the applicant is unnecessary and bureaucratic. It will require considerable resources of an entirely new kind not possessed at present by local housing authorities. I beg to move.
Lord Bassam of Brighton: Clause 65 sets out the matters to which a local authority must have regard in determining whether the conditions in Clause 63 are met for it to grant a licence. One of the matters it must consider in deciding whether the management arrangements for an HMO are satisfactory is that funding arrangements are suitable. As the noble Baroness clearly explained, Amendment No. 84 seeks to remove that requirement in subsection (6)(c).
We take a contrary view. We take the firm view that it is necessary to ensure that funding arrangements are suitable as that goes very much to the heart of adequate, effective and responsible property management. Clearly, standards of management or repair will seriously deteriorate if a manager does not have the money, or access to that money, to carry out his obligations. I am sure that the noble Baroness would agree that being a landlord is not simply about collecting rents and making profits; it imposes important obligations on that person to ensure that the property is well maintained, well managed and entirely suitable for the number of residents for whom it provides housing and shelter. We take the view that it is therefore quite proper that under a licensing scheme the local authority should be satisfied that the manager of the property has, or has access to, sufficient funds to carry out those obligations.
The noble Baroness prayed in aid of her argument that local authorities have limited experience in looking at business finance and that environmental health officers might lack the relevant expertise. My experience as a local authority leader was that on many occasions my local authority had to consider the financial arrangements for developments and for businesses taking over council leases and properties and so on. I should be very surprised if the noble
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Baroness's local authority did not have access to that kind of expertise within its financial management and other sectors. Local authorities are highly complex business organisations themselves and therefore well understand the importance of dealing with people who have the means to run and effectively manage the properties that we are discussing. Therefore, I do not find that a convincing or compelling argument. If this provision is not in the Bill, it will potentially lead to a situation in which local authorities are invited to grant licences to people who frankly do not have the means to run or manage effectively property in their control and ownership. We do not believe that the amendment has merit. I hope that, on reflection, the noble Baroness will withdraw the amendment today and not bring it back on a future occasion.
Baroness Hanham: I thank the Minister for his reply. The whole question of whether a local authority has adequate resources to deal with all the matters that will have to be considered under the fitness test is something that we have not dealt with in very great detail. As my amendment suggests, environmental health officers will require a wide variety of experience. In view of what the Minister said, funding will clearly constitute part of that; namely, an ability to look at and certify accounts, or, indeed, to transfer that to someone else.
I hear what the Minister says. I thank him for his reply and, for the moment at least, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 65 agreed to.
Lord Rooker: I beg to move that the House be resumed. In moving this Motion, perhaps I may suggest that the Committee stage begins again not before 2.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

School Inspections
1.28 p.m.
Lord Dearing rose to ask Her Majesty's Government what changes are desirable to schools' inspections so that they make the best possible contribution to the quality, effectiveness and well-being of education.
The noble Lord said: My Lords, some months ago I suggested that we might have a discussion about what changes are desirable to schools inspections so that they can make the best contribution to the quality, effectiveness and well-being of education.
I begin by welcoming the noble Lord, Lord Filkin, to his new appointment. We shall do our best to assist him regarding the conclusions to which he should arrive!
Since I tabled the Question much has happened. In particular, the Government published in June their proposals for A New Relationship with Schools and a month later their Five Year Strategy for Children and Learners.
I want to relate my remarks to what is being proposed. I begin by referring back to what I understand is the statutory basis for inspection set out in the 1996 Act; that is, educational standards, what is achieved in education, leadership and management and spiritual, moral, social and cultural development. I propose that to those final four qualities is added the word "physical". I do so partly against the background that in the five-year strategy the Government place particular emphasis on the health of people in schools. The five-year strategy states:
"In particular our aim is that every school should be a healthy school, giving good teaching and advice about nutrition and exercise, backed up by its school lunches, by PE and sporting activities".
It commits itself to tackling the growing problem of obesity among our young people. All this is,
"supported by a policy to increase the time spent on quality PE and Sport, to two hours a week, and there is reference to an investment of £1 billion across Government by 2006 on PE, School Sport and Cub Links".
On Tuesday, I read a main, front-page article in the Daily Telegraph about a study by academics at the University of Dundee of the health of 150 teenagers in that city. The finding was that one fifth of those young people had early signs of heart disease. I welcome the emphasis that the Government are giving to the issue of health. I request them to consider adding physical development to spiritual, moral, social and cultural development.
Having made that suggestion, I must welcome in broad terms the Government's intention to reduce the "run-up to the wicket" period of great hard work in preparing for inspections and the greater involvement of HMI, although I could, perhaps, wish it to be even greater than is proposed. I also welcome the intention to cut down the time taken for inspections, as long as that will produce reliable inspection reports.
It is here that I have a question. As I understand the February publication, the proposal is that inspections should be twice as frequent as at present but much shorter. Indeed, the man- or woman-hours put into inspection will be one quarter of what they are at present. That is very material. I know that the noble Baroness, Lady Perry of Southwark, if she were present, would want to urge the importance of mature, individual and collective professional judgment by the inspectors and ask whether there would be time for that. If Chris Woodhead were here, he might repeat a warning that he gave to the inspectorate when he was in the chair that inspection must be free of firmly held orthodoxies about the way to do things. Will there be time for inspectors doing such quick inspections to size up an approach to teaching that is not their preferred approach?
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I invited two chief education officers to give their impression of the reliability of inspections at present, with the longer commitment of time. I shall read their words. One wrote:
"We have suffered in the past from some of our best schools failing and some of our weakest being given a sound report".
The other wrote:
"I have known schools that probably should have been in serious weakness or special measures which escaped it, and conversely ones where to put them under was harsh and where I was as sure as I could be that a different team would have come to a different outcome".
As I understand the strategy document, there will be a lot of change in schools in the next few years—good changes—that will increase the ambit of the inspectorate and the challenge facing it. I welcome the intention—indeed, the practice—of piloting the changes before introducing them, but, given what is proposed in the five-year strategy, I wonder how reliable a guide they will be to what we will need in the future. That is my first point, and I pose it as a question. It is well intended but seriously meant.
My second point is about schools, parents, children and society having a fair deal. I can think of no other profession that is so vulnerable to inspection and public reporting of the outcomes. That has always been a worry for schools because their reputation is on the line. The Government's wider proposals for schools will make it easier for successful schools to expand and get a decision within 12 weeks. However, if an inspection report giving the thumbs-down is published, it will be not only the reputation of the teachers that may be on the line but the future of the school.
The intention is that, when the inspectors report, having completed their visitation, they will, within one day, give the school a draft of the report. That seems good, but will there be time, in that brief period, for the governors to make an input? Will there be time for the inspectors to give mature, professional, individual and collective judgment, before getting committed? It is asking a great deal of the system to expect it to move so quickly.
There is so much at risk. The report will be published in three weeks, and that will not be the end of it. There will be a school profile in which the school is required to set out the main inspection findings. It will be written in a way that is readable and understandable to parents, so that it is on the record for people.
It is important that further thought be given to providing time for the governors and for mature reflection on the inspection, before something is published. I know that there can be an appeal to an adjudicator on the way in which the inspection has been conducted, but, by then, the damage will be done. The adjudication comes later. As I understand it, the adjudicator cannot look at the judgments that have been made by the inspectors.
I turn to the judgments. As I understand it, that has been a no-go area: the inspectors see what they see and report it as they see it. But such judgments are difficult,

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and the inspections will be quick. There is, as I have argued, so much at stake for the school. If the governors have the support of the chief education officer in the view that a report is seriously flawed and if there is other external evidence—from SATS, say—it should be possible, in circumstances in which there is independent expert corroboration, for a second look to be taken before publication.
I want to welcome the approach, and I want to urge that physical development be added to the spiritual, moral, social and cultural development of children. I have a worry that the time proposed for the new inspections will be inadequate for the job, and I want a procedure to enable proper consideration of the school's input before publication.
1.38 p.m.
Lord Sutherland of Houndwood: My Lords, in the absence of the scheduled second speaker, I rise to present my speech.
The Earl of Listowel: My Lords, I withdrew my name from the speakers list last night and informed the Government Whips' Office. I noticed that there were a great many people with more expertise speaking on the subject this afternoon, and I wanted to allow them more time to speak.
Lord Sutherland of Houndwood: My Lords, I thank the noble Earl for that; it increases the running time from six to seven minutes.
I thank the noble Lord, Lord Dearing, for introducing the debate with his characteristic sharpness and specificity. I welcome the Minister to his new responsibilities and wish him well. A senior civil servant whom I knew once said that the only lobby that he thought more fractious than the education lobby was the arts lobby. Perhaps the Minister can draw some consolation from the fact that that is not included in his current brief.
I begin with a declaration of interest: I was the first HMCI under the new regime that introduced the system that is now, rightly, being rethought and amended. In 1992, when the new system was set up, there were three founding principles. It is important to re-emphasise them because they should be retained, whatever the particular changes introduced. The first was that inspections of schools should be regular. We discovered that some schools had not been inspected for 20 years. The responsibility for inspection was split between national and local sources and a number of schools reported never having seen an inspection team. That was the reason for insisting that there should be regular inspections, perhaps initially on a five or six-year cycle.
The second principle was that the inspection should be independent because there was clearly a confusion of roles among a number of those who were involved in inspection. Perhaps I may put it colloquially—they found themselves as both referees and coaches and it is difficult to combine those two roles: going to a school to inspect what is happening and at the same time
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providing the friendly local support that the well-oiled inspector often did. It is important the inspections are independent, whatever form that may take and it has taken a variety of forms.
The third principle was that the report should be published. That was as equally contentious as the others, but the intention, properly, was that the parents, school boards and the local communities should be aware of the manner of schools operating in their neighbourhoods. I hope that those three principles—regularity, independence and published reports—will be retained through change.
Ofsted was created and I confess that I invented the term, for which some have never forgiven me. Indeed one wag suggested that it should be called "Instead". It was deliberate that it had a new title to indicate that it was a new type of business. The context was not simply the formal creation of an independent inspectorate that would be a non-ministerial government department, but that it would sit alongside a national curriculum, of which the noble Lord, Lord Dearing, knows much and over which he spilt many drops of blood; and national testing alongside the national curriculum. That was a three-pronged approach that, I would argue, over the course of time led to significant improvements in schools over the past 10 years.
Of course times change and it was always envisaged that there should be development in the inspection process from day one. We were entering an area that was almost an unknown quantity. What would we find in 26,000 schools across the country? The intention was to build up a knowledge of what was happening and a database. In the light of that we could perhaps develop new systems in due course.
Ten years on all schools have been inspected more than once. Databases of reports have been built up. There is 10 years of learning and experience of how to do that and, indeed, of how to play the game, which is one of the dangers. All of that provides reason for change and development. But the change and development can be informed by that 10 years' experience and by the database that is there. Inspection teams who go into schools now, compared with, say, 1994 or 1995, have significant factual data available about the performance of those schools. On that basis, inspections ought to be different.
I re-emphasise that the changes proposed will not involve a change of the principles: regularity, independence and publication. But I welcome the new pilots in principle and in general, with the intent to reduce burdens on schools and the focus perhaps on specific issues in the light of the knowledge that we now have. I conclude by making one or two specific suggestions that I hope that the Minister will be able to take away and discuss with his colleagues.
First, I support the noble Lord, Lord Dearing, in that the mechanisms of appeal should be strengthened. A report now ought to be well-honed, built on a database and ought to be specifically looking for the issues that that knowledge of past inspections could bring to the inspection team. That leaves room for some element of appeal.

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One measure that we took that was not well publicised but that I commend as a possible way ahead for the pilot studies was that in the first 100 new-style inspections under the new framework we had external monitoring carried out by a completely independent body. Predictably in those days it was Coopers. That 100 inspection report was useful and interesting ammunition for the HMIs who were working on how to develop the new framework. It also meant that one did not go ahead simply on the basis of innuendo, hint or, perhaps, the suggestion that the inspection teams had not been up to their job. So I suggest that an external monitoring of pilots might pay real dividends. If necessary there should be re-inspection by HMIs after the report is in and published. The timescale is such that that should be fairly quick. Re-inspection ought to be strengthened.
Finally, there should be a greater focus on outcomes. The system has been process-focused. Outcomes are the final judgment of whether a school is doing well. There are different ways of doing that. There is not a single orthodoxy on how to run a school, primary or secondary. I much commend the notion of self-evaluation as central. It gives schools a role. Self-knowledge, as Socrates reminded us, is the beginning of wisdom and, indeed, of good management.
1.45 p.m.
Lord Tombs: My Lords, I join the noble Lord, Lord Sutherland, in thanking the noble Lord, Lord Dearing, for introducing this important debate and welcome the Minister to his new bed of nails, which we will try to make blunt.
Schools inspections can make an important contribution to the standards of education. Unfortunately, that has not always been the case and increased demands on inspectors have too often resulted in inconsistent judgments. Schools have come to view inspections as a lottery in which the capability of the lead inspector settles the odds and the rules are constantly changing. This, coupled with the long period of notice for inspections, has produced a febrile atmosphere in which over-preparation can present an unrepresentative picture to the inspectors and a huge additional workload for the staff. Happily, this is now changing for the better and I should like to pay tribute to the present chief HMI, David Bell, for his willingness to promote a widespread consultation and to seek to improve its efficacy as a result of that consultation.
The two main changes resulting from this process are generally welcome but, inevitably, they risk creating further difficulties. My object today is to identify those difficulties and to seek to suggest ways in which they could be managed. First, the proposal to shorten the notice period for inspections will do much to reduce the over-preparation to which I have referred. That will be welcomed by the staff and, no doubt, the pupils. But more warts will show and the inspectors will have to adjust their methods
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accordingly. Any shortcomings on the part of inspectors will be magnified by the necessarily increased reliance on their judgment.
More potentially difficult is the proposal to shorten the inspections. This will also increase the judgmental importance of the inspections and will therefore rely heavily on the experience of the inspectors. The proposal to have an HMI as lead inspector for every inspection is presented as a contribution to meeting that challenge. But the notion that Her Majesty's Inspectors are invariably superior in experience and judgment to registered inspectors is questionable. The plain and unsurprising fact is that neither constituency is perfect and it is on that fact that I want further to examine the problem and to suggest some ways of dealing with it.
There is a pressing need to ensure that the experience of all inspectors is adequate to the task they face. This requires that they should have practical and recent experience of the type of school under inspection, notably whether it is primary or secondary but also its social environment. Experience at senior management level is, or should be, a sine qua non. To some extent this calls for good management of existing inspectors by matching their experience to the task. But good management also calls for regular updating of that experience, perhaps by secondment to schools and regular audit of the experience and capability of inspectors. This should be seen, not as an intrusive process but as a means of helping inspectors in their important but difficult task.
I now turn to the category of "special measures" which is used to categorise schools which are seen as "failing" and which often results in the replacement of the head teacher. We should note that the "failing" head often goes on to rescue another school in the same "failing" category while a "superhuman" head comes in to perform the same transformation at the first school. We should also note that the decision to place a school in special measures is often preceded by one or more satisfactory inspections to the understandable astonishment of staff and governors.
The placing of a school in special measures is a draconian step, attracting opprobrium in the educational establishment and in the sensation-loving press, and imposing a massive additional workload and stress on the management team. It should not be undertaken lightly and, in my submission, the ensuing recovery process has not been properly examined or validated.
"Special measures" is a simplistic and unsatisfactory process which is attracting growing criticism in the educational world and urgently demands critical examination. In most cases, it involves schools in areas of great social deprivation where inspectors require a depth of understanding which is not always evident.
The need for constructive support of teachers should be intrinsic to the inspection process and the steps already taken will contribute to that. But the need for better training and audit of inspectors remains to be addressed and the penal aspect of the system, of which "special measures" remains an

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important and undesirable example, must be replaced by a constructive and supportive role for teachers, especially those coping with the special difficulties of deprived areas.
Without doubt, some schools are genuinely failing but, even then, it is very doubtful whether publicly pillorying them is the best way to obtain improvements. In special measures, the workload rises to meet supervision requirements, new staff are difficult to attract, newly qualified teachers cannot be appointed without specific permission and good staff leave to further their careers. How much better that could be handled in a supportive environment. But when "special measures" rests on a dubious inspection report, how much more damage can result. Steady, if slow, progress is interrupted or even reversed by the extra demands on staff. Morale is seriously damaged by a feeling of unfairness and victimisation. Nervous breakdowns can and do result and both staff and pupils suffer.
I make two pleas to the Government regarding special measures. First, commission an independent review of those schools placed in special measures over the past five years to examine the validity of the inspection recommendation and the methodology of the recovery. Secondly, abandon the public declaration of "special measures" with the general and indiscriminate opprobrium which results and concentrate instead on constructive measures to the benefit of staff and, most importantly, pupils.
1.52 p.m.
Baroness Sharp of Guildford: My Lords, I, too, thank the noble Lord, Lord Dearing, for introducing an interesting and timely debate. I also want to congratulate the new Minister on his appointment. We shall miss his predecessor, but I am sure that we shall enjoy having the noble Lord, Lord Filkin, as Minister.
Next Monday, I shall be spending the day at a local primary school as a governor of that school. We shall be working our way through a new school plan, taking account of an inspection which concluded at the end of the summer term. It was completed under the third framework of Ofsted's old rules. It was the third cycle of inspection, which indicates that since 1992 this was the third full inspection of the school. The inspectors were there for a week, which is not a short inspection framework, and they found some problems in the school. The inspectors were critical in some senses but praising in others, as frequently happens.
It illustrates well the developments that have taken place in the Ofsted framework since the early days of 1992. The noble Lord, Lord Sutherland, emphasises the change that took place and the difficulties which the HMI found in its dual role of both inspector and coach. Perhaps in the early days too much emphasis was placed on the role of independent inspector. On some occasions, we saw the process of inspection, public reporting and naming and shaming producing the kind of results referred to by the noble Lord, Lord Tombs. Schools which failed found themselves at the bottom of a pit and it was difficult for them to dig themselves out.
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However, we should acknowledge the considerable degree to which, during the past 13 years, the processes within Ofsted have changed considerably. The process I shall be going through on Monday, which will involve both parents and pupils giving their views, puts the emphasis on self-evaluation on the part of the schools. The criticism is there, but it is constructive and ways forward are pointed out. Central to it is the school improvement plan and self-evaluation in relation to the central core.
That illustrates the shift in particular towards self-evaluation, and that aspect is taken up in the new Government proposals. As the noble Lord, Lord Sutherland, pointed out, there is now a data base and many schools do not now need a long inspection. They are not causes for concern and in most cases it is appropriate that the inspection ensures that the self-evaluation processes are in place. In that sense, I greatly welcome the change.
No one has yet referred to a large volume, which landed on my desk at the beginning of the Recess, entitled Improvement Through Inspection. It deals with the impact of Ofsted's work and comes from the Institute of Education. It is interesting and contains masses of information about Ofsted. The work was done independently by the institute, but it is published by Ofsted. It is self-congratulatory in many senses but it is a timely volume.
Perhaps I may quote two paragraphs from the report. First a head teacher of a school in "special measures" wrote, contrary to the tone adopted by the noble Lord, Lord Tombs, of,
"the privilege of being able to look retrospectively on a process that has undoubtedly led to a transformation in the quality of education we are providing for our students. If this is the outcome of a regular inspection process, supported by rigorous monitoring and evaluation, then it is a process to commend to others".
The general conclusion of the report was that,
"Ofsted has been recognised by the Government as having fulfilled its statutory functions to the letter. Through assessing the effectiveness of past and current practice, this evaluation finds that Ofsted has made a substantial contribution to the improvement of the education system and—to a variable extent, alongside other powerful factors—to education providers".
So far, so good. What might we see in terms of improvement? The Liberal Democrats thoroughly endorse the move to self-evaluation. Indeed, we go one step further. We would like to see in schools the development of the new Ofsted framework into one of total quality management, together with shorter inspections and only longer ones where necessary. The emphasis should be on self-evaluation and on being able to recognise what you want to achieve. That comes from total quality management.
Like the noble Lord, Lord Sutherland, we feel that mechanisms for appeal should be strengthened. We also feel that the whole framework is too driven by targets. We are worried about that and we make no bones about it. Education is about questioning, creativity and learning how to learn. One of the dangers that creeps into the inspection framework is that achievement outcomes are measured against the targets that are set. In schools which fail to meet the

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targets, the wider framework is not recognised within the inspection framework. We should be looking at a total quality framework.
There are two other issues I wish to raise where I do not believe that the current inspection framework meets the requirements. I do not know what the answers are, but more work is required. The first is special educational needs. We have chosen an agenda of inclusiveness, which is fine. But schools have a very high proportion of children with special educational needs. They do fail to meet targets and have difficulties. That is not fully recognised within the inspection framework. We need to look at it and make sure that we are taking necessary account of the inclusion agenda and how best to meet special educational needs.
The other area, which is linked to some extent but different, is that of ethnic minorities. Last week a report was published by the London Development Agency into the performance of Afro-Caribbean boys in London. It shows that the schools have failed them time and again. It is necessary to see whether we are picking this up within the inspection framework and to think hard whether that framework is considering the needs of ethnic minorities within our schools.
Those are some of the ways forward. But generally speaking, I believe, and I believe that my party does also, that the inspection framework in this country has moved in the right direction. We would like to see it carried further. We endorse the moves that have been made.
2.1 p.m.
Baroness Seccombe: My Lords, first I would like to congratulate the noble Lord, Lord Filkin, on his new appointment. He has a hard act to follow because his predecessor was a dedicated, good humoured Minister, respected on all sides of the House. However, I look forward to meeting the noble Lord over the Dispatch Box and I wish him well. I, like others, thank the noble Lord, Lord Dearing, for initiating this debate.
There has been growing criticism of Ofsted since 2000 and in the light of the media articles on the July report before the summer Recess, it is indeed a timely Question. It enables us to take stock of the situation as it now stands.
While some organisations have cautiously welcomed the shift in direction, Ofsted has signalled in its most recent consultation document that many of the original concerns still remain at issue. A "Let's wait and see" attitude seems to prevail throughout the education sector, while they wonder whether this "Step in the right direction" will be followed through in September 2005.
The Secondary Heads Association, among others, remains disappointed that the inspection system appears to be extravagant, expensive and simply not good value for money. There are particular concerns regarding the cost of contracting out inspectors and of
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Ofsted as a whole. As some of your Lordships will be aware, the James review of taxpayer value identified savings for the education sector of £5.7 billion.
One of the main prongs of the review is the streamlining of Ofsted's inspection regime. With 2,400 full time and over 6,000 part-time inspectors, the James review recommends that by lightening Ofsted's touch and by enforcing a more focused regime, 800 posts could be released saving around £100 million. Would the Minister agree with me that it is crucial that this money goes to the front line in schools to help teachers and not to the employment of an excess of bureaucrats?
Heavy criticism has been levelled at the administration of the inspections by the school community. Filling in forms takes up the time of teachers and school administrators, placing pressure on the time that they have to spend with their students. For an average secondary school an inspection will require a whole week in which 12 inspectors are involved, plus 10 weeks of paperwork which precedes it. After all this time and effort, they are just presented with a judgment, which is often considered to be over-reliant on performance indicators, which inspectors could have found out without even entering the school.
Indeed, the process has been described by Mr Ward of the Secondary Heads Association as "unscientific". He was one of the many to challenge the Ofsted Improvement Through Inspection report in July, highlighting that the improvements in schools are made by the efforts of those who work in them, not by visiting inspectors.
Even Ofsted's chief inspector, David Bell, has questioned some of the judgments made by inspectors as a sharp rise in the number of schools failing inspections was reported in July. Education is not simply about grades achieved in exams; it is about the sound, well rounded physical and mental health and development of an individual within his or her peer group. Can the Minister inform the House what steps are being taken to address the perception that inspections are predominantly based on indicators such as grades? Can he assure the House that Ofsted inspectors will be encouraged to be positive and more helpful in their judgments and not the intimidating individuals many teachers still claim that they are?
Having said that, I must make it clear that we do support inspections and believe that they are certainly a necessary part of the process of transparency and accountability in the school system. Schools that are failing should be monitored and dealt with. We on these Benches believe that there should be non-notice inspections for schools at risk of failure. However, good schools should not be held back and continually interrupted by confrontational, intrusive and burdensome inspections. These simply restrain a school's right to choose how it is run, how it works successfully, and the right to educate our children. We need to allow good schools a free rein and to make them answerable to parents and not to Whitehall.
Ofsted was set up to act as a safeguard against poor education. It was a champion of standards, but I fear that it is being distracted from its core purposes. A case

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in point is the increasing amount of political correctness that can be found within Ofsted. This political correctness runs contrary to its original ethos of focusing on standards, particularly in the case of its new responsibilities for inspecting nursery education.
For example, I understand that inspectors are asked to ensure that in nurseries,
"the material and images used and displayed in the setting are accurate and non-stereotypical".
Such guidance led to one inspector making a negative report against a nursery school because,
"no resources [are] available that reflect the cultural background of children".
Similarly, an inspector has to read 52 pages of guidance on judging nursery schools before he or she reaches the section on,
"How well are the children taught?".
I have raced through some of the anxieties which, despite consultation, still linger. Therefore, I hope that the Minister can give me some assurances that the Government have listened so that schools, teachers and the taxpayer can have complete confidence in the system and that of course inspections make the very best contribution to the quality, effectiveness and well-being of education.
2.8 p.m.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Filkin): My Lords, I am delighted to have the opportunity to respond to this first debate on my new brief. What better opportunity than a debate led by the noble Lord, Lord Dearing, who is primus inter pares. There is no one greater than him on these issues. I am also grateful for the welcome that has been granted. I am very sorry to be leaving my good friend the Lord Chancellor, but I am very glad to be joining my old friend Charles Clarke, the Secretary of State for Education and Skills. There are always compensations in the process.
We know that inspection matters and we know why. It is about helping to deliver better outcomes for children. That is its purpose. The challenge to an inspectoral system is whether it delivers more gain than it costs in terms of the input process. That is the central issue at heart before us. Is it the best way of achieving improvement?
The noble Lord, Lord Sutherland, set out very clearly and impressively where we have reached in the past 12 years. There is hardly a voice of dissent about the importance of what Ofsted has achieved over those 12 years. He was commendably reflective of the fact that we have made achievements, which is an argument for change rather than for the status quo. I will explore that conundrum later. I assure the noble Lord that the three principles he articulated so clearly in his speech will and must be retained in the future.
First, I shall say a few words about the context within which the new inspection proposal sits. It is the context of a new relationship with schools. We set out our proposals in June or July this year. The Government wanted to have a new, more mature
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relationship with schools based on intelligent accountability and a simplified process for dialogue and interchange between the Government and schools; and recognition that the majority of schools have the maturity to use a less involved process and clearer lines of dialogue.
Without going into great detail, we shall be radically simplifying demands on schools by trying to have a single form of conversation with them about their development priorities. We all know how the process of government works: they keep adding on bits and after a while there are 15 bits that could be made down to one.
The process will have at its heart self-evaluation, to which I shall return in a minute. We will rationalise funding support and there will be a single plan based on a school's self-evaluation as to how it will move forward. It is important to cut bureaucracy—amen to that, with the noble Baroness, Lady Seccombe—and to recognise that there has to be proportionality in the Government's interventions and efficiency in our dialogue with the schools sector. We are passionate about that, which is an important part of improvement in schools and supporting schools to improve themselves.
Let us turn to the key issues of a new inspection system. The exam question set by the noble Lord, Lord Dearing, asked the Government directly what changes are desirable to schools' inspections so that they make the best possible contribution. It would be churlish of me not to try to answer it even in the limited time available to me.
The noble Baroness, Lady Sharp, and other noble Lords marked that it starts from the recognition that improvement is more likely to be effective if it starts from a position of ownership by the body that is to be improved. That says something different about the methodology: that an inspectorate does not simply come in and give a score of 55 per cent—although that has its use—but we are trying to move to a situation where, as the noble Baroness put it, the inspectorate is considering the self-evaluation process the school has gone through and whether it has accurately owned both its achievements and the challenges facing it to go further and faster to improve outcomes for the children.
That is in a sense part of a bigger journey about inspectorates generally in Government recognising that it is not about giving a number or score but trying to reinforce ownership of improvement in itself. Fundamental to making the new system work is trying to build on the ownership and therefore the self-evaluation by the schools themselves. Therefore the process starts from the school itself setting out what it thinks are its strengths and weaknesses and, equally important, what it intends to do about them. I shall not labour that point, although perhaps it is important to do so.
From that we construct the new mechanism of the system, but because we are sitting on a foundation of a statement that I hope is systematic and thoughtful,

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and in which there is some formality with self-evaluation, we can then move to a system with shorter, sharper and more frequent inspections. We all know how institutions can change in a period of six years—I would be so bold as to say that quite a bit has changed since 1997. To think that a school cannot change for better or worse in a period of six years is rash and therefore in principle three-yearly inspection periods should offer much greater benefit. We have to do that at the same time by reducing the burden on schools through that process.
There was a good deal of support in the consultation and in the House for reduced notice and for greater involvement of Her Majesty's inspectors. Shorter reports are better in principle. This is a classic area: a short report, if it is well written and based on sound judgments, is likely to have more impact than a longer one. That is a challenge to inspectorates; I think that Rousseau said something about it—it is difficult to do so.
Having said that, there will be no separate action plan. Actions from inspection will be taken forward as part of the school's own development plan—a bit of rationalisation and common sense. There will be less bureaucracy in the process. To address the challenge made by the noble Baroness, Lady Seccombe, Her Majesty's Chief Inspector aims by 2008 to have cut by 20 per cent the cost of the inspection process. That aim is set out clearly; there will be substantial benefits in cost reduction from the process.
We are not rushing into this. Although we want to move forward rapidly, Ofsted's consultation had remarkably high and positive responses to almost all its measures, which was pleasing and interesting. We are trialling the proposals both before and after the summer, as noble Lords are aware. I agree with the noble Lord, Lord Sutherland, that one needs some process for monitoring such pilots and therefore the pilot inspectors are being supported by quality assurance HMIs as part of trying to ensure that the piloting process is as strong as one can make it.
A number of speakers, including the noble Lord, Lord Dearing, raised the reliability of the judgments. They were right to do so, because for good reason the conclusions from an inspectorate process impact on reputation and all sorts of things. For the reason we touched on before, we want the body reported on to own the conclusion as well as the input. We do not want a situation where it feels that what has been done is unfair and therefore there is a resistance to owning the actions that flow from it.
Therefore it is fundamental to the continued ownership of the will to self-improve that people feel that there has been a fair process and outcome, rather than people feeling that they have to spend a lot of time on further argument or denial. The debate is therefore not about whether that is an important part of the process to ensure that there is reliability of judgment but to ensure that we get it right without creating burdens.
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In part we think that the short notice period will mean that there is less opportunity for too much lipstick to be applied, which is good—if that is not a sexist remark; I hope that it is not. However, it requires some moderation in recognising that we may see the occasional wart, as was signalled. It is important that one is mature about that in one's judgments.
HMI will conduct a large number of inspections and it will have access to sophisticated performance data, as will the school. The noble Lord, Lord Sutherland, signalled that we can partly make those changes because we have 12 years' experience of both inspections and performance data, which inform the performance of the schools in many if not all of their functions. Without those 12 years we could not now be making the move in this direction.
We also hope that, because it starts with self-evaluation and, I hope, self-knowledge, the inspector is not coming in from Mars; but that the inspectorate considers the self-diagnosis and self-evaluation of the school, so the debate is around that issue. That does not guarantee reliability and quality of judgment, but it says that the process should help to make them more likely. Time will not allow me to say more about quality of judgment, but if there are further points to make perhaps the House will put up with a letter from me.
I turn to the parallel issue, which is challenge and appeal. There is an important question about injustice in terms of ensuring that mistakes are not made and that a school has an opportunity to say, "We don't think you have got it quite right"; or something more robust if that is what is felt.
Under the current system schools can and do challenge judgments. If Ofsted decides that an inspection report is not sound and the inspectorate agrees, the report may be amended or republished. We hope that in future there will be fewer challenges to inspection judgments as much of the evidence base will have been supplied by the school. Schools will be more heavily involved in the inspection itself and therefore nothing in the report, if it has been done well, should come as a substantial shock.
One of the benefits of the new arrangements is that, as HMSI rather than registered inspectors will be responsible for inspection reports, Ofsted will be able to amend any report, including those written by contracted inspectors, whereas current law does not allow that unless they agree.
There is no external appeals process; we do not feel that it is automatically the right solution. One is mindful of the importance of a process that leaves a sense of ownership of the result. We are mindful of the consequences for schools of wrong judgments without there being an effective appeals mechanism. Therefore, we will give further thought to how a complaints system can be made to work effectively without the need for some ghastly mechanistic rote system. The gap between the draft and the publication, which the noble Lord, Lord Dearing, mentioned, is an element of the challenge in making the system workable.

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The noble Lord, Lord Dearing, is absolutely right that inspections form part of the contribution that a good education system should make to the physical health and well-being of a child. As a society we are clearer on that than we were 10 or 15 years ago. There will be a statutory imperative for school inspections to cover well-being, including physical well-being.
The noble Baroness, Lady Sharp, mentioned special educational needs. There will be a different framework for special schools. Maintained schools will have special guidance on picking up on vulnerable children. Perhaps it would be of interest to her if I wrote to her in more detail on the matter.
As the noble Baroness, Lady Seccombe, rightly said, at times one must arrive unannounced, in all sorts of contexts, for good reason. That is now possible and it will happen in the future, as it should.
We are in a process that, we hope, will lead to the implementation of the new system from September 2005. It could well require legislation; therefore we can say nothing on the matter now. But I may well have the further opportunity of gaining from the advice and experience of the House in this respect on a Bill. I look forward to that very much.
I conclude by outlining what we hope the provisions will lead to. They will be part of a coherent package of reform for schools: a less involved, lighter touch and a more mature relationship. It will integrate inspection firmly with school improvement cycles, because that is what inspection is about; it is part of the total picture. We hope that there will be less bureaucracy and cost for both the school and the inspectorate. We hope that, when we reflect on how to evaluate the approach—a challenge in itself—we find that it has led to significant improvement in the confidence of the system, the capacity for self-learning and as a consequence the educational improvement of children, for whom we are all concerned.
I thank the noble Lord, Lord Dearing, for the debate, and look forward to working with him and many other Members of the House on this agenda.
Baroness Andrews: My Lords, I beg to move that the House do adjourn during pleasure until 2.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 2.23 to 2.30 p.m.]

Housing Bill
2.30 p.m.
House again in Committee.
Baroness Hanham Baroness Hanham moved Amendment No. 85:
After Clause 65, insert the following new clause—

FITNESS CERTIFICATES
(1) A person who proposes to apply for a licence in respect of an HMO within the area of a local housing authority or who proposes to become the manager of one or more houses within the
742
area of a local housing authority may apply to that authority for a certificate that he is a fit and proper person for the purposes of section 65.
(2) The provisions of sections 62(2) to (7) and 65(1) to (3) shall apply in the case of an application for a certificate under this section.
(3) Local housing authorities shall grant a certificate if they are satisfied that the applicant is a fit and proper person for the purposes of section 63(3)(b)(i) and (d) and, in determining any subsequent application by the holder of the certificate in relation to an HMO licence, the holder of the certificate shall be treated as having satisfied the authority in relation to those matters unless proceedings are pending for the revocation of the certificate.
(4) Any certificate shall remain in force for the period of 10 years from the date of its grant unless revoked in the meantime but without prejudice to the right of the holder of the certificate to apply for a further certificate on the expiration of an earlier certificate.
(5) For the purposes of this section the following provisions of this Act shall apply—

(a) section 69(1) (other than paragraph (c));

(b) section 69(2)(a) and (b);

(c) section 69(7), (8) and (9) (omitting the words "or a relevant person" in subsection (9));

(d) paragraphs 22 to 25 and 29 in Part 2 of Schedule 5,

(except that references to "the relevant person" shall be omitted).
(6) The provisions of Part 3 in Schedule 5 (appeals against licence decisions) shall also apply to decisions in respect of a refusal to grant a certificate or the revocation of a certificate (except that any reference to "a relevant person shall' be omitted for these purposes)."
The noble Baroness said: Under this Bill, houses in multiple occupation and selected licences will be issued on an individual house-by-house basis. Each time the local council has to consider among other things whether the licence holder and the manager of the properties are fit and proper persons. That is a matter that we dealt with extensively before lunch.
The purpose of the proposed clause is to improve and simplify the system. It would enable a prospective licence holder or manager of more than one property in a local authority area to apply to the authority for an individual certificate of fitness for the purpose of licensing. The authority would then only need to investigate that particular person once. If found to be a fit and proper person, a certificate would be issued to that person. He could then rely on the certificate each time he applied to the authority for a licence for a house, so there would be no need for the authority to investigate the position time and time again.
A certificate of fitness once granted would last for 10 years, unless it was revoked for good reason in the mean time. There would be a right of appeal against the refusal of a certificate. Once the 10-year period was up, the person concerned could reapply and be reconsidered.
The Government estimate that 120,000 houses in multiple occupation licences are going to be required as a result of this legislation. We are aware of cases where the same landlord might have to apply at least 150 times for an HMO licence. It would make the process much simpler if that person could just apply the once to obtain a certificate of fitness.
A certificate would also assist when a property is sold. The seller may prefer to sell the property to someone who he knows already holds a certificate of fitness. That would assist the conveyancing process. Someone wanting to invest could obtain the certificate in advance.
This proposed procedure would allow application forms for licences to be simplified. Such a system of certificates would save a lot of work for all concerned, particularly local authorities, as they would only need to investigate any applicant who holds a certificate once. In the absence of a certificate procedure, each time an applicant completes an application form he or she will have to provide the same information over and over again.
A similar system has recently been introduced for liquor licensing, where designated supervisors have to hold a personal certificate of fitness in addition to the licence held by the individual premises. I beg to move.
Baroness Maddock: Amendment No. 86 is virtually the same as Amendment No.85. With the leave of the House, we have agreed among ourselves to debate them together.
The only difference between these two amendments is that I considered that allowing the certificate of fitness to go unchecked for 10 years was too long and I suggested that it should be five years.
This is an important point. Can the Minister clarify how the system will work? I cannot imagine that the Government meant that somebody who already has a certificate that says they are a fit and proper person has to go through the process every time. It may be that this is unnecessary as it is not going to happen. But if it does, we need to deal with this matter. As the noble Baroness said, a rule similar to the one that we are trying to put on the face of the Bill operates in liquor licensing.
I will listen to the Minister with interest. The amendment is intended to be helpful. Bureaucratic operation should not be repeated time and again. Can the Minister assure us that that will not happen, either through the agreement to an amendment like this one or through government guidance on how they envisage the licensing system operating? I speak to both amendments in that spirit.
Lord Borrie: I do not know whether these amendments are desirable but they raise an important matter. The wish to simplify the application process stems from a good motive.
If the Minister is disinclined to support the amendments and if he accepts the point made by the noble Baroness, Lady Hanham, that there is a burden of approximately 120,000 licences, can he reassure us that the licensing process will not take so long that the
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fundamental objectives of this part of the Bill—to control the lack of safety and other deficiencies in houses in multiple occupation—will be defeated?
Lord Bassam of Brighton: I understand the thinking behind the amendment. Cutting down on duplication and bureaucracy is worthwhile.
I will speak to both amendments as it makes sense to deal with them together. But they would not eliminate the need for separate licence applications on different properties.
Over time, it must be right that as regards every application for a licence a local authority should consider afresh whether or not the applicant remains a fit and proper person. Over time, circumstances change, new information becomes available and the ways in which properties are managed change. The presentation of a certificate valid for 10 years, unless revoked, would not provide that assurance without further checking.
We have thought carefully about this matter. The local authority will obviously need to be aware of the previous decisions that it has made about the fitness of those that it has licensed. In our consultation on selective licensing published on 16 July, we addressed this matter directly. We are dealing with the point raised by the noble Baroness, Lady Maddock, by consulting on whether landlords of several properties could provide information about themselves once in relation to all of their properties, rather than filling in these details on separate forms for each property.
We are also inviting views about the practical implications of this for the local authorities. We do not anticipate that local authorities will need or want to duplicate all of their inquiries on the fit and proper test. If it has recently found that a landlord is a fit and proper person to manage 26 Acacia Avenue, then he will obviously be a fit and proper person to manage 27 Acacia Avenue—unless there is evidence to the contrary. I cannot envisage circumstance in which that would happen if the applications were made at the same point.
The Bill enables us, by virtue of secondary legislation, to specify both the form and content of the application form used in licence applications. This should enable central and local government to have the scope to devise something that is practicable and workable, that tackles the understandable and proper concern raised by the amendment.
The amendment is not necessary. Clause 65 sets out the appropriate basis for local authorities to decide on the fitness of landlords or their agents. Clause 62(5) does that for HMO licensing and Clause 84(5) does it for selective licensing. That provides sufficient scope for regulations about the making of applications to address the issues that have been raised by the two noble Baronesses who have contributed and supported by my noble friend Lord Borrie. I hope that those

745
words reassure them and will encourage their friends in local government to respond to the consultation that we published in July.
Baroness Hanham: We will certainly encourage people to respond to the consultation. It is absolutely a sine qua non that a person should not have to keep on applying for licences. It seems to make a nonsense of the whole process, particularly at the outset when people will have to apply for licences for every property that they own.
There must be a system whereby people can be signed off for one property in respect of all the properties that they own. I am not sure that this should not be in the Bill. The trouble with legislation and secondary legislation is that so much—
Baroness Maddock: Perhaps I may clarify with the noble Baroness that what we are trying to achieve is not about applying for the licensing of the properties, but about individuals and their fitness certificate. I am a little confused because I would not want to be associated with that. I accept what the Minister said. My sense of meaning is that we are concerned with the fitness certificate for the person and not the property: I want to make clear that I agree with the person but not the property.
Lord Bassam of Brighton: My understanding is as the noble Baroness, Lady Maddock, has said.
Baroness Hanham: I have been causing confusion. I am talking about the person, but the person will still have to be licensed. I hear the Minister's reply, which is moderately reassuring. But we need to look at it and will watch the consultation process with interest. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 86 not moved.]
Clause 66 [Licence conditions]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 87:
Page 44, line 1, leave out "local housing" and insert "appropriate national"
The noble Lord said: This is a simple probing amendment that is designed to press the Minister for a little more detail about what he envisages would be the additional conditions that a local authority considers appropriate in this case. Again, what assurance can he provide that any additional conditions will not be excessive, unduly bureaucratic and costly on the landlord? That goes back to a previous amendment and comments on "gold-plated taps".
If the Minister can provide us with the assurances that we are seeking we will be happy not to press the issue any further. I beg to move.
Lord Bassam of Brighton: As the noble Lord explained, Amendment No. 87 would take away local authority discretion to set appropriate licence conditions and, as such, it is a probing amendment.
746
We appreciate the need for some standard conditions that would be necessary in all HMOs to ensure the same level of protection for the occupants up to a point, which we are trying to achieve by licensing those properties.
That is why we have made the conditions listed in Schedule 4 mandatory for all licensable HMOs. However, we are also aware that housing situations will not be the same in all local authority areas. It is therefore important that the local housing authorities are encouraged to introduce some additional conditions that could assist them in dealing with the problems in their area. One could, for example, compare Kensington and Chelsea with Christchurch, Brighton, Basildon or wherever. They will not be the same in every local authority. It may be important for the local authority to apply some additional conditions.
Clause 66(1) would allow a local authority to take a proactive stance to set out additional standards of management for HMOs in their area. We are not seeking to allow local authorities to impose unreasonable licence conditions. The Bill lists a set of illustrative conditions that can be imposed, which has the effect of limiting the type of conditions that could be imposed. Any conditions imposed by the local housing authority must, of course, be reasonably required. The reasonableness test will obviously apply, but only to the narrow focus of issues related to the management, the use and the occupation of the house, its contents and conditions. In my recollection, certainly there are particular problems peculiar to local areas. I have no doubt that the conditional flexibility that this provision would enable will assist local authorities in targeting those HMOs that perhaps are in the worst condition and help to raise standards in the locality.
If a licence holder does not agree that a particular condition is appropriate or that the scope is reasonable, he or she can appeal against the local authority decision to a residential property tribunal, which we have discussed a little in the past. Of course, that tribunal would be able to come to a reasonable view having listened to the concerns of all the parties.
We are not seeking to impose or enable local authorities to be unreasonable. They will have to behave in a way that is consistent and practicable in the circumstances. We see this as a useful measure that will enable us to have a core approach, but with some necessary add-ons where they will be of benefit to both the landlord and the tenant in raising standards. That is how we see this working.
Lord Hanningfield: I thank the Minister for that reply. Obviously, it is in line with some of the other replies regarding the discretion that local authorities might have. We will examine those replies to determine whether we need to take the matter further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66 agreed to.
Schedule 4 [Licences under Parts 2 and 3: mandatory conditions]:
Baroness Maddock Baroness Maddock moved Amendment No. 87A:
Page 189, line 38, after "house" insert "a minimum fixed term agreement and"
The noble Baroness said: Amendment No. 87A would amend paragraph 1(5) of Schedule 4. This issue has been raised with me by people involved in housing law. It concerns the type of agreement that a tenant will obtain and the duration of the tenancy. I understand that, currently, the Law Commission is looking at how agreements on lettings work and a standard agreement for all lettings.
Perhaps I may develop that point further in relation to the Housing Bill. At present, in effect, an assured shorthold tenant is given security of tenure of at least six months. A court cannot make a possession to take effect earlier than six months from the commencement of the tenancy. Almost entirely, the occupiers of HMOs—to whom this provision relates—are assured shorthold tenancies. The Court of Appeal has recently recognised that an assured shorthold tenancy is the normal form of tenure in the private sector.
It is possible that that security will cease following recommendations from the Law Commission, which were suggested on 5 November 2003 in its interim report No. 284, Renting Homes: Status and Security at paragraph 1.8. We are still awaiting the final report and Bill. As I said earlier, the Law Commission is recommending the application of a standard agreement for lettings.
We accept that for those who live in houses in multiple occupation, the greater proportion of the occupiers tend to be some of the most vulnerable in society. Obviously the purpose of introducing the licensing scheme is to protect such people. At the moment no minimum period is suggested for a tenancy agreement. Possibly the Government think that that would be too prescriptive but nevertheless, those properties provide homes for occupiers who would benefit from a minimum period stated, so that the occupier knows that for that period at least the landlord is committed to continue the agreement to occupy.
It may be that the Government understand that this is in the offing, and they may know that they can deal with it when it happens. I raise it as a legitimate issue, given that we are making new legislation. I beg to move.
Lord Bassam of Brighton: I am grateful to the noble Baroness for explaining her amendment in some detail. I hope that I can offer some reassurance.
Most tenancies in the private rented sector are granted as assured shorthold tenancies. Those granted before 28 February 1997 must have a minimum initial period of six months; those granted after that date need have no minimum duration.
However, the courts cannot grant orders of possession on the "no fault" ground to take effect within the first six months of any assured shorthold
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tenancy. Tenants who comply with the conditions of their tenancy have, in every case, a right to stay in the property for a minimum period of six months.
Imposing a requirement on landlords to grant an initial fixed term period of unspecified duration would not confer any additional rights on tenants.
The effect of the amendment, if accepted, could actually be to the detriment of tenants who wanted to give up their tenancy before the initial fixed term period had expired. They would be contractually obliged to pay rent for whatever the fixed term of the tenancy was.
I understand the sentiment behind the amendment—and understand it even better, having heard what the noble Baroness said about the Law Commission report on renting. We certainly agree that tenants should have a clear idea of the terms on which they occupy their home. We agree that it should include details of any fixed term period at the outset. But, we are not clear that passing this amendment would assist in meeting this objective. We shall, of course, reflect carefully on what the Law Commission finally reports. As things are, we think that we have covered the point raised by the noble Baroness.
Baroness Maddock: I am grateful to the Minister for that explanation. Not being an expert on housing law, I think that I shall have to consult further. The Minister's reply was helpful, and at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 88 not moved.]
Schedule 4 agreed to.
Clause 67 [Licences: general requirements and duration]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 89:
Page 45, line 11, leave out "That period must not end more than" and insert "The licence period shall end"
The noble Lord said: As the Bill stands, the maximum length of time that a licence can stand is five years. This probing amendment is designed to test what the Government see as the likely period of a licence. The local authority may want to issue licences for property that changes hands or changes its status. It is important to know precisely what the Government intend during the period in which the licence applies because of the possibility of rapid change in type and status of various kinds of property. I beg to move.
Lord Bassam of Brighton: Clause 67(1) provides that a licence must not relate to more than one house in multiple occupation. A licence is valid for a period that is specified in it, but for not more than five years, although it may be brought to an end earlier if there is non-compliance with a provision of the licence.
A licence is non-transferable, and upon the death of a licence holder, a three-month temporary exemption would automatically be granted.

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The amendment provides that a licence must be granted for a period of five years in all cases. In practice, we expect the vast majority of licences to be granted for five years, not least because that will minimise the administrative burden on local authorities. If a licensee did not agree with a decision to grant a licence for a shorter period, he could appeal against that decision and a local authority would have to explain why a shorter period was appropriate. However, we want to allow flexibility and allow the authority to use its discretion where it is right to do so.
We think that flexibility may sometimes be advantageous. For example, if a local authority knew that an additional licensing designation would end on a particular date, it could grant licences which would run to that date and it would not have to go to the trouble of revoking each licence individually.
I am not sure that the amendment is terribly helpful, and hope that, having heard what I have said, the noble Lord will feel able to withdraw it. The issue of flexibility is important and may well benefit not just the tenant but the landlord as well, and make for an easier application of the licensing regime.
Lord Hanningfield: As I said, it was a probing amendment. I thank the Minister for his reply. We all want flexibility as long as bureaucracy is not increased. I shall read what the Minister has said in detail, but in the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 90:
Page 45, line 11, leave out "5" and insert "10"
The noble Lord said: The Bill currently states that an HMO licence should continue in force for not more than five years, as we have just discussed.
The Government estimate that 120,000 properties will be subject to compulsory licensing. The industry believes that this is a gross underestimate and considers that the figure will be closer to 300,000. Even using the Government's estimate, a massive effort will be required to meet the requirement for mandatory licensing of HMOs, and local authorities do not have the resources available to deal with the number of inspections required.
One large northern city has estimated that it will take more than five years to process all relevant accommodation, by which time they will be starting the process of renewing licences. With a backlog likely, it would be sensible to issue a licence for 10 years, not five, as the Bill proposes.
With all the other safeguards in the Bill relevant to the condition of a property, there are sufficient safeguards to provide for any significant deterioration in the standard of the accommodation, and so allowing for a longer gap between full assessments. If it considers it appropriate, there is nothing to stop a local authority inspecting more often to ensure compliance.
We have just talked about flexibility. There is a power to vary licences at any time. There is also power to revoke the licence in the case of a problem property,
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as the Minister has just said. The management regulations will also apply. HHSRS assessments can be carried out at any time.
Extending the period will remove pressure on local authorities, save them time and taxpayers' money, while removing a burden from landlords. Too frequent renewals mean that local authorities will require extra staff to process such applications when the Chancellor of the Exchequer, as I said earlier, wants to cut considerable numbers of those employed in the public sector.
Further, too frequent renewals seem to be fee driven. Again, it is simply a cost that will be passed on to tenants in the long run. A longer licence will also reduce the incidences of licence renewal assessments being made within a short time of assessments being made when a property changes ownership. Given the degree of turnover in rented properties, it is likely that a majority will change hands within 10 years, so causing most to be re-assessed at some time within the period of a 10-year licence. Ten years provides a sensible time frame in which to operate a renewal system. In many other areas, such as fire certificates for commercial premises, there are no time limits at all. Why, therefore, is it necessary in the case of licensed HMOs to impose such an unnecessarily short maximum duration for licences? I beg to move.
3 p.m.
Lord Borrie: I agree with a number of the points made by the noble Lord, Lord Hanningfield. I have already expressed my concern today about the efficacy of the licensing system and the ability or inability of local authorities up and down the country to perform this huge task. The noble Lord, Lord Hanningfield, has said that many local authorities question whether the total number of licences will be as few as 120,000 because it may be very much higher, in which case the burden on local authorities will be greater.
I am more concerned that the licensing requirement is effective and follows adequate inspection of premises and inquiries into the landlord or manager to ensure that they are fit persons than with the length of the term of the licence. However, the noble Lord, Lord Hanningfield, has made some important points about that issue. We need a reassurance from the Minister regarding the effectiveness of the local authority licensing operation being proposed in the Bill. If the Government wish to keep to a renewal of these licences every five years, they also need to satisfy us that at the end of that term local authorities will not still be dealing with the backlog of the first applications.
I do not personally support the amendment for what it says, but it does give the Minister an opportunity to give reassurances about this fundamental part of the Bill. I hope that my noble friend will be able to do so.
Lord Rooker: This is another occasion on which a seductive argument is being used because it is coming from both sides of the Committee. However, I would say at the outset that it just shows what is the position in this country: we do not know how many houses are

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in multiple occupation. We do not know how many fit the criteria of housing more than five people and being of three storeys and above. The figure just referred to by the noble Lord is something between 120,000 and 300,000. If nothing else, that justifies what we are proposing in the Bill.
While I may be corrected—it is always dodgy to use examples—the noble Lord, Lord Hanningfield, cited the example of the fire certificate. That is not a good example because they are being phased out. During the passage of one of the fire Bills it was proposed that we move over to the risk management of buildings. The notion that a certificate pinned up means that a building is safe, thus giving people a false impression, is being phased out.
However, I am quite prepared to admit that there is no open and shut case in opting for five years; there is nothing brilliant about that number. However, I think that 10 years is unreasonable. We would be happy to look at figures around a period of five years, but the idea of the certificate is to ensure that local housing authorities know what is going on in their area regarding houses in multiple occupation. Leaving it for a decade would be far too long because that would undermine the purpose of granting the licence in the first place.
I do not know the northern town referred to by the noble Lord, although I did note that he mentioned a "town" rather than a "city" whose councillors claim that they will not be able to deal with all the relevant houses in the five-year period. All I can say in response is that there must be something wrong with the administration in that town. Local authorities will be expected to prioritise the inspection of their houses in multiple occupation. I find it astonishing to think that a local authority run by professionals and good councillors could not get its business affairs organised to the extent that it could not do that.
I say that bearing in mind that there will be no extra costs. The fee structure will pay for the process, so there is no excuse about extra resources. It is true that planning and training must take place, but we really want to see local authorities keep in touch on the ground with regard to what happens with houses in multiple occupation. Having an overly long period in which to review the licences would undermine that process.
I have a standard line here which states:
"I think that the Government have pitched the maximum duration of licences about right".
I cringe in reading it out. However, I started by pointing out that, while a five-year period is not perfect, 10 years is unreasonable for local authorities to keep in touch with what is happening with HMOs in their areas.
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We shall certainly consider whether the term should be six years or seven years, but we are clear that 10 years is way too long. Given that the maximum duration of a Parliament is five years, I do not see why that length of time should not fit the bill here as well.
Lord Hanningfield: I thank the Minister for that reply, and for acknowledging that there could well be a problem. I agree with him that the fact that we do not know how many houses are in multiple occupation is a pretty terrible state of affairs. If the estimate varies between 150,000 and 300,000, obviously it will take a lot longer and be far more work for local authorities if they have to inspect 300,000 properties.
I was pleased to hear that there might be some flexibility in the term. As I said earlier, many authorities have trouble recruiting enforcement officers for planning purposes. These are somewhat similar inspection jobs. In particular in some cities in the south-east and parts of the London area, local authorities will not be able to recruit enough people. Even with training and so forth, there are simply not enough people. Many authorities will face problems getting the process off the ground.
While I would consider possibly moving down from a period of 10 years, I think that the Government need to consider the term again so that the whole process does not grind to a halt because people cannot cope with it. With those remarks, I hope that between now and the next stage the Government will think further on this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hanningfield Lord Hanningfield moved Amendment No. 91:
Page 45, line 17, leave out "not"
The noble Lord said: As the Bill stands, HMO licences and selected licences are not transferable. A separate amendment proposes to delete Clause 67(6) which currently provides that licences are not transferable. These remarks also relate to that amendment.
Each time a property is sold, the existing licence holder will have to apply for the licence to be revoked and the proposed licence holder will have to apply afresh. The result is that each time the local authority will have to reconsider the property. It may want to change the standards or impose fresh conditions. That is despite the fact that these matters can be looked at every five years when the licence has to be renewed, although as a result of our last discussion that period may become more flexible. If there were a system of transferring licences, the local authority would need to look only at the issue of whether the licence holder and the manager, if different, are fit and proper persons and whether the management arrangements are satisfactory. It would not have to look at property-specific issues. This would also narrow the uncertainty from the perspective of both buyers and sellers.
You could have a situation where a property had been assessed for a licence just a few months before it was sold, but the local authority would have to

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undertake a new assessment. Landlords could be forgiven for thinking that this is a system which enables a new fee to be charged all over again.
The Government's avowed intention is to simplify the conveyancing procedure, such as Part 5 of this Bill relating to home information packs. However, the inability to transfer a HMO/selective licence has the opposite effect. Virtually all property requiring an HMO/selective licence will be bought with borrowed money. ODPM representatives have suggested that all the buyer needs to do in order to secure a loan is to apply for a licence. However, our discussions with lenders indicate that they will be willing to release funds for the purchase only once the buyer has actually been granted his licence. Merely applying will not be enough. Lenders view the certificate as an essential part of the title, and without the buyer having a licence in place, the title will not be regarded as good and marketable.
The Government have indicated that the old licence will remain in force to cover the person requiring the property until he is granted a licence, but the seller will not want to be responsible for a property he no longer owns. In any case, applications will have to be made to a local authority for a licence, and this will slow down the conveyancing process. I have just mentioned the difficulties regarding the recruitment of staff in some places.
The more the local authority has to consider, the longer it will take. Different local authorities will take different times. In the first five years, local authorities will have to inspect many houses for the HHSRS assessment, a point made on an earlier amendment. What priority will they be able to give to applications made by buyers? The more that the local authority has to consider when the buyer applies, the longer and more uncertain the process will be.
Conditional contracts will become the norm for the sale of properties which require a licence. This already happens with public houses and other businesses which require licences. If there is a risk that the local housing authority will require higher standards or change the conditions, then the process of negotiation of a conditional contract will be that much more tortuous and lengthy. For example, who will meet the cost of carrying out any works, the buyer or the seller? What is to happen if the buyer does not like the new condition that is imposed? To what extent does the buyer have to act reasonably in deciding whether he rejects a new condition? These are all matters with which conveyancers will have to grapple. On the other hand, if the only issues to be dealt with are personal to the buyer, negotiating the conditional contract would be much more straightforward.
A transfer system would enable a reduced fee to be charged to reflect the simpler processes, thus reducing conveyancing costs. Conveyancing costs would also be reduced if the terms of the condition of contract could be simplified by excluding property-specific topics. Otherwise, conveyancing will be slowed down even more. Finally, Amendments Nos. 91 and 122 are
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consequential to this new clause, removing the stipulation in the Bill that licences cannot be transferred. I beg to move.
Lord Rooker: Amendment No. 93—the substantive amendment, as the noble Lord said—is a new clause which provides that transfers may take place either with the agreement of the licence holder or when there is a change of circumstances, and that the transfer takes effect at the time that it is made. The same provisions would apply to licence transfers as apply in respect of applications for licences, including appeals to a tribunal against refusal of a transfer. The only exception is that it provides that on transferring a licence the local authority does not have to satisfy itself as to the maximum number of households or persons appropriate for the property in question.
Apart from the exception I have mentioned, the processes and considerations involved in respect of licence transfers are almost identical to those set out in the Bill for licence applications. So we do not think that there is a lot of point in setting up such a process. It would be just as much work for the new licence holder and the local housing authority but, at the end of it, the new licence holder would not have a five-year licence. He would only have whatever was left on the old licence.
I want to reassure the noble Lord that it is our intention that the application forms will enable applicants for licences to highlight relevant information that would not change with the licence holder. This will include such information as the maximum number of households or whether a licence applicant or manager has already passed a "fit and proper" test with respect to a different property. Therefore, there would be no need for a local authority to check the information again.
Twice now, the noble Lord has used the term "fee-driven". This cannot be fee-driven. This is not like the allegation about speed cameras.
Lord Hanningfield: We do not want it to be fee-driven—I am speaking for the landlords, not my local authority interest—but some landlords fear that it might be fee-driven to get income. I notice that the Minister said he did not want that to happen. We do not want that to happen either.
Lord Rooker: It cannot be fee-driven. There is no profit for local authorities to be made out of this. They can charge only for the cost of running the system. There is no interest in building up a bureaucratic system. It is not fee-driven. It is important that we send the right messages out to the industry, which is providing housing for millions of people in this country. It is a valuable commodity and a valuable service. The vast majority in the industry do a really good job and will welcome what we are doing.
The other amendments are consequential and I do not think that they need comment. We will debate another amendment that would allow transfers to

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existing licence holders so we have not finished this part of the debate. For the reasons I have given, we do not think that the amendment serves much purpose.
Lord Hanningfield: I thank the Minister for his reply. I am pleased to hear him say that the majority of the people in the industry are very responsible and provide a very valuable service, as we all agree. A lot of the amendments that we are tabling are promoted by the industry, which is concerned about the legislation. It supports the legislation but is concerned about its operation, as are local authorities. So the two sides are concerned, as I am sure the Minister will acknowledge. Most of the amendments that we are tabling are from one side or the other. They are not politically inspired amendments, they are inspired by people who want to make certain that the legislation works. I heard what the Minister said about that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.15 p.m.
Baroness Maddock Baroness Maddock moved Amendment No. 92:
Page 45, line 17, at end insert "except where that person is a current licence holder for one or more properties in the same local housing authority.
( ) In such cases he shall only have to satisfy the local housing authority in respect of matters outlined in section 63(3)(e) to have the licence transferred to him."
The noble Baroness said: As the Minister has just said, this is the same debate as we had on the previous amendment. The idea is to explore with the Government whether there are ways of transferring in limited circumstances. This is a probing suggestion. All afternoon, and this morning, we have been trying to see whether we can assist in the way this will operate. As the noble Lord, Lord Hanningfield, said, it is landlords who have been trying to assist by putting forward things that would assist them.
I do not pretend that this is a perfect amendment, or that it would be entirely satisfactory, but I hope that the Minister can explore how we can find ways of reasonably transferring licences. There are questions around the buying and selling of properties and mortgage lenders are concerned about how this might work out. The Government have looked at that quite carefully and have made comments on it. I look forward to what the Minister says on the general issue. I beg to move.
Lord Rooker: I take Amendment No. 92 in the spirit in which the noble Baroness has moved it. Clause 67(1) provides that a licence must not relate to more than one house in multi-occupation and that the licence is valid for the specified period, which may not be more than five years according to the Bill, although it can be revoked and finished earlier. Clause 67(6) provides that licences are not transferable. Under Clause 67(7), on the death of a licence holder the licence ceases to be in force. However, Clause 67(8) provides for a three-month temporary exemption to be granted automatically, as if one had been granted under Clause
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67(2). Without this provision, the personal representatives of the deceased licence holder could inadvertently be guilty of running an HMO without a licence. The exemption can be renewed for another three months at the request of the personal representative.
Amendment No. 92 provides that the licences are transferable in certain circumstances. They are that the applicant is a person who is already a licence holder for one or more properties in the same local housing authority area and that the proposed manager of the house is either the person having control of the house or a person who is an agent or employee of the person having control of the house. It seems an eminently sensible, rational proposal that I cannot accept today. I am not saying that we will even take it away, but it does seem to be a reasonable proposal as the person is already operating in the area and is already a "fit and proper" person.
However, we come back to the issue of not knowing as much about HMOs as we should. First, we do not know how many there are. Not knowing is the real problem. One of the aims of the licensing scheme is to ensure the good management of a particular property before a licence can be granted. That means that the landlord or the proposed manager needs to be fit and proper with no relevant convictions. Suitable management arrangements must be in place for that property. We are not working on the assumption that, just because an applicant is a licence holder of the authority in relation to property A, property B, which they own and run, is run to the same management standards. It is too risky to make that assumption. They may have various sizes of HMO; they may have a licence to run a very small HMO, but, as a sideline, they may also have a couple of larger ones where the management issues are wholly different from the one for which they have the original licence. Therefore, we need to be able to check each property regarding the licence.
The argument is quite reasonable and rational—there is a fit and proper person carrying out this business in a local authority. But there is so much that we do not know about the industry that we need to tread very carefully when it comes to size. The amendment would do away with the check to ensure that, where employed, the manager of the house was a fit and proper person or that the management arrangements were suitable. The same information with regard to criminal convictions would apply. The real nub of the argument is whether the management arrangements would be relevant to and suitable for the property.
As I said, it is our intention that application forms will be designed in such a way as to enable applicants for licences to highlight all the relevant information to the authority so that they can be fast-tracked where necessary. Such relevant information would include whether the licence applicant or, indeed, the manager, where employed, had already passed the proper test with respect to a different property. The aim is to make sure that the application process for a potential new licence holder and the local authority is as

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uncomplicated as possible. There is no purpose in having loads of extra forms and red tape slowing down the system. Where possible, we want to avoid having the local authority carry out the same checks again, because that does not make sense.
That said, we are only at Committee stage. That applies equally to what the noble Lord, Lord Hanningfield, said. There will be a rather longer gap between Committee and Report. My right honourable friend Keith Hill is a very listening Minister—that is, assuming that he is still Housing Minister as I speak. I once made a joke at a conference and I was rung up the day after.
We are very practical about this; we genuinely want to work with the industry and will be more than happy to listen to its views and read submissions after what has been said in Committee on this group of amendments. We want this to work.
Baroness Maddock: I thank the Minister very much for his full explanation and sympathetic tone. We on these Benches hope that he is not shifted around and that he will take the Housing Bill through to completion.
I will look carefully at what the Minister has said and consult with others. There may be something that we can do to ensure that, in certain circumstances, it may be possible to have some form of transfer of licence. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 67 agreed to.
[Amendment No. 93 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 94:
After Clause 67, insert the following new clause—
"HMO LICENCES: BREACH OF CONDITIONS
(1) A local housing authority may, if any of the conditions of the licence is not complied with, serve a notice (in this Act referred to as "a breach of condition notice") on the licence holder requiring him to secure compliance with the conditions as are specified in the notice.
(2) A breach of condition notice shall specify the steps which the authority consider ought to be taken to secure compliance with the conditions specified in the notice.
(3) The period allowed for compliance with the notice is such period of not less than 28 days from the date of service of the notice specified in the notice but this period may be extended by the authority.
(4) If at any time after the end of the period allowed for compliance with the notice—

(a) any of the conditions specified in the notice is not complied with, and

(b) the steps specified in the notice have not been taken the licence holder shall be guilty of an offence.

(5) It shall be a defence for a person charged with an offence under subsection (4) to prove—

(a) that he took all reasonable measures to comply with the conditions specified in the notice, or

(b) that he had reasonable excuse for failing to comply with the notice.

(6) The person who is guilty under subsection (4) shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(7) The provisions of Part 3 of Schedule 1 shall apply to a notice served under this section as if it were an improvement notice (omitting paragraphs 12, 13, 17 and 18)."
The noble Baroness said: This is quite a big group of amendments, of which Amendments Nos. 94 and 95 are in my name. Amendment No. 95 is slightly akin to one tabled by the Government, so I hope that we will be able to agree to that without trouble.
Let me start with Amendment No. 94. On selective licensing for houses of multiple occupation, the whole thrust of the Bill is to criminalise in the event of noncompliance. The other sanction for breach of licence is revocation. This is draconian and ought to be reserved for serious cases or those where there have been repeated infringements. Instead, a breach of condition notice is suggested as an intermediate step which a local authority can adopt in less serious cases. That is the general thrust of this new clause.
A breach of the condition notice would allow the local housing authority to set out the breaches complained of and the steps required of the landlord to comply with the notice. The landlord would have 28 days in which to comply. Non-compliance with a notice would be a criminal offence, attracting an appropriate fine. There would be provision for a defence of reasonable excuse, where the landlord could demonstrate that he had taken all reasonable measures to comply with the notice and/or that he had a reasonable excuse for failing to comply with all the conditions. This would enable a stern warning to be sent to the landlord without the need to go immediately to the extreme step of revoking the licence or instituting criminal proceedings. In most cases, it would ensure compliance without the need to go any further.
The amendment would allow local authorities to fire a warning shot, and is another weapon in their armoury. It would also avoid criminalising landlords at the outset. It would save both local authorities and landlords costs and, by not having such a heavy-handed approach, would help foster good relations between housing associations and landlords.
There are many other examples in existing legislation such as an improvement notice under the Health and Safety at Work etc. Act 1974 and for breach of conditions of planning permissions.
Amendment No. 95 deals with the failure of a serious or repeated nature. The Bill does not lay down any criteria for a local authority to consider revocation or breach of a licence condition. There is therefore the possibility that a trivial breach could result in action to revoke the licence. It must be recognised that landlords are vulnerable to baseless complaints by disgruntled tenants.
The purpose of the amendment is to make it clear that a licence can be revoked only if the failure to comply with a condition is of a serious nature. Alternatively, there must have been repeated breaches.
The revocation of a licence is a serious remedy. The licence holder will have to find someone else who is suitable and willing to undertake the responsibilities and who is acceptable to the local authority.

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Alternatively, an interim management order can be made under which the local authority will take over the property. Revocation could have other consequences for a licence holder, such as the inability to raise mortgage finance or to obtain insurance cover. It is important that the remedy of revocation should be a last resort and reserved only for serious or repeated breaches.
The amendment also sets out a yardstick for residential property tribunals when dealing with appeals against revocation orders. Otherwise, there is no guidance for them in the Bill, as far as we can see, as to the standard by which they should judge appeals against a revocation of an HMO licence.
The Minister may well argue, as he has done today, that what we seek is inherent in the Bill, but there is no guarantee that this is the case. It is important to set the height of the hurdle over which the local authority must jump before a licence can be revoked. I beg to move.
Lord Rooker: Although these words are not in my notes, I hope that the noble Baroness will accept that the revocation of a licence by a local authority would indeed be a last resort. It definitely is not the first port of call. Let me make that abundantly clear at the outset.
I shall speak to Amendments Nos. 94 and 95 before dealing with the government amendments. Amendment No. 94 would enable a local housing authority to serve a breach of condition notice on a licence holder who fails to comply with any of the licence conditions. The notice would require the licence holder to comply with the conditions specified in the notice.
The effect of the amendment would be to create an extra step in the process for dealing with breach of licence conditions in order that a person does not find himself or herself in inadvertent breach of a licence condition and is, without warning, served a summons by the local housing authority.
I assure the noble Baroness and other colleagues that we would expect the local housing authority, like all public authorities, to act reasonably in this regard. We would expect the authority to alert the licence holders of their potential breach and to give them reasonable time to remedy the situation. I want to make that point absolutely clear.
Most local authorities—I am not sure why it is not all—are signed up to the enforcement concordat, which sets out the principles of good enforcement. They underline the role that enforcement authorities have in advising and assisting with compliance, rather than simply prosecuting for non-compliance. I make that absolutely clear: it is not a first resort but a last resort. The licence conditions will be set out clearly in licences, so that it will be near impossible for any licence holder to claim ignorance of what the conditions are.
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A breach of licence conditions can be a serious offence, sometimes requiring immediate rectification, which the amendment would prohibit. Therefore, local authorities should have the flexibility to deal with the breach, as is appropriate to the circumstances of the case. Normally, we would expect the local authority to give a landlord reasonable opportunity to remedy the breach before embarking on prosecution.
Allowing the approach suggested by the amendment would mean the licence holder who was in breach of his conditions of licence would continue to operate the property without adequate protection for the residents, while the whole process of notification appeal goes on. That point is probably worth considering for future stages.
Amendment No. 95 would amend Clause 69 so that only a serious breach of licence conditions, or repeated breaches, are grounds for revoking a licence. I am happy to say that we fully accept the logic of the amendment and have tabled our own amendment, Amendment No. 94A, which will meet those intentions.
That brings me on to government amendments, Amendments Nos. 94A, 95A, 122A and 123A. Amendment No. 94A provides that in deciding whether to revoke a licence because of breach of condition in accordance with the provisions in Clause 69, the local authority must consider the seriousness of the breach or whether it constitutes a repeated breach of conditions. As I said when speaking to Amendment No. 95, I expect that local authorities will by and large act reasonably when deciding the grounds on which to revoke a licence. I am happy to clarify that they must in all circumstances take such action only when the breach is serious or constitutes a repeated breach of conditions.
Amendment No. 95A provides that in deciding whether to revoke a licence because either the licence holder or some other person engaged in the management of an HMO is no longer a fit and proper person, the local housing authority must apply the same test as it would for determining whether it would have refused to grant that person a licence. It is a technical amendment to put beyond doubt that the same criteria must apply in determining both questions. As currently drafted, a local authority could impose a different test in revoking the licence from that which it must apply in refusing to grant one.
Amendment No. 122A is identical in its application to the revocation of a Part 3 licence. Amendment No. 123A is identical to Amendment No. 95A but applies to the "fit and proper person" test for selective licensing under Part 3. In due course, I shall move those amendments on behalf of the Government.
3.30 p.m.
Baroness Hanham: I thank the Minister for more or less accepting Amendment No. 95; the government amendment says near enough what we were saying, so that is fine.
However, I am disappointed with the Minister's reply to the breach of notice and the possibility of having an interim stage on a breach of condition.

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There are, I am sure, innumerable occasions in the management of property when it would be perfectly feasible to allow time for something to be done. I understand the Minister's remark that something might be so serious that only an immediate revocation would be a suitable answer. But it is a serious step—both the breach of conditions of the licence and the need for the local authority to step in with summonses and criminal actions.
I want to read what the Minister has said, because I still believe that there is a need for something like our amendment to give some leeway to landlords, managers and local authorities, so that they are not pitted at each other's throats early on. That might very well happen in a situation—but with a breach of condition notice they could quietly feel their way through the process.
Lord Rooker: I am only planting the point in the noble Baroness's mind—and no doubt her advisers will read what I have said—but if she is thinking of coming back with a variation on her amendment, she needs to take account of the circumstances of the tenants during the period in question.
Baroness Hanham: But of course. We are not arguing political differences in this matter; we are simply raising practical issues. There are times when people are perfectly well protected by action that does not need to take place quite so quickly. I shall make sure the noble Lord's point is taken into account. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 68 agreed to.
Clause 69 [Revocation of licences]:
Lord Rooker Lord Rooker moved Amendment No. 94A:
Page 46, line 44, leave out from "has" to end and insert "committed a serious breach of a condition of the licence or repeated breaches of such a condition;"
On Question, amendment agreed to.
[Amendment No. 95 not moved.]
Lord Rooker Lord Rooker moved Amendment No: 95A:
Page 47, line 3, at end insert—
"Section 65(1) applies in relation to paragraph (b) or (c) above as it applies in relation to section 63(3)(b) or (d)."
On Question, amendment agreed to.
Clause 69, as amended, agreed to.
Clause 70 agreed to.
Schedule 5 [Licences under Parts 2 and 3: procedure and appeals]:
Baroness Maddock Baroness Maddock moved Amendment No. 95B:
Page 192, line 32, after "interest" insert "or has a tenancy or licence"
The noble Baroness said: In moving Amendment No. 95B, I wish to speak to Amendments Nos. 95C to 95E.
The purpose of Amendments Nos. 95B and 95C is to give those who are in actual occupation in the house in multiple occupation, or a Part 3 house, the opportunity to make representations on the terms of the licence, authorising occupation that the local authority proposes to grant to an applicant for a licence under Clauses 62(3) and 84(5). That can be achieved by extending the definition of "relevant person" in paragraph 13 of the schedule, as it is the relevant person on whom the local authority must serve the notice prior to granting or refusing a licence, as well as the terms of the licence granted or the reason why refused.
On the assumption that there will be occupiers of the house in multiple occupation, or a Part 3 house in some cases, it is right in principle that they should have the opportunity to make representation on the terms that will affect them, and that they should be aware of those terms when they are granted, particularly in the event of any infringement. Moreover, the exclusion of any tenant under a lease with an unexpired term of three years or less is far too restrictive. The effect of the current proposed exclusion would not be satisfactory.
The purpose of Amendments Nos. 95D and 95E is to enable those who are in actual occupation of a house in multiple occupation or a Part 3 house to appeal to the residential property tribunal on the grant or refusal to grant a licence by a local authority, or the grant or refusal of any terms of a licence—and similarly in respect of any variations or revocations of a licence already granted. This amendment is consequential on the others that I am proposing. If I seriously thought that the Government would accept the amendments, I would attempt to insert similar amendments in other parts of the Bill.
I hope that the Minister recognises that I am attempting to ensure that we pay due attention to the tenancies of tenants who own their own properties. The Government may think that the present position is satisfactory. These are probing amendments. I beg to move.
Lord Rooker: Basically, I have a bucket of cold water for these amendments for reasons that I shall explain. The noble Baroness puts her case in moderate and reasonable terms and her argument is seductive as regards tenants having a role with respect to the matter that we are discussing. However, we are not dealing with the same situation as that regarding the landlord for reasons that I shall try to explain.
The effect of the group of amendments would be to give the occupiers of licensable properties the same notification and appeal rights as owners of licensable properties. It would also give them the same rights as owners in their ability to appeal licensing decisions to the residential property tribunal. The amendments would require a local authority to notify such persons before and after a licensing decision and to consider any representations they might make on licensing decisions affecting the property in which they reside. Occupants would have the right of appeal to a residential property tribunal against the licensing decision by a local housing authority. We do not agree

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that such rights should be granted to occupants who do not have a long-term stake in the property. It is the Government's view that such tenants do not have sufficient ongoing interest in a property to merit influence on the outcome of the licensing process either by representation or through the avenue of appeal that these amendments would provide.
Nor does the licensing scheme have comparable implications for occupants as for landlords other than that occupants could expect to see an improvement in poorly managed properties. We hope that they will see an improvement overall in the sense of bringing in licensing in the first place.
The decision of a local authority to refuse a licence to a landlord or a decision by the residential property tribunal to overturn a decision to grant an appeal could have very significant implications for the landlord while quite probably having much less impact on the occupier of the property in question. Similarly, if an interim management order and/or a final management order were made on a property, this could have implications for a landlord long after the tenant has moved on.
Extending the obligation to identify all the occupants, provide notice of a licensing decision and consider representations from all relevant parties to all occupants could prove an exceptionally onerous burden on some local authorities without providing any commensurable benefits. I have talked about the scheme being effectively ring-fenced in the sense that the licence will pay for the process. That would add considerably to the costs but I did not see any indication in the amendment that the occupants would share the cost of that part of the process.
In relation to the right to appeal a licensing decision, there is a significant risk that the amendments, if enacted, could cause considerable delay. If every occupant of an HMO were to choose to appeal various aspects of a licensing decision, that could lead to the effective implementation of the whole regime being unduly delayed.
It is also worth noting the comparatively limited security of tenants with an unexpired lease of three years or less. To allow them involvement in the appeals process could leave them exposed to the threat of retaliatory action from landlords if they did not appeal on the landlord's behalf against the decision by the local authority. There is a bit of "legal speak" there but I have read it out word for word. The measure would appear to put the occupants at risk in those particular circumstances.
We believe that the proposed amendments would represent a significant and, indeed, an unjustified departure from the scope of rights provided elsewhere in the Bill to occupants. That is why I say that I have a bucket of cold water for this group of amendments but the whole thrust of the Bill is very pro the industry and good landlords and it is certainly pro tenants. I hope that for the reasons I have stated the noble Baroness will not press the amendments which I believe she said were probing.
3.45 p.m.
Baroness Maddock: I thank the Minister for a very clear bucket of cold water, if I may say so. I thank him for the detail with which he responded. I take very much on board the point that he made about long-term interests. I particularly take the point about problems regarding possible harassment of tenants. As I say, this is a probing amendment. However, I still believe that if you are a tenant and all kinds of management issues and licensing are being discussed over your head, you need to know something about what is going on. I shall read carefully what the Minister said and decide whether there is something that needs to be considered further. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 95C to 95E not moved.]
Schedule 5 agreed to.
Clause 71 [Offences in relation to licensing of HMOs]:
Baroness Hanham Baroness Hanham moved Amendment No. 96:
Page 48, line 14, after "permits" insert "knowingly"
The noble Baroness said: The HMO parts of the Bill relating to overcrowding will be unworkable. Most tenants request double rooms and this could result in occasional guests staying a night, or in a guest staying on a regular basis or someone staying a few days at a time. Are these people to be classed as occupants? How is the landlord meant to know they are there and how is he meant to police this?
To try to address this problem we have tabled two amendments. The first seeks to insert the word "knowingly" in front of the word "permits" and the second seeks to define the expression "occupation". The purpose of the first amendment is to make it clear that the landlord must have knowledge of the offence before it is committed. Under this proposal a landlord can be guilty only if he knows that the numbers allowed under the licence have been exceeded. If the wider meaning of "permits" is intended, which lays an onus on landlords to take reasonable steps to avoid overcrowding taking place, this has far-reaching consequences for both landlords and tenants/ occupiers of licensed houses in multiple occupation. The Act will become a snoopers' charter compelling landlords to intrude into the private lives of their tenants. Otherwise, the landlord is at risk of criminal prosecution with a substantial fine of up to £20,000 and even revocation of his licence if he does not do so. Clearly, if a landlord knows that the number of occupants exceeds the permitted number or ignores clear signs, he should be guilty of the offence. This amendment still provides for that.
The change in definition of HMO to bring shared houses within the scope of the legislation means that we are dealing with a wholly different situation from the traditional HMO where the landlord retains control of the common parts. With a shared house, possession of the whole property is given over to the tenants. Tenants expect privacy. They do not expect landlords constantly to inquire what is happening in their property.
If "permit" is given the wider meaning, landlords will have to visit their properties at nights and at weekends. There would be little point in going during normal hours on weekdays as the occupants will be out at work or studying.
The second amendment to this clause is intended to clarify the expression "occupation" so that the offence will be committed only where occupation is on the basis of only or main residence. Under Clause 217(2)(c), in determining whether a house needs to be licensed as an HMO, the test is that it is the "only or main residence". That is extended by Clause 222 to include residence in a building when undertaking full-time education or if the building is occupied as a refuge. The amendment would ensure that there is consistency of treatment.
Clause 71 refers to "occupation" without elaboration, which suggests that temporary residence could suffice for a landlord to be convicted of the offence as it stands. It is often the case that boyfriends or girlfriends regularly stay over. A landlord may let to five people an HMO in which all the rooms have double beds supplied by the landlord or are double rooms. Usually, nowadays, that is demanded by tenants. What happens if, on occasion, all the extra beds are occupied by guests? Alternatively, what if one room is occupied regularly—perhaps two or three nights a week—unbeknown to the landlord? Does the fact that he has provided double rooms make him guilty of permitting the offence of overcrowding?
The amendment would make it clear that the offence occurs only if the property is permanently occupied in excess of the permitted number. We should not criminalise transient arrangements. I beg to move.
Lord Bassam of Brighton: Amendment No. 96 would provide that a person having control of or managing—for convenience, I shall refer to him as the landlord—can be guilty of committing an offence under subsection (2), if he or she knowingly permits another person to occupy the property, so as to cause the house to be occupied by more persons than are permitted by the licence. I shall come to the question of the meaning of "occupation" when I address Amendment No. 99, but it is worth saying that, in the context of this amendment, "occupation" does not include a temporary stay that is beyond the control of the landlord; the clause is about occupying under a licence or tenancy.
The noble Baroness, Lady Hanham, gave full effect to her understanding of her amendment. I fully appreciate the concerns that she expressed, but I am not entirely convinced that the amendment is necessary. For a start, the person who permits the over-occupation must be the landlord himself.
I shall explain how we see the system working. It is a vital part of the licensing regime that landlords take some responsibility for the properties that they manage. I am sure that the noble Baroness will appreciate that, having, as leader of a council, been a landlord herself. Although the role is rather different, it is certainly the case that landlords in such
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circumstances ought to know rather basic matters such as who is living in the property, as it is fundamental to good management.
The concern has been that a landlord could be held to have permitted over-occupation unknowingly, through the actions of a tenant. It has been suggested that, in some other statutory contexts, permitting something to happen includes a failure to take steps to stop that thing happening. I reject the notion that, to make this part of the Bill effective, there must be a "snooper's charter" for the landlord. The Government must be as clear as we can about how we expect the provision to operate in the context of the Bill. A landlord would clearly be held to have "permitted" occupation by another person, if he or she granted him a tenancy or a licence and accepted payment of rent or licence fee from that person. A landlord would clearly be held to have "permitted" occupation by another person, if he explicitly gave permission to existing tenants to bring in any additional persons to live in the house. A landlord would not have "permitted" occupation by another person, if that occupation arose out of circumstances beyond his control and was in breach of a term in the tenancy agreement forbidding the existing tenants from permitting new occupation to arise. I hope that the distinction between being permitted and not permitted is clear in that interpretation of that part of the Bill.
Amendment No. 99, which works with Amendment No. 96, would insert a definition of "occupy" into the clause. The amendment is unnecessary. "Occupier" and related expressions are defined in Clause 224, and it is clear that it means occupation as a residence, not any less significant form of occupation. Moreover, subsections (2)(c) and (4)(d) of Clause 217 provide that a building is an HMO—unless an HMO declaration scheme is in force—only if it is occupied by persons as their only or main residence.
I understand the point made by the noble Baroness, and I see some force in her proposition. However, we are clear about what we see as being permitted and not permitted and about what we see as an occupier, who must occupy the premises as their only or main residence, not as a sort of overstayer, as the noble Baroness suggested in moving the amendment. I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Hanham: As with one or two other explanations, I am still not entirely happy with the Minister's response. If overcrowding is found in the premises, it is a serious offence. Although it may arise spuriously through people having guests in the premises, I do not sign up to the idea that the landlord would not find himself with serious problems if somebody were called in. Environmental health officers might come round on a Saturday night because there was a great deal of noise coming from a building and discover that there were 25 or 26 people in a house that was not meant to contain more than 13. They will set about finding out how it is that that number of people is staying in the property, which is clearly overcrowded and is causing other problems. I

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can see the landlord having difficulty sorting that out and explaining that he did not know that so many people were in the property.
I heard the Minister's explanation, and I am not totally happy that it covers the matter. We need to make sure that other people are content with the Minister's reply. As we shall discuss this with regard to another amendment, this offence carries a huge criminal penalty for a landlord found to be in breach. It is extremely important that the clauses are correct and watertight. I thank the Minister for his reply and, for today, I shall withdraw the amendment, although we shall probably return to the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 97 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 98:
Page 48, line 36, leave out "£20,000" and insert "level 5 on the standard scale"
The noble Baroness said: I said that we would return to the issue of the level of penalty; this amendment relates to that issue. Under the Bill, the maximum fine for a landlord in breach of a licence because of overcrowding is £20,000. That is an excessive amount for such an offence. The fine should instead be at level 5, which is £5,000. In the magistrates' court, fines of up to £20,000 are reserved for the most serious offences, and it is not considered that this offence falls into that category.
The Minister may argue that, as a house in multiple occupation will be licensed for a specific number, there is in effect no licence at all, if the number is exceeded, so that the breach ought to carry the same fine as if there were no licence. That ignores the fact that HMO licensing is not just about numbers. It is also about the fitness of the manager and the management arrangements. Breaching one aspect of the licence is less serious than having no licence at all. A breach of a condition of a licence attracts a level 5 fine. Exceeding the permitted number should be treated in the same way. I beg to move.
Baroness Hamwee: We do not agree with the amount of fine, as presented by the noble Baroness, but could the Minister direct us to any provision for uprating the fine because the value of money does not remain the same, one assumes, for the life of the Bill?
4 p.m.
Lord Bassam of Brighton: The noble Baroness explained her amendment with her usual clarity, but we take a different view. Running an HMO without a licence when one is required is, or can be in certain circumstances, a very serious offence which can lead to considerable problems and can be quite dangerous. Running an HMO with a licence but in contravention of its fundamental terms is tantamount to running one without a licence. The Government believe that the penalty should be sufficiently substantial to deter landlords from evading the licensing requirements.
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The penalty should outweigh potential benefits that the landlord might gain by illegally avoiding licensing. That is why it is important that the maximum fine is pitched at this substantial level. The exceptional level of the maximum fine for the main licensing offences is intended to demonstrate the seriousness with which the Government are treating the new compulsory licensing regimes and set it apart from the other housing offences which are pitched at a fine on level 5.
That is our clear position. The noble Baroness, Lady Hamwee, asked me about uprating. Clause 215 relates to the,
"Power to up-rate fines for certain offences".
So it answers that point.
Baroness Hanham: In that case, the previous amendment is crucial so that we establish whether the offence relates to knowingly permitting overcrowding or overcrowding that happens by accident. I declare an interest as a magistrate. The number of times that magistrates impose a fine of £20,000 is very small. Most of the serious cases that come to magistrates' courts do not attract a fine of that amount. So the fine would be a draconian outcome for a serious problem.
I would be the first to acknowledge that there are and have been known to be serious breaches of overcrowding. I have known of student hostels where people have been packed in and the number of bunk beds was well in excess of what should be there. So I acknowledge that overcrowding does happen. At the very least there should be a fine of up to £20,000, but it would be very serious if it was set at £20,000. We will look at the amendment again and the Minister's reply. For the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 99 not moved.]
Clause 71 agreed to.
Clause 72 [Further sanctions relating to unlicensed HMOs]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 100:
Page 49, line 33, at end insert—
"(6) On the application of the person who would be entitled to enforce payment of any rent or licence fee, but for the provisions of subsection (2) or from whom the same are recoverable under subsection (3), the Court may, if satisfied that such person acted reasonably or it is otherwise just and equitable to do so, make an order dispensing with the sanction provided for by this section and directing that the rent or licence fee shall be payable notwithstanding the provisions of subsection (2) (and notwithstanding any rule of law prohibiting the enforcement of a contract which is illegal)."
The noble Lord said: Clause 72 provides a sanction where an HMO required to be licensed is not licensed. Under this clause the landlord cannot recover his rent or licence fee for any period during which he is committing the criminal offence under Clause 71. Where a tenant has already paid the rent he can then claim it back from his landlord. The purpose of this amendment is to allow the court to grant relief from the sanction of non-recoverability. The court would be entitled to do this being satisfied that the landlord had acted reasonably or if it was just and equitable.
A number of situations can be envisaged where it might be unfair that the landlord has to forgo his rent. The landlord may be given misleading advice from a local authority official stating that no licence is needed when in fact one is required. It could be uncertain whether a property needs a licence at all. For example, a woman may own a house with her husband in London but work in Leeds. During the week she lives with her parents in Leeds where she lived before she was married and returns home every Friday night to her house in London. The house in London is a four-bedroom, three-storey house which, during the week, the woman's husband shares with three of his old university friends who now work in London but who disperse to various parts of the country at weekends to their parents' or girlfriends' houses. They pay rent. This example is based on a real life case. Is the London property to be treated as requiring an HMO licence? If one of the friends falls out can he claim his rent back if there is no HMO licence? The initial uncertainty as to whether a licence is needed at all shows how important it is that there is some discretion to waive this harsh sanction.
Under common law, rent is not recoverable if a contract is illegal and it is the view of the ODPM that the provisions of Clause 72 mirror the common law rule. The amendment makes clear that the courts' dispensing power expressly overrides that common law rule as well. I beg to move.
Lord Bassam of Brighton: The amendment seeks to allow a court, upon the application of a person to whom the sanction in subsection (2) of Clause 72 applies, to order the dispensation of that sanction if the court considers that the person has acted reasonably, it is otherwise just and equitable to do so and that this order can be made notwithstanding any rule of law that an illegal contract cannot be enforced. I will explain the general effect of Clause 72 in more detail when we move to debate its stand part, so, with the leave of the Committee, I shall address my remarks specifically to this amendment.
The amendment is a sanction for not having the necessary licence in place and it must operate as such. It provides that the court can order dispensation of the order if the person has acted reasonably. However, it misses the point that the sanction arises because a criminal offence under Clause 71(1) has been commissioned, but that it is a defence to a charge that the person had a reasonable excuse for having control of or managing the house under the provisions in Clause 71(5). If he or she has an excuse then no offence is committed and consequently the sanction does not apply.
I hope that the Committee would agree that the notion that a person can have a reasonable excuse for committing a criminal offence for which he or she has been found guilty is not sustainable. That is, in effect, what the amendment proposes to achieve. We cannot possibly support that and on reflection the noble Lord
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would also find it hard to support that. For that reason I hope that the noble Lord will withdraw his amendment.
Lord Hanningfield: The point was that for some inadvertent reason, some people might not receive rent or will lose out. No one was sanctioning anyone committing a criminal offence. However, there could be a situation in which people suffer and the court would be able to allow the payment of rent. I was not trying to sanction criminal activity, but was trying to point out anomalous circumstances in which people could lose out. Therefore there should be a chance for them to benefit by that. The noble Lord misunderstood my suggestion as sanctioning a criminal offence. I was not trying to do that. I was trying to illustrate a situation in which someone might get hurt.
Lord Bassam of Brighton: The noble Lord needs to understand the impact of his proposal. I can see where he is coming from, but the situation will not occur often in the circumstances he describes. However, I believe that if you are putting forward an amendment, you need to understand and work through its other implications.
Lord Hanningfield: I understand that and I thank the Minister. We will read his answer carefully to see whether we can take the problem forward in the future. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 72 shall stand part of the Bill?
Baroness Maddock: We want to press the Government further on the effect the provision will have on the tenants rather than the landlords. Shelter is concerned, as are the Office of the Deputy Prime Minister, some tenants' rights groups and the Local Government Association. Many people believe that the no-rent-payable sanction against unlicensed landlords could lead to the eviction of tenants. Although the principle that tenants should legally be able to withhold rent if their landlord is operating without a licence seems attractive, it does not take account of the reality faced by tenants on low incomes with no security of tenure who are unable to enforce their housing rights without risking eviction.
Tenants with an assured short-hold tenancy will simply face eviction by their landlord if they attempt to enforce a provision not to pay rent on unlicensed properties. In practice, many tenants will choose not to risk losing their homes and may continue to pay the landlord. If council housing benefit is withdrawn, and if they cannot pay their rent in any other way, there is a risk of them being homeless.
We believe that it would be better to penalise a landlord by fining him so as to avoid the possibility of the tenants losing their homes. I hope that if the Minister is not minded to look at that, he can address

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the concerns, many of which were rehearsed in the debate in another place, and convince us that this is a better way to legislate. I beg to move.
Lord Bassam of Brighton: I am grateful to the noble Baroness for explaining her objection to the clause in such clear terms. Clause 72 provides for sanctions in relation to unlicensed HMOs. The clause provides that if an HMO is required to be licensed but is not, then the person controlling or managing the HMO is guilty of an offence and no rent is payable by occupiers and no charge can be made in lieu of rent.
It is vital that we guarantee that the occupiers of unlawfully licensed HMOs do not suffer because their landlord has committed a criminal offence in failing to obtain a licence. Therefore, Clause 72(4) preserves the existence and validity of relevant tenancies. In other words, an occupier's security of tenure is not affected by this provision and nothing in it affects the terms of occupancy, other than payment of rent.
Equally, it is crucial to ensure that persons letting properties which are required by law to be licensed, but who fail to apply for a licence, should not be able to profit from their disregard of the law by receiving rents. Bad landlords should not be able to benefit from their criminality by continuing to take money through the housing benefit system. This clause means that they will not. That is its purpose.
While we are strongly wedded to the principles embodied in the clause, the practicalities involved in enforcing these provisions are far from simple, and the noble Baroness has given us a fair example. That point is well made and we have listened to the concerns. Indeed, she gave us chapter and verse on the organisations which are concerned. We appreciate their responses to this clause. We shall continue to give consideration to the issues and review the clause.
There are alternative measures which may be available to achieve the objectives which the clause is intended to reach. Officials are at present consulting relevant stakeholders on the issues. The best we can say today is that while we are convinced that we have the principles right, it is only right for us to give some further thought to the matter and report back at a later stage of the Bill. At present we should retain the clause and further consider the issues in concert with the LGA, Shelter and the other organisations which have expressed understandable concern about a potential spin-off from the clause.
4.15 p.m.
Baroness Maddock: I thank the Minister for that reply. It would be helpful if the issue were investigated a little further. I can see the problem for a tenant. We are here finding it difficult to get to grips with the legal side of the matter. But for a vulnerable tenant, the landlord may tell him, although he should not, that he is seeking eviction. It may be that there is some way in which we can ensure that the tenant has something which makes him or her feel secure in this situation.
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That may be the answer. I ask the Government to look at that. Meanwhile, I am happy for the clause to stand part of the Bill.
Clause 72 agreed to.
Clauses 73 to 75 agreed to.
Clause 76 [Licensing of houses to which this Part applies]:
Lord Rooker Lord Rooker moved Amendment No. 101:
Page 52, leave out lines 8 and 9 and insert "a tenancy or licence to be an exempt tenancy or licence—

(a) if it falls within any description of tenancy or licence specified in the order: or

(b) in any other circumstances so specified."

The noble Lord said: Clause 76 provides local housing authorities with the power to operate selective licensing of rented housing in an area designated by the local housing authority under Clause 77 for the purpose of selective licensing.
The Bill provides that all private rented property within a designated area will be required to have a licence, unless it falls within one of the exemptions. The first category of exemption is for properties managed by registered social landlords. The second category of exemption is for properties which will be specified in an order made by the appropriate national authority. This would include properties managed by local authorities themselves. We have it in mind to include in such an order the kinds of arrangements which are currently exempted from statutory protection under the Housing Act 1988, such as business tenancies, holiday lets and so on.
Government Amendment No. 101 would extend the order-making power of the appropriate national authority to enable it to prescribe situations in which tenancies or licences are exempt. The amendment is a small technical change to ensure that there is sufficient flexibility to specify all the circumstances in which it is right to exclude the requirement to have a licence. For example, it might be thought appropriate to exclude properties which are subject to a demolition order from the requirement to be licensed under Part 3. We believe that it is doubtful whether it would be possible to exclude such categories as,
"descriptions of tenancies or licences",
as the Bill currently provides.
Government Amendment No. 112 is a technical amendment aimed at ensuring that a property that should be licensed under Part 2, but is not licensed or temporarily exempted, can never fall within the requirement to be licensed under Part 3. With the unamended provisions, a house in multiple occupation that was required to be licensed under Part 2, but that was not licensed or temporarily exempted, would fall within the bounds of a selective licensing scheme in force in its area. In these circumstances a person operating such an HMO would be guilty of committing an offence under Part 3 as well as Part 2. We do not want this double jeopardy situation to occur. The amendment is to put this beyond any doubt.
Clause 88 makes provision for the general requirements and duration of Part 3 licences. The clause provides that licences granted to properties subject to selective licensing are valid for a maximum of five years and can relate to only one property. Licences are also non-transferable and a three-month temporary exemption notice is automatically granted on the death on the licence holder.
Subsection (3) provides that a licence would be in force for the period specified in the licence up to the maximum of five years unless it is revoked or on the death of the licence holder. As I said, Amendment No. 121 is technical, to put beyond doubt that a Part 3 licence can be terminated only in one of the three ways to which I have just referred. We do not want any other situation to arise where a licence ends automatically. In practice, we would expect a local authority to revoke a Part 3 licence at the point that it grants a Part 2 licence. It is just safer in our view that that is not an automatic consequence of a property becoming liable to be licensed under Part 2. Therefore, I beg to move.
Baroness Hanham: As with others, these amendments have crept upon us abruptly since the end of the Recess. I therefore do not feel entirely confident to deal with them today so, if necessary, we shall return to them on Report. They sound pretty bland, but we may need to look at them. As the Minister knows, a flurry of amendments has come in during the last few days of the Recess and I am sure that he will not expect us to be able to respond to all of them today.
Lord Rooker: No, that would be quite unreasonable. Although, as the noble Baroness says, they are bland and a couple of them are technical, I will make sure that, if we need to go beyond what I have said in Hansard, we will provide a separate note on these late government amendments that have been tabled in Committee, so that at least there is something more on the record for colleagues before we reach Report.
On Question, amendment agreed to.
[Amendment No. 102 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 103:
Page 52, leave out line 16 and insert "timescale specified by the appropriate national authority"
The noble Baroness said: There are four amendments: Amendments Nos. 103, 106, 108 and 116. They are all designed to ensure consistency in the application of the provisions in regard to selective licensing of HMOs. We are concerned that without them we are in danger of having a piecemeal and fragmented system—we discussed that earlier on. Although we are firm believers in the powers of local discretion and decision-making, it appears that without a greater lead and guidance from the appropriate national authority, local authorities, and consequently local people, will find it difficult to understand what could be a confusing and complex system.
Amendment No. 103 and the other amendments are designed to ensure that the Bill is effective and that local authorities are not placed in a position where they cannot implement its provisions, but can carry out their responsibilities in a way that they can properly handle. I beg to move.
Lord Rooker: I must say that the noble Baroness moved and spoke to her amendments incredibly succinctly. Although I have flicked through all my folders during the past few days, especially yesterday, you cannot really cut things down unless you have the detail. I should like to cut my response to fit the speech, but I do not feel that I can do that because I am not close enough to the subject. I shall therefore deal with the amendments in turn.
Amendment No. 103 would amend Clause 76(5)(b) in order to require the appropriate national authority to specify the time limit by which applications for licences must be processed by local authorities. The amendment revives an issue that I understand was debated in another place with reference to the processing of licences under Parts 2 and 3.
It would not be right or appropriate for the national authority to fix rigid time limits within which licence applications must be determined. Local authorities should certainly aim to determine such matters within a few weeks of application. However, there are circumstances in which they may need to take longer. For example, in determining whether to grant a licence, it might take time to determine whether a landlord is a fit and proper person under Clause 86 and whether he or she is the most suitable person to hold the licence. The authority may want to consider whether it wants to include specific licence conditions in the case of certain landlords.
Amendment No. 106 appears to be a probing amendment designed to provoke discussion on the scope of selective licensing and how we intend to use the order-making power in Clause 77(7). The provision allows that the appropriate national authority may by order add to the two general sets of conditions specified in the clause and so enable selective licensing to be extended beyond areas of low housing demand or areas where there is a significant level of anti-social behaviour.
I am aware that many local authorities believe that they should be allowed total freedom to impose selective licensing wherever they feel that it is necessary. However, we are extremely keen that selective licensing is a tool to be properly targeted and used only where the worst problems exist. As may be known, our original plan for selective licensing was to confine it to areas of low demand—effectively parts of the Midlands and the north-east and north-west. It has now been allowed nationwide, but not at the behest of local authorities. We do not wish to license the entire private sector, because that would be unjustified—I want to make that absolutely clear.
The current Part 3 provisions strike the right balance by limiting the scope of selective licensing to the specific problems of low demand and anti-social

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behaviour. We do not therefore at this stage intend to use the power under Clause 77(7) to broaden the remit of selective licensing. However, we will review how selective licensing is working in practice.
Amendment No. 108 would amendment Clause 77(9)(a) so that the appropriate national authority would specify the process by which consultation on selective licensing proposals should take place. The amendment was previously tabled in debate in another place. We resisted it then, as we do now, because we do not believe that it is necessary or desirable to micromanage every element of the licensing procedure.
We have to let—what is the phrase?—freedoms and flexibilities reign in local government. We have had a bonfire of controls and regulations in local government. Town halls up and down the country now have massive freedom to be fully accountable to their electorates; more than ever before. We have released them from financial burdens and ringfencing. We have to trust local government to be able to be reasonable and sensible.
Amendment No. 116 seeks to remove subsection (6)(c), which provides that the local authority must be satisfied that the management arrangements for the property are suitable; for example, can the manager or someone else be contacted in an emergency and does the licence-holder have sufficient funds to carry out repairs? Instead, the amendment would include a new provision that the authority must consider guidance on fitness of management arrangements as supplied by the appropriate national authority.
So the amendment's aim appears to be to require the national authority to produce guidance on acceptable management standards for licensed properties in the private rented sector. We do not intend to issue such guidance for the good reason that what constitutes "suitable" will vary depending on the type and condition of the stock, its location and the occupiers' requirements. We have to trust to good governance and the industry's good common sense in that regard.
Baroness Hanham: I thank the Minister. Freedoms and flexibilities are obviously the buzzwords of Government. I am sure that local government—certainly the upper levels—is beginning to appreciate what that means. I am probably the last to argue that national government should lay down all the rules, but at some stage there needs to be consistency. The only way that such consistency can be managed is by guidance from the top as to what is meant. That is the basis of the four amendments: to try to ensure that one local authority and another operate in more or less the same way; so that landlords with properties in more than one borough covered by more than one local authority know the rules.
We may need to return to the matter, as I am not sure that the Minister is absorbing what I am saying in my reply, so for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Baroness Hanham Baroness Hanham moved Amendment No. 104:
Page 52, line 16, at end insert—
"(6) Whatever the arrangements of management, it is the manager who shall be ultimately responsible for a house under this Part possessing a valid licence."
The noble Baroness said: I shall see whether I can engage the Ministers with my enthusiasm in moving this amendment because not much attention was paid to my final comments on the previous one.
Amendments Nos. 104 and 114 raise the interesting issue in regard to the owner of a property and his responsibility under this part of the Bill. The issue was debated in the other place at some length. However, noble Lords deserve the opportunity to pass comment on the relationship between landlord and manager in regard to this part and to probe the Government further on what could remain an area of some doubt.
The amendments would require that applications for licences be made by the manager of a house. We are concerned that, as the Bill stands, the owner rather than his agent—many owners employ some agent to manage property—remains responsible for licensing. Our amendments are designed to target accurately the responsibilities by requiring that applications for licences be made by the manager of a house. We recognise that the manager could be the owner, but equally they could be different people.
Of course the owner should quite rightly take ultimate responsibility for a property. However, practical experience of the relationship between manager and owner suggests that it would be unacceptable for us to let managing agencies off the hook by saying that they are not responsible for any of the matters dealt with in this part of the legislation when they are rewarded for running the affairs of the landlord. Additionally, does the Minister envisage possible problems were an owner to be out of the country for long periods or indeed non-resident in the United Kingdom? Both Ministers will know that there have been innumerable problems regarding absentee owners. I beg to move.
Lord Bassam of Brighton: I must confess that I am slightly perplexed as regards the true purport of Amendment No. 104. I am not sure whether the noble Baroness seeks to impose a duty on a manager to obtain a licence, or whether the amendment is intended to ensure that ultimately the manager is responsible for the management of the property, irrespective of the identity of the licence holder. I am not sure what the noble Baroness seeks to do in this probative amendment. I can certainly understand the issue that she is trying to get to the root of: to ensure that someone is responsible for the property and its licensing if absentee owners deploy a management agency to act in their stead. Perhaps the noble Baroness would like to explain the matter further.
Baroness Hanham: As I said, the amendments would in effect require that applications for licences would be made by the manager of a house. I added that I

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perfectly foresaw that the owner could be the manager of the house as the only person involved. Where the owner passes responsibility to someone else that other person should be the registered licence holder.
Lord Bassam of Brighton: That is helpful, because the buck must stop with the licence holder. Under the scheme as it is the local authority will know beyond doubt who to look to if any problems arise: the licence holder. They might seek to avoid their responsibilities if they could contend that some other person bore ultimate responsibility for the management of the house. That is why I think that the amendment does not work. She may wish to think about that point further.
Amendment No. 114 would replace the requirement that the local authority is satisfied with the managing arrangements in place with the requirement that the local authority is satisfied that the manager has ultimate responsibility for the management of the property in question.
If the intention is to make managers alone responsible for securing licences for properties, one problem that would arise is that it is not uncommon in areas of low demand for there to be no effective manager of the property. The landlord, as the noble Baroness knows, may live many miles away or even abroad, rarely if ever visiting, and simply collecting rent through the housing benefits system. That can easily he done through direct debits and so on.
In these circumstances, it is right that the owner should be required to make the application for a licence. There are other situations in which it might be appropriate for the owner of a property, rather than the manager, to apply for a licence—for example, if the manager has failed to make an application, or when the owner is new, or is in the process of changing the management arrangements for the property.
However, if the intention is to make the manager the completely responsible operator for the property, regardless of whether the landlord is also involved in the management, then that would be contrary to the overall aim of the licensing regime. For example, in many properties the manager is also the tenant, and while he may technically have some responsibility, the landlord is the person who is ultimately responsible and should be treated as such. The amendment does not take such circumstances into account.
Removing subsection (3)(d) from Clause 85—as this amendment would—would not give us any advantage. When deciding whether or not to grant a licence to an applicant, it is imperative that a local authority can require that the proposed management arrangements are satisfactory. There is no point having a manager who is fit and proper but who, for example, is frequently abroad.
I sympathise with the intention behind the amendments. The intention is that there should be an effective set of management arrangements and clearly-defined responsibilities in all licensed properties.
778
I hope that I have satisfied the noble Baroness that the licensing regime will deliver that outcome. In that sense, there must be a commonality of agreement between us. Ultimately the responsibility will lie with the licence holder.
I see where the noble Baroness is coming from. I invite her to study what I have said carefully, because in the end the way in which we envisage the licensing regime working probably covers her concerns. I see the importance of the issue that she raises.
Baroness Hanham: I will do as the Minister advises and study what he has said and the implications of that carefully.
We need to look into what happens about managing agents when the property is licensed to an owner who, within the terms of the licence, passes that responsibility to a managing agent; and whether managing agents need to have some form of licensing as well, if they are going to be responsible for the expanded nature of houses in multiple occupation. I thank the Minister for his reply. It is possible that we will return to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 76, as amended, agreed to.
Clause 77 [Designation of selective licensing areas]:
[Amendment No. 105 had been withdrawn from the Marshalled List.]
[Amendment No. 106 not moved.]
Baroness Maddock Baroness Maddock moved Amendment No. 107:
Page 53, line 16, at end insert—
"( ) The third set of general conditions are that the area is experiencing a significant proportion of private sector lettings that have been managed sufficiently ineffectively as to give rise, or likely to give rise, to one or more particular problem either for those occupying the privately let property or for members of the public."
The noble Baroness said: I rise to move Amendment No. 107. This is an amendment to Clause 77 and it puts in a third set of general conditions that can exist in an area in order to designate it as a licensed area. It is supported, in particular, by the Local Government Association and the Chartered Institute of Environmental Health. The amendment extends the circumstances in which a local authority can designate an area for selective licensing.
In addition to low demand and problems arising from anti-social behaviour, there are other circumstances where selective licensing could prove to be a powerful tool for local authorities seeking to address and effectively manage the private rented sector in their areas. We have already touched on some of those areas in Committee. Such circumstances could include areas where perhaps there is a large amount of seasonal holiday letting or student accommodation, which is where local authorities should be allowed to use such a tool when trying to set up licensing in a selected residential area.
The Chartered Institute of Environmental Health supports the proposals for the introduction of selective licensing. But it believes that some of the details are unduly restrictive; that the option should be more widely available; and that local authorities should not have to demonstrate that areas in which they propose licensing be introduced are likely to become areas of low demand or experience anti-social behaviour. The CIEH says that it understands the Government's thinking, but that the restrictions will tie local authorities' hands too tightly and will mean that the Government are much less likely to achieve their objectives. That is something with which I can agree.
We have heard a great deal about placing trust in local authorities. In exchanges on other amendments, the Minister has been fulsome in saying that local authorities should have a certain amount of freedom. Practitioners on the ground and those who run local authorities would like to have wider scope. That is what this amendment seeks to achieve. I hope that the Minister will look on it favourably. I beg to move.
Lord Bassam of Brighton: I am grateful to the noble Baroness for explaining her amendment, which is a very respectable amendment with some very respectable backing. It would be unfair of me if I did not say that, given my previous employment and my contacts at the Chartered Institute of Environmental Health.
The amendment adds a further ground for designating an area for selective licensing; namely, that poor management in the private rented sector is causing or likely to cause particular problems for tenants and others. Selective licensing is all about minimising the impact that poor management can have on the wider community. But, as with all regulation, it should be used in a proportionate and, probably, focused manner. It is a tool that must be properly targeted and used only where the worst problems exist. I think the noble Baroness would agree with that.
As we have previously made clear, the current provisions of Part 3 strike the right balance by limiting the scope of selective licensing to the specific problems of low demand and anti-social behaviour. They are sufficiently serious issues that warrant the interference in the operation of the housing market for which such licensing will provide. We are aware that some local authorities would like to licence all rented properties.
The amendment would offer much broader grounds on which to designate an area for licensing. It could lead to a situation where its use is somewhat indiscriminate. In turn, that could have a serious impact on the viability of the private rented sector, which, as we all now acknowledge, is a key component of the housing market.
However, while I do not believe that the case has been made for broadening the remit of selective licensing, which is why I do not think that the amendment would be necessarily beneficial, that is not to say that the issues from which the amendment arises
780
will not arise in the future and that, at some point, licensing might be a valuable tool. That is why in Clause 77(7) we have provided for the appropriate national authority to add to the specified conditions for designation and so enable selective licensing to be used to deal with additional challenges in the private rented sector. As we have made clear, if Amendment No. 242 is passed, this process will be subject to affirmative resolution. It is not just a sensible amendment, but one with a sensible train of thought behind it, and with a very practical impact. We do not think that it is appropriate to use it in the way suggested by the noble Baroness, but we see merit in the argument, which is why the provision is subject to the affirmative resolution procedure.
4.45 p.m.
Baroness Maddock: I thank the Minister for that—in many ways—positive reply. Would it be appropriate if we were to set a time scale for the Government to return to this issue to see whether they can put into practice Clause 77(7), which is the fall-back position?
The Minister and I both know how difficult it is to find time to get things through the House. If we say when making legislation that after a certain time there should be a review, perhaps something will happen. If we get representations, we would be in a stronger position to find time for legislation to proceed. I make that helpful suggestion to all concerned. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 108 not moved.]
Baroness Hanham Baroness Hanham moved Amendment No. 109:
Page 53, line 29, at end insert "; and
"(c) publicise its intent both electronically and in the local media."
The noble Baroness said: With Amendment No. 109, we are simply attempting to expand the channels whereby a decision made by a local authority as to the licensing of an area can be transmitted to the widest possible audience.
It seems to me that were an area to be so designated it would have possible consequences, not just for those individuals within the area itself but for those on its boundaries and in close proximity. This strikes at the heart of our amendment. It could be argued that such designation, given perhaps a misunderstanding of its intent, could possibly have an impact on, say, house prices. Those people, therefore, should, quite rightly, have the opportunity to be aware of such decisions.
The amendment would place on a local authority the responsibility to publicise its intent both electronically and in the local media. The Minister is fond of saying that no one reads the council notices in the local press—I have some sympathy with that, and perhaps there is an element of truth in it—but I should have thought it relatively easy for such information to

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be displayed on the local authority's website. I am confident that most local authorities now have websites.
Lord Bassam of Brighton: The noble Baroness tempts me to say that she has almost made my argument for me.
The amendment would require a local housing authority, in addition to consulting those likely to be affected by a designation, to publicise the intent of the designation electronically and in the local media. It is almost identical to an amendment debated on Clause 55, and for the same reasons as were given then, I would suggest that the noble Baroness withdraws it.
As drafted, the Bill provides that local housing authorities should take "reasonable steps" to consult those likely to be affected by designation. I am confident that all local authorities have, over many years, developed sophisticated methods of consultation that are the most appropriate for their particular areas. We think, therefore, that it is not necessary to specify the forms that this consultation should take, but would rather leave it to local authorities' discretion. I often hear the noble Lord, Lord Hanningfied, and the noble Baronesses, Lady Hanham, Lady Hamwee and Lady Maddock, arguing that we should maximise discretion to local authorities, that they are best left to determine what they do as to the procedure and content of the consultation, and that we should give them freedom and flexibility. That is exactly what we think should happen here. What works in one local authority as regards consultation may not necessarily be the most effective way of doing it in another.
It is perfectly possible that the methods of publicity proposed in this amendment would be among those deployed by any given authority, but I maintain that those with local knowledge are probably best placed to know what form of consultation has proved effective in the past and what might work in the future. I should also say that another problem with prescribing forms of consultation as suggested in the amendment is the danger that that could have the unintended side-effect of limiting a consultation exercise to those methods alone, which would not be particularly beneficial.
For those reasons, and on the basis of our previous arguments, I suggest that the noble Baroness withdraws the amendment.
Baroness Hanham: I thank the Minister for his reply, which was not totally unexpected. It is entirely in line with the answer he gave before. I too shall make the same response: I shall read most carefully his comments both on that and on the previous amendment. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 77 agreed to.
Clause 78 [Designations under section 77: further considerations]:
[Amendment No. 110 not moved.]
Clause 78 agreed to.
Clauses 79 and 80 agreed to.
Clause 81 [Duration, review and revocation of designations]:
Baroness Hanham Baroness Hanham moved Amendment No. 111:
Page 55, line 21, leave out "from time to time" and insert "on a yearly basis"
The noble Baroness said: This short amendment has been tabled to draw attention to an unhappy phrase which has crept into legislation; that is: "from time to time". The phrase is a consistent failure and ought to be resisted if at all possible.
My question to the Minister is therefore short and to the point: what exactly does the phrase "from time to time" mean in terms of this legislation? Does it mean 10 years, five years, two weeks or one week? This is a shorthand phrase and I do not think that it should be used in legislation.
We have therefore put in a defined time-frame of one year on any designation that a local authority makes in this regard, which seems a sensible and practical approach and certainly gives far more definition than is available under the present terms of the Bill. I beg to move.
Lord Rooker: Clause 81 requires that a designation for selective licensing can last a maximum of five years. Clause 81(3) obliges local authorities, from time to time, to review the designation. In some ways, having to go for selective licensing shows that there is a real problem with the area and I would hope that well within five years the selective licensing would not be justified because it may well have been based on issues related to anti-social behaviour. Such licensing must be kept under constant review. I suspect that the phrase "from time to time" is the legal version of that.
Following any such review, a local authority may revoke designations if the scheme is not achieving its aims. On revocation of a designation, the local authority must publish notice of the revocation in such a manner as is prescribed by regulations under Clause 81(6). The clause is designed to ensure that the designation of selective licensing remains in force only for as long as it is needed. It is not intended to be for the foreseeable future.
The amendment would require selective licensing schemes to be reviewed annually. However, as I have said, selective licensing is a highly targeted measure. That is why, before it is allowed, a local authority has to make a very robust case in order to use it. The idea is that it has to be successful within five years. While we want to see that success, we do not want to impose rigid time limits. It may be that the scheme can be withdrawn after less than a year or at another suitable time, taking into account what is going on in the community. We need that flexibility.
It is not intended to last for ever, to be used as a tool for housing management, or as part and parcel of the normal running of a local authority's functions. It is intended to be used in a highly targeted fashion, not to last for longer than five years and, it is hoped, a lot less than that.
Baroness Hamwee: The Minister did not make the point, which was made a few minutes ago, about the desirability of local authorities running things within the framework of the Bill as they see fit for their own areas. When the noble Baroness was speaking, it occurred to me that she might feel less suspicious of this if a phrase such as "kept under review" were used. Although just before the Recess the Minister paid me the compliment of saying that I am not one of the lawyers, from my experience the terms are more or less equivalent. I hope that that might reassure the noble Baroness.
Lord Rooker: I did not use all my note, but there is a lovely sentence that states:
"I believe that local authorities can be trusted to carry out these reviews in a timely manner without needing to be told when to do so".
I really mean that. We must trust local government.
Baroness Hanham: That is becoming a wonderful mantra. It gets trotted out on every occasion. "From time to time" does not seem to be at all the same as keeping under review. Keeping under review is a permanent action. Although my amendment did not say so, I think that keeping under review is rather better. I bow to our resident legal expert but I still think that "from time to time" has much the same meaning but it does not seem to be quite so determined. I am grateful to the Minister for his helpful explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 81 agreed to.
Clause 82 [Requirement for Part 3 houses to be licensed]:
Lord Rooker Lord Rooker moved Amendment No. 112:
Page 55, leave out lines 33 and 34 and insert—
"(a) it is an HMO to which Part 2 applies (see section 54(2)), or"
On Question, amendment agreed to.
Clause 82, as amended, agreed to.
Clause 83 agreed to.
Clause 84 [Applications for licences]:
[Amendment No. 113 not moved.]
Clause 84 agreed to.
Clause 85 [Grant or refusal of licence]:
[Amendment No. 114 not moved.]
Clause 85 agreed to.
Clause 86 [Tests for fitness etc. and satisfactory management arrangements]:
[Amendments Nos. 115 and 116 not moved.]
Clause 86 agreed to.
Clause 87 [Licence conditions]:
Lord Rooker Lord Rooker moved Amendment No. 117:
Page 59, line 18, leave out from "regulating" to end of line 20 and insert "the management, use or occupation of the house concerned."
The noble Lord said: This group of government amendments, Amendments Nos. 117, 118 and 120 clarify the proposed rules regarding licensing conditions under Part 3. It appears that certain local authorities in England, probably a very small minority, thought that they could unilaterally use selective licensing to impose any conditions they wished to regulate the condition and state of properties under the provisions in Clause 87(1)(b) as unamended. Amendment No. 117 puts it beyond doubt that they cannot. This amendment makes it clear that licence conditions under Clause 87(1)(b) must relate to the management and occupation of the house concerned.
New subsection (2A), inserted by Amendment No. 118, provides that this would not prevent local authorities imposing licence conditions in relation to any requirements made in regulations by the appropriate national authority concerning facilities and equipment at the house. While the Government have no present intention of introducing such regulations in England, the National Assembly for Wales is likely to do so in Wales. I beg to move.
On Question, amendment agreed to.
5 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 117A:
Page 59, line 25, leave out paragraph (b).
The noble Lord said: I rise to raise a possibly small matter but I should be grateful for the Minister's observations on its implications. I have no interests to declare, other than that which has been displayed by the Minister, his colleagues and many other noble Lords. That is that the conditions in which people live, whether in private or council property or in anything in between, are very important and are gradually creeping up the scale of interest.
At one time, as the Minister and I well know, housing was one of those topics that was high on the list when our constituents came to see us. Although housing still needs careful attention, I am convinced that the private rented sector has vastly improved in its attitudes from the time when it caused a great deal of distress and led to the scandals of bad landlords. Those times are, by and large, behind us.
I am intrigued by the situation under this clause. We are talking about the licensing conditions that can be applied. Subsection (2)(b) refers to,
"conditions requiring the taking of such steps as are reasonably practicable to prevent or reduce anti-social behaviour by persons occupying or visiting the house".
This is a practical problem. In Edmonton and Tottenham, we have a very good private landlord, Limelight Properties. I have discussed this matter with them over many years. Mr and Mrs Papadopoulos drew my attention to precisely how one can take action to intervene when a visitor behaves in an anti-social manner. We know that good landlords will have procedures in place to ensure that they have good

785
tenants, and good tenants are, of course, in the vast majority. But I have seen photographic evidence of people who at one time were good tenants doing terrible things to properties which are not theirs.
The purpose of the amendment is to invite the Minister to say precisely how one can deal with such a situation. Someone in a block of flats could be subject to terrible anti-social behaviour, such as drunkenness, noisiness and rudeness. In that case, how does one comply with the legislation? Does the aggrieved tenant get in touch with the landlord and say, "You had better hurry down here and sort this out because you have a responsibility to do that"?
I should be grateful if the Minister could spend a little time spelling out the practicalities for the good landlords—the vast majority, as far as I am concerned—who not only run a good business but act in a socially responsible way. I beg to move.
Baroness Hamwee: As I understand it, the noble Lord is arguing in favour of deleting the paragraph on the basis that he wants it retained. This has made me read the provision more carefully, and for that I am grateful.
The condition that is the subject of the provision is to require,
"the taking of such steps as are reasonably practicable to prevent or reduce anti-social behaviour"
by occupants and visitors. Steps may be reasonably practicable but not reasonable. In other words, they could be unreasonably required and would still fall within the provision because they were practicable.
I am sorry to bring this point up at the last minute, but I have only just thought of the distinction. I am coming at this from a completely different point of view from that of the noble Lord, Lord Graham. If the Minister can comment, I should be grateful.
Lord Rooker: In the same way that not all landlords are good landlords, although it is only a small minority who are not, not all tenants are little angels—a minority are not. However, my noble friend has raised legitimate questions, and I hope that I have a sufficiently robust and clear response.
Clause 87 is almost the exact counterpart to Clause 56. There are certain conditions that a local authority must include in every licence. The local authority can decide to include other conditions in addition to these. Clause 87(2) sets out the sort of conditions that a local authority may decide to include in a licence if "appropriate in the circumstances". It is not an exhaustive list. Clause 87 (3) requires that certain conditions must be included in every licence, and these are in Schedule 4. In the case of selective licensing, paragraph 2 of Schedule 4 provides for an additional mandatory licensing condition.
For licences issued under Part 3, the landlord will be required to demand references from persons who wish to occupy the house. That condition has been included because we expect selective licensing to be used to
786
encourage landlords to take more responsibility for the behaviour of their tenants and the impact on the surrounding community.
Amendment No. 117A would remove subsection (2)(b), which is the suggested licence condition relating to,
"taking of such steps as are reasonably practicable to prevent or reduce antisocial behaviour by persons occupying or visiting the house".
The list in Clause 87(2) is not an exhaustive one.
I begin by reiterating that we are determined that selective licensing be used as a targeted measure for dealing with specific problems in the private rented sector. Therefore it will be only a very small proportion of landlords, in areas where the particular problems justify intervening in the operation of the housing market, who will be subject to licensing.
There are only two grounds for setting up a selective licensing scheme: low demand and anti-social behaviour. I suspect that there will not be much of an issue of low demand in the London boroughs. I am not saying that it does not occur, but not on the scale that it is prevalent in the north of the country. In that regard, London does not know what the rest of the world is like.
As for anti-social behaviour, the local housing authority must consider that such behaviour is of a significant and persistent nature and that the inaction of private landlords is a contributory factor to its continuing. In these circumstances, when communities are being blighted by the actions of irresponsible tenants while some landlords turn a blind eye, we do not believe that it is unreasonable to require that private landlords take some degree of responsibility for the tenants to whom they choose to let their property.
The key words here are "some degree of responsibility". Landlords should not be their tenants' keepers, but neither is it right that they should wash their hands entirely of the behaviour of those people whom they choose to take on as tenants. As I am sure that noble Lords are aware, this issue was the subject of considerable debate in another place, which is hardly surprising, as Members of Parliament will be very much on the receiving end of complaints about this—as my noble friend was when he was in the of her place. Then, as now, our position was that we do not expect local authorities to impose conditions that would require landlords to seek to run their tenants' lives.
Landlords should be asked only to do what is reasonable and what a good landlord would do. That is why the clause refers to,
"such steps as are reasonably practicable".
For example, it could not be considered unduly onerous to oblige landlords in areas subject to selective licensing to respond to complaints from neighbours and, if necessary, make it clear to the tenant that their behaviour is unreasonable. If that has no effect, there is always the threat of eviction.

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A condition placed upon a landlord need not relate only to how he manages his relationship with the tenant. Local authorities have powers to act against anti-social behaviour through ASBOs and other measures. But it is difficult if landlords do not choose to co-operate with authorities—for instance, by informing them about problem tenants or giving evidence in legal proceedings.
As I have previously made clear, if a landlord believes that any condition in his licence is inequitable or unnecessarily burdensome he can appeal to the residential property tribunal to have the terms of his licence amended.
That is a considered response. It is not couched in language that responds to the complaints that some tenants have whose lives are blighted by anti-social behaviour. This issue is not being dealt with at the moment. These things go on and people turn a blind eye. That must stop. That is why we are introducing the possibility of selective licensing in a targeted area of private sector landlords. As I say, this does not include the public sector where those responsibilities already apply. We do not want private sector landlords to be their tenants' keeper or run their lives but they must take some responsibility. At the end of the day, sanctions can be imposed. With selective licensing the licence can be removed or revoked and the landlord then has a serious problem because he cannot collect rent. The measure will apply to those landlords who are not prepared to be good neighbours in the sense of ensuring that their property is inhabited by tenants who are good neighbours. Those are the people we are targeting.
As I said to my noble friend, the list is not exhaustive. However, I have given some examples of the kind of anti-social behaviour on which authorities may wish to take action.
Lord Graham of Edmonton: I have gained a great deal from this short debate. I am sure that the Minister was happy to spell out in some detail the Government's thinking. No one who knows good landlords believes that they turn a blind eye to patently anti-social behaviour. That does not happen with good landlords. The good landlord knows where to seek redress and knows his rights. He can, of course, threaten a tenant with eviction if either visitors or the tenant himself turn out to be bad neighbours to those around them.
I am very grateful to the Minister for disabusing some of the fears that I had regarding the impact of the Bill and this clause on others. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rooker Lord Rooker moved Amendment No. 118:
Page 59, line 27, at end insert—"
(2A) A licence may also include—"
On Question, amendment agreed to.
Lord Hanningfield Lord Hanningfield moved Amendment No. 119:
Page 59, line 37, at end insert—
"( ) conditions regarding equipment necessary to limit the susceptibility to fire hazards"
The noble Lord said: This is a simple amendment that would impose an additional condition for the licensing of accommodation under this section: namely, to have due regard to those devices that would help to reduce the risk of fire.
The number of deaths and injuries through fire has dropped in recent years. However, that figure is still too high. Therefore, the installation of smoke alarms and fire resistant furniture would seem a sensible provision. I suspect that such accommodation that is designed to be caught under this part of the Bill is likely to have such devices. The Minister may be able to reassure me that such an amendment is unnecessary and that there is nothing to stop a local authority from insisting on such devices already under this or another part of the Bill. I hope that that is indeed the case. I beg to move.
Lord Rooker: I believe that I can satisfy the noble Lord. Clause 87(3) refers to Schedule 4 which sets out the mandatory conditions for licences issued under Part 2 (HMOs) and Part 3 (for selective licensing). In identifying the mandatory conditions for both Part 2 and Part 3 licences, we have considered what is necessary to ensure the safety of the tenants. So, the following conditions will apply: producing a gas safety certificate every 12 months (if gas is supplied); keeping electrical appliances and furniture in a safe condition and supplying a declaration about their safety to the local authority if requested; keeping smoke alarms in proper working order; and supplying a declaration about the condition and position of these smoke alarms to the local authority if requested.
For licences issued under Part 3, the landlord will also be required to demand references from persons who wish to occupy the house, although there is no requirement on prospective tenants to supply such a reference. The appropriate national authority can amend Schedule 4 through secondary legislation.
5.15 p.m.
Clause 87(4) provides that the local authority is required as a general rule to address health and safety issues through the housing health and safety rating system under Part 1 and not by means of licence conditions. However, the local authority may impose conditions that relate to the installation or maintenance of facilities or equipment.
Amendment No. 119 would add a new potential licence condition concerning fire safety equipment. If regulations are made under the provisions to prescribe standards for facilities and equipment, they would include,
"equipment necessary to limit the susceptibility to fire hazards".

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To that extent, the amendment is not required. In other words, we are confident that the definitions that we have used would cover the point raised by the noble Lord about susceptibility to fire hazards in such properties.
Lord Hanningfield: I thank the Minister for that detailed reply. It seemed to cover the points that I made, but we will examine it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rooker Lord Rooker moved Amendment No. 120:
Page 59, line 46, after "imposing" insert "(in accordance with subsection (2A))"
On Question, amendment agreed to.
Clause 87, as amended, agreed to.
Clause 88 [Licences: general requirements and duration]:
Lord Rooker Lord Rooker moved Amendment No. 121:
Page 60, line 28, at end insert "or becomes an HMO to which Part 2 applies (see section 54(2))"
On Question, amendment agreed to.
[Amendment No. 122 not moved.]
Clause 88, as amended, agreed to.
Clause 89 agreed to.
Clause 90 [Revocation of licences]:
Lord Rooker Lord Rooker moved Amendment No. 122A:
Page 61, line 38, leave out from "has" to end and insert "committed a serious breach of a condition of the licence or repeated breaches of such a condition;"
On Question, amendment agreed to.
Lord Hanningfield Lord Hanningfield moved Amendment No. 123:
Page 61, line 43, at end insert ": and
( ) where the licence holder is deemed to have committed a serious criminal offence"
The noble Lord said: Amendment No. 123 would give a local authority the power to revoke the licence of a landlord who committed a serious criminal offence. The issue was debated in Committee in another place, but there appeared to be some doubt and confusion about it. We should clarify things today.
I accept that, as the Bill stands, a local authority can decide whether a licence holder is a fit and proper person and that it would be hard to see how someone who had committed an offence could be considered a fit and proper person. However, it is possible for a landlord to be a fit and proper landlord in one place and a bad one in another. The Minister used exactly those words in one of our earlier discussions. Furthermore, given the high level of discretion that the Bill affords local authorities, it is possible for different local authorities to take a different view of what constitutes fit and proper conduct.
We seek an assurance from the Minister not only that a person would be excluded from holding a licence were he to commit a serious criminal offence but that there is sufficient scope to ensure consistency of approach on a national basis. I beg to move.
Lord Rooker: Amendment No. 123 would include an additional condition that a licence could be revoked if the licence holder were deemed to have committed a serious criminal offence.
In an area subject to selective licensing, it is important that local authorities can revoke licences if there is poor management of a property, so that bad landlords or agents can be replaced. Our objective is to drive such people out, if they do not get their act together. We want the bad landlords driven out of business. I make that absolutely clear. It has taken a long time for this legislation to be introduced, and we are very serious about it. It will be used in a highly selective and targeted way.
Clause 90(2) provides that a local housing authority can revoke a licence granted if it has reason to believe that the licence holder or the manager of the property is no longer fit and proper. If a licence holder has committed a serious criminal offence that would normally be sufficient evidence that they were no longer fit and proper and we would expect the local housing authority to revoke their licence.
While I understand that the amendment might be intended to establish consistency across different authorities, we are not persuaded of the benefits of prescribing at that level of detail. Our position is to allow local authorities as much flexibility as possible in dealing with these matters while providing the appeal system for those who feel that they have been treated unreasonably. Therefore, while we understand and support the reasoning behind the amendment, the Bill already contains provisions to take care of such concerns.
Lord Hanningfield: The Minister himself said during an earlier discussion that the landlord could be good in one place and pretty terrible in another. If that landlord is terrible in another place should a third local authority have some consideration for the fact that he is good in the first authority? That is one of the purposes behind the amendment, to try to ensure that bad landlords are dealt with. We all wish to get rid of bad landlords. If they are bad in one place, although they are good in another place perhaps the third local authority should take some notice of the fact that they are bad in the first place.
Lord Rooker: If my memory is correct, the example that I raised at the time concerned someone who was managing or owned different properties in different authorities. Some properties might be smaller than others and, therefore, the management issues would be different. Clearly if the person was not a fit and proper person in one authority it would be highly unlikely that they would be deemed a fit and proper person in another authority. That would be irrespective of the nature of the different properties they ran. I was

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drawing a distinction that just because a person owning properties in more than one authority had a licence, and the property management was OK in one authority, that would not mean that it was OK in the other. The matter would have to be tied to the property. When it is tied to the person, however, regarding the matter of checking the licence, if they are not fit and proper in one authority it is highly unlikely that they would be in another. If they commit offences, that is bound to be known about from one authority to another. The matter is covered by the legislation.
Lord Hanningfield: I thank the Minister for clarifying that point. Perhaps he could undertake to ensure that the issue is covered. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rooker Lord Rooker moved Amendment No. 123A:
Page 61, line 43, at end insert—
"Section 86(1) applies in relation to paragraph (b) or (c) above as it applies in relation to section 85(3)(a) or (c)."
On Question, amendment agreed to.
Clause 90, as amended, agreed to.
Clause 91 agreed to.
Clause 92 [Offences in relation to licensing of houses under this Part]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 124:
Page 63, line 16, at end insert—
"( ) A lender who has taken possession of an HMO that should be licensed but is found not to be so, would not be guilty of an offence in relation to licensing of houses under this Part."
The noble Lord said: The amendment seeks to exempt a lender who has taken possession of a property requiring to be licensed, but not licensed, from committing the offence, so that they would not be liable to the £20,000 fine. Amendment No. 126 would exempt such a lender from the provision that no rent or charge is payable by the occupiers of the property and that no charge can be made in lieu of rent during the period. Finally, Amendment No. 125, as we discussed in an earlier part of the Bill, would reduce the level of fine for a person not in possession of a licence.
We were slightly disappointed by the response that the Minister, Keith Hill, gave to these amendments in the other place and by tabling them again we hope that the Government have had an opportunity possibly to rethink their approach to the legitimate concerns expressed by many mortgage lenders in the area. The Minister in the other place commented that he believed a lender generally would take possession of an empty property, thus precluding the need for a licence, and that there would be nothing then from stopping the lender from applying for a licence if he chose subsequently to let the property.
However, I believe that the Minister was speaking in general terms. His comments may well reflect the case for the majority of repossessed properties; however, the Government do not seem to have an answer for instances where properties are repossessed with
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occupants, yet without a licence. As the Bill stands the lender would still be facing a significant fine. These are the genuine concerns of people who have discussed the matter with us.
I hope that the Minister can provide us with a more satisfactory answer today. I beg to move.
Lord Bassam of Brighton: I understand the noble Lord's reasoning behind the amendment and can see that it is aimed at ensuring that mortgage lenders who need to repossess properties are not inadvertently caught by the provisions and subjected to the heavy penalties that non-compliance rightly attracts.
However, a lender taking repossession of a property which would fall within the scope of licensing would be likely to be seeking to obtain vacant possession of the property in any event. If the property is vacant, there will be no requirement for it to be licensed.
During any period when a lender has taken possession of a property and is taking steps to remove the occupiers, it would be possible to apply for a temporary exemption notice and the local housing authority would be able to grant such a notice. In fact, one could argue that it would be unreasonable if they did not, given the circumstances.
However, if the lender has no lawful way of removing the occupiers of the repossessed property, or if it decided to keep the property as a rented accommodation which would require a licence, we would expect it to obtain a licence in the same way as all other managers of licensable property.
I do not envisage that there should be any difficulty in reputable lenders being granted a licence and I would expect that they should easily be able to satisfy the licensing criteria. And I ought to point out the unwanted potential of the amendment for opening up a huge loophole in the legislation if any persons or companies, irrespective of how big, small or disreputable, could be exempted from the licensing provisions merely because someone to whom they had loaned money had defaulted on the loan.
I hope that the noble Lord is satisfied that there are provisions in the Bill to safeguard the interests of lenders and I would urge him to withdraw Amendments Nos. 124 and 126.
As regards Amendment No. 125, I believe that we have more than adequately made the case for the provision. Even though the amendment has been cleverly attached to those relating to lenders, I see no merit in it and it would be inconsistent with our earlier position.
Lord Hanningfield: I thank the Minister for his reply. I agree that we do not want to create loopholes in the legislation so that people can find ways around obtaining licences. However, lenders have legitimate concerns—large and local lenders—who do not necessarily want to become owners of multiple-occupation houses. They are in business merely to lend money on property.

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I will examine the Minister's reply, which I think was clearer than that given in another place. I hope that it will provide assurances to the people who are concerned. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 125 not moved.]
Clause 92 agreed to.
Clause 93 [Further sanctions relating to unlicensed Part 3 houses]:
[Amendment No. 126 not moved.]
Clause 93 agreed to.
Clauses 94 to 96 agreed to.
Clause 97 [Making of interim management orders]:
Baroness Hanham Baroness Hanham moved Amendment No. 127:
Page 66, line 41, at end insert ", and
(c) on an application by the authority to a residential property tribunal, the tribunal by order authorises them to make such an order; and the authority may make such an order despite any pending appeal against the order of the tribunal (but this is without prejudice to any order that may be made on the disposal of any such appeal)"
The noble Baroness said: Amendments Nos. 127 and 128 are to ensure that all interim management orders require the prior authorisation of the residential property tribunal. An interim management order is a severe remedy under which the local authority takes over management and control of a property. The local housing authority is under a duty to make an interim management order if a house in multiple occupation is not licensed and it considers either that there is no reasonable prospect of it being licensed in the near future or that the health and safety condition is satisfied. An interim management order must also be made where it has revoked the licence and it considers either that on the revocation coming into force there is no reasonable possibility of the house being licensed in the near future or again the health and safety condition will be satisfied.
There is a right of appeal against an interim management order, but only after the event. By then the local authority will have taken over the property and if it transpires that the order has been made unjustly, the damage will have been long since done.
Experience has shown that it can take up to six months for the decision of the property tribunal to be known. As an interim management order lasts for only 12 months, by then it would be half-way through its life. By the time an appeal has been dealt with a lender may well have repossessed the property. Although the local authority does have to pay over the income it does not have to do so straight away. An owner therefore may be unable to afford the mortgage repayments.
The absence of due process raises possible issues as to the contravention of Article 6(1) and Article 1 Protocol 1 of the European Convention on Human Rights. Under Article 1 of Protocol 1, every person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to conditions provided for by law and for the general principles of
794
international law. It is, however, provided that this does not in any way impair the right of the state to impose such laws as it thinks necessary to control the use of property in accordance with general interest.
The European Court of Human Rights has held that the way in which contracting states procedurally interfere with property rights may well be relevant to determine whether in substance their actions conform to Article 1 Protocol 1. Under Article 6(1), in the determination of his civil rights and obligations, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.
It is our contention that the European convention rights could well be infringed because the right of appeal arises only after the event and there is at the moment no prior procedure for obtaining authorisation. The length of time to deal with an appeal is also of concern and it is important that there is prior consideration before an independent tribunal.
If a property tribunal authorisation is required in advance in one category of case, why not in others? There could be issues which could well arise between the landlord and the authority as to whether there are prospects of the property being licensed in the near future. Issues could also arise as to whether the health and safety condition is fulfilled. These are matters where the landlord should be able to make representations to the property tribunal before any order is made. I beg to move.
5.30 p.m.
Lord Bassam of Brighton: I was very interested and intrigued by the human rights argument that the noble Baroness, Lady Hanham, expounded on this matter. It is the first time that we have had that particular train of thought brought to your Lordships' House on the Bill, as far as I can recall.
It might help if I go carefully through the clause and what it does and does not do and give a full explanation because it may well allay some of the concerns and suspicions which have prompted the thinking behind the amendment.
Clause 97 sets out the circumstances in which a local authority has a duty to make an interim management order and those in which an authority has a discretion to do so. If a property can be licensed under Parts 2 or 3, it must either have a licence or be subject to a management order unless it has been temporarily exempted. We would rather that properties were licensed than subject to a interim management order.
However, that will not always be possible; for instance, if no fit and proper person can be found to manage a property. Because the welfare of the tenant is paramount the Bill obliges local housing authorities to take over the management of such properties using interim management orders. The clause also provides a discretion for a local housing authority to apply to a tribunal to make an interim management order for other properties which cannot be licensed HMOs or to make a special interim management order under Clause 98.

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Amendment No. 127 would require the approval of a tribunal prior to an authority making an interim management order in respect of a house which is required to be licensed under Part 2 or 3, but is not licensed and where the authority considers that there is either no reasonable prospect of it being licensed in the near future or the health and safety condition in Section 99 is satisfied.
The Bill presently requires the approval of a tribunal for discretionary interim management orders such as special IMOs under Clause 98 and IMOs for non-licensable HMOs. That recognises that an IMO is a significant imposition on a landlord's rights. The requirement for approval by a tribunal is an appropriate safeguard where an authority is exercising its discretion to make an IMO. However, in regard to licensable HMOs no discretion is being exercised.
A decision will already have been taken at the time the licensing requirement was introduced that that particular type of property must be subject to some form of management control. If the amendment were passed a residential property tribunal would effectively be seeing whether it agreed with the decision of the local authority not to grant a licence. That is more properly dealt with as an appeal.
It is important to recognise that if a landlord disagrees with the local authority's decision to make an IMO, he or she can appeal against that decision to the tribunal. The tribunal has wide powers in those circumstances and can confirm the order with or without amendments to the terms or revoke it and order that a licence should be granted or a temporary exemption notice issued, so it has considerable discretion. But I have to ask why an appeal hearing should have to take place if the landlord does not dispute the making of the order that would, in effect, be the requirement imposed by the amendment.
Management orders need to be a genuine option for local authorities and therefore as unbureaucratic as possible, unlike the current control orders which some authorities find too cumbersome. In some cases it might be essential to the health and safety of the occupiers of licensable properties, or to people living nearby that effective management controls should be put in place rapidly, not some weeks or months later or even further down the line after a tribunal has considered the issue.
It should be remembered that interim management orders are intended to be short-term orders during which a local authority will take steps to sort out the long-term management of the property. No final management order can come into force until any appeal against it has been finally resolved. So no landlord will face a long term loss of management control without the opportunity to have the tribunal consider the case and go through the process about which the noble Baroness was concerned.
I hope I have given the noble Baroness sufficient assurance that adequate safeguards are in place to ensure that management orders are made only when it is appropriate to make them. And I hope that the noble
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Baroness will agree that it would be impractical to insert an authorisation stage before the making of an interim management order in the case of properties required to have a licence.
Amendment No. 128 begs us to make the same range of arguments as the previous amendment, so it would be unfair on the Committee for me to rehearse them again. I recognise the import of the issue raised by the noble Baroness, but the way in which we envisage the process working will not only limit the bureaucratisation but be clearer and provide for proper due process and redress where appropriate.
Baroness Hanham: I thank the Minister for his clear explanation of how he sees the provision working. The problem as we see it is that the original decision to seek an interim management order may be for only 12 months, but it has clear implications for the owner or manager of the property. The trouble is that if an appeal process is undertaken, as I have said, it will be well into the time of the interim management order before an appeal can be made and ages before the result comes out.
Perhaps we need to try to speed up how the property tribunal makes its decisions. It is not an uncomplicated area. I would like to look again at what the Minister said; we will probably return to the issue at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 128 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 129:
Page 67, line 16, at end insert ", either in the terms of a draft order submitted by them or in those terms as varied by the tribunal"
The noble Lord said: Amendment No. 129 amends Clause 97(4) to allow a residential property tribunal considering an application for the making of an interim management order for a house in multiple occupation that is not subject to a mandatory licence to rule upon the terms of the management order at the same time as deciding on the validity of the application. The tribunal can choose to approve the application and the draft order as submitted or it may approve the application but amend the order as it sees fit; for example, after hearing representations from the landlord or manager.
Amendment No. 130 makes the same change to Clause 97(7) in respect of a residential property tribunal considering an application for the making of a special interim management order. Amendment No. 156 is a technical amendment that would provide that the 28-day time limit for appeals would begin from the date specified in the notice served under paragraph 7(5) of Schedule 6. The other amendments are largely technical and relate to tribunals. I beg to move.
Baroness Hanham: I shall not comment on these amendments, but I wish to refer to the group starting with government Amendment No. 138, the group led by government Amendment 154A, and the

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government amendments, starting with Amendment No. 151, attached within another group. All those amendments were tabled over the Recess. We have not had a chance to consider them; they appeared suddenly on the agenda papers. It has been impossible for us either to produce amendments or to take advice on them. The absence of response to these amendments now does not mean that there will be no response subsequently. Major issues are being included in the Bill, well on the way through, that have not been considered in the other place and that will require considerable scrutiny by the House in due course. I assume that we will not go beyond Amendment No. 163 today; otherwise, we would reach another chunk of new clauses that we have not had the chance to consider.
Lord Bassam of Brighton: This group is not overly complicated and probably should not disturb the noble Baroness too much, but we recognise and respect her point. We understand that the noble Baroness may feel that she must come back on those issues at a later stage. We do not intend to go beyond Amendment No. 163 today. I am grateful to all those who have ensured that we make rapid progress on this part of the Bill today.
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 130:
Page 67, line 33, at end insert ", either in the terms of a draft order submitted by them or in those terms as varied by the tribunal"
On Question, amendment agreed to.
Baroness Hanham Baroness Hanham moved Amendment No. 131:
Page 67, line 40, leave out subsection (8).
The noble Baroness said: This probing amendment was tabled in another place, but it is important that a suitable explanation is also provided in this House. Clause 97 is not particularly easy to follow; for instance, the idea of a person having an interest in a house or in part of a house needs to be clarified. What is an interest in "part of the house"? Is it shared ownership, for example? How do we define it? I would be grateful if the Minister would be kind enough to explain. I beg to move.
Lord Rooker: I reiterate what my noble friend said in response to the noble Baroness's points about the late government amendments. We agree that we are putting into the Bill substantial new material that was not discussed in the other place. It is all good stuff, and it will still be scrutinised. There is always the danger, when everybody agrees that new provisions are all good stuff, that they will not be scrutinised properly. That is why we ended up with the disaster of the way in which the Child Support Agency was set up initially. Everyone thought that it was a good idea, so Parliament failed in its job of scrutinising. We fully expect proper scrutiny and debates on Report. We have no problem about that at all.
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I also hope that I can give a satisfactory explanation to the point that the noble Baroness made about Amendment No.131.
5.45 p.m.
Where an interim management order is made, the local authority can incur expenditure on such things as repairs to the house which will be reimbursed from rental income. It may not be necessary or appropriate for this to extend to the landlord's own accommodation. For example, a landlord may occupy a self-contained basement flat. It may be reasonable for the authority to exclude that flat from the interim management order so that it does not have to carry out repairs or do other things at the landlord's expense. The landlord would have the discretion to determine how money which would otherwise be deducted from his rental income is spent on the repair of the area in which he privately resides.
In other circumstances it might be necessary to include the landlord's accommodation in the order, where, for example, he shares facilities with the tenants such as a bathroom or kitchen, or if he was behaving in an anti-social manner, or was harassing the tenants. Inclusion in the order in those circumstances would make it far more practical for the local authority to be able to take effective legal action against him, which might include, for example, seeking authority from a court to exclude him from the property.
But, of course, if the landlord is aggrieved by any decision to include or exclude his personal accommodation from the order, he will have a right of appeal against that decision to the residential property tribunal.
I have given a couple of examples of how properties are split to the noble Baroness. That is fairly normal in properties in urban areas.
Baroness Hanham: Can I ask for a further example? There are houses in multiple occupation—or which will now be deemed to be in multiple occupation as a result of the Bill—where there may be two self-contained flats and some higher floors that are single dwellings. Would the self-contained part not be considered because it would not come under the legislation? But would individual accommodation associated with it be what this clause refers to?
Lord Rooker: I will have to take advice on that matter. It is a practical question and a practical example. The self-contained area might be excluded, but I need to be reinforced with advice on that point.
The noble Baroness asked what is meant by an interest in part of a house. This could be an interest in a flat. Shared ownership of a house or flat would also fall within this definition. Under a shared ownership arrangement there would be an interest in the property.
Baroness Hanham: I thank the Minister for his reply. It will be helpful to tease out some more examples of this sometime.

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The Bill expands what the term "houses in multiple occupation" relates to. Some further explanation of this matter would be helpful, either earlier in the Bill or at this point. We will come back to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 97 shall stand part of the Bill?
Baroness Maddock: Many of the issues that I wished to raise about Clause 97 have been discussed at some length. I will look carefully at what has been said and at this stage I am happy for the clause to remain part of the Bill.
Clause 97, as amended, agreed to.
Clause 98 [Special interim management orders]:
Lord Rooker Lord Rooker moved Amendment No. 131A:
Page 68, line 22, leave out "locality" and insert "vicinity"
On Question, amendment agreed to.
[Amendment No. 132 had been withdrawn from the Marshalled List.]
Clause 98, as amended, agreed to.
Clause 99 [The health and safety condition]:
Baroness Maddock Baroness Maddock moved Amendment No. 133:
Page 69, line 7, at end insert—
"( ) A local housing authority must have regard to any breach of the duty of care owed to the person occupying the house under section (Duty of care for those having control or managing a HMO)."
The noble Baroness said: Perhaps I may point out that for some reason, yet again, this amendment is in the wrong order on the list. We must do better next time. Amendment No. 133 applies to the health and safety condition currently provided for in Clause 99. It reiterates the obligation on local housing authorities to have regard to any breaches of duty of care when considering making an interim management order.
Over the years, this issue has been discussed. It began in 1983 when the late Jim Marshall MP introduced a houses in multiple occupation Bill to Parliament. In 1999, the Government consulted on the licensing of HMOs. The Office of the Deputy Prime Minister—I am sure that it was not called that in 1999—said that it had concluded that powers under housing legislation to deal with multiple-occupancy problems were necessary in parallel with the licensing scheme, which it spelt out a bit more carefully.
In July 2003, in the draft housing Bill, the Office of the Deputy Prime Minister Select Committee recommended that,
"landlords should be given a duty of care to maintain their properties to certain standards and conditions to protect the health and safety of occupiers. The Government should consider how the enforcement regime can be framed to give effect to such duty".
In November 2003, in its response to that recommendation, the ODPM argued that,
"there are already legislative provisions that impose positive obligations on landlords to maintain their properties to certain standards. These include section 11 of the Landlord and Tenant
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Act 1985, which implies a repairing obligation on landlords in most short leases. This is reinforced by section 4 of the Defective Premises Act 1972, which imposes a duty on any landlord who has a repairing obligation to take care that nobody is harmed by a relevant defect that should have been repaired. Additionally, detailed provisions as to how managers of licensed property should act in caring for their tenants will be set out in an approved code of practice or prescribed in management regulations".
While that can be of benefit, this legislation does not impose positive obligations on landlords generally to ensure the health and safety of tenants. The issue was not debated during the Bill's Commons stages. But in a response to a parliamentary Question tabled on 13 July 2004, the Housing Minister, Keith Hill, stated that:
"The Government decided not to introduce an additional provision relating to the duty of care on owners of houses in multiple occupation (HMOs) because such a duty already exists in law and will be complemented by the provisions in the Housing Bill currently before Parliament".—[Official Report, Commons, 13/7/04; col. 1084W.]
He again reiterated the various Acts to which I referred earlier.
We, and others, are concerned that this provision is not as strong as we would like it to be. Given all the discussion that there has been, we would urge the Government to make the duty clear in the Bill. It should be made absolutely clear in this very important Bill and we should not just rely on other legislation. I beg to move.
Baroness Hanham Baroness Hanham had given notice of her intention to move Amendment No. 134.
Page 69, line 8, leave out "threat" and insert "written termination of a tenancy agreement where its perceived intention is"
The noble Baroness said: Amendment No. 134 is grouped with Amendment No. 133, although it is not entirely on the same lines. When this issue was debated in the other place the Planning Minister gave an assurance to look again at the matter. We are therefore tabling the amendment to determine whether the Government have managed to have an opportunity to have a rethink.
Clause 89(3) appears to be making it an offence for a landlord to seek eviction or threaten to seek eviction in such circumstances. A landlord must not have his rights of possession taken away. There is concern among landlords that the use of the word "threat" may imply a reduction in a landlord's proper rights to deal with tenants. Being "threatened with eviction" is a term widely used and may not necessarily imply that the landlord has acted improperly in any way. Being "threatened with violence" may also be a term widely used, but it has a very different meaning. Our amendment would restrike the balance, but in a way that is helpful to the purpose of the clause. I beg to move.
Lord Bassam of Brighton: These two amendments sit rather uneasily together, but I shall try to deal with each in turn. Perhaps it is worth reflecting on what Clause 99 does. It sets out very well the health and safety condition test that must be satisfied before a

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discretionary interim management order can be made. The condition is satisfied if it is necessary to make the order to protect the health, safety or welfare of the occupants of a house, or other persons living in, or with an owner's interest in, property in the vicinity of the house.
Amendment No. 133 would insert a new subsection in Clause 99 requiring that when considering whether the health and safety condition is satisfied, a local housing authority must have regard to any breach of the duty of care owed to an occupant under the new clause proposed by Amendment No. 174. That amendment proposed that HMO landlords should have such a duty of care. It was resisted as we felt that it was rather too vague and that it would be inappropriate to impose criminal sanctions when civil ones existed. I understand that it was withdrawn for that reason.
The health and safety condition already requires local housing authorities to consider the health, safety and welfare of occupants, or those living nearby. It is hard to see what requiring consideration of a breach of duty, as set out originally, adds. Breaches of Section 4 of the Defective Premises Act 1972 would be more relevant. As a housing adviser in the past, we used to use that section in our law centre practice to considerable effect.
I now turn to the second amendment, which was tabled by the noble Baroness, Lady Hanham. Amendment No. 134 seeks to amend Clause 99(3) which begins:
A threat to evict persons occupying a house … to avoid the house being required to be licensed".
The amended clause would read:
"A written termination of a tenancy agreement where its perceived intention is"—
and continue—
"to evict persons occupying a house … to avoid the house being required to be licensed".
That is not appropriate, as a "threat" can be made in various guises, such as orally, by withholding services, or by other forms of harassment. The amendment would prevent the local authority acting unless the landlord obliged by putting his "threat" in writing.
The amendment would narrow the effect of subsection (3) by narrowing the circumstances in which the health and safety condition is activated. A threat of eviction may lead to a tenant seeking new accommodation just as surely as any written notice. While the use of the powers in Clause 97 will be exceptional, it is our intention that they should also apply to landlords who may not be scrupulous in using written legal forms to evict tenants.
Clearly there is a judgment to be made as to the nature of a threat. I fear that the amendment does not remove the need for a judgment to be made. That is because it requires that one should go behind the issuing of a written notice and gauge what its intention might be.
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In our view the amendment considers only one aspect of what a threat of eviction might amount to. It is too limiting. It is not the case that every decision to evict a tenant automatically triggers the health and safety condition and the making of a management order. All that this provision does is to make it possible for a local authority to take account of a threat to evict in its overall consideration of whether the health and safety condition is met.
If a written notice is served, and the perceived intention is to evict solely in order to avoid licensing, that may be one of the factors that would tend to encourage a local authority to determine that the health and safety condition is met. Of course, any decision by the local authority to make an interim management order can be challenged at the residential property tribunal, as I explained earlier.
I hope that this gives sufficient comfort that the rights of landlords will not be adversely affected by the provision as drafted. For those reasons, I hope that the noble Baroness will withdraw her amendment.
6 p.m.
Baroness Maddock: I thank the Minister for his reply. It was slightly disappointing, given that this issue has been around for a long time. Various people think that the Government have perhaps not been as strong as they said they would be. At this stage, however, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hanham: I have already spoken to this amendment, and the Minister has replied to it, so I shall respond briefly.
Clause 99(3) intimates that a landlord has been using improper means—I understand that there have been plenty of those. It is then a question of the interpretation of those who are threatening eviction because that is as if the words were quoted, not on the basis of an improper threat having been made; rather, there was a proper threat to evict. How that is untangled will ensure that everyone knows what a threat to evict means. However, I hear the Minister's response to my amendment.
[Amendment No. 134 not moved.]
[Amendment No. 135 had been withdrawn from the Marshalled List.]
Clause 99 agreed to.
Clauses 100 and 101 agreed to.
Clause 102 [General effect of interim management orders]:
Baroness Hanham Baroness Hanham: moved Amendment No. 136:
Page 71, line 27, at beginning insert "only"
The noble Baroness said: Amendments Nos. 136, 137 and 145 are designed to ensure that the interests of landlords are suitably acknowledged and protected by the relevant authorities when it comes to the enforcement of interim management orders. The amendments would amend subsection (3)(b) and the equivalent provision in Clause 110 in relation to final

803
management orders. Amendment No. 137 amends subsection (3)(b) so that the local authority would have the right to do something only in relation to the management of the property if it,
"ensures the immediate health, safety and welfare of the occupants".
In short, these amendments seek to ensure that if a local authority takes possession of a house through a final or interim management order, it should make only the changes that are absolutely necessary to ensure the safety and welfare of the occupants. It should not be at the liberty of the authority to make all manner of changes, even though they may be regarded as improvements, over and above what is necessary because that would be at the landlord's expense.
There is in addition the issue of a standardised approach, or rather the lack of one, across the country that may well arise through this clause. Some authorities might want to take more action than others unless the wording of the Bill makes it clear that the actions they take should be directly related to the reasons for their initial involvement. The purpose of these amendments is to make that clear and slightly to reduce the flexibility and freedom of this particular aspect. I beg to move.
Baroness Hamwee: Perhaps I may ask a question on the back of this group of amendments. Although it is not directly on the point, it may provide a brief opportunity for thought rather than my asking it on the debate on whether the clause should stand part.
Clause 102(3)(a) deals, in parenthesis, with the rights of existing occupiers—referring to those rights which are preserved. What is the position of a potential occupier, by which I do not mean just anyone, but someone who has signed an agreement to occupy perhaps the following week and is expecting to do so? While one wants to protect the health and safety of that person, they could nevertheless be very much thrown by the loss of accommodation. Am I correct in thinking that Clause 117 covers the position of someone in that situation? Perhaps I should have turned my head through a 180 degree arc in asking that.
Lord Rooker: It is a fair question asked quite clearly. No doubt an answer will wing its way to the noble Baroness, Lady Hamwee.
I turn to Amendment No. 136. I think that I can reassure the noble Baroness, Lady Hanham, that the power contained in the subsection she seeks to amend is relatively limited. It is a power that will allow the local authority to manage the property effectively. It does not dispossess the owner of all his rights. Indeed, the powers of local authorities are very clearly limited by subsections (4) and (5) preventing, for example, the local authority allowing further occupation without the owner's consent, or disposing of the property. I appreciate that the noble Baroness is looking for reassurance on this.
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Amendment No. 137 would further amend the provision on the interim management orders so that the local authority would be able to take action in relation to management of the property to ensure the immediate health, safety and welfare only of the occupants. Such a narrow approach would prevent action being taken once an interim management order had been made for the protection of people in the surrounding area. While we welcome the noble Baroness's desire to see the interests of the occupants protected, we think that it is important that bad management can be addressed and the interests of people in the wider community protected. But we take the point. It is absolutely clear.
This is the message that we want to give. It is important that local authorities do not see the making of an interim management order as giving them a green light to act as if they owned the property for all time. I believe that there are already adequate safeguards to protect against this. First, the authority is under a duty to sort out the long-term management of the house as soon as practicable. It will hardly fulfil this obligation if it is embarking on an extensive programme of unnecessary works. Secondly, and most importantly, the landlord can appeal to the residential property tribunal against any unreasonable expenditure incurred. If the local authority were to attempt to take unreasonable actions under the interim management order, it would find itself landed with the bill for doing so. I hope that the general thrust of that reassures the noble Baroness.
Regarding Clause 102(3)(a), which is about the rights of existing occupiers, and the question of whether the rights of a potential occupier, someone who has signed an agreement to occupy next week, are protected, they could be protected if the local authority agrees to serve a notice under Clause 117. The potential occupier would have no right to insist but we will look further into this before the next stage of the Bill.
Baroness Hanham: I thank the Minister for that reply, which is more reassuring than I expected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 137 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 138:
Page 72, line 3, leave out paragraph (a).
The noble Lord said: This is a highly technical group of amendments that amend Part 4 of the Bill to make sure that it fits more conveniently with the law relating to the registration of land. The amendments are minor and technical and they are brought forward to clarify the legal status of tenancies granted by local housing authorities under management orders that they make under this part of the Bill.
When a local housing authority makes a management order under Part 4, one of the powers it acquires is the ability to create what appear to be tenancies and licences. However, because under a

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management order a local housing authority does not acquire an interest or estate—that is, ownership—in the property, it cannot grant a legal tenancy. Leases and licences granted by a local housing authority are better thought of as being quasi-leases. This might give rise to some problems if the Land Registry ever becomes involved—if, for instance, a person attempts to register a quasi-lease or purchases a property and claims that the Land Register is defective because it fails to include a quasi-lease on its register.
The main purpose of these amendments is to provide that, except in certain specified circumstances, a tenancy granted by a local housing authority under its powers in a management order is regarded as a legal lease, binding on any future owner of the property and, in appropriate circumstances, registerable at the local Land Registry. This will not give powers to local housing authorities to create legal leases, but any lease they do create must be treated as if it were such a lease.
This group of amendments also covers two other related issues. It is intended to allow local housing authorities to seek the entry of a restriction in the Land Registry in respect of a property subject to a management order. This would address a potential mischief, namely an attempt by a landlord to register a lease that, by virtue of the management order, he was not entitled to grant because under the land registration rules, if registered, such a lease would be both legal and binding.
The other issue is purely technical and is to confirm that any charge on a property is a legal charge, capable of registration at the Land Registry, and also a local land charge in relation to any monies that might be owed. The remaining amendments in this group are largely tidying up amendments consequent on the new provisions introduced by the principal amendments. I hope that that rather short explanation of a large number of amendments gives a clue to noble Lords opposite and that they find the amendments that we have tabled rather easier to swallow, even though they have been put down rather late. I beg to move.
Baroness Hanham: I reiterate that we are not swallowing the amendments. We are complaining that we have not seen them before, and we will probably respond to them on Report.
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 139:
Page 72, line 19, at end insert—
"( ) The authority may apply to the Chief Land Registrar for the entry of an appropriate restriction in the register of title in respect of such an order."
On Question, amendment agreed to.
Clause 102, as amended, agreed to.
Lord Rooker Lord Rooker moved Amendment No. 140:
After Clause 102, insert the following new clause—
"GENERAL EFFECT OF INTERIM MANAGEMENT ORDERS: LEASES AND LICENCES GRANTED BY AUTHORITY
(1) This section applies in relation to any interest or right created by the authority under section 102(3)(c).
(2) For the purposes of any enactment or rule of law—

(a) any interest created by the authority under section 102(3)(c)(i) is to be treated as if it were a legal lease, and

(b) any right created by the authority under section 102(3)(c)(ii) is to be treated as if it were a licence to occupy granted by the legal owner of the premises,

despite the fact that the authority have no legal estate in the premises (see section 102(5)(a)).
(3) Any enactment or rule of law relating to landlords and tenants or leases accordingly applies in relation to any interest created by the authority under section 102(3)(c)(i) as if the authority were the legal owner of the premises.
(4) References to leases and licences—

(a) in this Part, and

(b) in any other enactment,

accordingly include (where the context permits) interests and rights created by the authority under section 102(3)(c).
(5) The preceding provisions of this section have effect subject to—

(a) section 116(5) to (7), and

(b) any provision to the contrary contained in an order made by the appropriate national authority.

(6) In section 102(5)(b) the reference to leasing does not include the creation of interests under section 102(3)(c)(i).
(7) In this section—
"enactment" has the meaning given by section 102(10);
"legal lease" means a term of years absolute (within section 1(1)(b) of the Law of Property Act 1925 (c. 20))."
On Question, amendment agreed to.
Clause 103 [General effect of interim management orders: immediate landlords, mortgagees etc.]:
Lord Rooker Lord Rooker moved Amendment No. 141:
Page 72, line 35, leave out "interest or right created" and insert "leases or licences granted"
On Question, amendment agreed to.
Clause 103, as amended, agreed to.
Clause 104 [Financial arrangements while order is in force]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 142:
Page 73, line 35, leave out from "made" to end of line 36 and insert "as soon as is practically possible after deductions to meet relevant expenditure are made"
The noble Lord said: Amendments Nos. 142, 150 and 163 relate to the balance that is struck between the rights of landlords and the protection of vulnerable tenants and residents around the relevant properties. Again, we are seeking to achieve a balance in respect of the rights of landlords.
Amendment No. 142 removes part of Clause 104(4)(b) that gives the local housing authority the power, as it sees appropriate, to return moneys to landlords under interim management orders and adds the words,
"as soon as is practically possible after deductions to meet relevant expenditure are made".
We feel that the amendments are necessary to prevent local authorities having unfettered freedom to withhold payments. At present, no guidance is given about how they should proceed in such matters. Indeed, as the Bill stands, there is nothing to tell a local

807
housing authority about when it should make the relevant net payments back to the landlord. I beg to move.
Lord Rooker: I want to be helpful, but I am not clear about this. The noble Lord mentioned Amendment No. 163 as being in the same group as Amendments Nos. 142 and 150. They are not grouped together on my list.
Lord Hanningfield: They are on ours.
Lord Rooker: This list is a mess today—we have government amendments that are not government amendments and the order is wrong. I am quite happy to deal with Amendment No. 163, by the way, now that I have located it, but it is not in the same group.
Lord Hanningfield: It is on the new revised list.
Lord Rooker: Yes, but I have not had one of those.
Amendment No. 142 would require the local authority to make payments to the relevant landlord as soon as practically possible after the relevant expenditure has been incurred. We wholly agree with noble Lords opposite that local authorities should be diligent in making these payments, and that they should be made at the relevant intervals. But we are also conscious that an interim management order is in force because there were problems with the landlord's former management of the property.
These orders are very short term—they can last for only up to one year—but in many cases will be for a much shorter period. They enable the local authority to put in place satisfactory management arrangements. The local authority is under a duty to pay any surplus revenue to the landlord at the end of the order if it does not proceed to make a final management order under Clause 110(2).
Clause 104(4) gives the local authority the flexibility to make payments to the landlord earlier than at the end of the order, if it considers it appropriate to do so. Obviously, we would expect it to do so. We fully accept the intention behind the amendment that landlords are treated fairly. In no way do we want landlords to be treated unfairly.
Amendment No. 150 would limit the discretion of the local authority and require it to make payment to the relevant landlord after the relevant expenditure has been incurred. We agree, again, that it should be diligent in making these payments.
6.15 p.m.
A management scheme must be agreed by a landlord before it can come into effect, or else determined by the Residential Property Tribunal on appeal. If the landlord is not satisfied with the proposed arrangements for the payment of surpluses, he already has a powerful method by which to challenge that.
The difficulty with this amendment, as with Amendment No. 142, is that it would remove the flexibility of local authorities to deal with any rent that they recover in the most appropriate manner. The landlord does have the right of appeal.
Clause 120(2) provides that, on termination of the interim management order, the surplus is to be repaid to the relevant landlord. Amendment No. 163 would remove the local authority's discretion to apportion payments when there are two or more landlords in such properties as it sees fit. In most cases, when they are joint owners of property, one would expect that they would be able to sort out between themselves who was entitled to what money. In the very rare cases when there is a dispute, someone needs to be able to resolve it, and we would argue that permitting the local authority to exercise its discretion is the best way around the problem. Disgruntled owners will have the ability to change any wrongful exercise of that discretion.
Government Amendment No. 151 is a technical amendment, which replaces an incorrect reference in other subsections of the Bill. Government Amendments Nos. 152 to 154 are technical changes to the provisions, setting out what authorities have to do with the money that they hold when a management order comes to an end. Essentially, if no further management order is made, the authority has to return the money to the landlord.
Government Amendment No. 155 provides that the exclusion will not apply when the issue is one of payment of surplus rent. Landlords will have the right to appeal against the frequency of payments of surplus rent and the rates of interest thereon in all circumstances in which an interim management order is in place. We are trying to be fair to landlords.
Government Amendment No. 165 amends Clause 120 by inserting new subsection (5A) to provide that if, at the end of either an interim or a final management order, a new final management order is made, the way in which any money held by local authorities is to be treated will be determined by the management scheme within the final management order. The amendment has been introduced to allow balances of income or deficit to be carried forward to a second or subsequent final management order. Landlords retain the right of appeal against the contents of a management scheme.
Lord Hanningfield: I thank the Minister for his reply. As I said at the beginning, I was trying to strike a balance between the rights of the landlords, the local authority position and the tenants. We shall examine his answers, for which I thank him, in detail. If we need to take them forward, we shall do so at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 104 agreed to.
Clauses 105 to 107 agreed to.
Clause 108 [Operation of final management orders]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 143:
Page 76, line 36, leave out "5" and insert "3"
The noble Lord said: Amendment No. 143 is simple enough, in seeking to reduce from five years to three years the time that is required to bring a house into proper management on a long-term basis. We would be grateful if the Minister could explain why the period of five years was picked. He might also tell us what checks the department will place on local authorities that drag their feet in dealing with such matters inefficiently or less than effectively. I beg to move.
Lord Rooker: That is a fair question. After the cooperation that has been given today, my following comment sounds almost cheap but I point out that the five years is a maximum period. Subsection (4) provides for an end date of anything up to but not beyond the five years. I now come to my cheap point. A maximum period of five years is consistent with the period allowed under the Housing Act 1985 for "control orders" where a local authority steps in to manage HMOs. In other words, we are carrying over the good works of the previous Tory government. The works that we carry over are always good, of course. I want to make it absolutely clear that the five years is a maximum period.
I also want to emphasise that the Bill provides that the local housing authority has to consult the landlord and other relevant persons on the terms of the final management order. These terms include the start and end date. Then the local housing authority has to consider any representations before issuing a final management order. At that stage the Bill also provides that if they so wish the landlord and/or other relevant persons can appeal to a residential property tribunal against the terms of the final management order. It is absolutely clear that an independent tribunal will adjudicate in the case of a grievance.
As I say, the five years is a maximum period, and there is a precedent.
Lord Hanningfield: I thank the Minister for that reply. Obviously. I shall have to agree with it if it was a Conservative government's idea to have a five-year period. I take the point that that is the maximum. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 108 agreed to.
Clause 109 agreed to.
Clause 110 [General effect of final management orders]:
Lord Rooker Lord Rooker moved Amendment No. 144:
Page 78, line 8, leave out "occupiers preserved by section 116(2))" and insert "and other occupiers preserved by section 116(2) and (4A))"
On Question, amendment agreed to.
[Amendment No. 145 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 146:
Page 78, line 39, leave out paragraph (a).
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 147:
Page 79, line 8, at end insert—
"( ) The authority may apply to the Chief Land Registrar for the entry of an appropriate restriction in the register in respect of such an order."
On Question, amendment agreed to.
Clause 110, as amended, agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 148:
After Clause 110, insert the following new clause—
"GENERAL EFFECT OF FINAL MANAGEMENT ORDERS: LEASES AND LICENCES GRANTED BY AUTHORITY
(1) This section applies in relation to any interest or right created by the authority under section 110(3)(c).
(2) For the purposes of any enactment or rule of law—

(a) any interest created by the authority under section 110(3)(c)(i) is to be treated as if it were a legal lease, and

(b) any right created by the authority under section 110(3)(c)(ii) is to be treated as if it were a licence to occupy granted by the legal owner of the premises,

despite the fact that the authority have no legal estate in the premises (see section 110(5)(a)).
(3) Any enactment or rule of law relating to landlords and tenants or leases accordingly applies in relation to any interest created by the authority under section 110(3)(c)(i) as if the authority were the legal owner of the premises.
(4) References to leases and licences—

(a) in this Part, and

(b) in any other enactment,

accordingly include (where the context permits) interests and rights created by the authority under section 110(3)(c).
(5) The preceding provisions of this section have effect subject to

(a) section 116(5) to (7), and

(b) any provision to the contrary contained in an order made by the appropriate national authority.

(6) In section 110(5)(b) the reference to leasing does not include the creation of interests under section 110(3)(c)(i).
(7) In this section—
"enactment" has the meaning given by section 110(10);
"legal lease" means a term of years absolute (within section 1(1)(b) of the Law of Property Act 1925 (c. 20))."
On Question, amendment agreed to.
Clause 111 [General effect of final management orders: immediate landlords, mortgagees etc.]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 149:
Page 79, leave out line 24 and insert "leases or licences granted by them under section 102(3)(c) or 110(3)(c),"
On Question, amendment agreed to.
Clause 111, as amended, agreed to.
Clause 112 [Management scheme and accounts]: [Amendment No. 150 not moved.]
Lord Rooker Lord Rooker moved Amendment No. 151:
Page 80, line 30, leave out "(4)(c) and (d)" and insert "(4)(d) and (e)"
On Question, amendment agreed to.
Lord Rooker Lord Rooker moved Amendments Nos. 152 to 154:
Page 80, line 32, leave out "is not to apply in respect of an interim" and insert "or (4) is not to apply in relation to an interim or (as the case may be) final"
Page 80, line 34, after "balance" insert "or amount"
Page 80, line 37, leave out paragraph (d) and insert—
"(d) that section 120(3) or (5) is not to apply in relation to an interim or (as the case may be) final management order that immediately preceded the final management order ("the order"), and that instead the authority intend to use rent or other payments collected during the currency of the order to reimburse the authority in respect of any deficit or amount such as is mentioned in that subsection;"
On Question, amendments agreed to.
Clause 112, as amended, agreed to.
Lord Rooker Lord Rooker moved Amendment No. 154A:
After Clause 112, insert the following new clause—
"ENFORCEMENT OF MANAGEMENT SCHEME BY RELEVANT LANDLORD
(1) A relevant landlord may apply to a residential property tribunal for an order requiring the local housing authority to manage the whole or part of a house in accordance with the management scheme contained in a final management order made in respect of the house.
(2) On such an application the tribunal may, if it considers it appropriate to do so, make an order—

(a) requiring the local housing authority to manage the whole or part of the house in accordance with the management scheme, or

(b) revoking the final management order as from a date specified in the tribunal's order.

(3) An order under subsection (2) may—

(a) specify the steps which the authority are to take to manage the whole or part of the house in accordance with the management scheme,

(b) include provision varying the final management scheme,

(c) require the payment of money to a relevant landlord by way of damages.

(4) In this section "relevant landlord" has the same meaning as in section 112."
The noble Lord said: This is a new clause after Clause 112 enabling an application to be made by a relevant landlord to the residential property tribunal for an order enforcement of a management scheme made under Clause 112. Clause 112 provides that, when a local housing authority makes a final management order, the order must contain a management scheme.
The relevant landlord can appeal to a residential property tribunal against the provisions in a management scheme, and the scheme will not come into effect until any such appeal is resolved. That means that the landlord and the local authority must reach agreement on the contents of the scheme or have the matter settled by the residential property tribunal.
The current draft of the Bill provides for no mechanism for the enforcement of the agreed scheme. For example, although the parties could have agreed that the local housing authority would collect a certain
812
amount of rent a year, it might collect significantly less than that because it has not promptly re-let rooms after they became vacant. The relevant landlord has no right to challenge such a breach of the scheme. The Government recognise that and other breaches. Undertaking works that are not agreed and are unnecessary could lead to a significant shortfall in the landlord's projected income, and he or she should be able to seek an order requiring a local housing authority to comply with the management scheme and to seek damages for loss of income. Amendment No. 154A provides that the landlord may apply to the tribunal.
Amendments Nos. 168 and 169 are technical amendments. Amendment No. 168 will amend Clause 121(3), making it clear that the provision applies to liability in respect of things done before the termination date. Amendment No. 169 is a technical amendment to subsection (6).
Amendments Nos. 169A and 169B are technical amendments. Amendment No. 169A will amend Clause 121(7) to correct a typographical error. Amendment No. 169B will add a new subsection to Clause 121, making it clear that its provisions apply to instruments—deeds, for example—as well as to agreements. The amendment is being made for the avoidance of doubt. I beg to move.
On Question, amendment agreed to.
Clauses 113 to 115 agreed to.
Schedule 6 [Management orders: procedure and appeals]:
Lord Rooker Lord Rooker moved Amendment No. 155:
Page 203, line 9, leave out "This" and insert "Except to the extent that an appeal may be made in accordance with sub-paragraphs (3) and (4), sub-paragraph (1)"
On Question, amendment agreed to.
Lord Rooker Lord Rooker moved Amendment No. 156:
Page 203, line 32, leave out "7(2)" and insert "7(5)"
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 116 [Effect of management orders: occupiers]:
Lord Rooker Lord Rooker moved Amendment No. 157:
Page 82, line 35, leave out subsection (1) and insert—
"(1) This section applies to existing and new occupiers of a house in relation to which an interim or final management order is in force.
(1A) In this section—
"existing occupier" means a person who, at the time when the order comes into force, either—

(a) (in the case of an HMO or a Part 3 house) is occupying part of the house and does not have an estate or interest in the whole of the house, or

(b) (in the case of a Part 3 house) is occupying the whole of the house,

but is not a new occupier within subsection (4A);
"new occupier" means a person who, at a time when the order is in force, is occupying the whole or part of the house under a lease or licence granted under section 102(3)(c) or 110(3)(c)."
On Question, amendment agreed to.
Lord Rooker Lord Rooker moved Amendments Nos. 158 and 159:
Page 83, line 14, at end insert—
"(4A) Section 110 does not affect the rights or liabilities of a new occupier who, in the case of a final management order, is occupying the whole or part of the house at the time when the order comes into force."
Page 83, line 26, leave out "section 102(6) or 110(6) or this section" and insert "this Part"
On Question, amendments agreed to.
Clause 116, as amended, agreed to.
Clause 117 agreed to.
Clause 118 [Effect of management orders: furniture]:
Lord Hanningfield Lord Hanningfield moved Amendment No. 160:
Page 85, line 4, leave out subsection (1).
The noble Lord said: With the amendment, we are attempting to bring a degree of clarity and understanding to this part of the Bill.
My understanding is that, as the Bill stands, on the granting of an interim or final management order, all property in the house in question is transferred to the local authority, with the exception of the occupant's property. I would welcome an explanation by the Minister of what that would mean in practice and why the Government have decided to go down what appears to be a rather outdated and regressive route. Is this an English version of the poindings and warrant sales that the Scottish Executive decided to abolish a couple of years ago?
What would happen if furniture that did not belong to the occupant were seized and subsequently sold by the local authority? I am thinking in this case of rented furniture; or, indeed, such is the definition of furniture in the clause that it includes TVs or DVD players. The company in question would surely have a legal right of redress in respect of its seized goods.
Finally, Amendment No. 161 attempts to shed a little more light on what the Government considers to be furniture. I have just mentioned some of the problems of having such a weak definition. Would that
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include white or electrical goods, for example? As the paragraph stands, it is written so loosely that virtually anything could be included. I beg to move.
Lord Rooker: I hope that I can satisfy the noble Lord. I have a brief response, but I hope that it will fit the bill. Clause 118 is concerned with the effect of a management order on furniture which is provided under a tenancy or occupancy agreement while the order is in force. Effectively, it provides that a local authority takes over the ownership of the furniture in the property so that it can continue to be used by occupiers.
The amendment proposes to delete subsection (1). That would make the clause unworkable and that is why it is a probing amendment. The subsection sets out the circumstances in which the clause applies. Amendment No. 161 seeks to qualify "other" with "specified" in respect of the articles in subsection (7). An "article" could be one of a number of numerous things which are provided under a tenancy but which are not conventional furniture or fittings, such as cutlery, works of art, books, candles and telephones, to name but a few examples. We think the word "other" is more appropriate in this context. It is not necessary to give anyone the power to specify what constitutes an article. There would normally be an inventory of furniture available—and it is in everyone's interests that there should be—which would specify the articles that are provided under the tenancy. There should be clarity about the matter. We could return to this matter, but I hope that I have made the point. There is furniture and there are other articles of which I have given some examples.
Lord Hanningfield: Again, I thank the Minister for his reply. We shall look at his answer to see if it covers the points I was making. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 161 not moved.]
Clause 118 agreed to.
Clause 119 agreed to.
Lord Bassam of Brighton: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at twenty seven minutes before seven o'clock.

Official Report of the Grand Committee on the Pensions Bill
(Seventh Day)
Thursday, 9 September 2004.
The Committee met at quarter past three of the clock.
[The Deputy Chairman of Committees (Baroness Pitkeathley) in the Chair.]
Clause 153 agreed to.
Schedule 7 [Pension compensation provisions]:
Lord Higgins Lord Higgins moved Amendment No. 216:
Page 264, line 6, leave out from "means" to end of line 8 and insert "90%"
The noble Lord said: Since the Minister and I first assumed our present offices back in 1997, she has served under, and I have suffered under, no fewer than three Secretaries of State—Miss Harman, Mr Darling and Mr Smith—and we now have a fourth. Alas, in that time, I am afraid, the situation with regard to pensions has deteriorated substantially. But I do not blame any of them; it is largely the fault of the Chancellor and his preoccupation with means testing and tax credits.
There has also been a serious effect on occupational schemes and, in a way, the Bill is something of a sticking plaster on a gaping wound. However, we must do our best on both sides of the House to make it work as satisfactorily as possible.
In moving the amendment, I come to the very important part of the Bill concerned with the level of benefits to be provided by the Pension Protection Fund. Nearly all my amendments—with the exception of one, Amendment No. 227—seek to substitute "90 per cent" for "100 per cent". However, as that amendment has been grouped with the others, it might be helpful if the Minister could explain why that particular part of the Bill has been included.
As far as the 90 per cent/100 per cent argument is concerned, noble Lords may well have seen a letter in The Times from the head of the NAPF and the Institute of Actuaries regarding what percentage of the benefit should be paid out of the fund—whether it should be 100 per cent or 90 per cent—and which categories of people should receive one or the other.
The main problem with the Bill of course is the fact that it will be financed by a levy on final salary schemes. Inevitably, the cost of that is likely to encourage more of the final salary schemes that remain to close and companies to go to a defined contribution scheme. Therefore, the issue of cost and the size of the levy—to which we shall return later—are of crucial importance.
There is also an important issue as far as the relationship between various people who might benefit under the Bill is concerned. The NAPF, in particular—but it is also true of a number of other outside bodies—put rather strong arguments in favour of the type of amendment I am now proposing. On the other hand, at this stage we must regard it very much as a probing amendment.
We ought to try to reach agreement about the right balance between the size of the levy and the burden on employers, on the one hand, and the actual benefits that will accrue to those whom the Bill seeks to help, on the other. The debates in the other place were not particularly clear about where we ended up on the arguments and it is helpful to have this debate today. No doubt by the time we reach Report we will need to decide what particular line we ought to take.
The NAPF points out that a level of protection of 90 per cent is available to a person, to pension stakeholders or to a group of personal policy-holders if their provider becomes insolvent under the Financial Services and Markets Act regime. Therefore, we would have thought that a coherent policy framework should apply to pension protection irrespective of the technical structure—the vehicle through which it is provided.
It is important that we have a system which is egalitarian so far as concerns individual groups of people. At present, some people receive 100 per cent and some receive 90 per cent; some are capped and some are not capped. Clearly one way of equalising the cover would be to provide 100 per cent for everyone. No doubt that is politically attractive, but I feel bound to point out that 100 per cent is a rather misleading way of putting it because it gives the impression to those for whom the Bill provides 100 per cent that it is 100 per cent of the benefits they were expecting to receive in the first place. Of course, that is not the case, as I think everyone in the Committee realises.
If the figure were to be 100 per cent, even in those limited terms, that would clearly be very expensive. I think that an estimate was made in the other place that there would be in the region of an additional £500 million on the levy.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): If everyone had 100 per cent?
Lord Higgins: Yes.
Baroness Hollis of Heigham: It would be £100 million.
Lord Higgins: At all events, it clearly increases the burden on the levy and, in turn, it increases the effects—perhaps "side effects" would be the best way of putting it—that I mentioned earlier. That would be one way of equalising the payments but it has the disadvantage which I have just mentioned.
Equality could also be achieved by providing 90 per cent for everyone but uncapped. The problem with that is that clearly the rich, for want of a better expression, would gain far more than everyone else, and so that is not a very good way of doing it either.
Therefore, we come to the alternative ways of achieving it. Perhaps we should also take into account whether someone has retired or not, or whether he should be paid from a particular age. If I understand the current proposal correctly—the noble Baroness will no doubt tell me if I am wrong—it would mean that, for example, a 60 year-old retired executive would receive a 100 per cent uncapped pension, whereas a 60 year-old ordinary worker who had retired earlier from the same company would receive only the capped 90 per cent. The noble Baroness indicates assent to that. That does not seem to me to be a sensible arrangement.
Baroness Hollis of Heigham: Depending on the normal retirement age.
Lord Higgins: Yes. It depends on the normal retirement age and so on and therefore we need to straighten that out as well. At all events, it does not seem that the present arrangement is particularly advantageous compared with some of the other alternatives.
In particular, we have the well known cliff-edge effect where, if a scheme is insolvent and it falls into the PPF, perhaps typically funded at 80 per cent, the provision of 90 per cent rather than 100 per cent cover would reduce the cost by 50 per cent. But there is a danger that in some cases one will suddenly find that one person who has already retired receives a great deal and others have problems. That also raises the whole issue of priorities, which we shall deal with in other parts of the Bill.
Finally—we can no doubt come back to these points in a moment—there is the whole question of the extent to which the PPF is likely to be able to fund these liabilities on any level of levy without a very serious effect on the remaining defined contribution schemes. My impression is that at present the Government are tending to underestimate the burden which is likely to fall on the PPF.
It is also true to say that because the advantages that will be given under the financial assistance scheme are likely to be far fewer than are available under the PPF, there will be an incentive for companies which might otherwise become insolvent, or schemes which were otherwise underfunded, to try to defer the crisis until such time as the PPF comes into operation. So it seems to me that the claims on the PPF are likely to be very front-ended.
As others in the industry have pointed out, there are also likely to be sudden ups and downs. I believe that there is a real danger of the scheme collapsing if we impose too heavy a burden on it. The United States Pension Benefit Guarantee Corporation has run into somewhat similar problems and according to the press a few days ago it is in very serious difficulties. So we must bear all those points in mind when considering the appropriate level of benefit, and how best we can avoid—to the extent that it is possible—anomalies in the way in which it is distributed between different categories of people.
I have mentioned the problems. I believe that it is worth while having the debate this afternoon. Then we can see where we stand by the time we come to Report stage. I beg to move.
Lord Oakeshott of Seagrove Bay: It may be helpful if I briefly set out our attitude to this set of amendments. We have a considerable amount of sympathy with the points that the NAPF and the noble Lord, Lord Higgins, are making, but our approach is rather different. Broadly, we do not support this cut from 100 per cent to 90 per cent—not because we do not agree that there will be very serious financial strains on the PPF and indeed on funds, but because we want to take what we regard as a more positive approach.
Putting the matter crudely, our view is that broadly the Government have the balance right on the paying-out side of the PPF, while at the same time making a complete pig's ear on the paying-in side. We believe that we should concentrate on improving and strengthening the paying-in side—critically by ensuring that the Government, if necessary, stand behind the PPF as lender of last resort and by focusing on ensuring that a properly assessed risk-based levy comes into effect as soon as possible. We would prefer to concentrate our efforts on that side of the matter.
Undoubtedly, the noble Lord, Lord Higgins, and the NAPF are right—to quote a very good piece of work by Professor Anthony Neuberger and his colleague David McCarthy at the London Business School—that,
"the PPF is likely to face many years of low claims interspersed irregularly with periods of very large claims".
They conclude, as do we, that,
"There is a significant chance that those claims will be so large that the PPF will default on its liabilities, leaving the Government with no option but to bail it out".
We shall come on to that later.
We understand why the Government have done that, but we feel that there is a difference between the position of people who have already retired and the position of people coming up to retirement. It is harder for those who have already retired to have to adjust to changes in their standard of living because of their pensions. I think it is right that there is some difference between the deferred pensioners and the others. In terms of the general approach we want to concentrate not on cutting the benefits—they are not 100 per cent anyway and we do not want to cut them further—but on strengthening the paying-in side.
Baroness Hollis of Heigham: I thank noble Lords for their contributions, which were very interesting. Before I turn to the amendments I want to argue two points—one of which has in part been made for me by the noble Lord, Lord Oakeshott. First, I entirely agree with the noble Lord, Lord Oakeshott—this is the first part of the Government's argument—that it is not decent to cut pensions, which often can be quite modest, that are already in payment to people who have no capacity to make good that cut. In an ideal

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world, there would be enough resources to pay everyone 100 per cent, apart from issues about moral hazard.
The second point is that pensioners in their former scheme—before it went into the PPF—will continue to receive 100 per cent of pension payment. Ninety per cent of DB schemes, although not required to, as far as we can tell, are indexed to pre-1997 contributions. That would not continue under the PPF.
So, although existing pensioners will not see a cut, they cannot expect to see an increase on the pre-1997 contribution that they would have enjoyed had they stayed out of the fund. Incidentally, that means that a deferred pensioner with a higher accrual rate of 5 per cent may, over 20 years or so, begin to catch up with the pensioner on 100 per cent. I should be very happy to share with the Committee my working figures on that. I was very interested in what happened.
3.30 p.m.
So I agree absolutely with the noble Lord, Lord Oakeshott, that the proposition is not decent. As to the noble Lord's other concern, I have no reason to believe that the envisaged levy, and the responsibilities falling on the PPF which the levy has to meet, will be onerous in that either government money will be essential to keep it afloat or that that is desirable. I should like to remind your Lordships that, first, any scheme coming into the PPF brings its assets along with its liabilities—and in some cases those assets may be substantial—and, secondly, concerning the employer, the cost of the levy is carefully controlled by the 25 per cent cap once the transitional period is over, and during the transitional period there is of course a ceiling.
The third thing to remember is that, given the assessment period, it is likely to be a year before any payments are made out. So the fund will effectively have two years' worth of money before it makes its first payment—subject to monies coming in on time. So there should not be quite the immediate cash flow problem that has been suggested. I agree that there may be steady funding for a lot of the time and then a sudden crisis of the kind that we currently face. That could well be the case. None the less, I have no reason to think that this will be problematic.
The levy allows for large claims. Again, I am perfectly happy to share my workings on the matter. The levy allows for one major FTSE-type company to become insolvent and for its scheme to come within the PPF every two-and-a-half years. The DB scheme allows for one scheme in 250 to come each year within the PPF. As to the assumed average of assets brought into the assumed average of liabilities, our econometric calculations suggest that £300 million of the full rolled-out levy should be more than adequate.
If not, over and beyond the levy's power to borrow is the backstop that the PPF board could, if necessary,
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reduce the pay out by bringing revaluation and indexation down to nil. That is undesirable, but it could be done.
Finally, in general evidence about this issue, I want to quote something that Members of the Committee may have seen from the Aon Consulting's survey for EF of its 45 largest members. It states that 85 per cent—which is admittedly a small number but none the less an important one—of those who responded to the survey felt that the introduction of the PPF and its levy would have either a negative or no impact at all on their company's decision to provide defined benefit occupational schemes. So, about one-third of them thought that it had an effect on their DB schemes and two-thirds did not.
It is worth remembering that the average levy we are talking about, however much may get off-laid onto individual members of the scheme, would work out to about £15 to £20 per member each year—possibly one-half of what most Members of the Committee would expect to pay per year on travel insurance for their holiday. So let us keep the levy in proportion.
Perhaps I may deal very rapidly with the specifics of the amendments. Amendments Nos. 216, 218, 219, 220 and 221 seek to reduce the level of compensation for those members who are over the scheme's retirement age, for those who receive an early pension on the grounds of ill health and for those already in receipt of survivors' benefits. As I say, I think that that would be unreasonable. They are the people least able to make up any shortfall in their compensation. Members may have been ill or they may have had caring responsibilities. Many will of course be women who may have been out of the workplace for many years. They may be elderly. We already know that elderly pensioners are the poorest. To make a further cut would be harsh.
We will propose that the PPF pays a 90 per cent level of compensation to members who are under the scheme's normal pension age before the assessment date. That is partly about costs in order to balance the fund, but it is also about trying to reduce the moral hazard issue. We want to ensure that the PPF is seen as compensation and not as a replacement pension. That is why we are going for the 90 per cent figure.
Amendment No. 217 seeks to pay compensation to early-retired members at a level of 100 per cent. We are proposing 90 per cent so that they have a financial interest in ensuring that the scheme stays out of PPF.
Amendment No. 227 seeks to apply the compensation cap to those members who are over the scheme's normal pension age before the assessment date.
Lord Higgins: The noble Baroness has referred to Amendment No. 227. With respect, I do not understand the purpose of the parentheses in line 21 of page 277, which states:

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"(in a case to which sub-paragraph (7) of that paragraph applies)".
I do not understand what that means. It is a rather odd grouping. Everything in the group is 90 per cent or 100 per cent, and suddenly Amendment No. 227 refers to a little sub-paragraph which I find puzzling. On reflection, the grouping is confusing.
Baroness Hollis of Heigham: The amendment relates to the application of the compensation cap to those members who have retired early—not on grounds of ill health—and are therefore subject to the 90 per cent compensation level and the cap; as opposed to members who have retired on grounds of ill health—which the board has possibly reviewed and decided not to revoke—for whom a payment of 100 per cent without the cap remains in position, as it does for other existing pensioners who have retired above normal pension age. Is that all right?
Lord Higgins: That is fine.
Baroness Hollis of Heigham: Perhaps I can stop there. As I say, our argument is twofold. Basically, first, it is not reasonable to cut the incomes of pensioners who cannot make good a shortfall in income—and the older they are the less likely they are able to do so; and, secondly, they will in any case, I fear, suffer some diminution because the indexation that they may have enjoyed in the previous scheme will not continue to apply and, over time, the gap between the 100 per cent and 90 per cent will narrow.
I believe that in the scheme we have constructed—although obviously there is room for disagreement—the costs are carefully controlled; the employers' levy, which they may or may not choose, wish or be able to lay off onto members, is reasonable given the protection offered; and certainly some of the modest evidence we have received from snapshot surveys carried out by other organisations seems to suggest that it has some degree of support outside the House.
With that explanation, and given that pensions should be protected, although not as much as one would wish, and that employers' costs as reflected in the levy are reasonable and contained—and therefore, I trust, acceptable—I hope the noble Lord will feel able to withdraw his amendment.
Lord Higgins: I thank the noble Baroness for those remarks. It has emerged very clearly that the 100 per cent figure is likely, in presentational terms, to be misleading for the reasons that have been spelt out—namely, that it is not 100 per cent of what the pensioners expected to get in the first place. The emotional view of 100 per cent and 90 per cent is somewhat diminished once you take that point into account.
I have some personal sympathy with the view that people who have already retired are much more vulnerable than those who have not. My attempts to retire over time have proved singularly ineffective. But it is true. It was particularly true, for example, for people investing in Equitable Life, who were put in an
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impossible position and had their whole retirement disrupted when they had, as the noble Baroness pointed out, absolutely no means whatever of recouping the situation. I am not wholly persuaded by what the noble Baroness said but I should like to consider it very carefully indeed so that we can, by Report, decide whether some amendment ought to be pressed. Having accepted the point about people who have already retired, there is none the less something of a cliff-edge problem here.
The other matter on which we have not really touched is the extent to which the costs on the PPF will be reduced by the way in which it invests—whether in equities or bonds and so on. The same applies to firms that might seek to defer until the PPF comes into operation their becoming insolvent by putting far more of the fund into equities. There are problems there, but they come up more appropriately later. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 217 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 217A to 217C:
Page 264, line 18, leave out "under the scheme or another scheme"
Page 264, line 24, leave out "under the scheme or another scheme"
Page 264, line 39, leave out "under the scheme"
On Question, amendments agreed to.
[Amendment No. 218 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 218A to 218D:
Page 265, line 30, after first "the" insert "postponed"
Page 265, line 30, leave out "under the scheme or another scheme"
Page 265, line 32, after "the" insert "postponed"
Page 265, line 42, leave out "under the scheme or another scheme"
On Question, amendments agreed to.
[Amendments Nos. 219 and 220 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 220A and 220B:
Page 267, line 24, leave out "scheme"
Page 267, line 26, at end insert—
"paragraph 19A (compensation in respect of scheme right to transfer payment or contribution refund),"
On Question, amendments agreed to.
[Amendment No. 221 not moved.]
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 222:
Page 268, leave out line 10 and insert "AR x PEL x PSL"
The noble Lord said: Even a very quick reading of the Bill will show that paragraphs 8, 10 and 11 in Schedule 7 have formulae that seem identical. Unfortunately, they are not identical because in the formula in paragraph 10 the expressions "PE" and "PS" mean something rather different from what they

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mean in paragraphs 8 and 11. For the avoidance of doubt, I should say that "PSL" in my amendment does not refer to "Parliamentary Secretary, Lords".
In paragraphs 8 and 11:
"PE is the active member's annual pensionable earnings in respect of the pension under the admissible rules".
However, in paragraph 10:
"PE is the active member's annual pensionable earnings in respect of the scheme lump sum",
which is different, for very good and obvious reasons. I am complaining not about the reasons for the formulae but about the formulae themselves. The same is true of PS. In paragraph 10, PS also refers to a lump sum, not to the,
"pensionable service in respect of the pension under the admissible rules in years".
They are slightly different, so there ought to be a slightly different formula to make that distinction. I beg to move.
Baroness Hollis of Heigham: I am confident that the noble Lord knows exactly how the formula works; it is the absolutely standard way of calculating a DB scheme. Is he suggesting that we should try to clean up the language? Is his primary concern that the language is being deployed to mean two things in the same schedule and that ambiguity might arise?
3.45 p.m.
Lord Skelmersdale: That is exactly what I am saying, but it is only in terms of the formula and not in terms of the words in the Bill explaining what the formula means.
Baroness Hollis of Heigham: Algebra is not my strong suit but certainly I had no problem in understanding how the calculations in paragraphs 8, 11 and 14 were arrived at because the definitions were applied. If this concern is shared by other Members of the Committee, I shall be perfectly happy to see whether we should look at it again. But it seems to me that with pensionable earnings you do move between added years and lump sums—that is, there is a possibility of commuting some of your years into a tax-free lump sum. You may use a lump sum to buy an annuity for additional years. Therefore, there is quite a lot of fluidity across the two.
However, the formula is clearly defined here and therefore at present I am not persuaded that there is a possibility that confusion or error will arise. Perhaps I may put it this way. If the noble Lord's point is supported by any organisations outside who feel that this is misleading or that it could give rise to confusion, I shall be very happy to have a look at it again. But if his position is not supported, perhaps we can regard this as at least being satisfactory to the insiders.
Lord Skelmersdale: I am grateful for that response so far as it goes. It is simply that I have an algebraic penchant for ensuring that formulae that appear to be the same in legislation—or, indeed, in any other piece of notification—are indeed the same. This is a case
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where they are not the same. But I take the point and, if necessary, I shall return to this matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 223 and 224 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 224A to 224E:
Page 268, line 34, leave out second "paragraph" and insert"—
paragraph 19A (compensation in respect of scheme right to transfer payment or contribution refund), and
paragraph"
Page 269, line 33, at end insert—
"paragraph 19A (compensation in respect of scheme right to transfer payment or contribution refund),"
Page 271, line 30, at end insert—
"paragraph 19A (compensation in respect of scheme right to transfer payment or contribution refund),"
Page 272, line 21, leave out "under the scheme"
Page 273, line 12, leave out "under the scheme or another scheme"
On Question, amendments agreed to.
[Amendment No. 224F had been withdrawn from the Marshalled List.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 224FA:
Page 274, line 10, at end insert—
"Compensation in respect of scheme right to transfer payment or contribution refund
19A (1) Compensation is payable in accordance with this paragraph where—

(a) a person's pensionable service terminates on the commencement of the assessment period,

(b) as a result, he has rights, under the admissible rules, to—

(i) a transfer payment calculated by reference to the value of benefits which have accrued to him under the scheme ("the protected transfer payment"), or

(ii) a cash payment calculated by reference to the amount of contributions made by him or on his behalf to the scheme ("the protected contribution repayment"),

(c) Chapter 5 of Part 4 of the Pension Schemes Act 1993 (c. 48) (early leavers: cash transfer sums and contribution refunds) does not apply to him, and

(d) he does not have relevant accrued rights to benefit (within the meaning of section 101AA(4) of that Act).

(2) That person is entitled to compensation in the form of a lump sum in respect of the protected transfer payment or protected contribution repayment.
(3) The amount of the compensation is 90% of the amount of the protected transfer payment or protected contribution repayment (whichever is the greater).
(4) For the purposes of sub-paragraph (3), the amount of the protected transfer payment or protected contribution repayment is to be calculated in accordance with the admissible rules, which are to be applied for this purpose subject to any prescribed modifications.
(5) The compensation is payable immediately after the transfer notice given under section 151 is received by the trustees or managers of the scheme.
(6) This paragraph is subject to paragraph 29 (power of Secretary of State to change percentage rates by order).
(7) Regulations may modify any provision of paragraph 8, 10, 11 or 14 (compensation for persons who were active members immediately before assessment date) as it applies in the case of a person who is entitled to compensation under this paragraph.
(8) Regulations may modify any provision of sub-paragraphs (1) to (6) as it applies in the case of a person who is entitled to compensation under paragraph 8, 10, 11 or 14."
The noble Baroness said: I shall be brief. This is a subject that we touched on earlier. I am sure that Members of the Committee will wish to support this amendment, which introduces new paragraph 19A into Schedule 7 to ensure that members who are essentially deferred pensioners with fairly small sums—in other words, whose pensionable service terminates on commencement of the assessment period and who do not have vested rights—none the less are eligible to receive protection from the PPF.
In those cases, if a member has a right under the admissible rules to either, or a choice of, a transfer payment or refund of their contributions, as often happens when one has been in a firm for less than two years, then compensation will be payable at a level of 90 per cent of the transfer payment sum or refund of contributions, whichever is the greater.
Regulations will enable modifications to Schedule 7 to ensure that the member is not entitled to double compensation in respect of the same rights under the scheme. I hope your Lordships will agree that this was a modest loophole that we needed to close in order to protect members with modest deferred rights. I beg to move.
Lord Higgins: If they receive a refund of contributions, is interest paid on it?
Baroness Hollis of Heigham: I am not sure about that. I do not think so, but later in the Bill we shall address the whole point about transfer payments and allowing people to move their funds into another scheme after six months rather than two years. If they receive a cash refund, it is a cash refund only of their contributions. If they move the value of that pot to another scheme, they take the employer's contributions as well. Therefore, we want to incentivise them not to take the money out but to move it on in order to build up a pot. On the noble Lord's specific point, they do not pay interest but, in any case, it represents fairly bad value because a person will probably receive less than he might have done if he had moved it across to another scheme, taking with him the employer's contribution.
Lord Higgins: I am grateful for that clarification. I now find myself a tiny bit confused. Clearly, it is probably better to transfer rather than take a refund; that is the case, generally speaking. However, are we talking about someone in a scheme that has been taken over by the PPF that is then transferred? I am not clear.
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If one's scheme is taken over by the PPF, I would have thought that one was stuck with it. Perhaps that is not so.
Baroness Hollis of Heigham: No. We could be talking about when a member has not been in the scheme before the guillotine comes down of going into the assessment period.
Lord Higgins: I do not want to take too much time on the matter, but are we talking about someone who has only just joined a scheme when almost immediately the scheme is taken over by the PPF? They can either remain in the scheme taken over by the PPF or are forced to transfer—is that is what we are saying? Can they take a refund of contributions? If they have only just joined, they cannot be taken over by the PPF—is that so?
Baroness Hollis of Heigham: No. If someone has just joined—if they do not yet have vested rights—at the moment they are entitled to take out their cash payment. The sums are tiny, in which case the compensation would apply to the level of money that they would otherwise have got. They would be bought out, so to speak. If instead they prefer to keep the money as a pension payment, they would get 90 per cent of that and choose whatever was greater.
Lord Higgins: So people can either get a cash refund, transfer to another scheme, or leave money in the scheme in the way that they would if they moved jobs and decided to do so anyway. There are three alternatives.
Baroness Hollis of Heigham: Effectively.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 224G to 224K:
Page 274, line 16, at end insert—
"( ) in paragraph 15(1) and (2) the references to normal pension age are to be read as references to normal benefit age,"
Page 274, line 22, leave out "of the scheme"
Page 274, line 30, leave out ", (2) and (5)" and insert "and (2)".
Page 274, line 31, after "age," insert—
"( ) in paragraph 19(4) for the words from "the aggregate of" to the end substitute "the accrued amount",
( ) for paragraph 19(5) substitute—
"(5) In sub-paragraph (4) "the accrued amount" means an amount equal to the amount of the scheme lump sum which, under the admissible rules, the deferred member is entitled to receive at normal benefit age by virtue of his pension credit rights.","
On Question, amendments agreed to.
[Amendment No. 224L had been withdrawn from the Marshalled List.]
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 225:
Page 275, line 28, leave out from beginning to "the"
The noble Lord said: We are talking now about the commutation of periodic compensation. The paragraph starts with what happens under prescribed

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circumstances, and goes on to list a few exceptions. I find that a little vague at this stage. It is a point on draft regulations, I know, but it would be helpful if the noble Baroness could give us some idea of what might be intended by the provisions. I beg to move.
Baroness Hollis of Heigham: The provisions are for dealing with very small sums—if one is just getting them out of the way, rather than having them clutter things up. Regulations will enable the PPF board to provide an option for members who are not entitled to a scheme lump sum to commute up to 25 per cent of their periodic compensation for a lump sum. That is in accordance with the Inland Revenue guidelines. We want exceptions in cases of trivial amounts of compensation, so that the PPF board can allow full commutation of periodic compensations, as that prevents the cost of paying recurring small sums of compensation such as £1.50 a week. That is all that the provision is about. I hope that the noble Lord is content with that explanation.
Lord Skelmersdale: I am very grateful, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 225A:
Page 275, line 43, after "scheme" insert "rules"
On Question, amendment agreed to.
[Amendments Nos. 226 and 227 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 227A:
Page 278, line 38, leave out "under the scheme or another scheme"
On Question, amendment agreed to.
Lord Higginshad given notice of his intention to move Amendment No. 228:
Page 279, line 21, leave out from "increase" to end of line 32 on page 280 and insert "based on the increase in the Retail Price Index"
The noble Lord said: Amendment No. 228 is grouped with Amendments Nos. 229 and 230. On reflection, I shall not move Amendment No. 228 but move straightaway to Amendment No. 229. I have a nasty feeling that Amendment No. 228 would give discretion to trustees who had ceased to exist, a point that I should have appreciated when tabling the amendment.
[Amendment No. 228 not moved.]
Lord Higgins Lord Higgins moved Amendment No. 229:
Page 279, line 21, leave out from "increase" to end of line 32 on page 280 and insert "based on the increase in the Retail Price Index"
The noble Lord said: Amendment No. 229 raises an important point. The whole section is concerned with the annual increase in periodic compensation, which will of course be paid by the PPF once it has taken over an eligible scheme. The question is: what is the
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appropriate amount by which it should be increased? Amendment No. 229 suggests that it should be based on the increase in the retail prices index.
Amendment No. 230 concerns a more important point. The Bill suggests that the appropriate percentage to be used in uprating the periodic compensation should be limited to the lesser of the increase in the RPI or, alternatively, 2.5 per cent. This is a more severe limitation than has previously been applied to upratings by existing and running pension schemes.
I am not entirely clear about the relationship between this part of the Bill and the Government's proposals that existing schemes should not be obliged to uprate by as much as 5 per cent. This was presented, together with the Bill as a whole, as a sop to pension schemes. They said, "You only need to uprate it by 2.5 per cent rather than 5 per cent", and somehow the Government managed to spin this in a way which suggested that this was a great advantage. It was a great advantage, perhaps, to those trustees who wanted to be stingy, but it certainly was not an advantage to the pensioners who otherwise might have received a bigger increase. How we deal with the problem, or where, I am not clear. Perhaps the noble Baroness can tell us where that particular provision will apply.
At all events, it seems to us not unreasonable that it should be the lesser of either the RPI or 5 per cent. The idea that the present situation—where we have a very low rate of inflation—will go on indefinitely seems excessively optimistic. The Chancellor of the Exchequer has an enormous borrowing requirement and it seems unlikely that he will be able to fund it fully. If he does not fund it fully, the money supply goes up; if the money supply goes up, the inflationary pressures increase; and there are many other factors—I shall not bore the Committee by going into them—which lead me to believe that, whatever the independent Bank of England may do, we may well find an increase in inflation of over 2.5 per cent. To suggest for all time, "Don't worry, chaps, it's not going to be more than 2.5 per cent", seems to me an unbelievably wildly optimistic view. So even the modest 5 per cent I am suggesting in the amendment seems to be the least that we can do. I beg to move.
Baroness Turner of Camden: The noble Lord, Lord Higgins, has referred to an issue that we had put down for debate later on. We wanted to raise the whole issue of doing away with the 5 per cent indexation in favour of 2.5 per cent. It occurs in this part of the Bill but I hope that we shall have the debate on it when we come to the amendments that specifically deal with it. Certainly the union feels very strongly that the present situation of a cap of 5 per cent is quite adequate and quite sufficient. We certainly do not want 2.5 per cent for some of the reasons advanced by the noble Lord, Lord Higgins, today. I hope that we will have the debate later when we come to the amendments to that effect.
4 p.m.
Lord Oakeshott of Seagrove Bay: I also support the amendment. It may come as a surprise to some Members of the Committee to know that the retail prices index is running above 2.5 per cent at the moment; the last figure that I saw was 3 per cent. The retail prices index, on which index-linked gilts depend and on which the matter under discussion will depend, is the old one, not the adjusted one that the Chancellor has given to the Bank of England, which is running rather lower. If the provision were in effect already, the real value of pensions payable under it would be being cut already. That clearly confirms how tight a cap—too tight—2.5 per cent would be.
Baroness Hollis of Heigham: I do not want to sound belligerent, but it is a little difficult if we are simultaneously asked to raise either people's compensation to 100 per cent in the name of equity, or down to 90 per cent or whatever, while being concerned about the levy on employers, and asked for full RPI indexation. At the moment in the Bill, as Members of the Committee will know, we expect the levy to be £300 million a year, once the risk-related element is through after the initial year, and possibly to go up as appropriate if necessary. Bluntly, if we were not to have a cap on indexation at 2.5 per cent and were to apply indexation to all members—active members and existing pensioners, with service both before 1997 and after—the additional cost to the levy of £300 million a year would be a further £300 million a year. It would be doubled.
The Government have to decide the priorities in expenditure. It was precisely because indexation was given a higher priority order for pensioners above active members under the 1995 Act that so many people found themselves not having their pension promises made. The noble Lord pressed me on that previously, and I said that the big change would be that indexation had come below the order of priority in terms of winding up—between trying to ensure members' benefits at 100 per cent and 90 per cent in winding up.
Amendment No. 229 would result in indexation being determined by RPI without any cap and applying to the whole amount of compensation. Although inflation is currently low, it would be foolish to assume that it can always stay that way over time; we obviously expect it to do so on average. Actuaries and accountants have to make allowances for much higher levels of possible inflation. As the noble Lord, Lord Higgins, rightly identified, the difference between what actuaries have to provide for on a very conservative estimate and what they may actually be able to provide for in forecasts with 2.5 per cent—that is covered in Clause 266—is, for existing schemes, one of the big savings to DB schemes that will remain outside the trust of the PPF. That is why the PPF has applied the minimum indexation cap, as set out in Clause 266, which is on the annual increase in the rate of certain occupational pensions.
In addition, indexation has been applied to post-1997 accruals to reflect the statutory requirement to provide indexation from 6 April 1997, as laid out in the Pensions Act 1995. Amendment No. 230 would increase the indexation cap from 2.5 per cent to 5 per cent. Again, that runs contrary to what we permit schemes to do, to contain their predictable costs under Clause 266. That is so that we can reduce the burden on employers while ensuring pensioners a reasonable level of indexation.
I can quite see, in an ideal world with unlimited resources, that every member going into the PPF—whether an existing pensioner, or an active member becoming a deferred member—would have 100 per cent compensation, that all service before 1997 as well as after it would be indexed, and that indexation would reflect RPI.
I have had the figures done and I am advised that the cost would be at least an additional £300 million a year on top of the £300 million levy. I do not think that employers would or could accept that. I think that that would undermine the case for Clause 266, which has been strongly welcomed by industry and business. The 2.5 per cent cap allows them to build into their estimates calculations for providing for scheme funding which will not be subverted by the understandably cautious responses of accountants and actuaries to provide against all possible contingencies.
It is a matter of priorities. If one were to index in this way and still try to stay within the £300 million budget, I suspect—although I have not done the sums—that compensation levels would have to come down to perhaps 60 per cent. I really do not know the answer but shall have the figures worked out, just for my own satisfaction.
Those are the sorts of trade-offs we are making. We either substantially increase the levy, possibly doubling it, or reduce the compensation level to account for indexation. We are confident that with the strong economy under the present Government—this is not a party point; I have no reason to think that any future government would subvert that economy—it is reasonable to build the 2.5 per cent into the PPF for service after 1997, as laid down in the 1995 Act.
As for moving away from that, I have to say to Members opposite that there ain't no free money. Are they suggesting that we increase the employers' levy? Or will it come from the taxpayers—or from the Government, which I think is the position of the noble Lord, Lord Oakeshott? That is a perfectly honourable position, except that the average weekly income of workers in jobs without attached DB schemes is just under £300 a week, whereas that for workers in schemes with attached DB schemes, who will be enjoying this protection, is just under £500 a week. I do not think it reasonable to ask lower-paid people, who are often women and often self-employed, to pay through taxes additional moneys into the PPF in order to subsidise the security of the pensions of those who are much better off.
That is the package under which we are operating. Unless Members of the Committee can find a way of increasing the PPF by inflation and allowing outside schemes to do so without jeopardising DB schemes—and employers have told us that the DB/RPI problem is one of their biggest obstacles, along with longevity and coping with scheme funding for pensions outside the PPF—then I have to say that I do not think that this is a realistic amendment. I therefore hope that the noble Lord will withdraw it.
Lord Oakeshott of Seagrove Bay: I have a factual question for the noble Baroness on which I ask her to write to us. Breaking down the shopping list total of an extra £300 million, and specifically on this retail prices index point, it would be interesting to know what would be the additional cost of a 5 per cent as opposed to a 2.5 per cent cap. Perhaps that information can be broken out separately so that we can look at it. I think the noble Baroness will find that she needs to make different assumptions about the actual rate of RPI over the years in order to see how much it will cost. We will need a little table, please.
Baroness Hollis of Heigham: I am perfectly prepared to circulate to all Members of the Committee the financial calculations we have done on the basis of certain assumptions, such as whether we include pre-1997 or post-1997 figures, and whether we go for 2.5 per cent, 3 per cent or 5 per cent. I am very happy to produce those figures. However, I am sure that if full indexation were paid as opposed to being capped at 5 per cent, all pre-PPF compensation including that for pensioners would have to be reduced by about 15 per cent; that is, down to 75 per cent from 90 per cent. I thought that it might come down even lower than that. However, those are the sorts of figures we are talking about. That may be the trade-off.
I am perfectly happy to share the figures I have asked for and had worked out with Members of the Committee in order to take the debate forward. These are difficult choices.
Lord Lucas: This is just a note. If the cost of Amendment No. 229 is a doubling of the cost of the compensation scheme, the noble Baroness is implicitly saying that this whole exercise will give pensioners back only half of what they would have had. They will get back only half their losses as a result of this. If we were giving them back all their losses, it would cost double.
Baroness Hollis of Heigham: No. I do not know whether the noble Lord, Lord Lucas, was here earlier when I explained the difference between the pre-1997 and post-1997 situation. The PPF will not index-link compensation for pension benefits lost for service accrued before 1997 even to 2.5 per cent; it was not required to do so under the 1995 Act. In practice, the majority of DB schemes—about 90 per cent, I think—did offer that indexation. However, it was not a requirement and the PPF will not continue it. That is one of the big pressures in terms of inflation.
Pensioners will not receive half. For their post-1997 service, under our current proposals, pensioners including active members will receive indexation of 2.5 per cent. That will be in line with proposals that we propose to bring to noble Lords under Clause 266 for schemes that remain outside. Surely it would not be reasonable to have a more generous return within the PPF than members would receive outside it. That would blow a hole through the issues of moral hazard.
Lord Higgins: I found the noble Baroness's reply a little strange. She dealt both with the question of whether the increase should be in line with RPI and whether it should be capped at 2.5 per cent. However, she seemed to be saying, "We cannot let it increase by RPI because inflation may rise, and it does not matter if we cap it at 2.5 per cent because inflation will not rise".
Baroness Hollis of Heigham: Accountants and actuaries may think it will increase. We believe it will not. None the less, as I understand it, they have to make those provisions in their schemes.
Lord Higgins: Yes; but essentially the noble Baroness's argument is, "If we were to accept these amendments, then to keep the cost within the original parameters, we would need to make an adjustment to the initial compensation payment. It is a question of evaluation between those two". I think that that is too narrow a way of looking at it. We have the initial amount of compensation, and we are then asking, "What happens if inflation increases?". The noble Baroness is seeking to balance the two. But of course, if inflation increased, the economic situation would not be the same as if it did not.
If inflation increases, it is very likely that profits, for example, will increase in money terms, although not in real terms—all of this is done in nominal terms—and that fixed interest rates to try to deal with the problem will increase. Indeed, in nominal terms, company profits and share prices are likely to increase. If there is increased inflation, the resources available to the PPF will be greater than they otherwise would be.
The noble Baroness looks slightly blank. I had not thought of this argument until just now, and I suspect that she has not either. Perhaps even her officials have not.
Baroness Hollis of Heigham: May I ask whether the noble Lord's right honourable friend Oliver Letwin also would welcome this espousal of higher inflation?
Lord Higgins: No one is in favour of higher inflation, and no one is suggesting that anyone is. All I am pointing out is that if there is higher inflation, consequences will follow which would enable the PPF—deplorable as the situation may be—to protect those who are suffering from inflation. Its resources would increase. There is no comparison with the initial amount of compensation paid and assumed over time. The noble Lord, Lord Lea, and I have been debating this issue for about the past 40 years.
Lord Lea of Crondall: This is very interesting. However, there is a contradiction in everything that

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has been said by Opposition Members as well. In so far as people are demanding specific answers to hypothetical RPI numbers, the same applies on both sides of the equation, so people cannot say that the Government ought to come clean and tell us the cost of a higher RPI on the PPF. We do not know what number Members of the Committee are talking about, and there are two sides to the balance. So there is a contradiction in the nature of the noble Lord's demand.
Lord Higgins: If I understand the noble Lord correctly, he is supporting what I am saying. One cannot deal with this particular argument without looking at what is happening to the economy as a whole. So, at the moment, I am not persuaded by what the noble Baroness says. However, as we need to make progress, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 230 not moved.]
4.15 p.m.
The Deputy Chairman of Committees (Baroness Pitkeathley): I remind the Committee that if Amendment No. 230A is agreed to, I cannot call Amendment No. 230AA because of pre-emption.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 230A:
Page 280, leave out lines 19 to 27 and insert—
""post-1997 service" means—

(a) pensionable service which is within paragraph 33(4)(a) and occurs on or after 6th April 1997, or

(b) pensionable service which is within paragraph 33(4)(b) and meets such requirements as may be prescribed;

"pre-1997 service" means—

(a) pensionable service which is within paragraph 33(4)(a) and occurred before 6th April 1997, or

(b) pensionable service which is within paragraph 33(4)(b) and meets such requirements as may be prescribed;"

On Question, amendment agreed to.
[Amendment No. 230AA not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 230B:
Page 280, line 30, at end insert—
"(6A) But in this paragraph, in relation to any relevant pension credit amount, "post-1997 service" and "pre-1997 service" have such meanings as may be prescribed.
(6B) In sub-paragraph (6A), "relevant pension credit amount" means an amount mentioned in sub-paragraph (3)(a) of—

(a) paragraph 3,

(b) paragraph 5, or

(c) paragraph 15 as it applies by virtue of paragraph 20,

which is attributable (directly or indirectly) to a pension credit."
On Question, amendment agreed to.
Lord Oakeshott of Seagrove Bay Lord Oakeshott of Seagrove Bay moved Amendment No. 231:
Page 281, line 12, leave out paragraph 29.
The noble Lord said: This amendment is rather different. It would delete paragraph 29, which is a set of procedures that allows the Secretary of State to vary or, so far as I am concerned, cut the percentage of the promised benefits paid as compensation. This is where we return to our objective, which is to strengthen the security of the PPF promise. This whole thing has been set up and there has been talk of guarantees. There was a fairly extraordinary exchange in the Commons yesterday, where the Minister, Malcolm Wicks, was talking about having an in extremis provision. In an extraordinary economic or business situation in which several FT-SE 100 companies go bust, there might not be the funds after raising the levy. In that case, the Secretary of State or the board with the Secretary of State could decide to cut benefits. He goes on to say:
"We have costed the provision carefully and I am certain that, allowing for even a large company to go bust, we will fulfil our commitments. That is why I, as a lay person, use the term 'guarantee'".—[Official Report, Commons, 8/9/04; col. 744.]
To most people that is clear as mud. Our view is that, although this was set up by the Government as a "guarantee", none the less the clear understanding of most people is that these are the benefits. In the event of an extraordinary economic situation, it is not right that the benefit should be cut—that there should be an insurance policy that paid out unless a disaster occurred. In that case, as we have discussed, the Government should stand as lender of last resort for a period.
In old fashioned racecourse terms, we are saying that the bookmaker should not be allowed to welsh on his commitments. We do not wish to see the Secretary of State being able to cut the percentage of benefits. That is fairly straightforward. I beg to move.
Baroness Turner of Camden: I have amendments in this group. The noble Lord, Lord Oakeshott, has explained that he wishes to remove paragraph 29. We wish to do something rather different in Amendments Nos. 233 and 234.
Schedule 7 concerns the power to reduce PPF compensation payments. The provision is a safety valve under which the Secretary of State can sanction that the amount of PPF compensation being paid can be reduced below the 90 per cent or 100 per cent levels. Our amendment would limit this power such that no entitlement can be reduced below the level at which the PPF first accepted liability for it. It is not acceptable for the PPF to get into a situation where it has to notify people in receipt of a pension that their benefits are going to be reduced.
The amendment would still leave members exposed to having increases in their pension stopped, as provided for in paragraph 28 of Schedule 7, but cutting benefits is surely going too far. Nor is it acceptable for a person to be admitted to the PPF on the basis that a level of benefit will be provided—a level of benefit that might be little or no more than the benefit that might

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otherwise be secured for them by annuity purchase—only to have that benefit subsequently reduced because of a deterioration in PPF finances.
Lord Higgins: I was slightly surprised by what happened just now. I had not realised that, because the government amendment was agreed to formally, my subsequent amendment was pre-empted. Therefore, we wish to return to the matter on Report, because many people are very concerned that the increase should take place only from 1997. We will return to the matter, but I mention it for the benefit of those outside who may be studying this debate.
My Amendment No. 232 is in this group and would leave out paragraph 29, which to some extent makes the same point as that made by the noble Baroness, Lady Turner—namely, whether the Secretary of State on the recommendation of the board should be able to substitute a different percentage which could result in benefits being reduced. I would have thought that the whole point of this Bill is that people who have suffered because their pension schemes have collapsed should have a degree of certainty about what is happening. Giving the board the power to recommend a reduction to the Secretary of State, and for him to agree it, seems to undermine the whole point. Unless the change is to be such that it is material in terms of the operation of the PPF and therefore not a matter of trivial importance, it seems to be an undesirable provision.
Baroness Hollis of Heigham: I understand and sympathise with the concerns raised throughout the House on these issues. I have tried to be brief on previous amendments, so I hope that the Committee will allow me a rather fuller answer to this one because this is a major issue. I may be able to outline where the levels of insurance lie behind the compensation levels. I emphasise that they are compensation levels not pension benefits.
Amendment No. 231, moved by the noble Lord, Lord Oakeshott, would protect all those who will be entitled to PPF compensation from any reduction in their compensation percentages by preventing any change to the percentages paid as PPF compensation. Amendments Nos. 233 and 234, tabled by my noble friend Lady Turner, would ensure that those in receipt of compensation were not subject to a sudden drop in compensation levels by limiting changes to either a limited period only or payments to which a member first becomes entitled after the date specified in the order. I reassure Committee Members that paragraph 29 will be used only in the most extraordinary circumstances. I find it difficult to envisage such circumstances, but maybe Committee Members can.
We have taken a three-pronged approach to deal with financial difficulties that the PPF may face. In good times, the pension protection levies are designed to smooth the peaks and troughs of the economic cycle, so a bad run of years for schemes should not have a detrimental effect on the funding position of the PPF. During bad times, even if a huge number of large, badly funded schemes enter the PPF board all at once,
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some of the members—possibly because there are usually twice as many active and deferred members as pensioners—will not yet have reached retirement age. The PPF is not buying them annuities, but will be paying out compensation like a pension, and that will be drawn down only as and when members reach the appropriate retirement age. Compensation will increase slowly over a number of years.
Lord Higgins: I look slightly puzzled because there are later provisions in the Bill to enable the PPF to provide annuities.
Baroness Hollis of Heigham: Yes, that tends primarily to be in DC schemes in which one is trying to float off—possibly in a hybrid scheme—the DC element. However, the point that I am trying to make is that the catastrophic scenario assumes that a big scheme comes in and all payments have to be made immediately through a full buyout. Given compensation and the age profile of most members, that would not be the case.
After a bad time has hit, the board has a number of options. It can increase the pension protection levy up to 25 per cent once it is out of the transitional period; it can borrow if, for example, it wishes to avoid selling off assets at a time when they might not achieve their full value; and it can—although we would regret it—reduce revaluation and indexation rates to zero.
Finally, only when revaluation and indexation rates have been reduced to zero and consultation has taken place, the board can ask the Secretary of State, by order under the affirmative resolution procedure so that it would be a matter for the Houses of Parliament to decide and determine, to reduce the 100 per cent/90 per cent levels of compensation. We think that this three-pronged approach should ensure that the power in paragraph 29 is used only in extraordinary circumstances—it would have to be apocalyptic for that situation to occur. Although we do not expect this power to be used, we consider it essential to ensure the long-term viability of the PPF.
It is important to recognise that when large employers become insolvent, the PPF will take control of their assets. This means that in the short to medium term the PPF will not have any cash problems and will, in fact, be cash rich, because the assets will come in but payments out will be made only as members reach normal retirement age. The PPF will obviously want to take into account the longer-term funding situation needs, so that it can control the differential between assets and liabilities. As I have already explained, the board has a number of options available—including increasing the levies, reducing revaluation and reducing indexation and borrowing—which I have already explained.
If the board has to make such a recommendation—for the Secretary of State to come to Parliament to seek to change those percentages—it is likely to be in dire straits. Being unable to reduce future liabilities will not be sufficient to help it recover. The emergency powers within paragraph 29 draw on the US experience, where some would like to limit the guarantee as they think

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that the PBGC may be getting into difficulties. Even in extraordinary circumstances, the board can limit the impact of any changes by recommending that the change to compensation percentage levels applies for a limited period and may apply only to compensation which first becomes payable after the date in the order.
I hope that I have described both the array of insurances in the system for compensation as well as the fact that, were such an apocalyptic event to happen, any change would have to have full parliamentary consent. Even then, it need apply only for a limited time and to new entries into the scheme.
Amendment No. 232, spoken to by the noble Lord, Lord Higgins, would remove what is considered to be superfluous wording from paragraph 29 of Schedule 7. I believe that reference to the "original percentage" within paragraph 29 is necessary to ensure that paragraph 29(4) clarifies the percentages at which PPF compensation is originally set. Paragraph 29(4) is required so that revaluation and indexation rates do not need to be reduced to zero to increase the "original percentages". The noble Lord's amendment would have an extremely perverse and malign effect.
The original percentages are the 100 per cent and 90 per cent compensation percentage rates that the PPF will use from the outset. The PPF will pay the 100 per cent level of compensation to those members who, before the assessment date, are over the scheme's normal pension age or are in receipt of a pension early on the grounds of ill health, and those who are already in receipt of a survivor's benefit.
We have discussed the rates. I find it hard to envisage such an apocalyptic scenario, given the powers of the PPF to increase its income and the fact that assets would come in immediately but liabilities would need to be paid out only over time. Were such an apocalyptic situation to arise, Parliament would have to give its full consent. Even then, such changes need be only for a limited period. I hope that with those assurances the noble Lord will feel able to withdraw his amendment.
Baroness Barker: We on these Benches are struggling with these definitions—apocalyptic, extraordinary and extreme. Clearly they have a significance, but it is not defined. Can the Minister confirm that she said that were the PPF board to make a recommendation and were the Secretary of State to exercise his power, that would have to be subject to an affirmative order? Therefore, in subsection (6), does "an order", which is "subject to sub-paragraph (3)", mean an affirmative procedure?
Baroness Hollis of Heigham: Forgive me, I know that the acoustics are not good in this room. I think I
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said twice that the Secretary of State would have to come before the Houses of Parliament through the affirmative procedure.
Lord Higgins: The Minister has not provided us with a precise event that is likely to trigger this clause.
Baroness Hollis of Heigham: I could not envisage one.
Lord Higgins: That is fine. If one cannot be envisaged, there is a strong case for not legislating for it as we could then have a clause which says, "Whatever happens, we can do what we like". That is not a satisfactory situation. As I understand it, the reality is that the PPF is being set up to help people in circumstances where they will not receive the benefits that they expect and a lower rate of compensation will be paid instead. Surely the essence of what is being done is that there is a degree of certainty about the matter.
In this schedule, the Government seek to say that if the board so recommends, benefits will be cut after all, and so the people who are being saved will go through the whole thing again. That does not seem to be a very satisfactory arrangement but the noble Lord, Lord Oakeshott, may have views on that. People want certainty, particularly, as the noble Baroness said earlier, if they have already retired. There is absolutely nothing they can do if, for some reason of state, the Government suddenly decide that they should cut these people's benefits.
Lord Oakeshott of Seagrove Bay: That is a good point. We are probably the only people taking the view that the payment should stay at 100 per cent and that it should not be cut because of an apocalypse.
First, I say to the noble Baroness, Lady Turner, that we are basically singing from the same hymn sheet in saying exactly how amendments get put together. I think we are all basically looking at the same thing and so I am happy to support the principle of what the noble Baroness says.
I take this opportunity to say how much I appreciate seeing Mr Churchill with the new chairman of the PPF here today. I have been critical of him in the past and I am really pleased to see him here. Indeed, he was here last week listening to our deliberations. I welcome him to this Committee. He has a very successful record on the marketing side of the insurance industry. I hope that he would be the first to say to the noble Baroness that she would not get very far with the sales pitch that we are hearing this afternoon, which is, "Join our insurance scheme. It will pay out unless there is a disaster, apocalypse, catastrophe or whatever". That is a pitch one can make only when one has clients who are compelled to invest with one.
Baroness Hollis of Heigham: I am not selling an insurance scheme; I am describing a compensation scheme.
Lord Oakeshott of Seagrove Bay: I think, as I believe the industry does, that to most people this looks like a

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scheme where pension funds are paying in and are effectively being insured against the risk of disaster. That is what most people think it is and it is what I believe it is in practice. The harder it is to envisage such an apocalypse happening—as I mentioned, Mr Wicks was talking about it yesterday—the more convinced we are that this let-out clause should not be allowed. It is simply that in that situation people need their pensions to be protected.
Baroness Hollis of Heigham: I would take the noble Lord's point as a very serious point if this power was exercised autonomously by the board. He would then have a much heavier-weight point than has so far been established. There has to be a recommendation to the Secretary of State. He has to agree that it is the only appropriate way forward. Then both Houses of Parliament have to agree. Does he not want Parliament to have the final decision? And does he not trust Parliament to make that final decision in the most extraordinary circumstances, as envisaged?
Lord Oakeshott of Seagrove Bay: Not by affirmative order, no, it would be much better to set things up on the basis that it "does what it says on the tin", to quote one of Mr Churchill's very good remarks. We are moving amendments because we believe that the Government should stand behind the scheme in the same way as they do with pool re-insurance. We do not believe that the percentage should be variable. The scheme should do what it says and do what most people in the country believe it is there to provide. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 232 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 232A and 232B:
Page 281, line 18, after "19(3)" insert ", 19A(3)"
Page 281, line 28, leave out "or 19(3)" and insert ", 19(3) or 19A(3)"
On Question, amendments agreed to.
[Amendments Nos. 233 and 234 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 234A to 234U:
Page 282, line 7, leave out from beginning to first "is" in line 8 and insert "the effect of disregarding rules within paragraphs (a) and (b) of paragraph 32(3)"
Page 282, line 26, at end insert—
"Short periods of service which terminate on commencement of assessment period
30A (1) This paragraph applies to a member of the scheme if—

(a) his pensionable service terminates on the commencement of the assessment period, and

(b) as a result, he has rights, in relation to the scheme, under Chapter 5 of Part 4 of the Pension Schemes Act 1993 (c. 48) (early leavers: cash transfer sums and contribution refunds).

(2) Where this paragraph applies, for the purposes of this Schedule the member is to be treated as if, immediately before the assessment date, he—
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(a) had relevant accrued rights to benefits under the scheme (within the meaning of section 101AA(4) of that Act), and

(b) did not have any other rights to benefits (other than benefits attributable (directly or indirectly) to a pension credit) under the scheme."

Page 283, leave out line 4.
Page 283, line 8, leave out sub-paragraph (2).
Page 283, line 25, leave out from "disregarding" to end of line 26 and insert "—

(a) in a case where sub-paragraph (4) applies, the recent rule changes, and

(b) in any case, any scheme rule which comes into operation on, or operates by reference, to the winding up of the scheme or any associated event."

Page 283, leave out line 40.
Page 283, line 46, leave out "changes attributable to" and insert "any scheme rules or changes attributable to paragraph 3 of Schedule 5 to the Social Security Act 1989,"
Page 283, line 47, after "1995" insert ", section 31(4) of the Welfare Reform and Pensions Act 1999"
Page 284, line 1, leave out paragraph (b) and insert—

"(b) any enactment, or any scheme rules or changes which are required or reasonably necessary to comply with an enactment,

(ba) any scheme rules or changes that come into operation on, or operate by reference to, the winding up of the scheme or any associated event, and"

Page 284, line 3, at beginning insert "any scheme rules or"
Page 284, line 5, after "scheme" insert "rules"
Page 284, line 12, at end insert "or"
Page 284, line 16, leave out from beginning to "or" in line 19.
Page 284, line 44, leave out sub-paragraphs (4) to (6) and insert—
(4) Subject to sub-paragraph (5), "pensionable service" means—

(a) actual service in any description or category of employment to which the scheme applies which qualifies the member for benefits under the scheme, and

(b) any notional service allowed in respect of the member under the admissible rules which qualifies the member for such benefits.

(5) The service within sub-paragraph (4)(b) does not include—

(a) service attributable (directly or indirectly) to a pension credit, or

(b) service of a prescribed description."

Page 285, line 12, leave out "under the scheme"
Page 285, line 15, leave out from "service" to "is" in line 16.
Page 285, leave out lines 25 and 26.
Page 285, leave out lines 39 to 48.
Page 286, line 5, leave out "under the scheme"
On Question, amendments agreed to.
On Question, Whether Schedule 7 shall be agreed to?
Lord Higgins: We have already debated most of this matter in considerable detail. However, the debate on Schedule 7 enables me to raise the point that I was prevented from raising on an earlier amendment, which may give the Minister a clue about the answer. As I understand it, the PPF pensions payment will be indexed in line with the retail price index capped at

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2.5 per cent, but only in respect to rights built up since April 1987, which is when the statutory obligation to index occupational pensions was introduced. Deferred PPF pension rights will be revalued in line with the RPI capped at 5 per cent. That will be an unsatisfactory position for many pensioners who will lose a significant proportion of revenue based on that calculation.
The Occupational Pensioners' Alliance has made strong representations on this point. The alliance also complains that the schedule has been substantially redrafted since the Committee stage in the Commons and it now finds the provisions extremely opaque—it may not be alone in that view as far as many of the provisions of the Bill are concerned. Will the Minister confirm that pensioners retiring prior to 6 April 1997 will still be eligible for indexed payments under the PPF?
Baroness Hollis of Heigham: No, my Lords. This is part of the initial discussion when I said that there was not a cliff edge between the 100 per cent and the 90 per cent, as first appeared. This is compensation for a scheme without which, if the PPF did not exist, pensioners might very well receive not 100 per cent—it may not be index linked or RPI linked—not 80 per cent, but may receive only 50 per cent or 40 per cent.
If noble Lords agree and the Bill goes through Parliament, those pensioners will have the security of knowing that through the Pension Protection Fund, which does not exist at the moment—we hope and expect that it will come into existence from April 2005—they will have compensation for the loss of a pension that they otherwise would not receive or of which they may receive only a fragment.
It is certainly true that in order to make the books balance, and to keep the levy at £300 million and at an acceptable figure to the industry, we cannot reinstate for all members of all schemes all the benefits that they currently enjoy as though the insolvency of the company and the under-funding of the pension scheme had never happened. That is not possible. Therefore, we are offering compensation in which we are protecting pensioners at 100 per cent of their pension at the point at which the transfer takes place; service accrued after 1997 will continue to be RPI-ed at 2.5 per cent; but as the Pensions Act of 1995 laid down, there will be no requirement, even on existing schemes that stay outside the PPF—it is not going to happen under the PPF—that there will be compensation which index links service before 1997.
I regret that, but the alternative is either to produce, as I was trying to suggest earlier—the Committee may be more willing to agree with me when they see all the figures laid out—very substantial increases in employers' levy—up to double—or to bring in money from the taxpayers. That would mean that people without any pension scheme at all would be asked to cross-subsidise the better off who have them. On average people with DB schemes have salaries and incomes that are 50 per cent higher. The alternative is
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to do what we are doing, or perhaps to cut the compensation levels by about 15 per cent—I now have the more accurate figures. Those are hard choices.
We believe that what we have is in line with the expectations laid down in 1995. Therefore, the noble Lord is quite correct, that pensioners with a substantial part of their service accrued before 1997, will not see that index linked when they come to receive compensation should their scheme go into the PPF. I remind the Committee that if your Lordships do not agree to the PPF, the alternative is that they may receive only 20 per cent or 30 per cent or 40 per cent from their schemes.
A pension scheme comes into the PPF only precisely because it was unable to meet the level of benefits that pensioners had hoped to receive under their old scheme. We are trying to get the balance right. Everyone talks about words such as "balance", but we have tried to get right the balance between the employers' responsibilities and levies and contributions and what pensioners can reasonably expect. I believe we have the best we can possibly do.
Lord Higgins: We can certainly agree that, as we said earlier, the whole thing is a matter of balance between the costs and the benefits. The noble Baroness has reverted to the £300 million figure. I shall suggest under later amendments that I have considerable doubt about whether that is an adequate estimate. But, as I recall, that figure was related to the overall issue of indexation. What is the cost in this case?
4.45 p.m.
Baroness Hollis of Heigham: If indexation was applied to all service to the 2.5 per cent figure, that would add £200 million to the £300 million levy.
Lord Higgins: But I do not think that that is what the schedule states. Am I wrong in thinking that? I am trying to find out the cost of protecting the pre-1997 index arrangement.
Baroness Hollis of Heigham: It depends whether or not a cap to inflation is being built in—that is, indexation at 2.5 per cent. If you built in a cap at 2.5 per cent but applied that 2.5 per cent to pre-1997 service, that would be £200 million in addition to the £300 million that the levy will have to raise. If, however, the 2.5 per cent were removed, it would be £300 million.
Baroness Turner of Camden: In effect, is my noble friend saying that, in order to pay for this scheme, all members of all occupational schemes must give up any right that they may have under their schemes for indexation above the 2.5 per cent level? Is that the price that all pensioners pay in order to have the scheme? Is that what my noble friend is saying?
Baroness Hollis of Heigham: Yes. No pensioner whose scheme goes into the PPF—whether an active member or a deferred member—will, once they become a pensioner, enjoy more than a 2.5 per cent indexation on the years of service accruing after 1997.

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However, active members who now become deferred members because their companies are insolvent will none the less have a revaluation of their pension during their years with another company or employer at 5 per cent.
Schedule 7, as amended, agreed to.
Clause 154 [Adjustments to be made where the Board assumes responsibility for a scheme]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 234V to 234AE:
Page 108, line 13, after "scheme" insert "rules"
Page 108, line 14, leave out "assessment period" and insert "period beginning with the assessment date and ending with the receipt by the trustees or managers of the transfer notice"
Page 108, line 15, leave out "transfer notice is given," and insert "trustees or managers receive the transfer notice,"
Page 108, line 18, at end insert—
"( ) Regulations may provide that, in prescribed circumstances, where—

(a) a member of the scheme died before the commencement of the assessment period, and

(b) during the period mentioned in subsection (2)(a), a person became entitled under the scheme rules to a benefit of a prescribed description in respect of the member,

the benefit, or any part of it, is, for the purposes of subsection (2), to be treated as having become payable before the assessment date."
Page 108, line 20, leave out "assessment period" and insert "period mentioned in subsection (2)(a)"
Page 108, line 39, after "include" insert "—
(a) "
Page 108, line 40, at end insert ", or
(b) any other amount of a prescribed description."
Page 108, line 41, after "Board" insert—
"(a) to recover any amount from a person in such circumstances as may be prescribed, or
(b) "
Page 108, line 42, at end insert—
"( ) In this section "assessment date" is to be construed in accordance with Schedule 7."
On Question, amendments agreed to.
Clause 154, as amended, agreed to.
Clause 155 agreed to.
Clause 156 [Guaranteed minimum pensions]:
On Question, Whether Clause 156 shall stand part of the Bill?
Lord Higgins: When I first looked at this clause, I thought that it concerned the main debate on guaranteed minimum pensions as that is the heading of the clause. However, on reflection, I believe I am right in thinking that that is not so; that issue turns up later on the subject of the substitution of a guaranteed minimum pension for scheme-specific funding.
If I understand it correctly, the later provisions of the Bill will, in any case, remove the GMP. There is a succession of head movements behind the Minister, some of which are saying "yes" and some of which are saying "no". The noble Baroness says that it is all a question of balance and so I hesitated just for a moment.
Perhaps I may rephrase my question. Am I right in thinking that the guaranteed minimum pension arrangements do not terminate completely with the passage of this Bill and that scheme-specific arrangements are not substituted for it? I am not clear why provisions have to be made here for a guaranteed minimum pension so far as concerns the board when I thought that the whole concept was going to disappear.
Baroness Hollis of Heigham: The noble Lord is right to say that GMPs have disappeared from legislation. None the less, in the past, active members or pensioners will have had some rights under GMP. When the PPF takes over a contracted-out occupational pension scheme, it will not take on specific responsibility for paying the GMP; members will simply receive the PPF level of compensation. However, even though the GMP will not be received, the members will still have paid lower NI contributions and we need to be able to adjust their SERPS entitlement accordingly. If we did not do so, the individuals would effectively be receiving SERPS that they had not paid for. That is what this clause goes on to do. I could go on in greater detail; it is quite technical.
Subsections (1) and (2) require the board to notify the Inland Revenue as soon as reasonably practicable when it has assumed responsibility for an eligible scheme because the Inland Revenue needs to know about the GMP being discharged in order to apply the contracted-out deduction. Subsection (3) is needed in order to extend the current procedures, as set out in Section 47 of the Pensions Scheme Act 1993, for taking account of the effect of contracting out of SERPS to members of a scheme taken into the PPF. It is that subsection which allows an appropriate amount to be deducted from a scheme member's SERPS entitlement. Therefore, I commend that Clause 156 should stand part of the Bill.
Clause 156 agreed to.
Clause 157 [Duty to pay scheme benefits unpaid at assessment date]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 234AF to 234AJ:
Page 109, line 27, leave out from beginning to "must" in line 28 and insert—
"( ) This section applies where the Board assumes responsibility for a scheme in accordance with this Chapter.
( ) Subject to subsection (2A), the Board"
Page 109, line 28, leave out from "benefits" to "under" in line 29 and insert "which a person had become entitled to payment of"
Page 109, line 33, at end insert—
"(2A) Subsection (1) does not apply in relation to the amount of—

(a) any transfer payment, or

(b) any payment in respect of a refund of contributions."

Page 109, line 33, at end insert—
"(2B) Regulations may provide that, in prescribed circumstances, where—

(a) a member of the scheme died before the commencement of the assessment period, and

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(b) during the period beginning with the assessment date and ending with the receipt by the trustees or managers of the transfer notice, a person became entitled under the scheme rules to a benefit of a prescribed description in respect of the member,

that person's entitlement to the benefit, or to any part of it, is, for the purposes of subsection (1), to be treated as having arisen before the assessment date."
On Question, amendments agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 234AJA:
Page 109, line 33, at end insert—
"(2C) Regulations may make provision requiring the Board, in such circumstances as may be prescribed, to take such steps (including making payments) as may be prescribed in respect of rights of prescribed descriptions to which members of the scheme were entitled immediately before the commencement of the assessment period.
(2D) For the purposes of regulations made under subsection (2C)—

(a) this Chapter (other than this subsection), and

(b) the scheme rules (including any relevant legislative provision within the meaning of section 303(1B)),

are to have effect subject to such modifications as may be prescribed."
The noble Baroness said: I want to return to an issue that we discussed in broad terms earlier in Committee. Amendment No. 234AJA provides regulations under new subsection (2C) of Clause 157 to specify which liabilities of the trustees the board is to discharge—that is, the liabilities that would have existed but for the discharge under Clause 152. The regulations will include provision for the trustees to discharge their liability in relation to a refund of contributions or transfer payment sum in respect of a member where the right arose before commencement of the assessment period.
As I said, we discussed this matter earlier and I hope that Members of the Committee will agree that the amendment is essential in order to ensure that the members referred to by the amendment do not lose out because the board of the PPF has assumed responsibility for their scheme. I therefore ask your Lordships to accept the amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 234K had been withdrawn from the Marshalled List.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 234AL:
Page 109, line 34, leave out "and 'scheme rules' are" and insert "is"
On Question, amendment agreed to.
Clause 157, as amended, agreed to.
Clause 158 [Modification of Chapter where liabilities discharged during assessment period]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 234AM to 234AR:
Page 109, line 39, after "where" insert"—
"(a) "
Page 109, line 42, leave out "(a)" and insert "(i)"
Page 109, line 43, leave out "(b)" and insert "(ii)"
Page 109, line 43, at end insert "or
(b) in prescribed circumstances, any such liability of a prescribed description is discharged on the assessment date but before the commencement of the assessment period."
Page 109, line 43, at end insert—
"( ) In this section "assessment date" is to be construed in accordance with Schedule 7."
On Question, amendments agreed to.
Clause 158, as amended, agreed to.
Clause 159 [Administration of compensation]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 234ARA:
Page 110, line 8, leave out "payable under Schedule 7"
The noble Baroness said: In moving Amendment No. 234ARA, I shall speak also to Amendments Nos. 234AS, 234ASA and 234AT. These amendments are technical changes to Clause 159, which relates to the administration of compensation, and Clause 160 concerning the discharge of liabilities. I shall try to he brief.
Amendment No. 234AT inserts a power into subsection (2) that will allow regulations to specify the circumstances in which the board may discharge its liabilities by the payment of a cash lump sum. Again, this comes back to the issue that we discussed earlier. We think that it is necessary for an individual to gain entitlement to exceedingly small payments of compensation. For example, someone may have a salary of £10,000 and have only very limited vested rights. He may be entitled to only a couple of pounds a month, and it would be sensible to buy that out rather than to seek to pay that.
We shall set out in regulations exactly when such payments will be permitted. That is because we need to consider further the maximum amounts that we would want to discharge in this manner—so that we have a realistic figure which can be bought out in a lump sum rather than continue periodic payments of compensation—but also because the level of payments that are deemed to be trivial may need to be changed over time in order to take account of inflation. The power also allows the way that the cash sum will be calculated to be prescribed in regulations—a level of detail that we do not consider appropriate for the face of the Bill.
A power already exists in subsection (2)(c) that would allow the board to discharge liabilities of this trivial nature by the payment of a lump sum. We considered that that power was drafted in such a way as to apply only to periodic payments of compensation, which might exclude some types of liability that we may want to discharge in this way—for example, the refund of contributions as opposed to a payment of compensation for potentially lost pension.
To make it absolutely clear that we want to be able to discharge any liability of a modest sum through a single cash payment, we thought it better to insert the new power into Clause 160. Amendment No. 234AS is consequential to that, removing the existing power

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from Clause 159. Amendments Nos. 234ARA and 234ASA are minor drafting and technical amendments to follow that through. I beg to move.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 234AS to 234ASA:
Page 110, line 11, leave out paragraph (c).
Page 110, line 27, at end insert "or under section 133(2)"
On Question, amendments agreed to.
Clause 159, as amended, agreed to.
Clause 160 [Discharge of liabilities in respect of compensation]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 234AT:
Page 110, line 37, at end insert—
"() in prescribed circumstances, by the payment of a cash sum calculated in the prescribed manner."
On Question, amendment agreed to.
On Question, Whether Clause 160, as amended, shall stand part of the Bill?
Lord Higgins: This clause provides for the discharge of liabilities by taking out policies of insurance and annuity contracts and so on. On an earlier amendment, we discussed the availability of such providers of insurance and came to the conclusion that there were only two and probably none which could be found abroad. Therefore, the board will be buying in a very limited market. Can the noble Baroness give us an idea of the extent to which the board is expected to operate and on what scale? With the kind of sums that we have been bandying around, it seems that it may be very difficult for it to obtain effective insurance or annuities for a particular class of people.
The other point is that the cash-flow situation of the board is significantly affected. It would be able to take up such policies in cases where it was rather flush with money and thus preserve the position for future periods. Have we any idea what criteria the board might use in making that kind of decision?
Baroness Hollis of Heigham: As I said in an earlier discussion, we expect the PPF to pay compensation by way of periodic payments; in other words, in a pensionable form—that is, in monthly payments or whatever is deemed appropriate. To the best of my understanding, this is not meant in any way to refer back to the big debate about closed schemes; it is meant to ensure that the board has flexibility. Of course, big closed schemes would remain outside the PPF.
This measure allows the board to discharge any of its liabilities to pay compensation. For the most part, we expect it to make periodic payments. It may seek to discharge the liabilities by a lump sum, as we said just now, where it is dealing with trivial amounts or the refund of contributions. But, in a certain situation, it may want to take out an insurance policy or a number of such policies; in certain situations, it may want to enter into an annuity contract or a number of such
GC 234
contracts; or it may want to transfer the benefit of such policies or contracts and, as I said, also pay a cash lump sum.
The provision simply provides the board with a variety of ways in which to add to its main response to the situation, which will be to pay compensation of benefits in a periodic manner. But, so far as I am aware, this does not have any connection to the earlier debate that we had in that, in that sense, closed schemes remain outside the PPF, although obviously still under the scrutiny of the PPF. I hope that that explains the situation.
5 p.m.
Lord Oakeshott of Seagrove Bay: I should have thought that the clause was sensible. It is really rather permissive. My problem with the previous matter was that there was a question of people being forced to buy things on uncompetitive terms. We are talking about simply one option for the board to discharge its liabilities. It is pretty unlikely, but it could act in such a way if we suddenly find a great rush of insurance companies offering things on very attractive terms. Like the Minister, however, I would expect the board to meet its own liabilities.
Lord Higgins: I am grateful for the explanation.
Clause 160, as amended, agreed to.
Clause 161 [Discharge of liabilities in respect of money purchase benefits]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 234AU:
Page 111, leave out line 14.
On Question, amendment agreed to.
On Question, Whether Clause 161, as amended, shall stand part of the Bill?
Lord Higgins: The clause is fairly straightforward, but I want to raise a point that may arise later in the Bill; it would be helpful to have a provisional view on it. It is on eligible schemes that are taken over by the board and involve money purchase benefits. Will the scale or number of people drawing those benefits be taken into account when deciding the size of the levy? Will they remain part of the scheme, or will they be regarded as rather separate?
Baroness Hollis of Heigham: If I may be completely frank, some of our thinking on the area has not been concluded yet. We are primarily dealing with a newly emerging area of hybrid schemes, and there are a lot of different ones. For example, some DB schemes may have accrual rates of one-hundredth, and then have a DC contribution of 2 per cent a year, and so on. The board will have to disentangle that. The Pension Protection Fund protects only the DC element against fraud, not against the delivery of any pension compensation and the failure of any pension promise. We seek to allow the PPF the power to float off the DC element of a hybrid scheme, essentially, although we expect the regulations to enable the board to purchase annuity contracts with money purchase benefits—we

GC 235
talked about that earlier—or to allow the member to transfer the money purchase benefits to a new scheme or a separate personal pension.
I suspect that we will increasingly see hybrid schemes. The PPF obviously does not seek to compensate for a money purchase scheme where the risk is that of what is happening to the stock market. Therefore, it needs a way of disentangling the DC element from the DB. The clause enables the board to do so. It is a necessary provision. We will have more details on how it will be done as and when; we are still working out the regulations in consultation with the industry. I have looked at the structure of half a dozen hybrid schemes, and every one is different at the moment; people think up their own best practice for their own schemes. Such schemes will grow, so we need the power. I hope that everyone agrees that it is a benevolent power.
Lord Higgins: I am grateful for that explanation. I am sure that the noble Baroness is right that the effect of hybrid schemes is difficult and that they are likely to become a more frequent arrangement. Therefore, we need to take that into account. As always, she is extremely helpful in providing us with notes and so on. If there are any developments before Report that she thinks it would help us to be aware of, perhaps she would be kind enough to let us know.
Clause 161, as amended, agreed to.
Clause 162 [Equal treatment]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 234AUA:
Page 111, line 28, leave out from "functions" to end of line 29 and insert "so far as it relates (directly or indirectly) to that pensionable service—"
The noble Baroness said: I do not know about algebra, but I am finding the alphabet quite difficult with the labelling of the amendments sometimes. In moving the amendment, I shall speak also to Amendments Nos. 234AUB, 234AW, 234AX, 274ZA and 277A.
This is a small number of government amendments which have been produced in relation to Clause 162 (Equal treatment), Clause 192 (Other permitted disclosures) and Clause 199 (Investigation by the Board of complaints of maladministration).
Clause 162 ensures that the provisions relating to the payment of compensation or other payments by the board are modified if they would otherwise discriminate between men and women insofar as the provision relates to pensionable service on or after 17 May 1990.
Current legislation outlaws any discrimination by pension schemes between male and female members on the ground of gender. Section 62 of the Pensions Act 1995 provides that any discriminatory provisions of OP schemes must be modified so that the discriminatory effect is removed. When the board assumes responsibility for a scheme the calculation of payments will be partly based on the rules of the scheme.
While the PPF provisions do not differentiate between male and female members, it is possible that the rules of the scheme which are applied by the board may themselves be discriminatory if Section 62 of the Pensions Act has not been applied correctly. The clause provides that any of the payment functions which have a discriminatory effect, directly or indirectly, are modified so that the discriminatory effect is removed and equal treatment follows.
I could go on to enlarge but I think Members of the Committee will understand that if any scheme comes in which has hangover discriminatory effects, the PPF is obliged to discard them, so to speak, and ensure equal treatment in terms of payments of compensation. I beg to move.
Lord Skelmersdale: Obviously the same person who wrote the brief which the Minister has just used wrote the notes on clauses because what she has said is almost identical to what is in the notes on the clauses. Does repetition mean truth? I am not sure that I would accept that, even from an academic.
However, my confusion lies in the last of this group of amendments. The original Bill referred to "pensionable service" as in paragraph 33 of Schedule 7. But the amendment changes that to Section 124(1) of the Pensions Act 1995. Unfortunately I do not have a copy of the Pensions Act with me—nor have I done as much homework as I usually do—but either they are the same or the Government have had a change of heart. Either one must be correct. If it is a change of heart, what has caused that change of heart? If they are the same, why bother?
Baroness Hollis of Heigham: It is my fault for trying to expedite proceedings by not spelling out in detail every amendment. Returning to Amendment No. 277A, Clause 199 provides for the investigation of complaints of alleged maladministration by the PPF. The current wording of Clause 199(2)(a) provides that complaints can be made only by a person,
"who is or might become entitled to compensation under Schedule 7".
The amendment broadens the provision and allows a maladministration complaint to be made by any person who is or might become entitled to compensation under the pension compensation provisions.
With that explanation—I should have given the Committee a fuller explanation at the time—I hope the noble Lord will accept the amendment.
Lord Skelmersdale: That is very helpful.
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 234AUB to 234AX:
Page 111, line 41, leave out "to" and insert "(directly or indirectly) to any"
Page 111, line 41, leave out "under the scheme"
Page 112, line 6, at end insert—
"( ) section 160 (discharge of liabilities in respect of compensation),"
Page 112, line 9, leave out "in paragraph 33 of Schedule 7" and insert "by section 124(1) of the Pensions Act 1995 (c. 26)"
On Question, amendments agreed to.
Clause 162, as amended, agreed to.
Clause 163 [Relationship with fraud compensation regime]:
Lord Skelmersdalehad given notice of his intention to move Amendment No. 235:
Page 112, line 13, leave out "12" and insert "6"
The noble Lord said: We have heard a great deal of "six months" and "12 months" during the course of the past few days. I do not think it is appropriate at this moment to go into the issue and I shall not move the amendment.
[Amendment No. 235 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 235A:
Page 113, line 2, at end insert "rules"
On Question, amendment agreed to.
Clause 163, as amended, agreed to.
On Question, Whether Clause 164 shall stand part of the Bill?
Lord Higgins: At long last—I say this with feeling—we come to the Pension Protection Fund clause. But we find that, to a large extent, it is paving the way for the subsequent clauses that follow which deal with vital matters such as the levy on benefits.
What puzzles me about the clause as drafted is that it seems to confuse flows with stocks. The first part of the clause, in subsection (1)(a) to (k), is essentially concerned with assets and amounts which are borrowed and so on, whereas the latter part of the clause is concerned with amounts which are paid out and so on.
I thought it might be helpful to ask precisely how the fund will form its accounts. Will they be in the form of a balance sheet—presumably they will, although the Government still has not produced one for the country or the Government as a whole—and, if so, how is it to be dealt with? Similarly, what will be the situation in regard to income and expenditure accounts? Will fairly normal accounts be produced by the fund, in the same way that an ordinary pension fund would produce them? I beg to move.
Baroness Hollis of Heigham: Clause 164 lists what is to be paid into and out of the Pension Protection Fund. It is worth noting that the Bill refers to the pot of money and assets held in order to pay pension compensation.
The three key categories of money to be paid into the fund are assets, the levies and income from investment. The clause also sets out that payments out of the pension funds are limited to such things as pension compensation, payment of loans during the assessment period and so on.
The clause is designed to ensure that income derived from the pension protection levies and assets transferred from the schemes for which the PPF
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assumes responsibility are kept separate from other money and assets such as those held in the fraud compensation fund. It expressly states that income from investment or capital gain relating to assets in the PPF must also be paid into the fund.
As a non-departmental public body operating at arm's length from the Government, the PPF will be responsible for its own financial management. However, it will have to operate within the legislative framework and fulfil its reporting requirements.
The accounts will be an actuarial valuation following regulations. The person appointed to carry out this task must have the relevant UK actuarial qualifications and so on. We will be prescribing in regulations the answers to the noble Lord's questions in order to take account of changes in actuarial best practice and any changes in accounting rules. In that sense, I would expect it to follow the accounts of other non-departmental government bodies.
5.15 p.m.
Lord Higgins: The problem is that I am not quite clear exactly what in terms of this clause will appear on, for example, the balance sheet, in whatever form it may be, so far as the liabilities are concerned.
Baroness Hollis of Heigham: Perhaps I can write to the noble Lord on this. As I said, the regulations on this still have to be worked out in detail according to the accountancy conventions and so on. Rather than ad lib it, I would much rather write to him with a description of what the accounts should look like. That will of course be available as part of the annual report of the PPF and through the Secretary of State and it will be placed in the Library. I will circulate that to everyone.
Lord Higgins: I should be grateful for that. My point was rather that the clause as drafted mixes up flows of money coming in and out with stocks of money coming in and out, and the two are not properly distinguished as one would normally expect a fund to do. If it is actually the Pension Protection Fund, one would expect to have its assets and liabilities specified here. But in fact some of these things are not stocks but flows of money. The actual drafting of the clause seems rather strange. However, I am grateful to the noble Baroness for her suggestion, which I am happy to accept.
Clause 164 agreed to.
Clause 165 [Initial levy]:
Lord Higgins Lord Higgins moved Amendment No. 236:
Page 114, line 17, at end insert—
"( ) The levy shall be based on an assessment of—

(a) the risk that the company becomes insolvent, and

(b) the risk that the pension fund is underfunded."

The noble Lord said: This amendment seeks to define the way in which the levy shall be assessed. We come now, I think, to a whole series of debates on the levy and how it will operate. In the discussions we had before the Bill arrived in your Lordships' House, the noble Baroness was helpful in discussing a number of

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these aspects. Effectively, we are going to have a levy imposed on schemes that still remain as final salary schemes. There is a timing problem and a problem relating to the way in which the levy is to be assessed.
This clause is concerned with the initial levy. As I understand it, we are going to go through a period when we have the initial levy, which will be a flat-rate levy, defined in the Bill very largely as a "scheme" levy—if I understand the terminology the Government have adopted. We will then go through an interim period when some of the levy will be flat rate and some will be risk based. Then, I believe we will finally arrive at a kind of ideal situation in which, apart from what is presumably an "overheads" levy, the rest of it will be risk based.
The important point, I think, is to distinguish between whether the size of the levy, when it becomes a risk-based levy, should be based largely on whether the company is insolvent or whether the risk is underfunded. The order of debate rather throws us in at the deep end on this issue rather than dealing with the timing problem.
The clause itself is largely concerned with the timing problem. However, I believe that the broad view outside this Committee is that the sooner we move to a risk-based levy the better. Otherwise the companies which are paying the levy—those which are sound, both with regard to the company itself and the state of its fund—will be unfairly penalised. That is undesirable.
I shall leave the issue of timing until later, but perhaps initially with regard to these amendments we may hear the view of the Minister on how she sees the risk element becoming evaluated by the board when it decides how much it is appropriate to levy.
Having said that, I am astonished by the kind of figure—£300 million—that the Minister is bandying around. What gives me particular cause for concern is that I have received representations from a very large public company which is particularly concerned about the point that I mentioned earlier. As the result of a merger, effectively it bought out an insurance policy for a large number of its members so that, ahead of the merger, it could be sure that the funds were available and that the burden would not fall on the relatively small group of people who were to be in the merged enterprise.
Earlier I posed the question (I am not sure that I received an answer) as to whether the number of people and the amount of money in that part of the scheme—I suspect it is part of the hybrid problem—will be taken into account in deciding to what extent they are paying a levy. My point here, in the context of
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these representations, is that when they bought out the fund's liabilities in respect of some 13,000 pensioners, the cost of it was £500 million.
Baroness Hollis of Heigham: That was a one-off cost.
Lord Higgins: Yes.
Baroness Hollis of Heigham: It was not a series of flows.
Lord Higgins: Yes, of course. None the less, for just one scheme that seems to be very large in relation to the £300 million, which, if I now understand it correctly, the noble Baroness says is the cost year-by-year. Even so, I am increasingly worried about the scale of the operation. No doubt we shall come to the timing problem in a few moments. Does the noble Baroness have initial ideas on how the risk assessment is to be carried out? We shall excuse her if she gives us a long reply. Could she also comment on the specific point that I made about whether those paying the levy, on whatever basis, are liable for it if effectively the whole liability has been hived off in the way in which I described by a company taking out insurance policies or annuities for their members? Are they part of a scheme in that sense?
Lord Oakeshott of Seagrove Bay: I may have got the numbers wrong and so perhaps I can ask the noble Lord for the words of the insertion and what the levy is to be based on. I am struggling to find which line that is. Is the noble Lord saying that the initial levy will be based on that risk?
Lord Higgins: We are at page 114, line 17.
Lord Oakeshott of Seagrove Bay: Does that come immediately after an initial levy or where would it come?
Lord Higgins: No, it comes earlier than that. It is at page 114, line 17. It comes in at the initial levy point. Of course, the noble Baroness will make the rather obvious point that it will not necessarily be based on risk.
Lord Oakeshott of Seagrove Bay: I assume it is meant to refer to a later matter. I just wondered whether there was a slight problem.
Lord Higgins: I take the noble Lord's point. Perhaps we are better dealing with the matter at a later stage.
Baroness Hollis of Heigham: Indeed, I have quite a long reply, because it is a very important debate. I invite Members of the Committee to speak to the group, after which I shall give a full reply, and then I shall be happy to do my best to answer any queries. My reply will obviously be based on what we assume is the thrust of the amendments, but I shall respond to points raised by noble Lords. They are right that we are thinking about hybrid contracts and stuff like that. I shall come back to that. If colleagues speak to the amendments now, I shall give set-piece advice, as it

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were. In this case, it will be important to have the debate in Hansard. Then we can come back to some of the more specific points.
Lord Higgins: Something like a Second Reading debate on the issue is much the best way of proceeding; it would be very difficult to talk about individual points.
Baroness Turner of Camden: I have an amendment in this particularly large group, which includes a number of amendments from the Liberal Democrats. My amendment is Amendment No. 247, which runs rather contrary to some of what the noble Lord, Lord Higgins, has said.
As I understand it, the levy to pay compensation has two elements. One is based on scheme factors—the number of members and so on—with the other based on risk factors. After the first year, the latter must raise a minimum of 50 per cent of the money, and higher proportions have been mentioned. The Bill identifies two elements of risk that must be considered in assessing risk-based levy. One is based on the finances of the scheme, and the other on the financial strength of the company. Our amendment seeks to remove the latter.
There is a concern that smaller companies may well be led into the withdrawal from final salary schemes in the future. More generally, firms wishing to meet their commitments to their pension schemes may be unfairly penalised. The finances of a company may, in many cases, be difficult for the PPF to assess, leading to decisions possibly taken on the basis of defective data, perhaps with unfair results. At a wider level, the whole idea of the risk-based levy is questionable. It gives companies a choice on the strength of funding policy to adopt, subject to the payment of the consequent levy.
As the clause stands, we think that there could be unfairness, and it might lead to a further decline in final salary provision. We are very anxious to prevent that. As my noble friend knows, I am a strong proponent of final salary schemes, and I would not want to do anything at all that led to their further disappearance. We are afraid that, if the Bill and particularly the relevant paragraph are unamended, that could well be the result. We seek to remove subsection (3)(a) on page 115, which reads,
"the likelihood of an insolvency event occurring in relation to the employer in relation to a scheme".
The likelihood of an insolvency event seems difficult to assess, and we do not think it a good idea for that to remain in the Bill.
5.30 p.m.
Lord Oakeshott of Seagrove Bay: Would it be appropriate if I talked generally and about our amendments? We have a number in the group. I shall deal first with the point made by the noble Baroness, Lady Turner. We often sing from the same hymn sheet, but not on this occasion. She seeks to take out the whole employer-solvency related element of the risk calculation. On any objective measure of where the
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risk really is in pension funds, that is an important part of the calculation. That would not be right; it would very much change the whole basis of the scheme to a much more—dare I say it?—socialist scheme. It would certainly not be one based on any objective analysis of the risk of default.
Our amendments seek to move the PPF and its whole operation as quickly as possible to what we regard as a fair and clear basis, on which it is commercially calculated and fairly reflects the real risk of default in individual schemes. There is the basic problem that otherwise one will end up with much more of a poll tax on pension funds, which will be a real disincentive to the good companies who do their best to have well-funded schemes.
At the moment there are two situations. There are strong companies such as BT or Marks & Spencer which can make substantial payments into their schemes to eliminate pension fund deficits over the years where the risk of default is negligible in such schemes and, on the other side, there are well-funded schemes such as the former National Coal Board pension fund or the British Steel fund, which are companies that have fallen on hard times. But again the risk is very low because they have had very prudent investment policies over many years and very well-funded schemes.
The risks of default in pension funds is very concentrated. Scheme members at risk are those who face the double whammy of under-funded pension schemes run by financially strapped companies. In motor insurance terms, if I can put it this way, they are the equivalent of a 25 year-old City of London money broker with a string of speeding convictions in a Porsche. It cannot be right to charge such a person the same as the responsible employers with the well-funded schemes—the 50 year-old teacher in the Isle of Skye with a clean licence in a Morris Minor. It must be done on a proper, commercially calculated basis.
To deal in more detail with the amendments: first, deal with the amendment in the names of the noble Lord, Lord Higgins, his colleagues, myself and my noble friend Lady Barker. It basically says that the risk-based levy must come in after one year; the initial levy must not last for longer than one year.
Amendment No. 239 says that the board must impose the risk-based element of the scheme. There is a flat-rate element per head, but it must be both risk and scheme based.
Amendment No. 240 says that the risk-based element must be assessed by the board after taking external professional advice. We think that how that is arrived at should be a very open and public process. That is why we have tabled that amendment.
Amendment No. 242 specifically includes the likelihood of one of two main things: to the under-funding of the scheme, we add the likelihood of an insolvency event occurring to the employer in relation to the scheme. That is the same form of words as is in the Bill later on, but we make it clear that that has to be used; it is not an option.
Most of the other amendments are really consequential. Amendment No. 262, which is also in this group, says that the amounts to be raised should be clearly determined, clearly planned in good time, that the board should make its recommendations and that that should basically be laid in good time by the Secretary of State before Parliament so that people can see what is to be raised.
That would be particularly important if our amendments and our proposals were accepted, to the effect that the Government, or the taxpayers, stand as the lender of last resort. Clearly there is an initial risk there, but none the less, even if that is not passed, I still believe that these provisions are sensible and that there will be great public interest and concern. There should be a transparent, public and regular process by which these levies are set and it should be possible to discuss the issue.
Finally, we are saying in Amendment No. 262 that the risk-based levy must amount to at least 80 per cent of the total amounts to be raised by the levy. So it must be the bulk of it. The scheme-based levy and the flat rate must just cover administrative costs and all the insurance investment-related element must come from the risk-based levies in that way.
We had quite a good discussion on that on Second Reading. This is the approach we have taken, and I believe that noble Lords will see things the same way. We are proposing these amendments to give effect to these principles and to ensure that this operates on a proper, commercial, transparent, fair and sustainable basis for the very long term. Pensions are very long term and this legislation has to be built to last for many years to come.
Lord Higgins: Perhaps I may intervene before the Minister's lengthy reply. We are effectively having a Second Reading debate on the clause, which happens to be about the initial levy. The initial levy, as one understands it, will be determined by a number of factors. We will come later to the question of the risk-based levy and the factors that will affect that. A very widespread view—which I certainly support, and has been reinforced by the noble Lord's comments just now—is that the shorter the period in which we have the initial levy and the quicker we move to a risk-based basis, the fairer it will be. Some have said that we really ought to defer the entire scheme until such time as we have an effective risk-based levy. So there are fundamental problems as far as this is concerned.
Perhaps I can start by saying a word on the initial scheme-based levy that will apply during the period covered by Clause 165. I am not clear about what the balance will be between the number of members and the liabilities. It seems, for example, that there is an intrinsic lack of fairness in the system presently proposed by the Government, and perhaps we will manage to persuade them on that. Let us suppose that scheme A has 56,000 members and PPF liabilities of, let us say, £1,237 million, and scheme B has perhaps 1,353 members and estimated liabilities of only £372 million. If I understand it correctly and the
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annual scheme-based levy was, for example, £10 per member, then scheme A would pay £261,000-odd and scheme B would pay £ 13,000-odd. So while scheme A's PPF liabilities will be more than three times those of scheme B, its scheme-based levy will be more than 41 times that of scheme B. Therefore, the balance between the number of members and the liabilities is a matter of very great importance.
I think I am right in saying that if the scheme-based levy was calculated by reference to its PPF liabilities, that would assure a greater degree of fairness. No doubt the noble Baroness has given great thought to that aspect of the matter.
I wonder whether I should now turn to the question of the risk-based levy. It may enable more orderly debate if we defer that until subsequent clauses in which we are considering a risk-based levy in the period beyond the transitional period. Is that the best way of doing it?
Baroness Turner of Camden: They are all grouped.
Lord Higgins: In that case, in a rather inconvenient way, let us turn to the question of—
Baroness Hollis of Heigham: The noble Lord is entirely entitled to do whatever he thinks most convenient for the Committee. We can certainly degroup these. However, as so much of the discussion is about the move from the initial levy to the transitional one, what goes into the scheme element and what goes into the risk-based element, whether we can expedite proceedings and what sort of timescale we have in mind, and what factors go into the scheme levy and what into the risk-based levy, it may be convenient for the Committee to take the issues together. If the noble Lord wishes to return to a specific point later, I would be entirely comfortable with that.
Lord Higgins: I shall restrict my remarks for the moment—the noble Lord, Lord Oakeshott did the same—to the question of the scheme-based levy. We can then turn at a later stage to the question of the risk-based levy. But it is important that we should get to the risk-based levy as soon as possible. I leave it there. Let us see how we go.
Baroness Hollis of Heigham: As the noble Lord, Lord Higgins, suspected, I do have a rather long reply. This is the second very important issue we have to consider today. The first was about the level of contributions—the 90 per cent, 100 per cent payments out in terms of compensation—and this is about the moneys coming in and how schemes will be assessed. So I hope the Committee will forgive me if I take much longer than normal.
I appreciate not only the important amendments but the informed and thoughtful way in which they have been debated. I have found it extremely interesting.
Taking the amendments in sequence, I shall seek to respond to individual amendments and explain where we have problems with them. I am perfectly happy for noble Lords to intervene as we go through them if they

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feel that they have made points which I have not predicted and they consider I should answer in addition.
Amendments Nos. 236 and 238 seek to amend the provisions relating to the initial levy outlined in Clause 165. They would require the Secretary of State to base the initial levy on the risk that a company becomes insolvent and the risk that the pension fund is under-funded.
The reason that we have provisions for imposing an initial levy is because we do not have the necessary information to put in place a pension protection levy based on risk from the outset. I wish we could, but we cannot. We have a choice. If we were to do that we would delay the introduction of the PPF altogether, but all the events of the last year show that there is an increasing urgency for it.
So the reason for the initial scheme-based levy is to produce a flat-rate scheme which gives us a working base over the transitional period. The risk is phased in as companies go through the triennial valuations. The purpose is to get it up and running and moving. Given that many schemes have been assessed against data that are nearly three years out of date, and given that different schemes may have to be assessed against different criteria, attempting to introduce a levy based on risk could have considerable implications on the amount an individual scheme is charged.
We have a straight choice. We believe that it is fairer to go for a scheme-based levy with transparent criteria and then phase in the risk-based levy as expeditiously as we can. To some extent we are in the hands of the companies. As soon as they can produce information the sooner their particular levy can be assessed on the risk-based element.
The Committee will know that a scheme-based levy will he based on the number of members. We would expect the levy to fall twice as heavily on active members as on deferred and pensioner members. The liability included could take into account, for example, the pay levels of the company involved and the degree of risk to which the PPF would be exposed. Clearly it would be very different if the average pension obligation was £5,000 a year as opposed to £25,000. It is pretty simple, I think. The scheme-based levy will be introduced after consultation with the industry.
Lord Higgins: I hesitate to interrupt the noble Baroness in full flow but she gave the impression a moment ago that you could change to a risk-based levy as soon as the company had the data available. I had rather assumed that there would be a period in time when everyone would change over to a risk-based levy. What she has just said gave the impression that as soon as a company had got the data it could change. Am I right in thinking that that is not so?
Baroness Hollis of Heigham: We are both right. What will happen is that after the transitional period is through, four years after the initial period, we would expect to be on a fully balanced risk-based levy with the underpinning of a scheme-based levy for all companies concerned. But individual companies tend
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to carry out their valuations on a triennial basis and if, for example, a company has made a risk-based valuation that is appropriate and acceptable for these purposes, it could come as an individual company into a levy that is risk-based earlier than other companies.
But we expect this procedure to be completed over the period of three years. In other words, the sort of companies that the noble Lord, Lord Oakeshott, talked about. Highly solvent and experienced companies with all the relevant skills may very well have a valuation ready to take them into a risk-based levy fairly quickly; other companies may not. So, over the transitional period companies will phase themselves on to the risk-based levy, but at the end of the transitional period all will be on it.
5.45 p.m.
Amendment No. 237, tabled by both Conservatives and Liberal Democrats, also relating to Clause 165, would result in the length of the initial levy being restricted to a maximum period of 12 months. It is our intention and hope that it would, having such a tight phrasing on the face of the Bill, remove the element of contingency that has been put in place. I should like to stress that we are committed to doing that as soon as we possibly can. We expect it to be a year, but we consider that building in an element of contingency is sensible. On a minor point, it allows the initial levy to end part way through a financial year, which would have an impact on future pension protection levies. So there is no difference between us with what we intend to do; we just think it wise to have a modest degree of flexibility.
Amendments Nos. 239, 251, 254, 255 and 256, moved by the noble Lord, Lord Oakeshott, relate to Clause 166 and would require the board to set both pension protection levies for each financial year following the initial period. Again, I am not sure how much divergence there is between us. In practice, we would expect that the board would set both levies each year, removing the board's ability to set a solely risk-based levy, should it choose to do so, and should this be sensible. It would be an unnecessary restriction. The proposed amendment may also create unnecessary complexity and burdens for schemes as it removes the ability to set a scheme factors only levy when the board estimates to collect only 10 per cent of the levy ceiling.
In other words, there is a, so to speak, de minimus for the PPF as well as de minimus for individual schemes. The noble Lord's amendment would cut across that useful de minimus. But in practice we would expect what he says to happen.
Amendment No. 240, again moved by the noble Lord, Lord Oakeshott, would require the PPF board to seek appropriate external professional advice before setting the risk-based pension protection levy. Provisions have already been included within the Bill that require the PPF board in certain circumstances to consult, for example, prior to setting the first pension protection levies or when changing any factors or rates from those used in the previous year, or indeed when no consultation has been required in the previous two years.
In addition, although we expect the PPF board to seek appropriate advice from various sources as and when it needs to, it is also the case that members of the PPF board and the PPF will themselves be "experts" drawn from the accountancy and actuarial professions as well as lawyers. So we do not want to tie ourselves to seeking external advice each year as it is unnecessary and costly but when appropriate it will obviously be sought. Given that the accounts for the PPF will be transparent and its behaviour in that sense transparent, it would be very unwise to overlook advice outside if it does not produce satisfactory advice in-house.
Amendments Nos. 242, 246, 252 and 253, also moved by the noble Lord, Lord Oakeshott, aim to alter the structure of the pension protection levy provisions in Clause 166. Amendment No. 242 would require the risk-based pension protection levy to be assessed by reference to a scheme's funding level, the risk of insolvency in relation to the sponsoring employer and the risks associated with a scheme's investment strategy.
The provisions we have put in place require the board to take account of the level of funding within a scheme because this is the risk factor most likely to encourage scheme trustees to fund their scheme sufficiently. Although important, we do not wish to require the board to take account of the risk of insolvency in relation to the sponsoring employer or the risks associated with a scheme's investment strategy. We are here making a distinction between "require" and "may". That is because at present—
Lord Higgins: Did the noble Baroness say that the Government were not going to take into account the risk of the employer's insolvency?
Baroness Hollis of Heigham: No, I was going on to say that although we do not wish to require the board to do so, which does not stop them doing so, the reason we do not require them to do so is that at present there is no consistent across-the-board approach for measuring insolvency risk; and that schemes may need to consider their investment strategy as a consequence of the risk factor relating to the level of funding.
Amendment No. 246, again moved by the noble Lord, Lord Oakeshott, seeks to remove Clause 166(3). The subsection currently sets out the risk-based factors the board may consider when setting the pension protection levies. Removing the subsection would prevent the Secretary of State prescribing further risk factors in regulations should there be a need to do so. That would allow him to respond particularly to concerns from the industry.
Amendment No. 262, again moved by the noble Lord, Lord Oakeshott, seeks completely to replace Clause 168, which establishes the boundaries within which the PPF board may operate when estimating and setting the pension protection levies. For instance, it requires the board to estimate to collect at least
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50 per cent of the pension protection levies via the risk-based pension protection levy, and restricts the board from increasing the pension protection levies by more than 25 per cent in any one year.
The first aspect of the proposed amendment seeks to use the scheme factors pension protection levy to recover the administrative costs relating to the PPF. However, the PPF administration costs will be met by grant-in-aid from the Secretary of State. He will then recover the expenditure via the administration levy. In order to ensure that there is a clear demarcation of expenditure, it is important and necessary to keep the costs relating to PPF administration separate from those costs relating to PPF compensation. I am not sure that the noble Lord has tabled this as a compensating amendment.
Lord Higgins: I am sorry to keep interrupting, but I hope it is helpful. As far as concerns the administration levy, I gather the proposal is that the Government effectively will give the board a float and the board will then recoup it in the form of an administration levy.
Baroness Hollis of Heigham: That is correct.
Lord Higgins: I am not clear why they cannot simply set an administration levy in the first instance. Certainly, it would seem a rather good idea to separate that out from the rest of the proceedings. They still have to decide how to charge individual companies for the administration levy: we are back to square one.
Baroness Hollis of Heigham: We are talking about a most interesting point. I think we are talking of £10 million to £15 million out of £300 million as the administration costs. It is certainly the case, as the noble Lord says, that we are trying to keep it at least in balance sheet terms separate from the compensation activities. The noble Lord rightly described it as an advance by the Secretary of State in order to get the PPF up and running. That is the basis of it.
I was talking about Amendment No. 262. It seeks to ensure that the risk-based protection levy goes from 50 to 80 per cent. That is where we hope and expect to get to, so again there is no policy difference between us. But we think that it would place an unnecessary constraint on the board and consider that the provisions we have put in place balance the need to focus on the use of risk factors, while at the same time ensuring the PPF board can operate in a flexible and appropriate manner.
In other words, I think that most of the disagreements arising from these amendments so far have been that your Lordships in your amendments seek a degree of precision which in terms of its policy intent we do not disassociate ourselves from, but we wish to have the contingency flexibility of not tying

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ourselves to them. I am very happy to place on the record that we expect to arrive at the position which the noble Lord has described.
Lord Oakeshott of Seagrove Bay: It is called "wriggle-room" in this instance.
Baroness Hollis of Heigham: It is called "head space for contingency room". I am sure the noble Lord would accept that is a more appropriate description of the scenario we both possibly envisage.
The final strand of the noble Lord's proposed amendment seeks to require the board to provide the Secretary of State with the estimate of the amount it proposes to impose in respect of the pension protection levies at least three months prior to the start of the financial year.
With that amendment we may also consider Amendment No. 245, moved by the noble Lord, Lord Higgins, which requires the Secretary of State to make a recommendation as to whether insolvency risk and investment strategy risk are to be included in the risk-based levy structure and to approve any future changes to the risk facts; and Amendment No. 258, which requires the board to obtain the approval of the Secretary of State when setting the pension protection levies.
As we have already discussed, the PPF will be a non-departmental government body. The way of funding the administration levy is exactly the same as is custom, standard and practice with other non-departmental government bodies. The board of the PPF will be given the appropriate levels of autonomy and flexibility to conduct its business effectively. Requiring the Secretary of State to approve any determination the board makes in respect of the pension protection levies would reduce that autonomy and could have unhelpful consequences.
For example, it might restrict the board's independence and flexibility when dealing with issues relating to the PPF, where it is essential for the PPF and sponsoring employers to proceed without political interference. Regarding this arms-length principle, which we are trying very hard to establish, if one looks to the American experience one can see why it is necessary. In the United States because the increase in the levy is only set by Congress, it has not been increased in my understanding since 1991. It has therefore not taken account of inflation and is worth probably 25 per cent or so—perhaps more—than in 1991. It is not surprising that it encounters some of the difficulties it does.
The noble Lord asked about the three months. Perhaps I may expand on that. It seemed to me at face value an entirely sensible proposition. I am very happy to circulate how we expect the timetable to operate. In terms of the three months' period of notice for which the noble Lord asks, I was assured that normally, say over the winter months, the PPF board would consult with the industry and individual schemes on the levy required; that the notice would normally go out in April; and that the monies would come in over a period of time from one to three months onwards.
So, although I cannot accept an amendment, in practice, individual schemes should have ample time both to understand and to receive the notice and have time to pay it. If we get problems in these areas, obviously the board must come back if necessary to Parliament for further regulations, but we expect the issues to be covered in regulations. That is the expected time flow of money, which should obviate the need for the noble Lord's amendment.
Amendments Nos. 241 and 243, moved by the noble Lord, Lord Higgins, seek to require the PPF board to take account of the risk of the sponsoring employer becoming insolvent when setting the risk-based pension protection levy.
Risk of insolvency is a key risk factor, but one for which there is no fully established measure that covers all those employers sponsoring DB pension schemes. Officials continue to work with industry representatives and external stakeholders to establish the options available for the board in taking this risk factor forward.
In other words, that will be done by the board in consultation with industry. Obviously, we want to establish robust agreement. It will ensure that the board has the information it needs to introduce some level of insolvency risk from the second year should the board consider it appropriate.
Amendment No. 244—a conservative amendment tabled by the noble Lord, Lord Higgins—would require the PPF board to take account of the level of a scheme's liabilities to or in respect of its members, when setting the scheme factors pension protection levy.
In order to set the scheme factors pension protection levy the board may take account of several factors: the number of members within a scheme; the annual amount of pensionable earnings for active members—in other words their pay rates, a matter I mentioned earlier; and the liabilities of the scheme. Each of those factors may be considered alone or in conjunction with each other.
The provisions are flexible enough to enable the board to choose the most appropriate scheme factors for setting the scheme-based pension protection levy in the future. Requiring the board to take account of one or all of these factors would again be an unnecessary and inappropriate constraint.
Amendment No. 247, tabled by my noble friend, seeks to remove the ability of the board—the exact opposite—to consider the risk of insolvency in relation to sponsoring employers when setting the pension protection levies. This amendment could result in schemes which are highly unlikely ever to call upon the PPF, because of the strength of the sponsoring employer, paying a greater share of the risk-based protection levy than they would otherwise have to do. Obviously that would be unfair.
We believe that taking account of the risk of insolvency, when setting the risk-based pension protection levy, is an important factor in determining the contribution levels for individual pension schemes. We have in fact received several representations from

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external stakeholders and various businesses suggesting that the PPF board should be required—not merely "made", but "must"—to take account of this risk factor.
We are therefore trying to get—those magic words that we will all be bored with by the end of these discussions—the right balance between recognising the importance of differing risk factors by setting these out on the face of the Bill and—the other side of the equation—allowing the PPF board the flexibility it needs to operate efficiently and effectively.
6 p.m.
Amendment No. 249, moved by the noble Lord, Lord Oakeshott, seeks to remove the power to allow the Secretary of State to prescribe additional scheme factors in regulations. Going forward, additional scheme factors may be established or become relevant. I was trying to think of one because, if we could think of one, we would put it in. I suppose apocalyptically, one could have something about the risk to a particular sector industry because, as in the States, PBGC has been most hurt by the liabilities of its 10 leading defaulters, so to speak, coming into the scheme, which were four airline companies, five steel companies as well as Polaroid. We were actually in some difficulty, but we wanted—
Lord Oakeshott of Seagrove Bay: I think the Minister is in difficulty. The reason is that that would undoubtedly be covered by the risk of employer insolvency requirement. That is why I do not believe anything else is relevant and why I moved my amendment.
Baroness Hollis of Heigham: It seems to me that the additional scheme factors would have to come into regulations. I am perfectly happy to say that they could be brought before the House. It is merely for what the noble Lord has so charmingly called the "wriggle-room factor", and what I like to think of as making sensible provision, to ensure there is head space so we do not need to trouble the House with primary legislation on some future occasion, but can do it by regulations.
We may disagree about that, but throughout all this the noble Lord accepts the need to have some headspace capacity for contingencies that not even the combined intellectual wattage of the present Committee can envisage.
Amendment No. 25, again moved by the noble Lord, Lord Oakeshott, is a further amendment to Clause 166. The amendment would require the pension protection levies to relate to each financial year,
"falling after the initial period".
Although I accept where the noble Lord is coming from, I do not think it is necessary. Clause 166(1) already stipulates that the provisions contained within Clause 166 refer to each financial year falling after the
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initial period. This is one occasion where straightforwardly I think that the amendment is unnecessary because it is redundant.
Because of the implications arising from those amendments, I should now like to sit down, but I realise that I probably have not covered all the points noble Lords want to raise. If any Member of the Committee would like to pursue this because it is a major issue, I am perfectly happy to do my best to answer further queries. I apologise for taking up the time of the Committee with such a long reply.
Lord Higgins: The noble Baroness has no reason to apologise. What is clear from this debate, which necessarily has covered the entire range of this clause and several later clauses, is that on Report we simply must not group this lot of amendments in this way because there may be a number of specific issues on which people wish to focus, to debate and to vote.
Perhaps I can seek to give a little shape to what we are now discussing. On the administration levy, the noble Baroness has pointed out that the costs involved are trivial in relation to the overall operation. The Government have come up with a scheme to give the board a float and then let it levy an administration levy, which apparently is something separate from the overall levy. Unless it is assessed on the same basis as the overall levy, it will have to go through a quite separate exercise.
Baroness Hollis of Heigham: Perhaps I may help the noble Lord. I gave the noble Lord the correct figures. We expect the administration levy to be between £10 million and, not the £15 million I said earlier, but £20 million. I did not have to hand the cost per member. That is a flat rate of £1 per scheme member per year.
Lord Higgins: It is fair enough if that is operated on £1 per scheme member. I should have thought that it would be more obvious for the Treasury to grit its teeth and pay out £15 million in the interests of having the scheme. The idea of having to do it on some other basis seems to us singularly unfortunate.
Perhaps I may next say a few words about the scheme-based levy. We are talking of the scheme-based levy in the initial period, but presumably it is an element of the eventual levy in the final arrangement. It seems to us to be very important that it should be done on the basis of the PPF liabilities of a particular scheme rather than, for example, on the number of members. I gave the noble Baroness an example just now. Perhaps she will consider that particular point.
On the vital question of the risk-based levy, the Minister seems to suggest that from the moment the Bill becomes law the board will start to assess individual company schemes. She again used the expression, "Each one will gradually be phased in". However, that conflicts with what she said earlier—that although the work will be done on a phased basis, the whole thing will happen at one moment in time. However, it does not. So if a particular board of pension trustees can provide the information fast

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enough, it can go to a risk-based levy faster than others. I must admit that I do not think that any of us on this side of the Committee had understood that to be the case.
Baroness Hollis of Heigham: That is indeed the case, although I am checking in case I have completely misunderstood the position. It depends on where firms are in the process of their triennial valuation. I would invite your Lordships to accept the dilemma. Noble Lords are perfectly properly asking us to go to a risk-based levy as quickly as possible. Under the timetable we expect the initial period to be about a year. We expect a transitional period of up to four years in which all the schemes will have completed their triennial valuations, which they would normally do anyway, for scheme-specific funding for the regulator, on top of which some of the PPF information would be partly extracted.
If we were to wait for four years, no risk-related levy would come into play for five years. Your Lordships are pressing us, perfectly properly, to introduce the risk-related element as quickly as possible. That is what we seek to do. Therefore, where we have that information from companies, the PPF can determine what an individual company's risk-related levy should be.
Lord Higgins: This is a fascinating development. I give way to my noble friend.
Lord MacGregor of Pulham Market: This is my first contribution on the Bill because I have not been able to be here very often. I share the same reservations and was puzzled by the Minister's earlier remarks. Clause 166(5) states:
"The Board must, before the beginning of each financial year, determine in respect of that year … whether to impose both or only one of the levies mentioned in subsection (1)".
Does that mean that if the board decides to impose only one of the levies, what she said could not apply until it changed its mind?
Lord Oakeshott of Seagrove Bay: Perhaps I may add my thoughts as this is one of the points dealt with in my amendments. The Minister thinks that it would be nice to have it on a rolling basis over several years, as we discussed at Second Reading. Whatever the intention, we do not think it a good idea. Like the National Association of Pension Funds, we wonder whether waiting for such a long period will be a case of the best being the enemy of the good. It may be a bit rough and ready to have to make estimates and bring in the risk-based element earlier, but if we do not, we will be waiting until 2009 or 2010.
If it is 12 months, we are talking about April 2006, which is 18 months away. These issues have been clear to the department, and we believe that there is plenty of time. So regardless of whether it is the Government's intention, we on these Benches will not be happy if it does not come fully into effect over that period. There is a very odd period between 2006 and 2009 when one is effectively running a sort of insurance company in which people can pick whether they pay a
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flat or risk-based rate. I think that the PPF will have to take a grip and have a policy on how it will set the risk-based levy from 2006.
Baroness Hollis of Heigham: I think I am right in thinking that Clause 171 indicates that. Certainly our expectation throughout has been that there would be a dual system in the transitional period, including both scheme factors and—as triennial valuations occur, or sooner if schemes wished to opt out of out-of-cycle valuations—a risk-based scheme. Many schemes will take several years to do all the work unless we ask them to do out-of-cycle valuations.
We can discuss that with industry. However, our proposal has come out of consultation with industry. It is partly in response to the fact that well run companies which feel they have a very low risk and believe they inevitably stand to gain as a result of moving to a risk-based levy, wish to proceed earlier. They believe they have information that we should take onboard and build into the levy which we assess on them, and that is what we are doing. I am slightly surprised that Members of the Committee are surprised at that.
Lord Oakeshott of Seagrove Bay: The noble Baroness does not understand. Of course the well funded and well organised companies want to move to a risk-based scheme, but they also want everyone else to go on to such a scheme; otherwise they will have to pay for those who are not paying enough. That is the insurance principle. We had this discussion on Second Reading. It is not right to say that that is the view of the industry. The National Association of Pension Funds does not agree with what the noble Baroness is saying. The noble Baroness must focus on the overall package.
Baroness Hollis of Heigham: We are talking not about the National Association of Pension Funds but about the employers who are paying the levy. It is certainly true that that £300 million is a zero-sum game and that the scheme basis will have to compensate accordingly if some companies are able to reduce their contribution because they have moved on to a risk-based levy. I absolutely agree that that is true by definition. However, that is where we will be regardless of when the transitional period ends.
Lord Higgins: I am slightly confused. I thought that I was making a speech when the noble Baroness intervened.
Baroness Hollis of Heigham: I am so sorry.
Lord Higgins: My noble friend Lord MacGregor then made a most interesting intervention in the intervention, which was followed by an intervention by the noble Lord, Lord Oakeshott. It goes to show that this Bill is not a simple Bill.
Be that as it may, before I was interrupted—I think that that is the right expression—I was seeking to make the point that it is absolutely crucial that the risk-based levy should take into account the solvency or otherwise of the employer. The noble Baroness is

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seeking to say, "That is very difficult because no one knows how to assess these things". It is true that a comparatively small proportion of companies have credit ratings. However, a specific and I think helpful suggestion has been made to me, which is that that can be resolved if all those companies without a credit rating were simply assumed to have a rating of, say, BB or B. As has been pointed out, numbers recently published by Standard & Poor's suggest that the insolvency risk of an employer with a BBB rating is less than one third that of a BB company and so on.
So I think that one can empirically come to a reasonable basis for assessing whether an employer is solvent or is likely to become insolvent. The sooner one does that, the better it will be. However, I think that it is unacceptable to suggest that, "This is a very difficult problem. We won't take it into account". The other part of the risk is the question of the extent to which the scheme is funded. Alas, given developments in recent years, one cannot help feeling that we will find that a rather large number of funds are fairly unfunded. We will have to come to some view on how long it takes them to sort that out. In that context, the three-year valuation point really is a dud one.
6.15 p.m.
It is true that pension schemes have valuations every three years, but there is absolutely nothing to prevent them having valuations more frequently. I, myself, in the course of a merger, called for a quick valuation. It does not need the full paraphernalia of a triennial valuation. The actuarial profession is perfectly capable of doing it. There may be some strain on resources to do so for everyone at a moment in time—to some extent the resources available from actuaries are related to the triennial arrangement—but we do not have to wait for three or four years before working out that side of the issue. Perfectly adequate valuations could be developed in the mean time.
Those are the main points. I stress once again that it is very important to recognise that the present basis for the scheme-based levy is not satisfactory. I hope the noble Baroness will take into account the example I gave and consider a better arrangement.
This has been an illuminating, if not surprising, debate. The noble Baroness may wish to say more. We shall have to be very careful on Report to table amendments on specific points related to the initial period, the transitional period and the final period, and also in regard to how the scheme assessment and risk assessment should be made. But these are complicated issues and perhaps a general run round the course of this kind has not been unhelpful.
Lord Oakeshott of Seagrove Bay: Perhaps I may speak briefly. The noble Baroness took a lot of trouble—which I appreciate—to answer a great deal of the thinking behind the amendments. I shall obviously read very carefully her detailed words in Hansard.
In essence, there is the question of whether we are saying, "This is an intention", on the one hand, or, "It must happen by a certain date", on the other. We do not want to leave too much discretion to the board because we feel that this is a case where Parliament should lay down the fundamental basic principles on which the scheme should operate. It is important that there is a clear direction to the board. I think the board would welcome that.
So far as timing is concerned, April 2006 for the end of the initial period is quite long enough. There is plenty of head space, wriggle room, whatever you like to call it, in there already. It will be my intention on Report to insist on that.
The principle of the risk-based levy—that it must be a combination of employer solvency and fund solvency effectively—is very important for the board. Unless the noble Baroness can produce more convincing possibilities than she has about ways in which one might change it, it seems to me that that must be the basis on which the figures are updated. We are not talking about technicalities; we are talking about basic principles on which both the industry and the pension funds would want us to insist.
We may all be aiming in the same direction, but it is important that Parliament should set down those basic principles. Obviously we will reconsider these amendments very carefully and bring them back when we come to the Report stage.
Baroness Hollis of Heigham: Let me pick up on a couple of detailed points. The noble Lord, Lord Higgins, pressed me about the scheme-based levy and gave an example of a company which secured the pension future for a proportion of its members by buying an insurance contract for them. I am assured that if those liabilities were completely discharged, the scheme would be levied for the PPF only on those members for whom that liability had not been discharged. I hope that is a precise answer to the noble Lord's example.
The noble Lord referred to scheme funding, and there is a difference in the PPF liability. By definition, the PPF funding is not only about compensation levels of 100 per cent and 90 per cent respectively but is also capped at £25,000. You could have a pension scheme that is under-funded for its pension promise because the company has a very high proportion of high earners who can expect significant pensions—£40,000 or £50,000 pensions—but still be more than adequately financed to meet the PPF liability, which will be capped at £25,000. Therefore it would remain outside the PPF. It could therefore be under-funded in scheme-specific terms, but still not a risk in terms of PPF liabilities.
I am slightly taken aback—it may be my fault—by the fact that there would be a potentially dual scheme operating through the transitional periods as more and more companies come over to a levy which is increasingly risk-based, with the scheme element underpinning it with a de minimis of small companies.

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I am surprised that this has taken Members of the Committee by surprise because it has been the subject of fairly widespread discussion.
However, I emphasise that, in the department's view, this is a matter for the board to take forward in conjunction with the industry. We do not want to burden schemes by requiring a further cycle of valuations if they consider it unnecessary and undesirable. If the board does, and the consensus of the industry is that it is, then maybe we can expedite the move to a risk-based levy earlier. There is no reason in principle, for example, why we might not be able to get to an assessment of insolvency risk within two years of the transitional period.
I do not believe that we disagree on any of this. We hope and expect to end up with an 80 per cent/20 per cent split or thereabouts between risk base and scheme base. Obviously it will vary between individual companies according to their assessments. We want to leave room for the board to determine these matters in conjunction with the industry.
During the debate in the other place, the Conservative spokesperson on the Committee, Nigel Waterson, said that the feeling in the industry is that a two-year period for the transition is probably unrealistically tight purely in practical terms. It looks as though the industry would prefer the likely result of a transitional period of about four years so that the full levy structure will be in place in year five—that is one plus four years after the PPF begins. I do not know to what extent he has consulted the industry, but that is also our feeling.
The substantive disagreement between us is whether it is reasonable to taper in over the transitional period the risk-based levy and the scheme-based levy. Our belief is that it is and we believe that we have the consent of the industry to do so.
The second disagreement is the degree to which we should tie down the considerations under which the PPF board should operate, the timetable it should operate to and what are the precise requirements. We simply have a difference of view in this respect. I do not wish to sound condescending but, were I in Opposition, I, too, would have wanted to argue the noble Lord's case. I would have felt that that would have helped to hold the Government to account.
Contingencies that perhaps could not be reasonably predicted hit you and you need the flexibility to better respond without coming to the House with primary legislation. But, having said that, all the matters about which we are talking—for instance, possible risks that we cannot currently identify and therefore have not been specified—will be introduced through regulations. I am perfectly happy that any regulations of that nature should be brought forward by the affirmative procedure to ensure that the House has full scrutiny of them.
But it would be very stupid—and could be regretted— if a subsequent Minister, standing in this place in two years' time, five years' time, 20 years' time, had to come back with primary legislation simply because this House denied them the capacity to cope
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with unforeseen contingencies. If I could think of why that would be necessary it would be delineated. It is not; that is why it is there. Even my limited experience has taught that it is wise to have it.
With those remarks, we have perhaps gone as far as we can on the debate today. Equally, if any Member of the Committee would like to write to me in order to follow up any of the discussion today or for further clarification, I shall be very happy to receive it. I invite the noble Lord to withdraw his amendment and we can then perhaps move on.
Lord Higgins: I note what was said in another place on my side of the House. I think the crucial point is that it should be changed to a risk-based basis as soon as practicably possible. Estimates may vary as to how soon that is, but the sooner the better. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 237 and 238 not moved.]
Clause 165 agreed to.
Clause 166 [Pension protection levies]:
[Amendments Nos. 239 and 240 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 240A:
Page 114, line 41, after "scheme" insert "rules"
On Question, amendment agreed to.
[Amendments Nos. 241 to 247 not moved.]
Lord Higginshad given notice of his intention to move Amendment No. 248:
Page 115, line 15, leave out paragraph (c).
The noble Lord said: This amendment deals essentially with the point that I raised earlier about whether those who had already had their pension arrangements finalised should be taken into account in determining the scope of the scheme. The noble Baroness gave me a very helpful and straightforward answer.
[Amendment No. 248 not moved.]
[Amendments Nos. 249 to 256 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 256A:
Page 115, line 35, leave out from "rules" to "if" in line 36.
On Question, amendment agreed to.
Clause 166, as amended, agreed to.
Clause 167 [Supplementary provisions about pension protection levies]:
Lord Higgins Lord Higgins moved Amendment No. 257:
Page 116, line 2, after "consult" insert "and give due consideration to"
The noble Lord said: This amendment seeks to spell out the fact that not only should the consultation take place but the result of the consultation should be given due consideration. The CBI believes that the board's consultation mechanism should be as strong as possible. As for up-rating proposals, in the United States, for example, Congress has to approve whether

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there should be an up-rating. I think that we should at least ensure that consultation takes place. To what extent it needs to be approved on a broader basis is a matter for consideration. I beg to move.
Baroness Hollis of Heigham: We shall be consulting. When we say "give due consideration", as has already been evidenced today, some of those views may be diametrically opposed, as we have seen on matters of insolvency of the employer. But there is no question that the board will not be consulting.
Lord Higgins: But will it give due consideration to all the matters on which it has consulted?
Baroness Hollis of Heigham: Of course. The point is, given that some of the views may cancel out each other, that still leaves quite a lot of space for—to use the charming phrase of the noble Lord—the pension board to seek to produce the schemes and proposals that it considers best for the situation.
Lord Higgins: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 258:
Page 116, line 15, at end insert—
"( ) The Secretary of State must approve any determination by the Board under section 166(5) in respect of a financial year."
The noble Lord said: The amendment suggests that after Clause 167(2), which states:
"The Board must publish details of any determination under section 166(5) in the prescribed manner",
it should read:
"The Secretary of State must approve any determination by the Board",
so far as that is concerned. We believe it is appropriate that it should be effectively endorsed by the Government rather than the board itself taking the responsibility. I beg to move.
Baroness Hollis of Heigham: Again, I am afraid that I do not believe that this is necessary. The board will produce annual accounts; it will report formally under audit requirements and so on; and, as a public body, it will be accountable to Parliament. We are seeking to ensure that it has the flexibility to exercise the appropriate judgment as do other non-departmental boards.
Lord Higgins: I thank the noble Baroness for that reply. I shall consider to what extent the amendment is necessary. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 167 agreed to.
Clause 168 [Amounts to be raised by the pension protection levies]:
[Amendment No. 259 not moved.]
Lord Skelmersdalehad given notice of his intention to move Amendment No. 260:
Page 117, line 2, after "consult" insert "the Board and"
The noble Lord said: We are interested in the two amendments in this group because they cover a situation in which the Secretary of State decides—
Baroness Hollis of Heigham: As Amendment No. 259 was not moved, I assumed that neither were Amendments Nos. 266 and 267, which are grouped with it. I was just checking.
Lord Higgins: Amendments Nos. 260 and 261 have not been dealt with yet.
Baroness Hollis of Heigham: Amendment No. 259 has not been moved because it rehearses much of the debate that we have just had. It is grouped with Amendments Nos. 266 and 267. Can I take it that those will not be moved?
Lord Higgins: They will not be moved.
Baroness Hollis of Heigham: Thank you. I am sorry.
Lord Skelmersdale: Returning to Amendment No. 260, as I said, we have reached the point in the Bill where the Secretary of State sets an initial margin for the raising of the levies. The Bill calls that the levy ceiling.
Baroness Hollis of Heigham: Perhaps I can help the noble Lord. I was persuaded by this and therefore government Amendment No. 344A has been tabled to amend Clause 301, which sets out the parliamentary control of subordinate legislation that the noble Lord is requesting.
Lord Skelmersdale: I thank the noble Baroness very much. For the second time this week, I am delighted. Therefore, I shall not move the amendment.
[Amendment No. 260 not moved.]
[Amendments Nos. 261 and 262 not moved.]
On Question, Whether Clause 168 shall stand part of the Bill?
Lord Higgins: This clause concerns the amount to be raised by the pension protection levy, and one or two points arise from it. Clause 168(2) refers to a "levy ceiling" for any financial year. I am not clear where the levy ceiling originates. It seems highly desirable that the board should impose such a ceiling. Presumably that would depend on forecasts of what it thinks its outgoings are likely to be during the course of the year and the amount necessary to give it adequate funds; presumably it will also allow for a certain amount of buffer. In what way is the levy ceiling to be determined?
Baroness Hollis of Heigham: Clause 168 sets out additional provisions relating to the pension protection levies. This clause details the parameters within which the board may set and increase the pension protection levies going forward. The parameters set out the amounts the board may raise from each of the scheme-based and the risk-based pension protection levies. That ensures that at least

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half of the money estimated to be raised by the levies in any financial year is obtained via the risk-based pension protection levy, except in the initial and transitional periods where this can be modified.
Each financial year the board must estimate the amount that it wishes to collect. This estimate must not exceed the levy ceiling applicable for that year, as set out in Clause 168(2). Only when the board sets a very low estimate of the amount that it wishes to collect—less than 10 per cent of the levy ceiling for a year—can it collect a pension protection levy that is based purely on scheme factors only. The provisions thus give the board the flexibility that it needs
We have also placed a limit of 25 per cent on any estimated increase to the total pension protection levies that the board may impose in a financial year to provide assurance to employers that the costs of the levy will not spiral out of control. That will also ensure that the board plans prudently for the longer term. I hope that that gives the noble Lord the assurances he seeks.
Lord Higgins: Yes. I am grateful for that explanation. On reflection, as far as this clause is concerned, there seems to be a transitional period after the transitional period. That is to say that arrangements are made for the first financial year after the transitional period, and then arrangements are made for a second financial year after the transitional period. I am not quite clear how this will ever come to an end.
At any rate, it appears to be going further and further into the future. Is it the case that the transitional period will end and that is the end of the transitional period? Or, will it go on with various other arrangements for years after the transitional period has ended?
Baroness Hollis of Heigham: Basically, during the transitional period the amount to be levied is capped within a levy ceiling. After the transitional period is over, the amount that can be raised beyond the £300 million—which will obviously have increased in real terms by then—is capped at a 25 per cent increase.
Lord Oakeshott of Seagrove Bay: Am I right in thinking that the increase can never go up by more than 25 per cent in any one year, under any circumstances? Is that what this clause states for the indefinite future?
Lord Skelmersdale: The amendments that I have just withdrawn rather summarily stated that the Secretary of State, in certain circumstances, can take over and increase the levy by more than 25 per cent if in a particular year it seems necessary to do so.
Baroness Hollis of Heigham: The levy ceiling is set once prior to the pension protection levies coming into force. The ceiling will he temporarily lowered during the transitional period. We further need to amend it in
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the year following a transitional period to ensure that the levy does not rise significantly. Thereafter, it is 25 per cent.
Lord Oakeshott of Seagrove Bay: I am right. So this is a permanent 25 per cent a year cap on the levy?
Baroness Hollis of Heigham: No. A 25 per cent increase on the levy.
Lord Oakeshott of Seagrove Bay: In that case. I cannot accept that. I do not believe that that is a correct provision. We are moving amendments to delete Clause 168. However, if Clause 168 is none the less included in the Bill, it is not right that there should be a permanent limit. One is in very uncertain territory on how much needs to be raised and for how long. It would be too prescriptive if we decided to turn round the argument that we were having earlier.
Baroness Hollis of Heigham: Again, we have a horrible dilemma. We think that employers are entitled to know—and they certainly want to know—what the expectation is of the limit of any possible increase in the levy that the Pension Protection Fund Board can set them. Therefore, we are giving the assurance of 25 per cent. Given all our financial assumptions—which I have already agreed to share with Members of the Committee—we estimated that £300 million would meet what we believe to be the assessed deficit between scheme commitments and liabilities according to the level of compensation by the PPF, divided through by the risks that we associate with companies. That produced the figure of £300 million, and I will circulate that figure.
We believe that the figure of £300 million, given that it is in addition to assets coming in and the power of the PPF to raise a loan if necessary, should be sufficient, together with the 25 per cent, to meet any foreseeable contingencies. If the situation should be sufficiently dire—we seem to have switched roles—there is the possibility of reducing revaluation and so on to zero.
If the worst came to the worst, the Secretary of State could come to both Houses to seek a reduction in compensation level. I do not say that that could happen, but I do not doubt that something that he could consider is whether one would need to revisit that 25 per cent. We are trying to make it very clear to employers that that is the limit of any increase. I would be surprised if the increase was by more than an appropriate amount, reflecting inflation and any foreseen contingencies in future. We believe that 25 per cent a year should be abundant head space for the PPF. If it is not, there are alternative sources of funds for the PPF to raise, should it need to do so. With that answer, I hope that the noble Lord will agree that we are trying to get the balance right again.
Lord Oakeshott of Seagrove Bay: I thank the noble Baroness for that answer. I can see why, for perhaps the first two or three years, one might want some such cap. However, we are in uncharted territory, all the experts agree that it is very difficult to make the initial estimates. Given that, having the cap in the long term

GC 263
materially increases the risk that the benefits will have to be cut, particularly if the Government will not stand behind everything. In a way, that is probably too restrictive in the very long term, but I shall not press the point now.
Lord Higgins: Most of the outside analyses suggest that there are likely to be very considerable peaks and troughs so far as the outflow of cash from the fund is concerned. My feeling at the moment is that the Government very much underestimate the likely size that could arise, particularly in the early years.
Earlier, if I recall correctly, the noble Baroness said that money would come into the fund two years before it paid anything out. Does the levy apply from the moment that the Bill is passed, with then a couple of years before it starts to pay out? Before it begins to pay out, do people get the financial assistance scheme payments instead?
Baroness Hollis of Heigham: That is not the point. I have obviously confused the noble Lord; I am sure that it is my fault. I was simply making the point that a scheme may go under in the first year of the existence of the PPF—from April 2005—in the sense that the company is insolvent and does not have sufficient resource to meet its pension promise. Therefore, that is potentially territory for the PPF. At our most recent sitting, we established that the assessment period was likely to take a minimum of a year. The levy will apply from year one. That means that any payments will not come out until after the end of the assessment period, which will effectively be in year two, so there is an extra float of moneys.
A second consideration—I keep emphasising it—is that a scheme that goes under will bring all its assets immediately into the PPF, once the assessment period is over and the transfer notices occur. However, the liabilities will be paid out according to when individuals reach their pensionable age. For the first few years, the contrary will be the case. The PPF will be cash rich, because the assets and levy will be coming in, but the liabilities will gradually build up over years as those who have potential for compensation reach their natural retirement age.
The hope—my expectation—is therefore that, to that degree, the PPF will put up the float. The problem will come if industry decides that, because there is a float, it does not need to raise the levy. There then may be debates against future contingencies. That is what I would expect to be the pattern of finance. It may be a misapprehension to assume that, somehow, one has to pay out all the block of liabilities at once. We are not doing insurance wind-ups, except for those DC elements in a hybrid scheme, when we are trying to float them.
6.45 p.m.
The reverse of what the noble Lord says may be true. The PPF will be cash rich in the beginning, with the liabilities gradually accruing. Behind the right to raise the levy by 25 per cent, there is the capacity for loans
GC 264
and peaks and troughs, as well as additional powers that the Secretary of State can exercise by coming to your Lordships' House.
Clause 168 agreed to.
Clause 169 [The levy ceiling]:
On Question, Whether Clause 169 shall stand part of the Bill?
Lord Higgins: I have only a very brief point on the clause. We have discussed the ceiling to some extent already. I am not at all clear how the overall levy ceiling will be set by the Secretary of State, but I am completely puzzled why it should be related to the general level of earnings that arise during the year. No doubt the noble Baroness can tell us.
Baroness Hollis of Heigham: Can the noble Lord repeat that? Forgive me; it is the acoustics.
Lord Higgins: I beg the noble Baroness's pardon; the acoustics are terrible. I am not clear on what basis the Secretary of State will determine the levy ceiling. In particular, I am not clear why, from subsection (4) onwards, he will set it in part by taking account of changes in the general level of earnings. It seems a strange concept suddenly to introduce in the middle of setting a levy ceiling.
Baroness Hollis of Heigham: The levy ceiling will be set in regulations by the Secretary of State. It will initially be set prior to the first year in which the levies are imposed. We anticipate the levy ceiling to be initially set at twice the anticipated costs for the PPF board to meet its liabilities—that is, £600 million. For each year following, the levy ceiling will be increased in line with the general increase in the level of earnings. That is because DB schemes follow—and therefore the compensation to be offered follows—an earnings-related factor. That is why someone who stays with one company for life with a DB scheme does much better than if they keep transferring.
Because earnings rise and because DB schemes outside the scheme follow the rise in earnings—after all, they are proportioned at 40/60ths, 40/80ths or whatever—so equally must the capacity of the Pension Protection Fund to increase its potential for compensation reflect that. It has to get its income aligned with the increase in value of the pension promises outside the scheme, so that, when any such scheme comes in within the PPF, the compensation will be sufficient to meet those, even though it has been proportionately reduced to the 100 per cent or 90 per cent. That seems to be expected.
Lord Higgins: I am most grateful.
Clause 169 agreed to.
Clause 170 [Valuations to determine scheme underfunding]:
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 263:
Page 118, line 5, at beginning insert "Where they are not available from the Regulator,"
The noble Lord said: I seem to have been biting my tongue for three-quarters of the afternoon while the Committee has discussed what the board will require for the calculation of the levy and from where the requirement will come. As I was reading the Bill almost three months ago—certainly two months ago—I decided that a lot of the information required by the board would have already been provided to the regulator. Rather than the board going to a lot of different firms, why should it not go to the regulator, especially in terms of the beginning of the clause? I beg to move.
Baroness Hollis of Heigham: The noble Lord is completely right. Although it is not explicit in Clause 170, we fully expect the PPF board to use all the information available to it, including the information obtained by the regulator on its behalf. It would be daft to go back. In so far as the regulator is to some extent an information-collecting body for the PPF, what the noble Lord has envisaged will happen exactly.
Lord Skelmersdale: Will that not speed up the process of moving from stage one of the levy to stage two? The actuarial valuations will be coming in to the regulator much faster than they are likely to come in to the board.
Baroness Hollis of Heigham: But there one needs to get into the territory—I just hinted at it—of the distinction between what the regulator does, which is to ensure that a scheme outside the PPF can meet its pension promise as reflected in its scheme-specific funding, and what the PPF is concerned about, which is to ensure that a scheme staying outside the PPF will at least have benefits better than those of the PPF.
A scheme about which the regulator might be concerned could be only 85 per cent funded. Say that it is a scheme of 200 members in an economic forecasting and IT company. A third of its members might therefore go on to enjoy quite high pensions of £40,000 or £50,000. The regulator would be interested in seeing the rectification plan of the company to be able to meet its promise over a period, although it has no reason to think that it is not healthy. The PPF is not interested in that; it simply knows that, because there will be a cap at £25,000 at any rate, even though underfunded for scheme-specific funding purposes, it will be more than able to meet the liabilities that would otherwise bring it into the PPF. Therefore, it stays outside.
The information needed for scheme-specific funding has a different function, because it is measuring the competence of the company over time to meet its full pension promise. The PPF needs a snapshot of whether, at that time, the benefits offered by the scheme will be comparable to or better than what the PPF can provide. We are talking about different exercises.
Lord Skelmersdale: In general terms, the noble Baroness is quite right. However, the amendment is tabled to a part of the Bill that talks about actuarial valuations required by the board in order to move from stage one to stage two to stage three of the levy scheme. I will not pursue the point now, but she might like to think about it in the next two or three weeks. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 264 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 265 to 265B:
Page 118, line 20, leave out ", a person with prescribed qualifications" and insert"—

(i) a person with prescribed qualifications or experience, or

(ii) a person approved by the Secretary of State"

Page 118, line 30, leave out "which limits the amount of its" and insert "rules which limits the amount of the scheme's"
Page 118, line 34, at end insert "rules"
On Question, amendments agreed to.
Clause 170, as amended, agreed to.
Clause 171 [Pension protection levies during the transitional period]:
[Amendments Nos. 266 and 267 not moved.]
Clause 171 agreed to.
Baroness Andrews: It might be convenient for us to call a halt to the sitting; I understand that the next debate might be quite long. I suggest that the Committee adjourn until Monday at 3.30.
The Deputy Chairman of Committees (Lord Lyell): That concludes the Committee's proceedings until Monday 13 September at 3.30 p.m.
The Committee adjourned at five minutes before seven o'clock.

  Questions for Written Answer
  Questions for Written Answer
  HIV/AIDS
  HIV/AIDS
  Army: Structure Changes
  Army: Structure Changes
  Government Departments: Official Entertainment
  Government Departments: Official Entertainment
  English Ports: Ocean-going Liners
  English Ports: Ocean-going Liners

  The Lord President of the Council (Baroness Amos)
  The State Opening of Parliament will be on Tuesday 23 November.

  Northern Ireland Tourist Board: Annual Report and Accounts 2002–03
  Baroness Amos
  My honourable friend the Parliamentary Under-Secretary of State for Northern Ireland has made the following Ministerial Statement.

  The Northern Ireland Tourist Board's 2002–03 annual report and accounts were deposited in the Libraries of the House today.

  European Union Charter of Fundamental Rights
  The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean)
  At the European Council in Brussels on 17–18 June 2004, EU Heads of Government agreed to include the Charter of Fundamental Rights as Part II of the Constitutional Treaty. This Statement sets out the Government's views on the Charter of Fundamental Rights.

  Changes to the European Union Charter of Fundamental Rights, which make it suitable for incorporation into the treaties.

  The EU Charter was agreed at Nice in 2000 as a political declaration, not as treaty law. At the same time, the European Council agreed that, "in accordance with the Cologne conclusions, the question of the Charter's force would be considered later" (Conclusions of the Nice European Council reference 00/1843, deposited in the Library of the House on 11 December 2000). Her Majesty's Government made it clear that we could not agree to incorporation of the charter into the treaties without further legal clarification of its meaning and application. In the White Paper A Constitutional Treaty for the EU (Cm 5934) of September 2003, Her Majesty's Government said we would make a final decision on incorporation of the charter into the Constitutional Treaty only in the light of the overall picture at the IGC.

  The Charter, including its original preamble, and its own special rules of application and interpretation, is now Part II of the Constitutional treaty, and is introduced by Article I-7(1) of the Treaty. Article I-7 deals with fundamental rights generally. Besides introducing the Charter, Article I-7(1) acknowledges the distinction made in the Charter between rights and principles. Human rights and other fundamental
  WS 92
  rights guaranteed by the European Convention on Human Rights (ECHR) and in the constitutional traditions common to all the member states remain general principles of EU law (see Article I-7(3)) and insofar as the Charter affirms such rights, they will be interpreted in accordance with the ECHR. Article I-7(2) enables the Union to accede to the ECHR in its own right.

  Significant amendments have been made to Articles II-51 and II-52 in Title VII of the Charter (now entitled "General Provisions Governing the Interpretation and Application of the Charter"). The Charter applies to the Union—its institutions, agencies and bodies—and, though only when they are implementing Union law, to the member states. Paragraph (1) of Article II-51 has been further clarified to show that the Charter does not entail any extension of the Union's competences or any extension of the scope of its application for member states. Paragraph (2) of Article II-51 also confirms that the Charter does not have the effect of extending the scope of application of Union law beyond the powers of the Union as established in the other parts of the Constitutional Treaty.

  Article II-52 deals with interpretation, and significantly improves the original Charter provisions. It indicates that there are four sources for the content of the Charter's rights, freedoms and principles: provisions of EU law, the ECHR, the constitutional traditions common to the member states and national law. Under Article II-52(2), Charter articles based on existing EU law are to be read subject to the conditions and limits set out in the Constitutional Treaty; that is, they are effectively subordinated to their legal base in other parts of the constitution. Under Article II-52(3), rights in the Charter that correspond to rights in the ECHR have the same meaning and scope as given by the jurisprudence of the Strasbourg Court. Article I-7(2) on EU accession to the ECHR will help ensure consistency of jurisprudence as between the European Court of Human Rights and the European Court of Justice.

  Under Article II-52(4), those Charter provisions which draw upon the common constitutional traditions of the member states must be interpreted "in harmony" with such traditions.

  Article II-52(6) emphasises the respect to be given to "national laws and practices", as referred to in the Charter provisions.

  Article II-52(5) is aimed at clarifying the distinction the Charter makes between legally enforceable rights on the one hand, and the principles, of an aspirational nature, on the other hand, which are to be found mainly in the Solidarity Title of the Charter. Principles are designed to guide the actions of the Union institutions, and of the member states when implementing Union law. The Union must observe principles by virtue of Article II-51 (1) when deciding whether to exercise its competences; but there is no obligation to legislate, and the Charter itself generates no additional powers to do so. Principles apply within the limitations set out in Article II-51(2).
  WS 93
  Finally, a further new horizontal article, Article II-52(7), has been added to the Constitutional Treaty. Article II-52(7) requires the Charter to be interpreted with due regard to the official Explanations, which address the legal bases for each of the Charter's provisions. The Explanations have been updated and strengthened and are the subject of a special declaration by the member states which ensures that they are published with the new treaty. The official Explanations constitute an authoritative guide to the legal meaning of the Charter's provisions and will help ensure that the Charter is not misinterpreted.

  Whether incorporation of the European Union Charter of Fundamental Rights into the treaties will increase the powers of the European Union.

  Incorporation of the European Union Charter of Fundamental Rights into the treaties will not increase the powers of the European Union. The Charter of Fundamental Rights must be read as a whole, including the General Provisions Governing the Interpretation and Application of the Charter, as set out in Articles II-51 to 53 of the Charter. Article II-51(2) provides that the Charter does not extend the scope of application of Union law beyond the powers of the Union or establish any new power or task for the Union, or modify powers and tasks defined by the other parts of the Constitutional Treaty.

  The benefits to the United Kingdom of the European Union Charter of Fundamental Rights.

  Although fundamental rights, freedoms and principles are guaranteed by the governments of the member states in accordance with national law, there was no statement of rights, etc binding the European Union. The Charter sets out such a statement for the Union. Following incorporation of the Charter, the institutions, bodies and agencies of the Union will be bound to recognise those rights, etc in exercising any of their powers. The Charter should help to ensure that citizens' basic rights and liberties are protected at EU level, as they are in their own countries.

  The effect of Article II-28 of the Charter of Fundamental Rights upon the laws governing industrial relations in the United Kingdom.

  In practice, Article II-28 of the Charter of Fundamental Rights will have no effect upon the laws governing industrial relations in the United Kingdom. Article II-28 states that workers and employers enjoy rights of collective bargaining and action "in accordance with Union law and national laws and practices". There is no Union law in this area, nor could there be in future. EU action on pay, the right of association, the right to strike and the right to impose lock-outs is specifically excluded (see Article III-104(6) of the Constitutional Treaty). Charter Article II-52(6) provides that full account should be taken of national laws and practices as specified in the Charter. As with all the Charter provisions, and by virtue of Article: II-52(7), it is important to read Article II-28 alongside the official Explanation, which in this instance points out that, "The modalities and limits for the exercise of collective action, including strike action, come under national laws and practices". The United Kingdom's
  WS 94
  laws governing industrial relations maintain a balance between workers' rights to pursue legitimate trade disputes and employers' rights to conduct their businesses without undue disruption from illegitimate strike action. Article II-28 will not alter that balance.

  Libya: Future Defence Requirements
  Baroness Symons of Vernham Dean
  On 19 December 2003, Libya announced that it would dismantle its weapons of mass destruction programmes, and limit its ballistic missiles to a range of less than 300kms. Since then, Libya has been working to put these commitments into effect, and has been pursuing a course of reintegration into the international community. The Government welcome and fully support this process.

  The Government recognise that Libya, following its decision to renounce weapons of mass destruction, has legitimate defence requirements. The United Kingdom has a clear interest in developing an open and co-operative relationship with Libya on defence matters. During his visit to Libya on 25 March, my right honourable friend the Prime Minister announced the appointment of General Robin Searby as the United Kingdom Defence Co-ordinator for Libya in order to offer Libya a new military relationship with the United Kingdom. As a natural part of progress towards full normalisation of the United Kingdom's relations with Libya, the Government intend to respond to Libyan requests to discuss its legitimate defence requirements in detail.

  The Government welcome news of Libyan and German agreement on a compensation package for the victims of the 1986 La Belle disco bombing as a significant milestone in the process of rebuilding the United Kingdom's and the European Union's relations with Libya. In light of this agreement, the United Kingdom expects to revisit the issue of the EU arms embargo imposed on Libya in 1986 with EU partners over coming months. If the embargo were removed, the Consolidated EU and National Arms Export Licensing Criteria (which apply to all countries) would be the test against which any proposed export of defence equipment to Libya would be assessed.

  While the embargo remains in place, all contact with Libya in this area must fall within the terms of the EU arms embargo and United Kingdom law. This means that no commitments in relation to the actual supply of licensable defence equipment will be made while the embargo is in place.

  Diplomatic Missions: Outstanding National Non-domestic Rate Bills
  Baroness Symons of Vernham Dean
  The majority of diplomatic missions in the United Kingdom meet their obligations and pay the national non-domestic rate (NNDR) requested from them. The total amount outstanding from all diplomatic missions is
  WS 95
  approximately £980,000. However, as at 31 July 2004 missions listed below owed over £10,000 in respect of NNDR. Twelve additional diplomatic missions, which owe £10,000 or more in respect of national non-domestic rates, have made arrangements with the Valuation Office Agency to clear their outstanding debts and have not been included in this list.

  COUNTRY

  AMOUNT

  Mozambique

  £33,718.35

  Cameroon

  £32,640.33

  Zimbabwe

  £31,778.64

  Uganda

  £30,892.13

  Egypt

  £26,674.46

  Bangladesh

  £25,948.51

  China

  £25,241.49

  Cote d'Ivoire

  £20,788.06

  Senegal

  £19,198.79

  Saudi Arabia

  £14,400.70

  Yemen Republic

  £13,582.61

  TOTAL

  £274,864.07

  Diplomatic Missions: Serious Offences
  Baroness Symons of Vernham Dean
  From a community of around 20,000 in the United Kingdom entitled to immunity, 16 serious offences, allegedly committed by such persons, were drawn to the attention of the Foreign and Commonwealth Office in 2003. "Serious offences" are defined in accordance with the 1985 White Paper on Diplomatic Immunities and Privileges—that is, as offences that would in certain circumstances, carry a penalty of 12 months or more imprisonment.

  Diplomatic Missions: Unpaid Traffic Fines
  Baroness Symons of Vernham Dean
  There were 4,565 outstanding parking and other minor traffic violation fines incurred by diplomatic missions and international organisations in the United Kingdom recorded during the year 1 January 2003 to 31 December 2003. These totalled £407,950.00. In May this year the Foreign and Commonwealth Office wrote to all affected diplomatic missions and international organisations giving them the opportunity to either pay their outstanding fines or appeal against them if they considered that the fines had been issued incorrectly. As a result payments totalling £49,280.00 were received, leaving a total of 3,941 (£350,170.00) unpaid fines for 2003. The table below details those diplomatic missions and international organisations that have 11 or more undisputed fines unpaid.

  Diplomatic Mission/International Organisation

  No. of fines Outstanding

  Amount in £

  Libya

  365

  34,480.00

  Saudi Arabia

  264

  24,200.00

  Nigeria

  232

  15,850.00

  Georgia

  172

  16,460.00

  China

  160

  14,080.00

  Kazakhstan

  146

  13,670.00

  WS 96

  Diplomatic Mission/International Organisation

  No. of fines Outstanding

  Amount in £

  Turkey

  116

  10,410.00

  Egypt

  115

  10,930.00

  Ghana

  106

  9,650.00

  Greece

  94

  8,230.00

  Senegal

  93

  8,680.00

  United Arab Emirates

  92

  7,900.00

  Angola

  87

  7,380.00

  Kuwait

  85

  8,270.00

  France

  78

  6,370.00

  Afghanistan

  76

  7,370.00

  Russia

  75

  6,980.00

  Algeria

  72

  6,780.00

  Jordan

  71

  6,660.00

  Yemen

  60

  5,110.00

  Malaysia

  59

  5,720.00

  Oman

  58

  3,830.00

  Hungary

  56

  5,500.00

  Kenya

  44

  4,200.00

  Brunei

  41

  3,920.00

  Iran

  41

  3,280.00

  Sudan

  40

  3,350.00

  Rwanda

  35

  2,650.00

  Bahrain

  34

  3,400.00

  Mozambique

  34

  2,690.00

  Germany

  32

  2,980.00

  Brazil

  32

  2,660.00

  Korea (DPR)

  31

  2,450.00

  Uganda

  30

  2,950.00

  Bangladesh

  29

  2,820.00

  Ukraine

  29

  2,480.00

  Tunisia

  28

  2,590.00

  Philippines

  28

  2,380.00

  Poland

  27

  2,030.00

  Tanzania

  26

  2,370.00

  Bulgaria

  26

  2,350.00

  Romania

  25

  2,300.00

  Latvia

  24

  2,130.00

  Zambia

  23

  2,140.00

  Lithuania

  22

  2,150.00

  Morocco

  22

  2,090.00

  Cyprus

  22

  1,780.00

  Guinea

  22

  1,430.00

  Syria

  18

  1,570.00

  Cuba

  18

  1,440.00

  Belgium

  16

  1,600.00

  Fiji

  16

  1,600.00

  Pakistan

  16

  1,540.00

  Vietnam

  16

  1,540.00

  Spain

  16

  1,220.00

  Azerbaijan

  15

  1,400.00

  Thailand

  15

  1,360.00

  Sierra Leone

  15

  990.00

  United States of America

  14

  1,310.00

  Cameroon

  14

  1,300.00

  Jamaica

  14

  1,280.00

  Panama

  14

  1,240.00

  Uzbekistan

  12

  1,020.00

  Zimbabwe

  12

  710.00

  TOTAL

  3,720

  331,200.00

  The number of outstanding fines incurred by Diplomatic Missions in the United Kingdom for non-payment of the London congestion charge at the end of its first year of operation in February 2004 was

  WS 97
  1,847. The table below shows the 10 diplomatic missions with the highest number of outstanding fines.

  1 - Egypt

  250

  2 - U.A.E.

  182

  3 - Angola

  126

  4 - Kazakhstan

  84

  5 - Sudan

  81

  6 - Tanzania

  72

  7 - Sierra Leone

  66

  8 - Zimbabwe

  52

  9 - Algeria

  50

  10 - Malawi

  50

  Afghanistan: Deployment of RAF Harrier G R7s
  The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)
  My right honourable friend the Secretary of State for Defence (Mr Geoffrey Hoon) has made the following Written Ministerial Statement.

  The United Kingdom has a long-standing commitment to help the people of Afghanistan to rebuild their country as a stable, secure and prosperous nation. That process is now approaching a vital stage. NATO is in the process of expanding the International Security Assistance Force (ISAF) by creating more Provincial Reconstruction Teams (PRTs). The coalition, meanwhile, continues to deploy PRTs of its own and to engage the remnants of the Taliban and its Al' Qaeda supporters that reject all the Afghan people have achieved since 2001. Both the ISAF and the coalition provide essential support to the Afghan Transitional Authority and to the United Nations' Assistance Mission Afghanistan as they prepare for the Afghan presidential elections which are due on 9 October 2004.

  These are important tasks and both the coalition and the ISAF merit our support. In response to a coalition request for the United Kingdom to provide a close air support capability to coalition forces operating in Southern Afghanistan, I have agreed the deployment of six Royal Air Force Harrier GR7 aircraft to Kandahar, Afghanistan. The aircraft will be provided by No. 3 Squadron, Royal Air Force, and the deployment is planned to be for nine months. The first personnel from 53 Field Squadron (Airfield Support), Royal Engineers, and No. 3 Squadron have already deployed to Kandahar and the force should be operational by the end of this month. The deployment will reach a strength of some 315 personnel in its early stages but will eventually settle at a strength of about 230. The cost of the deployment is estimated to be some £35.5 million.

  This is our first deployment of combat aircraft to Afghanistan in the current campaign. While their principal role will be to support coalition forces, the aircraft will also be available to support the ISAF. NATO has identified three such tasks: close air support as ISAF expands into Western Afghanistan; an airborne Intelligence, Surveillance and
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  Reconnaissance (ISR) capability to support all ISAF forces, and; the provision of "air presence patrols" as part of the ISAF's support for the security of the Afghan presidential elections.

  The versatility of the Harriers, which will be equipped with laser-guided bombs, air to surface missiles and the Joint Reconnaissance Pod, makes them an ideal asset to meet all these tasks. Deployment of these aircraft confirms our commitment to the NATO mission in Afghanistan, our support for the ISAF and our determination to help ensure the success of the international community's support for the Afghan electoral process. The Army and Royal Air Force personnel will provide a highly capable and credible force that will contribute to improving the security environment in the region. This is another clear sign of the UK's long term commitment to achieving a stable and secure Afghanistan.

  Naval Recruiting and Training Agency: Partnering Arrangement
  Lord Bach
  My honourable friend the Parliamentary Under-Secretary of State for Defence (Mr Ivor Caplin) has made the following Written Ministerial Statement.

  In 1997 the initial and major phase of the transfer of support service activities to Flagship Training Ltd (Flagship), under partnership arrangements with the Naval Recruiting and Training Agency (NTRTA), was agreed and subsequently implemented.

  I am pleased to inform the House that I have now agreed in principle to the next phase under this arrangement and the transfer of the provision of services which falls into two categories: Harmonisation, and the integration of the Nuclear Department.

  This phase will enhance the support services already transferred, providing greater efficiencies and effectiveness across the five major training establishments for the Royal Navy. There are potential total savings for the Naval Recruiting and Training Agency of approximately £6 million over the remainder of the contract period to 2011.

  The anticipated number of posts to be transferred is 296 (273 civilian and 23 service) under Harmonisation and 24 (20 civilian and four service) in the Nuclear Department. The trades unions have been regularly informed of progress and the formal consultation process has begun. A copy of the consultative documents has been placed in the Library of the House.

  MoD Police and Guarding Agency: Key Targets
  Lord Bach
  My honourable friend the Parliamentary Under-Secretary of State for Defence (Mr Ivor Caplin) has made the following Written Ministerial Statement.
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  Key targets have been set for the chief executive of the Ministry of Defence Police and Guarding Agency (MDPGA) for the financial year 2004–05. This year the key targets focus on MDP and work is ongoing to establish an effective and joined up performance management system that will fully incorporate the MGS and MDP from next year.

  The targets are as follows:

  Key Target 1By March 2005, as a means of providing greater public reassurance, ensure that no more than 25 per cent of the duty time of dedicated patrol officers is expended on activities not directly related to patrol duties.

  Key Target 2By 31 March 2005, as a means of reducing crime and protecting MoD property and interests, achieve a crime solving rate of 50 per cent for the investigation of primary crime.

  Key Target 3By 31 March 2005, in order to deliver performance as defined in relevant establishment CSAs, ensure that the agency fulfils at least 95 per cent of its funded and agreed customer taskings.

  Key Target 4By 31 March 2005, in order to maintain appropriate levels of security as defined in relevant MDP CSAs, seek to maintain and improve upon the average baseline Security Contribution Index score achieved in the previous quarter at each establishment contributing to the index system.

  Key Target 5By 31 March 2005, within the overall recruitment of police staff, and as part of an overall programme to retain personnel levels, to have recruited at least 15 per cent women and 4 per cent from minority ethnic communities.

  Key Target 6By 31 March 2005, excepting unforeseen operational commitments, and with the intention of providing cost-effective policing and guarding, as well as maintaining an appropriate work life balance for personnel, reduce the amount of overtime worked by each officer to no more than 8 hours worked per week averaged over a 17 week rolling period.

  Key Target 7By 31 March 2005, in order to maintain a healthy and effective workforce and contribute to the achievement of other key targets, reduce the overall level of sickness lost within the agency (except MGS personnel) by one hour per member of staff per month against the corresponding achievement in the previous year.

  Key Target 8By 31 March 2005, to have provided a greater clarity as to the extent of fraud within the MoD and thereby to have raised the awareness, by engaging with, and encouraging the MoD community to provide intelligence, with a view to increasing the number of reported fraud cases.

  Training Group Defence Agency: Key Targets 2004–05
  Lord Bach
  My honourable friend the Parliamentary Under-Secretary of State for Defence WS 100
  (Mr Ivor Caplin) has made the following Written Ministerial Statement.

  The Commander-in-Chief, Royal Air Force Personnel and Training Command has set the chief executive of the Training Group Defence Agency the following targets for financial year 2004–05:

  Key Target 1A:

  Output—RAF Initial Flying Training

  To recruit and train the required number of Royal Air Force aircrew to the standards required for entry to operational conversion unit training and other specialist flying training courses.

  Fast-Jet Pilots

  42

  Multi-Engine Pilots

  48

  Rotary Wing Pilots

  46

  Fast-Jet Weapons Systems Operators

  28

  Multi-Engine Weapons Systems Operators

  9

  Non-Commissioned Aircrew

  103

  Total

  276

  Key Target 1B:

  Output—RAF Initial Ground Training

  To recruit and train the required number of Royal Air Force personnel to the standards required to undertake ground appointments.

  Officer Basic Specialist Training

  274

  Airman Basic Specialist Training

  2,166

  Total

  2,440

  Key Target 2A:

  Output—Defence Flying Training

  To train aircrew of the three services to standards for entry to the Royal Air Force and Royal Navy operational conversion unit training, the Defence Helicopter Flying School and other specialist flying training courses, as well as providing training places for international students.

  RAF

  560

  RN

  164

  Army

  305

  Tri-Service

  95

  International

  113

  Total

  1,237

  Key Target 2B:

  Output—Defence Ground Training

  To train personnel of the three services to the standards required to undertake ground appointments.

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  RAF

  17,763

  RN

  3,983

  Army

  6,766

  Total

  28,512

  Quality of Output

  To underpin the military effectiveness of the Royal Air Force by the timely provision of military personnel trained to the standards agreed with the agency's customers.

  Key Target 4:

  Cost Management

  To ensure that the necessary systems are in place to manage the business on an output-cost basis.

  Key Target 5:

  Efficiency

  To reduce the average per capita cost of training by improving first time and overall pass rates.

  First Time Pass Rate

  Overall Pass Rate

  Officers—Phase 1

  75%

  98%

  Officers—Phase 2

  90%

  97%

  Airmen—Phase 1

  75%

  90%

  Airmen—Phase 2 (< 38 weeks)

  80%

  90%

  Airmen—Phase 2 (> 38 weeks)

  63%

  83%

  Defence Procurement Agency: Key Targets 2004–05
  Lord Bach
  My right honourable friend the Minister of State for Defence (Mr Adam Ingram) has made the following Written Ministerial Statement.

  Six key targets have been set for the chief executive of the Defence Procurement Agency for the financial year 2004–05.

  In a change to previous years, the first three key targets now apply to all projects over £20 million which have passed their main gate approval but not yet achieved in service date (ISD). Key targets 2 and 3 are consistent with the goals set in the department's public service agreement (PSA) for major equipment projects, although for the key targets, all movement in most likely ISD and cost forecasts will be measured, rather than only that which is in excess of the approval. The fourth key target relates to improvements in DPA customer satisfaction. A revised key target 5, comprising a basket of measures, replaces the previous straight measure in order to provide a better indication of DPA efficiency. There is a new sixth key target reflecting the importance which the department attaches to delivery of assets to the front-line. The key targets are:

  Key Target 1: Key requirements compliance

  Predicted achievement of customers' core requirements1 for projects: 97 per cent.
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  Key Target 2: Average in-year in service date slippage

  Average in-year slippage of in service dates not to exceed 0.9 months.

  Key Target 3: Average in-year cost growth

  Average in-year cost variation not to exceed 0.5 per cent.

  Key Target 4: Customer survey satisfaction rating

  Customer satisfaction rating of 72 per cent.

  Key Target 5: Achievement of planned efficiency measures2

  (i) Measures asset turnover in months by comparing assets delivered to total assets less current liabilities

  69.6

  (ii) Measures value of assets delivered as a multiple of operating cost

  10.7

  (iii) Measures value of assets added to the balance sheet as a multiple of operating cost.

  16.2

  Key Target 6: Asset deliveries

  Variance between planned and actual in-year asset deliveries not to exceed 15 per cent.

  1 Around 10 core requirements per projects are agreed between the DPA and MoD headquarters, defining the essential characteristics of the equipment/capability.

  2 Target levels differ from those in the published Corporate Business Plan as they reflect start of year forecast data.

  Nuclear Decommissioning
  The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
  My right honourable friend the Secretary of State for Trade and Industry (Ms Hewitt) made the following Written Ministerial Statement.

  The Government's updated policy on the decommissioning of the UK's nuclear facilities has been published today. Copies have been placed in the Libraries of both Houses. The statement is also available on the DTI website at www.dti.gov.uk.

  Richard Neale: NHS Committee of Inquiry
  The Parliamentary Under-Secretary of State, Department of Health (Lord Warner)
  My right honourable friend the Secretary of State for Health has made the following Written Ministerial Statement today.

  The report of the committee of inquiry into how the National Health Service handled allegations about the conduct of Richard Neale (Cm 6315) was published today and copies have been placed in the Library. This is one of the three inquiries announced in July 2001 by my right honourable friend, Alan Milburn, the then Secretary of State for Health. The other two inquiries were to consider how the NHS handled allegations about the conduct of Clifford Ayling, a former GP; and William Kerr and Michael Haslam, former psychiatrists.
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  The Government would like to thank the chairman of the inquiry, Her Honour Judge Suzan Matthews QC and the two members of her panel, Christine Funnell and Derek Caldwell, for their thorough review of the circumstances surrounding the appointments to and employment of Richard Neale in the NHS. Their hard work in bringing together the relevant issues and their sympathy and understanding in dealing with them is very much appreciated. The Government would also like to thank the secretariat and legal team who provided such excellent support for the review.

  The Government are very grateful to the former patients of Richard Neale who chose to provide evidence to the inquiry, and to Richard Neale's former colleagues and other witnesses who also gave evidence, all of whom generously gave their time to assist the Inquiry.

  If we are to learn the lessons when things go wrong we must ensure that systems are in place which have the confidence of patients who wish to raise concerns. All patients have the right to expect a high standard of care from clinicians. Richard Neale fell short of these standards and as a result caused the patients in his care unnecessary distress. I should like to extend my sympathies to all those patients involved who suffered in this way.

  The NHS failed many of Richard Neale's former patients and the inquiry has provided the opportunity not only for their voices to be heard, but also to ensure that their experiences will help to strengthen the systems now in place to try to prevent similar incidents in the future.

  The report sets out in detail the history of Richard Neale's appointments in Canada and his subsequent employment in the UK. It charts the system failures that allowed him to be employed as a consultant without a proper understanding of his background; and a mixture of similar failures coupled with complacency that permitted him to continue practising in spite of concerns being raised about him.

  Since these events have come to light, we have taken a number of steps to help avoid similar incidents in the future. In setting out details of the failures over many years, the inquiry found that "… even before the Inquiry began many of the wider lessons had been learnt and change implemented". The NHS has indeed been subject to considerable changes over the past few years, many having the specific aim of improving the patient experience, especially patient safety. But we are not complacent and we recognise the need for further improvements. The inquiry's conclusions and recommendations, together with those of the Clifford Ayling inquiry also published today, will help us to ensure that the patient experience is properly at the centre of our work in the NHS.

  Many of the recommendations made by this inquiry are concerned with improvements in the way that complaints are handled by the NHS. These include ensuring that patients have both sufficient and correct information about their treatment to inform their decisions as well as strengthening the role of the Patient Advisory Liaison Service (PALS) to support
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  patients who have concerns, and some of this work is already underway. Issues around complaints are also being considered by the Shipman inquiry, which is likely to produce recommendations in its fifth report due later this year. They are also being considered by the William Kerr/Michael Haslam inquiry, whose report is also expected later this year. We will therefore consider these recommendations together with those of the Shipman, Clifford Ayling and William Kerr/Michael Haslam inquiries and give a detailed response in due course.

  In the mean time, the Government will consider very carefully the other recommendations concerning the appointment and employment of consultants and doctors in other grades, as well as the role of the Council for the Regulation of Healthcare Professionals (now known as the Council for Healthcare Regulatory Excellence), and will respond to these as soon as we can.

  We have made clear that patient safety is a priority and the UK has led the way in pushing forward in this area. Tomorrow, I will be talking to fellow EU health ministers about the lessons EU members can learn from one another and make clear that patient safety will be a key issue during the UK presidency of the EU next year.

  This inquiry has provided a valuable insight into a series of errors over a long period of time in the appointment processes and in Richard Neale's employment performance. It has painstakingly identified the causes of those errors and has made helpful recommendations about how best to avoid repeating them. We will review the improvements we have made in the past few years to ensure that they address the concerns raised in the report. The Government are grateful to all those whose contributions to the review will help us to fulfil our commitment to patient safety.

  Blood Donation and vCJD
  Lord Warner
  My right honourable friend the Secretary of State for Health has made the following Written Ministerial Statement today.

  Following my Statements to the House on 17 December 2003 and 16 March 2004 concerning variant Creutzfeldt-Jakob disease (vCJD) and blood, I wish to provide an update on some further developments in this area.

  My Statement on 17 December 2003 informed the House of the first case of possible transmission of vCJD via blood transfusion and the precautionary actions taken. Those actions included measures to protect future blood supplies and contacting recipients of blood from donors who subsequently went on to develop vCJD. A further Written Statement on 22 July 2004 indicated a second case of possible vCJD prion transmission via blood transfusion had been confirmed.

  I also made reference in December to the fact that other patients, including people with haemophilia and

  WS 105
  other bleeding disorders, would have received plasma products before they were sourced from the United States of America. Although there are now two reports of possible transmission of vCJD via blood, the risk of transmission via plasma products, which will have been derived from large pools of plasma donated from many thousands of people—and therefore heavily diluted—is uncertain. But it cannot be excluded. The CJD Incident Panel (CJDIP) were asked to advise on a case-by-case basis (having adopted a highly precautionary approach) which recipients of plasma products will need to be contacted. This advice has been received and a programme of action has been agreed.

  In June 2004 the Health Protection Agency (HPA), on behalf of the CJD Incident Panel, reported on an assessment of the risk associated with each batch of product and advised my department on: a) which patients needed to be assessed and possibly subsequently contacted, and b) managing the possible risk to public health of those patients.
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  In the light of these assessments, the HPA is today initiating a process to notify relevant patients of these developments. The HPA are sending information to clinicians to enable them to trace particular plasma products. The clinicians will then notify any patients identified as 'at risk' as a precaution. Any patients affected should expect to be contacted by clinicians later this month.

  Aside from patients with haemophilia or other bleeding disorders, the other main group of patients who may have received significant amounts of affected blood products are patients with primary immuno-deficiency (PID).

  Throughout this exercise we have been concerned to ensure that the results of the risk assessment are communicated to patients by the clinicians responsible for their day to day care, so that appropriate supporting information can be provided.

  Further details about the risk assessment exercise will not be disclosed until after patients are informed of the outcome. I will make a further Statement at a later date, if necessary.