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Lords Chamber

Volume 569: debated on Friday 1 March 1996

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House Of Lords

Friday, 1st March 1996.

The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.

Prayers—Read by the Lord Bishop of Lichfield.

Trusts Of Land And Appointment Of Trustees Bill Hl

11.6 a.m.

My Lords, I beg to move that this Bill be now read a second time.

This is a useful measure of law reform which derives from recommendations of the Law Commission in two reports. It gives effect, with minor changes, to the recommendations in the report on Transfer of Land: Trusts of Laud (Law Corn. No. 181), and also gives effect to the second recommendation, which concerns bare trusts, in the report on Overreaching: Beneficiaries in Occupation (Law Com. No. 188). Rather than detain your Lordships for a long time with a detailed explanation of the somewhat technical provisions of the Bill, I propose, with your Lordships' leave, to explain the Bill's provisions in fairly broad terms. Fuller explanation of the current law and the proposed changes may be found in the two Law Commission reports to which I have referred, and full Notes on Clauses will also be available to any noble Lord who wishes to examine the technical provisions in greater detail. Since the Bill was introduced there has been a substantial opportunity for commentators, practitioners and professional bodies to consider the Bill in detail, and many helpful comments and suggestions for improving the Bill have been received, to which the Government will endeavour to give as positive a response as possible.

The Bill extends to England and Wales only. It amends and replaces much of the law governing joint ownership of land, which was last changed significantly by the property legislation of 1925, in particular the Law of Property Act 1925, which did away with most of the complications of the old, essentially feudal law. Indeed this Bill represents an arguably overdue development of the process of simplification which, although most obviously represented by the 1925 legislation, began in the late 19th century.

s The 1925 legislation simplified conveyancing by ensuring that a purchaser should not as a rule have to undertake lengthy investigation of the beneficial interests in the property, but can take free of them if the relevant statutory machinery is used. It restricted joint ownership of land to two forms: the strict settlement, where land is limited in trust by way of succession, and which is rarely used today; and the trust for sale, where the legal interest is held by a trustee or trustees on trust for sale for those who have the beneficial interest. If the appropriate statutory machinery is used (generally conveyance by two trustees for sale or a trust corporation), the beneficial interests are "overreached" and transferred from the land to the proceeds of sale, and thereby cleared off the title so that the purchaser takes free of them. Certain interests cannot be overreached; namely, legal interests and those which are protected either by registration where the land is registered or because the purchaser has actual notice of them where the land is not registered.

There are three main problems with the existing law in this area. First, although it represented a considerable simplification of the law in its day, it is unnecessarily complicated, and the settled land provisions particularly so. Those provisions in particular have been recently described as redolent of a world which was already dying in 1925 and has long since disappeared. Secondly, because of the priority which the 1925 legislation gives to settled land, it is possible for testators or grantors to trigger the complex settled land provisions unintentionally, thereby causing problems and expense for both beneficiaries and purchasers. Thirdly, the trust for sale mechanism is not appropriate to the conditions of modern home ownership, which represents the majority of jointly-owned real property, since it is based on an assumption that property which is not subjected to a strict settlement is intended as an investment rather than as a home, to be bought and sold as market conditions demand, with the beneficiaries being interested in the proceeds of sale rather than the property for its own sake.

The Bill replaces trusts for sale and strict settlements with a new single system of co-ownership of land known as the "trust of land". Trusts for sale are abolished and existing trusts for sale become trusts of land as from commencement. The creation of new settlements after commencement is prohibited, although it will be possible for a similar effect to be achieved by express provision in a trust of land, as I shall explain later. Existing settlements, however, are left untouched and subject to the existing regime for as long as there remains land or heirlooms subject to the trusts of the settlement. In addition, there is an exception allowing resettlement of settlements in existence at commencement, and settlements created in the exercise of powers of appointment contained in settlements in existence at commencement. These provisions will avoid problems with settlements which may have been in existence for a long time.

Under the trust of land, title is vested in the trustees, who are given power both to sell and to retain the land, rather than being placed under a duty to sell. As a consequence, the doctrine of conversion, under which a joint beneficial interest in land is deemed to be an interest in the proceeds of sale rather than in the land itself, is abolished. The resulting position reflects the fact that most co-ownership of property is for the purpose of providing a home rather than an investment, and that most joint home owners already believe themselves to have an interest in land rather than in money. Existing protection for purchasers of land subject to a trust by way of the overreaching machinery is to be maintained and will cover all cases of co-ownership except existing settlements, so that conveyancing will be simplified. In accordance with the Law Commission's recommendation in the overreaching report, this will include bare trusts which presently fall outside the statutory scheme.

The Bill makes detailed provision for the administration of the trust of land, giving the trustees broad and flexible powers balanced against extra rights for the beneficiaries. Trustees of land will have, in relation to the land which is subject to the trust, all the powers of an absolute owner. This does not override any restrictions on trustees' powers under any other enactment. It is also subject to the requirement to act in accordance with the trust instrument, which may expressly limit the trustees' powers, and with the general equitable duties attaching to the position of trustee, in particular the duty to have regard to the interests of the beneficiaries in exercising such powers.

A particular power specifically conferred on trustees of land enables them, acting unanimously, to delegate any functions relating to the land to any beneficiary who is of full age and capacity and who has a present vested interest. This will, among other things, permit the effect of a strict settlement to be broadly reproduced, but without the possibility of creating a settlement unintentionally, which is one of the main problems of the existing law.

These powers are further balanced against additional rights for the beneficiaries, such as a right for beneficiaries of full age and capacity to be consulted about the management of the property unless the trust deed provides otherwise; and a right for beneficiaries in certain circumstances to occupy land subject to the trust.

The existing provision for enabling application to the court to resolve disputes over ownership or disposal of the property is also simplified, with flexible guidelines reflecting the different purposes for which the property may have been bought. This will carry through the effect of the existing provision under Section 30 of the 1925 Act as it has been applied and developed by the courts, with the amendments necessary to ensure that the court's powers are sufficiently broad and flexible to reflect the nature and purpose of the trust.

The Bill also makes detailed provision for such matters as the application of the new regime to trusts of the proceeds of sale of land, and to the position of personal representatives.

The detailed provisions of Part I of the Bill apply only to trusts of land. Part II makes provisions which will apply to trusts of personalty as well as trusts of land, concerning the appointment of new trustees, for example, where a trustee has become unfit or incapable or wishes to be discharged. These provisions, which apply only where all the beneficiaries are both ascertained and of full age and capacity, give them the right, which would be required to be exercised unanimously, to direct the appointment of a new trustee or trustees. In addition, trustees intending to make such an appointment are required to notify the beneficiaries and give them the option of giving a direction to appoint another person or persons. It is in recognition of the fact that these provisions extend beyond trusts of land that the Short Title of the Bill has been changed from the Bill annexed to the Law Commission's report, the title of which was the Trusts of Land Bill.

Finally, Part III of the Bill makes general provision for such matters as interpretation, commencement and for consequential amendments and repeals of other legislation.

I began by suggesting that I would not go into the provisions of the Bill in great detail. Having heard what I have had to say, your Lordships will no doubt be very grateful that I chose not to do so. The Bill is of a highly technical nature, but it is reassuring that apparently it has support. I believe this to be a useful measure of law reform which will simplify an area of the law which has become somewhat arcane but which in practice affects a great many people, particularly homeowners. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Mackay of Drumadoon.)

My Lords, it takes a Lord Advocate with the clarity of mind and speech of the noble and learned Lord to introduce the Second Reading of this highly technical and to a large extent esoteric Bill with comparative simplicity, and even succeed in making it sound interesting. In speaking for the Official Opposition I have the pleasant task of congratulating him on that introduction, and of thanking the Law Commission for its two reports and for all the work and erudition that went into them, while noting, as I am sure the House will, that these reports were made as long ago as 1989. I can tell the House that the Law Society, as well as leading academics, having been extensively consulted as the noble and learned Lord mentioned, approves generally of the principles governing this Bill, and that this is one of those occasions when the Opposition can announce that the government measure is not opposed and indeed has their support.

Any necessary modernisation or tidying up of the law is a good thing. That is what the Bill achieves, based as it is, with some fairly minor amendments, on the two Law Commission reports which have been summarised by the noble and learned Lord.

Trust law has never been simple, but it did not have to be as complex as it has been, or as self-defeating, by having different legal consequences resulting from trusts for sale and strict settlements in respect of land. The basic proposition in the Bill, as it was in the recommendations contained in the Law Commission's two reports, is to have a new, single system of co-ownership of land known as "the trust of land". That will apply to all trusts of land, including bare trusts, but excepting strict settlements under the Settled Land Act 1925 already in existence when the Bill becomes law and is effective, and certain new settlements derived from such settlements.

I express my appreciation to the noble and learned Lord the Lord Advocate and to the noble and learned Lord the Lord Chancellor, which they in turn may wish to pass on to or share with Parliamentary Counsel, for their decision not to follow the form of the draft Bills which, with its usual helpfulness, the Law Commission attached by way of appendix to its two reports. As the noble and learned Lord the Lord Advocate knows, the present Bill has been extensively redrafted as against the method adopted in the commission's draft of textual amendment of existing legislation. That is, and especially in this instance would be, a cumbersome and confusing method by which to legislate, and would not be appreciated by legal practitioners, not to mention the unfortunate proverbial occupant of the Clapham omnibus in the event of his choosing this Bill as light reading on his journey. Instead of adopting such a procedure, the reforming measures provided in the Bill are formulated as new, freestanding provisions.

I should also like to emphasise, as did the noble and learned Lord, the importance of the manner in which under the Bill trustees have been given broader and more flexible powers and beneficiaries, for their part, rights which they do not now have. Included in those rights is a very new one, where beneficiaries not only under trusts of land but of personalty become entitled in certain circumstances where it is necessary to appoint somebody new as a trustee to direct the trustees to appoint someone of their own choice. Under Clause 19 of the Bill trustee are required to serve notice of intention to appoint a new trustee on their beneficiaries if all are of full age and capacity and to give the beneficiaries the opportunity to exercise by direction their right to choose a trustee themselves.

Clause 21 of the Bill gives the beneficiaries a similar right to choose a trustee where an existing trustee is mentally incapable and there are no other trustees willing and capable of making an appointment. The Law Society has suggested that those provisions could give rise to some difficulties in practice and that trustees may in future want to ensure that trusts and wills expressly confer power of appointment in order to avoid their operation.

While dealing with the right to nominate trustees perhaps I may mention that the Bill does not appear to deal with any overlap with the Pensions Act 1995, which includes some similar provisions; for example, members of pension schemes having the right to nominate trustees. I understand that draft regulations under that Act are the subject of consideration and consultation. Where pension trustees hold land as assets of the pension fund both pieces of legislation might apply unless specific provisions are made to avoid overlap. Would the noble and learned Lord the Lord Advocate care to look at that?

Furthermore, the existing provisions in Section 26(3) of the Law of Property Act for statutory trusts for sale under which trustees must consult beneficiaries of full age and capacity wherever practical when exercising their functions are also extended in Clause 11 to all trusts of land unless expressly excluded. As the noble and learned Lord the Lord Advocate may know, it has been suggested by some practitioners that that could well prove onerous in some circumstances and is causing some concern.

Again on this subject, it is appropriate that the Bill should not give discretionary beneficiaries rights which should sensibly be kept for beneficiaries who are definitely entitled to share in the trust. Apart from the principle that a discretionary beneficiary has no right until he is appointed to receive a benefit, I am sure that the noble and learned Lord would agree that it would be wholly impracticable for everyone in a large class of discretionary beneficiaries to be consulted on trust matters.

Perhaps the use in various clauses of the Bill of the word "ascertained" in relation to beneficiaries is intended to exclude merely potential beneficiaries under a discretionary trust. However, in view of past uncertainties over language in existing legislation on the same point (for example, whether discretionary beneficiaries have an "interest"), might it not be much safer to put the position beyond doubt rather than use shorthand expressions on such an important point? I appreciate that that is more of a Committee point, but I thought that it might be useful to mention it at this stage so that it can be duly considered.

One particular reform contained in the Bill, which was emphasised by the noble and learned Lord in his opening speech, will interest the House and the public at large, the majority of whom would think that they had no personal interest or connection with the law appertaining to trusts. What they may not have realised, until some lawyer explains it to them when it becomes appropriate to do so (sometimes, unfortunately, on a matrimonial break-up) is that when with the other spouse they jointly purchased their matrimonial home they created in law a trust for sale. Technically that means that there is a duty to sell even if the law implies a power to postpone the sale.

As the Law Commission report points out, house ownership is a common feature today among all sections of our community. The figures are interesting. The proportion of owner-occupied dwellings goes from 7 per cent. in 1914 to 43 per cent. in 1938 and 66 per cent. by 1992. In the old days joint ownership on the title deeds by husband and wife was a rarity. In these days it is very common, and the intention of most spouses when purchasing the matrimonial home in joint names is not to hold it as an investment for sale or as an investment asset pending sale but to use it and keep it as a home. Lawyers have been trying to deal with the position by developing a principle, to which the noble and learned Lord briefly referred, known as "collateral purpose". That means recognising that the intention and purpose was to provide a family home so that where there is a dispute the court can refuse to order a sale. In many respects, that has made confusion more confounded in regard to what is the true legal position and, as has been pointed out, there are conflicting precedents in the judgments of the Court of Appeal.

The new concept of a single trust for land and the provisions of this Bill supply a welcome solution to a very real current problem as, under the new style trust, the trustees (in this case the husband and wife) will hold the legal estates on trust with a power to sell and a power to retain the land rather than having the primary duty of sale as in the position under the existing law.

I do not wish, especially on a Friday morning, to weary the House with a detailed survey of the many provisions of the Bill. I believe that that paraphrases the opening remarks of the speech of the noble and learned Lord. As I have said, that has already been done so ably by the noble and learned Lord the Lord Advocate. I have merely attempted to select some of the principles which underlie the desirable reforms which the Bill contains, to point out why some of those reforms are necessary and to put to the noble and learned Lord a few matters which have arisen in the minds of legal practitioners which can doubtless be dealt with at later stages in the Bill's history. I follow the noble and learned Lord the Lord Advocate in commending the Bill to the House and in supporting the Motion for its Second Reading.

11.32 a.m.

My Lords, perhaps I may join the noble Lord in thanking the noble and learned Lord the Lord Advocate for his explanation of the Bill. I should also say how grateful I was for the early receipt of the Notes on Clauses, which give a clear description of what is a formidable subject. I am sure that I am not alone in always having been rather afraid of the bewildering law relating to trusts of land with its strange language such as "overreaching", "springing interests" and the like. The strict settlement and the trust for sale were taught to students as if they were immutable and sacrosanct, cast in the magnificent language of the 1925 legislation. They were always concepts which were very difficult to grasp—to me, at any rate—even once one had got hold of the basic point that they were mutually exclusive.

But the practising common lawyer cannot avoid the law of trusts, much as he or she may want to. The trust for sale or variants of it have become frequently used by the matrimonial courts as one solution to property and financial disputes after divorce. Conversely, when advising on potential claims against an estate under the inheritance provisions of the Inheritance (Provision for Family and Dependants) Act 1975, one is quite often faced with wills which inappropriately use a trust for sale in favour of a widow. There, the authorities suggest that the machinery of the Settled Land Act 1925 is more appropriate. Indeed, that Act is used to deal with certain claims under the 1975 legislation.

As I understand it, the Bill will not preclude that sort of flexibility in future, although the labels may change. The reforms in the Bill are, as we have been told, the product of reports from the Law Commission. They are generally welcomed, so far as I can tell, both academically and among practitioners to the north of the Law Courts. Frankly, it is hard to detect the emotional turmoil in Lincoln's Inn on almost any subject. But, as far as I have been able to discover, there is no seething discontent at the changes now proposed.

I understand that the complexity of the present law has led drafting, even by competent lawyers, to produce unexpected results. The Bill seems to produce a scheme which is simpler, albeit sometimes less certain, and may place a greater burden upon the draftsman. Of course, this is not simply an arid area of the law. The law of trusts has been creatively used to produce equitable solutions to social problems and informal arrangements between unmarried couples and between family members of different generations. For example, with the release of council house tenancies for sale, one quite often comes across quite elderly couples who have been tenants for a long time and so are entitled to a substantial discount under the right-to-buy scheme, who use the mortgage capability of their children to exercise that right. That all works perfectly well if everyone remains harmonious, but it can cause acute conflict if the generations fall out.

The use by the Court of Appeal of the Settled Land Act 1925 in the recent case of Costello in 1994 is a striking example of that use of the existing law to meet such a situation. A case called Dent in which the High Court found against a settled land Act tenancy for life was reported only this week. It is to be hoped that the Bill might reduce the need for such costly litigation.

Perhaps I may particularly welcome the formulation of a court's powers in Clause 14 of the Bill and the formulation of the relevant matters for consideration by the court in Clause 15, especially the express reference to the welfare of any minor child. It seems to me that that will assist in preserving the home for children so far as may be practicable.

I should like now to raise a point that I was asked to mention by the noble Earl, Lord Kinnoull, who regrets that he is unable to be present today. It concerns charitable trusts which sometimes, by historical accident as much for any other reason, can hold land either as settled land or under trust for sale. Under the Bill as drafted, a considerable difference will be created because those trusts which are settled land will not have the benefit of the powers in Clause 6 and will remain subject to the restrictions of the 1925 legislation but those which were set up as trusts for sale will be free of such restrictions.

There may be good reason for retaining such distinction in private trusts, but it is hard to see why they should affect charities, given the safeguards under the existing charities legislation. Indeed, I understand that the Charity Commission favours allowing existing charitable settlements to become trusts of land under the proposed new law but that the Home Office has suggested potential problems under Article 1 of the First Protocol to the European Convention on Human Rights. At this stage, I do not propose to swim yet further out of my depth, but I would inquire whether the Government have advanced their thinking on that topic and whether they might be prepared to bring forward their own amendments in Committee—failing which, I suspect that the noble Earl may be inclined to do so.

Finally, I should like to ask the noble and learned Lord the Lord Advocate about the present intentions as regards the commencement of the legislation. Can be tell us when that might be and whether it is intended that good notice will be given to the various professional bodies? With those remarks, I welcome the Bill.

11.39 a.m.

My Lords, those who have spoken before me have managed splendidly to avoid the technicalities of what is a technical Bill. Unfortunately it is my area of technicality but, even so, I shall do my best not to get lost in it.

Perhaps I may begin by welcoming the Bill personally. For the reasons that those who have spoken before me have given, we are at last going to get a little bit of common sense into the law affecting the matrimonial home, instead of leaving it to people like me to work out what ought to be the simplest thing in the world by reference to Acts designed to deal with the settled estates of the Duke of Omnium. That must be an enormous leap forward.

Secondly, perhaps I may echo the welcome for a complete redraft of the law in the sector, which is much overdue. Anything that gets rid of some of the matters that I have had to consider for the past 30 years cannot be anything but good. Finally, on that aspect, I shall miss my expertise in one way, but I have no doubt that for everyone, if the Bill goes through, it will make dealing with land and homes easier, better and, if I may say so, cheaper.

I hope to detain your Lordships for only a short while on the concerns which have been drawn to my attention by the Association of Pension Lawyers. It is an astonishing feature of our trust law that when people talk about trusts and trusts of land, they are inclined to think of matrimonial homes or the trust of half Essex. What they do not think about is pension funds. I do not know how many hundred billion pounds are currently invested in occupational pension schemes, but in terms of value it dwarfs any other trusts which are now subsisting. I do not blame anyone in regard to the drafting or presentation of the Bill, but it looks as though the interaction between those provisions and the running of pension funds has somehow been overlooked to date.

I am sure that the Government will be as aware as I am that it is of great importance that the provisions of the Bill are brought into line so that the regulation of pension schemes, which has recently been undertaken by Parliament in the Pensions Act 1995, does not come into conflict in any way with the provisions of the Bill. The definition of a trust of land in the Bill includes any land held in trust. Pension schemes have large holdings of land. It goes wider than that; many other large trust funds have holdings of land as investments. I am not quite sure of the extent to which the Bill has so far addressed the problem of people, pensioners or pending pensioners, being entitled to occupy number 22, Smithfield. That is an admirable provision when applied to the matrimonial home, but not entirely apposite when brought to bear on pension schemes and any other large trust fund which is invested in land.

Therefore, I hope that when we reach the Committee stage, or possibly before, the House will address how this admirable scheme is to be adjusted so as to ensure that the regulation under the Pensions Act is not frustrated, at the same time as preserving all the benefits that the Bill otherwise has.

I have a small number of technical points on which I shall not dwell because this is not the appropriate time. If I may, I shall provide to the noble and learned Lord the Lord Advocate a note of matters which have been brought to my attention and which I endorse.

I finish with one technical point of general importance. Various rights are conferred on beneficiaries, if they are ascertained and of full age. That theme recurs throughout the Bill. For myself—and I am not alone—I am not quite sure what the statutory formula means. Do beneficiaries have rights if all beneficiaries are ascertained and if all are of full age or do those who are ascertained and of full age have rights, even though there are many other unascertained parties? That is a technical point, but a real one because under the Bill great powers are being given to a class of beneficiaries. I hope that there can be no doubt at all, as a matter of drafting, which class is intended. Are the rights only conferred when all the beneficiaries are of full age and ascertained, or are they conferred on those beneficiaries who are ascertained, notwithstanding that there is a huge class of other beneficiaries to follow thereafter? I hope that, when we reach the Committee stage, careful attention will be given to the position of pension funds and, to my mind, the legitimate difficulties that they see arising in certain provisions in what otherwise is an admirable Bill.

11.45 a.m.

My Lords, as one whose practice of the law was rudely interrupted by the late Adolf Hitler 56 years ago, perhaps I may express my deep personal gratitude to those noble Lords who have taken part in the debate and clarified my understanding of the Bill to a considerable extent. I wish particularly to thank my noble and learned friend the Lord Advocate and the noble Lord, Lord Mishcon, for the clarification which they gave. At least I hope they know that one Member of the House understands the Bill a great deal better than he did before and is truly grateful for it.

11.46 a.m.

My Lords, I am grateful for the support which the Bill has received from all sides of the House. I am particularly grateful to the noble Lord, Lord Mishcon, for the eloquent way in which he conveyed his warm support for the Bill. He obviously has an extensive knowledge and understanding of this field of law. It is reassuring to me and the Government that the Bill commands his support. I shall pass on to Parliamentary Counsel the appreciation which the noble Lord, Lord Mishcon, expressed—an appreciation which we all share.

I am happy to indicate at this stage, dealing with the specific points which the noble Lord, Lord Mishcon, raised, that they will all be looked at fully and sympathetically as soon as possible. The concerns which he raised are understood and I am optimistic that the Government will be able to address them in the course of the next few weeks, before the Bill returns to your Lordships' House.

The noble Lord, Lord Meston, reinforced with some recent examples how trust law has been developed in new fields in recent years. The examples illustrate the desirability of simplifying the law as much as possible, and again it is reassuring to have his support.

Dealing with the specific point which he raised on behalf of my noble friend Lord Kinnoull, it has already been discussed with officials of the Lord Chancellor's Department and I am in a position to say that the officials see no reason why an appropriate amendment cannot be ready in time to be brought forward by the Government for the Committee to consider. As my noble friend indicated, the Charities Commission has supported the point and I am advised that there is no problem under the European Convention in bringing forward an amendment to deal with the concern.

The final point which the noble Lord, Lord Meston, raised is the issue of commencement. It is accepted that the Bill could only come into effect some time after Royal Assent and ample notice will be given to all practitioners who might be affected, assuming that the Bill follows the normal passage. It is anticipated that it will be some date next year before commencement takes place. I hope by Committee stage to be in a position to give a more specific indication of when that might be.

Turning to the points which the noble and learned Lord, Lord Browne-Wilkinson, raised, it is extremely reassuring to have support from that quarter as well. He explained the concerns of the Association of Pension Lawyers about the possible overlap. The two matters have been discussed with the officials of the Lord Chancellor's Department: the anxieties are of importance and they will be addressed. I hope that amendments can be brought forward to deal with those suggestions which the Government accept, so that they can be properly considered at Committee stage.

As to the final point raised by the noble and learned Lord, I am advised that the intended meaning of the provisions of the Bill is that the beneficiaries must all be ascertained and be of full age and capacity. I hope that that provides an answer to the specific point raised.

Finally, I thank the noble Lord, Lord Boyd-Carpenter, for joining in and providing his support, on the basis of his long experience, for a Bill which, it is accepted, commands support on all sides. I commend the Bill to the House and invite noble Lords to give it a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

Appropriation (Northern Ireland) Order 1996

11.50 a.m.

The Parliamentary Under-Secretary of State, Northern Ireland Office
(Baroness Denton of Wakefield)

rose to move, That the draft order laid before the House on 13th February be approved.

The noble Baroness said: My Lords, I beg to move that the draft Appropriation (Northern Ireland) Order 1996, which was laid before the House on 13th February, be approved.

This is one in a series of financial orders covering Northern Ireland departments which come before the House each year. The draft order before us today authorises expenditure of £96 million for Northern Ireland departments for the current financial year. This is in addition to the £6,142 million voted by the House last June. The order also authorises the vote-on-account of £2,821 million for 1996–97, to enable the services of Northern Ireland departments to continue until the 1996–97 main Estimates are brought before your Lordships later this year.

Before turning to the details of the Estimates, I should like to set them in the context of recent economic developments in Northern Ireland. Both official data and survey evidence show that there is a marked improvement in the recent performance of the local economy and that the prospects for the economic future of Northern Ireland are now brighter than for many years. This is also reflected in the figures for those in employment and those out of work. The number of employees in employment in Northern Ireland now stands at 570,290—an all-time high for the Province. Seasonally adjusted unemployment, at 11.4 per cent. of the workforce, is now at its lowest level for over 14 years.

This is encouraging, as is survey evidence from the local business community, which shows that confidence in the Northern Ireland economy remains strong across the hoard, with reported investment levels well above other regions in the United Kingdom. Furthermore, the positive growth in exports is continuing, and consumer demand remains buoyant. The output of manufacturing and production industries continues to rise at a rate well above that achieved at national level. Over the past five years Northern Ireland's manufacturing sector has increased output by just over 13 per cent., compared with a 1.3 per cent. rise nationally. Government will continue to assist local industry to improve its competitiveness and to maximise the opportunities offered by the new economic climate.

All this, without doubt, is very welcome news for the people of Northern Ireland and I am confident that the prospects and performance of the economy will continue to improve. But, let there be no mistake, all this success could be put at risk if there were continuing violence.

With your Lordships' permission, I now turn to the main items in the Estimates, starting with the Department of Agriculture. In Vote 1, a net increase of £1.1 million is required. Some £1.5 million is for capital grant commitments, £1.3 million of which is required for additional uptake under the farm and conservation grant scheme. These increases are offset by savings in other areas.

In Vote 2, covering local support measures, a net increase of £1.1 million is sought. This includes £3.6 million which represents the carry-forward of capital and running costs from 1994–95 to 1995–96. These increases are partially offset by projected easements elsewhere within the Vote.

Turning to the Department of Economic Development, a token increase of £1,000 is sought in Vote I. Some £3.5 million is for the Industrial Development Board for the provision of land and buildings. This is to meet additional expenditure on factories for recent inward investment projects. Some £6 million is for selective assistance to industry, mainly to meet claims made under existing offers to major inward investment projects. These increases reflect the continuing success of the board in attracting competitive companies to Northern Ireland. The increases are offset by increased receipts and reduced requirements elsewhere in the Vote.

In Vote 2, a token increase of £1,000 is also sought. This is mainly to cover residual expenditure in relation to the privatisation of the electricity supply in Northern Ireland. These costs are being met from dividend receipts and proceeds from the sale of shares.

In Vote 3, a net increase of some £1.6 million is sought by the Training and Employment Agency. The main requirement is £6 million to meet increasing capital under the company development programme. Partial offsetting of savings declared elsewhere in the Vole has reduced the additional requirements to £1.6 million.

I now turn to the Department of the Environment. A net increase of some £6.5 million is sought in Vote 1, including some £3.4 million for roads and bridges maintenance and for capital works. Some £2.8 million is for compensation payments and capital grants to Northern Ireland railways. These increases again are partially offset by increased receipts.

In Vote 2, covering housing, a net increase of some £3 million is sought, mainly to provide assistance to the Northern Ireland Housing Executive. Some £6.8 million is to provide private sector housing renovation grants. This increase is partially offset by the re-allocation of some £2.8 million in housing grant and by additional receipts from housing associations. Gross housing expenditure in Northern Ireland this year is expected to be about £599 million, some £25 million more than in 1994–95.

In Vote 3, covering water and sewerage services, a net increase of some £2.1 million is sought. Additional expenditure of some £4 million, mainly required for operational, new construction and improvement work. This has been offset by a reduction of some £2 million on water and sewerage administration.

In Vote 4, covering environmental and other services, a net increase of some £0.2 million is sought. Environmental and urban regeneration programmes are included in this increased expenditure, which again is offset mainly by additional receipts.

In Vote 5, covering office and general accommodation, £8.2 million is for new public building works, alterations and purchases.

In Vote 6, covering the Fire Service, a net increase of £0.9 million is sought for turnout and attendance fees for retained firefighters and other miscellaneous increased costs.

I now turn to the Department of Education, where a net increase of some £8.3 million is sought in Vote I. This includes some £7.1 million for grants to education and library hoards, mainly for maintenance, minor works and frost damage, and for replacement buses. Some £1.4 million is for voluntary schools, mainly for health and safety works. These increases are offset by savings elsewhere in the Vote.

In Vote 2, a net increase of £0.3 million is sought. Some £0.9 million is needed for an increase in the student support budget, £0.3 million for arts and museums, and a further £0.3 million for sport and community services. Increases are also required for departmental administration and youth cervices. These increases are offset by reduced requirements elsewhere in the Vote.

I now turn to the Department of Health and Social Services. Where a net increase of £17.6 million is sought in Vote I. This includes £26.1 million for hospital, community health and personal social services and family health services revenue; and £1.9 million for capital expenditure. These increases are offset by increased receipts and a reduction of £7.1 million in the centrally financed services.

Moving to Vote 3. where additional net provision of £5.3 million is required, his is due to a decrease in receipts of £6.8 million, most of which relates to recoupments from the National Insurance Fund in respect of administration costs and an increase in funding for the centrally financed miscellaneous health and personal social services of £2.8 Those increases are offset by reductions of £4.3 million elsewhere in the vote.

In Vote 4, which covers social security, £29 million is sought. This is due mainly to a greater than anticipated demand for disability benefits, in particular attendance, invalid care and disability living allowances. This is offset by decreases in income support and family credit.

Finally, in Vote 5 £5.3 million is sought. This is due mainly to increased expenditure on rent allowance and rates rebates. Those increases are partially offset by reduced requirements elsewhere in the vote.

In addition to the aforementioned increases, provision has been included within individual votes under the European Union Special Support Programme for Peace and Reconciliation. European funding has been provided initially for a three-year period 1995–97, with further funding for two years up to 1999, subject to review. Northern Ireland has been allocated £200 million, which, together with 25 per cent. matching funding, brings the total value of the programme in Northern Ireland to some £266 million. Both the European funding and the matching funding will be fully additional.

I hope that your Lordships have found this summary of the main components of the order helpful, if detailed. I commend the order to your Lordships.

Moved, That the draft order laid before the House on 13th February be approved.—( Baroness Denton of Wakefield.)

12.3 p.m.

My Lords, my noble friend Lord Williams of Mostyn very much regrets that he is unable to be in his place this morning, due to a previous commitment.

I should like to thank the noble Baroness, Lady Denton, for introducing the appropriation order with its range of figures, for her account of the main items of expenditure and her encouraging report on the economic background to the developments in Northern Ireland.

I believe I should not be going wide of the subject we are discussing if I were to say at the outset that the explosion in Canary Wharf three weeks ago which brought the IRA ceasefire to an end filled us all with disbelief and dismay. It seems to many of us that the clock went back that night. On the other hand, I believe that the message from the people of Northern Ireland right across the land is clear: they want the politicians to work towards a lasting peace and reconciliation. We were therefore immensely encouraged when the two governments were able to issue a joint statement two days ago. That statement showed a great deal of flexibility and contained elements which should have been acceptable to all parties. The statement sent out a signal of hope. As the Minister said, it is upon the expectations for peace that so much depends in Northern Ireland. However, the signals overnight from the IRA are sombre and it would appear that the reinstatement of the ceasefire is very much in doubt. That is the situation we are in.

I should like to hear from the Minister on the transfers which have been made during the past 12 to 15 months from the security budget to other budgets, such as those for economic development, health and social services. If the reinstatement of the IRA ceasefire is not likely to be imminent, do the Government intend to claw hack any of the funds which have been transferred from the security budget to the economic, health and social services budgets'? The stark fact is that there is horrendous dependence on the dole and social benefits in Northern Ireland. I believe it is agreed that to reduce this dependence should continue to be a central aim of government policy. The Secretary of State has been reported in the Belfast Telegraph as saying:
"if violence resumes, this saving will have to be restored to the budget".

Can the Minister clarify at whose expense it will be restored, hearing in mind that, notwithstanding what the Minister said about the health vote, at least two of the health and social services hoards are at present facing some financial difficulties, as is the ACE youth employment scheme'? I do not overlook the personal difficulties of the 40,000 long-term unemployed in Northern Ireland.

Though I have been considerably reassured by what the Minister has said, is there any evidence that any of the international bodies are contemplating the withdrawal of funds if the ceasefire is not restored? If such a move were to be one of the consequences of a resumption of violence, it would be shortsighted. However, I believe the Minister assured the House that the European Peace Fund, for example, is secure. Is there any evidence that some overseas companies or municipality funds, such as the New York City Employee Pension Fund, considering not proceeding with their plans to invest in Northern Ireland until the ceasefire has been reinstated? Surely the investment plans of overseas companies and large municipalities are more relevant than ever.

There is agreement, fully supported by Coopers & Lybrand, that the period of 17 months since the ceasefire has been one of the most successful periods for Northern Ireland in living memory. Clearly, the ceasefire contributed significantly to that achievement. That is not to belittle the admirable commitment of the Minister to the task of rebuilding the Northern Ireland economy. As the Minister said— I believe she touched on this in her speech this morning— we have to ensure that all the hard work of the past 17 months is not squandered.

I am conscious that it is Friday morning and therefore I have just a few specific questions for the Minister. They fall within the Minister's area of responsibility. We have all read of the worries at Short's, Ulster's biggest private sector employer. Those difficulties flow from the financial problems of its key customer, Fokker, the Dutch aerospace company. The loss of Short's would be a severe blow for Northern Ireland. My noble friend Lord Blease tells me that 1,500 redundancy notices have already been issued. No doubt that is no more than a precautionary move. However, that gives a stark indication of the size of the potential loss.

Can the Minister tell us how complex is the position as at today's date, 1st March'? Can she give us any reassuring information additional to what we read in the newspapers? I am sure that it would be appreciated if the Minister could give an indication of when the company and its 1,500 employees may anticipate a firm decision on the company's future.

I have a question about Northern Ireland's largest single industry, agriculture, which is facing critical years. Compared with the huge investments referred to in the order, my question is relatively minor; nonetheless, it is important for rural Northern Ireland.

Last December the Scottish Secretary of State made an order, the Rural Diversification Programme (Scotland) Regulations (1995 No. 3295). That order was made under the terms of the European Community Act 1972. The regulations provide a range of small but useful measures for promotion of rural diversification. They provide for the payment of grants up to £ 25,000 to a legal occupier of an agricultural unit— I believe those are Scottish tenns— to finance such measures on his land. I have a feeling that such an order would also be welcomed by the owners and tenants of agricultural land in Northern Ireland. Can the Minister say therefore whether the department intends to bring forward a comparable order for Northern Ireland in the near future?

My third point relates to an important growth industry— the tourist industry. The British and Irish Parliamentary Body, since its founding, consistently encouraged greater co-operation between the two tourist hoards. One is pleased to say that that co-operation has been forthcoming. I was therefore particularly sorry that the two hoards found it necessary, understandably, to postpone this year's joint advertising campaign in Britain because of the breakdown of the ceasefire. Can the Minister tell the House whether that campaign can be reinstated at short notice?

As the Minister said very eloquently, the past 17 months has been an excellent period for inward investment in Northern Ireland. However, I have read that it is claimed that there is a worrying gap between promise and achievement on the part of the IDB. Can the Minister clarify the position? Is there or is there not a gap of some 4,000 or 5,000 between the number of jobs promised by the IDB (and part-financed by the IDB) and those achieved in the year 1994? If there is a gap of that order, why should that be the case? On the other hand, if there is no gap, is the Minister satisfied that there are no additional ways in which the IDB can be made to function successfully in Northern Ireland?

With those few questions I am pleased on behalf of this Front Bench to give our approval to the appropriation order.

12.15 p.m.

My Lords, I join in thanking the noble Baroness for her introduction of the order and state the obvious; that is, that it is only the unavoidable absence of my noble friend Lord Holmc of Cheltenham which finds me here.

The economy of Northern Ireland has undoubtedly been transformed over the past 18 months. While there has been an uncertain recovery in the rest of the United Kingdom, the recovery in Northern Ireland has been more substantial— I understand some 13 per cent. more so. Business confidence rose as the political situation developed. Many more overseas investors have become aware of the latent opportunities in the north and consumer spending has risen sharply, largely because of people travelling from Britain and from the Republic.

The present is promising and the future looks even brighter. However, we are not yet out of the woods. Unemployment is falling and is lower than it has been for many years. but it is still worryingly high. It is higher than in the rest of the United Kingdom by some 3 or 4 per cent. and a much greater proportion of that unemployment is endemic. More than half of those people are long-term unemployed. If the order can help those people, it will have a disproportionately beneficial effect on the economy of Northern Ireland.

Unfortunately, I see that help for the long-term unemployed was cut severely. The Action for Community Employment, to which the noble Lord, Lord Prys-Davies, referred, is facing a cut of one quarter of its overall value. Up to 3,000 jobs may be lost, and those are jobs that can reach the long-term unemployed and strengthen the fabric of the community. The Minister may say that government funds are creating jobs elsewhere and that the private sector created some 11,000 jobs, which is both impressive and welcome. But that will not convince the community worker in the Shankhill or the Falls. I understand that the cuts in this scheme went down badly in Northern Ireland. If the Government have a case, they have some explaining to do; if not, then the cut is a false economy of serious magnitude.

I understand that the amount allotted to education for the coming financial year rose again, which is welcome. But the rise is small and insufficient. Education Vote I spending has risen by 3 per cent. over three years amounting to marginal increases above the amount required to keep pace with inflation. I understand that there is anecdotal evidence that education in Northern Ireland is in need of a boost. On these Benches we would like to see much of that boost directed towards integrated schools, which have done a great deal of good in Northern Ireland and must be supported in their efforts. Schools considering integrated status need financial backing to encourage them to make the break and gain integrated status, with all the difficulties and awkwardnesses that inevitably follow in the short term. But that point is not confined to integrated schools. Education generally, in most sectors and most schools, is as short of money in Northern Ireland as it is in the rest of the United Kingdom.

Finally, perhaps I may make a brief comment about agriculture, which is by some measures three times more important to the economy of Northern Ireland than it is to the economy of the rest of the United Kingdom. I understand that the Vote 2 sum granted has fallen again, as it has done now for several years. I ask whether there is some plan behind this reduction. Is there some way in which this figure is falling but agriculture is somehow better off? I suspect that that is not the position; in which case I should like to know why this sum continues to be cut, and cut so substantially. I conclude by joining in paying tribute to the work of the noble Baroness the Minister.

12.20 p.m.

My Lords, this debate is taking place in a somewhat more constructive atmosphere than one might have perhaps expected only 48 hours or so ago. I welcome that. The moral of this— it is something worth repeating over and over again— is that the two governments, Her Majesty's Government and the Government of the Irish Republic, simply have to stick together. If they do not, they are all too likely to hang separately. When they agree, it is possible to make progress; when they diverge, everything falls back.

I therefore welcome the timetable recently announced. I welcome the absence of general preconditions for negotiations. I welcome the electoral element, provided this does not exclude the very small parties entirely from negotiations. I welcome also the possibility of referenda, but it is quite essential that there should be separate and distinct referenda in Northern Ireland and in the Republic. If perhaps a third referendum might be desired in Britain, well so be it. The six principles so clearly set out in the Mitchell Report would, I suggest, provide an excellent basis for the question to be put in simultaneous referenda.

In view of the timetable already agreed by the two governments, it seems reasonable to ask that those who organise traditional marches in Northern Ireland should consider whether perhaps the right to life: and limb is not more important than the freedom to march and demonstrate. Such a request would come well from the leadership of the constitutional parties, from employers, from trade unions and from Churches; in short from all who have worked so hard and for so long to bring about a state of peace. Perhaps it may become possible to postpone all marches for a period of, let us say, one year, thus reducing tension and providing space for serious negotiations aimed at a lasting political solution.

It may be known that since 1979 I have taken a deep personal interest in the subject of prisoners, including those prisoners whose motivation has arisen from political violence and conflict. I therefore urge both governments to co-ordinate and harmonise their approach to such offenders. Those in prison and former prisoners made a significant contribution to the achievement of the 1994 ceasefires together with civilian intermediaries, several of whom from both traditions I am honoured to know as friends. They have helped to minimise the adverse consequences of the recent partial breakdown of the ceasefires. I therefore appeal to both governments to be as imaginative and as constructive as humanly possible in their approach not only to politically motivated prisoners but also to the probably larger numbers of paramilitary activists now at liberty.

These people need new lives in the context of an eventual agreed political settlement. They need to know that resettlement will be available to them, perhaps sometimes in a new country and under a new identity. Every possible measure should be taken to prevent paramilitaries drifting into organised crime and in particular into illegal drug trafficking. Planning and action are needed now and not only after a long period— perhaps two or three years— of political negotiations. Fortunately, we have a range of voluntary organisations in Northern Ireland with expertise in employment and in the resettlement of former paramilitaries. I have therefore put down Questions for Written Answer and I ask Her Majesty's Government to treat them with the seriousness and urgency that I think they deserve. Should Ministers wish to take me into their confidence, I hope they will do so.

I come now to Action for Community Employment, ACE, which has already been mentioned by two previous speakers. Since I have already written a three-page letter to the noble Baroness the Minister, to which she has not yet had time to reply, I shall not go into great detail. Suffice it to say that ACE provides a very valuable employment and training service for young people and older unemployed people in Northern Ireland. The Secretary of State may perhaps have been justified in imposing a 25 per cent. cut in the circumstances of last December. He was certainly wrong in my view in doing so without previous consultation with the voluntary sector. I say that because NGOs provide most, if not all, the employment and training. They also use ACE workers to deliver much needed services to the poorest, most deprived and most handicapped residents, often in inner city areas and large post-war housing estates. Much cross-community work is done by ACE workers and remains vitally necessary in today's situation.

In the circumstances of today, so different in many ways from those of December, the cuts are unwise and ill timed. Nevertheless, I congratulate the noble Baroness the Minister on having already rescued £ 2.5 million or perhaps £ 3 million out of the original £12.5 million reduction. I urge her to still greater efforts. I suggest that no ACE workers should have to be laid off before they finish their year's period of employment. The urban and rural priority areas where poverty, unemployment and deprivation are concentrated should be fully protected from the impact of cuts. ACE core workers should be kept on and, if necessary, redistributed to the areas of greatest need. That, in my view, is a minimum rescue package, but I trust very much that the programme as a whole will be reconsidered and if possible saved.

12.28 p.m.

My Lords, I begin by apologising most deeply to the Minister and to the House for my late arrival. I miscalculated and I am extremely sorry, the more so because I missed what I know must have been a deeply interesting speech. I hope that she and the House will forgive me if, not having heard it, I put a foot wrong.

I intervene in the debate in any case with some diffidence since I am no economist but I have read with care the debates on the appropriation order in another place and the first report of the Northern Ireland Affairs Committee on employment creation in Northern Ireland. I have been deeply impressed not only by the amazing courage, resilience and determination of the people of Northern Ireland but also by the range of initiatives undertaken by the Government to promote the economy, provide more employment and stimulate inward investment as well as supporting such different organisations as ACE, the IDB and LEDU.

My reason for speaking now is political and social. The recurring theme in the Northern Ireland Committee's report— and I should like to say how greatly I welcome the creation of that committee and its own imaginative agenda of travel; for instance, to the Far East, which has had the happy effect of promoting Northern Ireland as a place for investment— is that there would have been a much higher level of inward investment in the past two decades but for what it delicately describes as,
"the off-putting effect of the violence and the related political difficulties".

Elsewhere it describes the effect of the violence on the political life of the Province as severe. It goes on to estimate that as many as 46,000 manufacturing jobs were not created in the 1970s, early 1980s, directly as a result of Northern Ireland's difficulty in attracting inward investment.

Before making my main point, which is directly related to the issue of the breakdown in the ceasefire (which I have to say few would call partial), its impact, and what might be done about it, I should like, while paying tribute to the generous regime of government assistance and the help given in marketing abroad— not least by my noble friend the Minister and her energetic and splendid efforts— to urge that a special further commitment should be made to support schemes to train the many— too many— young people leaving school with no qualifications. The various community employment schemes which suffered the cuts were bringing hope to the young leaving school in areas where there is no employment; and to young people who have in any case little or nothing to offer in skills to a prospective employer.

I understand that £ 2 million will now be put hack, but this, I imagine, scarcely equates with the 25 per cent. cut suffered by these programmes and others designed to help the unemployed to re-enter employment. I also urge, at any rate for the next appropriations round, far more support for the Industrial Research and Technology Unit. Northern Ireland needs to be enabled to play its part in new research, innovation in industry and new ideas in a fast-moving industrial world.

As Principal of Somerville I had occasion to know many excellent young women who were a credit to the very high academic quality of Northern Ireland's schools. I believe that we now need to see a similar effort put into vocational and technical education and training so that Northern Ireland's labour force will be ready to respond effectively and fast when inward investment brings new industrial and technical challenges— challenges which Shorts are already meeting; but that is only one part of the industrial sector.

However, what I wanted to say in the context of this debate is that the economic regeneration of the Province through inward investment and through first-class training programmes for the future workforce, is a very important and effective battlefield on which we should be fighting the IRA. In the other place, the Minister of State having said that,
"Any increase in the Northern Ireland [Office] security budget as a result of the breakdown of the ceasefire will inevitably have repercussions for other important economic and social programmes".— [Official Report. Commons, 19/2/96; col. 1451

added that the blame lay fair and square with those who had returned to violence. He hoped that the people of Northern Ireland, in all parts of the community, would be fully aware that that is the price of the decision by the IRA to return to violence.

I urge the Government in the strongest terms to make clear to the widest possible audience, but especially in the US, precisely what inward investment has been jeopardised, if not lost, by the return to violence, and what energetic and wide-ranging measures have been, and are, being undertaken to ensure that Northern Ireland will have a well-trained and skilled labour force, which is only waiting for the opportunity to work.

Who has put that wantonly at risk?— the IRA. We should then go on— I know that this means spending more money, but it must still be infinitely less costly than the need to return to a very expensive military and security apparatus geared to resist indiscriminate and permanent violence— to announce further investment by us in our own country. It would surely send a signal to the people of Northern Ireland that we believe in their ability to develop and thrive, and that we do not intend to be driven off course in a part of the UK by the reversion to violence.

Since prosperity in Northern Ireland inevitably spills over into the South, such initiatives could only be welcome in Dublin, too. Let us tell President Clinton that his best contribution to peace in Northern Ireland and the breaking of the power of the IRA would be to bring about some serious US investment. there, or to reinstate investment now in the balance, rather than to contemplate convivial drinks with Gerry Adams on St. Patrick's Day. He might also be asked to establish the truth or otherwise of Gerry Adams' claim that Sinn Fein has been raising funds in the United States for the economy. I should be very interested to know whether that is the drug economy.

The IRA can scarcely be said to be in touch with the people of Northern Ireland, of all communities, in that it has failed to recognise the deep resentment felt against those who have destroyed their hopes and plans for employment and prosperity. It is not just the absence of terror that the people of Northern Ireland have welcomed— after all Gerry Adams reminded them last year that the IRA had not gone away; people are regularly and brutally beaten and intimidated and still no one knows where the IRA have buried those they have murdered— because terror has never actually gone away. What people mind just as much, I suspect, is that the prospect of work, prosperity and being able to plan has been wantonly and arrogantly snatched away.

So I appeal to my noble friend the Minster, who has so tirelessly and successfully promoted the economic and other interests of Northern Ireland, and hope that she will be able to urge on the Government the idea that whatever happens to the peace process in the coming months, and given that so far the IRA remains intransigent, there is everything to be said for putting our bets on the economic horse. The odds may be long, but I do not think we could lose by taking the battle against the IRA onto ground where they cannot compete and have been shown to bear the whole blame for any loss in confidence by investors. The latest news suggests that the IRA remains long on arrogance and very short on plain commonsense.

12.37 p.m.

My Lords, I hope that your Lordships will forgive me if I speak very briefly in what we call "the gap". I begin by thanking my noble friend the Minister. I shall also follow up the comments made by the noble Lords, Lord Prys-Davies and Lord Meston. Should any expert on Northern Ireland be absent. very much in the words of the Bible, "Cast out one devil for Beelzebub"— I do not necessarily believe that anyone speaking on Northern Ireland is of that persuasion— and one gets some more. In other words, I shall speak in the gap and I notice that there are other noble Lords who might follow me.

On pages 3 and 8 of the order there is some very encouraging news which has been briefly referred to by the noble Lords, Lord Meston and Lord F'rys-Davies. It is to be found in Vote 2 for the Department of Agriculture, both in Part I, which is on page 3 and Part II, which is page 8. Clearly, the wording has been very carefully followed for expenditure by the department on the development of agriculture and agricultural products industries.

I believe that these two aspects unify the tremendous talents of my noble friend the Minister. The agricultural industry is the No. 1 industry in Northern Ireland and my noble friend has made enormous efforts to make sure that everyone who participates in that industry, as well as all the incredibly hard-working officials in the Department of Agriculture, contribute to a seamless web of success in Northern Ireland. It was successful all the time I had the honour to serve the Province and during the short time my noble friend Lord Elton was there.

The success of the Northern Ireland agricultural industry has certainly spanned the past 20 years. It has been the stewardship, if I may call it that, of my noble friend which has brought this industry to new peaks of success. The Province is benefiting from her experience in small businesses and industry, coupled with the enormous hard work of what I might call the "men in overalls" as opposed to the "men in suits", about whom we have been hearing from the noble Lord, Lord Hylton, and my noble friend Lady Park, in relation to the political aspects.

I hope that none of your Lordships will forget the enormous amount of work that is carried out by my noble friend and, above all, by the Department of Agriculture. I would go so far as to call those working in agriculture in Northern Ireland the "unsung heroes". On television and in the media we hear a lot about the peace dividend and about all the opportunities for inward investment in Northern Ireland, but I believe that the Department of Agriculture and the agriculture industry are incredible examples of the hard work and success of an indigenous industry which is competing against the agricultural industries in England and Wales, in Europe and in my own country of Scotland. Everything that I have seen and heard has shown me that what is provided in the order is continuing to push the success of Northern Ireland's No. 1 industry.

I hope that, if not today then at a later stage, my noble friend will be able to confirm that new initiatives and new ideas are emerging all the time in terms of marketing as well as producing the unique output of Northern Ireland's agricultural industry.

12.41 p.m.

My Lords, I start by thanking all noble Lords who have participated in the debate. It may have a dull title, but it is a very important debate in terms of life in Northern Ireland. In particular, I express my gratitude to the noble Lords, Lord Prys-Davies and Lord Meston. When the regular teams are absent— not, I know, from choice— they must be relieved to know what great substitute Benches they have. I am sure that the noble Lords will not be offended if I say that it is not an elevation from the under-21 team.

We have covered a great range of topics and although I shall try to answer all the points that have been raised, I commit myself to reading Hansard carefully and writing to noble Lords on any point that I may forget to mention now. I am also grateful for the advance notice which so many noble Lords have given me of their points of concern. I start by giving one figure which I believe will please your Lordships. Around 90 per cent. Of the total decrease in unemployment over the year is due to a fall in the number of long-term unemployed. They are now returning to employment. Long-term unemployment is down by 9.9 per cent. On January 1995. Your Lordships are right to draw attention to that issue. The rate of short-term unemployment in Northern Ireland is now closely related to that in the rest of the United Kingdom, but we have a hard core of long-term unemployed and our efforts must be directed to them. I assure your Lordships of my commitment in that area. Furthermore, I have a personal target which is to get Northern Ireland off the bottom of the unemployment league. I should like us to move up that league. We have all the talents and skills that will enable us to do so.

I turn now to the issue which concerned so many of your Lordships— the reduction in the ACE programme. I am well aware of the concerns that that has created in the community. It may be helpful if I explain why that decision was made. It was not because of any lack of commitment to the long-term unemployed. There is still £ 46 million in the programme, almost £ 40 million of which is in the ACE programme. However, we have a new situation. There is growth in what might be described as "real" jobs, which undoubtedly usually pay better than any ACE scheme while allowing people to have aspirations and to look forward to building their own futures. For the first time we have a record number of registered vacancies. There are now 7,000 registered vacancies in Northern Ireland. To fill all those vacancies would make a significant impact on the unemployment figures. It seemed to us that it was important to give our people the skills to take on those vacancies. We have slanted the programme towards working to ensure that the people who fill those vacancies are the people of Northern Ireland.

We are working with the Jobskills programme. I should like to reassure both the noble Lord, Lord Meston, and my noble friend Lady Park that the Government's pledge to provide training places to unemployed school leavers is being successfully delivered through the Jobskills programme. The programme has already been able to put 60 per cent. of the people on it hack into employment. We have yet to achieve 50 per cent. on the ACE programme.

However, the real issue about the ACE programme is the bonus that it has provided. The primary purpose of the ACE programme is to assist the long-term unemployed. In doing that, the programme has delivered great benefits to the community. I brought forward the transitional fund and I do not want to be negative this morning, but I am afraid that it is £ 2 million, not £ 2.5 million or £ 3 million. It seeks to ensure that there is not an immediate gap in the lives of the vulnerable, the needy and those to whom we owe a great debt. We are working on that— doing so will ensure that many core workers are retained.

I should also like to correct the impression about the 25 per cent. cut. That 25 per cent. relates to the average occupancy of the scheme. Where the scheme has not been occupied fully, the statistics appear to suggest more. We are working on that. Officials who are tasked to do this are in discussions to ensure that that point is fully understood. I believe that the future looks brighter. This year we shall be undertaking a full review of the long-term unemployed, looking at their needs. We shall work exceedingly hard on that.

In closing on that issue, I should like to praise the voluntary sector which has made it possible for so many people to have training. I am delighted that future programmes will move away from the one-year programme of ACE where for six months you spend time getting used to going to work and for the last six months you worry about what to do next. We are looking at three-year programmes for skilling and qualifying. I should like to place on the record the fact that that was not forced on us by the Secretary of State in the public expenditure round. The communication difficulty arose because it was a PES statement, but the judgments were made by those working in the area.

On the subject of work, your Lordships have correctly drawn attention to the importance of Shorts in the community of the Province. Shorts is our largest employer. It is also a brilliant role model and is globally competitive. Wherever you travel in the world there is praise for Shorts. Shorts has been instrumental in bringing other work to Northern Ireland because of the excellence of its skills, particularly in engineering. 1 stress that the company is not at any risk, whatever the Fokker decision. Shorts has worked some fair miracles in past years and there is no question of Fokker decisions putting the company at risk. I believe that there is no question of there being a loss of 1,500 jobs. Protected redundancy notices are out, but I have seen the efforts that Shorts has made in terms of planning for redeployment. I believe that the number will be much less than 1,500 and that we shall certainly be able to look at a three-figure number rather than a four-figure number.

I raised at a meeting with representatives of the Dutch Government the importance of the company to Northern Ireland. I understand that, following discussions with potential investors, an announcement will be made today about plans for Fokker's future. The impact on Shorts will be considered carefully following that announcement. Should the aerospace division continue in Fokker, there is no more competitive place than Northern Ireland in which parts for those planes can be built. It is unequalled on quality and cost. Should the aerospace division continue, we shall see more work. Noble Lords should be reassured by a remark made to Inc by the chairman of Rolls-Royce. He said that Shorts used to be his worst supplier but is now his best supplier.

The noble Lord, Lord Prys-Davies, asked, rightly, what would be the cost to the community of the breakdown in the ceasefire were it to continue. He shared the depression that many of us feel at this morning's comments from Sinn Fein/IRA. We shall look forward to the future, and we shall work for the future. However, there can be no getting away from the fact that if there is a return to heavy violence, the savings that have been made from areas such as the security forces' overtime will have to be reconsidered.

I have made a commitment that the current community work programme will continue. We celebrated the fact that it arose from the peace dividend. If we lose the dividend, which must be earned like any other dividend, we shall be at risk. Instead of waiting for resources in the future to be available for education and employment, they will once again have to go to other public services. We must hope and pray that that does not happen.

We may rest assured that we have a good friend in Europe— the Regional Policy Commissioner, Monika Wulf-Mathies. She has said that she is pleased with the progress made on the programme for peace and reconciliation, and does not see it walking away from us. She recognises the efforts that we need to make to sustain it so that those funds keep flowing.

We shall see a slowdown in private sector funding, however good our economic package. At the moment people are in a wait-and-see mode. We have not lost inward investment, although we shall never know when the telephone was not picked up. We are finding it harder to obtain the bottom line signature. We are working on that. We are working to reassure the pension funds and City funds such as Mr. Hevisi's New York fund, which the noble Lord mentioned. There is much to do. However, I stress that the economic package that we have sold throughout the 17 months is not one of charity or emotion but one of shareholder value. We have got that message out to so many people during this period that I believe we can look forward to seeing continuing investment.

The infrastructure we have built, the extra air routes and the increased capacity on the ferry services will continue to exist. I am delighted to reassure the noble Lord, Lord Prys-Davies, that we are not behind Scotland. I did not expect that we would be, but I am pleased to say that the equivalent of the. Scottish Rural Diversification Programme Regulations are in place in Northern Ireland under the Sub-Programme for Agriculture and Rural Development Regulations 1994. They allow payment for grant towards farmers who wish to diversify from mainstream agriculture. Given the creative nature of the Irish, we can be certain that their diversification will be innovative.

The noble Lord asked also about IDB's job creation targets for the current financial year. It is difficult to attract inward investment from countries which are themselves undergoing recession. In particular, we have noticed a slowing down in Japanese overseas investment in recent years. However, I am delighted to say that there are over 2,300 inward investment jobs in place and there is much in the pipeline. The response to Wednesday's communique will make all the difference to how soon we can bring those jobs to the people who need them.

One of the good things which will not go away is the building of targeted social need into IDB's programme. I hope that the message will go through that it is doubly important that we attract new jobs because they are going to the areas of greatest deprivation. The Tourist Board's TV advertising campaign will be reinstated. There is no problem with that. It was sensible. Having seen Canary Wharf and the London bus, people hesitated and wondered what was going on. Sometimes those of us at the heart of the matter wonder what is going on. Although we saw tourist inquiries drop, they were still above pre-ceasefire levels. We are optimistic about a good summer. Last year's was brilliant. I only worry about whether people expect every summer in Northern Ireland to be hot and sunny. I just hope that I am not subject to a trade descriptions summons.

The noble Lord, Lord Mcston, asked about education. It is crucial. It is crucial to any economic programme. Education spending plans provide for an increase of £ 47 million next year— an increase of 3.5 per cent.— which includes an increase of £ 37 million for schools, which is in line with the equivalent settlement in England. The quality of education in Northern Ireland is well recognised. People often make the decision to return to Northern Ireland when their youngsters are about three or four years old.

The Government remain committed to supporting viable proposals for integrated schools. I know the interest in integrated education on the noble Lord's Benches. I am pleased that recently four further integrated schools have been approved— two new secondary schools and two existing primary schools have been transformed into integrated status. There continues to be progress. Of course that progress is at the request and instigation of parents, which is as it should be.

Wearing my agriculture hat, I am delighted to confirm) that the underlying expenditure in the agriculture programme has not been falling. The decline between 1994– 95 and 1995– 96 was due to exceptional additional spending on the agricultural development operational programme which amounted to £ 26 million in the earlier year. That figure is engraved on my heart because I had to do very special pleading with the finance people to obtain the extra money, but we obtained it and it has gone to farmers.

It is worth noting that for the fifth year in succession total farming income in Northern Ireland increased in real terms. It makes my life somewhat easier. It also makes the life of the retail motor trade in Northern Ireland somewhat easier.

The noble Lord, Lord Hylton, as usual brought to the debate his considerable knowledge of Northern Ireland. I hope that I have given him some reassurance that the ACE decision was not casual but part of the economic strategy for the future. I listened with interest to his proposal that it was worth looking at postponing the marches during the coming 12 months. I shall ensure that my colleagues take note of that suggestion. I hope that in the long term we can work to a position where the marches are a celebration of culture and not a statement of position, as, regrettably, they are now. I shall take that message to my colleagues, as I shall what he has said about prisoners and their great needs on release.

We continue to look carefully at ways of reintegrating prisoners into society in the light of the changing circumstances. The noble Lord rightly drew attention to the fear that we all have of the drug problem increasing in Northern Ireland. We work to try to retain, perhaps not easily, our record of Northern Ireland being the safest place in the UK, although at a high price in security costs. I am sure that everyone appreciates the work of the noble Lord in the reintegration of prisoners and will recognise the close understanding that he has of this subject.

I sympathise with my noble friend Lady Park. It is difficult for any of us to estimate how quickly lawyers will debate a previous item on the Order Paper. I am delighted to be able to reassure her that my opening speech was not deeply interesting. I was grateful for her input into the debate. Of course, we need to extend the research and technological development in Northern Ireland. We must be globally competitive and I am pleased to say that we capture a large number of the DTI Smart awards.

My noble friend Lady Park drew attention to the fact that even during the ceasefire period there were horrendous punishment shootings and beatings. They were barbaric and were rejected by every civilised member of the community. There is no place in society for vigilantes. The RUC continues to have the Government's full support for its vigorous operations to deter and detect those responsible. My noble friend also drew attention to the important role which the Americans can play in bringing about a peace process and getting the message across to those who appear to have difficulty in understanding democratic processes.

There can be no end to a peace process in a democracy. Violence never has and never can lead to solutions. On Wednesday, the Prime Minister and the Taoiseach announced a programme to allow all who believe in the democratic process to come to the table. They reaffirmed something which we all know well; their absolute commitment to exploring every avenue to bring about peace. I am sure that the whole House will share my admiration for their tireless efforts.

Perhaps I may say that 99.9 per cent., and possibly more, of the people in Northern Ireland want peace, have earned peace and deserve peace. While my colleagues wrestle with the difficult political discussions, I shall continue to work for the best cement for peace, which is jobs. I do so with great comfort from the encouragement of your Lordships' House. I wish to express my gratitude and the gratitude of perhaps all people in Northern Ireland for the support that we receive in this House. I commend the order.

On Question, Motion agreed to.

Farm And Conservation Grant (Variation) Scheme 1996

1.2 p.m.

rose to move, That the scheme laid before the House on 12th February be approved [9th Report from the Joint Committee).

The noble Lord said: My Lords, I beg to move that the Farm and Conservation Grant (Variation) Scheme 1996, laid before the House on 12th February be

approved and on this St. David's Day I wish all noble Lords Dvdd Gwyl Dewi Llawen, in my slowly improving Welsh.

The purpose of the scheme is to extend for a further period of two years those elements of the Farm and Conservation Grant Scheme 1989 which remain extant. Various elements of the 1989 scheme have been withdrawn over the intervening years. There now remain the provision, replacement or improvement of shelter belts for shading stock, the enclosure of grazed woodland to encourage regrowth and the renovation of traditional boundaries such as hedges and stone walls. There are also grants for the provision of stiles, gates and waymarkings for public access and opportunities for the control of bracken and heather. And finally, there are grants for the repair and renovation of traditional agricultural buildings using materials which are traditional to the locality. Grants are available at rates varying between 15 per cent. to 40 per cent., depending upon whether activity takes place on land designated as either outside a less favoured area or inside a less favoured area.

Extending the Farm and Conservation Grant Scheme in Wales will also allow other schemes which in part use this legislation to continue until other arrangements may be brought into place. These include capital grants for fencing under the water fringe, coastal belt and broadleaved woodland elements of the habitat scheme and the countryside access scheme. Similarly, provisions for bracken control and fencing can be applied under the moorland scheme. Also the Countryside Council for Wales uses this legislation for the hedgerow renovation scheme where that operates outside the three pilot Tir Cymcn areas.

The Welsh Office will in the course of 1996 review the overall provision of its various grant schemes to ensure their cohesive delivery and value for money. This is expected to result in proposals for the integration of remaining grants available under the farm and conservation grant scheme with other suitable mechanisms. I commend the scheme to the House.

Moved, That the scheme laid before the House on 12th February be approved [ 19th Report from the Joint Committee].— ( Lord Lucas.)

My Lords, I thank the noble Lord, Lord Lucas, for introducing this modest but useful scheme. I thank him too for evidence of his growing mastery of the Welsh language.

The Minister has explained the purpose of the scheme and my noble friend Lord Carter assures me that I can welcome it. Indeed, my noble friend tells me that it has been desperately slow in coming. I have only two questions to ask the Minister. First, there is anxiety that the scheme appears to disallow all claims for a grant in respect of effluent disposal if they are received after 19th February 1996. Is that correct? Can the Minister confirm whether a scheme which commenced before 19th February 1996 but was not completed by that date will be eligible for a grant?

My second question looks ahead to 1998 when the 1989 scheme will end. Is it intended that capital grants for the planting of hedges and the repair of stone walls and traditional agricultural buildings in Wales will be available in some form or other after February 1998, possibly within an integrated scheme, as I believe may be the position in England and Scotland? If that is so, can the Minister assure the Welsh farmers that their proposal will be subject to the fullest consultation? With those two questions, I am pleased to support the scheme.

My Lords, I too thank the Minister for having introduced the scheme. The reprieve for Wales is most welcome, even though it has come at the last moment. I wish to join the noble Lord, Lord Prys-Davies, in the two questions that he has asked, in particular since farmers who started work on projects for effluent disposal facilities may have had their work interrupted by the adverse weather conditions. It would be sad if they were unable to take advantage of the scheme.

The noble Lord asked about the important maintenance work on valuable environmental features such as hedges and stone walls. I welcome that work, but there appear to be fears that there may be onerous and restrictive conditions on future work. I would like an assurance that the Government will keep a continuing watch to ensure that nothing happens to stop the welcome return of encouragement to retain these important parts of the environment, the countryside and the farming community.

My Lords, I am grateful to both the noble Lords, Lord Prys-Davies and Lord Beaumont of Whitley, for their support for the scheme.

I shall reply briefly to the questions which they raised. In relation to the grant for effluent disposal, the expenditure eligible under the grant must have been incurred before 30th November 1994. The date of 19th February 1996 is only the date by which the claim must have been made. We feel that a reasonable time has passed and the time in which the claims had to be made has been well publicised. Since the expenditure had to take place in 1994, the recent bad weather will, if anything, have given the farmers an opportunity to sit inside and fill in their claims, so, in fact, that may have hurried things on a hit.

I do not wish to anticipate our plans for the future other than to say that, since we are continuing the scheme, we maintain a strong commitment to the projects which we are supporting under the scheme. When our proposals are ready, we shall consult fully on them with farmers and all other bodies with interests in the countryside. I commend the Motion.

On Question, Motion agreed to.

House adjourned at ten minutes past one o'clock.