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Lords Chamber

Volume 588: debated on Monday 30 March 1998

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House Of Lords

Monday, 30th March 1998.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Leicester.

Single Market: Business Opportunities

What steps they are taking to encourage British enterprises of all sizes to exploit more fully the new opportunities arising from the single European market.

My Lords, the Government are committed to ensuring that United Kingdom enterprises make the most of the opportunities offered by the single market. After all, eight of our top 10 markets are in the single market. To assist business, in the past few days my noble friend the Minister for Trade announced the launch of the Export Explorer service, offered through Business Links and trade associations in association with the DTI and the Foreign and Commonwealth Office commercial sections. This should assist businesses to export.

My Lords, I thank the Minister for that piece of information. However, will my noble friend tell the House exactly how such visits associated with the Export Explorer service will help firms to export? Bearing in mind the complexities and difficulties of exporting, is he happy that the level of support and assistance that SMEs receive from the scheme will be sufficient to increase substantially exports from this country?

My Lords, the scheme seeks to give new exporters the opportunity to visit markets. Research undertaken after we came to power indicated that many companies were nervous of going abroad. The Export Explorer service offers a visit to one of the more accessible markets—Ireland, the Benelux countries or the Nordic markets—or a support visit to one of the key international trade fairs in Germany, France, Italy or Spain. The service is to be delivered mainly by Business Links or trade associations by means of support from an experienced exporter, a sector expert, a tailored market or sector report, and general help while overseas. I am convinced that this is of assistance to companies. Further means of assisting companies will be announced in the next few months.

My Lords, perhaps I may congratulate the Minister on an Answer which was so clear that he could not have done better if he had had prior notice of the Question. Are not the benefits which he outlined those which one would expect from any sophisticated regional trading bloc? Can the noble Lord give the House any indication why those wholly admirable objectives are achieved in, to give one example, NAFTA, with far, far less cost in terms of fraud and bureaucracy?

My Lords, I am not sure of the relevance of the last sentence. The cost is quite small. It is £90 per company for the service; and firms pay for their own travel and accommodation.

My Lords, is the Minister aware that for the past five years there has been a single market in plants—in which I declare an interest. Is he aware that the export of plants has increased dramatically over that period? What use can the horticultural industry make of the measures he outlined?

My Lords, I am delighted to hear that there has been so much success in the plants industry. However, the measures are designed to help first time exporters to gain experience of the market: to encourage them to go to a market, to analyse it, if necessary to exhibit at an exhibition, and, generally, to get into the way of exporting.

My Lords, is there not a severe danger in encouraging businessmen to visit the European Union at this time—since, if they do so, they will find that the major problem for their exports is, "3 deutschmarks 8 pfennigs to the pound"? What do the Government intend to do about that?

My Lords, the Government cannot do much about the exchange rate. What the Government can do is encourage companies to be more competitive. Price is not the only aspect of selling one's product. The Government encourage companies to be more competitive by improving their productivity, sales techniques and management, and by doing all the things that make up the mix of running a business.

My Lords, will the noble Lord give the House the Government's views on the necessity for removing a whole series of petty regulations that have been imposed by the Commission, via the bureaucrats of the United Kingdom, which have borne very heavily—and still bear heavily—on British business? When will the promise that was made by the former Prime Minister on returning from Maastricht— namely, to embark upon a scheme of mass deregulation of unnecessary rules imposed—be honoured by this Government?

My Lords, the DTI's Action Single Market unit exists to help UK businesses when they encounter trade barriers or other factors that inhibit trade. The Government are committed to reducing regulations, but where those regulations inhibit trade that department of the DTI is specially committed to doing that.

My Lords, I recognise that English is the international language of business. However, will the noble Lord agree that it is extremely valuable for exporters to be able to speak the language of the country with which they wish to do business?

My Lords, will the noble Lord give the accent to the British computer industry, given the Prime Minister's recent announcement on millennium bug funding, and ensure that British experts are in the European Union doing their very best to help conquer the millennium bug, since English is the international computer language?

My Lords, the Government are certainly intending to do so. It formed part of the Prime Minister's statement. The computer industry is a global business. As the noble Baroness says, English is the international language of cyber trade. That is why it is so important.

My Lords, will the Minister confirm that it is the Government's intention that through the national minimum wage they will make British companies more competitive?

Breast Cancer Screening Programme

2.44 p.m.

Whether they will review without further delay their decision (Cm 3007) not to implement the recommendation in paragraph 96 of the House of Commons Health Committee's Third Report on Breast Cancer Services (Session 1994–95) that the upper age limit for inclusion in the call and recall system be extended to 69 to include those women most at risk.

My Lords, as the noble Lord will be aware, the report of the House of Commons Select Committee on Breast Cancer Services to which his question refers was received in 1995 by the previous administration.

This Government are firmly committed to providing a high-quality breast screening programme. Screening for women aged 65 and over is now available on request, and we are taking a range of steps to ensure that this service is widely publicised. I am glad to say that figures published last week show that the number of older women taking this up has risen from 39,000 in 1995 to 57,000 last year.

We are funding pilot schemes to evaluate the impact of extending the routine recall screening programme to include women aged 65 to 69. The first of these studies will be completed next year, and the others by the year after. The Government will base any changes to policy on the evidence emerging from the pilot studies. We must also ensure that any decision to extend the breast screening programme in this way does not jeopardise the existing programme.

My Lords, I thank the Minister for that reply and I congratulate her, given that half of the 30,000 women suffering from breast cancer are over 65 and given the problem that arose under the previous administration: the two pilot schemes in the Wakefield and South Thames area were a stalling measure owing to the funding involved. Secondly, given that the Gallup poll for Age Concern showed that most women over 65 are unaware of the risks to which they are exposed, why have no government leaflets been published—I congratulate the Minister if that is the case—to warn older women of the risks involved? Perhaps I may ask the Minister two or three questions. Is she aware that there is a higher detection rate for women suffering from cancer who are over 65? Secondly, is it not the case that the incidence of breast cancer increases with age? Is the Minister further aware that, in the case of older women, cancer is equally aggressive?

My Lords, I am grateful for the noble Lord's congratulations to the Government on their efforts to extend people's understanding of this very important service. I agree that it is extremely important that older women should come forward if they have any concerns. The number of women getting breast cancer each year peaks in the 60 to 64 age group; but that does not mean that the suffering of those in an older age group who get breast cancer is any the less. That is why we intend to make sure that the older age group are aware and, if necessary, extend the recall programme to them.

My Lords, is the Minister aware that we are grateful to the Government for making increased finance available, as announced in the Budget, to deal with this problem? It is still a very serious problem and, as I understand it, has slightly increased. The Government ought to be commended for making increased finance so quickly available.

My Lords, I am grateful to my noble friend. I believe he refers to the £10 million that we made available last year for breast cancer services almost immediately after being elected. The Chancellor of the Exchequer and the Secretary of State for Health announced the week before last that further money would be available to reduce waiting lists, and cancer will be given high priority in that area.

My Lords, is the noble Baroness aware that most of the mammographic X-ray equipment installed in the 1989–90 period to meet the Forrest plans is now reaching the end of its design life? Is she further aware that radiologists are now finding that X-ray film is reaching the limits of resolution, and that digital imaging is now needed to reduce the diagnostic uncertainties which lead to false negatives and false positives? Does she accept that there is a need to raise throughput? Will the Minister therefore agree that the time has now come for investment in an advanced equipment replacement programme to improve the National Health Service breast screening programme and help to reduce waiting times? Could some of the £10 million of extra money recently put into the services be made available?

My Lords, the Government are extremely aware of the concern felt about the need for high quality breast screening services. We announced last November an overhaul of breast screening precisely to enhance the existing quality control. That obviously includes a review of the machinery used, but we felt it was equally important to review the standards of screening of individuals within the service, and that is now being undertaken.

My Lords, is the Minister aware that Professor Fentiman of Guy's Hospital has estimated that the lives of up to 2,000 older women could be saved each year if that age group were routinely invited for screening? In the light of that, can the Minister say what kind of results from the pilot study would be conclusive enough to ensure that women of up to age 69 are included in routine screening or will the decision be determined by resources alone?

My Lords, I can assure the noble Earl that the decision will not be determined by resources alone. We are concerned to balance the needs of care and screening for women in all age groups. At the moment, the research project to which I referred, which is considering the necessity for screening those in the 65 to 69 age group, is also looking, for example, at whether there is a case to be made for lowering the age at which women are screened to 40 or for closing up the gap between screenings for individuals to fewer than three years. All these matters will be considered. They will obviously need to be looked at in terms of cost-effectiveness, but resources will not be the single determinant.

Animal Feed: Declaration Of Ingredients

2.51 p.m.

What plans they have to make the declaration of ingredients in animal feed mandatory.

My Lords, the declaration of compound feed ingredients, either by specific ingredient or category of ingredient, has been an EC requirement since 1991. The Commission is currently considering whether to remove the category option altogether, a proposal which the Government would support. This change would require amendments to a directive at Council level. Pending this development, we welcome the moves already being made by feed compounders towards listing ingredients and away from listing categories. In 90 per cent. of compound feeds the ingredients are declared in full.

My Lords, I am grateful to the Minister for his reply. It is satisfactory that so much progress has been made since the late 1980s, when the listing of ingredients in animal feedstuffs was extremely vague and mainly done by groups. The Minister said that in 90 per cent. of cases listing is now done ingredient by ingredient. That still leaves 10 per cent. Can the Minister tell us when he expects the new directive from Brussels which will make the individual listing of ingredients mandatory? Will that listing include a declaration of whether the feedstuffs have been genetically modified? If there is not an early decision by Brussels, do the Government have any plans for making that mandatory?

My Lords, regarding how soon we can expect the directive, the proposal is unlikely to emerge before the end of July. As a draft Council directive, it will not be agreed until next year. In the meantime, on the majority of feeds the ingredients are declared in full.

Regarding the disclosure of GM ingredients, any such labelling will be subject to separate rules—to use the jargon—on novel feed materials. This is a controversial area and will take some time to resolve. The Government will therefore consider whether to press for earlier labelling of animal feed once it is clear what rules will apply to GMOs and indeed all novel foods.

My Lords, is my noble friend aware of the report by the expert group led by Professor Lamming which recommended the setting up of an advisory committee on animal feedstuffs? Can he say what happened following that recommendation of the committee?

My Lords, my noble friend is correct that a committee chaired by Professor Lamming reported to the previous government in July 1992. Its main recommendation was that an independent animal feedstuffs advisory committee should be established to take an overview of all feedstuffs issues in relation to human and animal health. The government response accepted the recommendation, but they then decided that it should not be implemented, I imagine because of their attitude at the time to deregulation. I understand that Professor Lamming pressed the previous government again in June 1996, but there was still no response. I am pleased to say that we have accepted the recommendation and the committee is now in the process of appointment.

Sadly, the decision of the previous government not to implement the Lamming recommendation undoubtedly contributed to the feeding of infected meal after it was banned, with the result we all know of the incidence and severity of the BSE outbreak.

My Lords, does the Minister agree that the previous government should have responded to my Parliamentary Questions and pressure in 1987 and 1988, which came from farmers themselves, requiring declaration of ingredients in animal feedstuffs to be mandatory on labelling, and that the fact that they did not do so was a tragic error which may have had bad consequences for human health?

My Lords, the noble Baroness is absolutely right. For a long time the agricultural industry pressed for the full declaration of ingredients. This was resisted by manufacturers at the time, and the Government, with their view about deregulation, agreed with them. Sadly, it was the BSE crisis which led to the change within the past two years—which we had been told by the industry and manufacturers was not possible—so that on 90 per cent. of feedstuffs the ingredients are now declared in full.

Respite Care

2.58 p.m.

Whether they have any plan to introduce a right to short-term respite care breaks for disabled people and carers.

My Lords, the Government are not planning to bring in legislation to introduce such a right. We nonetheless recognise the great importance attached to respite care for carers and those for whom they care and we are committed to ensuring that local authorities also recognise this. We expect that good practice will best be achieved by the effective implementation of the carers Act, in which my noble friend played such a significant role when it passed through Parliament two years ago. The local availability and quality of short-term breaks are currently being assessed in a study by the Social Services Inspectorate. That report should be available later this year and we shall take any necessary action on the basis of it.

My Lords, I thank the Minister for that reply. Many of us look forward with great anticipation to the SSI report. However, is the Minister aware of the great concern among disabled people and their carers about the restrictions in local authority budgets which are leading to cuts in the respite care and short-term breaks that are available? Is she further aware of the effect that that has on carers who wish to remain in paid employment, many of whom, sadly, have the experience of Joyce? Because respite care for her mother is now available for only two days a week instead of four, she has had to give up her paid employment and become dependent on state benefits, perhaps building up poverty for herself in the future. Can the Minister give us an assurance that her department is concerned about this aspect of the issue?

My Lords, we are aware that there are pressures on local authority budgets and that in some instances this has led to the kind of cuts described by my noble friend. I hope she was encouraged by the fact that my right honourable friend the Chancellor of the Exchequer announced in his Budget that the tax allowance that had previously been available only to men with children whose wives were incapacitated was being extended to mothers with dependent children and incapacitated husbands. This removes an anomaly in the tax situation, and we hope it will enable more carers to return to work.

There are also the questions raised by the new deal for the disabled detailed in the Green Paper last week. We hope that the reforms we propose will enable disabled people to have a better deal, with proper rights and opportunities to work, which should as a result allow those who care for them to have the same rights and opportunities.

My Lords, in view of the increasing length of hospital waiting lists, will the Minister particularly address the need for respite for carers of people waiting, often for long periods, for admission to hospital?

My Lords, that is a helpful suggestion. One of the advantages that we found of providing additional money during the winter for support for people living in the community to try to prevent unnecessary acute hospital admissions was that many people were able to be supported at home and to come out of hospital more quickly because their carers had better support in their home circumstances, which was obviously better for everybody.

My Lords, does the Minister mean that, even if the short-term breaks project recommends legislation such as the Disabled persons and Carers (Short-Term Breaks) Bill presently being considered in another place to implement full caring in the community for carers and disabled people, it will not be forthcoming?

My Lords, I cannot predict either the results of the project to which the noble Lord refers or the outcome of the Government's response to it. We will take seriously any suggestions made in the report but, as the noble Lord will be aware, the pressures on the legislative timetable at the moment are extreme.

My Lords, have the Government any idea of the additional cost to the National Health Service and social services due to the breakdown in the health of carers, who sometimes work extremely long hours? If not, do the Government intend to undertake any research into the matter?

My Lords, I imagine that that will be part of the review of the working of the carers recognition Act. The Social Services Inspectorate is looking at the whole rounded picture. It will also be relevant to the long-term care charter, on which my honourable friend who has departmental responsibility for that area is working at the moment. On the other side of the coin, it has been estimated that providing short-term breaks on a completely legally-based rights system, as suggested in the Question, could cost anything between £300 million and £900 million a year.

My Lords, while the review is taking place, can it be borne in mind that, if carers are allowed to maintain their role as carers for longer periods due to relief from the physical and mental stress for both themselves and those for whom they are caring, we may save money in the long run by introducing a properly funded and enacted system which will allow that caring to go on in the community?

My Lords, I entirely support the noble Lord's position. As I said in my initial response to my noble friend Lady Pitkeathley, we all recognise the enormous importance of short-term breaks for those who care for people with long-term disabilities and for those who suffer from the disabilities. We must ensure that good practice is conducted throughout the country. That is why it is important that the Carers (Recognition and Services) Act is fully implemented with all the resources necessary at the local level.

My Lords, is my noble friend aware that estimates of the numbers of young carers—that is to say, young people and children under the age of 18 who are caring for disabled adults—vary between 15,000 and 50,000? Does my noble friend agree that the main reason for that lack of knowledge is that, though the carers Act 1995 to which she refers entitles all carers to assessment, few local authorities have taken the trouble to find out how many young carers there are in their community?

Does the Minister acknowledge also that in January of this year Mr. Justice McCullough held that the London Borough of Newham unlawfully failed to assess the needs of young carers in Newham? Will she therefore ensure that all local authorities undertake within the next 12 months to conduct a systematic study of the number of young carers in their communities and to publish the results? In the light of that, will the Minister reconsider whether, if local authorities continue to ignore the Act, legislative action will be taken?

My Lords, I am grateful to my noble friend for giving that extremely useful example of where the Carers (Recognition and Services) Act does not seem to be being properly implemented at local level. He will be aware that the problems of young people, particularly school-age children who are acting as carers, are something of which we are acutely aware and where we see specific needs. He will be aware also that those children and young people are covered by the carers Act. But I am grateful to him for drawing that example to my attention. I shall certainly look into it if he writes to me, although again I cannot guarantee any legislative result arising from the inquiry.

My Lords, can the Minister tell us whether she has received representations on this important subject from the British Medical Association? If so, what response did she make?

My Lords, I have not received any deputation or correspondence from the British Medical Association. I will inquire whether my honourable friend Mr. Boateng, who has departmental responsibility for this area, received any. If so, I shall write to the noble Lord.

My Lords, bearing in mind the Answer my noble friend's noble friend gave to the previous Question and the specific distress that carers of sufferers of new variant CJD experience—bearing in mind that the diagnosis cannot be made until after death—what case will the carers have to take legal action against the animal feed compounders and the individual Ministers who previously made the decision that feed compounders should not necessarily be required to list all the ingredients in the animal foodstuffs?

My Lords, my noble friend is extremely ingenious in eliding those two questions. However, his question is not relevant to the Question on the Order Paper regarding carers. In all questions of no-fault compensation and compensation where negligence can be proved, as he will be aware, the answers are extremely complicated and legally involved in relation to the National Health Service. I am willing to pursue the matter with him outside the Chamber if he so wishes.

Animal Health (Amendment) Bill

Brought from the Commons, read a first time, and to be printed.

Pesticides Bill

Brought from the Commons, read a first time, and to be printed.

Bank Of England Bill

3.7 p.m.

Read a third time.

Clause 15 [ Publication of minutes of meetings]:

moved Amendment No. 1:

Page 6, line 43, at end insert—
("( ) The Bank shall publish at the same time forecasts of all macro-economic variables considered by the Monetary Policy Committee as background to their deliberations.").
The noble Lord said: My Lords, my noble friend Lord Peston apologises that he is unable to be present today and I am happy to move this amendment of behalf of us both.

Amendment No. 1 is straightforward and I look forward to hearing that my noble friend will be able to accept it. The objective of the amendment is to ensure that the Bank provides us—that is, the House of Lords as well as everybody else—with all the necessary statistics and forecasts on which the Monetary Policy Committee makes its decisions. It is vital for us to know them because, if we do not know the basis of the decisions of the Monetary Policy Committee, if we do not know what its assumptions are about the outlook of the principal economic variants, we will not be able to interpret, for example, its minutes. It is crucial therefore that we have that information.

It would be equally impossible to check whether the committee sought to comply with the requirements to support the Government's economic policy which are written into the Bill, albeit regrettably coming second after inflation—about which my noble friend and I tabled an amendment in Committee and the Minister felt unable to accept. I regret that and perhaps he will now have second thoughts in that regard. I look forward to hearing from him on that point also.

It is important that the implications for the exchange rate—though that will not be necessary once we are members of the European Central Bank, which I hope will not be too far ahead—and employment are understood. I put that in only to upset my noble friend Lord Bruce of Donington. It is not very relevant. My noble friend knows that I love him dearly and that I always try to give him something to deal with.

It is important to ensure that when the Bank of England and the Monetary Policy Committee collect regional, sectoral and other information for the purposes of formulating monetary policy they are able to let us know what their assessments and assumptions are. Without that information, we will not be able to conclude in this House, in another place and elsewhere whether the decisions taken are reasonably correct. That is another reason why it is important that the amendment should be accepted.

Furthermore, it is important that the Monetary Policy Committee sets out in ways which do not confuse or mislead financial markets precisely what is the background to their policy decisions. Transparency is crucial. There is a serious problem between independence and transparency. I speak as one who supports the idea of giving the Bank of England and its Monetary Policy Committee the power to decide on interest rates. However, it is equally important that there should be transparency and accountability to both Houses of Parliament and to the public at large. The amendment seeks to enable this House to come to a clear conclusion on the reasons behind the decisions of the Monetary Policy Committee on interest rates.

It is vital that we in your Lordships' House and not just the Treasury Select Committee of another place should have a say in this matter. I want to make it clear to my noble friend the Minister that, whatever he is able to tell us today, my noble friend Lord Peston and I intend to press the matter further and that a Select Committee of your Lordships' House should be able to consider the issue and look at the whole reasoning behind the decisions of the Bank of England and the Monetary Policy Committee.

I have the honour to chair a sub-committee of the European Communities Select Committee. However, as I am sure my noble friend will know, that committee is extremely busy with many other issues and certainly would never have time to look closely at what the Monetary Policy Committee and the Governor of the Bank of England are doing. I know that it is not for my noble friend to say whether there should be such a Select Committee. However, my noble friend Lord Peston and I intend to ask the Leader of the House to set up such a committee. I hope your Lordships will agree that what we are proposing is not unreasonable. I hope particularly that we will not be told that we cannot have such a committee because of administrative reasons or a shortage of Hansard reporters or of committee rooms. That would be intolerable and I am sure my noble friend would not put that forward as an excuse for not having such a Select Committee. I am delighted to see the noble Lord, Lord Ampthill, who is a former Chairman of Committees, nodding in agreement.

I know that my noble friend the Minister will not be able to tell us today that he is willing to recommend the setting up of such a committee. However, whatever he says and whatever anyone else says, my noble friend and I have every intention of pressing this matter strongly. It is crucial both for the present monetary committee and eventually for the European Central Bank that there should be a Select Committee of your Lordships' House that is able to give proper consideration to what those bodies are doing. I beg to move.

3.15 p.m.

My Lords, the noble Lord has been kind enough to mention his anxiety that I ought to be convinced of the wisdom of the remarks he has made. I have to tell your Lordships that, for reasons I will not go into this afternoon but which will become known in due course, I have been excluded from all committees connected with the European Community. I shall not go into the reasons—possibly the anniversary of the occasion would be appropriate for that.

I am quite sure that the noble Lord would he only too anxious to help the Government on this because he is seeking a concession. If the noble Lord had enlarged his speech just a little—he is always very brief—by a list of what he considers to be the economic variables, that would have been helpful. The noble Lord is skilled in these matters both professionally and as a former member of the Council of Ministers. He is well aware of the nature and extent of the economic variables which he has dealt with in general terms. I wonder whether, possibly a little later in the debate, he will consider acquainting the House and the Government as to the economic variables he has in mind. Will he also take into account the possibility of all the economic variables not relating to the same period, being available in accelerated or de-accelerated form, and state what other characteristics he considers ought to be taken into account by all reasonable people to whom these matters should be explained in quite simple terms so that the House as well as the Government may be able to arrive at some reasonable consideration of these matters?

Will he also answer the question—when he complies with my request as I am sure he will he able to do—whether at the same time these various variables have reacted against one another, particularly where they do not relate to identical periods? In other words, I should like him to inform the House as to the extent to which he and possibly the Government are committed to the new science of econometrics, which pays increasing reference to what is called the government model, presumably being the computer model. If the noble Lord can clarify the position a little, it would be for the material use not only of myself, who is not important in these matters, but of the House as a whole.

My Lords, I wish to lend my support to the proposal of the noble Lord, Lord Barnett, that there should be a committee of this House to examine the performance of the Monetary Policy Committee of the Bank of England. As noble Lords will know, the Treasury Committee in another place is charged with that responsibility. It will also be charged with the responsibility of examining the performance of the Financial Services Authority. Taken together, those are very heavy responsibilities indeed. It would be entirely appropriate for the work of the Treasury Committee in another place to be supplemented by an appropriate committee of your Lordships' House or perhaps by the formation of a joint committee of both Houses. Given the new position of the Bank of England as defined in the Bill, and given the new independent regulator who will have extraordinary powers over the whole financial industry in this country, Parliament will have a heavy responsibility of review and assessment of the activities of the Bank and the FSA. A committee of this House or, as I would prefer, a joint committee would be appropriate to consider such heavy new responsibilities.

My Lords, it gives me some pleasure not only to follow the noble Lord, Lord Eatwell, but also to agree with everything that he said about the need for a committee of this House, or perhaps a joint committee, to examine the policies of the Monetary Policy Committee and how it reaches its decisions. As we know from previous Sittings on this Bill and from the way in which the MPC has behaved to date, decisions of that committee are extremely important and many people will be affected by them. I referred at Question Time to the exchange rate. Anybody who is involved in selling abroad will be most interested to learn the basis on which the MPC makes its decisions in any given month. Therefore, it is important that the MPC should publish the forecasts that it has used when reaching its conclusions, so that the outside world can have confidence in its decisions.

That is why I think that the amendment in the name of the noble Lord, Lord Barnett, is sensible, and that is why I support it, as I support the point made not only by him but also by his noble friend Lord Eatwell about the need for this House to have a committee to examine the MPC.

My Lords, I am grateful to my noble friend Lord Barnett for raising this matter again. Clearly, it is of interest to the House and I am happy to be able to respond to it. I am also grateful to my noble friend for speaking to the amendment in a way in which I could understand. My noble friend Lord Peston occasionally places me out of my depth, so I am grateful that my noble friend Lord Barnett did not do that on this occasion.

The MPC is committed to providing the best and fullest possible explanation of its members' thinking. It has already progressed from publishing just an inflation fanchart to publishing a chart also for growth; and it has most recently added a further set of charts illustrating the implications if interest rates were to follow the course implied by market expectations.

The Bank does not have a single economic model which generates a single forecast, but forecasts play an important part in the MPC's decisions, and when members hold differing views the Bank may provide forecasts based on different assumptions to reflect the range of views. I am reminded at this point of Casey Stengel, the manager of the New York Yankees, who uttered a word of warning about forecasts saying that they were peculiarly difficult, particularly when relating to the future. That might be true in this instance also.

The MPC would expect to continue to vary or expand the range of its published forecasts where there was a clear value in doing so. However, it does not favour publishing point forecasts, but rather charts or tables which show clearly the inherent uncertainty of any economic forecast. That brings us back to Casey Stengel. Also, given the number of possible forecasts, the MPC would be trying the patience of its audience if it was to attempt to publish in the inflation report all the possible outcomes of each set of assumptions.

Nevertheless, it has no wish to withhold the details of its forecast where these would be helpful to promoting understanding of the way it is approaching its task, and it is committed to the following. First, it is planning to publish its suite of economic models, and it hopes to do this later this year: outside forecasters and others will then be able to assess these and to use them. Secondly, it expects to indicate further in the text of the report the main implications for employment, the balance of payments and other variables of the different forecasts that it illustrates in the report. Finally, of course, the MPC will be prepared to consider reasonable requests from the relevant parliamentary committee to make available, in fanchart form, details of the MPC's forecasts that are not published in the inflation report.

I can confirm that the Bank is keen to have the widest possible scrutiny of the proceedings of the MPC, including all forms of parliamentary scrutiny. As the House will know, it is not for me to decide whether there should be a special committee of your Lordships' House or a joint committee, but I am sure that the Select Committee on Liaison and the powers that be will have noted that noble Lords on both sides of the House have requested such a committee and noted also what I have said about the Bank and the Treasury welcoming the widest possible scrutiny. In the light of those assurances, I hope that my noble friend will be prepared to withdraw his amendment.

My Lords, I am obliged to my noble friend for his reply. I am sorry that my noble friend Lord Bruce has been kept off Select Committees. I do not have the faintest idea why, except that it is just possible that his views are reasonably well known. It is not my job, however, to put my noble friend on or off a committee, so I cannot really reply to that point. I would always be happy to see my noble friend—I cannot say that I would always be happy to "hear" him because sometimes I hear him just a little too often and just a little too loudly. However, at least I know his views, whether or not he serves on a Select Committee.

I am obliged for the support of my noble friend Lord Eatwell and the noble Lord, Lord Mackay of Ardbrecknish, with regard to my point about the need for a Select Committee of this House or a joint committee. I noted, and was pleased to hear, my noble friend on the Front Bench expressing his "sort-or support which I am sure that the Select Committee on Liaison and the Lord Privy Seal will note with great interest. I look forward in due course to such a committee being established.

I am grateful to my noble friend Lord McIntosh for what he said. I appreciate—I have always appreciated—the fact that the Bank of England will always supply the maximum amount of information possible. I have never had any doubts about that. Indeed, what my noble friend has said today goes a long way towards replying to my noble friend Lord Bruce of Donington. I have no doubt that with the information and the variables which he set out, it will be possible for a Select Committee of this House, or a joint committee, or another place, to consider the matter fully. I note that my noble friend does not always quite understand economists—or at least one economist. I do not believe that for a minute. I am sure that my noble friend fully understands economists and all that they have to say, whether that be my noble friend Lord Peston or anyone else. My noble friend Lord McIntosh is too bright not to understand these matters.

I was interested in the view of forecasting given by the New York Yankees. I wish that my noble friend could forecast what will happen to Manchester United this season as that might be even more interesting. I very much appreciate the point about forecasting and the future. It is not always easy to know the forecast for tonight's weather, let alone that for weeks, months or years ahead, yet we sometimes seem to rely on forecasts given on the economy by all kinds of strange people.

Having said that, I am happy with the reply given by my noble friend and with what he said about the kind of reports that the Bank of England would be willing to commit itself to supplying. I know that my noble friend Lord Sefton, who spoke in Committee, would be happy to see regional reports also on how the Bank's policies will affect different parts of the country. Given what my noble friend Lord McIntosh has said and the commitments given by the Bank, I am very happy to withdraw the amendment.

Amendment, by leave, withdrawn.

3.30 p.m.

moved Amendment No. 2:

After Clause 22, insert the following new clause—
LISTED MONEY MARKET INSTITUTIONS: INCLUSION ON THE LIST
(". In section 43 of the Financial Services Act 1986, after subsection (1) there is inserted—
"(1A) The Authority shall have rules and practices to secure that a person included on the list referred to in this section is fit and proper to he included on that list.".").
The noble Lord said: My Lords, in moving Amendment No. 2, I should like to speak also to Amendments Nos. 3 and 4. Noble Lords may be aware that I am an independent member of the board of the Securities and Futures Authority. Although much of what I have to say this afternoon is motivated by my experiences in that position, my remarks are made, and my amendments have been tabled, in a purely personal capacity.

I first moved similar amendments in Committee and I am grateful to my noble friend Lord McIntosh for discussing them with me since then. I am also grateful to Mr. Howard Davies and his staff at the Financial Services Authority for giving up some of their valuable time to discuss the amendments with me. I remain convinced of the importance of the issues raised in these amendments. While not repeating the whole case made at Committee stage, I shall make a brief and, I hope, convincing case for the Government's urgent consideration of these issues.

The case rests upon the need to minimise risks to the integrity of financial supervision between N1, the date at which the supervisory functions of the Bank of England are transferred by this Bill to the new Financial Services Authority, and N2, the date at which the statutory responsibilities of the other regulatory authorities, notably the present self-regulatory organisations (SROs), are also transferred to the FSA. It is currently estimated that about two years will elapse between N1 and N2.

However, at N1 not only the supervisory staff of the Bank of England but virtually all of the staff of the SROs will be transferred to the FSA. Their services will then he contracted back to the SROs in order to enable them to maintain their statutory regulatory duties under the Financial Services Act until such time as the new financial services reform Bill becomes operative in a couple of years' time.

Therefore, the staff of the Financial Services Authority will be responsible for virtually all financial regulation as of 1st June this year. Prior to the implementation of the new Finance Bill they will be performing their duties under different statutory frameworks and according to a number of different rule books. As I pointed out in Committee, in some important instances this will result in the same people regulating exactly the same kinds of businesses but in quite different ways. This lack of coherence is particularly acute in the case of those firms listed as exempt under Section 43 of the Financial Services Act and whose investment business has therefore typically been regulated up to now by the Bank of England and not the Securities and Futures Authority which, under the Act, has the main responsibility for regulating such business.

As a result of the Bill before us and the working agreement between the new Financial Services Authority and the FSA, these Section 43 firms will be regulated by the same people as unlisted firms which are currently the responsibility of the SFA but according to quite different rule books. Therefore, the same people will regulate the same kind of investment business but according to different rule books; the difference being due entirely to the history of which firms in the past had been regulated by the Bank of England and which by the SFA. I believe that that situation is not only incoherent but confusing and even dangerous. It is exactly the kind of regulatory incoherence that can be exploited by wrong-doers. Moreover and perhaps more importantly, as we have seen in the Far East in recent months, financial storms can appear out of a clear blue sky. If between N1 and N2 a major business crisis were to be associated with incoherence in the regulation of investment business the reputation of the new system which the Government rightly seek to introduce could be placed in jeopardy.

My amendments are an attempt to enhance regulatory coherence among listed and unlisted firms with respect to all investment business during the period between N1 and N2. The amendments achieve that goal by the simple device of ensuring that the listing of all institutions under Section 43 follows criteria that are more in line with the registration procedures used to regulate firms conducting identical investment business which are currently regulated by the SFA. Accordingly, the investment business conducted by listed firms will be regulated in a manner more akin to the regulation of investment business by unlisted firms. The criteria that I propose essentially replace the informal procedures used up to now by the Bank of England. Those informal procedures may have been appropriate for a regulatory authority which was also responsible for the conduct of monetary policy and the maintenance of liquidity, but they are totally inappropriate to the new Financial Services Authority.

I accept that in no way can these three amendments result in the complete harmonisation of regulatory rules and procedures for all investment business. That would require a new and highly complex financial services Bill. But I believe that the two areas covered in my amendments—the criteria by which firms and individuals are deemed fit and proper and the enforcement of conduct of business rules—go to the heart of the matter. The incorporation of these amendments will remove a large amount of ambiguity and incoherence which is the inevitable product of the gap between N1 and N2.

I turn now to Amendments Nos. 2 and 4. These amendments require that clear rules be formulated for establishing that institutions, and most importantly the individuals comprising those institutions, are fit and proper to conduct investment business. They achieve coherence in the characterisation of what is fit and proper by requiring that rules which stem from what used to be called the SIB principles should be applied by all investment business regulated by FSA employees. Under Section 43 of the Financial Services Act there are at present no specific criteria that govern how companies are listed. The Bank of England procedure is fundamentally informal. Amendment No. 50 replaces that informality by requiring that in order to be listed all institutions conducting investment business shall be deemed fit and proper to conduct such business according to the specific rules and practices of the new Financial Services Authority.

Amendment No. 4 is the most important of all. The amendment requires that to be included in the list each institution must satisfy itself that its employees are fit and proper persons to carry out their designated functions and that for such positions as the authority designates persons appointed are approved by the authority. We seek to ensure that individuals are fit and proper—fit in terms of having acquired the appropriate qualifications. Again, the procedures of the Bank of England are essentially informal. Certainly, the Bank requires that all senior management of listed firms should be fit and proper, but exactly how fitness and propriety are defined is not embodied in a set of formal rules. In particular, the Bank of England requires that only senior management, not traders, should be licensed as fit and proper, whereas the Security and Futures Authority requires that such persons conducting investment business should be listed and regulated as fit persons. The value of this is that in the enforcement activities of the regulator subtle differences can be drawn between the activities of firms and the activities of individuals employed by those firms. That is an important part of the regulatory process which the Bank of England at present does not pursue.

Amendment No. 3 requires the authority to ensure that listed firms obey conduct of business rules appropriate to the kind of investor with whom they are dealing and the costs involved. I believe it is vital that Bank of England informality be replaced with modern rules. As far as concerns the conduct of the Bank of England, it seeks to regulate business by means of its code of conduct set out in the so-called Grey Book. But the terms of the code are not rules. The code defines best practice but the rules demand a minimum satisfactory performance. Conduct of business regulation is the fundamental protection which the supervisory system offers to individuals. In a modern regulatory system surely it is imperative that what is appropriate should be embodied in clear rules and that those rules are attuned to the characteristics of the counterparty. It would be a nonsense if the investment business conducted by listed firms was subject to a best practice code while identical investment business conducted by unlisted firms was subject to clearly defined conduct of business rules. This amendment ensures that conduct of business regulation is formal, clear and coherent rather than informal, unclear and incoherent.

These three amendments replace the informality of Bank of England procedures with the more formal rules required of a modern regulator. They will ensure that coherent rules and practices define which firms and which individuals are fit and proper. They will also ensure that all business, not just some, is conducted according to a clearly defined set of rules so that the same SFA staff regulate the same kind of business in the same way. I quite understand that the development of a coherent structure is an important part of the very hard work that the SFA will be carrying out between N1 and N2. If the Government believe that these amendments are premature I understand that position, although I disagree with it.

In those circumstances, I should be grateful if my noble friend would at least provide some comfort by answering three questions. First, do the Government intend that in future individual registrations should be the rule in what were previously listed firms? As I said earlier, I regard that as the most important element in establishing an effective modern financial regulatory system. Secondly, do the Government intend that in future the conduct of business rules should apply to all firms, whether previously listed or unlisted; and, thirdly, what steps do the Government expect the FSA to take to achieve maximum coherence in the regulation of investment business between N1 and N2? I beg to move.

My Lords, will the noble Lord elaborate in respect of subsection (2D) of his amendment which provides:

"A condition of the kind referred to in subsection (2C)(a) or (b) above may make different provision for different cases"?

My Lords, with the leave of the House, the important point with respect to subsection (2D), which refers to the fitness and propriety of individuals, is that the particular regulations of fitness and propriety may be different, for example, for a senior executive officer from those required for a trader on the desk. It provides the flexibility for the authority to define appropriate fitness requirements for people at different positions within an investment organisation.

3.45 p.m.

My Lords, I am grateful to my noble friend for raising this matter again. I appreciate that it was not possible for him to do so on Report. I recognise his expertise as a director of the FSA, and his proper concern, which we share, to ensure that the highest regulatory standards are established from the outset.

As I explained in Committee, the Bill merely transfers the existing regime for supervising money market institutions from the Bank to the FSA. More general reform of the regulatory system, is, and has always planned to be, in a second Bill.

First, I shall set out, as far as I can, what the powers of the FSA will be under the second Bill, and then I shall talk about the transitional arrangements about which my noble friend asked me. In case there is any confusion, I should say that the second Bill will, of course, be a financial services Bill and not a finance Bill.

The Government's aim is to make the FSA a more effective regulator with the necessary statutory powers, drawing on the best of each of the existing systems. There has been much support for the less-prescriptive approach to regulation which has been adopted hitherto for these wholesale market institutions. I appreciate that my noble friend does not share that view, but it is a view that is widely held.

The Government recognise the importance of the wholesale-retail split. We intend that the FSA should have the scope to adopt both code-based and rule-based systems for players in different markets. Code-based rules can be more effective, and less easy to circumvent, than detailed prescriptive rules. That depends upon the type of business the firms are doing and the sort of counterparties with which they are dealing.

The important point is to ensure that the FSA has the powers to make appropriate rules in respect of all the businesses that it authorises. I can assure the House that it will have. It is important that its rule-making and supervision are subject to statutory objectives to protect investors, depositors and policy-holders, and to maintain confidence in the integrity of the markets. Again, I can assure the House that that will be the case. A statutory objective to ensure that the requirements it imposes are proportionate to the benefits that they bring in terms of meeting those other objectives, is also necessary, and again I can assure the House that it will be. Those powers and objectives will apply equally to authorised firms whether or not they were listed under Section 43.

I can also assure my noble friend that we are considering what powers the FSA ought to have to discipline individuals holding key positions in authorised firms—he made a particular and legitimate point about that—bearing in mind, the objectives that I have mentioned. Again, the FSA's powers will apply equally to authorised firms which were listed and those which were not. I hope that those assurances meet my noble friend's concerns about the future regime.

The answer in respect of my noble friend's two final questions is yes: do the Government intend that in future individual registrations should be the rule in what were previously listed firms? Yes. Do the Government intend that in future conduct of business rules should apply to all firms whether previously listed or not? Again, the answer is yes.

I turn now to the transition period. My noble friend talked about the need for the FSA to achieve maximum coherence during the transition period. Again, I can assure him that the FSA is adopting an approach that maximises continuity and ensures a carefully managed integration of the different regimes. The current rules book will continue.

SFA staff that come across to the FSA will continue to act on behalf of the SFA in applying the SFA rules to SFA firms for the time being. Equally, in the wholesale markets supervisors from the Bank will continue to supervise the Section 43 firms, and will do so according to the same rules. From the start, it will be the same firms being regulated or supervised, under the same rules, and by the same supervisors.

In the meantime, we do not accept that the wholesale markets regime established by the Bank under Section 43 of the Financial Services Act is inadequate. If there are any difficulties, of course the FSA can bring forward changes to the listing conditions.

The important point that the House should recognise is that we should not make ad hoc changes to the wholesale markets regime through this Bill which may not fit in with the final regime under the second Bill. It would send the wrong message to those markets. It would involve potential costs to business in implementing two different sets of changes, especially coming on top of preparing the euro and resolving the year-2000 millennium bug problem. It is important that we should not chop and change and undermine the attractiveness of London as an international financial centre.

My noble friend used strong words. He talked about ambiguity and incoherence. I hope that in my exposition of our policy I have reassured him, at least to some extent.

In Amendment No. 2 my noble friend proposes to introduce an explicit fit-and-proper test for wholesale market firms. Most of the Section 43 firms are banks or members of the SFA, so they are already subject to a fit-and-proper test. Indeed, the vast majority of Section 43 firms is subject to a fit-and-proper test by the Bank. My noble friend would not be adding all that much by the implementation of Amendment No. 2.

My noble friend spoke next to Amendment No. 4. He proposes a power for the FSA to introduce a statutory system of regulation for individuals in capacities that the FSA may determine. That reflects contractual powers which are already used by two of the three existing self-regulating organisations, including the FSA, and a similar regime is in the process of being introduced by the third.

Finally, in Amendment No. 3 my noble friend talks about an explicit rule-making power. The FSA will have powers to make rules or establish principles for the conduct of business along the lines of the existing code. In exercising that power, the FSA will, in all cases, be informed by the overall statutory objectives we are to introduce, including the protection of consumers and the duty to ensure that the costs imposed by regulation are proportionate to its benefits.

My noble friend's third final question relates to what steps the Government expect the FSA to take to achieve maximum coherence in the regulation of investment business between the passage of this Bill and the next financial services Bill. Perhaps my answer has been set out—and I apologise—at too great length, but I hope that on that basis my noble friend will feel able to withdraw his amendment.

My Lords, I am grateful to my noble friend for that reply. He reiterated the Government's devotion to the notion that there is a black and white split between wholesale business and retail business and that their regulatory procedures should be different. The Government should take great care over that proposition. There is a significant grey area between wholesale and retail businesses. When Baring failed, a number of ordinary individuals were not paid their salaries and could not pay their mortgages during that week. Individuals were affected by what happened in wholesale markets on the other side of the world. It is enormously important to realise that behind all wholesale business there are individuals who will be affected by the nature of its conduct.

I am given considerable comfort by the fact that the FSA appears to be taking a more flexible view than that taken by my noble friend. It has not, for example, organised the Financial Services Authority in a manner which takes note of that split. The organisation of the FSA is along functional lines and does not divide wholesale and retail businesses. I hope that the differences in the nuances between wholesale and retail businesses will be recognised by the Government.

I am greatly reassured by my noble friend's confident "yes" that individual registration will become a characteristic of previously listed and unlisted firms in the financial services Bill. I am sure that the entire industry will take considerable comfort from that.

I focused in particular on the transition period between N1 and N2. My noble friend made an important point in arguing that the rule books of the Bank of England and the FSA would be run by different people at the FSA between N1 and N2. I had not understood that. I had believed that the organisation of the FSA was such that the same people would regulate investment business according to the different rules. If there are to be separate persons I believe the coherence of regulation during that period will be greater than I had previously feared. I am grateful to my noble friend for that new piece of information.

Finally, he suggested that my amendments appeared to be ad hoc and would result in firms chopping and changing the regulatory procedures to which they were subject. I was a little puzzled when he then said that Amendment No. 2 did not add much. If it did not add much how could it lead to considerable chopping and changing? However, given that that is nitpicking and given the reassurances and additional information which my noble friend has provided today, I am happy to withdraw my amendment.

Amendment, by leave, withdrawn.

[ Amendments Nos. 3 and 4 not moved.]

Clause 28 [ Board of Banking Supervision]:

moved Amendment No. 5:

Page 12, line 20, leave out (", who shall chair the Board,").
The noble Lord said: My Lords, in moving Amendment No. 5, I shall speak also to Amendment No. 6. It was moved in a slightly different form in Committee and I am grateful to my noble friend for discussions which have taken place since then.

The objective of the amendment is to ensure that one of the lessons learnt during the Baring affair is not forgotten; namely, that supervisory authorities should be subject to assessment and examination by an authority which is not only independent but seen to be independent. We discussed that issue in respect of Amendment No. 1 in that, under the new Bill, the Treasury Committee in another place will be charged with the responsibility of overseeing the activities of the Financial Services Authority.

Noble Lords will remember that the investigation into the conduct of the supervisory authorities of the Bank of England with respect to the Baring affair was conducted by the Board of Banking Supervision, to which Clause 28 refers. The Board of Banking Supervision has not only the investigatory role, which was thrust upon it at that time, but, under the Banking Act 1987, it has the statutory duty to advise the Governor of the Bank in the exercise of his or her supervisory functions. Under the Banking Act the board is chaired by the Governor.

Noble Lords will recognise that that structure—a committee chaired by the chief executive of the Financial Services Authority replacing the Governor—is contained in Clause 28. Therefore, the executive head of the institution responsible for supervision is deemed the appropriate person to chair the committee responsible for investigating whether that supervision is conducted in a satisfactory manner and advising the organisation on the conduct of its activities.

My amendment seeks to change the provision for chairing the Board of Banking Supervision. Noble Lords may remember that at the time of the publication of the report of the Board of Banking Supervision into the Baring affair the value of the report was called into question in your Lordships' House, in another place and in the financial press when it was revealed that the conclusions had been drafted at meetings of the board chaired by the Governor and by Mr. Quinn, who was at that time the executive director of the Bank of England responsible for supervision.

No one has suggested—and I am certainly not suggesting—any impropriety in the operation of the Board of Banking Supervision or on the part of the Governor and Mr. Quinn. But what was correctly suggested at the time was that the report of the Board of Banking Supervision should not only be independent but it should be seen to be independent by virtue of having been prepared under an independent chairman.

I am sure that the Government are totally in agreement with that sentiment. In the new era of regulatory openness and institutional transparency, it is totally unacceptable for an individual with the authority of a chief executive to chair the body designed to advise and monitor the institution for which he or she is responsible. Amendment No. 5 removes that embarrassment. Amendment No. 6 requires that the chairman of the Board of Banking Supervision be elected from among the independent members of the board.

As I said in Committee, I am sure that the drafting of Clause 28 was a slip on the part of the Government. My simple amendments prevent the new FSA inheriting unfortunate and embarrassing practices from the Bank of England. I understand that the Board of Banking Supervision will not survive N2, but I believe that it is appropriate to send a signal to the markets and to all those involved in the financial services industry that in the new regulatory apparatus openness and independence will be the key characteristics defining the supervisory activity and the monitoring of that activity. I beg to move.

My Lords, in some ways, although not entirely, the amendment parallels one which I tabled to Clause 3, which referred to the sub-committee of the Court of the Bank of England. At an earlier stage, I suggested that the members of the court should appoint their own chairman to the sub-committee, but the Government were absolutely determined that the Chancellor of the Exchequer may designate one of the members as chairman. I believed that that was wrong and I still believe that is wrong, but the Government got their way.

Today's amendment is similar, although I suspect more important and I listened with care to the noble Lord, Lord Eatwell. I remember the Friday afternoon when we in your Lordships' House spent some considerable time discussing the affairs of Baring. I can certainly say that the noble Lord made the point which he has just made fairly forcibly in my direction because I had to answer for it at that stage.

It seems to me that if the Board of Banking Supervision is to be seen as independent, it should not have a chairman of the authority as the chairman of the board. I believe that the noble Lord has made an eminent case that one of the six independent members should be the chairman and that the independent members should make the decision as to which of their number it should be.

After all, rather like the court, the six independent members will not be picked off the street at random. They will be appointed jointly by the Chancellor of the Exchequer and the chairman of the authority. Therefore, quite clearly they will have the confidence of both of those gentlemen as people of some substance and considerable knowledge in that field. On that basis, I believe that it is right and proper that the six independent members should decide for themselves which of their number should be chairman. I have some pleasure in supporting the noble Lord, Lord Eatwell.

4 p.m.

My Lords, I am grateful to both noble Lords who have spoken for explaining the motivation behind the amendment. I should say straightaway to the noble Lord, Lord Mackay of Ardbrecknish, that I do not follow him in his analogy with the amendment to which the House disagreed at an earlier stage.

I should explain that the board was set up originally to advise the Bank rather than to discharge any executive functions. Therefore, under those circumstances, we believed that it was proper for it to be chaired by the Governor. It has not been our approach in this Bill, as has become clear, to change the banking supervision regime in the course of transferring it to the FSA, although we have proposed to increase slightly the Board of Banking Supervision's independence by reducing the number of executive members from three to two.

However, in Committee I undertook to consult on those amendments. We have consulted Howard Davies, the chairman of the FSA, and through him the non-executive members of the board. Having done so and having confirmed that they are content with that change in their role, I am happy to accept my noble friend's amendment.

In accepting it, I wish to reinforce what my noble friend Lord Eatwell confirmed: that this does not imply any criticism of the past conduct of the board or of any of its members or, indeed, of the Governor and other executives who sat on the board. I wish to reiterate the point which my noble friend made that we do not propose to retain the board in its current form when we bring forward our further legislative proposals. That would not be in keeping with the wider responsibilities of the FSA. But the FSA has consulted on the form of practitioner input in the longer term. On that basis, the amendments have our support.

My Lords, I am extremely grateful to my noble friend for accepting the amendments. Perhaps I might add to his remarks concerning the Governor and Mr. Quinn. Of course, the purpose of the amendments does not suggest any lack of confidence in the abilities of Mr. Howard Davies, chief executive of the FSA, who is doing a truly excellent job. The amendments seek merely to establish a clear independent framework for the Board of Banking Supervision between N1 and N2.

I am grateful also for the support of the noble Lord, Lord Mackay, who rejected exactly those propositions at the time at which I advanced them; namely, at the time of the Barings affair. But there is of course more rejoicing in heaven for one sinner that repenteth, and I am delighted to hear of his repentance on this matter. Having said that, I am extremely grateful to the Government for supporting the amendment.

On Question, amendment agreed to.

moved Amendment No. 6:

Page 12, line 27, at end insert—
("( ) The independent members shall elect one of their number to chair the Board.").
On Question, amendment agreed to.

Schedule 3 [ Monetary Policy Committee]:

moved Amendment No. 7:

Page 23, line 8, at end insert ("or
( ) he has been the Governor or a Deputy Governor of the Bank").
The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendment No. 8. I suppose that it would be too much for me to expect that the success rate of the noble Lord, Lord Eatwell, might carry over to at least one of these two amendments.

We have been over this ground before and I have tabled the amendment in this way partly because I placed the amendments wrongly the first time and the Minister was able to have some sport at my expense because of that, but also because of something he said on Report on 23rd March.

I shall go over the ground quickly because I do not suppose that there are many noble Lords who have not been present during other stages of the Bill. Essentially, the Monetary Policy Committee will have nine members. I described five of them as the home team. They are people from the Bank —the Governor, two deputy governors, as there will be two in the future and two people who are employed by the Bank in senior executive positions. Then there will be four others who are appointed by the Chancellor and they will come from outside. They will bring their outside expertise—at present it is three from universities and one from commerce—to meetings of the Monetary Policy Committee. Your Lordships will know that the meetings of that committee are extremely important as regards the economic life of this country and for everyone who lives in it, whether they be mortgage holders, in employment, seeking employment or running businesses, especially in the export business, given the high value of the pound at present.

What bothered me rather when I looked at this matter was that there did not seem to be any way in which the hands of a future Chancellor might be tied as to who he could appoint as the away team. I was concerned in particular by the fact that two of the four current away team members—and I mean it as no reflection on them—had been in the past senior officials. One was at the Bank. Professor Goodhart was the chief adviser to the Bank in 1980. One was at the Treasury. Sir Alan Budd has been the Chief Economic Adviser at the Treasury since 1991. Therefore, two out of the four members have had some fairly high powered, in-house experience of the home team. In the case of one that is not so long ago and somewhat longer ago in the case of the other.

That is why I questioned whether in this part of the schedule as a disqualification for appointment we should suggest that no senior employee of the Bank or the Treasury could re-emerge as one of the four non-Bank members of the Monetary Policy Committee. I have slightly refined that to mention Treasury officials at Grade 3 or above or:
"office of equivalent rank in the Bank".
That is my general point.

However, the first amendment comes from an exchange which the noble Lord, Lord McIntosh, had with me on Report. At that time I asked whether there was any reason why the Chancellor could not appoint a former governor or deputy governor of the Bank as one of the away team. The noble Lord, Lord McIntosh, said that,
"there is no formal exclusion for a former governor or deputy governor".—[Official Report, 23/3/98; col. 1016.]
Therefore, it was not just a case of thinking that the teams were home and away. It was almost the school versus the old boys. Although I do not suppose that the present Chancellor would act in that way, one cannot guarantee the actions of future chancellors. He might decide that a previous Governor was a safe pair of hands. Noble Lords who have served in government will recognise the minute, "AB was the Governor some years ago. The Chancellor will remember he was a perfectly sound man and can be relied upon on all occasions. We suggest that now he has a nice job at a university as a part-time professor, he is eligible to become one of the four wise men who will help the Monetary Policy Committee". The Chancellor may think that that is a good idea and will sign his initial at the top and off the minute will go.

I do not suggest that a future Chancellor would try to pack the committee with previous Governors, deputy governors and senior employees. Perhaps the Minister can give an assurance on the record that that certainly would not be the Government's intention and that in writing into the Bill that four members of the Monetary Policy Committee should not be employees of the Bank of England, they have absolutely no intention of the positions being taken by former Governors and deputy governors.

In a way, I am less concerned, although I am still concerned about senior employees of the Treasury and senior employees of the Bank being on the MPC as part of an "away team". Indeed, I was extremely concerned when the Minister raised the doubt in my mind about former governors or deputy governors. I hope therefore that the Minister can give me some assurance, at least as regards my first amendment, at this Third Reading stage.

My Lords, as always, I followed the noble Lord's argument with great interest. I also noted the opportunity that it gave him to refer, once again, to the high exchange rate. I thought that he was going to tell my noble friend the Minister how he would reduce that rate, but I was not too disappointed because I did not really expect him to do so. However, perhaps the noble Lord can tell us why he has restricted the disqualification in Amendment No. 8 to,

"a Treasury official at Grade 3"?
Why did he not specify Grade 2 or Grade 4; or, indeed, why not specialist Treasury advisers, like perhaps my noble friend Lord Eatwell? Can the noble Lord tell the House why he decided on this particular disqualification level? In other words, why did he stop at that point?

My Lords, with the permission of the House, I shall try to answer the noble Lord. This refers back to the Committee stage and something that the noble Lord, Lord Newby, said about the more broadly-based amendment that I tabled at the time. The noble Lord pointed out to me that, in the course of their careers, many people spend a year or two at various levels in the Bank—but less so in the Treasury—and that it would not be very fair to exclude them. I picked Grade 3 and above, because in the departments in which I served, including the Treasury for which I was a spokesman, Grade 3 and above are the senior, serious players at the top of the scale. I am just asking whether it would be right for them and their equivalents at the Bank of England to end up as the "away team" members of the MPC.

My Lords, I am grateful to the noble Lord for reminding me of what I said in Committee. We have sympathy with the view that one does not want the MPC to be too full of home players, as opposed to away players. However, in my mind at least, I believe that there is a slightly different definition as regards the group of people whose membership of the MPC one wants to limit. The phrase that comes to my mind is not so much "home and away" but rather the concept of the "charmed circle", which goes slightly beyond former employees of either the Bank or the Treasury.

It seems to us that on the MPC we should seek to achieve a rather broader membership than the normal group, comprising not just officials but also advisers and chums of officials who one might suggest to Ministers for the committee and who might equally be seen as a well-known safe pair of hands. Instead of the two amendments that have been tabled today—although we would also welcome an assurance from the Minister as requested by the noble Lord—it seems to us that there are two better methods to achieve that aim. First, there is the proposition that we sought to put forward earlier in our debates; namely, that the nations and the regions of the UK should be better represented on the MPC; and, secondly, we believe that there should be confirmation hearings of members of the MPC so that no Chancellor of the Exchequer would run the risk of being seen to fill the MPC with chums, whether officials or otherwise. Therefore, although we have some sympathy with the thinking behind the amendments, we doubt whether they represent the best way to achieve the noble Lord's aim.

4.15 p.m.

My Lords, I admire the noble Lord, Lord Mackay, for coming back with a third version of what he made clear in Committee he wanted to do. His amendment in Committee was profoundly defective in the sense that it would have excluded him, as a former Minister, from membership of the MPC. His amendment on Report was defective in the sense that it proposed a power to remove a member of the MPC rather than restricting the ability of the Chancellor of the Exchequer, or anyone else, to make appointments to the MPC.

It is with great sadness that I have to tell the noble Lord that his amendments on Third Reading are also profoundly defective. They are defective because Schedule 3 to which they relate refers not only to what he calls the "away team" but also to the home team. If the noble Lord looks again at Schedule 3, he will see that it refers back to Clause 13(2)(b) and (c)—(b) being the home team and (c) being the away team, as he would call them. Therefore, the effect would be that no person who has held office of the equivalent rank to Grade 3 in the Bank could be one of the two members appointed by the Governor of the Bank of England after consultation with the Chancellor of the Exchequer. I am afraid that it would not work in that way.

The amendments also would not work because, as the noble Lord will have realised from our previous debates on the Bill, this legislation establishes the statutory basis for the MPC for the first time. Therefore, the appointments to the committee are not simply carried over automatically from the existing appointments to the non-statutory committee: they are being made for the first time. In that case, Alan Budd and Charles Goodhart, would be excluded under the noble Lord's amendments. When I challenged the noble Lord on that point on Report, and said that these were anti-Budd and anti-Goodhart amendments, he denied the charge. However, it is as true now as it was then. Therefore, the amendments simply could not go into the Bill as presently drafted and there is little opportunity left to discuss them.

The noble Lord's intent is of course the same as it was on Report; namely, that the Chancellor of Exchequer should not appoint former senior Bank or Treasury officials to the MPC. I am afraid that my answer is the same. As I said last week, there is no basis for excluding former Treasury or Bank officials from the MPC. The important point is that such appointments should be made on merit. Clause 13(4) requires the Chancellor of the Exchequer to appoint those he is satisfied have the relevant knowledge and experience in such matters. There is no justification for further narrowing the field as regards potential candidates.

The Government firmly believe that positions on the MPC should be filled by the best people for the job. That judgment must be made on the basis of their current knowledge and experience. If we go down the route of excluding particular types of people, the credibility of the MPC will suffer. The noble Lord's proposal would not enhance confidence in that committee; indeed, even if the amendments had been correctly drafted, they would in fact do the opposite. Therefore, I invite the noble Lord to withdraw them.

My Lords, I am grateful to the noble Lord, Lord Newby, for what I might call his "generalised" support of the principle that I am trying to achieve by way of this amendment and, indeed, the principle that I was trying to put forward with my previous amendments. I am rather sorry that the noble Lord's generalised support did not extend to particular support as regards making one of the members of the MPC a person who would be nominated by the Chancellor of the Exchequer on the advice of the First Minister of the Scottish Parliament. However, as that is still in the legislation—and I very much trust that the other place will not try to overturn it—at least one of the members of the MPC is unlikely to come from the magic circle.

I have to say that I am not very pleased with the Minister's response. I take his point about paragraphs (b) and (c) of Clause 13(2), but I was really only looking at paragraph (c). It still seems to me that the Minister does not appreciate the kind of reaction which would occur if a future Chancellor of the Exchequer were to appoint someone who had been a very senior figure—indeed, right up to the level of the Governor of the Bank of England—to the MPC. If any future Chancellor of the Exchequer were to do so, I believe that there would be some degree of attack on the whole principle as regards whether or not the "four members" now under discussion were actually independent people drawn from outside.

My Lords, I am grateful to the noble Lord for giving way because it enables me to make clear a confusion which I may have introduced when I said that the Monetary Policy Committee has to be reappointed when the Bill receives Royal Assent. I should make it clear that the Chancellor has said that he will appoint the existing four outside members. Therefore when the Monetary Policy Committee is formally constituted it will contain two ex-senior officials of the Bank and Treasury, but it will not contain any ex-governors or deputy governors.

My Lords, I suppose one has to be thankful for small mercies. As no doubt the noble Lord said to me on a number of occasions in the previous parliament, I am not considering what the present Chancellor will do; I am considering what future Chancellors can do. I cannot believe that the Minister thinks the number of people for these four posts will be drawn from such a limited field that future Chancellors will need to consider also former governors or former deputy governors, and that if we exclude governors and deputy governors we shall narrow the field of selection for a future Chancellor. That does not say much for the economists, business and commercial people in this country from whom I am sure the Chancellor could draw a pretty long list of nominees. However, clearly I shall not make much progress. If the Minister and I are around when a Chancellor of the Exchequer in the future says that he is not bound by anything and that he will appoint a former governor to the Bank, I shall look forward to discussing with him the fuss that will arise when one of the "away team" is just an ex-player from the "home team". I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendment No. 8 not moved.]

My Lords, I beg to move, That the Bill do now pass.

It has never been my belief that there should be substantive retrospective debate on the Question that this Bill do now pass. We do enough chewing of the cud as it is without reviving Second Reading speeches or things that we forgot to say in Committee, at Report or on Third Reading. I shall confine my remarks to thanking those who have taken part in the proceedings on this Bill at all stages. I have benefited enormously from the behind-the-scenes support of my noble friend Lord Haskel and also from the active participation of my noble friends Lord Peston, Lord Barnett and Lord Eatwell with, in the second XI, so to speak, the noble Lords, Lord Thomas of Macclesfield, Lord Montague of Oxford and Lord Sefton.

I have been grateful, as always, for the constructive opposition. I think that should apply to the Liberals, but it applies also to the noble Lord, Lord Mackay of Ardbrecknish and the noble Earl, Lord Home. The noble and learned Lord, Lord Mackay of Drumadoon, also took an active part, as did, in particular, the noble Lords, Lord Boardman and Lord Stewartby, from the Back Benches. I am grateful to all of them. From the Liberal Democrat Benches the noble Lords, Lord Newby and Lord Taverne, made a positive contribution to our considerations. Above all, I am grateful to the Bank of England Bill team in the Treasury, led by Stephen Pickford. I am grateful also to all of his colleagues for the support that they have given during the passage of the Bill. I beg to move.

Moved, That the Bill do now pass.—(Lord McIntosh of Haringey.)

My Lords, I shall say just a few words. I have absolutely no intention of repeating my Second Reading speech even if I could remember it. Nothing used to irritate me more than when people at this Dispatch Box repeated Second Reading speeches at this stage.

I am grateful to those who advised my noble friend Lord Home and myself on certain aspects of the Bill. I am particularly grateful to my noble friend Lord Home for help with the second part of the Bill. We certainly explored some of the details of the first and second parts in Committee. We were grateful to the Minister and his team for some of the detailed replies that we received although I cannot say I was grateful for all of them. That certainly would not hold true as regards this afternoon. However, I was grateful to the Minister for the courteous way in which he replied to us.

I am grateful to a number of my noble friends who took part at the Committee stage in the Moses Room—some of whom are present this afternoon—and at the Report stage and today's stage. Rather a select number of noble Lords took part in discussions on the Bill. Perhaps it is one of the defects of the Moses Room stage that what I might call the "passing trade" misses out on a Bill. I shall reflect on that in future. At Report stage we heard interesting comments from people who were not present in the Moses Room. It is a pity they were not present at the Committee stage. I am grateful to all my noble friends who have taken part and to other noble Lords for making this a brief but interesting Bill.

My Lords, I join the noble Lord, Lord Mackay, in thanking the Minister and his team for the way in which they have handled the Bill. As regards the discussions in the Moses Room, I shall long remember the seminar on the concept of price stability. It was not a debate on amendments; it was a seminar. We were all engaged in that discussion for a long time. I believe that it enlightened all of us. I am sure that students of economics will no longer need to read the textbooks of the noble Lord. Lord Peston, but will read the relevant part of the Committee stage of the Bill to discover the various definitions of price stability.

We on these Benches have a particularly partisan reason for being pleased that this legislation is heading for the statute book. We approve of it in principle. However, it also means that a well-known vote winner will no longer appear in Liberal Democrat economic policy; namely, the independence of the Bank of England. Those of my colleagues who have pounded the streets for many years advocating that independence will be grateful that this measure has now been so successfully dealt with.

We all recognise that in some respects the Bill is a transitional measure and that in due time we shall discuss the European monetary committee in another guise in terms of the European central bank when we discuss the euro. I look forward to those discussions. I hope they will be undertaken with the same generosity of spirit which has characterised our consideration of this Bill.

My Lords, I shall mention two fundamental aspects of the Bill. I shall not make a Second Reading speech. I very much regret two provisions. First, the Bill passes control of the monetary policy of this country from the Chancellor to the Bank of England. I believe that the Government will regret that as the years pass, and no doubt they regret it now. Secondly, I regret that they have removed the supervisory role from the Bank of England which it has held for a long time. It has made mistakes but nevertheless it has acquired great experience in that role. I think both those steps are fundamental mistakes and I personally regret them. Subject to that, I wish the Bill well.

On Question, Bill passed, and returned to the Commons with amendments.

Social Security Bill

4.27 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security
(Baroness Hollis of Heigham)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Baroness Hollis of Heigham.)

On Question, Motion agreed to.

House in Committee accordingly.

[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES (Lord Tordoff) in the Chair.]

Clause 1 [ Transfer of functions to Secretary of State]:

moved Amendment No. 1:

Page 1, line 10, leave out ("are hereby") and insert ("shall from the relevant date be").
The noble Lord said: In moving Amendment No. 1 I wish to speak also to Amendments Nos. 2 and 5. I have no doubt that elements of this Bill will cause son-le controversy and arouse some discussion, and probably some division. However, I trust that the amendments that I move today will not be the subject of division or argument, or even much debate.

Part I of the Bill is about decisions and repeals. Under Clause 1 decisions about benefit claims, child support assessments and the discretionary social fund which are currently made by adjudication officers, child support officers and social fund officers respectively will pass to the Secretary of State. Clause 9 covers decisions already exercised by the Secretary of State. There is considerable support for creating a status of single decision in all these areas. In the past there has been some confusion about who was and who was not making decisions.

The thrust of the amendments is that the Secretary of State should report to Parliament on the standards of decision-making. The arguments for the amendments that I have tabled were made in another place both at Committee and at Report stages. I hope that those who supported the principle on those occasions will support it now.

As drafted. Clause 1 creates the status of single decision-maker and abolishes the current distinction between the Secretary of State's largely administrative decisions and the decisions by independent adjudication officers which are made at arm's length and can have a great impact on individuals and groups of individuals. Such decisions can be the subject of an appeal to a tribunal.

The decisions previously made by these officers were the subject of annual reports. In the interests of open government, under this Bill it is essential that Parliament is kept fully informed of what has happened and what decisions have been made for which the Secretary of State is answerable. We appreciate that the Secretary of State will not be sitting in her office continually looking at such issues and arriving at decisions on them. Decisions will of course be made by senior officers on her behalf. But, nevertheless, she is answerable to Parliament for those decisions.

The amendment would require the Secretary of State to report to Parliament on the functions that would he transferred to her under Clause 1—decisions on social security benefits, Social Fund payments and child support assessments. The duty to report would commence from the date on which the new functions are transferred to the Secretary of State under Clause 1. Amendments Nos. 1 and 2 take the scheme of the Bill for transferring these functions and link it to the duty to report. Under Amendment No. 5 each 12-month period would run from the anniversary of that date and the report would be laid before each House of Parliament in the month in which it was published. The amendments would provide a means for Parliament to monitor the effect on the standard of decision-making in the proposals in Clause 1.

I lay the amendments before the Committee to improve and strengthen the Bill and not as a criticism of the Government's current drafting. I am not a parliamentary draftsman; I recognise that there is a danger that amendments of this nature may be flawed. If they are, I trust that that will not be a reason for not accepting them and that my noble friend will accept the principle of the amendments. I heartily commend them to the House. I beg to move.

4.30 p.m.

I have put my name to these amendments moved by my noble friend Lord Evans of Parkside. I hope that the Minister will be able to accept them.

As my noble friend rightly says, in putting down these amendments we are not being critical of the general thrust of the Bill but seeking to improve it. Many Members of the Committee will have received a substantial briefing from the National Association of Citizens Advice Bureaux on the whole of the Bill. I noticed in the material I received from it this morning that it is in favour of what is proposed in these amendments. That is important because it has the job of handling claims at grass-roots level on behalf of people who often have little support unless they get it from the local CAB.

Evidence suggests that the present quality of initial decision-making within a number of the agencies—the Benefits Agency, the Employment Service and the Child Support Agency—is unacceptably low. The CAB believes that if there is the change that we have suggested, with the Secretary of State having the responsibility to report to Parliament, and thus introducing some element of parliamentary accountability, that will have the effect of generally improving decision-making throughout the service. That could save a lot of time and trouble over appeals etc, at later stages in the claim.

I hope that my noble friend will feel that these amendments are intended to be helpful to ensure that the Bill is a good one and that the people who will be affected by it will have the additional support and protection of a system with a high degree of parliamentary accountability. I support the amendment.

It will be convenient to link discussion of Amendment No. 4 with the two amendments referred to by the noble Lord, Lord Evans of Parkside, and the noble Baroness, Lady Turner of Camden. These are variations on what is essentially the same point.

As we begin on what may be a rather long and tortuous journey through the Bill because the order of the clauses is somewhat confusing, perhaps I might make one or two general remarks. The comments by the Minister last week were helpful in pointing out the way in which the amendments have now been grouped.

The Bill was referred to earlier as the Peter Lilley Memorial Bill. I have increasing doubts about that. Certainly in some of the later stages of the Bill there are elements which were not in the Bill envisaged by the previous government. In many ways those elements will turn out to be highly objectionable.

The first part of this Bill is technical in nature. We would not wish in any way to be partisan about this—nor indeed would any Member of the Committee—but we are anxious that the Bill is drafted in the best possible way so that it is of the greatest help to those affected by social security decisions.

I am pleased to have the assistance of my noble friend Lady Anelay of St. Johns, who has served on many tribunals of this kind and has considerable experience. My experience is limited to the way decisions are reached at grass-roots level and the distress which may be caused if they are not correctly arrived at at the initial stage. We shall turn to the question of appeals etc, later. But it is important that we get matters right at the earlier stages.

Amendment No. 4 states:
"'relevant bodies and organisations' means such bodies and organisations as are prescribed by regulations".
In recent weeks there has been a great deal of discussion as to the extent to which the use of regulations is appropriate. In the context of this amendment it is entirely appropriate that one should be able to adjust without any great trouble—certainly not by primary legislation—the names of particular organisations which may reasonably consider the reports we are advocating in our amendment. However, there are many other provisions in the Bill which are dealt with by regulations and where the use of this power is open to objection.

From time to time I may have promoted measures which involve legislation by regulation. But one cannot amend regulations. The Bill refers to regulations but we have no chance at the first stage—the Government must surely be aware of what they have in mind—to amend those provisions. If we put the provision in primary legislation, we are able to amend it subsequently. But Parliament has a responsibility to consider the issue in the earlier stages of the Bill when it can be amended. The House—in particular the Opposition—cannot do so at later stages.

I am reinforced in this view by convention. I understand that in this House we do not normally vote against regulations, although I believe that the Liberal Democrat Party has adopted a different view. Nonetheless, the case for not legislating by regulation is all the stronger if the House is not able to vote against such regulations.

Having said that, we recognise and support the need for streamlining the procedures. The problem with the clause is that in effect the Secretary of State will become judge and jury in the matter rather than some other independent body. For that reason, the noble Lord who moved the amendment and I believe that it would be appropriate for the Secretary of State to report in writing annually to Parliament on the standards of adjudication. While we have drafted another amendment somewhat differently, we divide this amendment, as the Bill is divided, between child support, the jobseeker's allowance and other social security benefits.

Our strong view is that there is a case for such reports. I do not know how the Minister will reply to the debate. I do not believe that it would be adequate for such reports to be included in the general reports of the agencies concerned. They need to be free-standing. The general reports of the agencies cover a huge range of different subjects. I fear that the report would become lost if it were merely included in an agency's normal annual report.

The report should be differentiated for the reason mentioned by the noble Baroness, Lady Turner. The CAB has made representations. It has put forward some frightening figures. They can be borne out by one's own experience of the extent to which the system has failed at the initial stage. We must all hope that when we finally agree on the new arrangements, they lead to better decision taking. However, the figures quoted in the representations of the chief adjudication officer's annual report for 1996–97, to which the noble Baroness referred, indicate that, of the 45 per cent. of income support cases examined, 40 per cent. result either in incorrect amounts being paid or the amounts are in doubt. The adjudication deficiency rate in family credit was 37 per cent., with payments either incorrect or in doubt in 35 per cent. of cases. In child support, the adjudication decision in 57 per cent. of cases was deficient. A number of statistics are cited which are worrying. Instead of the individual having the right decision at the first stage—whether favourable or unfavourable—the lengthy process of appeal, and so on, has to be gone through.

It is clearly appropriate to seek to achieve a provision to ensure that the new arrangements work properly. It has been pointed out that, for example, the National Audit Office already carries out some degree of supervision. But that is a very narrow field and not adequate in this context. I hope that in the light of this debate we can agree that we should have an annual report of this kind, and that it should be a specific report.

Perhaps we may turn to a number of detailed points at later stages of the debate. However, finally at this stage, perhaps I may make this point. We are putting forward the idea of an annual report which can be scrutinised by Parliament. But we should consider, perhaps at a later stage of the Bill, whether, if the level of decision taking is as bad as the figures to which and the noble Baroness referred indicate, there should be some form of sanction on those making the decisions. I do not refer to mere parliamentary debate. Saying how bad the situation has been would not be adequate. It is a point that we should consider later. In the meantime, I hope that the Government will consider carefully and sympathetically what seems an overwhelming case for having a report of this kind. I hope that either in the form proposed by the noble Lord, or that suggested in the amendment, the measure will be acceptable to the Government.

4.45 p.m.

The amendments appear to be driving at much the same point. I am encouraged to think that the Minister will not have "resist" at the top of her brief because there is a government amendment on much the same lines. If I am wrong and I am to be disappointed, no doubt the noble Baroness will say so when she replies.

Before dealing with the amendment, perhaps I may say a brief word about the order in which the clauses are being debated. I am not getting at the Minister. The order is probably the best that can possibly be achieved in the light of the way in which the Bill is drafted. But anyone who spent time over the weekend, as no doubt many of us have, trying to make head or tail of the amendments, have found it very difficult to make a proper assessment while jumping from one part of the Bill to another. As a Minister at the old Department of Health and Social Security, I was used to these Bills being complex. Social security Bills always are complex. But it is more difficult when clauses are not taken in sequence. This Bill has been drafted in the interests of the department rather than of Parliament. I hope that the point will be taken on board.

The main problem with which we are dealing is the poor quality of initial decisions. If all the initial decisions were right, there would be little cause for appeal and therefore the system would not be gummed up, as it is. These poor initial decisions mean that those individuals who feel that they have not been accorded the right level of benefit are anxious. They have to wait for decisions eventually to be made. So there are very human factors involved when the initial decisions are incorrect.

There are a number of strong reasons for one or other of the amendments. First, I understand that the annual reports of the chief adjudication officer, and of the chief child support officer, will disappear. Therefore there is a need for something to be put in their place. My preference would be for the suggestion made by my noble friend Lord Higgins.

Another important point—I am sure that the Minister understands it well—is that it is of great importance that decisions should be seen to be independent and free from political interference. It is a matter that has always been stressed. It might appear on the face of it, unless some safeguards are made, that Clause I would to some degree undermine the very long and honourable tradition operated by the Department of Health and Social Security, and now the Department of Social Security.

I am not very keen on annual reports. They often mean civil servants having to devote a great deal of time to preparing them rather than getting on with the main job in hand in their department. Furthermore, annual reports very often gather dust; they are read by very few people. However, in this instance there is a strong case for an annual report. After all, we are dealing with very substantial sums of money—something like £100 billion a year—of benefits paid out and, of course, money which has to be paid in by the taxpayer and national insurance contributor. We are dealing with well over half of government expenditure. So in a sense it is of a very different order to many other items of public expenditure.

I therefore hope that the noble Baroness will feel able, if not to accept the precise wording of these amendments, at least to recognise that for the principle of Clause 1 to be acceptable, there should be an effective report to Parliament on an annual basis.

Amendments Nos. 1, 2, 4 and 5 require the Secretary of State to make and publish annual reports on standards in decision-making. That is a proposal that we on these Benches support, certainly so far as these amendments go. I do not agree with the noble Lord, Lord Dean of Harptree, that annual reports serve no useful purpose: they serve a very valuable purpose. Even if they are not widely read, they are there, and the need to make and publish the annual report concentrates the mind of any Secretary of State.

However, the proposals in these amendments lack any element of independent monitoring. It is proposed that the Secretary of State should report on the performance of her own department and officials. For that reason, we on these Benches prefer our own version in Amendment No. 3, which I shall move shortly.

Amendment No. 39, to be moved by the noble Baroness on behalf of the Government, is much more limited. It gives the president the duty of making a report which is based only on the decisions that go to appeal. That is not a proper cross-section of the cases that come before the department. It is as important to monitor the cases which do not go to appeal as it is to monitor those which do. In those circumstances, while we do not seek to oppose Amendment No. 39, we feel unable to give it any positive support.

In speaking to these amendments, it is right to begin by stating that, by the proposals in the Bill on decision-making appeals, we want to change the current complex system so that it is easier for customers and staff. As the noble Lord, Lord Dean of Harptree, rightly said, we want to get more decisions right first time. Then, when matters go wrong, we want to be able to put them right more quickly. We want to use the system to help more people and not just passively pay the money.

The proposals in the Bill on decision-making and appeals are designed to provide the framework needed for a new, active modern delivery system for social security. However, in achieving such a system, we will also take care to ensure that the fundamental basis of current arrangements will be maintained. Decisions will continue to be taken on the basis of the facts of the case and the application of the law. There will continue to be an independent right of appeal, as there is now. The proposals are about flexibility and achievability, not about reducing rights.

Before I go on to comment on the particular amendments, perhaps I may first express my appreciation that so many of the amendments both from the Official Opposition and from the Liberal Front Bench were tabled early enough to give us a generous amount of time to examine them. That is much appreciated. I wish to express my thanks for that.

Secondly, the noble Lord, Lord Dean of Harptree, raised a point about the confusing order of the Bill. That concern was expressed by the House when I had to move this as a formal amendment. I tried to explain why; namely, that the topics were to some extent at odds with the issues—in other words, there were two ways of organising the matter. I will certainly do my best to ensure that we are not faced with such a confusing order in future. I take that reprimand.

In this group of amendments we are discussing some very important issues about the way the effectiveness of the new system of decision-making proposed in the Bill will be monitored and reported on to Parliament and the public.

I now turn to Amendments Nos. 1, 2 and 5, moved by my noble friends Lord Evans of Parkside and Lady Turner of Camden. I thank my noble friends for tabling the amendments. They are similar to ones previously tabled in Committee and on Report in another place.

Speakers to those earlier amendments in the other place argued that it was imperative that detailed reports were provided on the success or otherwise of the transfer of decision-making functions to the Secretary of State, and on the quality of decision-making under the new arrangements.

It has always been the intention to do just that, as my honourable friend the Parliamentary Under-Secretary of State for Social Security, Mr. Keith Bradley, made clear during those earlier debates. We will continue to monitor the quality of decision-making, and the Secretary of State and agency chief executives will issue annual reports on quality standards and the operation of the system.

We had previously taken the view that there was no need for reporting arrangements to be set out on the face of the Bill. However, it is now clear that noble Lords on all sides of the Chamber would welcome a requirement to report to be included on the face of the Bill. We have reflected on this matter and I am happy to give that commitment—namely, that the requirement to have an annual report from the Secretary of State be included on the face of the Bill.

I am therefore pleased to accept in principle the amendment tabled by my noble friends Lord Evans of Parkside and Lady Turner of Camden, together with support given by noble Lords on all sides of the Chamber, including the noble Lords, Lord Higgins and Lord Dean of Harptree. With the permission of your Lordships, however, we should like to consider further the precise drafting of the amendment, and table a government amendment on Report. In drawing up that amendment, I will of course take full account of your Lordships' views.

It may be helpful at this point if I describe in a little more detail our proposals for monitoring and reporting on the quality of decision-making, so that your Lordships can see how comprehensive our plans are. The Bill introduces a new decision-making system which streamlines the current processes; it is our clear aim that the quality of decisions should improve. As noble Lords have cited, there is some need for improvement to be made. We will monitor the new system to ensure that we achieve improvements in quality, and we will report fully on our efforts to Parliament and to the public.

First, there will be systems in place locally to double-check a sample of first-instance decisions. There will also be central quality assurance teams within the agencies who will be fully independent of local checkers—who will, as it were, check the checkers—and who will report on the standards of the monitoring process to agency chief executives. Those teams will also take a broader view on the standard of decision-making agency-wide.

Monitoring criteria will be important for both local and central checking teams and will be fully agreed with the National Audit Office. That is therefore a further safeguard.

Agencies will set up standards committees which will include external representatives. Those standards committees will consider the results of checking by quality control teams and will prompt any remedial action.

Finally, agencies will have clear performance and quality standards to achieve and will be held firmly to account by the Secretary of State.

I should like to make it clear to the House that it has always been our intention that there should be comprehensive reporting arrangements. In addition to the reports from the Secretary of State—which will, as I say, be on the face of the Bill—and by agency chief executives, there will be the report made annually by the president of the appeals tribunals to the Secretary of State, in accordance with the provisions in Schedule 1, paragraph 9 of the Bill. This will include a section on the quality of decisions made in agencies in cases which subsequently go to appeal, as is made clear in government Amendment No. 39, to which I shall turn shortly.

The National Audit Office, the Government's independent watchdog, will also be fully involved. We are discussing with it how its role might be enhanced, particularly in the early stages of the new scheme. It will, where necessary, publish reports or bring matters to the attention of the Public Accounts Committee.

With annual reports from the agency chief executives, an annual report from the Secretary of State on the face of the Bill, annual reports by the president of the appeal tribunals and regular reports by the National Audit Office, I believe there are many assurances in place and that together these will amount to a comprehensive monitoring and reporting structure.

I hope that the firm commitments I have made about monitoring and my proposal to bring forward a government amendment at Report stage on annual reports on quality standards demonstrate that we are determined to improve quality and that we take our accountability to this House and to the public very seriously indeed.

With those assurances and my commitment to return to the House with a government amendment which meets the principle raised, I trust that my noble friend Lord Evans will feel able to withdraw the amendment.

My proposal to return with an amendment at Report will, I trust, meet the concerns which prompted the noble Lord, Lord Higgins, and the noble Baroness, Lady Anelay, to table the first paragraph of their amendment.

The second paragraph of the amendment is designed to probe our intentions with regard to consultation with outside bodies and other organisations on the monitoring criteria to be employed in preparing reports on quality standards. The amendment would require the Secretary of State to consult relevant outside bodies. As I said a moment ago when outlining our detailed proposals, in setting up monitoring criteria we do intend to consult with relevant bodies. Monitoring criteria will be agreed with the National Audit Office; and the remit of the agency standards committees will be to advise on all aspects of monitoring, including the criteria to be employed. We shall also discuss monitoring arrangements with welfare rights groups. I do not believe that there is need for this commitment to be on the face of the Bill, with lists of bodies set out in regulations.

I believe that the point was made for me by the noble Lord, Lord Higgins. We cannot amend regulations, and there is not just a convention but an undertaking—at least, from the official Opposition—not to vote against regulations. Such regulations would have to be displaced by new regulations every time we wished to discuss an issue with a new group which might have come into being since the previous amendments and regulations had been laid. Given the difficulties, I hope that the undertaking we have given to consult—while not wishing to tie our hands to a specified list which cannot be amended because it is through regulations—will enable the Opposition to decide not to proceed with their amendment. The first part is met in the substantive amendment moved by my noble friend and the second part would take us into the area of difficulties explored by the noble Lord. Lord Higgins.

I now turn to the government amendment in this group, Amendment No. 39. This amendment puts on the face of the Bill a requirement for the president of appeal tribunals to make a written annual report to the Secretary of State on the standard of appealable Secretary of State decisions coming before the tribunal. It also provides that the Secretary of State shall publish the report. This report will be in addition to, and will complement, the annual report that the Secretary of State will make on quality standards, which is the subject of the amendment we have just discussed.

During the Second Reading debate, the noble Baroness, Lady Anelay, asked why there was no provision in the Bill for the Secretary of State to report to Parliament on appeals and standards of decision making in the agencies. I subsequently wrote to the noble Baroness suggesting that paragraph 9 of Schedule 1 to the Bill provides for the president of appeal tribunals to supply the Secretary of State with such reports and information as she may require on the functioning of appeal tribunals. This would include information on the quality of those agency decisions seen by tribunals. However, I agreed to consider whether it might be helpful to specify this on the face of the Bill. With this amendment we are responding to the concerns raised at Second Reading.

I am grateful to my noble friend for giving way. For the record, does she appreciate that the presidents of the ITS publish an annual report each year?

Yes. I believe that that is why the Liberal Democrat Front Bench was not persuaded that this was the earth-moving amendment that Members of the Committee might otherwise have believed it to be.

I have outlined the ways in which we intend to ensure thorough monitoring and reporting. We see reports from the presidents of appeal tribunals as a valuable contribution to ensuring that high standards are met. The amendment specifies, on the face of the Bill, in response to a request from the official Opposition, that the president should report on the standards of agency decisions in cases going to tribunals and that the report should be published. That has always been our intention; it continues present practice; and the amendment puts the matter beyond any possible doubt.

We are delighted to respond to Amendment No. 1 and its related amendments proposed by my noble friends Lord Evans and Lady Turner, which have been warmly supported in the Chamber. I hope that, with the reassurances and explanations on other amendments, together with Amendment No. 39 which meets concerns raised at Second Reading by the noble Baroness on the Opposition Front Bench, noble Lords will be happy not to pursue their amendments.

I was brought up in the House of Commons where, in matters of procedure, the late lain Macleod made the memorable remark, when commenting on a government concession to the opposition, that one should never shoot Santa Claus. Apart from it being unseasonable in any case I certainly would not wish to do that. What one should do, however, is look very carefully at the wording on the wrapping paper. We shall study what the Minister said. Certainly, it seems a very significant move which we would welcome. We shall wish, in particular, to consider between now and Report stage the point she made about consultation with outside bodies. As she said, our amendment was more specific.

Perhaps I may make a final point, given the forthcoming attitude of the noble Baroness. Last week we had a Statement on the Government's proposals for reform of the welfare system and in particular a number of success measures. There was some dispute between the noble Baroness and myself as to the extent to which those could be quantified in particular cases. Will she consider adding to the proposals in the Green Paper the suggestion of quantifying as a success measure the kind of statistic referred to by the noble Baroness who supported this amendment and to which I myself referred? It might be a good idea to adopt the process which the Government have suggested in terms of success measures but to have a quantitative measure against which we could judge the reports which the Minister has kindly said she intends shall be produced by the Secretary of State and the heads of agencies.

That is a very interesting point. It will not have escaped the noble Lord that, as the Green Paper has already been published, I can hardly add to it at this late stage. I shall consider whether it might be appropriate for the annual reports to have benchmark targets to be aimed at. However, I know from some areas of my experience—for example, in disability benefits—that because of the length of time between the first decision and an appeal, during which time someone may have become physically much worse, a decision on appeal may overturn the decision made at the first tier of decision-making and yet both decisions may be right. The fact that the appeal went against the department in favour of the complainant should not mean that there is an easy read-across to suggest that there was therefore a faulty decision at the point of the adjudication officer's judgment. The issue is clearly more black and white where one is dealing with, say, income support or JSA where a decision may have been faulty. It is not always the case that, when an appeal decision is substituted for an AO's decision, the AO's decision was necessarily wrong. The decision may have been correct at the time and other considerations may come into play.

I shall reflect on the point. There is no intention by government to back away from setting ourselves challenging targets by which we seek to improve the quality of the original decision-making and to measure that improvement.

At the outset of what may be a long voyage to examine this important Social Security Bill, which will affect hundreds of thousands of families in this country in a variety of ways, I am pleased to find considerable support for the broad principle of the amendment tabled by my noble friend and myself. In my experience over many years in the other place I was taught never to look a gift horse in the mouth when the Minister was offering a concession. I therefore thank the Minister for her assurances and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendment No. 2 not moved.]

Clause 1 agreed to.

5.15 p.m.

moved Amendment No. 3:

After Clause 1, insert the following new clause—
ADJUDICATION STANDARDS COMMISSIONER
(".—(1) The Secretary of State shall appoint an Adjudication Standards Commissioner.
(2) The Adjudication Standards Commissioner shall keep under review the exercise by the Secretary of State of the functions transferred to him by paragraph (a) of section I above and in particular the accuracy of decisions made by him or on his behalf under sections 9, 10 and 11 below, and the time within Which such decisions are made.
(3) The Adjudication Standards Commissioner shall report annually to the Secretary of State in the light of the review referred to in subsection (2) above and the Secretary of State shall lay a copy of his report before Parliament.
(4) The Adjudication Standards Commissioner shall issue guidance on the law relevant to decisions referred to in subsection (2) above.
(5) The guidance referred to in subsection (4) above shall he available to any person who requests it.
(6) The Adjudication Standards Commissioner shall ensure that officers acting on behalf of the Secretary of State in the discharge of his functions under section I above receive suitable training.").
The noble Lord said: This is the first of a series of amendments tabled by my noble friend Lord Russell and others as well as myself. As everybody knows, the Bill is based on Conservative proposals being implemented by a Labour Government. Not surprisingly therefore it has the broad support of both the Government and the official Opposition Front Benches. However, if I may say so, it is none the better for that. As the presidents of the Independent Tribunal Services for Great Britain and Northern Ireland said in their joint comments on the Bill,
"a Bill which enjoys such hi-partisan support paradoxically needs to be challenged more strenuously in order to test its effects".
I do not in any way belittle the amendments tabled by the noble Lord, Lord Higgins, and the noble Baroness, Lady Anelay, on behalf of the official Opposition; the great majority of them are well thought out and will be supported by us. Also, I welcome and support the amendments tabled by the noble and learned Lord, Lord Archer of Sandwell, and other noble Lords. However, the burden of challenging the details of this Bill rests mainly on these Benches and with a Bill as complicated and technical as this one, that burden is a heavy one.

Public criticism of this Bill mainly concentrated on Clauses 70—the abolition of the higher rate for lone parent child benefit—and 72 on the reduction in the period of backdating. In this Committee stage those clauses are a long way down the road. Today we start with Part I which creates major changes in the system of decisions and appeals. Cumulatively, it is fair to say that those changes are at least as important as those in Clauses 70 and 72.

The Government's stated aim is to produce a less complex, more accurate and cost-effective system for making and changing decisions. That is a proposition with which I agree—and one might say: who would not? But in fact many of the proposals seem to us to be unsatisfactory. Some are simply unlikely to achieve the Government's aims; some achieve one aim at undue cost to another; for example, cost-effectiveness may be achieved to the detriment of accuracy. That is illustrated by the proposals on appeal procedures. Some proposals may achieve the aims stated by the Government, but at the cost of other aims which are not included in the list but which everybody recognises as valid. That includes transparency and fairness. A claimant whose claim is refused is entitled to an explanation that he or she can understand and to feel that that claim has been treated and looked at fairly, either at first tier or on appeal.

We are concerned with the proposed removal of the independent oversight of the first-tier decision-making process. We want to ensure that the claimant is given a proper explanation and decision; that at all levels of decision-making all proper factors are taken into account by the decision-maker, whether or not those factors are raised by the claimant; and we want to see a proper complaints procedure.

We are concerned with many of the alterations to the tribunal procedure such as the shortening of the period for appeals, the ending of the requirement for three-person tribunals and the ending of the requirement that one member of the tribunal be legally qualified. We are concerned with enshrining in statute the current practice that an appellant will not be given an oral hearing before the tribunal without a specific request.

The Government propose in Clause 1 to abolish the statutory offices of the adjudication officer or the child support officer. That is an extremely important change. There are arguments with some force in its favour and we do not object to that proposal. We accept it as a proper decision that the Secretary of State, through the agencies which administer benefits or child support, should he directly responsible for first-tier decisions. But the Bill, in removing the statutory offices of adjudication officer or child support officer, abolishes the offices necessarily of chief adjudication officer or chief child support officer. The responsibilities of those officers are transferred to the Secretary of State. In practice, those responsibilities will fall on the chief executive of the agencies which administer benefits or child support.

That increases the importance of having an independent monitoring officer who is not under the control of the Secretary of State or the chief executive. There can be no doubt that adjudication standards are now unacceptably low. The chief adjudication officer's report for 1996–97 found that there were adjudication deficiencies in 45 per cent. of income support cases examined and 37 per cent. of family credit cases. In 40 per cent. of income support cases and 35 per cent. of family credit cases examined, the amount paid was incorrect or doubtfully correct. The chief child support officer reported deficiencies in 57 per cent. of child support cases examined.

It is possible that bringing first-tier decisions in-house will itself improve those standards. We hope so. It is essential to get first-tier decisions right as far as possible. Reviews and appeals cost money, take time and—an important factor—increase the stress on claimants. However, we believe it is wrong to transfer to the agencies both the responsibility for adjudication and for monitoring that adjudication.

The reports of the chief adjudication officer and the chief child support officer have done a great deal to reveal the weaknesses of the existing systems. They also reported on matters such as the effectiveness of the management arrangements for adjudication, on training and on access to advice for adjudication. We believe it is essential that there should be independent monitoring. There is an obvious risk in the agencies monitoring their own standards of adjudication. That was pointed out by the Council on Tribunals in its annual report for 1996–97.

Amendment No. 3 requires the Secretary of State to appoint an adjudication standards commissioner. That commissioner will hold a statutory office independent of the agencies. The adjudication standards commissioner will be concerned to see that decisions are accurate and timely; will be available, as the chief adjudication officer is now, to give guidance on the law and to oversee the training of adjudicators. To quote again from the comments of the presidents of the Independent Tribunal Service:
"once the Chief Adjudication Officer … ceases to exist, there will he no independent means of assessing consistency and reliability of decision-making. If such a system is not established, and it is left to the Chief Executives of the relevant agencies, we fear that it may not achieve the priority it deserves when competing for funds in a pressured business environment. The absence of such a system may actually threaten achievable efficiency at first-tier level".
That is a very powerful criticism and the amendment is intended to meet it.

We warmly welcome the undertakings and explanations given by the Government but their proposals still lack the essential element that the report and standards should be made by someone outside the structure of the Department of Social Security. The noble Baroness referred to annual reports by chief executives, the Secretary of State, the president of the appeal tribunals and the Audit Office. But the first two of those are in-house reports and the last two do not report in either case on the whole picture. We believe that there should be a single officer who can do so. That is why we propose Amendment No. 3. I beg to move.

I listened with great care to the points made by the noble Lord in proposing the amendment. As I understand it, the basic object of this part of the Bill is to streamline the proceedings. There is always a trade-off between, on the one hand, streamlining and, on the other hand, achieving an effective system. Whatever the merits or otherwise of the clause, it could not reasonably be regarded as streamlining. What the amendment seeks to do is to introduce an additional tier of decision-taking for assessment of the standard of adjudication.

Having said that, certainly there are points here of considerable importance. In particular there may be some argument on the lines which have been mentioned. If I understand the position correctly, the arrangements announced in the Budget, about which the noble Baroness has written to some of us, will transfer the procedures in some cases from the Contributions Agency to the Inland Revenue. So one of the points with which we are concerned and to which this amendment would be relevant is the extent to which the Inland Revenue can go ahead correctly. I may have misunderstood the precise point here; if so, I am happy to be corrected. I am not sure whether the Inland Revenue, in its new role as envisaged in the Chancellor's Budget, will come within this process.

I am somewhat surprised by the wording of the amendment. It states:
"The Adjudication Standards Commissioner shall report annually to the Secretary of State in the light of the review referred to in subsection (2) above and the Secretary of State shall lay a copy of his report before Parliament".
That is straightforward enough. However, subsection (4) goes on to state:
"The Adjudication Standards Commissioner shall issue guidance on the law relevant to decisions".
I can understand it if the commissioner issued guidance on the law in relation to the reports which had been produced and said that this or that was appropriate in the legal context. But subsection (5) states:
"The guidance referred to in subsection (4) above shall be available to any person who requests it".
My experience with the Child Support Agency at grass roots level suggests that very often someone will be disputing fiercely the decision made in a child support case. If he is suddenly able to go to the adjudication standards commissioner and get legal advice, that, I am sure, would be welcomed by some of my former constituents. But it seems to me to open up an enormous range of problems and probably very considerable expense. Presumably it means that the adjudication commissioner will have to be a lawyer, as I do not see how else he will be able to give legal advice,
"to any person who requests it".
So I hope that in the course of the debate the exact point of this provision will be clarified. It may be that I have totally misunderstood what the noble Lord has in mind.

Overall, my feeling is that the amendment does not introduce sanctions of the kind to which I referred in relation to a previous amendment and it does not seem to take the matter very much further forward. It may well be that, despite the suggestions made by the noble Baroness in response to an earlier amendment, we are making progress and that we may need to make further progress. However, it does not seem to me that this amendment takes us very much further forward.

I assure the Minister that I am not going to shoot Santa Claus. What she said about bringing in a new amendment was extremely welcome, especially since this is the second sack of unexpected gifts she has brought to us within a week. However, what the noble Lord, Lord Higgins, said about reading the wrapping paper is also extremely relevant. I have never forgotten the day on which I discovered that both my mother and Father Christmas used wrapping paper that came from W. H. Smith. So, with that remark in mind, I should like to scrutinise these issues a little further.

In this country we do not have separation of powers. The Woolsack, even in the absence of its distinguished occupant, is sufficient testimony to that. But one element of the doctrine of separation of powers which we have always had, and to which we have rightly given very great importance, is the independence of the judiciary. Adjudication is, of its essence, a judicial function. The outward form of Clause 1, directing that the Secretary of State, who is an executive officer, shall be responsible for adjudication, bears an outward appearance of threatening to infringe that principle. We are assured that that is not so. I listened carefully to the noble Baroness at Second Reading. The understanding, as I see it, is that the administration rests with the Secretary of State but the judicial responsibility rests elsewhere. That is why it is crucial that the word "independent" in my noble friend's speech should be somewhere in the amendment which the Minister brings back to us on Report.

There is a strong case which executives have always made for influence on the judicial process. The Star Chamber was not actually an inefficient court. On many occasions it did do justice. There was a powerful case to be made for it, roughly along the lines of the speech of the noble Lord, Lord Higgins. However, because it allowed an executive presence in judicial decisions, a very few bad decisions in a distinguished record discredited the whole court. One can see why that should have been so.

The Secretary of State here is standing at the very top of a slippery slope. When you are standing at the top of a slippery slope, it is generally considered wise to be roped and belayed. That is why the presence of an independent adjudication standards commissioner who can issue guidance on the law is important. Perhaps I may say to the noble Lord, Lord Higgins, that this is not so very different from the law reports in The Times, which are available to everyone who wants them and which do not cause very profound administrative problems and have even in the past caused considerable amusement.

This is not such a very startling proposal and it may save us from a good deal of difficulty with the courts later. In fact, a great deal of the Bill is likely to cause problems with the courts not only in this country through judicial review but under the European Convention on Human Rights and through the European Court of Justice. I hope that the Government will think extremely carefully all the way through the passage of this Bill about the way in which the courts may take some of its provisions and that they will not lead the courts into temptation. Taking on board some of the proposals of the amendment in a welcome undertaking to come back with a further amendment on Report would be one way in which the Government could do something to meet us. I hope that the Minister will consider it.

5.30 p.m.

I am grateful to the noble Lord, Lord Goodhart, and the noble Earl, Lord Russell, for tabling this amendment, as it gives me the opportunity to explain how we will ensure that decision-making under the new system is of the highest quality. Our proposals will ensure that there are proper arrangements for training decision-makers; for producing clear guidance; for monitoring decisions made under the new arrangements; and for reporting on the quality of decision-making.

Before I continue with the rest of the answer, perhaps I may say as an aside that no decision has yet been made in response to the request from the noble Lord, Lord Higgins, for information about the Contributions Agency. No decision has yet been made about the implications of moving the agency over to the Inland Revenue, but later this afternoon my noble friend Lord Haskel will be making a statement on that, which may help to address some of the questions.

This new clause seeks to introduce a statutory office-holder—an adjudication standards commissioner. The office-holder would keep the new decision-making process under review and report on the operation of the scheme; issue published guidance on decision-making; and ensure that decision-makers receive suitable training. We aim to ensure that the public have confidence in the integrity and quality of the decision-making system. It may be helpful if I say a little more on the arrangements that we have in hand to meet that aim.

We are all agreed that decisions must be taken fairly and impartially in accordance with the facts and the law. We believe that the best way of ensuring high quality decisions is for agency chief executives to be accountable to the Secretary of State for the decision-making system, and for the individual decisions generated in their agency. Whilst the Secretary of State will remain accountable and responsible for all decisions made on her behalf, I believe that effective decision-making can only be achieved if agency chief executives are given autonomy for all components of the decision-making system.

Agencies have given considerable thought as to how they are to meet their new responsibilities. Decision-makers, first and foremost, need access to accurate guidance that reflects the law. There can be no question of this guidance being written in such a way as to favour administrative convenience. Chief executives will look for impartial advice to the department's professional legal advisers who are experts in administrative and social security law. Agencies will draft guidance based on that legal advice. Agencies will publish the legal guidance together with operational guidance. It will, as now, be available to anyone who wants to see it.

Agency chief executives will also be responsible for monitoring and general oversight of the system. They will have clear performance and quality standards to achieve.

We are absolutely committed to ensuring that these internal arrangements provide for quality decisions. There is no question of the quality or integrity of decisions being influenced by operational or financial considerations. The decision-making system and associated monitoring structures will be devised and operated in consultation with outside bodies, and the results will be published for all to see.

There will also be external monitoring of the decision-making system. The Government's external auditor, the National Audit Office, will continue to audit the department's accounts. This will include checking the accuracy of decisions. Decision-making could also, if appropriate, feature as an NAO value for money study. We are talking to the National Audit Office about how its role could be enhanced, particularly in the early stages of running the new system. The president of appeal tribunals will report on the quality of decisions made by agencies for those cases which subsequently go to appeal; and we will be placing this requirement on the face of the Bill.

This new clause seeks to give an adjudication standards commissioner the responsibility for ensuring that decision-makers receive suitable training. I have to say that it would be administratively difficult, in practice, for an independent adjudication standards commissioner, with no direct responsibility for management within the agencies, to adopt such a role, but even if the noble Lords' intention is that their role should be advisory, I still do not believe it is necessary. We already recognise that decision-makers need to be supported by quality training. Agency line managers will have responsibility for both identifying and meeting training needs; and central quality support teams will have a role in commenting on the overall quality of training. We therefore see no need for a separate check of training arrangements.

The new clause also proposes that the adjudication standards commissioner should report annually to the Secretary of State. My honourable friend, the Parliamentary Under-Secretary of State, Mr. Bradley, has already given assurances in another place that we will publish information on quality standards, and I am happy to reaffirm this. However, we do not believe that it is necessary for details such as reporting arrangements to appear on the face of the Bill.

We are committed to giving customers accurate, speedy decisions. We will put in place comprehensive training and guidance and will monitor and report on the quality of decisions. We have an impressive battery of measures which will command public confidence. I hope that with these assurances the noble Lord, Lord Goodhart, and the noble Earl, Lord Russell, will feel able to withdraw their amendment.

I do not think that the Minister has met the force of the argument, which is not just mine but that of the president of the tribunals, that the present arrangements lack an adequate independent element of monitoring. However, in the circumstances, perhaps the best thing that I can do is to wait and see the form of the amendments which the Minister will be tabling later on the subject of the reporting obligations of the Secretary of State and other persons. Therefore, on this occasion, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendments Nos. 4 and 5 not moved.]

Clause 2 [ Use of computers]:

moved Amendment No. 6:

Page 1, line 21, leave out from ("made") to end of line 4 on page 2 and insert—
  • ("(a) by an officer of his acting under his authority employing for the purposes of relevant calculations a computer for the operation of which such an officer is responsible: and
  • (b) in the case of a decision, determination or assessment that may be made or a certificate that may he issued by a person providing services to the Secretary of State, by such a person employing for the purposes of relevant calculations a computer for the operation of which such a person is responsible.").
  • The noble Baroness said: Clause 2 introduces new powers about how decisions on social security benefits and other business areas are to be made. It allows decisions to be taken not only by officers acting on behalf of the Secretary of State, but also by computers for which such officers are responsible. It also allows for decisions made by a private sector service provider to be similarly made by computers.

    The amendment seeks to remove from the clause the phrase that relates to the making of a decision by a computer and introduces a phrase which allows a computer to be used by persons who are themselves responsible for the decisions taken.

    Clause 2, as currently drafted, raises questions of both practice and principle with regard to the use of computers. I am decidedly not trying to be a stick-in-the-mud; nor am I afraid of technical innovation—far from it, I am most glad to exploit all the advantages offered by IT at every turn. Particularly now that we are in opposition, for however short a time that may be, one is very much aware of the need to be able to get at all sources of information. I am one of those Members of this House whose first job when they arrive here is to turn to the Internet, particularly to "Farmers' Weekly Interactive", and to discover, in my guise as spokesman on agriculture, what I ought to know on any particular day. I have no fears about using IT and, as I have said, I am most glad to exploit it.

    I believe that we can use information technology effectively in streamlining the welfare system, but that we must do so with caution. If the use of computers can release staff to concentrate their efforts on improving the service to the public, that should be encouraged, but only if we then fully understand—perhaps one should say "compute"—the risks we may be taking along the Way.

    When I served as a member of the Social Security Advisory Committee, I was fortunate enough to have the opportunity to visit local offices during the years in which information technology was introduced to the service on a rolling programme, benefit by benefit. I pay tribute to the staff who made so many adjustments over such a relatively short period. There was much training and heartache because of problems with both hardware and software. They moved from the paper processing of every single change made by the stroke of a pen to the use of screens. My visit to the local office in Toxteth took place on the very day that it went live on the Social Fund computation and the whole system crashed. I hope that it had nothing to do with my visit! We were lucky that the staff were able to cope by reverting to pens and making their own calculations.

    I am reminded of a recent visit to Northern Ireland when one of those whose responsibility it was to manage the system commented that to manage it was difficult because the staff simply would not be able to perform the tasks now performed by officers using the screens. Such is the advance that staff in the local DSS offices and benefit agencies have had to achieve in a short time.

    I am aware that today the Prime Minister makes speeches about the problems that we may face here and around the world with the arrival of the millennium bug. Press reports have said that he will be referring to potential problems about the payment of benefit in the year 2000 and that that may be disrupted. All of us have read predictions about what may happen at that stage.

    Can the noble Baroness provide an assurance that the provisions of Clause 2 will not be enacted until all DSS, and the relevant agency, computers, including all those with which they may be networked—for example, on housing benefit interchange of information—are guaranteed to be millennium compliant and will not fall sick of the millennium bug at the appropriate time?

    Clause 2 also raises serious questions of principle. Should a wedge be driven between the concepts of decision and responsibility? One of the achievements of English law is to find means of dealing with decision and responsibility in such a way as always to be able to identify one with the other. Where a decision is made, there the responsibility lies.

    The computer can in some extended sense make a decision. We are all aware of that from the number of leaflets that pour through the door reminding us that we may wish to renew a subscription to a particular newspaper or magazine. Certainly, decisions can he made as to when to trip in reminders, but it is only when the computer is correctly programmed that it can carry out a series of calculations or issue forms or reminders at pre-programmed points. A computer cannot be held responsible in layman's terms in a legal sense.

    Have the Government fully taken into account the impact that the divorce of decision from responsibility could have on English law? I was interested to read the comments of Mr. Tony Lynes in his paper The End of Independent Adjudication. He says that it may appear unreasonable to object to computer-made decisions. He goes on to ask:
    "after all, what could be more independent than a computer?".
    I notice that the Minister laughs. I agree with her scepticism on this matter. I am glad to see that she exhibits such scepticism. He goes on to say:
    "But, of course, someone has to give the computer its instructions".
    If I give my computer instructions, when it goes wrong I know that it is my mistake. Who is responsible for programming the computer, and what redress does anyone have if the programme itself is wrong?

    Clause 2 does not answer that question but merely provides that an officer of the Secretary of State must be responsible for the operation of the computer, whatever that may mean. How far will the computer's responsibilities extend? Under Clause 10 the Secretary of State may revise her own decisions. Does this mean that one computer will be able to revise the decision of another or even of the same computer? What are the implications of allowing a computer to revise a decision on its own initiative? Where is all of this leading us? Could a future social security Bill provide for appeals to be heard by computer? All of these questions deserve serious consideration in the course of this Bill and will need to be resolved at some stage.

    My amendment would not militate against the greater use of computers; far from it. I do not wish it to do so. It specifically permits and encourages such use but seeks to do so in such a way that we do not have to lose either the concept or the reality of having a person involved in the decision who can be held to be responsible for that decision. I beg to move.

    5.45 p.m.

    I intend to be brief. We fully support the amendment which raises an important matter of principle. We agree with the noble Baroness that computers should be treated as a tool of decision-making and not as the decision-maker itself. I also read and was persuaded by the article written by Tony Lynes to which the noble Baroness has referred. I am very happy to support the amendment.

    Clause 2 introduces new provisions for how decisions on social security benefits and other business areas may be made. It allows decisions to be made not only by officers acting on behalf of the Secretary of State but also by computers for which such officers are responsible. Furthermore, where decisions are to be made by a private sector service provider, these may similarly be made by computers.

    It is important to consider the provision in this clause in context. Currently, automated decision-making in the private sector is not unlawful; indeed, it is commonplace in the financial sector where it was pioneered by credit reference agencies. However, in relation to this department the law requires that social security and child support decisions are made by particular officers or by the Secretary of State or by officers acting on her behalf. This has the practical effect of excluding automated decision-making by computer unless the decisions are approved by officials. Hence the need for this clause which removes the anomaly by stating explicitly that decisions may be made by computer.

    The question is: which decisions? Clearly, there are some kinds of decisions which are not suitable to be made by a computer process. I can reassure the Committee that decisions which require the exercise of discretion or judgment will continue to be made by the department's trained staff. Examples of decisions requiring the exercise of discretion may be where there is a question whether for benefit purposes a couple are living together as husband and wife, or whether a claimant has deprived himself or herself of capital, or whether a 16 or 17 year-old would suffer hardship if refused benefit.

    However, there are significant benefits to be gained for customers and staff from greater automation where computers can be programmed to apply a series of tests to factual data in order to produce a consistent result: in other words, the clause enables us to make the best use of new technology. At present staff working in the various agencies have access to central computer systems via terminals on their desks. Staff make decisions and input information to the computer. However, modern computer systems are capable of using information already held and once programmed with the rules are capable of applying those rules automatically without the need for human intervention. They cannot make discretionary decisions: they will he made by staff.

    I give some examples where computers will appropriately make a decision. I take the field of child benefit. At present, for most child benefit and one-parent benefit applications, information is input to the computer. The system calculates awards and generates payments. The computer produces a schedule listing all of the awards that have been calculated over a given period of time and the adjudication officer signs to authorise all the awards on the schedule. While in theory the adjudication officer is deemed to be making a decision on each individual case, the reality is that there is no individual consideration in the vast majority of cases, of which there are nearly I million every year. The computer system calculates and awards benefit without any human consideration.

    Making provision in the Bill for automated decision-making will legitimise what happens at present. They will be able to calculate and award benefit in such straightforward cases without the need for human intervention.

    Clearly the initial factual data need to be accurately complete, and checks will be made to ensure that. With greater support from IT, agency staff will he able to concentrate on ensuring that all the necessary information and evidence which the claimant has supplied is collated and checked. That will lead to improvements in speed and quality, and should allow staff to refocus their efforts on overall customer services.

    Where decisions are made by an automated decision-making process, they will still be made in accordance with the facts and the law, and the customer's appeal rights will not be affected. The Secretary of State and departmental accounting officers will continue to be accountable to Parliament for all decisions made on their behalf, including those made by a computer. It is people, not machines or processes, which have responsibility and accountability for outputs and outcomes. Neither agency staff nor Ministers will hide behind any excuse which suggests that it was the computer's fault, and has nothing to do with them.

    I understand the concerns that lie behind the amendment and that it is novel for this Committee to be asked to endorse the specific use of technical equipment which we all take for granted in many other spheres of activity. However, I am sure that, on reflection, the Committee will appreciate the extent to which the amendment would inhibit the agencies in their objective of improving service delivery. It would substantially hinder our programme to modernise social security by retaining unnecessary breaks in our business processes.

    The amendment would mean a missed opportunity. It would prevent us from taking the organisation forward to a new level of efficiency and customer service. I can assure the noble Baroness that the system will not be brought into use until it is millennium compliant. For those reasons, I ask the noble Baroness to withdraw the amendment.

    The only part of that answer by which I was somewhat reassured was the very last part. I am grateful to the Minister for pointing out that the provisions of the clause will not be introduced until the equipment is proved to be millennium compliant.

    I hope that the DSS and the agencies will lead the way, because I am aware that other government departments are having difficulty in meeting the requirements. The Department of Health medical services have already said that there could be severe breakdown problems for their services in 2000.

    I am grateful to the Minister for defining the different areas in which computers will be used to make decisions and other areas where those decisions will be left to the officers. I shall obviously wish to read carefully her remarks in Hansard to see how far her answers meet my concerns. She was almost beginning to persuade me but I was somewhat wary when she referred to the success rate of the private sector with reference to credit reference agencies. I have had long service with the CAB and I have seen some of the heart-breaking, heart-rending results of the misapplication of information through those agencies. So I was a little put off at that stage from my initial welcome for what she said. As I said, I shall of course read most carefully in Hansard what she said. At this stage, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 2 agreed to.

    Clause 3 [ Use of information]:

    On Question, Whether Clause 3 shall stand part of the Bill?

    Before we part with Clause 3, will the Minister clarify some points? The clause relates to the use of information. As I understand it, information held by the department in relation to its social security, child support or war pensions functions can be used for other purposes. Will the Minister tell the Committee what those other purposes might be? I realise that the Minister probably cannot answer that question off the cuff, but I wonder what those other purposes might be.

    May I also have an assurance that the clause would relate only to functions within the department, and that it would not stretch, for example, to the Inland Revenue? I realise that those are detailed points of which the Minister has had no notice. If she cannot answer off the cuff, perhaps she would be good enough to write.

    If I mislead the noble Lord, I shall of course write to him, and the official spokesmen. However, my understanding is that this builds on the provisions of the previous Social Security Act which was brought forward by the Opposition when they were in government, which allows for data matching to ensure that information is not fraudulent or erroneous. It is data matching which would allow us successfully, I hope, to increase our efforts to combat fraud, which we all want to see.

    The question of the Inland Revenue may be one to which we should want to return on some future occasion when we may be introducing legislation associated with the CSA, when obviously such questions will be discussed. My understanding is that at the moment the provision applies, on the one hand, within the DSS, and the DSS and local authorities on the other. If I have any additional information to give to the noble Lord, I shall of course write to him.

    Clause 3 agreed to.

    Clause 9 [ Decisions by Secretary of State]:

    moved Amendment No. 7:

    Page 5, line 15, at end insert—
    ("(1A) The Secretary of State shall provide an explanation in writing, or other medium if that is more appropriate, of a decision which he makes under subsection (1) to any person who is directly affected by it, including a claimant for a relevant benefit.
    (1B) For the avoidance of doubt. the explanations provided under subsection (1A) shall be sufficiently full to enable a person affected by it to decide whether to apply for a review under section 10, 11 or 38 below, or make an appeal under section 13 below.").
    The noble Earl said: The purport of the amendment is to require that reasons shall be given for judicial decisions. The giving of intelligible reasons is a vital part of the doing of justice. There was once a judge who had the same facts before him at an interval of 20 years. Counsel, who was aware of that, had unwisely advised his client that he was certain of success. Of course he lost the case. Counsel, white in the face and stammering, said, "But these facts have been before you before, my Lord". The judge said, "I know, but they do not appear to me now as they appeared to appear to me then".

    If the judge did not have good reasons for that change of opinion, he is likely to have attracted a considerable amount of interest in the Court of Appeal. The giving of reasons is of course essential for discovering whether there is any ground for the laying of an appeal. It is therefore essential to the controlling of judicial power.

    It is also of course essential in making the thing intelligible to the claimant, because if the claimant does not understand what is going on, as is sadly too often the case, it encourages precisely that atmosphere of passivity in the face of an omnipotent welfare system, which the Green Paper expressed the Government's desire to bring to an end. That is a laudable ambition, but making the judicial processes intelligible to those who are subject to them is an essential part of doing that.

    I have a great deal of material here that I am sorry not to have been able to introduce on the previous amendment, but one cannot really say the same things twice, because of course reasons for decisions are often conveyed in the form of a computer-generated letter. That letter is itself often extremely hard to understand and extremely short on information.

    I have a few examples. One is of someone who was told four different levels of benefit over a period of four months. The communication said only:
    "This is to do with other money which you have coming in".
    That is a statement not of sufficient precision to be particularly verifiable. The local CAB tried to work out what was going on and was told by a Benefits Agency official that one of the items was probably due to someone pressing the wrong key in the office—that is the computer again—and that she did not have enough information to verify the rest.

    In another case someone was told that they could not have a jobseeker's allowance because:
    "the law says we cannot pay you".
    That is a case of we are here, because we are here, because we are here. I cannot see how that decision could have been verified, checked, or examined on the information available.

    Perhaps I may give another example that is equally confusing. The letter states:
    "I am sorry to tell you that we cannot pay you jobseeker's allowance from 3/10/97. This is because there is a change in the contribution information that we used to assess your claim. We have used the tax years ending 5th April 1992 and 5th April 1993 to assess your claim".
    I do not know whether the Minister got to the bottom of that—she possibly did—but I doubt that many other people did. The purpose of the letter was to inform the contributor that his entitlement to contributory jobseeker's allowance had run out and that he was going on to income-jobseeker's allowance. However, there is nothing in the letter from which that could have been deduced by the claimant or anyone else. Therefore, as a reason, it falls short.

    My final example is the computer-generated letter. It relates to someone being told that she had been overpaid £295.80 but was also entitled to arrears of £373.50. The letter stated:
    "We will owe you £77.70".
    But the computer ran and the letter continued:
    "Please pay hack the £295.80 as soon as you can. If we do not hear from you within 28 days we may begin civil proceedings".
    Computers really do need controlling. If I had received that letter I should have been in some doubt about what to do with it. We need proper, intelligible reasons both for the citizen's rights of the claimants and for the judicial accountability at appeal of those who made the decisions. This is a vital part of the controlling of power. I beg to move.

    6 p.m.

    I support the amendment which also stands in the name of my noble friend Lord Higgins. I do not wish to pre-empt what may be said by the noble and learned Lord, Lord Archer of Sandwell. The amendment seeks to establish a minimum standard which all notifications of decisions must reach. It requires that the explanations must be comprehensive enough to enable the claimant to decide whether to apply for a review or to appeal. The noble Earl, Lord Russell, gave us prime examples of where things can go wrong. I shall take a leaf out of his book and will not seek to repeat all that has been said. I merely endorse his comments.

    It seems right that on grounds of natural justice someone who is refused benefit should then be entitled to know exactly why it has been refused. It sounds exactly like the kind of amendment which the noble Baroness, Lady Hollis, would have supported when she was on these Benches. Indeed, I heard the noble Baroness say just that on many occasions. I am sure that it is fair to quote exactly what a Minister said, as a noble Lord or noble Baroness would quote Members on these Benches, too.

    When the matter was debated in Committee in another place, the Minister claimed that the Government will specify in regulations that claimants must he notified fully and properly of decisions regarding their claims and that regulations will specify how that should be done. The Minister in another place acknowledged that the Government have an extra duty with regard to that because the Bill imposes on claimants a much greater responsibility to provide evidence and information before their claims will be processed and before the date from which benefit may be paid is to he established. That is exactly the point I am making. The Bill requires extra diligence on the part of the claimant; extra diligence which I do not oppose. However, that extra diligence is specified on the face of the Bill. Why should we then not put on the face of the Bill the quid pro quo; the extra diligence of the Government in explaining decisions to the claimants?

    In Committee in another place, my honourable friend Mr. Burns pointed out the great difference between primary and secondary legislation. Today, my noble friend Lord Higgins referred to that matter. We need to keep it at the forefront of our minds when determining whether to relegate certain decision to secondary legislation. Secondary legislation by its very nature cannot properly be scrutinised by either House. Indeed, in another place some secondary legislation may be taken on the Floor of the House, hut, as noble Lords will be aware, as a proportion of the number of statutory instruments taken in any one year that is minimal. We in this House may discuss such matters, but there are some self-imposed inhibitions on these Benches as to what we do about them in regard to voting.

    I hope that the Minister will not tell us that the best way forward is simply to plough ahead with regulations on this matter because that would be contrary to what every Opposition spokesman from the noble Baroness's party has been telling the country and this House for the past 18 years. My views on the matter have been consistent. When I was a member of the Social Security Advisory Committee, when my party was in Government I expressed concern about the use of regulations. I do so now and I shall continue to do so.

    The report of the Delegated Powers and Deregulation Committee makes it clear that the large number of delegated powers in the Bill means that we should approach it with caution. In paragraph 1, the committee points out that:
    "The Bill constitutes an overhauling of much of the social security system, and the consequence is that arrangements which are well known and seen as fair will come to an end. For this reason, it is important to consider in some detail the regulation-making powers which will result in new and as yet untested arrangements".
    I hope that the Minister will be able to reaffirm the fact that she recognises the difference between primary and secondary legislation, as clearly as she did in Opposition, and that she will accept the amendment.

    I would not presume to embellish a case which has been made by the noble Earl, Lord Russell, or by the noble Baroness, Lady Anelay. I venture to support it. There are three reasons why there is much to be said for having to give reasons. First, as a discipline, it assists those who have to take the decision. If you have to give reasons why you are doing something you have to think your way through the problem. You have to ensure that the conclusions follow from the premises and that the whole thing hangs together.

    Furthermore, it is extremely good discipline to find yourself explaining an issue in a way which can be followed by those who do not necessarily share your technical knowledge. For 26 years in another place, I tried to test everything that I did by asking myself the question, "Can I explain this at ten o'clock on a Saturday evening in Rowley Labour Club?". Frequently I would have to do so and if I could not I thought about it again. That is the first reason why I believe that the amendment will improve the quality of decisions if we require those who make them to explain them.

    Secondly, reasons help the claimant to understand what is happening. If the decision is right it is much better that the claimant should know clearly that it is right and why, if only because that may prevent many totally unmeritorious appeals. One of the difficulties which the ITS must cope with relates to appeals which have no prospect of success, but which are brought because the right decision has not been explained to the claimant. If the decision is wrong the claimant and those advising him will be able to see the reasoning. They will be able to see that the argument is wrong and point to where it is wrong. That will save them and everyone else a great deal of time and enable them clearly to present a letter of appeal and the case.

    Thirdly, it is a great advantage for those who finally have to adjudicate on the appeal. Those who adjudicate frequently have the papers beforehand, although not invariably these days, and that is a matter which we may debate on some other occasion. But if you have the papers before the hearing of an appeal and you have before you set out clearly the reasons for the decision, you can see whether it seems persuasive. You will obviously have to hear the arguments. Someone may point out something that you have overlooked. But you may say, "That looks right to me", or you may say, "No, they have gone wrong here and I can put my finger on precisely where they have gone wrong". That will save an enormous amount of time at the hearing.

    As I understand it, the whole purpose of the Bill is to try to save time and resources at the appeal hearings. Therefore I hope that when my noble friend replies she will at least agree with the principle behind the amendment and that those who take decisions should give clear and comprehensive reasons for those decisions. I hope that she will go on to say—although I see that it is a separate argument—that that should appear on the face of the Bill.

    Those of us who have been in government know that when you are in government you tend to be rather more resistant to things appearing on the face of Bills and prefer to reserve them to secondary legislation than is the case when you are on the Back Benches or Opposition Benches. However, I hope my noble friend is persuaded also in that regard.

    6.15 p.m.

    This amendment seeks to place on the face of the Bill a requirement for the Secretary of State to provide an explanation, in writing or by some other means, of a decision to any person directly affected by it. It also requires the explanation to be sufficiently full to enable the recipient to decide whether to apply for a revision, supersession, or Social Fund review, or an appeal.

    I agree entirely with the comments made by my noble and learned friend Lord Archer of Sandwell when he set out the three reasons behind this amendment. It is important to improve the quality of decisions. It is important—indeed, essential—that claimants understand decisions. I accept that it is a clear advantage to those who are charged with the burden of adjudicating on appeals.

    It will be apparent from what I have just said that, while I understand and sympathise with the thinking behind the amendment, I hope that I can explain why I do not believe that this is the right way forward. In other words, there is not an objection to the concept behind the amendment but rather an objection to the means of achieving it. It is the last point made by my noble and learned friend which I address as to whether it should be on the face of the Bill or dealt with in regulations.

    Clause 13(5) of the Bill requires that persons with a right of appeal be given such notice of their decision and right of appeal as prescribed in regulations. It is our intention to use the regulation-making power in that subsection to ensure that customers are notified fully and properly of decisions on their claim. If we have not made that sufficiently clear up to now then I accept that that was remiss of us, but that issue has never been in doubt. Of course, customers must understand why decisions have been taken and what their responsibilities are. We want them to be able to play a more active role in future. So our side of the equation is that we must do more to ensure that the way in which we notify customers is clear and informative.

    I pause there to comment on the examples given by the noble Earl, Lord Russell. It is accepted that we have been inadequate on occasions in the past and it is accepted that improvements are essential, particularly if this new regime is to achieve its objective. There is no doubt that there is definite room for improvement, and single-status decision-makers and outcome decisions provide the opportunity for those improvements.

    Outcome decisions will place the onus on clients to dispute an aspect or aspects of a decision which they believe to be wrong. However, to enable them to do that they must have better, clearer explanations of decisions. The explanation which they receive will make it clear what factors were considered in reaching the decision, thereby enabling them to identify whether there is truly something which would justify taking further action.

    As I said, it is essential that we notify customers in a clear and informative way of the decision which has been taken. We must also tailor the way in which we explain matters to the needs of particular customers.

    We shall need to give explanations in a permanent medium and the majority will continue to receive explanations in writing. But there may be issues, for example about non-Braille reading blind people, where another medium would be more appropriate. As we look to the future we shall wish to make greater use of new technology in all our communications.

    By offering an improved service and improving the structure and content of our written notices, we shall aim to help customers to be better able to exercise their choices; to seek a revision of a decision from the agency; or to pursue an appeal to an independent tribunal.

    As I have said, I accept that there is room for improvement, as the noble Earl has clearly illustrated. But we believe that all those provisions are more appropriate to secondary legislation. Perhaps I might take up the point made by the noble Baroness, Lady Anelay, about why there are such wide-ranging regulation-making powers in the Bill. The aim of the proposals is to introduce further flexibility in handling social security matters. That would be limited if the detailed proposals were set out in primary legislation. The regulation-making proposals have been scrutinised by the Delegated Powers and Deregulation Committee and it has commented on them. My noble friend Lady Hollis will deal later with some aspects of those comments.

    In drafting the new legislation, we have tried to strike a balance by setting out a framework of rights and responsibilities in the Bill and leaving the detail to secondary legislation and guidance so that the department is in a position to respond to change over time and to incorporate lessons gained from practical experience. I hope that I have explained the position to the noble Earl, the noble Baroness and my noble and learned friend Lord Archer. With those explanations, I invite the noble Earl to withdraw the amendment.

    I am grateful to the noble and learned Lord for a great deal of what he said. I am grateful to him for what he said about Braille and I am grateful to him in particular for his admission that things have been going wrong. There rests between us only the final point touched on by the noble and learned Lord, Lord Archer of Sandwell, in a speech which I thought had very great force; that is, the question of the face of the Bill.

    I wonder quite how well every person who works in a benefit office knows every regulation which comes out of the Department of Social Security. I am sure that there are not many who do. I wonder also whether the method of regulation-making which tends to go for a process of total enumeration and always forgets some categories is precisely the right vehicle for an obligation which should be expressed in general terms and be capable of being applied to situations which have not been foreseen.

    But since I shall be returning to the regulation-making power and its limitations on Amendment No. 9, I beg leave to withdraw the amendment now and return to the issue of regulations on Amendment No. 9 and no doubt on many other occasions.

    Amendment, by leave, withdrawn.

    moved Amendment No. 8:

    Page 5, line 29, after ("138(1)(a)") insert ("or (2)").
    The noble and learned Lord said: This amendment simply ensures that the current rights of appeal against decisions about cold weather payments and winter fuel payments are maintained. Unfortunately, reference to those payments was omitted from the list of relevant benefits in Clause 9. Indeed, that may be an illustration to the noble Earl, Lord Russell, that it is not only in regulations that omissions are made. Clause 13 uses the list to define which decisions may be appealed. Without the amendment, appeal rights would be lost for these payments. The amendment will correct that error and preserve the appeal rights. I trust that Members of the Committee will agree to the amendment. I beg to move.

    On Question, amendment agreed to.

    Clause 9, as amended, agreed to.

    moved Amendment No. 9:

    After Clause 9, insert the following new clause—
    DECISIONS BY SECRETARY OF STATE: SUPPLEMENTARY
    (" .—(1) The Secretary of State shall, in such manner as is prescribed, inform with sufficient particularity a person wishing to make a claim for a relevant benefit what information and evidence is required to support the claim.
    (2) Where the Secretary of State makes a decision awarding a relevant benefit, the claimant shall he entitled to payment from no later than the date when the claim for it was made.
    (3) For the purpose of subsections (1) and (2) above, "relevant benefit" has the same meaning as in section 9 above.").
    The noble Earl said: I promised to return to the issue of regulations. The amendment now before the Committee says that the Secretary of State must tell any person who is making a claim what information and evidence is required to support such a claim. It also stipulates that when the Secretary of State,
    "makes a decision awarding a relevant benefit".
    the payment should begin from a date,
    "no later than the date when the claim for it was made".
    The amendment would reverse the onus of proof regulations which came into force in October 1997. The effect of those regulations was that, if evidence was supplied within one month, the claimant got the benefit from the date of the claim. However, if the evidence took longer to come in than one month, the benefit started from the date when the evidence was submitted. It was held that the purpose of this was to give claimants an incentive to submit information rapidly.

    The point about benefits is that if a person has no other means of support—and normally that applies to a claimant for means-tested benefit—he or she needs that money urgently and instantly. People do not need any further incentive to submit a claim urgently. In those regulations, which this amendment would revoke, it was recognised that there were certain cases in which this requirement would apply unjustly. So the regulations attempted, by the usual regulation method of total enumeration, to list all the cases in which exemption from the requirement to supply information within one month would be justified. There was an exemption for those who had a physical, mental, learning or communication difficulty in cases where it was not reasonably practical for someone else to assist them. However, the list left out a possibility which is quite likely to arise: namely, that people in such a situation might not know that they require assistance. I have in mind, for example, the person who did not put in a claim for a very long time because she was in a mental hospital, under another name and in another part of the country. How could she possibly have known that she required assistance? Indeed, that is an actual case which comes from the CAB in Richmond.

    The list also leaves out, for example, ordinary illness. It leaves out undiagnosed depression, which is one of the commonest reasons for people who should have done something not doing anything about it. Above all, it leaves out the one thing that the department always claims for itself when it is taking powers by regulation—the final category of, "some other reason why". I have never known a regulation from the Department of Social Security regarding taking powers which it did not specify at the end of the reasons why it might use such powers, the phrase: "some other reason why".

    What is sauce for the goose is sauce for the gander. If the department can take powers which it may need for, "some other reason why", claimants may be entitled to make a late claim for, "some other reason why". For example, someone may have been staying with relatives at the other end of the country; or, indeed, there may have been a strike in the local post office. I have received practically no post for a week now for that very reason. That is why it is on my mind.

    I believe that a general entitlement would be rather better than this attempt to enumerate every possible reason in regulations and, necessarily, missing a great many of them. That is why regulations are always capped by regulations and by other regulations on top of them. Therefore, Ministers become, as I once put it, "piddlers" as garages would say: always topping up the radiator with a little bit of water. One cannot possibly enumerate all the cases. As one cannot do so, regulation is often not the best method. So I believe that a general entitlement would work a great deal better. I beg to move.

    The proposed new clause seeks to place new statutory obligations on the Secretary of State to inform claimants of evidence requirements and to award benefit from the date when benefit was claimed, regardless of when supporting evidence is provided. However, before addressing the amendment, I hope that I am not seen as a "piddler"; indeed, I have never been described as one until today. Like the noble Earl. Lord Russell, we do not want people to lose benefit to which they are entitled. However, we believe that customers should have clear responsibility for making claims and providing basic information in support of them. They should be able to understand what is expected of them and the implications of their failure to do what is necessary. We believe that the best way to achieve this is through agency communications and procedures, not through regulations.

    Perhaps I may pause here and deal with one of the points made by the noble Earl about people who are suffering from incapacity and who are, therefore, unable to provide the necessary information. The measures that we propose will not penalise those who cannot provide the necessary information—for example, because they have physical or learning difficulties or because the information is unavailable. The claim forms have been simplified and clarified so as to ensure that those who are able to help themselves do so.

    We do ensure that customers know what is expected of them. Income support and jobseeker's allowance claim forms have been revised to show what evidence is required and when it should be provided. These changes are important to clarify roles and responsibilities for clients and staff alike. Claim forms for other benefits already request the required information, and we will be looking to improve these forms further to reflect the changes made to the income support and jobseeker's allowance claim forms. There are exemptions in the current regulations, as referred to by the noble Earl, to protect vulnerable groups. In particular, certain people who have genuine difficulty in obtaining information are not required to do so. That will continue under the new arrangements.

    I believe it is right that people play an active role in enabling their benefit to be correctly determined. But, importantly, without the right evidence it is simply not possible to reach proper decisions and put the right payments into effect. It is more helpful to make customers aware of what is needed of them so that they can get their entitlement paid promptly.

    I turn to the drafting of the amendment now before the Committee. Subsection (2) of the amendment could lead to anomalies. There are many circumstances in which we encourage people to apply for benefits early. For example, retirement pension can be claimed up to three months before retirement age is reached, although it is not paid until the date of retirement. If this amendment were adopted and the date of claim were always the date of payment, we might find that payment of benefit is allowed where there is no entitlement. Similarly, claims are often made in advance by people who have left work and have received wages in lieu of notice, so that benefit can be paid promptly when the period covered by their wages ends.

    Under this amendment benefit would appear to be payable at once, although there would be no entitlement. If this amendment were passed, the only practical solution would be to stop taking claims early, which could in turn result in delaying payments to customers and cause potential hardship. I am sure that that is the last thing the Committee would wish. There are already provisions to ensure that people receive benefit from the appropriate date of their entitlement. I assure the Committee that we shall not disturb those in any way. I invite the noble Earl—with such assurances that he takes from these comments—to withdraw the amendment.

    6.30 p.m.

    I thank the noble and learned Lord for that reply. Had I been minded to press this amendment his comments on the proposed new subsection (2) of the amendment and its drafting would have persuaded me not to do so. Nevertheless I think there is a case here to be considered. I was, of course, aware of the exceptions that he outlined. However, the difficulty with these exceptions for vulnerable people is that they must be claimed, which means of course that it is precisely those people who most need to do so who are least likely to be able to claim an exception. Let us consider, for example, a schizophrenic who fails to take his or her medicine. It is almost impossible to persuade such a person to do anything whatsoever.

    Let us consider also the case to which I referred of undiagnosed mental illness, especially depression, and the possibility of other serious impediments which are not mentioned. For example, there is no mention of having to attend funerals perhaps in other parts of the country or even in other countries. There will be many more reasons for late claims than any regulation can possibly allow for. Putting the burden on the claimant to make a claim who is already vulnerable and already in difficulties, will mean that those who are least entitled to the exception are most likely to get it. I wonder whether that is quite just or particularly effective. I hope the Government may think further about this. For the time being I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 10 [ Revision of decisions]:

    moved Amendment No. 10:

    Page 6. line 14, leave out subsection (2) and insert—
    ("(2) When considering whether to make a decision under subsection (1) above, the Secretary of State shall consider any issue which appears to him to be relevant to the claim, so however that he shall not revise the decision in question so as to terminate an award of benefit or reduce its amount unless he is satisfied that it was given in ignorance of, or was based on a mistake as to, some material fact, or was erroneous in point of law.
    (2A) For the purposes of subsection (2), "relevant benefit" has the same meaning as in section 9 above.").
    The noble Lord said: At present Clause 10(2) provides that in making a decision to revise an earlier decision,
    "the Secretary of State need not consider any issue that is not raised by the application".
    We have tabled this amendment to seek to remove that exemption for the Secretary of State—or, in practice of course, the adjudicator—to make sure that the adjudicator is bound to take into account any relevant issues whether or not they are raised on the application. It is surely a basic principle that decisions should be correct as far as possible. If there is an application for revision of an earlier decision, surely it should be the duty of the adjudicator to take into account any issue which he or she thinks is relevant.

    I recognise that there may be some problems if the adjudicator is a computer. Nevertheless it is surely not beyond the ability of computer programmers nowadays to programme the computer to identify circumstances where relevant issues that might be raised on the application have not been raised, and therefore alert the computer's "minder" to the need to look into further aspects of the case. There is a principle of civil law that an appellate court is not bound to consider a point of law raised for the first time on appeal, but has a discretion whether or not to do so. But this of course is not an appeal; it is a revision of the original decision. In those circumstances all the circumstances which gave rise to the original decision, or which might indicate that it is wrong, should surely be considered. It is wrong to apply to the adjudication procedures the strict rules governing appeals in civil actions where both parties are likely to be represented.

    Applicants are unlikely to know much about social security law. They will certainly know less than the adjudicator, whether or not the adjudicator is a computer. No doubt if there is a serious relevant issue of which the adjudicator is aware, the adjudicator will raise it. But why should the adjudicator not be bound to do so? Why should it simply be left to the adjudicator's discretion, recognising, of course, that the adjudicator cannot raise an issue of which he or she is not aware?

    The amendment also proposes that, first, a downward revision of the original award should be possible only where the earlier decision is plainly incorrect; that is, based on a wrong view of the facts or law, and, secondly, that it should not be possible to revise a decision downwards just on the exercise of a discretion where the revising adjudicator disagrees with the original adjudicator's exercise of that discretion. It is entirely wrong that in such cases there should be any question of the recovery of an over-payment made on the basis of the original decision. This might arise unless there is a regulation to prevent that happening.

    In those circumstances I hope that the Minister will explain why it is thought necessary that the adjudicator should be given the power not to take into account relevant issues simply on the grounds that they are not raised on the application. For my part I find it extremely difficult to see why there should not be such a duty. I beg to move.

    I welcome the opportunity presented by the noble Lord, Lord Goodhart, in setting down this amendment as it enables me to explain our thinking in an area where the Government's intentions are clearly causing concern, not only to the noble Lord. I am aware that other members of the public have expressed similar concerns about this matter.

    As the noble Lord has pointed out, the amendment would do two things. First, it would reintroduce, in statute, the concept of formal grounds for revision where an award was to be terminated or reduced. It would also move away from concentration on that part of a decision which is disputed or which appears to be wrong to the position where undisputed aspects of a decision must be revisited.

    The amendment goes to the heart of our proposals on improving customer services. Services which simplify complicated, bureaucratic processes, which reduce delays and which cut out waste are central to the Government's welfare proposals and result in more efficient, customer focused services. Clause 10 is a key component of those proposals. It is about revising decisions which appear to be wrong. I think we would all agree that this should be a simple, easily understood process. Yet current law requires customers to seek review by means of an application in writing to an adjudication officer, stating the grounds of the application. That is neither simple nor easily understood. Customers are constrained by a complex legal framework set out in statute and with rules which differ from benefit to benefit and from agency to agency.

    In future our approach will achieve two things. First, it will make the claimants' task easier. They will need only to say in their own terms what it is they do not like about a decision. They will not have to translate their objection into one of the more formal grounds. Members of the Committee with experience of these matters will agree that the requirement to set out grounds for a review can cause problems at present. For example, when does a change of medical opinion amount to a relevant change of circumstances? Sometimes it is not easy for the expert to interpret these matters and it is certainly not easy for the average claimant.

    Secondly, our approach makes the best use of limited resources. By focusing on the issue that is being queried cases will be dealt with more efficiently. When a claimant writes in to query a decision, agency staff will not have to look at every aspect of a claim. Their time will be better spent by focusing on the issue that has been raised and moving quickly on to the next case.

    In the long run, the time saved should lead to a more comprehensive and better service for all claimants.

    When reconsidering a decision under this clause it is entirely reasonable that there should be no obligation for the decision-maker to consider the entire matter afresh. Customers should play an active part in identifying and voicing their concerns. This will enable decision-makers to focus on the issues raised by the customer and place the responsibility for reporting changes and disputing decisions firmly with customers. I stress that there is nothing in our proposals to prevent the investigation and correction of errors which have not been raised by the claimant.

    Dealing with the point raised by the noble Lord, it could be argued that every aspect of the decision was relevant. It would be a waste of time and effort to re-address every single aspect of a decision, even where there was no question of it being likely to change.

    Clause 10(2) allows the decision-maker to take a wider look at any decision where he or she thinks it is appropriate. In other words, decision-makers will be free to reconsider any aspect of the application, whether or not it is raised by the customer, if they believe there are other errors. It would be unreasonable to ignore a clear error solely because it had not been raised by the customer—this would simply create problems for the future—but what we do not want is an automatic opening up of every aspect of the dispute in every case. Your Lordships would find that equally imprudent.

    In the second part of the amendment the noble Lord appears to want the more straightforward approach to revising decisions to be used only when it results in an increase in benefit—not where the benefit is reduced or terminated. I fully appreciate the noble Lord's concerns. Changing benefit awards—whether upwards or downwards—must not be done at the whim of decision-makers; there must be good reasons. Customers and other users of the benefit system would quickly lose confidence in it if decisions were seen to be taken in an arbitrary manner.

    That will not be the case. As now, all decisions will continue to be made on the basis of the facts and the law. Regulations will contain the grounds for a decision to be changed, and detailed guidance, which will be published, will include examples to help agency staff, claimants and their advisers alike.

    Customers can be assured that before any decision is revised there will have been a thorough examination of all the relevant issues. Constraints against "whimsical" or arbitrary decisions will continue to be an integral part of the legal framework for revising decisions. Our approach simply allows that process to be easier for claimants and staff alike to understand.

    I hope with this explanation that the noble Lord will understand why the amendment cannot be accepted and I would invite him to withdraw it.

    I am grateful to the noble and learned Lord for his explanation.

    We do not oppose Clause 10 and give a warm welcome to any proposal for simplification. In particular, we are pleased to hear that the claimants will be entitled to have a decision revised simply on the basis of saying that they do not like that decision.

    The noble Lord then went on to say that "customers"—an expression which I do not like—should focus their own application. That is inconsistent with the idea that they only have to say that they do not like the decision. Another problem is that the claimant or customer might be unable to focus the application without help, which is difficult to obtain.

    I do not intend to press the matter further this evening and I will ask leave to withdraw the amendment. I am not altogether happy with the answer of the noble and learned Lord. We do not propose that there should be anything in the nature of a total re-investigation every time there is a revision. It should be the duty of the adjudicator not simply to take an application at face value but to think as far as possible whether there are issues which are likely to arise and have not been raised. We are only asking that the adjudicator considers an issue which appears to him to be relevant to the claim. So he must be aware of the issue and must think it relevant. If those two conditions are satisfied, there is a case for saying that the adjudicator "must" and not merely "may" take those things into account.

    I shall read in Hansard what the noble and learned Lord has said. For the time being, I ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    6.45 p.m.

    moved Amendment No. 11:

    Page 6, line 23, leave out subsection (5) and insert—
    ("(5) Where an application has been made under subsection (1), for the purpose of any rule as to the time allowed for bringing an appeal, the decision in question shall he treated as made on the date it is revised or the date the Secretary of State notifies the claimant of his refusal to revise.").
    The noble Lord said: Here again we are looking at a matter under Clause 10. Subsection (5) says:
    "Where a decision is revised under this section, for the purpose of any rule as to the time allowed for bringing an appeal, the decision shall be regarded as made on the date on which it is so revised".
    So far so good, but that leaves a lacuna because what is to happen if the decision is that the original decision is not to be revised? We seek to clarify when the time limit for appeal starts running where the original decision is not revised.

    The time limit should run from the date of the Secretary of State's decision on the application to revise, whether the decision is to revise or not to revise. In another place the Government said that this was unnecessary because, if a decision was not revised, a claimant would still have one month to appeal from the date of that decision. It is not clear that that is in fact the effect of Clause 10(5) as it stands. As a lawyer, I would expect a judge to hold that subsection (5) does not apply where the original decision is not revised and that the time in those cases runs from the original decision. That point needs clarification.

    The time should run also from the date of notification, not from the date of the decision. The regulations should provide for a presumption, in the usual way that notification has been received on the next working day after posting if the notification is sent by post. That is a technical matter.

    I hope that the point about the running of time for an appeal, or where there is an application for revision which is rejected, can be clarified.

    As the noble Lord has said, he is rightly concerned about the claimant's right of appeal once the Secretary of State has dealt with an application for a decision to be revised.

    There are three possible situations. The first is where the Secretary of State actually refuses to act on the application because she considers that it is without foundation—that is, that the reasons provided are such that there is no question of the decision being revised. A ludicrous example would be where someone applied for extra benefit for their pet cat or budgerigar. Clearly this is meaningless in benefit terms and the applicant should not expect to receive consideration. This refusal to act on the customer's application will not be a decision under Clause 10(1). Therefore it will not carry a right of appeal under Clause 13(1). Of course, I can reassure the Committee that the claimant will still have the right of appeal against the original decision. Some claimants may have less time in which to appeal because of the time that has to be taken to notify them of the Secretary of State's refusal to act on their application. We intend to make provision in regulations to allow such claimants a reasonable time to lodge an appeal.

    The second situation is where the Secretary of State acts on the application but does not change the award. This would happen where the claimant raises a point of substance which requires the Secretary of State to reconsider her decision, but it transpires that it does not affect the amount of the award. This action would generate a new outcome decision, and the claimant would have a month to dispute or appeal against the new decision. For example, a claimant may notify the agency of the birth of a child. This would result in an increase in income support. At the same time, the claimant's part-time earnings increase, which would result in a reduction in income support. If those changes cancel each other out, the net result would be that the benefit remains the same. But there would have been two changes of circumstances which would have required the Secretary of State to reconsider and revise her decision.

    The third situation is where the Secretary of State acts on the application and changes the award. Again, this would generate a new outcome decision with a new dispute period with a fresh month in which to lodge an appeal.

    The amendment seeks to ensure that where a decision is reconsidered but the award is not changed, the customer not only retains a right of appeal but has the time to exercise that right. As I hope that I have explained, this will be the case.

    More importantly in terms of the amendment, this is already catered for on the face of the Bill by Clauses 10(5) and 13(6). With that explanation, I hope that the noble Lord will withdraw the amendment by virtue of it being unnecessary.

    My Lords, I still have some difficulty with the provision. Clause 10(5) states,

    "Where a decision is revised … the decision shall he regarded as made on the date on which it is so revised".
    Clause 13(1), the appeal section, states:
    "This section applies to any decision of the Secretary of State … (whether as originally made or as revised under section 10 above)".
    It is clear that, where the matter is considered again but the decision is taken not to alter the original decision, the relevant decision against which the appeal is to be made is the original decision because it has not been revised under Section 10.

    I accept that the matter could be covered in regulations. However, I am not clear whether the noble and learned Lord the Lord Advocate is giving an undertaking to do so or whether the matter has not yet been considered. I wonder whether I can ask for his response.

    As I said earlier, we intend to make provision in regulations to allow claimants a reasonable time to appeal if the period has been delayed by virtue of the application to the Secretary of State and the notification has caused further delay.

    I accept that it is an appropriate matter for regulations. On the basis of that statement, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 10 agreed to.

    Clause 40 agreed to.

    Clause 11 [ Decisions superseding earlier decisions]:

    moved Amendment No. 12:

    Page 6, line 29, leave out ("subsection (3)") and insert ("subsections (3) and (3A)").
    The noble Lord said: Before I move the group of amendments and the new clause concerning directors' liability for national insurance, I think that it would be helpful to give the Committee some information about how the Chancellor of the Exchequer's announcement in his Budget on changes to the national insurance regime could affect this Bill.

    Noble Lords on the Front Bench opposite have been consulted about this and have agreed that I should clarify matters in advance of more detailed discussion on those aspects of the Bill which might be affected. I beg the indulgence of noble Lords.

    The Chancellor of the Exchequer announced a number of significant changes in national insurance as part of his strategy to reduce the barriers to lower paid employment and further to align the tax and contributions regimes so as to streamline administration, and thereby help businesses.

    Some of these changes require primary legislation, and must be brought forward urgently so as to allow time for them to be implemented by April 1999. We therefore propose to bring forward new clauses to this Bill in the following two areas only: first, alteration of the structure of some of the earnings bands and rates used to calculate national insurance contributions. Essentially, the new clauses will provide for three changes: first, the abolition of employees' national insurance contributions on earnings up to the lower earnings limit—the so called entry fee for employees; secondly, the abolition of employers' contributions on earnings up to the single person's tax allowance—the employers' entry fee; and, thirdly, the replacement of multiple "earnings bands" and contribution rates for employers' contributions with a new single rate payable on all earnings above the single person's tax allowance. The present system of contracted out rebates will be maintained.

    While these measures will simplify national insurance, the legislative changes themselves are more complex. It will unfortunately not be possible to bring forward amendments until Report stage. There will be an opportunity for full consideration of the changes at that stage. I am sure noble Lords will be pleased to learn that these changes command widespread support from business. Secondly, we will also introduce a new clause to mirror in national insurance, changes to the income tax treatment of shares which are subject to the risk of forfeiture or that are convertible.

    It is essential that we should take action now to ensure that the tax and contributions regimes are consistent in their treatment of different types of earnings. The income tax change will be introduced in another place through the Finance Bill and will take effect from 6th April. We therefore need to take this opportunity to ensure that our national insurance changes can be made within a similar timescale. To keep to a minimum the period over which income tax and national insurance positions are out of step, the clause will apply to shares awarded from the date that the clause is tabled for Report.

    The Chancellor of the Exchequer also announced that, in line with the Taylor recommendations, administration of national insurance carried out by the Contributions Agency would be transferred to the Inland Revenue from April 1999.

    There are two key areas of this Bill which are potentially affected by this: the arrangements for appeals against national insurance decisions; and the new penalties and distraints regime for the Contributions Agency. Noble Lords will be aware that there are amendments relating to the appeals arrangements for national insurance which my noble and learned friend the Lord Advocate will be speaking about later on in this Committee. I do not wish to open that debate now; but I can advise noble Lords that we will be considering carefully the implications of the planned transfer of responsibilities for appeal arrangements on contributions issues. Much complex detail needs to be considered. We do not therefore propose to bring forward any amendments to appeals arrangements in this Bill as a consequence of the planned transfer, but we will be looking carefully at the options. The Government will bring forward legislation in due course to make necessary changes flowing from the transfer of responsibilities to the Inland Revenue, and conclusions on the appeals arrangements will be reflected as necessary in that legislation. That will give Parliament the necessary time to scrutinise the implications in appropriate depth.

    Similar considerations and a similar approach will apply to the measures on penalties and distraint for national insurance which also form part of the current Bill, and where some adjustments to the legislative structure are likely to be needed to support administration of these arrangements within a single organisation.

    I mention now an issue on which we might need to return to the House. To ensure continuity of service to contributors and employers, some preparatory expenditure may need to be incurred in advance of Royal Assent of the transfer legislation itself. It is possible that the Government may need some additional powers to permit that. We are addressing the issue urgently and, if it seems that a further amendment to the current Bill is necessary, we will bring it forward at a later stage. I am grateful for the opportunity to make that announcement. I hope that noble Lords will find it helpful.

    I should now like to return to the amendments standing in the name of my noble friend—

    7 p.m.

    Perhaps the noble Lord will allow me to intervene. We are already engaged on a Bill of which a number of clauses are being taken in a very complex sequence. That in itself presents some difficulties. The noble Lord's statement is in one sense helpful. I must confess that I am suffering some culture shock. There is little doubt that in another place it would have been out of order to make the announcement at this point; but clearly in this House we have a more flexible arrangement, which is perhaps a great advantage. However, I suggest to the noble Lord that it might be better if we discuss the points that he has made up to now without mixing them up with the amendment to which he is speaking, which is concerned with the responsibilities of company directors and, with great respect, has absolutely nothing to do with what he has said up to now. It would be slightly less confusing—I will not say disorderly—if we were to comment on what he has now said before going on to debate the amendments themselves. Perhaps the noble Lord will consider whether that would be a better way of doing things.

    Certainly, if noble Lords would like to make any points regarding what I have just said, we could take them now.

    If we could proceed in that way. I think it would be for the general convenience of the Committee.

    Perhaps I may therefore refer to a number of points arising from the noble Lord's remarks. I am not quite clear to what extent the changes that he now proposes as a result of the Chancellor's Budget will require an amendment to the Long Title—as I understand it, it is possible to make such an amendment in this Chamber. These matters would seem to be somewhat outwith the title as it stands.

    As I understand it, the noble Lord proposes to make some further changes involving amendment of the financial resolutions that will appear in another place. In Committee in the other place those were made available. Is the noble Lord saying that these changes in the financial resolutions will eventually appear, I suppose, when the Bill returns to another place, on the basis of the amendments that have been made?

    The confusion arises since, to a considerable extent, the Government now propose to introduce into the Bill a number of changes which might be regarded as budgetary matters. They may not, strictly speaking, be budgetary matters—although almost everyone now regards national insurance contributions as a tax, technically speaking that is not the case.

    That said, it would seem that the Government propose to introduce at a later stage a number of amendments which are fairly wide of the Bill as it stands, but do not propose to introduce corresponding amendments in relation to the appeals procedure; they are apparently to be introduced in some other legislation. Will the Minister say whether that will be primary legislation or by order? By what means will these repercussions from the Budget changes, which have been announced, be subsequently introduced? They are not to be introduced in this Bill, although they affect appeals. I think I got that right; it is a little complicated.

    It may well be that a number of people outside have studied carefully the changes made in the Budget and are producing highly sophisticated and complicated suggestions; and it might be to the general good that they are accepted. However, they were not expecting to have the measures introduced along with this Bill immediately after Easter. Have the Government already put out a press release about these matters which will at least alert the outside interests, some of which may be affected quite significantly and may have sensible suggestions to make with regard to the way in which the proposals might be implemented—under this Bill or otherwise? If the Government have not issued such a press release, are they considering whether to do so?

    The Committee will appreciate that I am saying all of this straight off the top of my head, apart from a brief letter which the noble Baroness courteously sent me. However, I had not quite realised what the Government were going to say this afternoon. As I say, I am suffering slightly from culture shock, but will endeavour to adjust myself to the circumstances.

    Perhaps I may express my sympathy with the noble Lord, Lord Higgins, in relation to the culture shock that he is experiencing, both as a recent Member of the other place and as a former Treasury Minister. But there is a clear procedural distinction between taxation and national insurance. I think it is understood that national insurance, right back to 1911, is treated in this Chamber just like any other legislation. I should have thought, subject to correction, that it is therefore within the words of the Long Title:

    "to make further provision with respect to social security".
    I take the noble Lord's point about a press release, and hope that that may be done. My noble friend Lord Thurso, for example, might well have wished to be present had he known that this matter was coming forward. While I thank the Minister and her department for their great care in keeping us notified as to what was being done, inevitably they could not send that notification to every Member of this place, any more than I was able to send it to every Member on my Benches. Therefore, a press release might be useful.

    The procedure obviously is confusing, though I believe it to be for the convenience of the Committee. Because this House is sovereign over its own procedure, it can do things, if there is general agreement, that it is for the convenience of the House that it should. I believe that it is, but I have listened extremely carefully and taken note of the points made by the noble Lord, Lord Higgins.

    Of course I understand the distinction that the noble Earl makes between taxation and national insurance contributions, although I was making the point that that distinction is becoming increasingly blurred. We also have to take into account the fact that the Inland Revenue will now be involved in supervising the collection of contributions.

    That is a point of substance, on which I hope we may collectively take advice.

    Perhaps I might add to what my noble friend Lord Russell said but from a substantive rather than a procedural position. We do not welcome everything in the Budget, but we strongly welcome the proposals for changing national insurance contributions. Indeed, they move in the direction of proposals which we have made in the past. We shall therefore support them when they are introduced into the Bill at a later stage.

    I have not had a chance to consider in any detail the income tax treatment of shares liable to forfeiture, but I suspect that we shall also support that proposal.

    As far as concerns contribution appeals, this matter is raised by the amendments in my name, Amendments Nos. 21, 22, 30, 42 and 52 which have been grouped together for discussion later this evening. It may be convenient to discuss those matters at that time because they will clearly be extremely relevant to those amendments.

    I thank Members of the Committee for their comments. This is an unusual procedure. We are trying to carry this out in a way which gives noble Lords the maximum amount of warning. These matters can be discussed at Report and Third Reading when the appropriate amendments are brought forward.

    The press release was part of the Budget package and this proposal was announced in that press release. It may be helpful to identify that part of the Budget package which is relevant.

    I am grateful to the noble Lord. What he says is absolutely right, but I do not believe that it was said in the press release that the proposal would be incorporated in this Bill. Perhaps it did; if so, I am unaware of it. It is the shortness of notice which is the problem. Outside interests will suddenly find in a couple of weeks' time that this has appeared in legislation. I fear that this may not receive much publicity unless some formal statement is made to alert people to what is happening.

    7.15 p.m.

    We shall look into the question of a formal statement. Some of these points will go out for consultation. The fact that consultation takes place alerts outside interests to what is happening.

    As the noble Lord said, some amendments regarding appeals are down for consideration later this evening and my noble and learned friend the Lord Advocate will discuss the matter at that time.

    The noble Lord asked whether we expect primary legislation. We are exploring what is needed. Although it was said in the Budget Statement that the Government wish to align tax and national insurance collections as far as possible in order to reduce the load on employers and to reduce administration costs, the detail of how that will be done is currently being worked out. When that is done, the appropriate amendments will be brought forward. The Inland Revenue will be involved in the collection, and that changes the position. They will take over full responsibility from April 1999.

    No change is required in the Long Title of the Bill, which takes care of these amendments.

    Most of the issues raised by Members of the Committee will be discussed when these points are brought forward at Report or Third Reading. Noble Lords may benefit from reading the Statement in Hansard, because it was rather complex.

    Perhaps I may move on to speak to Amendments Nos. 12, 15, 55 and 100. Amendment No. 100 introduces a new clause on directors' liability for national insurance contributions. Amendments Nos. 12, 15 and 55 are consequential to the introduction of the new clause.

    The Government are determined to act against the problems caused by directors and others who abuse the national insurance system. Clause 61 introduces one measure in the new penalty regime to be operated by the Contributions Agency, a new criminal offence of fraudulent evasion of national insurance with a maximum penalty of seven years' imprisonment. This will be used only in the most serious cases, where tens of thousands of pounds of national insurance contributions have been deliberately misappropriated. But this alone is not enough.

    The National Insurance Fund loses about £150 million per year when companies go into insolvency with national insurance debts. A good portion of these are related to the so-called phoenix set-ups, where one company is put into insolvency only for a replacement company to rise from the ashes almost immediately. A recent analysis by the Contributions Agency of company directors who have been associated with three or more insolvent companies identified some 850 individuals. The loss to the National Insurance Fund as a direct result of the actions of these 850 directors alone is at least £26 million. The end result is that employees may have problems claiming their benefits. Contributions which have been collected from employees' pay have to be credited and benefits paid out on the strength of contributions which the fund never receives. The Government propose to take action to make culpable directors personally liable for national insurance debts where the failure of their company to pay is due to serious negligence or fraud on their part.

    Let me offer an example of the type of rogue we are determined to pursue. "A" Ltd. was a one-man company which invested in land and buildings. Its director had other companies, as well as running a farm in a self-employed capacity. Funds appeared to circulate between the businesses on loan. On successfully completing a property deal, "A" Ltd. had sufficient funds to vote this director £1 million as remuneration. He took £600,000 out of the company immediately and in the company's records reflected a provision of £400,000 for tax and national insurance contributions. This amount was never paid over to the collector. The money was apparently used for other purposes. "A" Ltd. then went into creditors' voluntary liquidation and there were no funds available to pay any dividend to the creditors. I am sure that the Committee will agree that this is the kind of abuse which must be dealt with.

    This is how the measure will work. Where a company owes a national insurance debt which it fails to pay in full, and the failure to pay is due to the negligent or fraudulent behaviour of any or all of the directors, it will be possible for the debt to be transferred to those directors personally.

    A small, specialised, highly trained body of staff will fully investigate the facts. They will decide whether negligence or fraud is involved and, if so, which of the directors are culpable. A decision as to the degree of culpability in each case will be made.

    The total debt, which includes any associated penalty and interest, will be apportioned between the culpable directors in proportion to their degree of culpability without taking account of each individual's ability to pay. Thus no "innocent" director will be pursued simply because he has not disposed of his assets.

    There will be a full right of appeal both against the decision that a director has behaved negligently or fraudulently and whether the apportionment was reasonable. That is the purpose of Amendment No. 100. As it is a new clause and quite complicated, my noble friend Lady Hollis arranged for an additional note to be made available from today in the Printed Paper Office.

    Amendments Nos. 12 and 15 prevent a decision to transfer a debt to a director under the new Section 120A from being "supersedable" under Clause 11. By "supersedable" I mean a decision which replaces a previous decision. Superseding is not appropriate as it operates in a different way from the review provisions of Clause 10. The review provisions operate to replace the earlier decision in its entirety from the date of that earlier decision whereas the superseding provisions are designed to take account of a change in circumstances so that the later decision supersedes the earlier one from a given date rather than replaces it in total from the date it was originally made. In superseding there is the possibility of two valid decisions existing side by side. That is not appropriate in these cases.

    I hope that both this Committee and legitimate businesses will welcome a measure aimed at dealing with the unscrupulous minority of directors who abuse their positions and ignore their responsibilities. This measure poses no threat to honest, hard-working businessmen. I beg to move.

    I can well understand the Government's motivation in this respect having had a number of individual cases in my earlier incarnation of people being defrauded by double-glazing companies and finding that, somehow or other, the companies had arisen from the ashes and, though their double glazing was not provided, the individuals engaged in selling it had again set up in business.

    I am also well aware of the problems which may arise if a specific company engages in the practices described by the noble Lord and the employees find that, though they paid the national insurance contributions to the employer, the employer has not passed them on to the National Insurance Fund. In cases of the kind that I have pursued, the department has been quite good at immediately ensuring that the individual who paid the contributions received credit for them. I do not know therefore that in practice it is a tremendous problem.

    The question is whether the director concerned should pay for the contributions which he collected and did not remit. It would be rather optimistic in such cases to suppose that the funds which the Government propose to collect under these amendments will necessarily he sufficient to pay the contributions which were not remitted. I shall return to that point in a moment.

    Having said that, one cannot but have a slight sense of unease in regard to these measures since the principle of limited liability is extremely important and it would seem in these circumstances to be overridden. Therefore, those who set up a limited liability company may suddenly find that they are liable for national insurance contributions, even though the company formally ceases to exist. I do not know how many other similar cases there are where limited liability is overridden by legislation. However, this gives one a slightly odd feeling, even though one can well understand the motivation behind it.

    Clearly, these are pretty draconian powers which the Government are proposing to take, even though the provision substitutes civil for criminal liability in some cases and in other cases introduces a Draconian criminal liability. I accept that it has been going on a long while and I therefore make an entirely non-partisan point. Why have those directors not been disqualified, all 850 of them, if they are known to be engaging in this practice?

    The noble Baroness was kind enough to write to some of us in this regard. Apparently it is to be decided by a small, specialised, highly trained body of Contributions Agency staff liaising with the Inland Revenue over whether negligence or fraudulence is involved and, if so, which of the directors is culpable. A decision will be made on the degree of culpability in each case. That seems an extraordinarily onerous task to place upon the officials concerned. It may be that we should have a preliminary run over the amendment at this stage and return to it at Report stage.

    It seems an extremely unusual exercise which the Government are proposing to undertake. We are told that there will be a full right of appeal against the decision, but I am not at all clear to whom the directors involved will appeal. It also seems that these measures are only to be imposed if someone makes a habit of it, if I may put it that way. Some directors certainly do make a habit of it. Am I to understand that there will be less stringent measures imposed on a first offence? I say that with great hesitation because I am not a lawyer, as the Committee will know. I therefore venture into this territory with many other more expert Members of the Committee. However, these are relevant questions which at this stage we should at least probe.

    I am a lawyer and I have some experience in this area. I am absolutely in support of the principle behind the amendment and strongly opposed to the way in which it is suggested it should be carried out. There is no doubt that serious abuses are being practised by these phoenix companies. Directors set up a company; run it for a certain time; take all the receipts they can obtain (they are not profits; the company usually ends up going bust); do not pay their debts; and in particular do not pay their liability for national insurance or PAYE. In those cases I have no reason whatever to disagree with the idea that those directors should be made personally liable. It is a gross abuse. Those who practise in the companies courts, as I have done to some extent, see it happening time and again and it is absolutely right that stern measures should be taken to stop it.

    However, when we come to the way in which it is proposed to enact the provision, I have equally strong objections. What is taking place is a form of abuse which is well known in company law and described as either "wrongful trading" or "fraudulent trading"; that is, people who incur liabilities on behalf of their company when they know there is no reasonable prospect whatever of those liabilities being paid. One might have thought that the right course, as with other forms of wrongful or fraudulent trading, would be to send those cases, in the usual way, to be dealt with by the companies court. But what is proposed here is something completely different; namely under Clause 9, use of the adjudication procedure so that the decision will be taken initially not by the court but by some official within the Department of Social Security. The route of appeal—and this is perhaps even more extraordinary—will be not to the companies court. which is accustomed to dealing with problems of this kind and gets them day in and day out, but to the appeals tribunal. Such cases will be miles away from any other kind of case that the appeals tribunals deal with. This is completely the wrong route for dealing with such cases.

    Therefore, while I am entirely in favour of the principle of hitting these directors hard, we need to do it in the right way by sending cases to a court which has experience in dealing with problems of this kind and not to a tribunal which has no experience whatever and whose ordinary cases are miles away from anything of this kind. While I do not oppose the principle, if the amendment is accepted today we feel strongly that it will be necessary to come back at Report stage to make a further amendment.

    7.30 p.m.

    I thank noble Lords for their comments. I say to the noble Lord, Lord Goodhart, that the purpose is only to investigate one liability and not the liability of the directors as a whole in the way they ran the business if the business went into bankruptcy. It is only the question of whether they handed over the national insurance contributions. That is a matter which the adjudication procedure could handle.

    With respect to the noble Lord, I do not think you can separate the two. It is a single picture. The directors who run these companies do not pay their debts. Some of them may be national insurance, some will be PAYE, and some with be debts to private creditors. It is all part of the same picture. One cannot separate them out in that way.

    These are national insurance offences concerning the non-payment of contributions. For instance, Customs and Excise have exercised a similar power in regard to penalties for VAT debts for some years. It could be modelled on much the same kind of procedure.

    I thank noble Lords for their general support of the principle even though there is some disagreement as to the way in which it will be carried out. The noble Lord, Lord Higgins, asked which directors are culpable. The investigation of each director's responsibility and knowledge will be carried out so that only those shown to have acted knowingly and deliberately will be penalised. As far as concerns being able to collect money, I say to the noble Lord that one can only collect what is available. If they have spent it all or have got rid of it, one can only collect what is there.

    Disqualification of directors is really a matter for the Department of Trade and Industry under company law. But disqualified directors can still work in companies and conceivably still be involved in some kind of national insurance fraud. The exact form of appeal arrangements will need to be looked at in the light of the transfer of the Contributions Agency to the Inland Revenue.

    The principle of limited liability, raised by the noble Lord, Lord Higgins, is not really intended to protect fraudsters and those who are seriously negligent in carrying out their responsibilities. I am sure the noble Lord agrees that people who carry out fraud should not he able to hide behind limited liability. I think I have dealt with all the points. I beg to move.

    On Question, amendment agreed to.

    I beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that the Committee stage begins again not before 8.35 p.m.

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

    House resumed.

    The Arts In Education

    7.35 p.m.

    rose to ask Her Majesty's Government what plans they have to support the arts in education, and in particular whether they plan to offer appropriate financial support to drama students so that the future of theatre arts in Britain may be secured.

    The noble Lord said: My Lords, I am raising this issue tonight to give the Government an opportunity both to clarify some of the confusions that have arisen in recent weeks over their policy towards the arts in schools and to give the House a progress report on the work they are doing to develop a permanent solution to the problem of funding drama, dance and stage management students.

    I begin by expressing my gratitude to all those noble Lords who are to speak this evening and are thus assisting me in raising the profile of this issue, which has very serious implications for the future of theatre arts in this country.

    The first problem I wish to raise centres on how we are to strike an effective balance in our national curriculum between "the three Rs" and the enriching and inspirational elements like art, music and drama. The Parliamentary Under-Secretary of State for the Arts, Mr. Mark Fisher, gave an impromptu speech the other night at a reception by the Performers' Alliance and confessed that confusion had arisen because, in the same week as the Government wanted to be seen to be encouraging arts education in schools, the Secretary of State had announced that schools will not be required to follow the programmes of study for arts subjects at key stages 1 and 2. There was a widespread public impression that the Government were happy that schools ditch arts subjects. At the same time, the Chief Inspector of Schools, Chris Woodhead, appeared to say that you could not practise or appreciate art or music unless you could read or add up. Later he said that this was not what he meant, but so much of this is about perceptions, and at times the Government seem to have tied themselves up in their own "spin".

    We are concerned that in schools, especially in inner city or very small rural schools, where the arts have only a tentative foothold, the Secretary of State's announcement will be a signal to sideline them altogether. We are especially anxious about the role of the arts in the training of teachers. Even when an institution has a specialist interest in the arts, for example, it is usual for a complete music course to be taught in a total of nine to 11 hours over three years, and for dance and drama to be just minor parts of PE and English. It is no great surprise, therefore, and an even greater anxiety for the long term, that the number of arts graduates applying for PGCE courses is getting smaller every year.

    The Secretary of State's announcement may well have had an unintended effect on funding within schools as resources are moved towards literacy and numeracy. The estimated average spend per student for subjects like art and design is just £2.70 per year. Instrumental music teaching has all but disappeared in some parts of the country.

    On these Benches we have no doubt that the integrated teaching of art, music and drama feeds and enhances the teaching of literacy and numeracy. I hope the Minister will be able to come forward tonight with some practical proposals for ensuring that our schools do have a rich and balanced curriculum which will enable those with artistic talent to flourish and those who perhaps have rather less talent at least to enjoy and appreciate the arts.

    I should now like to move to a more sharply focused issue, that of the funding of drama students in this country and how we can secure the long term future of theatre arts in Britain. Your Lordships will be aware that young people go to university to do academic degrees in drama and that their universities receive HEFCE funding. Those students will be entitled to means-tested help towards their payment of the £1,000 contribution to tuition fees. They will get 75 per cent. of their tuition fees paid outright by their LEA and they will have access to a subsidised student loan to help with their maintenance. However, such students may never set foot on the professional stage or on a film set.

    Contrast that with the deal that we give to those students whose burning desire is to dedicate their lives to acting on stage, on television or on film. Under the Arts Council of England's interim funding scheme, we insist that students at independent drama schools, on three-year courses, persuade their LEAs to come up with a discretionary grant of £1,250. If the student lives in a cash-strapped local authority area where they can no longer afford discretionary awards, that student gets no help because, without the £1,250 "trigger", the interim funding scheme cannot pay out. What that means in practice is that, last year, only 227 of the 400 places granted to independent drama schools were taken up. The remainder of those places were taken by students who are, at this moment, battling to raise funds privately.

    I have been appalled by the stories of hardship endured by young students whose struggles to fund themselves have been as horrifying as they have been heroic. It is commonplace for students to do paid work during the evening at weekends; some students have to defer entry to drama school for two years to raise the fees (which are typically running at £7,000 a year). Others have staged amateur productions, run car-boot sales and raffles, and used great imagination and enterprise to set up sponsored walks and so forth. Many keen students write hundreds of begging letters to the rich and famous.

    The Development Director at LAMDA, Dominic Tickell, gives the example of one of its students, who wrote to 2,000 actors and actresses to request help in the months before he was due to start. He received enough money to help him to pay his first-year fees, but his money ran out. His health seriously deteriorated due to poor diet. By the time the drama school got him to a doctor, he was found to be suffering from malnutrition.

    This is against a background where the young drama students in question work from 8.45 a.m. to 5.30 p.m. and beyond on a five-day week for 33 weeks of the year on intensive courses requiring great physical and mental activity and athlete levels of fitness. I would seriously question how many university undergraduates work that hard, and that intensively.

    Before I leave these issues of hardship, perhaps I may quote from a letter written by Christopher Fettes, principal of the Drama Centre London, who says:
    "A high proportion of the students at this school survive on a hand to mouth existence owing to the generosity of a very limited number of private beneficiaries who try to ensure that they receive at least one hot meal daily and are able to help them meet basic expenses for rent, lighting, heating and transport … Quite simply, their wretched condition is a national scandal".
    I have every confidence that our deep anxieties over this situation are shared on the government Benches. We want to see dance, drama and stage management students at independent drama schools put on the same footing as university undergraduates. We are not talking of huge sums here: for example, in 1997–98 there were just 2,263 students on courses accredited by the National Council for Drama Training.

    The Arts Council of England has recently published its guidelines for the final year of the interim funding scheme. May we plead with the Government to lower the level of LEA "trigger" (perhaps to the £300 level set by the Arts Council for Wales) so that more students this year can access IFS funds? Perhaps the Government could look at ways of funding drama students from within the industry itself. Michael Cashman of Equity has suggested a levy on the pre-tax profits of television companies.

    Finally—here I am talking not about students, but about actors, dancers and stage managers who have qualified—perhaps I may express some concern about the impact of welfare-to-work on young actors who may be pushed into inappropriate work which stops them using their expensive training. We are talking of very little money, but it is money that would have a huge effect on the future of the theatre in Britain.

    7.44 p.m.

    My Lords, it gives me great pleasure to thank the noble Lord, Lord Tope, for initiating this important debate.

    Britain has a well-deserved international reputation for creativity in the arts which the current Labour Administration have been quick to harness, both for their own interests and as a tool to promote Britain to the rest of the world. They are quite right to do so: the brilliance of Britain's designers, musicians, actors, artists and architects, both young and old, is inspiring and exciting. We want more of them, not fewer, and that is precisely why some of the proposals to the structure of the national curriculum worry me, because I think they will stifle creativity at children's most formative ages rather than encouraging and giving it free rein.

    The arts form an essential part of a broad and balanced education, giving children subtle insights, making them aware of the achievements and evolution of their own and other cultures. History, English and geography are all part of this process. Study in the arts gives children the opportunity not only to become practitioners, but even more important, for those who have no practical talent, to enjoy and understand as spectators. Of all these subjects, the only one to be included as a core subject after the age of 14 is English.

    At the moment art is compulsory part of the curriculum up to the age of 14. After that it is optional. This is, I think, regrettable, because it gives already stretched schools licence to concentrate on the core subjects to the exclusion of others: indeed it could lead to the considerable reduction, if not the actual removal, of arts subjects in a number of schools. This can only be at the expense of those pupils who are drawn more to the arts than the sciences. However much provision for maths and sciences there may be—and the desire to raise the standard in Britain is understandable—there will still be people who have no aptitude or sympathy for numbers and technical problems. They should be allowed to stretch themselves too.

    Far more serious is the fact that the Secretary of State for Education and Employment is currently seeking to ease the requirements for history, geography, art, music and physical education in key stages 1 and 2—that is, for children from the age of five to 11. This would result in those subjects only being covered within a broad curriculum, perhaps by teachers who have no particular skills or training in these fields, whereas at present usefully detailed programmes of study must be followed.

    Furthermore, there is an intense pressure even on primary schools to perform well in league tables. These tables only reflect pupils' competence in English, maths and science, in tests taken at the ages of seven, 11 and 14 (at the end of key stages 1. 2 and 3). Anxious to be seen in a good light, schools will understandably neglect subjects that have no effect on their standing—in other words, the arts. A survey by the Royal Society of Arts in 1995 revealed that primary school pupils spend 50 per cent. less time on art than 10 years ago and that half the teachers of craft, design and technology in all schools are unqualified in the subject they teach. Surely continuing in this direction is harmful to children rather than beneficial. We want to increase creativity, not stifle it.

    Ministers have pointed out that modifying the requirements of the non-core subjects at key stages 1 and 2 will enable teachers to meet literacy and numeracy targets, and that such a move is not intended to devalue the arts, or indeed history and geography. However, this is exactly the effect such a measure will have. In addition, although literacy and numeracy are desirable and necessary, concentrating chiefly on increased ability in these areas is unlikely to improve artistic abilities, which are also an important part of a student's education. Quite the reverse; schools with good arts provision tend to have higher achieving pupils in the core subjects.

    Evidence is patchy, but there is an increasing impression that participation in the arts actually improves students' performance and behaviour across the board. Kenneth Robinson, Professor of Arts Education at Warwick University has stated:
    "The arts are essential in realising the potential of individuals. They can give children sonic idea of success and confidence, both of which are vitamins for achievements".
    In music this is known as "the Mozart effect", and has been substantiated by research. It shows that children who are given instrumental music tuition also perform well in other subjects, particularly in mathematics. The arts in general play an important role in helping to develop creative and innovating skills. These are exactly the qualities that new and expanding industries seek.

    Many arts educators further believe that it is important to provide a broad and balanced curriculum in the primary years. Insisting that higher level English, maths and science must be attained at the expense of other subjects takes away pupils' chances to fulfil their potential in these spheres. Arts teaching in schools encourages a broader exposure to higher culture. It is a sad fact that while pupils at independent schools are likely to have access to costly music lessons, theatre and concert visits, children whose parents cannot afford such out-of-school activities suffer most. For them, the teaching of art subjects within the school is often their only access to them.

    The Qualifications and Curriculum Authority is shortly to advise the Secretary of State for Education on the scope of the national curriculum review. I urge him to include within the curriculum provision for pupils in art, design and the expressive arts. As the Government have recognised, the arts are not minority concerns. More people go to art galleries than to football matches. The British art market is an important financial concern. Last year's turnover was £2.2 billion while the music industry is currently valued at £1.6 billion. It would take a wilful person to ignore their importance in maintaining Britain's place among the nations.

    Quite apart from money, the arts if introduced to people at school will enrich every area they encounter whatever their ability and age and continue to give pleasure, one hopes, for the rest of their lives. There is also difficulty in tertiary education. The study of fine and applied arts in further education also has special requirements, which the scrapping of discretionary awards for foundation courses by a majority of local education authorities in recent years has failed to recognise. Only 2 per cent. of students wishing to take art or design degrees get in straight from school. The rest attend a foundation course where they try out a range of disciplines, choosing one in which to specialise for their degree courses. Few of these disciplines will have been encountered before—even more so now that there is less emphasis on craft-based skills in schools.

    This change in support for foundation students will encourage many students to go straight on to a degree course from school without discovering in advance whether or not they have a real aptitude for that particular discipline. It will also prohibit many less well-off families from pursuing a career in the arts. The London Institute which includes the capital's five major art colleges has found financial hardship to be a major factor in the decision by students from poorer families to withdraw from both foundation and degree courses.

    It is harder all round for art students not to incur large debts which the very nature of their profession ensures they have little chance of paying off. Unlike the lawyer, banker or doctor, most arts graduates will never earn a regular salary. A recent survey by the Institute for Employment Studies of arts and conservation students found that one in three graduates in art and design were self-employed against a national average of less than 1 per cent. in the general graduate population. The report also discovered that making a living from the arts labour market was particularly hard for newcomers. Only 17 per cent. of graduates earn more than £15,000 a year and the majority are in the £10,000 to £15,000 band.

    I am sure it is inadvertent, but by downplaying the role of the arts in schools the present Government have been discouraging the study of art and the importance of creativity at both school and tertiary level. I therefore beg them to examine the effect such schemes will have in the long term.

    7.53 p.m.

    My Lords, I have listened with great interest to the first two speeches this evening, although I had some difficulty in keeping up with the previous speaker. I look forward to reading his speech in Hansard tomorrow and hope that the reporters did not have similar difficulty. I hope that noble Lords will forgive me if I widen the field and make particular reference to music. I am aware that many students and organisations involved in the teaching of arts looked forward to the new Labour Government.

    In his preface to the Labour Party's Strategy for a Cultural Policy the Prime Minister said,
    "the arts and cultural industries help define who we are as a nation. They enrich our quality of life and create a thriving society. They have enormous economic benefits and bring enjoyment to millions and for far too long arts and culture have stood outside the mainstream, their potential unrecognised in Government. It has to change and under Labour it will".
    It has changed, but not in the way expected. The Secretary of State for Education has announced that arts and music will no longer have an official place in the primary school curriculum. As both previous speakers have said, this decision has been justified to make more time for improvements in numeracy and literacy, but authoritative studies has shown that involving students in music increases their overall ability. The booklet produced by the Music Education Council, Music Industries Association and National Music Council The fourth 'R'—the Case for Music in the School Curriculum—I remind the noble Lord, Lord Tope, that there are four Rs, the fourth being rhythm—highlights research from several countries which shows that young people who are taught music in schools have increased memory and reasoning capacity, improvements in participatory and time management skills and, importantly, eloquence. This change in emphasis which downgrades music and other arts subjects in the primary curriculum will mirror the same disastrous effect which is now being revealed as a result of the decimation of the Instrumental Teaching Services and Theatre in Education.

    I am sure that the Minister will remind us of the initiatives whereby musical instruments and tuition are now being funded from the lottery, but experts do not believe that these will compensate for the excellent local authority schemes and free lessons which existed 15 to 20 years ago. Actors and dancers have fared no better. A mandatory grant system should have been put in place for those wishing to study these subjects rather than make them rely on the discretion of the local authority.

    The attempt to provide financial assistance with funds from the lottery linked to local authority discretionary payments will not encourage authorities who do not already make discretionary grants to do so now. I hope that the Minister will be able to say that a permanent replacement for the interim funding scheme for dance and drama students can be introduced so that many talented young people will not be deterred from entering drama school. As the noble Lord, Lord Tope, has said, another deterrent to arts education is the replacement of grants for higher education and performance studies by £1,000 per year tuition fees and maintenance payments that will need to be repaid by way of loans. This will be particularly difficult for young musicians who have to buy expensive instruments. Unless the Government can come up with a solution to these problems, actors, dancers and musicians who all work in an insecure and low-paid profession, will have additional burdens placed upon them which may well deter many from entering the arts.

    Finally, I should like to make a few comments on one particular aspect of music; namely, jazz. I declare an interest in that I am a mediocre performer. I intended to produce my trumpet this evening but the noble Viscount, Lord Falkland, informed me that props were not allowed. I am also joint-chairman of the Parliamentary Jazz Appreciation Group. Many music students study and perform jazz. The jazz policy of the Arts Council of Great Britain published in November 1996 recognised the importance of jazz and its inadequate profile in the UK:
    "In the last 30 years, many British Jazz musicians have established themselves as original voices within the global evolution of jazz. Their work is well documented and the stature of their achievements acknowledged by their colleagues and audiences abroad. However, there has been insufficient opportunity in this country for this important contribution to world music to he fully recognised by audiences and for the work to be adequately profiled in Britain".
    I bring this to the Minister's attention as it is only rarely possible in debates in this House to draw the Government's attention to the wealth of talent that this country has with its established and young jazz musicians. The parliamentary group has often brought the inadequacies of the Licensing Act 1964, which discriminates against the performance of live music, to the attention of Ministers. Currently on licensed premises, a landlord can provide wall-to-wall TV and reproduce any amount of recorded sound at any given level of decibels but he or she cannot employ more than two live performers. To give an example of the inequality of current legislation and to show the absurdity of it, if Robbie Williams and Louise were to perform on licensed premises without an entertainment licence the vast numbers of people who might attend would probably infringe fire, health and safety regulations and cause a local nuisance, but it would he legal. If a jazz quartet were to play in the same place to a modest audience the landlord would be in breach of the Licensing Act. That has been brought to the attention of the Home Office on many occasions, with the response that it hopes to be in a position to issue a paper in the near future.

    That has a connection with music in education, for students need to perform and to have places to perform. I hope that the Minister will bring the problem to the attention of her right honourable friends so that the Act may be modernised. I thank the noble Lord, Lord Tope, for introducing our debate, the Musicians' Union for its notes on the subject, and apologise for my slight deviation to jazz. I look forward to hearing the Minister's reply.

    8.2 p.m.

    My Lords, because of my background, no doubt noble Lords believe that I will concentrate on entry into the theatre through the conventional, but hard-pressed route, of drama college. I have a confession to make: I never went to drama college. I developed a love of the theatre through plays at school, through amateur work with my mother, who ran the local dramatic society, and then through having to fill in 10 months' deferred service from aircrew training in 1942. It was not difficult to get a job and an Equity card, for in those days young actors were in great demand and the only ones available were too young for military service, unfit for military service or what was euphemistically known as temperamentally unsuited for military service.

    I am happy to say that I was too young for military service, so when that great barnstorming actor-manager, Donald Wolfit, was playing at the New Theatre in my home town of Hull, I knocked on his door, acquainted him of my availability, was taken on stage to declaim my audition piece, which was Robert Service's North Country poem, Bessie's Boil which I had recited for my mother at a troop concert the previous Sunday at the Floral Hall, Hornsea. The description of such a large, inflamed swelling on Bessie's nether regions assured me of a job in "Hamlet", "King Lear", "Twelfth Night" and "Midsummer Night's Dream". No, I cannot claim any special relationship with drama colleges.

    I can, however, remind your Lordships that we produce many of the finest actors in the world, and very few have the privilege of such an easy entry into an overcrowded profession as I. They have to be proficient in every aspect of theatre arts—speech, movement, song, dance, classic and modern plays, tragedy, comedy, farce—as well as being proficient in front of cameras, both cinematic and televisual.

    Managers, producers, directors—both in the theatre and cinema—expect the highest levels of competence in all aspects of an actor's armoury, and that can only be provided by first-class training. Furthermore, the desire for,
    "a poor player, that struts and frets his hour upon the stage",
    to become that "poor player" (in wealth not in talent, I hasten to add) is often engendered at school and how sad it is—nay, tragic—that our young are often now denied the joys of drama classes and visits to see work in progress or the finished product upon the stage. As the noble Lord, Lord Tope, stressed, Theatre in Education is an invaluable service. It can be used to deal with special needs such as languages. It can raise awareness about social issues such as drugs abuse, racism and violence, with results that traditional forms of teaching could never match and, through lack of funding, it is in danger of collapse.

    Already 15 counties have no TIE company. Means must be found to enable all local authorities to provide a universal TIE service. The Government's stress on -Education, Education, Education," is laudable—if somewhat repetitive (obeying the comedic rule of three)—but the Government must remember that education draws more widely than simple literacy and numeracy. In fact, drama education can transcend most facets of the "three R's".

    I am assured by British Actors' Equity (of which I am now, in my "last scene of all", a Life Member) that the Minister is in fact—and I quote—
    "doing something about dance and drama training."
    I am sure that your Lordships would like to know exactly what that is, when the Minister replies. I hope that the Minister can assure your Lordships that the Government are heeding the advice of the Dearing Report and about to implement a workable, durable and all-embracing replacement for the interim funding scheme, and that any such scheme will leave all dance and drama students on accredited courses at least as well off as students at the music conservatoires. It would pay dividends.

    According to my information, supplied by the National Council for Drama Training, music students are entitled to mandatory funding from LEAs while drama and dance students are not. That is clearly a grossly unfair anomaly, arising from the decline in discretionary funding as a result of local authority spending restrictions. Furthermore, central government funding for the music courses reflects the low student-staff ratio that is required for intensive music tuition; drama and dance do not require that. Indeed, one of my happiest experiences in the theatre during the past few years was seeing a second-year student production of "Chorus Line" performed by the Guildford School of Acting. At least three dozen aspiring young artistes sang and danced their hearts out with huge enthusiasm and daunting talent. And the staff involved to create this joyous occasion? Exactly four: one director, one choreographer, one musical director, one stage manager—a ratio which no music conservatoire could possibly match.

    I can envisage a cynical member of your Lordships' House—should there be such in a House which generally shows that cynicism is not a feature of maturity—wondering why I should want to encourage young actors and dancers when so many of those who have done their aspiring are unemployed. My point is that unless we promote training, those who make it to the stage may tend to be those with money or with luck, and not necessarily those with talent.

    That leads me to my final point. One of the discoveries of recent years has been the acting, dancing and singing talent of people with disabilities, including people with learning disabilities. In the excellent debate on the arts instituted by the noble Lord, Lord Puttnam, on 18th March, your Lordships may recall the noble Lord, Lord Renton, making this point when he was good enough to say something on this issue in my enforced absence. Some of your Lordships may have seen the excellent work of one or other of the groups of people with disabilities or pan-disabled and non-disabled actors. A number of them have performed in our major auditoria. It is even harder for this group to get started and I am glad to say that Mencap's Dilston College in Northumberland has ambitious plans for what we hope will be the first regional theatre and arts centre, then a national and international centre—and learning base—accessible to all disabled people, to non-disabled people and the local community as a whole. I shall be taking the liberty of providing the Minister with further details in due course.

    It is good that being on the stage and both getting—and giving—pleasure is no longer restricted to those physically able to make their exits and their entrances with consummate ease. I hope that the lack of funds, at present bedevilling the theatre and its adherents, will not limit the opportunity to those who possess personal resources, luck or physical and mental dexterity. If given the opportunity, many men, and women, until recently considered beyond the pale will, in their time, play many parts.

    My Lords,
    "perchance you wonder at this show;
    But wonder on, till truth make all things plain".

    8.7 p.m.

    My Lords, that is a hard speech to follow. So, if I may, I shall switch away to my noble friend Lady Thomas who reminded me that last week we saw the finals of the BBC's young musician of the year awards in which five brilliant young musicians showed their skills and their talent which had been nurtured when music was an integral part of the education system. I shall not repeat the same kind of irritable speech I made on 18th March. But can we expect in years to come the same quality of musicians if we just rest on our laurels and go the disastrous way, as seems to be happening, of taking music out of the primary school curriculum?

    I turn now to drama about which I know a little more. I have no business at all in an education debate because I am hardly educated. I was well educated until the war. I was five at the outbreak of war. I was only well educated because I went to a school where the teacher was new and I was the only pupil. I was then dragged around without any schooling for several years by my dear mother who was charming and affectionate but had rather strange ideas about education. After the war, because my behaviour was crude and she thought it was about time that we conformed, I was sent to a prim middle-class—if I may use that unfashionable term—preparatory school for boys where I had to catch up on five years of lost work. I became temperamentally unsuited to school, rather like the soldiers mentioned by my noble friend.

    The one person who came to my rescue was an excellent English master found to have been temperamentally unsuited to armed service. He taught us by reading the novels of John Buchan. As a result I have long been an admirer of John Buchan and many other authors, too. He made me an avid reader. I moved up in the school and had another English teacher who was keen on drama and wrote excellent children's plays. As I had been dragged around by my mother so as not to notice too much of what was going on—a lot of it I did not want to see—I read a great deal and listened to plays on the BBC. I was educated mainly by books, magazines, comics and the BBC.

    My involvement in drama enabled me to overcome all my anti-social habits because immediately I found something that I could do. I could speak relatively clearly, I was not clumsy; I did not knock anything over; and I had the great satisfaction of putting in the shade certain boys who were academically better. I have no wish to boast, but they were very bad indeed.

    That experience straightened me out. I managed to pass the normal entrance examination to a public school and live through that dreadful period, again clinging to the raft of drama. It helped again, except that my tutor in the school insisted that in the evenings new boys read plays out loud. I had no problems reading out loud; but the trouble was that the plays were always those of Galsworthy. Galsworthy is a dramatist I hate, but I have realised in recent years—I did not see television at the time—that like many second-rate dramatists his plays make good television material. It is rather like poor books making good films.

    Having struggled through that experience, I found myself in the Army. As a matter of fact, I was not temperamentally unsuited to National Service. No drama, of course—although there was enough going on around me—but I nevertheless became stage struck. I was attracted to theatre and drama, and eventually found myself working as a junior in the office of a theatrical agent. I was hired mainly to look after the film side of the business. A company of actors would be looking for work and were out to meet casting directors and watch films being made. However, during the dark days of the winter I had to cover the drama schools.

    The drama schools are interesting. The noble Lord, Lord Rix, will correct me, but, in terms of the theatre, drama students do not show their talent until later. I never wanted to be an actor because my mother would not have permitted me back through the front door. She was the daughter of an actor and could not bear them. At school acting is an escape. It allows one to communicate and develop social skills which have not previously been encouraged. What transports you from that stage to the drama school? When I was covering the drama schools, selection was based on a feeling that would-be students were enthusiastic, physically strong, had a good memory and were not completely mad. Many of the great actors who have emerged from that time were completely mad and some at that time did not complete the course. As the noble Lord, Lord Rix, said, many of the greatest actors did not go to drama school. I suggest that they were temperamentally unsuited!

    It is no accident that many dyslexic children are drawn to the theatre. They can use the skills which compensate for their lack of reading skills. We should not ignore children who have had a difficult time. My childhood was not so difficult; many children have very difficult times. Drama is excellent for them and for our weaker brethren, particularly from inner city areas, and I hope that the Government will encourage it. When preparing for this speech, I spoke to a teacher who recently began teaching drama in an inner city school. He started with the younger children and said that the older ones who had missed the lessons ask, "Why couldn't we have done that? It would have taught us so much and would have been helpful in going out into the world and getting jobs."

    I see that my time is up. I apologise for being somewhat anecdotal and reminiscing. So much was said by my noble friend, and I have enjoyed the debate very much.

    8.15 p.m.

    My Lords, I have greatly enjoyed the debate so far, certainly the idiosyncratic education of the noble Viscount, Lord Falkland, and the self-effacement of my noble friend Lord Colwyn who described himself as a mediocre jazz player. I do not know whether anyone in the House has heard my noble friend play, but I would not describe him as mediocre.

    First, I apologise for omitting to put my name on the speakers' list until today. I had thought that it was down and I admit that I am culpable. Secondly, I thank the noble Lord, Lord Tope, for introducing this important and timely debate. I was proud and privileged to be a new Member of this House when the national curriculum was introduced. I remember the intensive debate about its prescription and the number of subjects which should be included. From the outset, I considered that the inclusion of music, art and drama, which fell within another subject, was most important. I have no difficulty defending that decision. Many practical activities are important; for instance, painting, drawing, sculpting, pottery, design, working with many different materials, understanding texture and textiles, drama through the English curriculum, experience of acting, stage management and stage drama production, the appreciation of art and music and an awareness and knowledge of museums and galleries.

    The arguments which the Minister has used since the disapplication of the national curriculum in these areas are not strong. The subjects will continue to be taught, as the Government expect, but if the obligation to do so is removed there is no guarantee of that. More importantly, less imaginative schools will meet their obligations to the letter under the literacy and numeracy programmes, but will not use art, music and drama to enliven their teaching. That will be the saddest thing of all because the most vulnerable children in those schools will be disappointed. I find the disapplication of those subjects most disappointing.

    No one who has spoken tonight will argue with the importance of reading and writing. I am on record as saying almost too many times—I am not sure that one can say it too many times—that reading is the cornerstone of all learning. Literacy and numeracy are helped by using art, drama and music as educational vehicles to improve achievement and attainment in those subjects.

    Ministers underestimate how such skills can be addressed through such practical subjects. That point was made so well by other noble Lords tonight. Drama helps with confidence building, the development of speech and its use in reading with comprehension, expression and so much more. Music helps with co-ordination, computation, team work and basic arithmetic. The therapeutic effect of music and drama, particularly on less able children and adults and those with disabilities and, more importantly, on disturbed young people and adults, is well established.

    When replying to a question last week, the noble Baroness dismissed transport costs as not being very significant for schools in rural areas. Those schools which make visits to the theatre or museums or galleries have a very real difficulty in meeting transport costs. The equivalent of 20p or so on every gallon of petrol is an aspect of finance which they cannot ignore.

    I want to refer to another aspect which has not been mentioned so far in the debate today; that is, money for the arts and heritage from the national lottery. That will reduce as a result of changes to the lottery introduced by the National Lottery Bill. As we know, funds are to be diverted to health, education and the environment from the five originally stated causes. We know that that will cause real anxiety not just in the voluntary sector but for bodies within the arts and heritage which are expecting that money to flow to them as one-fifth of each of the allocations of the national lottery monies.

    In its manifesto, the Labour party pledged:
    "Labour has already proposed a new millennium commission to commence after"
    and this is important,
    "the closure of the Millennium Exhibition, to provide direct support for a range of education, environment and public health projects, including those directed at children's play, currently excluded from lottery benefit".
    Not only has the principle of additionality been breached but the pre-emption of funds which will now take place ahead of the millennium fund being wound up, by creating a sixth fund, will cause grave anxieties. Many of those bodies which are out there working with young people, particularly with less able people, children with disabilities and some working with adults in the community, will lose out as a result of losing that proportion of money which will go towards the sixth new cause.

    As an interloper in the debate, I shall not abuse the indulgence of the House by speaking for too long. The noble Lord, Lord Tope, Mentioned in some detail his concern about students who wish to go on to study art, drama and music. I look forward to hearing what the noble Baroness has to say on policy and proposals to assist students who wish to study dance and/or drama.

    8.22 p.m.

    My Lords, I thank the noble Lord, Lord Tope, for initiating what has been a most enjoyable debate. It has been marked by high-speed delivery but also, I admit, by admirably clear enunciation. It has raised a number of important issues about the arts in education and future support for dance and drama students. I, too, may have to go quite quickly in order to cover what I wish to say in the short time available to me. But I am very grateful for the very well-informed contributions to the debate although I, too, am sorry that the noble Lord, Lord Colwyn, was not able to play his trumpet in the Chamber.

    None of us taking part in the debate needs reminding of the great importance of the arts to our lives, to our culture and to our prosperity. Exposure to the richness, creativity and diversity of the arts helps to shape our individual and national characteristics. I believe in that passionately. One side of my family is full of theatre people. Indeed, my mother, unlike that of the noble Viscount, Lord Falkland, was an actress. I have been personally involved for many years in dance, especially in classical ballet.

    The Government places great importance on the role of the arts in education. That is demonstrated in our provision and plans for education at every stage. I should say to the noble Lord, Lord Tope, that I do not believe there is any confusion about it. The diversity of the arts, and the need to cater for the special interests and talents of individuals of all ages provides both a challenge and an opportunity for those responsible for education. The Government's response has been to make provision for people to pursue the arts within mainstream education and through a range of specialist provision. We are committed to providing an education which gives an appreciation and understanding of the arts to all as part of compulsory education. That is absolutely as it should be.

    In our manifesto we undertook,
    "to review the scale and quality of all courses which serve our cultural industries and to identify ways in which existing budgets can be spent more effectively to achieve higher quality, better targeted training".
    Acting decisively on that commitment we have set up the Creative Industries Task Force and the National Advisory Committee for Creative and Cultural Education, agreed a review of performing arts in higher education, planned a National Endowment for Science and the Arts (NESTA) and made a public commitment to long term government funding to replace the interim funding scheme for dance and drama students. I will return to some of these.

    First, I would like to outline the arrangements for the arts in schools. As noble Lords will know, art and music are compulsory national curriculum subjects for all pupils between the ages of 5 and 14. The Secretary of State announced in January that in order to allow primary schools to provide the necessary focus on literacy and numeracy in the vital early years—and I am grateful for the support of the noble Baroness, Lady B latch, in that regard—the detailed statutory requirements of six subjects, including music and art, would be lifted. But I say to the noble Viscount, Lord Falkland, and the noble Lord, Lord Colwyn, schools must still teach all national curriculum subjects and requirements to teach art and music in secondary schools remain unchanged. After Easter, the QCA will be issuing guidance to primary schools on how to ensure abroad and balanced curriculum.

    I say to the noble Lord, Lord Freyberg, that because we are committed to creativity in our schools, the Secretary of State has asked the National Advisory Committee on Creative and Cultural Education, chaired by Professor Ken Robertson, to make recommendations on how we might identify, encourage and nurture creativity in our young people. The committee will be taking a close look at the arts in schools as part of its work.

    For exceptionally talented children of school age, we shall go on maintaining the music and ballet scheme at specialist independent schools. The five music schools and three ballet schools currently participating in the scheme provide intensive specialist training alongside a broad and balanced academic curriculum. Those schemes have produced some of our most outstanding performers.

    Our colleges and universities face the challenge of meeting the learning needs of students who will go into the performing arts and entertainment industries. The range and nature of employment in the arts is diverse. It includes working environments as different as the Globe Theatre, night clubs, cruise liners, holiday camps, music publishers and the Royal Ballet. As with all competitive sectors the standards necessary for success are high.

    In 1996–97 FE colleges reported: art, design and the performing arts and media studies as the third largest of the FEFC's ten programme areas; 15 per cent. growth in enrolments in art and design; over 6,500 students on national diploma courses in performing arts; just over 1,000 on popular music courses including, I expect, some jazz; and almost 1,500 on the first diploma in performing arts. In total, over 9,000 students, mainly full-time, were enrolled for arts courses.

    The new GNVQ in the performing arts and entertainment industries is currently being piloted and there are 822 students enrolled in schools and colleges. There are nearly 6,500 students doing GCE A-levels in drama, music or dance in schools and colleges.

    I turn next to higher education, there are a number of dance and drama courses which qualify for public funding in our universities. There are also a limited number of specifically designated courses at private dance and drama schools. All are eligible for fee and maintenance support through the mandatory awards system. And over £18 million is allocated by the funding council in teaching funds to the specialist institutions providing dance and drama courses in England as well as to the music conservatoires. This funding will support the education of over 2,800 students next year. I thought that the noble Lord, Lord Tope, was a little hard on students studying these courses, many of whom will not become performers. Of course some of them will, but others will become teachers of either dance or drama in secondary schools or elsewhere.

    The particular contribution made by specialist institutions has been recognised by the panel chaired by Sir Stewart Sutherland, whose recommendations resulted in additional funding for those specialist schools where there is evidence of higher costs being incurred. The HEFCE has also recently published a review of the music conservatoires under an advisory group chaired by Sir John Tooley. Again, the valuable contribution made by them to both the higher education sector and the country as a whole was acknowledged in the report.

    Before turning to future funding for drama students, I want to mention briefly the work of the Creative Industries Task Force. This interdepartmental body has been working to identify ways of maximising the economic impact of British goods and services in the creative sector. As the noble Lord, Lord Freyburg, suggested, this is an increasingly important sector in the British economy. Among the initial areas that it is considering are how to encourage the teaching of creativity in primary and secondary schools; how to go about training creative people in business management: and how to encourage businesses to invest in training, for craft skills.

    I turn now to the Government's plans to support drama students. We recognise the importance of education and training for dance, drama and stage management and are pleased to be supporting the interim funding scheme which was introduced by the Arts Council of England last year. This set out to provide assistance with tuition fees for students in dance, drama or stage management courses at independent schools approved under the scheme. It will be available for eligible students not only in this academic year but also in the next two. I am aware that local authority expenditure on discretionary awards has been declining and that there are vast differences in the availability of support between authorities. All students, not just drama and dance students, have been affected by the situation. That is why we are planning to replace that scheme by new and more effective arrangements, about which we will be able to say more later when Councillor Lane has completed his report.

    I return now to the interim scheme. During its first year it is supporting some 580 students with the cost of their fees and 232 of those students are studying drama. The scheme is supported by 66 per cent. of local authorities, including some which have not previously supported awards in this area. I can reassure the noble Lord, Lord Rix, that we are also responding to the Dearing recommendation that permanent arrangements for the equitable support of dance, drama and stage management students should be provided to replace the interim scheme when it expires. We have initiated the work that is necessary to take this forward. I am most grateful to both the dance and drama sectors for their co-operation and support.

    My department and the Department for Culture, Media and Sport are now working with the sector, the funding councils and others to replace the Interim Funding Scheme. A new permanent scheme will target the most promising students with potential to become performers or to make a significant contribution in other ways to the performing arts—for example, as directors. We will ensure that these students are able to complete their courses irrespective of their family financial circumstances and we will build on the progress and understanding gained from the Interim Funding Scheme in developing new arrangements.

    The Government hope to he able to announce the new arrangements this summer, with a view to implementing them in 1999. We are determined that students with talent in these very important art forms should receive the support that they deserve. The last thing we want is for them to live in wretched conditions.

    Social Security Bill

    8.34 p.m.

    House again in Committee on Clause 11.

    moved Amendment No. 13:

    Page 6, line 29, leave out ("subsection (3) and section 36(3)") and insert ("section 36(3) below, in the circumstances set out in subsection (3)").
    The noble Lord said: In moving the above amendment I shall speak also to Amendment No. 14. Under Clause 11(3) the circumstances in which a decision can be superseded are entirely a matter for regulations. We believe that that is too wide and our amendments would restrict the power to supersede a decision to grounds upon which a decision call be reviewed under existing law.

    The decision of the Secretary of State could be superseded on any ground under our Amendment No. 14, as set out in subsection (3)(a). A decision of the appeal tribunal or of social security commissioners could, however, only be superseded on the grounds in paragraphs (i) to (iv) of our amendment: that is, they could not be superseded on the grounds of being erroneous in law, the reason being that the tribunal and the commissioners are higher authorities on a question of law than the Secretary of State. Therefore, the Secretary of State cannot take the view that their decisions on the law are erroneous.

    In Committee in another place the Government said that the grounds set out in our amendments are those which they intend to use, but that they wanted to keep some flexibility to enable them to add to those grounds in the future by statutory instrument. The power of the Secretary of State to supersede an earlier decision is very important. We believe that the parameters for that should he set by primary legislation. I beg to move.

    I rise to express my support for Amendment No. 13 and to speak also to Amendment No. 14. These amendments have also been tabled in the name of my noble friend Lord Higgins. Clause 11 gives the Secretary of State power to make a decision which supersedes one made under Clauses 9 and 10, as has been explained by the noble Lord, Lord Goodhart—that is, other than discretionary Social Fund decisions or one made by an appeal tribunal or a commissioner. I notice that the 10th report from the Delegated Powers and Deregulation Committee, to which I referred earlier, states in paragraph 10:

    "These powers may seem wide, but the explanatory memorandum (paragraph 52) explains that they will he used for only two limited purposes. Provided that the Minister is prepared to give an undertaking to this effect, the Committee therefore considers that the negative procedure is appropriate".
    Of course, I respect the committee's recommendation. I would ask the Minister today to give such an undertaking to this Chamber as a very minimum response to the amendment.

    I support the principle which underlies this amendment and Amendment No. 14. It is surely a fundamental principle of liberal democracy—and I use the word "liberal" in its broadest sense at this stage. I believe that the party sitting to my right does not have a monopoly of belief in the value of liberal democracy at any stage. As I said, I believe that it is a principle of liberal democracy that decisions should be made and unmade predictably. In this case subsection (3) will govern whether the unmaking of decisions can be predicted because it explicitly states that there are no restrictions on the circumstances under which the Secretary of State may unmake a decision, apart from constraints that may be imposed by regulation.

    The Bill lays down explicit power that any regulation may be made at any time. When we combine the general intent of the clause with subsection (3), the subject of this amendment, the Secretary of State is given wide power to unmake decisions, thereby necessarily introducing a significant element of unpredictability into the Bill without any constraint on that unpredictability other than a vague gesture towards regulations which may encapsulate constraints.

    The amendment seeks only to place some constraints on the way and the basis on which, decisions may be unmade. It therefore seeks to reintroduce at least some element of predictability into decision making. I certainly see the merit in that. I hope that the Minister who responds will also see merit in that. I support the amendment.

    My noble friend Lord Goodhart drew attention to the Minister's claim to what he described generously as flexibility. The noble Baroness, Lady Anelay, said correctly that this introduces a large element of unpredictability into the operation of Clause 11(3). The Minister in another place said that he wanted to keep the flexibility in case,

    "further opportunities to modernise the process arise. There may in future be a need to be more precise".—[Official Report, Commons, Standing Cttee B, 30/10/97; col. 91.]
    This is a classic case of the principle "or else some other reason why" which, as I mentioned in relation to Amendment No. 9, means not being allowed to the claimant. It is also an example of the Secretary of State taking power to do whatever he likes. It is therefore a classic example of what has become known as the Cambises clause after Cambises, King of Persia, who was said to have a law to say that he did whatever he liked. Far too often the Secretary of State does that. I am not sure that Cambises is a good precedent to follow in English law.

    8.45 p.m.

    These amendments raise again the issue of primary as opposed to secondary legislation which we discussed earlier this evening. For the benefit of the Committee I should explain that it is our intention that the powers in this clause to supersede decisions will be used when an error in the original decision has not been identified within the dispute period of one month, or when there is a relevant change of circumstances.

    We intend to provide in regulations that a decision may be superseded where there was ignorance of, or a mistake as to a material fact, or an error of law in the original decision, or there has been a relevant change of circumstances (or one is anticipated), or a decision falls to be reconsidered under the relevant sections of the Jobseekers Act.

    It will be apparent to anyone who studies the provisions of the proposed new Subsection (3) of the amendment that the regulations will cover the points mentioned in that subsection. The real issue here is whether those reasons should be contained in primary or secondary legislation. We believe that there are good reasons why secondary legislation is more appropriate. The department wishes to be in a position to respond over time to issues which will inevitably arise as the new arrangements for decision-making and appeals are implemented. In that regard I think I am saying no more and no less than the Minister said in another place. For example, there may be a need in the future to make the wording of the regulations more precise, to maintain the spirit behind the provision, or to close loopholes which emerge. Or it may be that particular kinds of decisions require specific sets of rules defining matters in more detail. There is a risk that if we were required to seek parliamentary time to amend primary legislation, we would not be able effectively to incorporate lessons learnt from practical, operational experience.

    I address the point raised by the noble Baroness, Lady Anelay, with regard to the Delegated Powers and Deregulation Committee. The Committee will recall that at the beginning of my reply I indicated that it was our intention that the powers to supersede decisions would be used in the two circumstances mentioned by the committee. However, I am not able to give explicit assurance that the powers will be used only for those two purposes for the reasons that I have explained; namely, that the new legal structure for decision making and appeals contains substantial changes and, as time progresses, lessons will be learnt. It would be more appropriate to have the flexibility of regulations rather than require to amend primary legislation. I hope with that explanation the noble Lord will withdraw his amendment.

    I would have preferred to see the matter dealt with by primary legislation rather than being left to secondary legislation. However, it is not a matter I wish to press further. Therefore I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    [ Amendment No. 14 not moved.]

    moved Amendment No. 15:

    Page 6, line 42, at end insert—
    ("(3A) Subsection (1)(a) above does not apply in the case of a decision of the Secretary of State under subsection (1)(c) of section 9 above where the relevant enactment within the meaning of that section is section 121C or 121D of the Administration Act (liability of directors etc. for company's contributions).").
    The noble Lord said: I have already spoken to this amendment. I beg to move.

    On Question, amendment agreed to.

    Clause 11, as amended, agreed to.

    moved Amendment No. 16:

    After Clause 11, insert the following new clause—
    INDEPENDENT CASE EXAMINER
    (" .—(1) The Secretary of State shall ensure that any complaint concerning an officer acting on his behalf under sections 9, 10 and 11 above is properly investigated and the results of the investigation notified to the complainant.
    (2) The Secretary of State shall appoint an independent case examiner to consider the complaint of any complainant not satisfied with the result of the investigation into his complaint by the Secretary of State under subsection (1) above.
    (3) The independent case examiner shall publish each year a report on complaints investigated, their outcome and his recommendations to prevent the recurrence of such complaints.").
    The noble Earl said: This amendment seeks to set up an independent case examiner for complainants to address if they are not satisfied with an internal complaints procedure. It is an extremely modest amendment. It relies on the principle of the Citizen's Charter. I am a little surprised to find myself doing that. It is a real measure of my modesty. The principle is a well-publicised and easy to use complaints procedure with independent review wherever possible. That already exists in the Contributions Agency and in the Child Support Agency. It would do something to relieve discontent which builds up from time to time. It would also do something to relieve pressure on existing organisations. In particular it would relieve some of the pressure on the ombudsman.

    During the period from May to October 1997 the ombudsman investigated 194 cases involving 20 government departments. Some 121 of those involved the Department of Social Security. I imagine that a large proportion of those were child support cases. The Inland Revenue, which came second, was quite a long way behind. The figures measure the complexity of the business involved rather than any administrative failing in the department. But they do indicate considerable pressure. A measure of this kind might also relieve pressure on Ministers who may receive as a result rather fewer letters than they do at present. I see from the Minister's expression that he does not believe that. Perhaps that cynicism is justified. Perhaps if the measure would not result in Ministers receiving fewer letters, they may not receive a steadily increasing number of letters as they might otherwise have done. Perhaps the Minister finds that a little more persuasive.

    The measure might also relieve pressure on MPs' surgeries. It seems that social security complaints take up a large part of the time of those surgeries. It might well he in the interests of justice and because it could involve expert mediation and knowledge of where to go and which button to press, it could succeed in resolving some grievances. Therefore it may do a modest amount of good. There have been worse reasons for putting forward amendments. I beg to move.

    I am disarmed by the approach that, the more modest the amendment, the more likely it is to be accepted by the Government. I wonder whether the more trivial it is, perhaps the less significant it is. It may reassure the noble Earl that the substance, if not the form, of his wording is well taken into account.

    The amendment seeks to require the Secretary of State to ensure that complaints, including complaints about agency staff, are investigated. The way to do that, the noble Lord suggests, is to set up a single independent case examiner.

    We all agree that complaints must be fully investigated and appropriate action taken. There should be some kind of external review mechanism to ensure that that happens.

    Two of the DSS agencies, the Contributions Agency and the Child Support Agency, have adopted the independent case examiner route referred to in the amendment, which perhaps puts a question mark over the noble Earl's belief that the ombudsman is the appropriate safety valve for the Child Support Agency.

    I am grateful to the Minister. I obtained my belief from reading the ombudsman's report on the Child Support Agency. Clearly I am in good company.

    It is clear that one does not obviate the other or make it redundant.

    The Benefits Agency has taken a different route and I shall explain how this has come about. The BA wants its staff to resolve complaints as quickly and as simply as possible. It encourages customers—no, it encourages claimants—to make a complaint at the initial point of contact in the first instance. If the claimant is still dissatisfied after his case has been through the agency's normal internal complaints procedure, he can take his case to the local independent complaints panels. These panels were set up in July 1997 for each of the agency's units, following a successful pilot in Newcastle. The pilot was found to be an unbureaucratic, speedy and effective way of addressing the concerns of claimants.

    The Citizens' Charter Complaints Task Force was set up in 1993 with a two-year remit to look at how public services handle complaints and to make recommendations. One of its aims was to uncover good practice in public service organisations.

    The task force asked officials from the Benefits Agency to make a presentation about the Newcastle pilot. The task force fully supported the approach, which was tied in with a customer-oriented approach to service generally. This approach has brought about many service improvements since the BA was launched and has resulted in the agency being awarded a total of 51 Chartermarks. It does not say out of how many, but 51 must be better than two.

    The task force recommended that all public services should have an external review mechanism appropriate to its own circumstances and its existing complaints handling arrangements. The Benefits Agency wished to implement this recommendation by extending its pilot scheme, and the task force fully supported this.

    The system now operates throughout the agency. Each local panel sets its own terms of reference and is entirely independent of the agency. The Benefits Agency merely provides administrative support. The full facts of the case are made available to the panel, and the agency provides additional information as required. The panels are made up of volunteers from local organisations who are knowledgeable about providing a service; for example, members of welfare rights groups, hospitals, libraries, schools and GP surgeries. By working with representatives of local groups in this way, the agency receives objective advice from people with a wide range of experience.

    Panels can recommend new local procedures for areas of improvement. Managers are able to consider recommendations quickly and implement them wherever possible. The recommendations a panel might make are wide-ranging. For example, it might suggest that the office handle certain cases more sensitively; revise certain procedures, consider whether compensation payments would apply in a particular case; try to alter waiting room arrangements; consider improvements for service to particular groups such as pensioners, people with young children or the blind. It might also highlight a training need, particularly if a problem kept recurring.

    The local complaints panels are a recent initiative and the Benefits Agency is monitoring their operation carefully. It will publish its findings and information on the improvements resulting from recommendations made by local panels in the agency's annual report and accounts for 1997–98. A full review of the effectiveness of the independent local tier will commence in April 1998 and will include consultation with claimants and panel members.

    We want to encourage local ownership of service standards by Benefits Agency districts and local communities. This amendment would involve creating a centralised, more remote and more expensive system which would take many months on average to deal with each complaint. On the other hand, we anticipate local panels will consider each complaint and deal with it within two months.

    The arrangements I have described are right for the Benefits Agency and tailored to local circumstances. I hope that in the light of my explanation, in particular of how this approach fits in with the views of the Citizens' Charter Task Force, that the noble Earl will withdraw this amendment.

    May I make an impassioned appeal at this stage of the proceedings? I do not expect the noble Baroness to reply immediately, but perhaps she and the Lord Advocate will take it into account.

    I hope that we can avoid the use of this horrid word "customers". These people are not customers; they have no choice. Customers have choices where they go. These people are human beings, they are not customers. They are people about whom we are concerned to ensure that they get their proper benefits. I hope that the bureaucracy will take this into account and avoid it in future.

    I understand where the noble Lord is coming from. It is even worse than being told when you are a passenger on a train that you are a customer, as though you have a choice about which train you go on. It is even worse in the NHS. Many of us prefer the old-fashioned term "patient" to that of "customer". It may be that the Citizens' Charter has produced a vocabulary with which we have to be consistent, but I share the noble Lord's preference for the old vocabulary.

    I agree with the noble Lord, Lord Higgins, and I am grateful for what he said. I noticed with great pleasure that when the noble Baroness used the word "customer" she instantly corrected it before the noble Lord spoke.

    I congratulate the Minister on her debating skills. She scored every point she could from the hand she had to play. The way she instantly responded to the implications of the Child Support Agency by arguing that, first, an independent case examiner does not relieve the pressure on the ombudsman and, secondly, that the ombudsman and the examiner are not mutually exclusive alternatives was extremely well done.

    The Minister went into a revolving door. The trouble with the Child Support Agency is that it illustrates the danger of decisions made by computer. The Minister said that she wished it did. That is exactly what you get when you try to use a formula and you feed it into a computer. As my late noble friend Lady Seear used to say, "Garbage in, garbage out".

    Much more substantial was the point she made about the new procedure set up by the Benefits Agency. It is too early to start passing judgment finally on a procedure set up in July 1997. I wish that procedure well. I note what the Minister has said about it, and in the light of that, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 41 agreed to.

    Clause 12 [ Regulations with respect to decisions]:

    moved Amendment No. 17:

    Page 7, line 8, leave out subsection (2).
    The noble Baroness said: I move Amendment No. 17 and speak also to Amendment No. 155. This group of amendments is wholly technical. The effect is to move the provisions currently to be found in subsection (2) of Clause 12 of this Bill into subsection (5) of Section 16 of the Industrial Tribunals Act 1996. Amendment No. 17 deletes the relevant provision from Clause 12, while Amendment No. 155 effectively inserts the substance of that provision into subsection (5) of Section 16 of the Industrial Tribunals Act 1996.

    The provision in question is a straightforward re-enactment of Section 58(4) of the Administration Act. The provision puts beyond doubt that the regulation-making power in Section 16 of the Industrial Tribunals Act 1996 on decisions extends to the total or partial recoupment of jobseekers allowance or unemployment benefit from compensation payments employers are due to pay in consequence of the findings of industrial tribunals.

    I can reassure the Committee that the amendments do not substantially affect the policy. The draftsman has simply taken the opportunity to tidy up the drafting of the primary legislation.

    With those assurances, I hope that the Committee will accept that the amendments are purely technical, as well as being highly technical, and will therefore feel able to support them.

    On Question, amendment agreed to.

    Clause 12, as amended, agreed to.

    Clause 18 agreed to.

    Clause 19 [ Matters arising as respects decisions]:

    9 p.m.

    moved Amendment No. 18:

    Page 12, line 45, at end insert—
    ("(1A) Regulations under subsection (1)(a) above shall in particular authorise the Secretary of State to make a payment on account of a relevant benefit pending any decision referred to in that subsection and shall require him when he is considering whether to make such a payment to take account of the hardship that any person is likely to suffer if a payment is not made.
    (1B) In making the provision referred to in subsection (1A) regulations shall not circumscribe the circumstances in which a payment on account may be made (other than that a decision referred to in subsection (1A) above is pending) but they may make provision requiring a claimant to agree to repay the payment in prescribed circumstances as a condition for making the payment.
    (IC) In making such provision, regulations shall provide that, where the Secretary of State declines to make a payment on account, a claimant may appeal to an appeal tribunal against the refusal and that such an appeal shall in prescribed circumstances he determined expeditiously,").
    The noble Earl said: The effect of the amendment would be to give the Minister the right to allow payments on account pending appeal where severe hardship might result if that were not done. Its effect would be to restore the law to what it was before 5th February 1996. Both the Minister and I, having been involved in the Asylum and Immigration Bill, will, I think, remember other significance in that date. This may not possibly be coincidental.

    We have had recently a considerable number of regulations under which people can be denied benefit entirely. That in itself is one injustice. But to deny people benefit entirely, and then to find, when there was an appeal, that you did not have the legal entitlement to do so, is a double injustice. In those original asylum regulations—I am sure that the Minister and I remember them extremely well—there was a provision to pay the benefit after appeal if they were subsequently found to be entitled. But this is in danger of becoming somewhat like a posthumous VC. One is not in any position to enjoy it. Where there is a total disentitlement to benefit, the only options really are starvation or going underground in some illicit capacity. Therefore it can he important to have an entitlement to benefit pending the final resolution of whether one has a right to it.

    We shall return to the issue in debates on Clauses 25, 26 and 27, where we shall be getting a large number of cases held up pending resolution of the test case. To do that without giving people the right to have anything to live on in the interim can be a very harsh measure indeed. This is a benefit of the doubt amendment; and where life itself may be at stake I should have thought that the benefit of the doubt is not too much to ask. I beg to move.

    This amendment would provide for regulations to be made authorising the Secretary of State to make interim payments, taking account of any hardship that might otherwise result, where a decision of the Secretary of State, an appeal tribunal or a commissioner is pending. The amendment provides for such payments to be recoverable and gives a right of appeal against a refusal to make an award.

    Our intention is that current provision for interim payments in Regulation 2 of the Payments on Account, Overpayment and Recoupment Regulations (made under Section 5 of the Administration Act) will remain in force under the new decision-making and appeals arrangements. Payments on account, or interim payments as they are otherwise known, can be paid before a final decision on benefit entitlement has been reached where the Secretary of State has reason to believe that there is, or may be, entitlement to the benefit in question.

    These payments are recoverable either from benefit, if eventually awarded, or from other income if benefit is not awarded. They are intended to provide an immediate source of income where entitlement is possible but there is a delay in making a claim in accordance with the claims and payments regulations, making a decision or making the right payment, for administrative or practical reasons—for example, in a case where the department believes that there is clear entitlement to benefit, but there is no time to go through the formal claims process because it is Friday afternoon and the claimant is in urgent need.

    There are currently no appeal rights against a refusal to make an interim payment, and we do not propose to introduce them. This is because it is almost always the case that the initial question is resolved well before an appeal against the refusal to award an interim payment could be heard. And, of course, the customer has the usual right of appeal against the decision on full benefit entitlement, when that is taken.

    Interim payments were only ever intended to be made, as an emergency measure, where proper benefit entitlement could not be established under the normal statutory provisions because of administrative difficulties.

    It has never been the intention that interim payments should be made where a claim has been properly determined, but is under appeal. This would be to circumvent the normal rules on benefit entitlement as established by legislation approved by Parliament. It would mean making payments to customers who have no entitlement to benefit under the statutory provisions. The Secretary of State would make payments to the very people who she has already decided are not entitled.

    The noble Earl, Lord Russell, has argued that any interim payment could be recovered. However, in practice it would be extremely difficult to recover any payments made, especially where the eventual outcome was that there was no entitlement to benefit. We would be in the position of having made payments to claimants many of whom turn out to have no statutory entitlement to benefit. In such circumstances, the chances of ever recovering the amounts paid out would be minimal. The practicalities and the administrative costs of attempting to pursue such overpayments and the recovery of them in these cases would be prohibitive.

    I hope that I have been able to explain that there is already adequate provision for the making of interim payments where administrative difficulties prevent a final decision being made. I therefore hope, in view of this explanation, that the noble Earl, Lord Russell, will feel able to withdraw the amendment.

    I cannot help feeling that was a rather self-satisfied reply. The department, like the servant in the open testimonial, is saying that it has carried out its duties entirely to its own satisfaction.

    Before deciding whether we need to come back to this at another stage, I should like to probe some of the words which the Minister has used as taken from the existing regulations. The noble Baroness said that benefit is payable only where the Secretary of State is satisfied that there is or may be an entitlement. Everything seems to me to hang on the interpretation of the words "or may be". According to a strict and narrow interpretation—I suspect that that is the one the department is using—the Secretary of State would under those words require to have good ground for believing that there may be a legal entitlement. There would have to be a strong degree of probability.

    However, according to the other interpretation, which relies on possibility rather than probability, the mere fact that the case has gone to appeal—and judgments on appeal are well known to be capable of going either way—would indicate that, just because the judgment is uncertain, therefore there may be an entitlement. That would be rather more plausible.

    We must accept that if there are to be appeals there must be rules for what is done pending those appeals and that those rules, since we do not know what the result of the appeal will be, are bound to involve the possibility of injustice to one side or the other. Whichever side is given the benefit of the doubt, it may be that the judgment will go against it.

    I take the Minister's point about the difficulty of recovery. However, that seems to me to be saying that recovery will he perfectly possible where the payment on account was not necessary; but where it was necessary, and where in fact the person would otherwise have starved, recovery will he extremely difficult. It therefore seems to me to be a provision that would catch the guilty and spare the comparatively innocent.

    It is a question of which risk we are prepared to take. The Minister knows, as well as I do, that when people have been unjustly denied benefit, sometimes over quite a period of time, there has been a multiplication of further hardships—such as, very often, eviction from their house. That leads to difficulty in finding further employment. It therefore leads to a loss of future revenue for the Treasury, which loses, just like everyone else. Since somebody has to lose whichever way we handle the question of payment of benefit pending appeal, the body that takes the risk should properly be the one that is better able to bear it. When I ask which is better able to bear a financial loss—Her Majesty's Treasury or an individual claimant with no other visible means of support—the answer does not appear that difficult.

    It is the basic function of social security to make sure that people are not cast into utter destitution. That is in the public interest, since, if they are, they tend to become unemployable in future. It deprives the Government of potentially useful tax-paying subjects. In the light of that, I cannot help wondering whether we have really got this one the wrong way round, and whether it really ought to be the Government who are taking the risk during the period when the case goes to appeal. I look forward to hearing the Minister's reply.

    The thrust of the noble Earl's response was to ask what "may be" might mean. To put it negatively to start with, I do not believe it was ever intended that, because a claimant had recourse to appeal, that equates to "may be" in legislative terms. We have had arguments in this Chamber over many years about the payment of benefit while pursuing appeals. The implication of the noble Earl's position would be that anyone who went to appeal thereby produced a "may be" case and therefore an entitlement to interim payments of benefit. The read-across implication of that for the DSS would be huge. It would mean that. in every benefit area, anyone would be encouraged to go to appeal in the knowledge that, if the appeal was some six or nine months away, the benefit would continue to be paid under a "may be" criterion for the whole of that six to nine months and until the appeal was disposed of either way, even though the Secretary of State had previously assured herself at the time when she made the original judgment that she was satisfied that the claim was ill-founded. So, to put it negatively, it would not be expected to apply to that.

    On the contrary, "may be" is meant in this instance to be an enabling power allowing the Secretary of State to act where no claim has been made but where it might be impracticable for one to be made immediately; where such a claim has been made but it cannot be immediately determined; or where an award has been made but it is impracticable to pay the whole immediately. In other words, it is a discretion on administrative grounds, not an issue about the payment of benefit, almost like a hardship payment, while an appeal is being pursued, with implications for the rest of social security legislation.

    The Minister has given almost exactly the answer I expected. I understand the case that she makes. It is perfectly true. I think the case that I am making is perfectly true also. What we need to consider is which of those cases is more important. That is something that we might better do at our leisure, and quietly. Therefore, for the time being, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 19 agreed to.

    Clauses 4 and 5 agreed to.

    Clause 6 [ Lord Chancellor's panel for appointment to appeal tribunals]:

    moved Amendment No. 19:

    Page 3, line 25, after ("shall') insert ("after consultation with the President").
    The noble and learned Lord said: With this amendment, it may be for the convenience of the Committee to discuss Amendment No. 20. I set down these amendments partly as a crusader, partly as a seeker after truth. I should at the outset make a declaration which I omitted to make in the course of my former intervention—namely, that I am privileged to be chairman of the Council on Tribunals, which has expressed views on a range of matters relating to the Bill. I hope that, in the interests of promoting expedition and avoiding tedium, Members of the Committee will accept that declaration as applying throughout the Committee stage.

    In fact, these amendments were suggested not by the Council on Tribunals but by His Honour Judge Bassingthwaighte, the former president of the ITS, in the memorandum which has already been referred to this evening and which he circulated in December. In that memorandum he referred to the proposal that the Lord Chancellor should appoint members to the panel for appeal tribunals. Of course, we all agree that normally appointments to judicial office should be by the Lord Chancellor and certainly not by, for example, the Secretary of State, who in effect will be a party to many of the disputes. However, Judge Bassingthwaighte expressed concern at the logistical problems which that may raise.

    In the last reporting year there were 178 appointments in England, Wales and Scotland and 60 part-time chairmen. I assume that not all existing members and chairmen will be automatic appointments to the new panels since part of the purpose of the exercise is to produce a different range of expertise.

    Recruiting and appointing the required number of members may well be a formidable operation. It is not likely that all potential candidates will be known to the Lord Chancellor and his officials; it seems probable that they will have to consult. Who will be consulted? Not, I hope, the Secretary of State or her officials. In appointing a judge, one does not consult one of the parties to the litigation which he will have to decide. Judge Bassingthwaighte suggested that it would be sensible to consult the president, who would be in the best position to know the numbers and the range of expertise required. He, in turn, would consult with his administrators, but it would be wrong in both principle and practice to short-circuit that process by consulting directly and only with the administrators.

    If it is said, "Of course, the Lord Chancellor will consult the president; you do not need to write it into the we shall all have a feeling of déjá vu and we shall return the usual answer, "If it is to be done in any event, why not say so in the Bill?"

    The present arrangement, which seems to work quite well, is that the Lord Chancellor appoints the chairman, who will now be legally qualified, and other members are appointed by the president. I assume that the change is explained by the fact that all members will now be expected to have a specific expertise. That is the subject of Amendment No. 20, to which I shall speak in a moment. If there is a reason for omitting a role for the president from the text of the Bill, it would be enlightening to be told what that reason is. There is clearly no principle of keeping consultation requirements off the face of the Bill. That brings me to Amendment No. 20.

    On the face of it, the provision in Clause 6(2) is surprising. As the Bill stands, the Lord Chancellor is not required to consult anyone before appointing members, whatever the expertise in respect of which they are appointed, with one exception. Before appointing a medical practitioner, he is required to consult the Chief Medical Officer. I suggest that that is puzzling, for two reasons. First, while I understand that the Lord Chancellor has no medical expertise and therefore may not know who is and who is not a good doctor, there is no similar requirement in respect of those appointed for their skills in accountancy or for their actuarial skills. I assume that the Lord Chancellor will take advice from whomever he considers necessary; there is nothing to prevent him doing so. Perhaps it would be better to write that into the Bill. A moment ago I complained that one possible consultation requirement was not written into the Bill. But, of all potential consultees, why select just one, a medical officer? That is the first reason why it is surprising.

    There is a second and more worrying reason. The Government's Chief Medical Officer can hardly be described as independent. Surely he is an official of the DoH, the very department whose decisions are being challenged? At present, when consultants are appointed to MATs there is consultation with the president of the appropriate Royal college. If the candidate is not a consultant but a general practitioner, there must be a number of doctors familiar with his abilities. But how can my noble and learned friend justify consultation with the Government's own Chief Medical Officer?

    I say at once that I have not had the pleasure of meeting the Chief Medical Officer. I have no reason to believe that he is less than completely fair. But that is not what independence is about. There should be no input from a potentially interested party, not even a potential conflict of interests. I therefore raise two questions with my noble and learned friend and look forward with curiosity, if not with anxiety, to his answers. I beg to move.

    I support Amendment No. 19 in the name of the noble and learned Lord, Lord Archer, and my noble friend Lord Higgins, and Amendment No. 20.

    The noble and learned Lord began by making a declaration of interest with regard to his long experience in the world of tribunals as chairman of the Council on Tribunals. Indeed, I have respected his work over the past few years. Perhaps therefore I should add my declaration of interest—I am tempted to say past interest. I was a lay member of tribunals from 1982 until August 1996 when I had a direct interest. I now have a personal interest but do not benefit from any of the results of the Bill unless, as a member of the public, I make a claim at some stage and appeal against the decision.

    I should like to identify myself with all the remarks made by the noble and learned Lord, Lord Archer, and with the underlying spirit of his amendment. He is a crusader and seeker after truth. He carefully and clearly put forward the arguments which Judge Bassingthwaighte presented to us in a memorandum circulated before Second Reading.

    Within my definition, these are modest amendments in that they are practical, useful and certainly not damaging to the rest of the Bill. I hope therefore that when the noble and learned Lord replies he will indicate that both of these commonsense amendments will be accepted.

    I regret to disappoint the noble Baroness, Lady Anelay. I am grateful to my noble and learned friend Lord Archer for proposing Amendments Nos. 19 and 20 because this gives me the opportunity to explain how the appointments process will work in practice.

    At present, the Lord Chancellor, in consultation with me, as Lord Advocate, appoints the chairmen of all tribunal jurisdictions within the Independent Tribunal Service. Tribunal members are currently appointed by the president, but he has no formal role in the appointment of the chairmen, who are all legally qualified. The Lord Chancellor, as a matter of good practice, involves the president closely in the appointments process and the president, or another member of the ITS judiciary, almost invariably sits on the relevant interview panel. In addition, in appropriate cases, the Lord Chancellor also consults other members of the judiciary on the suitability of candidates for those offices. As my noble and learned friend observed, the Lord Chancellor may consult anyone he wishes, prior to making an appointment.

    My noble and learned friend the Lord Chancellor believes that the independence of panel members is most effectively guaranteed if the power of appointment is vested in him alone, as it is under the existing legislation for chairmen.

    It is important to bear in mind that in the new system, confidence will depend on people having confidence in the independence of the chairmen and of the panel members. The starting point, then, is to have all of them appointed by the Lord Chancellor. It is also the position in respect of other judicial appointments to tribunals for which the Lord Chancellor is responsible that he has the power of appointment vested in him alone. We share the Lord Chancellor's view and have therefore made provision in Clause 6 for all appointments to the panel to be made by him.

    The effect of Amendment No. 19 would be to create a statutory requirement for the Lord Chancellor to consult the president before setting up the panel of persons who will act as members of, and experts to, appeal tribunals. Clearly, the president, as judicial head of appeal tribunals, will have an interest in ensuring that the panel comprises sufficient numbers of persons with the right expertise from whom he may draw properly constituted and equipped appeal tribunals. As I said, it is the current practice of my noble and learned friend the Lord Chancellor to involve the president closely in the selection process, and he will continue to do so.

    However, the Lord Chancellor considers that it would be inappropriate for a requirement for consultation with the president to be on the face of the Bill. Why restrict it to the president? It would also be out of step with other jurisdictions for which the Lord Chancellor has appointment responsibilities and would dilute the responsibility which he holds as a Minister and for which he is answerable to Parliament. I share that view.

    In relation to Amendment No. 20, my noble and learned friend the Lord Chancellor and I are also both in agreement that the appointment of medical practitioners to the panel is a special case. That is why Clause 6 requires the Lord Chancellor to consult the Chief Medical Officer with respect to medical expertise. If I may pause and take up a point made by my noble and learned friend Lord Archer, the Chief Medical Officer is employed by the Department of Health and not by the department which is a party to the cases before the appeal tribunals.

    Furthermore, why should medics be in a different position from members of other professions? Other professions—for example, accountants and solicitors—tend to have standard qualifications and belong to a small number of professional bodies. Medical practitioners, on the other hand, have a wide range of medical qualifications and experience. Some specialise in general practice while others specialise in particular discrete areas of medicine. The Chief Medical Officers have access to information on all types of medical practitioners and are best placed to advise the Lord Chancellor on suitable appointments, bearing in mind that different expertise will be required for different types of tribunal.

    The Lord Chancellor will need to appoint general practitioners to deal with straightforward medical appeals but he will also require a wide range of specialists and consultants who have specific expertise in particular areas. For example, vaccine damage appeals will require the expertise of medical practitioners with experience of the effects of vaccines on childhood conditions. Industrial injuries cases, which raise a medical issue in relation to a prescribed disease, will require the expertise of a medical practitioner with knowledge of the particular condition. It is appropriate that the Chief Medical Officer should be the person to give guidance to the Lord Chancellor on the appropriate person to appoint to the pool of candidates from whom the president would select a panel member.

    Perhaps the noble and learned Lord will allow me to intervene for a moment. I have some difficulty in understanding why the medical officer should be the person with the expertise in selecting doctors. He is clearly a doctor like any other but no