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Lords Chamber

Volume 591: debated on Thursday 9 July 1998

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House Of Lords

Thursday, 9th July 1998.

The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Manchester.

Royal Assent

My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Registered Establishments (Scotland) Act,

Pesticides Act,

Criminal Justice (International Co-operation) (Amendment) Act.

Know How Fund: Expenditure

My Lords, on behalf of my noble friend Lord Wallace of Saltaire, and at his request, I ask the Question standing in his name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they propose to increase resources for the United Kingdom Know How Fund as a means of strengthening links with central and east European states now preparing for future membership of the European Union.

My Lords, expenditure on the Know How Fund is set to remain broadly at current levels over the next three years. Of the countries preparing for EU accession, expenditure will increase for Bulgaria and Romania, where incomes are lower, social problems are more pronounced and progress in transition has been less rapid. In central European countries where economic reform has progressed further, assistance will be gradually reduced.

My Lords, in thanking the Minister for that Answer, perhaps I may say that many of us in the House have great sympathy with his aim of concentrating on areas of great poverty. But, given the great importance over the next few years of establishing democratic institutions in central and eastern Europe prior to countries entering the European Union, will he consider some increase of a temporary nature for this purpose only, as the Know How Fund has not been increased over the past couple of years?

My Lords, the strategy for the Know How Fund has been to concentrate more on the areas of greater need and is not solely related to the countries seeking membership of the EU. In fact, the biggest programme is in the Russian Federation. There are other steps which the Government, bilaterally and multilaterally, are taking to improve the democratic and administrative structures in the countries seeking accession, principally the one being co-ordinated by the Commission which involves twinning between EU countries and applicant countries.

My Lords, does the Minister agree that the Know How Fund is largely British staffed, that it enjoys a very high reputation for its projects in the countries concerned, and that its influence is way out of proportion to the modest funds it has available?

My Lords, I am very happy to endorse that view. To my knowledge, it is almost entirely British staffed and it is certainly appreciated by the representatives of the applicant countries whom I meet.

My Lords, can my noble friend say what arrangements are in place to evaluate the sustained progress and performance after a particular phase in the Know How Fund has come to a conclusion? The objective is surely to ensure that the people of the countries themselves are taking things forward and that we are not increasing dependency.

My Lords, the principal method of assessing progress and performance comes in the review process and the screening process for the applicant countries, both the first six moving towards formal negotiations and the other five. In that context the effects of the Know How Fund and other forms of assistance will be assessed.

My Lords, is the Minister aware of the vital importance of the Know How Fund to the three Baltic States, Estonia, Latvia and Lithuania? Will he join me in congratulating the Strathclyde police authority, which has done so much to establish a democratic police force in Estonia, where there is enormous crime, often promoted from outside that nation's borders. Will the Minister assure us that the Know How Fund will not be decreased in respect either of assistance to the police force of Estonia or of language training through the British Council?

My Lords, there will be continuing assistance on that front to Estonia. However, the general picture is as I stated, that there will be a slight reduction in the total amount of Know How Fund expenditure in the Baltic States.

My Lords, does the Know How Fund extend its operations to helping less developed countries to adopt the latest techniques in banking, not least correspondence banking?

Yes, my Lords. The skills transferred via the Know How Fund include those related to financial services and advice to other enterprises on the banking aspects of their operations.

My Lords, will the Minister bear in mind the need to help countries in eastern Europe to put right the legacy of huge environmental damage which many of those countries inherited from the communist regimes and the valuable part the Know How Fund can play in helping them to do that?

My Lords, the Know How Fund is essentially to provide expertise. Some of these problems also require substantial amounts of money which would come under other programmes, mainly EU rather than British.

My Lords, I agree with all the favourable comments made by noble Lords about the Know How Fund and its excellent work. But can the Minister tell us the current situation with regard to the balance of funds for that fund and the overall development fund for the poorest nations of the world?

My Lords, Know How Fund expenditure, excluding emergencies, is about £80 million of the total Department for International Development budget. It is therefore a relatively small expenditure because it concerns the transfer of expertise rather than the provision of whole projects. It does not divert from the general strategy of the department to concentrate on the areas of greatest poverty.

My Lords, I thank the Minister for mentioning Bulgaria. Given that it is the third poorest country in eastern and central Europe, will the Minister give the House assurances that high priority is accorded Bulgaria by the Know How Fund and that it will definitely be maintained?

My Lords, I believe that I can give that assurance. As I indicated in my original Answer, Bulgaria and Romania in particular need some concentrated activity. There have been very severe economic setbacks in Bulgaria as well as slower progress towards meeting the requirements for accession to the European Union.

My Lords, may I commend the Know How Fund for choosing partners in the countries in which it works and say in particular how very important is the work that it is doing in Russia in trying to establish democratic political parties in a still very chaotic political scene?

My Lords, as I said, the largest single activity is in Russia. That is partly because of tremendous problems in both democratic and economic development. It includes areas of social expenditure as well as the more traditional areas.

Beach Pollution: Clean-Up Schemes

3.14 p.m.

What progress is being made to clean up polluted beaches in England and Wales; what is the role of water authorities in the process; and what funds may be available from the European Union.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions
(Baroness Hayman)

My Lords, considerable progress has been made with compliance with the headline standards of the Bathing Water Directive, rising from 66 per cent. in 1988 to 89 per cent. in 1997, in England and Wales. The Government expect further progress as more improvement schemes are completed. However, the results for 1997 went against the improving trend with a very small fall in compliance compared to the previous year. The role of the water companies is to maintain or improve the sewerage infrastructure to meet the Environment Agency's discharge consent conditions which are set so that the Bathing Water Directive standards are achieved. Funds are not available from the European Regional Development Fund for works which are required to meet EU directives, but in some instances funds may indirectly help progress in cleaning up beaches.

My Lords, I thank the Minister for her helpful reply. Does she agree that our beautiful coastline and beaches are very much national assets? Does she further agree that as a baseline the continuation of the coastal discharge of raw sewage and untreated waste water less than a mile off shore is not acceptable in today's environment? I would add that despite the vigilant monitoring of the quality of the bathing water by the Environment Agency, which gives great public assurance, we need more. Will the Minister consider her department taking a fresh look at the matter, along with the water companies and the Environment Agency, focusing on the need for future investment to hasten the modernisation of the treatment works in order to deal with waste water around our coasts?

My Lords, I certainly agree with the noble Earl that our beaches and coastline are great national assets and that we need to protect them. It was for that reason that my right honourable friend Mr. Michael Meacher called on the Environment Agency and the water companies to take urgent remedial action in the kinds of instances which the noble Earl described and to report on the prospects for compliance with the directive and on the action needed in the case of persistent failures. The Government will not be satisfied until we are regularly achieving close to 100 per cent. compliance.

As regards investment, we are looking at the possibility of providing more to improve bathing waters under the current periodic review of water company price limits. Other measures which would help to improve compliance are the completion of the bathing water improvement programme; the urban waste water treatment directive programme, and the EA policy introduced last year requiring design and guideline standards where secondary treated effluent may impact on bathing waters.

My Lords, is my noble friend aware that when I was a Member of the other place, the whole of the Durham coastline fell within my constituency, and much of my time was spent dealing with the fact that the golden sands—which they were in those days—were being transformed into a black mess because of the dumping of coal waste into the sea? All the pits have now closed, but the problem does not seem to be improving. Can the Minister say whether any research has been done into this matter? If she does not have the answer to hand—which she probably does not—would she care to write to me about it?

My Lords, I shall certainly write in detail to my noble friend. I know that the beaches around Easington certainly had the problem that he described and was concerned with when he was the constituency Member. I understand that there is a reclamation scheme to clean up those beaches. The cost is being met through millennium funding. I understand that it is being brought forward by a consortium of local partners. The Environment Agency is advising on the proposals and their environmental impact. The aim is to reclaim those beaches and perhaps give back to the noble Lord his golden sands.

My Lords, is the Minister aware that European Union structural, cohesion and regional funds are being used by other countries for that very purpose: to clean up their beaches and to make sure that raw sewage is pumped further out than one mile from the coastline? As that is the case, is there any merit in suggesting to the Minister's right honourable friend either that application be made to the EU to get funds for this particular area of the United Kingdom—most of the United Kingdom does not qualify for such funds—or that application be made to the EU that this particular area of responsibility should be taken outwith the structural, cohesion and regional funds and put into a certain fund to which the United Kingdom can apply for this purpose rather than have it fall on the water companies?

My Lords, I shall certainly consider that suggestion. My understanding is that moneys from the regional development fund are not available simply to meet the requirements of directives. However, as I said in my Answer, a variety of projects are funded under the ERDF, including infrastructure projects which might involve tourism. It may be possible through such funding to take action to improve bathing water standards. I shall investigate the issues raised by the noble Baroness.

My Lords, can the Minister please give us any reassurance about what seems to be an absolutely appalling situation in the Fal Estuary at the moment and, with the summer coming and children and everybody else using many of the beaches around the Fal estuary, can the Minister tell us whether South West Water is really going to have what seem to be several months to try to get the matter right?

My Lords, I saw the reports, which were confirmed yesterday, that the Falmouth and Truro Port Health Authority served an abatement notice on South West Water requiring the company to cease to discharge sewage effluent from the new outfall at Blackrock on the grounds that the port health authority considers the discharge to be a nuisance and prejudicial to health within the meaning of the law. As I understand it, that is now an issue for the courts to resolve. It is for South West Water to show whether it has used the best practical means to prevent or counteract the effects of any nuisance which may have been caused. If bathing waters are affected, the Environment Agency will obviously have an interest in this.

My Lords, does the Minister agree that in relation to its total coastline the Isle of Wight has the cleanest beaches in the United Kingdom?

My Lords, I understand the loyalty to the Isle of Wight which is displayed by the noble Lord. However, last year there was quite a serious problem—

with leakages between foul sewers and drains contaminating the bathing water. However, action is being taken and I hope that it will resolve the problems that were experienced last year, lead to further improvements in the future and to the reinstatement of the high quality to which the noble Lord referred.

My Lords, although beaches need to be cleaned up as soon as possible, given the loot that has been acquired by those who own the private water monopolies, could we not ask them to pay for this to be done rather than fund it from public sources?

My Lords, that is exactly the issue under consideration in the periodic review of water company price limits. My right honourable friend the Secretary of State will be giving advice on the extent of the environmental improvements that he expects the water companies to make.

Association Of Chief Police Officers

3.23 p.m.

To what form of accountability they consider the Association of Chief Police Officers' resolutions relating to matters of public interest should be subject.

My Lords, the Association of Chief Police Officers is not part of the Home Office. It is not accountable to the Secretary of State for the Home Department or any other government department. As I have explained previously, the association is a provider of professional policing policy advice. It is a useful source and has a very constructive relationship with the Home Office. It is only one source to which the Government turn for advice. Policy determined by ACPO is not binding on individual chief constables.

My Lords, I thank the Minister for that Answer. ACPO Limited passes resolutions which affect potentially every man, woman and child in the country and I should like to draw the Minister's attention—

My Lords, I apologise. May I draw the Minister's attention to a policy adopted by police forces concerning the insurance industry, with which I have a connection? With the leave of the House, I shall read that policy. On 12th January 1978—20 years ago—ACPO's policy recommendation was that the supply of routine information relating to theft, loss and burglary would no longer be given to insurance companies and that that co-operation would be discontinued. Does the Minister think that that is in the public interest?

My Lords, there may have been such a resolution 20 years ago. I am not aware of whether that is still ACPO's policy. I repeat what I have already said: if ACPO comes to a certain conclusion, that is a matter for ACPO. It is entitled to its views. Whether we all agree with every one of those views is another question. I repeat that ACPO's policies are not binding on individual chief constables, who remain locally accountable under the existing arrangements.

My Lords, is the Minister aware that some of us are puzzled by this Question? Is it not obvious that it is highly desirable that the Home Office and, for that matter, the public deserve the frank opinion of the leaders of the police service and that anything that is done to inhibit chief officers from giving their advice would be extremely injurious to the national interest?

My Lords, I am a little puzzled about this Question—and I am even more puzzled by many other Written Questions which are answered at substantial public expense and at considerable official inconvenience, but I answer them. I cannot alter my Answer from day to day because it remains the same: ACPO is a body with substantial, independent, informed expertise. We value its co-operative assistance, as do many other bodies.

My Lords, is it not a fact that ACPO receives considerable funds from the Government to the tune of nearly £0.5 million, in addition to receiving further funds of nearly £1 million from police authorities throughout the country, and that, as it is a limited company, those funds do not appear in ACPO's books?

My Lords, as I have said previously, the Home Office allocated £458,000 to the costs of running the secretariat and the local authorities provided £330,000 in 1996–97 and £669,000 in 1997–98. Those sums did not appear in ACPO Limited's accounts because ACPO Limited was not then constituted. For the future, ACPO Limited, now being a public limited company, will have to produce its accounts in the format required by the companies legislation. That is what I said on the last occasion that this Question was put to me in the past few weeks.

My Lords, further to his answer to the noble Lord, Lord Harris, does not my noble friend agree that the Association of Chief Police Officers makes extremely interesting and important announcements and comments on some of the major social issues facing Britain at the moment and, by its comments and insights, informs the whole process of policy formulation to a very valuable extent?

My Lords, my noble friend is absolutely right. There are important public debates, some of which are reflected in your Lordships' House, and ACPO plainly has a proper, important and central role to play in the conduct of those debates. It adds value to the public debate.

My Lords, given the comparatively large sums of money which the Minister mentioned, can noble Lords and Members of the other place see the advice which has been given by ACPO? Is the Home Office ever in a position to ask ACPO for advice on particular issues, and, if so, will the Minister ask ACPO to give advice on the policing of gypsy sites, which has been a matter of considerable complaint recently, particularly after the incident in which a six year-old boy was killed during an eviction on a site in Enfield last October?

My Lords, the advice given is often published. I refer, for instance, to the excellent Home Office report on intimidation and vulnerable witnesses, into which ACPO had an input. If one wants to read such reports, one can generally see what ACPO's policies have been. If there is any specific question about police misbehaviour, that should be directed to the chief constable or the police authority concerned. If the noble Lord has no satisfaction, I shall then be perfectly happy to take up the matter myself. However, I do not believe that the relationship between ACPO and the Home Office is at all secretive.

My Lords, does the Minister accept that one of the reasons for the continued line of questioning by noble Lords on the Floor of the House and in Written Questions is his failure to provide me and other noble Lords with any details of the activities of ACPO beyond a two-item breakdown of an annual Home Office allocation of £458,000? Does the Minister agree that that does not amount to transparency or accountability?

My Lords, the last time I answered this Question I said that the sum of £458,000 contributed to the cost of staff salaries and other administrative costs, such as stationery, cleaning and communications. We do not give that as a global sum to ACPO but pay specific invoices. I am content that that is proper accountability of public funds.

Government Documents: Disclosure

3.31 p.m.

Whether their policy of more open government enables secret departmental information to be disclosed to people with a commercial interest in it.

My Lords, of course not. Disclosing confidential official information that would give someone an improper financial advantage is a serious disciplinary offence, and in some circumstances it may be a criminal offence.

My Lords, I thank the noble Lord for his Answer so far as it goes. Can he inform the House why there have been so many leaks and premature disclosures of government documents in the past 12 months? Does he agree that the time has come for the Government to insist that civil servants and others in their employ should at last honour their contracts of employment?

My Lords, of course the Government insist that those in their employ honour their contracts of employment. Yesterday the Prime Minister said:

"I have instructed the Cabinet Secretary … to revise the rules that we inherited that govern such contacts and to strengthen them in any way that he thinks fit. In particular, there can be no circumstances that ever justify either passing confidential or inside information to a lobbyist, or the granting of any improper preferential access to, or influence on, Government. These rules will be strengthened and they will be published. Anyone found breaching them will be out on his ear".—[Official Report, Commons, 8/7/98; col.1065.]

My Lords, can the Minister inform the House when the proposed freedom of information Bill is to be introduced which is the supposed flagship of the Government's policy of openness? Can the Minister say whether it will lead to redundancies among spin doctors on the one hand and lobbyists on the other?

My Lords, the noble Lord well knows that the preparation of a freedom of information Bill is well in hand and will be available for introduction next Session, if it is included in the Queen's Speech.

My Lords, do the Government recognise that they have brought many of these woes on to their own head? Has the attention of the Government been drawn to the excellent first letter in The Times yesterday by the director-general of one of the major trade associations which states that the way in which the Government now formulate and announce policy, in many cases bypassing normal civil service channels, has given rise to this new industry that has brought such wrath upon their heads?

My Lords, I have read that letter, which is as unspecific as the second question of the noble Lord, Lord Renton. If the noble Lord wishes to ask me about any particular example in which information has been given other than to Parliament I shall gladly answer, but it is very difficult to answer generalised allegations.

My Lords, I should declare an interest as a director of a company that has a public affairs division. Will the Government respond to a united call by the industry for a proper register in Parliament of those who act as lobbyists? Does the Minister agree that if the Government set standards perhaps by a return to more formal decision-making in Whitehall, backed by a freedom of information Act and a register, that will do a great deal to restore public confidence?

My Lords, as the noble Lord well knows, some of the allegations that have been made in recent days relate to firms that are members of the professional organisation to which he refers and some that are not. Clearly that raises the question of whether official recognition should be given in the form of a register to a proper professional organisation. I have no doubt that my colleagues will consider that. The noble Lord is also right that the Government's freedom of information proposals which so far are only in the form of a White Paper will contribute to a proper relationship between government and the outside world.

My Lords, does my noble friend agree that, although the word "lobbying" has become somewhat discredited in recent days, there are perfectly proper uses of lobbying represented by the many national charities with which Members of your Lordships' House are connected?

My Lords, it is proper that public sector organisations, charities and businesses should seek to have their views represented to government. It is essential for government business that those interests should be represented in a proper and responsible way.

My Lords, does the noble Lord agree that the Government should listen rather less to the coterie of lobbyists and advisers who make up the inner circle of those close to the Prime Minister and Ministers and considerably more to your Lordships' House, in particular the wise advice that this House gave to the Government on Tuesday of this week? Furthermore, will the noble Lord make available a list of all contacts between Market Access, the company that employed the hapless Mr. Draper, and Ministers since 1st May last year?

My Lords, the noble Lord is trying his luck if he asks me to deal with the Teaching and Higher Education Bill in response to the original Question. The answer to his second question is, of course not. It would be utterly absurd for the Government to list contacts between Ministers and outside bodies. Once one started to do that one would spend more time recording than making policy.

My Lords, does the Minister agree that a freedom of information Act might make matters worse? Is it not better to strengthen the Official Secrets Act?

My Lords, the noble Lord is right that the Official Secrets Act is very narrow. Since I signed it many years ago it has been narrowed so that now it covers only intelligence, defence and international relations. There may be some point in extending the scope of the Official Secrets Act. I acknowledge the force of the point that the noble Lord makes. But that is certainly not an alternative to proper freedom of information legislation, which is the intention of the Government.

Business

3.39 p.m.

My Lords, I have given prior notice to the Government Chief Whip to raise an important matter; namely, whether or not there should be a debate in your Lordships' House before the Summer Recess on the question of reform of this House. At the same time, perhaps I may also ask the noble Lord the Government Chief Whip whether he is in a position to furnish noble Lords with the Recess dates. Can he confirm that he has no intention of allowing the House to rise beyond 31st July which would be regarded by this side of the House at least as a hostile act? Can the noble Lord also confirm that so far this Session this House has witnessed a great deal of co-operation from all sides? We have used an unprecedented amount of time on the Moses Room Grand Committee procedure. We have expedited the Government's business. This month we have sought to ensure that the Government get on to the statute book two important pieces of emergency legislation.

I wrote to the noble Lord the Government Chief Whip exactly three weeks ago. I received a reply to that letter on Monday of this week. The request was a very simple one; that this House should be allowed to debate its future before it rose for the summer.

There was a reason for that: first, to inform the Government of the views of this House; secondly, since the Government have recently made an announcement that they are now willing to provide an options paper in the shape of a Green Paper at some point in the autumn, it would help to guide the Government on the drafting of that document; and, thirdly, and perhaps most importantly, to avoid the many misconceptions of government Ministers that we have seen so visibly over the past few weeks.

I have now received a reply from the Government Chief Whip who stated that it was not possible to provide for such a debate before the end of July and before we rose for the summer. I have two questions for the noble Lord. First, is he now able to reconsider that position; and, secondly, can he confirm that the Green Paper will be published by the time we return for the spill-over? It has struck me on many occasions recently that there is an absurdity in the fact that the only place in which the reform of your Lordships' House cannot be discussed is in this Chamber.

My Lords, perhaps I may say a few words on this point of which the noble Lord, Lord Strathclyde, was good enough to give me notice. I agree with him that there should clearly be a debate in this House on the future of this House. On the other hand, I cannot say that I regard it as a hostile act were we to have that debate after the Summer Recess. Clearly, it must be in this Session of Parliament. That is a critical point.

Secondly, again, I would not regard it as a hostile act were we to have to sit into the month of August, given the fact that there is a precedent, I understand, for a Conservative government doing precisely that when I do not believe that any of us took a similar position.

I believe that there is an urgent need for more collaboration between the usual channels—and indeed other parts of the House, for that matter—in terms of how we consider legislation. We have all been exposed in recent weeks, particularly on education Bills, to never-ending Second Reading speeches on amendments, where there is not the remotest relevance between the speeches being made and the terms of the amendments which are nominally before the House. I hope that in any further discussions there may be between the usual channels, that issue will be addressed.

My Lords, before my noble friend replies, I endorse the remarks made by the noble Lord, Lord Harris. It is in my memory that at the same time in the parliamentary timetable of 1980 the Commons sat into the second week of August. It did so because the government at that time felt, despite no doubt valiant efforts to reach agreement, that they had to proceed with their business. Will my noble friend take it from me that if to get the Government's business through he needs to come before the House and indicate that the House will sit in August, while it would be regrettable, it is not a hostile act?

Secondly, will my noble friend tell me whether serious discussions are going on in an attempt to meet the twin imperatives; that is, the Government's business, and the possibility of finishing, as we would all wish, before the end of July? The question of the over-spill date and its length clearly comes into it, but I hope that my noble friend will not fall for the argument that unless he agrees to what the Opposition ask for be will be in trouble. Without that, we are already in trouble.

My Lords, does the noble Lord the Government Chief Whip agree that the expeditious conduct of business calls for flexibility on both sides? Does he further agree that it calls for flexibility in Whitehall as well as in Parliament? Will he note that of the two departments with which I deal most regularly, the Department of Social Security has consistently tackled that very much better than the Department for Education and Employment? Will he make that view heard inside Great Sanctuary Buildings?

My Lords, it ill behoves the Opposition to criticise the present Government for sitting into August. I have voiced criticisms previously that governments seek to push far too much business through both Houses in too short a Session. The problem is that governments—it does not matter what colour they are—just want to push through masses of legislation which cannot be properly discussed and digested in both Houses. I appeal to my Front Bench to review that, and to ensure that in the next Session of Parliament we have a programme that can be properly discussed and properly digested by both Houses of Parliament so that we do not have to sit into August, and can discuss in both Houses the legislation which comes before us in a proper and considered manner.

The other point I wish to make is that I think a number of people in this House are a little resentful of the fact that Members of another place are being sent home for a fortnight's holiday in their constituencies because they are not wanted. At the same time, I must remind the House, if it needs reminding which I do not believe that it does, that this is not a remunerated House. People here are being sent missives every week telling us to be here at all costs. There is a requirement to be here sometimes until three o'clock in the morning. That is not good enough.

In the most friendly manner, I say to my noble friends on the Front Bench that I should like them to use their influence-o-what influence they have—within the Cabinet to try to ensure that we have a much more balanced programme which can be properly discussed in both Houses in a reasonably leisurely way.

My Lords, may I ask the noble Lord to desert the standpoint of political egocentricity and remember all the House servants who serve us faithfully and well the whole year through, and who are as deserving of their holidays as we are?

My Lords, I can perhaps start by answering the question about the Summer Recess. The noble Lord the Opposition Chief Whip seems to be slightly obsessed about the date of his summer holiday. I would be grateful if he would not put questions to me which seem to be based on the assumption that I came up the Clyde on a bicycle. It would have been possible for me to have made an announcement today, but I did not wish in any way to pre-empt the noble Lord's remarks or the views of the House. Under those circumstances, I hope the House will forgive me for remaining silent a little while longer.

Perhaps I may remind the House that the previous administration sometimes announced the Summer Recess with as little as eight days' notice. I wish that I could say that the House will rise on 17th July, but it will not. However, your Lordships may be encouraged to know that my holiday does not begin until 16th August. That is a provisional date, and I have made arrangements to be kept in touch with the Business of the House while I am away.

I thank the noble Lord the Opposition Chief Whip for his remarks and for giving me notice that he intended to raise the subject today. Until I heard his remarks I was not sure of the point that he was intending to raise. I was a little surprised that the noble Lord felt it necessary to raise these matters on the Floor of the House rather than away from the Chamber. It is not the first time in recent weeks that he has done so. I hope that he is not seeking to impose upon your Lordships' House a form of regular weekly Business Questions as happens in another place. I am sure the House would agree that that is not how we do things here, as the noble Lord well knows.

That aside, I shall answer the noble Lord as follows. He did indeed write to me requesting a debate on the reform of the House of Lords by mid-July. After consulting my noble friend the Leader of the House, I replied that the Government agreed that there should be a debate on reform. We would wish to see a two-day debate on reform in the spill-over. The Government believe that such a debate would be of value and want it to take place at the best time for the House. It was my view and that of my noble friend that a debate in the spill-over would allow noble Lords time to gather their thoughts over the Summer Recess and to return refreshed. It would also avoid this important debate taking place in the next few weeks when the workload is very heavy.

Perhaps I may respond to points made by the noble Lord, Lord Harris, and the noble Earl, Lord Russell. Support from the Liberals is always welcome. I take the point about debates on amendments; I am sure we can discuss it through the usual channels.

The noble Earl, Lord Russell, mentioned flexibility and the differing response he had from two departments in Whitehall. That surprised me because I always have had the feeling in this Government that relationships between departments were a seamless robe. I shall draw his remarks to the attention of the people concerned.

That is all I wish to say at present. We expressed our view clearly to the noble Lord. I hope to tell the House the date of the Summer Recess as soon as I can. There is a very heavy workload. As noble Lords know, we have been given extra business. We feel that the two-day debate on reform, with which we agree, should be held in the spill-over.

My Lords, I thank the noble Lord the Government Chief Whip for his kindness in answering fully the questions I put to him. It is not my intention for this to become a weekly event. However, it is an important issue which needed to be raised rather more widely than the usual channels.

I asked one further question. Can the noble Lord reply? If we are to have a debate in the spill-over, shall we be able to have before us the Green Paper, or the options paper, that the Government have promised? In other words, will it be published by the time we return in October?

My Lords, the date of publication of the Green Paper has not yet been decided. It will be published, and the Government's plans and proposals will be made available when we are ready.

Government Of Wales Bill

3.52 p.m.

My Lords. I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—( Lord Williams of Mostyn.)

On Question, Motion agreed to.

Clause 80 [ Grants to Assembly]:

Page 41, line 23, after ("State") insert (",recognising the needs of Wales in relation to the United Kingdom as a whole,").

The noble Lord said: My Lords, Clause 80 of the Government of Wales Bill deals with the all-important matter of government grants to the national assembly for Wales. Our first amendment requires that the Secretary of State should recognise the needs of Wales in relation to the United Kingdom as a whole. We withdrew a similar amendment in Committee because

the noble and learned Lord the Solicitor-General said unequivocally in winding up the debate at col. 923 of the Official Report of 9th June:

"The amendment would require changes to, or even the complete abandonment of, the Barnett formula and I have already said that we have no plans to do that".

The Minister's assertion was based on his understanding, stated at col. 924 of Hansard, that the Barnett formula,

"is based solely on applying a particular formula to increase the baseline figure year on year. It is not calculated by reference to need. It is simply a formula".

However, opinion clearly varies on that point. The formula has a bearing on need according to the noble Lord, Lord Barnett, himself. He said at col. 904 of Hansard, with reference to the formula,

"It is more than being based only on population … as my noble friend rightly said"—

he was referring to the noble Lord, Lord Callaghan—

"it is based on the needs of the population. And rightly so: it should be based on the needs of the population".

So we have a clear difference of view on the relationship between the formula and need.

The noble Lord, Lord Barnett, thinks that the formula should now be revised. So does the Welsh Affairs Committee, which agrees with the Treasury Select Committee. Paragraph 90 of its report states:

"The needs assessment within the formula should be brought up to date".

If the Government are determined not to change the formula for the time being, so be it, although one must wonder just how long their resolution will last. The Government may come under mounting pressure for change.

In those circumstances, I find some attraction in Amendment No. 105 put forward by the noble Lord, Lord Elis-Thomas, to the effect that Ministers should have regard to the Barnett formula while it prevails and to any new arrangements that develop from it; and that the assembly should be consulted on any successor arrangements.

Amendment No. 103 goes beyond the annual increases or decreases in spending to which the Barnett formula applies. It goes to the heart of the matter: the basic allocations. It asks that they be based on the needs of Wales as assessed in relation to the rest of the United Kingdom. That is an area which requires a fresh study if the needs of Wales in the context of the United Kingdom are to be fairly addressed. If there is no commitment to the principle of a proper needs assessment study, the Government must understand that there will be continuing concern and that every shortfall in grants to whichever sector complains of inadequate resources will be attributed to the arbitrariness of Ministers and possibly even to the careless attitude of the Government towards Wales and its people's interests.

The sheer bareness of this grants clause, its lack of any underlying principle, its total dependence on the discretion of Ministers, give no security whatsoever to the assembly about the resources that will be made available to it to meet future needs. That causes us grave concern.

As it stands, the clause will cause endless argument and trouble. It provides no reassurance and no guarantee that present levels of spending will be maintained or that the differential per capita spend will continue. Ministers—indeed all your Lordships—will know that in 1995–96, for example, government expenditure per head in Wales was some £4,352, £609 more than was spent in England. The Scottish differential was rather more at £871. The Northern Irish figure was still higher at £1,396. Of course there were good reasons for the different spend per head.

The quality of many of our services in Wales depends on that differential. There is no underpinning for it in the Bill. Therefore devolution is a financial gamble so far as concerns Wales, and its outcome is not known. All we can do is hope that the assembly will have at least the planned 2.75 per cent. increase in spending promised over the next three years to meet the inevitable additional costs of assembly government and the high expectations generated. I beg to move.

4 p.m.

My Lords, my Amendment No. 105, which is a re-run of the rehearsal which took place on this issue in Committee, is grouped with this amendment.

In a sense, I no longer need to make the speech I would have made because the Government have made it for me. I have in my hand off the late train to Paddington a copy of Pathway to Prosperity: A New Economic Agenda for Wales (FFordd i ffyniant agenda economaidd newydd i Gymru). The document is signed by the fair hand of the Secretary of State Mr. Ron Davies. Paragraph 3.1, entitled "Where Are We Now" states:
"Although Wales has recovered well from profound economic change, the Welsh economy currently creates less wealth than many regions of similar size in the industrial nations. Judged against European standards, Gross Domestic Product (GDP) per head in Wales is 80 per cent. of the European Union EU average (the lowest of any G.B. region). Estimates of the GDP for west Wales and the Valleys suggest that it is likely to be just over 70 per cent. of the EU average, and for East Wales over 90 per cent. Outside Europe, the comparison suggests that Wales performs much less well than, for example, US states with similar populations".
I shall not go through the whole document. However, I wish to emphasise that it seems to me that the Government must respond to themselves in terms of what has been set out in the document.

That issue was debated in a quite sparkling and intelligent debate opened by my right honourable friend Dafydd Wigley on disadvantaged areas in Wales. I shall not quote from my leader. However, the House can be assured that my right honourable friend in the other place spelt out the analysis which is contained in the paper. He spelt out the further need for partnership of investment between public and corporate private investment. He spelt out also the importance of creating, in terms of development, an emphasis on regional growth in the west and the valleys based on the growth of SMEs. That is something which the Welsh Office also emphasises.

How are we to do that? How are we to ensure a partnership of the corporate sector, the commercial sector, the workforce and the public sector in Wales through the national assembly and its powers to achieve it? It seems to me that that can be done only through a real assessment of the public spending needs.

I do not argue—and I do not want to argue—any kind of special case for Wales. I do not believe in special cases for any region or nation as against another. In this sense, I am supporting the noble Lord, Lord Roberts of Conwy, because I am arguing for a proper assessment of the needs of the Welsh economy and the social, environmental and other services provided within that economy and society, and the need for an objective assessment. That is why I am again pressing Amendment No.105 to put the Barnett formula on the face of the Bill.

In particular, I seek a firm assurance as regards subsection (4) of my Amendment No. 105 which provides that:
"The Secretary of State",
whoever he or she may be, and I do not wish to reopen the debate that we had on the last day on Report,
"shall consult the Assembly concerning any proposals by Ministers … to introduce changes to the arrangements referred to";
that is, the Barnett formula.

I seek an assurance from the Minster that it is the Government's intention in assessing the economic performance of the assembly and its impact on the Welsh economy and its position as set out in the Government's own paper Pathway to Prosperity that it shall have regard to the Barnett formula.

I also seek an assurance that it will develop on from that along the lines proposed by the noble Lord, Lord Barnett, in our earlier debate in Committee. The formula should be brought up to date and a needs assessment should take place. I look forward to those assurances from the Minister that the Government intend to act on the Pathway to Prosperity. It is by far and away the best analysis of the Welsh economy produced by any government. What we need now is action and support in terms of public spending.

We are speaking before the Welsh Grand Committee Debate on this issue at Merthyr Tydfil on Monday and before we know the result of the comprehensive spending review. All those issues are crucial to ensure that the Welsh economy has the benefit of action by the national assembly with its economic powers in a way which seriously improves our present condition in relation to other nations and regions. After all, in my book at least, the test of the assembly will be the extent to which it will provide genuine sustainable development in the economic, social and environmental sense.

My Lords, the various stages of the Bill have illustrated the inadequacy of the Barnett formula. Its foremost critics have been the noble Lord, Lord Barnett, himself and also the noble Lord, Lord Callaghan, who was head of the government when that formula was introduced.

And yet, the White Paper on which the Bill was based said that,
"Annual changes to the Welsh Block will be calculated by the population-based formula used at the moment … The Government will publish the rules under which the Barnett formula currently operates … The formula will be up-dated from time to time to take account of population changes".
That population-based formula has not succeeded because the empirical evidence suggests that the economic situation of Wales has been in steady decline during the period that the Barnett formula has been in operation. It has been in decline in the sense that Wales has the lowest gross domestic product in Great Britain—only 83.1 per cent. of the United Kingdom average—the lowest personal disposable income in any region in the United Kingdom and average earnings are the second lowest in Great Britain. Economic inactivity in Wales is more than 4 per cent. higher than it is in England. Those are the words of Mr Peter Hain in another place.

If one adds to those criticisms the statistics which show the poor health of the Welsh population, the poorer housing conditions and the lower education achievements, the only conclusion which one can reach is that Wales needs more funding than has been previously provided under the Barnett formula.

As at present exists, the Barnett formula does not allow for an increase in resources. It follows that I have every sympathy with the sentiments which lie behind the amendment proposed by the noble Lord, Lord Roberts of Conwy. But I still maintain my opposition to the amendment of the noble Lord, Lord Elis-Thomas, which would seek to enshrine the Barnett formula in statutory form in a way which we see to be completely unacceptable.

At present, the measure says that:
"The Secretary of State shall from time to time make payments to the Assembly out of money provided by Parliament of such amounts as he may determine".
I would hope that given that wide discretion, the Government will move away from the Barnett formula; will enter into positive discussions with the Welsh assembly when it is formed; and will arrive at a suitable sum of money which will meet the needs of the Welsh people.

My Lords, clearly my reading over the past 24 hours has been the same as that of the noble Lord, Lord Elis-Thomas. I too have in front of me Pathway to Prosperity published by the Welsh Office and the Official Report of the debate in another place on 8th July. On this occasion I find myself agreeing with the noble Lord and able to support both amendments.

The noble Lord who has just spoken referred to the decline of the Welsh economy. Anyone who has read Pathway to Prosperity would feel that that was a distortion of the picture painted. I read just one sentence from the document. The words at paragraph 3.1 are perhaps more accurate when they say that:
"Although Wales has recovered well from profound economic change, the Welsh economy currently creates less wealth than many regions of similar size in the industrial nations".
That seems to me to be a question of fact that few could challenge.

I should like to focus on one other point made by the noble Lord, Lord Thomas. He criticised the amendment tabled in the name of the noble Lord, Lord Elis-Thomas, on the grounds that it seeks to enshrine the Barnett formula in the legislation. I do not see how it could do so when it also refers specifically to,
"any future arrangements which may be substituted for it".
I should like to dwell a little longer on the Welsh Office document produced by the Secretary of State to which I have referred. I believe that it is directly relevant to the amendments that we are now debating. To begin with, I turn to the conclusions contained in Chapter 9 and the astonishing and, I believe, wholly inaccurate statement:
"For the first time Wales has the opportunity to direct its own economic destiny",
together with the further words in the same chapter, which state:
"Our success in achieving the vision will be judged against how well we do in closing the GDP gap, raising employment rates, increasing average earnings, and spreading prosperity".
My criticism of the document is not that it is not a rather good analysis of the condition of Wales, the problems confronting it and the challenges that it faces, but the fact that it contains a number of statements which I believe are misleading about the powers of the assembly to do much about the situation.

I do not criticise the general tone of the document; indeed, there were times when I thought that, perhaps, the words drafted by my noble friend Lord Roberts of Conwy and myself a decade or more ago had been lifted from the records of the Welsh Office and reproduced. One of the most curious references—

My Lords, I am much obliged. Although I accept that some of the wording may be the same, will the noble Lord accept that, this time, the figures are different? Indeed, never before has the 200,000 job shortfall been so clearly and cruelly identified.

4.15 p.m.

My Lords, it is true that the shortfall has been identified, though I believe that that particular section is a subject for debate and analysis in itself. I am saying that most of the words contained in this document might have been drafted by a succession of Secretaries of State; indeed, they have been incorporated in speeches made by a succession of Secretaries of State over the past 20 years. However, none the worse for that is the fact that they are now brought together in a coherent whole which paints an overall picture.

It is a little curious that the document suggests that the assembly is likely to produce a degree of consistency and stability and that things will not change abruptly every time there is a change of Secretary of State. The reality is that things have not changed abruptly. There has been a consistency perhaps going back even to the time of the last Labour government when they introduced the legislation that set up the Welsh Development Agency. That was certainly carried forward during the time when I and my noble friend Lord Walker were Secretaries of State and through the time of the policies pursued by my noble friend Lord Hunt. I suppose I have to acknowledge that there might have been a minor diversion from that path during the time when Mr. Redwood was in charge of our affairs. However, things were restored pretty quickly on to the same track when the present Leader of the Opposition was Secretary of State for Wales.

The interesting thing about the document is the way in which Mr. Ron Davies has now joined that succession of Secretaries of State and the remarkable consistency with which he appears to be following the policies and objectives that we pursued. It is a welcome conversion: I shall not say on the road to Damascus, but there are policies espoused in the document and descriptions of the role of the private sector and of the need for partnership that I would not perhaps have expected to hear from Mr. Davies just a few years ago.

Therefore, I welcome the fact that we have a document which sets out the problems which confront us in Wales and the challenges that we face. But the fact is, as clearly set out by the Secretary of State in his introduction, the Welsh economy is part of a UK economy trading in a single European market and monetary and fiscal policies are set at the UK level. It is also quite clear that we are part of a European community and that the policies of the European Union are of central importance to Wales. Against that background, I find it hard to see quite how the assembly is to have the control of its economic destiny in the way suggested in the document. I fear—as, indeed, one Member of Parliament suggested in the debate in the other place to which I referred earlier—that much of what is entailed in the reorganisations that will be carried out as a result of the Bill will have only a marginal effect.

However, what is absolutely clear is that, in so far as the Welsh assembly is to have an influence and be able to use the powers that it does have—entirely the same as the powers that the Welsh Office, essentially, now has—much will depend on its ability to use the resources made available to it by the Government through the Barnett formula as it now is, or through any substitute which replaces it.

What is also clear is the fact that the requirements will change from time to time. Again, it was pointed out in the debate in another place on 8th July that we are about to see a reorganisation of regional policy boundaries, which will have a profound effect on Wales. Indeed, some very important questions were asked in the other place about how the financial consequences were to be funded and what scope there would be for providing the funds required to deal with the problems identified in the valleys and west Wales.

Perhaps I may say here that, although there has been a switch in the economic situation in Wales with growing problems in the west, I believe that the problems of the valleys may be of a different nature and perhaps may be solved in a rather different way. There have been great economic changes, many of which have provided a foundation for future prosperity in employment in the valleys. The firms, the technologies and the new industries that are referred to in the document are all in close proximity to the valleys, linked by the improved road and rail facilities which now exist. In the valleys we are suffering from the understandable social consequences that are the hangover from the long period, the many decades, of industrial change and decline. As the people who suffered most from those changes reach retirement age and a new generation takes over, I think we may find a new sense of energy and confidence coming to the valleys, together with a reduction in the problems with which we are confronted at present.

The real problems are further west. The document wisely points out that, whatever policies are pursued by the so called new "powerhouse" and the Welsh assembly, it is firms which decide where they will be located. Those of us who worked hard over long periods of time to bring new industry into Wales will know that we also worked equally hard to ensure that quite a lot of that industry went to those western parts which are afflicted by the present problems. However, one cannot dictate such matters: one can only encourage and assist. At the end of the day firms will go to the location where they believe they can prosper. There is nothing in the document which really suggests that there are new solutions. I give way to the noble Lord.

My Lords, the noble Lord is treating us to a most interesting and informed debate, but, with the greatest respect, I should like to turn to the amendments. Can the noble Lord marry the population-based approach of the Barnett formula, as advocated in Amendment No. 105, with the emphasis on the needs of the Welsh people, as set out in Amendment No. 103?

My Lords, that is precisely why I support my noble friend's amendment which mentions matters being relative to the UK as a whole. That applies not just to population but to the changing needs of regions in the UK as a whole, and to the possibility, implicit in the amendment of the noble Lord, Lord Elis-Thomas, that the Barnett formula may have to be changed and replaced. That is exactly the argument I was coming to. Anyone who has seen the changes that have taken place, not just in Wales but also in the English regions and in cities such as Newcastle and Glasgow—to pick out two obvious examples—will realise that we are in a changing world where the industrial and social conditions in 10 or 20 years' time will be different from those which exist today, and still more so from those which existed 10 or 20 years ago.

In successive years I sat through Cabinet committees in which all my colleagues reached considerable agreement—except with the Secretary of State for Scotland—that Scotland was over-provided by the special arrangements. I do not think that situation has changed. For the reasons that have been referred to, in terms of the relative prosperity of people as measured by GDP per head, I believe that the needs of Wales have probably grown. Therefore, I believe that there is now a need to review the Barnett formula. I believe there will be a need to change these arrangements in the future. What I find difficult to accept is the reluctance of Government to acknowledge these facts and to make some arrangements in the Bill before us.

I also find it difficult to make judgments as to the adequacy of the arrangements when we cannot get any answers out of the Government about the necessary detail. I shall not repeat all the important questions that were raised by Mr. Wigley in another place. He asked some pretty important questions about the present funding under the Barnett formula, the changes which would occur if there were changes in the map and the resources which would be made available. Mr. Alan Williams asked some equally significant questions. What was extraordinary about that debate was that when Mr. Hain replied he gave no answers at all. Indeed, so far did he fail to do so that it was almost insulting. When he replied to Mr. Rowlands' question, he produced that old non-answer; instead of answering the question that was asked, he said that it was clear that the Tory strategy on job growth would not have solved the problem that Mr. Rowlands had identified. However, he had been asked how the present Government would solve that problem.

At a time when we have this document before us, when these points have been identified with the clarity of the noble Lord, Lord Elis-Thomas, when legitimate questions are being raised, and when we are being asked to pass a Bill in which the funding of the Welsh assembly is of central importance, we are entitled to have some answers. Perhaps it was symptomatic of the Government's attitude that it took a lot of effort on our part to ensure that copies of this document were placed in the Printed Paper Office of this House. Originally they were not sent there. They were sent to another place but apparently they were not thought initially to be necessary for this House although we were to debate Welsh affairs today. I had to apply pressure to persuade someone in the Printed Paper Office to collect copies of the document so that we could read it before this debate. However, there were copies in the Library.

We cannot be treated like this. I hope that we shall be given some clearer answers today about the future funding of the assembly and if the Government seek to reject these amendments I hope that they will give some clear reasons for doing so. These amendments appear to be wholly sensible and do not impose any great problems or burdens on the Government. They provide a foundation for better arrangements for the long-term future. I support them.

My Lords, in rising to support my noble friend on the Front Bench it would be wise for the House to remind itself that what we are discussing is not an exclusively Welsh problem. We are discussing a United Kingdom problem, of which Wales is but a part. On the matter of finance, although this may sound a tough way of putting it, the case for finance for Wales is easier to make than the case for additional finance for Scotland because Wales is relatively less well off than many parts of the country. That point was clearly made by the noble Lord, Lord Thomas of Gresford.

That said, the Bill as drafted says nothing about how money for Wales is to be calculated. I have had long experience of permanent division between a lower level of authority and government over matters of finance. There was never satisfaction. We had the most sophisticated, detailed formula that government statisticians could devise which changed annually to take account of the changes that were occurring. There was permanent dissatisfaction. The financial arrangements on which the national assembly has to run will be either the foundation on which the whole edifice stands successfully, or the rock on which the ship founders. The key is how we make the arrangements in this Bill. That is an important matter.

At the moment, the Bill contains nothing. It simply says that the Secretary of State will make payments although there are statements elsewhere which give some guidance and put some flesh on that, for which we should all be extremely grateful. However, the difficulty that we all need to face is the following. This matter will be discussed more and more, not specifically in relation to Wales but also in relation to the other regions of England and in particular to Scotland. If the noble Lord, Lord Dean of Beswick, were present, he would speak up for some of the English regions. He would be right to do so. If we do not put on the face of the Bill some such words as my noble friend on the Front Bench suggests, we leave an opening for the future which will be likely to cause the same kind of dissatisfaction which existed for so many years—and which still exists—in local government where one is dealing with a different form of devolved authority, but (dare one say it?) one that has real tax raising powers. If they ever escape from capping, there is some way in which they can help themselves which the national assembly for Wales will not have available to it.

4.30 p.m.

My Lords, this cluster of amendments brings us to the heart of one of the central problems of devolution. I have no doubt that the same range of problems will occur when we discuss the Scottish devolution Bill again in Committee. It is idle for the Government in their more bombastic moments to suggest that Wales or the assembly will have control of the economic destinies of Wales. Of course, it can make an important contribution, but the economic destinies of the United Kingdom, for example, do not lie entirely within its powers or those of the Chancellor of the Exchequer. We must get our own situation as a country, and we must get our own situation as a Province—if I dare call Wales that—into perspective. Nonetheless, it is important that we should consider what will be the financial underpinning available to the assembly when it applies its mind—as I am sure it will—from time to time to the economic problems of the Principality.

It does not assist the debate to suggest that Wales is in a state of total demoralisation and economic collapse. No one is able to speak with more authority and with more approval from his colleagues than my noble friend Lord Crickhowell, who did so much to improve the economic and social state of the Principality. I am sure that he would be the first to admit that it is possible to take matters slightly further. We shall study the situation critically over the years to see whether the present Government have improved on the efforts of the previous government.

One recognises that Wales, like many of the outlying parts of the United Kingdom, has a special range of problems which may have to be treated in a special way and may deserve special financial support. It is rather idle to imagine that the Government could devise a detailed financial framework for the operation of the Welsh assembly and Wales in respect of legislation. Had they tried to do so, in the event, we should probably find it more uncomfortable than the looser, more general terms employed in Clause 80 and subsequent clauses. I am sure that the Government wish to see a fair approach to the financial problems of devolved legislatures. Approaching matters in that light, let us see what they have achieved.

I shall turn in a moment to the detailed phraseology. It raises some interesting questions which I hope the noble and learned Lord the Solicitor-General will take up in replying. First, let us consider the special problems that arise in parts of the United Kingdom such as Wales. I am sure other noble Lords, who have greater knowledge of, let us say, the north-east, Cornwall and similar areas will say that they have a similar range of problems. I am not sufficiently equipped to deal with those problems. The virtue of the amendment in the names of my noble friends Lord Roberts and Lord Mackay of Ardbrecknish is its reference to:
"recognising the needs of Wales in relation to the United Kingdom as a whole".
That is very important. Those of us who are fortunate enough to come from or live in Wales are concerned with the problems of the Principality. Any financial settlement that is worked out must take account of that fact. If we were to achieve—by the eloquence that comes all too readily to people of Welsh descent, to the tedium of debates on the subject in this Chamber!—too favourable a settlement, it would generate hostility, jealousy and friction throughout the United Kingdom. In that case, we should not be able to sustain the settlement over the years. What we are looking for is a fair settlement. That is why I find the words of the amendment particularly appropriate—
"recognising the needs of Wales in relation to the United Kingdom as a whole".
I now turn to the attractive amendment standing in the name of the noble Lord, Lord Elis-Thomas. It returns to the Barnett formula, which the noble Lord touched on. We have had the advantage of hearing the noble Lord, Lord Barnett, speak on the formula which he evolved. Subsequent Chief Secretaries have grasped it with gratitude, as slightly simplifying their tasks.

The Barnett formula is all right to a degree, based on population and other factors. I very much doubt whether it could be encapsulated in a piece of detailed legislation short of about five appendices. That would no doubt generate a whole range of debates upon which we should not wish to embark. It was a useful, slightly rough and ready tool, which enabled one, during the course of the public expenditure round, to shorten—only slightly—the debates that one had with colleagues, and particularly with the Secretary of State for Wales in relation to the basis for the package for Wales. It was not by any means the sole determining factor. It was merely the base from which one started. Problems were thrown up during the course of the year which went way outside the Barnett formula. So let us not imagine, even if it could be formulated in legal terms, that it would resolve all our problems. What we need to have set out is a general principle.

The noble and learned Lord the Solicitor-General is listening closely. When he comes to reply, if he does not feel able to recommend the adoption of this amendment, perhaps he will tell us how the Government propose to approach the financing of the problems with which the new assembly will be concerned.

I do not have the Chancellor of the Exchequer's words in front of me, but I understand that he is rather in favour of a triennial settlement. There are certain constitutional difficulties. Anyone who has spent even a short time examining Treasury matters will know that supply is voted on an annual basis. It might be of assistance if the government of the day could indicate in broad terms what their plans in that area would be for three years or so. It would be very helpful for a new assembly, coming afresh to Treasury questions, to have some indication beyond merely the current financial year. I am sure that the Solicitor-General's brief is bristling with textual criticisms which his devoted civil servants have devised. However, if he can rise above the detail for a moment, perhaps he could indicate some sympathy with the approach enunciated in Amendment No. 103.

Returning to Clause 80, perhaps the noble and learned Lord will enlighten us. The clause is interesting. It is divided into two subsections. Subsection (1) deals only with the money provided by Parliament. Perhaps other noble Lords are better acquainted with these constitutional details. I wish to know what other moneys the Government have in mind in relation to subsection (2), and moneys paid out by,
"Any Minister of the Crown, and any government department",
and not necessarily moneys provided by Parliament. What is the precise distinction? What are those moneys?

I wish to make a practical suggestion, which I hope will commend itself to the Committee and to the Government. I wonder whether, in practical terms, it would not be better if the moneys, even though disbursed over various fields of governmental activity, were in the first instance channelled from central government through the department of the Secretary of state for Wales rather than being diffused over the whole area of government. Then, both in Wales and in the Westminster Parliament, we should know whom to approach in the first instance if detailed questions arose. I do not think that the assembly itself would want to have dealings with a whole range of government departments, or indeed quangos or other bodies if they are embraced by Clause 80. That might make for a slightly tidier approach to the whole question.

I do not want to cover ground that has been more ably covered by other noble Lords. The approach embodied in the amendment is both sympathetic and practical. I hope that the Government will give an appropriate response.

My Lords, when noble Lords debated in Committee the very important question of the financing of the assembly, it seemed that a number of specific questions arose. Listening from the Cross Benches, there seemed, on some of them, a clear preponderance of arguments. The first was: should the basis of the finance be a Barnett-like formula? Although that the noble Lord, Lord Thomas, with his authority, disagreed, it seemed to me that there was a clear preponderance in favour of that.

Perhaps the most powerful argument was advanced at Second Reading and in Committee by the noble Lord, Lord Callaghan, and I ventured to try to endorse it. Once there is that formula, one has to take into account its limitations. It does not cover the whole of the field of finance; it applies only to the year-on-year increase in expenditure.

Secondly, it is clear that, even when the formula was enunciated, it was out of date because it was based on statistics of the late 1970s. Therefore, in my respectful submission, the formula needs to be brought up to date.

Thirdly, there is another, quite different formula, which was referred to by the noble Lord, Lord Crickhowell, in Committee, and by the noble Lord, Lord Dixon-Smith, today and in Committee; namely, that governing local authority finance.

Under the Barnett formula, Wales comes off badly, for the reasons that have been put forward so cogently. On the other hand, I gather that, under the local government formula, Wales benefits, on the whole. It seems to me clear that there must be some review if the Barnett formula is to be used.

I support the amendment moved by the noble Lord, Lord Roberts, and the amendment in the name of my noble friend Lord Elis-Thomas. I again emphasise, as did the noble Lord, Lord Crickhowell, the words,
"and any future arrangements which may be substituted for it".
That is very necessary under the circumstances.

Perhaps a minor question is whether the formula should be expressed on the face of the statute. It seemed to me that as to that matter opinions were very nicely balanced, although personally I agree with the way it was put by my noble friend Lord Elis-Thomas.

In view of all the points to which I have referred, it seems to me that the line taken by the Government embodies the worst of all the solutions. They say that they will proceed on the Barnett formula but will have no review of it, no review of the financial implications and no update, nothing which the noble Lord, Lord Barnett, himself advocated; namely, a review and, as he put it, a Barnett formula Mark II. I fully support the amendment moved from the Opposition Benches and, it seems to me, the perfectly compatible amendment tabled by my noble friend.

4.45 p.m.

My Lords, I hesitate to speak in this debate, but the Barnett formula has been mentioned. It used to be my hobby and so I should like to examine the question. I believe that the Government have decided, in both this Bill and the Scotland Bill, that the formulation of the financial part will be very general, leaving a lot of scope for administrative and political settlement. The amendments before us seek to put some more structure into the Bill. I wish to argue that that is not always desirable. Even people who want more money may regret putting something on the face of the Bill because it may cause problems.

Any formula—even the Barnett formula—which simply increases expenditure over a certain base eventually takes into account needs, because population is a rough indicator of need. One could make it more complicated, but it does take into account needs. What else would it do? Another formula could be to say, for example, that the larger the population, the more the needs; the lower the relative income, the greater the needs. The difficulty would arise from the weights that one puts on these two elements, as well as from the numbers. Numbers become a matter of great argument. Revised population numbers are available only every 10 years. One might get oneself into a formula which was so rigid that one could not do much about it.

I believe that in this kind of devolved financial situation there will not be much change from one year to the next with regard to the proportion of money going to Wales or to Scotland. No one imagines that a government would come to power and cut even as much as 10 per cent. We are talking about small adjustments, which, in my opinion, should be left to the ongoing political process between the Secretary of State for Wales, the assembly and the Cabinet rather than be set in a rigid formula, which would lead to great sorrow later on.

As an example—not with regard to a financing formula—I remember that when the Conservative Government came into power they did not like the way the inflation formula was calculated. They thought that, if they calculated a tax-and-price index, inflation would look lower than it looked in the CPI. They soon found that the tax-and-price index did not do what they wanted it to do and so they quickly dropped it. I have spent a great deal of my life making up formulas and I caution noble Lords about getting into that.

It should be sufficient if it is understood and recorded in Hansard—and I am sure my noble friend will say this from the Front Bench—that, by and large, no one envisages any drastic alteration to the rough proportions in which the money is spent. As noble Lords have said, other moneys which are not in the Barnett formula are given to Wales, for example through MAFF or the Ministry of Transport. There may be special schemes, for example. Therefore the Barnett formula does not represent the total amount of resources which go to Wales. It is more flexible to leave things unsaid, especially if one wants to negotiate more money in the future.

I wish to mention one more point, which was referred to by the noble Lord, Lord Crickhowell; namely, the European dimension. At the moment structural funds come to Wales, or to some parts of Wales, through the European Community. We know that that formula is also about to change drastically, first with the Agenda 2000 document, which will be decided next March, and, secondly, with enlargement. The existing 15 members will all receive less money than they have been receiving. We should be thinking about such matters as how Wales and other regions will deal with the fact that European funds coming to the UK will be smaller than at present. That is something outside the Barnett formula which is definitely worth thinking about.

My Lords, I listened with great care to what my noble friend Lord Desai said, but I have to say that there is concern in Wales that there is no reference in the Bill to the guiding principle which should govern the funding of the assembly. The issue before the House is whether the Bill should contain such a guiding principle.

Amendments Nos. 103 and 105 were discussed in Committee. I was in sympathy with the principle behind both amendments, in particular the amendment moved by the noble Lord, Lord Roberts. However, we were told in Committee by my noble and learned friend the Solicitor-General that the Government were rejecting the relative needs criteria because,
"The amendments would require changes to, or even the complete abandonment of, the Barnett formula".—[Official Report, 9/6/98: col. 923.]
That argument has not been addressed this afternoon. To my way of thinking, the risk of abandoning the Barnett formula is unacceptable and that is why I cannot support Amendment No. 103.

My Lords, in fact, I addressed the very quotation to which the noble Lord, Lord Prys-Davies, referred. I pointed out that there was a difference of opinion as to the content of the Barnett formula because the noble Lord, Lord Barnett, referred to the element of need as well as population involved in that formula. Therefore, I could not understand how the recognition of need as in our amendment would enforce the abandonment of the formula.

My Lords, I accept that correction. I was five minutes late coming to the debate and no doubt that is why I missed the contribution of the noble Lord, Lord Roberts.

I turn now to Amendment No. 105, also discussed in Committee. This amendment requires Ministers to,
"have regard to the arrangements known as the 'Barnett formula'".
My noble and learned friend the Solicitor-General was opposed to the inclusion of the reference to the Barnett formula being on the face of the Bill because it,
"would mean that the whole system would need to be built into the Bill and we do not believe that it would he helpful or practical to freeze the detail in statute".—[Official Report, 9/6/98; col. 923.]
Must the whole system be built into the Bill? Is it not possible to insert in the Bill a reference to a guiding principle which would not involve the freezing of any details? What worries many people in Wales is that we have no assurance that the present arrangements or the underlying principle will continue to apply, particularly if the Welsh assembly and Parliament are under different political control, as might frequently be the case in the future. Therefore, it is not this Government's intention that worries me, but that another Parliament of a different party may not adhere to the present arrangements.

I believe that I speak for a number of people who wrote to me expressing the wish to see a guiding principle in the Bill, not just the details. The financial settlement—as was mentioned by one or two speakers this afternoon—is one of the major pillars which underpin the devolution settlement. Another Parliament, at some time in the future, should not be in a position to remove or weaken that pillar without at least the need for primary legislation to get around the provision which an amendment would insert into the devolution Act. I believe that we could be accused by a future generation of not having thought as carefully as we could about the financial arrangements if the Bill proceeds without an amendment to Clause 80.

My Lords, this is an important aspect of the Bill; namely, the funding mechanisms. We had a full examination of these matters in Committee because, in effect, both these amendments appeared during the Committee stage of the Bill. The issues raised by the two amendments concern the framework of the funding mechanism for the new assembly. I hope that I will be forgiven by the noble Lords, Lord Crickhowell and Lord Elis-Thomas, if I do not go into a detailed debate of the present Welsh economy. If I can, I shall focus on the actual drafting of the Bill.

As noble Lords pointed out, particularly the noble Lord, Lord Rees, the present drafting says that,
"The Secretary of State shall from time to time make payments to the Assembly out of money provided by Parliament of such amounts as he may determine".
That gives the Secretary of State a wide discretion as to what he gives. Amendment No. 103 in effect proposes that that should be restricted by reference to the fact that he must be involved in,
"recognising the needs of Wales in relation to the United Kingdom as a whole".
That is the effect of the amendment of the noble Lord, Lord Roberts of Conwy. The amendment of the noble Lord, Lord Elis-Thomas, says that we should build into that the provision that Ministers of the Crown, in determining how much they should pay to the Welsh assembly, should have regard to the Barnett formula or anything else that replaces it. The noble Lord, Lord Crickhowell, and the noble and learned Lord, Lord Simon of Glaisdale, support both amendments at the same time.

The Government's position, in summary, is this. There is no practical scope for entrenching in the Bill either a kind of rolling needs assessment, as the amendment of the noble Lord, Lord Roberts of Conwy, suggests, or of the Barnett formula, or whatever replaces it, as the amendment of the noble Lord, Lord Elis-Thomas, suggests.

I recognise that these are important issues and, with your Lordships' permission, I shall go into what I submit are the main points in support of the Government's position. First, we have had debates in Committee and again today as to the shortcomings of the Barnett formula. I adopt what was said by the noble and learned Lord, Lord Simon of Glaisdale; that is, that on the last occasion when we debated this, the balance of the argument was overwhelmingly in favour of the Barnett formula being preserved in relation to Wales. Indeed, that was the view of the noble Lord, Lord Roberts of Conwy, and in the course of the Committee stage he made it clear that he did not wish to endanger the Barnett formula in any way.

My Lords, perhaps I can obtain a clear understanding of this matter from the Solicitor-General. Is he saying that,

"The amendments would require changes to, or even the complete abandonment of, the Barnett formula"?—Official Report, 9/6/98; col. 923.]
Does that apply to Amendment No. 103, which is our amendment?

My Lords, I believe that the answer is yes. The Barnett formula applies by reference to a formula based on population increases that are to apply in England in relation to public expenditure. The amount of the increases therefore is not based on "need"; it is based simply on the application of a formula.

As a matter of law, it would be impossible for the Minister to say that he is having regard to, or recognising the needs of the people of Wales—I am not sure I have the exact wording—if all he was doing was benefiting from whatever the formula produced. It is a completely different approach. I fear therefore that the answer is that I stand by what I said at the Committee stage.

My Lords, I am sorry to persist with this point. I am sure that the noble and learned Lord appreciates its importance. Is he saying that the noble Lord, Lord Barnett, is wrong in describing the formula as being based on more than just population; that it is based on the needs of the population? And rightly so, it should be based on the needs of the population. Is he right or wrong?

5 p.m.

My Lords, I do not wish to set myself up in any way against the noble Lord, Lord Barnett. The nature of the Barnett formula does not involve, as a matter of practicality, a Minister saying, "What are the needs of the people of Wales? What are the needs of the people of England? Therefore, let us give to each one of those two components of England and Wales that which they need". It is simply, for all the reasons gone into on the last occasion and today, the application of the formula. I am not sure that the quote from the noble Lord, Lord Barnett, would necessarily involve disagreement with what I am saying. I am sorry that he is not in his place so that he can give an answer himself.

As far as the Government are concerned, there is little doubt in their minds that it is a matter of approach to the framework. If the approach that the noble Lord, Lord Roberts of Conwy, proposes in his amendment were adopted, then we would be forced to abandon the Barnett formula. I do not believe that that is what the noble Lord, Lord Roberts of Conwy, wants, I do not believe that that is what this House wants, and I do not believe that this is what the people of Wales want.

My Lords, perhaps I may help my noble and learned friend in this respect. It is perfectly possible for an economist to say that a population is an indicator of needs, but to put it on the statute book, that needs are to be taken into account, may require to do more than just consider population. That is essentially what one would say, that taking account of population is a way of taking account of needs. It is not needs as such. That would require a much more elaborate formula. Perhaps I am reconciling what my noble and learned friend has said and what the noble Lord, Lord Barnett, said.

My Lords, it could also indicate his understanding of the wording of Amendment No. 103. I fully understand the words "recognising the needs of Wales", but what does the noble and learned Lord assume is meant by

"recognising the needs of Wales in relation to the United Kingdom as a whole,"?
Does that mean in relation to the needs of the United Kingdom as a whole, or what meaning does he attribute to it?

My Lords, I thank my noble friend Lord Desai for what appears to be a reconciliation of the Government's approach and the approach of the noble Lord, Lord Barnett. It seems to me to be a perfectly sensible way of reconciling the two positions. On the basis of what the noble Lord, Lord Desai, a very eminent economist, has said, there is no real distinction between what I am saying and what the noble Lord, Lord Barnett, has said.

Secondly, I come to the point that the noble Lord, Lord Thomas of Gresford, has raised. What indeed is meant by,
"recognising the needs of Wales in relation to the United Kingdom as a whole,"?
It is difficult to say what is meant by that. Perhaps the question should be better posed to the noble Lord, Lord Roberts of Conwy, than to myself. Who is to say what are the needs of Wales? It is a subjective matter on which the amendment offers no clues whatever.

My Lords, I am grateful to the noble and learned Lord for giving way. I do not speak for the noble Lord, Lord Roberts, entirely on these matters, but I do speak with one voice with the noble Lord, Lord Crickhowell, this afternoon. We both quoted the same paragraph, which is paragraph 3.1 of Chapter 3 of the Government's clear document Pathway to Prosperity. Will my noble and learned friend the Solicitor-General, agree that the comparisons between Wales and the rest of the United Kingdom, the rest of the European Union and the rest of the world, in terms of the present performance of the economy, GDP per head and so on, are absolutely objective indicators of the needs of the Welsh economy in society?

My Lords, perhaps I may remind the House that we are on Report. The convention of the House is that on Report, once the Minister is speaking, it is not usual for noble Lords to make a second speech.

My Lords, I am grateful to the noble Lord, Lord Haskel, for that protection. May I answer the question raised by the noble Lord, Lord Elis-Thomas? I am not taking issue at all with any part of the analysis in Pathway to Prosperity. The point I am raising is what does the amendment of the noble Lord, Lord Roberts of Conwy, mean? I am taking it one stage further and asking what protection it gives to the people of Wales when you are dealing with a concept so nebulous, so ill-defined and which gives such a wide power that it may not really add very much to the existing situation?

My Lords, despite what the noble Lord, Lord Haskel, said, may I ask the noble and learned Lord's view? Surely, these two amendments are taken together. In other words, the amendment of the noble Lord, Lord Roberts, is taken together with a reference to the Barnett formula. The Barnett formula includes a reference to deferential income, does it not?

My Lords, the essence of the question was that if we take both together you can make it clear that needs equals the Barnett formula, so why do you have a reference to needs at all in those circumstances? You are saying that you can continue to apply the Barnett formula. If that is what you want to do, you do not have the amendment of the noble Lord, Lord Roberts of Conwy, but you have the amendment of the noble Lord, Lord Elis-Thomas. Why should one fall over backwards to have contradictory amendments? With the greatest respect to the noble and learned Lord, Lord Simon of Glaisdale, I do not think that is a sensible suggestion so far as concerns framework.

Perhaps I may go back to the point made by the noble Lord, Lord Thomas of Gresford. I believe, for the reason he indicated in his question to me, that the amendment of the noble Lord, Lord Roberts of Conwy, offers precious little assurance to anyone. The right honourable Member for Wokingham in another place, Mr. John Redwood, certainly had his views of what the needs of Wales were when he was Secretary of State. He had a fondness for returning money to the Treasury which he thought Wales did not need. Who could interfere with his assessment of the needs of Wales? I do not need to dwell on the merits of his approach, save to say that there were many in Wales who did not necessarily agree with it.

I fail to see how the noble Lord's amendment will prevent that, or worse, happening in the future. I submit that the noble Lord's amendment would give the Secretary of State just as must discretion as Clause 80 does now. Combined with its undermining of the Barnett formula, I fear that it would leave the assembly in a very precarious position indeed.

In the light of that and of the noble Lord's comments, to which I have already referred, that he had no wish to imperil the Barnett formula, I hope that he will not press his amendment to a vote tonight.

I turn next to Amendment No. 105, in the name of the noble Lord, Lord Elis-Thomas. I recognise and share the noble Lord's concern about preserving the Barnett formula, as I know do noble Lords on all sides of the House. It is simply a question of how best to do that. I do not go as far as the noble Lord and suggest that the Barnett formula should be reviewed. As is known, and was made clear throughout, there is no intention to review the Barnett formula.

I do not see the amendment of the noble Lord effectively preserving the Barnett formula. If there were any purpose in placing the Barnett formula on the face of the Bill it would surely be to ensure that it continued to be applied. That must involve more than "having regard to the formula", as the amendment of the noble Lord puts it. One can have regard to something but, ultimately, decide not to act on it. A real safeguard would involve giving statutory force to the full block and formula rules. The noble Lord has, of course, not attempted to do so. I have to say that this means that his amendment would also provide scant assurance to anyone.

In any event, enacting the block and formula rules would be a Herculean task. The rules do far more than apply a simple multiplier to an easily discernible sum of English expenditure, as your Lordships will see when we publish the full rules in due course. For instance, any changes in the scope of the Welsh block, such as will arise when the assembly takes on responsibility for the Forestry Commission in Wales, needs to be reflected in the rules as do any changes in the population multipliers.

Even if it were possible to pin the rules down to a statutory form, they would need to be regularly revised for many of the same reasons. That would mean primary legislation on an annual basis once population multipliers are reworked annually from 1999 to 2000 onwards, or else some power to change the formula by order. No doubt your Lordships would see the latter—namely, an order-making power—as preferable for technical matters such as these. That being so, I would submit that the effect would not be greatly different from Clause 80 as it stands. Such an order-making power in the hands of the Secretary of State would give him almost the same discretion over assembly funding.

I appreciate that the Government's repeated resistance to amending this clause may smack unduly of defensiveness. That is not so. I genuinely see no practical alternative to the course we have taken. We have given undertakings that Barnett will remain and that any changes to it will involve full consultation with the assembly. We have published the principles of the formula and will publish the full rules so that everyone knows what to expect. If noble Lords or Members in another place had devised a workable alternative, we should have been only too glad to consider it. I regret, though, that they have not and I must therefore suggest to the noble Lord that he does not move his amendment.

My Lords, once again we have had an interesting debate. Perhaps I may refer to the Solicitor-General's remark to the effect that the Government might appear to be on the defensive. I think that they are very much on the defensive on this issue. I am still not absolutely clear in my mind why our Amendment No. 103 would mean the abandonment of the Barnett formula.

I am grateful to the noble Lord, Lord Thomas of Gresford, and to the noble and learned Lord, Lord Simon of Glaisdale, for their support. I am grateful, too, to the noble Lord, Lord Prys-Davies, who is absolutely right in saying that there is concern in Wales about the absence of a key underlying principle for this clause. It is an extremely bare clause and gives no underpinning whatever for any principle whereby:
"The Secretary of State shall from time to time make payments to the Assembly".
This is a matter of fundamental importance not only to the assembly but, as my noble friend Lord Dixon-Smith said, to the United Kingdom as a whole. The problem will not go away. It will stay with us. My guess is that the assembly will raise expectations and will require considerable resourcing, as the noble Lord, Lord Elis-Thomas, intimated when he read sections from The Pathway to Prosperity and referred to the needs of Wales.

All we are asking for is a fair basis for the settlement, as indicated by my noble friend Lord Rees. The noble Lord, Lord Desai, is right in saying that we anticipate that we may not receive as much as we have done in the past from the European Union because of enlargement and other factors. That makes it all the more essential that we should know on what principle the assembly is financed.

The noble and learned Lord the Solicitor-General said that we did not require a rolling principle of the kind that we have put forward in Amendment No. 103. However, I say to your Lordships that the clause as it stands is totally lacking in any kind of principle and, depending as it does entirely on the discretion of the Secretary of State, is totally unacceptable. I detect that the feeling of the House is very much in support of the position that we have taken on this amendment. But in view of what the Minister said and the doubt that he has cast, and persists in casting, on the continuance of the Barnett formula, I have no option but to withdraw the amendment for the time being. But we may well return to it at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Page 41, line 28, at end insert—

("( ) The Secretary of State may designate payments for the provision of services by the unitary authorities in Wales.

( ) The Assembly shall not use such payments for any other purpose.").

The noble Lord said: My Lords, your Lordships will see that we have two amendments on the Marshalled List relating to local authority finance. The first, Amendment No. 104 to Clause 80, empowers the Secretary of State to designate payments for the provision of services by unitary authorities and prevents the use of such payments for any other purpose. Our second amendment, Amendment No. 210 to Clause 113, requires the assembly to consult the Partnership Council before it allocates funds to the unitary authorities.

These amendments reflect a variety of concerns, the first being that local authorities should be adequately provided for and properly enabled to provide services of good quality. As has already been said today, traditionally Welsh local authorities have been generously supported by central government through the rate support grant because of the comparatively low rateable values prevailing in Wales. Low rateable values reflect the character of the housing stock and the general levels of income, which are well below the United Kingdom average.

A higher proportion of local authority costs met by the rate support grant means that levels of service—educational, social and so on—can be maintained at United Kingdom national standards. It is clearly important that after the assembly assumes control of allocations to local authorities the authorities should not be put in a position where it is impossible for them to maintain services at an acceptable level.

Why, one asks, should that happen? The answer lies in our anticipation that the assembly will face ever-growing demands upon the limited resources available to it. That is very clear from the Bill. The assembly may well be tempted to reduce its allocation to local authorities, especially since they have the ability to raise their own council taxes, an ability that is likely to increase, certainly if rate capping is ended and the business rate returns to local authority control.

One way of trying to stop such regressive action would be to ensure that the assembly consults the Partnership Council before allocating funds to unitary authorities. I dare say that that is not a complete action in itself which might prevent local authorities from increasing taxes at the behest or under the influence of the assembly. But at least the assembly will then be fully aware of local authorities' financial needs and requirements and their estimate of their electors' ability to pay, and to pay more

The alternative approach is for the Secretary of State to hypothecate the sums payable to unitary authorities when he makes his grant allocation under Clause 80 and to ensure that such sums shall not be used for any other purpose. We are talking about a substantial sum; it is about one-third of the £7 billion budget of the assembly.

I believe that there is a degree of hypothecation under the present system, although theoretically the Secretary of State may allocate the contents of his block as he wishes. But the truth is that the Welsh local authority annual settlement has to take into account the similar settlement in England—there is some reference to it—and the previous year's settlement in Wales.

What concerns us is that there are no constraints on the assembly. It could come to some pretty revolutionary decisions. As I said, we are talking about a very large sum—it is almost one-third of the assembly's entire budget—and radical changes could affect the quality of service that people receive in their communities and from their local authorities. The Secretary of State, as the source of grants for the assembly, must be interested in the destination of those moneys. The amendment that we propose would enable him to exercise a modicum of restraint on the assembly in this all-important area of local government finance. I beg to move.

My Lords, perhaps it might assist your Lordships' consideration of these amendments, which relate to local government finance, if I were to give a brief summary of the functions with respect to that finance which we intend the assembly to have. We propose that the assembly should inherit from my right honourable friend the Secretary of State all his functions with respect to council tax and non-domestic rates, such as the powers to make regulations about administration of these taxes and the arrangements for appeals.

The non-domestic rate multiplier for Wales increases each year by the retail prices index. While there is no power to increase the multiplier by more than the rate of inflation, there is a power—currently vested in the Treasury—of allowing the annual increase to be less than RPI. We propose to transfer this modest power to the assembly. If it chose to exercise the power and local government spending was not being reduced, any shortfall in non-domestic rate income would have to be made up either by the assembly increasing the amount of revenue support grant that it provides to local government or by increases in the amount of council tax raised by councils.

The most significant responsibility to be vested in the assembly will be that of deciding the local government revenue and capital settlements for Wales. The assembly will decide the total amount of revenue funding to be provided to local authorities in the form of revenue support grant and specific grants. The whole assembly will vote on the local government finance reports, which are currently debated in another place, and the formulae that are used for distributing the funding. The assembly will issue basic and supplementary credit approvals to county and county borough councils and national park authorities. Finally, the assembly will have available to it the capping powers which are currently in the Local Government Finance Act 1992, although, as your Lordships will know, we shall bring forward proposals that will put an end to crude and universal capping.

Amendment No. 104 (proposed by the noble Lord, Lord Roberts of Conwy) would permit the Secretary of State to designate payments for the provision of services by unitary authorities in Wales and would not allow the assembly to use this money for other purposes. This would be fundamentally at odds with the spirit of devolution. The assembly will be an elected body responsible to the people of Wales. It will be for it to decide its priorities, and it would be quite wrong for this legislation to allow the Secretary of State to specify how it should spend its money and to bind its hands.

More fundamentally, the amendment would be in conflict with the statutory functions for deciding local government funding that we intend the assembly should have. The Secretary of State would in effect be able to usurp or override the assembly's decisions; for example on revenue support grant, which, as I have indicated, will be voted on by the assembly as a whole. It cannot be a desirable outcome that the assembly's discretion should be fettered as the amendment proposes.

We have heard from noble Lords opposite on more than one occasion about tax raising powers by the backdoor. There has always been the ability to alter the share of local government expenditure that is met by council tax. Those decisions are taken by the Secretary of State now. The difference is that under our proposals those decisions will be taken by a body that is directly accountable to the Welsh electorate, and it is that that the amendment seeks to prevent.

Amendment No. 210 would require the assembly to consult the partnership council before allocating funds to unitary authorities. The provision for the Secretary of State to consult local authorities already exists in Section 78 of the Local Government Finance Act 1988, which requires him to,
"consult such representatives of local government as appear to him to be appropriate".
This duty will pass to the assembly. It will be open to the assembly to consult the partnership council if it so wishes, so there is no need for provision to be included on the face of the Bill.

My noble and learned friend Lord Williams of Mostyn was chided last week for allegedly seeking to let nanny into the nursery. I must say to noble Lords opposite that these amendments go well beyond that. By allowing the Secretary of State to hypothecate the assembly's funds, it would mean nanny would not even need to enter the nursery: she could keep a rein on her charges by remote control.

Someone has to determine local government funding in Wales. The question is simply whether it should be a directly elected assembly, backed by a partnership council, or the present system under which the Secretary of State takes the decisions. I must say I am disappointed that noble Lords opposite have chosen the latter course and sought, perversely, to impose centralist controls in a devolution Bill. I must therefore urge your Lordships to reject these amendments.

My Lords, I am grateful to the noble and learned Lord the Solicitor-General for his reply. Nevertheless, he has not really answered the key point about these amendments, which seek ultimately to prevent the assembly from increasing taxation, albeit through local authorities, and in a sense by the backdoor. The key point that I was making to the noble and learned Lord was that the assembly can, as he has confirmed, reduce the rate support grant and thereby force local authorities to increase the level of council taxes.

As I said, I do not believe that that would be acceptable to us in Wales because of the circumstances of the population, low rateable values and so on and all that that entails. After all, it is the key reason why we have had the comparatively high level of rate support grant in past years in Wales. Quite apart from the uniform business rate, the direct rate support grant runs to about 70 per cent. of total local authority spending in Wales compared with about 48 per cent. in England in 1996–97. Therefore, it is very important to the people of Wales to ensure that the assembly does not have the power to increase taxation on them. It was never put to them in a referendum, as it was in Scotland, that the assembly should have such a power. That it should have such power exercised indirectly through the local authorities and an increase in council tax is totally unacceptable.

My Lords, I am grateful to the noble Lord for giving way. Does he accept the argument that was put forward in Committee; namely that the people of Wales have an opportunity to take a view as to whether the assembly should increase or decrease its support to local government by voting at elections both to local authorities in Wales and to the national assembly, probably for the same parties? Therefore, does not the noble Lord accept that this is part of a democratic political process and will be resolved in that way rather than through legislation and on the face of this Bill?

My Lords, it is very seldom indeed that increases in taxation feature on any election platform. If they do, it is usually in a misleading way. We are well aware of pledges not to increase taxation which have been made and which have promptly been abandoned. Indeed, we have seen increases in taxation under the present Government which were certainly not referred to at the time of the last election.

I believe that the Minister has underestimated the concern in Wales about this issue and the anxiety there to ensure that the assembly should not have any influence over taxation. We believe that it would have such a power through the local authorities. Indeed, the Minister has confirmed that. It is with that very much in mind that I wish to take the opinion of the House on this amendment.

5.31 p.m.

On Question, Whether the said amendment (No. 104) shall be agreed to?

Their Lordships divided: Contents, 73; Not-Contents, 113.

Division No. 1

CONTENTS

Annaly, L.Kenyon, L.
Baker of Dorking, L.Lauderdale, E.
Beloff, L.Lindsey and Abingdon, E.
Berners, B.Long, V.
Biddulph, L.Lucas of Chilworth, L.
Biffen, L.McColl of Dulwich, L.
Birdwood, L.McConnell, L.
Bowness, L.Mackay of Drumadoon, L.
Brabazon of Tara, L.Marlesford, L
Burnham, L. [Teller.]Massereene and Ferrard, V.
Butterworth, L.Mersey, V.
Cadman, L.Monteagle of Brandon, L.
Campbell of Alloway, L.Mottistone, L.
Carnegy of Lour, B.Murton of Lindisfarne, L.
Carnock, L.Newton of Braintree, L.
Colwyn, L.Norrie, L.
Courtown, E. [Teller.]Northesk, E.
De Freyne, L.O'Cathain, B.
Dean of Harptree, L.Orr-Ewing, L.
Dilhorne, V.Park of Monmouth, B.
Dixon-Smith, L.Prior, L.
Downshire, M.Rankeillour, L.
Dundee, E.Rees, L.
Effingham, E.Rennell, L.
Ellenborough, L.Renton, L.
Elliott of Morpeth, L.Roberts of Conwy, L.
Fraser of Carmyllie, L.Romney, E.
Rotherwick, L.
Glenarthur, L.Rowallan, L.
Harlech, L.Saltoun of Abernethy, Ly.
Harrowby, E.Strathcarron, L.
Holderness, L.Sudeley, L.
HolmPatrick, L.Swansea, L.
Howe, E.Swinfen, L.
Hunt of Wirral, L.Thomas of Gwydir, L.
Hylton-Foster, B.Vivian, L.
Jenkin of Roding, L.Young, B.

NOT-CONTENTS

Acton, L.Falconer of Thoroton, L.
Addington, L.Falkland, V.
Ailesbury, M.Farrington of Ribbleton, B.
Archer of Sandwell, L.Gallacher, L.
Berkeley, L.Gilbert, L.
Blackstone, B.Gladwin of Clee, L.
Borrie, L.Gordon of Strathblane, L.
Burlison, L.Gould of Potternewton, B.
Burton, L.Graham of Edmonton, L.
Calverley, L.Grenfell, L.
Carlisle, E.Hacking, L.
Carter, L. [Teller.]Hanworth, V.
Cledwyn of Penrhos, L.Hardy of Wath, L.
Clinton-Davis, L.Haskel, L.
Cocks of Hartcliffe, L.Hayman, B.
Currie of Marylebone, L.Healey, L.
Dahrendorf, L.Hollis of Heigham, B.
David, B.Howie of Troon, L.
Davies of Coity, L.Hoyle, L.
Davies of Oldham, L.Hughes, L.
Dean of Beswick, L.Hughes of Woodside, L.
Dean of Thornton-le-Fylde, B.Hunt of Kings Heath, L.
Desai, L.Irvine of Lairg, L. [Lord Chancellor.]
Dholakia, L.
Dixon, L.Janner of Braunstone, L.
Donoughue, L.Jay of Paddington, B.
Dormand of Easington, L.Jeger, B.
Dubs, L.Jenkins of Putney, L.
Dunleath, L.Kilbracken, L.
Eatwell, L.Lester of Herne Hill, L.
Elis-Thomas, L.Linklater of Butterstone, B.
Evans of Parkside, L.Longford, E.

Lytton, E.Shepherd, L.
McIntosh of Haringey, L. [Teller.]Shore of Stepney, L.
McNair, L.Simon, V.
Mallalieu, B.Smith of Clifton, L.
Masham of Ilton, B.Smith of Gilmorehill, B.
Merlyn-Rees, L.Steel of Aikwood, L.
Milner of Leeds, L.Stoddart of Swindon, L.
Milverton, L.Stone of Blackheath, L.
Mishcon, L.Swinton, E.
Monkswell, L.Symons of Vernham Dean, B.
Morris of Manchester, L.Taverne, L.
Murray of Epping Forest, L.Taylor of Blackburn, L.
Nicholson of Winterbourne, B.Thomas of Gresford, L.
Ponsonby of Shulbrede, L.Thomas of Walliswood, B.
Prys-Davies, L.Thurso, V.
Ramsay of Cartvale, B.Turner of Camden, B.
Randall of St. Budeaux, L.Walker of Doncaster, L.
Rea, L.Watson of Invergowrie, L.
Rendell of Babergh, B.Weatherill, L.
Richard, L. [Lord Privy Seal.]Whitty, L.
Rogers of Riverside, L.Williams of Crosby, B.
Russell, E.Williams of Elvel, L.
St. Davids, V.Williams of Mostyn, L.
St. John of Bletso, L.Winston, L.
Serota, B.Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.40 p.m.

[ Amendment No. 105 not moved.]

Clause 81 [ Statement of estimated payments etc.]:

Page 41, line 29, leave out ("of the Assembly").

Page 41, line 32, after ("that") insert ("financial").

Page 41, line 34, after ("that") insert ("financial").

Page 41, line 37, after ("that") insert ("financial").

Page 41, line 41, at end insert ("financial").

Page 42, line 7, after ("that") insert ("financial").

Page 42, line 11, leave out ("of the Assembly after the first") and insert ("after the first financial year of the Assembly").

On Question, amendments agreed to.

Clause 82 [ Loans to Assembly by Secretary of State]:

Page 42, line 32, leave out ("made with the consent of the Treasury").

The noble and learned Lord said: My Lords, Amendment No. 113 is the last in a series of amendments that I have tabled to leave out unnecessary verbiage in this already extensive Bill. With this amendment is grouped Amendments Nos. 114 and 115. In submitting that these are unnecessary expressions and provisions I would not like it to be thought that I am critical of the draftsman. I presume to believe that this is a very well drafted Bill, all the more so because in a number of respects it breaks entirely new ground. Where the draftsman has included unnecessary expressions it is because they have always been put in. One supposes that originally a clever young recruit to the office of the parliamentary draftsman inscribed something on a card index. That was transferred to a Hollerith and I do not doubt that today it is on a computer. It pops up quite unnecessarily. This is the clearest example because it is not pretended that these words have any positive effect. If they are left out exactly the same happens. Nor on this occasion is it claimed that by leaving them out it may give rise to an argument, however far-fetched, based on the omission. It is simply a question of whether or not we are to countenance the continued inclusion of words that are entirely unnecessary.

Clause 82 deals with loans to the assembly by the Secretary of State. Subsection (2) provides:

"The Treasury may issue to the Secretary of State out of the National Loans Fund such sums as he needs for making loans under this section".

Subsection (6) provides:

"The Secretary of State may from time to time by order made with the consent of the Treasury substitute for the amount specified in subsection (5)"—

that limits the loan to £500 million—

"such greater amount as is specified in the order".

Not only does the ordinary machinery of government make it absolutely certain that the Treasury's consent is required but, as the noble and learned Lord the Solicitor-General has himself pointed out, the Treasury stands on the route between the Secretary of State and the National Loans Commissioners so that his consent is all the more necessary in this particular case.

The present score in trying to purge this Bill of unnecessary provisions stands at one all. But things are rather better than that. My first amendment sought to leave out a provision that a vacancy in membership did not impair the operation of the assembly. That was quite unnecessary. Even though I counted that as minus one, the noble and learned Lord, Lord Mackay of Drumadoon, moved a similar amendment to the Scottish Bill, which is outstanding, so by no means do I despair of the Government seeing some sense in this matter.

Moreover, the noble Lord, Lord Williams of Mostyn, asked me to withdraw yet another in this series of amendments so that he could consider it. That can mean one of two things. It may mean that there is an ongoing argument in Whitehall as to whether or not an obvious concession should be made. Alternatively, it may be a coded word to say that the amendment will in due course be favourably considered and may possibly be redrafted by the draftsman. Therefore, the score is rather better than one all. In addition, I count confidently on adding another one this time to the positive side.

The noble and learned Lord would not have attained the eminence that he has in his competitive profession if he had lacked forensic courage. It was particularly marked on this occasion when the matter was debated in Committee. He said that the words were entirely unnecessary and reinforced that by drawing attention to the fact that the Secretary of State could not get at the National Loans Commissioners except via the Treasury. He said that although the words were unnecessary, to include them would not be a subject for criticism; on the contrary, it would be a subject for congratulation. As I have said, there is forensic courage. I believe that I have accurately summarised what the noble and learned Lord has said, but if he wishes I shall quote his precise words. I understand that the noble and learned Lord does not require that.

Therefore, the argument was that the words were unnecessary but that it was a matter for congratulation to include them because it made plain what was to happen. There is no limit to that argument. It is for that reason that I have tabled two further amendments to tease the noble and learned Lord. Subsection (6) would read:

"The Secretary of State may from time to time … with the written consent of the Treasury sought and granted during normal office hours",

and so on.

I hope that the noble and learned Lord will not say that that is frivolous. I hope that the noble Lord, Lord Williams of Mostyn, who is in charge of the Bill, will not say that they are unnecessary, with which I entirely agree, because he would then be cutting the ground from under the feet of the noble and learned Lord the Solicitor-General who takes credit for including a completely unnecessary provision.

I do not know how the noble and learned Lord or the noble Lord, Lord Williams of Mostyn, will respond. If they oppose the amendment—their names have not been added to it—I hope that they will make it clear that it is not government policy invariably to include unnecessary expressions in order to make the meaning plain. I beg to move.

My Lords, I should have thought that the noble and learned Lord would have anticipated that there would be substantial support for the point raised by the noble and learned Lord, Lord Simon of Glaisdale, who, as he informed your Lordships, supported me in the House last night when I moved a similar amendment in relation to the Scotland Bill.

The matter was put fully and clearly by the noble and learned Lord, Lord Simon of Glaisdale. I add just one further observation. If the score is at one all, and a further goal is not scored, it will be necessary to have a penalty shoot-out which would be an unsatisfactory way of resolving this important issue. The noble and learned Lord the Solicitor-General was courageous on the previous occasion. I hope that he will be similarly courageous tonight and accept the amendment.

My Lords, I hope that the way the Government accept, from time to time, drafting changes proposed by the noble and learned Lord, Lord Simon of Glaisdale, or anyone else who suggests them, indicates that we do not obdurately defend the drafting, come what may, but we look to see whether we can improve it wherever possible. Despite the force, eloquence and persuasive way in which the point was put, I submit that it is not a good point on this occasion, essentially for two reasons.

It is right that the Treasury would be bound to consent to the exercise of a power such as this. I regret that I cannot accept the noble and learned Lord's argument that the existence of such a practice—namely, that it has to consent—makes the provision that he seeks to remove otiose. Understood and accepted practices such as that are all very well, but the argument, "We do not need a provision on the face of the Bill, because everyone knows it happens anyway", is somewhat undermined by the fact that everyone does not know.

The noble and learned Lord knows, and I dare say that many noble Lords know it also, that the Treasury controls the purse strings, but that is not to say that members of the assembly, or the interested lay person trying to make sense of the assembly's powers and its relations with the UK Government, will know. I therefore respectfully submit and repeat to the noble and learned Lord that it is a good thing for the process to be set out on the face of the Bill so that everyone knows what happens.

It is not right to say that it is unnecessary as a matter of drafting, because it rightly sets out what the process is. It adds to the transparency of the process. There is also a more substantive point. As part of the transfer order process under Clause 22, we propose to remove many Treasury consents. That is part of the rationale behind paragraph 8 of Schedule 3. The assembly will thus not need to seek the Treasury's approval in the vast majority of cases where the Secretary of State does now.

While I accept that that process is somewhat removed from that of raising the assembly's borrowing limit, it would be prudent, in the context of devolution generally, to make clear exactly where the requirement for Treasury consent remained. Again, I do not believe that the noble and learned Lord's amendment would help the understanding there. There is a sound basis for including the words. It is helpful rather than unhelpful, and avoids any problems where there are certain areas where we are removing the need for Treasury consent.

I turn to the other two amendments, which I assume are teasing rather than probing or serious amendments. I should not have thought that it was necessary for the consent to be described in writing, because it is axiomatic—

My Lords, will the noble and learned Lord accept from me that it is invariably in writing?

My Lords, I accept that entirely. I would not deny it for one moment. That is why I say that it is otiose to put it in the Bill. As for the suggestion that it should be given in normal working hours, I cannot see any reason why a consent given at 7.30 p.m. in the hard-working Treasury should be regarded as ineffective, and have to be given at 9 a.m. the next morning. I see no basis for either of those amendments. Even though the noble and learned Lord is looking for another score, I respectfully ask him to withdraw the amendment.

My Lords, the noble and learned Lord has done, as we expected, quite valiantly. I do not know whether any noble Lord was in the other place when a similar defensive argument was put up by the then Financial Secretary to the Treasury, Mr. Glenvil Hall. The noble Lord, Lord Cledwyn, will remember that. Mr. Oliver Stanley said that the Financial Secretary had shown the same courageous spirit that had inspired some of the most indomitable defences in the history of the British Army which had led to some of our greatest military disasters.

The noble and learned Lord really made just one point. He knows, I know, and all your Lordships know, that the consent of the Treasury is necessary and will be obtained, but he said that the members of the assembly and the members of the public may not know that. That is entirely irrelevant. All we are concerned here is with the Secretary of State. It is he who must seek the consent of the Treasury. I am glad that the noble and learned Lord did not, at any rate, assure your Lordships that it is now a general principle of government legislation to include admittedly unnecessary verbiage in order to make things plain and transparent. However this is not the sort of point upon which it is convenient to divide the House. Therefore, protesting at the defence we have heard, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendments Nos. 114 and 115 not moved.]

Clause 83 [ Accounts relating to loans under section 82]:

Page 42, line 35, leave out ("of the Assembly").

On Question, amendment agreed to.

Clause 86 [ Statement of proposed expenditure etc.]:

Page 44, line 2, leave out ("of the Assembly after the first") and insert ("after the first financial year of the Assembly").

Page 44, line 4, leave out ("that") and insert ("the financial").

Page 44, line 8, leave out ("that") and insert ("the financial").

Page 44, line 10, leave out ("that") and insert ("the financial").

Page 44, line 13, leave out ("that") and insert ("the financial").

Page 44, line 17, leave out ("that-) and insert ("the financial").

On Question, amendments agreed to.

Clause 88 [ Accounts relating to funds paid to Assembly for lending]:

Page 45, line 1, leave out ("of the Assembly").

On Question, amendment agreed to.

Clause 93 [ Expenses, fees and accounts]:

Page 47, line 35, leave out ("of the Assembly after the first") and insert ("after the first financial year of the Assembly").

Page 48, line 1, leave out ("of the Assembly").

On Question, amendments agreed to.

Clause 97 [ Preparation and audit of Assembly's annual accounts]:

Page 50, line 36, leave out ("of the Assembly").

On Question, amendment agreed to.

Clause 104 [ Her Majesty's Chief Inspector of Schools in Wales]:

Page 54, line 23, leave out ("of the Assembly").

Page 54, line 32, leave out ("of the Assembly").

On Question, amendments agreed to.

6 p.m.

Page 54, line 36, leave out ("provision consequential on this section)") and insert ("further provision about the Chief Inspector)").

The noble Lord said: My Lords, in moving Amendment No. 129, I speak also to Amendment No. 133. Amendments Nos. 129 and 133 are intended to allow provisions in Schedules 6 and 7 to have effect before the establishment of the assembly. Amendment No. 129 relates to the Office of Her Majesty's Chief Inspector and Amendment No. 133 to the Forestry Commission.

On Amendment No. 129, paragraph 5(1) of Schedule 6 requires Her Majesty's Chief Inspector of Schools to keep proper accounting records, and we believe it would be sensible for these to commence on 1st April 1999 so as to coincide with the current system of financial years. However, the new financial arrangements for the funding of the chief inspector's office cannot come into effect prior to the establishment of the assembly.

The keeping of accounting records under paragraph 5(1) of Schedule 6 is related to the provisions in Clause 104 but it is arguable that Clause 104(6), as presently drafted, would prevent paragraph 5(1) from being brought into force so that it takes effect from 1st April 1999. The amendment to Clause 104(6) is to remove that doubt and to produce sensible accounting arrangements.

In respect of Amendment No. 133, it is also the Government's intention that paragraph 1 of Schedule 7, which deals with the exercise of the Forestry Commission's functions in relation to Wales, should be brought into force before the establishment of the assembly. An order will be made under paragraph 1 to amend the Forestry Act 1967 so as to convert Great Britain duties to duties applicable to Wales, England and, if the Scotland Bill is passed, Scotland.

Clause 105(5), as currently drafted, may leave an impression that the provisions of Schedule 7 are directly consequential to Clause 105. This is not the Government's intention and Amendment No. 133 is a drafting improvement to clarify the position. I repeat: these amendments are simply to produce a rational accounting regime in both respects. I beg to move.

On Question, amendment agreed to.

Schedule 6 [ Her Majesty's Chief Inspector of Schools in Wales]:

Page 89, line 20, leave out ("of the Assembly").

Page 89, line 30, leave out ("of the Assembly").

On Question, amendments agreed to.

Clause 105 [ Forestry Commissioners]:

Page 55, line 6, leave out ("of the Assembly").

On Question, amendment agreed to.

Page 55, line 16, leave out ("provision consequential on this section)") and insert ("further provision about the Forestry Commissioners and the exercise of their functions in relation to Wales)").

On Question, amendment agreed to.

Leave out Clause 105.

The noble Lord said: My Lords, there is a great deal of concern about the proposal to split responsibility for the Forestry Commission between the three countries. That concern arises despite the reassuring assertions that overall strategic control of forestry will remain on a Great Britain basis.

I understand that the current responsibility of the Secretary of State for Wales and the Secretary of State for Scotland will be devolved to the Welsh assembly and the Scottish parliament. The Scottish parliament will have primary legislative powers in this field—perhaps I should say "wood" on this occasion because it clearly is tomorrow to fresh woods and pastures new!

We have the word of the Secretary of State for Wales when he addressed a Committee of the whole House. On 2nd March (at col. 710 of the Official Report) he said:

"On matters that operate GB-wide, it will be necessary for the Ministry of Agriculture, the representative of the Welsh Assembly, and the appropriate Minister in the Scottish Parliament to agree".

Agreement may not always be as easy as it sounds in this context, especially when national interests conflict and when the unified commission to which we have been accustomed is financed from three separate sources, as is proposed, each with the power to vary its financial contribution.

Those of us who have had some experience of such divided funding know how wrong it can sometimes go. However, the key question is this: who is to have the final say in the event of a disagreement between the three participants in the decision-making process—the assembly, the Scottish parliament or the Ministry of Agriculture? Who will be the lead Minister responsible for forestry after devolution? I cannot find the answer to that question.

Clause 105 concentrates on the funding issue. It is clear from subsection (3) that the whip hand rests with the assembly which,

"shall have regard in particular to what it considers the Commissioners need to spend in order effectively to discharge their functions in relation to Wales".

An element of second guessing seems to be involved here. I find that somewhat disconcerting. Forestry is important to the Welsh economy and to the environment. The forest area in Wales covers about

12 per cent. of the total land area, and about half of that is controlled by the Forestry Commission. Current Welsh timber production represents 15 per cent. of the British total. Self-evidently forestry is important.

The employment aspect of forestry is of particular concern bearing in mind the current plight of the farming industry in rural areas. About 4,700 people are employed in forestry and allied industries in Wales. Of those, 1,270 are employed by the Forestry Commission and 1,700 in the wood processing plants which have invested heavily in Wales. We have already heard mention of companies such as Shotton Paper, Kronospan at Chirk and BSW in mid-Wales. It is important that the industry is properly handled and not sidelined in any way.

It is reassuring to know that the forest enterprise will continue to operate on a Great Britain basis. We are also told that the Forestry Commission will prepare three separate corporate plans for England, Scotland and Wales covering all the commission's objectives, including conservation. That is welcome. We hope that the plans will be complementary too. When we discussed the forestry issue in Committee on 9th June, my noble friend Lord Mackay of Ardbrecknish spoke of some of the disadvantageous situations that could arise in the event of a conflict of interest between the three countries. That is why we are concerned with the provision in Schedule 7 which would allow the Secretary of State by order to change the Forestry Act 1967 which is a fundamental piece of legislation in this area. However, one can also see how such a change might be necessary if, for example, the Scottish parliament were to decide unilaterally to establish its own Forestry Commission independent of the body covering England and Wales.

The Minister is well aware of our doubts as to whether the division of responsibility proposed is good for forestry in Britain as a whole, good for the commission or good for Wales. We are doubtful whether the scheme will work satisfactorily in practice and sure in our minds that the scheme proposed is inferior to the current unified approach, which makes business and commercial sense. It is that sacrifice of business to political expediency that some of us find worrying.

There are certain Great Britain matters which are not being devolved. Broadcasting is a very good example. I shall not expand on that, but it seems to me that forestry is one of those businesses that we have found through experience is best run on Great Britain lines. Therefore, there is an argument which we should expect to hear from the Government as to why forestry is being devolved and whether that is in the best interests of the industry and in the best interests of Wales in particular. I beg to move.

My Lords, I have not spoken on these forestry clauses nor, indeed, I confess, have I studied them very carefully. I was absent when they were debated in Committee. However, there are one or two points which I should like to raise and some questions that I should like to ask.

I must declare an interest. I was a forestry Minister for eight years and one of the perks that I inherited, I am glad to say, was a bunch of keys which opened all the forestry gates anywhere in the United Kingdom. It is extremely important for me, living in a heavily forested valley, as it enables me to reach parts of the countryside which it would otherwise be extremely difficult to enter.

I look back to the period when forestry Ministers acted together under the leadership of the Secretary of State for Scotland. The Ministers from Wales, England and Scotland met together and decided forestry policy. That worked effectively and the Forestry Commission worked effectively.

My noble friend Lord Roberts of Conwy has raised some important questions about how the Forestry Commission is to run its affairs when three different bodies—a legislative assembly, an assembly with limited powers and a Ministry—will all have different responsibilities for one organisation. As someone who was chairman of a large organisation covering England and Wales—the National Rivers Authority—I can only say I am thankful that I do not have to run that particular body and co-ordinate its affairs effectively.

Indeed, my noble friend has raised the point about those organisations which have not been divided up in quite that way. The Environment Agency is a case in point. The organisation has been kept on a centralised basis with national legislation but certain aspects of its responsibilities are to become those of the assembly.

I do not argue at all that the assembly should not have a significant role in this regard because quite clearly, as my noble friend said, forestry is extremely important economically in Wales and for environmental reasons. Therefore, I am concerned about the practicalities.

I make one other point and it is in relation to Schedule 7. We have been told in the course of debates that certain provisions must appear on the face of the Bill in order to make things clear to those who must operate them. If anyone believes that Schedule 7 makes anything clear to anybody, I must disabuse them of that fact. If one tries to interpret the meaning of Schedule 7, even the most agile among us and those most experienced in dealing with parliamentary drafting may have some difficulty.

As I understand it—and this is the point on which I seek clarification—it arises from Clause 105 which appears to deal only with questions of funding. Therefore, the ability to change things under sub-paragraph (2) of Schedule 7, which deals with the power of the Secretary of State to amend legislation, can arise only out of Clause 105 which deals with funding issues.

It may go further. If it does, I want to know. Are we in a situation where the assembly can influence what the Forestry Commission does by saying, "We are not prepared to spend as much as you want to spend", or, "We interpret the functions laid on us by statute in that way and after discussion with you, we think that they should be administered in this way"; or has it the ability to ask the Secretary of State by order fundamentally to change those functions under this sub-paragraph in the schedule?

I just want to know how far we are simply dealing with judgmental decisions about the application of existing functions and their financing and how far we are facing the possibility that the assembly, although it does not have legislative powers, will be able to ask the Secretary of State to make fundamental changes to the functions of the Forestry Commission and perhaps alter entirely the way it operates.

I apologise for raising those detailed questions at this stage, but sometimes one is forced by amendments which are moved to look again at clauses. As I say, I had some responsibility for forestry in Wales over a long period and, at present, I do not understand how the provisions will work, or what is the scope of the assembly or the Secretary of State to change the statutory basis or the functions which are to be operated.

6.15 p.m.

My Lords, in the past I have been fortunate to receive some extremely good advice from the local Forestry Commission officer. Indeed, I still use his advice and did so this week. Will that relationship still continue? But, more important, will my Forestry Commission officer be put in the position of having to serve two masters so that when I ask him a question, he may be forced into saying, "I am only the Forestry Commission officer. I can deal with that, but you will have to go to someone else who deals with the assembly side of forestry matters"? That is all I wish to ask, but I hope the Minister will be able to say that one person will be able to deal with all the matters.

My Lords, I do not quite follow what is the purpose of the amendment. Paragraph 1 of Schedule 2 transfers to the assembly the functions of the Secretary of State as they presently exist in forestry. But the proposal in the amendment is to delete from the powers of the assembly any issue concerning funding. Therefore, the assembly is presumably to talk and to discuss and to lay down policy, but is not to have the ability to provide the funds to carry out the policies upon which it has decided.

Paragraph 1 of Schedule 7 states:
"The Secretary of State may by order make provision for securing … (b) the exercise of functions by the Forestry Commissioners in relation to Wales free from so much of any requirements as would oblige them to have regard to circumstances outside Wales or to interests other than those of Wales".
It seems to me that what lies behind that schedule is the intention to give to the assembly the widest discretion to lay down policy guidelines and if policy guidelines are laid down, surely the funds must be available to carry out those policies.

I heard the noble Lord, Lord Roberts of Conwy, say that forestry is important to the economy and it certainly is. I know of the importance to the community in North East Wales of two of the firms to which the noble Lord referred—Shotton Paper and Kronospan. Of course, very wide forestry areas exist in North and mid Wales.

The noble Lord, Lord Roberts, suggested that it made business and commercial sense to keep forestry on a United Kingdom basis. But I heard no argument which sustained that proposition in any way. He simply said that it is best run on Great Britain lines. In my respectful opinion, such an enunciation is not right.

It is not sufficient for the noble Lord, Lord Crickhowell, to say that he wants to retain the keys to all the gates in the United Kingdom; indeed, if it comes to that, he can do as the Liberal Democrats do and climb over the gates in Scotland and in England. So that is no argument. We have heard no argument whatever for removing from the functions of the assembly the power to fund its policies. I give way to the noble Lord.

My Lords, I am much obliged. I was of course taking our Committee debate on 9th June as read. During the course of that debate, my noble friend Lord Mackay of Ardbrecknish outlined the position whereby many of our industries in Wales draw their supplies from other parts of the UK. I believe that he had in mind the scenario where, for example, it might be the case in the future that Scottish forestry policy could handicap our industry in Wales from using the product of the Scottish forest. It is quite clearly conceivable that these nationalist policies might be pursued to the disadvantage of the individual countries.

My Lords, I am most grateful to the noble Lord for referring me to the Committee debate. I wondered at the time whether the noble Lord, Lord Mackay, was looking at the issue from a Scottish rather than a Welsh perspective. Indeed, I made that comment before. From a Welsh point of view, it seems to me to be entirely appropriate that Wales and the Welsh assembly should have power not merely to set forestry policy but also to fund it.

My Lords, I did not join in the debate in Committee because I was still trying to understand what the Wales Bill was about and, indeed, what the difference was between Wales and Scotland. As a small landowner with an estate in Scotland, I believe that I can honestly say that I am probably more involved with the Forestry Commission than almost any government department outside those which deal with farming.

One requires a licence for thinning, for planting and felling; in fact, one requires one for almost everything that one does. Equally, there are different grants available for planting different types of trees. It would be a great pity if the standards set by the Forestry Commission in the past were to vary among England, Wales and Scotland. I do not believe that that would be in the best interests of any country.

Moreover, one of the very few times that I am involved with VAT on my estate is when I am felling trees. One has to charge VAT as regards forestry. It is a pity that forestry is not regarded as a crop in the same way as is agricultural produce. I will never know what the difference is. Almost everything produced on a farm is zero rated as regards VAT, whereas, just to put the other side of the picture, rents are exempt. That can be a complication. As this Bill is a little further ahead in its passage than the Scottish one, I am a little concerned that there may be differences which I do not believe will be in the best interests of the four countries involved, including Northern Ireland.

My Lords, as the noble Lord, Lord Thomas of Gresford, pointed out, Amendments Nos. 134 and 135 would radically affect Clause 105. We had a lengthy debate on forestry in Committee. Therefore, I shall follow the example set by the noble Lord, Lord Roberts of Conwy, and not revisit every particular grove that we raddled about in at that time. I did not find what the noble Lord, Lord Mackay, said on 9th June to be persuasive; indeed, I do not find it any more persuasive now.

The commissioners may be accountable to the assembly in relation to their functions in Wales. I cannot accept the rather overheated suggestion that, because this concerns accountability to the Welsh assembly, there might be adverse commercial consequences. I see nothing in that argument. Of course, the forestry industry is very important to Wales. After all, it owns 120,000 hectares. The noble Lord, Lord Roberts, has already indicated the employment consequences of its existence in Wales, as well as drawing our attention to the fact that 15 per cent. of the total British output is produced in Wales. We believe that that is a very good reason for putting the funding of its functions in Wales into the hands of the assembly. Obviously, as a consequence, the commissioners would have to be fully accountable to the assembly for their activities in Wales. We would say that that is simply one of the points of devolution.

After all, different institutions are sometimes established in the Welsh context and exist at present. I have in mind the Higher Education Funding Council for Wales, which deals with the appropriate areas in Wales only and on a Wales-only basis. There is a completely different funding council for England, and I have not come to the conclusion that that is a disadvantage to Wales or indeed to England.

Section 1(2) of the Forestry Act 1967, which is referred to in paragraph 1 of Schedule 7, charges the commissioners with the duty of promoting the interests of forestry, the development of afforestation, the production and supply of timber and other forest products in Great Britain. There is nothing in the Bill anywhere which can affect those duties, either now or in the future. All that an order under paragraph 1 of Schedule 7 could do would be to allow England, Wales and Scotland to be substitutes for Great Britain, thereby producing the consequence that the commissioners would be allowed to exercise their functions separately in respect of England, Wales and Scotland. We believe that that is an essential part of our proposals for devolving responsibility for forestry, and that it is entirely consistent with our proposals for wider democracy.

The noble Lord, Lord Thomas of Gresford, is quite right. Paragraph 1 of Schedule 2 devolves to the assembly the present functions of the Secretary of State for Wales relating to agriculture, forestry, fisheries and food. Moreover, Clause 105, especially subsection (1), provides the funding mechanism.

At present, the Secretary of State for Wales is the forestry Minister for Wales. He has to exercise his functions jointly with the Minister of Agriculture and the Secretary of State for Scotland. We need the ability contained in paragraph 1 of Schedule 7 to split the joint functions so that the assembly, the Scottish Executive and the Minister of Agriculture can deal with matters in their appropriate areas.

To answer specifically the question posed by the noble Lord, Lord Stanley of Alderley, I should point out to him that there is no reason why he should not carry on in exactly the same way. The commission will not lose any of its powers. There is no reason at all why the present regime should not continue. However, bearing in mind the sensitivities and delicacies of this area, I should stress that the present role of the Secretary of State for Wales will fall to the assembly in relation to Wales and Wales alone. I am sure that the noble Lord will receive the same co-operative response in the future because the commission official will be reporting to the commissioners but they will be accountable and funded in an all-Wales context.

In answer to the noble Lord, Lord Crickhowell, I should point out that it is also important to realise what paragraph 1 of the schedule does and does not do. It does not allow for the abolition of the Forestry Commission; it does not allow for the establishment of a separate commission for Wales. The important distinction—and I agree that it is an important one—is that it simply allows for the commissioners' functions to be made separately exercisable for Wales. I hope that that is a useful clarification of what I agree is perhaps a rather cloudy schedule, at least unless one sat down for a day or two with a wet towel and a hot pot of coffee to consider it.

In many ways, this debate comes down to a difference in approach and a different principle. We believe that the point of devolution is to devolve the powers of the Secretary of State to the assembly. We do not believe that the suggestion put forward by the noble Lord, Lord Mackay, is realistic. We feel—this is the principle—that you need to trust the people. It is said that duplication or triplication will be difficult, but is it all that different from the position of the planning inspectorate agency, which is funded by two government departments, the DETR and the Welsh Office, or that of the Environment Agency, which can do better because it is funded by three departments, the DETR, MAFF and the Welsh Office?

If the dispute cannot be resolved, the assembly's duty is perfectly plain; it is set out in Clause 105. It has to fund the Forestry Commission's activities in Wales. It will not be on every occasion that a conclusion about Forestry Commission policy in Wales will be identical to that on policy and strategic planning in England or in Scotland. There is no real reason why every decision should be identical in every circumstance.

I think there is a difference of principle here. We believe that the powers ought to be devolved; that is what Schedule 2 says. Clause 105 provides the funding mechanism and Schedule 7 is limited in the way that I have indicated. I hope that is sufficient explanation to induce, coax and cajole the noble Lord into accepting that his amendments are wholly misconceived and to withdraw them.

6.30 p.m.

My Lords, I am grateful to the Minister for his comments. There is a difference of principle here. We believe that the Forestry Commission operates best on a Great Britain basis, and that difficulties will arise if the functions are exercised separately in the three countries simply because of the accountability for the exercise of those functions which will obviously differ as between England, Scotland and Wales.

There is, of course, the point that the Scottish parliament will have primary legislative powers while the assembly will not, and that the Scottish parliament can make separate provision in Scotland. I shall certainly consider what the Minister has said. In that spirit, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 7 [ Forestry Commissioners]:

[ Amendment No. 135 not moved.]

Page 92, line 31, leave out ("of the Assembly").

Page 92, line 43, leave out ("of the Assembly").

Page 94, line 21, leave out ("of the Assembly").

The noble Lord said: My Lords, I beg to move Amendments Nos. 136 to 138 en bloc.

On Question, amendments agreed to.

[ Amendments Nos. 139 and 140 not moved.]

Clause 106 [ Community law]:

Page 55, line 24, at end insert—

("(1A) Subsection (1) does not apply in the case of a Community obligation of the United Kingdom if—

  • (a) it is an obligation to achieve a result defined by reference to a quantity (whether expressed as an amount, proportion or ratio or otherwise), and
  • (b) the quantity relates to the United Kingdom (or to an area including the United Kingdom or to an area consisting of a part of the United Kingdom which includes the whole or part of Wales).
  • (1B) But if such a Community obligation could (to any extent) be implemented (or enabled to be implemented) or complied with by the exercise by the Assembly of any of its functions, a Minister of the Crown may by order provide for the achievement by the Assembly (in the exercise of its functions) of so much of the result to be achieved under the Community obligation as is specified in the order.

    (1C) The order may specify the time by which any part of the result to be achieved by the Assembly is to be achieved.

    (1D) No order shall be made by a Minister of the Crown under subsection (1B) unless he has consulted the Assembly.

    (1E) Where an order under subsection (1B) is in force in relation to a Community obligation, to the extent that the Community obligation involves achieving what is specified in the order it is also an obligation of the Assembly (enforceable as if it were an obligation of the Assembly under subsection (1)).").

    The noble and learned Lord said: My Lords, in moving Amendment No. 140A I shall speak also to the other amendments in this group standing in the name of my noble friend Lord Williams of Mostyn.

    Clause 106 provides for a Community obligation of the United Kingdom also to be an obligation of the assembly to the extent that the assembly can implement or comply with it. Clause 108 deals with the United Kingdom's international obligations which generally do not form part of domestic law, and provides override powers for the Secretary of State to ensure that the assembly complies with these obligations.

    The Government have identified a gap in the provisions, namely the various obligations of the United Kingdom which are expressed in quantitative terms, such as an amount, proportion or ratio. We shall bring forward equivalent amendments to the Scotland Bill at the appropriate time. If I could give an example, the Kyoto agreement provides for emissions in greenhouse gases to be reduced over the next 15 years.

    Amendments Nos. 140A and 148A confer on Ministers of the Crown the power to specify, by order, the assembly's share of such quantitative obligations; and the time by which any part of the result to be achieved by the assembly is to be achieved. The power is conferred on a Minister of the Crown and so in theory could be exercised by any Minister. However, the Government expect that, because of their importance, decisions on these orders and on the use of the override powers in Clause 108—to which I shall return shortly—would be taken by Ministers of Cabinet rank.

    In making an order, a Minister would have to have regard to what the assembly can achieve within its powers. The amendments require that the assembly must be consulted before any order is made, and Amendment No. 231A provides for the orders to be subject to the negative resolution procedure in Parliament.

    It would be for the assembly to decide, in exercising its various functions, how best to achieve its share of a quantitative obligation, although in the case of the international obligations covered by Clause 108 a Minister could direct the assembly to take or not to take a particular action.

    It is often the case that a long timescale is specified for the implementation of a particular target. In such circumstances, the United Kingdom Government need to be sure that the assembly will be taking appropriate interim steps to meet its share of the target. The Government will give further urgent consideration to these matters, and I therefore want to give the House notice that it may be necessary to return with further minor amendments on this point at Third Reading.

    Amendments Nos. 140E, 142A and 143A provide that the override powers in Clause 108 can be exercised by a Minister of the Crown instead of by the Secretary of State. Your Lordships will appreciate that many of the quantitative obligations relevant to the assembly will be in the field of agriculture, and the Minister of Agriculture, Fisheries and Food does not fall within the term "Secretary of State". The other amendments to Clause 108 in this group are minor consequential drafting changes.

    Amendment No. 140B provides that it is ultra vires the assembly to do anything which is incompatible with its share of a Community quantitative obligation. Amendments Nos. 148B and 148C adapt the judicial dispute mechanisms in Schedule 8 so that a question whether the assembly had failed to comply with a duty imposed upon it, including a question whether the assembly had failed to comply with an obligation which is an obligation by virtue of Clause 106, would be a "devolution issue" which could be referred to the Judicial Committee. This would cover such things as failures by the assembly to comply with its share of a Community obligation.

    Likewise, a question whether a purported or proposed exercise of a function by the assembly is, or would be, outside its powers by virtue of Clauses 106 or 107 would also be a devolution issue: this encompasses whether the exercise of a function would be incompatible with the assembly's share of a Community obligation.

    These amendments ensure that, where appropriate, a share of the United Kingdom's Community or other international quantitative obligations can be specified for the assembly; and that the assembly will be obliged then to meet that share, while leaving the assembly to decide how best to do so. I beg to move.

    My Lords, I welcome these amendments. I wish to flag up their importance in terms of the way they set for the assembly an agenda for meeting international obligations on sustainable development and other issues relating to environmental control. I believe that we have over 300 various international treaties and protocols relating to the environment, in addition to those aspects of European Community law which place an obligation upon member states in this regard.

    Increasingly now—this will probably be the case in the forthcoming informal summit to be held under the Austrian presidency in October—the level of the European region or the small nation is seen as an appropriate level for implementing environmental protection measures and sustainable development measures as they apply to protocols and quantitative and qualitative standards of this kind. I know, for example, that the sustainable development round table is soon to take evidence on the effectiveness of the new arrangements in Northern Ireland, Scotland and Wales for delivering sustainable development. I am certain this is one of the aspects it will wish to study.

    I also know that the European Environment Agency is increasingly looking to partnerships with the regions through the various centres of excellence in the regions and their various topic centres. It is looking to the regions as partners in the whole area of implementing sustainable development. These amendments bring a new clarity to the Bill. I very much welcome them.

    My Lords, we, too, welcome these amendments. First, I should thank the noble Lord, Lord Williams of Mostyn, for sending me a letter explaining their purport. They are perfectly fair amendments to enable Wales to undertake its appropriate share of a United Kingdom obligation to achieve an overall result that is quantifiable.

    It is clear that no order can be made by a Minister without consulting the assembly. We believe that that is right. I suggest that the Minister could belong to any government department and, most likely, to the department with the task of achieving a particular result.

    The noble Lord explained in his letter that the Minister concerned might be the Minister of Agriculture, who,
    "does not fall within the term 'Secretary of State'".
    Will the noble Lord confirm that that is all that lies behind the change in terminology, and that the Government do not anticipate the demise of the office of Secretary of State for Wales or Secretary of State for Scotland in the not-too-distant-future and that is part of the reason for the change?

    On another small point, presumably "Minister of the Crown" does not cover an assembly Secretary, or indeed a member of the Scottish executive.

    My Lords, first, we do not envisage the demise of the Secretary of State for either Wales or Scotland. Secondly, "Minister of the Crown" does not include either an assembly Secretary or a member of the Scottish executive. So I am able to give the noble Lord the confirmation that he seeks.

    On Question, amendment agreed to.

    Page 55, line 29, at end insert ("or an obligation under subsection (1E).").

    On Question, amendment agreed to.

    Clause 107 [ Human rights]:

    Page 55, line 36, leave out from ("tribunal") to end of line 39 and insert (", or

    (b) to rely on any of the Convention rights in any such proceedings,

    in respect of an act unless he would be a victim for the purposes of Article 34 of the Convention if proceedings were brought in the European Court of Human Rights in respect of that act.").

    The noble and learned Lord said: My Lords, in moving this amendment I shall speak also to the other amendments in this group standing in the name of my noble friend Lord Williams of Mostyn; namely, Amendments Nos. 140C, 140D, 230A, 231B and 234A.

    The House agreed to government amendments in Committee that were intended to bring the provisions of this Bill into line with those of the Human Rights Bill. On further reflection, we think it is necessary to return with further government amendments to Clause 107 and other clauses, although they do not alter the substance or effect of those provisions.

    These amendments are necessary because it is probable that the Human Rights Act will not be brought fully into force by the time that the assembly is established and assumes its functions in the early summer of 1999. The Government have decided that the assembly should be bound to observe the convention rights from the outset, and the amendments before your Lordships today are intended to ensure that Clause 107 can operate effectively in the period before the Human Rights Act is brought into force.

    Amendment No. 140C amends subsection (2) of Clause 107 so that a person could not bring proceedings about an act of the assembly relying on subsection (1) unless he would be a victim for the purposes of Article 34 of the Convention if proceedings were brought in the European Court of Human Rights in respect of that act. The amendment removes the reference to the equivalent provision in the Human Rights Act, so the effect of the subsection is unchanged.

    Amendment No. 140D alters subsection (4) of Clause 107, by replacing the reference to damages which could not be awarded "by virtue of that Act" with a form of words that has precisely the same effect. However, the new form of words copes with the position where the Human Rights Act is an Act but has not been brought into force.

    Amendment No. 140D also inserts definitions of "the Convention rights" and "the Convention" in a new subsection (5). The changes to Clauses 155 and 156 are consequential on that.

    Finally, Amendment No. 230A inserts a specific transitional provision into Clause 153, so that Clause 107 can operate successfully in advance of the Human Rights Act coming fully into force. I beg to move.

    6.45 p.m.

    My Lords, from these Benches I indicate a welcome for, and acceptance of, the amendments. They seek to address a concern that I raised some months ago when the Human Rights Bill was debated in this House. I am sure that the noble and learned Lord the Solicitor-General will forgive me if I say that the experience of the Government in having to introduce amendments at Committee stage and then amend them on Report, illustrates the value of a revising Chamber. As the noble Baroness, Lady Ramsay of Cartvale—whom I am happy to see in her place—will appreciate, that is a live issue in debating the Scotland Bill.

    My Lords, I recognise that the amendment is necessary in order to bring this Bill into line with the Human Rights Bill. As the noble and learned Lord the Minister knows, I disagree profoundly with the "victim" test in the Human Rights Bill. It is an alien import from a completely different purpose under the convention and is used in a way that is against principle and will damage the effectiveness of the Human Rights Act when it comes into force. This provision is consequential on decisions taken in relation to that Bill. I should not like the absence of any voice on my part to be taken as an assent to the principle. However, I agree with the amendment as a consequential amendment.

    On Question, amendment agreed to.

    Page 56, line 5, leave out from ("award") to end of line 6 and insert ("in respect of an act any damages which it could not award on finding the act unlawful under that subsection.

    (5) In this Act "the Convention rights" has the same meaning as in the Human Rights Act 1998 and in subsection (2) "the Convention" has the same meaning as in that Act.").

    On Question, amendment agreed to.

    Clause 108 [ International obligations]:

    Page 56, line 7, leave out ("the Secretary of State") and insert ("a Minister of the Crown").

    On Question, amendment agreed to.

    Page 56, line 8, at end insert ("treaty").

    The noble and learned Lord said: My Lords, in moving this amendment, with the leave of the House I shall speak also to Amendments Nos. 142 to 148. This group of amendments was drafted and tabled before I had the opportunity of seeing the government amendments, beginning with Amendment No. 140A and running through to Amendment No. 148B, which form part of two fairly large groupings dealing with this clause. Therefore, I readily accept at the outset that the drafting of my amendments may not be entirely easy to reconcile with the drafting of the various government amendments, to which no objection is offered.

    Nevertheless, I shall press on with my amendments in a probing frame of mind and seek to explore with the Government why it is that the Secretary of State is being given, in regard to the Welsh assembly, the right to intervene as set out in subsections (2) and (3) of the clause in relation to what are defined as "international obligations".

    My amendments have two purposes. The first is to seek to define "international obligations" and "international legal obligations" constituted by a treaty, convention or other agreement, seeking to refine the term "international obligations"—or "international obligation", as it will become after the Government's amendments are agreed to—in order to make it clear that what we are talking about is not a general understanding that may be entered into between the United Kingdom Government, on the one hand, and another nation state, on the other, but international legal obligations which are binding on the United Kingdom under international law.

    The second purpose of the amendments is to make it clear that, if the Secretary of State is of the view that what the Welsh assembly has done, or refuses to do, is incompatible with such international obligations, he has the option of going to the court for a declarator or declaration to that effect, or, alternatively, taking action by order, which is the purpose of my Amendment No. 144. To some extent this matter is already dealt with in subsection (3) of Clause 108, but the provision in Amendment No. 144 is in broader terms and the power is not limited to revoking subordinate legislation.

    A similar clause in the Scotland Bill has been described as being of the nature of a colonial governor's power Bill, entitling the Secretary of State to march in and order the Scottish parliament about. I do not believe that such an approach would be desirable if one was trying to encourage a devolved body, whether it be the Welsh assembly or the Scottish parliament, to be seen to be as independent as is possible within the devolved framework in which it will act.

    I fully accept that the Secretary of State may require to have residual powers. Indeed, in the Scotland Bill it is intended that the power should not only extend to international obligations but also where there is concern about the interests of defence or national security. I should be interested to hear from the Minister whether it is proposed to bring forward similar amendments to this Bill.

    I believe that the Secretary of State should either go to the court for an order on the legal issues that arise, or, if he is satisfied that he is right in law, should exercise the power which I seek to give him by Amendment No. 144. I beg to move.

    My Lords, my comments here relate to Amendments Nos. 141 to 148, which the noble and learned Lord, Lord Mackay of Drumadoon, has proposed to Clause 108 of the Bill. I believe it would be helpful to your Lordships' consideration of these issues if I first provided the House with an explanation of the Government's thinking with regard to the need for the clause.

    The provisions of Clause 108, as currently drafted, ensure that Ministers will have the power to prevent the assembly from taking action which is incompatible with the international obligations of the United Kingdom. No such intervention will apply in respect of Community law and convention rights as the Bill, in Clauses 106 and 107, places an explicit requirement on the assembly to observe such obligations. This is possible because these obligations form, or soon will form, part of legislation made by the Westminster Parliament for the United Kingdom and will thus become part of the domestic law of this country. However, as far as Clause 108 is concerned, it is not the case that all international obligations of the United Kingdom have been incorporated into domestic legislation. Thus the reserve power in Clause 108 is a deliberate one to allow Ministers to intervene if the assembly is considering an incompatible action or has already taken it.

    Furthermore, not all international obligations are in the form of treaty. Some—for example, the Rio Declaration on the Environment and Development—take the form of conventions, protocols or heads of agreement. As a consequence, Amendments Nos. 141 and 146, which seek to insert the word "treaty", may have the effect of leaving the United Kingdom Government without the power to deliver certain obligations to which they are committed, to the extent that they are ones which fall within the competence of the assembly.

    Amendments Nos. 142 and 143 would remove Ministers' power to direct that an action may or may not be taken, and instead allow the Secretary of State to apply to an appropriate court for a declaration that an action is incompatible with international obligations or that action is required by the assembly to give effect to an international obligation. In addition, and consequential upon the earlier amendments, Amendment No. 142 goes on to allow the Secretary of State to make rules to define the applicable court.

    Amendments Nos. 141, 142, 143 and 146 would introduce a serious weakening of Ministers' powers to take action. The Government firmly believe, for the purposes of Clause 108, that action by order would be the more effective mechanism for safeguarding the United Kingdom's international obligations. The order-making power would, of course, be subject to parliamentary procedures and scrutiny, which would not be the case if the courts were given a role in these matters.

    Amendment No. 145 is consequential to others in this grouping, but by itself the amendment would oblige the Secretary of State to consult with the assembly only when he was prepared to exercise his order-making power under Clause 108 for action to be taken to remedy assembly subordinate legislation, or that which could be revoked by the assembly, which is incompatible with an international obligation.

    It appears odd that those on the Front Bench opposite wish to strike out only part of the consultation provision set out in Clause 108(6). In any case, if the assembly's actions, or proposed actions, were seen to be in breach of an international obligation and the Secretary of State was minded to take appropriate action, this is already covered, as subsections (1) and (2) of Clause 108 give the Secretary of State the power to direct the assembly that action should or should not be taken. The amendment is therefore unnecessary.

    Amendments Nos. 147 and 148 attempt to provide a definition of the international obligations for the purposes of Clause 108. As I have indicated, international obligations can take many forms and it would be counter-productive to attempt to define them in the way proposed by these amendments.

    I hope that, in view of the explanations I have given, the noble and learned Lord will be minded to withdraw his amendment.

    My Lords, I am grateful to the noble and learned Lord the Solicitor-General for a very full explanation of the reasoning behind this clause. As I indicated, in the light of all the government amendments, I have no intention of pressing my amendment to a Division. I beg leave to withdraw Amendment No. 141.

    Amendment, by leave, withdrawn.

    Page 56, line 9, leave out ("obligations") and insert ("obligation").

    On Question, amendment agreed to.

    [ Amendment No. 142 not moved.]

    Page 56, line 11, leave out ("the Secretary of State") and insert ("a Minister of the Crown").

    Page 56, line 13, leave out ("obligations") and insert ("obligation").

    On Question, amendments agreed to.

    [ Amendment No. 143 not moved.]

    Page 56, line 15, leave out ("the Secretary of State") and insert ("a Minister of the Crown").

    Page 56, line 17, leave out ("obligations") and insert ("obligation").

    On Question, amendments agreed to.

    [ Amendment No. 144 not moved.]

    Page 56, line 24, leave out ("this section") and insert ("subsection (1),(2) or (3)").

    Page 56, line 27, leave out subsection (6).

    On Question, amendments agreed to.

    [ Amendments Nos. 145 and 146 not moved.]

    Page 56, line 29, leave out from first ("international") to ("not") in line 32 and insert ("obligation" means an international obligation of the United Kingdom other than—

  • (a) an obligation under Community law, or
  • (b) an obligation").
  • On Question, amendment agreed to.

    [ Amendments Nos. 147 and 148 not moved.]

    Page 56, line 33, at end insert—

    ("(7A) A Minister of the Crown may make an order containing provision such as is specified in subsection (7B) where—

  • (a) an international obligation is an obligation to achieve a result defined by reference to a quantity (whether expressed as an amount, proportion or ratio or otherwise), and
  • (b) the quantity relates to the United Kingdom (or to an area including the United Kingdom or to an area consisting of a part of the United Kingdom which includes the whole or part of Wales).
  • (7B) The provision referred to in subsection (7A) is provision for the achievement by the Assembly (in the exercise of its functions) of so much of the result to be achieved under the international obligation as is specified in the order.

    (7C) The order may specify the time by which any part of the result to be achieved by the Assembly is to be achieved.

    (7D) Where an order under subsection (7A) is in force in relation to an international obligation, references to the international obligation in subsections (1) to (3) are to an obligation to achieve so much of the result to be achieved under the international obligation as is specified in the order by the time or times so specified.

    (7E) No order shall be made by a Minister of the Crown under subsection (2),(3) or (7A) unless he has consulted the Assembly.").

    On Question, amendment agreed to.

    Schedule 8 [ Devolution issues]:

    Page 94, line 38, leave out ("incompatible with Community law or any of the Convention rights)") and insert ("outside its powers by virtue of section 106(2) or 107(1))").

    Page 94, line 42, leave out ("Community obligation which is an obligation of the Assembly)") and insert ('obligation which is an obligation of the Assembly by virtue of section 106(1) or (1E))").

    On Question, amendments agreed to.

    7 p.m.

    Page 95, line 41, leave out ("Judicial Committee") and insert ("House of Lords").

    The noble and learned Lord said: My Lords, in moving Amendment No. 149, I shall, with the leave of the House, speak also to the amendments which run through to Amendment No. 169.

    These amendments return to an issue which I raised at Committee stage; namely, whether the ultimate court of appeal on devolution issues should be the Judicial Committee of the Privy Council, restricted as the Bill provides to those members of the Privy Council who have held office as Lords of Appeal in Ordinary or who hold or have held high judicial office, as that term is defined in Section 25 of the Appellate Jurisdiction Act 1876. That is one alternative. The other is that the ultimate court, as this amendment seeks to bring about, should be the Appellate Committee of your Lordships' House.

    In replying to the debate on the last occasion, the noble and learned Lord the Solicitor-General set out three reasons why the Government considered that the Judicial Committee was the appropriate body to be the final arbiter on constitutional matters which will arise as devolution issues after the coming into being of both the assembly and the Scottish parliament.

    The first reason he gave was that the Privy Council had experience of acting as the constitutional court of appeal for the colonies and various parts of the Commonwealth. The second was the need for it to be a flexible mechanism to deal with such disputes promptly—the suggestion being that by adding to the judicial workload of the Appellate Committee of your Lordships' House, it might be impossible to achieve sufficiently prompt decisions. The third reason was that the larger number of judges that would be entitled to sit if the jurisdiction was placed with the Judicial Committee would be an advantage.

    I reflected carefully on the detailed reply given by the noble and learned Lord and discussed what he said with a number of Members of your Lordships' House and others outside. Having done so, I remain concerned that the Government have not reached the correct decision on what is clearly a difficult issue. To explain that, perhaps I can give my reaction to the detailed reasons which the Solicitor-General gave.

    First, there was a suggestion that the Privy Council had experience of appeals from the colonies and the British Commonwealth. That is entirely correct. But the Bill before us on this occasion—as indeed did the Scotland Bill—will preclude any judges from Commonwealth countries from sitting on devolution issue cases. Therefore, the only members of the Judicial Committee who have experience of such constitutional cases will be those Members of your Lordships' House who currently hold or who have held in the past, office as Lords of Appeal in Ordinary. It is rare that a High Court judge from one of the jurisdictions within the United Kingdom sits as a member of the Judicial Committee of the Privy Council. That reason therefore does not stand up to detailed scrutiny. The same individuals will be sitting whether the jurisdiction is with the Judicial Committee on the one hand or this House on the other.

    The second reason advanced was a need for a speedy resolution of disputes. I accept that that is desirable. But it is equally desirable that the Lords of Appeal in Ordinary should play a major part in the court that ultimately resolves the devolution issue and therefore, if there were to be any suggestion of the existing workload of the Appellate Committee making it impossible for the Lords of Appeal in Ordinary to play a major role in the final court that arbitrates on devolution issues, that would be extremely regrettable. The public will expect the Lords of Appeal in Ordinary to play a role and any problems that that might cause for their workload will require to be addressed by whichever court the jurisdiction is placed with.

    The third reason given was that this would admit a wider pool of judges. I fully accept that, as a matter of fact, that is correct. My problem with that reason is that it was not taken into account when the decision was made. When the White Papers were published, it was made clear that it was proposed that the Judicial Committee was to be the final court of appeal. But it was also made clear that those who would sit on the Judicial Committee would be restricted to serving Lords of Appeal in Ordinary. Therefore, not even retired Lords of Appeal in Ordinary would be eligible to sit; only those who currently serve. As a lawyer, I have some difficulty—not for the first time—in accepting as a valid reason for a decision, a reason which was not available when the decision was taken and certainly was not one of the reasons for the decision when it was taken.

    I accept that there are differing views on this matter. I accept that the matter is not entirely straightforward. But I firmly believe that on this occasion the Government have got the balance wrong and come to the wrong decision. Apart from the reasons which the noble and learned Lord discussed in his reply to my speech on the last occasion, there are other reasons that should not be forgotten. One is the fact that the decisions of the Welsh assembly, and indeed of the Scottish executive, will be challenged on a variety of issues. In a number of respects, it will be suggested that they acted beyond their powers; in other words, they have acted ultra vires, as lawyers would describe it. In some instances, those vires questions will be devolution issues and in others they will not. Therefore, there is a

    serious risk of some cases involving a challenge to the Scottish executive going up one legal route to the House of Lords and, equally, others going up another legal route; that of the Judicial Committee to the Privy Council.

    Even the Bill as drafted would not preclude the House of Lords considering and deciding upon devolution issues if it felt it appropriate to do so. Therefore, there is some concern that there will be confusion and that parties may become involved in more than one litigation and, consequently, involved in unnecessary expense.

    There is the further reason that I mentioned on the last occasion; that is, that some people hold the view—and it has some merit—that giving additional jurisdiction to the Appellate Committee of your Lordships' House may serve to reinforce the supremacy of this Parliament. I fully accept that, in debating this Bill, those who are taking part in the discussions are not concerned with the threat of nationalism or with the cry for independence which is undoubtedly building up a certain head of steam at the moment in Scotland. But this further way of reinforcing the fact that this Parliament is supreme, and that in judicial matters the Appellate Committee of your Lordships' House is the superior court, is not a consideration that should be thrown away lightly. Others hold the view that if this jurisdiction is placed with the Judicial Committee, it will become an encouragement to having a constitutional court in this country—again, a major issue on which differing views are held. I am against it, but I readily accept that others are for it.

    If we are to have a constitutional court, that is a major issue which should be addressed separately, carefully and in a considered manner. It should not be allowed to develop almost unconsciously from a development such as at present, which seeks to put this jurisdiction to the Privy Council.

    For all those reasons, therefore, I press Amendment No. 149 as a matter which merits serious consideration by your Lordships' House. I beg to move.

    My Lords, the noble and learned Lord, Lord Mackay of Drumadoon, has made an important point. He says that having issues determined by the House of Lords would emphasise the supremacy of this Parliament. But in many devolution issues, if not perhaps in all, the question that will be decided will be the powers of the Welsh assembly as against this Parliament. Therefore, his argument on principle—that the supremacy of this Parliament should be emphasised, should be invoked, when this Parliament is a party to the dispute—seems to me, in principle, to be quite wrong.

    The Judicial Committee of the Privy Council takes its jurisdiction directly from the Crown. Traditionally, the Judicial Committee give advice to Her Majesty. It is Her Majesty's order that is made in every appeal that comes from Commonwealth countries, or indeed from other jurisdictions, other areas, where the Judicial Committee of the Privy Council has responsibility.

    To my mind, if the combatants in a piece of litigation are, on the one hand, the Welsh assembly and, on the other, Westminster, it is far more appropriate that the Judicial Committee of the Privy Council, taking authority straight from the Crown, should be the arbiter.

    My Lords, I rise with trepidation to comment, as a lay person, on this subject. Some time ago I read a lecture given to Edinburgh lawyers by the noble and learned Lord, Lord Hope, in which he discussed this matter and expressed opinions close to those that my noble and learned friend has expressed. I tried to understand these and I found them somewhat convincing.

    It seems to me that on this issue it is extremely important that the process should work, but also that it looks right to people on the ground. These are amendments of high emotion and I am not convinced that in Scotland, at any rate, what was said by the noble Lord from the Liberal Benches is the case. The Judicial Committee and Her Majesty deciding issues will seem strange to people. They are used to the Lords of Appeal in Ordinary making ultimate decisions on legal issues in civil matters, but not in criminal matters in Scotland. They are completely accustomed to that, and I believe that they would accept that. I say that simply as an observer of the scene who is interested in that. Other points which my noble and learned friend made perhaps refute the case made by the noble and learned Lord the Solicitor-General at the previous stage, when I listened with great attention.

    I understand from the lecture of the noble and learned Lord, Lord Hope, and from what my noble and learned friend has just said, that some of the issues which arise may be devolution issues, but some may not be and they may get mixed up together.

    The second point which my noble and learned friend made is about what works. One could have the Judicial Committee and the Lords of Appeal in Ordinary deciding issues which are closely related, if not identical. Can the noble and learned Lord the Solicitor-General tell us who will win if they decide differently?

    7.15 p.m.

    My Lords, as the noble and learned Lord, Lord Mackay of Drumadoon, rightly pointed out, this raises the question of whether the final court determining devolution issues should be the Judicial Committee of the Privy Council or the Appellate Committee of this House. I gave the noble and learned Lord a full account of our reasoning in Committee. Could I briefly go over it again, without being too repetitive, because the noble and learned Lord has himself gone over it again?

    There are, as he rightly identified, three reasons. First, the Judicial Committee of the Privy Council already acts as the final constitutional court of appeal for various parts of the Commonwealth and in respect of certain colonies. That is a function which gives it particular experience in dealing with the kind of issues that will arise in relation to devolution. The kind of matters that will arise in that respect will be issues about the powers of an assembly, so where in a constitutional settlement does power arise? That is the kind of issue that, from time to time, it has to resolve in relation to the written constitutions of other states.

    Secondly, and I respectfully admit that this is an important point, the issues that could arise as devolution issues could be of great emotional or political importance at a particular time. Moreover, they will have the debilitating effect potentially upon the progress of certain measures through the Welsh assembly or the implementation of such measures. It is plainly of the greatest importance in these circumstances that those measures be dealt with as promptly as possible.

    Thirdly, there is no doubt that the workload on the Appellate Committee of this House is heavy at the moment. If the Judicial Committee of the Privy Council is used, as opposed to the Appellate Committee of this House, there will be a greater pool of people who can be used. It means more than just Lords of Appeal in Ordinary; it means anybody who has held high judicial office who is a Privy Counsellor. That provides a much wider pool and it seems to me to be sensible that it should be used. No undertaking was given, or no indication was given, that such people would not be used in relation to Welsh assembly devolution issues. It seems to me entirely sensible that they should.

    In those circumstances, one has a court which is used to dealing with the issues; a court which is likely to be quicker than the Appellate Committee of the House of Lords; and a court which has a wider pool from which to draw than the Appellate Committee of the House of Lords. Equally importantly, I believe that that court is held in the widest possible respect throughout the United Kingdom. There could be no doubt about both its ability and its experience to deal with such issues.

    With greatest respect to the noble and learned Lord, Lord Mackay of Drumadoon, I believe that when he referred to the "supremacy of Parliament" he was muddled as to what that phrase means. There is no doubt that Parliament is supreme in relation to the activities of the Welsh assembly, but one is talking there about legislative supremacy and not about the role of a body exercising a court function, resolving disputes between parties.

    It seems to me that nobody could possibly doubt that the Judicial Committee of the Privy Council was a separate and appropriate body to deal with that. It can deal with it more quickly and it has people experienced to deal with it. I would respectfully submit that the balance of the argument favours the Judicial Committee of the Privy Council.

    I have not had an opportunity to read the lecture to which the noble Baroness, Lady Carnegy of Lour, referred in her speech, but I did not understand her to be saying anything over and above that which the noble and learned Lord, Lord Mackay of Drumadoon, said. When one analyses it, I believe that the sensible choice is the Judicial Committee of the Privy Council. I believe it is a choice that would command widespread respect. Therefore, despite the eloquent arguments put by the noble and learned Lord, Lord Mackay of Drumadoon, ably supported by the noble Baroness, Lady Carnegy of Lour, I do not believe that there is any reason for the Government to change their mind in relation to that.

    My Lords, I apologise because I have heard only the speech of the noble and learned Lord the Minister. However, having heard his speech, I wonder whether he can deal with a point which concerns me. Has the time not come to have a Supreme Court with one jurisdiction rather than conflict between the Appellate Committee and the Privy Council? There should be a unified court with a constant membership.

    My Lords, that is a rather wide issue. I do not think that this is the appropriate amendment on which to discuss the question of whether there should be a Supreme Court. I should deal with the issue of conflict, which was raised by the noble and learned Lord, Lord Mackay of Drumadoon. The noble and learned Lord will be aware that paragraph 29 of Schedule 8 to the Bill states:

    "Any devolution issue which arises in judicial proceedings in the House of Lords shall be referred to the Judicial Committee unless the House considers it more appropriate, having regard to all the circumstances, that they should determine the issue".
    Of all the people in all the world who would be able to decide whether there would be a conflict, I should have thought that the Appellate Committee of the House of Lords would be the best people to judge in any individual case whether there was a risk of conflict. With respect to the noble and learned Lord, I think that that deals with the conflict point.

    My Lords, with the leave of the House, there is that aspect to the conflict. However, the point that my noble friend Lady Carnegy stressed, on which I certainly intended to touch, was the problem of the Appellate Committee on the one hand deciding an issue one way and the Judicial Committee on the other hand deciding it the other way. My noble friend posed the question: who wins?

    My Lords, unless they are sitting simultaneously in relation to the same issue, which will never happen, the one will have the benefit of the other. Therefore, they themselves will be in a position to determine what the right result should be in relation to that. So I think that the idea of the conflict to which the noble Baroness referred is unrealistic. The court will have the benefit of previously decided cases both in the Judicial Committee and in the House of Lords before it comes to a conclusion and it will be able to take that into account. As the noble and learned Lord knows, the House of Lords, when sitting judicially, is entitled to depart from its previous decisions.

    In any event—and an even better point—paragraph 32 of Schedule 8 states:
    "Any decision of the Judicial Committee in proceedings under this Schedule … shall be binding in all legal proceedings (other than proceedings before the Judicial Committee)".
    So there are two answers.

    I think I have dealt with all the points. The noble and learned Lord has not referred to his other amendments, which deal with costs issues, so I will not refer to those. In the light of my reply, I respectfully ask the noble and learned Lord to withdraw his amendment.

    My Lords, I am grateful, as always, to the noble and learned Lord. It will be one of the regrets of my legal career that I never had the opportunity of appearing against him in court, although, who knows, once devolution issues come thick and fast, we may yet meet.

    Perhaps I may begin by responding to the point made by the noble Lord, Lord Thomas. I may be wrong but I do not understand that this Parliament will be a party in any legal proceedings in which devolution issues arise. The parties as far as concerns this part of the world will be the United Kingdom Government represented by one or other of the Law Officers. So I think the noble and learned Lord's point may not be, as we sometimes say in the courts, his best point.

    The noble and learned Lord more than once stressed that this is a situation where the arguments require to be balanced, and that it is not clear-cut one way. I fully accept, taking one of the detailed points that was raised, that paragraph 32 of Schedule 8 says what it says. But it still seems to me that there is a concern about conflict and there is a concern about some of the wider issues on which I focused. For that reason, I seek to take the opinion of the House.

    7.24 p.m.

    On Question, Whether the said amendment (No. 149) shall be agreed to?

    Their Lordships divided: Contents, 39; Not-Contents, 82.

    Division No. 2

    CONTENTS

    Annaly, L.Marlesford, L.
    Balfour, E.Mayhew of Twysden, L.
    Biddulph, L.Mersey, V.
    Burnham, L. [Teller.]Molyneaux of Killead, L.
    Carnegy of Lour, B.Mottistone, L.
    Colwyn, L.Munster, E.
    Courtown, E. [Teller.]Northesk, E.
    Cumberlege, B.Norton, L.
    Denham, L.Oppenheim-Barnes, B.
    Dixon-Smith, L.Renton, L.
    Fookes, B.Roberts of Conwy, L.
    Garel-Jones, L.Romney, E.
    Glenarthur, L.Rotherwick, L.
    Harlech, L.Rowallan, L.
    HolmPatrick, L.Skelmersdale, L.
    Kenyon, L.Stanley of Alderley, L.
    Leigh, L.Stodart of Leaston, L.
    McConnell, L.
    Mackay of Drumadoon, L.Strathcona and Mount Royal, L.
    Mancroft, L.Taylor of Warwick, L.

    NOT-CONTENTS

    Acton, L.Hughes of Woodside, L.
    Amos, B.Hunt of Kings Heath, L.
    Ampthill, L.Irvine of Lairg, L. [Lord Chancellor.]
    Archer of Sandwell, L.
    Berkeley, L.Janner of Braunstone, L.
    Carlisle, E.Jay of Paddington, B.
    Carter, L. [Teller.]Jeger, B.
    Chandos, V.Jenkins of Putney, L.
    Clinton-Davis, L.Judd, L.
    Currie of Marylebone, L.Kilbracken, L.
    David, B.Kirkhill, L.
    Davies of Oldham, L.Levy, L.
    Dean of Beswick, L.McIntosh of Haringey, L. [Teller.]
    Dean of Thornton-le-Fylde, B.
    Desai, L.Merlyn-Rees, L.
    Dholakia, L.Milner of Leeds, L.
    Dixon, L.Molloy, L.
    Donoughue, L.Monkswell, L.
    Dormand of Easington, L.Murray of Epping Forest, L.
    Dubs, L.Nicholson of Winterbourne, B.
    Dunleath, L.Ponsonby of Shulbrede, L.
    Eatwell, L.Prys-Davies, L.
    Elis-Thomas, L.Ramsay of Cartvale, B.
    Evans of Parkside, L.Randall of St. Budeaux, L.
    Falconer of Thoroton, L.Rendell of Babergh, B.
    Farrington of Ribbleton, B.Richard, L. [Lord Privy Seal.]
    Gallacher, L.Rogers of Riverside, L.
    Geraint, L.St. Davids, V.
    Gilbert, L.Simon, V.
    Gladwin of Clee, L.Smith of Gilmorehill, B.
    Gordon of Strathblane, L.Stone of Blackheath, L.
    Graham of Edmonton, L.Symons of Vernham Dean, B.
    Grenfell, L.Taylor of Blackburn, L.
    Hacking, L.Thomas of Gresford, L.
    Hanworth, V.Turner of Camden, B.
    Hardy of Wath, L.Walker of Doncaster, L.
    Haskel, L.Watson of Invergowrie, L.
    Hayman, B.Whitty, L.
    Hollis of Heigham, B.Williams of Mostyn, L.
    Holme of Cheltenham, L.Winston, L.
    Hoyle, L.Young of Dartington, L.
    Hughes, L.Young of Old Scone, B.

    Resolved in the negative, and amendment disagreed to accordingly.

    7.32 p.m.

    [ Amendments Nos. 150 to 169 not moved.]

    Clause 110 [ Power to vary retrospective decisions]:

    [ Amendments Nos. 170 and 171 not moved.]

    Page 57, line 9, leave out ("Attorney General") and insert ("relevant law officer").

    The noble and learned Lord said: My Lords, Amendments Nos. 172, 173 and 175 were originally proposed by the noble and learned Lord, Lord Mackay of Drumadoon, in Committee. They would allow each of the UK law officers potentially to be participants in proceedings about devolution issues. In bringing these amendments before your Lordships the Government are fulfilling the pledge that I gave to the noble and learned Lord during the Committee proceedings. At that time, had our procedures permitted, the Government would have accepted the amendments. As it is, we bring them back, with thanks, now. I beg to move.

    On Question, amendment agreed to.

    Page 57, line 11, leave out ("Attorney General") and insert ("relevant law officer").

    On Question, amendment agreed to.

    [ Amendment No. 174 not moved.]

    Page 57, line 27, after ("In") insert ("this section "the relevant law officer" means—

  • (a) in relation to proceedings in England and Wales, the Attorney General,
  • (b) in relation to proceedings in Scotland, the Advocate General for Scotland, and
  • (c) in relation to proceedings in Northern Ireland, the Attorney General for Northern Ireland;
  • and in").

    On Question, amendment agreed to.

    Schedule 9 [ Welsh Administration Ombudsman]:

    Page 102, line 18, leave out ("of the Assembly after the first") and insert ("after the first financial year of the Assembly")

    Page 102, line 32, leave out ("of the Assembly")

    Page 102, line 44, leave out ("of the Assembly")

    On Question, amendments agreed to.

    My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, may I suggest that the Report stage begins again not before 8.35 p.m.

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

    Appropriation (No2)(Northern Ireland) Order 1998

    7.35 p.m.

    rose to move, That the draft order laid before the House on 16th June be approved.

    The noble Lord said: My Lords, the draft order before us today authorises expenditure of £3,754 million for Northern Ireland departments in the current financial year. This is in addition to the sum of £3,026 million voted on account in March, and brings total estimates provision for Northern Ireland departments to £6,780 million, an increase of 6 per cent. on 1997–98. The order also authorises the use of additional receipts to meet an excess vote in 1996–97.

    I would remind your Lordships that the order does not cover the estimates for the Northern Ireland Office on law and order services. As a Whitehall department, the estimates for the Northern Ireland Office are dealt with separately. However, the public expenditure decisions underlying the estimates for the Northern Ireland departments and the Northern Ireland Office form part of the Northern Ireland block allocation. As such, the Secretary of State has flexibility to reallocate resources within the block in the light of emerging pressures and easements.

    Before turning to the contents of the estimates I hope your Lordships will allow me to make a number of more general comments. I am sure that many of your Lordships would share with me the view that the present process of approving this order is not the most effective means of exploring and examining the Northern Ireland Estimates. However, since in the future it will fall to the new Northern Ireland assembly to deal with the estimates and expenditure currently falling to the six Northern Ireland departments—and this may, therefore, be the last occasion on which the order is brought before this House in this way—this would clearly not be the appropriate time to propose change.

    I am sure your Lordships will join with me in recognising the possibilities for truly momentous change flowing from the establishment of the assembly and will share with me in the desire to do everything possible to ensure its success. Indeed, given the present difficult circumstances in the Province, I am sure your Lordships will agree that all those who can bring influence to bear in resolving the present situation should be encouraged to do so. Furthermore, I am sure that your Lordships will agree that the initial cost of the assembly at some £9 million is not a high price to pay compared to the cost and consequences of an absence of democracy. Surely we will all accept that locally elected representatives accessible to, and ultimately accountable to, the people of the Province, provide the best possible chance of a lasting solution to the tensions which remain so evident.

    The effects of the present, but, hopefully, temporary disruption in the Province, undoubtedly impact on the prospects for economic development, including tourism. Many observers might see these as self-inflicted wounds. However, past achievements have shown that Northern Ireland can and will recover lost ground. For example, the latest available official statistics show that the Northern Ireland economy remains in good health in almost every area. The main economic indicators have, once again, shown very positive results for the Province.

    The output of manufacturing and production industries continues to rise at a rate well above that achieved nationally. Over the past five years, Northern Ireland's manufacturing sector has increased its output by almost 24 per cent.—more than twice the rate of growth achieved nationally. There has also been a significant improvement in the Province's gross domestic product relative to the United Kingdom, with GDP per head rising from 78.2 per cent. of the national average in 1990 to 81.2 per cent. by 1996. Furthermore, record employment levels have also been achieved.

    The year 1997–98 has also been a record year for investment in the Province, with planned investment by IDB client companies totalling £713 million, an increase of 12 per cent. on last year's figure. This investment represents the promotion of 7,137 new jobs while safeguarding a further 4,254 existing jobs. Forty-one inward investment projects contributed anticipated investment of over £520 million. This should create a record high 5,064 new jobs, while safeguarding a further 2,483 jobs.

    All of this clearly demonstrates the impressive achievements of the Northern Ireland economy which, coupled with the potential for achieving political stability, provides Northern Ireland with an opportunity for a brighter economic future.

    In Northern Ireland, as in the rest of the UK, education and health are government priorities. So far as concerns Northern Ireland, additional funding in these and other comparable national programmes is calculated by reference to the Barnett formula which in essence reflects the broad population balance between Northern Ireland and the rest of the UK. Budget additions to Northern Ireland public expenditure in 1998–1999 include £34 million for education, £44 million for health and £46 million for welfare-to-work. In addition, the Chancellor's package amounting to £315 million, announced on 12th May, provided funding for roads, education, housing and agriculture, including funding through the proposal to transfer the Port of Belfast to the private sector.

    I now turn to the main items of expenditure covered by the order as detailed in the estimates booklet. The figures are generally rounded to the nearest million pounds and I shall be as brief as possible to allow maximum time for debate. I shall start with the Department of Agriculture. In Vote 1, net provision of £17 million is to fund EU and national agriculture support measures.

    In Vote 2, £130 million is for on-going regional services and support measures. This includes £63 million for the development of the agriculture and agricultural products industries and for scientific and veterinary services. Some £23 million is for farm support, enhancement of the countryside, and fisheries and forestry services; £22 million is for central administration, including information technology and specialist accommodation services, and £7 million is for the rural development programme. Some £17 million is for the Rivers Agency and some £5 million is in respect of processing and marketing and fishing projects which are wholly funded by the European Union.

    In the Department of Economic Development's Vote 1, £160 million is for the Industrial Development Board. As the shadow assembly begins to work towards implementing the Belfast Agreement supported by over 70 per cent. of the people of Northern Ireland in the referendum on 22nd May and re-affirmed in the assembly election at the end of June, the prospect of greater political stability provides a unique opportunity for attracting new investment to Northern Ireland. The IDB already offers a very competitive package of assistance to both new and existing firms and together with a more stable environment will further increase the attractiveness of the Province as a good place to do business. This major commitment of resources will enable the IDB to maintain a high level of support towards improving the Northern Ireland economy.

    In Vote 2, £117 million is required. This includes £14 million for the Northern Ireland Tourist Board, to assist the development of tourism in Northern Ireland. In 1995, during the previous ceasefires, almost 1.6 million visitors came to Northern Ireland, an increase of 20 per cent. on the previous year. This aptly demonstrates the potential that exists for attracting tourists and increasing the contribution the tourist industry can make to the economy. At present, spending by holiday visitors and domestic holiday makers accounts for 2 per cent. of Northern Ireland's GDP, sustaining in the region of 12,500 jobs. I hope that at the present time, when Northern Ireland is going through what I believe is a short-term but difficult situation, people will reflect on the consequences of their present conduct on the potential for tourism and attracting inward investment.

    In Vote 3, £210 million is sought for the Training and Employment Agency; £62 million is to fund 14,700 training places under the jobskills training programme. A total of £32 million is for the Action for Community Employment Scheme, Community Work Programme and Enterprise Ulster which will provide some 5,780 places for long-term unemployed adults in projects of community benefit. A further £23 million is to assist companies improve their competitiveness by developing the skills of their workforce. Almost £40 million under the Government's welfare-to-work initiative will provide a range of employment and training measures within the new deals for 18–24 year-olds and long-term unemployed.

    The Chancellor's recently announced initiative will also provide an additional £42 million from November 1998 to assist the long-term unemployed, providing up to 30,000 places. Taken together with the welfare-to-work allocation, this is a substantial commitment by this Government to tackle the root causes of unemployment and provide new opportunities for work.

    I now turn to the Department of the Environment, which in Vote 1, seeks £174 million for roads, transport and ports. This includes £138 million for the development and operation of Northern Ireland's public roads system as well as maintenance which continues to remain a priority.

    Vote 2 relates to housing, where £267 million will be provided, mainly to the Northern Ireland Housing Executive and the voluntary housing movement. When net borrowing and the Housing Executive's rents and capital receipts from house sales are taken into account, the total resources available for housing will be approximately £603 million.

    In Vote 3, gross expenditure of £194 million is estimated on the provision of water and sewerage services, of which £87 million is for capital expenditure and £104 million for operational and maintenance purposes, including administration costs.

    In Vote 4, £190 million is being sought for environmental and other services provided by a number of agencies including the Environment and Heritage Service, Planning Service, Ordnance Survey of Northern Ireland and the Rate Collection Agency; £38 million is for the important task of urban regeneration measures targeted at areas of social, economic and environmental need. This represents a net increase approaching £5 million more than last year and it is anticipated that these resources, through various partnerships with the private sector, will continue to produce higher overall investment levels; £30 million will be made available under the EU Peace and Reconciliation Programme of which £23 million will be funded from EU receipts.

    The estimates for the Department of Education seek a net total of £1,403 million in Vote 1, an increase of 0.5 per cent. on last year's provision. When account is taken of Northern Ireland's share of receipts in each year from the national sale of the student loan debt, expenditure will increase by 3.2 per cent. Vote 1 includes £833 million for recurrent expenditure by education and library boards, of which £1 million is provided under the Government's new deal. This includes £792 million for schools, and £41 million for libraries, youth, administration and other services.

    Vote 1 also provides £37 million for boards' capital projects; £50 million for capital projects in voluntary and grant-maintained integrated schools; and £151 million for recurrent expenditure in voluntary and grant-maintained integrated schools. These amounts include £41 million for grant-maintained integrated schools, an increase of £9 million over 1997–98. The provision for boards' and other schools' capital includes some £6 million under the Government's new deal.

    Also in Vote 1, £95 million has been provided for colleges of further education, £112 million for local universities and £133 million for student support, including grants and student loans. The vote also covers expenditure on a range of youth, sport, community and cultural activities, including £16 million for arts and museums, and £4 million for community relations. Some £12 million has also been made available under the EU Peace and Reconciliation Programme, of which £9 million is being funded from EU receipts.

    The next set of votes relate to the Department of Health and Social Services where £1,601 million is sought in Vote 1 for expenditure on hospital, community health and personal social services, health and social services trusts, family health services and certain other services. This amount represents an increase of 2.3 per cent. on last year's final net provision.

    In Vote 3, £25 million is sought for expenditure on grants to voluntary bodies, research, training, bursaries and further education and certain other services.

    In Vote 4, £142 million is sought to meet the department's administration and other miscellaneous costs. This includes £93 million for the Social Security Agency, which also takes into account £2 million in respect of administering the welfare-to-work initiatives; £8 million is for the Northern Ireland Child Support Agency; £4 million for the Health Estates Agency and £37 million for the core department.

    In Vote 5, £1,766 million is sought for social security benefit expenditure administered by the Social Security Agency. This represents an increase of 8.6 per cent. compared to forecast outturn for last year. It covers not only the general uprating of benefits from April 1998, but also an increasing number of beneficiaries.

    In Vote 6 £348 million is sought to cover expenditure on the independent living funds, motability, housing benefits, the social fund and payments into the Northern Ireland National Insurance Fund.

    Finally, I turn to the new Northern Ireland Assembly vote where £9 million is sought for set-up and operational costs. Pending parliamentary approval of the 1998–99 main estimates, arrangements have been made for resources to be advanced from the Northern Ireland Consolidated Fund.

    I hope that this short summary of the main components of the estimates is helpful. I commend the order to your Lordships. I beg to move.

    Moved, That the draft order laid before the House on 16th June be approved.—( Lord Dubs.)

    7.51 p.m.

    My Lords, it goes without saying that in the light of the Northern Ireland Assembly and the rather exotic base thereon there may be a considerable change to our debates on appropriation orders, if indeed they exist in their present form in future. Local representatives will in many ways, not yet clearly defined even by themselves, become responsible for the administration of the departments listed in the present order. But the Parliament of the United Kingdom will remain in control of the block grant, as will be the case in Wales. There is a certain parallel. In both cases the Treasury will remain the paymaster. It follows that financial accountability to Parliament must remain. It may not be in such detail but in principle there will have to be accountability.

    Presumably, the estimates of the Northern Ireland Office will continue more or less in the same categories but under a form of direct control, if not direct rule. Therefore, the position will not resemble the arrangements that existed under the Government and Parliament of Northern Ireland up until 1972. It follows, I hope, that there will remain a Secretary of State for Northern Ireland with Cabinet rank, as in the case of Wales, as I understand it. Scotland may be in a different position even in advance of achieving independence. That is not my ideal but it may prove to be unstoppable.

    I turn to Part II, Vote 1: Department of Agriculture. I should like to raise the plight of the pig industry in Northern Ireland. I am aware that the Minister yesterday met representatives of the Ulster Farmers Union. He will have been made aware of the serious difficulties. As I understand it, the first difficulty is the burden of cost arising from the disposal of offal and dead pigs. That cost is now attributed to the producer. It may appear to be a minor matter, but in an industry that is already in serious trouble and in a depressed state it becomes a large minus factor for the average pig farmer.

    An additional burden is imposed by the 1991 legislation that requires the conversion of sow stall and tether systems. I understand that the phasing-in period ends on 1st January 1999. It has been put to me that, although the legislation was and is a requirement of the European Union, other member states, including our nearest neighbour the Irish Republic, do not share the intention to enforce the conversion in their respective territories. My facts may not be entirely accurate and I should welcome any clarification that the Minister may be able to provide. In similar fashion, there appears to be no ban in the Irish Republic, and as I understand it in other European states, on the use of meat and bonemeal in pig feed. Northern Ireland pig producers do not advocate the use of such dangerous ingredients, but find it difficult to understand why competitors south of the frontier should be permitted to retain a feedstuff cost advantage. I trust that the noble Lord, having reflected upon the proposals put to him yesterday by the Ulster Farmers Union, can give the House some encouraging news this evening.

    I turn to the Department of the Environment's Vote 3 dealing with water and related matters (as it is politely called). For several years I have pleaded with successive Ministers in various departments for co-operation and co-ordination between the key elements of the Department of the Environment in regard to housing development in general. The roads and planning sectors, which are now subject to agencies within the department, appear to take no account of the non-availability of water and sewerage facilities, which I understand are also under an agency. I offer as a typical example the village of Glenavy in my former constituency, which is about five miles from my home. The planning and roads agencies gave the go-ahead for new housing estates. The builders moved in and the houses were built and occupied before it was discovered that basic services were almost non-existent and certainly totally inadequate. For two or three years residents had the unedifying experience of mobile slurry tankers shuttling from house to house, all made worse by inevitable spillage. The point that I have raised about co-ordination is made more urgent by the creation of three agencies that cover the fields that I have outlined. For the same reason, I caution against rumoured plans to split up the Department of the Environment. That would tend to make for even less communication and certainly less co-operation.

    With Glenavy still in mind, perhaps I may mention that just before the fourfold expansion of that village the primary school and Roman Catholic secondary school were closed and demolished on the grounds the respective authorities decided that the roll in one case was seven short of the 200 required to enable the school to remain in operation. That decision was taken because no one had informed the education authority—I do not refer specifically to the department—that school numbers would mushroom within two years. Now the children have to be bussed long distances to inadequate schools.

    That leads me to my final point, which is also related to the Department of Education: Vote 1. One of the primary schools to which children are bussed is Ballycarrickmaddy. (In my notes I have spelt the name of the school in block letters. I shall furnish that information to whoever requires it later.) That primary school is well known to my noble friend Lord McConnell. It is a tiny Victorian building, surrounded by a sea of mud in wet weather. Around the building dotted in a sea of mud like satellites are numerous mobile classrooms. Noble Lords will recall that the Department for Education in Whitehall made a Statement to the House some months ago that funds were to be made available to remove and replace outside toilets in the whole of England and Wales. In that Statement a time limit was set for the achievement of the target. Has that scheme been extended to Northern Ireland? If so, how has it been put into effect in schools like Ballycarrickmaddy, which passed out of my care at the general election but for which I still have a great affection? That school has no covered connections between the satellite portakabins. If that has proved to be impossible given the architectural layout of the complex, I am afraid that the only alternative is a new school.

    8 p.m.

    My Lords, the Minister suggested that this is not a satisfactory way of handling the order in this House. I agree with him most heartily, because it is a subject upon which there should be detailed questions and answers for each department. We have only an hour in which to complete the debate on this order. There is no time to go though each section of it. For that reason I shall concentrate on the economy, which influences almost everything in the Province.

    The Minister gave pertinent figures for the growth in GDP and employment. He has saved me trouble in that respect. The achievement and the steady growth of the Northern Ireland economy and its manufacturing industry in recent years have been outstanding. For much of that, the noble Baroness, Lady Denton, deserves credit. As Minister responsible for the economy in the previous administration, she worked hard, and, what is more important, effectively for the development of the economy.

    Looking ahead, I cannot agree with the rosy outlook described by the Minister because for a variety of reasons the immediate prospects are not all good. For instance, the textile and clothing industry is under severe pressure, due partly to the strength of sterling but also because modern machinery and methods are now being employed in the Far East where labour costs are but a fraction of those in Europe. Long-established textile firms are in real difficulty. I trust the IDB is doing all that it can to assist those firms which provide employment for a large number of people and have been stable, in some cases, over several generations.

    The most serious threat to the economy of Northern Ireland relates to agriculture. The EU embargo on beef exports by the UK has affected Northern Ireland more than Great Britain because 55 per cent. of beef in Northern Ireland was exported, in contrast to about 10 per cent. or less in Great Britain. At last the embargo has been lifted in Northern Ireland due to the combined efforts of government and the industry, but unfortunately it will take time before exports can be developed to anything like the former level.

    The agri-food industry in Northern Ireland is very important. It accounts for 10 per cent. of total civil employment and 8 per cent. of GDP and has sales of £2.28 billion, of which 53 per cent. is directed outside the Province. In 1997 total income from farming in Northern Ireland decreased by 38 per cent., due largely to the beef crisis, and it is estimated that agriculture output will decrease by a further £50 million in 1998. Already large numbers of small rural businesses are having to cut their workforce numbers. This is very serious because rural areas in Northern Ireland depend almost entirely on agriculture, and the stable social structure depends on it.

    My noble friend Lord Molyneaux spoke about the pig industry where there is a crisis. He gave reasons for it. For example, for more than a year the net margin per pig on a birth-to-bacon basis is negative. It varies from a loss of about £2 to as high as £10 per pig. As a result, pig farmers are in serious debt, and there is no sign of how they can get out of it. I know that the Minister is well aware of the situation. I hope that he can give us some suggestions tonight as to how the industry might find its way back to profitability.

    In agriculture generally there is money which should be made available to the farmers, many of whom are seriously in debt to banks and to suppliers. For instance, the revaluation of the UK's green pound rate should be paid out. It has already been paid out in all other EU countries. There are other compensation packages approved by the EU and paid out elsewhere. Will the Minister tell the House what action is proposed to make payment of the various grants and compensations which have put Northern Ireland farmers at a disadvantage, particularly compared with their neighbours in the Republic of Ireland? The general belief is that the Republic of Ireland is much more adept at obtaining EU grants and assistance than is the case in the UK. That does not seem to make good sense.

    The recent package of financial assistance announced by the Chancellor of the Exchequer as a peace package has been widely welcomed. The roads scheme which will help the infrastructure is most urgently needed and I hope can be put in hand without delay because of the time taken—a long time in some cases—to obtain planning permissions. Traffic delays in the Westlink in Belfast have a very high cost attached to them and the improvement is long overdue. For instance, freight traffic to and from Belfast Harbour has been restricted for some years.

    Industry in Northern Ireland generally has been handicapped and promises to be handicapped for many years to come by something quite unconnected with the value of sterling or lower labour costs elsewhere. The cost of electrical power to Northern Ireland industry is approximately 30 per cent. higher than in GB and domestic customers are similarly disadvantaged and to an even greater extent than our cross-Border neighbours. That disadvantage is expected to widen in the coming years and promises to continue until the year 2010 when the contracts with the generators can start to be renegotiated. The Director General of OFREG is well aware of the seriousness of those differences and has been working hard to reduce the differential. His responsibilities include transmission and distribution where his action has reduced charges to consumers, but the real problem lies in the high cost of generation, over which he has no control.

    The cost of generation in Northern Ireland is 43 per cent. higher than Great Britain. That is a remarkable difference. A recent report by consultants retained by the regulator shows that generating costs in Northern Ireland do not need to be out of line with those elsewhere. The reason for it is the nature of the generating contracts offered by government in 1993. Those power procurement agreements offer a premium for making the power available, and at the time of signing it was not appreciated by government that prices would fall in Great Britain. A premium is offered for increased availability. By improved efficiency, the generating companies have increased availability and reduced the cost. The present Government were not responsible for those contracts, but they must surely appreciate the disadvantage suffered by industry in Northern Ireland which makes it even more difficult to attract new manufacturing industry to the Province.

    At the present time the problem has been complicated by the need to plan for the EC directive on electricity trading which will become effective in February 1999. That requires 25 per cent. of the output in Northern Ireland to be opened to competition.

    Consultants have been engaged to work out a system which will nominally comply with the EC Directive, and by complexity of arithmetic it may be possible to devise a system but administration costs will be high both to the generators and to consumers. Due to high fixed costs payable under the long-term power purchase agreements I do not see how any system can be devised which will produce overall savings. In fact the costs of administration may lead to some increase in prices, rather than a decrease.

    It is generally believed that OFREG is now in discussion with the generators to see whether some reduction in availability payments can be negotiated, but this can only go a small way to reduce the present large differential of 43 per cent. Surely this is the time, when Government are working on the peace package, to become involved in discussions with OFREG and the generator and to work out ways in which all or part of the present contracts can be bought out. There is, after all, £40 million available which was ear-marked by the last administration which could be regarded as an appetizer. A genuine reduction in power costs would send out a very good signal to industry if included as part of the peace package and of course for domestic consumers it would be very, very welcome.

    I wish to ask the Minister whether there is provision in the order for civilian victims of violence and for police who have suffered violence. The issue was highlighted by Sir Kenneth Bloomfield in his recent report. The provision is urgently needed.

    My Lords, I wonder whether it assists the noble Lord, Lord Cooke of Islandreagh, if I correct a minor point? The debate is not time limited. I am not inviting noble Lords who have yet to speak to do so at great length; but it is not a time-limited debate.

    Lord Cooke of Islandreagh