Lords Chamber

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House Of Lords

Monday, 6th March 2000.

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

Prayers—Read by the Lord Bishop of Wakefield.

Academic Medicine: Vacant Chairs

asked Her Majesty's Government:

How many chairs of academic medicine are now vacant, and what action they propose to take to encourage suitable candidates to come forward.

My Lords, these data are not collected centrally. However, I am aware that concerns are being expressed about filling some of the posts. Work is in hand by the universities to establish the size of the problem. We shall consider whether further action is needed at the national level once we have received the results of that work.

My Lords, that is a very interesting Answer. However, will the noble Baroness agree that the problem is caused at least in part by people who should be engaged in research and training being pushed into clinical duties? Does she agree that that gives Ministers, particularly in the other place, the opportunity to give well dressed up answers to show that they have fulfilled their pledges, which they probably have not, and that they are doing better than their predecessors, which they should be doing but are not?

My Lords, I am not sure about well dressed up answers being produced in the other place. I assure the noble Lord, Lord Peyton, that there can be no question of academic clinical staff being pushed into NHS work simply in order to bolster the statistics of the numbers of doctors working in the NHS. Academic clinical staff are, of course, a very small proportion of the total numbers in the medical profession. However, I am aware that there are many time pressures on that particular category of staff. They are required to carry out good research and there are great pressures on them to achieve in the research assessment exercise (RAE). They have considerable teaching responsibilities but many of them carry out clinical work, too. Some work must be done to ensure that the balance is right and that the jobs do not become unsustainable and unattractive because too much is expected of that particular category.

My Lords, I can answer the noble Baroness's query. At present there are 74 vacant clinical chairs in the United Kingdom. Does she agree that the noble Lord, Lord Peyton, is right in that, to some extent, the pressures of clinical work to the detriment of teaching and research have affected recruitment in clinical academic medicine? Further, does she agree that with the Government's commitment to introducing an additional 1,000 medical students, it is crucial that this sector of clinical academic medicine should be improved? Will she take account of the Savill report of the Academy of Medical Sciences, published today, which makes a number of important and innovative suggestions about how to improve recruitment in clinical academic medicine?

My Lords, yes. I shall be delighted to take into account the work of the Savill report. Of course, that will be a matter also for my right honourable friend the Secretary of State for Health, who is responsible for the NHS side of this issue. However, perhaps I may address the question of the 74 vacancies. That figure derives from a BMA survey, not from centrally collected statistics. The survey was not of the complete population of all medical schools. Moreover, one-third of those surveyed did not reply. Therefore, I believe that we must take the figures with a little pinch of salt. Perhaps I may say also that, of the 74 vacancies quoted in the unpublished BMA survey, 26 were in the process of being filled.

I am trying to provide the background to this matter in order to assist your Lordships. However, I do not in any way want to intimate that there are not considerable pressures on the people who occupy those posts. More work needs to be done in considering how to alleviate the pressures in order to ensure that the posts are filled. There will, of course, be another 1,000 medical students and that means that we shall need to recruit more staff in this category.

My Lords, does the Minister agree that, in fact, recruitment in academic medicine is presently at an all time low and that that may account partly for the failure to fill many of those chairs, rather than it being a matter purely of the recruitment process? Can she confirm what her department and the Department of Health are doing to improve recruitment into academic medicine? The noble Lord, Lord Walton of Detchant, referred to the report of the Academy of Medical Sciences. I wonder whether the Minister has looked particularly at the tenure track proposals made both by that academy and by the Royal College of Physicians?

My Lords, yes, I am aware of both those reports. However, the recruitment of academic staff is, of course, a matter for the universities; it is not carried out by central government, as the noble Lord is fully aware. The universities are looking at all those issues. Further work is being done. The group which is taking it forward is expected to report in May or June. When the Government receive that report, they will consider whether anything needs to be done centrally. However, I would not be quite as gloomy as is the noble Lord about general overall recruitment in academic medicine. I have received reports that there is still a large number of young doctors who are very attracted by this type of work.

My Lords, since the noble Baroness has confessed that she does not know the size of the problem, should we not perhaps have a tsar to look at academic medicine? If such an appointment is made, perhaps he or she should look at not only the number of medical students but also at the percentage of those medical students who go into full-time work, whether it be of an academic nature or as clinicians?

My Lords, I do not know that we need either a tsar or a tsarina for that particular purpose. It is important that young medical students who are about to qualify are given information about all the options available to them. But substantial numbers of them are interested in research and go into research. That is one reason why the UK is ahead of many other countries in terms of both the quantity and quality of its medical research.

On the noble Lord's more general question, the vast majority of young people or, indeed, slightly older people—because more mature students are coming into medicine—who qualify go into careers in medicine.

My Lords, if, as the Minister said, the review was incomplete and medical schools did not reply, that means that there is a minimum of 74 vacant chairs. That must be so if the questionnaires were not completed. In view of the fact that there is not the slightest doubt that morale is very low in the world of academic medicine, will she consider revising the answer which she gave a few moments ago when she said that she would consider whether further action is necessary? Such action is desperately needed now.

My Lords, that is really a matter for universities. The Government do not directly recruit people into universities. They are not the employer in that case. Nor do the Government set the pay of academic staff. Again, that is a matter for the universities, as are the conditions under which people work. So it would be quite wrong for the Government to set down in stone today what should be done. More work needs to be done to consider the extent of the problem. I do not know whether there are more than 74 such vacancies. I suspect that there are not because I suspect that those medical schools which did not reply are more likely to be those that do not have a particular problem. I do not know. But we need to have all the data in front of us before we decide whether further action is needed.

Death Penalty: Worldwide Abolition

2.44 p.m.

asked Her Majesty's Government:

What efforts they have made to secure the worldwide abolition of the death penalty.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office

(Baroness Scotland of Asthal)

My Lords, the Government oppose the death penalty in all circumstances. EU guidelines on death penalty démarches in third countries were agreed under our presidency, allowing us to raise both individual cases and capital punishment more generally. We have established a panel of independent experts to advise on practical steps to promote abolition. And we have led the EU efforts for a successful death penalty resolution at the UN Commission on Human Rights.

My Lords, I thank the Minister for that encouraging reply. In the light of her welcome commitment to support the European Union policy towards third countries which states that the death penalty,

"has no legitimate place in the penal system of modern civilised societies",

will the Government intensify their efforts to secure its abolition throughout the Commonwealth? Is my noble friend aware that up to last Thursday no fewer than 19 people have been put to death in the United States this year—three of them juvenile offenders and one of them a 62 year-old great grandmother who had suffered a lifetime of sexual, physical and emotional abuse and whose other misfortune was to live in the state of Texas where the governor is a candidate for the presidency of the United States?

My Lords, I can certainly reassure my noble friend that the Government are doing all that they can to raise the issue internationally. Noble Lords will know that 108 countries have now effectively abolished capital punishment and only 87 now retain it. As regards the United States, we have joined our EU partners on a number of recent démarches in relation to specific cases at state and federal level. We are particularly concerned about executions of those under the age of 18 at the time of the offence, executions of those who are mentally incapable and executions of foreign nationals. It is a matter which we are pursuing with great vigour with all our partners and with some success.

My Lords, is the Minister aware of the consistent support which the majority of church leaders in this country have given to the Government's policy for the worldwide abolition of the death penalty? Does she share the concern of these Benches about the alliance of politics and religion which, in the southern part of the United States of America, so grotesquely perpetuates the use of the death penalty? In the light of the Government's earlier representations made to the US State Department in March 1999 and the ratification of the International Covenant on Civil and Political Rights, will she say what other ways the Government have in mind to exert pressure on that religious and political alliance?

My Lords, first, perhaps I may say how grateful Her Majesty's Government are for the wholehearted support we have received from our Churches here. That has been extremely welcome. They have been a supportive element as opposed to a distraction. That is a benefit which not all legislators have enjoyed. I warmly thank the right reverend Prelate for raising that point.

We have done a great deal in the past two years to address the issue. Many noble Lords will know about the death penalty panel which brings together a number of academics. Regrettably, the noble Baroness, Lady Stern, is not in her place because she has participated in that work. The panel is looking very creatively at making recommendations to assist the Government to see how they can most advantageously exert pressure and encourage countries to come away from the use of the death penalty. We are extremely grateful for all the work that has been undertaken by that panel.

My Lords, now that our relationship with Iran has improved considerably and the Iranian elections have produced a Majlis far more inclined towards human rights, will the Minister and her colleagues in the Foreign and Commonwealth Office make fresh representations to the Iranian Government that they should not execute the three students convicted of offences in connection with the student disorders at the university last July?

My Lords, I assure the noble Lord that we shall continue to raise human rights issues with Iran. Issues relating to human rights and the death penalty cause us a great deal of concern. We shall continue to pursue them wherever they arise.

My Lords, is the Minister aware that last year executions in the United States reached a 48-year high, rising by nearly 50 per cent from the previous year? Are the Government entirely satisfied with that state of affairs, bearing in mind that according to a Written Answer of 16th April last year,

"The Foreign Secretary's Death Penalty Panel"—

to which the Minister referred—

"has … targeted the United States for action, and we are constantly reviewing the best way to tackle the US authorities over the death penalty"?

My Lords, I have said already that the matter causes us concern.

Considerable effort is going into the initiative. The noble Earl will know that it has been in existence since 1998. We have welcomed some recent improvements. For example, there is a moratorium in Illinois which highlights the practical problems associated with capital punishment. We welcome also the increased debate in the United States. Public awareness of the issues will be central to any change in policy. We are engaging in those matters. I do not hesitate to compliment the panel again because its work is incredibly valuable. We are taking its recommendations extremely seriously.

My Lords, since the abolitionist resolution before the third committee was sabotaged last year, will we be seeking other methods of bringing the matter before the General Assembly?

My Lords, as I said earlier, we shall be engaging with our partners to try to ensure greater success than we have had in the past. We are extremely proud that, on the last occasion, the number of countries which joined with us in that endeavour rose significantly. We wish to pursue it and we shall continue to do so with great vigour.

Meat Industry Red Tape Working Group:Report

2.52 p.m.

asked Her Majesty's Government:

Further to their response to the report of the Meat Industry Red Tape Working Group, how they propose to prevent widespread closure of small and medium-sized abattoirs and cutting plants and give confidence to their owners and to the wider farming community.

My Lords, the Government recognise the difficulties of small and medium-sized abattoirs. The Red Tape Working Group, which we established, proposed a radical agenda to assist and give confidence to those sectors of the industry as well as to the wider farming community. The Government have accepted the vast majority of the group's recommendations and are now pursuing their implementation.

My Lords, I thank the Minister for that reply. Does she appreciate that the one point absolutely crucial to the survival of small and medium-sized abattoirs—that relating to charges—is one of the three points which the Government did not accept? Will she please make it absolutely clear to her right honourable friend that most of the small abattoirs questioned—I believe 26 out of 28—said that they would probably have to close within the next 12 months if charges were maintained and that that will have a devastating effect on the farming community both up and down the food chain? Will she bear in mind in particular the Prime Minister's exhortation to diversify which he made to farmers when he was in the West Country? This situation will crucify that policy.

My Lords, I accept the noble Countess's point that it is important that we have a range of facilities and that small and medium-sized abattoirs can be extremely important for particular sectors and specialist sectors, which we want to encourage and where marketing is extremely important.

With regard to charging, we have taken action to help the whole of the sector; for example, by freezing the hourly rate of MHS charges at April 1999 levels and promising that they will not be raised by more than the rate of inflation this year; and by deferring the introduction of charges for cattle passports and for specified risk material enforcement until 2002. The further issue about the basis for charging (particularly around headage which, I believe, is the issue to which the noble Countess was referring) has been put forward to a task force which I understand will be meeting next week.

My Lords, I declare an interest as a breeder of rare breed pigs. Apart from the general thesis of the noble Countess, with which I wholly agree, will the Minister accept that, in spite of the measures she has detailed, small and medium-sized abattoirs are rapidly closing all over the country, which will have a dramatic effect on the future survival of rare breeds? That is something which I am sure the Minister would deplore. Does she accept that the matter is urgent and that the Government badly need to do something about it if we are to preserve such remarkable leftovers?

My Lords, I recognise the issue raised by the noble Viscount in respect of rare breeds. As I said in my earlier answer, there are specialist areas for which such abattoirs are of great importance. Over time, there has been a substantial reduction in the number of red meat slaughterhouses. We must recognise that. I was surprised to see that red meat slaughterhouses in this country declined in number from 1,385 in 1975 to 339 last year. Over the past 25 years, there has been an inexorable reduction.

One of the most important things we can do is to move from a prescriptive approach to a risk-based approach in abattoirs. That is one of the issues that my right honourable friend is pressing with Commissioner Byrne in Brussels today.

My Lords, one of the recommendations of the Red Tape Working Group was that a derogation for the smallest abattoirs should urgently be considered. When I raised the matter several months ago with the then Minister, the noble Lord, Lord Donoughue, he said that the Government were looking into it. Will the Minister tell the House what progress has been made with regard to looking for a derogation for the smallest slaughterhouses? Furthermore, does the ministry accept, in the light of its sustainable agriculture launch, which considers a number of indicators—economic, social and environmental—that the number of slaughterhouses serving the industry should be one of the indicators?

My Lords, I cannot give the noble Baroness an off-the-cuff answer on the second point, but I shall certainly look into the matter.

With regard to the derogation for a reduction in veterinary supervision for low throughput plants, we received an indication last year from the Commission that it was possible to have a reduction in such supervision at the post-mortem stage, but it was still necessary to have full supervision at the ante-mortem stage. For that reason, we froze veterinary supervision levels in low throughput plants at May 1999 levels. But we must consider carefully the implications of the differential between post and ante-mortem supervision. That is exactly what we are currently doing.

My Lords, has the Red Tape Working Group identified those rules and regulations which do not come out of Brussels and which have been superimposed over the years by officials here?

My Lords, I recommend the Red Tape Working Group report, because it is written in robust and clear English. I am sure that the noble Lord would appreciate it. It makes clear comment about the possibilities and the matters which fall within national rather than European jurisdiction. Of the 35 recommendations, the Government have accepted 28. We are considering four of them and only three have been rejected. The most important recommendations must be negotiated at European level. They relate to the HACCP-based approach to supervision which I believe is supported here without exception. That is why it is important that we pursue those matters in Brussels. I believe that the working group accepted that point.

Merger Reform

3 p.m.

asked Her Majesty's Government:

When their proposals to restrict ministerial involvement in merger cases, as announced in August 1999, will be implemented.

My Lords, the Secretary of State for Trade and Industry is currently considering the responses to the Government's consultation on merger reform and plans to issue a response in May.

My Lords, I had hoped to be slightly more encouraged by the Answer than I am. I hope that the proposition in the consultation paper, that in future Ministers will be less likely to second-guess the competition authorities in such matters, will he carried forward. Will the Minister consider making a statement with instant effect so that the proposition put forward by the Government can be carried into effect immediately rather than awaiting legislation with the uncertain priorities that that will entail?

My Lords, I understand my noble friend's point about awaiting legislation, but I do not believe that he is right to suggest that we should anticipate the proper consideration of consultation. After all, many people—companies, lawyers, the CBI, the TUC, consumer associations, regulators and individuals—have responded to the consultation document. They are entitled to have their views taken seriously. An instant statement of the kind recommended by my noble friend would scupper that.

My Lords, will the Minister agree that this situation is widely regarded as the result of the dispute between the Treasury and the Department of Trade and Industry? In view of the Government's commitment to "joined-up" government, would it not be a good idea to take up the suggestion of the noble Lord, Lord Borrie?

My Lords, I have given my reasons for rejecting the suggestion of my noble friend Lord Borrie. As to any widely regarded view on disagreements between government departments, that is the view of the noble Lord.

My Lords, does the Minister agree that there is a paradox in that although the Secretary of State will step back in relation to cases that arise in the United Kingdom, on his own analysis he will most probably be stepping forward in relation to European cases, given the White Paper produced by the Commission a year ago and the problems of consistency between national administrations?

My Lords, my noble friend raises an important point that was indeed raised by the Secretary of State in his speech last Monday to the Social Market Foundation. The Secretary of State certainly recognises that the European dimension is likely to make some decision-making political, and as a result that will make the residual intervention of the Secretary of State under the national security heading perhaps more likely.

My Lords, will my noble friend ask his right honourable friend to reflect on a fundamental matter: this Government introduced the Competition Act 1998 which, for the first time, gives us a stringent piece of pro-competition legislation? Does it follow logically from that extraordinarily powerful Act that the Secretary of State for Trade—I believe he is still so called—should not intervene as a matter of principle and that industry should get used to the idea that competition is a good thing and should not scream "national interest" every time it affects them. Rather like celibacy, industry believes competition is a good idea for everybody else. In this case competition is good. The Minister should say so and that he will not get involved.

My Lords, I am glad that my noble friend has given me an opportunity to say that he is right. The powerful Competition Act came into force on 1st March. Already it is beefing-up the activities of the Office of Fair Trading, the offices of the utilities regulators and many others. That is not an argument for pre-judging the consultation that has taken place. Other people have taken it seriously, as must the Government. However, the important consideration is that the Government have taken such issues seriously and have given the necessary powers to regulators and government bodies to pursue anti-competitive practices with proper penalties.

Bank Of England Monetary Policy Committee: Select Committee

3.4 p.m.

My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That a Select Committee be appointed to consider the operation of the Monetary Policy Committee of the Bank of England and to make recommendations; and that, as proposed by the Committee of Selection, the following Lords be named of the committee:

L. Barnett,
L. Burns,
L. Cuckney,
L. Elder,
L. Forsyth of Drumlean,
B. Hogg,
L. Newby,
B. O'Cathain,
L. Paul,
L. Peston (Chairman),
L. Roll of Ipsden,
L. Taverne;

That the committee have leave to report from time to time;

That the committee have power to adjourn from place to place;

That the committee have power to appoint specialist advisers;

That the committee do meet on Tuesday 7th March at quarter past four o'clock.—( The Chairman Of Committees.)

On Question, Motion agreed to.

Financial Services And Markets Bill

My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That it be an instruction to the Committee of the Whole House to whom the Financial Services and Markets Bill has been committed that they consider the Bill in the following order:

Clause 1,
Schedule 1,
Clauses 2 to 20,
Schedule 2,
Clauses 21 to 29,
Schedules 3 and 4,
Clauses 30 to 34,
Schedule 5,
Clauses 35 to 39,
Schedule 6,
Clauses 40 to 72,
Schedule 7,
Clauses 73 to 85,
Schedule 8,
Clause 86,
Schedule 9,
Clauses 87 to 98,
Schedule 10,
Clauses 99 to 106,
Schedule 11,
Clauses 107 to 123,
Schedule 12,
Clauses 124 to 153,
Schedule 13,
Clauses 154 to 156,
Schedule 14,
Clauses 157 to 196,
Schedule 15,
Clauses 197 to 219,
Schedule 16,
Clauses 220 to 324,
Schedule 17,
Clauses 325 to 407,
Schedules 18 and 19,
Clause 408.—(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

Crown Prosecution Service Inspectorate Bill Hl

Read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.

Representation Of The People Bill

3.7 p.m.

Read a third time.

Clause 9 [ Restriction on supply of information contained in register]:

moved Amendment No. 1:

Leave out Clause 9.

The noble Lord said: My Lords, Amendment No. 1 seeks to leave out Clause 9 as this Bill is not the occasion on which to seek to resolve questions relating to the commercial use of the register without the consent of the person registering and because there has been no reasoned, constructive discussion with the Government on Clause 9.

This is not a wrecking amendment. The Representation of the People Bill can receive Royal Assent and be wholly effective without this clause. On the elections to the Greater London Authority, they could be subject to Amendments Nos. 3, 20 and consequential amendments.

On Report the point was taken that Clause 9 should not stand part unless the Bill was amended to ensure that a single register could not be used for any commercial purpose without the consent of the person registering and that unless the Government were prepared to accept some such amendment Clause 9 should not stand part. The effect would be that the present situation would remain with a single register available for the public in public buildings. The Government have been advised that to make that register available to anyone who wanted to buy it would be a breach of the EU data protection directive and that there would be a risk of it being found to be in breach also of Article 8 of the European Convention on Human Rights.

The situation is that the Government wish to sell the register to commercial interests that wish to buy it. The annual income of such commercial interests is some £30 billion and so by Clause 9 the Government seek to introduce a device whereby they can sell the register and commercial interests can buy it. That device is the edited version which seeks to avoid an infringement of Article 8. In that regard, the noble Lord, Lord Bassam of Brighton, informed us that he believed that the clause was on the right side of the law and formed the right balance without falling into the Article 8 bear trap. We do not have the substance of the advice he was given, which would appear to conflict with the decisions of the European Court of Human Rights to which reference was made in Committee.

Further questions raised in Committee, to which I shall turn briefly, remain unanswered. The Government intend to stand by Clause 9 because it suits their purpose. No means of reasoned argument or persuasion can induce them to accept any amendment to Clause 9 and there is therefore no point in retabling such an amendment.

In Committee the noble Lord, Lord Goodhart, went some way in supporting the amendment. On Report he expressed a good deal of sympathy but was unable to support the amendment because,

"it simplifies what is a complex situation".—[Official Report, 29/2/00; col. 461.]

I agree with that. At Second Reading, having referred to current trading practices which had reached the proportions of unacceptable abuse of individual privacy, I said that this order of abuse had been augmented by the advances in technology and will be

so augmented in the future. We are now on the fringe of a further leap in development in this area by resort to a new type of use of the Internet. I also said that the workings of these processes were beyond my comprehension and I doubted my confidence to draft a truly effective amendment.

On Report, just before the speech of the noble Lord, Lord Goodhart, I said that to seek to resolve the question on this Representation of the People Bill, involving database protection, an EU directive on direct marketing, Article 8 of the European Convention of Human Rights and other considerations, was not well advised; that the two registers under Clause 9, which I now seek to leave out were,

"a total misconception; they are unnecessary and unacceptable; they were devised only to serve those commercial interests [and the purposes of government]".—[col. 461.];

and that these matters should be dealt with in a separate Bill.

Because the Government will not entertain any acceptable amendment in this matter for the reasons given, the only reasonable resolution appears to be that this clause should not stand part. I say that there has been no constructive argument from the Government and wish briefly to make that comment good.

First, on Report it was pointed out that the noble Lord, Lord Bassam of Brighton, had plainly failed to deal with the questions raised by the noble Lord, Lord Thomson of Monifieth—how the two-tier system would work; whether it would be enforceable; and that we should have to go a long way in considering the issues. None of those points was answered. Furthermore, the substance of the Government's assertion that they were on the right side of Article 8 of the European Convention on Human Rights has never been made good in argument. They have never supplied me with either paper or verbal response to say why I was wrong in my suggestion that the provision would infringe Article 8 and why the Government are on the right side of the law.

Lastly, the Government do not seem to have given their mind to dealing with the questions put by my noble friend Lord Mackay of Ardbrecknish. I shall not go through them in detail; we have been through them all too often. I refer to the ticking of the box, the options for selection and so forth. They are all crucial considerations, but even today we do not know where the Government stand on them. They remain examples of the disinclination of this Government to entertain constructive argument. It is idle to seek to amend this clause; I seek to have it removed altogether. I beg to move.

3.15 p.m.

My Lords, I have a great deal of sympathy with the amendment of my noble friend Lord Campbell of Alloway. As we come to the Third Reading of the Bill. this clause remains most unsatisfactory. We made a little progress on it when we agreed that each individual elector should tick his or her own box, or at least that an obligation should be placed on the head of a household in regard to whether each member of that household wanted the box ticked. That was progress from where we had started; namely, that the head of the household would tick the box for the whole household and was not under any obligation to ascertain the position of other members.

But I remain uncertain as to how the Government see this clause operating in practice. A full electoral register will be available to the registration officer, MPs, councillors, candidates and others; in other words, it will be used for electoral purposes. There will also be an edited version containing a list of those who decide not to opt out.

The reasons given for opting out were many. We started with what I shall refer to as the "battered wife" argument: a husband wishing to find out where his wife has fled from his brutality will simply be able to obtain access to the electoral register and find out where she has gone. But that husband will still be able to do that. He will be able to go to the library and inspect the register. So that argument has been blown out of the water before it has even started.

Another argument was that if people's names do not appear on the edited version available to companies involved in direct mailing, they will not receive any junk mail. Those who think that by excluding themselves from the register of electors they will no longer receive junk mail will be disillusioned; they will find that the junk mail still arrives, because those who send junk mail have other means of finding names and addresses. So there will be a degree of disappointment in that regard.

Despite that, the legitimate point was raised by my noble friend that, under the European Convention on Human Rights, one should not be forced to give one's name and address and have them appear in a list when they can then be used for purposes other than electoral purposes.

I regret that my noble friend Lord Norton of Louth is unable to be here today. Mondays are difficult for him because he gives lectures to his students. He would have confirmed what my noble friend has already said. An electoral register should be a register of electors, and that is all that it should be. There should be no edited version or commercial sale and no one else should be allowed to use it. I find that to be a simple, nice, black and white solution to the problem.

However, that is not the solution the Government have chosen. They have been persuaded that credit companies and so forth ought to be able to get at the list. Otherwise those seeking credit may well find themselves unable to secure it. The electoral register is used by companies to verify whether someone genuinely does live at the address given. I understand the point and I have some sympathy with it.

We have been through these arguments several times and I do not believe that we have moved any further forward. At all stages I have asked questions about companies that might be allowed access to the full list. I have not yet had a detailed reply. My noble friend Lord Campbell of Alloway knows much more about the legal position but it seems to me that even the edited version may be seen as an infringement of the convention and that the full version will almost certainly represent an infringement if it is sold on to those companies the Government are to prescribe.

The European convention has resulted in some strange decisions. I acknowledge that the Minister has declared that the Bill's provisions obey the convention. I have to tell him that I am less confident and that I consider there is only a 50:50 chance of success. That has nothing to do with the noble Lord, Lord Bassam of Brighton; it has everything to do with the experience we have had in Scotland. I have explained previously that a case was brought under the convention to stop temporary sheriffs, a system that had been used perfectly satisfactorily for years. A further case threatens the workings of the road traffic Acts as regards speed cameras. The noble Lord, Lord Whitty, explained to the House that an appeal is being considered. It was also suggested recently that hearings in sheriffs' courts could fall foul of the convention if, for whatever reason, a case is heard by two sheriffs, one at the beginning and one at the end. There is concern that the much-admired system of children's panels may be under attack from the convention. No less a person than the retired professor of Scots law at Glasgow University, Professor Walker, has described the convention as a "charter for cranks and crooks" because it is beginning to run a coach and horses through certain aspects of our legal system. In my view, and that of Professor Walker, this is neither beneficial to law-abiding people nor does it protect their civil liberties.

On a number of occasions my noble friend has asked whether this clause will fall foul of the European convention. He has not yet received an answer. Today, at the final stage, we seek a little more than a statement to the effect that. "I have signed the Bill so it must be all right". We should like to hear the arguments that persuade the Government that the clause does not infringe the convention. As I read the clause, I do not believe that it is going to work. I believe that it will be a shambles. It will not do what the Government believe it is going to do. They will have trouble with it and that trouble may lead all the way to the courts. I do not see how it can effectively be amended. Although I understand the need to allow people to opt out and why the Government have made provision for that, I can also understand why the Government then backtracked and decided that certain companies should be allowed access to the full register.

The whole matter still seems untidy. I cannot support my noble friend all the way by saying that the clause should not stand part of the Bill, but I regret that, as we reach the last stage of the Bill, it is still largely unamended and several serious questions remain unanswered.

My Lords, as the noble Lord, Lord Campbell of Alloway, said, I confirm that through all the stages of the Bill I have expressed considerable support in principle for the views that lie behind his amendments. It seems important that information that is required by law to be given for particular purposes should not then be used for other purposes without the consent of those required to provide that information. In the circumstances, I can see that in Clause 9 the Government have gone some way towards solving the problem. However, as the noble Lord, Lord Mackay of Ardbrecknish, said, I recognise that there are still potential problems with Article 8 of the European Convention on Human Rights. However, I have to say that I regard that problem rather more sceptically than does the noble Lord and I do not feel that the risk is particularly serious.

As regards the text of the amendment proposed today by the noble Lord, Lord Campbell of Alloway—namely, to leave out the entire clause—I feel that we shall run into serious problems. From my point of view, Clause 9 makes things better rather than worse. Without the clause there would be no way of amending the existing rules that allow publication and sale of the full register to anyone who wishes to buy it. In those circumstances, I regard Clause 9 as a move in the right direction, although perhaps not the ideal move and not the final stopping place. However, it is a great deal better than having no such provision at all.

I accept the spirit that lies behind the noble Lord's proposed amendment but I regret that I cannot agree with it.

My Lords, the noble Lord, Lord Campbell of Alloway, has throughout our debates on the Bill ensured that we give very careful consideration to Clause 9, which places restrictions on the availability of the electoral register. He is quite right to do so. It is an important clause and we must make sure that we strike the right balance and take account of all our obligations, in particular under the European Convention on Human Rights and the EU Data Protection Directive.

In our earlier debates the noble Lord moved amendments which would have had the effect of imposing more restrictions on the availability of the register than those for which Clause 9 provides. But, on this occasion—as he has made plain—he is proposing that we should stick with existing electoral law under which the register is freely available for commercial purposes.

As I explained in our earlier debates, I do not think that the status quo is an option. It is a statutory requirement to complete the electoral registration form and to appear on the electoral register. A person who does not provide the necessary details may, in theory, be prosecuted.

We do not consider that a situation in which one is obliged, on pain of prosecution, to submit personal information which can then be used for completely different purposes without one's consent is acceptable. More to the point, we do not believe that this state of affairs complies with the EU Data Protection Directive. We have taken advice from the Data Protection Registrar. The noble Lord has seen copies of my officials' correspondence with her office.

Since our last debate, we have again looked at the legal issues raised by the noble Lord. I can confirm that we remain convinced that what we are proposing in Clause 9 is not in conflict with the European Convention on Human Rights.

I believe that we need to strike a balance. On the one hand, there are the data protection and privacy concerns identified by the working party on electoral procedures. On the other hand, it is a fact that a large number of commercial concerns currently make use of the electoral register. If possible, we should avoid doing undue damage to their interests.

I do not intend to weary noble Lords this afternoon with a further full explanation of how the new arrangements will work. But, in brief, electors will be able to opt out of having their names included in the version of the register that will continue to be freely available for sale—the edited register. The full register will continue to be available for local inspection in town halls and libraries. It will also be available for electoral purposes to elected representatives, political parties and candidates; and to credit reference agencies for the purpose of confirming identity in connection with credit applications.

The noble Lord, Lord Mackay, made a interesting point about some husbands still being able to find the addresses of their battered wives. That point was also mentioned in our earlier discussions. However, I believe that the noble Lord has missed the point that the register will be in libraries in paper form and set out by ward and street. Therefore, people need to know where the person lives in order find him or her on the register. The problem with "battering spouses" arises with CD-ROMs, through which people are reachable by name. Giving people the option to be excluded from the edited register means that they will not be included on such CD-ROMs and the easier method of finding people by a name search will not be available. People must have some idea of where the person lives in order to access that information from a paper-form register.

We cannot provide absolute protection, but the system will provide a degree of protection. Indeed, that important point was made by some noble Lords during our earlier discussions. It is an important consideration. I realise that this is a difficult matter, but we have not reached this position easily. In all honesty, we have tried to strike a balance while protecting privacy. We do not want to stymie completely the commercial use of the register, but we also recognise that the register is primarily compiled for electoral purposes. That is what we have tried to achieve in Clause 9. No one is saying that it is a science of perfection. Time will ultimately tell us whether or not we have got it right.

For the time being, we must assume that we have got it right and work on that principle. I hope that noble Lords will support the clause on those terms. The noble Lord, Lord Campbell of Alloway, made some powerful and valuable arguments in his opening remarks, but, on the basis of my response, I invite him to withdraw his amendment.

3.30 p.m.

My Lords, I thank the Minister for his reply. I believe that the situation boils down to this. As appears in the Official Report, the noble Lord has received advice that if we just continue with a single public register and make it available to anyone who wants to buy it, we would be in breach of the EU Data Protection Directive. We would also be at risk of being found in breach of Article 8 of the ECHR. On that advice, the Minister has reiterated that the two-register proposal under Clause 9 will be on the right side of the law.

In a thin Chamber with—I believe I can say—relatively no overt support, it would be quite unusual and, indeed, improper to seek to take the opinion of the House. However, I should like to thank the noble Lord, Lord Goodhart, for his contribution, even though I could not quite understand his reasoning. If the single register were to remain in accordance with my proposals, it could not be bought or used. Therefore, I do not understand the object of the noble Lord's objection. But, be that as it may, this is not the time to reason; indeed, it is the time to seek leave to withdraw my amendment and thank my noble friend on the Front Bench for his contribution to my argument, which he was unable to support.

Amendment, by leave, withdrawn.

moved Amendment No. 2:

Before Clause 10, insert the following new clause—

FREE POST FOR GREATER LONDON AUTHORITY ELECTIONS

(" .—(1) The 1983 Act shall be amended as follows.

(2) After section 36(2B) there shall be inserted—

"(2C) Section 91 shall apply to elections under the Greater London Authority Act 1999 with such modifications as may be prescribed by regulations made by the Secretary of State."").

The noble Lord said: My Lords, in moving this amendment, I shall speak also to the other amendments tabled in my name. There are also amendments from the Government in this grouping. These amendments deal with the whole question of the free mailshot for the mayoral election. We have already dealt with this matter on a number of occasions and have discussed the issue with the Government. In the circumstances, the best thing that I can do is to introduce this as a debate about the London free mailshot and then sit down. That will allow the Minister to tell your Lordships what the Government have brought forward by way of an offer. I beg to move.

My Lords, the noble Lord was commendably brief. All the amendments in the group deal with the vexed question of mailshots or freepost for elections to the Greater London Authority. As the noble Lord said, the issue has been debated on a number of occasions both here and in another place. I, for one, have learnt a great deal about the direct mailing industry as a consequence. It is a very fascinating business. We have all been grateful throughout these protracted discussions and debates to the representatives from that sector who have played a part in advising us.

When we last met to discuss the matter, noble Lords will recall that there were, so to speak, two rival propositions, as reflected in the amendments standing in both my name and that of the noble Lord, Lord Mackay. The two propositions were, essentially, the Government's idea of a booklet containing inserts from every mayoral candidate and the Opposition's proposal for an envelope stuffed with material produced by every mayoral candidate.

As noble Lords will appreciate, the difference between these two methods of informing the electorate is very large indeed. The difference is a staple! The Government's proposal amalgamates candidates' material into a booklet which would be delivered in an envelope. The Opposition's proposal would have separate pieces of paper being placed in the same envelope—the envelope-stuffing option, one might say.

Some people may think that this staple was not worth spending much time over; others clearly did not hold that view. A great deal of time was spent on the matter by officials from the Department of the Environment, Transport and the Regions and from the Home Office. They have listened patiently and, I hope, politely to the arguments in favour of the staple-free method of delivery—the envelope-stuffing option. So eloquent were noble Lords and their representatives that hour upon hour of debate took place in the corridors of power on the matter of this staple. Indeed, we heard about the staple from a number of different angles, in so far as you can look at a staple from many different angles.

I do not wish to be unkind in this respect because we have had a discussion about serious issues. However, the matter could perhaps have been resolved more speedily. The solution that we reached—namely, the booklet—has required movement from all sides. We have accepted that there should be an election communication for this first election and a flexible power enabling permanent arrangements to be established for future elections. We hope that the Opposition will accept our concerns about cost and the need to guard against abuse.

I believe that we now have a very satisfactory outcome. I hope that it will be welcomed by smaller parties, poorer candidates and—dare I say it?— independents, as well the major parties. It will give everyone in this whole exercise a level playing field from which to start. It will also provide those concerned with the opportunity to express themselves in their own way. Indeed, we may even take a certain pride in our discussions, differences and debates on the matter. Perhaps the GLA will build on the proposals in the future when it comes to consider election communications in the run-up to the 2004 election. We can all contribute to that debate too; perhaps we shall have another opportunity to exercise our minds on the question of whether or not to staple, or whether or not to stuff the envelope.

Let me now turn to the detail of the amendment and try to deal with it as quickly as I can lest I fall into the trap that has bedevilled many who have tried to wrestle with this vexed issue. Each candidate, or their agent, will submit an election address to the Greater London Returning Officer (the GLRO) covering no more than two sides of A5. The GLRO may specify certain requirements in order to be able to compile the booklet, but beyond that the candidate is free to decide what to include in those two sides and indeed whether to include any material in the booklet at all! Therefore there is a clear choice there.

To make this exercise feasible—printing 5 million copies of the booklet, inserting each copy into a pre-addressed envelope, and delivering to each elector in London before the first day of polling—we have had to set out some clear rules. One is that the booklet will be no longer than 32 pages. This means that each candidate's election address will cover two sides of the A5 booklet if fewer than 16 of the candidates standing nominated have had election addresses accepted by the GLRO by noon on 3rd April, but only one side if 16 or more have had addresses accepted. To allow for this, candidates will need to submit a second version of their election address to the GLRO covering a single side of A5.

Each candidate will need to have their election addresses approved by the Post Office before submitting them in a format to be decided by the GLRO. The addresses would need to comply with Post Office regulations similar to those that apply at general elections, but strengthened to guard against the potential of abuse. As noble Lords know, we treat the potential for abuse very seriously and are determined that the booklet should not be waylaid by unscrupulous candidates. The amendment therefore makes clear that candidates' election addresses must not contain any advertising material (other than material promoting the candidate as a candidate at the election), or any other material with a view to commercial gain.

No address may refer to any candidate standing for election to the assembly. I know that some noble Lords wanted mayoral candidates to be able to refer to assembly candidates in their election addresses. We have thought about this long and hard, taken advice, and concluded that it would be manifestly unfair to give some assembly candidates (such as those from parties with a mayoral candidate) an advantage over others (such as independents) who would not be mentioned.

This issue is not clear-cut and I think that there may even be different views about it on the Opposition Benches. The simple fact is that allowing mayoral candidates to refer to assembly candidates would place some assembly candidates in a better position than their opponents. That does not seem right. As I said earlier, we are trying to create a level playing field. Time is short, and we believe that it is important not to bring this election into disrepute by legislating to create an unfair contest. That may be subject to some form of challenge and we do not want to run that risk.

The GLRO will determine the form of the booklet, and set out each address alphabetically, by candidate surname. He will also include a short section in the booklet to explain its purpose, and give some background to the election itself. I can assure the House that the GLRO will consult fully on this text, and on the design and layout of the booklet (although candidates may only have a very short time to respond). The GLRO will decide the date by which candidates must submit their election addresses to him, and the format in which they should be provided—we anticipate that it will be camera-ready copy.

Each candidate who wishes to include an address in the booklet will need to contribute £10,000 towards the cost of printing. I feel certain that your Lordships will consider this fair given that candidates themselves bear the cost of printing and mailing at a parliamentary election.

For future GLA elections, the amendment provides for the Secretary of State by order to make such provision for the free delivery of election communications as he thinks fit. Before making the order, he or she will consult the mayor, assembly, and any other body he considers appropriate, such as the electoral commission when that is established.

Amendment No. 20 provides for the only realistic process to deliver an election mailing to London electors in the time available before the first election. It meets the concerns of the Government and many of the concerns of noble Lords opposite. Let us not argue further over a staple and let us make progress in terms of seeking consent to the method that I have mentioned.

3.45 p.m.

My Lords, the outcome of the battle that has distracted your Lordships' House for some weeks now certainly reflects considerable credit on your Lordships' House and, in the outcome, also reflects credit on the Government, although I believe that the Government could, and should, have taken steps to remedy the situation a great deal earlier than they did.

Two weeks ago your Lordships' House decisively rejected the so-called "constitutional convention" that your Lordships' House does not reject secondary legislation, and threw out two orders that had been made under the Greater London Authority Act. It did so in defence of democracy. The Government recognised that their position was indefensible and did not try to raise the "Peers against the people" issue.

We had fruitful and quite lengthy negotiations. Speaking for myself I wish to thank the noble Lords, Lord Carter, Lord Whitty and Lord Bassam of Brighton, for the courteous way in which they listened to the arguments and for their willingness to take them on board. They accepted the principle of a freepost and negotiated that seriously and in good faith. I pay particular tribute to my noble friend Lord Rennard, who unfortunately is otherwise engaged this afternoon, for his knowledge of what could and could not be done technically in the time available and his persuasiveness in explaining that.

The outcome is, of course, a compromise. We obtained a freepost for the mayoral election but not a separate freepost for assembly candidates. We obtained a freepost that will be delivered to all electors and not simply to households, which would have been unacceptable for reasons which I tried to explain at Report stage. Indeed, I believe that that was the main issue that was dealt with in the negotiations.

We obtained an agreement that the format and artwork should be a matter for each candidate to decide and that there should not be a rigid formula under which each candidate would be allowed simply a text of 200 words and a passport photograph, as the Government originally proposed. We accepted that addresses should go out as part of a booklet rather than as free-standing leaflets, collated into a single delivery.

I agree with the noble Lord, Lord Bassam of Brighton, that mayoral candidates should not be allowed to refer to assembly candidates of the same party in their freepost because I fear that if that was allowed there could be a challenge to the fairness of the election process by independent assembly candidates, who, of course, would be unable to obtain a mention in any freepost leaflet.

Overall I believe that the opposition parties achieved most of what we wanted. We have made the elections for the mayoralty of London fairer, particularly for the smaller parties and the independents. I do not include among the independents for this purpose the honourable former friend of the noble Lord, Lord Bassam of Brighton, Mr Ken Livingstone, who is the last person to need a freepost as no doubt he will receive plenty of publicity without it!

Rightly, the amendment leaves the Greater London Authority itself to decide what should be done in subsequent elections. We shall in due course need to consider whether the freepost should be extended to direct elections for an executive mayor outside London. That is an issue of potential importance and certainly in major cities such as Liverpool, Birmingham, Manchester or Newcastle it is hard to see how there can be a fair election without it. Speaking on behalf of my party, we welcome very much the steps which the Government have taken to meet our objections in the matter of the London free post.

My Lords, speaking on behalf of my party, I also welcome the solution arrived at. I have but one query.

I welcome the booklet scheme. It seems to me that it is a good solution and that the Government have come down on the right side of the debate which has taken place very warmly on the subject. It is tremendously important for the democratic process that the booklet should go to every elector and not to every household; I welcome that wholeheartedly.

The only question to which I do not entirely know the answer concerns the issue of mayoral candidates not being allowed to refer in their address to other candidates for the council. For the reasons that have been given, I think that that is absolutely right. But some mayoral candidates—possibly those who have less likelihood of being elected, although no one ever knows what the electorate will do—also want to be elected as members of the council if they should fail in the mayoral election. Are they allowed to refer to this possibility? It is not a bull point for voting for them for mayor but, nevertheless, is probably a useful thing. Are they allowed to refer to this matter in the course of their election address for mayor?

My Lords, I think that it was the noble Lord, Lord Norton of Louth, who, at the previous stage, drew attention to the problems presented by blocks of flats where there might be only one large brass letterbox at street level serving, say, a dozen or 20 flats. If I understood the noble Lord correctly, it has been the practice of the Post Office up until now to push through the door only one electoral communication per block, so that only one of the flats' tenants would receive it. Have the Government thought of any way of overcoming that particular problem?

My Lords, I congratulate the noble Lord, Lord Bassam of Brighton, on the becomingly modest way in which he spoke to his amendments. I think that it is a device which justifies a high degree of modesty, and the noble Lord met the requirement admirably.

I am not revealing anything at all surprising when I say that I was not in any way consulted. For that I am deeply grateful. Nor did I have any part in the negotiations which have produced this, to my mind, extraordinary arrangement. The noble Lord said that a great deal of time had been spent on the issue. I can understand that. He then made the candid admission that the matter could have been handled more speedily. I am not sure that the noble Lord is right about that. The subject contains material that would allow for almost endless delay. On the whole, I am rather surprised that in the end weariness came to his rescue and he was able—I shall not say, "to cut it short"—to reduce the length of the proceedings which otherwise may have obtained.

When it comes to the "birth" of the election booklet—if that is the right phrase—or when it makes its appearance, it will be a fairly astonishing document. I can bear witness and testify to the fact that it will probably not be the most widely read publication there has ever been. I also think that it will be useful to many people who are not taking any part in the election. I am sure that comedians—who, in our time, do not lack altogether raw material—will find it a useful quarry for further reference. The Minister said that it is important not to bring the election into disrepute. I agree with him. I think he can safely leave that little task to other people who will be more immediately involved than even he is.

My view, which I have attempted to express in your Lordships' House on previous occasions, is that the idea of having a mayor of London is a thoroughly bad one. The matter was not thought out by the Government and they have found themselves horribly embarrassed, as has been the Tory Party to some degree, by some of the fruit—shall I say, "by some of the harvest"?—that has sprung from their idea.

I think the Government are justified in saying that at least they have paid some degree of homage to the idea that, if we are go to through this extraordinary process, the individual elector should receive some kind of communication with his name on it. From what the noble Lord said, I am not sure how confident he is that each and every elector will receive an accurately addressed package containing this booklet. It will be interesting to see what turns up. Judging only from the extraordinary results achieved by firms which go in for this kind of operation and from the versions of our names (even if we have quite simple ones) that they produce from time to time, one is lead to expect that in the course of this delivery some people will receive communications addressed to people they have never met but who are, roughly speaking, intended to be themselves.

It would be churlish to divide the House and to break up the happy harmony which has prevailed between the Front Benches. The Government of the day, the Liberal Democrats—with the noble Lord, Lord Goodhart, championing his cause, quite rightly up to a point—and my noble friend on the Front Bench have all gone into cahoots and produced this extraordinary creature. Naturally they wish to cheer it on its way. I cannot resist the temptation of saying that I do not fall over myself with enthusiasm for the creature they have produced. I recognise that they are entitled to a degree of self-congratulation, but they must not expect me to join in.

4 P.m.

My Lords, I should like to ask the noble Lord, Lord Bassam, three questions arising from the debate so far. I share two points with the noble Lord, Lord Peyton. First, like him, I was not consulted by anyone; and, secondly, I have rarely in my life voted with greater conviction than when I voted "no" to there being a mayor for London. It still to me seems a totally unnecessary post, which perhaps rather reflects on the individuals who have been seeking to run for it.

My three questions begin with the statement made by the Minister when he said that no material should refer to ally candidate standing for election to the assembly. I am not quite sure where we get to with that. It would mean, let us say, that a Labour candidate could not refer to Mr Norris but, presumably, a Labour candidate could refer to the policy of the Conservative Party. I understand that. One cannot refer to an individual but I should be very surprised if one could not refer to a party.

For example, what would happen if Mr Livingstone, having been thrown out of the Labour Party, founded something he called the "Livingstone Party" which, as an individual, he could well do? What would the position be if the name of his party happened to be his own name too? Would it then be illegal for any of his opponents to refer to the "Livingstone Party"? I think it is a rather important point that could inhibit criticism in his opponents' election addresses. We are entitled to know what the situation would be. It gives rise to a number of problems.

Secondly, I want to inquire about the position once the draft of an election address has been submitted. Presumably, all that would be necessary is for one copy in draft to be submitted to the returning officer for it subsequently to be printed. Of course, the draft would have had to be submitted to the Post Office first. It would be very unsatisfactory indeed if, once a submission had been put in to the returning officer, there was an opportunity for it subsequently to be withdrawn or amended, the particular candidate having seen what was in other candidates' election addresses and being able to alter his own to meet a particular point made. It really would be unreasonable if that were to happen.

I want to stress how important it is to maintain the confidentiality of an individual candidate's election address from the point of submission to the point when it goes finally to be printed. It would be very unfair indeed if one candidate or another were to know what was in his opponent's election address. I should like to know what would happen in that event. I cannot over-emphasise how important it is that returning officers and the Post Office treat these documents with the greatest confidentiality.

On that point, I notice a provision in the proposals before us. Paragraph 7(6)(a) of the new schedule states,

"make such typographical corrections to the proof as appear to him"—

that is the returning officer—

"to be appropriate".

I should have thought that it would have been wiser to have made those corrections after consultation with individual candidates. I can imagine nothing more infuriating than for a returning officer to change what is in the draft of an election address without consulting the candidate. All of us who have stood for elections of one kind or another can imagine how irritating it would be to find that one's election address had been altered without consultation. The paragraph goes on to say that the returning officer should,

"proceed with the printing and distribution of the election booklet without further reference to the candidate".

I feel that there is a large hole there about which I would be quite unhappy.

My final point concerns the contribution of £10,000 towards the printing of the booklet. The Minister may recall that last week at Report stage I said that it would be totally unacceptable if a cash contribution were to be demanded towards the cost of postage. I hope I am right in assuming from what the Minister said and from what I read in the draft regulation that all that would have to be submitted are one or two pieces of paper constituting the draft of the address and that there would be no prior printing costs for the candidate before he put in his draft election address. I would be content with that situation. I am perfectly content with a £10,000 contribution towards the cost of printing because that could well be less than the cost to the individual candidate himself of printing all his own election addresses. I made that comment last week on the basis that the candidate had already paid for the printing of all his election addresses. I said that it would be totally wrong if a further contribution were demanded to cover part of the postage. I hope the Minister will tell me that I am correct in making that assumption.

I wish to make another point on the financial contribution. The Minister did not make clear the small print. If at the end of the day the cost of printing the booklet came to more than the £10,000 contribution covered, the candidates would be surcharged for the remainder. The Minister looks slightly befuddled by that, but I would refer him to paragraph 9(4)(a) and (b) on page 14 of the Marshalled List which specifically says that if there is to he any excess expenditure over the sum of all the £10,000 contributions, the candidates would be surcharged for the remainder. I find that slightly surprising as it seems to leave things wide open for a very extravagant printer.

Otherwise, I congratulate the Minister on listening to what your Lordships' House had to say. The Government have gone a very long way towards meeting our case.

My Lords, like the noble Lord, Lord Jopling, it seems to me that the principals who have taken part in these debates are very much to be congratulated on arriving at this compromise. Normally, I distrust very much the usual channels. I tend to follow the noble Lord, Lord Cockfield, who once described them as a conspiracy against Back-Benchers and Cross-Benchers. I feel rather ungracious in saying that following the informative speech of the noble Lord, Lord Jopling, and with the noble Lord, Lord Shepherd, so close to me on my left. Nevertheless, on this occasion it seems to me entirely satisfactory that each side has found it possible to concede marginally and we have an outcome which, to my mind, is entirely satisfactory.

The principal reason is that, as the noble Lord, Lord Beaumont, said, it vindicates democracy. Society, after all, is democratic in so far as the mass of its members can influence the decisions which affect them. That cannot be done unless they are informed as to the issues which will affect them. In this case, your Lordships have insisted that the information should be available to the electors who will be affected. That is the main lesson of these debates.

The second point, which relates to what we are to engage in tomorrow, is that this has been achieved in your Lordships' House. It was not even raised in the Chamber which originated this measure. It has been achieved in your Lordships' House and I cannot conceive that it would have been achieved in the other place. Perhaps I may add in relation to that point that the fact that a compromise has been achieved seems to owe something not only to the arguments on each side, though they have been cogent on the Opposition Benches, but also to the relaxed and genial attitude of Ministers in charge of the measure. To some extent that is adverted to by the Wakeham report. It is very important. It is not something which a constitutional academic will notice, but it is an important element in the way that the Wakeham report envisages your Lordships coming to acceptable decisions.

A third important point is that we have now vindicated without question the responsibility and right of your Lordships to challenge secondary legislation. That was a matter of expressed resolution of your Lordships' House in 1994. It was rather disturbing that in the debate on the matter just before Christmas the noble and learned Lord, Lord Falconer of Thoroton, challenged that decision time and again, asserting that there was a convention that your Lordships would not vote against secondary legislation. We owe it very much to the noble Lord in charge of the Bill at an earlier stage when he expressly conceded that your Lordships have such a right. Indeed, your Lordships voted in vindication of such a right. Therefore, I trust that henceforth there will be no question but that your Lordships have power to examine, scrutinise and challenge secondary legislation.

That is not to say that every piece of secondary legislation will be challenged. On the contrary, at the time in the 1960s and 1970s when both parties voted against secondary legislation, it occurred only two or three times in each Session. I should think that, your Lordships' House having taken the attitude that it has in relation to this matter, it will be even less frequent in the future. I would surmise that government draftsmen and departments will be chary of misusing secondary legislation after your Lordships' House has vindicated its right to examine it critically. It is only likely to be exercised where the secondary legislation goes beyond the nuts and bolts of the primary legislation and goes beyond putting into practical effect what has clearly been "blue printed" in the primary legislation. This measure is a good example. It was a challenge, as we have now recognised, to democracy. That is very much a circumstance where your Lordships can say. "Secondary legislation is being misused".

The last matter I would advert to is the question of vires. When the Minister was in charge of the Bill earlier, he quite rightly pointed out that what was envisaged in your Lordships' vote was ultra vires the Bill as it then stood. But it was not ultra vires the Bill as it could be refashioned at Report, we being then in Committee. That is what has happened. It could be done only while the Bill was current before your Lordships' House. But it is a very good example of the flexibility of your Lordships' procedures.

I end by congratulating all those concerned on the result to which we have come. It has a lesson for tomorrow as an example of what your Lordships' House can do and what I think the other place is unlikely to do.

4.15 p.m.

My Lords, like others who have spoken, I welcome the results of the formal and informal discussions about this issue and welcome them for the procedural and perhaps constitutional reasons which the noble and learned Lord, Lord Simon of Glaisdale, has just spelt out so eloquently. I welcome the result also because, like the noble Lord, Lord Peyton, I look forward to receiving this amusing booklet. Thanks to our efforts, it will not be a best seller because it will be free, but it may well be read by more people than the noble Lord thinks.

I want to state clearly that, unlike the noble Lords, Lord Peyton and Lord Jopling, I am an unreconstructed supporter of a directly elected mayor for this great city. Nothing that has happened in public and media debates over the past few weeks and months has put me off. On the contrary, it has all proved that this is obviously a very exciting position in which parties and individuals take an unusually strong interest, as do some voters; certainly the one who is speaking now.

Without wishing to delay proceedings—I believe that there is widespread agreement on the proposals before us—I should like to raise one question. I see in the schedule a reference to,

"any material referring to any candidate standing for election to the Assembly".

No one else has raised this particular question. A number of mayoral candidates have referred explicitly to persons whom they would choose as their deputies. Initially, the deputies are likely to be candidates for the assembly. As the proposal now stands, is it the intention to ban any reference to deputies as well as to any other candidates? Beyond that, naturally I strongly support the compromise which has been reached.

My Lords, I am delighted that the noble and learned Lord, Lord Simon of Glaisdale, has spoken in this debate. He is among those who deserve our warmest thanks for what has happened. I have been listening to him on the subject of regulations for 12 years and have learnt a vast amount. His contribution shows the great virtue of being prepared in this House to play it long.

The noble Lord, Lord Peyton of Yeovil, sometimes reminds me of Augustus in Ruthless Rhymes:

"Whatever people say about my son,

He does enjoy his little hit of fun".

Fortunately, he enjoys it in such a way that the rest of us can, too. I listened with great pleasure to his speech. Like the noble Lord, we on these Benches collectively never wanted a mayor for London, but now that we have an election we intend to do it properly. It is a paradox that the only party which never wanted a London mayor is the only one to have made an unalloyed success of the job of selecting a candidate. Perhaps lessons can be learnt from that.

The noble Lord, Lord Peyton of Yeovil, is quite right that there are imperfections in the amendment as we see it. The amendment is the result of a real negotiation. Nobody got exactly what he wanted, as one should have expected. On the other hand, when one looks at a horse designed by a committee one asks two questions: first, can it walk? Secondly, can it carry the load to be placed upon it? I am quite confident that in this case the answer to both questions is "yes". All I need do is to thank very warmly everyone from all parties who has taken part in these negotiations and to say that their activities reflect credit on the House and democracy.

My Lords, I hope that noble Lords will allow me to speak before the Minister so that I may comment on the amendment that he has tabled and the points that he made. In my defence I say to my noble friend Lord Peyton that I give this proposal one-and-a-half cheers, but not much more than that. My granny told me that I should be thankful for small mercies, and that is what I am doing. These small mercies have come about because your Lordships have decided to exercise powers, which this Chamber has always had, in the new House in a way that certainly we on these Benches refrained from doing in the old House. The noble and learned Lord, Lord Simon of Glaisdale, rightly reminded us that we have always had that power. I believe that he commended us to use it sparingly in the new House. I trust that we shall not be tempted to do more than that, but to an extent that depends on Her Majesty's Government listening to the signals which are sent to them.

In the discussions both the Government and the combined Liberal Democrat and Conservative sides started off a fair distance apart. The Government, in the person of the Chief Whip and the noble Lords, Lord Bassam of Brighton and Lord Whitty, listened to our concerns. They attempted to meet some of them and explained why in their view some of our demands could not be met. We are grateful to them and their officials for the part that they played. As usual, I am impressed by the fact that, when given a proper steer, in next to no time officials can produce pages and pages of amendments that can, I believe, work legally. I have some experience of the way that officials work.

In the interests of finding common ground in the discussions, we agreed early on to concentrate on the mayoral elections only. It was perfectly clear to the noble Lord, Lord Goodhart, and me that we would not make any progress at all unless we did that. To begin with, there was a gulf between the Government who did not want any of this and ourselves who wanted a freepost for each candidate, in the same way as each candidate in Scotland, Wales, Northern Ireland, Europe and the other place has a freepost. While that remained my preferred solution, clearly it was not one to which the Government were prepared to listen.

However, the issue of the booklet arose. It started with a request to candidates to send in 200 words to be put into a collage, as it were. We have moved from that to an A5 booklet, which will be considerably more attractive, in which the candidates themselves, within the rules of the Post Office and the schedule, are able to produce what is called camera-ready copy. Like the noble Lord, Lord Bassam, in the discussions I learnt a good deal about direct mailing. In future I may not treat with such contempt the material that comes to me which I regard as junk mail and place in the wastepaper basket. I realise now that a good deal of effort goes into collating and producing it so that it can reach me. The booklet is important, and I am grateful for the concession by the Government that if there are fewer than 16 candidates it will have a front and back page. However, it will not be like that; it will have facing pages.

What cheered me most was that very early on we were able to move the Government towards the proposition that the freepost should be aimed at each elector rather than each household. It is probable that that move made us more willing to make progress on the other issues than we would otherwise have been. This afternoon your Lordships have again heard the arguments about the importance of each elector, especially in an urban area like London, receiving this material. Therefore, I am grateful to the Government for arriving at that decision.

Aside from the ever-present ghost of the Treasury, the Government seemed to be haunted by the thought that there would be lots of candidates, not just loose (or unloosed) cannons on the deck like Mr Ken Livingstone advertising their political wares, but also restaurateurs, services and others. On reflection, it occurred to me—to be fair, it was not mentioned—that perhaps the Government's real concern was that every "dot.com" business that wanted to establish itself might nominate itself for mayor and, therefore, have a freepost. I am not convinced that that is ever likely to happen.

If a considerable number of mayoral candidates come forward, even if they do not use the freepost, the Government should start all-party talks about how to prevent the serious business of an election degenerating into farce, with candidates from hither and yon having no real interest in the matter. Clearly, deposits, written support and the signatures of an increasing number of electors before a candidate is allowed to stand provide one way to deal with that. However, I suspect that, with the rise of single issue pressure groups and the candidates who support them, for perfectly democratic reasons there will be an increase in candidates in elections at all levels in future. I do not believe that we can do anything about that; nor should we try to do so, because that is a legitimate activity. I regret that in future the Government intend to opt out of this issue by passing responsibility to the new authority to decide what, if any, freepost facilities will be made available. I also regret that, as my noble friend Lord Jopling mentioned, the mayoral candidate will not be allowed to mention the first-past-the-post candidate standing for the assembly. I never believed that we needed to think about the top-up because, from my experience of the Scottish scene, it is very much based on the party, with the exception of Mr Dennis Canavan. I remind the governing party that sometimes maverick independents whose parties have rigged elections against them can comfortably win elections. I do not expect that to happen: I expect Mr Norris to win, of course—before anyone rises and tries to be smart! However, I think that I should put that little warning to the Government about our experience in Scotland.

I understand the legal reasons, and I do not wish to go over them. But I want to ask one question on this issue. In his leaflet can a mayoral candidate draw attention to the fact that there are two other votes on that day: one for the assembly, and one for the top-up? I was unable to check at the weekend in Scotland what happened last time. My recollection is that in the leaflets for the first-past-the post and the top-up the parties played on the two votes—give two Tory, Labour, Liberal Democrat or SNP votes. The campaign was: do not separate your vote. Will that be legitimate? It may be technical but it is an important matter. The literature of the mayoral candidates is the only literature people will receive. For example, will Steve Norris and the assembly candidates be able to say, "Vote Conservative, and vote Conservative for the top-up", without naming the candidates? We should be grateful for advice on that point.

I welcome the delivery to every elector. I regret that it will not be an individual leaflet with every candidate responsible for his or her own. The Government have insisted on a joint publication, and on the production and timing. They will have to ensure that they do that. The Post Office will have to deliver the leaflets on time. I presume that it will be the responsibility of the official who delivers to the Post Office to ensure, perhaps better than political parties have managed, that all leaflets are delivered by the Post Office and that bundles are not discovered behind hedges some time after the election is over.

We have made progress. I think that noble Lords can be satisfied at the part your Lordships' House has played in bringing about some common sense on the issue. These elections are unique given the size of the electorate. I believe that we are correct to give the mayoral candidate the opportunity to have his or her case read by each elector. If the Government had listened at Committee stage, when we rattled their cage, so to speak, we may not have been forced to vote against the secondary legislation.

4.30 p.m.

My Lords, I listened with interest to the contributions to the debate. I think the feeling of the House is that the Government have done the right thing: I may be wrong. There seems a happy coincidence of views from most corners of the Chamber. The noble Lord, Lord Mackay, said that he would give the measure one and a half cheers. Those are more cheers than he usually gives measures which originate from the Government. I guess that we may take that as a compliment.

I particularly enjoyed the speech of the noble Lord, Lord Peyton. He indicates that I am a modest man. I apologise for that. I am very modest. I always have been. It is my nature.

My Lords, I never said anything of the kind. All I said was that the noble Lord behaved modestly on this occasion.

My Lords, that is wonderfully put! However, I must take issue on one point. The noble Lord seemed to suggest that it was weariness on the Government's part which obliged us to make the concession. I have to contradict that and say that it is because we listened to all sides of the debate. We did not weary. From time to time we even found the debate exciting.

A number of points were raised in the discussion. I shall respond to them as best I can. The noble Lord, Lord Beaumont of Whitley, asked whether mayoral candidates standing for assembly can refer to assembly candidates. The answer is no. The proposed new schedule rules out references to,

"any material referring to any candidate standing for election to the Assembly".

In this instance, "any candidate" would include himself or herself in the capacity of assembly candidate.

The noble Lord, Lord Jopling, said that he would raise three points; he raised four or five. I do not chide him for that. It was fair. Referring to parties, the prohibition is on any candidate standing for election to the assembly. Reference can be made to parties and to other mayoral candidates. So there will not be a prohibition on candidates referring to parties in the way they address their election material.

My Lords, I am most grateful to the Minister for giving way. The regulations as drafted state that,

"an election address must not contain any material referring to any candidate standing for election to the Assembly".

As I read that, it would preclude a candidate from referring in his election address to his or her own suitability for the job. I should have thought that most unreasonable. An election address should allow a candidate to refer to himself or herself. I understand the drafting, but surely it should preclude any material referring to any candidate other than himself or herself.

My Lords, mayoral candidates cannot address their suitability as assembly candidates. I hope that that clarifies the point. That is what we seek to achieve.

The noble Lord raised the issue of confidentiality. I hope that I can reassure him. There will not be an opportunity for candidates of one party, or independent candidates, to be able to see opponents' material submitted to the Greater London returning officer or to the Post Office. That would not be acceptable.

The noble Lord also asked what the £10,000 covered, and whether there would be a surcharge. The £10,000 is specifically a contribution towards the printing of the election booklet—the summary of election addresses. That is all it can be used for. Clearly any candidates will have to pay for the camera-ready artwork they provide, but that is their own cost. It is their own material. They are responsible for its origin. But at the point at which it is passed over to the GLRO, the cost of publication will come from that £10,000.

I hope that I can put the noble Lord's mind at rest on this point. There will not be a surcharge on top of the £10,000 if the sum of the costs is more than £10,000 collected together. However, there will be potential for a refund. The noble Lord may have misunderstood the wording under that part of the schedule. For instance, if, let us say, 30 candidates chipped in £10,000 each, it is possible that there might be a small surplus. That will be refunded pro rata. We consider that candidates are getting a pretty good deal from the arrangements that we propose.

The noble Lord, Lord Jopling, asked about typographical corrections to the proof. There will be corrections to the proof, as appear appropriate, only if the election agent of a candidate fails to check the proof of a candidate's address. They will be made at a time and place to be notified by the GLRO. There will have to be consultation between the GLRO and the candidate and/or his agent to ensure that typographical corrections are understood to be exactly that, and no more. If there is a problem, there will no doubt be careful consultation. We expect the provision to cover simple mis-spellings rather than changing the text fundamentally. I hope that that clarifies the point.

The noble Lord, Lord Dahrendorf, raised a point about referring to deputies. Mayoral candidates will not be able to refer to assembly candidates, including those who may become deputy mayor. Therefore, that is a straight exclusion. No doubt in all the other material produced by candidates' parties and so forth there will be ample opportunity to mention running partners—but not in this leaflet. I hope that that is clear and tidies up the last point.

I am grateful to all noble Lords who have contributed to the discussion. I shall not go over the constitutional issues because they have been well rehearsed, but the contributions have been valuable.

I turn to the issue raised by the noble Lord, Lord Mackay. There are difficulties, but probably any reference to the assembly elections will have to fall short of endorsing candidates. That will probably be the guiding rule. Clearly, it is not black and white. But, based on the drafting of the amendment, that is how it should work.

This has been a useful debate and we have focused on the issues. We have been reminded of the importance of the elections and the contribution which the booklet can make to democracy. It may well be that this is the most successful pilot run within the terms of the Representation of the People Bill. I have little doubt that the 5.1 million documents being circulated in the capital will help to excite the later stages of the election. I am also confident that they will improve the level of turn-out.

These are important elections and our concession or amendment to the legislation recognises their value. We believe that we have done the right thing, having given careful thought to all the issues. I am grateful to all those who have helped us along in that direction, including the experts; notably the noble Lord, Lord Rennard, whose contributions to the discussions were most helpful. I therefore hope that the noble Lord, Lord Mackay of Ardbrecknish, will withdraw his amendment.

My Lords, I am grateful to the Minister and I am content to beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[ Amendment No. 3 not moved.]

Clause 10 [ Pilot schemes]:

moved Amendment No. 4:

Page 13, line 27, at end insert ("either—
(i) without modification, or
(ii) with such modifications as, after consulting the authority, he considers appropriate,").

On Question, amendment agreed to.

moved Amendments Nos. 5 to 8:

Page 13, line 37, leave out second ("and").

Page 13, line 38, at end insert—

("(c) the sending by candidates of election communications free of charge for postage.").

Page 13, line 39, leave out ("and such a scheme may, in particular,") and insert ("() Without prejudice to the generality of the preceding provisions of this section, a scheme under this section may").

Page 13, line 41, at end insert—

("(b) for postal charges incurred in respect of the sending of candidates' election communications as mentioned in subsection (2)(c) to be paid by the authority concerned; and where a scheme makes such provision as is mentioned in paragraph (b), the Secretary of State's order under subsection (1) may make provision for disapplyine section 75(1) of the 1983 Act (restriction on third party election expenditure) in relation to the payment of such charges by the authority.").

The noble Lord said: My Lords, I beg to move Amendments Nos. 5 to 8.

My Lords, I am sorry to interrupt the fast progress, but I should have liked the Minister to comment on the amendments. I presume that they have been made in order to allow for the Watford experiment with the postal vote. The Minister mentioned that in a letter to me, but it would be advantageous to have it on the record. I believe that there is to be a freepost. The amendments allow for that experiment to take place and make it clear on the face of the Bill that Watford pays.

4.45 p.m.

My Lords, I should have picked that up and I apologise to the noble Lord. We have had careful deliberations on the freepost issue and it begs the question of whether the use of the freepost facility is a sensible use of public funds. All things considered, we believe that to be right in relation to the Greater London Authority mayoral election. We reached that view after careful consideration and debate.

The freepost facility has never been made available in local elections. That was part of the original argument over the mayoral freepost. However, it seems to us to be sensible to allow local authorities, if they wish to use their own funds for such a purpose, to run pilot schemes involving a freepost. If it works for the GLA and for Watford, and if it can be demonstrated to have made a marked impact on turn-out, no doubt other local authorities may want to apply to run pilot schemes involving freepost.

As your Lordships will be aware, Watford Council has already indicated that it wants to do that at this year's May elections and that it intends to use its own resources for the purpose. We hope that in future other authorities may well take up that refrain.

We shall have to have a full evaluation. We discussed the conduct of that at earlier stages. No doubt that evaluation will focus on how much impact the freepost facility has had in raising the profile of the election and drawing it to people's attention. It could make a valuable impact. We shall await the assessment. This will be the first time it has happened in local authorities outside London and we shall carefully watch and monitor it. I suspect that it will have some impact, but as regards how much only the future can tell.

I am happy to move our amendments which regularise the situation. We look forward to seeing and studying the fruits of the Watford initiative.

On Question, amendments agreed to.

moved Amendment No. 9:

Page 13, line 41, at end insert—

("() A scheme under this section may include the provision for the Presiding Officer at his discretion to ask for documentary proof of identification by one of the following—
(a) a polling card;
(b) a valid United Kingdom driving licence;
(c) a relevant social security benefit book;
(d) a National Health Service medical card;
(e) a certificate of verification as issued by the electoral registration officer,
or other such documentary evidence as may in the reasonable opinion of the Presiding Officer concerned constitute such evidence of the matters provided for within this subsection.").

The noble Baroness said: My Lords, I rise to move the amendment standing in my name. With it is linked the new clause which also stands in my name. I do not want to detain your Lordships for long as the subject matter of the amendments was thoroughly aired on a previous occasion. However, I return to the matter in the hope of persuading the Government of the wisdom of allowing for the identification of voters, at least in any pilot schemes of which they approve.

It is a weakness in the present set-up that a presiding officer has to take the word of the person coming in to vote that he or she is entitled so to do. Therefore, I have set down the fact that the presiding officer should be able to ask for proof of identity: a polling card, driving licence or any of the other documents listed. On this occasion, instead of making the measure wholly obligatory, I have suggested that it should be at the discretion of the presiding officer. That is the purpose of the amendment in relation to pilot schemes.

The new clause is intended to be a wider application and to allow the presiding officer, if he thinks fit, to ask for proof of identification in all cases. I do not know whether I shall fare better on this occasion, but I believe that the measure is important. Indeed, it will be even more important if new schemes provide for early voting, perhaps spread over several days or at a polling station other than the normal one.

I offer my thanks to the noble Lord, Lord Bassam. I raised the issue of the Plymouth pilot scheme which sought to include a requirement for the presiding officer to request identification by means of a polling card. He said that he would write to me and let me know the Government's views. He kept entirely to his word in very good time and I am delighted that the requirement will be permitted at least in that scheme. I hope that we shall have better success today. I beg to move.

My Lords, I shall be brief because my noble friend has made the point most clearly. When in future elections the new provision for homeless people will be effective, it is important that the general public do not feel that there is a new opening for impersonation. That is all that my noble friend is trying to achieve in her amendments. I strongly support them.

My Lords, perhaps I may also speak briefly to this amendment. Undoubtedly, impersonation does take place. The problem is that we do not have much idea of the extent to which it occurs. We know that action has been taken in Northern Ireland to stop it happening, but I believe that perhaps it occurs more in Great Britain than we would like to believe. Certainly, in the constituency in which I live, there are frequent rumours that impersonation takes place on a scale which would be significant if it were a marginal constituency. However, as it is not, it probably does not affect the election outcome; but if it were a marginal constituency, it might.

Of course, the position will be made more serious if we move from the current way to new ways of voting; for example, early voting, where polling stations may be open for one, two or three days, or where a central polling station will be open for two or three days prior to the election and the usual local polling stations will be open thereafter. It will then become very important indeed to keep a record of who has voted.

If I may say so, it will be increasingly important to require identification, especially in urban areas. In many country areas, the polling clerks know jolly well who has come to vote. They may not know the voters personally but they know them by sight. I believe that impersonation would be extremely difficult throughout much of rural Scotland, England or Wales, but not too difficult in an urban area. If we move to a system which provides alternative polling stations—that is, where it is very much up to the individual on the day of the poll which station he attends—frankly, I believe that identification, as well as electronic communication between the stations, will be required.

Therefore, I believe that my noble friend has a point. Even if the Government do not accept my noble friend's amendment today, I believe that in the not too distant future we shall have to return to this issue and give the polling clerks or agents the right to ask for identification. As I explained, I do not believe that everyone will need to produce identification. In many cases, the polling clerks will know the person who has come to vote. However, when there is doubt, I do not believe that it will be sufficient to say simply, "Are you who you say you are?" The person will reply "Yes". He will not say "No" if he has come deliberately to impersonate. I believe that that question is no longer adequate.

My Lords, I rise to say briefly that on these Benches we cannot possibly support these amendments. The problem is that the presiding officer must exercise his discretion and one does not know on what basis that discretion is to be exercised. In practice, one can see only that the presiding officer is likely to require proof of eligibility to vote from those who look scruffy or shiftless or who in some other way attract the attention of the presiding officer as being doubtful. That is no possible basis for exercising a discretion and I can see no other possible basis for exercising a discretion of this kind.

Logically, it could be done fairly only by requiring everyone to produce evidence of identification. The consequences of that would be absolutely horrendous: the queues would last all day if evidence had to be produced. Of course, the people who were asked to produce evidence on the basis of a discretion might well be those who were unable to do so, simply because they had not realised that it would be required of them. They may be sent away. Unless they were voting very late, in theory they would have time to come back again with the necessary evidence. However, frankly, the chances are that they will not. In those circumstances, it seems to us that the amendment is unworkable and, if and in so far as it were applicable, likely to be unfair.

My Lords, I shall try to be brief in dealing with the amendments. I said in Committee that I did not believe that there was a need to impose a general requirement for producing identification at polling stations; nor we do believe that we need to give the presiding officers discretionary powers to demand identification above and beyond the prescribed questions which, as things currently stand, they are allowed to ask a voter, and to insist on the production of a polling card. The Working Party on Electoral Procedures did not see a need to make a change of that kind. As was pointed out in Committee, the Home Affairs Select Committee in another place, which considered this issue at quite some length, made a positive recommendation against such a move. Accordingly, I do not believe that I can invite your Lordships to support Amendment No. 18.

As the noble Baroness is aware, the council of the City of Plymouth, which she represented with considerable distinction for many years in another place, has applied to run an early voting pilot scheme. As part of its application, it intends to require those who want to take advantage of the early voting facility to provide proof of identification. That is precisely because they may vote at a polling station other than the one in their neighbourhood. The other pilot schemes with early voting procedures established will be expected to run in a similar manner. I believe that that will provide us with an idea of the potential scope for abuse within the current system.

I believe that on this matter we have agreed across the Benches that we do not consider our system to be overly abused. Clearly, there are occasions when abuse is a problem and those come to light from time to time. However, I believe that the pilot schemes will enable us to test exactly how great the problem may or may not be. In its evaluation of the scheme, Plymouth City Council has been asked to look particularly at this aspect of the pilot and at the way it works. No doubt in the outcome of that evaluation we shall all be very interested to see whether there is any potential for abuse and whether voters have been turned away, to take up the point made by the noble Lord, Lord Goodhart.

Assuming that the Bill receives Royal Assent in time—I do not now see any great barriers to that—the pilot schemes will be able to go ahead in May on the basis of the Bill as it is currently drafted. Therefore, I am not able to accept the noble Baroness's first amendment. I would argue that it is not necessary. I believe that if we let the pilots take their course, it will be proven that there is not the manifest abuse which some people suspect. In the light of that and of the fact that this issue will be examined under the pilot schemes, I trust that the noble Baroness will feel able to withdraw her amendment.

My Lords, although I feel somewhat disappointed, I am not at all surprised. Having been taught that half a loaf is better than none, I suppose that I should take the quarter-loaf provided by the Minister. In those circumstances, although with some reluctance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 10:

Page 14, line 19, at end insert—

("or in encouraging voting at the elections in question or enabling voters to make informed decisions at those elections.").

On Question, amendment agreed to.

Clause 11 [ Revision of procedures in the light of pilot schemes]:

moved Amendment No. 11:

Page 15, line 7, leave out ("relevant elections of any description") and insert ("local government elections in England and Wales (or any particular description of such elections)").

The noble Lord said: My Lords, at the same time as moving Amendment No. 11, I should like to speak also to Amendments Nos. 12 to 17, and 26. I believe that I can be brief in dealing with these amendments as we had lengthy discussions of the underlying policy issue both in Committee and on Report.

At the Report stage last week, I said that the Government had listened to the strong views expressed in your Lordships' House about the power to roll out pilot schemes and that we had paid particular attention to the views of the Select Committee on Delegated Powers and Deregulation. I said that, as a consequence, we would bring forward amendments to limit the extent of the roll-out power in Clause 11 to local elections only. These amendments give precise effect to that commitment.

As your Lordships are aware, another Bill (currently being considered in another place) will establish a role for the Electoral Commission in the instigation and roll-out of pilot schemes. Therefore, we feel that that, coupled with our amendment, should provide all the necessary safeguards in rolling out new initiatives. With those few words, I beg to move.

5 p.m.

My Lords, these amendments result from the Government's decision to accept the recommendations in the report of the Delegated Powers and Deregulation Committee. I expressed the gratitude of these Benches for the Government's decision to do that because it seemed to us a matter of considerable constitutional importance. We had that debate on the last occasion and I merely repeat my gratitude to the Government for accepting the point.

My Lords, I too welcome the amendments. As your Lordships made clear in Committee, it was felt that the Government should take on board the powerful recommendations of the Delegated Powers and Deregulation Committee. At that stage, the Government were rather reluctant to move but I suspect that the events in relation to the London mayoral election showed the Government that we were serious. I also like to think that those of their Members who were in the other place realised that your Lordships took the view that the Government should listen to the Delegated Powers and Deregulation Committee. The Government have done that and I warmly welcome it. I only hope that that is a precedent for the future and that we shall no longer have to rattle the cage in Committee if the Delegated Powers and Deregulation Committee suggests that the Government have gone beyond what is reasonable.

My Lords, I am grateful to noble Lords for their warm congratulations. I was grateful also on Report for assurances, with caveats of course, that because flexibility has been lost by putting Clause 11 on one side, they may feel minded to assist us if and when we bring forward legislation to have national roll-outs of some of the pilots which we have seen through successfully in local government and which have worked well. I am grateful to noble Lords for their support in these matters.

On Question, amendment agreed to.

moved Amendments Nos. 12 to 17:

Page 15, line 10, leave out ("enactment)") and insert ("provision of an Act, including this Act)").

Page 15, line 11, leave out subsections (2) and (3) and insert—

("(2) An order under subsection (1)—
(a) may except from the operation of any of its provisions any local government area specified in the order; but
(b) subject to that, must make the same provision—
(i) in relation to local government elections, or
(ii) if it applies only to a particular description of such elections, in relation to elections of that description,
throughout England and Wales.").

Page 15, line 31, leave out (", or district electoral.").

Page 15, line 32, leave out ("(3)") and insert ("(2)").

Page 15, line 35, at end insert—

("() Rules made under section 36 of the 1983 Act (local elections in England and Wales) may make such provision as the Secretary of State considers appropriate in connection with any provision made by an order under subsection (1).

() Nothing in this section shall be taken as prejudicing the generality of any power contained in any other Act to make subordinate legislation (within the meaning of the Interpretation Act 1978) with respect to elections of any description.").

Page 15, line 36, leave out subsection (7).

On Question, amendments agreed to.

[ Amendment No. 18 not moved.]

Clause 13 [ Assistance with voting for persons with disabilities]:

moved Amendment No. 19:

Page 17, line 4, after ("orally") insert ("or in writing").

The noble Lord said: My Lords, this amendment is almost identical to that moved on Report by my noble friend Lord Ashley. I pay tribute to him. He has fought many battles on behalf of the disabled and I am sure that he will chalk this up as another victory on what is already an extremely impressive roll of honour.

As your Lordships will be aware, the Bill extends the right to be assisted in voting by a companion from the blind to others with a physical disability which prevents them from voting unaided and those who are unable to read. People who wish to be assisted with voting by a companion are required to make an oral declaration to the presiding officer that they need or want such assistance.

On Report, my noble friend drew our attention to the problems that that may pose for the profoundly deaf who are able to communicate only by means of sign language. This amendment overcomes that by allowing declarations to be made in writing. So I am extremely grateful to my noble friend Lord Ashley for focusing our attention on this problem. I am sure that as a consequence, many people will feel indebted to him.

This is an important amendment, small as it is, and we believe that it should make a significant contribution to providing a more inclusive voting system so that all feel that they can happily participate in elections, whether they be local, national or European. I beg to move.

My Lords, I express warm appreciation to my noble friend. This amendment will help a number of profoundly deaf people who use sign language and who otherwise, without this amendment, may well have been disenfranchised.

I emphasise that the Minister's rejection of this amendment at the earlier stages was not due to an error of judgment. It was due entirely to a misunderstanding between us which has now been resolved. I am extremely grateful to him for his speedy response and for acting as quickly as he did. I thank him very much indeed.

On Question, amendment agreed to.

moved Amendment No. 20:

Before Clause 14, insert the following new clause—

("Miscellaneous

FREE DELIVERY OF ELECTION ADDRESSES AT GREATER LONDON AUTHORITY ELECTIONS

.—(1) The Greater London Authority Act 1999 shall be amended as follows.

(2) After section 17 there shall he inserted—

"Free delivery of election addresses.

17A.—(1) Each candidate at the first election of the Mayor shall be entitled (subject to and in accordance with the provisions of

Schedule 3A to this Act) to have an election address prepared on behalf of the candidate included in a booklet of election addresses—

(a) prepared by the Greater London returning officer; and

(b) sent by that officer, by post, to each elector in Greater London.

(2) In subsection (1) above "elector", in relation to the election mentioned in that subsection—

(a) means a person who is registered in the register of local government electors for an electoral area in Greater London on the last day for publication of notice of the election; and

(b) includes a person then shown in any such register as below voting age if (but only if) it appears from the register that he will be of voting age on the day fixed for the poll.

(3) The Secretary of State may by order make such provision as he considers appropriate for and in connection with enabling candidates—

(a) at ordinary elections other than the first such election, or

(b) at elections to fill vacancies in the office of Mayor or Assembly member,

to have their election addresses (within the meaning of the order) delivered, at the Authority's expense, by the Post Office or by any other means specified in the order.

(4) Without prejudice to the generality of subsection (3) above, an order under that subsection may make provision—

(a) for free delivery of election addresses to be available under the order only in the case of any specified description of election falling within paragraph (a) or (b) of that subsection or within section 2(7) above;

(b) for enabling the Authority to determine the descriptions of elections (if any) in the case of which free delivery of election addresses is to be so available;

(c) for regulating in any respect the form and manner in which free delivery of election addresses is to be so available;

(d) for restricting the number of separate mailings in respect of the free delivery of election addresses, whether—

(i) by limiting the number of separate election addresses by reference to any specified circumstances, or

(ii) by requiring the preparation of a single document incorporating all the election addresses to be delivered on behalf of candidates at a particular election, or otherwise;

(e) for imposing conditions which must be satisfied by any candidate or candidates seeking to avail themselves of free delivery of election addresses under the order;

(f) for authorising election addresses falling to be delivered under the order to be disseminated by such means (other than those by which they are to be so delivered) as may be specified;

(g) for securing that civil or criminal liability in respect of material contained in any election address falling to be delivered under the order (including any such liability arising in connection with any dissemination of the material in pursuance of paragraph (f) above) is incurred only by the candidate on behalf of whom it falls to be so delivered or his election agent.

(5) In subsection (4) above—

"free delivery of election addresses" means the delivery of election addresses, in accordance with an order under subsection (3) above, at the Authority's expense;

"specified" means specified in an order under subsection (3) above.

(6) Before making an order under subsection (3) above the Secretary of State shall consult—

(a) the Mayor and the London Assembly; and

(b) such other persons and bodies as he may determine to be appropriate.

(7) Schedule 3A (which makes provision supplementing subsection (1) above) shall have effect."

(3) In section 420(3) (orders under specified provisions to be subject to affirmative parliamentary procedure), before paragraph (a) there shall be inserted—

"(za) section 17A(3) above,".

(4) The provisions set out in Schedule (Free delivery of election addresses at first GLA mayoral election: New Schedule 3A to the Greater London Authority Act 1999) shall be inserted as Schedule 3A to the Act.").

The noble Lord said: My Lords, I beg to move.

My Lords, I want to raise a drafting point on this amendment. I did not do it when the earlier group of amendments was dealt with because I did not wish to derogate from the warmth of welcome that was shown for the Government's compromise.

I ask your Lordships to look at the bottom of page 7 of the Marshalled List. Subsection (3) of the proposed new clause states:

"The Secretary of State may by order make such provision as he considers appropriate for and in connection with enabling candidates … to have their election addresses … delivered, at the Authority's expense, by the Post Office or by any other means specified in the order".

I should have thought that nothing could be more general than that.

However, subsection (4) emphasises it by saying:

"Without prejudice to the generality of subsection (3) above, an order under that subsection may make provision",

and it then goes on with paragraphs (a), (b), (c), (d), (e), (f) and (g). It goes on for practically the whole page.

I used to complain about that style of drafting during the last Parliament. My noble and learned friend Lord Mackay of Clashfern used to say that it was not strictly necessary. That is a Lord Chancellor's way of saying it is not necessary. He would say that nevertheless, it may be useful in letting Parliament know the kind of circumstances in which the general order may be used. No doubt that is true but it is not the only way and it is the most expensive way.

The reasonable way would be for the Minister to explain to Parliament where he thinks the provision might be used. That is eminently the case here.

I ask your Lordships to look at paragraph (c) which states that it is,

"for regulating in any respect the form and manner in which free delivery of election addresses is to be so available".

Obviously, that gives a free discretion and in paragraph (d) it refers to "or otherwise".

When I used to complain during the previous Parliament, such particulars at their worst ran to paragraph (h). I suppose that as this is confined to (g), that is some improvement. But I should have thought that they were all unnecessary and, indeed, the very opening words of the subsection shows that to be so.

I do not expect the Minister to withdraw the words at this stage, but the Bill is going to another place with this amendment. I ask two things. First, why does he think that this page of particularity within a perfectly satisfactory generality, which is emphasised by the words,

"without prejudice to the generality",

is necessary? Secondly, will the matter be considered? I should like to know, as he is the Minister in charge of the Bill, why he believes that this enormous series of particularities, admittedly within the generality, is expensively to be put in the statute, printed and reprinted which is conducive to the continual expansion of the statute book.

I am glad that I have been speaking long enough to see the arrival of a brief, but I should be grateful for the Minister's immediate reaction. I should be even more grateful if he would say that the matter will be considered.

My Lords, before the Minister answers, I must say that the noble and learned Lord, Lord Simon of Glaisdale, has prompted a question, not so much about new subsection (4) but about subsection (1). I accept that this is a rather naughty question, but I cannot resist asking it. Each candidate is to have an election address prepared and included in a booklet of election addresses. Will they be restricted to 75 words?

My Lords, if the noble Lord had been here earlier on, he probably would have followed that rather more than 75 words will be allowed; words and images together and no doubt logos too.

The noble and learned Lord, Lord Simon of Glaisdale, has given us a valuable lecture on how we might better construct the wording of our legislation. I am not a constitutional expert, but I rather fancy that the way in which legislative drafting is carried out means that rather than having to return to Hansard for the source of an explanation, there is a reliance in part on having something on the face of the legislation. Although the subsections involve a degree of repetition—and perhaps, in the noble and learned Lord's terms, some drafting sloppiness has crept in—that is their value; one does not have to refer constantly to Hansard, but if an explanation is to be found it is there on the face of the Bill.

The matter raised by the noble and learned Lord is obviously important. It is one which we shall continue to keep carefully under review, and the noble and learned Lord will no doubt continue to remind us to do so. It has prompted me to think that I probably need to consult some of the speeches of the noble and learned Lord, Lord Mackay of Clashfern, to find out what his explanations were at the time when he enjoyed the challenges raised by the noble and learned Lord himself in earlier debates. I trust that that explanation begins to pick up some of the points raised by the noble and learned Lord.

On Question, amendment agreed to.

Clause 16 [ Citation, construction, commencement and extent]

moved Amendment No. 21:

Page 18, line 38, at end insert—

(""modifications" includes additions, omissions and amendments (and "modify" has a corresponding meaning).").

On Question, amendment agreed to.

[ Amendment No. 22 not moved.]

moved Amendments Nos. 23 and 24:

Page 18, line 39, after ("11") insert (", ( Free delivery of election addresses at Greater London Authority elections)").

Page 18, line 39, after ("section") insert ("and Schedule ( Free delivery of election addresses at first GLA mayoral election: New Schedule 3A to the Greater London Authority Act 1999)").

On Question, amendments agreed to.

moved Amendment No. 25:

Page 18, line 39, after ("section") insert ("and paragraph 6 of Schedule 5,").

The noble Lord said: My Lords, this is a simple amendment. Your Lordships will recall that an amendment was passed in Committee to insert a provision—which can be found at page 44 line 8—to prohibit the publication of the results of exit polls until the final close of the poll. The fear which prompted the amendment was that, in an election taking place over more than one day, an exit poll published after the first day of voting might in some way influence how people voted in the subsequent day or days, or perhaps even put them off voting at all.

The amendment that was passed deals with such problems, I hope that the number of pilot schemes involving early voting will be run in this year's local elections. That amendment should clarify the issues with regard to the local elections and protect them. We therefore want the new exit poll provisions to come into effect as soon as possible and as soon as the Bill receives Royal Assent. This amendment provides for precisely that. I beg to move.

On Question, amendment agreed to.

moved Amendments Nos. 26 and 27:

Page 19, line 10, leave out ("Section 10") and insert ("Sections 10 and 11").

Page 19, line 11, at end insert—

("() The amendments made by section (Free delivery of election addresses at Greater London Authority elections) have the same extent as the Greater London Authority Act 1999.").

On Question, amendments agreed to.

5.15 p.m.

Schedule 1 [ Registration: amendments of 1983 Act]

moved Amendment No. 28:

Page 28, line 43, leave out ("local government") and insert ("electoral")

The noble Lord said: My Lords, Amendment No. 28 is a drafting amendment. Section 76(2) concerns the register to be used for the purposes of calculating election expenses. A local authority by-election by definition does not cover the whole of a local authority, so we are changing a reference to "local government area" to "electoral area". That is all that is involved or implied in any way by the amendment. I beg to move.

On Question, amendment agreed to.

moved Amendment No. 29:

After Schedule 4, insert the following new schedule—

("SCHEDULE

FREE DELIVERY OF ELECTION ADDRESSES AT FIRST GLA MAYORAL ELECTION: NEW SCHEDULE 3A TOTHE GREATER LONDON AUTHORITY ACT 1999

"SCHEDULE 3A

FREE DELIVERY OF ELECTION ADDRESSES AT FIRST ELECTION OF MAYOR

Interpretation

1. In this Schedule—

"the 1983 Act" means the Representation of the People Act 1983;
"candidate" means a person who stands nominated as a candidate at the election;
"the election" means the first election of the Mayor;
"election address" shall be construed in accordance with paragraph 2 below:
"election booklet" shall be construed in accordance with paragraph 6 below;
"the GLRO" means the Greater London returning officer;
"print" means print by whatever means (and "printer" shall be construed accordingly);
"the relevant provisions" means the provisions of section 17A(1) of this Act and this Schedule.

Election addresses

2. For the purposes of the relevant provisions an election address, in relation to a candidate, is a statement prepared by the candidate's election agent which complies with the provisions of paragraphs 3 and 4.

Contents of election addresses

3.—(1) An election address must contain matter relating to the election only.

(2) In particular, an election address must not contain—

(a) any advertising material (other than material promoting the candidate as a candidate at the election);

(b) any other material appearing to be included with a view to commercial gain; or

(3) An election address may include a representation of the registered emblem, or (as the case may be) one of the registered emblems, of a registered political party if the address is prepared on behalf of an authorised party candidate.

(4) In sub-paragraph (3) above "authorised party candidate", in relation to a registered political party, means a candidate who has been authorised to use the emblem in question by a certificate—

(a) issued by or on behalf of the registered nominating officer of the party, and

(b) received by the GLRO before the last time for the delivery of nomination papers for the election.

(5) An election address must—

(a) contain a statement to the effect that it has been prepared by the candidate's election agent; and

(b) give the name and address of the election agent.

Form of election addresses

4.—(1) Subject to any requirements imposed by or under this paragraph. the format of a candidate's election address may be determined by the candidate (and. in particular. may consist of a combination of words, pictures and artwork).

(2) An election address must be printed on not more than two sides of A5 paper; but if such an address is printed on two sides of such paper—

(a) it must, when submitted to the GLRO for inclusion in the election booklet, be accompanied by a second version printed on a single side of such paper; and

(b) if the total number of candidates from whom election addresses have been accepted by the GLRO by the last time for the delivery of nomination papers for the election exceeds 15. the version to be included in the election booklet shall be the second version.

(3) An election address must—

(a) comply with such requirements as to typographical layout, margins and the use of colour as the GLRO may determine; and

(b) comply with such other requirements as he may determine with a view to facilitating its reproduction as a page or pages of the election booklet.

(4) An election address must. when submitted to the GLRO for inclusion in the election booklet, be accompanied—

(a) where the address is to contain a photograph of the candidate, by two identical copies of the photograph, of which one is signed on the back by the candidate; and

(b) in any case, by such copies of anything contained in the address as the GLRO may reasonably require in connection with the reproduction of the address.

Approval of election addresses by Post Office

5.—(1) Before an election address is submitted to the GLRO for inclusion in the election booklet a draft of the address must have been—

(a) submitted by the candidate to the Post Office, and

(b) approved by the Post Office as complying with the relevant Post Office regulations.

(2) In sub-paragraph (1)(b) above "the relevant Post Office regulations" means the provisions of the Post Office regulations under section 91 of the 1983 Act as to the contents of election communications, other than the provisions of those regulations—

(a) authorising the sending of different material to different groups, or

(b) requiring the name of the printer and publisher to appear on election literature.

(3) Without prejudice to the operation of sub-paragraph (1)(b) above, the Post Office shall not approve an election address if. in their opinion, the address does not comply with the provisions of paragraph 3(1) and (2) above.

The election booklet

6.—(1) For the purposes of this Schedule the election booklet is a document prepared by the GLRO which contains the election addresses of all candidates who—

(a) desire their election addresses to be included in the booklet, and

(b) have submitted—

(i) those addresses, and

(ii) any additional material required under paragraph 4(4) above,

to the GLRO by such date as he may determine.

(2) If—

(a) it appears to the GLRO that any of the requirements of paragraphs 3(3) to (5), 4 and 5(1) above has not been complied with in relation to an election address, or

(b) a candidate fails to make the payment required by paragraph 9 below in respect of an election address,

the GLRO shall decline to include the address in the election booklet.

Form of election booklet

7.—(1) The order in which candidates' election addresses appear in the election booklet shall be determined alphabetically by reference to the candidates' surnames.

(2) The election booklet may include. in addition to candidates' election addresses. a statement by the GLRO—

(a) explaining the nature and purpose of the election booklet;

(b) listing. in alphabetical order, the names of all the candidates at the election (whether or not their election addresses are included in the booklet); and

(3) The election booklet must—

(a) contain a statement that it has been published by the GLRO; and

(b) give the name and address of the GLRO and those of the printer of the booklet.

(4) Subject to sub-paragraphs (1) to (3) above. the form of the election booklet shall be determined by the GLRO.

(5) The election agent of each candidate whose election address has been accepted by the GLRO for inclusion in the booklet shall be given an opportunity to attend at a time and place notified to him by the GLRO in order to check, and submit to the GLRO typographical corrections to, the proof of the candidate's address.

(6) If the election agent of any such candidate fails to avail himself of that opportunity, the GLRO may—

(a) make such typographical corrections to the proof as appear to him to he appropriate; and

(b) proceed with the printing and distribution of the election booklet without further reference to the candidate or his election agent (and without incurring any liability for any errors in the candidate's address).

(7) No person other than—

(a) the candidate by or on whose behalf an election address included in the election booklet was prepared, or

(b) the candidate's election agent,

shall incur any civil or criminal liability in respect of the publication of that address in the election booklet or its dissemination in accordance with paragraph 8 below.

Distribution of election booklet

8.—(1) Copies of the election booklet shall be delivered by the GLRO to the Post Office, in envelopes addressed to individual electors falling within section 17A(1)(b) of this Act, at such time as the GLRO may determine.

(2) The GLRO may disseminate the contents of the election booklet by such other means as he may determine.

Contributions by candidates towards costs of printing

9.—(1) Each candidate by whom an election address is submitted to the GLRO for inclusion in the election booklet shall pay the sum of £10,000 to the GLRO as a contribution towards the expenses incurred by him in respect of the printing of the election booklet.

(2) The payment required by sub-paragraph (1) above shall he made at such time, and in such manner, as the GLRO may determine.

(3) A candidate shall be entitled to a full refund of any such payment if, but only if, the candidate has given notice of withdrawal of his candidature before the last time for the withdrawal of candidates.

(4) If the total amount of the payments made by candidates under this paragraph exceeds the total amount of the expenses incurred by the GLRO in respect of the printing of the election booklet, the GLRO shall—

(a) divide the amount of the excess between the candidates in equal shares, and

(b) send to each candidate a payment in respect of his share.

Payments by Secretary of State

10. Except so far as they are met by payments under paragraph 9 above, the expenses incurred by the GLRO in consequence of the relevant provisions shall be met by the Secretary of State.

Candidates' election expenses

11.—(1) The amount of any payment made by a candidate under paragraph 9 above (or, if sub-paragraph (4) of that paragraph applies, the net amount of any such payment after deducting the payment under that sub-paragraph) shall be taken, for the purposes of Part II of the 1983 Act (the election campaign), to be an amount of election expenses incurred by the candidate in relation to the election.

(2) Nothing in section 75(1) of the 1983 Act (restriction on third party election expenditure) shall be taken to apply, in relation to any candidate, to any expenses incurred by the GLRO in consequence of the relevant provisions."").

The noble Lord said: My Lords, I beg to move.

My Lords, I am sorry again to trouble the Minister with a drafting point, but it is somewhat the same. At the bottom of page 10 of the Marshalled List it is stated,

"An election address must contain matter relating to the election only".

That is reasonable enough. Why then do we need the phrase, "in particular", in subparagraph (2)? I refer especially to,

"(a) any advertising material (other than material promoting the candidate as a candidate at the election)".

Is that not clearly covered by subparagraph (1)? It is the same with the phrase "commercial gain" referred to in paragraph (b). Paragraph (c) is more questionable. It was referred to by the noble Lord, Lord Jopling, I believe. It refers to,

"any material referring to any candidate standing for election to the Assembly".

I presume that that means any other candidate, but it does not say so. Will the Minister consider that point at any rate?

In the three general elections in which I stood, I never found it necessary to refer at all to my opponent. It is entirely laudable that this part of the Bill precludes the election addresses from being used in a slanging match. But a slanging match can be verbal. Why, then, should it be excluded from the election address? It is true that there is a Latin phrase which says that the written word remains and perhaps it is rather more dangerous, but I should have thought that we could well have got rid of those seven lines as a beginning to pruning the statute book.

My Lords, the purpose of these lines in the schedule is to be more precise about the nature of abuse that we attempt to circumscribe and rule out. This follows logically from paragraph 3(1) and adds further explanation that an election address should not be used to advertise or for material gain relating to commercial activity. Subparagraph (2)(c) refers to an earlier discussion and precludes the mayoral candidate from referring to himself or herself if he or she is standing also as an assembly candidate or to other assembly candidates. This links to an issue that we discussed at some length earlier. I hope that explanation clarifies the issues raised by the noble Lord. I thank him for raising the matter.

My Lords, the noble Lord was courteous enough to say that he would consider the point I raised on an earlier amendment. Will he do so also on this amendment, and will he be kind enough to write to me with the result of his consideration?

My Lords, I want to be more helpful to the noble and learned Lord because he raises important drafting issues. However, it needs to be understood that those relate to ruling out the abuse about which we were so concerned in our earlier discussions, not just this afternoon but in relation to the orders and during the Committee and Report stages of the Bill.

We believe that we have tightened up the provisions so that we can reasonably expect abuse not to take place through the freepost facility. That is exactly what the schedules are all about. Of course, we keep drafting under careful consideration at all stages of the legislation and it would be wrong to say that we shall not check the drafting carefully. However, this provision is directed at the issue of abuse: it is an attempt to tie it down precisely.

On Question, amendment agreed to.

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

Moved, That the Bill do now pass.—( Lord Bassam of Brighton.)

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

Greater London Authority Elections (Expenses) Order 2000

5.21p.m.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions

(Lord Whitty)

rose to move, That the draft order laid before the House on 28th February be approved [11th Report from the Joint Committee].

The noble Lord said: My Lords, we have debated this matter before. The matter of the free mailshot has been disposed of and I hope we can deal briefly with the matter in question in relation to this order.

The draft order prescribes the maximum amounts for the election expenses of candidates, their agents and third parties in elections for mayor of London and the London assembly. In my opinion the draft order is compatible with the European Convention on Human Rights.

The draft order sets out three separate limits: for mayoral candidates, assembly constituency candidates, and for parties and independent candidates contesting the London-wide list, reflecting the GLA's unique voting systems. Those limits are £420,000 per mayoral candidate; £35,000 per candidate contesting an assembly constituency; and £330,000 per party or independent candidate contesting the London-wide list.

As I said, we consulted political parties on our proposals in December 1999. We listened carefully to the points they raised about the level of the limits and, in the light of that consultation, reduced significantly the mayoral and London-wide list limits from the levels that we originally proposed—namely, £990,000 and £495,000 respectively—because consultees considered them too high and likely to disadvantage smaller parties. The limits provide for a more level playing field for candidates while allowing them the freedom to put their message across to the electorate.

The limits can be broadly compared to expenses limits in other relevant regimes. The expenses limits for mayoral candidates and for parties and independent candidates contesting the London-wide list are broadly derived from the figure of £30,000 per parliamentary constituency used in the Political Parties, Elections and Referendums Bill, which is presently before another place, as the building block for calculating the national spending limits for political parties. The assembly constituency limit is broadly equivalent to the sum of parliamentary constituency limits within an assembly constituency area. The limits are enough to enable candidates and parties to fight effective campaigns at either the London-wide or constituency level, while not allowing their spending to become unacceptably high.

When the order comes into force, GLA candidates and parties contesting the London-wide list will not be permitted to spend more than the relevant prescribed limit in respect of their election expenses. Election expenses are defined in the Representation of the People Act 1983 as,

"whether before, during or after an election, on account of or in respect of the conduct and management of the election".

Spending before 14th December 1999—the date when the relevant provisions in the GLA Act were commenced—is not caught by the provisions of the Representation of the People Act and hence would not, in our view, count toward the limit. I want to take this opportunity to clarify that a mayoral candidate's contribution of up to £10,000 towards the cost of printing the booklet referred to in our earlier discussion will count as an election expense on the part of that candidate.

Noble Lords may wonder whether, in the light of the decision to produce the booklet, explained so eloquently and modestly earlier today by my noble friend Lord Bassam, to the appreciation of the House, we should perhaps adjust downwards the election expenses limits for mayoral candidates. After all, their literature will be delivered to every elector at a pretty cheap rate. However, on balance I believe that it could be unfair to do so, given that we are where we are. Candidates have known about our proposed expenses levels for some time. Their spending since 14th December—the date when the relevant sections of the GLA Act were commenced—would count against those limits. We could be accused, with some justice, of moving the goalposts if we altered them now. I believe it is right to leave them for this election and look again at the issue before the next Greater London elections.

Article 2 of the order prescribes the maximum expenditure which a person other than a candidate, his agent or persons authorised by the agent—that is, a third party—may incur at such elections. The limits are set at £25,000 per third party supporting or opposing mayoral candidates; £25,000 per third party supporting or opposing London-wide list candidates, including independents; and £1,800 per third party supporting or opposing an assembly constituency candidate.

Some comment has been made on those limits and the Delegated Powers and Deregulation Committee drew attention to them. The limits are derived from the formula we intend to bring forward by amendment to the Political Parties, Elections and Referendums Bill to limit third-party spending in local elections. Concern has been expressed that the limits are too high. They are indeed high compared with the current £5 limit set out in the Representation of the People Act 1983, but the main reason for drawing those levels is that they are justified; and they justify my earlier contention that the Bill is compatible with the European Convention on Human Rights. They are justified also in the light of the judgment of the European Court of Human Rights in the Bowman case. The court ruled that the £5 limit constituted an unjustifiable restriction on freedom of expression.

With that explanation, I commend the order to the House. I trust that we shall have a constructive debate about the matters that are set out in it. I beg to move.

Moved, That the draft order laid before the House on 28th February be approved [ 11th Report from the Joint committee].—( Lord Whitty.)

My Lords, until half an hour ago the Minister probably thought that, apart from a bit of justified teasing on the subject of the candidates for mayor of London, and on election addresses being posted free, this order would be plain sailing. However, as the Minister almost said, there is unfinished business—indeed, business previously unmentioned in your Lordships' House—to which the Joint Committee on Statutory Instruments (not, with respect, the Delegated Powers and Deregulation Committee) on which I have the honour to serve, drew attention in its 10th report. It is most unusual for the committee to draw the attention of both Houses to matters incorporated in an affirmative instrument. Indeed, I cannot recall it happening during the time that I have served on that body.

The subject of my attention is embodied in Article 2 of the order and relates to what are known as third parties' expenses. As Article 2 helpfully explains, those may by law be,

"incurred by a person other than a candidate, agent. or person authorised by an agent".

and the latter are covered by not ungenerous monetary limits of their own. Were this order not to be passed tonight, the third-party limit would remain at £5, as the Minister said. I accept that that amount is a little mean in this day and age, hearing in mind that the original purpose was, for example, to buy canvassers a round of drinks or some buns for a picnic while canvassing. I have no objection to the limit being raised to a reasonable figure. However, as the Joint Committee pointed out, it is a mega leap from £5 to the mammoth amount of £25,000 embodied in Regulation 2 in connection with the mayoral election. The amount would not be quite so large in relation to an election of a constituency or a member of the London Assembly, but, nonetheless, £1,800 and £25,000 respectively are significant amounts, especially when added to the candidates' and agents' expenses that are referred to in Regulation 3 for the same series of elections.

I bend over backwards not to be a conspiracy theorist, but what are the Government up to? In my experience, the members of the Joint Committee never take it into their own heads to report on orders; they always ask the relevant government department a question or two first. The Department for the Environment, Transport and the Regions on this occasion was asked the same question and the reasoned reply is printed in the tenth report. I will summarise those reasons.

Firstly, the law needed changing because of the Bowman case, which held that the £5 limit violated Article 10 of the ECHR Convention as it was a restriction on the freedom of expression. This is all well and good, but noble Lords will probably agree that an increase from £5 to £25,000 was somewhat excessive insurance against being found guilty again by the court for the same reason.

Secondly, the Committee on Standards in Public Life in its fifth report recommended a limit on third-party expenditure at parliamentary elections of £500. Obviously, we are not dealing here with parliamentary elections but I would have been happy to go along with that limit for the London elections; but the Government have gone into overkill again.

The last reason is the most obvious reason. The Minister said that the £5 would be replaced by new limits on third-party spending if the Political Parties, Elections and Referendums Bill, which is currently at Committee stage in another place, is enacted. We are being asked to increase the London limits exponentially, on the basis of law that is not yet on the statute book, and which, in that respect at least, may never get there. It is no use the Department saying that the proposed national limit of £739,000 for expenditure by third parties in England is some 10 times the maximum expenditure limit for third parties during the Greater London Authority elections. None of these reasons appear to hold water, or the bath is not big enough to hold this enormous increase.

The Minister has the ability to pacify me, if he will be good enough to do so. Can he explain who the third parties are likely to be? Would an advocate of Mr Livingstone or Screaming Lord Sutch, were he still alive—both of whom are unlikely to have agents—qualify? Would an ordinary canvasser qualify? Can a candidate have more than one such supporter? If that is the case, the total amount for the London mayor would rapidly approach half a million pounds, which is a large amount of money that would have to be found from somewhere.

How is this extra money to be policed? Practically anyone could tell if I had spent over £5; it is much more difficult to show that I have spent £1,800 or £25,000.

Can the Minister give me confidence that the Government are not conjuring up yet another rod for their devolutionary back?

My Lords, I had not intended to speak, but I should like to intervene briefly. I am a member of the Committee on Standards in Public Life and I was a member at the time when the committee recommended a substantial increase in the limit on third-party spending. I think I should explain how we arrived at that recommendation and how the figure came to be calculated.

The problem was that the United Kingdom lost the Bowman case before the European Court of Human Rights, in which Mrs Bowman had spent money on circulars to the electors of the constituency of Halifax, to explain to them on behalf of the Society for the Protection of the Unborn Child the views of the various candidates on abortion. Clearly, this was directed against the sitting Member of Parliament, Alice Mahon.

The European Court held that a limit of £5, which effectively prevented any circulation of material at all, was unreasonable. It was accepted therefore that the United Kingdom had to change its laws to recognise that third parties—that is, those who are not supporting a particular candidate but who are raising particular issues—must be allowed a reasonable sum of money to make their case to the electors.

The figure that we thought was appropriate for parliamentary constituencies was £500, that being approximately the cost of printing a leaflet which could then be distributed by volunteers around the constituency. As an extension to that, we applied broadly a figure of 5 per cent for third parties at all elections: that for the national elections, where we proposed a limit of £20 million, came to a figure of £1 million; and third-party campaigns—for example, the campaign by UNISON before the last election in favour of the minimum wage. We thought that 5 per cent was broadly appropriate, and the figures for third-party spending in the London elections are not significantly out of line with that proposal from the committee on Standards in Public Life. The members of the committee have not had an opportunity to consider these proposals, but they are in line with our views on election procedures generally.

My Lords, I apologise to the noble Lord, Lord Skelmersdale, and the Joint Committee on Statutory Instruments. The noble Lord is correct in saying that that was the reference. On the other hand, I can correct the noble Lord: if we do not pass a spending limit today, there will be no spending limit in relation to the GLA, because the Act does not apply that limit but requires a different limit to be substituted by order: if we do not substitute an order, there is no limit.

The noble Lord, Lord Goodhart, has helpfully set out the background to the decision made by the Committee on Standards in Public Life. I can understand the reasons for the hesitation and the indication that third parties should not intervene to this degree in elections. However, it is considerably less than proportionate to the proposal by the Committee on Standards in Public Life for £500 per constituency. There are 74 constituencies in the Greater London area, and therefore that would be a higher figure. Likewise, the £25,000 maximum relates to 5 million electors. We have looked into this matter at great length: to print a single sheet for 5 million electors would cost at least £60,000. We have to bear in mind, in that context, that it does not seem to be an unreasonably restrictive limit on third party interventions, which for the most part will probably be single-issue campaigns or single interest group campaigns. Given the Bowman judgment, we feel that we need to put a realistic figure into this delegated legislation to meet the concerns that have been expressed.

I hope that, with that explanation, your Lordships will feel able to agree the order.

My Lords, I am grateful to the noble Lord. With the leave of the House, perhaps I may ask, before the Minister sits down, whether this is only directed at campaigning leaflets or whether other people can take advantage of these large amounts of money.

My Lords, I am not sure to what "other people" the noble Lord refers. These are leaflets paid for by third parties; there is no public expenditure involved. It is a question of expenditure up to £25,000. I agree that an enforcement issue arises, but an enforcement issue in relation to candidate's expenditure arises also. That could well be addressed by similar means.

The third parties may be single-issue groups, small businesses, campaign groups or people interested in any individual issue. If the question relates to whether it is a leaflet campaign material, in a physical sense, or whether it is activity, then the provision applies to everything. It is £25,000 worth of intervention in the campaign.

My Lords, before the noble Lord, Lord Whitty, sits down, is it correct that the position will be that anybody who spends money in support of a specific candidate without the authority of the agent will be committing an offence? There is no possibility, therefore, of third-party spending being used to support a campaign in favour of a specific candidate; it can only be used by single-issue groups or others raising specific subjects rather than those supporting specific candidates.

My Lords, yes, in general terms. As in the example which the noble Lord, Lord Goodhart, spelt out of the Bowman case, there are implications as to which candidate one is for and which candidate one is against.

On Question, Motion agreed to.

Limited Liability Partnerships Bill Hl

5.42 p.m.

Report received.

Clause 1 [ Limited liability partnerships]:

moved Amendment No. 1:

Page 1, line 20, leave out subsection (5) and insert—

("(5) The following provisions of the Partnership Act 1890 shall apply to limited liability partnerships—
(a) section 19,
(b) section 24,
(c) section 25,
(d) section 28,
(e) section 29,
(f) section 30,
(g) section 32,
(h) section 35.

(5A) For the purposes of subsection (5), the sections of the Partnership Act 1890 mentioned in that subsection shall apply as if—
(a) references to a firm or partnership were references to a limited liability partnership.
(b) references to a partner were references to a member of a limited liability partnership, and
(c) references to the dissolution of a partnership were references to the winding-up of a limited liability partnership.").

The noble Lord said: My Lords, I am afraid I am doing rather a lot of duty this afternoon and your Lordships will have to hear rather more of me than might have been wished.

I will need to take a few moments in discussing Amendment No. 1. That will at least make it unnecessary for me to speak at any length at any later stage of this debate. Amendment No. 1 raises an issue discussed at some length at both Second Reading and in Committee; that is, what is the nature of a limited liability partnership?

We on these Benches believe that a partnership is a simple, cheap and effective way of carrying on business. We also believe—though I do not speak for my noble friend Lord Phillips of Sudbury on this point—that it should be possible for partners to obtain the benefits of limited liability and avoid joint and several liability. We believe that a limited liability partnership should be just that; that is, a partnership with limited liability. Statute and common law rules should apply to limited liability partnerships so long as they are not inconsistent with limited liability and with the legal personality of an LLP.

That appears to have been the original view of the Government, because the first draft of the Bill provided that, subject to the terms of any agreement between them, the mutual rights and duties of the members of an LLP should be governed by the rules and principles of partnership law. I paraphrase the actual terms of the draft. By the time the Bill was published, that provision had been omitted.

In the debates at Second Reading and in Committee, it appeared that the Government were moving away from the concept of an LLP as a partnership with limited liability and were seeing it instead as what might be called a cheap and cheerful kind of corporate body with no real links with partnership law. That was most clearly expressed by the Minister in the Committee stage debate on 24th January at col. 1353, where he said that the Government's objective was to create a new entity,

"which falls under company law as far as possible and changes company law as little as possible except in respect of taxation. It falls under partnership law as little as possible".

That worried us considerably, because we felt that the Government were throwing out the virtues of partnership law though it was unnecessary to do so in order to achieve the principal objective of obtaining limited liability. In Committee, therefore, I tabled, in the names of myself and my colleagues, an amendment in general terms which brought in the rules and principles of partnership law on the lines of the Government's original proposals in the Bill's first draft.

This time, we have produced a rather more detailed amendment which means that the members of an LLP continue to be bound by the statutory rules in the Partnership Act 1890, so far as is consistent with limited liability and the legal personality of the LLP, and subject to any agreement between the members. This amendment should be read with Amendment No. 8, which preserves the duty of good faith between the members. That is the most important of the common law rules governing partnerships. Amendment No. 8 will be spoken to in due course by my noble friend Lord Phillips.

Before going into detail, I should say that in February of this year the Government published a consultation paper about regulatory default provisions governing the relationship between members of LLPs. "Default provisions" means the provisions which apply if the agreement between the members does not exclude or alter them. I found the consultation document helpful. and indeed encouraging, because it suggests that the Government are intending to use their powers under Clause 14(c) of the Bill to bring back partnership principles to a considerable extent. The dispute therefore to some extent boils down to an argument as to whether the default provision should be on the face of the Bill or in regulations.

We have a clear preference for the default provisions being on the face of the Bill. The usual argument with regulations is the need for flexibility and quick action. But the statutory principles of partnership law have been established for 110 years, during which time they have seen little change and there has been little disagreement with the way in which they are stated. There is no reason why more flexibility or a sudden change is needed now. We therefore believe that these default provisions should be on the face of the Bill because they have been proved to work for more than a century and because they lay down what we see as the essential nature of LLPs as partnerships with limited liability.

Perhaps I may turn to this in a little more detail. The key section in the Partnership Act is Section 24. That contains a number of basic rules of the relationship between partners in a partnership. Those rules include the equal share of all partners in the capital and profits of the firm in the absence of any decision to the contrary; the right of all members to take part in the management of the firm; the fact that consent of all members of the partnership is needed for the introduction of a new member; the fact that ordinary business decisions are to be taken by the majority of the partners but no change in the nature of the business can be made without the consent of all partners; and again, that all partners are to have a right of access to the books of the partnership.

The Government, in their consultation paper, indicated their intention to bring back all of Section 24 for LLPs except for two minor provisions which I have no wish to see returning. They also propose to bring back Section 25, which provides that there shall be no expulsion of members unless the agreement so provides, and a modified version of Section 26, which enables a member to retire on notice to other members if the agreement does not provide otherwise. The Government are now proposing, by way of Amendment No. 5, to put this particular provision on the face of the Bill and not in regulations. We welcome that.

The paper also raises a question for discussion without indicating its own preference; namely, whether Sections 29 and 30 of the Partnership Act 1890 should be brought back. Section 29 requires partners to account to their firms for any benefit derived by them from the use of partnership property, the partnership name, or a business connection of the partnership without the consent of other partners. Section 30 requires partners to account to their firms for profits from any competing business carried on by them without the consent of the other partners. We strongly believe that both of these provisions should apply to LLPs in the same way as they now apply to partnerships.

I have to say that the consultation paper was doubtful about the need for a general duty of good faith. However, I certainly believe that such a duty is needed, although I shall leave it to my noble friend to speak on that issue.

As I see it, of the statutory provisions involved, the only remaining issue is the failure of the Bill to include any provision to replace Section 35 of the Partnership Act. Section 35 gives powers to the court to dissolve a partnership on various grounds, including the incapacity of a member to carry out his or her partnership obligations, or to dissolve a partnership because of various kinds of misconduct by a member other than the member who is seeking the dissolution.

Limited liability partnerships are basically a structure for business where it is intended that all the members shall be involved in the work. I believe that the Bill needs a formal provision to cover a situation where one member becomes permanently incapacitated or is guilty of serious misconduct in the management of the business. In substantial LLPs, undoubtedly the members' agreement will cover that kind of situation. However, there is a need for a default power to cover small LLPs where a formal agreement and proper advice on the terms which ought to go into a formal agreement are much less likely to be in place. It is essential to provide something of that kind for a body where all the members are normally working members.

The consultation paper considers, although without much enthusiasm, the possibility of introducing into LLPs something along the lines of Section 459 of the Companies Act 1985 which gives a minority shareholder the power to go to the court for various remedies, including the compulsory buy-out of his or her own shares if the business is being carried on in a manner unfairly prejudicial to him or her. I hope that the consultation will come to the conclusion that something of that kind is needed in the case of LLPs because I believe that it is required, although possibly in a simplified form. That would avoid the problems of time and cost that have been thrown up by Section 459. However, I believe that we also need something along the lines of Section 35 of the Partnership Act—not in an identical form because here I believe that we are less likely to be looking at dissolution than the continuation of the LLP on the basis of buying out a member who is incapacitated.

I believe that something of this kind should be included, as well as an extension of Section 459. Although in general I find the Government's position much more acceptable than it was previously, I hope that they will now be able to consider taking action along these lines. I beg to move.

My Lords, in rising to speak to this amendment, first, I thank the Minister for providing me with a marked-up copy of the government amendments together with an explanatory note. Perhaps I may also thank all noble Lords who have kindly written to me and copied to me correspondence concerning a number of issues following the Committee stage of the Bill.

A comparison of the Bill in its form at Second Reading with the Bill that we are considering this evening confirms that we have made considerable progress. However, the consultation paper, Regulatory Default Provisions Governing the Relationship Between Members, dated February 2000, clearly illustrates the challenge of endeavouring to introduce a new vehicle—a new business entity—which, in the words of the Minister,

"combines the best of both worlds".

is "an enormous privilege" and, at the same time, recognises the rights of third parties.

Taking this consultation paper together with the correspondence of the noble Lord, Lord Goldsmith, dated 2nd and 3rd March 2000 and addressed to the Minister, we on these Benches remain concerned as to how the rights of third parties will be protected. We are concerned in particular, in the event of a conflict, with how the potential responsibility of a member of an LLP would be apportioned—I shall quote the noble Lord, Lord Goldsmith—

"in order to split out liability of the members for his own acts as opposed to the liability of others".

Surely that goes to the heart of this business entity.

Turning to Amendment No. 1, I recall expressing concern in the debate on Second Reading as regards Clause 1(4) in so far as, on the face of the Bill, no reference is made to issues which are central to partnership law, something one might have expected when discussing a new vehicle called a "limited liability partnership". Indeed, there is no express reference to the limits of liability. However, I also recall that the Minister's response to the concern when it was raised in Committee made it quite clear that, although the taxation of LLPs will be on the partnerships analogy, all other aspects of the LLP will be on the companies analogy. It is now clear that an LLP will be quite different from a partnership and that those areas of partnership law which govern the mutual rights and duties of the members, including key provisions of the Partnership Act concerning dissolution, joint and several liability and relations with third parties, will not apply to LLPs.

Although to some extent I am reassured by Clauses 5 and 6 of the Bill, assuming that regulations under Clause 14(c) will contain a number of default provisions modelled on Section 24 of the Partnership Act 1890, I have considerable sympathy with the amendment. It expressly covers a number of key issues, including dissolution either by members or by the court; the accountability of partners for private profits; the duty of a partner not to compete with the business of which he is a partner; and the disclosure of accounts and information as between partners and their legal representatives. For that reason, I look forward to the Minister's response to the proposed amendment.

My Lords, I am grateful to the noble Lord and to the noble Baroness for the way in which they have moved and spoken to the amendment. From the speech of the noble Lord, Lord Goodhart, it is clear that I shall need to use the long version of my response rather than the short version. However, I make no complaint about that.

In the debates at Second Reading and in Committee, I made it clear that, although the Bill will introduce a new business entity, we are not seeking to rewrite company law or partnership law. We seek to make as few changes as possible, other than those which are necessary to meet the demand from business and the professions for a new entity of this kind. For that reason, we have fundamentally resisted attempts both in Committee and, I am afraid, at this stage, to introduce into the Bill very substantial elements of partnership law, just as we have resisted attempts to amend company law any more than is absolutely necessary for the purpose of this exercise. I shall return to the amendments to Clause 5 before I conclude my remarks.

Two amendments were tabled in Committee: one from the noble Lord, Lord Goodhart, and one from the noble Baroness, Lady Buscombe. Both of them sought to apply, as a default, provisions of the Partnership Act 1890 and the noble Lord and the noble Baroness argued them with considerable force. I explained at the time that an LLP is a body corporate that is treated for tax purposes as a partnership. We strongly believe that it would create substantial uncertainties to apply partnership law in default to a body corporate. Companies Act provisions are being applied to an LLP by the regulations made under the Bill and the application of partnership law in general would lead to confusion as to how the two would interact.

However, we recognise that there is concern among consultees—indeed, that is why we issued a consultation document on the point—that circumstances may arise where, for example, an LLP does not have an agreement between its members, or where the agreement may not cover all situations. That is why in our amendment to Clause 5, which will be debated later, we say that there will be regulations but that those regulations will apply,

"in the absence of agreement as to any matter, by any provision made in relation to that matter by regulations under section 14(c)".

In other words, we are looking to agreement between the members of the limited liability partnership as the first line of defence and providing for regulations in the absence of that agreement. This series of default provisions in legislation will allow us the flexibility to modify the provisions, as necessary, depending on the practical experience of the operation of LLPs.

I know that the noble Lord, Lord Goodhart, was not convinced by my arguments on the previous occasion. He said that he would bring the matter back on Report; indeed, he has done so. I said in Committee that we would consult on the draft provisions, and that is what we are doing. The draft regulatory default provisions were published in February for consultation. A copy was sent to those who participated in the Committee stage and is available in the Library of the House.

The document raises three issues: first, whether the LLP regulations should contain such default provisions, and how they should be drafted; secondly, whether the LLP regulations should impose a duty of good faith between members; and, thirdly, whether, under minority protection, Section 459 of the Companies Act should be applied to an LLP. If the amendment before us were agreed to, it would preempt the outcome of that consultation. I cannot see any good reason why we should do so. Moreover, some of the provisions included in the amendment are, in our view, inappropriate for application.

I turn now to the details of each of the provisions in the Partnership Act 1890 that Amendment No. 1 seeks to incorporate into the Bill. Section 19 of the Act provides that mutual rights and duties of partners may be varied by consent. It is implicit in Clause 5 that an LLP is governed by agreement between its members. The part of our Amendment No. 7 to Clause 5 that I read out makes that clear. Indeed, the amendment would make the position even clearer because it provides that the mutual rights and duties of the LLP, and its members, are governed by an agreement between members, or between the members and the LLP, or, in the absence of an issue, by the default provisions contained in the regulations. I cannot agree that it is necessary for Section 19 to be applied to LLPs.

Section 24 contains the rules as to the interests and duties of partners subject to any agreement between them. The draft default provisions that we propose to include in regulations are based primarily on Section 24. We have concentrated on including those areas that were considered by consultees to be the most appropriate for limited liability partnerships. However, it was not considered necessary or appropriate to include the two provisions—Section 24(3) and (4)—which govern the financial relationship between partners and the partnership. We regard this as an area that should best be left to the members to decide between themselves.

Section 25 deals with the terms on which a partner can be expelled from the firm. This, too, is included in the draft default provisions. The noble Lord, Lord Goodhart, referred to Section 26, which is dealt with in Amendment No. 5.

Section 28 requires partners to render to any partner true accounts and full information of all things that affect the partnership—I love the Victorian language. It is our intention to apply by regulation Section 238 of the Companies Act 1985 to LLPs. That will require a copy of the LLPs annual accounts, together with a copy of the auditors' report on those accounts, to be sent to every member of the LLP and every holder of the LLP's debentures within a month of their being signed, and no later than 10 months after the end of the accounting period. In addition, the draft default provision requires that the books of the LLP should be kept at the place of the LLP and that every member may have access to, inspect and copy any of them. Therefore, I see no reason for Section 28 to be applied; indeed, I would go as far as to say that the wording is less robust than that which we are including in the regulations. Failure to comply with Section 238 would mean that the LLP and the designated members who were in default would be guilty of an offence and liable to a fine.

Section 29 concerns the accountability of members for private profit and Section 30 deals with the duty of a partner not to compete with the firm. We have suggested including provisions along these lines in the default provisions and we have sought consultees' views. Although the consultation paper suggests that it might be considered inappropriate to make these variable by an agreement between the LLP's members, the paper also points out that Section 19 of the Partnership Act appears to suggest that, even in the case of a partnership, Sections 29 and 30 may be overridden by consent.

Sections 32 and 35 concern the dissolution of a partnership either by expiration or notice, or by the court. An LLP will be a separate body corporate. It is our intention to apply to LLPs, by regulation, the appropriate parts of the Insolvency Act 1986, like those that apply to a company. It would not be appropriate to apply to a body corporate the dissolution provisions of a partnership; for example, it could have detrimental consequences if a member of an LLP were able to dissolve the LLP simply by giving notice to the other members. What if the LLP had entered into contracts with third parties? The LLP's status as a separate legal entity requires that dissolution is dealt with formally.

The noble Lord, Lord Goodhart, referred to the possibility of a member being permanently incapacitated. We believe that the application of the Insolvency Act 1986 would cover the situation because the legislation deals with such circumstances; for example, in a company with two members, one may become incapacitated. However, we shall consider that matter further to ascertain exactly how the partnership provisions and the insolvency legislation interact.

The noble Lord, Lord Goodhart, was good enough to say in his introduction that the difference between us has very much narrowed as regards whether these provisions should appear on the face of the Bill or in regulations. In view of the detailed analysis of the 1890 Act and what we propose to do in regulations, subject to consultation, I hope that I have persuaded the noble Lord that it would be better to leave such matters to regulation.

6 P.m.

My Lords, although I do not know whether the Minister has persuaded me that it would be better to leave this to regulations, he has certainly managed to persuade me—if I ever thought of doing otherwise—that this is not an issue on which we should force a Division of the House. Following the publication of the consultation paper, clearly this matter is one that causes us much less concern than was previously the case. The only issue to which we may return on Third Reading is the question of what should happen in the event of incapacity, given the fact that an LLP is clearly intended to be the sort of body within which a small group of people are working together. I understand that it would not necessarily be appropriate to dissolve the LLP or wind it up, but it may be desirable to include some kind of default provision that would enable the interest of someone who has become incapacitated to be bought out—

My Lords, before the noble Lord leaves that point I should stress that I am anxious to avoid conflict on Third Reading. Therefore, perhaps I may write to the noble Lord on the issue and, if necessary, we can meet to discuss the matter along the lines of the investigation to which I referred in my response.

My Lords, I am most grateful for those comments. I am happy to accept the noble Lord's suggestion. In those circumstances, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [ Incorporation document etc.]

moved Amendment No. 2:

Page 2, line 4, leave out ("the form prescribed by regulations") and insert ("a form approved by the registrar").

The noble Lord said: My Lords, Amendment No. 2 is intended to provide the Registrar of Companies with the same powers of approval as exist for the incorporation document in Clause 2(2)(a). We see no reason to treat the statement of compliance differently from the incorporation document in this respect.

The noble Lord, Lord Phillips of Sudbury, suggested in Committee that the original wording here looked a little "futuristic" because it referred to someone,

"who is to be a member".

He thought that this could perhaps be made more straightforward without undermining the effect of the provision. We agree. I beg to move.

My Lords, this amendment seems to be very necessary, if I may say so. But, when turning to Clause 5, we see in the first line the words,

"The provisions of any agreement (express or implied) between the members of a limited liability partnership or between the limited liability partnership and the members as to the mutual rights and duties-,

and so on. Am I right in thinking that, bearing in mind the way in which Clause 2 is now drafted, subject to the amendment having been accepted—as we assume that it will be—the idea of an agreement between the members being implied seems to be most unlikely, and, indeed. I would have said impossible, bearing in mind what is put forward in Clause 2? Will the noble Lord be so good as to say, bearing in mind Clause 2, how the words "or implied" in Clause 5 can be consistent?

My Lords, I had not intended to comment on this amendment, but as the noble Lord, Lord Renton, has raised this matter, perhaps it would be more appropriate for me to raise now the question I was going to raise when Amendment No. 7 to Clause 5 is considered. I should be grateful if the Minister could elaborate also on the provisions that he expects to be contained within the incorporation document. I now look at Clause 2(2)(a) which states that the incorporation document must,

"be in a form approved by the registrar (or as near to such a form as circumstances allow).

All the other requirements visàvis the incorporation document in Clause 2(2) are extremely straightforward factual matters: name, registered office, the names and addresses of designated members. However, as regards Clause 5, and in particular Amendment No. 7 to Clause 5, questions are raised as to exactly what is potentially to be included in the incorporation document. It seems to me that Clause 5—whether as it now stands, or as it is proposed to be amended—makes no sense unless Clause 2(2)(a) will involve matters of substance visàvis the agreement between members.

Perhaps this is rather a fast ball to bowl at the Minister on this clause and perhaps this is a matter that is better dealt with after this debate, but I thought it appropriate to follow the comments of the noble Lord, Lord Renton, as his point touches on the one I have tried to explain.

My Lords, the simple answer to the point raised by the noble Lord, Lord Renton, is that the words he referred to would be removed from the Bill by Amendment No. 7. Amendment No. 7, which stands in my name, seeks to omit Clause 5(1). Therefore, if it were accepted, there would be no reference to an agreement (express or implied). However, as a more general point, I think that the noble Lord will acknowledge that the courts may well find that an agreement between members could be implied from their conduct, even if it were not written down. I hope that the noble Lord will agree that—

My Lords, I am most grateful to the noble Lord; I should have noticed that. However, the point that he has made disposes of the point that I made.

My Lords, I am grateful to the noble Lord. If the noble Lord, Lord Phillips, will allow me, I shall respond to his detailed point about Clause 5 when we reach Amendment No. 7, to which it properly refers.

On Question, amendment agreed to.

6.15 p.m.

moved Amendment No. 3:

Page 2, line 6, leave out from ("anyone") to ("that") in line 7 and insert ("who subscribed his name to the incorporation document:).

The noble Lord said: My Lords, I believe that I have spoken to this amendment with Amendment No. 2. I beg to move.

On Question, amendment agreed to.

moved Amendment No. 4:

After Clause 3, insert the following new clause—

WINDING-UP OF A LIMITED LIABILITY PARTNERSHIP FOR INACTIVITY OR INAPPROPRIATEACTIVITY

(" . A limited liability partnership may, in accordance with regulations made under section 13, be wound up by the court on the petition of the Secretary of State or a member of the limited liability partnership if—

(a) it has not for a period exceeding 12 months carried on a lawful business with a view to profit. or

(b) its sole or main activity is an activity which is not the carrying-on of a lawful business with a view to profit.").

The noble Lord said: My Lords, this is a probing amendment which follows from the Government's amendment to Clause 2 in Committee which requires those who are subscribers to an incorporation document of an LLP to be people who are associated in carrying on business with a view to profit. Those words reflect the requirement for the formation of a partnership.

However, what happens if that requirement is satisfied at the time of the incorporation of an LLP but ceases to be satisfied afterwards? What happens, for example, if the LLP switches from a lawful business to an unlawful one; or—perhaps this is a little more realistic—what happens if an LLP starts to operate as a not-for-profit organisation? Is there any sanction for its doing so? If there is a sanction, what is it? If there is not a sanction, what is to prevent an LLP doing this and departing from what is clearly the basic intention with which LLPs are allowed to be formed? I beg to move.

My Lords, I had not intended to speak on this amendment but, having heard the comments of the noble Lord, Lord Goodhart, I simply add the following points. If this amendment is to probe the question of what is to happen in the circumstances that have been mentioned, I very much hope that the answer will not be that it is intended that members of the limited liability partnership will be able themselves to wind up the LLP in that event. The reason I say that is that if the LLP has traded and has incurred liabilities directly to third parties, I should be concerned if a member of the LLP was able to bring it to an end with a potential detriment to third parties in that they would not be able to pursue their remedies against the LLP.

From time to time in the field of company law, a company is wound up and then a third party liability comes to light. The third party may be put to considerable difficulty, and sometimes finds it impossible, to have the company restored simply so that the rights against the entity can be pursued. Although I do not for a moment doubt the desirability of probing the issue, I hope that the answer will not be what is stated in the amendment. Therefore, I oppose the amendment.

My Lords, I am grateful to the noble Lord, Lord Goodhart, both for moving the amendment—it enables me to clarify the issue—and for the way in which he moved it.

First, he is right to say that the amendment arises out of the alterations made in Committee which changed the definition of the role of an LLP to that of carrying on a lawful business with a view to profit. Secondly, he is right to say that the amendment deals with a change which takes place in the lifetime of an LLP—in other words, after incorporation.

Providing for the wind-up of an LLP in the way proposed by the amendment seems unnecessary. In one case, as my noble friend Lord Goldsmith said, it could be damaging. As to the issue of a lawful business, the combined operation of the provisions of Section 432 of the Companies Act 1985 and Section 124A of the Insolvency Act 1986 mean that the Secretary of State has the power to petition the courts to wind up any company whose affairs are being carried out for an unlawful purpose. It is our intention to apply the relevant provisions of these Acts to limited liability partnerships by way of regulation, and so the Secretary of State will have identical powers in this respect. That means that we do not need to make separate provisions on the face of the Bill.

The proposed amendment may provide members with wider grounds to apply for a winding-up order than those which currently apply to companies. The scope of "lawful business" may possibly include circumstances where there has been misconduct or fraudulent behaviour. At present, as insolvency and company law applies to companies, it would be only the Secretary of State who could apply for a winding up on the ground that it was expedient in the public interest, based on a report furnished under Section 432 of the Companies Act. As my noble friend Lord Goldsmith pointed out, we would have some difficulty if either the intent or the effect of the clause was that a member would have analogous powers to wind up an LLP to those which the Secretary of State has in the Insolvency Act.

As to carrying on with a view to profit, again, we can see little reason for what is proposed. Once again, the intended application to LLPs by regulations of appropriate parts of the Insolvency Act will provide assistance here. It will be possible for an LLP to be wound up by its members through a petition to the court as a result of our intention to apply in regulations Section 124 of the Insolvency Act. We see no good reason to provide separately for members' winding up in the set of circumstances described by this amendment.

My Lords, I am grateful to the Minister for his explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [ Members]:

moved Amendment No. 5:

Page 3, line 10, at end insert ("or, in the absence of agreement with the other members as to cessation of membership, by giving reasonable notice to the other members").

The noble Lord said: My Lords, it is the turn of the noble Lord, Lord Goodhart. The noble Lord argued in Committee that the issue of cessation of membership should be dealt with in the Bill rather than in regulations. He thought that provision in regulations might be ultra tires and asked us to look again at the issue. We have concluded that it is more appropriate to include here provision that, unless otherwise agreed, a member may withdraw from the LLP by giving reasonable notice.

The noble Lord's amendment in Committee specified a particular time period. We have concluded that reasonable notice is more appropriate than setting a specific time period. Depending on the circumstances, whatever was included in legislation might be regarded as too long or too short, and it will, in any case, be possible for members to set a specific period for giving notice by agreement. I beg to move.

My Lords, I am grateful to the Minister for having taken this point on board. Obviously I greatly welcome the amendment.

However, there is one point that I should like to follow up, and that is: what are the consequences for someone who retires on giving notice while the LLP continues in operation? In the case of a company limited by shares, his or her shareholding would remain in the company except in the special circumstances where Section 459 of the Companies Act would apply or where the other shareholders agreed to buy out his or her shares. What will happen in the case of an LLP, where there are no shareholdings as such? Should there not be some kind of default provision to ensure that when a member of an LLP retires, the LLP is required to pay out to the retiring member his or her share in the LLP's property? Otherwise we could run into considerable difficulty.

Let us take the case of three partners who are running a small restaurant business and one of them leaves. It is clearly inappropriate that that member's interest in the LLP should be simply locked in for the benefit of the two remaining members. It is not clear on the face of the Bill that there is a right for the outgoing member to take out his or her interest.

My Lords, I rise to speak briefly in support of the amendment. I expressed concern at Second Reading that the Bill does not expressly provide for a member who wishes to retire from the partnership. I am pleased that the amendment now covers that point. Although I suggested that notice be given to the LLP, I accept the Minister's preference for notice to be given to the other members.

My Lords, the noble Lord, Lord Goodhart, has raised an issue which is, in my limited experience, a current difficulty in company law. If a shareholder director, for example, wished to leave a company, it could be that an absolute right for him to take out his shareholding at a previously agreed rate could bring the company to its knees. I have seen examples of that.

The situation is the same for an LLP as it is for a company; there cannot be any default provision provided in legislation. It will have to be done by agreement between the members and the buy-out will have to be negotiated. Any default would be extremely complicated. But the same problem arises with companies and it would be a pity to attempt to bring something in for LLPs which we have not been able to do for companies.

My Lords, before the Minister sits down, I wonder whether that will be the case. It seems to me that there is a serious lacuna here. Membership of an LLP is so closely linked with management that it is very difficult to contemplate circumstances in which a member who retires from the LLP cannot take out his or her share in it without the agreement of the other partners.

My Lords, that would have to be done by agreement. Anyone going into an LLP as a member must, at the time of the original agreement, put himself or herself into a position of being either the person who is leaving or the persons left behind, and take the steps necessary to protect that position in the future.

It will never be a straightforward issue; it is not a straightforward position for partnerships under the 1890 Act. The Law Commission is considering partnership law generally and we expect that it will look at this issue in its consultation paper. If I can add anything to that, I will certainly do so. However, I do not see any way round that difficulty, whatever the nature of the business entity.

On Question, amendment agreed to.

moved Amendment No. 6:

Page 3, line 13, leave out ("(rather than members of a limited liability partnership)").

The noble Lord said: My Lords, it is the turn of the noble Baroness, Lady Buscombe. She suggested in Committee that it might be possible to simplify the wording of Clause 4. We have looked again and we have decided that the wording in brackets adds little value and can be advantageously removed. I beg to move.

My Lords, I am grateful to the Minister for the amendment. It certainly simplifies the understanding of the status of members. I simply suggest that the final comma should be removed. It is a small point, but it affects the intonation and thereby the understanding of the clause.

My Lords, I believe that sufficient discretion is allowed to the printers to do that without reference to your Lordships.

On Question, amendment agreed to.

Clause 5 [ Relationship of members etc.]:

6.30 p.m.

moved Amendment No. 7:

Page 3, line 16, leave out subsection (i) and insert—

("() Except as far as otherwise provided by this Act or any other enactment, the mutual rights and duties of the members of a limited liability partnership, and the mutual rights and duties of a limited liability partnership and its members, shall be governed—
(a) by agreement between the members, or between the limited liability partnership and its members, or
(b) in the absence of agreement as to any matter, by any provision made in relation to that matter by regulations under section 1 4(c).").

The noble Lord said: My Lords, we have already anticipated some of the discussion on this amendment. The noble Lord, Lord Phillips, tabled a probing amendment at the Committee stage to establish the thinking behind subsection (1). We have looked again at the wording and decided that there is no need to refer to the incorporation document but that it is beneficial to include something to point to the importance of agreements between members in determining internal relations. Of course, we are looking for agreements as far as possible rather than the implementation of default provisions. In addition, in the light of our consultation on draft regulations for default provisions governing the relationships between members, we are of the view that it is helpful to point to the default provisions by amending Clause 5(1)(b) to refer to "regulations under section 14(c)", which is what we were discussing when we were concerned with Amendment No. 1.

The noble Lord, Lord Phillips, raised the question of the wording at Clause 2(2)(a). I think I can deal with it most readily now because the reference is to an incorporation document. If it is going to be meaningful, it must have information about the agreement between members. The registrar cannot say what the agreement should contain or what form it should be in, so the incorporation document is limited specifically to the details set out in paragraphs (b) to (f) and paragraph (a) is deliberately left so that the members of a partnership can, provided they state the necessary facts in paragraphs (b) to (f), use their own form. I do not think there is any danger here of anybody being misled.

My Lords, I am in favour of this amendment apart from one point on which I would like the noble Lord's views. Subsection (c), which is an exception to the normal effect of the provisions, states,

"applying or incorporating, with such modifications as appear appropriate, any law relating to partnerships".

Surely the law relating to partnerships applies in any event and therefore subsection (c) would seem to be unnecessary. If the noble Lord can say that it is necessary, that is all well and good but, if the law relating to partnerships prevails, I would have thought it was unnecessary to make a regulation applying it.

No, my Lords, the law relating to partnerships does not apply. The whole principle of this Bill is that the new business entity called a limited liability partnership is a corporate body, not a partnership. The only partnership element of it is the tax treatment of the members of the limited liability partnership. The consultative document which we issued in February, of which the noble Lord did not receive a copy because he did not take part in the earlier proceedings on the Bill—he is welcome to have a copy—specifies those elements of the law of partnership and specifically the Partnership Act 1890, which ought to be applied in regulations. That is the reason why we have to have Clause 14(c).

My Lords, before saying what I was going to say, I come to the aid of the noble Lord, Lord Renton, because surely Clause 14(c) says that the Government may by regulations apply or incorporate,

"with such modifications as appear appropriate, any law relating to partnerships".

Therefore, they could incorporate sections from the Partnership Act if they were so inclined.

My Lords, I apologise for intervening. I thought I had looked around but I am sure the House will allow the noble Lord, Lord Phillips, to intervene now. Yes indeed, that is exactly what we have been debating.

Mr Lords, perhaps I may come back to the amendment itself. At the previous stage, I said quite frankly that I was confused by the purport of subsection (1) of Clause 5 and, to be frank, although it is an improvement in that I think I understand what it is saying. I have a question for the Minister. If one were to leave out Clause 5 entirely, would it not be harmless as regards the Bill? That is to say, as Clause 5 currently stands with the amendment now proposed in it, is not all of that necessary and is it not essential law that would be implied in the complete absence of Clause 5? If that is not the case, both I and the House would like to know what purpose it serves and, in particular, I would like some reassurance that both parts of Clause 5 as now proposed to be amended will not and could not prejudice innocent third parties.

I should like to add one other point. I assume I am right in interpreting the amendment as applying to agreements between all the members from the limited liability company and not some of the members. I should be grateful if the Minister would confirm that as well.

My Lords, before the Minister replies to the noble Lord's question, perhaps I may raise a point which arises out of a matter raised with the Minister by the noble Lord, Lord Renton. It relates to the omission of the words "express or implied" which qualified the word "agreement" in the provision which is being taken out of the Bill. With great respect, it suggests to me that, if the word "agreement" is left unqualified, then it leaves open, by reference to what is commonplace in partnership law at the moment, the argument that an agreement has been created by implication. In the ordinary course of events, that would not give rise to concern but, when one sees the default provision in paragraph (b), one may have cases where, in order to escape from the default provision, a party seeks to rely upon an implied agreement. Experience tells one that, in general, litigation finds it more difficult to cope with cases where implied agreements are sought to be spelled out of the evidence than express agreements. If it is intended to restrict the kind of agreement which is now referred to in the clause, will the Minister think a little more about whether it would be desirable to write into the Bill words to the effect that the agreement should be express or, even better, in writing between, as has been suggested, all the members or between all the members and the LLP'? I raise the issue simply because it was a matter of concern to the noble Lord, Lord Renton, and it could have some bearing on the extent to which litigation is either generated or avoided.

My Lords, perhaps I may respond first of all to the noble Lord, Lord Phillips. The reason for having Clause 5 in the Bill is in order to make it clear that an agreement between the members or between the limited liability partnership and its members has primacy and that there should be provision in the absence of any agreement. If we did not have that, the status of the regulations to be made under Clause 14(c) would not be clear. The new amendment first of all gives power to apply the default provision which was not explicit before and, secondly, makes it clear that agreement between members is subject to any other enactment. On those grounds, we believe that Clause 5 is necessary.

Secondly, the noble Lord asked whether it applied between the limited liability partnership and all its members, or between all its members or some of its members. Paragraph (a) provides that it is,

"between the members, or between the limited liability partnership and its members".

My understanding is that that does not apply to "some" of its members.

The noble and learned Lord, Lord Hope, raised the issue of express or implied agreements. He is right that litigation is easier for express agreements than for applied agreements. It is intended to have—and it is necessary—implied agreements in certain circumstances. For example, it is difficult to set out explicitly in advance an agreement on sharing profits, because that might change from time to time and there might be a formula which would bring about an implied agreement. For that reason one still has to have the possibility of implied agreements, although it is not necessary to refer to it on the face of the Bill. What is being proposed here is no different from the law on partnerships which has worked for 110 years. We do not see any reason to suppose that it will be more difficult.

On Question, amendment agreed to.

moved Amendment No. 8:

Page 3, line 25, at end insert—

("(3) Every member of limited liability partnership shall have a duty of good faith to every other member and also to the limited liability partnership provided that in the event of a conflict between those duties his duty to the limited liability partnership shall prevail.").

The noble Lord said: My Lords, I rise to move the amendment standing in my name and in the names of my colleagues. We believe that the public interest would be served by retaining on the face of the Bill a good faith obligation. We feel that with some strength, notwithstanding the clarity of the Minister's statements today and at previous stages that the Government want this to be clearly a corporate animal and not a partnership one.

Perhaps I may refer to the consultation paper of last month, which covers this point. I wish to congratulate the author on his helpful piece of paper. It must be a new way of dealing with legislation to scotch amendments put forward in this House by saying, "I have now produced a new consultation document so you are in baulk". We cannot buy that, especially since at the previous stage one of my amendments to do with the change of name of LLPs was swept from court on the ground that a prior and existing consultation on company law was going on. If we continue with that thesis and Ministers are quick on their feet in setting up internal consultation groups, there will be very little left for us to talk about. Therefore, I shall not pay any attention to the paper except to say that it is jolly good and I shall refer to some of the points in it.

The author's arguments against including a duty of good faith are, first, that the application of a duty by statute will require a formulation that may well prevent the duty between members developing in the future. The formulation in my amendment would not do that and is precisely intended to hitch the wagon, so to speak, to the common law definition of good faith. Secondly, he says that the express application would be unusual. Well, as the French would say, tans pis. We believe that it is necessary. Thirdly, he says that it is not expressly mentioned in the Partnership Act 1890. That

is so, but the Partnership Act 1890 was itself only a consolidation of existing common law. Here, given that we are moving completely away from the Partnership Act 1890, there will be no implied duty of good faith unless it is expressly written into the Bill. That is why the amendment is before us. Fourthly, he makes the point, which the noble Lord, Lord McIntosh, himself made several times in previous debates, that it could be confusing. One could have parallel fiduciary duties—partners to each other and partners to the LLP. However, the amendment is perfectly clear that if there is such a conflict, the duty to the LLP prevails.

We then come to considerations with which the noble Lord, Lord McIntosh, dealt in a letter which he kindly wrote to me dealing with this matter and in which he said that he was not convinced that there was the need to encourage greater vigilance in selection and working with other partners in the case of an LLP. He made the point that the reputation of an LLP is very much bound up in the name and that anyone breaking the rules would find himself in extremely difficult circumstances in getting a job if he had had to leave. The world we live in is very different from the world that prevailed even 20 years ago. Reputation within and between partnerships is now a fragile strand. Partnerships are now so large and the rate at which membership of those partnerships changes is growing apace. To rely on the drumbeat of the market place in upholding standards within partnerships is no longer sufficient.

Perhaps I may offer one brief anecdote. Not long ago I met two partners from a large law firm. I knew them both. Then, suddenly, two others materialised from the other direction. I knew one of them. I said, "Of course you know each other". They said, "Well, no". I said, "Let me introduce you. You are members of the same partnership". These partnerships are very large and never the twain shall meet. We feel that it is in the public interest to retain this aspect of partnership.

It was Lord Lindley who, in the case of BlissetV. Daniel in 1853, put it rather well. He said that,

"if any dispute arise between partners…he [the partner concerned] will be required to show, not only that he has the law on his side, but that his conduct will bear to be tried by the highest standard of honour".

There are those in the House and outside who are anxious about the impact of the Bill on the highest standards, which we would say do currently prevail within the old partnership structure. The fact that they prevail is intimately bound up with the joint and several liability and the duty of good faith that exists partner to partner and the mutual confidence and trust which that engenders. We very much hope that the Government will not be sidetracked by the old argument about whether we have here a corporate animal or a partnership animal. We accept that a corporation is being created by the Bill. But it is important that that one very particular aspect of partnership—law the duty of good faith between partners—should continue. I beg to move.

My Lords, this is an interesting but slightly puzzling amendment. Although the partnership is to be incorporated, its decisions will, the provision states,

"in the event of a conflict",

of the kind mentioned, depend on a majority of the partners. It seems to me that that will arise rather frequently. After all, in any partnership there will, before decisions are reached, be a good deal of discussion and perhaps not complete agreement between the partners. We should legislate on the assumption that that is what will normally happen. When it does happen, the view of the majority should prevail. That is another, and perhaps better, way to express it.

Perhaps I may have the attention of the noble Lord who moved the amendment. I should like to draw attention to two drafting points which are so minor that I hardly dare to mention them. First, in common English the expression "every other member" means "every alternative member". That cannot be what the noble Lord means. If the amendment said "each other member", the noble Lord would have it right. Secondly, I was brought up to avoid ever using the expression "and also" because that is merely repetition. Therefore, the word "also" could be omitted.

My Lords, I rise to speak in support of the amendment, although in light of the observations of my noble friend Lord Renton perhaps I should add "in principle". In so doing, I thank the noble Lord, Lord Phillips of Sudbury, for his correspondence on the point. I have reread the reference to a duty of good faith between members in the Minister's letter to me dated 10th January 2000. In that letter he states that the difficulty lies in how to define it since there is no express duty set out in the Partnership Act 1890 and, instead, it has been developed under general law.

Given that partnership law is to apply only to LLPs in a very limited way—namely, for the purposes of taxation—it cannot matter that it is not expressly referred to in the Partnership Act. I believe that the expression and status of a duty of good faith as between members themselves and members and the LLP will assist in protecting the interests of third parties. I also agree with the observations of the noble Lord, Lord Phillips of Sudbury, about standards in that regard.

The amendment complements the remainder of Clause 5 and is of assistance when considering the apportionment of liability, to which I referred at the beginning of the debate. If a partnership wants to convert to an LLP and, in so doing, retain the partnership ethos—something which has not so far been expressed this afternoon—surely a duty of good faith, although not expressed in partnership law, is central to maintaining that ethos.

My Lords, the amendment would apply a duty of good faith between members in addition to an existing duty between the members and the limited liability partnership. I recognise that the amendment has been drafted so as to provide that the duty which exists between the members and the LLP prevails if there is any conflict. That was one problem which arose in Committee which we do not face now. However, I am still not convinced of the necessity or desirability of imposing such a duty between members.

The consultation paper published by the Government on 16th February, which set out draft regulatory default provisions governing the relationship between members, raised the issue of a duty of good faith. If I am accused of consulting, I plead guilty. If the noble Lord suggests that I used the argument about consultation to stop him tabling and speaking to amendments, or even voting on them, I plead not guilty. I recognise that he is fully entitled to put his point of view regardless of the consultation document. I admit that, in response to the noble Lord, Lord Goodhart, I said that Amendment No. 1 would scupper the consultation process. However, the noble Lord is not obliged to pay attention to anything that I say; he can proceed as he wishes.

This is a matter which affects not only Members of your Lordships' House, learned in the law and in accountancy as they are, but the outside world. Therefore, it is proper to seek outside views on issues which are raised in this House. I should have thought that noble Lords would be pleased by that rather than the reverse. We explained in the paper that, even though it was not expressly set out in legislation, we believed that it was reasonable to expect that a member would owe a fiduciary duty to the LLP because he would be the firm's agent. The paper went on to say that it was doubtful that any similar duty would be owed between the members, but that there were a number of dangers in imposing a duty. The most important of these is that at present there is no statutory definition of "good faith".

It is generally recognised that a duty of good faith includes the following factors (which are a summary of paragraph 20 of the consultation document): first, a duty of honesty and good faith owed to each fellow member. I am not sure that that deals with the question whether it should be "each" or "every". Good faith also includes: a requirement for openness; a duty to act in favour of the firm; fair treatment of a minority within the firm; and a duty not to compete with the firm. Those are generally accepted factors in the context of partnerships, although they do not feature in the Partnership Act 1890. Why should we assume that reference to a duty of good faith with regard to limited liability partnerships will result in the same conclusions as exist for partnerships? Moreover, why should we assume that in future what is applicable to partnerships should now be applicable to LLPs? In any case, there will be nothing to prevent members agreeing between themselves in their agreement that they owe particular duties to each other.

We are doubtful about the desirability and necessity of imposing a duty of good faith. However, this is an issue on which we have gone out to consultation and it may be that we shall be persuaded otherwise by the results. It is open to the noble Lord, Lord Phillips, to press his amendment if he wants to do so, but we may still be persuaded when the results of the consultation are known. At the moment, however, we are not inclined to pre-empt the results of the consultation and to agree to the amendment.

The noble Lord, Lord Phillips, referred to partnerships where there were hundreds of members who did not know one another. I do not believe that that affects the duty of good faith between members. I do not see how the duty of good faith, which from the factors that I have cited appears to be intensely personal, will apply any more or less according to whether the partners know each other. Surely the important fact is that in large partnerships the members owe a duty to the firm, which is much more effective.

The noble Lord, Lord Renton, referred to majority decisions. We have provided for such decisions by agreement in the default provisions which will be part of regulations. I hope that that answers the noble Lord's point.

I understand the concern of noble Lords, but it arises from a desire to bring into legislation partnership principles which should apply only to taxation and, as far as possible, to little else. That is the principle on which we have drafted the legislation. We cannot believe that it will be helped by introducing the principle of good faith as is proposed in the amendment.

My Lords, with the leave of the House, can the noble Lord point to where majority decisions are expressly mentioned?

My Lords, they are to be provided for in regulations under Clause 14(c).

My Lords, I am grateful for the Minister's response. The definition of "good faith" is classic common law. The common law has done the job of defining that expression in relation to partnerships, and could do it eminently well in regard to companies. That would be a much better way to proceed than is trying to define it and set it in concrete.

The noble Lord referred to partners being able voluntarily to write into their partnership agreements good faith obligations. Our whole approach is based on the public interest in not leaving yet further matters to the partners of very privileged animals: LLPs. I very much hope that the Government will reconsider the arguments expressed this afternoon. I do not believe that the public interest will be served other than by allowing the good faith obligation to prevail in limited liability partnerships. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7 p.m.

Clause 6 [ Members as agents]:

moved Amendment No. 9:

Page 3, line 32. leave out ("or believes").

The noble Lord said: My Lords, the issue of the word "or believes" arose in Committee. By removing the words "or believes" from Clause 6(2)(b), the amendment narrows the test of authority in Clause 6(2)(b) so that an LLP is bound by the actions of its member except where the person dealing with that member knew that he had no authority. The amended wording follows the precedent of Section 5 of the Partnership Act 1890.

The effect is to strengthen the position of persons dealing with an LLP, so that the LLP will be bound by a member's actions unless the member had no authority to act, and the person dealing with that member knew that he had no authority or did not know or believe him to be a member of the LLP.

We have concluded that this strikes a better balance between the interests of the third party and those of the member in the light of discussion on this point in Committee, and particularly the comments from my noble friend Lord Goldsmith, to whom I wrote about this and another issue which arose in the debate on Clause 6. I should like, if I may, to touch upon that other issue. It was whether the common law could be relied upon in all cases to achieve the liability of a member for his own negligence: and whether the Explanatory Notes to the Bill accurately reflected the position. I do not think it appropriate or necessary to return here to anything that was said in Committee, which drew out cogently the potential for uncertainty, other than to point out that it would be outside the scope of the Bill to amend the general law on the duty of care, and that any other attempt to create greater legislative certainty would seem likely to cause as many problems as it would solve.

However, I should like to note that we shall be revising the Explanatory Notes on this point before they go with the Bill to another place. We shall draw on the detail which was contained in the correspondence that I have had with my noble friend Lord Goldsmith, which has been copied to other Members who have taken part in these proceedings. I beg to move.

My Lords, I welcome the amendment. I also welcome, and am grateful to the Minister for, the indication of the intention to revise the Explanatory Notes to deal with the other point that I made in Committee.

Throughout, my contributions to the debate have been from concern for the protection of third parties who deal with this new entity. I formed the conclusion that it was not technically possible to table an amendment as regards the personal liability of members, the point to which I referred in Committee. I do not repeat it. However, I believe that it is an indication, as is this amendment, of the need for people to know what they are dealing with.

On Amendment No. 9, the onus must be on the limited liability partnership to draw clearly to the attention of any third party a limitation on the authority of any member with whom it deals. That is why I welcome the amendment. It provides clearly that nothing less than knowledge on the part of the third party that the member did not have authority will do.

For the same reasons, at Second Reading I suggested that the courts should be vigilant to ensure that the device of the LLP was not misused. It should not be a trap for the unwary who may not understand that the body with which they are dealing, although it includes the word "partnership", is not the same as a partnership which carries with it personal liability and responsibility.

I am grateful to the Minister for having indicated changes that may be made to the Explanatory Notes. I support the amendment.

My Lords, I am grateful to my noble friend for his comments. Of course, it does not remove unlimited liability under all circumstances. That still exists when an act is in bad faith. However, my noble friend's general point is legitimate. I commend the amendment.

On Question, amendment agreed to.

Clause 10 [ Income tax and chargeable gains]:

moved Amendment No. 10:

Page 5. line 27, leave out from ("section-) to end of line 35 and insert ("118 insert—

"Limited liability partnerships

Treatment of limited liability partnerships.

118ZA. For the purposes of the Tax Acts, a trade, profession or business carried on by a limited liability partnership with a view to profit shall be treated as carried on in partnership by its members (and not by the limited liability partnership as such): and, accordingly. the property of the limited liability partnership shall be treated for those purposes as partnership property.

Restriction on relief

118ZB. Sections 117 and 118 have effect in relation to a member of a limited liability partnership as in relation to a limited partner, but subject to sections 118ZC and 118ZD.

Member's contribution to trade.

118ZC—(1) Subsection (3) of section 117 does not have effect in relation to a member of a limited liability partnership.

(2) But, for the purposes of that section and section 118, such a member's contribution to a trade at any time ("the relevant time") is the greater of—

(a) the amount subscribed by him, and

(b) the amount of his liability on a winding up.

(3) The amount subscribed by a member of a limited liability partnership is the amount which he has contributed to the limited liability partnership as capital, less so much of that amount (if any) as—

(a) he has previously, directly or indirectly, drawn out or received back,

(b) he so draws out or receives back during the period of five years beginning with the relevant time,

(c) he is or may be entitled so to draw out or receive back at any time when he is a member of the limited liability partnership, or

(d) he is or may be entitled to require another person to reimburse to him.

(4) The amount of the liability of a member of a limited liability partnership on a winding up is the amount which—

(a) he is liable to contribute to the assets of the limited liability partnership in the event of its being wound up. and

(b) he remains liable so to contribute for the period of at least live years beginning with the relevant time (or until it is wound up. if that happens before the end of that period).

Carry forward of unrelieved losses.

118ZD.—(1) Where amounts relating to a trade carried on by a member of a limited liability partnership are, in any one or more chargeable periods, prevented from being given or allowed by section 117 or 118 as it applies otherwise than by virtue of this section (his "total unrelieved loss"), subsection (2) applies in each subsequent chargeable period in which—

(a) he carries on the trade as a member of the limited liability partnership. and

(b) any of his total unrelieved loss remains outstanding.

(2) Sections 380, 381, 393A(1) and 403 (and sections 117 and 118 as they apply in relation to those sections) shall have effect in the subsequent chargeable period as if—

(a) any loss sustained or incurred by the member in the trade in that chargeable period were increased by an amount equal to so much of his total unrelieved loss as remains outstanding in that period, or

(b) (if no loss is so sustained or incurred) a loss of that amount were so sustained or incurred.

(3) To ascertain whether any (and, if so, how much) of a member's total unrelieved loss remains outstanding in the subsequent chargeable period, deduct from the amount of his total unrelieved loss the aggregate of—

(a) any relief given under any provision of the Tax Acts (otherwise than as a result of subsection (2)) in respect of his total unrelieved loss in that or any previous chargeable period, and

(b) any amount given or allowed in respect of his total unrelieved loss as a result of subsection (2) in any previous chargeable period (or which would have been so given or allowed had a claim been made)."").

The noble Lord said: My Lords, Amendment No. 10 is horribly long and technical and makes heavy reading. (I was going to enter a bet to see how many people had read it!) For that reason, I shall deal with the amendment in instalments by reference to each of the four new sections that it proposes inserting in the Income and Corporation Taxes Act 1988.

The first new section is Section 118ZA of the ICTA. This section is largely the same as Section 111 A of the ICTA that was previously inserted by Clause 10. The only change that has been made to that provision is to insert the words "with a view to profit" which we debated in Committee, after the requirement that an LLP must be carrying on a trade, profession or business if it is to be taxed as a partnership. In this way we are seeking to ensure that an LLP that is taxed as a partnership would otherwise have been capable of operating as a partnership under the 1890 Act.

As the effect of this clause is that LLPs will be taxed as partnerships I should like to take this opportunity to say something about this tax treatment. The limited liability partnership is a response to the desire, particularly from professional partnerships, for an entity which will allow them to operate with limited liability, while maintaining a partnership ethos—that is, the flexibility to organise their own internal structure, and to participate in the ownership an running of the business. For these reasons, such an entity may also prove attractive to start-up businesses, and to multi-disciplinary businesses. We concluded, in the light also of the views of the trade and industry committee, that it would be wrong to try to restrict this combination of limited liability and partnership structure to the professions, even if it were possible to find a satisfactory legal definition.

We have become aware, however, that taxing LLPs as partnerships might mean that there is scope for them to have alternative uses for which they were not intended, where the primary or only attraction may be their tax status. We shall be looking further into these issues with the Inland Revenue with a view to bringing forward legislation in the Finance Bill 2001, which should be in time for the availability of limited liability partnerships. Clearly, this will only be after appropriate consultation. There is no intention to undermine the commercial certainty of taxation as a partnership for those businesses for whom the entity was intended, and clearly this will be uppermost in our minds in whatever option we propose. I wished to put that on the record.

The next new section of the Taxes Act that is inserted by the amendment is Section 118ZB. This and the remaining aspects of this amendment make up the proposed amendment to which I referred at Committee stage, at col. 1395 of the Official Report of 24th January. The effect of the amendment is to make the provisions of the existing Sections 117 and 118 of ICTA applicable to members of LLPs with detailed modifications that I shall explain.

Sections 117 and 118 are anti-avoidance provisions that were introduced in 1985. They currently apply only to limited partnerships under the 1907 Act that carry on a trade. They operate to restrict tax relief claimed under specified provisions. Section 117 applies to individual partners; and Section 118 applies to corporate partners respectively. We propose that the extension of Sections 117 and 118 will apply only to claims made by members of trading LLPs and not claims by professions.

The reason that they are being extended to LLPs is that without doing so there would be the same scope as for the 1907 Act limited partnership for using LLPs as vehicles for tax avoidance. This avoidance would involve people buying into LLPs to claim tax relief for losses substantially in excess of their capital contributions; or interest could be artificially manufactured on loans to buy an interest in the LLPs and relief claim for that interest. The particular claims for tax relief by members of LLPs to which Sections 117 and 118 will apply are the same as the particular claims by partners in the 1907 Act limited partnerships. These are claims to tax relief against income other than profits from the trade of the LLP for interest paid on loans to buy into or provide working capital for the LLP and for trading losses of the LLP. There is no restriction by these sections of tax relief for interest paid or trading losses that are set against the partnership profit. Any amount by which the loss is restricted can be carried forward and set against the members' future shares of the LLP profits.

The claims to these tax reliefs are limited by Sections 117 or 118 to a specified amount which, for limited partnerships, is the partner's capital contribution plus any undrawn profit. That limit would not have worked for LLPs which will be structured differently. Because of this, the new Section 118ZC, which this amendment inserts, defines the limit which reflected our policy of allowing claims by members in LLPs up to the amount of money that they stood to lose if the LLP was wound up because it was insolvent. The effect of this provision is to set a limit on claims based on any capital that the member has subscribed to become a member, plus any undrawn share of profit and any further amounts that he or she has undertaken to contribute in the event that the LLP is wound up. The provision includes certain conditions that ensure that relief cannot be obtained on the basis of money that has been temporarily lodged with or committed to the LLP and then withdrawn after the tax relief has been given.

The provisions of new Section 118ZD cater for the situation where a member of an LLP who has had a claim to loss relief restricted by Sections 117 or 118 later makes a further capital contribution. Where this happens, he or she can claim relief for any balance of the loss that was not relieved in the period of the original claim and has not, in the mean time, been set against the LLP's trading profit. This claim is made on the basis that the loss arose in the year of the further contribution. This provision was introduced in response to comments by the bodies which were consulted. I beg to move.

My Lords, I rise to say that I am a member of the Tax Law Review Committee. It is currently undertaking the tax law rewrite project, putting tax law into reasonably understandable English. All I can say is that the Minister has made our task considerably more difficult!

My Lords, I rise to speak briefly and simply to the amendment. I want to raise three concerns on which we would appreciate the Minister's response. First, if a member borrows to provide funds to an LLP, we see no reason why interest on the loans should not be available for off-set against income from sources other than the LLP as that interest will have been funded from sources other than the LLP.

Secondly, we agree with the principle that tax relief for losses incurred by the LLP should be restricted to cash lost by the member, but presently there is concern that the provision fails to achieve this because of the treatment of profits undrawn at the date of the loss and the treatment of subsequent profits retained to replace lost capital.

Thirdly, it is proposed that transparency for capital gains tax purposes is lost if the LLP ceases to carry on a trade or business, with potentially serious consequences if, for example, the LLP ceases one trade and commences another. Does not the Minister agree that it would make sense for the transparency to remain for assets held on the date of cessation at least for a sufficient period to allow for their orderly disposal?

My Lords, I apologise for challenging the Tax Law Review Committee. I fear that there will be more challenges before it has completed its work.

The noble Baroness, Lady Buscombe, raised three technical questions. I hope that she will be satisfied if I write to her on those issues. I commend the amendment to the House.

On Question, amendment agreed to.

moved Amendment No. 11

Page 5. line 42. at end insert ("with a view to profit").

The noble Lord said: My Lords, in moving Amendment No. 11, I shall speak also to Amendment No. 12. These amendments would achieve two objects. Amendment No. 11 links the partnership tax treatment allowed by new Section 59A of the Taxation of Chargeable Gains Act 1992 to Section 59 of that Act. The words,

"with a view to profit",

refer back to the Partnership Act 1890 definition of "partnership" used in Section 59 of the Taxation of Chargeable Gains Act. Only business carried out with a view to profit should be treated as partnerships for tax purposes. That is consistent with our debate in Committee.

Amendment No. 12 makes it clear that the tax referred to in new Section 59A of the Taxation of Chargeable Gains Act 1992 is tax in respect of chargeable gains. I beg to move.

On Question, amendment agreed to.

moved Amendment No. 12:

Page 5, line 44, after ("tax") insert ("in respect of chargeable gains").

On Question, amendment agreed to.

7.15 p.m.

moved Amendment No. 13:

Page 6, line 8, at end insert—

("(2) Where subsection (I) ceases to apply in relation to a limited liability partnership with the effect that tax is assessed and charged—
(a) on the limited liability partnership (as a company) in respect of chargeable gains accruing on the disposal of any of its assets, and
(b) on the members in respect of chargeable gains accruing on the disposal of any of their capital interests in the limited liability partnership,
it shall be assessed and charged on the limited liability partnership as if subsection (1) had never applied in relation to it.

(3) Neither the commencement of the application of subsection (1) nor the cessation of its application in relation to a limited liability partnership is to be taken as giving rise to the disposal of any assets by it or any of its members."

() After section 156 of that Act insert—

"Cessation of trade by limited liability partnership.

156A.—(1) Where. immediately before the time of cessation of trade, a member of a limited liability partnership holds an asset, or an interest in an asset, acquired by him for a consideration treated as reduced under section 152 or 153, he shall be treated as if a chargeable gain equal to the amount of the reduction accrued to him immediately before that time.

(2) Where. as a result of section 154(2). a chargeable gain on the disposal of an asset, or an interest in an asset, by a member of a limited liability partnership has not accrued before the time of cessation of trade, the member shall be treated as if the chargeable gain accrued immediately before that time.

(3) In this section "the time of cessation of trade", in relation to a limited liability partnership. means the time when section 59A(1) ceases to apply in relation to the limited liability partnership.").

The noble Lord said: My Lords, Amendment No. 13 has two closely related purposes. First, it clarifies the tax treatment both of LLPs and of LLP members where the LLP is in liquidation. Neither the coming into operation of Section 59A at the start of a business of an LLP, nor its ending at liquidation, causes a charge to arise on the members. In liquidation, the "transparent" treatment of the LLP members as partners can no longer apply as the assets of the LLP vest in the liquidator who disposes of them to meet the claims of creditors. It would be unrealistic for the Inland Revenue to attempt to tax the LLP members on disposals of assets by the liquidator. Instead, any tax due on such disposals will be met by the liquidator under the normal corporate regime for liquidations. The LLP members will continue to be taxed under the rules for individuals, but their asset will be an interest in the LLP which may give rise either to a chargeable gain or an allowable loss on a disposal following liquidation.

The second purpose of the amendment is to ensure that any gains which LLP members have deferred while the partnership tax treatment was in force are brought back into charge when the LLP goes into liquidation. Under Sections 152 to 154 of the Taxation of Chargeable Gains Act, LLP members will be able to defer gains realised on the disposal of business assets where the proceeds from the disposal have been used to acquire assets used in the trade carried on by the LLP. New Section 156A of the Taxation of Chargeable Gains Act 1992 inserted by this amendment ensures that immediately before the LLP goes into liquidation a member who has deferred gains in this way becomes liable to pay the tax due on the deferred gain. Although the assets concerned are then under the control of the liquidator, it would not be appropriate for the charge to fall on them. This is because claims for this relief would have been made by the LLP members on an individual basis and the gains concerned may have arisen on assets outside the LLP. This measure is necessary to ensure that tax that has been deferred is brought back into charge on the members who would have originally been liable to that tax. I beg to move.

On Question, amendment agreed to.

Clause 12 [ Stamp duty]:

moved Amendment No. 14:

Page 6, line 32, leave out ("immediately before its incorporation") and insert— ("at the relevant time").

The noble Lord said: My Lords, in moving Amendment No. 14, I shall speak also to Amendments Nos. 15 to 17. It may be that some property of the former partnership is transferred to the LLP after incorporation, but before it acquires the former partnership's business. During this interim period, the previous partnership may continue trading and hence acquire new assets, such as debts due from its customers or clients. The technical changes made by these amendments put beyond doubt that, as intended, such assets will come within the scope of the relief, provided that the conditions are met. I beg to move.

On Question, amendment agreed to.

moved Amendments Nos, 15 to 17:

Page 6, line 35, leave out ("subscribe their names to the incorporation document") and insert ("are or are to be members of the limited liability partnership").

Page 6, line 43, leave out ("immediately before its incorporation") and insert ("at the relevant time").

Page 7, line 5, at end insert—

("() In this section "the relevant time" means—
(a) if the person who conveyed or transferred the property to the limited liability partnership acquired the property after its incorporation, immediately after he acquired the property, and
(b) in any other case, immediately before its case, incorporation.").

On Question, amendments agreed to.

moved Amendment No. 18:

After Clause 12, insert the following new clause—

CLASS 4 NATIONAL INSURANCE CONTRIBUTIONS

(". In section 15 of the Social Security Contributions and Benefits Act 1992 and section 15 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (Class 4 contributions), after subsection (3) insert—

"(3A) Where income tax is (or would be) charged on a member of a limited liability partnership in respect of profits or gains arising from the carrying on of a trade or profession by the limited liability partnership, Class 4 contributions shall be payable by him if they would be payable were the trade or profession carried on in partnership by the members."").

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 19. These are both technical amendments. Between them, they ensure that members of LLPs who are taxed on their share of the LLP profits as though they were partners in a conventional partnership will also be charged Class IV national insurance contributions on that profit share. That reflects the position for self-employed people and partners generally. The new clause has been welcomed by consultees. I beg to move.

On Question, amendment agreed to.

Clause 18 [ Commencement, extant and short title]:

moved Amendment No. 19:

Page 9, line 36. leave out (" 12") and insert ("(Class 4 national insurance contributions)").

On Question, amendment agreed to.

In the Schedule [ Names and registered offices]:

moved Amendment No. 20:

Page 10, line 13, at end insert—

("() When the name of the limited liability partnership ends with the abbreviation "llp" or "LLP" any notepaper, invoice, circular or other communication in whatever medium shall legibly state thereon that it is "a limited liability partnership".").

The noble Lord said: My Lords, I should apologise at once for chickening out of an attempt to table an amendment to incorporate the Welsh version as well. However, I hope that if the Government accept this amendment, they will bring in the necessary linguistic means to complete its effect. Before I go any further, I add my thanks to those of the noble Baroness, Lady Buscombe, for the assistance given by the Government to myself and colleagues on these Benches in arriving today with as much help as they have been able to give.

This amendment is simple but important. I believe that it is necessary on grounds of public protection. The word "limited" in relation to a limited liability company and the requirement for any but a public company to have the word "limited" or the letters "Ltd" after its title are, I believe, now generally understood by the public. However, it takes an awfully long time—not merely decades—for the man and woman in the street to latch on to even the simplicities of company law. I believe, too, that the word "partnership" is broadly understood, as is the difference between "partnership" and "company".

We have two particular problems: first, the limited liability partnership is a brand new corporate animal; and secondly, it has a kind of hybrid feel to it. One of the drawbacks in terms of public understanding of what is going on is that the word "partnership" remains in the Bill's title and the letters "LLP" contain, obviously, the word "partnership". Indeed, it is predictable that members of LLPs will refer to themselves as partners. They will talk about "the partnership". They will say, "My partner did this" or "My partner did that".

I believe that, at least for a period—perhaps 10 years, but perhaps permanently—if LLPs do not set out in full the words, "limited liability partnership", after their name, they should be required to put the words in full at the bottom of their notepaper, etc, in much the same way as they are required to do for their registered company, the place of incorporation, their registered number, and so on. Without it, I believe that there will be serious confusion. By means of this Bill we are bestowing a tremendous privilege upon firms which translate from partnerships into LLPs. Therefore, in order to protect the public, I believe that the least requirement on those firms should be the provision set out in the amendment.

I wish to make one other point. Today, the talk has been largely about the large professional partnerships. I have absolutely no doubt that they will not be a problem in terms of this amendment. Indeed, most of the firms that I am aware of which are likely to use this route are already so well off that the chances of them going bust and leaving Mrs Smith and Mr Jones short of a penny or two is fanciful. I am concerned about the many, many companies that will in future be formed as LLPs rather than limited companies. The very fact that, constitutionally speaking, they are a light structure—that is, that the requirements for registration and the formalities of running an LLP are so much lighter than for a limited company—is in my view likely to make them a favourite resource for companies in the future. I refer to the small companies which give trouble and which in large numbers lead men and women to lose money that they can ill afford.

For a long time, I have been in the lucky position of giving advice to the public through BBC2. It is a very good vantage point from which to see the real problems that afflict so-called ordinary people. Should anyone have any doubt, believe me, a very serious problem of cynicism exists towards the law in relation to the effectiveness of the wrongful trading provisions. Quite simply, it does not work. The complexity and cost of pursuing directors to make them personally liable for debts for which, patently, they should be personally liable is such that it is rarely done. In that respect, prevention is a good deal better than cure. I believe that this small amendment, which, I suggest, will cause no problem to a bona fide LLP, will go some way towards addressing the problem that I have tried to describe. I beg to move.

My Lords, I am aware of the concern expressed by the noble Lord; that is, that some people will be unfamiliar with the concept of LLPs. I share that concern. We have always intended to apply Sections 351A and 351B of the Companies Act 1985, which require LLPs to mention on all business letters and order forms the place of registration, the registration number and the address of the registered office. However, I can say to the noble Lord that we shall amend that by inserting a new subsection (c) to require firms which use the abbreviation "LLP" after their names to mention on their business letters and order forms that they are limited liability partnerships. Therefore, those who do business with an LLP will be given notice that they are dealing with an entity of that kind. I hope that that will satisfy the noble Lord.

My Lords, I am most grateful to the Minister for agreeing to that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Appropriation (Northern Ireland) Order 2000

7.27 p.m.

rose to move, That the draft order laid before the House on 28th February be approved [11th Report from the Joint Committee].

The noble Baroness said: My Lords, I beg to move that the draft Appropriation (Northern Ireland) Order 2000 laid before the House on 28th February be approved. Details of the sums sought are given in the Spring Supplementary Estimates booklet and the Statement of Sums required on Account, which have been placed in the Library of the House and are available from the Printed Paper Office.

I regret that this legislation is before the House today instead of being considered by locally elected representatives within the Northern Ireland Assembly. However, while we await the restoration of the Assembly, it is our responsibility to see that good government is maintained. Once again, we must ask Parliament to deal with issues such as appropriation. Of course, that should be one of the most important tasks for the Assembly, which was about to embark upon it when the suspension began. I am sure your Lordships will agree with me when I say that we all hope that it will not be too long before the Assembly is restored on a permanent basis and the benefits of a devolved administration will he fully realised by the people of Northern Ireland and beyond.

If I am unable to provide detailed answers to points raised at the end of the debate, I shall, of course, respond in writing. However, I must advise your Lordships that the Government cannot account for the policy decisions which were taken by the Executive Committee and its members during the period of devolution. I would remind your Lordships that the draft order does not cover expenditure by the Northern Ireland Office on law and order services.

Unfortunately, the Assembly was still in the process of scrutinising budget proposals for the coming financial year when it was suspended. Consideration of the annual Budget, which the Assembly has the right to modify, is one of its key tasks. By approving the Vote on Account today, this House would not necessarily be pre-empting the decision of the Assembly about the final allocations for 2000–01, since less than half the total proposed budget is being sought in the draft order. However, budget holders in the health service, in schools and all other key public services in Northern Ireland have to plan and commit resources now if they are to be able to discharge their responsibilities properly. They are presently working with the executive budget proposals which were presented to the Assembly in December on a provisional basis, and this will continue to be the case. The longer restoration is delayed, therefore, the less opportunity there will be for the Assembly to modify spending plans, since the resources will effectively have been allocated.

The draft order has two purposes. The first is to authorise expenditure of f 193 million in the 1999–2000 Spring Supplementary Estimates. To a large extent this reflects recent decisions taken by the Northern Ireland Executive Committee and will bring total estimates provision for Northern Ireland departmental services to £7,595 million for this financial year. The second purpose is to authorise the Vote on Account of £3,539 million for 2000–01. In general, this has been calculated as 45 per cent of the anticipated net 2000–01 Main Estimates provision contained within the Budget proposals. This will enable the services of Northern Ireland departments to continue until the 2000–01 Main Estimates are approved—it is hoped—by the Assembly later this year.

With your Lordships' permission, I now turn to the main areas where supplementary provision is sought. Some of the votes seek token increases only because new pressures have been offset by reduced requirements elsewhere within the same votes.

In Vote 1, which provides for Northern Ireland expenditure on national agriculture support measures, a net addition of £10.5 million is sought. That includes £8.5 million in respect of the Special Aid Package payable under the Hill Livestock Compensatory Allowances and £2 million is to cover higher than anticipated demand for the Environmentally Sensitive Areas Scheme. A further £4.1 million is in respect of agri-monetary compensation for the beef sector and £3.5 million is for Hill Livestock Compensatory Allowances. Agri-monetary compensation is designed to offset the effects of currency appreciation on agricultural support prices and compensation payments which are set in euros.

In Vote 2 covering local agriculture support measures, a net increase of £5.4 million is sought. That includes £10.2 million in respect of controlling outbreaks of animal diseases, including tuberculosis and brucellosis. The additions are partially offset by reduced requirements elsewhere within the vote.

Token increases of £1,000 are sought in Votes 3, 4 and 5, covering economic development and training. In Vote 3, some £13.3 million is sought by the Industrial Development Board to meet pressures on industrial development grants from increased claims from client companies. A further £1 million is sought for industrial development promotion, to allow the Industrial Development Board to build on the success of its overseas marketing campaign and to maintain the momentum in promoting Northern Ireland as a good and competitive investment location. Those increases are offset by reduced requirements and additional receipts elsewhere within the vote.

A token £1,000 is also sought in Vote 4. Within the vote, which covers other economic support measures, administration, energy and miscellaneous services" increased requirements are offset by savings elsewhere. Additions sought include £0.5 million to assist with the setting up costs associated with the new Equality Commission and to meet pressures within the Office of the Industrial and Fair Employment Tribunals.

In Vote 5, covering the Training and Employment Agency, a token increase of £1,000 is sought. That, as in Vote 4, involves increases sought being offset by reduced requirements and additional receipts. The adjustments include a redistribution of resources within the New Deal to meet changing demands and pressures.

I turn to Vote 7. A net increase of some £1 million is sought. The main increases are some £6 million for roads maintenance and £2 million for capital expenditure on the Vehicle Information System of the Driver and Vehicle Licensing Agency. There is also increased provision for Northern Ireland Railways and for works at St Angelo Airport in Fermanagh, as well as additional running costs for roads service. Those increases are largely offset by reduced requirements and increased receipts elsewhere within the vote.

In Vote 10, a net increase of some £8 million is sought for increased expenditure on urban regeneration, assistance to Omagh District Council for costs incurred following from the tragic bombing, as well as additional running costs brought forward from 1998–99 under end year flexibility arrangements. Those increases are partially offset by additional receipts.

I now turn to Vote 12, covering expenditure on education and related services, where a net increase of some £53 million is sought. That is mainly due to a reduction of £70 million in receipts previously forecast as a result of the third UK sale of student loan debt not proceeding. I should add that the Treasury has made good the resulting deficit from the Reserve so there is no loss to public services in Northern Ireland. In addition, there are increases of £3.9 million for school and library books; £3.5 million for school and further education maintenance; £2.8 million for tuition fees and grants to students; and £2.6 million for the Odyssey Millennium Landmark Project. Those increases are partially offset by a reduced requirement of £11 million on student loans; and a reduced requirement of £4.5 million on the European Union Peace and Reconciliation Programme.

In Vote 14, a net increase of £58.6 million is sought for expenditure on hospital, community health and personal social services, health and social services trusts, family health services and certain other services. That includes £23.9 million carried forward from 1998–99 under end year flexibility arrangements, £20.3 million towards winter and other pressures, £9.4 million for capital expenditure and £5 million for the meningitis vaccine programme.

In Vote 16, additional net provision of £9.1 million is sought for expenditure on certain miscellaneous health and personal social services costs. That includes £8.5 million for the European Union Peace and Reconciliation Programme and £0.4 million for grants to community groups funded by the ERDF.

Additional net provision of £10.5 million is sought in Vote 17 to meet administration and other miscellaneous costs. That includes £12.3 million to fund running costs, capital and other administration pressures in the department. The increases are offset by an increase of receipts of 1.8 million, mainly from the Department of Social Security for administering certain services on its behalf.

In Vote 19, which covers social security that is centrally administered, £12.9 million is sought mainly to meet higher than anticipated expenditure on housing benefit and increased payments into the Northern Ireland National Insurance Fund in respect of the statutory sick and statutory maternity payments. Those increased requirements are offset by reduced requirements elsewhere within the vote.

Finally, there is also additional provision of £4.4 million for the Northern Ireland Assembly. That increase is to allow the Assembly to begin to implement the recommendations of the Assembly Commission, which examined the resources the Assembly will require in order to discharge its functions fully. However, I must advise your Lordships that, during suspension, the Northern Ireland Act 2000 requires the cost of the Assembly to be met directly from a Northern Ireland Office vote. That is put before Parliament as part of the approval process for UK supply estimates, a completely separate procedure from today's business. That arrangement will continue until the suspension is lifted, at which time the Assembly will revert to taking its funding from the provision sought under this order. We have, of course, had to provide for the Assembly in the draft order in order to facilitate a speedy return to devolution.

I should point out to your Lordships that both the supplementary estimates and the vote on account are based on proposals made by the devolved administration in Northern Ireland before suspension. Those proposals have not been modified or extended. I hope that that short summary of the main components of the estimates is helpful. I commend the order to your Lordships.

7.42 p.m.

My Lords, we are at some small disadvantage as a result of delays in terms of both availability of documents and of short notice. I do not attach any blame to Ministers or to the Department of Finance and Personnel. Your Lordships will be aware of certain little difficulties elsewhere.

It seems appropriate that we should calmly examine government expenditure in Northern Ireland against a more settled background than would have been the case, say, a year ago. In Northern Ireland there is a sense of relief and a degree of normality resulting from an absence of media bombardment which, for the past three years, had the effect of "setting the children's teeth on edge". People are now concentrating on those matters which they judge to be important in everyday life. They are not going to thank any party which endeavours to hoist them and their Province back on to yet another high profile, high wire act. Politicians north and south would do well to heed Clem Attlee's directive:

"A period of silence would be welcome".

The debate provides an opportunity to focus attention on the financial realities that are block allocations from the Treasury and products of the annual public expenditure survey by the major Whitehall departments. It follows that the most any devolved assembly can do is to plead a special case which may of course be valid in all three devolved regions. At present and for decades past, all three devolved regions benefited through the Barnett formula benefit per capita to a greater extent than the United Kingdom in general and England in particular. In their own local interest, I must say that those three devolved regions—and London's elections are coming up, which is an unknown quantity—must take great care to avoid upsetting that well tried formula.

The Secretary of State in all three regions occupies the key role because he has the discretion to allocate the block between services in response to local needs and priorities. Junior Ministers apply great pressure to the Secretary of State and the overall department. We have two representatives of that band present tonight: the noble Lords, Lord Dubs and Lord Patten, who have treated their responsibilities to the departments under their control and fought their corner with great sensitivity and determination. I want to pay tribute to them and to some of their predecessors.

However, to a great extent, one of the main Northern Ireland departments is not quite so closely bound by the restrictions of the block. That is the Department of Agriculture and Rural Development, which features in Votes 1 and 2 on both parts of the appropriation order. In the Barnett formula of 1978, agriculture was—and still is—in a kind of semi-detached position. I am grateful for the clarity with which the position is set out in the statement of sums, which tends to confirm that semi-detached status. But, since then, agriculture has been affected by membership of a far greater authority: the Common Market: now the European Union. I said that agriculture has been affected by that body, but I should have said "disastrously affected" by the European Union.

There is the need now for a genuine opportunity to reprioritise government support for Northern Ireland agriculture relative to its much greater importance to the Province's economy as compared with any part of Great Britain. Government assistance is imperative in the immediate and short term to secure the very survival of Northern Ireland agriculture. The ongoing Ulster Farmers Union campaign has secured widespread acceptance from both political representatives and the general public throughout Northern Ireland. It has convinced them that the agricultural crisis is extremely real and that urgent assistance needs to be provided. Nothing more can be done on what one might term a "Northern Ireland only" basis. We are now totally dependent on the Treasury and Downing Street for progress to provide the necessary short-and immediate-term assistance for the general UK-wide crisis in agriculture.

One must ask what short term assistance is necessary. It would appear to fall under two crucial areas identified by the Ulster Farmers Union and by many other bodies with farming interests. The first is urgent assistance for the pig sector—a situation made far worse by the closure of one of the major plants only this weekend. Secondly, there is the provision of all agri-monetary compensation available to UK agriculture in the year 2000: beef, £135 million; cereals, £169 million; dairy, £28 million; sheep, £67 million; and sugar, £3 million, making a total of £402 million.

What is the state of Northern Ireland's agriculture? The agri-food industry is still the largest single industry in Northern Ireland, accounting for 10 per cent of employment and 7 per cent of the gross domestic product. In Northern Ireland the agri-food industry is almost three times as important as at the UK level. The industry is still the main driving force in the rural economy of the whole of Northern Ireland. Over the past five years, some £756 million has been removed from the economy of the Province as a result of various crises in agriculture. The annual total farm income has plummeted by 79 per cent in real terms to £71 million in the same period.

A recently produced Eurostat report shows that in the period 1995–98 agricultural producer prices in the United Kingdom have fallen by much more than in any other member state of the European Union. Provisional figures for 1999–2000 indicate average net farm income to be minus £700. In 1999 Northern Ireland farm incomes fell by 23 per cent in real terms compared with 1 per cent in real terms in the UK as a whole. That is surely a shattering fact. Now farmers are in a situation of owing £520 million to banks alone and that sum continues to grow. A deadline of the end of April exists for the United Kingdom Government formally to request from the European Union its allocation of virtually all the available agri-monetary compensation for the livestock sectors.

The message from the Northern Ireland farming community is that there is urgent need for the provision of short-term assistance to secure the survival of Northern Ireland's agriculture industry.

7.52 p.m.

My Lords, I rise with some temerity to support my right honourable friend—I use that phrase with care—the noble Lord, Lord Molyneaux of Killead. He has told your Lordships that after recent months he felt that peace and quiet and above all silence from politicians on this side of the water was called for. I hope that he will allow me to break that Trappist silence to support him. I know that he feels that in the past 35 years one of the endemic problems in the politics of the Province has been that dreaded word "initiative", and that one initiative piled upon another by people of good intention has often not only failed to produce results but made matters worse.

My right honourable friend the noble Lord, Lord Molyneaux, has given us one clear initiative tonight that the Minister and her colleagues could take to heart: to achieve by the end of April the aim that the noble Lord has pressed upon the House this evening. Uniquely—again I choose that word carefully—agriculture has an extraordinary place in the economy and society of Northern Ireland, more than in any other part of the United Kingdom.

I do not know how hopeful I should be in making the request that a useful initiative would help the agriculture industry and agri-business in the Province. I come from the West Country of England, where recently we had a visit from someone who pressed a telescope with Nelsonian indifference to his eye, saw no crisis about him and went away again. I do not believe that anyone could visit the Province, look at the agri-business and see anything other than crisis. The terrible situation among pig farmers in the Province deserves urgent consideration for a host of reasons one of which is that those devotees of the Ulster fry in the morning—of which I am one—still want a supply available to fuel their plates.

I believe that there is an opportunity for something to be done which is not only right for the economy and the society of the Province, but may also help measured and careful future political development there. Where there is poverty there is trouble. There was trouble in the 18th century when a pike was hidden in every thatch and there is in the early 21st century when there are too many Armalites in too many attics. I believe that the Minister could do a lot to reassure the people of the Province and aid its careful, slow and measured political development by listening to what my right honourable friend the noble Lord, Lord Molyneaux, had to say tonight.

7.56 p.m.

My Lords, I hope that we shall pass this appropriation order. However, the noble Lord, Lord Molyneaux of Killead, referred to the Barnett formula. I believe an English backlash is growing not just in Northern Ireland, but also in other devolved areas. In a year's time when an order such as this comes before the House, it may not receive the reception that I want it to receive tonight. In voting for this order we urge the politicians of Northern Ireland to get their act together so that they can proceed in a peaceful manner and so that external investment will continue to flow in at the rate that it has, because unless there is a settlement that will come to a sudden and juddering halt.

7.57 p.m.

My Lords, I thank the Minister for so clearly presenting this order. It is sad on two counts. First, it is sad that we are debating it at all. Secondly, it is equally sad because it is a comprehensive order, the most important financial order for Northern Ireland in the year. We have not had adequate time in which to do it justice. It is well laid out, but there must be many questions that need to be asked.

On the positive side, I hope I understood right that the Minister has not committed the total Vote and that should the Assembly be resumed shortly, it will have an opportunity to re-run this debate and do with the block grant what it wants. That is very important. Northern Ireland has gone a long way down the road of deciding how it wishes to spend the money for its electorate. I sincerely hope that this situation will not recur.

However, the Northern Ireland economy is in as balanced a situation as its politics and is probably as dependent upon success in the major political scene for its future as it is on what we talk about tonight. There are crises. The noble Lord, Lord Molyneaux, has outlined clearly the plight of the farmers, in which connection I must declare an interest. I understand that our fishermen have had their cod quotas reduced and that French fishermen are benefiting from their waters. If that is true, it cannot be right.

Our shipyard has been the leading company in international endeavour for probably 100 years and was once the largest shipyard in the world, but it is once again in serious danger of dying. However, the company has great opportunities and is currently negotiating, critically and vitally, to win orders to fill that yard again. Are the Government using all endeavours to afford the shipyard the best possible opportunity? I understand that funding of up to 9 per cent is allowable in assisting such a contract.

I hope that Ministers will act quickly and sensibly to attend to the vacuum created by the Executive and to any crises as they arise. Although in UK terms, little crises in the Northern Ireland economy may seem small, they can be of critical future importance to the well-being of the people of Northern Ireland.

My Lords, I welcome the opening statement by the Minister, especially her hope that peaceful trends will prevail. The people of Northern Ireland earnestly seek, with honour, trust and good will, to establish a form of government as set down for the Assembly.

Although it is a matter that is outside the Minister's control, I should have preferred the draft order to have been duly tabled and considered by elected representatives in another place first. However, the opening statements have been very constructive and positive.

I find it difficult to accept this appropriation order in the light of years of experience on the Opposition Benches in dealing with expenditure and the various developments that took place.

It is necessary to refer to three documents. The first is the Northern Ireland Act 1974 which sets out the background and shows why the appropriation order had to be presented at this time in this manner. In relation to expenditure, it is necessary to look not only at the appropriation order but also at the Northern Ireland Spring Supplementary Estimates 1999–2000.

There are two matters that touch on the point of principle that I should like to develop. Paragraph 12 on page 7 relates to expenditure on education in schools. We see there a figure of £53 million, which is a decrease of approximately £68 million. I looked at the Supplementary Estimates to see why that reduction has taken place. On page 45 the reduction is stated to be mainly due to a reduction of planned spending of £4 million as the result of the non-availability of receipts from the sale of the Belfast Port. The Minister has already referred to that point.

Paragraph 5 refers to a reduced requirement of £5 million-plus being mainly due to a reduction of planned spending of £2 million-plus as a result of the non-availability of receipts from the sale of Belfast Airport; a transfer of £2 million to sub-head (2) for education technology, and a reduced requirement of £24,000 in respect of the Making Belfast Work Initiative. Why has that situation arisen? Is it sound or practical to build a budget on that basis?

Page 9 of the appropriation order deals with expenditure for the Northern Ireland Assembly. It is an increase on the original estimate. In the Northern Ireland Spring Supplementary Estimates on page 79 approval is sought for various changes in relation to additional staff salaries and recruitment costs of over £600,000; additional Members' and office holders' salaries of £500,000; a party allowance of £400,000; and road, security, cleaning and catering costs of £1.5 million.

I do not understand how those figures can be presented at a time when Northern Ireland is trying to fulfil the housing, transport development and educational needs of ordinary working people.

I do not wish to close the door on a sad note or a highly critical note. I know that the Government have tried to deal with the affairs of Northern Ireland in a liberal manner. But at the same time, this appropriation order requires acute examination that cannot be done in one sweep in this House.

I thank the Minister for the way in which she presented the order. The burden she carries in this connection would be much less if it had been presented in the other place first, instead of in this House.

My Lords, I share my noble friend's regret that we are debating this order at all. We hoped fervently that these matters would stay with the Assembly in Belfast. I feel also that this procedure is not entirely satisfactory, even if we have to conduct the business here. Frankly, noble Lords asking questions, which are answered by the Box passing messages to the Minister or the Minister writing in response, is not the best method of dealing with these matters. I am sure that a better procedure could be devised, though we hope that we shall not have to deal with appropriation orders in the future. There are better ways in which to debate these matters, ask questions and obtain the answers than this cumbersome way via secondary legislation.

I have sympathy with the points made by the noble Lord, Lord Molyneaux, in relation to the state of Northern Ireland agriculture. This is not necessarily the appropriate time to debate those issues, but I share his concern about the dreadful situation facing farmers, including the hard-hit pig farmers, at the present time. I am not sure that there could be much in this appropriation order which would make a difference. As the noble Lord suggested. we must look to Brussels and possibly even MAFF for some easement, not to decisions made in Belfast.

I should like to raise a few issues, one or two of which have been referred to, which underlie some of the figures that we have been debating this evening.

The first concerns the difficulties as regards Belfast Harbour. I wonder whether my noble friend can throw a little more light on the timing as regards the plans to privatise the harbour, which have been somewhat delayed for reasons some of which I am familiar with and others which have arisen more recently. But they cast a dark shadow over any spending plans in Northern Ireland because it meant that some items of expenditure had to be deferred on the assumption that the harbour will be sold before too long. Perhaps my noble friend can say something about the assumptions underlying the failure so far to make much progress in selling Belfast Harbour.

Secondly, and importantly, it is likely that Belfast Harbour is worth a lot more than the £70 million that we have been discussing. Although I am sure that my noble friend cannot give any assurances from the Front Bench today, I hope that when the harbour is sold for a sum in excess of £70 million, all that money will stay in Northern Ireland; that the Treasury will not get its hands on the difference between £70 million and the amount the harbour fetches and claw it back. The wealth of the harbour comes from the efforts of people in Northern Ireland their industry, commitment and hard work. It is only proper that wealth created in Northern Ireland should stay in Northern Ireland for the benefit of the people of Northern Ireland. My noble friend probably cannot say much about that and I do not want to tempt her into a discussion about it. But that needs to be said for the record.

As I understand it, one consequence of not having that £70 million—or whatever greater sum it might be is that the roads programme has not proceeded as we hoped following the Chancellor's initiative a couple of years ago. Perhaps my noble friend can say a little more about what happened to some of the road schemes which were so eagerly sought after by district councils and others throughout Northern Ireland and which I suspect now have had to be delayed.

My noble friend referred to the costs of the Assembly. I hope she can assure us that in the figures for next year we assume that the Assembly will be going from the beginning, and that we are not writing into the figures any assumption about savings through the Assembly not functioning. The message that has to go out and that has gone out through some of the speeches this evening, is that we want the Assembly back in operation as soon as possible and therefore we do not want to look at savings which may make it more difficult for the Assembly to get restarted.

I have a few other points that I want to raise briefly. One concerns the water industry and capital expenditure on water and sewerage in Northern Ireland—an area which has seen too little spending over many years. I should like an assurance that the high levels of spending envisaged will go on being achieved in so far as this is not a matter that will go back to the Assembly in Belfast; in other words, that we are working on the assumption that the higher levels of spending will taker place whether it be from public expenditure or income from the regional rates.

My next point concerns public transport, again an area which has been under-resourced for a long time in Northern Ireland. Can my noble friend say anything about the needs of the railways and the buses and whether they can be met by some further increments in public expenditure, public-private partnerships or through PFI'? Is there any difficulty in applying PFI? Is there a legislative basis for it? It is a matter of seeing by what combination of means further capital spending can be achieved in both the railways and bus services of Northern Ireland.

Lastly, I want to raise a point about which I failed to give my noble friend notice earlier as I did with the other points. St. Angelo Airport was mentioned. Can she say anything about the plans to develop Londonderry Airport? It is much needed. I am not aware of what the latest position is but I know that some contribution has been made from the Republic. It will make an interesting and helpful package for the economic development of the north-west of Northern Ireland and indeed of Donegal. If my noble friend is not able to give me the answers today, perhaps she will be kind enough to write to me.

8.15 p.m.

My Lords, I begin by thanking all noble Lords who have taken part in this debate. The noble Lord, Lord Molyneaux, identified a crucial issue with regard to funding for Northern Ireland in that the Barnett formula largely removes the need for detailed negotiation with Her Majesty's Treasury on spending needs. It is a transparent mechanism that enables allocations to be scrutinised. Expenditure per head in Northern Ireland remains significantly above that in England, reflecting relative need.

The noble Lords, Lord Molyneaux, Lord Patten and Lord Glentoran, raised the issue of agrimoney compensation. We are aware of the tremendous pressure to do something for the agricultural sector in Northern Ireland. Incomes have fallen by a further 22 per cent in the past year whereas they appear to have stabilised in the rest of the UK. We recognise the funding difficulties, but payment of compensation cannot proceed on a regional basis. The UK agriculture Ministers discussed agrimoney compensation on a number of occasions, including most recently at their meeting on 10th February this year. In 1999 a total of £ 16.8 million agrimoney compensation was provided to farmers in Northern Ireland. Further assistance will also be available over the next two years. Future assistance to the farming industry in the UK will need to be looked at in the context of the next spending review.

The noble Lords, Lord Molyneaux, my noble friend Lord Dubs and the noble Lord, Lord Glentoran, also raised the issue of the crisis in the pig industry. We recognise that that industry is facing difficulties across the UK. I can assure the noble Lord, Lord Patten, that the whole Government, including my right honourable friend the Prime Minister, recognise the problems facing agriculture. The Government are doing what they can within the rules on state aids. Special assistance has been given to Northern Ireland pig farmers to compensate them for the immediate effect of loss through fire of a major processing plant. A sum of £400,000 has been made available to promote pigmeat sales. In this, I concur with the recommendations of the noble Lord, Lord Patten. A cross-border study of the pig industry has been set up and will report before the summer. The Government will study that report extremely carefully.

The noble Lord, Lord Glentoran, raised the matter of Harland and Wolff and the negotiations with Carnival and with Cunard. We appreciate the concerns expressed by the noble Lord. Negotiations are continuing between Harland and Wolff and the Carnival Corporation of the USA. Officials at the Industrial Development Board are in close contact with senior management at Harland and Wolff and with the DTI in relation to the company's bid for the contract to build the new liner. I can assure the noble Lord that the Government will do everything in their power to be of assistance.

The noble Lord, Lord Glentoran, also raised the issue of the Irish Sea cod recovery plan. We sympathise with whitefish fishermen who have to forgo their traditional spring cod fishing. However, the cod must be allowed to spawn during this period. Prawn fishing will continue without serious restrictions, affording continuity of supplies to the important processing industry in Northern Ireland.

My noble friend Lord Blease spoke of justification for the costs of the Northern Ireland Assembly. The Assembly commission has estimated that the required expenditure of the new Assembly is necessary if the Assembly can resume its business. I believe that we would regard that as money well spent.

I thank my noble friend Lord Dubs for giving me advance notice of several points that he wished to raise. Both he and my noble friend Lord Blease asked about progress on the sale of Belfast Port and the financial implications for improvements to Northern Ireland's roads network. The position on the sale of the port is that the Belfast Harbour Commissioners have now published their revised PPP proposal, but have not yet submitted their transfer scheme to the department. The Assembly Minister for the Department of Regional Development recently submitted an options paper on the future of the port to the Regional Development Committee. If the sale of the port does not proceed, it is possible that there will be an impact on the roads programme. I would expect the consequent implications to be a matter for consideration by the Executive Committee and the Assembly. If the sale does not proceed, the allocation of receipts to spending programmes would also be a matter for those bodies. My noble friend Lord Dubs also raised the issue of what would happen were there to be in excess of £70 million from the sale of the port. We are aware of general concern on this point. Discussions are proceeding with the Treasury. However, it is important not to hold up the sale.

My noble friend also raised the question of the cost of the Assembly and possible savings arising as a result of the suspension. If devolution is not restored during this financial year, it is estimated that expenditure on the Northern Ireland Assembly will reduce by some £2 million in 1999–2000. Savings next year will, of course, depend on the date of the restoration. However, along with my noble friend Lord Blease, I can reassure my noble friend that we all seek restoration of the Assembly.

My noble friend Lord Dubs mentioned the issue of investment through the use of PPPs and PFIs to support investment in the railways and buses. I am pleased to be able to advise him that present investment in public transport services includes the purchase of 130 new low-floor buses at a cost of £15 million, reinstatement of the Antrim to Bleach Green railway line, costing £17 million, and the provision of the Bangor integrated transport centre, costing £4 million. Pending the development of PPP options for public transport, £5 million is being made available subject to a satisfactory investment appraisal to begin to address the rolling stock needs of the railway. We are also conscious of the potential contribution which PPPs could make to public transport and a review of possible PPP opportunities in public transport services has recently been completed. The conclusion and recommendations of the review are currently under consideration. It is expected that a decision on the way forward can be taken soon.

My noble friend made the point that public expenditure plans for Northern Ireland announced in the Comprehensive Spending Review included an assumed increase in revenue from the regional rate. One of the beneficiaries of the additional spending is, as he said, water and sewerage services, where significant increases in expenditure amounting to £85 million over three years are planned to help to meet European Union drinking water and waste water quality standards. Future spending on water and sewerage needs to be considered alongside other priorities in the next spending review.

My noble friend Lord Blease raised the question of a decrease of £68 million in the Department of Education estimate. The bulk of the £68 million decrease is the reduction of £70 million in receipts as a result of the third UK sale of student loan debt not proceeding. I can assure my noble friend that the resultant shortfall has been made good by the Treasury.

My noble friend Lord Dubs raised the issue of the City of Derry airport runway improvements. A final decision on whether to provide the city council with additional grant assistance to cover the cost overrun on the runway project has not yet been taken. I can assure the noble Lord, Lord Glentoran, that the Government will, at all times, act sensitively and quickly in reaction to crises in Northern Ireland. The noble Lord, Lord Smith of Clifton, expressed very well the view that peace is the best means of ensuring inward investment and economic redevelopment. Political success is vital, as my noble friend Lord Blease said.

The noble Lord, Lord Glentoran, is right to say that, should the Assembly be resumed shortly, it will resume responsibility with the appropriate level of funding within the budget left for it to determine. Several noble Lords have referred to the short period of time to consider the detail of this order. In commending it to your Lordships, I undertake to reply to any further questions submitted in writing. I join all noble Lords in hoping that the situation in Northern Ireland will improve and that this order will not need to be repeated in your Lordships' House. I commend the order to the House.

On Question, Motion agreed to.

European Southern Observatory

8.28 p.m.

rose to ask Her Majesty's Government what steps they are taking to allow expeditious participation in the European Southern Observatory (ESO).

The noble Lord said: My Lords, first, I must congratulate the Minister who is to reply this evening on his stamina. He has had a busy evening so far. I am also grateful to the Government for allowing me time—which will be the minimum possible—to raise the important question of British astronomers' participation in the European Southern Observatory's very large telescope situated in Chile on the high mountaintop of Cerro Paranal, which is famous for the transparency of its atmosphere.

However, one thing must be remembered about all astronomers, which is that size does matter! Throughout the history of astronomy, from Newton to Herschel, Eddington, Jeans, Airy, Lord Rosse, up to and including present-day astronomers and cosmologists such as Hoyle, Hawking and Rees, it is the quality and size of the telescope to which they have access which eventually governs the quality and scope of their work.

I am sure that the noble Lord who is to reply to the debate will recall that it was the great British astronomer William Herschel who discovered the planet Uranus in 1781 with his own telescope, which he built in his back garden. In fact, King George III was so impressed that he provided adequate funds for him to build the world's largest telescope in order that an improved lens and a larger 40-foot reflecting mirror might lead to more exciting discoveries of this nature in and around the solar system.

I am sure that the noble Lord is aware that patrons or sponsors have always been required in the field of astronomy since the days of King Charles II. I am also certain that he will agree that they are needed today more than ever, as the science and technology involved is more complex and expensive, as it is in the ESO which will be a co-ordinated array of four 8-metre optical telescopes.

Once the ESO (the European Southern Observatory) becomes operational, it will be the world's largest terrestrial telescope. Other countries, including Japan, having given up their own national efforts in this area are subscribing instead to the ESO. This is because it will be the only ground-based telescope capable of distinguishing and studying planets circling at least 100 neighbouring stars similar to our own sun. Further, when it is fully operational, there will be the exciting prospect of astronomers being able to distinguish over the next 20 years not only the type of atmosphere but even the shape of the continents and the size of the oceans on these distant worlds.

Unfortunately, none of those astronomers will be British that is, if this country fails to subscribe, with our European partners, in the setting-up costs of this incredible telescope. In effect, this will mean that astronomy will hardly be worth pursuing as a career in Britain in the new millennium. Does the Minister agree that this will be a most unsatisfactory situation, especially in view of what the Government say about the need to encourage science in our schools, coupled with their apparent keenness to participate in Europe?

I am sure that the noble Lord will agree that it is not the intention of the Particle Physics and Astronomy Research Council (PPARC) to destroy the future prospects of British astronomy. But when its director reduces British astronomers' access to very large telescopes to a mere 3 per cent over the 10-year period 1995 to 2005, does the Minister accept that it will have the same effect? Perhaps the noble Lord will think about it for a moment. Is this not a rather strange decision in view of PPARC's own consultation document which showed that increased access to very large telescopes was regarded as the top priority within astronomy?

I wonder whether the Minister is aware that the United Kingdom now has less access to very large telescopes than any other major European country. Indeed, there are a number of universities in the United States that are prepared to pay for more access time to large telescopes than the meagre ration that PPARC has allocated to British astronomers out of its annual budget of £230 million.

The Astronomer Royal, Sir Martin Rees, recently made the same point when he addressed the All-Party Parliamentary Group for Astronomy and Space Environment, of which I am proud to be the founder-chairman. He reminded our group that there was a time in 1990 when British astronomers had 15 per cent of the world's time on large 4-metre telescopes, which was made possible by this country's share in the William Herschel Telescope at La Palma and in the Anglo-Australian Telescope at Parkes in New South Wales. British astronomers were able to make many important contributions to world astronomy during this period. However, now, observational opportunities to achieve this over the next 20 years will become a rarity due to the intended cut-back on access time to very large telescopes. Therefore, perhaps I may remind the Minister that size really does matter to astronomers.

How can this situation be remedied? Does the noble Lord agree that it could be remedied quite simply by paying up and joining in observation time available on the four 8-metre telescopes that comprise the European Southern Observatory in Chile? Coincidentally, the cost of this would be the same amount as was paid without a murmur to extend the shelf life of the Greenwich Dome by just another nine months.

Therefore, can the Minister say whether it would be acceptable to our European partners for this large sum of £60 million to be paid partly in kind and partly over an agreed period of time? Can the noble Lord say what efforts, if any, have been made by PPARC in this direction by offering, for example, European access to our VISTA survey telescope? Alternatively, will the noble Lord state quite clearly to our partners, who are becoming increasingly impatient with our attitude in this matter, our real intentions? Further, can he confirm that, if we do not make up our minds soon about the VLT in Chile. our partners may shut out British astronomers for good from the whole project?

Can the noble Lord also say what efforts, if any, are being made to find sponsors from the private sector for this exciting project? They might be more willing to support optical astronomical discoveries rather than invisible ones, which may one day be found in the particle physics accelerator at CERN.

Is this not a project for which the lottery might perhaps provide some backing? I believe that there is a genuine public interest in such matters, especially among young people. For instance, I asked the editor of Hello magazine—a publication more noted for its coverage of social rather than cosmic events—why she had recently devoted four colour pages to the work of the European Southern Observatory. She replied that the mostly young readership of about half a million was decidedly interested in, and excited by, present and future developments in space and in astronomy.

It was for that reason—the realisation that younger people are really excited about the future as regards what is going on in space—that it occurred to me that in the past parliamentarians have not been as excited as they should have been; nor, indeed, as well informed. Therefore, I created the All-Party Group for Astronomy and Space Environment in order to educate us and help us better to appreciate some of the things that are happening in nearby space. Because such things are happening many hundreds of thousands or millions of miles away. we should not think that they do not affect terrestrial life.

My group—I am sorry to go on talking about it—looks at the political, social and philosophical implications of what might happen if, for example, the sun were to create problems through an increase in its bombardment of the atmosphere of the earth with various and different rays. What might happen if incoming asteroids or comets either come close by or impact on the terrestrial surface?

There is also the question of global warming, which I raised in 1976 in this House, much to the amusement of noble Lords opposite and, indeed, to the incomprehension of the noble Lords who were sitting on the Government Front Bench at the time. It took years for parliamentarians to appreciate that this was a political and social factor and one that probably affects our lives very considerably, especially when one sees the effects on Mozambique, the hurricanes that hit Venezuela and the extraordinary weather patterns. Not all of these phenomena are entirely due to man-made products, as one is inclined to think. The sun has a great deal to do with it, and we need to understand it more. Therefore, I am hopeful that the noble Lord who is to reply to the debate will be able to show more enthusiasm than that which is apparent at present from PPARC about our subscription to the very large telescope in Chile.

I shall be brief because it is a little late in the evening. I suggest merely that we cast our minds back to the 18th century when William Herschel, who built his telescope in his own backyard, discovered the planet Uranus. It was a thrilling and exciting moment for this country; and, indeed, the world. John Keats wrote a poem referring to Herschel. It is one that every schoolboy must remember and one that we all had to recite. On First Looking into Chapman's Homer. It states:

"Then I felt like some watcher of the skies [William Herschel] When a new planet swims into his ken".

We are not talking about planets of our solar system being observed by astronomers on the earth's surface; we are talking about planets of alien solar systems. What this will mean in terms of how we consider ourselves and how we consider the chemistry of the earth is something that we need to know about as soon as possible, and which we can know about.

I want a British astronomer to have another poem written about him when he sees something through this great telescope: but unless we do something about it now, this opportunity will be denied to us through a misunderstanding or through the parsimony of the Government because they feel that it may not be important.

I look forward to the Minister's reply which I hope will be slightly more enthusiastic than was the reply of his right honourable friend in another place when this matter was raised by Mr Tam Dalyell.

8.40 p.m.

My Lords, I congratulate the noble Lord, Lord Tanlaw, on securing a debate on this matter today. At the outset, and as the noble Lord has made so plain, it is worth remembering that our country has an especially honourable tradition in the field of astronomy. From Newton in the 17th century, through Herschel to Eddington, Jeans, Hoyle and Hawking in the 20th, British astronomers and cosmologists have changed the way we place ourselves in the universe.

As your Lordships will be aware, the European Southern Observatory was created in 1962 to,

"establish and operate an astronomical observatory in the Southern hemisphere. equipped with powerful instruments. with the aim of furthering and organising collaboration in astronomy".

. It is supported by eight countries: Belgium, Denmark, France, Germany, Italy, the Netherlands, Sweden and Switzerland. The UK was actively involved in the early discussions about the establishment of ESO in the 1950s but it was decided at that time not to join, partly because of our access to other astronomical facilities in Australia and South Africa.

But of course the world moves on. In the new millennium, optical astronomy is experiencing a boom and, at least in part, the UK is actively involved in that boom. The four-metre VISTA telescope is to be built—at, it has to be said, ESO's base in Chile—for a consortium of 18 British universities led by Dr Jim Emerson of Queen Mary and Westfield College. The UK Astronomy Technology Centre has been chosen as the project's managing organisation, responsible for the design, construction and commissioning of the telescope. Here I acknowledge the input of both the Joint Infrastructure Fund, which, as I understand it, is providing the necessary funding of some £22 million, and the Particle Physics and Astronomy Research Council (PPARC), which will underwrite the observatory's operating costs. More generally, it is important to acknowledge that UK involvement at the 4-metre level notably at La Palma in the Canaries, Hawaii, as well as in Australia and Chile—is robust.

But the difficulty, which the noble Lord, Lord Tanlaw, highlights today, is that the UK has only a minor share in collaboration on the new breed of ground-based telescopes with 8-metre mirrors, where much of the cutting-edge research is being conducted. It is the case that we are involved in what Professor Roger L Davies and Dr Patrick Roche—project scientists with the UK Gemini Project—have described as,

"the remarkable success of the Gemini eight-metre telescopes project, which has already outperformed the Hubble Space Telescope at infra red wavelengths".

But they would say that, wouldn't they? However, as they go on to say,

"Without Gemini, UK astronomers would now have no prospect of being able to compete internationally. Joining the ESO would bring the provision of eight-metre telescopes to the level that UK astronomers enjoyed on four-metre aperture telescopes when these were forefront instruments, and restore our competitive position".

This is a view echoed by the Astronomer Royal, who has perhaps gone a little further by suggesting that PPARC, the funding body in this field, may be,

"seriously misjudging the balance of its scientific priorities",

by having devoted less than a tenth as much of its budget to large telescopes as it had to particle accelerators. But, to be fair, PPARC, at its annual strategy meeting on 19th and 20th February, noted that,

"The ground based astronomy community needed to gain more access to time on eight metre telescopes; (the UK would slip from being second in the world for access to four metre telescopes to fifteenth for eight metre telescopes)".

It went on to say,

"Council felt the advantage would be obtained from carrying these"—

that is, collaborations on larger arrays—

"out in a European framework".

As I have already implied, what is of particular significance to astronomers about ESO is the construction at their site at Cerro Paranal in Chile of a group of four 8-metre telescopes, called, unsurprisingly, the Very Large Telescope, or VLT, a precursor for the new generation of 30- to 50-metre arrays which are already scheduled to be built in the first decades of this century. Clearly there is strength in the argument that VLT has leapfrogged ESO ahead of the UK in the new era of big telescopes and that, unless we now join ESO, Britain faces relegation to the second division in astronomy.

This leads me to my first question for the Minister. Far be it from me to encourage the review culture of the current administration. I believe firmly that Ministers, on the basis of the evidence before them, should take their own decisions and thereby be accountable for them. But does the noble Lord accept that the time has come for the strategic focus of UK involvement in astronomy to be looked at? In particular, do the Government accept that our proliferation of collaborations on 4-metre arrays needs to be more appropriately balanced with new collaborations on 8-metre and larger arrays?

We should consider this matter in the context of the Government's overall philosophy. In his recent speech at the Smith Institute, the Chancellor of the Exchequer outlined the Government's absolute commitment to the "knowledge-based economy". He stated,

"Now that the future is knowledge-based—e-shaped. if you like—we can already see the qualities needed for success: those countries that will succeed will he those that can best unleash the potential of their people by drawing on the qualities of creativity, flexibility and adaptability, the work ethic and of course an open and outward looking approach to the world".

In particular the Chancellor suggested that the Government,

"are discovering … new ways of harnessing our innate creativity and adaptability as a people",

and that they—that is, the Government—

"are keen that British universities build trans-Atlantic and trans-European alliances in research and commerce".

That is all good and well. Of course astronomy is by no means as fashionable as IT, the particular focus of the Chancellor's remarks. Nor does it have IT's public profile. But it is no less important for that. Certainly it does not stretch imagination or credibility to suppose that UK participation in ESO would be wholly consistent with the Government's general thrust here. Indeed, this is the crux of the matter before us today. If I can put it in a somewhat inelegant way, is the DTI prepared to put the science vote's money where the Chancellor of the Exchequer's mouth is?

Against that background, I am bound to say that I am a little surprised at the Written Answer to which the noble Lord, Lord Tanlaw, referred of 1st February this year on what discussions had taken place with the authorities of ESO and governments of nations participating in ESO about UK involvement in the project. The Minister of State at the Department of Trade and Industry replied,

"Neither my right honourable Friend the Secretary of State nor my noble Friend the Minister for Science have had any discussions with the authorities of the European Southern Observatory (ESO), or with Governments of ESO member states about UK participation in ESO'.—[Official Report. Commons, 1/212000; col. WA535.]

Of course, as I have already mentioned, funding of UK participation would be by the science vote through the budget of PPARC. But I hope that the Minister can confirm that this exasperating state of affairs has been rectified. It simply is not good enough for the Government to say that, because they have not received,

"any specific recommendations for Ministerial consideration".

from PPARC, that justifies them in doing nothing. After all, this administration prides itself on giving a lead, a lead which PPARC clearly needs. Its press release of 24th February, giving details of deliberations at the 29th Council meeting, states:

"Council recognised that UK membership of ESO was a potentially effective route to securing that advantage, but"—

this is the key point—

"considered that under present conditions and without additional resources membership could not be afforded".

What makes this all the more surprising—the noble Lord, Lord Tanlaw, alluded to this—is the decision, to which I have already referred, for VISTA to be hosted at Cerro Paranal by ESO. Self-evidently there is considerable government input to this project via the involvement of the joint infrastructure fund. I am therefore bound to ask the noble Lord whether, in arriving at this decision, any attempts were made to tie VISTA in to negotiations about possible UK participation in ESO. As I have said, VISTA is scheduled to cost some £22 million; not to use that cost as a possible mechanism to defray some of the £55 million entry costs to ESO seems, to say the least, strange. I look forward to the Minister's reply to this and to the other questions which have been posed today.

I conclude with this observation from a recent leader in The Times. It states:

"The money is not available in the PPARC budget, nor is the annual subscription of £11–12 million. By appealing to Lord Sainsbury, the Science Minister—

and, as an aside, it is a shame that the noble Lord is not here today—

"the astronomers are trying their luck in an atmosphere more favourable to science than for many years past. The astronomers' claims are strong and deserve support".

It would seem that both The Times and the field of astronomy are putting a great deal of faith in the Science Minister's willingness and ability to deliver.

8.51p.m.

My Lords, I am grateful to the noble Lord, Lord Tanlaw, for initiating the debate and to the noble Earl, Lord Northesk, for his well-informed contribution. I am sorry that I am replying; the noble Lord, Lord Sainsbury, the Science Minister, is on duty in Portugal under the Portuguese presidency.

It is vital that the UK's astronomy community has access to the ground-based telescopes and to the other facilities that it needs to conduct its research. This is the only way that our researchers in the field can stay at the forefront of science and stay competitive with their peers in Europe and around the world.

These facilities are a major investment. Unfortunately they take many years to come to fruition. The availability of telescope time for our astronomers today reflects funding decisions and policy decisions taken in the Science and Engineering Research Council more than 10 years ago. The decisions that this Government make now will have an impact on scientists in this field for more than 20 years.

The Particle Physics and Astronomy Research Council, PPARC, has the lead responsibility for identifying both the long-term and short-term facility needs of the astronomy community and for advising the Office of Science and Technology and the Government on the priority of those needs and how best to secure access to them.

PPARC is also the route by which the UK access to such large facilities is generally funded, whether by subscription to international projects, investment in our own infrastructure or by grants to individual researchers. I should say to the noble Earl, Lord Northesk, and to the noble Lord, Lord Tanlaw, who referred to the possibility of private sponsorship or of lottery funding, that historically—at least in recent years—astronomical and astrophysical research has largely been by way of public expenditure; there has been very little contribution from private sponsorship. Whether it will be possible to persuade Parliament to change the lottery rules I am not sure. We had great difficulty when we tried before.

In the run up to the outcome of the current spending review, which is entitled SR2000, and the funding allocation process for the years 2001 to 2004, PPARC is updating its strategy for astronomical facilities. Its deliberations will be informed by the long-term science review on astronomy that reported to PPARC on 19th February, a matter to which both the noble Earl and the noble Lord have referred. This review, by the astronomy panel of PPARC, highlighted a range of capabilities that it believed were particularly important for the future of UK astronomy. As your Lordships can imagine, its ideal shopping list is quite extensive and PPARC now has to look at how best to address, and most cost effectively, its requirements and to propose a way forward. As part of its thinking, PPARC will certainly be looking again at capitalising on its many international relationships, including those with the European Southern Observatory, ESO.

The noble Earl, Lord Northesk, seemed to think that there was something wrong about the proliferation of international partnerships. They have always been the case in astronomy. We have always taken our opportunities where we find them; we join with people who are able to offer us a good deal, both financially and scientifically; and, when we do not have formal links with such people, we still buy time, or are even awarded time, on a competitive tendering basis, on existing facilities. That is the case with ESO's 4-metre telescopes in Chile.

As these projects are such major investments we have always worked with a variety of international partners over the years, both to share the costs and to get access to the most advanced technology. The European Southern Observatory has been, and still is, one of the main routes for the UK to investigate for joint development and access to the facilities that our astronomers need.

The UK has always had a close relationship with ESO. We participated actively in the 1950s in the establishment of ESO, but we decided not to join because we had access to other equivalent southern astronomical facilities in Australia and South Africa. More recently, in 1989, we decided to join the USA in building the Gemini 8-metre telescopes rather than joining ESO in its development of its very large telescopes as we believed at the time—this was largely the view of the astronomical community—that that was the most cost-effective way of delivering the capability to our astronomers.

I mention the 8-metre telescopes in particular because it is the high priority that UK astronomers are now giving to gaining additional access to this size of telescope that is at the heart of the current debate over membership of ESO. When the Gemini South facilities come on stream the UK will have the equivalent of 50 per cent of one 8-metre telescope. This was the level planned for when we entered the project but, as reported to PPARC in the long-term science review, the community would now like more time, at least one telescope's worth, and it sees the ESO 8-metre VLT telescopes as a possible source.

So we are not members of ESO but we do continue to have productive working relationships with it. For example, another top priority facility for UK astronomers is the Atacama Large Millimetre Array (ALMA). This will be the largest ground-based astronomy project of the decade. It will detect and study the earliest and most distant galaxies, the epoch of the first light of the universe. It will also look deep into the dust-obscured regions where stars are born to examine the details of star and planet formation. The UK is participating in this £250 million project as part of the European component and signed a memorandum of understanding with ESO to this end in December 1998.

Moving right up to date, the executive board of the UK VISTA project has just announced that it is aiming to locate this new, powerful, 4-metre instrument at the ESO Paranal observatory in Chile. The project will provide the largest and most effective telescope of its kind, for use by the VISTA consortium of universities, when it enters service in 2004. However, I should emphasise that PPARC does not own it; it is owned by the consortium of universities. Therefore the kind of deal that the noble Earl referred to may not be possible. As the organisation that will pay for the running of VISTA once it is commissioned, PPARC have been asked by the VISTA Consortium to negotiate with ESO the Financial and technical conditions for siting it at its observatory at Paranal.

It is a difficult job to balance our investment between the short term demands from the astronomy community and positioning the UK as favourably as possible in the medium to long term. This means ensuring that we are making the right investments in new and advanced capabilities such as the very large 50 metre telescope that we shall need in 10 to 20 years' time, as well as getting the time on today's facilities that the astronomers most need right now. As new astronomical facilities come on line, they very rarely replace existing facilities but they provide new capabilities in addition to those that astronomers already have. For PPARC, this means that it must also juggle the requirements for funding an ever increasing range of existing facilities within what is, after all, a fixed budget. Therefore, UK membership of ESO must be considered against this backdrop.

The most recent figures for joining ESO as a full member show that it would cost the UK some £55 million for the joining fee plus an additional£12 million or so annual contribution. This is because we did not join in 1989 and is a reflection of back fees and because fees are based on gross national product rather than on any more astronomical consideration. Frankly, that is not likely to be affordable within the current level of funding available and, even if more money could be found, it is not clear that membership of ESO on those terms provides particularly good value for money when compared with other UK research priorities.

The approach we are taking is certainly not to turn our backs on ESO but to encourage Ian Halliday, the Chief Executive of PPARC, and officials of PPARC to hold discussions with ESO to see whether there are alternative packages of collaborative activity and access to ESO facilities that would be more attractive to the UK, both scientifically and financially. These discussions are ongoing. Mr Halliday has had two meetings with the ESO director general. They have already agreed that there is potential benefit to both sides in moving towards a single European optical astronomy body.

The noble Earl, Lord Northesk, said that my noble friend Lord Sainsbury, the Science Minister, had not yet become involved. He has not, but he is certainly prepared to be as soon as we reach that stage of negotiations and we do hope—and we are enthusiastic about this—that these discussions will provide a springboard for the wider debate on how to give European astronomy as strong a position as possible for the future on the global stage.

The Question before the House refers to an,

"expeditious participation in the European Southern Observatory"

I think what I have said shows that we are pursuing our approach to the European Southern Observatory with all due dispatch. The important consideration is that we should reach a conclusion, the best conclusion that we possibly can, in time for the spending review 2000. I am confident that we shall be able to do that, although I cannot of course be confident about the exact nature of the result of the negotiations.

House adjourned at three minutes past nine o'clock.

Volume 610: debated on Monday 6 March 2000

House Of Lords

Academic Medicine: Vacant Chairs

Death Penalty: Worldwide Abolition

Meat Industry Red Tape Working Group:Report

Merger Reform

Bank Of England Monetary Policy Committee: Select Committee

Financial Services And Markets Bill

Crown Prosecution Service Inspectorate Bill Hl

Representation Of The People Bill

Greater London Authority Elections (Expenses) Order 2000

Limited Liability Partnerships Bill Hl

Appropriation (Northern Ireland) Order 2000

European Southern Observatory