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Lords Chamber

Volume 696: debated on Wednesday 21 November 2007

House of Lords

Wednesday, 21 November 2007.

The House met at three o'clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Newcastle): the LORD SPEAKER on the Woolsack.

Financial Institutions

asked Her Majesty’s Government:

Whether they are proposing any changes in the relationship between the Bank of England, the Financial Services Authority and HM Treasury.

My Lords, there is nothing I can usefully add to what the Chancellor of the Exchequer said in the other place on 11 October.

My Lords, I confess that I find that an extraordinarily disappointing reply. I have to say that I think that we deserve better. Is it not true that the Government have, perhaps unwittingly, created the landscape in which a financial crisis could arise and has done? Is it not also true that while in the years 1997 to 2004, it might have been sensible to create a Financial Services Authority that first took over banking supervision and then added the regulation of general insurance and mortgage companies, that is not sensible today? Times are very different. Surely it would be right at the moment for the Bank of England to have clear over-riding responsibility for the health of the system while the Financial Services Authority acts as a junior partner looking after the liabilities and the balance sheet of financial companies. That must be the way to go at the moment. Please would the Minister take steps in that direction towards the Chancellor?

My Lords, I am sorry the noble Lord was disappointed by my initial reply, but he will recognise that the Chancellor of the Exchequer was explicit about the way in which the tripartite system works. It has been tried and tested on a number of occasions. Of course, this is a very serious test indeed, and there are lessons to be learnt from the developments with regard to Northern Rock, but the noble Lord will recognise that the Chancellor has made it clear that each of the institutions involved will evaluate its work over this period. He expects the Financial Services Agency to produce its report on its work by the end of the year. Of course, evaluation is going on on the operation of the system, but it should be recognised that it has stood this country and its economy in good stead. It should also be recognised that it is much admired elsewhere in the world and others are eager to follow a similar strategy to tackle what we all recognise is a very difficult situation.

My Lords, how can the Minister stand there and say that this system has been tried and tested? At its first trial, it failed dismally. How can the Minister stand there and say that in the six weeks since 11 October he has nothing to add on how the tripartite arrangements need to be changed for the future? It is clear that the Government have to take some action. When are they going to share that with the House?

My Lords, the Government could be criticised if the component parts of the tripartite system were not devoting all their energies to solving the problem of the distressed bank. Whether action could have been taken at a different time in a different way by any of the principals and whether procedures need to be improved needs to be evaluated over time and needs full consideration, but the priority is to solve the problem.

My Lords, Britain's regulatory system has long been admired, but under the tripartite arrangement between the Bank of England, the FSA and the Treasury, when times have been good, it has been a happy merry-go-round but, now that times are bad, it has become a miserable blame-go-round. Will the Minister please clarify who is responsible for what?

My Lords, as I said, the Chancellor of the Exchequer made absolutely explicit in his Statement who is responsible for what. Of course I can reply directly to the noble Lord in the Chancellor's terms. Unfortunately, as is to be expected, the Chancellor's terms occupy two paragraphs or more, which is well beyond the scope that I have for answering an individual question today. I emphasise to the noble Lord that the Government have been entirely explicit about the roles of the three members of the tripartite system. They have, of course, been questioned: there have been not only general questions here and in the other place, but the Treasury Select Committee has examined each of the principals and listened to their responses. We are quite clear on how they work.

My Lords, does my noble friend agree that the recent problems of Northern Rock have resulted far more from a failure of management than from a failure of regulation; that regulations that exist are robust and sensible; and that no one would want them to be any stronger than they already are? It has been a failure of management that has caused the recent problems.

My Lords, I am grateful to my noble friend. There is a danger from the interesting questions that emerge, primarily from the Opposition, that anyone would think that the Government had conjured up this problem out of thin air, when the bank is failing—admittedly, as we all recognise, in difficult international financial circumstances, which began in the United States of America—as my noble friend so accurately identified, through deficiencies of management.

My Lords, does the Minister accept that the principal failure in this case was not one of the tripartite system but a failure, first, of the FSA, by being far too dilatory in taking action to review what Northern Rock was up to and, secondly, of the Bank of England, for not moving more quickly in August; thirdly, that has now been compounded by the Chancellor not moving more quickly to bring Northern Rock into public ownership and bring some certainty to the situation?

My Lords, the virtue of public ownership, as the noble Lord continually emphasises to the House, is that it brings an element of certainty to the position. Of course, it also produces very great dangers for the public purse and the money that has been invested in Northern Rock and rules out any other solution when, at present, alternatives continue to exist.

On the other points that the noble Lord made about the failures of the Financial Services Authority and the Bank of England, all I can say is that he has only the same access to information as everyone else. That is his interpretation of the position, which scarcely squares with the facts of the way in which the Bank, the Financial Services Authority and the Chancellor have responded to questions from the Select Committee in another place.

My Lords, despite what my noble friend and others have said, does not my noble friend accept that the FSA did not exactly do very well in its monitoring of the bank? Was it not rather surprising that, in that monitoring, it did not note the aggressive nature of the bank's behaviour and did nothing whatever about it?

My Lords, as I indicated in my earlier comments, the Chancellor is expecting a report from the Financial Services Authority on its operations in this crisis by the end of the year.

Children: UN Convention

My Lords, I declare an interest as a trustee of UNICEF UK. I beg leave to ask the Question in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government when they plan to incorporate the Convention on the Rights of the Child into domestic legislation.

My Lords, the Government have no plans to incorporate the Convention on the Rights of the Child into domestic legislation. UK law often goes further than the convention requires. The key articles and general principles are given full effect in the Human Rights Act 1998, which incorporates the articles of the European Convention on Human Rights.

My Lords, I thank my noble friend. She no doubt accepts that the Committee on the Rights of the Child, the monitoring body for the implementation of the convention, has deprecated the UK immigration reservation from its first consideration of the UK Government’s response in 1995 and that it described the reservation as being incompatible with the object and the purpose of the convention to protect all children. Does my noble friend agree that the Committee on the Rights of the Child is right to encourage the Government to withdraw their reservation, given that it is not necessary when UK law accords with Article 22 of the convention?

My Lords, although I acknowledge my noble friend’s commitment to this important issue, I am afraid that I shall disappoint her—there is a theme running through Question Time today—by saying that, following a government review, a decision was taken to maintain the reservation because it was seen as necessary to preserve the integrity of our immigration laws. The point is that we do not wish the immigration laws to be interpreted in the light of a convention that says that it requires the best interests of the child to be made a primary consideration but does not indicate what this might mean in practice. Does it mean, for instance, that unaccompanied children should have a right to be joined in this country by their parents and their siblings because that is more in their interest than not being joined?

My Lords, a basic right for a child is their right to privacy. Along with many influential voices, we have been critical of the Government’s determination to hold details, sometimes sensitive details, on every child in the country. We were told that the data would be safe in the Government’s hands but, in the light of yesterday’s announcement of the appalling loss of the child benefit details, how can parents and children have confidence in that? Is it not time for an urgent review of ContactPoint and would not the money be better spent on those children who are most in need?

My Lords, in the context of the Question that was asked of me on the UN Convention on the Rights of the Child, one of the areas in which even critics say that we have not done badly at all as far as children are concerned is privacy and family life.

My Lords, does the noble Baroness agree that full compliance with the convention could not create a new avenue of appeal under the immigration Acts, as the noble Lord, Lord Bassam, claimed during consideration of the UK Borders Bill, but would merely add a new argument to the existing arguments that are used on appeal? If it is so difficult for the Government to remove unwanted children from the United Kingdom, why not say that the convention should not apply to decisions to grant, refuse or vary leave to remain in the United Kingdom but should extend to all other functions of the Border and Immigration Agency?

My Lords, the Government are not seeking to be intransigent on this matter. As far as immigration is concerned, nothing in the reservation prevents the Government from having regard to the rights set out in the UNCRC, even where the circumstances are within the terms of the reservation. There have been many instances in which the Government have accepted that children were not complicit in the immigration abuse that led to their coming to the UK, and have declined to enforce a return to circumstances in which a child might be at risk.

My Lords, I refer to Article 37 of the convention, which enjoins everyone not to incarcerate children, save as a measure of last resort. Nevertheless, in 2005, England and Wales incarcerated 2,274 children—a greater total than that of France, Germany, the Netherlands and Norway together. How many would we be incarcerating if we were not taking the principle of Article 37 very much to heart, as we were told yesterday?

My Lords, we take into account the principle of Article 37. The new joint youth justice unit, which has been created in the recent machinery of government changes, will take forward the Government’s work in this area. The Youth Justice Board has secured improvements in healthcare arrangements, including provision of 24-hour healthcare, physical and mental health screening and the transfer of responsibility for healthcare provisions from the Prison Service to primary care trusts. We take the matter of children in the penal system very seriously.

My Lords, when the Joint Committee on Human Rights was taking evidence on this concern, it was very perturbed to discover that frequently in the immigration process children were treated not primarily as children but as an extension of the immigration problem. Is it not essential that children be recognised as children whether they are British, migrant or whatever and that we live up not only to the legal detail but to the spirit of the convention, of which, after all, we were pioneers? Our reservations are very perplexing to the world as a whole.

My Lords, I hope that we step up to the plate when looking at the principles and the spirit of the convention. There is a long list—I will not go through it—of areas where we are working on the rights of the child, such as in the Children Act 2004 and Every Child Matters. Those rights very much engage with the articles of the convention.

Smoking: Fire-safer Cigarettes

asked Her Majesty’s Government:

Whether they will encourage or oblige United Kingdom tobacco manufacturers to introduce the self-extinguishing fire safety cigarette.

My Lords, careless handling of smokers’ materials continues to be one of the major causes of UK accidental fires in the home. My department has been instrumental in encouraging the European Commission to look into the case for creating a European standard for fire-safer cigarettes. The European Commission will vote later this month on whether to create such a standard.

My Lords, I thank my noble friend for that encouraging Answer. Given that 2,000 deaths each year are attributable to this type of fire in 14 member states of the European Union, I believe that the final remedy will have to be found through the EU. But given the urgency of the situation in this country, where 110 lives are lost and 1,100 people are injured in 3,000 such fires annually, will my noble friend encourage the interested parties, including the Tobacco Manufacturers’ Association, to see what can be done now to extinguish this blot on our social life?

My Lords, the noble Lord is right. We have already engaged with the Tobacco Manufacturers’ Association and with manufacturers to encourage their co-operation on the European standard, which will be based on the existing American standard. We will continue to do so, and continue to take a lead in Europe. We expect that next week’s vote in Europe will be positive and Sir Ken Knight, the Chief Fire and Rescue Adviser, has already volunteered to chair the technical standards committee to take the work forward.

My Lords, while approving entirely of the sentiments of the noble Lord’s Question, I do not understand it. Does it mean that if you stop sucking the thing goes out? If so, it seems hardly worth buying any.

My Lords, in response to that very technical question, the position is that if you stop sucking, it goes out. These cigarettes have little bands like speed bumps which are made of extra, less porous filter paper. Consequently they extinguish themselves—sadly.

My Lords, it is difficult to discuss a puff of smoke after the previous two questions. However, I acknowledge the benefit on the fire-hazard front. Can the noble Baroness assure the House that there will be no change to the health risks of cigarettes as a result of doing this?

Yes, my Lords, I can. New York State was the first place to legislate under the American standard to ban the use of conventional cigarettes and 22 American states now have such legislation in place. As we understand it, there is no change to the health considerations.

My Lords, can the noble Baroness explain why her department’s report persists in using the term “fire safe” to describe these cigarettes? Does she agree that it is rather irresponsible to suggest that a lit cigarette does not imply some sort of hazard, even if it is reduced?

My Lords, if the department is using that term it is a mistake, because the term is “fire-safer”. It is a very important distinction. As the noble Baroness says, no cigarette is safe as long as it is alight; but because these cigarettes do not burn their full length they are much safer than conventional ones.

My Lords, does my noble friend agree that the good example set by Wales in introducing a smoking ban has now been followed by England? Can she give an indication of how successful a smoking ban in England has been? It has been a great success in Wales. Does she also agree, returning to my noble friend’s Question, that the fewer the cigarettes smoked, the smaller will be the hazard from fire?

My Lords, as we all know, Wales often takes the lead. However, we have some very positive statistics for England. The smoking ban was introduced in July, and 98 per cent of smoke-free premises and venues inspected in August by local authorities across England were properly compliant. That is an excellent result. We have a range of strategies to help people stop smoking and to make it difficult for them to smoke, but as long as people continue to smoke, and to die from it, we must do all that we can to protect them from death and injury resulting from fire as well.

My Lords, since the subject of health and smoking has come up, does the Minister agree that a practical aid to giving up smoking would be for every tobacco outlet to stock and sell nicotine replacement therapies?

My Lords, that is a sensible idea and I cannot think of a reason why it should not be done. In fact, since the beginning of October the minimum age for the sale of cigarettes has gone up from 16 to 18 years, so the retail industry is playing its part in this. But I am sure that the Department of Health will want to consider what the noble Lord has just said.

My Lords, will the new system—with speed bumps on the cigarette paper—apply also to the cigarette papers used by those who roll their own?

My Lords, I knew that there would be variations on this theme, though I was expecting a question on pipes. People who roll their own cigarettes are such technicians that I am sure they will be able to manufacture a way of dealing with this. I shall try to get a template organised for the noble Lord.

Northern Ireland: Electronic Border

asked Her Majesty’s Government:

What discussions have taken place with the Northern Ireland Executive and the Government of the Republic of Ireland on the impact of the electronic border on the British Isles common travel area.

My Lords, we continue to work closely with both the Northern Ireland Executive and the Government of the Republic of Ireland on operational policy and legislative issues, including the implementation of the e-borders programme, which is a key part of the Government’s plans for securing our borders.

Lord Trimble: My Lords, I wonder if the Irish Government have pointed out in their discussions with Her Majesty’s Government that British citizens make up the largest group of foreign nationals in the Irish Republic and that they, together with the hundreds of thousands, if not millions, of Irish passport holders domiciled in Great Britain, have been accustomed to travelling back and forth between the two states without any formalities ever since the creation of a separatist Irish state. With the e-borders, there will of course be considerable inconvenience to them. Would it not be much better to take the existing informal common travel area and put it on a formal basis analogous to the Schengen agreement that applies elsewhere in Europe? This would solve the problems that arise in practice and relieve the difficulties experienced by the Home Office, which seems to be intellectually challenged by the idea of a land frontier.

Lord West of Spithead: My Lords, as was said before, there is a lot of dialogue between ourselves, the Border and Immigration Agency, the UK police, the Garda National Immigration Bureau and the Northern Ireland Executive on these various issues. We carry out a lot of joint operations, and we all believe that the way we are moving forward with two chunks of work—one relates to the Police and Justice Act 2006 and the other to e-borders—are good ways of covering the problems. We know both anecdotally and from taking samples that there are people who either come through the Republic of Ireland, move into Northern Ireland and then come across to the United Kingdom or vice versa. The sample evidence we have suggests that it is a considerable problem, and this way forward will resolve those issues.

My Lords, can the Minister assure the House that the same quality of protection against external terrorism will be afforded to citizens of the United Kingdom residing in Northern Ireland as to our fellow citizens who reside in the mainland?

My Lords, I return to basic Northern Ireland politics after a very statesmanlike Question from my noble friend Lord Trimble. Do Her Majesty’s Government really understand Ireland and Northern Ireland? I think not. They are expelling the people of Northern Ireland—I am one of them; I live there—geographically from the United Kingdom. They are putting an electronic boundary around England, Scotland and Wales, excluding Northern Ireland and packaging it in with the Republic of Ireland. Do Her Majesty’s Government really think that that will help political friendship and political progress between these islands given their delicate state? I would love to answer the question. I hope the Minister’s answer is the same as mine.

My Lords, I do not agree. The Government do understand Northern Ireland and the Irish Republic and the status of the people there. There is no doubt whatever that, in the interests of the Republic of Ireland, the people in Northern Ireland and the people of the United Kingdom in general, it makes sense to move down this route. On the e-borders area, for example, we have carried out a trial run called Project Semaphore, and in that very small pilot project 1,300 arrests were made for crimes including murder, rape, assault and so on. On a counterterrorist basis, it is better for the safety of all our people. I cannot accept what has just been said about our lack of understanding. There is absolutely no intention, no desire and no wish; it would be contrary to everything we believe in.

My Lords, will the Minister reply specifically to the question posed by the noble Lord, Lord Trimble? Would it not be more optimal to maintain the common travel area rather than hive off Great Britain from our neighbours in both Northern Ireland and the Republic? This is a complex issue. Given the mix of population between the islands, it is absurd to go down the route that the Government appear to be going down.

My Lords, we are maintaining the common travel area, which is recognised by the EU. We are applying a sensible way forward to identify the loophole that existed of people moving in through the Republic of Ireland, into Northern Ireland and then travelling across to the United Kingdom. We know, as I said, from anecdotal and sample evidence that that is a considerable number of people. Similarly, the Crown dependency routes are being maintained. So the common travel area is staying as it is.

My Lords, do the Government not recognise the enormous symbolism of what they are doing with the map? What will be the security losses of including the province of Northern Ireland with the rest of the United Kingdom instead of leaving it out?

My Lords, there has been mention already of the common land border in Ireland. Those of us who have patrolled and walked along it know how permeable it is. That is part of the issue in terms of the ability of people arriving in the Republic of Ireland to get into Northern Ireland. Nothing that is being done makes any declaration about the status of Northern Ireland. It is for the safety of all the people of these islands that we are doing these things. There is a great deal of discussion going on. I think it is a sensible way forward.

My Lords, does the Minister not realise that, when he spoke a moment ago of travelling from Northern Ireland to the United Kingdom, he demonstrated clearly his lack of understanding of the basic concept?

My Lords, it was a slip. I certainly understand it. As I said, I have served in Northern Ireland. It was rather like the slip that people make when they forget that the United Kingdom is in Europe. It is a slip that is made sometimes.

My Lords, will the Minister let me have details of how the projected security measures across the border between Northern Ireland and the Republic will be similar to or different from the projected border controls within and without the European Community?

Parliamentary Broadcasting Unit Limited (PARBUL)

Parliamentary Office of Science and Technology (POST)

Tax Law Rewrite Bills

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

Parliamentary Broadcasting Unit Limited (PARBUL)

Moved, That, as proposed by the Committee of Selection, the following members be appointed to the board of the Parliamentary Broadcasting Unit Limited (PARBUL):

L Brabazon of Tara

L Naseby

L Paul

L Thomson of Monifieth.

Parliamentary Office of Science and Technology (POST)

Moved, That, as proposed by the Committee of Selection, the following Lords be appointed to the board of the Parliamentary Office of Science and Technology (POST):

B Greenfield

L Oxburgh

L Sutherland of Houndwood

L Winston.

Tax Law Rewrite Bills

Moved, That a Select Committee of six members be appointed to join the committee appointed by the Commons to consider tax law rewrite Bills, and in particular to consider whether each Bill committed to it preserves the effect of the existing law, subject to any minor changes which may be desirable;

That, as proposed by the Committee of Selection, the following members be appointed to the committee:

L Blackwell

L Christopher

L Goodhart

L Haskel

L Millett

L Newton of Braintree;

That the committee have power to agree with the committee appointed by the Commons in the appointment of a chairman;

That the quorum of the committee shall be two;

That the committee have power to appoint specialist advisers;

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

That the evidence taken by the committee shall, if the committee so wishes, be published;

That the procedure of the Joint Committee shall follow the procedure of Select Committees of the House of Commons when such procedure differs from that of Select Committees of this House, and shall include the power of the chairman to select amendments.—(The Chairman of Committees.)

On Question, Motions agreed to; and a message was sent to the Commons.


My Lords, we are about to resume the debate on the Second Reading of the Human Fertilisation and Embryology Bill. It is important that I make clear the advisory Back-Bench speaking time, because we have had half the debate already and could not have different rules for the second half of the debate from those of the first. The advisory speaking time remains 10 minutes, which I hope will be rigorously observed. Before the Clerk calls the Second Reading, my noble friend Lord Darzi will, with the leave of the House, make a brief Statement.

Lord Brennan

My Lords, I am pleased to report that I spoke with my noble friend Lord Brennan earlier today. He is recovering well and is expected to return home tomorrow. I thank the staff of the House for their quick response, and I am grateful, too, for the presence of the defibrillator in the House. It was the defibrillator and its immediate availability that saved his life, as my noble friend was in ventricular fibrillation and had no cardiac output. This incident shows how important it is to have defibrillators in public places. I am also grateful to the House for allowing me to maintain my clinical skills, although, in the future, I would prefer to keep my practice in hospital rather than in the Chamber.

My Lords, as someone who was in the Chamber when the noble Lord, Lord Brennan, was taken ill, perhaps I may express the relief of these Benches that the noble Lord is recovering so well. We look forward to seeing him back in his place very soon. I not only reiterate the importance of defibrillators, but emphasise the importance of having somebody such as the noble Lord, Lord Darzi, who is medically qualified, to attend to the noble Lord, which I congratulate him on doing with such expedition. There is no doubt that we all owe him a great debt of gratitude.

My Lords, I was not in the Chamber, but my noble friend Lady Tonge was. As a doctor, she gave the noble Lord a clean bill of health on his performance. In reporting to our Peers today, she also paid special tribute to the staff of this House and their training, which much complemented the skill of the noble Lord.

My Lords, I have just spoken to the son of the noble Lord, Lord Brennan, who said that he will come out of hospital on Friday. I hope that it was not my speech that made him have his episode, because I had spoken just before him. I congratulate the skilful surgeon who immediately leapt to his feet and saved the noble Lord’s life.

Human Fertilisation and Embryology Bill [HL]

Second Reading debate resumed.

My Lords, before I continue what I had already commenced on Monday evening, I should like to associated myself and my party members in your Lordships' House with the sentiments expressed about the noble Lord, Lord Brennan. I have been praying that he will have a speedy recovery, and it appears that those prayers are being answered. We look forward to having him back in your Lordships' House very quickly. It just goes to show us all how brittle life can be and the necessity for us to make preparation for the life that is to come. I also associate myself with the remarks passed about the noble Lord, Lord Darzi, and his skill. We thank him for what he did in those vital golden moments immediately after the noble Lord, Lord Brennan, became ill.

I wish to voice my concerns on matters arising from the Human Fertilisation and Embryology Bill. The current proposals threaten not only human dignity but the family and, if the liberalising amendments on abortion are accepted, human life itself will also be threatened. I believe that the creation of animal/human embryos for research is not only unnecessary and undesirable but unethical and would undermine our human dignity and alter the very nature of humanity. Further, this proposal totally disregards the biblical law on mixing kinds or species as laid down in Holy Scripture, and would be an offence to the Creator Himself, who made man in His own image. These proposals would also unleash an untameable monster on an already morally diminished people, the end result of which is too fearsome to contemplate.

I was greatly heartened at the weekend to hear Professor Wilmut’s decision to abandon cloning because of the new discoveries and work of the Japanese Professor Yamanaka, who has found a way to create a patient’s own stem cells from fragments of skin, obviating the need for embryos. Today a statement was made by another scientist from America, who agrees with this and is on to the same line of creating a patient’s own stem cells. A warm welcome was given to this by Sir Martin Evans, who sees it as a long-term solution, and by Professor Robin Lovell-Badge, who said that it was very likely to be the future. I believe that Josephine Quintavalle spoke for all right-thinking people when she commented:

“As a country we must follow the Wilmut lead and put behind us all meddling with human cloning and animal/human hybridisation”.

I trust that your Lordships' House will take these words to heart today and reject the proposals in this iniquitous and immoral Bill.

My concerns are heightened when I hear that a group of Members of another place have threatened that they will use this Bill to force Northern Ireland doctors to carry out abortions. To use this Bill as a Trojan horse without any considered discussion on the implications is an abuse of Parliament. No consideration to this issue was given by the Joint Committee, nor by any Select Committee. Such behaviour flies in the face of the assurances given by successive Governments that no change would be made to the law without the consent of the democratically elected representatives of Northern Ireland. This is but the latest example of certain people trying to foist their ideas on the people from every background and tradition across Northern Ireland who have repeatedly and steadfastly shown their revulsion at the wholesale murder of unborn children.

Northern Ireland will not be bullied by political activists whose ideas and actions have brought about the massacre of more than 7 million innocent unborn children in the years that this Act has been in operation on the mainland. It is difficult to comprehend the enormity of this murder campaign, and how many scientists, musicians, doctors, teachers and business men and women have been flushed down the sluices of our hospitals and clinics. We hear complaints about the brain drain, but it never seems to be recognised that the surgeons who advise women and carry out their wishes are the people who drain the brains, together with the lifeblood, dismembered limbs and bodies and crushed skulls of their silent victims. I wonder whether the women who abort their children and those who carry out the gruesome execution of these innocent and defenceless living babies ever think that they are emulating Herod in the horrific campaign that he perpetrated on innocent victims in his day. It is heartbreaking to think that any man or woman who has sworn to preserve life is instead wilfully and systematically doing what only God Himself has the authority to do—sons and daughters of Herod indeed.

At this time of renewed hope in Northern Ireland under the new system of Government, it is extremely important that Westminster politicians should support it, bearing in mind the strong opposition to abortion in Northern Ireland. In response to a question on 16 July this year from my colleague, the right honourable Jeffrey Donaldson MP MLA, Mr Paul Goggins, the Minister in another place, revealed that legislation covering abortion falls within the criminal law and therefore remains a reserved matter. However, a further question from Lady Ann Winterton MP seeking clarification received an answer that made it plain that, once criminal law becomes a devolved matter in Northern Ireland, so too will abortion.

How will the Government respond if parliamentarians try to table amendments during Committee, Report and Third Reading of this Bill extending the Abortion Act 1967 to Northern Ireland while it remains a reserved matter? What about the Government’s promise of the triple lock which shuts firmly the door on the Government proceeding down that road? Will the Minister make it clear today that his Government will resist any attempt to overturn the undertakings given to Northern Ireland elected representatives?

I must tell your Lordships’ House that any attempt to impose the 1967 Act would be “over our heads” and “in spite of us” and the whole world would know it. During the abortion debate in the Northern Ireland Assembly as recently as 25 October this year, that view was made abundantly clear from the mainstream parties.

Many dangers are connected to abortion. The mortality following abortions is higher than recognised, and women need to be seriously counselled before they make such a devastating and irreversible decision. Sadly, I have had mothers tell me that because they refused to abort what they were told would be a seriously handicapped baby, they were reprimanded for being irresponsible. However, when their babies were born, they were perfect. How many sons and daughters have been denied the right to live because of misdiagnosis?

Handicapped children also have the right to live and I believe that they are made in the image of God. I served for some years on the board of a school for physically handicapped children in Northern Ireland and was deeply impressed by the love and devotion of the parents to these children. These children are special and deserve special treatment. There are doctors and surgeons able to rectify many of the deformities with which some of these children are born. The world would be a poorer place without the handicapped when we think of the achievements and pleasure so many of them have given to the world.

There are also serious complications following abortions such as the risk of premature births in subsequent pregnancies. There is overwhelming evidence regarding the physical and psychiatric consequences for women. Breast cancer is another significant risk factor. I watched a young mother being interviewed on television. She had an abortion because she had had a difficult time at the birth of her first baby. She was given medication to do away with the baby. She went to the lavatory and as she looked down the bowl she saw two little feet disappearing down the toilet. She will never forget that experience: she said that herself. These things are matters that we need to consider and think about deeply because they affect us all. It will affect that young woman all her life.

It is also shocking to think that every abortion carried out has a 50 per cent mortality rate. When a woman goes in for an abortion she has herself and her unborn baby to consider. On every occasion, the child is done to death. That is another very serious matter that we need to think about very seriously. There are other consequences to do with husbands and fathers. Husbands have no legal right to stop the abortion of their children. Evidence suggests that 25 per cent of prospective fathers only accompany their wives or partners when they apply for a termination. The other 75 per cent are never advised by their GPs or clinics.

I have many other concerns but time has beaten me. This year we celebrate the bicentenary of the abolition of slavery, but using human embryos for commercial benefit is no different from slavery and is equally abhorrent. I shall continue to oppose this Bill if it goes forward. I trust that your Lordships will think very seriously before bringing matters to a conclusion.

My Lords, I wish to return to the main themes of the Bill, one of which is to ensure that Britain remains at the forefront of medical research. Laudable as that is—and it is—it cannot be at any price, and, like other noble Lords, I have reservations and questions.

The 1990 Act provided the legal framework for the regulation of treatment and research involving the use of embryos outside the body. In doing so it enabled the public to have confidence in that area of research. Since 1990, things have moved on and science has advanced and they need to be regulated for public confidence and trust to be retained. We are dealing here with controversial matters for this Bill permits research that much of the rest of the world would not allow; it tests ethical limits and where they should be placed in a number of ways. The Bill must continue to provide public trust in the system of regulation. That is not easy when it represents a compromise between passionately held and conflicting views. If that was true of the 1990 Act, it is just as true of the Bill before us today.

The 1990 Act was flexible—it gave discretion to the regulator, detailed decision-making to the scientists and all within a strong regulatory framework. This Bill transfers into legislation certain issues hitherto left to the regulator and it is right that Parliament should decide the major issues of principle, for the regulatory body regulates only on what Parliament has decided. In doing so, many things need to be kept in balance. We need a balance between the pioneering work of our scientists and the benefits they will bring to many people; the key ethical principles we hold which determine where the boundaries are to be drawn; principles such as the utmost respect for the moral status of the embryo; the welfare and well-being of any potential child, which has to be paramount; the assurance of human dignity and worth; and the continuing confidence of the public in these hugely complex—indeed, breathtaking—areas of research. All those factors point to the need for serious and detailed consideration of the Bill in Committee.

I have three particular areas of concern. The first concerns the term “interspecies embryo” that the Bill introduces. This term includes a whole raft of possible combinations of human and animal tissue. It includes creating an interspecies embryo from human egg and animal sperm and vice versa. It also includes replacing the animal nucleus in an animal egg with a human nucleus and vice versa. All these practices will now be allowed, although the conditions under which they may be created remain laid down. I believe that this all-embracing term “interspecies embryo” is too wide. It is too big an umbrella and it covers things which in reality are quite different. For example, the Bill does not differentiate—and I believe that it should—between cytoplasmic hybrids and the so-called true hybrids. I believe that cytoplasmic hybrids should be allowed but that true hybrids are more problematic. I do not want to get technical here—indeed, I am not competent to do so; that is for Committee—but cytoplasmic hybrids and true hybrids are formed by very different processes. Even if both sorts of interspecies embryos come to be allowed and to be created, they are never to be implanted in a woman; but do we have sufficient safeguards in place?

In considering embryology, I support the scientific development as long as the vital moral status of the embryo is retained, such that it never becomes and is never regarded as a mere bit of tissue with no real significance. Over the years we as a society have been able to retain that attitude of respect for the embryo in our laws and regulations. Equally there is the continuing sense that using human embryos for research is never straightforward, and is always testing and highly complex. That should lead us to proceed with caution. Does this generalised permission in the Bill to create interspecies embryos lead to a lessening or a dilution of the attitude of respect for the human embryo? If it does, it should be resisted. We need to be clear about the differences between the different forms of hybrids, and to think again about the indiscriminate way in which that term is being used.

We must also take very seriously the fact that the Bill allows embryos to be genetically altered for research for the first time. Several noble Lords have already mentioned Professor Wilmut’s decision to stop using human embryos for his research. He says he is doing it for scientific reasons, but does not his decision still reflect this retained sense of the important moral status of the human embryo?

I have two other comments. The Government are removing from the law the clause that the doctor seeking to give IVF treatment should consider the welfare of the future baby, including the need for a father. It seems extraordinary that at this time in our society’s life we state in the law that in the welfare and well-being of a child there is no need any more for a father. We hear it said again and again that children lack good male role models today, yet we are writing fathers out of the script. Again, it is surely very odd that the law might provide a birth certificate showing two women as parents of the child. I well understand that comes from a desire not to discriminate, but to have two women, or, indeed for that matter, two men on a birth certificate as parents is a very odd way to put things.

We have come to see that donor-conceived children should be able to discover the truth about their origins, and of course we all commend the Bill’s desire to promote the truth. So why provide a birth certificate naming two persons of the same sex, when it is simply not true? If the well-being of the child is a key principle, and if truthfulness is a key principle, then above all we have to be honest.

Finally, I come back to trust. For reasons of maintaining public trust, I, too, support the creation of a national bioethic commission, and I very much hope that the Government will consider that seriously. The noble Lord, Lord Brennan, put that point very powerfully before he was taken ill. I add our tribute from these Benches to the attendants for their skilful attention and care, and, especially, to the noble Lord, Lord Darzi. We are very grateful for his considerable help. We look forward to the noble Lord, Lord Brennan, returning to his seat on the Benches behind us.

I also believe that in this matter of trust and confidence the Government could take the lead in pressing for international guidelines and global agreements, and, not least, to ban the implantation of cloned human embryos. The way embryology has developed in this country has enabled public confidence in innovative practices. We have taken tentative steps forward—too quickly for some and not quickly enough for others—by giving permission for research within careful regulation and scrutiny, with the HFEA keeping a very close and responsible eye on it. That has been all to the good. It has allowed important developments. It has increased our understanding of embryology and stem cell research, but it has always kept us mindful of the respect and care that is owed to all human life, not least life in its very earliest moments. That has been possible because we have trusted our scientists and regulators. Whatever we do, we must not allow any parts of the Bill to put that trust at risk.

My Lords, I am a layman in both senses of the word in this debate; both spiritual and temporal. When the debate began two days ago, I was in some doubt as to whether I should contribute to it at all. However, during the debate, I have come to some conclusions, and there are things that need to be said or repeated with some force.

I was very much taken with the fact that the Bill deals with extraordinarily complex matters with which most of us are entirely unfamiliar. It stands to reason—does it not?—that before we legislate we should know precisely what it is that we are legislating on. That means that we must have a language that we all share. I was disturbed to hear my noble and learned friend Lord Mackay of Clashfern reveal to the House that even the experts brought in by the Joint Committee that scrutinised the Bill were unable to understand the definition proposed of the interspecies embryos to which the right reverend Prelate has just referred. If we do not know what they are, and if the scientists do not know what they are, we cannot say anything about them. We must get the language understood; the language that we use in discussion as well as that which we use in legislation. It might be useful to have a glossary placed in the Printed Paper Office before we proceed much further.

The point about paternity cannot be overemphasised. I commend to those of your Lordships who did not hear it the speech made by the most reverend Primate the Archbishop of York on Monday about the role of the father and our duty to preserve it. I also commend it to those who did hear it, because he spoke at some speed, and it was only on reading his speech that I realised the full power of what he said. To keep things short, I endorse every word of that speech.

It is an extraordinary thing to try to write fathers out of the lives of children before they are born. It seems to me grotesque and unpleasant. The sensibilities of those who may be bringing children up after they are born must come second to the interests of the child—

My Lords, I wonder whether the noble Lord, Lord Elton, will allow me to give an example of why what he says is not relevant to the Bill. My sister is a lesbian, and she and her partner decided to have a child. Her partner bore the child, with the active agreement of a man friend. My sister has no rights whatever over that child. She had no legal power to become the equivalent of a father. Fortunately, it has worked well, and the child has grown up happy and contented. The effect of the existing law is to take away the equivalent of a father, and the effect of this Bill would be to give my sister rights that would be equivalent to those of a father. It works in the opposite direction from that which the noble Lord, Lord Elton, is describing.

My Lords, I am much indebted to the noble Lord, and I congratulate him and his sister and rejoice in the birth of a happy human being. But we are dealing with the general and not merely the particular. The Bill is not perfect, and the noble Lord suggests that there is no way of introducing a right for a woman in this position or a relationship which cannot in my view properly cut out the parenthood of the male.

I declare an interest as a father and a grandfather, as someone who taught for 10 years, as someone who was a Minister in the Home Office for three years and who was responsible for juvenile offenders in the Department of Health for six months before that. I speak as the founder of a trust to keep juveniles out of crime, which has now been absorbed by the Rainer Foundation, of which I am a patron. I have some lasting interest in the effects of male input into the upbringing of children.

All the statistics and the subjective impressions bear out the international belief that a significant male role model has a defining input in the behaviour of children who result from a marriage or another union. Those statistics cannot be contested and they chime in with what my instinct tells me and my religion teaches me is the right thing to do. I do not rule out the possibility of putting a locus for a second female with the child of a couple—I am undecided on that and it should be looked at—but to rule out the male responsibility seems to go in the face of nature, religion and good sensible politics on the part of a Government who are trying to stop overfilling the jails of this country.

On the question of male paternity, I, too, wish to pick up the point made by the noble Lord, Lord Winston, that anonymity has a very costly downside. We are treating human material with new forms of manipulation, the results of which may not become apparent in those who result from them—the product of those manipulations—until 10, 15 or even 50 or 60 years on. If the actual parentage of those individuals is not known, lessons which may be vital for the well-being of humanity generally may simply elude us.

I see an enormous difficulty, which I am not sure has been addressed, in deciding at which point an embryo becomes a person. Several people have mentioned the point at which the primitive streak appears on the 14th day. That seems morally acceptable, in light of the fact that natural birth results in the loss of many fertile ova in any case. It is a pity that a different term is not used—here we come back to our glossary—for that collection of cells. If it could be a line of cells, rather than an embryo, that started on the 14th day, that would be extraordinarily useful—although it may be an approximation—and an addition to the glossary that we need.

This Bill was not designed to be and should not be used as a means of amending the law on abortion. That is a line in the sand. I commend the idea endorsed by the noble Lord, Lord Brennan, in a dramatically placed speech, and by sundry others, including the right reverend Prelate. I echo the right reverend Prelate in asking your Lordships to consider not going too fast in these matters. It seems that our thirst for knowledge has rather outgrown our need for wisdom. As technology accelerates, we are more rapidly faced with increasingly complicated and potentially costly, even lethal, problems and being asked to decide on them very swiftly at a moment in our social development when, as the right reverend Primate the Archbishop of York said, we are very consumerist, saying, “It’s there, I want it, I must have it”. This stage of our history started when Barclays Bank invented for Barclaycard the compelling advertisement,

“takes the waiting out of wanting”.

We need to wait a little longer before we become exactly clear on what we want, and whether we really want it. However, that goes beyond the Bill. If we observe the precepts set out by the most reverend Primate the Archbishop and some of my noble friends, I think that we shall not go as far wrong as we otherwise would.

My Lords, on the basis of my scientific qualifications, I am the least qualified Member of your Lordships’ House to speak in this debate. However, I speak with my religious, ethical and moral convictions.

I begin by thanking all those who have written to me by either e-mail or letter. It would be impossible for me to reply to each member of the community, as on Monday it took six hours for my research assistant to open all the letters and e-mails and I am still receiving correspondence on this issue.

I realise that the UK’s position as a world leader in reproductive technologies and research requires regulations. Therefore, I welcome the commitment to ensuring that all human embryos outside the body, whatever the process used in their creation, are subject to regulation. Reference has been made to designer babies, and I also welcome the ban on the selection of the sex of offspring for non-medical reasons. However, I remain deeply concerned with other aspects of the Bill and therefore will support amendments, such as those to the clause that will remove the reference to the need for a father.

I remain deeply concerned at the notion of abortion as a form of contraception, although I accept the need for abortion to save a mother’s life where there is a medical complication. As we heard from the noble Lord, Lord Alton of Liverpool, on Monday, abortion has, sadly, been used for many other reasons.

As a Muslim, I believe deeply that all life is sacred and I am disturbed to be a member of a society that, since 1967, has condoned the destruction of more than 6 million innocent lives in the womb, as we have heard from many of your Lordships. In addition, we have condoned the manufacture and destruction of around 2 million human embryos; we have permitted the cloning of human embryos for experimentation; and now we have before us a Bill that allows the creation and, following experimentation, the destruction of animal/human hybrid embryos. As one eminent scientist opposed to these proposals told the Joint Committee that considered the draft Bill, this is simply satisfying scientific curiosity. It is deeply immoral to create a life simply in order to plunder it and dispose of it when it has outlived its usefulness. It is even immoral to mix the building blocks of human life with the genetic material of animals. As my Labour colleague in another place, Geraldine Smith, MP for Morecambe and Lunesdale and a member of the Joint Committee, rightly said, just because something is scientifically possible, it does not make it right; it does not mean that we should do it. Life is not a fashion accessory to be treated in this cavalier manner.

As we have heard time after time, the Bill also robs a child of a father by denying him knowledge of his lineage. Muslims have a profound belief not just in the sanctity of human life from conception onwards but in the importance of knowing your antecedents: the root from which you spring. No Parliament has the right, nor does any law, to deny a child knowledge of his origins.

Your Lordships may sometimes wonder why British Muslims feel uncomfortable with aspects of modern Britain; perhaps this issue illustrates one of those reasons. However, I do not believe that we are alone in finding these proposals utterly repellent and repugnant. We will join others in ensuring that nationwide attention is drawn to the proposals in the Bill, which many of us in all parts of the House will oppose.

There have also been calls to use the Bill to further liberalise the abortion laws. MPs such as Evan Harris, the Member for Oxford West and Abingdon, have called for the law to be extended to Northern Ireland, as the noble Baroness, Lady Paisley of St George’s, pointed out, and for the requirement to be removed for two doctors in the abortion authorisation. Doctors—including Muslim and Christian doctors—who exercise the conscience clause and refuse to undertake abortions have been criticised. I will fight any attempt made to repeal the conscience clause. No medic should be forced to take innocent life. If the law on abortion is to be reassessed, we should not rush into hasty and ill considered proposals.

If there is to be change, I would call on noble Lords to reflect on the consequences of the Abortion Act and I would urge them to support amendments that would limit more shedding of innocent blood. The effect of the loss of 6 million largely healthy young citizens from our society is impossible to calculate, but it has seriously diminished our capability to look after ourselves. Without immigration it is hard to see how society could support an increasingly ageing population. Among those lost will have been the average incidence of geniuses and prospective leaders; we may well have killed the very people who could have led our society forward.

The effect of abortions on women who have had them has been serious, with more depression, suicide and future obstetric problems, including premature births and miscarriages. There are serious risks of haemorrhages, infections and pain from medical abortions carried out in the home. How are women to dispose of the products of pregnancy at home? Is the sewer to be the main means of disposal? Does anyone in this House think that that is a suitable outcome?

The evidence of association between early abortion and breast cancer is a growing concern, even if the medical establishment is not yet sure of that. There is enough evidence for it to be raised as a possibility, but how often does that happen? If the only counselling given is that of the abortion clinics, it is probably never raised. It is interesting that abortion clinics never publish the numbers of women who decline abortion after their so-called counselling. Real non-directional counsellors would not be so shy of publishing their data. There is much anecdotal evidence that women, once they attend an abortion clinic, find themselves on a virtual conveyor belt. How often do they hear of the alternatives to abortion once across the threshold of an abortion clinic?

Post-abortion syndrome, which is mainly a form of post-traumatic stress with particular overtones of regret and even guilt, is blighting the lives of many. Men, too, regret the loss of fatherhood, while the absence of the knowledge and support of would-be grandparents can be crucial at a time of crisis. That is the trouble: a crisis pregnancy may confront a woman without support with the despairing conclusion that she does not have any other choice.

It is interesting that in the Irish Republic, where state-supported, independent counselling is available, the number of women going abroad for abortions has dropped for five years in succession. Independent and balanced counselling should be looked at in this country, too, but it will not come from the abortion industry. There is some safeguard in women having recourse to two doctors, one of whom is likely to know them and be committed to their ongoing care. Parliament was wise to put this requirement in place and we should not be persuaded that hastening to streamline abortions is in a woman’s interests.

Finally, these profoundly important issues deserve widespread consideration. The Government need to understand that many in my community are watching how this law proceeds with intense interest and growing concern.

My Lords, I declare an interest in that I find this one of the most fascinating and interesting subjects that I have ever come across in your Lordships’ House. It confuses me in many ways because I am, or was, a member of the Joint Committee; I was actually the longest-serving member and the one who knew the least. I was drip-fed by my noble and learned friend Lord Mackay of Clashfern, who introduced me to the primitive streak; I was spoon-fed by the right reverend Prelate the Bishop of St Albans, as we both had an understanding of Isaiah Berlin; and I was excited by the noble Baroness, Lady Hollis of Heigham, who had that female enthusiasm for various activities. I learnt so much. My problem, however, was that I thought that this Bill was about saving life and curing diseases. I did not realise that it was such a social Bill or that it had the potential to create so many problems.

I declare another interest: in my own family, historically, we have had problems of fertility. Yet when it was suggested that there should be single-sex selection, I pointed out that the hereditary peerage would have welcomed that hundreds of years ago, as would many in the Middle East who would prefer to have only male children. My real sensitivity, however, came when I found that I had a problem. I saw a consultant, who said, “You have a knee problem; obviously, you are not academic”. I thought that that was a strange thing to say. Was I so stupid? He said, “No, academics are so happy with their own thoughts that they never take any exercise”. I went to see a surgeon in a well known hospital here and found myself sitting down waiting. There were a lot of women there and I was not sure where I was. Then I suddenly saw women coming in, one after the other, and then going out. Your Lordships will know what body language can be; you would see someone coming in nervously and going out with a spring in their step or looking more miserable. I was in the waiting room of a fertility clinic. I realised the importance of the child to a man and a woman and a family.

In the committee, I found two things missing. First, nobody could tell me what diseases or maladies this research would assist in. When I asked the Chief Medical Officer how many, he said, “We don’t actually know, but maybe about 10 million”. I asked whether anyone knew where it was going, but no one was quite sure. I also thought that we were short of socio-economic data. I worked in that field some time ago and my great guru Mark Abrams, who was then my chairman and president of the Social Science Research Council, said to me, “Always think in social trends, but don’t forget that trends can be reversed”.

Your Lordships will be aware of the publication Social Trends. I thought that I would look up some social data. As your Lordships know, we have 60 million people in this country, of whom 90 per cent are white and 10 per cent are black. Does that mean anything? Is that ethnic? No, but it means that there are different religions, and minority religions. We have 30.9 million women and 29.5 million men. We have an average age of 39, which is up from 34 over the last generation. These are just the basic statistics of a population. But 50 per cent are married; of another 10 per cent, my grandmother would have said that they “live in sin”, although it is now called co-habiting. You then look at the other trends and find that the fertility rate among women in the last generation has gone up from about 1.63 to 1.79: the average number of children has increased.

Perhaps more significant still is that the average age for giving birth is 27.3, up from about 23. In general, we have an older and older population, with people getting married later—women at an average age of 29, men at 31. This may not necessarily be relevant, but there is a change in the structure of our society in that 7 million people now live alone. A generation ago, 4 per cent were from single-parent families, and now the figure is 25 per cent.

These social changes have had an impact on me and I have wondered what has gone wrong. Are we talking about parents or families? So I thought that I would try something on your Lordships: I suggest that we stop talking about mothers and fathers, because, quite frankly, we need the mother just as much as we need the father and there is no mention of the need for the mother. We must start to look at the family unit.

As I pointed out, 50 per cent of the population are married. If they have children, they will do so by natural or assisted conception, or by adoption. The 10 per cent who are cohabiting can also have children. If you are married and have children, are they legitimate? Yes. If you are cohabiting and have children, are they illegitimate? I am not sure. I asked my noble and learned friend Lord Mackay of Clashfern this morning and he said that legitimacy does not come into it these days. People can have children naturally, if you call it that, or by assisted conception, or they can adopt. Then I came to a new classification of what I will call families: a family of two women cohabiting. They cannot have children by natural conception, but they can have children in assisted manners and they can adopt. I thought that maybe we should try to introduce into the law that we should assist people who are registered in some form or other. The registrations of civil marriages that have taken place since the Act was introduced show that there were 18,000 in the first year and an average of 800 a month since then. By my calculation, that comes to 30,000, which is a small minority compared with the 50 per cent of people who are married, so they are a minority group.

Here I shall make a political point, but not a party-political one. Over the past 10 years, I have noticed that in the political world people are paying more and more attention to the views of minorities, because, I suggest, they think that the minority vote might count. That may not be true, but the wishes and feelings of the majority are often ignored, including the moral feelings. When we look at that, my suggestion is that we have a few technical problems. The average age at which a male civil partnership is entered into is 47 and the average age for female civil partnership is 44. Therefore, the people involved are above the age at which it is normal to be given IVF treatment on the NHS.

Those are minor issues, but I come now to some of the other sides of the action. What diseases and afflictions can be cured? As your Lordships know, we have roughly 274,000 people in this country with heart problems, 275,000 with cancer, 700,000 with Alzheimer’s and 120,000 with Parkinson’s. If you go further down the scale, there are some 2 million people with diabetes and other things. Which of these diseases or afflictions can be cured? No one has been able to explain it to me.

I thought that I should look at the other side. I have become so interested in this that I have become actively involved in adult stem cells. I really did not want to have a knee operation and I wanted to be able to regrow cartilage. I learnt that stem cells can be taken from embryos but that they tend to be allergenic; the body may react and the immune system may reject them. In the middle you have the foetal stem cells from the cord. I declare an interest, as my grandchildren’s cords have been deep-frozen in case they may be useful in future. Then you have adult stem cells. I am told that they may be one of the best routes by which to go forward into the future because, although they are older and not so manipulative, they provide considerable benefits. In the cases that I am involved in, adult stem cells are used; they are extracted from the hip to regenerate heart muscle and to solve problems of diabetic foot, at a stage when possibly people can no longer have a heart transplant.

All of this I find fascinating, but it is a moral and ethical issue above all else. I am still not sure when life begins. I like the idea of the primitive streak roaming over something and of the single cell emerging that can then differentiate—from that comes forth life. I believe that the ethics and the morality are the most important part of the Bill and I agree with everybody who subscribes to the belief that that should be supervised by an appropriate body. I believe that that body should be Parliament.

My Lords, when I used to be involved extensively in agriculture, people used to ask me, “What do you think about GM crops?”. My answer was always the same: it depends who is using them and what they are using them for. I suggest that that is not a bad criterion for judging scientific discovery. All scientific discoveries are rather like the genie that you let out of the bottle: you know that you cannot put it back in again, and you know that the reason that you will be given for letting it out is that it will do all sorts of wonderful things. We have not really thought about the downside.

I will not say more on that subject, except that I very much support the proposal made by the noble Baroness, Lady Jay, and the noble Lord, Lord Turnberg, that we need a national standing committee on bioethics to see whether we cannot limit the damage that will ultimately be done by charlatans using the discoveries that we will have authorised for good.

I know that the last thing that your Lordships want to hear any more about is fathers, but I fear that fathers and families is the bit that I have to speak about. I will try to keep it short.

I find it very depressing that this Government, who have introduced so many excellent initiatives to help children, propose to use words in the Bill that will undermine the role of fathers and families. Honestly, I do not believe that they mean to do so, but I fear that the words they have chosen will have that effect. As drafted, the Bill has major social implications, as I see it. I suspect that the Minister will say that the removal of the word “father”—I take as the central example Clause 14(2)(b), which has been spoken about by other noble Lords—makes no difference because the welfare of the child requirement will remain in place. I believe that he is wrong.

For most people, and especially for some fathers, the removal of that word will imply that the Government do not really think that the role played by fathers is important. It will also seriously downgrade the standing of the traditional family in the long term. It will downgrade the role of fathers to leave some children in limbo, not knowing their biological father—a point that has been made by many noble Lords. It will promote the idea that the mother’s wishes are more important than the well-being of the child and it will encourage single parenthood.

Today, the state and local authority services are wildly overstretched and sometimes they have shown themselves not to be absolutely ideal surrogate parents. Our society surely needs more, not less, parental responsibility, especially more responsible fathers. It is not the moment to discourage fathers and suggest that they are not important.

During our debate on Monday, the noble Baroness, Lady Williams of Crosby, who is not in her place, drew attention to our society’s growing need to look to fathers to be more responsible for their child or children. If we want fathers to be responsible, the last thing that we should do is to carelessly send them a message that they do not matter.

Why, then, are fathers important? Parenting is one of the most important jobs in the world. It is also one of the toughest, especially if you are poor. It is very expensive; it is hugely time-consuming; and it is often emotionally draining. It is scarcely surprising that the parenting job is easier and the chances of success greater if there are two partners working together, sharing the physical, financial and emotional burdens. To say that is in no way to criticise those mothers who have to bear the burden alone, and often do so with courage and success.

An accumulation of evidence shows the importance of a father in bringing up children. I suggest that the father has four roles. The first is giving physical, financial and emotional support to the mother. The second is as a secondary, but still very important, attachment figure for the child, adding to its self-esteem and sense of security. The third is as a role model, showing a boy what it means to be a man, building his self-esteem, encouraging him to work at school and developing by example his social skills. The fourth is as a role model to both boys and girls, showing them how a man and a woman can live and work together in a loving relationship.

It is possible, but not proven, that a second mother can perform the first two of the roles that were traditionally those of the father, but she certainly cannot substitute for the father as a male role model. When most boys reach the age of seven or eight, they instinctively start to ask themselves what it means to be a man. They seek out heroes to be their role models. If there is a father, the child will instinctively love and admire him and will turn to him. If there is not, however, he will look elsewhere. With so few male teachers in primary schools today, he may have little alternative but to find a role model in his computer game or, as he grows up, in a gang leader on the street.

I recognise—I am sure someone will say this—that there are some bad fathers and some families with poor relationship skills. To be fair, some of us have been saying this for a number of years and have been pressing the Government to do more to encourage and empower young men and women to improve their relationship skills and to teach relationship skills as part of the schools curriculum. Of course there are also wonderful mothers who manage to bring up their child successfully on their own, but this does not alter the fact that the statistics show that, across the board, children who grow up with a dad, or with a committed surrogate dad such as a grandfather, are likely to have better chances in life, both at school and later.

My main concern is not so much with that small minority of children who will grow up in a lesbian household and who will have two women to look after them, but with the fact that Clause 14(2)(b) and other parts of the Bill will send a message to fathers that it does not matter if they abandon their child, and it will send a message to all prospective mothers that it does not matter whether their child has a dad. In this context there is a serious lack of government clarity about the responsibilities of parenthood. This is not defined clearly in any way in the law of England, although it is defined in the law of Scotland. I shall return to this matter in Committee.

Finally, the failure of boys to achieve in schools and in later life is tremendously linked—more linked than we realise—to the lack of a father at home, a point that has been made by other noble Lords. This Government have, to their great credit, committed themselves to the principle that every child matters and to the principle that primacy must be given to the best interests of the child. In this context, they are making a very great mistake in giving the impression in the Bill that fathers do not matter. I shall be interested to hear how the Minister will square the primacy of the best interests of the child with the Government’s decision to sideline fathers in the Bill.

My Lords, a while ago my noble friend Lord Ahmed said that he was the least qualified in the Chamber to speak on this subject. I should tell him that he runs a close second to me because I am probably the least qualified.

Since the debate on Monday, I have been troubled by a number of issues raised by noble Lords. As the Bill progresses through its various stages, I have no doubt that some of my concerns will be discussed in greater detail, and I sincerely hope that my fears will be somewhat reduced. One issue raised in Monday’s contributions really frightens me: the plea made by my noble friend Lord Winston when he asked the Government to ensure,

“that the regulation is done with a light touch”.—[Official Report, 19/11/07; col. 710.]

It could be said that someone like me who has no scientific qualifications should not question what my noble friend said, but I want the most stringent regulation in the areas covered by the Bill. Many lay people like me would find it hard to accept that any easing of the regulations would be in the best interests of the researchers in this field. I suggest that they, like me, want just the opposite of a light touch.

As I said, many parts of the Bill cause me concern, but I have great concern about the fact that Members in another place have already made clear their intention to seek amendments to liberalise further the laws on abortion—laws that have led to almost 7 million abortions. It would be a pity if other controversial issues in the Bill—such as the creation of animal, human or hybrid embryos, or the deliberate removal of a father from the upbringing of a child—were overshadowed by issues never considered by the Joint Committee that scrutinised the draft Bill.

It is worrying to hear pronouncements that the Bill will be used to remove the two-doctors requirement on forms authorising abortion, to force nurses and midwives to undertake abortions, to extend the Act to Northern Ireland and to abolish the conscience clause. I was pleased that the noble Baroness, Lady Emerton, in her excellent speech on Monday, informed the House of the problems facing midwives and nurses. It is vital that the House has proper time to reflect on these huge questions before we are stampeded into voting. It would be better if these issues were sent to a Select Committee of your Lordships’ House where they could be properly considered.

In particular, I believe that we need to give fresh, objective and detailed consideration to the current upper time limit for abortions. As the House will know, the limit under the Abortion Act 1967 was initially 28 weeks but was lowered to 24 weeks as part of the changes introduced under the Human Fertilisation and Embryology Act 1990. This change reflected changes in our understanding of intrauterine life and improvements in neonatal care which meant that more premature babies were surviving. Under the Infant Life (Preservation) Act, already mentioned today, it remains a crime to abort a baby who is,

“capable of being born alive”.

There has been much debate about whether the upper limit should be lowered further, and public and parliamentary opinion on the matter is now very clear. In written evidence submitted to the House of Commons Science and Technology Committee, it was noted that 63 per cent of MPs, nearly two-thirds of the public and more than three-quarters of women support a reduction in the 24-week upper age limit. Seventy six per cent of the public think that aborting a baby at six months’ gestation is cruel. The recent poll by Marie Stopes International, as reported in the Telegraph on 20 October, found that two-thirds of GPs want a reduction from 24 weeks.

Those results are striking because the BMA remains opposed to a reduction. The BMA’s opposition suggests to me that it is out of touch with grassroots doctors’ opinion. The question has also been raised whether the BMA has been influenced by members of its ethics committee who have quite extreme views on the issue. Dr Evan Harris—the Liberal Democrat MP for Oxford, West and Abingdon—played a major role, through his local BMA division and as a member of the BMA ethics committee which drafted the guidance on upper limits, in achieving this change of policy. I note that he was also on the Science and Technology Committee which recommended this policy. According to a national newspaper, he tabled 126 amendments to the chairman’s original draft report. He is also secretary of the All Party Parliamentary Pro-Choice and Sexual Health Group and I believe that his partner works as a press officer for the BPAS, one of our country’s largest abortion providers. Might it be that we are being swayed by a small number of activists in this debate?

As a former union official I know how it is possible for a small group of activists to influence policies, not just in trade unions but within political parties. Abortion Rights—the national coalition pushing for liberalisation of UK abortion law in order to bring in abortion on demand, “nurse abortion” and to make abortion available in doctors’ surgeries and at home—claims the support of the TUC and a number of national trade unions. Given where public opinion is moving, I find it very hard to believe that grassroots members of trade unions are really this extreme in their views. I suspect that most of them are not even aware of what their leaders are claiming in their name or where their union contributions are going. I suspect that we are seeing a very effective political campaign by a few people with extreme views who are skilful politicians and yet badly out of touch with public opinion.

It is not hard to understand why public opinion has changed. I am sure that we have all seen Professor Stuart Campbell’s amazing 4-D ultrasound images showing, in amazing detail, babies walking in the womb from 12 weeks’ gestation. In written evidence, stories of babies born alive after failed abortions were also presented to the Science and Technology Committee.

A paper published in May 2007 in the BJOG, an international journal of obstetrics and gynaecology, presented data on termination of pregnancy for foetal anomaly from a large population-based cohort of births that occurred in a 10-year period from 1995 to 2004 in the West Midlands. The authors found that of a total of 3,189 cases of termination for foetal anomaly, 102—3.2 per cent—of the babies were born alive. Those live births following abortion for foetal anomaly occurred in 18 of the 20 maternity units in the West Midlands. The proportion of births at different gestation periods were: 14.7 per cent at between 16 and 20 weeks; 65.7 per cent between 20 and 24 weeks and 19.6 per cent at or after 24 weeks. These accounts have shocked the public, and quite rightly so.

Added to this growing perception of the humanity of the foetus is evidence showing that foetuses feel pain; and in the very best neonatal units, increasing numbers of babies are surviving below 24 weeks. We have all heard the amazing story of Millie McDonagh, who weighed just 20 ounces and measured 11 inches from head to toe when she was born in Manchester, in October, after a 22-week pregnancy. She was a week older than the world’s most premature baby, Amillia Taylor, who was born in the United States on 24 October.

The EPICure study, which is used by institutions such as the RCOG and the BMA to justify not lowering the abortion limit, was criticised in the Science and Technology Committee minority report for averaging out survival rates across a variety of UK centres. My point is this: in the best centres, such as in Minneapolis, Minnesota, we are told that 66 per cent of babies born at 23 weeks will survive. It seems bizarre that on the one hand we are condoning abortion for some babies while, on the other hand, making every effort to give the best neonatal care to other babies at exactly the same age. Something is very wrong.

We know that from 16 weeks babies will recoil from a noxious stimulus in the womb and that premature babies born earlier than 24 weeks will, if stabbed in the heel with a needle, pull their foot away and cry. It seems reasonable to assume that they are feeling pain. Experts marshalled by the RCOG and the BMA tell us that these babies are not able to feel pain and that what we are observing is just a complex reflex. They say that such babies do not have the proper neurological connections between the thalamus and the cortex to sense pain. But other experts such as Professor KJ Anand from the University of Arkansas, who spoke on the Channel 4 “Dispatches” programme and has been in correspondence with the Times newspaper, tell us that the RCOG’s understanding is based on an outdated understanding of physiology and that foetuses do have the apparatus to feel pain down to 18 weeks.

Who are we to believe? I am reminded of the great philosopher, Bertrand Russell, who said:

“A fisherman once told me that fish have neither sense nor sensation, but how he knew this he could not tell me”.

I do not know whether fish feel pain or not, but Russell’s point was that we should be very wary of drawing our conclusions solely from those who have a vested interest in the fishing industry. The 6.7 million abortions carried out in this country since 1967 have been performed by doctors; most of them are members of the Royal College of Obstetricians and Gynaecologists and many of them benefit financially from the process. Might this be a subtle way of influencing their interpretation of the data? Would we not be wary about seeking opinions about the link between smoking and lung cancer only from employees in the tobacco industry?

I shall cut out the last part of my speech because my time is nearly up. But I ask the Minister to specifically assure the House that any votes on the Bill’s contents or possible amendments to it will be free from any government whipping.

My Lords, I start by taking this opportunity to congratulate Sir Martin Evans, currently of Cardiff University, who is a joint recipient of the Nobel prize for medicine and physiology for 2007. It was he who first discovered that chromosomally normal cell cultures could be established from early mouse embryos, now commonly referred to as embryonic stem cells. He was subsequently responsible for developing what are called knockout mouse models, which started the new era in genetics and the immensely powerful technology of gene targeting. It is this research and methodology that now drives research workers all over the world, using stem cell research, to look for therapies for diseases.

I strongly support the Bill. I particularly welcome the proposals related to interspecies embryos and RATE. I shall comment mainly on the research aspects of the Bill and only briefly on other issues. However, before I do so, I declare an interest. I am a fellow of several of the medical royal colleges; I am a Fellow of the Academy of Medical Sciences; vice-president of the Royal Society of Edinburgh; chairman of the MRC Stem Cell Oversight Committee; chairman of the UK National Stem Cell Network; and I have been an obstetrician for more than 40 years.

Comments have been made that interspecies embryo and embryo research itself should not now be allowed because of recent developments and suggestions that we do not need it, particularly in the report related to the induced pluripotentiality of adult cells which was reported in today’s newspapers and in science journals yesterday. This is far from the truth.

Let me briefly say why scientists need the ability to research using interspecies embryos. For any cell-based therapy it is always better to have an autologous source of cells—that is, cells from the patients themselves—because this avoids the problem of graft rejection. A perfect solution would be the availability of adult stem cells—every stem cell research worker in the world is chasing this holy grail right now—but these cells are not available. Growing adult stem cells is not easy. There are many cell types that adult stem cells are unlikely to be able to give rise to. Embryonic stem cells, on the other hand, have the potential to give rise to any stem cell.

There are currently only two ways of obtaining patient-specific embryonic stem cells. One is by somatic cell nuclear transfer and cytoplasmic hybrid embryos—the so-called interspecies embryos. The reason why scientists want to carry out somatic cell nuclear transfer experiments—the so-called SCNT experiments—using animal oocytes is a pragmatic one: there is not a ready supply of human oocytes and large numbers of oocytes will be required. For example, an article published in Nature, a respectable science journal, and in the newspapers last week, reported the use of rhesus monkeys and SCNT technologies to produce ES cells. This procedure used 300 eggs to obtain 30 blastocysts, and from these only two embryonic stem cell lines were obtained. So the number of human eggs required using this technology will be enormous.

Readily available animal eggs provide suitable recipients for human somatic cell nucleus. Embryonic stem cell-like cells have been obtained from rabbit- enriched eggs and nucleated eggs and human skin cells. Such disease-based embryonic stem cell-like cells are ideal for studying human diseases and for the testing of small molecule drugs, which is urgently required.

There is a powerful argument for allowing interspecies embryos for research, under strict licence from HFEA, when no other means are available. Scientists who work in this kind of stem cell research are happy with that. They would much rather work in ethical surroundings and an ethically tested, regulated environment than in an open environment.

The second way of obtaining pluripotent patient- specific ES cells is by the direct reprogramming of adult somatic cells into ES-like cells. Today’s Times reports the findings of two research teams, one from Japan and one from Wisconsin. This procedure was carried out by a group of scientists in Japan, led by Yamanaka, and others in the USA have achieved this using mouse skin fibroblasts and adding four factors, four genes. It is a remarkable achievement. That it has come so quickly is quite astonishing. That it has required only four genes, of the many genes that might have been tested, is also quite remarkable.

One of these genes is an oncogene—a gene that causes cancer—known in technological terms as c-Myc. It induces pluripotency in the skin fibroblast. We now know that it is repeated in humans, because today’s report confirms it. As I said, two papers were published yesterday, one again from Japan and one from Wisconsin, by the people who identified human embryonic stem cells a decade ago. Your Lordships are now scientifically up to date.

I wish it was all that simple. The cells that Yamanaka had derived from a rabbit’s skin were rather like embryonic stem cells. He injected them into a four-stage, four-cell mouse blastocyst by taking out one of the cells from the four-cell mouse blastocyst and injecting his new stem cells. They worked and differentiated just like the natural blastocyst cells, but the mouse that developed was full of cancer tumours. The reason may have been the powerful oncogene that was used as one of the factors to induce pluripotency into the skin cell.

We cannot conduct such chimeric experiments in humans. Details of research were published just yesterday where a skin fibroblast from a human was converted into a pluripotent, rather like ES cells. Such experiments would not be permissible. We need to understand how embryonic stem cells behave to be able then to understand how to manipulate cells that we have derived from human skin to behave like pluripotent embryonic stem cells. Embryonic stem cells are the gold standard against which other pluripotent cells derived from human skin will be tested. That is the holy grail that every scientist chases, and it is why we must not stop research at this stage on any aspect of any stem cell research—adult, embryonic, umbilical, cold-blood, on the cord itself or any other adult cells. We must not try to block other aspects of the Bill, including those which concern fertility treatment, because it would also block research. We must allow the Bill to pass.

My Lords, I was a member of the pre-legislative scrutiny committee that was fortunate enough to have had the brilliant insights of the noble Lord, Lord Patel, which the House, too, has been able to experience today. I very much welcome the Bill. It devolves regulation, subject to the 14-day rule and the no-implantation rule, under the HFEA, which affords that blend of careful scrutiny and scientific head space which is probably the nearest in this world that we will get to being able to see around corners.

I shall speak very briefly—that is why I originally put down my name in the gap on the speakers’ list—about an issue that has been widely referred to: whether the Bill should continue to carry a clause or a phrase referring to the need for a father. I hold what my sons would probably tell me are conservative views about the family. I say that because I regret not some of the views, which I very much respect, but some of the language used in this debate. To suggest, as did the most reverend Primate the Archbishop of York, that we need to include such a phrase in the Bill to placate Fathers 4 Justice is profoundly unwise. Families Need Fathers I respect and Fathers Direct is an admirable organisation, but Fathers 4 Justice? I think not.

Should reference to the need for a father be in the Bill? Let me be clear. Do I think that the welfare of a child is usually best ensured within a loving, stable family of a mother and father? Yes, I do. Do I also think that a single parent or a gay or lesbian couple can be a loving, stable family, as my noble friend Lord McIntosh said? Yes, I do. Do I think that fathers should offer sustained emotional and financial support to their children? Yes, I do. Do I value their contribution, especially in providing a role model for sons, as the noble Lord, Lord Northbourne, eloquently described it? Yes, I do. Do I think that many children will want to know who their father is? Yes, I do. Do I therefore believe that the need for a father should be a consideration for the clinician and the phrase reinstated in this Bill? No, I do not.

I emphasise that to say that the phrase should not be in the Bill is in no way to underplay or undermine the role of fathers. The matter simply belongs to a different debate—and let me say why. Either the need for a father contained in a phrase or clause in the Bill carries meaning or it does not. Currently it is in the Act and I understand that it has become meaningless, vacuous, empty rhetoric. Single women receive IVF. We have been told this by the Minister and by clinicians, and the noble Baroness, Lady Warnock, has emphasised the point. It is not usually germane to the decision to offer IVF treatment. Instead the assessment is made on whether the woman is in sound physical and emotional health—or, in more conventional parlance, not “flaky”—and has family support.

If we reinsert the phrase, we are doing so because it should be meaningful; otherwise there is no point, and why bother? It would mean that clinicians would and should question the whereabouts of the putative father. If there is no such person, what then? Will they still permit treatment, in which case the question was intrusive but irrelevant, or refuse it, which means discriminating against and denying single women and lesbian partners the right to IVF? Even if they are young and fertile enough and may have unassisted births and even though, after the most intense and rigorous scrutiny, they may have adopted a child, they may not receive IVF.

Fathers belong in children’s lives—I firmly believe that. It is just the phrase that does not belong in the Bill. Either the wording is meaningless, as it is now, in which case it should not be there; or it is meaningful but the answer ignored, in which case it is irrelevant; or it is meaningful but got around and manipulated, and we end up with doctors deciding which families are desirable and which are undesirable, with some families and some children being judged second-class but perhaps smuggled under the ropes. If it is meaningful and upheld, it is utterly discriminatory.

What do we want? Do we want a question in the Bill which is meaningless but not asked, a question that is asked but the answer—whatever it may be—ignored, so it is irrelevant, or a question that is asked and is meaningful, is acted on and in consequence denies treatment in a discriminatory way? I suggest to the House that if we go down that path we will end up in an unnecessary legislative mess. However much we personally may prefer conventional families for children, these words do not belong in the Bill, and I hope that the House will not seek to insert them.

My Lords, with the leave of the House, I would like to speak briefly in the gap. I scrubbed my name from the speaking list on Monday because I was not sure that I could be here for the winding-up speeches. I will not say all that I had it in mind to say there because many others have said it very well. I want to suggest one thing: there may be more room for compromise than has yet been apparent in the contentious question of the need for a father.

We are all clear that this legislation does not in any way abolish the biological reality of fathers. Cloning remains and in my view should remain illegal. The question arises about the social need for a father. Many noble Lords have spoken eloquently about the importance of fathers in the lives of their children. I wholeheartedly agree. If the views of the noble Baroness, Lady Hollis, about the family are conservative, mine must be ultra-conservative, because I think that children need about five parents. That is based on the experience of being a parent on my own and of living most of my life in some way or another in the extended family.

Fathers are needed. Biological fathers are not touched by this legislation but we must face the reality that the social father is very often not the biological father. The social father may indeed be a stepfather, close friend of the family or an uncle. The role of the father is indisputably essential and it must be fulfilled for every child and, I would contend, while especially so for young boys, also for young girls.

We must protect that, but in doing so we may be unwise to leave the need for a father in the legislation. It is a highly ambiguous phrase which has not proved practical in the way in which IVF clinics operate. I also believe that we may have reason to remove the phrase “agreed fatherhood”. Being a father is a deeply understood notion in our and every culture. Fatherhood is not something that is up for legislative redefinition. We would do much better to put the emphasis on the notion of the agreed parent and the second agreed parent and, if I had my way, even the third agreed parent. We need not challenge in a way that many of our fellow citizens find offensive the importance of fathers in fixing with legal certainty the parental rights of those who actually bring children up.

My Lords, I also wish to convey to the family of the noble Lord, Lord Brennan, our best wishes for a speedy recovery. I would also like to say to the noble Lord, Lord Darzi, that when his fitness to practice review occurs, my noble friend Lady Tonge would like to be there to give a testimonial.

My noble friends Lord Carlile and Lady Williams of Crosby cannot be here today for different reasons although at different stages they will take part in the Bill. It is always a difficult job to be a Front-Bencher summing up on a debate of this kind, but I am glad to do so for two reasons. It allows me to set forward the position of the Liberal Democrats formally and to make some points that have not yet been made in this debate.

In the Liberal Democrats, we have a deliberative and inclusive policy-making process and it is open to all members. It is our party's policy to support the use of embryos for research designed to improve reproductive medicine and to find cures for disease. However, in recognition of conflicting and very deeply held religious and moral views, we, like the Conservatives, believe that this should be open to a free vote. It is also our party's policy that individual women and lesbian and gay couples should not face discrimination when they seek fertility treatment. I will explain why later.

My school bus used to go past an old Victorian building every day. Nobody paid it very much attention until 25 July 1978 when Louise Brown was born there. I remember thinking that the world had changed radically on that day—there were new and interesting complexities and an overwhelming sense of joy and hope. Not until five years later did the groundbreaking report of the noble Baroness, Lady Warnock, set the ethical and moral principles which took on board the enormity of those changes. Those five main principles continue to inform democratic debate and legislation on assisted reproductive medicine. The principle of the developing moral status of the embryo has not been accepted universally but I believe that it forms the cornerstone of good governance, appropriate legislation and ethical practice in this most difficult of areas.

This House with its scientific, ethical and religious expertise of the highest order has an unrivalled opportunity to go behind some of the simplistic and pejorative headlines to look at the legal and social evidence—I stress the word “evidence”—which should enable us to set the ethical boundaries for these matters. Since 1984, legislation in this area has followed in the wake of scientific discovery and on each occasion it has been the responsibility of politicians to set the boundaries within which research is deemed necessary and acceptable. As we do so we should recognise the increasing rapidity with which scientific knowledge is being developed.

I listened to the many noble Lords who invited us to consider a standing national committee on bioethics. I would be happy to do that. However, it is important that it should not duplicate the work of local research ethics committees nor the Nuffield Council on Bioethics, and that it should work closely with the Science and Technology Committee of this House to look towards developing technologies and to consider their ethical implications.

If only one message goes out clearly from our debate, I hope that it will be that the creation of interspecies embryos is solely for the purpose of research and that such embryos cannot be used for reproduction and will not exist beyond 14 days. I hope that the Government will agree with the suggestion made by my noble friend Lady Williams the other day that there is a need for them to press for a similar ban around the world so that the high standards in this country to which many noble Lords alluded are universal.

In the time available to me I shall not attempt to replicate the speeches of the noble Lords, Lord Walton and Lord Patel. I simply thank them for the way in which they cast light and clarity on some extremely complex areas. However, the noble and learned Lord, Lord Mackay, voiced the concern of many of us that the Bill should have absolute clarity with regard to terminology. Exactly what does the term “permitted embryo” mean and how can it be used? The right reverend Prelate the Bishop of Newcastle was absolutely right to ask for clarification of the terms “cytoplasmic” and “true hybrid embryos”. We will support him in that.

Much has been said about the development of adult stem cells. As we have heard increasingly over the past few days, it is a very promising and hopeful line of research which holds out the possibility of developing immunologically compatible cells with the host. That is a truly exciting development. However, I do not think that any speaker in this debate has made it clear that the technology still involves harvesting human female eggs, a procedure that is not without its dangers.

I listened very carefully to the exposition of the noble Lord, Lord Walton, about the necessity for continuing cell line research for the foreseeable future if we are to find cures for dreadful diseases. But more than anything I noted the statement made by Professor Wilmut yesterday, and repeated on the “Today” programme, that, notwithstanding his decision, we are years away from finding research answers and cures. Therefore it is of the utmost importance that all lines of research continue. I invite the Minister to address another of the questions posed by my noble friend Lady Williams about research funding. Will he confirm that there will be no bias in the research funding for the different types of research?

I turn to the topic of parenthood as it is addressed in the Bill. The Joint Committee summarised the approach taken in the Bill as,

“moving towards the concept of parenthood as a legal responsibility rather than a biological relationship”.

I was tempted to say that this is a reflection of modern life, but perhaps it is more a reflection of family life, which is, and always has been, complex and messy. I believe that Clause 28 of the 1990 Act talks about how the husband of a woman who receives fertility treatment shall be treated as the father of the resulting child, not the donor of the sperm with which the child was created. To use the phrase used by some noble Lords during the debate, that is a lie. It is not true. But we saw and understood in 1990 the concept of social parenthood; it was expressed in that way too.

Since the report of the noble Baroness, Lady Warnock, not only science and scientific knowledge but families have changed. It was the considered view of Parliament and this House that there should be legal recognition of civil partnerships. I say to those noble Lords who have said throughout the debate that they do not wish to be discriminatory in any way that some of the statements that have been made about fatherhood and parenthood can only be that.

When heterosexual people agonise long and hard and decide that adoption is not the right course for them or for the children, we support them through the physical and emotional trauma of fertility treatment and we rejoice with them when it is successful. But when single or gay people make that same difficult considered decision, we are suddenly surrounded by phrases like “children are accessories” and “nobody has the right to a child”. Of course nobody has the right to a child, but nothing in the Bill suggests that they do. All that is suggested is that people are given the same consideration as potential parents.

The noble Baroness, Lady Warnock, said the other day that legislators have to be utilitarian in the broadest sense of the word. She said:

“They have to consider the consequences of any legislation they propose and carry through and, in considering the consequences, they have to weigh up the harms that may be done to society as a whole against the benefits to society as a whole”.—[Official Report, 19/11/07; col. 721.]

We invite noble Lords to think about the consequences of removing the words set out. Under the 1990 Act, the HFEA is required to provide guidance. The current guidance states:

“Where the child will have no legal father the treatment centre is expected to assess the prospective mother’s ability to meet the child’s/children’s needs and the ability of other persons within the family or social circle willing to share responsibility for those needs”.

On Monday the noble Lord, Lord Winston, spoke movingly about the powerful emotion that leads people to want to have children, and the lengths to which they will go in desperation if they cannot. He talked about the fact that if people are refused fertility treatment they will go abroad, make private arrangements, or put themselves into the hands of unscrupulous practitioners. I suggest that in seeking to make the changes that noble Lords have indicated, we risk eliminating those single women and gay people who have taken a responsible attitude towards parenthood, who are willing to subject themselves to the intrusive questioning that is quite rightly conducted when people present themselves for this sort of treatment and who are the responsible parents we should be encouraging.

I noted the comments of the noble Baroness, Lady O’Neill. Other countries such as New Zealand have taken a different approach and allow more than two people’s names to appear on birth certificates. I challenge those noble Lords who have said that they do not wish to be discriminatory but that they wish to see the recognition of fathers to consider that approach. Why? Because it is our role and duty, in this House of all places, to demonstrate to the outside world not only that we have mastered some of the most difficult scientific concepts—I was delighted when the noble Baroness, Lady Warnock, confessed that she would not like to sit a test on it either—but that we are capable of going beyond pejorative headlines to understand such ever-increasing social complexity. Then, we will be able, just as others have tried along the way, to recapture the feeling that was abroad in 1978 that the world had changed, that knowledge had increased and that with the powers that are now open to us we have the ability to make that a force for good, for change and for the benefit of adults and all children.

My Lords, we are almost at the end of a debate which, by any standards not least those of this House, has been one of remarkable quality. That fact is as it should be because, as almost every noble Lord has remarked, the matters before us in the Bill are of exceptional social and ethical importance. While the opinions expressed by noble Lords have been wide-ranging, we can all agree that as a House of Parliament we have been tasked with addressing issues of the utmost gravity, which the British public rightly expect us to examine forensically and with due sensitivity.

The phrase “from these Benches” is not one that I shall be using during the passage of the Bill. Any views that I may express will be my personal views and no more than that. The Conservative Party, deliberately, has taken no position on the matters in the Bill because, as with the 1990 Act, they are issues that should be left to individual parliamentarians to decide for themselves in a free vote. Therefore, but for the fact that it is the custom of the House to have an Opposition spokesman winding up, my presence at this Dispatch Box is not of significance.

This Bill has been long in gestation. It comes to us following a House of Commons Select Committee report in 2005, a public consultation, a government White Paper, a draft Bill, pre-legislative scrutiny of that Bill by a Joint Committee of both Houses and a government response to the Joint Committee’s report. By no stretch of the imagination therefore could this Bill be regarded as having been fashioned in haste. All that should give us reassurance but, at the same time, the history of the Bill is no reason for saying that what it contains is necessarily perfect. It is for Parliament as a whole to decide on its merits or failings. I have absolutely no doubt that we shall wish to debate every issue thoroughly and very often from first principles.

However, while the Bill may break important new ground, it is for all that an amending Bill. As such, it seeks to build on an inherited corpus of thought and public policy embodied in existing legislation. As has been said by many speakers, we owe much to the work done by the noble Baroness, Lady Warnock, and her committee in the 1980s, which gave us much of the ethical and practical underpinning for our present regulatory regime. Perhaps the defining feature of that underpinning was the balance which the Warnock committee sought to strike between utilitarian considerations about treatment and research and strongly held, often absolutist, beliefs about the sanctity of life and the status of the human embryo. The balance was struck by acknowledging on the one hand the legitimacy of the medical and scientific case, but on the other hand insisting on a system of strict regulation, tight codes of practice, an outright prohibition on certain sorts of activity and the adoption of a gradualist ethical position on the status of the developing human embryo, based on science.

From this emerged the concept of the special ethical status of the human embryo—a concept that means, put at its simplest, that anything done in a laboratory with or to a human embryo may be done only for compelling and benign reasons, as defined in law, never frivolously, lightly or wantonly. This approach was adopted by Parliament in the 1990 Act and sought to reconcile as far as was possible two diametrically opposed camps. Full-scale consensus between the two camps was never going to be achievable. That is perhaps the first key point to make in the context of this debate. For Parliament there is no unequivocally right answer to the questions we are addressing, nor can we reasonably expect to do other than debate those questions within the broad framework of principles laid down by the noble Baroness, Lady Warnock, and the 1990 Act. It is entirely possible that we will end up drawing lines in the sand that are substantively different from the lines currently drawn in the Bill; but those individuals who wish to see the entire structure of law in this area overturned—that is the manifest desire of many who have written to Members of this House in sometimes passionate terms—need to understand why we are not in that territory.

Having said all that, there is a troubling feature to the Bill, or rather, to Part 1 in particular. This point was made by the right reverend Prelate the Bishop of St Albans and by the noble Lord, Lord Brennan. The Bill lacks the equivalent of a Warnock report establishing the ethical values and evidence-based pointers that should guide Parliament and the regulator in these novel areas of decision-making. Perhaps the most obvious manifestation of this lacuna relates to the question of whether or not to legalise the creation of hybrid embryos. A number of witnesses to the Joint Committee regretted the fact that that question was made more difficult by the uncertain and vague ethical status of such hybrids. No group of informed men and women has yet sat down to form a considered view of these issues; and the Bill itself is silent about them. As the Joint Committee commented, the fact that the Government initially proposed one set of provisions for hybrid embryos and then another—each time expressing surprise that there could be any other viewpoint but theirs—only then to change their minds again, is a graphic illustration of how rudderless they were, and perhaps still are, on the issue. Perhaps the Minister thinks that that does not matter, provided that Parliament places a clear and unambiguous set of provisions in the Bill. Even if that is his position, I still believe that we owe it to the regulator to articulate a set of fundamental guiding principles that are relevant to the exercise of his discretion in making licensing decisions. That is perhaps a task which we can begin to tackle in Committee.

The provisions relating to hybrid embryos are perhaps the most controversial from an ethical perspective. Many people regard the very idea with revulsion and many have expressed outright hostility on religious grounds. I am sure that noble Lords have been right to say that those views are ones which we have a duty to respect. On the other hand, the reasons that researchers wish to create cytoplasmic hybrid embryos have been well rehearsed in this debate. They are essentially reasons of expediency and pragmatism in the cause of pursuing potentially beneficial science. Until now, the creation of interspecies embryos has been prohibited by law, with the sole exception of the hamster test to assess the performance of human sperm. The Joint Committee recommended that the matter be put to a free vote of both Houses, and I believe that that is what we should do.

We will debate these matters in Committee but, as we do so, we need to be careful about clarity of thought and language. It is surely not enough to say, as some do, that the mixing of human and animal genetic material is inherently degrading to humanity. What exactly do people mean by that? If researchers are to be denied by Parliament the freedom to conduct certain kinds of research, then parliamentarians, in turn, have a duty to define precisely the alleged harms to society that would ensue from such activity. The Animals (Scientific Procedures) Act 1986 already sanctions the mixing of human and animal genetic material. It is far from self-evident to me that the creation of a very few cells of a hybrid nature which would soon be destroyed would of itself degrade the human condition or engender disrespect for humanity among either scientists or society at large.

Nor can I agree with the noble Lord, Lord Alton, that the recent emergence of techniques which may one day make embryonic stem cell research unnecessary is reason enough now for Parliament to make embryonic stem cell research illegal. All the available scientific advice, including that from the MRC, is that, of the three possible routes to the applied use of stem cells, including the reprogramming of adult stem cells, there is no conclusive evidence which of them will ultimately prove the most effective. The noble Lords, Lord Patel and Lord Walton, re-emphasised that point. In my view, it would be highly premature for Parliament to close off one or more of those options. In any event, the regulator already has to be satisfied that the use of human embryos is necessary for the purposes of a given piece of research.

Many noble Lords spoke about the proposal to remove from the conditions of treatment licences the requirement that clinics must take account of the future child’s need for a father. I was particularly struck by the speech of my noble and learned friend Lord Mackay of Clashfern on this subject, as I was by the speeches of the most reverend Primate the Archbishop of York and the noble Baroness, Lady Deech. Equally, this afternoon I was extremely impressed by the speech of the noble Baroness, Lady Hollis. Certainly, Parliament needs to be guided by the evidence; and there is some evidence that the presence of a second parent rather than the gender of that parent counts more in terms of a child’s welfare. At the same time, many of us are instinctively uncomfortable with the notion that the presence or absence of a father in a child’s life should be completely irrelevant to any assessment of its likely welfare. Again, I have no doubt that this is a matter which in Committee we shall wish to explore thoroughly.

Equally difficult are the questions surrounding the definition of parenthood where a child has been donor-conceived. The concept in the Bill of parenthood as a legal responsibility, rather than a biological relationship, is one that many find unacceptable. Personally I have yet to be persuaded that what the Bill proposes is misconceived. The laws around adoption already provide a model in this area. In the normal way, a child regards as his parents the people who nurture and bring him up. A different question arises, however, over a child's right to know about his or her genetic origins. At the moment, the Bill merely gives a child, when adult, the right to inquire about them. My noble friend Lord Jenkin of Roding was absolutely right: we need to ask whether that is enough. The issue of what information should be included on the birth certificate of a donor-conceived child is one about which the Joint Committee was considerably exercised; and I believe that in Committee we need to confront that issue.

Not all the other issues of importance in the Bill have been referred to in any detail: for example, the rules that should apply to saviour siblings—the noble Lord, Lord Alton, spoke about that— storage times for embryos and the difficult issue of the storage of gametes on behalf of someone lacking mental capacity. Our Committee deliberations will no doubt make up for that. For now, I think it is right for me to end on an upbeat note by congratulating the Government on bringing this Bill forward. Whether Parliament accepts it in its entirety is a question for the future. However, the Government can take credit for their assiduousness in shaping proposals, consulting on them, listening to views and bringing them forward in their final version for our consideration. That measured process bodes well for our deliberations, a process to which I, for one, look forward.

My Lords, I take this opportunity to remind the House that I am a member of many royal colleges and the Academy of Medical Sciences. More important, I remain an active clinical scientist and I am a recipient of funding from research councils.

We have had a wide-ranging and extremely stimulating debate. We have heard some excellent speeches from all sides of the House. The issues raised demonstrate both the profound nature of the subject matter and the importance of proper scrutiny. We have seen a wide span of issues raised, including promising avenues of medical research and the welfare of children. As I have said previously, the United Kingdom has a good record of innovation and effective regulatory oversight, thanks in large measure to good parliamentary debates such as this. I shall do my best in the time available to answer as many as possible of the points that were made. I will not be able to do justice fully to all those issues in the space of one debate, but I am sure that there will be further in-depth discussions as the Bill progresses.

On the need for public debate, a number of noble Lords, including the right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Hastings, raised concerns about the pace of change and the Government rushing ahead with the legislation. We also heard concerns from my noble friend Lord Winston that we are falling behind. Several noble Lords mentioned the great importance of informed public debate on these complex and emotive issues.

The Government agree that there should be a full public debate on complex ethical, moral and social issues, but we have tried to take as inclusive and as deliberative an approach as possible in our review of the legislation and the development of our proposal. As the noble Earl, Lord Howe, suggested, it is important that legislation keeps up with scientific advances and that the ethical implications are fully taken into account. The existing legislation is 17 years old and has served us well. It is, however, in need of updating and we have conducted a lengthy review process, resulting in the Bill before the House. There remains a general desire for a scheme of regulation with clear boundaries, but with a light touch.

The noble Lord, Lord Winston, raised important points about HFEA regulation, particularly the need for streamlined regulation of embryo research. The Government agree that it is important that research is not unduly delayed by the consideration of licence applications. The Bill gives the HFEA scope to introduce arrangements to enable licence applications to be dealt with more quickly. As the noble Lord indicated, these issues will no doubt be discussed in detail in Committee. On the filling of the vacant clinical academic chair previously held by my noble friend Lord Winston, I am sure that noble Lords will acknowledge that he is a mighty hard act to follow. Nevertheless, we will continue to strive to do so.

Many speakers have talked about how bioethical issues are considered and debated. The noble Lord, Lord Brennan, spoke powerfully in favour of an independent bioethics commission. The noble Baronesses, Lady Neuberger and Lady Hooper, among others, raised the idea of a parliamentary standing committee to consider these issues. The Government have considered the idea of an independent commission on several occasions and have expressed their view that the present system, whereby a number of bodies are able to consider and advise on various ethical issues, is preferable. The Joint Committee that scrutinised the Bill also found that it could not support the idea of a bioethics commission. However, the Government share its view on the value of debating bioethical issues and the benefits of addressing complex issues in Parliament. As I hope noble Lords will appreciate, however, whether to establish a standing bioethics committee of both Houses, or whether the current structure is preferable, is ultimately a matter for Parliament itself.

Beyond the domestic sphere, the noble Baronesses, Lady Williams and Lady Neuberger, asked about the Government’s position on attempts by the United Nations to ban reproductive cloning. The Government are prepared to support a worldwide ban on human reproductive cloning provided that it can be achieved without at the same time attempting to ban therapeutic cloning for legitimate research. Previous attempts at forming a UN resolution have foundered on this point. I say in response to the noble Baroness, Lady Hooper, that the UK has not ratified the Council of Europe Convention on Human Rights and Biomedicine. One problem is that that convention does not allow the creation of embryos for research and would therefore conflict with UK legislation.

On adult stems versus embryonic stem cell research, there has been a significant debate—particularly from the noble Lord, Lord Alton of Liverpool, and the noble Baronesses, Lady Williams and Lady O’Cathain—around why we need to use embryonic stem cells in research when we can use adult stem cells. Several speakers referred to the work of Professor Wilmut, who has made a great contribution to stem cell research, which has also been eloquently described by my noble friend Lord Patel. He is, of course, right that all avenues of research should be explored.

Let me be clear: the Government wish to see research using all sources of stem cells, including adult, umbilical cord and embryonic stem cells. Stem cell research offers the potential to deliver numerous new treatments for diseases as diverse as Parkinsonism, diabetes and heart disease. It is far too early to know from where useful results will come. This position is supported by the published scientific findings and informs the legislation and the decision-making of the HFEA. The noble Baronesses, Lady Williams and Lady Barker, asked about the funding of adult stem cell research. From 2004-05 to 2005-06 the Medical Research Council provided funding of £14.7 million for adult stem cell research and £16.5 million for embryonic stem cell research.

Several noble Lords, including the right reverend Prelate the Bishop of Newcastle and the noble Lord, Lord Elton, raised the issue of the creation of interspecies embryos for research. The 1990 Act provides a legislative framework for the regulation of research projects, including human embryos, in accordance with the legal limits. One of those limits is the prohibition of the mixing of human and animal gametes that could result in the creation of true hybrid embryos. Otherwise, the current legislation does not explicitly mention any form of interspecies embryo. The Government have sought to address that.

In the 2006 White Paper, following the development in the potential creation of interspecies embryos for research, the Government stated that the revised legislation would clarify the extent to which regulation would apply to embryos containing both human and animal material. The report of the Joint Committee that scrutinised the draft Bill very helpfully moved this debate forward. The committee recommended greater scope for discretion for the regulator and that the creation of a range of interspecies embryos, including true hybrid embryos, should be brought clearly within the regulator’s licensing remit. The Government have revised the Bill in order to put the proposal to Parliament for wider debate.

The Bill brings some interspecies embryos within the scope of the regulator where licences may permit their creation subject to the requirement that the project is necessary or desirable for the purposes described in legislation. Additionally, subsection (5)(e) in proposed new Section 4A contains a regulation-making power to extend the definition of interspecies embryos. This will provide future flexibility to ensure that the law keeps pace with technological developments. The noble and learned Lord, Lord Mackay, asked what the Government mean by interspecies embryos. The definitions in the Bill are intended to ensure that embryos at the human end of the spectrum of research involving the mixture of animal and human material are clearly within the HFEA regulatory remit. The Government have discussed the available approaches with representatives from a number of professional bodies, including the Academy of Medical Sciences, the Royal Society, the Medical Research Council and the Wellcome Trust.

On a more technical drafting point, the noble and learned Lord asked whether Clause 4(2) and Clause 3(2) are both needed. Clause 4(2) prevents any embryo other than a human embryo being implanted in a woman. This is to prevent animal embryos being implanted. Clause 3(2) limits the type of human embryo that can be implanted to a permitted embryo created by the fertilisation of a natural egg by natural sperm. The clauses prevent different things to make it clear that no animal embryo can be implanted in a woman and that only certain types of human embryos can be implanted.

Many speakers, including the most reverend Primate the Archbishop of York and the noble Baroness, Lady Deech, have mentioned the child’s need for a father. I hope that I may be able to address some of the concerns through further explanation of the Government’s thinking. Many of the concerns raised appear to be motivated not by any practical effect that the clause may have in relation to assisted reproduction but by a general concern for the perceived signal or message that may be derived from its removal. I understand that concern.

Let me say at the outset that the proposal is not motivated by any attack on fathers or on the concept of fatherhood. Nor is it motivated by a simplistic desire for political correctness. The Government recognise clearly the extremely important role that fathers can and do play in their children’s lives and the consequences that can follow where a relationship breaks down. Many measures taken by this Government are aimed at strengthening the role of fathers and ensuring that they are aware of their responsibilities.

However, today’s debate deals with a very specific context: a fraction of the fewer than 1.5 per cent of births in the UK that result from licensed assisted conception treatments. Hence, we are talking about a few hundred children. The issue is what duties the state imposes on clinicians regarding whom they may or may not treat, or whether access to services—including those purchased privately—should be easier or harder for certain groups of people. Naturally, that will involve us considering our own individual views, to which we are well entitled, on the desirability of different family forms. However, unless the law is to be purely rhetorical, we must look at what is the intended outcome and whether it is justified by evidence.

The duty to consider the welfare of the child is subject to the HFEA guidance, which states:

“Where the child will have no legal father the treatment centre is expected to assess the prospective mother’s ability to meet the child’s/children’s needs and the ability of other persons within the family or social circle willing to share the responsibility for those needs”.

There is no ban on single women or same-sex couples receiving assisted conception treatment. There is no requirement in the law as it stands that there must be a father or any man involved in the upbringing of the child. The outcome intended to be achieved by the current law is therefore extremely unclear—or, as the noble Baroness, Lady Warnock, said, ineffective and wishy-washy.

Undoubtedly, we want anyone contemplating having children to think through the implications. Given the nature of the procedures in question, we are talking about people who will almost invariably have considered very carefully their decision to approach treatment services and who will have decided to act responsibly. In addition, the law requires the provision of information and an offer of counselling.

We must also remember that from a medical standpoint there may be no need to involve the services of a clinician at all. Informal arrangements for artificial insemination can take place. We must be careful that there is no perverse incentive for some people to avoid regulated services and the quality and safety assurances that they provide. The Government propose to retain the overarching requirement to consider the welfare of the child, which in practice, following consultation by the HFEA, focuses on the likelihood of serious harm to the child.

In relation to fathers, there is clear evidence of poorer outcomes for children where a marriage or partnership breaks down and the father is then absent. It is right and proper that that should be addressed. However, in the context that we are discussing today, the available research evidence suggests that it is the quality of parenting that is the factor of prime importance, not the gender of the parent per se—a point strongly emphasised by my noble friend Lady Hollis.

Elsewhere in the Bill there are provisions to extend legal parenthood in cases that recognise the family forms that already exist in practice, if not in law. The Government came to the view that, on balance, the reference in the 1990 Act to the need for a father should be removed in favour of the general duty to consider the welfare of the child. This does not prevent us from valuing the role of fathers in their children’s life, but it recognises the crucial role played by all parents.

The noble Earl, Lord Howe, talked about saviour siblings, where the issue of children’s welfare arises very clearly; the noble Lord, Lord Alton, mentioned the definition of other tissue in relation to saviour siblings; and the noble Baroness, Lady Jay, mentioned the advances in the pre-implantation genetic diagnosis. The Bill does not limit which tissue can be used in the treatment of a sibling. However, the HFEA retains the control of tissue typing via licensing, and the Human Tissue Authority must approve any transplants involving organs from living donors and children who are too young to give consent. The noble Lord also asked why the Government changed the criteria from life-threatening conditions to serious ones. The pre-legislative scrutiny committee recommended that the Bill should not be limited to life-threatening conditions but should also include serious conditions.

There has been some debate around abortion. I thank the noble Baronesses, Lady Tonge, Lady Emerton and Lady Williams, and the noble Lord, Lord Alton, who acknowledged that abortion is a separate issue and that it would not be appropriate to use the Bill to amend the law on abortion. I recognise that different views are held, and held strongly, but we do not want to cloud the debate or hinder the passage of this important Bill by debating matters that are unrelated to its substance.

This has been a very good and illuminating debate. The Bill has already benefited greatly from the pre-legislative scrutiny and I am glad that so much experience and expertise are being brought to bear to ensure that the legislation is as good as it can be. I look forward to the debate to follow on the very important issues that it covers. I commend the Bill to the House.

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

Dormant Bank and Building Society Accounts Bill [HL]

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

It is a fact of life that many people forget about, or lose track of, often small deposits of money in bank and building society accounts. This may be because they have changed address and lost contact with their bank, or perhaps have died without anyone being aware of the account. As a consequence, a large amount of money is lying dormant in bank and building society accounts. The estimation of the British Bankers’ Association and the Building Societies Association is that there is currently between £250 million and £350 million in banks, and up to £150 million in building societies. This is based on a dormancy period of at least 15 years.

Several countries have schemes to enable these unclaimed assets to be reinvested in society. Following a Labour Party manifesto commitment, the 2005 Pre-Budget Report set out that the Government had decided that the time had come for such a scheme in the United Kingdom. The Dormant Bank and Building Society Accounts Bill is a key part of turning that ambition into a reality. The Bill enables a scheme that both releases money for distribution in the community and protects consumers, providing them with the same ongoing right to repayment as they would have had from their bank. It also takes an approach that deliberately limits the regulatory burden on industry. As such, it is an approach that is good for the consumer, good for industry and good for society.

The Bill is central to the delivery of the scheme. Its key elements include: defining a dormant bank account as one where there has been no customer-initiated transaction for 15 years; defining the financial institutions able to participate in the scheme, which is broadly speaking retail banks and building societies; and permitting eligible institutions to have their liability extinguished on eligible accounts on certain conditions, including a transfer to a reclaim fund, which in turn takes on the liability to repay any reclaiming customer. It sets out what a reclaim fund is and amends the Financial Services and Markets Act 2000 to enable the activities of a reclaim fund to be specified in secondary legislation as regulated activities and, thus, for a reclaim fund to be regulated by the Financial Services Authority.

The Bill provides consumers with protections, including the right to repayment from the reclaim fund. It gives powers to the Big Lottery Fund to distribute assets that the reclaim fund deems surplus to its requirement to hold assets to meet anticipated levels of customer reclaim. It provides a power for the Secretary of State to apportion money between the countries of the United Kingdom following consultation with the devolved Administrations. It sets out the priorities for expenditure in England as youth services, financial capability, financial inclusion and resource for a social investment wholesaler. It provides Ministers in the devolved Administrations with an order-making power to set distribution objectives in their country, and it sets out an alternative option for small institutions to participate through separate arrangements that allow distribution of money in their local communities.

There are a number of elements outside the proposed legislation that will be integral to the delivery of the scheme. These include: the setting up of a reclaim fund and its subsequent authorisation by the Financial Services Authority; agreements between individual participating institutions and the reclaim fund under which institutions agree to act as agents of the reclaim fund for the purposes of repaying customers; revisions to the self-regulation of the Banking Code; and the industry’s commitments to maximise efforts to reunite account holders with their lost accounts.

The Government’s approach has been informed by the following principles: first, wherever possible, reuniting account holders with their money; secondly, the consumer’s right to reclaim—account holders must have the legal right to reclaim their money at any time; thirdly, the light-touch approach, as our intention is to minimise the running costs for the scheme and participating institutions by wherever possible building on existing infrastructure in order to maximise the money available for reinvestment in the community; and, finally, better regulation. The proposed UK scheme differs significantly from other international arrangements in being in part a self-regulatory scheme. It is proposed that legislation will enable, but not compel, banks and building societies to transfer funds held in dormant accounts.

The scheme is intended to operate as follows. Following the pre-scheme reuniting exercise, participating institutions identify accounts that meet the definition of dormancy. The Bill allows banks and building societies to cancel their liabilities to holders of these accounts on certain conditions, including the transfer of assets to an FSA-authorised reclaim fund. As part of this transfer, the Bill establishes a new statutory right for consumers to be repaid by the central reclaim fund. Money that the reclaim fund does not require to repay consumers will be passed over for reinvestment in the community via the Big Lottery Fund.

In England, distribution will focus on providing places to go for young people, financial capability and inclusion projects, and, resources permitting, developing the social investment market. The devolved Administrations will determine their own priorities for distribution. Small institutions will have an option of seeing money reinvested in their local communities. As I set out earlier, banks and building societies estimate that between £400 million and £500 million currently lies unclaimed under the proposed definition. Clearly, the impact of pre-scheme reuniting and the provision by the reclaim fund against future reclaim requests will mean a significantly smaller amount is available for distribution. It is not possible to quantify this figure at present with any degree of confidence.

While customers will always have the ongoing right to reclaim their money under the proposed scheme, the Government believe that it is important that any scheme is preceded by a concerted reuniting effort. Reuniting customers with their lost accounts is primarily a matter for financial institutions and their customers and is outside legislation. The Government therefore welcome the bank and building society sector’s commitment to a comprehensive reuniting exercise in advance of the scheme launch.

The BBA and the BSA made a detailed announcement on 8 November, which is available on their website. It sets out that they and the individual institutions will undertake proactive search activity throughout 2008. As part of this, the BBA, BSA and NS&I will bring together their free tracing schemes into a single cross-industry facility for customers seeking to locate a lost account. The one-stop shop will be launched in January. The scheme aims to capture genuinely lost accounts as opposed to those that are managed by customers. The proposed dormancy period of 15 years is deliberately long with this objective. In the Bill, dormancy is defined as no customer-initiated transactions on the account.

It is intended, however, that banks and building societies can use the voluntary nature of the scheme to generate greater flexibility. Thus, they can refer to any customer-initiated activity related to the account, such as correspondence or telephone calls, e-mails or voting at AGMs, in deciding whether an account is suitable for the scheme. Institutions that can participate in the scheme are, broadly speaking, all retail banks and building societies operating branches in the UK. National Savings & Investments is not included in the scheme.

The reclaim fund will receive money from dormant accounts transferred by individual banks and building societies. The Bill does not create a reclaim fund but sets out the requirements that a company must meet in order to operate as one and paves the way for its authorisation and regulation by the FSA. A reclaim fund will be a private sector-run company and the banking and building societies sector has committed to lead on selecting and setting up a central reclaim fund. This commitment and a timetable for the identification were set out in its 8 November announcement.

The Bill requires a reclaim fund to be authorised by the FSA, and the FSA’s regulation will help to ensure that it has sufficient money to meet anticipated levels of claims for repayment by customers. The Bill also sets out the three purposes of a reclaim fund which will be incorporated in its articles of association and may not be changed at a later date. The purposes are that the reclaim fund must meet repayment claims, manage money prudently, and transfer surplus funds to the Big Lottery Fund for distribution. In addition, the Bill will place further restrictions on a reclaim fund. A fund may cover its running costs to the extent that they are reasonable and it must publish key information about institutions that are participating. The flow of money into the scheme and the levels of customer reclaim by institution must also be published.

It is intended that account holders will experience no practical difficulty in the way that they are treated as a result of the scheme. Banks and building societies will act as a reclaim fund’s agents, and this will be set out in private arrangements outside of legislation. Consumers will therefore be able to continue their usual relationship with their bank or building society and will deal with their bank directly if they wish to reclaim their money. Banks and building societies’ relationships with their customers are self-regulated through the Banking Code, and this will remain the case for customers with accounts under this scheme.

The Banking Code is to be updated in March 2008. The industry has indicated that the code will be updated to ensure that customers will continue to use their own bank or building society as a means of reclaiming their money. They will ensure equivalency of treatment for all customers regardless of whether their money has been transferred into the scheme, and banks and building societies will inform their customers about the scheme, including publishing their policies for treating accounts as unclaimed assets. In the event of any disputes, consumers will continue to have recourse to the Financial Ombudsman Service for resolution, subject to the usual qualifying conditions, and of course consumers can resort ultimately to the courts to enforce their legal rights.

The reclaim fund will release money not needed to cover reclaim for distribution. The principles underlying the Government’s approach to redistribution are that it is an efficient and co-ordinated light-touch scheme which limits spending on administration and releases as much money as possible for investment in communities; that, as a UK-wide scheme, it is an appropriate and efficient distribution of assets across England, Scotland, Wales and Northern Ireland; that spending is additional to government provision in a manner which is accountable and transparent; and that distribution should benefit a diverse range of communities and be used to deliver practical programmes which bring about real change to neighbourhoods.

Guided by these principles, the Bill appoints the Big Lottery Fund as the distributor of dormant account money. The decision to use the lottery was supported in consultation. It has been chosen because using an existing body makes practical sense. The Big Lottery Fund is one of the few existing UK-wide organisations with the capacity to distribute resources on a large scale. It operates across the whole of the UK and has country headquarters in England, Scotland, Wales and Northern Ireland to which decision-making is devolved, and it has access to an extensive network of third sector and public sector delivery partners ranging from large-scale national charities through to grass-roots community groups. Dormant account money will not be folded into the lottery’s other activities but will be managed as a separate and distinct fund with separate financial management and accounting arrangements.

The 2005 Pre-Budget Report stated the Government’s preference for these resources in England to be focused on youth services that are responsive to the needs of young people, and on the issues of financial capability and inclusion. The Government believe that there is a strong case for focusing resources in England on improving the life chances of young people and helping them through the important transition from childhood through adolescence to adulthood. Investment in young people is an investment in the future of the whole community. Their success is a social and economic necessity. More also needs to be done to raise the level of financial capability and financial inclusion across the whole population and to ensure that people are able to make the right financial choices and develop the skills to manage their finances to their own advantage.

The Government feel that spending on these activities represents an appropriate use of dormant account assets. In addition to these spending areas, following consultation the Government would also like to see a proportion of the available assets in England, if resources permit, used to invest in the long-term sustainability of the third sector. This can boost the social investment market through support to the creation of a social investment wholesale institution. These priorities for distribution are set out in the Bill and are for England. Scotland, Wales and Northern Ireland will determine their own spending priorities, reflecting the needs of communities in each country.

Under the proposals, small banks and building societies will have the option of distributing money not needed to fund reclaim to charities that benefit their local communities. Typically, these institutions will be building societies often playing an important role in their local communities, and this builds on the commitment made in the 2005 Pre-Budget Report. Customers with these small locally based institutions will be treated in the same way as for the main scheme. For example, the reclaim fund will take on the liability to repay them and they can continue to claim directly with their bank or building society to get the repayment. But money not needed by the reclaim fund will be available for the small institution to distribute the balance to charities benefiting their local communities. To qualify for this scheme, an institution must have total assets of £7 billion or less. The Government believe that larger financial institutions serving wider communities should take part in the main scheme.

The scheme is not intended to affect membership rights. The Bill contains provisions so that if a building society transfers an account to the scheme, any membership rights attached to the account will continue as though the scheme had not been transferred. This includes any rights that might exist to demutualisation benefits. The Bill will not impinge on the Crown’s existing rights to bona vacantia, or ownerless property. It will also allow existing arrangements for dormant charity accounts as set out in the Charities Act 1993 to continue.

This Bill offers an historic opportunity to allow money lying dormant in bank accounts to be used to the wider benefit of society. It does so while protecting consumers and maintaining a low burden on industry. As such, I commend the Bill to the House.

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

My Lords, as the Minister said, this Bill came out of a statement made by the then Chancellor, now Prime Minister, in his Pre-Budget Report in 2005. He said that,

“unclaimed assets held in bank accounts will, once realised, be put to use to improve youth and community facilities throughout Britain”.—[Official Report, Commons, 5/12/2005; col. 613.]

That is the area of the Bill that I should like to concentrate on. While the Minister gave a very detailed explanation of the Bill, he did not say why it should be these particular areas. Why do the Government feel that they are in particular need of extra funding that is not already distributed by any of the lottery bodies, the Big Lottery Fund or any of the others? The Government have given no explanation of why they have taken these two areas, and it would be useful to know how the decision came to be made.

As to the Bill, Clause 15 states that the money shall be distributed for,

“meeting expenditure that has a social or environmental purpose”.

Having heard the Minister’s speech, I find it difficult to know how the environmental purpose fits into this.

Clause 17 refers to distribution being made for,

“the provision of services, facilities or opportunities to meet the needs of young people”.

That makes sense. But paragraph (c) refers to distribution being made,

“to a social investment wholesaler”.

There is an intriguing explanation of this in subsection (2), which states that a,

“‘social investment wholesaler’ means a body that exists to assist or enable other bodies to give financial or other support to third sector organisations”.

Sadly, not being a draftsman or as clever as the Minister, I have no idea what that means. In fact, there is no explanation in the Explanatory Notes. Can the Minister explain what on earth a “social investment wholesaler” is in this context? It is absolute gobbledegook to me.

We all give the Government credit for the principles behind the Bill—the principle regarding dormant accounts is a good one—but the big question is how the money is to be distributed. We know it is going to go to the Big Lottery Fund, but why just to that fund? The Big Lottery Fund is an amalgamation of the New Opportunities Fund, the Community Fund and the Millennium Commission, and it has done quite well since it was set up by the Government, but why are the other distributing bodies not included? After all, the Big Lottery Fund gets 50 per cent of all lottery money and the other organisations, for sports, arts and heritage, receive only 162/3 per cent.

Those distributing bodies are under real pressure because under the recent Olympic Lottery Distribution Fund order that the Government laid before the House, the Secretary of State is going to transfer £1.085 billion from the National Lottery Distribution Fund to the Olympic Lottery Distribution Fund between February 2009 and August 2012. This sum, as the order states, represents a previously agreed transfer of £410 million plus an additional £675 million. This will have a huge effect on both heritage and the arts. It begs the question: why are they not included on the list? Why is the money going only to the Big Lottery Fund? After all, their budgets are being squeezed. Their budgets are smaller than the Big Lottery Fund, which gets 50 per cent of all the money. I remind your Lordships that the Big Lottery Fund will probably distribute close to £700 million this year.

If one follows the chain through, it raises the issue of whether the Government are, in effect, allowing this money to go to the Big Lottery, and then money that would go to the Big Lottery is given to the Olympic Games. It is a circular motion. It begs the question of whether the Olympic Games are being bailed out in this way. I hope that is not the case. I hope the Minister will be able to say that he will not be coming before the House with any additional orders for taking money from the lottery.

On the previous lottery Bill we had arguments about prescription, specifying matters and additionality. I am delighted to see that in both Clause 21 and Schedule 3 those points are addressed and that we will not have to refight those arguments. I congratulate the Minister on succeeding, again, against the Treasury. But there is a concern because it has proven more difficult to ascertain whether the money given out by the Big Lottery Fund is additional. As we know, it has given money to provide hospital scanners and so on, some of which we believe should be part of normal expenditure.

I welcome the Bill although it does raise some questions. I am sure the Minister will answer them when he winds up. We will have an interesting time in Committee probing him on some of the details and checking that the directions the Government can give to the Big Lottery Fund on the way the money is spent does not allow them to control the distribution of funds. I hope that that is not the case. I look forward to the Minister’s response.

My Lords, I thank the Minister for outlining the purposes of the Bill. It has a fairly dull name for an incredibly exciting and life-enhancing Bill; I am an enthusiast for it.

I should declare my own position. For some years I have been a trustee of the Joseph Rowntree Reform Trust Limited; I am chairman, a director and a trustee of the Joseph Rowntree Charitable Trust. We are not averse to money coming in but, because these are endowed funds, we are mainly donors. Therefore I have some understanding of the grant seeker. I also founded in 1990—I am now a vice-president—a community foundation for my own community, Calderdale. It was my major voluntary activity for nine years. From nothing in 1990 we have put together £6 million now. That organisation is looking for money and I shall say more about it later.

It is now 11 years since I penned a pamphlet for Demos entitled The Building Society Bounty. I was concerned about the demutualisations that were taking place and, whatever the principles involved in whether it was right for a mutual to remain as it was or to be demutualised, my concern was whether it was right for a specific generation to pick up all the benefits of intergenerational equity that had been built up, often over 150 years or so. It was like the parlour game of pass the parcel; the music stopped and those who happened to have a pass book ran off with all the assets.

The Bill has limited aims. It is about gathering in, holding and spreading out to good causes. There is a definition of “dormant accounts” and a suggestion that they are accounts that have not been touched for 15 years. It has been suggested also that that is too long; that perhaps it should be 10 or 12 years. This has happened in other countries and we hope it will happen in the UK. I have read that in one country the period is three years. I do not argue with 15 years because it may be right. We could perhaps cope with 10 or 12 years but I am not going to argue that point.

We all understand that a big effort has to be made to reunite the dormant money with the rightful owner—that is only right and proper—and then, at the appropriate time, to transfer it to the intermediate agency, the reclaim fund. After weighing up the probabilities of a reclaimer appearing, the reclaim fund will transfer dormant money from large banks and building societies to the Big Lottery, or from smaller ones with under £7,000 million in assets to a local trust or foundation. That is allowed for in the Bill, but it is all voluntary.

There is not enough prescription in the gathering-in but there is too much in the spreading- out. There has been a fair period of consultation on the gathering-in, but some say there has not been as much consultation on the spreading-out as there might have been. The Government have looked at the position in Ireland, which is ahead of us in this work, and I have read and carefully considered the report of the Treasury Select Committee of the other place on the work it has carried out on this.

The Bill is too limited in scope. Before it was published, it was the draft Unclaimed Assets Bill; now it is the Dormant Bank and Building Society Accounts Bill. Is this just the start? It covers two specific areas: banks and building societies. However, in Ireland, post office accounts—equivalent to National Savings here—have been brought within the scope of the equivalent legislation, as were unclaimed life assurance policies two years later. What about shares and dividends? We should look at non-take-up following demutualisations. I have the latest figures for Standard Life, the Scottish life assurance company. It issued shares in July 2006. It put out a press release in January 2007 stating that 235,000 members had yet to claim £236 million worth of shares. In April, it put out another press release stating that the number of members was 220,000, but that the value of the shares had increased to £261 million. It might well be less now. That is only one company. There is a rich seam to tap.

Government savings are important. The Treasury estimates that there is just short of £1 billion in them. There should be a level playing field with the private and mutual sector. During the past four or five years, I have looked in detail at the Northern Ireland budget and kept my eye on the Ulster Savings scheme. It was closed by the Government in March 1997. I suggested four or five years ago that the unclaimed assets of that scheme should go to the Community Foundation for Northern Ireland, but was told that it was “too early”. However, I had to raise the matter again a few months ago, because it was the last time that the assets were in the Budget book before going off the edge. I received a letter from the noble Baroness, Lady Amos, who stated that the cash was not ring-fenced and that the balances had already been used to fund public services. She said that a few months ago, but I could have been told that four or five years ago. The Government have not been clear about that.

Pages 59 to 61 of the Treasury Select Committee’s report refer to what happens in the US state of Vermont, for which it lists 110 different categories of unclaimed asset. The Bill deals with two. The Bill makes provision for four orders and three regulations, plus sub-orders for Scotland, Wales and Northern Ireland, but why does it not make provision for an order to extend the provisions of the Bill to other forms of asset?

I turn to the definition of dormant bank and building society accounts. The Bill refers to 15 years—I could have been persuaded of 10 or 12, but I shall leave that aside for now. However, what about the starting point? Reference has been made to the voluntary Banking Code, which states:

“If you have money in a dormant account, it will always be your property (or if you die, it will become part of your estate). This is the case no matter how many years pass”.

However, the Banking Code was first introduced in 1992, which, amazingly, is 15 years ago. We are therefore talking about assets that, in terms of the Bill, were dormant before the Banking Code was introduced. The code followed the Jack committee and was established in 1992. What about earlier years? When did history start? The Halifax Equitable Benefit Building Society, the precursor to the Halifax, was started in 1871. In terms of the Halifax, is that the starting point?

I shall share with your Lordships an experience of my own. I found in a drawer a passbook for the Yorkshire Bank. The account was opened just after my wife and I were married. The book states that it was opened on 5 March 1966. I thought that it was mine, but it was my wife’s. There must have been a specific savings plan, because a few pounds were put in, then they were drawn out. There now remains, 41 years later, the princely sum of five shillings and 11 pence. It does not matter; it is from more than 41 years ago; it is a very small sum; it will not buy a postage stamp. I am now in my third matrimonial home. What if the book that I had found had belonged to a great-great-grandfather and the balance was £500? Would that be available now to be written off? Or would it be available under this scheme, had it not been found, to go to good causes? What happened before the introduction of the Banking Code? Did banks and building societies write off money to profit, or did they write off to a suspense account, which meant that the bank or building society would have greater capital? The start is important. It is important, too, in terms of a level playing field for all banks and building societies.

I turn to the voluntary or compulsory nature of the scheme. What is in it for the volunteers? The British Bankers’ Association and the Building Societies Association say that they will be in it, but will they? How can we be certain? What about the overseas element? We know, for example, that the Bank of Ireland and the Allied Irish Bank are in business here in the UK. Has any dormant money there already found its way under the Irish Sea, or is it in a separate UK bank or subsidiary? What about overseas ownership? The demutualised Abbey National Building Society is now part of the Bank of Santander. Is the decision whether to join the voluntary scheme to be made here or in Spain? Similarly, the Yorkshire Bank is now Australian-owned. Other changes in ownership of banks and building societies, if they demutualise, can take place. Could banks volunteer now, then be taken over, and backtrack later?

Apart from the BBA/BSA indication, the only really persuasive issue is the comfort of indemnity via the reclaim fund. I shall not say too much about it—I understand the indemnity point—but I have one question for the Minister: does he have any idea of the generosity/caution ratio of the reclaim fund? The reclaim fund will have to say, “Yes, 15 years have passed and we’ve tried very hard, but we haven’t been able to reunite, but, you never know, something might crop up”. What will be the balance? To what extent will it be able to say, “Well, we think that we could put in 80 per cent”? Or will it be 60 per cent? Does the Minister have any indication of that?

On spreading out the money to the good causes and the main scheme, I was—as previous speakers have said that they were—surprised at the specific prescription of the money being provided for,

“services, facilities or opportunities to meet the needs of young people … or connected with … the development of individuals’ ability to manage their”—

own affairs, or—

“the improvement of access to personal financial services, or … made to a social investment wholesaler”.

I asked myself, “Is there a problem here? Is it to do with the manifesto?”.

The Labour Party manifesto of 2005 said:

“There are many bank accounts that are lying dormant and unclaimed, often because people have forgotten about them or because the owner has died. We will work with the financial services industry to establish a common definition and a comprehensive record of unclaimed assets. We will then expect banks, over the course of the Parliament, to either reunite those assets with their owners or to channel them back into the community”.

So there is not the precision there that is now in the Bill.

Bearing in mind the source of the money, the category about assisting the financially excluded is bang-on right, and there is no question of that. I would have expected housing to be mentioned, however. Think about what building societies were set up for. If Shelter could use a significant grant, that would be quite appropriate. Furthermore, although I am very much in favour of supporting youth, I would have said “youth and community”. We are talking about capital money—although there is no problem whether we are talking about capital or revenue, ultimately, in how the money is used. But you would not want a place to be built in a rural area that could be used only for youth when it was quite obvious that it could be used for the community more generally. It would be out of keeping with today’s thinking not to have a place that is multi-use.

I highly approve of the position for the second scheme, involving smaller banks or building societies, and that resources can be used locally. However, there is a problem. This is where I come back to the nine years that I put into the Community Foundation for Calderdale. In a place such as Halifax, the Halifax Building Society was, and HBOS is, an incredibly important part of the community. If you are looking for money from the private sector in a community whose major employer and institution is so huge, it can well be the first port of call. Under this scheme, if HBOS followed the BBA advice, it would have to sign up to the main scheme. There should be a compromise so that with organisations as big as HBOS, which clearly have an incredible local involvement but whose depositors, former members and shareholders are UK-wide as well, we balance the national interest in the incredible potential resource nationally, which is obviously beyond the local need, with the local need that is clearly still there.

In other words, we have a cliff edge in this Bill. We are told that there are 60 building societies, 52 of which are below the cut-off line of £7,000 million. I shall give a little case study of the Skipton Building Society. The figures are easy to cope with. That building society is based in Skipton, in the Craven area of Yorkshire. It has been a successful and progressive building society and is now number six in the list of building societies. Its asset base of £10.5 billion puts it in the top eight, and it is above the £7,000 million for the alternative scheme. Would the Minister agree that there should be a way of avoiding the cliff edge, so that there is an element of local generosity available? I happen to know that in Skipton there is a community foundation called the Craven Trust, which in my view would be particularly well placed to look after local money.

Number nine on the list of building societies is Derbyshire Building Society, with £6 billion. There is also a community foundation in Derbyshire—and again, that would be an appropriate body to use the money. There would be something wrong in my book if Derbyshire could benefit locally and Skipton and Craven could not. We should be thinking about the opportunities available to ensure that there is some possibility of doing things differently, so that there is some local element. Because the numbers fit, my suggestion would be that if £7,000 million is seen as the correct figure—and in the case of Skipton the figure is £10.5 billion—two-thirds could be distributed locally and one-third nationally. Of course, when you get to the big ones, such as HBOS and Nationwide, a tiny percentage would be local. Clearly, with a very large institution, the local element would be very small as a proportion, but it would be incredibly worth while.

My Lords, I am grateful to the noble Lord for giving way. I am just wondering whether I will be able to have dinner tonight, or not.

My Lords, the noble Earl has ample time for dinner. I believe that this is an important Bill, as I hope he does—and I hope that he stops and listens.

There are three ways for the smaller bank or building society to act. They could create or add to their own charity, or they could give to a community foundation, which now covers 95 per cent of the country. Indeed, they could have a discrete fund within the foundation. Or they could do nothing. They could say that by order the figure of £7,000 million could be raised. The Skipton Building Society, which gave evidence to the Treasury Select Committee of the other place, raised the issue with its members, and 88 per cent of its members believe that the money should not go in the direction of government. Half its members agree with the potential scheme. I suspect that many people would think that the National Lottery was somewhere near government—and this is an area in which we have to be careful.

On the Big Lottery Fund, as the Minister knows, since we have been here before, I have a preference for local and regional decision-making on grants. But if the local element is enhanced, perhaps the system as described could be right. There is a case for the Big Lottery, with its expertise in grant-making covering the national scheme. The Bill is clear in its transparency as to accounts. But I am doubtful of the name—the Big Lottery—being used for the money. Perhaps a new brass plate could be ordered, even if it is placed outside the doors of the Big Lottery, and perhaps rather than “dormant” it could refer to the “reawakened” fund, so that it is clear that these funds have not been raised from gambling, which is an issue that has been upsetting to some.

Finally, this is an important and exciting Bill. I return to the theme of a rich seam. Early calculations in Ireland were that there would be €3 million from the scheme, and €196 million came out of it in the first year. They were wrong by a factor of 64. Early estimates here are £450 million, on these very restricted proposals. If that factor were applicable here, the figure raised would be £28.8 billion in the United Kingdom. That is not a forecast—but it could be that £450 million is a little on the low side.

I look forward to the Committee stage in which we shall endeavour to improve, enhance and localise the splendid opportunities available in the Bill.

My Lords, I hope to be relatively brief. While freely acknowledging the good intentions of its sponsors and supporters, I must confess to considerable misgivings about this Bill, specifically Part 1. Despite the safeguard incorporated in it designed to prevent the effective confiscation of an individual's assets, I none the less fear that de facto confiscation could sometimes occur in whole or, more likely, in part as the Bill stands. At the very least, it could involve individuals in unwelcome time and trouble when they finally come to discover their entitlement, particularly if they are old or confused, as may statistically often be the case by the nature of things.

There are many reasons why people may want to keep sums of money undisturbed in an account for 15 or more years. For example, they may not want to keep their rainy day nest egg in the proverbial sock under the mattress for fear of being assaulted or robbed in their home—an increasingly likely scenario, unhappily. At the same time, they may have a deep distrust of stocks and shares in whatever form. You and I would almost certainly advise anyone investing for 15 or more years to put their money into a selection of well-run unit trusts or, better still, well-run investment trusts standing at a good discount to net asset value. But there are many who would never entertain such a sensible proposal, in particular if they burnt their fingers over Railtrack or Northern Rock shares.

People should not be penalised for being suspicious, stubborn or unsophisticated. Moreover, someone who puts money into certain types of building society account for 15 years—accounts whose relatively high interest is earned in return for restricted withdrawals and substantial notice periods—is not necessarily being silly or irrational. Their funds may sometimes even keep or very occasionally exceed the rate of inflation.

Another aspect came to light yesterday evening in your Lordships' House when I briefly mentioned this Bill to a friend from overseas who was dining here. She told me of a Jewish acquaintance living in the near East who deposited a five-digit sum with a London bank and left it totally undisturbed for 20 years, just in case life started to become difficult for people of Jewish origin in their part of the world. One suspects there must be hundreds—perhaps thousands—of similar cases where members of potentially vulnerable political, ethnic or religious groups have transferred funds to the supposed safety of United Kingdom institutions as a contingency fund to keep their families afloat should things go wrong.

If, therefore, it is accepted that some people have subjectively valid reasons—even if sometimes cranky reasons—for keeping money undisturbed in banks or building societies for decades, how will the Government protect their interests?

It is claimed that Clause 2(2)(a) will do the trick: provided the account holder instructs the bank or building society not to communicate with him or her concerning the account, it will not be reclaimed. But most sane account holders will positively want to be communicated with once or twice a year with statements showing the opening and closing balances and any interest credited or bank charges debited, if only to reassure themselves that some fraud or computer glitch has not transferred their funds wholesale to someone else with a vaguely similar name living hundreds of miles away. Surely it should instead be made incumbent on banks or building societies to make every effort to ascertain from the account holder every three, four or five years that he or she wishes to maintain the account in force.

What about interest? A small current account will earn no interest; a larger one a fairly derisory rate. But a well-chosen building society account could earn on average 5 per cent gross or 4 per cent after 20 per cent tax. Compounded, that would increase a £5,000 deposit to £7,400 after 10 years. Will an individual whose £5,000 in a dormant building society account has been switched into a “reclaim fund” in 2008 be able to claim back £7,400 in 2018 when he suddenly reappears from some distant part of the world? If not, this surely constitutes partial confiscation of his or her assets.

Will the Minister assure the House that under no circumstances will there be attempts to extend the provisions of this legislation to the Channel Islands or the Isle of Man? If one or more of the legislatures of those territories decides to do so of their own free will, all well and good, but there should be no arm twisting.

My Lords, I, too, will try to keep my remarks short. There are two schemes in the Bill, as has been pointed out. There is what you might call the general or public sector scheme, which is much the bigger part of the available money, and the alternative scheme. The general scheme is bureaucratic and complicated. The alternative scheme is very simple. In fact, you only have to look at the space given to the alternative scheme in the Bill to see that it must be simple, but it would come out with a much more diverse funding than the general scheme, which is constrained.

The Treasury Committee report that came out in August concentrated on consultation. The Committee took a lot of evidence—from the NCVO, the Charity Bank and the British Bankers’ Association, which has been referred to, but interestingly not from the Big Lottery Fund as far as I could make out. In conclusion 15, which is on disbursement, the report states:

“We regret the Government's decision to make its choices on funding priorities without meaningful prior consultation with relevant stakeholders”.

The Government's reply, which has already been given to us by the Minister, was, “Well, we said what we were going to do in the Pre-Budget Statement of 2005. That was our decision and our minds are made up”. That is the first “given” in this situation.

The second “given” is the arrival of the Big Lottery Fund. That is wrong in principle. If you are going to support the third sector, you do not come up with a public sector solution. It is the wrong way to go. That leads me to say that I entirely agree with the noble Lord, Lord Shutt, that the alternative would give a more desirable outcome. I certainly hope that Skipton Building Society will be above the barrier rather than below.

Big is also wrong for practical reasons. These moneys are too small to make much difference to its operations and likely to remain so on the figures given by the Minister. The Big Lottery’s level of activity is shrinking at the moment, which gives it a major management challenge. It paid out grants in 2005-06 of £900 million. Its income the following year was £640 million. Clearly, that will not support the continuation of £900 million of disbursements. Its commitments in 2006-07 were £400 million, which is a reflection of the fact that, whether as an intended or unintended consequence of the Olympics, the Big Lottery Fund has to reduce its operations drastically to meet the prospective funding from lottery funds. The last figure is less than half the first—£400 million and £900 million respectively.

What has been happening at the same time to the Big Lottery Fund’s costs? The answer is that they have continued to rise. The Minister referred to running costs. They have risen from £72 million in 2005-06 to £77 million in 2006-07. This leads to awful ratios. Their ratios are quite out of order. If you look at the Wellcome Trust, which has been referred to, or the Gatsby, which the noble Lord, Lord Sainsbury of Turville, is very much involved in, the Esmée Fairbairn or any of the other big trusts, you will find that on balance the ratio of costs for administering their funds and making grants vis-à-vis the grants themselves is about half that of the Big Lottery Fund. That leads me to wonder what is the sustainable level of Big Lottery Fund grants, given its own original statement and given more recent statements.

The Big Lottery Fund’s own report published in July states—in a joint introduction by the chairman and chief executive—that it,

“will receive £425 million less than we forecast in the period 2009-12”,

and that,

“there will be less money available for new funding programmes after 2009”.

But in fact its disbursements have already fallen. They were 900; last year they were 750. What will they be this year? Is it not risky to put another responsibility on to the Big Lottery Fund when it already has major issues to deal with?

As regards my next point, I support my noble friends Lord Astor and Lord Inglewood. My noble friend Lord Inglewood would have made this point if he were present. However, he has a family commitment and the timing of this debate has meant that he is unable to be present. As noble Lords know, he was the chairman of the committee that looked into whether works of art should be exported. He has said on many occasions that if only £25 million a year had been provided over the last few years, many works of art would not have gone abroad. He wanted to draw the Minister’s attention to that as a good cause. If additional money is to be provided, could not that cause be supported. Other witnesses have suggested that there should be a much more diverse approach to deciding where the money goes as opposed to the approach of which we have heard a great deal during this short debate.

The Government should think again. Are they stuck with the 2005 decision or could they be a bit more imaginative? What do they consider the original depositors would think about most of their money going into the single stream that is proposed by the Government? As regards the alternative approach, it is not difficult to raise the £7 billion ceiling; in fact, I believe that the Bill provides for a regulation to do just that. That would give us much greater scope. If the scheme were voluntary and private, I think that many more of the institutions that have potentially dormant assets would become enthusiastic about it, whereas I fear that if they think that the scheme is government controlled and that the disbursements will also be controlled by the Government through the DCMS and the lottery fund, they will not want to join it with anything like the same enthusiasm.

My Lords, like, I think, all other speakers in the debate thus far, I welcome the intentions of the Bill, if not necessarily the way that they are to be fulfilled. As my noble friend Lord Shutt said, this is an untapped seam. As he also demonstrated, the seam that could be tapped is very much larger than is covered in the Bill. So I join him in wishing that it was not as prescriptive as it is, and hoping that before too long—I hope during its passage—it will become less so.

I was also a little surprised that the Government have chosen to put quite such a prescriptive measure in Clause 17 with regard to England. I say straight away that I very much welcome the provision for youth. Like many other services, youth services have suffered greatly during the years of restrictions on local authority budgets. However, I wonder why it was necessary to be so prescriptive. I again agree with my noble friend Lord Shutt—it is always a good idea to agree with one’s Chief Whip—that it would be better to refer to youth and community purposes in that regard.

I want to concentrate my remarks on the distribution mechanism proposed in Part 2. I ask the Minister specifically why the Government have chosen the Big Lottery Fund as the distributor. In saying that I make no criticism of the Big Lottery Fund, the way it does its job or the decisions that it makes; my criticism, if there is any, is directed at the Government, not at the Big Lottery Fund. As a matter of principle, is it now government policy that all money not drawn directly from taxation should be distributed by national non-departmental agencies such as, in this case, the Big Lottery Fund? If this is a point of principle, we should be clear about it, or is there some other reason why this is happening? I ask this particularly in the context of the work that another arm of government has been doing to develop local strategic partnerships—LSPs in shorthand—and the new process for funding them that is about to be introduced through local area agreements, usually known by the acronym LAAs.

At this point I must declare my own interest. I am a member of the local strategic partnership board in the London borough of Croydon, on which I represent the Metropolitan Police Authority, and of the local strategic partnership board in the London borough of Sutton, on which I sit as the executive councillor for community safety, leisure and libraries. So in both cases I have a very real interest—although not a pecuniary one, I hasten to add—in what is proposed here and in the opportunities that it gives.

These local strategic partnership boards are statutory bodies and exist in all parts of England. They bring together on one board and in one place all the statutory bodies in that area—the local authority, the police, primary care trusts, learning and skills councils, Jobcentre Plus, and, most importantly, the business sector, the voluntary sector and the community sector. They are brought together on one board and their role is to work together to agree the priorities for their area and to address in partnership how those priorities will be achieved. Those priorities are then reflected in the local area agreement, which is agreed with the relevant government regional office. The Government have just revised their method of funding these strategic partnerships into a new process based on identifying improvement targets for the area, drawn from the new national indicator set, as published in the Comprehensive Spending Review. Alongside the new local area agreements, local strategic partnerships will be given a new single pot area-based grant from government. This brings together a number of specific grant-funding streams previously received by the partner agencies as specific grants. Then the local strategic partnership—which I again stress includes as very real partners the voluntary and community sector—will decide locally how those funds are distributed in accordance with the priorities that have been set locally.

The context of my question is that this new mechanism created by government, which involves all the relevant players in a local area, would determine how funds are distributed to meet locally determined priorities. Why is that not an appropriate mechanism to deal with the funds released through unclaimed assets? Why do we have to go through the process of setting up a whole new regime?

Did the Government specifically consider using local strategic partnerships and this new mechanism as the distribution mechanism? If so, why was it rejected? I think it is probably conceptually impossible that the Government would not know what another arm of government was doing, but if they did not consider it, why not? The decision seems at odds with the clear leadership role for local authorities envisaged in Aiming high for young people: a ten year strategy for positive activities, published jointly by the Treasury and DCSF as recently as July of this year. Paragraph 4.22 of that publication states:

“The investment of unclaimed assets from dormant bank accounts offers a once-in-a-generation opportunity to stimulate more visionary and ambitious thinking about what can be achieved through partnership, co-funding and putting young people in the lead. The Government wants to see a network of high-quality dynamic and attractive places for young people to go that reflects circumstances and uses existing provision, such as community buildings, libraries and art centres”.

It continues at paragraph 5.18:

“Local authorities need to play a strong leadership and coordinating role, working with a wide range of local partners from the statutory, third and private sectors to provide high quality services for young people”.

That could not sound more like a role for the local strategic partnership. All that is missing is any reference to it. So why does it not feature in the Bill?

The briefing from Barnardo’s, under the heading “Local ideas to meet local needs”, states:

“In order to have maximum impact on communities, the funds from this scheme should be targeted at projects that are responsive to the needs and priorities of communities”.

Who is better placed to judge that than the local strategic partnership in which all those interests are represented, including—I say again—the voluntary and community sectors? Barnardo’s goes on to say:

“Local and regional knowledge is essential in targeting resources to have the most impact by designing and delivering services to meet local need”.

Why is a national agency like the Big Lottery Fund—albeit through its regional offices—better placed to determine that than the local strategic partnership board? Later on Barnardo’s states:

“We also believe local organisations and individuals are often best placed to advise on the overall impact projects may have on communities, providing information on how well proposals would complement others in their areas”.

Again, the local strategic partnership is clearly best placed for that, but there is no reference to it in the Bill.

As I said at the start, I intend absolutely no criticism of the Big Lottery Fund or its work; my questions are to the Government and about their decisions. I understand that 80 per cent of responses to the consultation supported the Big Lottery Fund; and I understand why. Was the new and developed role of the local strategic partnerships, and particularly the new funding regime, which is about to come into existence, part of the consultation? I think probably not. Even among the 80 per cent who supported this, concerns were expressed that funding through a national organisation might render the application and decision-making process overly bureaucratic and therefore time-consuming and resource intensive for smaller third-sector organisations to manage. Knowing this Government, it is likely that they will press ahead with using the Big Lottery Fund as the distributor. If so, how does the Minister see local strategic partnerships fitting into the process? For instance, will the Big Lottery Fund be required—not requested—to consult local strategic partnerships before making its decisions and to take properly into account any recommendations made there? Indeed, will the local strategic partnership be able to apply for funding from this source?

I am conscious not only of the time, but also that I am the last speaker from the Back-Benches. I had expected that the concerns expressed by a number of us from the Unclaimed Assets Charity Coalition of 52 charities would have already been mentioned in the debate. As I am the last speaker from the Back-Benches I will raise briefly the coalition’s concerns so that they are on the record, and I hope that the Minister can respond. The coalition is united by a desire to locate the assets bequeathed to its member charities in supporters’ wills but which currently remain unclaimed. Its main concern is simple; that the Bill should focus far more on the central objective of reuniting people, including relatives, with the unclaimed assets that are rightfully theirs instead of focusing primarily on how those assets should be distributed.

The coalition makes five points about what it wants from the Bill. I will quickly read them so that they are on the record and the Minister can respond to them. It says it wants: first, any activity to reunite owners with their assets to include provision for identifying unclaimed assets from deceased people's estates; secondly, the establishment of a “one-stop shop” for searching data to reclaim lost assets; and, thirdly, the definition of an “unclaimed asset” to be extended in time to include more financial assets. I think that point has been covered in the debate. Fourthly, it wants a recognised scheme to identify unclaimed assets held by financial institutions. Its preferred approach would be mandatory. Finally, it wants the dormancy period of what is considered an unclaimed asset to be reviewed. It thinks that for many asset types 15 years is too long. I hope that the Minister will respond to those points because they are important and undoubtedly we will return to them during what I think will be a very interesting and, if I may say so, quite a challenging Committee stage to the Bill.

My Lords, like other noble Lords who have spoken this evening, I welcome the Government’s proposals to put dormant assets to positive use. I particularly welcome a number of the Bill’s features. The concept of the reclaim fund is clever and the plan on how to make it work has much to recommend it. In particular, the fact that depositors will still have access to their funds beyond the 15-year period is crucial, and the Bill deals elegantly with the point. Like my noble friend Lord Shutt, I strongly agree with the special provisions for smaller banks and building societies.

I know that the Government have undertaken consultation on the Bill but fear that, at least in certain respects, this consultation has followed the pattern of Treasury consultation down the ages, which is to put out proposals for consultation and then completely ignore what people have said. The fact that the Government have almost entirely repudiated the Treasury Select Committee’s comments and suggestions is extremely unfortunate because those comments were in most cases extremely sensible.

We on these Benches will, as we have heard, wish to examine in Committee a number of issues regarding the operation of the reclaim fund and the distribution to good causes. There are a number of general issues, but I will raise just a few. The first is the importance of trying to reunite assets with their owners before the assets reach the fund. It is much better for the owners of the assets to use them as they wish rather than for someone else, whether it is the Big Lottery Fund or anyone else, to use them on their behalf. One interesting issue is what scope there is for reuniting people with their assets. According to evidence that I have seen from an organisation called Heirtrace, some 80 per cent of currently dormant assets can be reunited with their owners if sufficient effort is put into it. Although that figure seems high, even if it is only 50 per cent it would be worth making a considerable effort to try to reunite people with their assets or to ensure, as the Unclaimed Assets Charity Coalition is at pains to point out, that assets which may be dormant at the time of someone’s death and might be allocated to a charity can find their way to the charity specified in the will. Some of the proposals—at least the ones on a one-stop shop for information—go some way to addressing that issue.

I am not clear whether that can best be dealt with by including additional provision in the Bill or whether those are administrative provisions that are best dealt with by the banks, building societies and the reclaim fund. However, we need to be satisfied that, whatever provisions we put in place, maximum effort is expended to reunite people with their assets. I am not sure that I agree with the Unclaimed Assets Charity Coalition about 15 years being too long. It seems to me that you must pick an arbitrary figure, and it is probably about right.

The next issue is whether membership of the scheme should be voluntary or compulsory. I am very far from convinced by the Government’s arguments for voluntary involvement. If the idea is so important, why should any bank or building society be able to avoid it? The Government’s answers on this point in their response to the Treasury Select Committee are pretty thin. They argue:

“A voluntary approach enables the use of private sector expertise … A voluntary approach means that it will be the private sector that takes responsibility … The voluntary approach brings added flexibility ... A voluntary scheme also takes account of better regulation principles”.

All those are highly questionable assertions which I will examine in Committee.

The next issue, raised by a number of speakers, is whether the Bill is correct in limiting its scope to banks and building societies. Again, I greatly enjoyed reading the Government’s response on why National Savings & Investments should not be included in the scope of the Bill. They explained that it was completely unnecessary because that money is,

“used to fund public services”,

and therefore is “already benefiting the community”. I wonder whether the Government could explain how they came to that conclusion and whether the unclaimed assets from National Savings & Investments might, at the very least in future, be identified in some way in government accounts so that we would know exactly how they were “benefiting the community”.

There is also the issue of whether we should extend the scope to other sorts of assets, including insurance policies. My inclination at this stage would be to follow the precedent in the Financial Services and Markets Act, in which additional categories of financial activity can, by order, be brought within the remit of the FSA. It seems to me at this stage that bringing banks and building societies into the scope of the Bill to start off with is a good idea. Bringing additional classes of asset in at a later stage might be an equally good idea, and it may be possible to amend the Bill to allow that to happen relatively easily.

My noble friend Lord Shutt mentioned the situation of overseas banks, which again raises the issue of voluntary versus compulsion. The logical situation is that any bank account held in the UK should be subject to the Bill. I take the point made by the noble Lord, Lord Monson, about people who bring assets into the UK with no intention of using them for a considerable time. I would have thought that there are two mechanisms that might give him some reassurance. First, the bank will maintain the life of the asset by occasionally contacting the person who has deposited it so that it does not become technically dormant. Secondly, under the reclaim fund people could come back at any point and reclaim their assets.

There is also a technical issue regarding interest on balances held in the reclaim fund. Clause 8 says that the balance is,

“the amount owing to the person … after the appropriate adjustments have been made for such things as interest due”.

Given that the reclaim fund will, as I understand it, be a fund that will contain assets coming from a large variety of accounts, how does one determine what interest is due? Some will be from non-interest varying accounts and some from different accounts. Is each amount, or a proportion of each amount, going to be allocated a separate interest rate? That seems almost inconceivable, both conceptually and in practice. In the absence of such a complicated scheme, will a composite interest rate be applied to all the assets and, if so, what will that interest rate be? There is no indication in the Bill.

That is the business of gathering the money together; we now come to the question of spending it. As for who should have overall responsibility, given the scope and purposes of the expenditure, there has to be a single national body. At least until I heard my noble friend Lord Tope, it seemed to me that the Big Lottery Fund was the logical national body. If not it, who will it be? Given that one of the aims must surely be to get this out of the clutches of central government, it is equally possible that local strategic partnerships could, in theory, bid for funds from the Big Lottery Fund from this account. There is no reason either under the Bill as drafted or as it might be amended why local strategic partnerships could not have a big say on how at least the youth strand is funded. When it comes to financial inclusion and the social investment wholesaler, there is not necessarily similar local involvement and national schemes may be necessary.

Equally, although we may need “a body” responsible for overseeing how the money is spent—the Big Lottery Fund might be the logical choice—the money could in theory be used for anything. I know that this is unusual for the Lib Dems, but we have had a tendency to want to spend such money on everything and to spend it many times over. We had a strong lobby in our party that such money should be used for overseas development. It seems to me that, with the exception of financial literacy, where there is an obvious link, you could in theory spend the money on anything. The two other causes are perfectly sensible. We can always beneficially spend more on youth affairs and young people. I therefore do not have any huge problems with the Bill’s definition of where the money should be spent.

I have an issue about what a “social investment wholesaler” is. First, I have never heard the phrase, and I have been involved in this area for some time. I had never seen it until I read it in the Bill. The Bill does not define what I thought the Government were seeking to achieve. I thought that the Government were seeking to establish a social investment bank. The Bill says something completely different, which is much less prescriptive of what the wholesaler could do. It says that it is,

“a body that exists to assist or enable other bodies to give financial or other support to third sector organisations”.

It therefore seems that the NCVO is a social investment wholesaler, because that is exactly what the NCVO does. It exists to give support to third sector organisations. As a member of the NCVO advisory board, in which I declare an interest, I can see some advantage in the NCVO getting some of this money; but I did not think that the Government wanted that. I thought that the Government were talking about a single new social investment bank and that there was a suggestion that it had to have several hundred million pounds in it to be worth while.

I am pleased that the Minister has confirmed that the money will not be used to substitute for existing government expenditure and that additionality will apply. In terms of its broad usage, I would be grateful if he could confirm that the Government envisage that the money could be used for both capital and current expenditure and would not be limited to one. There is no doubt that we will want to deal with many other issues in Committee. I hope that I have dealt with some of the main ones, but we look forward to the Committee stage and to seeing the Bill through.

My Lords, we have had a varied debate, which should at least put the Minister on notice that the Bill is not quite as straightforward as he might have hoped. But let me start on a positive note. Like other noble Lords, we agree with the proposition that unclaimed assets should be put to good use. The banks and the building societies thought that they had a rather good use for those assets as a bit of free capital to produce an additional income stream for their shareholders and members. But clearly there are other uses with wider societal benefits. We support the Bill to that extent, but that is the extent of our wholehearted agreement.

Just as the banks were probably quite happy with the status quo, I imagine that the Government feel much the same way about the unclaimed assets in their own bailiwick; namely those in National Savings, to which other noble Lords have referred. We understand that there is just short of £1 billion of unclaimed accounts. I agree with the noble Lord, Lord Newby, that we need to look at that further. Will the Government say when they intend to take action to allow the value locked up in other unclaimed assets within the financial services sector, such as those in pensions or life assurance policies, to be liberated? We do not understand why the Bill is restricted to bank and building society accounts. It should be drawn much more widely in order to provide a way of using the value in other dormant financial assets, and we shall want to pursue that in Committee. I hope that the noble Lords, Lord Newby and Lord Shutt, will join us in that endeavour.

Your Lordships’ House amended the most recent Pensions Bill to allow improved benefits to the 125,000 pensioners for whom the Government still do not provide adequate pensions, in defiance of the ombudsman. We sought to create a “lifeboat” funded by an unclaimed assets recovery agency which could have included dormant bank accounts. The Government overturned those amendments in another place. This Bill closes the door on using dormant bank account money for that purpose. We regret that and believe that the Bill should be widened in scope to allow it.

I turn now to how much money is involved, because it is relevant to how widely the Bill should be drawn. The Explanatory Notes give no idea of how much money should be funnelled through the Bill, and the Minister said that he did not know. The summary at the beginning of the final impact assessment booklet says that costs and benefits are nil, but that is plainly nonsense. In fact, a footnote towards the end of the impact assessment states that dormant accounts could at present yield between £400 million and £500 million. Those estimates are given by the British Bankers’ Association and the Building Societies Association, but, as noble Lords have said, the evidence from a similar exercise in Ireland showed that initial estimates proved to be wild underestimates. If one listens to City chatter—I put it no higher than that—people are talking about very significantly larger sums being made available. The noble Lord, Lord Shutt of Greetland, referred to a figure in the tens of millions. I am not sure that I have heard a figure quite as high as that, but there could nevertheless be significantly more.

The potential for higher sums being available means that we must ensure that the use of the money is drawn as widely as possible in the Bill. I have referred to supporting pensioners. There are other possibilities, including Liberal Democrat pet causes. We need to ensure that the Bill can deal with a wider range of expenditure and also remain flexible over time, because we do not wish to fix in stone the uses to which the money can be put. We need a broader concept built in.

For today, let us assume that the scheme will raise the lower end of the amount estimated by the BBA and BSA—some £400 million. We then have to flow that through because not all of it will be available for distribution, because some has to be used for reserves. We do not know how much that is, and the Minister has already been asked to comment on the level of reserving policy covering how much would be top-sliced before the money could be made available. I look forward to his answer. Expenses will also accumulate as this money passes through the system. On industry estimates, we might be talking about some £300 million to £350 million being available at the outset.

We shall be concerned to look at how the “prescribed percentages” provided for in Clause 16 will work. In particular, we will want to ensure that England gets its fair share. At the moment, England accounts for some 80 per cent of public expenditure. If we assume that England receives that as a minimum, we are talking of perhaps 80 per cent of £350 million—some £280 million—flowing into English activities. When the Prime Minister addressed the Labour Party conference in September, he said:

“so we will use unclaimed assets in dormant bank accounts to build new youth centres, and will invest over £670 million so that in every community there are places for young people to go”.

The simple question for the Minister is why did the Prime Minister use the figure of £670 million? It is unlike any figure that has come out of the industry at any point during the consultation. If you flow that through into England and take off some reserving to get to my £280 million figure, the Prime Minister was overstating the figure by 2.5 times. I hope that the Minister can explain that.

I want to look in a little more detail at the promise on youth centres in the Prime Minister’s speech. I should say that, like other noble Lords, we support spending money on youth facilities, but I want to clarify the Government’s intentions. The consultation issued in May claimed that the money,

“could allow over 700 new places for young people to be built”.

So, the vision is clearly one based on bricks and mortar. I expect that the Prime Minister has some kind of memory from his own youth when teenagers were grateful for the opportunity to gather in youth clubs and listen to the latest chart-topping black discs. The Prime Minister may not have noticed that that is not the aspiration of today’s teenagers, nor does it reflect the lives that they lead, including the way that technology changes the way that young people interact. Will the Minister explain in more detail what the Government envisage the money will be spent on and how they will avoid spending it on things that young people do not actually want in the modern age?

Lastly, it is clear that the Government see the use of this money in terms of capital projects. The noble Lord, Lord Newby, asked whether it could be used also for revenue projects, but it is clear from everything that the Government have written that their vision is that the money is for capital projects. The Minister will be aware that the public sector is littered with many well intentioned capital projects that struggle to find ongoing revenue funding. Will he say how the Government think these youth centres will be financed on an ongoing basis? The amount of money available from dormant accounts is bound to fall sharply after the initial catch-up period, when a backlog is dealt with. Where is the money coming from? It sounds like another hit on council tax is coming down the line.

I have dwelt on spending on youth because that is what the Prime Minister has focused on. However, as we have heard, Clause 17 has two other objects: financial inclusion and social investment. The Government have made it pretty clear that they are still keen on financial inclusion but they seem, at best, lukewarm about a social investment bank, even though that is what their own Commission on Unclaimed Assets recommended, with, by its calculations, a price tag of anything up to £330 million over five years.

Will the Minister explain how the Government see those two additional objects being funded? There is the £670 million to which the Prime Minister referred. That may sound like a lot but, if it is to provide for the 8 million or so teenagers, it could be spread extremely thinly. Do the Government have a view on how much ultimately needs to be spent on these youth facilities? How much will be spent on youth before the other two objects get a crack at the money? Will youth spending stop at £670 million or will the Government have a higher figure in mind before they are happy to see money going into either of the other two concepts? It is important that we understand what the Government intend from the Bill.

Staying loosely with my money theme, there is no information in the papers about the amount to be raised and no information about the costs. As we have heard, the money is to be processed through a reclaim fund and then distributed via the Big Lottery Fund. Overall, that seems to be a recipe for job creation with two layers involved. When will we be told the costs of processing this money? What will the upfront costs and the annual running costs be? How, in the longer term, will the annual running costs compare with the estimated annual flow from dormant accounts? As I said earlier, once the initial amounts have been gathered, we have to expect the annual flow to drop down to a relatively low level, and we have to query whether the Government have designed a value-for-money solution.

The Government’s chosen conduit is the Big Lottery Fund. My noble friends Lord Astor and Lord Eccles raised some very important points on that and I share their concerns. There are concerns about the use of the Big Lottery Fund, the issue of additionality, or indeed the lack of it, and the impact of the huge sums being diverted to the Olympics on all the lottery distribution funds, including those concerned with the arts. We will look at those very carefully in Committee.

As has already been pointed out this evening, the Bill does not guarantee that a single penny of dormant bank and building society account money will flow to good causes. It merely permits the banks and building societies to transfer the money but it does not compel them to do so. What will the Government do if the amounts of money transferred through the scheme are quite low? If the banks get better at contacting their former customers and if those with entitlements, such as the charities which benefit from legacies, manage to track more down, there may well be considerably less money available. We think that those two activities are important and we will be looking at whether the Bill needs to be strengthened to reinforce their importance, but those activities are likely to diminish the amount of money that is available.

How will the Government tell whether the banks and building societies have transferred all the money that they could do? I cannot see where in the Bill there is an incentive for banks or financial institutions to transfer money; nor do there appear to be any inspection or audit functions attached to whether they do so. As has already been said, banks and other financial institutions with head offices outside the UK may well take the view that they have no particular interest in supporting the issues that the British Government have set out for them in the Bill.

There are other aspects of the Bill that my noble friend Lord Howard of Rising and I shall want to explore further in Committee. We shall want to look at the role of Treasury powers—as usual, we find the hand of the Treasury written all over this Bill. We shall want to look at the fact that English money has some very specific objects set out for it but nothing at all is prescribed in respect of the other countries which will get the money. We shall also want to look at the definition of a dormant account in Clause 10 because we are aware that it may raise practical difficulties. The noble Lord, Lord Monson, raised some important points this evening which we should think about. Like the Liberal Democrat Benches, we also want to look again at the scheme for smaller institutions to opt out of the central arrangements and to see whether they can be made more widely available. Lastly, we shall look very closely at the accountability arrangements.

In short, we shall subject this Bill to very detailed scrutiny and we hope to see a number of significant changes to it. I look forward to our Committee stage.

My Lords, I am grateful to all noble Lords who have contributed to the debate and, like everyone else, I look forward with enthusiasm to the Committee stage, when we will have a considerable amount to discuss—as though I ever doubted it.

The only general point that I make concerns the questions asked by the noble Baroness, Lady Noakes. She will appreciate that the approach of the Bill is both voluntary and light touch. Therefore, if the Government came in with very heavy directions in the way that she requested, that would run counter to the philosophy behind the legislation. She may disagree with that philosophy or she may contend that it cannot work on that basis. Of course, I always respect her opinion and I shall listen to the way in which she expresses herself at subsequent stages, but I hope that at this stage she will give us the benefit of the doubt and agree that we have presented to the banks and building societies a proposal for how dormant accounts can be used intelligently.

Of course we are vague about the figures. I said at the start of my opening contribution that the British Bankers’ Association and the Building Societies Association estimate that between £250 million and £350 million is currently in banks and up to £150 million is in building societies. Those are approximations and there are therefore bound to be caveats. I cannot talk about categorical figures at this stage and I do not think that it is reasonable that we should do so, particularly as the noble Baroness and other contributors to the debate have emphasised the prime importance of restoring these accounts to their rightful owners, if that can be achieved.

If the Bill succeeds in passing through Parliament, it will come into operation as an Act some time hence because the banks and building societies need time to do their best to locate the owners of these accounts. Not only are we concerned that that process should continue over the next year with the intensity to which those organisations committed themselves in their 8 November statement but we will also give all the support that we can to the delivery of the process, because the individuals to whom the dormant accounts belong have a prior claim on the property. That is an absolute principle to which we subscribe.

Before that process starts, we have a rough estimate of the money that might be available. I do not suggest for one moment that banks and building societies are currently dilatory in finding out what has gone wrong when an account is not activated, but they are not committed to a drive in this respect because they know that the consequence of the accounts remaining dormant is that they will fall within the framework of the Bill when, in due course, it becomes an Act. Therefore, it is not reasonable for us to be challenged too precisely on the figures for the possible return, which has been a central element in the debate.

The noble Viscount, Lord Astor, as astute as ever, had the opportunity to speak first. He identified the key issues for the benefit of us all. He looked at the priorities to which the resources should be devoted and said that he was not too sure that they were the right ones. They are the product of the most extensive consultation. I do not think that any noble Lord disagrees that we should do something with resources from this source to improve the level of financial literacy and understanding in our society. The fact that resources remain dormant is proof positive that people do not have the acumen to use them as effectively as they might, otherwise they would not be dormant in banks and building societies in the first place.

I hear what the noble Baroness says about how prescriptive and narrow our vision might be of the needs of youth. I do not think that any Member of the other place can be other than very well advised of the challenges that youth provide in the community. We live in challenging times as regards young people. They are articulate and make their presence felt and, of course, if they engage in anti-social activity it affects the whole community in a very direct way. So we will be concerned to look at the provision for youth in the widest possible perspective and against local needs and local demands. We will pursue that objective intelligently.

On other social purposes, we recognise that there will be demands from communities for such resources to be devoted to matters that benefit the immediate local community. The noble Viscount, Lord Astor, has had enough experience of the lottery legislation, which we happily debated together in past years, to focus on the Big Lottery Fund operating this. I make one thing clear. These resources going to the Big Lottery Fund will be separate. They will be separately accounted for and the lottery fund will merely be the intermediary and allocator. There is no question of them being in any way, shape or form absorbed in other activities, going towards the Big Lottery Fund costs or being used for other aspects of the Big Lottery Fund. I want to reassure the noble Viscount, Lord Eccles, who has also been prominent in our debates on these issues in the past, on that point. They would be separately accounted for.

I had one direct challenge from the Liberal Democrat Benches—in fact, a number of challenges—from the noble Lord, Lord Shutt, about the fact that the Government have already created more effective, greatly to be welcomed local partnerships, which could be better distributors. I apologise, it was the noble Lord, Lord Tope. I shall turn to the virtues of the noble Lord, Lord Shutt, in a moment, but I shall start with the virtues of the noble Lord, Lord Tope, who mentioned the local partnerships. I am the first to identify the potential success of the local partnerships doing great work in the localities. He described how and where they were intended to act. Of course, they are distributors of public funds.

We went out to consultation about these funds and the principle on which we should work. These are not public funds; these are private resources in banks and building societies. Of course we have to go in with a light touch. The noble Lord, Lord Newby, emphasised that and I remember the noble Lord, Lord Shutt, mentioning it in connection with who owns the banks and, therefore, how much they will participate. Of course, we have to go for the best and most consensual model, because this is a voluntary scheme and we want the maximum participation by the holders, the organisations that have dormant accounts. The noble Lord, Lord Tope, is a persuasive and articulate member of a number of bodies as well as of your Lordships' House, but I defy him to go to the banks and building societies and say, “I think the Labour Government have exactly the right model and you could add your resources to the local partnerships, which distribute public money locally”. That is not quite how we envisage the world working.

I understand the criticism, although I do not accept it, about the Big Lottery Fund being high on costs. It is not high on costs; it produces good figures on costs and on its distribution. It has the great advantage that not only is it a national organisation but it has regional offices and is represented in all the nations of the United Kingdom. It has a structure on to which we can latch, intelligently, the distribution of other funds, which are not public funds any more than the lottery proceeds themselves are government resources. We can put on to the Big Lottery Fund a distribution mechanism, which is all that we are doing.

In Committee, there will be many questions about the efficacy of the Big Lottery Fund and I have not the slightest doubt that we will have lively exchanges on that matter. It is part and parcel of the main theme behind this legislation, which is to create not a state bureaucracy, or even an arm of a state bureaucracy, but a voluntary participative scheme to do good in the community by the distribution of resources and with the maximum amount of participation. That is why nearly every one of the structures that we have in place with regard to the Bill—of course, I shall listen to strong criticism of them in Committee—has a basis in considerable public support following the consultation process on the way in which the Bill should be created.

I have heard the noble Baroness, Lady Noakes, the noble Lord, Lord Newby, and others say that the Bill is too limited in the number of financial institutions to which it addresses its objectives. The answer is that we are delighted with the progress that we have made and with having on board the two biggest financial institutions, in terms of their spread across the United Kingdom. There are more challenges regarding insurance policies and other financial institutions compared with the bodies that we have approached at present. I hear what noble Lords say: we should leave the door open. That is a debate to which I shall listen with great care. The Government believe that, on the whole, permissive legislation that offers up the hope and optimism of the future being fulfilled, rather than closing down everything within the narrow parameters of the year in which we are operating, is an advantage. So I shall listen to the points that are made on that. Effectively, a deal had to be struck and arrangements had to be made for a voluntary, light-touch scheme. That is why this scheme has certain limits to its ambition.

I have been asked a range of detailed questions. There are two advantages to winding up at Second Reading. First, people hope that you do not continue for too long in any case. Secondly, I can offer the reply that where I invariably fail is in never having produced a satisfactory reply for the noble Baroness, Lady Noakes—so I am not going to succeed this evening. My great advantage is that I will be able to make fuller replies when we meet in Committee in the not-too-distant future.

I have not the slightest doubt that several important points will be made in Committee, or that, from the original concept of what could be achieved by resources that currently benefit no one, we have the basis of a light-touch, voluntarily committed scheme. It can achieve a great deal through a distribution mechanism that has already stood the test of distributing funds for the lottery. I want to reassure the noble Viscount, Lord Astor, that we will not be returning to debates about where resources for the Olympics go, or anything else to do with the Big Lottery Fund. I trust that I will be able to reassure the Committee that these resources are channelled in a specific, controlled direction for the objectives that will eventually be identified in the legislation.

On Question, Bill read a second time, and committed to a Grand Committee.

BBC: Chairmanship (Communications Committee Report)

rose to move, That this House takes note of the report of the Communications Committee on The Chairmanship of the BBC (First Report, Session 2006-07, HL Paper 171).

The noble Lord said: My Lords, I shall give the Minister time to pick up his new script. It would be quite unfair of me to say that we are moving from dormant bank accounts to the dormant Department for Culture, Media and Sport, but we are certainly moving.

Last week, I received a wonderfully double-edged recognition of our work. It was at the premiere of the new and vastly enjoyable film “Cranford”. The Evening Standard diary reported that there was a glittering attendance: Judi Dench and Eileen Atkins, and from the world of politics Neil Kinnock and Geoffrey Howe. It added that Norman Fowler was also there, presumably because he was chairman of the House of Lords Communications Committee. So there we are. The Liaison Committee will be pleased to note that, after a certain amount of constructive debate, the Communications Committee has now been well and truly established in the BBC’s mind as a successor to the BBC Charter committee, and established with a wide and experienced membership, many of whom served on the original BBC committee and whom I thank for all their effort and commitment.

Indeed, I am glad to say at the outset that the Government have now accepted one of the principal recommendations of the BBC committee, which should be noted. When we reported on the charter, we stressed the importance of the BBC World Service, which has great influence throughout the world. We welcomed the proposal by the BBC to start an Arabic language television service, but we were strongly critical of the inadequate funding offered by the Government which allowed only a 12-hour service. We could not see how such a service could compete with the already established 24-hour broadcasters—Al-Jazeera and the rest—although, for very little extra cost, the BBC could also offer a 24-hour Arabic language service. I strongly welcome the Government's decision to make more funds available so that a proper 24-hour Arabic language service can now be provided. I congratulate the Minister on that, and will not embarrass him by quoting the reasons he consistently gave us for why this eminently sensible step was entirely impossible and unnecessary. The important thing is that it has been done. We hope that, whatever may have been the initial response to our report on the chairmanship of the BBC, in the end Ministers will agree with all our proposals here as well.

In part, this inquiry was provoked by the sudden resignation of Michael Grade as chairman of the BBC and his just as sudden transfer to the executive chairmanship of ITV. The BBC had already lost one chairman quite recently and here was another, this time not only resigning but switching to the BBC’s direct competitor. I remember the response of the Minister—who is replying to this debate—when the point was put to him in this House. His response was:

“it is a free country”.—[Official Report, 30/11/06; col. 848.]

I doubt if the Minister can say with a straight face that this was the immediate reaction in the Department for Culture, Media and Sport when the news first came through. I doubt that Tessa Jowell did a little jig to celebrate the free and successful working of the market. It seems altogether more likely that there was a collective chewing of the carpet at the totally unexpected departure of a chairman who everyone thought would serve a full term, not least to see through the new governance arrangements for the BBC he had agreed and to work through the consequences of the new licence fee settlement.

As our report makes clear, we recommended that the chairman of the new BBC Trust should be subject to a six-month notice period. We thought it absurd that the BBC could be left virtually without notice in this potentially vulnerable position. The Government's response was that the charter provided only very limited powers for setting terms relating to the chairman’s employment; although it is perhaps relevant to point out that the Government could have taken such powers in the charter that they have only recently provided for the BBC.

Nevertheless, I welcome the statement in the Government’s response that, in the absence of legal power to make such provision, they accept the need to establish a clear understanding between the department, the BBC and the chairman about the requirements of the role, including the expected length of term of appointment. The understanding on the length of term of appointment for the current chairman, as in the Government’s response, was set out in writing and will be for future appointees. That is a sensible step forward. I also welcome what the BBC Trust said about a non-compete clause. We proposed six months; the BBC Trust said in effect that the current non-compete clause in the trust’s code of practice is for three months, introduced voluntarily by the trust earlier in 2007 following Michael Grade’s departure. Legal advice at the time was that the enforceability of any non-compete over three months was doubtful. We obviously accept that advice and welcome the steps that have been taken.

I am not going to describe in a short speech each and every recommendation that we made. In the process of appointing a chairman, we have tried to set down a procedure that would make the selection as open, transparent and independent of government as possible. We proposed, for example, that the chairman of the independent selection panel should no longer be a civil servant who, by definition, works to a Minister. We proposed that the Secretary of State’s powers to make the final choice should be more limited than at present. Perhaps not surprisingly, Ministers are entirely happy with the present position, given their power, so we will have to wait for change there.

However, there is one point where I think the Government should look at policy immediately. The members of the committee all remember a rather embarrassing moment in our evidence-taking when Mr Woodward—who I remember as my director of communications at Conservative Central Office but appeared before us as broadcasting Minister of the current Government—declined to answer some questions before he had checked back with headquarters whether this was allowed. Eventually it was agreed that he was allowed to answer, but it poses the question of whether other information was being withheld. I say that because under the Freedom of Information Act the department has now provided copies of the Civil Service submission to the Secretary of State on whom to appoint as chairman of the BBC Trust, including how the appointment was to be handled and announced. I observe that those documents were never offered to the committee, and it would be an enormous pity if departments were not to offer maximum information to parliamentary Select Committees. I suggest that the fundamental recommendations in this report are to deal with the role of the chairman and the role of Parliament.

On the role of the chairman, I suspect that there is still a great deal of public confusion because Sir Michael Lyons is not the chairman of the BBC, but chairman of the BBC Trust. “Chairman of the BBC” is now only an honorary title and Sir Michael is not chairman in the way that that has previously been understood at the BBC. Very substantially he is a regulator: his stated aim is to represent the licence fee payer. The question then becomes who is representing the BBC. At the time of the faked phone-ins, we thought that the director-general looked an isolated figure when he was trying to explain what had gone wrong. Of course, I do not believe for a moment that the BBC chairman or any other chairman should be there to defend the indefensible, but he should be there to advise and support and to tell management when he thinks that things are going wrong. That is what happens in the best companies in the private sector. It is what good governance is all about.

However, it is also the case that a corporation such as the BBC has legitimate interests that need to be expressed. For example, there is a gathering debate on whether the licence fee should be top-sliced for purposes apart from those of the BBC and for other companies. It is entirely legitimate and expected for the BBC to enter that debate and argue against top-slicing. We would expect it. It has already had £600 million sliced off the licence fee to support social spending on helping people in need with the digital switchover, yet curiously when the question of top-slicing the licence fee was put to Sir Michael Lyons at a recent meeting I was at, his reply was to the effect that he was keeping an open mind on the issue. I can think of no chairman in the past giving such a reply. They would quite legitimately put the case for the BBC, against, I have to say, some very organised opposition organisations which, for one reason or another, argue in favour of top-slicing.

I emphasise this not in any way as a personal criticism of Sir Michael. He has certainly impressed me, and not just because he lives in my old constituency of Sutton Coldfield. It is a criticism of the structure of the job he has been given. I would much prefer him to be chairman of a regular board jointly responsible with the executive for the success of the BBC. If I am allowed a personal aside, I see that the Commons committee has come out in favour in principle of top-slicing the licence fee. In the now famous words of the noble Lord, Lord West¸ I need to be convinced of the case, and I may not be converted quite as quickly as the noble Lord.

My final point concerns the role of Parliament. We had hoped that the Government would agree that the chairman of the BBC Trust should be one of the appointments which could be scrutinised by a parliamentary Joint Committee which would focus simply on his qualifications and aptitude for the job. Predictably, the Government rejected that. I say “predictably” because, as we say in our report, there is a democratic deficit concerning the BBC. This is a point on which the committees in the Commons and the Lords speak as one. Although the public are providing more than £3 billion a year through the licence fee, they have very limited power through Parliament to change anything. Parliament—particularly the Commons—is the only body that can claim to represent the public, yet the new charter of the BBC, including the new arrangements for the chairmanship, was not subject to approval by Parliament. It was a deal between the BBC and the Department for Culture, Media and Sport. It is virtually the same with the licence fee; it does not need a debate in either House and proceeds by negative resolution, which means that even if there is a debate Parliament has only the choice of accepting or rejecting it. There is no power to amend; for example, there is no power not to accept that the £600 million of social spending should come from the licence fee.

I know that there are those in the BBC who are wary of any parliamentary check. To them I say that if the £600 million funding for targeted help with the switchover had been put in legislation that Parliament could have amended, my judgment is that it would have been amended. How can you say that free television licences are social spending to come from the Exchequer but that helping old people with digital switchover is not? It is logically unsustainable. In the same way, there would have been a fierce debate on the charter provisions relating to the role of chairman of the BBC, and I am by no means certain that that would have got through either.

The Government's answer, which is set out in their response, is that their public opinion research does not favour what they call in their response,

“increased Parliamentary control over the BBC”.

In truth, the research shows no support for government control over the future of the BBC either, but, of course, the Government are not reducing their powers accordingly. It is a pity that the department keeps on quoting that opinion research because, to be frank, it is hardly worth the paper that it was written on and would be worth even less if the issues were properly set out for the public. I simply observe that there might be those in the BBC today who would place more trust in Parliament than in Governments of any party.

I am very grateful to all those who gave evidence to the committee. I am very grateful to the committee, a number of members of which are here tonight. I welcome the movements to our point of view that have been initiated by the Government and the BBC Trust. However, I warn that confusion and some conflict remain on the role of the chairman of the BBC Trust. Above all, I believe that Parliament should be more involved with some of the important decisions affecting the BBC, such as the charter and the licence fee that raises more than £3 billion from the British public. I beg to move.

Moved, That this House takes note of the report of the Communications Committee on The Chairmanship of the BBC (First Report, Session 2006-07, HL Paper 171).—(Lord Fowler.)

My Lords, I speak as a member of the Communications Committee, but as a new bug who is not speaking with the benefit of having been a member of the previous committee; I was highly privileged. I thank the noble Lord, Lord Fowler, our greatly esteemed chairman, for introducing the report so elegantly.

I do not want to detain the House long because I want to address only one issue in the report. In doing so, I intend to amplify a point already raised by the noble Lord, Lord Fowler. It relates to the first recommendation of the report which concerns the lack of clarity about the role of chairman of the BBC Trust. We noted that:

“Article 10 of the new Royal Charter states that there is no longer a formal Chairman of the BBC ‘The Chairman of the Trust may also be known as the Chairman of the BBC. In view of article 8, this is an honorary title, as the members of the BBC will never act as a single corporate body, but only as members of the Trust or Board to which they belong.’”

That is a rather curious form of words, in my estimation, but what it really means, as the report points out, is that the chairman of the BBC trust and the director-general, who chairs the executive board, can no longer stand together representing one organisation. The report observes at paragraph 7:

“This is a radical change and one that concerns us”.

The committee spent quite a lot of time with a number of witnesses trying to figure out how that relationship worked or will work in practice. In particular, we were concerned to understand the implications of the trust’s primary responsibility to represent the interests of the licence fee payer. I think that it is fair to say that we were not a whole lot clearer at the end than we were at the beginning. Even Sir Michael Lyons, who gave us a generally robust and lucid account of his new responsibilities, when talking about the new governance arrangements, conceded that:

“there is no doubt that this is a complex arrangement”.

One can only agree with him.

The question at the heart of the matter is whether the trust, under the new arrangements, is or is not a de facto regulator. The then Minister, my right honourable friend Mr Woodward, Mr Ramsay, the civil servant who gave evidence with him, and Sir Michael Lyons himself all strove in various ways to convince us that it is not, but the way in which recent controversial events at the BBC have been handled suggests that the role of the trust in its affairs is closer to regulation than to anything else, as the report notes at paragraph 16.

In the wake of the cataclysm that overtook the BBC after the Hutton report, it is no surprise that the Government and the BBC sought through the charter provisions to protect against any such disaster occurring again. I have no problem with that and accept that some change is inevitable. The question is whether what is now in place has created a new set of problems. In particular, I am concerned that, in the new order, the BBC is more vulnerable than it was before—in this respect, I agree with the noble Lord, Lord Fowler—because its sovereign body, the trust, has as its principal responsibility not the interests of the BBC but the interests of licence fee payers.

In their response to recommendation 1 of the report, which states:

“It should be clear whose job it is to represent the BBC itself, as distinct from the licence fee payer, what it means to represent the licence fee payer”,

the Government say:

“the Trust and the Executive Board both have a responsibility for representing the interests of the BBC within the context of the particular functions of each body. By representing the licence fee payer, we mean taking on the role of understanding and bringing to bear the public interest on the activities of the BBC”.

I am tempted to say, pick the bones out of that.

My question to my noble friend is this. The BBC has been much in the spotlight since the committee's report was published. Is he satisfied that the new governance arrangements have stood up well to the challenges that they have faced? In carrying out its duty to represent the interests of licence fee payers, has the trust in fact been acting primarily as a regulator? If so, has that left the BBC itself—and the director-general in particular—without a robust champion?

My Lords, it has been a great pleasure to continue my interest in media matters under the eyes and experienced chairmanship of the noble Lord, Lord Fowler: first, during the ad hoc Select Committee’s examination of the BBC charter review process; and, since then, on the reconvened Communications Select Committee, whose main current project concerns media ownership and the news.

The very fact that a number of members appointed to the Communications Select Committee had also served on the previous committee on the BBC charter meant that the committee was ideally placed, as an initial short project, to examine the unexpected and, in my mind, rather shocking resignation of the then chairman of the BBC, Michael Grade, and to help to identify possible lessons that might be learnt for future such appointments.

As we say in the report, the chairman of the BBC is not subject to any formal contract because the chairman—and, rather surprisingly, members of the new BBC trust—are considered officeholders, not employees. Therefore, there was, for example, no “non-compete” clause to prevent Mr Grade accepting the offer to chair ITV, the BBC's main competitor. Mr Grade certainly made it clear in his evidence to the committee that, once in the saddle at ITV, he would not have acted on any confidential BBC information in his possession. However, not unnaturally, many licence fee payers would have been less than fully convinced by that. The mere fact of his leaving the BBC without a chairman before the final licence fee funding had been agreed would, if nothing else, have weakened the BBC's negotiating position and, for some, Mr Grade’s credibility.

This has been mentioned by other noble Lords and will no doubt be commented on by noble Lords, but I draw particular attention to our recommendation to include a six-month non-compete clause in the contract of any future appointment to the chairmanship of the BBC. I think that we should still stick to the six months as being a reasonable period, although I hear what my chairman said, and always listen very attentively to that.

That, and other details that we recommend for increased transparency about who chairs and serves on the Secretary of State's appointment panel and about the process to be followed will, I hope, also be accepted. There is very little doubt that many of the procedures adopted in the latest appointment process were worrying. For example, if it had turned out that the Secretary of State’s own added candidate had been chosen, as referred to in chapter 3, paragraph 22, that might have caused quite an eyebrow lifting. The appointment of Sir Michael Lyons was certainly appropriate. I was personally very impressed by his performance but, as we say in chapter 3, paragraph 18:

“We do not believe the quality of the outcome validates the process”.

I also hope that the recommendation to involve both Houses in pre-appointment parliamentary scrutiny for the chairmanship of the BBC will, on reflection, be accepted. I say that with some reluctance myself, for my view has always been that the last thing needed by or for the BBC was further parliamentary involvement or oversight. The BBC has always managed to stand up to ministerial pressure from all political parties. However, post-Hutton and the subsequent BBC resignations, events have sadly changed all that. Now I feel that there must be a role for both Houses of Parliament for, in today's world, those procedures are more relevant. They also take account of the newly shared responsibilities between the BBC executive board and the BBC trust—about which we overheard in considerable detail, when important points have been made—and, perhaps especially, the trust’s enhanced accountability to the licence fee payer, as well as its additional regulatory responsibilities.

I have one more concern, which is that there may still be other appointments like those of the BBC which still do not fall completely within the scrutiny of the Commissioner for Public Appointments and/or follow Nolan principles. I asked the Library about that and it kindly sent me details of current practices, which I feel should reassure me. Is the BBC really the only remaining body that appears to have felt it safe to assume and to rely on honourable behaviour by a “great and good” incumbent, rather than spelling out what would not be acceptable behaviour?

I hope that we will get some more detailed answers to that but, be that as it may, personally I remain confident that the long-standing central sense of purpose and integrity of the BBC remains intact. There have been some recent problems. We may feel obliged to take some steps to buttress the BBC in the way that we have been discussing today, but we can still assume with some confidence that those qualities that have helped build the BBC as the great institution that it was and is still is today.

My Lords, I welcome the debate and thank the noble Lord, Lord Fowler, both for his speech introducing the debate and for his excellent chairmanship of the committee. He was absent abroad on one recent occasion and I had that onerous task. I have to say that, as a result, I am more appreciative of the work that he does. It is not easy. I am also grateful to him for dealing very fully with the report, allowing the rest of us to range a little wider than the report itself. I note that, with the exception of the noble Lord, I happen to be the only male Back-Bencher speaking in the debate. I do not believe that it has anything to do with football. My team went out last Saturday, so as a Scot I am of course less concerned about the result than the rest of you might be.

In a sense, we now have to move on. The charter has been agreed and set up. The chairman is there and, although we may have the process of selecting the next chairman within four years, it is likely that Sir Michael Lyons might be reappointed, so his chairmanship may extend to cover almost the whole of the charter period. It is therefore now our role to look at what exactly the chairman and the trust will do with the slightly limited powers that they now have. They obviously see themselves as regulators and as representatives of the licence fee payer. Like other members of the committee, I had reservations about the structure but, as I said, that is now in the past and it is time that we considered how this will work. In passing, I have reservations about the claim of the chairman and the trust to represent the licence fee payers. After all, licence fee payers are electors and constituents, so their real representatives in this matter are Members of Parliament, not an unelected trust.

What should the role of the chairman and the trust be? I believe that they should be the long-term strategic thinkers on the future of the BBC and the guardians of BBC standards. They should be regulators, not in the nit-picking way of regulating particular things but in considering whether the BBC is fulfilling the aims laid down for it in the charter.

As members of the committee might expect, I could spend a considerable time dealing with convergent technology and the role of the BBC in relation to it. I hope that the trust has already employed experts in convergent technology to give it advice on how broadcasting, or what I increasingly call “narrowcasting”, will look in 10 years and on how or even if the BBC can survive in this new world. It is very difficult to forecast the future when technology is changing so rapidly, but it must be the responsibility of the trust to try to make judgments and to ensure that the BBC has the capacity to adapt to change as it comes. So far, the BBC has been very good at this, but we must ensure that it continues to be so. We will move rapidly to a world where we will watch what we want to watch when and where we want to watch it. In this world, what will the role of a schedule-based broadcaster be? The BBC will have to become a programme producer rather than a schedule producer, but that is a role for the trust.

I shall address the rest of my remarks to the trust’s role as the protector of BBC standards. I hope that the BBC will for once accept criticism from someone who has been a very loyal supporter in my years on various media committees in both Houses of Parliament and who remains committed to the whole concept of a public service broadcaster such as the BBC.

At the heart of the BBC public service is a commitment to news. There is a growing concern both about how the news is presented and about its attitude to politics and politicians. That concern might be more widely felt on the government side than it is on other sides, but it should be appreciated by all. Everyone here believes that the BBC should never be threatened by political interference from any quarter. In return, however, politicians have a right to expect the BBC to fulfil its charter obligations to be educative, impartial and accurate in all that it does.

Let me give a small example of accuracy that has nothing to do with politics. It was given to me by my office companion, the noble Lord, Lord Haworth, of Fisherfield, who is a climber. The BBC has received awards for its “Mountain” series, in which Griff Rhys Jones was filmed climbing Ben Nevis and supposedly on the summit. Climbers, such as the noble Lord, Lord Haworth, and others, say that that is not the truth; he was not on the summit but two kilometres away and 129 metres lower down. It might not matter—the BBC has rather dismissed it—but if the BBC is careless with the truth in matters such as this, that gives rise to the question of trust in other things that it does.

I have three worries about news programmes on the BBC. First, they too often appear to lead with sensational news about individual cases rather than what I would consider to be the major news story of the day. It recently led the “Six O’Clock News” with about five minutes on the arrest of a suspected paedophile in, I think, Thailand. The third or fourth news item was the signing in Madrid of the new European treaty. Which is the most important? In my view, it is obviously the signing of the treaty.

Secondly, the BBC’s news coverage is too often negative. Very rarely is there any positive coverage about anything that politicians in particular and the Government do. This causes concern because, thirdly, whether we like it or not, the BBC is a vital part of the democratic structure of this country. It is the most trusted provider of news and views and is for many people the link between the electors and the elected. Elected representatives cannot meet all their constituents and discuss the issues of the day with them. That is simply a physical impossibility, as I know as a former MP. Their constituents therefore rely on the media, in particular the BBC, for the views and analysis of the issues of the day. It is therefore vital that the BBC is seen to be open, accountable and impartial in its reporting of politics and politicians. I therefore welcome the recent announcement by the trust that it has commissioned a review of the BBC news service, particularly in the nations and regions, with particular reference to impartiality. I must say in passing that the BBC is impartial; a large number of its correspondents sneer at all politicians, not simply at those of one particular party.

Let me make a few suggestions about what the trust should consider. First, it is important, as I have said, that the BBC and the rest of the media should be seen to be open and accountable. Members of the committee will know that I believe that the Freedom of Information Act should cover all aspects of the BBC, including the salaries, expenses and financial interests of those who report and give us the news. The BBC is, as I said, a vital part of the democratic structure. I fully supported the freedom of information legislation and believe that, if we are entitled to know about all other public bodies that are publicly funded, we are entitled to know about the BBC as well. It is very difficult for the BBC chairman and the trust to claim that they represent the licence fee payers when they are not prepared to tell them exactly how they spend their money.

Secondly, the chairman and the trust should carefully examine the way in which news and views are presented. Too many BBC newsreaders and presenters believe that hectoring politicians and giving them a hard time is their job. I do not believe that it is. Their task is to allow politicians and others of differing views to express themselves to the public in such a way as to give the public the opportunity to make up their own minds on different points of view. It may make good television or radio to have a self-opinionated, self-appointed guardian of what they see as the truth badgering a Minister or an opposition spokesman on the latest political story, but it does not educate the public.

Thirdly, and perhaps most important to the health of democracy, a culture of cynical contempt about politics and politicians pervades the BBC from the newsroom to almost all programmes. One of my favourite programmes is Michael Parkinson on a Sunday afternoon on the radio, mainly because he plays my sort of music. He has throwaway lines in which he shows his contempt for politicians. In that, he follows the example of people like John Humphrys and Jeremy Paxman. There are those in the media who understand this and deplore it. I believe that Jeremy Paxman has said that people such as him should always remember that the politicians whom they interview have been elected by the people of the country and that he has not. It is a pity that he does not often take his own advice. In his book, My Trade, Andrew Marr states that journalists and the media,

“have become too powerful, too much the interpreters, using our talents as communicators to crowd them”—

the politicians—

“out. On paper we mock them more than ever before and report them less than ever before. On television and radio we commentators are edging them out ever more carelessly. Democracy made modern British journalism”.

The problem often seems to be that too many journalists in the BBC and elsewhere do not appreciate that democracy and politics are inseparable. They may be the reverse sides of a coin, but they are part of the same coin. You cannot damage politics without to some extent damaging democracy as well. There has been much criticism of politicians in the media about declining turnouts in all elections. Of course, politicians bear some responsibility, but those journalists and media commentators who are so free with their attacks should perhaps look in the mirror every morning and every night and ask themselves how much they are to blame in creating an unjustified cynicism among the public about politics that means that they see little point in voting.

The BBC in particular has an important role to play in creating an educated electorate in the most mature democracy in the world. That may make its political coverage less interesting, but there are times when the BBC’s role as educator and its responsibilities within a civic society are more important than its role as an entertainer. I hope that the new chairman and the trust will look carefully at the part that the BBC must play in a modern democracy, not just to ensure that licence fee payers are satisfied, but also to ensure that the elected politicians on whom the BBC ultimately depends for its existence are not increasingly alienated from them, as many of them are at present.

My Lords, it is a great pleasure to take part in this debate and to lend my support to the chair and fellow members of the Communications Committee. It is daunting to follow my noble friend and say anything that is even remotely original. I probably should not say this, but I enormously enjoy being a member of the committee. From the outset, it is important to say that this inquiry, its conclusions and our comments on the issues which broadly can be described as “what is the chairman of the BBC for?”— which I agree with my noble friend Lady McIntosh we did not quite work out—and “how he was appointed and whether that process served the public interest” are not a reflection on the capability or appropriateness of Sir Michael Lyons, the person appointed. I came to this inquiry as a novice on the committee. Many members had been investigating this and other BBC matters for some time.

During the inquiry, some matters were of broader concern than simply whether the mechanism by which the chairman of the BBC was appointed was right or not. As my noble friend Lord Maxton said, the BBC is an institution of enormous national significance. Its independence, the quality and trustworthiness of its news and the balance of its comment are part of the weft and weave of British democracy. Any change or development in the way that the BBC does its work has to be tested against its position of national importance. That is why the change to its governance was a hotly debated matter and the appointment of its chair is worthy of at least comment by Parliament. All of us on the Communications Committee will be keeping a watching brief on how it works out.

In preparing this contribution, I read through the evidence and was struck by one or two things which merit comment, some of which has already been said. But in the honourable and noble tradition of this House, I intend to say them anyway. Like many other members of the committee, by the end of the inquiry I was still unclear as to who is now the champion of the BBC. Who is the person who will stand up and say, “Over my dead body”? For instance, the noble Lord, Lord Fowler, spoke about the top-slicing of the BBC’s funding. While the current chair was keen to assure us that he is the chairman of the BBC, the fact that the new charter refers to him as having an honorary title is borne out by the fact that he did not say, “Over my dead body” when the top-slicing was suggested, which I suspect other chairmen would have done.

It was also unclear to me who would win in a confrontation with the director-general should it ever happen, which is why I am keen on recommendation 12 and the need for clarity on the role of the chairman. It should be clear whose job it is to represent the BBC itself as distinct from the licence fee payer. I agree with earlier remarks that the trust seems to act as a regulator and that the director-general acted as the voice of the BBC in its recent troubles concerning “Blue Peter” and others programmes. That begs the question of how, under the new arrangements, the BBC would handle a Gilligan-type scandal. Would the whole management team resign should such a thing happen now or would no one resign because it is not clear where the responsibility rests?

That leads to the other question for the inquiry: why it is important to have a robust and transparent process for appointing the chairman of the BBC. Although the issues of transparency and accountability have been more than adequately covered by the chairman of our committee and others, I suggest that the process for appointment would be enhanced by the proposals set out in the report. While we were working on it, in my innocence I was surprised at how difficult it was to achieve clarity on the appointments procedure, even from members of my own Government, and although I was probably less exercised by the fact that the Secretary of State has a role in the appointments procedure because I think he should have such a role, what is important is that it is clear and on the record so that everyone knows what is going to happen.

I return to the effect that parliamentary scrutiny would have on this appointment. Greater scrutiny, as outlined by the noble Baroness, Lady Howe, would recognise the importance of appointing a person who is fully aware of the responsibility that the chairman of the BBC bears for the democratic health and fabric of our society, and indeed the importance of the BBC in the world. It may be that a more robust and accountable appointments process would have produced the same result in terms of the present incumbent, but how much stronger a position would he have been in and how much greater status would he have enjoyed had the process been more robust, accountable and transparent? Indeed, how much better would he have been able to fulfil the important job of being both the champion of the licence fee payer and of the BBC? That is why I urge the Minister to take heed of our report.

My Lords, this has been an excellent debate largely because it has been so clearly focused. I note that all the speakers apart from those winding up and the Minister are members of the committee. I congratulate them on the report, and in particular the chairman, the noble Lord, Lord Fowler, on his rather forensic introduction. Many noble Lords have pointed out that the BBC is a unique institution, and for this reason the position and the appointment of the chairman, or more accurately the chairman of the BBC Trust, deserves particular consideration. While the previous and the current chairmen have been of high calibre, it is clear that such an appointment cannot simply be left to government without debate.

The concise report of the committee sets out particular concerns about the process employed for the selection of the current chairman. Looking at it afresh, it is extraordinary to note the level of influence of Ministers as they have exercised it at each step of the appointment process. Moreover, as the noble Lord, Lord Fowler, pointed out, it was disappointing to note that obtaining information about the process clearly took considerable time and effort on the part of the committee. The role of Ministers is pivotal under the current procedure. Officials responsible to Ministers appoint the selection panel. I say that advisedly while looking carefully at the Government’s response—perhaps not Ministers, but certainly officials responsible to them. Ministers have the power to add to and subtract names from the shortlist. Ministers choose from a list of four names, not necessarily having to choose the candidate most highly recommended by the panel. Members on these Benches wholeheartedly agree with the committee that transparency in the process is vital and that any perception of political interference should be countered. We therefore welcome the recommendation that there should be a duty on the Secretary of State to appoint a selection panel of at least five members made up of a majority of non-political appointees and chaired by a non-political appointee who is not a civil servant.

However, I am pleased that the committee is in agreement with my honourable friend Don Foster MP, when he said in his evidence that parliamentary scrutiny and oversight of the process is important. The committee’s recommendation that the composition of the panel should be announced to Parliament in a Written Ministerial Statement can hardly be objected to by the Government. Surely that is entirely in line with the Prime Minister’s plans for the Executive to become more responsive to Parliament, as he set out in his Statement of 3 July 2007 accompanying the Green Paper, The Governance of Britain. He stated specifically that the Government should surrender certain powers, including the power to make key public appointments without effective scrutiny. That is a clear statement, but I have read what the Government said in their very disappointing response to the committee’s report. They seem to be saying that the post of chairman of the BBC Trust is not a key public appointment. If that were put to an opinion poll, I think the general public would regard the chairman of the BBC Trust as being one of the central public appointments. So the Statement made by the Prime Minister is extremely important. Similarly, I agree with the committee’s recommendation that the adding to or subtracting of names from the shortlist by a Minister should be made public and, finally, that the panel should recommend only one name to the Minister, being the candidate who scored highest at interview, though of course Ministers will still retain the power to reject the name and ask the panel to reconsider.

I, like the committee, was surprised and concerned by the absence of the chairman of the BBC Trust in the list of key positions to be subject to a relevant parliamentary Select Committee which was set out in the Green Paper, The Governance of Britain published earlier this year, to which the Statement refers. Why is the key appointment of chairman of the public service broadcaster of our nation not included on that list? On what possible grounds can it be excluded? If the Prime Minister wishes to see greater parliamentary involvement, including pre-appointment hearings, then surely this is a clear omission from the list.

Not only is the process of appointment of concern to the committee, but also the lack of clarity in the role of the chairman, as has been mentioned by many noble Lords today. Previously the independence of the BBC from government was safeguarded as a team effort by the chairman of the governors, together with the director-general. The committee heard evidence to this effect from the former chairman, Gavyn Davies.

The chairman now has regulatory responsibilities and has a specific remit to represent the interests of licence fee payers. The Select Committee on the BBC Charter Review rightly raised concern over potential confusion. Of course, in a sense, the Communications Committee is very much the successor of the BBC Charter Review Committee and shares the chairmanship of the noble Lord, Lord Fowler. But the Government have failed to address these concerns, as a number of noble Lords have pointed out. Now the committee has reiterated the need for clarification as to whose job it is to represent the BBC itself as distinct from the licence fee payer. I wonder also as to the impact on the BBC’s long-term independence from government of the new structure.

In the recent faked phone-in scandal and the inaccurate trailer about the documentary “The Queen”, the chairman and the BBC Trust acted as regulator. I agree with the committee that the question arises, with this role being taken by the trust, whether it is consistent that it should be management, headed by the director-general, that is responsible, as the trust puts it, for,

“ensuring the culture of the BBC properly reflects the requirements of a public institution”,

with the trust representing the interests of the licence fee payer.

There seems to be confusion here. I raised concerns when we debated these issues in December 2005 and June 2006 about the role to be taken by the trust in the different elements. I pointed out then that there were three different areas that needed addressing—regulation, governance and management roles. I do not think we have yet teased out a satisfactory way of dealing with those three areas. We can now see in practice the downside of having the chairman of the trust involved in regulation. It would be gratifying if the Government had the courage to acknowledge the deficits in the present arrangements and to rethink them.

A further matter considered by the committee is that of the conditions of service of the chairman. My honourable friend Don Foster made the point in giving evidence to the committee that it is staggering that there is no written confidentiality clause governing the position when a chairman resigns. It is not good enough that the BBC obtained written assurances from Michael Grade on his departure. The position should be clear from the outset. It is certainly no reflection on Michael Grade. I support the committee’s recommendation that the chairman of the trust should be subject to a six months’ notice period and in the interim the non-compete clause in the trust code of practice should be amended so that the chairman cannot take up a position with a competitor for at least six months.

I referred to the Government’s response to the committee’s report. In looking through it, I tried to find a ray of sunshine. The noble Lord, Lord Fowler, was extremely gracious in picking out the one element of it that was of any benefit at all to posterity. It seems to be a stonewalling exercise. It is as though none of the committee’s recommendations was invented here—that is, within the DCMS—and therefore found absolutely no favour with Ministers at all. I recommend that the Minister and his colleagues look again at the committee’s report. I have rarely seen a more negative and stonewalling response and I hope that they will act eventually on the recommendations made by the committee.

It will be up to others in this House and elsewhere to keep up the pressure on the Government to make them rethink. It is crucial to get it right and to learn from experience. This is an extremely experienced committee and it has not made frivolous recommendations. It is crucial that we ensure the BBC’s independence and that it retains public confidence and respect. I believe these recommendations will go a long way towards securing that.

My Lords, like all other speakers this evening, I thank my noble friend Lord Fowler for moving this Motion and for his excellent work in chairing the Communications Committee for some years. I thank also the members of the committee for the hard work that has gone into producing their report, which we on these Benches broadly welcome.

Like the noble Lord, Lord Maxton, I shall divert slightly from the subject and say that I approve of what he said about the announcement of a review of the news services, which, in the BBC, too often major on the trivial.

The BBC is one of the great British public services, as we all know, and scrutiny of how it is led is thus of considerable importance to all of us. It is not just because of its history as the gold standard of British broadcasting that it can make claims of importance to this House; it is also because it is the recipient of huge amounts of public funds. A number of noble Lords have already mentioned the figure of £3 billion, which is an enormous amount of money. It is therefore extremely important that we can be assured that the BBC is being led apolitically, with clarity of purpose and a commitment to safeguarding the standards that the public have come to expect. We must be able to have confidence in the BBC.

I am afraid that this confidence has recently been shaken, as has been mentioned by other noble Lords. The recent revelations of fake phone-ins have meant that the public are likely to have doubts regarding the BBC, as well as other channels. They have certainly damaged the corporation’s reputation as the gold standard in public service broadcasting. On 9 July, the BBC was fined £50,000 by Ofcom following a revelation concerning a faked competition on “Blue Peter”. On 18 July, following the aforesaid exposure of industry-wide fakery, the BBC revealed the details of six shows in which the public had been misled or deceived. The shows included “Children in Need” and “Comic Relief”. As has already been mentioned, the BBC was also forced to apologise after it showed misleading footage of the Queen to journalists in July. This is simply unacceptable. Does the Minister think that the new governance arrangements are robust enough to restore confidence and prevent future deceptions?

These revelations came to light while the Lords Communications Committee was sitting. The committee rightly notes that the actions taken by the BBC Trust during the faked phone-in scandal underline how much the role of the chairman has changed. As has been said earlier, the problem is that the chairman of the BBC Trust no longer stands shoulder to shoulder with the director-general, as his position now carries regulatory responsibilities and is much further removed from executive broadcasting decisions than that of his predecessor governors. According to Gavyn Davies, the former chairman of the BBC whom we have previously mentioned, this division may eventually threaten the independence of the BBC, which I am sure noble Lords on all Benches would wish to safeguard most ardently. The chairman and the director-general might not be able to stand together against government pressure at a time of crisis, such as in 2003. In this respect, the new executive configuration of the BBC has not yet been tested. It is vital that the BBC always makes decisions in the interest of the public and not of Ministers and the Government. What assurances can the Minister give that the current executive organisation of the BBC will allow for complete independence, especially if something as serious as the Hutton inquiry happens again?

I also draw particular attention to the committee’s criticism of the way in which BBC chairmen are appointed. Its concern focused on the lack of parliamentary oversight of the selection and appointment procedure, and it mentioned too much ministerial influence. The committee argued that during the recent appointment of Sir Michael Lyons, Ministers were given considerable influence over the selection process. It said:

“Ministers appointed the selection panel, Ministers were allowed to change the shortlist of candidates and ultimately Ministers were able to choose between four candidates who passed the interview process”.

This, of course, contributes further to the concern regarding lack of independence. As my noble friend mentioned, his committee argued that there is a democratic deficit in the management of the BBC. How does the Minister respond to this assessment?

The committee recommended that, while the Minister would still be answerable for appointments,

“an independent panel should suggest only one name to Ministers and that name should be the candidate who scored highest at the interview”.

That sounds logical to me. Can the Minister explain why this suggestion to ensure greater independence has been ignored by the Government? Our position on these Benches is that we want to ensure greater transparency, not only in the appointment of the new executives, but also in the way the BBC is run. Of course, we welcome the drive to make the BBC more efficient.

Noble Lords will remember that the BBC Trust issued a public statement setting out its new role as regulator, in which it said:

“The primary responsibility for ensuring the culture of the BBC properly reflects the requirements of a public institution … rests with the senior management team. We have underlined that and asked the Director-General … to review the management structure with a view to strengthening the BBC's editorial controls and compliance procedures”.

What happened when it became clear that editors and producers might have been contravening the regulatory code? Does the Minister think that the regulatory code itself could be flawed? As the broadcasting code was clearly breached during the summer, with the quiz shows and competitions, what action are the Government taking to strengthen it? If, as the BBC Trust has outlined above, the responsibility for compliance rests at the most senior levels, I would like to conclude by asking, can we trust the trust to do the right thing?

My Lords, I am grateful to all noble Lords who have contributed to this important debate, but particularly to the noble Lord, Lord Fowler, who chairs the committee and introduced the topic with his usual style—which is, of course, particularly difficult for the Minister responding to the debate because not only does he accurately identify the committee’s arguments and stress his own strong views on several points, but he anticipates what the Government’s reply might be. After all, the Government have given a reply to the Select Committee. So he identifies that and then demolishes it in part of his opening speech. Therefore, I find myself with most of the positions that I would have adopted already demolished by the noble Lord, Lord Fowler, as he has already indicated why he will disagree with pretty well everything that I am going to say.

Let me get to the heart of the matter. The debate provides an opportunity for noble Lords to range widely over BBC matters, but it is chiefly about the chairman and the governance arrangements for the BBC. The most significant point that emerges from nearly every speaker who addressed themselves to it—as the noble Lords, Lord Fowler, Lord Luke and Lord Clement-Jones, did—is the democratic deficit. It was contended that the BBC had a democratic deficit under its old governance arrangements. There was great concern about the way in which the BBC was responding to several significant political crises, and about problems with its reporting. The noble Baroness, Lady Howe, mentioned the Hutton report.

The new governance arrangements are there to address the issue of democratic deficit. The problem is that noble Lords are interpreting that the only solution to the democratic deficit is increased participation in Parliament either in the lower House or this House. However, after substantial consultation and three years’ work, debate and analysis on creating the arrangements for the BBC, the problems all along were that the public thought that the previous arrangements were complicated and difficult to understand. They were not trusted by the BBC's commercial rivals or widely understood by licence fee payers, but there was no call for the BBC to come under closer parliamentary control—quite the opposite.

Of course there is the issue of the licence fee payers—the vast majority of the British public—being concerned that the BBC should be robust but also responsive and that new arrangements were necessary. But not, except in Parliament, was it strongly articulated that the solution lay in greater parliamentary control and supervision. Why should that be? Because the public value the independence of the BBC. Noble Lords cannot easily argue for the role of Parliament to be enhanced without great anxieties being created about the independence of the BBC.

My Lords, the Minister is taking his argument extremely wide from the outset. We are talking about the appointment of the chairman of the BBC, and parliamentary oversight and scrutiny in relation to that, not some Aunt Sally of parliamentary interference in the BBC.

My Lords, I recognise that, but what has been proposed in the new arrangements is the separation of the trust from the executive of the BBC and the role of the chairman within that. Within that framework, there is a clear illustration of how the democratic deficit is meant to be overcome. The role of the trust and the chairman in particular is to represent the licence fee payer; to supervise the actions of the executive board of the BBC. If one wants an illustration, the BBC moved with some dispatch to deal with the problem of the broadcast involving Her Majesty the Queen. The trust is looking at the broader—

My Lords, will my noble friend answer a simple question? The chairman and the trust are to represent the licence fee payer, but representation would normally mean that they had been elected by licence fee payers. That is simply not the case, so they do not in that sense represent licence fee payers.

My Lords, one can use the concept of representation of interest on a different basis from a purely elected basis, although I recognise the purity of the elected basis in the broader issues of government: that goes without saying. However, my noble friend and, I hope, the House will recognise that, in order to meet the democratic deficit, the trust is there to hold the executive board responsible to the wider public—the licence fee payer. Its role in those terms is illustrated by the example that I was about to give. The executive moved with some dispatch to deal with the broadcast that was the offensive with regard to Her Majesty the Queen, and apologised for it. The trust is looking at the guidelines that may need to be put in place to ensure that such a deleterious result does not occur again. It is the trust’s role to ensure that the executive is able to respond to the broad guidelines which it lays down. The trust is working hard in these areas.

The trust has existed only for a matter of months. I accept the point made by the noble Lord, Lord Clement-Jones, that this debate is concerned largely with the chairmanship of the BBC. However, he will recognise that it has ranged widely and that there has been condemnation of the structure which has existed only for a short period. It ought to be given time to bed down. So far it has a good record in responding to the crises that have arisen. Within that framework, the Government are bound to differ with the committee, as they did through the whole debate on the charter—the noble Lord, Lord Fowler, played an important part in that regard through his chairmanship of the relevant committee—on the fundamental point of whether the democratic deficit can be solved through the adoption of a greater role for Parliament in relation to the BBC. The Government argue that that cannot be the solution because the public take the view that it is important that the BBC’s independence should be guaranteed through maintaining distance between it and Parliament. We had that debate when we discussed the charter and it underpins the debate about the chairmanship.

The chairmanship of the trust is not quite the same as the chairmanship of other public bodies because other public bodies can be subject potentially to parliamentary vetting. If the chairman of the BBC Trust became subject to parliamentary vetting, the independence issue would be brought sharply to the public’s attention and the Government’s judgment is that the public would not support that position. What the public do support, and what the committee should recognise, is that the process by which the chairman is appointed should be fully in accord with the guidelines and requirements of the Commissioner for Public Appointments. She endorsed the way in which the process had been carried out. I believe that my noble friend Lord Maxton suggested that the process should be open. However, there is a problem with appointments that have to be open and subject to freedom of information requirements. It is not as if it is easy to fill some public positions. The House will recall—this occurred only the other day—an appointment in the nuclear industry which has had to be readvertised several weeks later at many times the original salary. Such a difficult post in the public service is not easy to fill.

To make every aspect of applications for such a post as we are discussing open and, under the Freedom of Information Act, available for everybody to see in terms of who had applied, who had failed, what their qualifications were and perhaps even the judgments made on them, would be very deleterious for aspects of public appointments. It is not easy for us to suggest that these issues can be any more guaranteed than they are by the Commissioner for Public Appointments. I refer to her excellent record and that of her predecessor, the noble Baroness, Lady Fritchie, who is now a distinguished Member of this House. This role ensures that the process meets the public test of probity for public appointments.

I understand that members of the committee have a deep, abiding and significant commitment to the future of the BBC and a real appreciation of the role that it needs to fulfil. It should be recognised that, in their response, the Government have established consistency on the charter and on the debate on the charter. The public expect the BBC to have the necessary degree of independence from political institutions and from Parliament. Nevertheless, it must be answerable to the public. The way it did so under its old board and arrangements allowed, as was mentioned this evening, the happy advantage of the chairman and chief executive being able to stand side by side. But it was also the case that, in certain circumstances, the chairman and the chief executive stood side by side in somewhat indefensible circumstances. There is now a separation between the trust and the board of the BBC. The arrangements have admittedly worked for only a short period of time, but they have given a clear indication that it can address itself to the issues that arise.

I regret that I did not pay due regard to the generosity of the noble Lord, Lord Fowler, in mentioning the contribution of the Arabic service and in saying with regard to the appointment that although he and the committee would have preferred a six-month cooling-off period, the BBC and the Government have settled for three months as there were legal difficulties with going as far as six months. The committee has made a proposal, and the BBC and the Government in their response have sought to move some way to meeting the committee's position. However, there is a quite significant difference between the Government's and the committee's positions. All contributions this evening have therefore indicated that the Government's response is not as acceptable to the committee as it might have been, and I fully understand that. The noble Lord, Lord Fowler, put me on the spot regarding these issues within 10 minutes of the debate being entered into.

It ought to be recognised, however, that these issues have been argued about for a number of years now. The Government are clearly maintaining consistency in what they expect from the BBC and the BBC ought now to be given the chance to show how the new arrangements will work. There is nothing in the evidence of recent months which leads us to any other view than that the BBC will grow in strength from the arrangements that have been put in place or to lead us to think that we should express undue concern about the future of what we all agree is one of our most significant public institutions.

My Lords, this has been a good debate. It gave some evidence of the quality of the Communications Committee. I thank everyone who has taken part. The noble Baroness, Lady McIntosh, rightly underlined the curious position of the chairman of the BBC Trust and the complex position at the top of the BBC. The noble Baroness, Lady Howe, pointed to the unsatisfactory position of Michael Grade’s departure from the BBC and the whole appointments process. The noble Lord, Lord Maxton, with his substantial experience, set out his view of what the new trust should be doing and the standards that the BBC should be observing, particularly in news programmes. The noble Baroness, Lady Thornton, asked, among other questions, who was the champion of the BBC—a question that I do not think has been answered. She, like all other Members—and this is an important point—spoke from a supportive position the BBC and its importance in our national life.

From the Front Benches, my noble friend Lord Luke pointed out some of the serious errors that the BBC has made recently, but he also stressed its independence. The noble Lord, Lord Clement-Jones, rightly criticised the fact that Ministers and officials were closely involved in the selection process and he supported greater parliamentary involvement in the oversight of the BBC, including pre-appointment hearings. He described the Government’s response to our report as negative and stonewalling.

Then we came to the great old stonewaller himself, the noble Lord, Lord Davies. He predicted that I would disagree with him, and I certainly do. It is frankly a little fanciful to give an illustration of the difficulties of filling public appointments by trying to compare the nuclear appointment with appointment to the chairmanship of the BBC. There is a long queue around Portland Place of people who would like to do the latter job.

I, and I think the committee, profoundly disagree with the noble Lord’s well rehearsed point about the role of Parliament. No one is arguing, as the response says, for parliamentary control. However, we are arguing for parliamentary scrutiny. We are talking about £3 billion of licence fee money, which has been provided by the public. As the noble Lord, Lord Maxton, rightly said, the only legitimate representatives of the public in this respect are Members of Parliament—to a lesser extent those in this House, but Parliament generally. Decisions on the charter and the licence fee taken by the department and the BBC are open to all kinds of objections. The idea of public support of the Government—not just this Government—being a determinant factor here is slightly ludicrous.

I do not really think that it can be seriously argued that, whatever else, the BBC Trust is the answer to the democratic deficit. I do not see how that can even be put forward as an argument. It is not a democratic body; no one elects it. That comes back to the point that the noble Lord, Lord Maxton, and others have made on its democratic legitimacy. The BBC Trust is and can be a regulator, but I do not see how it can be asked to fill the democratic deficit that undoubtedly exists.

We have had our debate. I am grateful to the Minister. It will come as no surprise to him that we will want to come back to these issues and we will be debating and investigating new issues over the coming months.

On Question, Motion agreed to.

House adjourned at 9.18 pm.