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Lords Chamber

Volume 700: debated on Thursday 24 April 2008

House of Lords

Thursday, 24 April 2008.

The House met at eleven o'clock: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Newcastle.

Jodrell Bank Observatory

asked Her Majesty’s Government:

What proposals they have for securing the future of Jodrell Bank Observatory in Cheshire.

My Lords, the future of the Jodrell Bank Observatory is a matter for the University of Manchester. Delays in the e-MERLIN project are costly to the STFC. The STFC is discussing with the Northwest Development Agency and the University of Manchester e-MERLIN and the next generation, the SKA, on which the University of Manchester and Jodrell Bank are leading. No decisions have been made by the STFC, which has made clear that e-MERLIN is part of its strategy for radio astronomy.

My Lords, does my noble friend recognise the historic role of Jodrell Bank in the discovery of quasars and the important future potential, currently through the e-MERLIN programme, of inspiring students and research in the physical sciences, including astronomy, so vital for our nation? Will she remind the STFC of the vital role that Jodrell Bank plays alongside Daresbury in inspiring and encouraging the centre of excellence in the north-west rivalling those of London and Cambridge?

My Lords, I thank my noble friend for his question because it gives me the opportunity to do as he suggests and draw attention to the iconic status of Jodrell Bank and the contribution that it has made in placing the UK at the forefront of worldwide astronomy. I concur with him and stress, for example, that the Daresbury Science and Technology Campus, along with a host of key scientific developments in the north-west, make a tremendous contribution to our scientific effort in this country.

My Lords, although the Minister has said that the future of Jodrell Bank lies in the hands of Manchester University, is it not also a fact, though, that the Science and Technology Facilities Council, as the funding agency, is going to be the determining factor in whether Manchester is able to sustain these internationally renowned facilities at Jodrell Bank? Universities UK has said that there should be a,

“sensible period of adjustment before abrupt decisions are taken”.

Does the noble Baroness agree with that view? Will she at least give an assurance today that the Government will monitor any of the STFC’s decisions in regard to Jodrell Bank?

My Lords, the noble Lord raises a number of very important questions. I support Universities UK’s call for close monitoring. The department and the STFC will look closely at the effects of its strategy in the workplace. I stress that the STFC has said that e-MERLIN is helping to prepare the ground for the next generation, the SKA. That is a very important statement. But, as I have said, discussions are taking place between the funding council, the university and the Northwest Development Agency about how to go forward.

My Lords, having heard the Minister’s first reply to the noble Lord, Lord Harrison, and then having contrasted it with her second reply, is it not the case that the first reply was fairly complacent bearing in mind that this is a very important national asset?

My Lords, I stand by both my replies. I am trying to stress that we have an important arrangement with our funding councils whereby they must review the scientific priorities within their particular areas. A review has taken place. The STFC has looked at the programmes associated with Jodrell Bank and it is in discussions with the university and the development agency to make the best decisions for radio astronomy going forward in the region.

My Lords, is my noble friend aware that the fact that no decision has been made is quite damaging? Science in the north-west, as well as Jodrell Bank, depends on this. Can she apply pressure for an early positive decision to be taken to further the interests of science not only in the north-west but nationally and internationally as well?

My Lords, I thank my noble friend for that. The STFC would be the first to recognise that communications around the decisions, and the consultation process around the programme review that it has undertaken, have created an element of heat and an unnecessary degree of uncertainty. We expect to see an outcome from the consultation for the STFC’s July council, and I hope that that will create more certainty in those areas, as my noble friend suggests.

My Lords, the Minister stressed that she would emphasise the historic role of Jodrell Bank. Will she also reassure the House that she will be stressing the importance of Jodrell Bank in carrying forward the next generation work in terms of its e-MERLIN and SKA facilities, which are very important in terms of the next generation of radio telescopy?

My Lords, I agree with the noble Baroness. I am trying to stress that the same expertise—in fact, many of the same people—are involved with e-MERLIN and SKA. The expertise, technologies and resources that are being developed at Jodrell Bank are seen by the STFC as being important or as even laying the ground for SKA.

My Lords, will the Minister accept my warm personal support for the observations of the noble Lord, Lord Harrison? Will she bear in mind that the founders of Jodrell Bank, Professor Bernard Lovell, who luckily is still with us, and Professor Hanbury Brown, are among the greatest scientists we have produced, and that the nation owes them a considerable vote of thanks for their efforts in founding Jodrell Bank and in seeing that this amazing scientific work was developed? Does she agree that we should always respect the names of these gentlemen, one of whom is with us while the other is now deceased, in a very strong way? The nation has benefited greatly from their wisdom.

My Lords, I agree with the noble Lord. As I said at the start, Jodrell Bank houses the Lovell telescope, which is an iconic facility that has placed the UK at the forefront of radio astronomy for the past 50 years. The Government are proud to recognise the contribution of those scientists. We also recognise, as I said in my Answer, that the STFC sees e-MERLIN as part of its strategic future. I hope that the House recognises that we have to allow research councils to make the difficult decisions about scientific priorities and that we as politicians should not micromanage what they do. However, we must recognise the contribution that these scientists make.

International Aid

My Lords, the Government are committed to ensuring that that UK aid is used effectively to reduce poverty in the world’s poorest countries. DfID has a rigorous system of evaluation and has established the Independent Advisory Committee for Development Impact. Progress against public service agreement targets is tracked continuously and formally reported in the autumn performance report and the departmental report. Parliament, the National Audit Office and the OECD Development Assistance Committee scrutinise our international development assistance.

My Lords, I thank the Minister for that reply. Will the Government take up the proposal made by my honourable friend in another place, Andrew Mitchell, for an independent aid watchdog to provide detailed scrutiny of the effectiveness of British aid in reducing poverty—especially now with the further fear of famine—rather than the self-evaluation that takes place at present?

My Lords, the Independent Advisory Committee for Development Impact, while within DfID, is genuinely independent. It is chaired by David Peretz, an independent consultant and senior adviser to the Independent Evaluation Office of the IMF, the World Bank and other international organisations. It will operate independently of DfID management; the chair will write annually to the Secretary of State; the minutes of its meetings will be made public; and the chair will also appear before the International Development Committee when required.

My Lords, I welcome the Minister to his new position. He is not yet listed on the website of the Government Whips’ Office, but I hope that he will be shortly. Does he agree that we are seriously off-track with regard to meeting the MDGs in 2015 and that aid must now be regarded as an international, and not simply a national, priority? What impact will the massive rise in food prices have on the effectiveness of all international aid? What international initiatives can therefore be taken to try to address this? Does he see change in international institutions as being urgent if a global crisis such as this is to be properly addressed?

My Lords, I thank the noble Baroness for her welcome; I realise that this will be the only gentle day.

The present crisis has been addressed by the Secretary of State for International Development, Mr Douglas Alexander. We have already talked about the advance in payment of budgetary support to countries highly affected. The UK is pledging £30 million of additional aid to the World Food Programme and £25 million of aid specifically to Ethiopia, and it is co-operating in an international research programme involving more than £1 billion, £400 million of which is new funds, which will be available over the next five years for agricultural research. We are also co-operating internationally in establishing uniform evaluation of the effectiveness of aid.

My Lords, in assessing the effectiveness of our aid programme, is it not worth the Government stressing two things in particular: first, that, as well as substantially increasing the overall amount that has been allocated, they have particular expertise in the speed with which they respond to emergencies; and, secondly—a point often overlooked—that DfID is a very young department? It was established in 1997, which is a date that we all remember vividly; one of the Government’s great achievements is to have established an independent department of state dealing with this massively important subject. I doubt that it will ever be changed.

My Lords, I thank my noble friend for that question. I am very tempted simply to agree with him. We can be very proud of this country’s programme of aid. I believe that I do not exceed my brief in saying that it has wide cross-party support and wide support in this House. We are on track to raise international aid from £2.1 billion in 1997 to an anticipated £9.1 billion in 2010, which represents a trebling of aid in real terms. We are also on track to meet our UN target by 2013. The fact that we have an independent department with a seat in Cabinet is unusual in the world, if not quite unique, and allows a very quick response to emergencies.

My Lords, will the Minister assure the House that the Government, in monitoring the results of the aid given, do not rely solely on government, top-level contacts and actually examine the situation on the ground, at individual level and at the recipient end, for only in that way will they have any chance of stopping corruption?

My Lords, we are concerned about corruption and effectiveness. We are particularly concerned about effectiveness in the aid that we give to Governments because, clearly, that is an area in which corruption is possible. But we believe that it is very important to deliver aid through Governments because, in the long run, only through Governments can countries be brought out of poverty.

We try to protect our funds in three ways: we assess risk before giving support, assess underlying problems and, if necessary, we have special audits. In particular, in areas of high risk we use public expenditure tracking surveys to trace government money from the budget allocation to check that it reaches the end user—for example, schools and clinics.

My Lords, on behalf of a whole variety of development agencies, I, too, welcome the Minister to his post. On effectiveness, does the department accept that the partnerships that it can develop, not only with development agencies in this country but, through them, with a whole variety of civil society and voluntary agencies across the world, are one of the most effective ways in which we can tackle poverty and ensure that resources get to where they are needed?

My Lords, I thank the right reverend Prelate for his welcome. We entirely agree with the general view that, through partnerships, we will get better value for the aid and develop in-country capability. Aid is best spent in the longer term creating ways out of poverty in those societies, so we can look to long-term help for these societies, not simply short-term emergency relief.

Disabled People: UN Convention

asked Her Majesty’s Government:

When they expect to ratify the United Nations convention on disability rights.

My Lords, as noble Lords are aware, ratification of international treaties is a complex process which takes time, but our aim remains to ratify this convention by the end of the year.

My Lords, I am grateful to my noble friend, who is aware of my long involvement in this policy area. Since the sooner we ratify, the greater our influence in monitoring the convention to the benefit of disabled people here and, with our support, of the poorest of the world’s disabled poor, would it not be mistaken and wrong further to delay ratification? For example, would not ratification signal that the inhumanities of institutional discrimination by health authorities against people with learning disability, as documented in Mencap’s report, Death by Indifference, will cease? And where do we stand now with regard to the optional protocol and the fear among disabled people of substantive reservations being taken out when we ratify?

My Lords, I should start by saying that because a number of states have ratified the convention it comes into force on 3 May, at the end of next week, which is good news. Ratification by the UK, which is important for the reasons that my noble friend has outlined, would be a fitting tribute to the leadership and commitment of my noble friend in the cause of disabled people over so many years. I know that he would also wish me to mention the tireless work of the late Lady Darcy de Knayth, which has been an inspiration to many.

The fact that we have not yet ratified the convention does not mean that we cannot be supportive of poor people. DfID and the Foreign and Commonwealth Office have been actively working to support poor people, and the convention is embedded in everything that DfID does. As for the optional protocol, it is still under consideration, as is the issue of reservations to the convention. I would be happy to say a little more about that if I was asked a supplementary question that gave me time to do that.

I very much agree with my noble friend that our association with the convention and our leadership in getting it under way in the first place is a signal to the world that we will not tolerate discrimination and will do everything that we can to eliminate it across the globe.

My Lords, by delaying ratification until the end of the year, will we not be debarring ourselves from membership of the monitoring committee which will undoubtedly be set up by those countries that have already ratified? Will our absence from the monitoring committee mean that we are not effective in terms of framing policy?

My Lords, as I think all noble Lords will understand, the general rule is that the UK does not ratify international treaties until it is in a position to ensure that it can implement the provisions and comply with its obligations. The noble Lord is absolutely right that the monitoring committee has to be set up initially within six months of the convention coming into force, but further provisions say that when 60 states, I think, have ratified, the monitoring committee can be expanded. So although we will not be there at the start, we will certainly have an opportunity when the monitoring committee is expanded.

My Lords, does the Minister agree that many developing countries expect the UK to take the lead in these matters? Will he tell us which countries have already ratified the convention?

My Lords, I am happy to list them but it will take me a little while. Perhaps I may say that there are currently 127 signatories to the convention, 71 to the optional protocol, 24 ratifications of the convention and 14 ratifications of the optional protocol. The countries that have ratified include Bangladesh, Croatia, Cuba, Ecuador, Egypt, El Salvador, Gabon, Guinea, Honduras, Hungary, India, Jamaica, Jordan, Mali, Mexico, Namibia, Nicaragua, Panama, Peru, Philippines, San Marino, South Africa, Spain and Tunisia.

My Lords, does the Minister agree that the idea of ratification reinforces the idea that all parts of the law and government structure should respond to civil rights issues for disabled people, as they should across the board? That is one of the important reasons why we must be seen to be in the forefront—in addition to the example that it gives to other states.

My Lords, I very much agree. A lot of work has been undertaken to ensure that we can ratify in accordance with the aspiration to do it by the end of the year. I should point out that the average timescale between the signing of a convention and its ratification is in excess of four years. We signed in March last year and hope to ratify by the end of this year. We must work very hard, for the reasons which the noble Lord said, to ensure that we achieve that.

My Lords, I acknowledge the positive role that the UK Government have played in the process leading to the development of the convention, and would in particular pay tribute to the work of the Minister for Disabled People, Anne McGuire, in another place. Can the Government confirm that they do not intend to make substantive reservations to the convention which would undermine the human rights of disabled people? Do they intend to communicate the results of the departmental exercise currently under way to determine the extent to which the UK meets the requirements of the convention?

My Lords, I thank the noble Lord for his kind words about my colleague Anne McGuire, who has been very active in promoting the convention. I should also state that whatever reservations may come forward in due course must not be incompatible with the object and purpose of the treaty. A lot of work has been undertaken which is coming to a conclusion and it is hoped that my honourable friend Anne McGuire will be able very shortly to make a Statement on this issue. I should also say that it is helpful to be able to have reservations because it facilitates a country’s ability to ratify the convention when it may otherwise be precluded from doing so, so there is a positive aspect to reservations as well. History also shows that reservations that are entered over time are removed, as pressure builds up domestically to effect the changes that are needed.


asked Her Majesty’s Government:

What is their response to the recent protest action called by the Movement for Democratic Change in Zimbabwe.

My Lords, the crisis in Zimbabwe continues. It is understandable that opposition parties and civil society organisations should call for peaceful protest. In a country with inflation at more than 165,000 per cent and unemployment above 80 per cent, it is not surprising, however, that many people who have jobs continue to go to work if they can in order to support their families. This crisis will continue until credible presidential election results are announced that reflect the will of the people.

My Lords, I thank the Minister for his reply. Some members of the defeated party are already using violence to try to hang on to power. What action can be taken through the region, the African Union or the UN to stop additional weapons getting into Zimbabwe? Given the quantity of arms already in Zimbabwe, which from what we are hearing are clearly being used, what can be done, particularly by those in the region, to try to bring this situation to a peaceful conclusion?

My Lords, the noble Baroness focuses on the current arms shipment on a Chinese ship, which still remains on the waters off southern Africa and has been refused entry to South Africa and Mozambique for unloading. I met the ambassador from Angola this morning and I believe that the ship will not be allowed to unload in Angola, either, so it will effectively be sent home. We will see huge action by civil society and the Governments of the region, if necessary through the UN and elsewhere, to make sure that no more arms arrive and reach this illegitimate Government to allow them to suppress their people.

My Lords, is the Minister aware that the Zimbabwe Electoral Commission has just awarded a seat in Parliament to Mugabe’s party on the ground of an alleged miscount? Should we not bear in mind that the Electoral Commission is a wholly owned subsidiary of Mugabe’s party? The proposal that a number of people have put forward for a rerun of the election is regrettable at this time, because the violence of Mugabe’s party to the population is as fierce as it has been at any time in recent years. That had a bad effect on the turnout of MDC voters before the recent election and on previous occasions and it is likely to have a bad effect for some time ahead unless the violence stops.

My Lords, while it remains the position of the Opposition to press for the immediate announcement of a presidential election result, the news that the noble Lord brings of an election seat being turned over and awarded to the government party, ZANU-PF, is a further indication that the Zimbabwe Electoral Commission and the election process itself lack credibility. After a month of silence, we can conclude only that.

My Lords, is my noble friend satisfied with the actions and the words of the South African Government in relation to this crisis?

My Lords, as I have said before in this House, President Mbeki deserves credit for having created the conditions in which this election took place, which has begun the process that will lead to the departure from power of President Mugabe. The people of Zimbabwe have voted and the putting of ballot tallies on the doors of the polling stations, a reform for which President Mbeki pressed, means that it has been impossible to hide the result. Obviously, we would have wished for clearer public statements since the election from the leaders of the region that this stalemate cannot be allowed to last. We are impressed by a number of private statements that are being made, but the time has come for ever clearer public statements by the leaders of the region, including President Mbeki, that this election stalemate must be ended in favour of the people of the country.

My Lords, further to the question asked by the noble Baroness, Lady Jay, and the Minister’s comments, did he get the impression from talking to Mr Zuma, who is now in London, that South Africa will back an international arms embargo to prevent the coming genocide? That is an important part of the jigsaw building up to prevent the horrors to come. Secondly, the American authorities say that they would like to see Nigeria and, indeed, any country that has some influence on the situation weigh in to try to control the deteriorating situation. Does the Minister agree with that approach, which is outside the UN? What links can we establish with the Indian authorities and, indeed, with the Chinese authorities, as well as over the shipment issue, in order to bring global pressure on to this situation before it turns into a major bloodbath?

My Lords, the American position, like ours, is that it is important to engage the broader AU beyond the immediate neighbouring countries of SADC and, within the AU, countries such as Nigeria that are traditionally leaders in the region. It is clear that more straightforward public statements about the situation in Zimbabwe can be made by those countries not immediately adjacent to it. The initiative to press for broader AU engagement is very welcome. Just last week I raised in Beijing the broader issues of Zimbabwe with the Chinese authorities. I am confident that no Government—not the Chinese or any other—believe that this situation can be allowed to last. A month has passed without a result being announced. That is almost unique in the annals of elections. I do not think that any serious person anywhere can say that the status quo is sustainable. We need a result. Everybody needs to press for that in their own way.


My Lords, my noble friend Lady Vadera will, with the leave of the House, repeat the Statement on industrial action at Grangemouth at the end of the debate in the name of the noble Lord, Lord Colwyn.

Business of the House: Debates Today

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

Moved, that the debate on the Motion in the name of Baroness Byford set down for today shall be limited to three hours and that in the name of Lord Colwyn to two hours.—(Baroness Ashton of Upholland.)

On Question, Motion agreed to.

Post Offices

rose to call attention to the role played by post offices in local communities and the public reaction to plans to close a portion of the network, and to the case for a review of the operations framework of the Royal Mail and post offices provided by the Post Office Act 2000; and to move for Papers.

The noble Baroness said: My Lords, the situation with regard to post offices is a shambolic mess. The Government have succeeded in uniting town and countryside in a roar of protest, backed by government Ministers, that comes from a sense of outrage. Three million people signed the petition in October last year. They feel, and rightly so, that post offices are an important part of everyday living, particularly for the less wealthy, old-age pensioners, single mums and dads and small businesses.

Let us start at the beginning. Sub-post offices used to be profitable. The Post Office had a savings account that was accessed through a book and carried no rights other than to put money into it over the counter and to take cash out of it. There was no automated payment, no overdraft facility, no credit card, debit card or cash card. Then the Government announced that giros, pension books and cheques would all have to go. The Post Office savings book was abolished and pressure was applied to each payee to accept their benefit payment into a bank account. The Post Office could not, apparently, use automated payments as there were no slots left in the bankers’ automated clearing system.

Millions of people who owned a bank account needed their benefits paying into the Post Office because they had an overdraft and did not want the bank to have first call on that money. Millions more who did not have a bank account were either unable to use one or did not have the documentation to open one. A surprising number of people have neither passport nor driving licence. Moreover, the banks made it very difficult for those on low incomes. The citizens advice bureaux fought for improvements but I understand that it is still not easy. The banks prefer to have as customers those of us from whom they can make a profit rather than those from whom they just cover costs.

Jeff Rooker—now the noble Lord, Lord Rooker, but then a Minister in the other place—stated in a Written Answer:

“As at August 1999, about 65 per cent. of all benefit recipients were receiving payment in cash by order book or girocheque”.—[Official Report, Commons, 26/10/99; col. 842.].

At that time 95 per cent of the population were within one mile of a post office and 60 per cent were within a mile of a bank, but most of those lived in town as only 9 per cent of villages had a bank.

At Second Reading of the Child Support, Pensions and Social Security Bill on 17 April 2000, the noble Baroness, Lady Hollis, said that 96 per cent of parents who were separated or divorced have care responsibilities for their children or adults and earn less than £100 a week. That statistic exemplifies the poverty of large numbers of people, even in this new century. It was into this situation that the exponents of joined-up government dropped the bombshell of automated payment. On 2 May 2000, the move was supported by the noble Lord, Lord Sainsbury, when he rejected the idea that post offices should go into the future with a paper-based system. He argued that the continuation would place the Post Office in a totally defensive and unacceptable position, particularly with regard to gaining new business. We argued against that. Had the Government allowed sub-post offices to diversify at that stage, we might not be in the situation that we face today.

At the time, there were many statements about financial losses in the Post Office, the cost to the Government of the existing systems and the amount by which the taxpayer would benefit after the changes had gone through. There was, for example, a quote of £140 million annual loss due to fraud. I wonder whether that was due to malpractice by certain members of the public between the point where the benefit reached the post office and was withdrawn by the payee, or whether it was due to incompetence in the department.

After the revelations of recent weeks, will the Minister confirm that none of that annual £140 million loss was caused by transfer errors between the Government and the Post Office? At that time, we were told that it would cost 1p per transaction for an automated payment as against 49p for a payment by an order book, 79p for a giro payment and 67p for a payment card. What costs were included in those figures? Will she confirm the current cost of automated payment and the basis on which the calculation is made? Exactly how much money was saved by the DWP, and where did that money go?

I have good reason for querying this figure, because at that time I was coming up to a certain significant birthday, and I decided that I wished my state pension to be paid into an account in the post office. This is what I encountered. I was contacted by the DWP, which asked me if I had a bank account, to which I said that I did not think it was really relevant, but I did have one. I was told that my payment would be made into that account. I said, “No, I do not wish it to be paid into that account; I wish it to be paid into the post office”. Had I got a post office account? No, so I needed to get one. I put the phone down and I went to my local post office. I asked the postmaster whether I could have the form to apply for an account. He said, “This is the form, but I cannot give it to you. You need a letter of invitation from the DWP before I can give it to you to fill in”.

I went back home and rang the DWP. Sure as anything, I did need a letter and a letter would be sent. Several days elapsed, and a letter eventually came. I returned to the post office, presented the letter, and the postmaster gave me the form. I filled it in, and I said, “Now can we open the account?”. He said, “Oh no, it has to go back to the DWP again”. It took another two goes before that account eventually came through. I am fairly tenacious and a bit bolshy, but think of the other people who do not have the time or the temerity to make that point. If I had not got my account there, that was one fewer person who would be using that post office for the purpose it was there to serve. I share that experience with noble Lords to share the frustration and the difficulty—nay, near bullying—that one is put through to be able to get an account in the Post Office.

Those who live in rural areas invariably have to have a car, because that is the only way that they can get from point A to point B. This is particularly true if they have a sickly child or an old person in their household, or have a job in town. Those who do not have a car have to rely on family members, friends and neighbours and a bus service that is at best infrequent, but often non-existent. Now they will have to cope with the reorganisation of the Post Office.

The Government have set a number of parameters which define how the service will look: 90 per cent of people nationally must live within a mile of a post office; in urban areas 95 per cent must live within one mile, and in deprived urban areas that rises to 99 per cent. However, in rural areas 95 per cent of the population must be within three miles of a post office, and in remote rural areas there will be a journey of six miles. How many of us who are fit would choose to walk six miles every week to draw a benefit, let alone those who are not well? What happens to those who are pushing young children in buggies when they have to go that distance? Often there are no pathways on rural roads.

The Government are planning to close post offices that have been newly opened and are owned by the community. Some are profitable or in areas earmarked for massive housebuilding. Has anyone mapped those offices which are making serious losses, calculated the effects of closing most of them and costed the funding necessary to support the remainder?

Back in 2000, the Minister—the noble Lord, Lord Sainsbury—described the then working methods as,

“an inefficient system involving a lot of work in post offices”.—[Official Report, 2/5/00; col. 984.]

I prefer a system that requires efforts on the part of its employees to one that puts pressure on millions of people as a result of the loss of their post offices and the advice freely given by sub-postmasters and sub-postmistresses, and destroys the local community cohesion. One of the greatest benefits of regular visits to the post office, particularly for older people is that they get out and about and meet other people.

I had taken with a pinch of salt reports on the consultation process. As one knows, it was cut from 12 weeks, which is the norm, to six weeks. In another place on 28 February, Mark Lancaster, MP for Milton Keynes North East, asked a Question on the consultation. Following the Oral Answer, he said:

“The consultation for post office closures in Milton Keynes is not due to start until July, but last November the Post Office inadvertently published on its website the five post offices that it has already earmarked for closure in Milton Keynes”.—[Official Report, Commons, 28/2/08; col. 1225.]

That is no consultation. That is a decision taken in advance. He went on to ask why the Government were insisting on the closure of these post offices when they were forcing expansion in the area.

The travails of the Post Office are mainly due to the Government, whose advertising stresses that people have a right to benefits. But it surely must also be the right of people to draw those benefits at a place convenient to them. The Government have said that the Post Office card account will continue until 2010. I suggest that it should be a universal account. It should, at the very least, be available to those who need small sums of money—particularly those of old age, single parents, the unemployed and children. There should not be a presumption against other members of the public from having an account, given that every time there is such a presumption, it decreases the footfall going into those post office branches.

In the past five parliamentary Sessions there have been 417 Written Questions in the Commons on Post Office closures. A number of those asked for data on the costs saved by the DWP, the costs incurred by the DWP, the costs incurred by the Post Office and the costs incurred by the Treasury. To the best of my belief none of those facts has been made public and I am wondering why. Simply dealing with that number of Written Questions has cost more than £250,000 and there have been several debates, which have cost valuable time and money. Surely we should have answers to those Questions. Can the Minister tell us whether anyone has analysed the extra time and travel that will be involved in people accessing their benefits? Has that been translated in any way into an increase in the amount of carbon emissions and fuel consumption?

I have doubts about the process of post office closures, particularly with regard to consultation. Why has the figure for closures, which remains at 2,500, not been looked at again since late 2006? Why is the number of outreach units set at 500? Will they all be in rural areas and is there a breakdown of that figure? Looking to the future, what research has been done into the possibility of those outreach units being in churches, which are usually everywhere within communities in both towns and rural areas, or in village halls or other places within the community? Is the Minister not concerned that those who are forced to withdraw several weeks’ money in one go because of the distances they will have to travel—they will not be able to go on a weekly basis—will run the risk of muggings?

Finally, I should like to borrow from Frank Field a comment that he made about the removal of the 10 per cent tax band, which I think applies equally well to the post office closure programme. I agree wholeheartedly with him that it is wrong that we should penalise the lowest-paid and that they should pay for the simplification. Post offices should be freed to seek new business opportunities, and both national and local government could aid this development.

I am deeply grateful to all who follow me in the debate and I greatly look forward to hearing their contributions. I beg to move for Papers.

My Lords, I am not sure that the noble Baroness, Lady Byford, will be that happy about what I have to say because I do not agree with everything that she said. There is sometimes a degree of forgetfulness in contributions on the Post Office and Royal Mail; the blame or credit can rarely be laid wholly at the door of one party or one Government. I notice that my noble friend Lady Vadera will be replying to this debate. I think that this will be her first contribution on the subject but it certainly will not be her last. It is the kind of issue that keeps coming; it is a dripping roast and, as we get near to elections, so the opportunists will swarm around and make local political advantage of it. If they have any claim to be politicians, they should be doing nothing else.

We have to recognise that the financial difficulties of Royal Mail are well known. There is almost a consensus on the reasons for them but there is never agreement on the significance of each factor’s contribution. That some £200 million is the cost attributed to Post Office Counters Ltd for the support of the Post Office branch network is not in dispute, but the level of subsidy varies. Where the service offered is, for example, combined with a local grocer’s shop or a filling station, it is probably part of quite a viable business. In other instances, where it is in a remote rural area and the number of beneficiaries for whatever reason has declined, so the footfall or viability of the business comes into question. Equally, where the people who run the post office are nearing retirement age, they are faced with the problem of passing on the franchise. To whom should that franchise go if it is not a very attractive commercial enterprise? Should the property be reaching the end of a lease and a rent review is due, the viability of the business will be under even greater threat. When the rent of the building goes up, regardless of the cost of the franchise, that is another burden that has to be borne by a potential successor.

Let us face it: very few modest post offices are run on a highly profitable basis—indeed, they have hardly ever been run on a highly profitable basis. The people who have been running these post offices have been providing an underpaid social service to the community for very many years. One cannot blame them if at the end of their lives, as it were, the providers of these services sell the property—if they are fortunate enough to own it—to whomever wants to buy it and for whatever purpose the building can be adapted.

It is not a simple matter of saying that if they have a few more benefits and more footfalls all these post offices will remain open. The anarchic system by which the franchises were allocated in the past has meant that we have overprovision in some areas and underprovision in others. The Post Office does not always have an opportunity to fill the gaps in the service. For example, if one looks at the way in which the franchises for the National Lottery were allocated, one sees the kind of model which the Post Office is now applying to the allocation of future franchises and the reorganisation of some of them. That process is rough and ready and mistakes are made—this is where I agree with the noble Baroness—so, if the process is to have any credibility whatever and for there to be a degree of justice, there has to be a far greater guarantee of time and transparency in the consultative process.

A point was made about diversification. A number of new services and new financial offerings have been made available, which sometimes are beyond the competence of some of the post offices that sell them. However, in the Crown post offices, the staff enjoy far better pay than most of those in small private post offices—they are paid a rate that is commensurate with the provision of financial services. I am not convinced that if WHSmith assumes responsibility for Crown post offices, that level of reward will still be made available to the staff.

This is a complex issue. The number of speakers and the short amount of time denies us the opportunity to develop themes as we might want to, but this matter will be with us for far longer than the two or three years to 2010 and beyond. However, there is some degree of hope. The National Federation of Sub-Postmasters has, nevertheless, agreed reluctantly to certain financial rewards, and the Government deserve credit for taking on the issue and trying to ensure that the Post Office is given a level of resource—never enough, obviously—to smooth the passage of transition involved in network reconstruction. For that reason, I am reluctant to go wholly down the road mentioned by the noble Baroness, although some concerns have to be addressed.

My Lords, I welcome the opportunity given to us by the noble Baroness to discuss once again the issue of post office closures. We know how important it is now and how people emphasise the need in our large cities to create communities where people live with respect and with a responsible attitude towards one another. That is one of the solutions to many of the problems that cities face. In order to build communities, perhaps we could look at cities as networks of villages. Often, because of the demise of services, our existing towns and villages lose their heart. A village can descend into a commuter area and so the heart goes out of that village and that community.

The war, the Blitz and so on devastated so many of our cities and towns. People looked at the rundown roads and streets, the old communities, and decided to build skyscraper tower blocks. People were moved into those tower blocks and they were great. They had modern bathrooms, good kitchens and there was no damp. However, in moving from the old communities they lost the spirit of community. We need to reclaim and safeguard the communities and try to restore that feeling of community.

What makes a community? You need a church—a Methodist chapel, possibly—shops, a viable school, a bus service, perhaps a community centre or a village hall, a pub and a post office. The post office is often the gathering or meeting place for so many people. I see them in Llandudno on pension day; there is a queue of people outside—they are friends as they come every Tuesday or Friday. It is not only a place of business but a social place.

No one party can claim that it has safeguarded post offices over the years. I have figures showing that between March 2000 and September 2007 the net fall in the number of urban post offices was 2,653, and for rural post offices in the same seven years the figure was 1,622. A calculation off the top of my head suggests that when the Conservative Government were in office about 4,000 post offices were closed and under the Labour Government in the past few years about 4,000 post offices have closed

We know that a number of post offices in Wales are under threat. In my own patch we are still waiting for the list to be published. I am sorry that there has been a moratorium on that in the local election period because many people would vote a different way if they knew that their local post office was threatened with closure.

Facilities are eroded and the community as a separate entity collapses. This is the story of many rural places in particular. Young people who want a good career leave the countryside and it loses a lot of the necessary leadership. I can imagine a village in the Conwy valley when first the quarry closes, then the woollen mill, the bus service is reduced and mechanised farming needs fewer farm workers—the people who used to fill our pews on a Sunday are no longer there. The structure of the village changes. The local village shops are not viable if families are not there.

What of schools? I know that in parts of Wales—and possibly England as well—numerous schools are threatened with closure. We cannot always safeguard schools because we have to be realistic. The school is threatened, the chapel goes, the church goes, the library goes, and the village as a community collapses. The noble Baroness said that often it is the income from the post office that saves the adjoining village shop. They share the same premises. Once the television licence, car tax and ordinary pension business is taken away the post office loses so much of its necessary income to serve the community. We are a country of lost communities.

I shall not go into my party’s proposals. We have them to strengthen local post offices but I suggest that local authorities could possibly look at a village in a holistic way and choose some local community activists in the area to take special steps to safeguard the school, the travelling library and the post office. I hope that the Welsh Assembly can inject some money into Welsh communities for such a policy. The church authorities and the breweries could meet to discuss how to make the place a viable community. That policy could be a pilot for what could follow that would safeguard the very being of our communities. The post office is so essential that it is a pivot, and we can halt its decline in the big cities and in the smaller communities as well.

My Lords, I declare an interest as a former chairman of the Post Office and as a member of the superannuation scheme. I congratulate the noble Baroness, Lady Byford, on the passion with which she spoke. It matched that of representations I received over the phone from someone who had marched with 400 others in wind and rain to save his post office and picketed it for four hours afterwards.

I am much concerned about the issue of the card account. The noble Baroness described the difficulty in opening one. I understand that the contract with the DWP prevents the Post Office promoting the card account in any way. It is now open to tender. I understand that tenders are in and that 4,000 cards are at risk. We know about the 2,500 post offices that are to close over the next few years. How many more will close if the card account goes elsewhere—1,000, 2,000 or 3,000? We know about the cost to the Exchequer of the present closures. The Secretary of State referred to a cost to the Exchequer of £2 billion and then to a cost of £1.7 billion between 2006-11 for the present closures. What would it cost if the card account is lost? What criteria were used in evaluating the tenders? How much weight will be given to service and convenience to the public alongside cost? Those are important issues.

If we need a network, we need volume business. The Post Office has done much to generate new business, but it needs volume such as only the Government and local authorities can generate to maintain a large service, which may be needed in times of emergency. We are going to hear a Statement on Grangemouth. Suppose we faced a wider issue. The state needs points at which to access the public.

I am especially grateful to the noble Baroness for raising the issue. I move on to Royal Mail itself. Royal Mail welcomed the opening of the mail to competition when it was announced, and it still welcomes the principle, but the Government's decision to appoint a committee to look into how things are working is indicative of the need to have a fresh look at how the Act is working in practice.

I have a few points to make in my allotted few minutes. First, in addition to maintaining the universal service, the Act prescribes that Postcomm, the regulator, should promote effective competition, as opposed to fair competition. Is that the right basis for the future? I can understand why the Government would want to push the provision in favour of competition to get it into action. That has been successful: 40 per cent of bulk mailings are now handled by others than the Post Office. It is right to suggest now that the basis of the Act should be reviewed.

Secondly, in the light of comments that Postcomm has been making about structures, I say as one who when chairman divided the Post Office into three separate businesses that I can think of nothing more likely to disrupt the efforts that the business needs to make to increase efficiency and competitiveness than to go further and split the business into two. I can think of nothing more likely to frustrate the outcome of the agreement with the unions negotiated with such difficulty last year than to disturb the whole structure and introduce the necessary changes branch by branch. Now is not the time to be thinking about that.

Thirdly, I should like to be assured that the policy will be to keep the obligation to maintain a universal service to all addresses Monday to Saturday, and that the income that the Royal Mail can derive from that is sufficient to cover its costs and remunerate the capital involved. That is an important service to the public that needs to be maintained.

There is the regulation system itself. Having looked at it over the years, it seems to me that perhaps it was necessary to have the present approach initially but, in the light of some years’ experience and given the extent to which competition has developed, it is time to consider a lighter touch rather than a muzzle-loading system that slows down the efforts of Royal Mail to compete. Perhaps Postcomm should be part of a larger structure of regulatory bodies. It is unusual to have one regulator, one concern.

When the Government opened the Royal Mail to competition, they could not have chosen a time of greater weakness through underinvestment in the past. This is in great distinction from Germany and France, which allowed and enabled through prices their industries to invest heavily. The Royal Mail was grossly underinvested in, and as a result operates well below its desired efficiency.

Do you notice that the Germans, in opening the Bundespost to competition and mindful of their balance of payments, have prescribed that the wages of competitors must not be less than those of the Bundespost, and that the French, in opening their business, are prescribing that the competitors will contribute to the maintenance of the universal service? Our balance of payments deficiency is now £50 billion a year and rising. Perhaps we should be as wise as the French in looking at the public interest as well as other factors.

I said that I had an interest. I ask that my remarks be judged to be in the public interest.

My Lords, I too thank the noble Baroness, Lady Byford, for giving us the opportunity to debate this really important matter today. I am fortunate to be bishop of one of the loveliest counties in England, but it is also one of the most sparsely populated, so the lack of provision of public services, including post offices, to people who live in areas such as rural Northumberland is of increasing concern. I shall speak about the impact of post office closures on rural people and rural communities.

When I asked one of my rural clergy the other day what she wanted to say about today’s debate, she said that we must be careful that we do not mutate into the post office conservation society. Some post offices have a footfall of less than 10 people a week and are simply unsustainable. They are not viable and we cannot keep them. Yet the fact remains that the most basic community service in villages is provided by the post office and shop along with the pub and the church.

The reorganisation of the post office network is not easy to achieve, and I for one certainly wish for far smaller numbers of closures, but the change programme is being implemented in a pretty flawed way. The consultation timetable has been far too tight, and communities have felt disenfranchised from the process. Local churches have not been included in the stakeholder information network, which is a serious omission because rural churches and chapels can provide the venue for a post office outreach service. The Church of England, the Methodist Church and United Reformed Church are exploring possibilities for church buildings to host such post offices in order to maintain a presence for these vital services in isolated rural communities. To my knowledge, there are already 10 such post offices in churches and chapels, and there are more on the way.

From the Lake District to the Isle of Wight, the Midlands and Yorkshire, a good number of examples of hosted post offices in churches are already enhancing community life. In a Methodist church in Rutland—the noble Baroness, Lady Byford, may well know of it—the post office appears once a week, refreshments are provided, Fairtrade products are sold, and the community comes together and has a sociable and companionable afternoon. We could do with lots more such examples, because as always the closure of rural post offices will be felt most by some of the most vulnerable people in our society. The elderly and those without transport are left stuck without choices, options and services. If the post office closes, where does an elderly person who needs meals on wheels get the small amount of cash that is needed to pay for the meal when it is delivered?

We all know that post offices are closing because they do not have enough customers, partly because of rural depopulation, the rise of second-home ownership, and people using the internet and the telephone far more than they have ever done for their services. That leads me to my final point on the changing nature of the countryside and the serious decline in agriculture. Tenant farms in my part of the world can no longer sustain a family, so the call has been to diversify to set up new small businesses in rural areas. To do that, you need some kind of basic infrastructure, not least the ready availability of a post office.

As the number of microbusinesses increases, there is a danger that closing village post offices will do them harm and simply stop them in their tracks. The internet cannot replace the post office for the sending and the receiving of goods. That is certainly true for the village of Kirkwelpington in Northumberland. People in the village with a mail order business at home need an available post office. In one of the best and most creative forms of small-scale rural generation, farm buildings at Kirkharle have been turned into a showcase for local crafts people to sell their goods and display their skills. It is a place for small, rural businesses with a coffee shop and the like. At least one of those businesses just newly started runs a mail order element. It needs an accessible post office, let alone banking facilities, and there is no bank and post office for about 15 miles.

I cannot help thinking that the mark of a civilised society is the way that those at the margins are kept in the mainstream. Isolated and dispersed deprivation is very difficult to address, but the churches stand ready with buildings in almost every village community to play our part wherever we can to save some of the most basic services for our people. Post offices are an essential part of rural community life. It is in the end, for me, a matter of justice that the most vulnerable members of our communities are able to gain adequate access to their post office.

My Lords, I should like to congratulate my noble friend on initiating this debate in her usual inimitable and passionate style. I wish that I had time to refer to the speakers who preceded me. I merely say that if the noble Lord, Lord O’Neill, were in charge of the handling of all of this, I do not think that we should be having the uproar around the country that we have had.

There is clear understanding across the Chamber—and I imagine that more will be demonstrated—that accelerating change in communications is costing the post office network some £4 million a week, thus forcing change in the system which would have to be dealt with by whatever Government were in power. Post office closures, because they affect communities at their most basic level, are a highly emotional issue. It is for that reason that they need to be handled with care and sensitivity to local circumstances, and in a way that responds to and does not ignore the consultative process. Sadly, so far, none of those conditions have been met by the handling of the current round, leading a Norfolk MP, Charles Clarke, to describe that handling as “insensitive and over-bureaucratic”. At local level, I would say that the handling also appears ill informed and unco-ordinated.

In 2007, the Government announced the intended closure of 2,500 post offices; that is, the most swingeing round of cuts in the history of the post office. No rationale has been given for that number. I imagine that the Minister will want to give it in her closing remarks. Consultation periods of six weeks—much shorter than the period recommended in Cabinet Office guidelines—have been set in 41 areas. However, those consultations have been suspended since November last because, as a letter to sub-postmasters published in the Guardian states,

“the closure of any post office can be highly sensitive and can potentially become a local political issue”.

Well, you can say that again.

The Government have asked the Post Office to have regard to access criteria, as my noble friend said, requiring in rural areas that 99 per cent of people should live within three miles of a post office. This is in fact a reversal of the Government’s 2000 policy, which was that:

“It was impossible to formulate numerical access criteria which met the Government’s aim of maintaining the rural network”.

I do not think that this smacks of an orderly process.

I wish to concentrate on rural areas. Stuart Burgess, the Government’s rural tsar, has described people in rural parts of England as forming,

“a forgotten city of disadvantage”.

From a rural perspective, it feels as if we have been singled out for a programme of community hospital closures and closures of pubs, schools and now GPs’ surgeries as a result of the polyclinic programme. An Oxford University report published rather quietly last month on the DCLG website disclosed that, in the past four years, half of such communities have lost shops, post offices, schools and surgeries. As has already been said, rural communities have disproportionately to bear the spiralling cost of fuel. They have been told by Margaret Beckett that there is no need for their primary industry, agriculture, because,

“the world is awash with food for us to import”.

That may be undergoing a bit of a rethink at the moment. Rural communities are having imposed on them a costly reorganisation of local government that no one wants. And in Norfolk, to complete the impression of government disinterest, the Environment Agency has announced that a number of coastal and broads villages may well be left to invasion by the sea, reinforcing the view of rural people that they just do not matter very much.

We have now been told that we are to lose 69 post offices. If one is saved, another will be closed. The access criteria take no account of the conditions of the three miles to be travelled, such as the availability of public transport, road conditions or even, in the fens and broads, the existence of water. No account has been taken of housing development either taking place or planned, with the result that post offices are to close precisely in the towns and villages scheduled to grow. Indeed, so random has been the process that no one will be surprised to hear that post offices are to be retained in the communities which the Environment Agency plans to abandon to the sea. Not a moment’s thought has been given to how poor, elderly and disadvantaged people with no transport can possibly access a post office three miles away.

It is obvious that change in the network is necessary; any Government, as I said, would have to deal with this problem. But I imagine that the Government will have noted that in the post office debate in another place, not one speaker supported the closure programme. They will also have noticed that half the Cabinet is campaigning against these closures. Practical measures such as the involvement of local authorities—and I imagine that my noble friend Lord Hanningfield will talk about the measures planned for Essex—the introduction of new business, the use of post offices as hubs for community activities, in short a vision for the future of this much loved and valued service, is what is required from the Government. I hope that we shall hear from the noble Baroness today that such vision is in the Government’s mind.

My Lords, I immediately declare an interest as the chair of the new National Consumer Council, which in a few months’ time will be merging with Postwatch and take on the onerous statutory responsibilities of dealing with the public consultation in relation to post office closures. There are several other issues we could debate about the Post Office—the noble Lord, Lord Dearing, touched on some of them—such as the Post Office card, the future of the universal service obligation and many other activities associated with collections and deliveries, but most public concern at the moment is about the closures on the network. My central contention is that we can blame all sorts of things—social change; technological speed-up; inept management of the Post Office at various stages in its career, and I would do that; the wooden regulatory framework, and Postcomm’s role in that needs some querying; and, lastly, we can blame the people because they do not use the Post Office that much. However, I say gently to the Minister that the central failure here is a failure of imagination and of joined-up government.

The noble Baroness, Lady Byford, will recall debates on rural business when I was sitting on the Front Bench. At a time when we were lamenting, post the foot and mouth epidemic, that we did not have support for rural business as a whole and that the kind of measures that the Government were allowed to bring forward were relatively limited for rural business as a whole, a large sum of money was still going to rural post offices. It would have been better if we had been able to use that money—£400 million over three years at one point—to stimulate rural business as a whole, to maintain rural services in one place in each village and to ensure the kind of holistic approach to which the noble Lord, Lord Roberts, referred, rather than to aggravate the problem by putting all the money into the current structure of post offices without improving their efficiency or allowing them to diversify, and indeed by taking government services away from them.

Much has been said about rural areas. The National Consumer Council carried out a survey of the effects of the most recent rounds of post office closures from 2002 to 2006. It was clear that, contrary to the conclusions drawn by Postcomm, the worst-hit areas were the low-income areas of central London, the outer suburbs of many English provincial towns, particularly those dominated by social housing, and the more disadvantaged villages and towns in rural areas which underwent a loss of transport and access to public and private services. It was not so much urban versus rural; it affected disadvantaged people who were most likely to need post office services. These people should at least have somewhere to go where they can engage with government services generally. It could be where they buy their petrol, or in the pub, or, as the right reverend prelate said, in the churches, any of which could at the same time provide the kind of services that post offices used to provide. Somewhere in those communities we need a focus for all the services that our outer suburbs and many of our rural areas have lost so tragically over the past couple of decades.

The present round is about 2,500 post offices. The number has already been decided. Postwatch is diligently and in great detail going through the proposals area by area and carrying out the kind of community engagement that one could argue the Post Office itself should have done at an earlier stage. But however effective those representations, 2,500 post offices will be closed. It is only a question of which post office will close. That is an unnecessarily narrow choice.

The whole range of government needs to be engaged in this. The only bit of joined-up government on post offices that I remember—if I can blow my own trumpet—is when I was roads Minister and I and Ian McCartney, then the Post Office Minister, decided that we were not going to take the DVLA contract away from the Post Office. Dare I say gently to the Minister that we resisted Treasury pressure that time round? Five years later, however, the Treasury got its way and the Post Office lost that contract.

This is not joined-up government. I am rather on the same page as the noble Lord, Lord Roberts, here. We need to take a holistic approach especially to our more deprived rural and urban areas and see what kind of services and government support they need. We should look at it not simply through the tunnel of Post Office finances and subsidy but in terms of what the community itself really needs. It is possible to do that. Services in large villages in France and Germany are provided through the mairie, the pharmacy or the post office. There is a place in such towns, and sometimes in their outer suburbs as well, that fills the role that the post office has historically filled in many of our communities.

We need to move this issue away from a focus on Post Office finances and operational management and away from the kind of constrained choices that this round of closures is focused on. We should look for a more detailed and local solution based on the services that people need. I have no doubt that the noble Lord, Lord Hanningfield, will shortly be giving us a few good examples of that. It is important that local authorities as well as central government play a major role in this issue. Central government need to raise their sights and consider what the people in the communities which have lost or are about to lose their post offices really need. They should not see the issue from such a narrow perspective.

My Lords, I join other noble Lords in thanking my noble friend Lady Byford for this debate. The number of speakers who have put their names down is surely an indication of the interest in, and concern about, this issue. I think that we would all agree that the village post office provides much more than just a place to buy stamps and to post letters. The Countryside Alliance has rightly stated:

“Rural services, in particular the local post office, are the life blood of rural communities”.

They provide a vital focus of social and economic benefits to isolated communities across the whole country. When a village post office is closed down, it is the elderly and those who are unable to move around freely who are affected. They may not have access to a car; their bus services may be minimal; and taxi services often represent a substantial financial outlay for what might be a very minor transaction.

Let me give your Lordships an example. When mail with deficient postage is sent, a little note is delivered saying, “This can be retrieved at the local post office by payment of the excess mail charge plus a fee of £1”. It may take a whole day for an elderly person to get to the local post office where that package or letter awaits them. In my village, the post office closed down three years ago, leaving nowhere to purchase minor items, quite apart from post office things such as stamps, mail and so on. Everyday necessities such as greetings cards are no longer available in the village. The only retail outlet is the pub, which does a roaring business but does not help with the mail situation. It has been mentioned in this debate that public houses may well serve as sub-post offices. That is an excellent idea, because they can enjoy a roaring trade; they are open every day for the majority of the day.

The nearest post office to me is two miles away. Although I can drive a car, other people do not have such a facility. The role played by post offices in rural communities has been highlighted by the Business and Enterprise Committee, which concluded that,

“pure commercial logic cannot be the overriding factor here; the Post Office performs a social function”.

It said:

“We believe that there should be a presumption against closing a post office where this is the last shop in the village”.

Mention has been made of the Post Office card account, the POCA, which, as noble Lords have said, is a bank account offered by the Post Office. It is designated for benefits, pensions and tax credits with direct payment into the account. Some 4.2 million customers regularly use those accounts. The decision of the Department for Work and Pensions not to renew the POCA beyond 2010 is short-sighted and will have a further negative effect on the Post Office. The Post Office card account has provided many people in rural areas, and indeed in urban communities, with access to their benefits. The village post office supplants the branch of a national bank. The national banks, too, are removing their premises from local village communities, so that elderly people have nowhere to go to deposit their funds or to use the facilities that the Post Office card account provides.

Much of the thinking about the future of village post offices is based on financial considerations, but there seems to be little consideration of the rural services that are the glue holding local rural communities together. One is reminded of the phrase, “knowing the cost of everything but the value of nothing”. Noble Lords will be aware of the independent review panel of the post services to be chaired by Richard Hooper, which was announced by John Hutton last December. It is understood that the panel has consulted widely. Discussion on this evidence will take place at the meeting in May this year. That is too late for the debate that we are having today, but we hope that many of the issues that have been raised will be addressed both sympathetically and accurately.

My Lords, many communities across our country will be grateful to the noble Baroness for giving us an opportunity to give a public airing to an issue that is of concern to a lot of people in many communities across Britain. The House has already been made aware of the excellent proposals being pursued in Essex through the county council; I, too, am looking forward to the contribution of the noble Lord, Lord Hanningfield, on all this. I understand that in our county we have already lost more than 30 post offices, a number of which the county council want to engage in business relationships. They are now shut and awaiting the outcome of those negotiations. I simply ask: what needs to be done to get a sense of urgency into the process of consultation so that we might get on with it and find out whether this is a model that can be made to work, not only in Essex but elsewhere? I understand that lots of local authorities are interested in this model.

In Little Hallingbury in Essex, for example, the post office is closed. The closure was delayed because of the county council negotiations. The community is waiting and in the mean time people have to go to Bishop’s Stortford and Hatfield Heath for services, neither of which places have excellent parking or ease of access for people. These things need sorting out.

We are seeing, at a time when the Post Office is under both financial and organisational challenge, the weakest and most vulnerable services in some of our smallest and often very vulnerable communities being cut. The outcome of our collective failure, whoever is responsible, to ensure that the Post Office is on the front line of contemporary communications systems and development is that the weakest go to the wall.

I am bound to ask two questions, following up the question asked by the noble Lord, Lord Dearing, earlier. Is there a duty any more to offer good postal services across the whole community? If there is such a duty, how is it imagined that in the contemporary world it will be fulfilled, or are we now the victims of market forces? The Church of England, as the established church in this land, has a duty to ensure that ministry is provided in every community. I cannot look at Essex and east London and move the church to where I think the business is best. We all have to face change and we have to manage it in a way that holds on to our fundamental duty and responsibility—that is, to maintain a level of service across the whole community. I say to the noble Lord, Lord Roberts, that I am afraid that in my county the Church of England is the only institution left in vast numbers of communities. It is, I hope, open and welcoming to Christians of all traditions and to the whole community. My first question is: where is this universal obligation and how are we going to meet it today?

My second question is: what is being done to bring the Post Office into the 21st century so that it is able, imaginatively and flexibly, to ensure that all have good and easy access to necessary services? The noble Lord, Lord Dearing, mentioned what is going on in France and Germany. I gather that in the United States of America the equivalent service is right out in front regarding modern communication systems, offering important contemporary services to corporate enterprises and developing new ways of developing services on the basis of its history and skill. That provides the basis for improving contributions in small communities. If the development of modern communication systems means the destruction of the small and the local, something has gone badly wrong and we need to resist it. Modern communication systems do not require us to centralise and pull everything out of the small; they provide exactly the context in which imaginative new services can be provided. It is time collectively and with joined-up government for us to put our minds to establishing how that is to happen.

We all know that we have to face change but we ought not to endure the gradual deterioration of vital public services. Parliament has a responsibility to be resistant to that process. At present, we are facing change through retreat. That is bad news for thousands of small rural communities and, as has been said, urban communities across our country. I hope that today we might hear from the Government of steps being taken to pursue a more creative, comprehensive and joined-up set of policies that will ensure the delivery of necessary services to our people in the 21st century.

My Lords, I join other noble Lords in congratulating the noble Baroness, Lady Byford, on introducing and initiating this debate. There is no doubt that the programme of closures of sub-post offices in rural areas and small towns is causing great distress. The right reverend Prelate the Bishop of Newcastle rightly said that we are not here as a post office preservation society; I am not in favour of simply providing taxpayers’ or council tax payers’ money arbitrarily to protect post offices that are not profitable. At the same time, I join the right reverend Prelate the Bishop of Chelmsford in insisting that we are entitled as shareholders in the Royal Mail to ask it to behave like a proper, responsible public authority. That it is not doing so is the crux of the problem.

I say in response to a comment of my noble friend Lord O’Neill that I believe that there is a difference between village post offices and urban post offices. The noble Lord, Lord Roberts, brought in Llandudno; I shall bring in Llandrindod Wells, because when I am at my Welsh home I happen to visit a sub-post office daily that has been marked for closure.

The Tremont Road post office will serve as a paradigm for many small urban area—not village—post offices. It is in the north ward of Llandrindod, which is the third most deprived ward in the county of Powys. There is almost no public transport worth the name. The town will expand to the north of the post office. There are plans for a new, multiservice centre with ambulance bay, fire service, police, a new court and possibly the Probation Service. Around 25 per cent of residents do not have a car; 34 per cent of property is rented; 13 per cent of residents are lone parents; and 20 per cent are long-term ill. This is a seriously deprived ward and this service is going to be lost.

The consultation took place. I cannot say that it was a true consultation for the simple reason that the figures that the Post Office should have brought out to justify closure were simply not available; we were told that they were commercially confidential. That does not seem to be the action of a responsible body. The Post Office should have said to the sub-postmistress and master, Mr and Mrs Hodges—Mr Hodges is a town councillor who is standing for election to the county council in the Conservative cause—“Let us sit down together and see whether we can make this post office profitable”. There may be many ways of doing that. It is linked to a shop that has been there for 100 years, in the same family. Mrs Hodges works a 60-hour week for something less than the minimum wage. Many people would be prepared to buy or lease the equipment, which is Post Office owned. Plenty of solutions might have been put on the table, but none was mooted by the Post Office, which simply said: “You are going to be closed”. First, you get a telephone call saying that you are going to be closed; then you get a letter. That is not a serious way to conduct business.

Will my noble friend the Minister instruct the Post Office to look again at this type of post office—the urban area post office—which has the potential to be profitable if the local authority were allowed to intervene and the Post Office were to introduce new services? All sorts of things might make that post office profitable. If at the end of the day it turns out that it cannot be made profitable, at least we would all know that the best efforts had been made to see whether we could keep it going. I ask my noble friend to ensure that, in this instance at least, the Post Office will play it fair.

My Lords, I, too, thank the noble Baroness, Lady Byford, for introducing this debate, because post offices are an essential part of many rural communities. They are a trusted source of a whole range of services, such as cash and banking for those who are financially excluded or those who still depend on a post office for their child benefit or pension payments. They also produce a significant economic boost to their community. A shop attached to a post office can expect a 25 per cent higher turnover than one without. A shop near a post office can expect a 15 per cent higher turnover thanks to the footfall created by the post office.

Post offices do more than that. As has been said, they often represent the only focal point in day-to-day intercourse within a community. The church and the village hall are slightly narrower in their approach. They provide discos for the young and perhaps whist drives for the elderly. But it is only in the local post office and shop that old Mrs Smith can meet and chat to young Master Jones in an unstructured but secure setting.

That is the USP of our rural post offices and the reason why I in my capacity as chairman of the late-lamented Countryside Agency worked with others on trying to persuade the Government to keep rural post offices open. The Government provided £150 million a year—an amount that amazed me, although I did not say so at the time. However, it could only ever be a stopgap. Even with the most favourable costing of the value of their social benefits, many rural post offices still present a negative balance sheet, so, for them, closure at some point is inevitable.

However, the potential to promote a valuable role for post offices through the delivery of financial services still exists. There are still more post offices in the countryside than all the banks put together. Using rural post offices for financial services has proven very effective in both New Zealand and Germany in keeping the rural network open. However, as we heard from the noble Baroness, Lady Byford, the Government have made—and still are making—a real Horlicks of introducing the card account. It is all very Terminal 5-ish. The Government seemed determined that this idea should fail and not present any real competition to the other banks, which I suspect was the deal that was done. Why is the DWP still determined to shut down the card account? It could still be worth as much as £1 billion per annum to Post Office Ltd and represents a good chunk of rural sub-postmasters’ income. Why not build on it, improve it and, above all, promote it, rather than cause more closures come 2010?

Meanwhile, I must praise Post Office Ltd for its imaginative use of its window of opportunity. It has experimented with core and outreach schemes and with mobile post offices; it has combined with others such as the police and Business Link to share facilities; it has worked out of hotels, pubs, churches, libraries, tearooms and even an optician’s, and long may that continue. Many of these schemes are being included in the outreach alternatives being offered to some communities under the current consultation. I make a brief plea on that consultation: where the post office is part of the last shop or retail outlet in a village, I ask that it receives special consideration, because the departure of the post office would undoubtedly kill that last shop.

My final comments are on local communities and local authorities. As I said in my opening words, post offices provide many valuable services, particularly for the elderly or less able. Many of these services are now available online. Perhaps, instead of subsidising local post offices, local authorities and others can think laterally and provide facilities and training in IT for these people. In the Countryside Agency, we used to have lots of buses full of computers and trainers to go round the countryside to villages, training pupils who were virtually all over 65. Some of them were even over 90—and very successful they were, too. As for accessing other services lost with post offices, the spread of ATM cash machines would be good for rural areas. Local government support for the formation of parish car clubs would be as good a solution as any towards ensuring that the rural elderly get access to modern services and company.

That brings me to the loss of the social benefits of post offices. Parish councils, PCCs, village hall committees and other voluntary organisations should think hard about other ways in which to achieve the benefits that are being lost with the post office, if they are losing their post office. How can they help old Mrs Smith and young Master Jones to meet as often as possible in circumstances comfortable for them both?

I am as great a supporter as anyone of our village post offices and have worked hard over the years to devise ways of retaining them, but I am afraid that in many cases the milk is now spilt. I agree with the noble Lord, Lord Whitty, that we now have to be imaginative about keeping the benefits of a village post office, rather than the post office itself. I hope as many as possible of our rural post offices survive but, for many villages, I am afraid that it is time to move on.

My Lords, I thank my noble friend Lady Byford for raising this issue today. I shall speak as much as leader of Essex County Council as I shall as a Member of this House—and fortunate to be able to speak here as a member of it.

I hope that I can live up to my billing. Several noble Lords have referred to what we are trying to do in Essex, and I shall try to explain it. I feel a bit like Mary Tudor, in that she said that she would die with “Calais” engraved on her heart; I think that I shall probably die with “post offices” engraved on my heart. It is an issue that has dominated my work and thinking in the past few months.

In Essex, we have lost a lot of post offices over the years—admittedly, under both Conservative and Labour Governments—and 300,000 people have seen the closure of a branch within one mile of their home in the past few years. So when it was announced before Christmas that we would have the first tranche of another 30 post offices closed and that there was the possibility—as will be announced later this year—of another 30 or 40 branches being closed, in Essex County Council we began to think, “Enough is enough”.

In Essex we spend nearly £500 million a year on care for the elderly. A lot of that work is done in a preventive way, in day centres and community centres. All sorts of things are done to keep elderly people more active and involved in the community. What keeps them more involved in a community very often is a post office, where they can go and spend a bit of money but also talk to colleagues and other people in the community. I have lost both my parents in the past few years, but I know that in their last few years they went out shopping every single day, to do something. They did not want to sit at home getting things from the internet; they wanted to go out and about. That is what a lot of elderly people want.

In a post office, we have a community asset. It is something like a library or a community centre. In Essex when these potential closures were announced at the end of last year, we thought that we had to do something different about it. As I say, we spend £500 million a year on the elderly. Spending a very small fraction of that—about £500,000 a year—on the retention of post offices in our county seems a very worthwhile social thing to do.

Over the past few months, we have examined how we might do this. I have spent a lot of time on it personally but, obviously, we have used offices of the county council to understand more and see how this might happen. We have had ups and downs in working with Post Office Ltd. We had a lot of help initially but, months after we were supposed to get it, we have not had the financial information about the post offices that we were promised, even after signing a non-disclosure document saying that we would not release any of that information. Furthermore, we still do not really understand the rationale behind the closure of the offices. It seems often to have been done on a geographical basis rather than on the economics of a particular post office. Now that I know quite a lot about it, it seems that the Post Office has decided that it wants to close so many offices and that it does not really have detailed information about particular ones. The losses are often not taking place in those post offices; it is the overheads of the national network that are the problem, not the individual offices. I believe that a lot of those offices could be saved and retained with very little expenditure. Often they are a small shop and they could carry on with very small subsidies. It would not cost a lot to keep some of these post offices going.

I am disappointed, because although I have discussed the matter with the Minister—the Secretary of State himself originates from Essex—and I have had quite a lot of co-operation from the Government on this they just have not moved fast enough. I am disappointed that the Post Office board discussed the issue only this week, four months after we raised it. We have been inundated by requests from other local authorities asking advice on how they might do it; the Welsh Assembly contacted us and asked how it could be done in Wales. I was speaking to a very senior official at the Post Office last week, who told me that it now had 200 local authorities following Essex’s example and wanting to get involved in supporting post offices in local communities. We have set an example that others might follow.

I now just want it to happen. For example, there is a branch in West Clacton, in Essex. Some 20,000 people live in West Clacton—it is a profitable branch, in a town, but it is being closed because there is a bus stop there and it has been said that people can get on a bus and go to another place. But the community is fairly elderly, and I want to see that branch reopen again in the next few weeks.

I have talked to the Post Office, which said that Essex County Council might sign a contract with it to provide postal services in our county. I hope, with the co-operation of the Post Office, that I can in the next few weeks reopen that West Clacton branch and the Little Hallingbury branch. I should like to make certain that in the next few months we reopen around 20 or more of the branches that have been closed and prevent other branches being closed in future. There is a real future for local post offices, but I believe that they will be—and probably should be—part of a local government network of services. We will do what we can in our community.

My Lords, I join all those who have complimented the noble Baroness, Lady Byford, on obtaining this debate. In the past eight years she and I have shared a number of criticisms of the Post Office—and I honestly wish that we had such a champion on this side of the House supporting the Post Office as she is on the other side, as she demonstrates every time she speaks on the subject.

It is timely that we have had this debate. The citizens of our country have witnessed the deterioration over a number of years of the postal service, certainly since the ill conceived and destructive Postal Services Act 2000. This debate could be of great value to those who will be conducting the independent review of postal competition. The announcement has been made that the review has been welcomed by the Post Office and the unions within the postal industry. I have no doubt that in some parts of the United Kingdom people still enjoy the reliable service that was once the norm in all parts of the country. It is very hard to find such people, but I am sure that they exist somewhere.

The call for a review of the Royal Mail and the Post Office as contained in this Motion is necessary, and we should take the opportunity today to expose what has gone wrong. Perhaps for once the Government will listen. I declare my usual interest, although I shall not go through it all because I would use up the six minutes that I am allowed. I started with the Post Office this month 62 years ago, at the age of 14. Through that period I have served in many ways in the Post Office, through public service, in my union and latterly as a trustee of postal pension funds. I hasten to add that in those days they were in surplus—a very large surplus.

I hope that noble Lords will understand that speaking like this is a painful experience. As a lifelong supporter of my party and socialism, I find it very difficult to publicly criticise those who were elected to do what I thought was our duty. Unless we do something, it is going to go further downhill, so we have to speak out.

The White Paper contains the objectives of the Government. Six minutes does not allow me to go through them all. I am sure that noble Lords will understand when I say that the objectives make very sad reading today. No. 1 is:

“To improve postal services for business and domestic customers through greater choice, better quality and falling real prices”.

Does anybody believe that that has happened? Does anybody believe that our Government have provided that in this period of eight years? Another is:

“To establish clear and accountable relationships between the Government, the Post Office, the Regulator and POUNC”,

which has now been replaced by another innocuous group called Postwatch. I welcome the comments of my noble friend Lord Whitty about absorbing that into his area of responsibility, because in my view Postwatch does not represent anybody except the nice people who sit around the table.

We rejoiced when it was announced that at last we were going to get commercial freedom. It would be the end of external finance limits; we were going to be allowed to borrow, to invest and to have joint ventures with other organisations. We were all very happy about it, but some of us had a little suspicion that things were not going to be all that they said they were. I do not have time to read out those things, but does anybody think that it has got better? How many of you go to a pillar box and see that there is no tablet showing when the next collection will be or when the last collection was? The chief executive of the Royal Mail assured me almost two years ago that all the tablets would be replaced in pillar boxes. He should have a look around St Albans and various other parts to see that people have no idea whether the box has been emptied. It is a simple thing; it is a management thing; and it is time that it was done.

The chairman of the Post Office is called Leighton. On Monday of this week he was appointed as full-time chairman of Loblaw. The press release accurately describes him as having a reputation as a union tamer and says how he can go around unions and go straight to the workforce. He has developed this reputation for forging direct relationships with postal workers. The press release makes an interesting point. It states:

“Allan Leighton will now devote [approximately] 100 per cent of his time to [the company], which we view to be positive”.

If he is going to spend 100 per cent of his time with Loblaw, what is he going to do for the Post Office? My direct question to the Minister is: is he going to be given his P45 and got rid of now? It will not affect him very much because as vice-chairman of Loblaw he was paid $1 million last year and has options on 371,839 shares. Mr Leighton does not need our or the Government’s charity. But we need a person who will come in and have the Post Office and public service at heart, and we want somebody who will discover what is needed.

A lot of comments have been made about the various initiatives we have had. I support them and I wish the noble Lord, Lord Hanningfield, every success in trying to maintain the service that he is valiantly trying to get through his county council. I hope that it can be replicated. There will be problems with it. That is why I say that we must use this period of consultation to get the best for the future.

I am sorry that has been a disjointed speech. I spent about three hours on it last night, but six minutes is not enough. I end by thanking the noble Baroness, Lady Byford, for giving us this opportunity and by asking your Lordships to be firm and to tell this Government of ours that they have a public duty to provide an efficient postal service.

My Lords, it is a great privilege to be able to follow somebody who speaks on post offices with the passion and experience of the noble Lord, Lord Clarke of Hampstead. I thank my noble friend Lady Byford for providing us with the opportunity to look at the subject which is vital to so many of our communities.

Those of us who live in rural situations have particular cause to be grateful to the efforts of the Post Office to maintain a universal service. That has become more and more essential, as the right reverend Prelate the Bishop of Newcastle pointed out, as the drive continues for the diversification of rural businesses and alternative uses for redundant buildings. I declare an interest as a farmer and as an operator of a couple of rural-based industries.

We have all been made aware of the huge financial shortfall that the present operation engenders. Obviously that must be examined regularly. I wonder whether the Government ever envisaged that the future operation of a universal service would be totally economic. What level of savings is anticipated if the current network change is carried out in full?

We are obviously entering a new age in which the Government are increasingly hoping to communicate and to deal with their population by internet means. They have enthusiastically switched the main issue of state payments and benefits and the issue of TV licences and road vehicle licences to an online basis, happily calculating to themselves the great savings in expense and administration. But that does not come without cost. As the Countryside Alliance has informed us, it has meant the withdrawal of £168 million of government services from the Post Office in 2006 alone.

The Government take some recognition of their responsibility, as mentioned by my kinsman, the noble Lord, Lord Cameron, by providing £150 million a year to their social network payment but appear not to recognise that this was directed only at the rural network to compensate for the losses brought about in 2006 and will now have to cover the urban deprived network and the urban non-commercial post offices. Do the Government have in place a plan to review this subvention in view of the increased coverage that will be demanded?

Over and above the role of the Post Office in providing a community focus—I speak as a farmer—access to a secure postal service is very important. Many of the levels of interchange with government take place online, but I wonder whether Members of the House are aware of the paperwork that is still involved in applying for government support? Critical deadlines are imposed and very serious penalties are attached to a failure to meet these, and if you do not drive the 50 or 60 miles to your local government office, the only acceptable valid proof is sending the items by registered post. I do not know if this is a realistic charge, but at £4 to £5 a time, it is quite an imposition.

Furthermore, the EU and the British Government are now insisting on detailed traceability for livestock. That involves an immense amount of physical records. Every four-legged bovine that you see in the country has been registered and has received a passport, which has to be done within a strict time limit. This passport has almost as much detail on it as the one that you or I possess, but without a photograph. Every movement is then registered, and at the end of its life the passport has to be sent back to the British Cattle Movement Service. Every movement of sheep has to be accompanied by a document which eventually has to be submitted to the sheep traceability office. Sooner or later somebody comes around—I have had such an experience—to check that every piece of paper is in its proper place and that it has been fully complied with.

The Post Office is a national service, but, very properly, Scotland has been allowed to administer the review in its own way. The consultation and closure process has been divided into six regions. Three of these have already completed the process. Ninety closures are now firmly identified, with more to come. The criteria employed make some allowance for sparsity but, in the Scottish context, to measure provision by the criteria of three miles as the crow flies can be hugely misleading. I hope that when considering individual closures, the distance on the ground will be the vital measure. I gather that some consideration is being given to this in the Western Isles because of the dispersed nature of their settlements.

Finally, I return to the finances of the Post Office. I am much of a novice in looking at this issue, but I gather that one of the burdens carried by the Post Office is the shortfall in its pensions. I would be interested to hear from the Minister whether some of that shortfall can be attributed to the period before the break-up of the original Post Office and whether the current body is actually trying to cope with a millstone that has been around its neck for rather a long time. That is an element of the burdens that the Post Office carries that does not, at present, help to reach out to the population as a whole.

My Lords, like other noble Lords, I thank the noble Baroness, Lady Byford, for this debate. It is essential that we have it. So much has been said about the Post Office, rural post offices and the closures. It is true that the post office is very often the fabric of the society in a village. However, I go along with my noble friend Lord Whitty in saying that we are very often not looking at the wider aspects of the village and village life. There is certainly a need for joined-up government. There is a catalogue of services that have been removed from rural post offices. In 2005-06, government business worth £168 million was removed from the Post Office system.

We must also recognise that the viability of many rural post offices is difficult. It would be wrong if we did not face that: 56 per cent of them are just not viable. The question is how we begin to make them viable. Many of them serve fewer than 70 customers per week; 800 of them serve only five customers a day. Those communities deserve a decent service, and we must look at ways of providing it if it is not there. I welcome the remarks about using churches, church halls and, in particular, pubs, as well as having mobile vans in communities at certain times for people to have access to the service. We must move forward. At the same time, we must ensure that post offices are not deprived of services. I have never understood why we are talking about taking the card service away from the Post Office. We should instead be developing the Post Office as a bank. That is one way of moving forward.

I shall join the noble Lord, Lord Dearing, and other noble Lords in talking about the universal postal service. It would be wrong if we did not mention this now because it is under threat and if we are not very careful it will be the subject of our next debate. The universal postal service is the fabric of our society. The fact that the Post Office delivers to 20 million addresses is part and parcel of it. Although we are rightly debating the closures, we must debate that as well. The noble Lord, Lord Dearing, picked on the real reason, which is that companies have been allowed to cherry-pick the bulk business, the profitable side; 40 per cent of it has gone and that amount is increasing. In this country, we have introduced competition faster than anywhere else in Europe. Our major competitors are from Europe where they are more relaxed and competition is not even beginning to bite; for instance, in the Netherlands and in Germany.

What is the problem? The real problem is Postcomm and the restrictions it places on the Post Office. Let us talk about access headroom—I know it is a technical term, but it is easy to understand. It means that the Post Office must have a set margin between the price it charges its retail customers and the amount it charges its competitors. It is obvious that that is nonsense and cannot continue. I turn to my noble friend as I have to declare an interest as a member of Unite, which represents managers in the Post Office. We suffered redundancies. Cuts worth £1.5 billion have taken place in the Post Office, which led to 50,000 redundancies, and we know that there are cuts worth another £1.5 billion yet to come, with further losses at the Post Office. However, that will not put it back on track.

Postcomm is the problem. It has two obligations: the first is to promote competition, which it is doing, as the noble Lord, Lord Dearing, pointed out; its second and primary obligation is to ensure that the universal service continues. That is what it is failing to do. It is failing to do it because of the restrictions that have been placed on the Post Office. They benefit its competitors, but we know what is happening to society. We are talking about post office closures now, but in future we will not be talking about them but about the universal service and our ability to post a letter and have it delivered. Even though some of the efficiency has gone, 94 per cent of letters are still delivered the next day, and even in remote parts of the island delivery is guaranteed in a minimum of three days. All that will be lost to us unless something is done. I ask my noble friend to pay some attention to that when she replies. I hope we will get some answers from her about what may happen.

The big thing is that an independent review is taking place. Representations have been made not only by the Royal Mail but also by the unions. Unless what we are saying today is listened to, the next debate will be not about post office closures but about the universal service, which we cannot afford to lose.

My Lords, I commend the Conservative Front Bench for allocating its time to this important question. I am particularly grateful to it for agreeing to broaden the scope of its Motion to encompass the Question for Short Debate that I tabled. The fact that this debate has attracted so many speakers is proof, if proof were needed, of the level of concern, the urgency of the matter and the timeliness of the debate.

Before I come to the matters I had in mind for my debate, I must say a word about post office closures. After all we have heard, noble Lords hardly need me to underline the impact of further closures on elderly, vulnerable and disabled people and on communities. Let me give an example: the criteria for closure have to do with the proportion of the population who are within a mile of the nearest post office, but for many older people a mile is simply too far to walk. Many blind people receive their library books by post. A book may comprise several large volumes. Let us take the Companion to the Standing Orders. It is a slim volume weighing about 12.5 ounces that we all know well. In Braille, it occupies five large volumes weighing 4.5 pounds each. Imagine staggering to the post with that lot. If these closures go ahead, it will be essential to develop alternative outreach services to enable people to access the post.

If not only the access but also the sense of community that the post office provides is not to be further eroded and perhaps lost for ever, we need to think creatively about locating post office counters in what community facilities remain, such as the local library or the village hall. My plea to the Government is to have more regard for the social consequences of policy decisions and not just for the opportunities to cut costs by whatever means possible.

In my maiden speech I referred to Henry Fawcett, the blind Postmaster-General who was MP for Hackney, where I live, and introduced the parcel post in the last quarter of the 19th century, reduced the cost of telegrams and postal orders, improved facilities for small savers and investors in the Post Office Savings Bank and opened a number of positions in the Post Office to women. So he presided over a universal service but was clearly prepared to act entrepreneurially.

The universal service provided by the Royal Mail is part of the fabric of British society which it behoves us to treat with care. Yet it is under tremendous pressure, much of it, as we heard, stemming from the system of regulation we have in place. The volume of mail is declining by 2 per cent to 3 per cent a year, and that is accelerating due to alternative modes of communication. Competition is being allowed to develop more rapidly here than elsewhere. Royal Mail’s competitors now have 40 per cent of the bulk mail market. Postcomm says that Royal Mail needs to become more efficient, but the latter has done a lot to increase efficiency. As we heard, since 2002, it has taken £1.5 billion out in costs and reduced the head count by 50,000, and further cost reductions of £1.5 billion are planned. Yet Royal Mail’s competitors are still given a built-in advantage—some might call it an unfair advantage—by the system of regulation we have in the so-called access headroom rule, which means that Royal Mail can never be competitive, however much it increases its efficiency.

The regulator Postcomm imposes a particular business model on Royal Mail. Eighty-eight per cent of its revenues come under Postcomm’s price control, far exceeding the requirements of the European Union’s postal services directive and far exceeding the proportion of business regulated in other European countries. Yet Postcomm’s business model is flawed. It estimated that Royal Mail would make a profit of £779 million on its regulated business in 2006-07, whereas, for the reasons I indicated, it actually made a loss of £29 million despite meeting the regulator’s efficiency targets and keeping within the price control. Postcomm sees the future for Royal Mail as either a better deal for the customer through increased efficiency, greater liberalisation and more competition, or a scenario of managed decline. But as we have seen, the present Royal Mail management is doing much to increase efficiency. It welcomes competition, but not on terms which give competitors, some of them coming from Europe where they have a much more protected domestic base, an unfair advantage.

Royal Mail wants to operate commercially in a commercial environment but it cannot do this if the weight of regulation—as to 88 per cent of its revenues—means that it is trying to operate commercially with one hand tied behind its back. Postal services clearly need to be regulated but if we want Royal Mail to behave entrepreneurially, regulation must be light touch, leaving it scope to act entrepreneurially, to innovate, diversify and seize commercial opportunities. If we are not prepared to do this, I fear that the future is managed decline, and that inevitably means progressive erosion and ultimate destruction of the one-price-goes-anywhere universal service.

Whatever we think of Royal Mail—and we all have our grumbles—this is not something we should contemplate. The universal postal service is a priceless asset, truly part of the fabric of British society, still part of the steadily declining heritage of public service in our country, and we destroy it at our peril.

The Government have set up an independent review of the postal market. I fervently hope that the review panel will weigh these considerations carefully and fairly. If it does not, I fear that Henry Fawcett will be turning in his grave.

My Lords, I, too, am grateful to the noble Baroness, Lady Byford, for giving us the opportunity to have this debate and to look for better prospects for the post office network. It is also a privilege to follow the noble Lord, Lord Low of Dalston, many of whose views I share. Like my noble friend Lord O’Neill of Clackmannan, I want to mention a few difficult facts rather than offer more tea and sympathy so that we can get a better balanced debate, which I believe is in the best interests of all the British public.

As the noble Baroness, Lady Shephard of Northwold, stated, the Opposition know that the post office network is losing half a million pounds every day, between £3 million and £4 million every week of the year, and that is increasing. As the Opposition also know, there are now 4 million fewer post office customers than there used to be. I see little benefit in going back over the history of why we have got to that position; it is a fact of life that confronts us. More and more people now use alternative technological services which have become increasingly available and of which there will be more in the future. Many of us, even elderly people such as myself, no longer queue at the post office with all the relevant pieces of paper to get their road fund licence. Instead I use the new brilliant system available from the DVLA. I say to my noble friend Lord Whitty that, had this system been left with the Post Office, I do not believe that it would have delivered it in the way that the DVLA does. The change is absolutely phenomenal. The system is available seven days a week, 24 hours a day and 52 weeks of the year. It is interesting to note that 50 per cent of the people using it do so at hours when post offices are not open. I understand that a million people a month are using it. That is a remarkable change and it is happening in other areas too, which we should not disregard. Technology will have an even bigger impact in a whole variety of ways.

Changing lifestyles are also having a big impact on the post office network. The people using the post office are increasingly an ageing group. We must do everything we can to protect them but we must also take into account the fact that a change is taking place. There is no point in building for the future if you will not have customers going into post offices. I say to the right reverend Prelate that if customers are determined to act on a personal basis, this matter will not be tackled on a community basis. That is what we are seeing all the time with computers and online systems. People do not want to go to the post office, they want to access services from home and they will do so more and more in the future. That presents great challenges for us in a whole variety of ways but we cannot ignore that it is happening. In addition, post offices face more and more competition for their traditional business from organisations such as the banks. As the noble Lord, Lord Dearing, pointed out, a major threat is facing us as regards where the Post Office account will go in the future.

Post offices are part of the social network. I support them and want them to continue to be part of that network. They are the glue that holds communities together. I speak as someone from an urban area where these changes are having an equal, if not greater, impact on certain parts of the community than in rural areas, as my noble friend Lord Whitty pointed out. I support a subsidy for the post office network but we should acknowledge that the Government have provided much support, which has hardly been mentioned—£2 billion of support was given overall between 1997 and 2006 and another £1.7 billion is guaranteed up to 2011. It is estimated that without this, if the network operated solely on a commercial basis, it would be down to only 4,000 offices around the UK. None of us wants to see that. We need to see the network operate on a sustainable basis. But should there be unlimited subsidies? I do not believe that there should and I do not believe that, ultimately, the public want that either.

Having followed what our friends in the Opposition have been saying in their “Save our post offices” campaign, I have been trying to establish where they stand. I should be grateful if when they respond they could give us a few straight answers on some of those points. Speaking in the Opposition Day Debate, Alan Duncan said:

“Let me make it clear that we fully expect the network to shrink in size. We have never given a guarantee that no post offices will close, because such a guarantee is not ours to give”.—[Official Report, Commons, 19/3/08; col. 947.]

Later, when he was asked how much subsidy he would offer to post offices to stay open, his response was right to the point:

“The same as is proposed”.—[Official Report, Commons, 19/3/08; col. 956.]

That is, proposed by the present Government. We have to have some openness and frankness about finding a policy that takes us forward. If everyone accepts that we need a subsidy, we ought to try to reach an agreement on what kind of subsidy, and we should endeavour to reach agreement on how many post offices there will be and what size the network will be, rather than pretending that it will continue as it is at the moment without any further changes.

Some very useful suggestions have been made in this debate and, like others, I look forward to listening to what the Minister says in response to the vision that has been proposed by many noble Lords. Equally, I emphasise that I should like to hear from the Opposition on where they stand on subsidies and the size of the network.

My Lords, my noble friend Lady Byford has the ability to choose the right topic at the right time and to present it in the right way. Somehow, she managed to gather around her a group of cockerels and hens who say the right things. There is always a unity on such subjects between the political parties. I do not know when noble Lords do their thinking; I do mine late at night and sometimes, according to my wife, I mutter in the middle of the night, “my Lords” this or that. I think in the early morning. I have a very expensive coffee machine. As noble Lords know, coffee is the second biggest commodity in the world. I sit with my coffee under a framed sort of charter, which says, “We, trusting in the fidelity and wisdom of our most trusty and well-beloved Sir William Mitchell-Thomson, hereby give tremendous powers”. That is one of the reasons why I am in your Lordships’ House; he was my grandfather, who was Postmaster General.

Noble Lords will recall that the first master of post was in 1510. He was one of the Tuke family, I think it was Sir Brian Tuke. He was probably from Norfolk or the rich parts of the world. The first Postmaster General came in about 1630, I think it was Sir Henry Bishop. In 1880 to 1884, I think we had Mr Henry Fawcett. My grandfather was from 1924 to 1929. He had to be in charge, as chief civil commissioner, of the general strike in 1926 to force people to go back to work. Somehow, sitting in front of that charter makes me think every morning of post.

I have certain hatreds. At the moment, I measure my waste, because I am trying to be good with that pink bag. Some 85 per cent of that waste is complete and utter coloured junk delivered by direct mail. That is wrong, because of the cost of putting it away, and because I value my privacy. Then there are people who advise burglars that you are not there, because they chuck post or other things on your doorstep and you cannot get rid of it. My first suggestion is to say that the Post Office is pre-eminent; so let us increase the costs and the legislation that affects those people who send unwanted junk to so many people. The savings to the environment—if you are Conservative or Labour—will be enormous.

What is the reason for communication? After my grandfather, there were certain other successful Postmasters General, the latest being Tony Benn, who writes about it. I do not agree with him on many things, but I agree with his comments about the Post Office. There was also Clement Attlee. There were many great men, and it was a great post. Then in 1969 we got rid of it, and we had the Minister of Posts and Telecommunications. Yesterday, at 2.35 pm, I went on to the government website to find out who the Minister is for Posts and Telecommunications or who is responsible for it. The answer is “nil”. We do not have one on the official government website. Therefore, we should reinstitute the post of Minister or Postmaster General. I do not know what government department is involved.

I am also worried because I do not trust the post any more. I have to have one of those machines that chop up your bits of paper. You wonder who will pilfer your address and your postcode. Postcodes are extraordinary things. No one bothers to research the fact that alphanumeric numbers are very difficult. People can remember the alpha and the number, and everyone in the world can remember their service number; PJ963040 Pompey Rating.

My Lords, I knew that the noble Lord would do that.

I sometimes cannot remember postcodes. Who owns the intellectual property of my address? Is it me? I used to have the right to deny other people to know what it was. I know that I can go into British Telecom to find out where I live and find out how rapidly a burglar from Chepstow can get to my house. I have lost my security and I have lost my identity. I tear things up and realise that I have to burn them, because I realise that someone who has sent me unwanted post may have got my postcode on it. I go into a shop, and I do not have an account there, but they can look me up because someone sent me a present once, which had the postcode on it. I do not want my postcode any more; I want to get rid of it.

I am being light hearted, but I have some suggestions to make, and I have been writing things to myself. I think again of my grandfather. I would have been Sir Malcolm McEacharn Mitchell-Thomson, Baronet of Clackmannan, had they not chosen Polmood instead. My grandfather was an MP for Glasgow, for North Down and for England but never for Wales. The reason he ceased to be Postmaster General was that in 1929 he obviously did something wrong. A certain postmaster Crick was appointed to a town in Wales. He was an Englishman. He was not very good at the Welsh language, and he did not understand postcodes. There was one problem; he did not know where to deliver the post, so he resigned and joined the Navy.

That postcode was quite a difficult one; it had 58 alphabetic letters. I thought because it was a Welsh name, I would try to learn it, and Eleanor in security downstairs, who speaks fluent Welsh, gave me a training lesson, and I started to do it. I realise that there is another one who has the same sort of name, who spoke earlier today. This postcode, in English, is the Church of Saint Mary in a hollow of white hazel near to the rapid whirlpool by a red cave. I wonder whether I could have some help?

My Lords, let me jump in to help our colleague. The town was Llanfairpwllgwyngyllgogerychwryndrobwlllantysiliog ogogoch.

My Lords, these Llans! I have a feeling that the noble Lord may well have wished to choose that as his title. I finish on that happy thing.

My Lords, it is a pleasure to take part in this debate. Like other colleagues, I warmly thank the noble Baroness, Lady Byford, for, as always, championing the cause of those who live in rural areas in their present indictment.

The noble Lord, Lord Selsdon, tempted me to give my Royal Marine number. There is another number in the minds of most people, at least on this side, which is their Mam’s Co-op share number. I can give mine; I wonder whether the noble Lord can give his. Mine is 65539 in the Newcastle Co-op. I have heard that number, and many others, quoted in many other places.

This is not a happy debate because, quite frankly, there is no solution with a large “S”. The value of the debate is to bear down on the Minister and her colleagues with noble Lords’ anxieties for the plight of those who live in the circumstances outlined. My take on the situation is this. As noble Lords can see, I wear a tie on which is written the word “Co-op”. My background in this debate, as in many others, is with the Co-op. Its history, as I know it, is that in many a small town and village there was a butcher, a baker, a candlestick maker and all sorts of shops, including a Co-op. Over a period, by the will of the people who once patronised those shops, and with the creation of what we call the car-borne shopper, those customers decided to take their trade elsewhere until eventually there was only one struggling shop left: the Co-op. It remained because it had a responsibility to the wider membership of the community. The Co-op shops kept going in many small places for a long time until eventually the imperative of economic logic drove them out.

I live in Loughton, in the middle of Epping Forest. It is a lovely place. When I moved there 15 years ago, there was a Crown post office, which was then closed. But it reopened inside the Co-op. It had a life. Eventually the Co-op left that place and the post office was re-established inside a chemist shop in Loughton. As far as I am concerned, it is successful in providing what the populace need.

During the war I was wounded, and so I receive a small pension for that. For years I went happily along, weekly or monthly, to the post office in Chase Side, Enfield to draw my pension until it was suggested to me that it would be more convenient all round if I had it paid into my bank account, which I now do. That was a service to me, and I was glad to take it. The consequences of the service remain to be seen, of course. I also have my old-age pension paid that way, not by queuing as I saw people do all my life as the constituency MP. The figures have already been given. Some 80 per cent of old-age pensioners have opted by one means or another not to use the post office facility. The Government’s dilemma is to match the changing mood and pattern of the people of this country, which is referred to as their lifestyle. I do not envy the Government in having to come up with a solution.

In an adjournment debate in the Commons in 1975, when I was the MP for Edmonton, I made a successful plea to the then Minister, Gregor Mackenzie, for the post office at 101 Silver Street, Edmonton, not to be closed. It was not. The issue came up again when a local library was threatened nearby. Among those who protested was the postmaster, who still resides at 101 Silver Street. You pays your money and you takes your choice. I believe in the initiative proposed by Essex County Council, which says that we need to look much more at outreach services and we need to be flexible, because other people are taking advantage and applying their commercial expertise. Others are finding gaps in services and taking advantage of them.

I do not envy the Post Office management; they are closer to the issue of how to find a solution than I am or Ministers are. But do not think that the issue has been visited on us out of the blue. I remember the noble Baroness, Lady Byford, talking about the lack of affordable rural housing. As I reminded her, most of the village council housing she described is no longer public because of a Bill that was passed in 1982 which gave every council tenant the right to buy their house. It was a great thing at the time to own your own house, but the consequences down the line have had to be picked up by others. You pays your money and you takes your choice.

My Lords, I thank the noble Baroness, Lady Byford, for this timely debate. I particularly thank the noble Lords, Lord Selsdon and Lord Graham. I did my national service and it worries me that I cannot remember my Army number.

We have had a very well supported debate in terms of speakers, with a wide range of views expressed. But it is a great pity that we are discussing post offices today. I say that because it is a long saga going back to many debates that I and many others attended in the other place and, I am sure, in this Chamber. That is what I mean by a great pity. My hope, and the hope of others, was that this matter would have been resolved favourably long ago, because our local post offices are an essential part of our communities. In calling for local community action areas, my noble friend Lord Roberts of Llandudno covered that concern very well, as did other noble Lords.

The battle has gone on for a long time. I cast my mind back to the early days when notices put up in post offices and letters sent to benefit and pension recipients implied that payments would no longer be available over the counter. Many people were confused, concerned and wrongly informed. The noble Baroness, Lady Byford, has produced a clear example of her own experience in that regard.

The government approach is to manage the decline of our post office network rather than take long-term strategic decisions that will secure its future. The Government have increased the losses by undermining the Post Office account and withdrawing vehicle licensing, to which the noble Lord, Lord Whitty, rightly referred. The noble Lord also spoke of a lack of imagination. Some 2.1 per cent of Post Office income was derived from over-the-counter sales of TV licences. In rural areas alone, more than 300,000 such purchases were made annually. Passport reviews have also been taken away from post offices. Those are actions of the Government.

The post office could easily be a real arm of local and national government. It could be an information centre and continue to be a local focus. Help the Aged, for example, says that 99 per cent of older people in rural areas consider their local post office a lifeline, a point which many speakers have made. In 2006 alone, the Government withdrew £168 million-worth of government services from the Post Office. In rural areas and many urban areas post offices are the lifeblood of the community. As the Countryside Alliance and other speakers in this debate have clearly said, post offices provide a vital service. The overall impact of the reduced footfall is badly affecting small shops and town shopping areas.

Earlier I mentioned community, a word which, back in the 1980s and 1990s, the Prime Minister of the day, Mrs Thatcher, rejected as meaningless. We must not forget that 3,500 post offices were closed under that Conservative Government.

My Lords, there were 3,500 closures, and possibly a few more. It shows that the current process was started by the Conservatives. Perhaps the official Opposition should in all modesty be a bit more realistic about these closures, about which they are complaining so loudly across the country.

We on these Benches believe in community. We believe that post office closures are damaging and that they will increasingly damage people: the old, the young, the disabled, those without transport, those who are sometimes lonely, those who need a local facility close to them—the noble Lord, Lord Soulsby, rightly spoke about these issues earlier, as did many other speakers—and, indeed, those with young families. Many of those people need a service near by but that is not likely to happen with the distances that are being talked about. I know that in practical terms the distance that many people can walk is quite restricted.

Of course, it is not right to deplore a situation without having a solution. That is why I am glad that our Liberal Democrat policy will produce £2 billion to reinvest in post offices. I know that, for example, in Weston-super-Mare—my part of the country—the planned closures will have a destructive impact. We need small shops, many of which need to be post offices.

Along with others, I feel that the closure process is affecting our neighbourhood shops. When the small shops go, they are sometimes replaced by mini-supermarkets but, sadly, often the supermarket chains do not want to include a post office within the mini-supermarket. In fact, just such a circumstance arose in Weston-super-Mare, and only pressure from the public ensured that a mini-supermarket included a post office. But, of course, in years to come, who knows whether it will still be there.

There is great support from the communities for small shops. A recent survey by the Federation of Small Businesses found that 97 per cent of its members said that the post office had a role to play in local communities, and 82 per cent thought that the closure of a local post office near to them would have a significant impact on their business. That concern is widespread and, as has been mentioned, is found not only in local communities throughout the country. In fact, people may be surprised to learn the importance that the City of London attaches to post offices. In 1980, there were 12 post offices in the square mile; now there are just four. London is also affected because one more post office within the City area is now at risk, despite the fact that in the coming years the number of residents in the City will increase, as will the number of businesses. I believe that the post office concerned is in the Ludgate area.

Again, I thank the noble Baroness for this debate, as I am sure we all do. Many points have been drawn out and it is clear that there is much to be concerned about. More time should be allowed for this process. In many areas, the amount of time given to the consultation was not adequate, with allowance not being made for weekends or bank holidays and so on. This matter is too important to be rushed but, in fact, the process has been rushed in all respects. Many ideas are emerging—in particular, the noble Lord, Lord Hanningfield, mentioned what is happening in Essex—and time is needed for these possible measures to be implemented. It is very encouraging to hear how the churches are willing to play their part, and mention was made of a universal service, which is very important. Therefore, I ask that communities be given more time so that the ideas that have been put forward in this debate have a chance to be implemented.

My Lords, I thank my noble friend Lady Byford for choosing this as her subject for debate and for giving us all the opportunity today not only to say what we think but to listen to what others think. I am amazed at how much common cause we seem to have heard around the Chamber. I am supposed to stand here and speak for my party—not stand at the back and speak only about what I think. I shall try not to speak for too long. I shall try not to repeat what has already been said, and I shall try not to sound as though I am reading from a script that someone else has given me.

I start by saying that, yet again, our Minister of State, the noble Lord, Lord Jones, is not here. He is doing what he likes doing best and what he thinks is most important—he is banging the drum for Britain. However, over these past few weeks I am only too delighted to have welcomed to the government Front Bench the noble Baroness, Lady Vadera, who I hope will bang the drum for our communities and local businesses. I particularly hope that when she replies to the debate we will hear her pick up on a lot of the things that we have heard today. Many of them are new to us and have come from those whom we did not expect them to come from, which is always much more refreshing. I am delighted to see the noble Lord, Lord Whitty, taking part in the debate. When I became chairman of the National Consumer Council, everyone said, “Be very careful, Judith. You could easily go native”. I am delighted to see that now that the noble Lord is chairman of that council, he too is going native.

I have wasted all that time when I should have been saying how wrong the Government have got it. However, as we all know, we had the Post Office brief a long time ago and this has all been going on for a long time. The trouble is that we expect some things to last for ever. We take our eye off them; we do not invest in the way that perhaps we should have done; and, when it comes to the point where things start to go wrong, the Prime Minister of the day uses his clunking fist and, in this case, his clunking fist comes down on the weakest.

The target for closures seems to have been arbitrary and, some say, illogical, taking no account of whether a post office that is marked out for closure is profitable. We have heard that communities are being pitted against each other because of the dog-eat-dog closure programme. If one community campaigns successfully against a closure, a neighbouring branch will shut down. I can tell noble Lords that I know what that feels like. I live on the Roseland peninsula in Cornwall and it is absolute war down there. Two months ago, we held a joint carnival with a village which has been our friend, but we can hardly speak to any of those neighbours now. We realise that if we win the battle for our post office in St Mawes, it will mean that Veryan is likely to lose its post office. An awful lot of friends and families are at war down there, and I imagine that everyone around the Chamber today can say the same thing.

Most people have brought out the key facts in this issue, and I see no point in going over the subject of post office card accounts again—we have heard it all. With regard to the access criteria, the Government’s subsidy to support the post office network was due to finish in 2008, but they have announced that it will remain in place and that compensatory payments will be made to sub-postmasters whose branches are to close. That is also a sadness because it means that some older people who run post offices have accepted the payments very quickly, without a fight, because they felt that at least that was a form of pension for them. It is different for the younger, more vigorous people who have moved into post offices and given up careers in other areas to start a new life or to take themselves forward. Julie Plomer and Andy Forham, a dynamic couple, have come to St Mawes and are doing wondrous things. They have both given up careers in marketing in London to take on a completely new life which they are absolutely embracing.

My goddaughter, Tamsin, living in Eggbuckland, a suburb of Plymouth, is combining a nursery school with her post office. Some wonderful initiatives are taking place, but unfortunately if people take the money because they need it, what can one expect? The money is only a fleabite when one compares it with the amount of money that has gone to Northern Rock or the amount of money that has gone to the banks. We are talking about a service that covers the whole country and it really is a tiny amount of money. I know that the noble Baroness, Lady Vadera, is listening to me and taking it all on board.

In the few moments I have left, I want to break a rule and tell the Minister that we in the Conservative Party have a Post Office action plan. I am delighted to share that with her. I will happily share with her the fact that we want to free up sub-postmasters; we want to allow them to provide a greater range of products, and so on. I am happy for anyone to take notes on what I am saying now. We want to use post offices for government GP services. We think it would be a very good idea to have a government GP person working there who can explain many of the forms that one has to fill in if you want a disabled parking badge, and so on. We could campaign on the Post Office card account and encourage local councils to see what services they could provide through post offices and whether they could use the Post Office network in their area to engage better with local residents. We have heard what Essex County Council has in mind.

This matter is so important; it goes beyond me standing here saying that the Conservatives would do it better and others standing up and saying that we did it worse and the Liberal Democrats wasting their time saying that we did it wrong a long time ago. We should all get together to see what we can to do. Once again, I very much look forward to hearing the response of the noble Baroness, Lady Vadera.

My noble friend Lady Byford always puts life into matters and she talked about the Post Office savings account. I remember my son aged five, having been told by me that he had to save half of everything that he was given, going into the post office with half of half a crown—half of 20p or whatever. One day he stood beside me, looked over the counter as best he could and said to the woman behind the counter, “Please may I see my money?”. The woman looked at me and over the top of his head she whispered to me, “How much is it?”. I said whatever it was—“£1.52”. She said, “One moment”. She picked up a bag from under the counter, put a few bits in it, brought it up and said, “I think this one’s yours”. My son was so thrilled that his confidence in the post office from that day on went up and stayed up. He always says, “Do not mention me, mummy; I am a 43-year-old barrister and I don't want to be embarrassed by you again”. For all I know, he may still have that Post Office book.

It is not too late to stop the destruction of a cherished service to our local communities, to everyday people in town and country. Sixty million people manage to live in relative harmony in these crowded islands. More flock here every day from all over the world and one has to ask why. It is that kind of consistency and constancy, that duty of quiet service which stems from our monarch and goes right down to our sub-postmasters and sub-postmistresses, which gives us the confidence for the big changes that we have to endure. We destroy that at our peril.

My Lords, I am very grateful to the noble Baroness, Lady Byford, for calling this very timely and welcome debate, particularly given the strength of feeling that it has aroused. Despite the depth of feeling, I am very grateful, as my noble friend Lord Whitty said, that noble Lords have all been relatively gentle with me. I shall address as many points as I can during the time available and if I am not able to cover them all, I promise I shall write to noble Lords.

I recognise and fully endorse the views expressed by all noble Lords on the social and economic importance of post offices in local communities, especially for the elderly and vulnerable. In response to the right reverend Prelate the Bishop of Chelmsford’s point, echoed by many others, we do not see the Post Office as a purely commercial concern. That is why we have made quite an unprecedented financial commitment to the network. My noble friend Lord Brooke very kindly reminded us that we have put in £2 billion between 1999 and 2005 to help the Post Office to adapt to market changes and we have committed a further £1.7 billion up to 2011 to protect the social role of the network. It is quite an interesting view of financial management to consider £3.7 billion a flea-bite, particularly when one understands that it is a cost that we do not recoup in any other way—we consider it a service.

This is the first time that a Government have taken and funded a planned and strategic view of the Post Office network. My noble friend Lord O'Neill indicated that there are a number of very complex issues here. I completely agree. In modernising the network we have attempted to take all those into account to meet today's economic and social needs. The decline of the Post Office network is, as someone commented, not new; it has been falling since the 1960s. As the noble Lord, Lord Cotter, has already said, 3,542 post offices closed between 1979 and 1997 and they were all unplanned and uncompensated. Therefore, I say to the noble Baroness, Lady Wilcox, they were arbitrary, which is essentially the reason we have now taken a planned look at the network. Without this planned review and without this funding, 10,000 post offices would close rather than the 2,500 that we are currently planning to close in this programme.

My Lords, I do not want to try to make a tricky point, but we have heard evidence this afternoon that offices are destined to close in areas where housing, and so population, is destined to increase. I do not expect the Minister to address that point here and now, but she is claiming that the Government are doing this in a systematic way. When one looks at the issues, that is not how it feels on the ground. Perhaps, after the debate, she would be able to turn her mind to that point.

My Lords, I was planning to address the very point the noble Baroness makes on local terrain.

The Post Office network as it stands, despite the funding, faces some serious challenges. The volume of business has reduced significantly in recent years. Four million fewer people visit post offices a week compared with just two years ago, which is a drop of 20 per cent in two years; 800 of the least-used branches have fewer than 16 customers a week and it costs taxpayers £17 in subsidy every time one of those 16 customers walks in and undertakes a transaction; and about 1,000 urban sub-post offices compete for business with at least six other branches within a mile of them. I have heard comments about being innovative and making urban post offices profitable. I have some business experience and I defy anybody to find a way of competing in that kind of network.

We completely understand the depth of public concern about closures but we have to be mindful of the amount of funding that taxpayers can put into a service that is facing profound changes in terms of technology and how people choose to live their lives. The 20 per cent decline shows that consumers are fundamentally changing their lifestyle choices. Despite this public concern, like my noble friend Lord Graham, the public are voting with their feet.

My Lords, is it not true that once you withdraw, say, the ability to buy car tax or a television licence in the post office, naturally the number of people entering that post office will be reduced?

My Lords, the implication is that the Government removed the service, so usage declined. But I would argue that the usage declined, making it unprofitable, because people were voting with their feet. This is not precipitated by the Government; we are lagging behind consumers in their choice, like my noble friend Lord Graham. Eight out of 10 pensioners choose to have their pensions paid directly into their bank account, and among new retirees the number is nine out of 10. A million people a month choose to renew their car tax online, and half of them do so outside office hours. We are not precipitating the decline of the network by moving business to new channels but are following rather than creating the trend of lifestyle change.

The noble Baroness, Lady Byford and the noble Lord, Lord Dearing, asked about the cost of changing the method of social security payments. Each benefit or pension paid by girocheque costs £1.80 and a Post Office card account transaction costs 80p. Each pension paid into a bank costs the taxpayer 1p. Anyone can still elect to receive their pension or benefits through a Post Office card account; they can also receive such payments through a bank account of their choice. There are 17 basic bank accounts and nine current accounts available through the Post Office. People will continue to be able to choose the POCA or its successor—the government card account. Payments into bank accounts first became an option in the 1980s, so we are following a trend rather late.

The Government need to address the issue of financial inclusion. There are significant benefits in using bank accounts that we want everybody to be able to access, which they may be unable to do under a POCA. It has been noted that the changes have led to substantially increased Post Office Ltd losses—£174 million last year, which is almost £3.5 million a week. The noble Baroness, Lady Wilcox, suggests that we are closing profitable post offices. Indeed, usually the sub-post office is profitable but that does not mean that it is not loss-making to Post Office Ltd, which, at a cost, has to provide the service. A transaction can cost £17, which might make the sub-post office profitable but it does not make Post Office Ltd profitable—75 per cent of sub-post offices lose money for Post Office Ltd.

My Lords, the overheads of Post Office Ltd are not the responsibility of individual branches. Post Office Ltd has considerable overheads with empty offices, and so on, but surely that should not be put on to a profitable individual branch. That is not fair and it is not supporting the community.

My Lords, as part of the Government’s programme, overheads will reduce by about £200 million up to 2011, but I do not wish to get into a discussion on the economics of transfer pricing. If a service requires a centre that provides the service that is then transmitted through the distribution network, somebody has to pay for it. That is what we are paying for, and it is only fair and right that the true cost is transferred to the Post Office. We are transferring the cost and then choosing to subsidise it to the tune of £1.7 billion up to 2011. It cannot be said that that is costless. There is a central cost to create the service that is then transmitted on via the Post Office network.

Given that we are facing such deepening problems, doing nothing is not an option. I felt that there was consensus among noble Lords on that. Because we recognise the significant and economic role of the Post Office we have acted to ensure planned and consistent network provision across the country, first, by the funding I mentioned and, secondly, by stipulating minimum levels of geographic coverage. The access criteria are designed to protect the vulnerable, marginalised and rural in a way commented on by noble Lords, unlike unplanned closures would be. Nobody likes individual closures and everybody has a story, but let me say to the noble Baroness that there is nothing wrong with the Minister having a view on an individual closure, which is different from understanding the overall network’s design requirements.

For the first time we have criteria for a strategically planned network. I understand that there have been some criticisms on the access criteria, and the noble Baroness suggested that they are somewhat arbitrary. First, we are funding beyond the access criteria. A certain size of network will be provided and the funding we are supporting is greater than that. Secondly, access criteria, of which noble Lords are aware, are not the only issues. Others are taken into account, including the terrain or surrounding area, the location of the nearest public transport, provisions for disabled people and disabled parking, the impact on local economies, demographics and housing needs, and whether it is the last place to get cash. I appreciate completely that it may not feel quite like that when an individual post office is closing, but those are the access criteria created for the network.

I reassure the noble Duke, the Duke of Montrose, that measurements are made not as the crow flies but by road. We believe that the current programme will increase sustainability of the network through the migration of business from closing branches to those that remain to increase the profitability of the whole network. The need to rationalise the network has been recognised by many stakeholders. George Thomson, the general-secretary of the National Federation of Sub-Postmasters himself, has accepted that the closures are regrettable but necessary.

My Lords, while not wishing to drag out the time, I am a little concerned about those post offices that are also shops. If they take the compensation package by losing the part of their shop that is the post office service, are they are told that they cannot carry on providing certain services, such as the lottery, that are seen to be vaguely part of that service? That would be very unfair indeed.

My Lords, the compensation package is 28 months’ remuneration, which struck me as quite generous. It is compensation for loss of income from selling a service on behalf of the Post Office. If the sub-postmaster chooses to carry on providing that very service on behalf of a competitor, I am not sure that I see the logic of compensating someone for going to a competitor service. I can confirm this in writing, but from memory I believe that no more than 10 per cent could be deducted from the 28 months of remuneration if their income is compensated from using a competitor service.

My Lords, before my noble friend leaves this point, I must say that she has been very frank in opening up the criteria and explaining to us the considerations made. The only problem is that, as she does that, she is creating another problem because the review procedure and the right to be consulted become that much more important and complex. Will she undertake to monitor the length of time that the review procedure will take? As I said earlier, unless the public have a sense of ownership and trust in the review procedure, they will not readily accept what might not be quite what they want, but is a lot nearer to what they want than they originally anticipated.

My Lords, I will go on to discuss the issue of the consultation process and review procedure, and I say to the noble Lord, Lord Selsdon, that there is a Minister for Postal Services. Thankfully it is not me; it is Pat McFadden, and I will be passing comments on to him.

I thank the noble Lord, Lord Cameron, for his recognition that the post office network will inevitably be facing closures, and for his work in promoting outreach for a number of years. Those outreach services are specifically designed to help those who are insufficiently mobile—an express concern of the noble Lords, Lord Soulsby and Lord Low. We have provided funding for 500 new outreach services in rural communities. They include vans for those who are not mobile to visit, and local shops. I welcome all ideas from the noble Baroness, Lady Wilcox, about how we can use innovation to improve those outreach services. I also very much welcome the work of the churches. The right reverend Prelate the Bishop of Newcastle mentioned such work. That is exactly the kind of outreach service in church halls, churches and shops that is being tested. It has proven popular and customer satisfaction levels are comparable to levels enjoyed by post office branches themselves.

My noble friend Lord Williams suggested that we consider making urban offices that are closing more profitable by providing new services. Post Office Ltd announced on 9 April that it will now trial the outreach model for urban communities as well. If successful, that could mean a significant number of outreach branches over and above the 500 originally planned. That is an innovative trial to deliver services in a way that meets the changing needs of customers.

As I said, alongside that there is a plan to improve the profitability of the post office network, not just by reducing its overhead costs, but by introducing other products and services and ways of delivering them—perhaps using some of the imagination that my noble friend Lord Whitty suggested was lacking. For example, post offices will now be the UK’s largest provider of foreign exchange and car insurance.

I apologise to noble Lords, but I have been reminded that I am running out of time and will therefore not be able to answer the question on consultation. If I may, I will write to noble Lords.

Important questions were also raised about the regulatory framework of the Royal Mail. That is being considered by the Hooper review, so it would not be appropriate for me to comment. I simply point out that, in addition to the funding that we have provided to the network, we have provided investment—most recently in 2007—of more than £2 billion in the Royal Mail. So I do not agree with the assessment that we have not invested in the Royal Mail relative to, say, Deutsche Post or the Dutch post office.

My Lords, with respect to the Minister, I was referring to the situation when the decision was taken to introduce competition. That was five or six years ago. Now it is being put right five years too late.

My Lords, in 2003, we invested in Royal Mail to the tune of £1.3 billion, so we have in fact been investing in it, although I quite understand that it feels that it has faced significant competition.

My Lords, we mentioned the universal service. The review is taking place, but could we at least have an indication that the Government still believe in the universal service?

My Lords, perhaps I should quote the terms of reference of the review, which are,

“how to maintain the universal service obligation in the light of ... market developments”.

Noble Lords will note that I did not say “if”.

I conclude by saying that 99 per cent of the population will see no change or be within one mile by road of an alternative branch following the programme; 90 per cent will see no change at all. We are looking at a network that will provide underlying protection for all. Although this is difficult—we are making difficult long-term decisions—they are decisions that need to be made. This is hardly the wholescale destruction of the network or of local communities. As noble Lords have commented, it has cross-party consensus. In closing, I cite the Opposition spokesperson for business:

“I agree with what the Secretary of State has said on numerous occasions: we have to face the facts about the future of postal services in this country … We understand that the Post Office is haemorrhaging around £4 million a week ... and that in this difficult business climate, uncertain times lie ahead”.—[Official Report, Commons, 19/3/08; col. 947.]

My Lords, I respectfully ask my noble friend to follow up my point about her not wanting to give compensation to—

My Lords, we have three hours. How can my noble friend compare the logic that she applies to the compensation—

My Lords, I say to my noble friend that this is a timed debate. I have to take the feeling of the House. My noble friend was, rightly, interrupted a number of times and has now concluded her remarks.

Yes, my Lords, but I have to take into account the fact that most noble Lords kept to their allotted time. I am sure that they all wanted to say a lot more. Therefore it is right that the Minister keeps to her allotted time.

My Lords, I think that it then behoves me to stand up.

I am very grateful to everyone who has taken part in the debate. I did not envy the Minister in trying to respond to such knowledge as, she has realised, is around the Chamber today: people who have worked within the Post Office and people who have represented constituencies with which they clearly identify, who obviously bring particular issues. She was not able to answer virtually any of our questions—I do not mean that as a criticism; they were very wide. I would be grateful if the department would answer my question about the saving to the DWP. That department has saved a lot of money that has clearly not come back to the Post Office, so I suspect that it has gone back to the Treasury. I would be grateful for a response to that.

I thank all those who spoke. I tried to present the debate not as town against country—it is not that sort of issue; it is a community issue, whether that community is part of a suburb or of a town, or in a rural area. I am grateful for the contributions that have been made.

With regard to the outreaches, I think that I heard the Minister say that all of the 500 proposed are taking place in rural areas. She nods, so I assume that I was correct. I pick up on the point made from the Bishops’ Bench by saying that Sheepy Magna in Leicestershire—what a suitable rural parish—was one of the first to take up the challenge and take in post office facilities.

I shall not even attempt to pick up on what everyone has said, but the debate this afternoon will have given the Government a chance to pause to think about how we need to move things forward. That is what we are after. Most of us are after ways in which we can create greater innovation within the post offices so that, from being in the doldrums, as they have been for some time, they can look to new business. I was particularly grateful to hear about the example of what is happening in Essex and the interest that other counties are showing in how they can save a precious part of their communities. With that, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

NHS: Dental Services

rose to call attention to the current situation in the provision of National Health Service dental services in England; and to move for Papers.

The noble Lord said: My Lords, in 1946, the Minister of Health, Aneurin Bevan, said:

“The resources of medical skill and the apparatus of healing shall be placed at the disposal of the patient, without charge, when he or she needs them”.

His dream was realised on 5 July 1948 when the NHS was born. In 1999, Prime Minister Blair said that by September 2001 everyone would have access to an NHS dentist, no matter where they lived. His dream is not yet realised.

Now, the NHS exists in a cash-limited system and has a multitude of competing priorities. It is difficult to reach a consensus on expensive drugs and treatments that please everyone. The provision of dental services is a good example. Statistics published by the Information Centre on 28 February show that the number of people in England able to access NHS dentistry continued to decline between 30 June and 30 September 2007.

The purpose of the debate today is not to make political points about the perceived failure of the dental contract, but to discover why the new contract, which was introduced more than two years ago, seems to have failed to meet the Government’s own success criteria for the future of NHS dentistry as set out in the Department of Health report, NHS Dentistry: Options for Change, particularly the need to improve access and to place prevention at the centre of dental care. Why is there such a strong contrast between the view of patient groups, the media and dental professionals, who all believe that the system is in a mess, and that of the Department of Health and its representatives, who assure us that access is acceptable and that reforms are on target? Why did a survey by the Patients Association of Members of Parliament last year find that dentistry topped the poll in the three main concerns about health raised by their constituents? Why has the Health Select Committee in another place found it necessary to conduct an extensive inquiry into how NHS dentistry has been delivered since the reforms? Perhaps the Select Committee will come up with an answer, because one view or the other must be wrong. The Government owe it to the public to provide an answer and to put a stop to claims and counterclaims about NHS dentistry.

I have deep admiration for the Chief Dental Officer, Dr Barry Cockcroft, and his team. He is a very effective presenter and an asset to the department. I declare my interest as a semi-retired dentist with more than 40 years’ experience, of which 20 were in the NHS. Despite this experience and a working knowledge of the NHS treadmill, 10 minutes with Dr Cockcroft usually convinces me that NHS dentistry is working to plan. However, the new contract is complex. In February, Mr Justice Collins, commenting in a High Court challenge involving a dentist and his primary care trust, said:

“I do pity these unfortunate dentists who have to struggle with this”—

legislation. He described the contracts that dentists must sign as being of “inordinate length”, and said that dealing with them was,

“like going through a marsh, trying to leap from tussock to tussock”.

He suggested that if PCTs do not provide terms that encourage dentists to work in the NHS, they are letting everyone down.

Patient groups, dentists and the Government’s own figures show that the number of people in England able to access NHS dentistry has continued to decline. In the 24 months ending in September 2007, 543,000 fewer people were seen than in the 24 months before the reforms were implemented. More than 2.5 million people are now officially recognised as being without access to NHS dentistry, no matter where they live.

Last December, the National Association of Citizens Advice Bureaux found that 34 per cent of respondents to the Omnibus survey of 1,813 adults had not been to an NHS dentist since April 2006. Of the 998 people surveyed who had not been to a dentist in that time, 31 per cent cited lack of availability as the reason why. In an earlier survey in March 2007, the National Association of Citizens Advice Bureaux found huge regional variations in patients’ ability to access dentistry. It spoke of dentistry deserts, observing that people in rural communities who rely on public transport are particularly disadvantaged.

In a survey of more than 5,000 patients and 750 dentists, the Commission for Patient and Public Involvement in Health found that 35 per cent of patients not using dental services said that it was because there was no NHS dentist near to where they lived. It found that people had to pay for private treatment, and that 78 per cent of new private patients left the NHS because their dentist had gone fully private or because they could not find an NHS dentist in the first place. Although it is not a serious problem, noble Lords will have heard of the 6 per cent of patients who are resorting to treating themselves.

The Department of Health acknowledges that 2 million people who wish to receive NHS dentistry could not do so. The British Dental Association believes that this may well be an underestimation of the extent of the unmet need for dental care. To provide some idea of the scale, the Healthcare Commission’s national patient survey in 2005 found that 69 per cent of patients who were not registered with an NHS dentist—this equates to about 15 million people—would like to be. This explains the current increase in hospital admissions for dental treatment. Last year, there were nearly 240,000 hospital admissions for dental treatment. About 18,000 of these were for dental emergencies, of which the majority I assume should have been dealt with by high street dentists. That number has increased by 27,000 patients, and it is clear that regions with a bigger increase in the number of patients without an NHS dentist now show a bigger increase in the number of hospital admissions for NHS dental treatment.

Unfortunately the new contract was not given sufficient time for a proper pilot scheme, and was imposed on the profession. A survey of dentists found that 85 per cent of respondents said that the new contract had not improved access, and that only about 10 per cent of them could take on new patients. Dentists want to provide high quality care for patients in a prevention system, as proposed in NHS Dentistry: Options for Change, but patients’ quality of experience is threatened by the time pressures on dentists generated by the new crude target-driven system.

Under the new contract, dentists must deliver a fixed number of units of dental activity—UDAs—over 12 months. A dentist may be commissioned to deliver, say, 12,000 units annually. The range of treatments provided is assigned to one of three bands that attract a set number of UDAs. Thus if a patient requires one filling, the dentist secures three UDAs, but if the same patient requires 10 fillings during the same course of treatment, the dentist will still gain only three UDAs, even though the work will take much longer. This is just one of the absurd anomalies of a crude target-driven system that was never pilot-tested and is certainly not patient-centred. Yet it is the only measure used to establish whether a dentist has complied with the terms of the contract.

The consequences for a dentist who fails to deliver the requisite number of UDAs can be detrimental. In 2006-07, almost half of dental contractors failed to achieve the required number. This results in practices having to pay back money to the PCT, and can run into thousands of pounds. Deficits of more than 4 per cent can be rolled over into the following year’s contract, adding to the time pressure on dentists to achieve even more targets. Conversely, a dentist will gain no rollover benefit from delivering too many UDAs and will have done this work for free. In some areas, PCTs have taken a constructive and sensitive approach to dentists missing their UDA targets, but others have not. About 40 per cent of practices had money clawed back from them that had already been paid by their PCT, and 35 per cent said that their PCT had insisted that the uncompleted UDAs be performed in the next contract year.

The NHS annual work quotas of some practices have been filled and patients are being turned away, despite the fact that so many people cannot find a dentist. Patients are being told that they must either pay privately or return in the next contractual year. This further explains the increase in hospital admissions for treatment that normally would be carried out in the dental surgery.

The Birmingham Local Dental Committee estimates that up to one-third of dentists in the West Midlands have run out of work or have had to reduce the number of NHS patients that they treat. This arbitrary system of performance measurement fails to promote a more preventive approach to care. When dentists spend additional time with patients to explain oral hygiene, nutrition, smoking cessation and disease prevention, they do so at the risk of missing their UDA requirement or disproportionately increasing their clinical working time.

Despite the Government’s stated aim to allow time for prevention, I fear that most dentists believe that they are still on a treadmill and that the contract in its present form has not worked. Unlike general practitioners, dentists have to buy their own premises, equipment and consumables, and have to pay their own staff. Their business has to be viable. The uncertainty about the new system puts the future of NHS dentistry at risk.

Dentist leaders have long argued that a prevention-based system could be delivered if the NHS contract used a range of quality-based performance indicators, rather than have sole reliance on a single, flawed output measure. They support the Department of Health’s advice to PCTs to include factors such as oral health, access, quality and patient experience in dentists’ contracts. This approach would enable PCTs to develop and agree contracts with dentists and practices that reflect the needs of patients in their area.

If PCTs are to meet the oral health needs of their communities, they must have the right resources to commission dental services successfully in terms of funding and expertise, as well as a commitment to do so. It seems likely that some PCTs with access problems may be adopting a narrow interpretation of their duties, focusing on spending at the level of their historic budgets, rather than on a comprehensive assessment of local need.

For too long, investment in NHS dentistry failed to keep up with funding for other areas of the NHS. Until recently, the proportion of the NHS budget spent on dentistry in England had been lower than it was in 2002-03, at only 2.8 per cent. However, the 11 per cent increase in the dental budget for 2007-09, announced last December, is a welcome development and should ensure improvements in the number of patients accessing primary care NHS dental services. It is also a step in the right direction that the ring-fencing for dental budgets has been extended until April 2001. I hope the Minister might be able to confirm that the income guarantee that dentists were given, which is due to end next April, will also be extended.

Apart from historic under-funding, the PCTs’ ability to deliver dental services has relied on the collection of about one-quarter of the dental budget via payments from patients who must pay for NHS dentistry—nothing free at the point of delivery here. This charge has turned out to be about 20 per cent lower than expected and PCTs are being forced to cover the deficit by a combination of commissioning less dentistry and by implementing inflexible performance targets for dentists. Reliance on patient charge revenue ensures that PCTs’ dental commissioning budgets remain unpredictable for future years. The BDA has called for an allocation of full dental budgets for PCTs, so that they are no longer reliant on patient charge revenue.

In 2004, the National Audit Office warned that PCTs had little experience of high street dentistry and would need to develop new expertise in dentistry. The development of effective working relationships with local dental committees and local dentists is a crucial part of addressing this requirement. The expertise of consultants in dental public health is also vital. The recent loss of a number of consultant posts is therefore of great concern and undermines the Secretary of State’s elevation of public health to the top of the national agenda and his recognition that it is pivotal to reducing health inequalities.

Having drawn on these resources, it is important that PCTs publish plans on how they intend to reduce health inequalities and to improve the oral health standards of their communities. I shall look forward to the publication of the adult dental health survey, which is invaluable for the monitoring of the population’s oral health. I hope that despite the one year delay in publication the Minister can confirm that this report is imminent.

I have tried to be helpful. I am looking forward to the contributions from other noble Lords who are taking part in the debate. I am sure that the Minister has realised that the dental profession and its leaders wish to co-operate, but as an absolute priority the public must be assured by the Government and dental professionals that the NHS dental service is in good order. The noble Lord, Lord Darzi, is leading a wide-ranging review of the NHS and has included a dentist, John Milne, to provide the clinical input and to represent the dental profession. I hope that the review will address this very urgent problem. I beg to move for Papers.

My Lords, from these Benches, we thank the noble Lord, Lord Colwyn, for giving us the opportunity to discuss this critical problem. As he so rightly said, nine years ago the then Prime Minister, Tony Blair, said that within two years every person in the UK would have access to an NHS dentist, which just is not happening. At that time, the picture was pretty bleak and it has not improved. In April 2006, the Government introduced a new dental contract, which promised that dentists would be allowed to take on 2 million new NHS patients. However, figures released in February 2008 show that the opposite has occurred. NHS dental statistics for England, released in February, show that 500,000 fewer patients have access to an NHS dentist since the adoption of the new dental contract.

In February, a Liberal Democrat survey showed that only 29 per cent of dentists were taking on new NHS patients. In March 2007, a British Dental Association poll discovered that 85 per cent of dentists did not think that the reforms had improved access after a year under the new contract. This was shown in the fact that half of all adults and almost one-third of all children still do not have access to an NHS dentist.

For patients who find a dentist, the charging system makes it unaffordable for many of the poor and the elderly. Even the maximum charge for a complex course of treatment under the NHS, which, in England, is £198, and, I am proud to say, in Wales, is only £177, is beyond the reach of many people. For people living just within their income finding this sort of sum is nearly impossible. For those who are unable to find an NHS dentist, the charges are totally beyond them. A week ago, I called at a dentist in the Conwy Valley where an examination costs £60; a routine extraction under local anaesthetic costs £65; a porcelain bonded crown costs £350; and a full set of dentures costs £750. This makes dental treatment very difficult for people to afford.

The noble Lord mentioned the Dentistry Watch survey published in October 2007. It confirmed that more than 10 per cent of people were not registered with a dentist; 35 per cent said that there were no local dentists; and 13 per cent said that they were still on a waiting list. The most shocking thing in the survey was that 6 per cent of the population were treating themselves. They use pliers to remove teeth—one man said that he had removed 14 teeth with pliers—use clove olive and Polyfilla to make fillings and Super Glue to fix a crown. That is not the sort of NHS dentistry we dreamt of for 2008.

A parliamentary Answer that I received in June 2005—the Minister might confirm that the figures are probably near to the mark even today—showed how Wales was missing out. The ratio of dentists in Wales was one per 2,823 patients. Scotland had one dentist per 2,202 patients, while England came in the middle with one dentist per 2,464 patients. The Welsh Assembly, the Scottish Parliament and our own Government need to get together and make sure that there is much wider availability.

The population of Wales stands at around 3 million. In 2005, more than half—1,411,574 people—were unable to register with an NHS dentist. The new contract, as well as failing to improve access, has provided no incentive for dentists to spend time with patients providing, for example, oral health advice such as how to floss and use a toothbrush properly. The contract has been estimated to allocate a mere 90 seconds for oral health advice for each patient. Something is seriously wrong here.

Of course we have known about the disillusionment of the dental profession itself since the contract was introduced. Over 1,500 dentists, 8 per cent of the total, dropped out of NHS provision within three months of the new contract being introduced, and many more signed their contracts in dispute, a situation which has yet to be fully resolved. This issue is too grave for us to make party political points, but we must increase the flexibility of the current contracts. The aim must be to ensure that dentists are properly compensated for completing NHS work and, as has already been mentioned, there must be full co-operation between the dental profession, the Government and patient groups.

I shall not take much more time from the debate. As most dental disease is preventable, charges for check-ups should be scrapped. That would ensure that all patients are able to have their teeth checked regularly, resulting in a massive saving in times ahead. Knowing that the problem is critical, we wish the Government well and look forward to the review in order to find a truly effective answer that fulfils the promise made in 1999: that every person has access to an NHS dentist.

My Lords, I am grateful to my noble friend Lord Colwyn for tabling this Motion. As one of only two dentists in this House, I feel obliged to take part, and I am sorry if noble Lords have heard much of what I have to say before. I was fascinated by the speech of the noble Lord, Lord Roberts, because Wales has always been badly off for dentists. Going back 50 years ago, all the Welsh dentists were driving Rolls-Royces and none of them did any fillings at all. That is a bit of a generalisation, but it was the impression that everyone had. Welsh dentists did nothing except extractions at half a crown a time, but they had so many to do that they could all afford to drive Rolls-Royces. People queued for treatment even then.

Today’s debate looks at NHS dental provision in England and that is what I intend to speak about. I should say first that the position is dire. Last night a paper was presented to a full council meeting of the Royal Borough of Kensington and Chelsea on health inequalities. The review was set up by a sub-group made up of both parties and chaired by a Labour councillor, Judith Blakeman. It identified the lack of National Health Service dental provision in the area and the particular problems arising for people with disabilities. The only provision for these people is at Northwick Park Hospital, if they can get an appointment. It is true that patients with disabilities may not be suitable for treatment in a general dental surgery because they may need a general anaesthetic. Of course now that general anaesthetics cannot be administered in a dental surgery, people have to go to hospitals. There are at least three other hospitals within easy reach of Kensington and Chelsea patients, but none provides any service to help those requiring specialist treatment. One of the suggestions made in the report was that people with special health problems ought to be provided with crisis cards of the type sometimes carried by mental health patients. That might make it easier for them.

But the biggest problem noted in the report is that there is no clearly defined care pathway between community dental services and hospitals, so that communication relies on personal contacts between staff. Just when people have built up good contacts so that one person can phone another saying, “We need someone to see this patient very urgently”, the member of staff at one end or the other leaves their job and the contact is broken. It is important to give thought to this issue.

Surprisingly, the review found that it is difficult for patients in the more deprived northern part of the borough to find National Health Service dentists. Whether that is because those living in the southern part go for private treatment or it is a general problem, I do not know. The report stated that not enough appropriate provision is made or information provided for the black and ethnic-minority communities in the area. The report strongly supported the children’s programme called Brushing for Life and the Cool Kids campaign, but there is still a need for more information.

My noble friend Lord Colwyn told us clearly about the 2 million people unable to access dental care. When the National Health Service was set up in 1948, the leaflet—it was republished 50 years later for us to read—stated that not enough trained people were available to provide dental services, and that is why people like myself came over here. I would love to know who was the first Commonwealth person to discover the need for dentists in this country, but thousands of Commonwealth dentists came over in order to meet that need, and I think they did quite a lot.

I was shocked to hear from my noble friend that dentists have to pay money back to the PCT. I do not understand that. I thought that the new contract meant that dentists would be given guaranteed payments for three years. If the payments are guaranteed, how can dentists be asked to pay them back? I would appreciate a comment on that.

In the days when I was practising, at one stage dentists’ earnings were limited in the form of a ceiling being placed on the amount they could earn in one year. A lot of dentists did not mind that at all. They would happily do the work in six or nine months and then spend the other months travelling around the world or playing golf in Spain before going back to earn the money all over again. Many of the programmes that are supposedly the answer to everything do not work out in practice.

On these units of dental activity—the other side of the coin, as my noble friend put it—patients are smart enough to know that they can get a cheaper and better deal if they wait until they need more than three fillings. It is not only dentists who are thinking about that; patients are watching their pennies too. So when the noble Lord, Lord Roberts, told us that a full set of teeth cost £750, I was amazed. I made hundreds of sets of false teeth, for which patients originally paid £2.50. Even private dentures did not cost £750, so the figure is very high for a basic set of teeth.

My Lords, I am relieved to hear that because it was an unbelievable amount. However, I think the fee for an examination quoted by the noble Lord was for an NHS dentist—

I understand, my Lords. However, patients have to pay for National Health Service examinations, and I support the view of the noble Lord that they should be free. Indeed, I think that that was the beginning of the rot in NHS dentistry. In 1986 I fought for and defeated the Government in your Lordships’ House on a provision to retain free dental examinations. That was reversed in the Commons and financial privilege attached, so when the proposal came back to this House we did not have the opportunity to play ping-pong or debate it further. Throwing out free dental examinations was the beginning of the end of NHS dentistry. It may be taking a long time to die, and I hope it never does, but it is certainly not good news.

The point I made in that debate is that not only people who have teeth need dental examinations. Many people on all kinds of different chemical therapies and drugs can easily develop a malignancy in their mouth which can clearly be picked up by a dentist carrying out an examination. To now read in the paper that many patients have not seen a dentist for more than two years, since the new contract was introduced, is very disturbing, because who knows what is happening in such mouths?

A dental practice is rather like running a small business. As the noble Lord, Lord Colwyn, said, you have to provide your own equipment and premises and balance the books. As time goes by, more and more paperwork is required and more regulations are introduced. A regulation has already been passed that as from July this year, every person helping you in your surgery will have to be fully qualified. I am all for people getting bigger and better qualifications. In general nursing I am in favour of nurse practitioners and nurses with higher skills, but it was a tragedy when we threw out the state-enrolled nurse who did not have to have A-levels to get into nursing. Some of the best nurses I have known could never have achieved the number of A-levels required. We have lost out by imposing academic qualification standards only. As in other businesses which are bringing back apprenticeships, people can learn so many things simply by working in a surgery.

When I see the questions and answers about dental nurses, it concerns me that if, for example, you need someone to fill in for 10 minutes a day while someone goes off for lunch and so on, that person must also be fully qualified. Apart from the registration fee, which will be about £100 a time, in a national health practice it will be an expensive business to have that many fully qualified staff. There should be a degree of flexibility. If someone is ill or away, there should be some way of finding someone to fill in. It is the same for dentists. On maternity breaks they still have to maintain their full training standards and registration. All these matters are quite difficult for people.

Another matter which is quite damaging arises from the Health and Social Care Bill. It has been announced that under order 2—which I think appears under Section 60 of the Act—the General Dental Council will be fully appointed. There will be 12 lay members and 12 professional, but they will be fully appointed. That is a retrograde step. A regulation was introduced some years ago that a number of general dental practitioners could be elected to the General Dental Council, and I was one of those elected at that time. In my experience of the General Dental Council and since, when I have been following matters, the elected members have been extremely useful. They have represented ordinary dentists, mostly in national health practice, and have been able to bring the council’s attention to the day-to-day real problems that exist. If everyone is to be appointed by the Privy Council—even if they are appointed as ordinary practitioners—they will not necessarily be representative of the practitioners in the way that someone elected to that post would be. When we get back to the Bill I shall have another go at that.

Another regulation is being introduced in July in relation to technicians. All these matters impact on the costings for dentists. All technicians in this country will have to be registered and work to a certain standard. But if you send your work to a technician, there is nothing to stop him sending it off to be done in South Africa or China because it is much cheaper to have it done there. There has been considerable trouble in the United States. People have suffered from lead poisoning caused by crowns produced in China. These have had a deadly amount of lead in them and have been put into people’s mouths. It is quite complicated.

Another interesting feature of dentistry for the private person is dental tourism. I was sitting next to someone at breakfast in the House yesterday who was just off under dental tourism to have seven implants done in Hungary. He told me that to have it done here would cost £20,000 but to have it done in Hungary would cost £7,000, so there is a considerable difference. I recall that at the time of the Hungarian uprising, or perhaps a few years afterwards, a man came over to Britain with 20 jam-pot crowns, as they were called, which were common in eastern Europe. They were tin things that you bought off the shelf, put into the mouth and hammered into position. They did untold damage to the gums—they were dreadful. But that man, who escaped in the uprising and came to this country, was able at that time to have all his crowns done in our surgery under the national health scheme, with a beautiful result.

I am running out of time. I think the National Health Service provides a marvellous dental service. I do not want dentists to be concerned about their futures; I want them to feel confident and I want patients to benefit.

My Lords, I offer my sincere congratulations to the noble Lord, Lord Colwyn, on his timely initiative in introducing the debate today. It is a slightly unusual problem that we are facing because it is not often that one is simultaneously concerned with the creation of a resource and a market to use it, which are really the two halves of the contract issue that we are facing here. What we have heard from the speakers so far suggests that neither side of the equation is finding that the deal is working to its satisfaction. We need to look very carefully at why.

Your Lordships will remember that on 8 November last year we debated the question of the National Health Service in general and the financial aspects of it. A very interesting aspect which emerged on that occasion was the fact that there had been a £800 million deduction made in one year from the cash allocated to the PCTs. This was to be held in deposit for two years hence until it could be released back to them. Questions were asked on that occasion as to how the PCTs were to function in the mean time. Given the fact that we have already had significant recognition today that the PCTs are ultimately responsible for the management of dental services, one has to ask whether any of the problems today in dental services are closely related to the absence of that £800 million from the PCT pot. We have not yet had a definitive response from the Minister—the noble Lord, Lord Darzi—as to the present whereabouts of that £800 million, its future release and its present earning potential and security. I hope that we will in time be informed of that important information.

Today we already know certain things that have happened to the fortunes of the PCTs arising from the last year or two of operations since the new contracts came in in 2006. First, it appears that the National Health Service got off to a rotten start because it forgot to make any provision for the cost of the contracts. Therefore, the whole cost of the NHS dental services for that first year from April 2006 effectively fell straight into and formed the bulk of the black hole in the deficiency of NHS funding for that first year. Things got marginally better in the second year when the patients had to fund a total of £62 million, which was an increase of 15 per cent over the previous year, from their own pockets. In the course of that, 47,000 fewer people used the NHS dental services that year. So it has had a push-pull effect; the more the cost has gone up, the more people have voted with their feet and walked away from using the service.

All this has occurred against the background of a Statement made to your Lordships to the effect that the new charging system,

“will not increase the proportion of revenue raised from patients’ charges”.—[Official Report, 7/7/05; col. WS 27.]

This appears to be in conflict with the reality.

I speak on this subject as a humble user of dental services. I have had the same dentist for 45 years. He provides both NHS and private services and I have used him variously in that form during that time. His predecessor, who was an excellent dentist, ran away with his beautiful nurse, went to Easter Island and has never been seen again since. The present dentist certainly did not run away with his nurse, but he did marry her. They have become an absolute pillar of society and are among the most socially provident people, providing for every walk of life in our community.

On the face of it, dentists are asked to be thankful that the Government are saying they are extending their ring-fence over the dentistry budget for a further two years, but, if the top-slicing continues or gets worse, it will be only a matter of time before that budget is again raped and pillaged, as is happening with maternity units and accident and emergency centres. I echo the noble Lord, Lord Colwyn, on this: dentists deserve strong reassurance on this point. If the Government are serious about prioritising preventive dental care, would it not be logical to amend contracts to ensure that dentists were paid on a per capitation basis and not on a per treatment basis? That would at least ensure that patients had the same arrangement with their dentist as they have with their GP.

My friendly neighbourhood dentist has given me what he considers to be eight reasons not to be a National Health Service dentist. Although some of them duplicate those that have been mentioned by other speakers, it is worth going through all eight because their impact is considerable.

His first complaint is that the National Health Service does not recognise that a dental business is a business. It has a fixed income, effectively, but not fixed expenditure. That puts dentists in a place where they have a huge problem in funding and providing, with security, the cash flow to cover their costs. He is particularly concerned about an aspect that has not been mentioned much today: his laboratory bills, which he says are huge.

His further concern is that the UDAs, the units of dental activity payment bands, are seen as covering too wide a spectrum. A dentist is paid the same amount for performing one filling as for 10 fillings, despite the material expenses and laboratory costs that have to come out of his own pocket and which are disproportionately much higher than for one single filling.

He does not think that dentists wish to take on new patients with an unknown volume of work needed, because of the risk of a large increase in expenses against a fixed-target income. As we have already shown, if a dentist reaches his UDA target without seeing additional patients, he has no extra funding to pay for extra patients and work undertaken.

His other big complaint is that if the dentist falls short of the fixed target in his contract at the end of an NHS financial year, a proportion of his fee can be reclaimed, as we heard from the noble Lord, Lord Colwyn, and that is very painful. In contrast, if the dentist exceeds his target, any further work undertaken by the dentist in that financial year has to be carried out unpaid. According to my dentist—and he says this is a common practice—dentists will sometimes, not surprisingly, opt to close down their business at that point for a month or two and go on an extended holiday. That is surely a huge waste of what could be a valuable resource with which to catch up on waiting lists, and a stupidity in the contractual arrangements that needs to be urgently corrected. He says he can finance his holiday very comfortably, simply because of the amount of material for which he does not have to pay to use in laboratory work for the two months that he might be away.

Preventive work is not carried out fully because dentists are too busy on the UDA treadmill. Although capitation would encourage dentists to carry out preventive work, it is inadequate as the present system seems still to be stuck in the drill-and-fill era.

His age is the same as mine and he is concerned that when a dentist comes to retire, it has become extremely difficult to realise the good-will value of the business by selling it on to a successor dentist, which would be logical and sensible for the community because it would mean that a whole tranche of customers was transferred with adequate dental services being provided. The reason for this is that the PCTs will not provide any transfer undertaking or certification of the UDAs to support a sale to a new dentist coming in. This sounds like a way of seriously diminishing the continuity of the market that is available.

The dentistry contract that came into existence in April 2006 was supposed to promote better access to NHS dentistry. Clearly, however, not only is it discouraging NHS dentistry from entrenching—indeed, it is reducing it—but it is also scaring patients away due to the confused and unbalanced cost structure. This is all completely in conflict with the Government’s statement that the new contracts are designed to allow more time for preventive advice. As matters stand, this situation is capable of being resolved with a bit of common sense. Someone needs to rethink these contracts, take them away from the idealistic approach that is enshrined in the original drafting and get them back into the real world by providing a cost-effective and easily understood service that supports the continuity of dentists running their own independently viable businesses.

The Government must rethink this one urgently, and I hope that that will be in the context of allowing this House in the near future to have a definitive statement about the PCT financial status and the current whereabouts, and the future use, of that £800 million that we asked about in November but have still heard nothing more about.

My Lords, we are grateful to the noble Lord, Lord Colwyn, for initiating this debate. At the outset I want to discount the rumour that I am speaking here only because the alternative the Whips put to me was to have my teeth extracted by them. I am somewhat puzzled by this debate, but I have learnt a lot.

As the noble Lord was saying at the outset, ever since Nye Bevan inaugurated the National Health Service we have been chased by high expectations and continuous adjustments of resources to meet them. Historically, spectacles and teeth were such a problem that within three years they led to the resignations of various Ministers from the then Labour Government.

Today, we have a peculiar situation. On the one hand, we know that there are about 4,000 more dentists in business than there were in 1997. We have the news that only 30 per cent of children entering school with tooth decay problems used to be seen, but now the figure is 60 per cent. Statistics show that 28 million people have seen a dentist in the past two years. More doctors are being trained and will come on stream by 2009. More spending has been committed—£2.5 billion for the latest fiscal period, which is considerably more than was being spent only four years ago.

At the same time, various people are saying in newspapers and, of course, your Lordships’ debate, that all is doom and gloom. A variety of stories has been told today. The noble Lord, Lord Roberts of Llandudno, said how badly off Wales was in terms of dentists. The noble Baroness, Lady Gardner, assured us that Welsh dentists had Rolls-Royces—perhaps not the latest model, but good enough at least. She said that dentists typically worked for nine months and had a holiday for three months—the noble Lord, Lord James, confirmed it—and long may it continue.

I shall try to put into perspective these complaints and problems and the nature of the business that we are trying to understand. The noble Lord, Lord James, was accurate in saying that dentistry is a business. Unlike general practice, dentistry is a business. Opticians have long since ceased to be a subject for debate in the press, but they, too, are a business. NHS entitlements to optical care are very basic, and the frames that one gets on the NHS are fairly basic. Had John Lennon not made them popular in the mid-1960s, nobody would have chosen a National Health Service frame if they could afford anything better. Opticians are a combination of NHS and private: we get our eyes examined and then we spend our money on buying the frame.

Something similar has happened in dentistry, which we have not yet quite acknowledged. It is interesting to ask whether that is a way to look at dentistry. I am not a dentist, nor a frequent-enough patient of dentists to be able to answer; I speak more as an economist. People say that not everybody has access to dentists, which may be true. Apparently, around 60 per cent of the population has access to dentists. Perhaps that has been the case for the past 60 years. The question that I put is: does everybody need immediate access to a dentist all the time? A dentist is someone you visit frequently at certain ages in your life: when you are a child, you need them; when you are very old, you need them. In between, you need them only for emergencies. If children in school can be seen by a dentist, especially if they have tooth decay, that is a good cover on the surface. The fact that the 40 per cent of the children who did not have tooth decay did not see the dentist may be worrying but it is not serious.

Similarly, we have to ask which dental services are required with high frequency—they might be routine services—and which are required in emergencies. Implanting teeth and decorating them either with Chinese lead or South African gold is not a service that an NHS dentist should provide. I may be speaking completely out of turn and a Minister may tell me once again that I am making a fundamental error. When we go to an optician, we do not expect them to give us the best frame possible. But why are complaints of the kind we hear about dentists being made?

We may need to think about a different structure for payments and charges. Some noble Lords have mentioned dentists’ contracts, the complexity of which I can only guess at. If dentists are a business, and have been given certain amounts of money to spend on certain targets which they have not met, it is perfectly right that the money should be returned. I agree with the noble Lord, Lord James, that if they have done more than that, they should be paid for it—that asymmetry should be corrected—but I certainly do not see why the money should not be asked back from dentists. Dentists are not a class of citizens known for their poverty. They may have complaints, but I have seen few dentists out on the streets on income support. Having sympathy for dentists is like having sympathy for bankers who have just lost a couple of billion pounds. It would be hard for them to bring tears to the eye.

We need a redefinition of the nature of the business, in which such things are made clear. Although there are complaints, citizens understand that when they go to a dentist, what they can expect from the National Health Service are certain basic, essential services. Luxuries are not delivered as part of the NHS. Additionally, not only does advice on dental care not need to be given by a fully qualified, first-rate dentist but it should be available in schools. It should be much more widely available, on a paramedical level, with trained people. But we also have the problem that, given the kind of foodstuffs that children are eating and have been encouraged to eat, the story of teeth is much more tragic today than it was, say, 50 years ago. We have created a much bigger problem by not taxing properly sugar and salt in foods. We have allowed that sort of laissez-faire regime in food consumption to encourage tooth decay.

Many of those issues should be considered. Debates like this are very good. Rightly, we may never be fully satisfied with any part of the NHS. However, I am confident from what I know that more money is being put into the NHS and more people are seeing dentists. If the people of this country are not yet 100 per cent fully satisfied, let us make sure that we get there. If the contracts are difficult, let us try to look at them. The time has come to understand why the service provided by dentists, along with the testing of eyes and getting spectacles, is in a different class from the general service provided by the health service. When we understand that we may be able to devise better contracts and financing of dental care.

My Lords, I thank the noble Lord, Lord Colwyn, for introducing this debate. I declare an interest as president of the Royal Society of Medicine, whose fellowship includes dentists as well as doctors, for which we are best known, and vets. It includes allied professionals and managers who work with dentists. In the light of the comments of the noble Baroness, Lady Gardner of Parkes, I feel that I should also declare that I come from Wales, where I have friends who are dentists who drive small, second-hand cars. My dentist, my own Mr Jenkins, does only private work now, because he has also abandoned NHS dentistry.

At the end of last year, following a question on the Floor of the House from the noble Baroness, Lady Gardner of Parkes, I wrote to 214 English acute care NHS trusts to survey their services on the subject of the new dental contract and how it had affected cancer services. I intended to find out the experience of cancer centres, but it was not possible to disaggregate cancer centres and units from trusts not providing cancer services, although it was easy to exclude mental health trusts and community trusts from my survey. Of the 214 trusts mailed, I received responses from 110, of which 81 said that they provided cancer services.

Twenty-nine of the trusts that responded—that is over one-quarter—answered yes to the question, “Has the dental contract adversely affected your clinical service?”, and many wrote comments about negative effects experienced through the new contract. Of the 29 that answered yes, by far the most common reason given was a significant increase in referrals. For example, Salisbury District Hospital reported a 30 per cent increase in referrals. Mayday Healthcare Trust reported a 100 per cent increase and the Royal Wolverhampton Hospital Trust reported a threefold increase. Although 66—or 60 per cent—of respondent trusts had emergency dental services available before the new contract, only 50 per cent of the trusts now have such services. Comments from those with current services included that there had been a,

“sharp increase in heavy local referrals … less availability of community dentists”,


“an increase in inappropriate referrals to maxillo-facial services”.

Several commented that routine dentistry is difficult to access and that patients either do not have a dentist or have less regular dental check-ups.

Sadly, those figures simply add weight to the stories from accident and emergency departments reporting a steep increase in patients with toothache and dental abscesses. The immune system of patients undergoing other treatments such as cancer therapy may be compromised, making them particularly prone to infection and in need of good dentistry.

I turn to the importance of dental hygiene in patients with systemic disease. Those with scleroderma and muscular diseases can find cleaning their teeth particularly difficult because they cannot open their mouth adequately, and they may have limb weakness which makes cleaning their teeth difficult. For those with heart disease, the NICE guidelines do not recommend antibiotic cover for routine dental work because the evidence shows that many more bacteria are showered off into the bloodstream at other times. That guideline has been very carefully looked at and seems eminently sensible. However, when the mouth is dirty all the time and a particularly large bacterial lobe is around the gum margins, the risk of high bloodstream infection obviously increases.

Quite apart from that, patients who have lost weight, particularly those with cancers, often find that their dentures do not fit, so to maintain nutrition they need rapid access to community dental services. Without such services their dentures swing around in their mouths, clunk and cause erosion of the gum margins. My own hospice unit has for many years enjoyed good community dental services from a local dentist. I have seen first hand how bedside relining of dentures and emergency management of caries can dramatically improve eating, talking, comfort, quality of life and social interaction. It cannot be overestimated how rapidly these patients get relief and how rapidly they need the service.

Another small area of NHS dentistry which I should like to address is one that may not be on noble Lords’ radar today—forensic dentistry, which is crucial to the criminal courts. There are only four such centres in the UK: one in Cardiff, one at the Royal London, one in Glasgow and one in Sheffield. With such a small number of training posts these services could be viewed as an endangered species. Once the number of these dentists has dwindled they will be greatly missed by those wishing to bring prosecutions for heinous crimes. I am sure they will be greatly missed by the Ministry of Justice. I am delighted to see the Minister in his place.

Routine dentistry consists not only of dentists but of dental therapists, dental nurses and dental hygienists, as well as dental technicians who work behind the scenes but with leadership from dentists. As the noble Baroness, Lady Gardner of Parkes, pointed out, early detection of oral cancers in this day and age is due primarily to dentistry, and the management of ulcers and infections are core competencies of dentistry. In addition, facial pain clinics and even some smoking cessation clinics are run by good dental teams. Sadly, those are not a ubiquitous resource.

Orthodontics, another area not addressed, is a very specific field whose methodology to measure tooth crowding determines eligibility for NHS treatment. If the criteria are tightened by stealth, fewer children will qualify for NHS orthodontics. We must be aware of the damage to body image, as well as of the poor functioning of all aspects of the mouth, that can occur as a result of grossly misaligned teeth. Let us face it, a teenager is less likely to be or feel kissable behind the bike shed if they truly have buck teeth. That may sound trivial but it is not. Body image problems are horribly apparent in our society and undermine many other aspects of young people’s functioning.

Before this debate I read an interesting article in the Daily Telegraph that stated that almost half of Britons, 23.1 million people, have not seen an NHS dentist—or a hygienist or anyone else in the dental team—in the past two years. Apparently the figure has increased by 4 per cent, almost 850,000 people, since the Government introduced the new contract in 2006. I also noted with interest the response by the Minister in another place to a Question tabled by Tim Farron. The Minister stated:

“The Department estimates that there are some two million people in England who would like to access national health service dental services but are unable to do so. This estimate predates the dental reforms introduced in April 2006”.—[Official Report, Commons 13/3/07; col. 309W.]

I wonder what that figure would be now. The increase in referrals to acute trusts seems to be putting pressure on efforts to meet the new national waiting-target time of 18 weeks from referral to start of treatment. I was interested to learn that London has more NHS dentists than most other areas of the country, yet only half of Londoners regularly visit the dentist, and children in London are less likely to visit a dentist than children anywhere else in the country.

There seems to be hard evidence of a gap between the theoretical standard that should be attained and practice on the ground. That needs urgent examination. While listening to this debate, I was wondering whether there needs to be a cross-party working group to look at dental services in the long term with forward planning for 20 or 25 years. The danger of overpoliticising dentistry is that it will become a political football subject to elections and so on, whereas new dental graduates coming in to establish their careers need to know where they are going in the very long term. This has been an important and timely debate. I hope we will eventually see an upturn in the provision of dentistry with high-quality dental care across the whole population.

My Lords, I thank the noble Lord, Lord Colwyn, not so much for calling this debate but for the masterclass that he gave in his opening remarks. I do not have great knowledge in this area and I found what he said good and useful for the parliamentary record and for other organisations outside the House. When I walked into the Chamber for this debate, I wondered why I felt a particular fear; of course, the reason is that there are two dentists present. This is an area of high emotion. Dentistry is a medical or technical practice that we want an excuse not to use. Psychologically, that lies behind a number of the statistics that the noble Baroness, Lady Finlay, mentioned. Later, I shall come on to how we can reduce some of the barriers.

A few years ago now, under the old payment regime, I visited an establishment in Cornwall, where I live, called HMS Raleigh. It is a Royal Navy training station. A lot of naval staff go through it in preparation for military service. One of the key issues—this was a few years ago now, but it is by no means ancient history—was that the Navy had to reject a number of people for a service career, particularly careers involved in the nuclear submarine fleet, because of the cost of putting their dental equipment—their teeth—right so that the Navy did not have to bring nuclear submarines back into port or, as my noble friend Lord Roberts said, get out the superglue, the Polyfilla or the pliers. The state of the nation’s teeth was a major problem for recruitment into the services.

In this debate, we can sometimes forget that the system before 2006 was far from perfect and that reform was needed. Some years back, I moved to Bristol and signed up with an NHS dentist there. When I turned up at his practice and sat down, he drilled out the first tooth; I then went back out, whereupon the next patient came in. It was like a production line. I am sure that this occurred with a minority of dentists, but there was an incentive for dentists to give patients treatment that they did not need. That was not good for the Treasury and it was certainly not good for patients. It may have been good for Rolls-Royce orders in certain parts of the United Kingdom, but the system very much needed fixing.

Many speakers have expressed disappointment that the fundamental change with regard to contracts has not been successful. That may be due to a lack of trial runs or pilot studies but it has certainly not delivered what the Government expected or what patients deserve. Further, the third part of the triangle, the dental profession, voted with their bank accounts and their feet and moved out of the NHS.

Having read the relevant literature, I believe that three important areas are involved. One concerns expense, as my noble friend Lord Roberts of Llandudno mentioned. Cost is important, as the noble Baroness, Lady Gardner of Parkes, said. The high-end cost of £194, which can be charged for work that is not necessarily very technical, is a great sum for most people. However, the entry fee even to come in for an inspection is also high.

The noble Lord, Lord Desai, referred to opticians. When you have a problem with your eyes and cannot see, you are aware of that and you try to get it fixed. I speak as someone who wears glasses. There is a public/private option there that seems to work well. However, you can find out about a dental problem too late, when the damage has been done. You can lose teeth or find out that you have serious problems such as cancer or less serious problems such as cavities or broken teeth. However, you may already have lost teeth before preventive work can be carried out. Therefore, price barriers are important in terms of future costs and the population’s overall dental health.

Private practice costs are very high, which has resulted in dental tourism. I am not against that. I approve of the fact that the European Court of Justice, or whoever, permits us to obtain medical treatment abroad that is not provided under the National Health Service. However, our dental service is high cost in both the public and private sectors.

The second area, which is related to expense, is prevention. The noble Baroness, Lady Gardner, referred to a change in this regard. I never used to mind turning up for a check-up because not only did it not cost me anything but I convinced myself that no dental treatment would take place during a check-up and therefore I could get off scot-free. However, that process got me into the system and I could then be offered dental care. I know that it is free for children, but the same principle applies. I had not previously come across the acronym UDA—unit of dental activity—but it seems to me that UDAs do not cover education and prevention. They are mainly concerned with completed dental work.

The third area is availability, which is much discussed and is certainly a problem in the south-west. I find it difficult to understand how, with the increase in funding over the past few years and the major reduction of 500,000 or 600,000 visits per year—demand going down and funding going up—we still have unavailability for an estimated 1.5 million people. To me, as a small-time economist in my corporate career, compared with the noble Lord, Lord Desai, somehow those figures do not add up. How does the Minister square that triangle of funding going up and demand going down but availability not getting any better at all? Secondly, how do we practically tackle prevention, which, in all medical matters, is what people strive for? We seem to add barriers rather than take them away.

My Lords, having listened to the excellent contributions to this debate, I am sure that the Minister will have detected from their tone that most, if not all, of us approach these important matters more in distress and perplexity than in anger. The opening speech from my noble friend Lord Colwyn covered the issues admirably, as one might expect from someone who knows dentistry from the inside. I am sure that the Minister will know him for the professional that he is—a man whose chief aim is always to present a case in a manner that is both balanced and free of unnecessary political brickbats. Making party points is not the object of today’s exercise; the object is to try to expose what is really going on in dentistry and to look for ways in which the situation might be improved.

Perhaps when the Minister replies she will assure us that, despite a few initial hiccups—I am avoiding the phrase “teething troubles”—everything will be all right. That seems to be the position taken by our very able and conscientious Chief Dental Officer, to whose efforts I pay tribute. Indeed, I note that only a few weeks ago Dr Cockcroft was quoted as saying:

“All the things that were missing previously—the dental workforce, the money, are now there—and the extra 11 per cent funding we are putting in from April. It will take longer in some areas than in others but certainly all the basics are there now to deliver a really functioning fully comprehensive NHS dental service for anybody who needs it”.

Dr Cockcroft clearly believes those things; his confidence should not be lightly dismissed. The problem, as my noble friend pointed out, is that the profession is saying something quite different. I happen not to believe that this is scaremongering or dog-in-the-manger behaviour. Most dentists, in my opinion, are supporters of the NHS and would dearly love to be able to deliver NHS dental care. But the fact is that we are not yet seeing the necessary numbers of dentists coming forward and signing up, or the necessary increase in the number of patients. Why is that?

I believe that my noble friend had the answers. It is for a mixture of reasons. The first one is to do with the dental contract. The contract is perceived by dentists as being fraught with risk. Dentists are professionals who run independent businesses, as a number of noble Lords have emphasised. They are willing to stand up and be judged on the strength of their professional abilities but they do not need the added risk of a contract that can penalise them financially through no fault of their own. Indeed, there is a real sense in which the more conscientious a dentist is, the more likely he is to be financially penalised. That cannot be fair or appropriate.

The UDA is a rather strange animal. It is not like the tariff that operates in NHS secondary care. The UDA does not purport to reflect the amount of work that a dentist actually does, nor is its value the same for all dentists. Certainly, there is a case for flexing the value of a UDA in an area with a shortage of dentists and high dental need, but the variations in value do not always have that sort of logic behind them.

For as long as the dentistry budget of a PCT is based on historic spending levels in that geographic area, which many budgets have been, the total amount of money available may well fail to address unmet patient need. It was very interesting to read the report published last month by the Patients Association, The New Dental Contract—Full of Holes and Causing Pain?. The first question that PCTs were asked was: in 2006-07 is funding designated for dental services ring-fenced or floor-funded? Floor-funding is the minimum spend for a PCT on a particular activity. You might have thought that every PCT would have given the same answer, but they did not—87.7 per cent of PCTs said that the funding was ring-fenced; 12.3 per cent said that it was floor-funded. The result in any given area could be vastly different depending on the way in which the money was treated. It would be helpful to hear from the Minister whether, based on those answers, she believes that some PCTs may be labouring under the misapprehension that the ring-fencing of money precludes or discourages them from topping up their funding for dentistry from their general health budget if they believe that there is unmet dental need.

The other main reason why dentists do not like the contract is that, in their eyes, it does not enable them to do what they want for their patients, which is to take a more preventive approach to care. The noble Lord, Lord Teverson, and others mentioned that. Dentists are not rewarded for prevention. Indeed, for NHS dentists, time taken in giving preventive advice is time lost from doing work that earns them money. The dental contract does not contain any equivalent to the quality and outcomes framework for GPs, under which dentists would be able to earn points for improving the dental health of their patients. The only measure used to determine whether or not a dentist has fulfilled the terms of his contract is the number of UDAs that he has worked.

If you take those two points together—the difficulty for dentists of expanding their NHS work beyond the envelope dictated by the available UDAs and the lack of incentives for preventive care—you start to question whether the current dental contract is fit for purpose. Its purpose was, of course, to achieve two main things: to widen access to NHS dentistry and to end the treadmill effect of the previous dental contract by enabling dentists to focus on preventive care rather than on interventions. It is true that the new arrangements have greatly simplified the charging structure for patients. I have always applauded the Government for being bold enough to do that. But simplification can be overdone.

From the patients’ point of view, we know from the survey carried out by the Patients Association as well as that carried out by the Commission for Patient and Public Involvement in Health last year that patients are confused by the new contract and how to access regular care. This may well explain, at least partially, the rise in hospital admissions that my noble friend referred to. A priori you would have thought that having the same charge for three fillings as for one would mean that the patients most in need would be seen and attended to, but we know that that is not the way in which the system is working in some places. Dentists are becoming choosy about whom they take on, because, given the choice, it makes financial sense to take on the less complex patients. That perverse incentive is a further drawback to the current arrangements and surely has to be addressed. The latest figures available show the continuation of a worrying trend. We are seeing a steady and significant decline in the number of adults who have seen an NHS dentist within the past two years. In some areas, such as the south-west, the problem seems to be particularly serious.

From this year, the dentistry budget will go up by 11 per cent. That is an important step and I welcome it. But I say what I suspect the Minister knows: by itself the money will not do the trick. Two years ago, when the new contract came in, we and many others said that PCTs were woefully ill equipped to commission NHS dentistry. In some PCTs, I am sorry to say, those commissioning skills are still absent. The Chief Dental Officer more than hinted as much the other day and the Minister, Ann Keen, in her evidence last month to the Health Select Committee, conceded that,

“some PCTs need much more support”.

That is certainly right. It is not just a matter of throwing money at the problem and hoping that it will resolve itself. PCTs need to start commissioning much more smartly. To begin with, they need to look carefully at the guidance on successful procurement issued by the department last month. Among other things, the guidance urges PCTs to learn about best practice from other areas. There are success stories around, such as Sandwell PCT, where the number of NHS patients has gone up. Meanwhile, the Government have taken what I believe is the necessary step of continuing the ring-fencing of funds for dental services for another couple of years. It would have been risky in the extreme to do anything less.

However, we come back to that contract, in which the faith of the Chief Dental Officer continues to reside. I am really doubtful about it. The BDA believes that as many as 1,000 dentists have been lost to the NHS since April 2006 and, contrary to the recent pronouncement by the Secretary of State, it is younger dentists who are proving less enthusiastic about doing NHS work than older ones. If we cannot attract the young professionals, where as a nation will we be in five or 10 years’ time? The Government do not have long to rescue the situation. For all our sakes, I hope that they can do so.

My Lords, I thank the noble Lord, Lord Colwyn, for initiating this debate. It has been an interesting discussion featuring our two dental experts, including the noble Lord, Lord Roberts, who seems to be working very hard today. I thank all noble Lords who have participated for their informed, interesting and varied contributions. I shall attempt to address the questions that have been raised but, should I fail to do so, I will write to noble Lords.

From the outset, it is important to say that our record on dentistry is strong, so I refute the suggestion from noble Lords that the system is failing, and I shall say something in support of that. England is a leader within Europe in improving oral health. According to the World Health Organisation database, our 12 year-olds have the best oral health in Europe, measured by decayed, missing or filled teeth.

Through the 11 per cent increase over the current year, our dental funding allocation for the NHS in 2008-09 will be £2,081 million, net of patient charge income. Therefore, this Government are demonstrating their commitment to improving access to dental services. That figure is 56 per cent higher than the net spend on dentistry in 2003-04, and more than double the equivalent spend in 1997-98— an increase of 117 per cent.

We are increasing our dental workforce. In July 2004, we launched Project 1000 with a commitment to recruit the equivalent of 1,000 more dentists. In fact, we exceeded that target. By October 2005, we had recruited the equivalent of 1,453 new whole-time dentists, including those returning from employment breaks and overseas dentists. We have also raised the number of dentists in training by 25 per cent. The first new cohort of additional students will graduate next year. We have established two new dental schools. We now have more than 4,000 more dentists than there were in 1997 and 300 per cent more dental care professionals. To ensure that the additional dental students will be able to pursue their careers in the NHS, last month we announced that new funding of £32 million will be made available to fund more vocational places. I hope that that addresses some of the concerns expressed by the noble Baroness, Lady Gardner.

The Government’s starting point is to begin to rectify the longstanding access issues caused by the previous system, described so ably by the noble Lord, Lord Teverson. Thus, through the changes introduced in April 2006, we have given the local NHS the power to control its local services. Under the 1990 contract, if a dentist reduced or stopped his or her NHS work, there was very little that the local PCT could do to replace the lost services. Under the new system, the funding for that service remains with the local NHS, enabling it to build and plan a sustainable service to meet the local needs of the population, rather than the piecemeal system we had before.

We have radically simplified the patient charging system, to which reference has already been made, scrapping the confusing tariff of 400 charges under the old system. Now patients’ treatment falls into one of three clear payment bands for courses of treatment, on which noble Lords have expressed some doubts, rather than fees for each item of service. We have reduced the maximum charge from £384 to £198, directly benefiting those with poor oral health. The reforms have also allowed us to remove the exclusive focus on active treatment and allowed dentists to concentrate more on preventive treatment.

The noble Lords, Lord James and Lord Teverson, both raised the issue that the new system has merely swapped dentists from one treadmill to another. This misrepresents the nature of the reforms. In fact, the noble Lord, Lord Teverson, did not make that criticism. For many years, dentists had complained that the old fee-per-item system created a treadmill effect and gave no time for preventive care. The new system, which we developed in close consultation with the British Dental Association and other stakeholders, guaranteed dentists the same income for delivering 5 per cent less activity than they did during the reference period. That enabled dentists, without any financial penalty, to spend more time on preventive care.

The noble Lord, Lord Colwyn, asked why the Government’s view of the reforms appears to be out of step with some of our stakeholders. I am not going to pretend that everyone is happy—clearly, that is not the case—but with any major reform there will be people who will be unhappy and for whom it will take time to recognise the benefits of the new system. However, the citizens advice bureaux have stated publicly and repeatedly that they welcome the reforms and regard them as a sound basis on which to build dental services.

I suggest that lots of committed NHS dentists have realised, as the reforms have bedded down, that this is a workable system. The commitment that the reforms represented to NHS dental services is something that mainly private dentists may be uncomfortable with because if they have business models based on a local shortage of NHS services the resurgence of the NHS on dental services will, rightly, challenge them.

The general welcome for the 11 per cent funding uplift, the clear upsurge of interest from corporates in providing NHS services, and the fact that PCTs generally report no difficulty in attracting dentists to provide new services suggest a rather different picture from the one in the headlines. Tackling the problems that began in the early 1990s will not be an overnight job, but the Government are very serious about getting NHS dentistry back on track.

As I have mentioned, we appreciate just how big a change the reforms were for PCTs and the dental profession alike, and we have continuously offered support during this process. The noble Lord, Lord Colwyn, is correct to say that those local relationships lie at the heart of the improvements that need to take place.

As well as making year-on-year increases in the funding available to PCTs to commission dental services, we have made increasing access to dentistry a national priority in the 2008 operating framework. We have also extended the ring fencing, mentioned by several noble Lords, of dental funding to 2011. I will address the issue raised by the noble Earl, but I shall take some time to explore what seems to be a misunderstanding by some PCTs on the position. I promise to get back to him on that. We are seeking to offer commissioners further stability when planning their dental services over the next period.

I hear the concerns raised by the noble Lord, Lord Colwyn, and others about PCT funding. Dental budgets are now allocated net of patient charge income for good reason. The reforms give local control and management of NHS dentistry to PCTs so that they can determine what dental services are commissioned in their area. But as the amount of patient charge income is largely determined by what services are commissioned and how those services are delivered, it makes sense for the local body to oversee the whole dental budget. We cannot plan centrally for the effects of such local decisions. For example, a local decision to prioritise orthodontics or other services for children will directly affect patient charge income and needs to be based on local priorities and assessment of needs.

Patient charge revenue was reduced in the first year of the new system. It is too early to measure the settled-state level of patient charge income under the new system but the indications are that 2007-08 will see patient charge levels closer to those predicted. We have provided guidance and data to PCTs to help them and their dentists understand the local factors affecting levels of charge income and to help them correct any problems that may have arisen as the new system was bedding down. We have also provided, and continue to provide, practical support and guidance to PCTs on commissioning appropriate dental services. These have been both direct from Department of Health officials, including the chief dental officer, and through the primary care contracting team, who are experienced NHS managers providing hands-on, tailored support to PCTs as well as a whole suite of guidance available to all dental commissioners through the website. For example, we will shortly be issuing updated guidance to PCTs on handling end-of-year issues with their contract holders, which I know is an issue of particular interest, as has been mentioned by noble Lords several times during the debate.

Annual service levels are agreed between the PCT and the dentists at the beginning of the year for all existing dentists and will be based on the actual patterns of service the dentist provided under the old contract. Ninety-seven per cent of contracted activity was delivered in the first year of reforms. Indeed, Suzie Sanderson, chair of the British Dental Association’s executive board acknowledged that in the press release issued on the subject. She said:

“We know from our own research that many primary care trusts have shown understanding when examining end of year issues.”

The BDA’s own research showed that in 25 per cent of underdelivered contracts, PCTs had written off the shortfall entirely. However, PCTs have the responsibility, as the local commissioners of dental services, to use flexibility and choice within the new contract to handle such end of year issues as they feel appropriate. If they feel that necessary resources are not being used effectively they can re-invest them in other local dental services to help ensure that patient demand is met.

On the flipside, I heard the noble Lords, Lord Colwyn and Lord James, describing practitioners with the reverse problem of delivering all their contracted activity before the end of the year. The only reason that they would have to shut up shop early and head for the golf course, as the media have recently reported, and which the noble Lord, Lord James, mentioned, would be if they were spending less time with their patients than they had done previously. PCTs have the flexibility to increase contracts where this is appropriate and have guidance on providing alternative care to any patients affected by a dentist meeting his contract too early. While we are not content when even a single patient remains affected, we are pleased to say that anecdotal reports suggest that this has been far less of an issue this year than it was last year. PCTs have used the support I have just outlined greatly to improve the provision of services across the country.

For example, the community dental access project set up by Tower Hamlets PCT in 2003 brings the dentists to the community through a range of dental services. Tower Hamlets has historically been an area of poor oral health and low uptake of dental care. The project, which has been developed at every step with the local community, uses a fleet of mobile dental surgeries to travel out into the heart of the community to locations selected by the local community. Both screening and treatment services are offered and the project uses link workers to help local people understand their dental treatment and how to access care.

The project has brought dentistry much closer to patients and the mobile services are very popular, with sometimes 100 people being screened in a day at a community event. However, I can assure noble Lords that the Government are not looking through rose-tinted spectacles, and we know that we still have work to do to ensure that everyone in this country who wants to see an NHS dentist can do so quickly and easily.

Several noble Lords said that the number of patients accessing NHS dental care has dropped by 0.5 million in the 24-month period ending September 2007 compared to the 24 months ending March 2006. I need to make it clear that these figures do not reflect the current situation. The noble Earl referred to the figures. The most recently published figures cover September 2005 to September 2007. Around 4 per cent of services had to be replaced during 2006 when the reforms were introduced, equating to around 960,000 patients. The statistics show that drop.

I am pleased to say that the current picture is far healthier with access improving as new services open across the country. We know that PCTs across the country are commissioning new and expanded services and that there is no shortage of dentists putting themselves forward for these new contracts. Furthermore, the majority of PCTs now run dental access helplines quickly to match up patients seeking NHS care with the services available. However, because the data available are retrospective and look back over the previous two years, it will take a little more time for the current growth in access to work its way into the figures for the loss of service immediately after the 2006 introduction of the new system.

Several noble Lords mentioned surveys that show a bleak picture. Without going into too much detail, there are surveys and surveys; it is a mixed picture. The Citizens Advice/MORI survey indeed showed a need to improve access, but in publishing the survey, Citizens Advice also welcomed the extra investment that we are making precisely to that end.

The Greater London Authority survey published in November concluded that London is well served by NHS dentists and found that, although the majority of dentists said that they were willing and able to take on new NHS patients, there was a problem in persuading some groups in society to come forward for treatment, which is why I so warmly commended the Tower Hamlets outreach service. In other surveys, the Commission for Patient and Public Involvement in Health survey was based on a self-selecting sample. As a result, those findings must be open to question. For example, the claim that six per cent of the population has resorted to self-treatment would mean that 3 million people had done so, making DIY dentistry marginally more popular as a pastime than freshwater angling. I suggest that that is probably not the case.

My key point is that primary health care trusts are commissioning new services now. We are starting to see reports in local newspapers that reflect that from places as far afield as Gainsborough, Wantage, Newquay, Plymouth, Norwich and west Essex—the sort of places where access problems have been most acute.

The noble Baroness, Lady Finlay, and others, raised the issue of hospital admissions for dental problems. I will not repeat myself by talking about the new services being commissioned, but I am sure that noble Lords will be interested to hear that the proportion of all dental admissions that were emergency admissions has dropped from 8.1 per cent in 2005-06 to 7.4 per cent in 2006-07. The article used the overall rise in emergency admissions, while omitting the fact that, as a proportion, dental admissions were down.

However, dealing with access is only one part of reforming the NHS. We need a quality service. The noble Lord, Lord Colwyn, raised the issue of the NHS next stage review and how dentistry fits into it. In 2007, my noble friend Lord Darzi invited stakeholders, including the British Dental Association and the General Dental Council, to submit their policy ideas to the review. They responded to that invitation and attended the national stakeholder forum to discuss their concerns.

The noble Lord, Lord Colwyn, also asked why the Patients Association poll of MPs showed that dentistry topped the concerns in correspondence. I acknowledge that there are concerns about access to dentistry; that is what this debate is about. In fairness, there are some long-running problems. As I said, our increased spending on dentistry and the inclusion of dentistry in the NHS operating framework is starting to address that issue.

The noble Lord, Lord Roberts, raised the issue for Wales. As he will be well aware, dentistry in Wales is a matter devolved to the Welsh Assembly, so I have confined myself to issues concerned with English dentistry. The noble Baronesses, Lady Finlay and Lady Gardner, and the noble Lord, Lord Roberts, raised the issue of the proportion of adults and children who have no access. There has never been a time when more than 60 per cent of the population was in regular touch with an NHS dentist. My noble friend Lord Desai explained why that may be the case. That is almost certainly not a satisfactory position, but back in 1993, when there was no access problem, 40 per cent of the population chose either to go private or to go less regularly than every two years. We are determined to increase access: that is now an NHS priority. We need to be clear about the number of people who are using NHS dentistry.

The noble Lord, Lord Roberts, talked about charges and whether they should be scrapped. We think that it is better to have a system that exempts people in hardship from payment while charging those who can afford to pay. I should make it clear that half of all NHS patients in England are exempt from charges.

The noble Lord, Lord Roberts, and the noble Baroness, Lady Gardner, raised the issue of dentists needing to be adequately compensated for NHS work. The figures from specialist dentists’ accountants show that NHS dentists’ earnings have increased since 2005-06. Single-handed dentists now earn more than £100,000 a year. Indeed, dentists’ expenses have fallen because the proportion of complex treatments has fallen, as we expected, under the new contract.

The noble Lord, Lord Colwyn, and the noble Baroness, Lady Gardner, raised the issue of income guarantee for dentists. Existing dentists’ gross income was guaranteed for the first three years of the new system, but where practice has changed and dentists’ costs have gone down, it is right that the PCT can renegotiate. The extension of the budget ring-fence shows the Government’s commitment. Within this, the NHS is entitled to expect a fair price for a quality service.

The noble Baroness, Lady Gardner, raised the issue of the claw-back of funds because of the income guarantee. Dentists were guaranteed no less income than they earned under the old system. Activity is set at a level delivered under the old system, so if they do less work now—in other words, if they do not do the work that they have agreed to do—the NHS rightly reserves the right to ask for funds to be given back.

The noble Baroness, Lady Gardner, also raised the issue of dental products and lead in imported fillings. I recognise her concern, but I should add that dentists are responsible for the quality of the materials that they use and, as she will know, they must satisfy themselves that the products they use are of the required standard.

My noble friend Lord Desai was the one person who mentioned school dentists. In 2006, the National Screening Committee considered research into school dentistry and discovered, unsurprisingly, that middle class children were generally registered with a dentist, and that the parents of children in more deprived circumstances often failed to act on the advice that had been sent from schools and those children remained untreated. On the basis of this advice, we believe that the most effective method of improving the oral health of children is not the re-establishment of the school dental service but a combination of population-based inventions, such as water fluoridation—I am pleased that no one mentioned that today, although I have two pages on it—toothpaste schemes that build on the Brushing for Life initiative, improving access to NHS dentistry generally, and running campaigns that encourage families with children to visit their dentist regularly.

The noble Baroness, Lady Finlay of Llandaff, in her usual erudite and informed contribution to the debate, raised a number of important clinical matters, including patients with muscular dystrophy and cancer and the detection of oral cancer. With her permission, I will explore those and come back to her.

The noble Earl, Lord Howe, talked about the number of dentists and the fact that not enough are coming forward to do NHS work. In fact, PCTs at present report no shortage of dentists seeking to expand their NHS activity. For the first time in decades, dentists are competing to provide NHS care. It will take time for the new money to feed through to the new services, but it is not true that recruiting is the problem. The noble Earl highlighted the need to ensure that the money is effective, that it is going to the right places and that we are monitoring it in the right way. We all need to watch that.

The noble Lord, Lord Teverson, said that he felt fear coming into the Chamber, given that two dentists are present. I did not, because I have always had very good experiences with my dentist. The hygienist is a different matter, but it is probably better that we do not go there at this point.

I conclude our discussion today by reinforcing the point that the dental reforms of 2006 were an essential step towards solving the problems created by a previous treatment-focused, provider-led scheme. The reforms for the first time put the power into the hands of the local NHS to plan and to provide dental services to meet the local needs of the population. I reiterate our commitment to improving access to NHS dentistry. I thank the noble Lord, Lord Colwyn, again for bringing this subject to our attention and I thank all noble Lords for contributing to today’s debate.

My Lords, it remains for me to thank all noble Lords who have taken part in this debate. I am grateful for their input. It has been an interesting afternoon. I have written one or two witty remarks about each speech, but in view of the two items of business we have yet to do, I will not say them, except to say to the noble Lord, Lord Roberts, that I regularly used Super Glue when I was in practice and if you want to pull your own teeth out, a screwdriver is far more effective than a pair of pliers.

I thank the noble Lord, Lord James, for mentioning laboratory bills. The problem that technicians have is something the Government have also got to keep a very careful eye on. Finally, the noble Lord, Lord Teverson, talked about dental tourism, which is fine as long as nothing goes wrong. I thank the noble Baroness, Lady Thornton, who covered all the items beautifully and I look forward to reading her speech in Hansard. She commented briefly, I think, on The NHS in England: The Operating Framework for 2008/9, published in December 2007, and the document, Commissioning NHS Primary Care Dental Services: Meeting the NHS Operating Framework Objectives, published in January 2008. I hope that the introduction of those documents will be thoroughly discussed with the profession and its leaders before being imposed.

Many dentists think that the contracts are unfair and unworkable. The shift towards private practice is not to earn more money. It is to create a stable, long-term environment to enable adequate investment in premises and modern equipment, and to spend greater time providing prevention-based care for patients. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Fuel Supply: Grangemouth Refinery

My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Business, Enterprise and Regulatory Reform. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement on the implications of the industrial action at the Grangemouth refinery, which, I regret to report, is scheduled to begin on Sunday and to last 48 hours.

“Throughout the last few days, we have kept in close contact with Scottish Ministers, both parties to the dispute and with the industry as a whole. I am grateful in particular to ACAS for the effort it has made to resolve matters between the parties. Our first priority now is to ensure the maintenance of sufficient fuel supplies during the period of industrial action.

“Over the past few days significant additional supplies of imported fuel have been made available in Scotland. I have been advised by the industry that there is sufficient fuel to re-supply forecourts and other users ahead of the planned industrial action. Industry has also advised us that, at present, fuel stocks at Grangemouth, together with the planned imports of finished product through Grangemouth to replace lost production, should be sufficient to maintain supplies through the period of the industrial action and the consequent re-starting of the plant.

“We are already working under our established Memorandum of Understanding with industry to develop a jointly managed approach which allows fuel suppliers to work together to maximise available fuel. We also have available, if necessary, the National Emergency Plan for Fuel which can be used to ensure fuel is available for priority groups such as the emergency services. Our best assessment is that, at present, there is no need for the Government to take action under its emergency powers. We are working closely with the Scottish Executive, and with the regional forums in Scotland, to prepare for further action should that become necessary. We will not hesitate to use these emergency powers if this becomes necessary.

“The oil companies have reported significant increases in fuel up-take this week in response to concerns about shortages of fuel. While this response is perfectly understandable, I want to emphasise that industry has made it clear that there is sufficient fuel available via imports and that any localised shortages will be re-supplied quickly.

“It is also essential to prevent the industrial action at Grangemouth from disrupting the flow of North Sea oil and gas associated with the Forties Pipeline System and the Kinneil processing plant at Grangemouth. I believe that there can be no justification whatever for action that adversely affects production of oil and gas from the North Sea. Continuing production depends on power, steam and cooling water being delivered by or through the Grangemouth site. Discussions are continuing this morning on ensuring the continuance of these vital utilities and of course it is essential that they are maintained.

“Finally, there is a need to protect critical equipment to allow a rapid return to normal operation following the period of industrial action. This will require the provision of safety cover for the INEOS refinery and petrochemical plants. It will also require maintaining the steam supply throughout the plant to ensure the integrity of steam lines, pipes and production units.

“This is a dispute for INEOS and Unite to resolve as a matter of urgency. The Government’s view is that both of them have a responsibility to minimise the impacts of their dispute on the public and on the wider economy. I would urge both sides to get back to the negotiating table as quickly as possible and to resolve this dispute without any further harm being done to the public and to the economy. We will continue to monitor the situation closely, working with the Scottish Executive and emergency services, local authorities and other key agencies”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for repeating the Statement and I strongly agree with her that it should be a priority to persuade the unions and INEOS to reopen negotiations at the earliest opportunity. I urge both sides to lay aside their own immediate interests and give thought to the serious consequences that this dispute could have for the general public and the economy.

The Minister will be aware that there has been much speculation about the impact of this shutdown. Does she agree that we need to maintain a sense of proportion in relation to these events? That is the only way to reassure the public and avoid the scenes of panic buying of petrol or stockpiling of supplies that we have seen in the past. Can she confirm that, as the situation does not as yet represent a widespread shortage, she does not expect there to be any impact on petrol prices on the garage forecourt and that she will monitor what happens to petrol prices to ensure that no one tries to take advantage of the situation and push their prices up unfairly? Fuel prices in general, and oil in particular, are already sky high, so we cannot afford to take this threat lightly.

The Minister will be aware that the industry believes that a two-day strike is damaging but manageable. However, there is deep concern about the implications of a longer dispute, which would undoubtedly increase the risk of serious shortages throughout the United Kingdom. How are the Government monitoring the situation, and will they make a commitment to keep Parliament informed?

Can the noble Baroness give us an indication of what action the Government will take if the unions and INEOS do not see it to be in their own interest to come to an agreement and restart production after two days? On current plans, the Forties oil field will be forced to cease production for a number of weeks. Can the Minister tell us whether any long-term damage will be done to North Sea fields, where there are only limited facilities to store oil and gas in situ? What effect will that have not only on UK oil prices, in the future?

What is the Minister’s understanding of the impact of the strike on plans to invest in the future of the Grangemouth facility? What impact does she think a strike will have on INEOS’s ability to fund the £750 million investment programme necessary to modernise the plant, and in this respect, does she agree that a strike will actually put jobs at risk and damage the interests of those working at Grangemouth and in a vital British industry?

Finally, while these discussions are ongoing, can the Minister give us more details about how her department is working with the industry to secure fuel from other sources to make up the shortfall while Grangemouth is out of action? To what extent does she understand that fuel has been stockpiled to minimise the effect of the strike on the public?

My Lords, I thank the Minister for repeating the Statement. The short-term damage that this strike could have would mirror the effects of the fuel protests. I know all too well the issues at stake for Scotland, having witnessed what took place in Northumberland. Those businesses that are on the end of a distribution line, especially in rural areas, suffer because panic buying leads to a complete lack of available fuel. I know that because at the time of the fuel protests I owned a tourist attraction which suffered substantially. The amount of traffic on the A68 fell dramatically as people decided not to take the route in case they had the misfortune to run out of petrol. Indeed, petrol supplies did run out, but not for any reason other than that everyone decided that they needed a full fuel tank. People would drive a great many miles to fill up and thus emptied the petrol stations. That did not happen in the towns. I hope that the Government will ensure that rural areas are not treated as second-class citizens. While town petrol stations were immediately replenished, those in rural areas were not.

I understand some of the concerns of those working at Grangemouth. The closure of final salary pension schemes is affecting many businesses across the country. But they are in a situation where they hold so many of us over a barrel that their demands are slightly more pressing. Someone had to say that at some point and I thought I might as well get in there.

However, I was surprised by the comment in the Statement that it is essential to prevent industrial action at Grangemouth disrupting the flow of North Sea oil and gas. What actions could the Government take if the strike were to escalate? Of course, as long as the strike is legal, it is possible for those people to undertake work. I do not think it would be in their interests, of course, but do the Government have a subsidiary plan for bringing workers in to make sure that the supply from the North Sea continues? If disruption was to take place, do the Government have an estimate of how much the Treasury would suffer from loss of tax revenue in the short term, given that so many demands are being made for Treasury money at the moment?

My Lords, I wholeheartedly agree with the noble Baroness, Lady Wilcox, that we need to have a sense of proportion about what is happening. Indeed, the Secretary of State was clear in urging that people do not buy more than they need and that they maintain their normal buying patterns. This will ensure that there are no shortages.

There have been reports of a couple of incidents of petrol stations putting up their prices. While in some instances that may be understandable, we have to be clear that in no sense can profiteering be acceptable. If there is any evidence of collusion in any way, the OFT will be ready to investigate.

On the actions that we will be able to take should they be necessary, it is not the current assessment that any emergency actions are needed. If they were, there is a national emergency action plan which will enable us to ensure that fuel supplies are available to essential services, that we can do bulk purchasing, and that we can distribute supplies and put caps on individual purchases. There is no assessment that any of this is currently needed. The Energy Act 1976 allows us to take action to direct the industry, but again that is not assessed to be needed. However, a memorandum of understanding, which has been in place for a while, was activated this Monday. It forms part of our discussions with the industry and allows those in the industry to have discussions with each other without fear of any issues around competition law. This will enable them to ensure that there is a managed supply.

As to the longer-term impact, it is important that we have the same sense of proportion. This is a two-day industrial action and there is no reason to believe that it will have any significant impact on investment plans going forward, on the industry or on jobs.

On the noble Lord’s questions about rural areas, the Scottish Executive are very seized of this issue. The supply in rural areas is usually by coastal tankers and barges and provisions have been made to ensure that these can be resupplied as quickly as possible.

I do not know whether the Treasury has made any estimate of lost tax revenue. I suspect that if it had it would not say, so I am not going to promise to write on this matter.

We urge both parties to come back to the table and resume negotiations. As the noble Baroness and the noble Lord have said, the issue of longer-term impact arises out of sustained action rather than any immediate action.

I hope I have answered all the questions, but if I have not I will come back. The noble Baroness asked whether we will maintain our scrutiny of what is going on. We will be very vigilant. My department is working closely with industry, through direct discussions with the MAU, the Scottish Executive, local authorities and the emergency services. We will maintain those discussions and report back to Parliament on any issues that arise.

My Lords, I thank my noble friend for repeating the Statement. For many years I had the privilege of representing many of the people involved in this dispute. Indeed, at one time my former parliamentary constituency was the boundary wire of the petrochemicals complex at Grangemouth. It has to be recognised that this is only a 48-hour strike. It may well be only the first, although I hope it will be the last. I take the point that ACAS has an important role to play here.

The significance of pension arrangements for people in the petrochemicals industry should not be underestimated. They have a tradition of being retired comparatively early and therefore pensions are of almost disproportionate significance. Men are normally laid off before they are 60 and they tend to be long-serving workers, so anxieties about pensions are often of considerable substance. This is not the kind of action that the men and women whom I know, and had the privilege of representing, take willy-nilly; it comes as a last resort.

In some respects, this is different from the way they were treated by BP when it was their tough but, at times, paternalistic employer. Ineos represents a rather different breed, and there is a different response coming at this time. I would be cautious about this, because these people are fairly moderate workers. They are not patsies, they do not get taken for a ride and they do not like to be—as they would see it—abused in industrial relations. We can hope only that ACAS will be able to resolve the dispute as quickly as possible. They know the routes. It is just a question of getting both sides walking along the same way at the same time.

My Lords, I agree with my noble friend that the most important issue now is to get both parties back to the table. I hope that ACAS will remain involved. It would be inappropriate for me to comment on an individual’s company’s pension issues, particularly when they are currently in dispute.

My Lords, I underline the point made by my noble friend Lord Redesdale from over the border in Northumberland. Over the past decade there has been a serious reduction in the number of filling stations available in rural areas in Scotland; quite a major drop. It is therefore essential—although I realise that this matter is more for the Scottish Executive than for the Minister’s department—to ensure that the rural areas are safeguarded if there are any diminutions of supply, because the people there do not have the choices that there are in the city.

Can the Minister tell us what retail products come out of the Grangemouth refinery? The reason I ask that is that there have been conflicting press reports, one of which suggested that it is just diesel fuel that it refines and that there is no problem with unleaded green petrol of the kind that most of us use.

My Lords, I fully understand the issue about rural Scotland. As I said, this is a matter for the Scottish Executive, who I understand have taken special note of the fact that resupplies are needed—although supplies are in fact more intermittent so, perversely enough, there is a bit more time.

With regard to the products, if it will assist the noble Lord I can have a quick look through the list I have: petrol, diesel, kerosene and jet fuel, gas oil, fuel oil—and then it goes into the petrochemical feedstock of a petrochemical refinery, which is on site. A number of products come out of that refinery, so far as I can tell.

My Lords, I am grateful to the Minister for repeating the Statement. I agree with the noble Lord, Lord Redesdale, that this could potentially be a threat to the economy, particularly the rural economy. A 48-hour strike is not a problem, although if it drags on it will be a serious problem for us. I am glad to report from my latest information that everybody in Caithness seems well stocked, which is due largely to the presence of a major supermarket in the town of Wick. They certainly have contingency plans and do not need to panic at the moment. That is good news.

However, it is the rural areas that again need attention. I could not help but smile when the noble Baroness said that most rural areas were supplied by barge. Trying to get a barge into the Highlands of Scotland—up Lairg or somewhere like that—is an interesting thought. It is not the case. There are various ports such as Wick and Thurso to which petrol and other fuels are delivered. But getting it from there to the really rural areas is the issue. The price of petrol is important. I was heartened by the Minister’s response on that. When I was in her position, the brief from the excellent fifth cavalry sitting in the box was: “It’s a matter of supply and demand, not for the Government to interfere”. I am glad that the Government are taking a slightly stronger view on that, which I hope is conveyed also to the Scottish Executive.

The Minister did not answer the point of the noble Lord, Lord Redesdale, about North Sea oil. Perhaps she could go into that in a little more detail. It is critical. It is not just the oil coming from the North Sea, but all the industries related to it. Many people in Aberdeen and in Caithness work in the North Sea sector.

The Minister mentioned jet fuel in responding to the noble Lord, Lord Steel. We have talked about the motorist, but not about aviation fuel. Could there be a problem with aviation fuel for places such as the Hebrides, Orkney and Shetland, or Caithness? If there is no aviation fuel, and we cannot get the limited number of flights in, we will have a serious problem. I hope that the Minister will say something about that, too.

My Lords, I thank the noble Earl for correcting me. I certainly did not want to imply that barges go into rural areas; I simply meant that the restocking is done in that way. Nor would I wish to imply that we were going to interfere with pricing, although we are being very vigilant about security of supply. There was an impact of just over $2 on the price of crude oil yesterday, but that was due in part also to disruption in Nigeria—this is how the market works—and it has been corrected slightly, with the price back down to $115 today. I do not wish to give the impression that we will interfere in the event of the price reaching a certain level.

The four major airports are well stocked with jet fuel, and it is believed that the smaller airports also are well stocked. We completely take on board the points made about the impact that could be felt on North Sea oil, given that Grangemouth is responsible for about 700,000 barrels a day. A short, 48-hour strike would not have a significant impact. The processing plant would certainly have to be shut down, but if it is able to access low-pressure steam, for example, it can restart reasonably quickly. It is a matter of the time that it would take. That is why we have made very clear our views on ensuring that there is no significant impact.

The noble Baroness implied that this was about the whole of the United Kingdom and not just Scotland. Supplies in England are not being affected at all. There are seven or eight other refineries. Northern England is being supplied through other refineries, as is Northern Ireland, so the strike is not at this stage having an impact outside. I will certainly ensure that the Scottish Executive are completely aware of noble Lords’ strength of feeling about ensuring supplies in rural Scotland.

My Lords, I apologise to the House and to the Minister for not being present at the start of the Statement. The noble Lord, Lord Steel, referred to the problems with the supply of derv. This problem is known to be worldwide; there is a lack of refinery capacity to produce enough diesel. What have the Government done in recent years to encourage the UK industry to address that shortage? If we had addressed that problem, we would not have the problems to which the noble Lord, Lord Steel, referred.

Secondly, oil refineries are part of our critical national infrastructure. Does the Minister agree that the loss of one oil refinery should not be a problem for the economy? We should be able to survive quite happily despite losing one oil refinery. Does she agree that that is the case?

My Lords, as I have already indicated, the temporary loss of production in that one refinery is not having an impact on the whole economy. There are other refineries and this is a very international market, both for crude and for oil products. So while it might have an impact on price it is not having an impact on the national economy. However, it does have an impact on Scotland, given the fact that the whole infrastructure is built over the past 60 years around that one refinery.

There is a regime in place to incentivise refining diesel. We consult on that regularly and I should be happy to write to the noble Earl with the information from the relevant department, which in part is the Treasury.

House of Lords (Members’ Taxation Status) Bill [HL]

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

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

House in Committee accordingly.

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

Clause 1 [Taxation status of members of the House of Lords]:

1: Clause 1, page 1, line 3, leave out “and domiciled”

The noble Viscount said: I shall speak also to the other amendments in my name. I was unable to be here at Second Reading but I have read carefully in Hansard what was said. I shall say at the outset that I do not think that the Bill should go very far. I do not think that it should leave this House. The Bill that is being promoted in another place is a more satisfactory answer to the issue and the whole thing should be wound up in the debate when we consider how this House is reformed in future. I do not think that we can just pick one thing.

The noble Lord’s Bill brings up some interesting issues that are worth exploring. I find it extraordinary that a party that is so keen on Europe and everything European and which has not put down a single amendment to the Bill on the Lisbon treaty wants to prevent anybody who sits in this House from living perhaps part of the time in France or Italy, or wherever it may be in the European Union, and then attending this House. If we take the fact of the European Community as it is, one should be able to do that. I see no reason why, in theory, one should not do that.

We can stand for the European Parliament and we do not have to live in this country to do that. I remember that the noble Lord, Lord Steel, stood for the European Parliament in a seat just outside Rome—

No doubt he had an extremely interesting time canvassing the various hostelries around the whole of central Italy. I am sure that he had an overwhelming vote, but I seem to remember that he was just pipped to the post by a local. However, he did not have to establish residence or domicile in Italy at that stage.

The Bill also excludes anyone who lives in the Channel Islands or the Isle of Man, as I do not think for tax purposes that they count as being resident or domiciled in the United Kingdom, although there seems to be no reason why, if you live there, you should not be able to serve in this House. Many people have done so in the past. If you take this theory even further, we must ask what about civil servants? Are they going to be asked to be resident and domiciled in this country before they accept the Government’s money? What about all those who sit on government quangos and accept the Crown’s payment for doing so? It seems that we go down a dangerous route.

I am all for people paying their taxes in this country. I have no interests to declare. I think I have always been domiciled here; that I have always been resident here; and that I have always paid far too much tax here. I do not think that I have ever been to Luxembourg, or wherever it is—if I have, I have certainly never noticed it—and I do not have a bank account there. It seems to me that there is also a philosophical difference and, indeed, a legal difference between residency and being domiciled. You can be resident in this country without being domiciled. There are Members of this House who are not—

I thank the noble Viscount for giving way. He mentioned Luxembourg, which is obviously not the same place as Liechtenstein. Before we continue the debate, would it be useful to have a map of Europe so that we can see where all these places are?

The noble Lord is probably better at his European geography than I am, whether it is Luxembourg or Liechtenstein. No doubt he will be able to tell us all about it if he so wishes.

There is a definite legal difference between being resident and domiciled. There are Members of this House who were born in another country, who have arrived here and are resident. They do not necessarily know whether they are domiciled here because you have to have lived here for a certain number of years before you are officially domiciled. They may be paying full tax while they are here, but it does not mean to say that anybody has actually formally told them whether or not they are domiciled. I am not a tax lawyer, but I am not sure that works as part of the noble Lord’s Bill. The noble Lord is much better trained in the world of finance than I and will be able to tell us how these interesting issues work. However, it seems extraordinary that a party that is so keen on Europe is not going to allow anybody in this House to live in Europe and to come here. I beg to move.

I hope that I may be forgiven for intervening but I am pleased with the gentle light-hearted way with which this has begun. In the Recess, having worked in these areas for many years, I found myself being approached by a number of non-nationals who had growing concern about the situation in the United Kingdom. It is sufficiently serious to ask for certain reassurances. The problem arises probably in press comment, but it was said that this particular Bill was going to be fast-tracked though the House of Lords. I believe I was told that that was because it was a statement from the Liberal Democrat party. That, for people who understand the British system, is no problem, because they know that the legislation has to go to the House of Commons; but there are those who do not and think that Bills end up in the House of Lords and then receive Royal Assent. That is quite worrying.

Your Lordships may not think this is important, but as we go on and as the matter develops, I will try to demonstrate to your Lordships that since the Bill was introduced there has been what one may call a series of material adverse changes in attitude to politicians and to law in this country, which could have a major detrimental effect on the economy. Therefore, I begin by asking a few questions of the noble Lord, Lord Oakeshott, and others, to which the noble Lord can well reply. He has solid financial background and has always been open in everything that he has done.

The first question is: is everything accurate and true that he is reported in Hansard as having said? I found two spelling mistakes, but people have been taking this apart. That is the first question. I have a series of questions; they are not unfriendly.

I am having some difficulty following the relevance of some of these points to the amendments under discussion. I am happy to answer at the end, but I am not going to pop up and down like a jack-in-the-box. I will listen to the noble Lord making his speech and then reply.

First, I would like to remind the noble Lord of certain procedures in this House that have not necessarily been followed. I do not put this down to his youth or to his lack of time here, but over 45 years I have found certain things. I once had a word with him outside the Chamber to ask whether some of the things said were correct. I would like to refer to the codes of conduct applicable to Members of Parliament. It indicates that Members intending to refer in debate to another Member should inform that Member in advance. Members may not accuse other Members of deliberate misrepresentation or lying, use abusive or insulting language likely to create disorder, or criticise the conduct of individual Peers other than on a substantive Motion to that effect. That has been the case for a long time. If we are all in the Chamber and I am talking about the noble Lord, Lord Oakeshott, and others, there is normally no problem. However, when the conversation happens outside and gets repeated in the Chamberand Hansard today is much more widely read than people may believe—it is pulled apart. Further than that, the BBC Parliament channel and others can reproduce, often with selective editing, extracts from all proceedings. I found to my horror—not horror, that would be the wrong word—that when I spoke in the slavery debate, it was repeated eight times in seven days, right the way around the world. I suggest that that may have been part of the promotion of the party opposite. The first thing one wants to do is to take any heat out this debate.

The second question to the noble Lord, Lord Oakeshott, relates to the impact of the Bill and who it is intended to impact upon. I could go on for quite a long time with these questions, and the noble Lord would prefer that. I would like to ask whether he or the Liberal Democrat party has made an assessment of how many people may be impacted upon by the terms and conditions in the Bill; that is, Members of your Lordships’ House. Perhaps I could ask that, sit down and then jump up again.

I do not know if I can assist the noble Lord. The normal rule in Committee allows interventions, but it might be better if the noble Lord puts his points, other noble Lords speak, I then give a government view and the noble Lord, Lord Oakeshott, winds up. Would that be acceptable to the Committee? It seems to me that that is the way we should go.

The Bill, relating only to the House of Lords, raises an issue that I think should have been raised in a general purpose debate and then discussed within the House and the usual channels. It should not be presented in this way, as an attempt to drive through Parliament a Bill that impacts upon a particular group of people. After what was said, not recently, by the Conservative Party in an article attacking the noble Lord, Lord Sainsbury, who was a very good Minister and did a lot of good for this country, and what was said by others who, in the attempt to deal with cash for peerages, sought to knock each other and Members in this House, which is not normal practice and never has been, my concern is that within the international community in London, where I have worked, on and off, all my life, there is now a groundswell of nervousness and anxiety. It was started by Mr Cameron when he made a political speech saying they would tax foreigners in order to pay for a lack of Treasury revenue. That was followed up by the Prime Minister and the Liberal Democrat party which has asked for harmonisation of taxation throughout Europe.

The worry here—I cannot nod my head—for me is the impact upon the economy. Without wishing to bang on, but I shall bang on for a bit, I want to take noble Lords back to the basis of the economy which historically, when I was involved in the trade world, was based upon balance of payments surpluses, mainly in manufactures. For years we had surpluses in manufacturers because we were a manufacturing industry. Then at the time when I was on the Audit Committee with the noble Lord, Lord Ezra, and others in this House, we looked for some years at what would happen to the economy when oil ran out. I have to say that we were not predicting $100 a barrel or anything like that, but it was said that that was the time when the United Kingdom should reinvest heavily in other activities and industries. There were investments. There were high-tech investments. There was a silicon valley, where 50 per cent of all the computers in Europe were made, in Scotland, near Glasgow. There was also the silicon road down to Bath where high technology came and service industries began to spring up. But gradually the manufacturing base was eroded almost completely. Even some of the more brilliant developments, such as the Dyson machines, were made outside the United Kingdom. So the balance of payments in our economy ceased to be based on manufactures. It was therefore based on services.

In the days when I was on the committee for trade in invisible exports, services were deemed to be financial services such as insurance, banking, accountancy and consultancy activities, but there was also a range of other smaller manufacturing and service industries. Gradually, other than at the high level, many of these services have been exported, for example, telephone answering systems, to India. So what is the basis of the economy? It is not based just on the City of London. At the high-tech level, particularly in medical research and health, we are very advanced in the engineering but we are not very good at the application. The noble Lord, Lord Desai, and I have discussed these matters for many years.

I am worried that the statements that have been made about taxation are causing concern among members of the international community living in London and the United Kingdom within a free market economy. I may be wrong but this area is a large part of my life. I have been president of the Anglo-Swiss Society for many years. Its members always agree that taxation is a trade weapon. We have used it as such in the United Kingdom in giving tax allowances to people who built ships and people who imported things and then reused them. We started business capital leasing in a big way and even double-dip leasing. We led the field in airlines not owning their own airplanes.

I note that we are now in Committee. I recall the Standing Order that says that long speeches tend to weary the House. The noble Lord is in his 15th minute. For the last five minutes I have not managed to understand the relevance of his remarks to the Bill, which is about the domiciled status of Members of this House. He is giving us a very interesting tour of the recent history of the British economy but it has no relevance to the amendment we are discussing. I suggest that the noble Lord is close to being out of order.

That is very good as the noble Lord has always proposed harmonisation of taxation. As I say, I may be wrong, and I shall be pleased if I am proved to be wrong. However, at the moment, there is confusion about domiciled residence and ordinary residence. The Bill uses the word “domiciled”. Obviously, if you are born and brought up in the United Kingdom, you are domiciled in the United Kingdom, and will be for ever and a day. The noble Lord will correct me if I wrong.

That is not the case. I was born and brought up in the United Kingdom but from my birth until 1966 I was domiciled in the USA.

I am concerned about domicile, and so are other people. I assume that in some cases, in order to be domiciled, particularly in Scotland, you have to have a grave.

When I was born my father was, and continued to be for the whole of his life, domiciled in the USA. I acquired domicile of origin of the USA because the rule then was, and still is, that a child acquires the domicile of its father at the date of birth. I ceased to be domiciled in 1966 when the—

I am grateful to the noble Earl for that intervention but it may be convenient if I point myself in the direction of the noble Lord, Lord Selsdon, who raised this point. It was only when it became clear to me by 1966 that I was going to make my life permanently in the United Kingdom that I recognised that I had acquired, and should be treated as having acquired, a domicile in the United Kingdom.

That relates to the noble Lord himself, and I am not necessarily talking entirely about British subjects. My concern here, which is probably not real but perceived, is that there is a groundswell of opinion that all foreigners working in London will have to be domiciled there and pay tax on their worldwide income. That is a real fear. It would be helpful if the Liberal party could perhaps give the assurance that that will never be the intention. Domicile is not necessarily a matter of fact. Certainly for non-British nationals that is not the case, and it depends on your marital status and where you come from.

As President Sarkozy said the other day, London is the sixth or seventh city of France. There may be 750,000 French subjects in this country paying tax on their British income but not necessarily paying tax on their mortgages in France or other benefits. That has always been the case with the international community. Therefore, the employees have no objection to paying tax in this country and I do not think that any member of the international community objects to the principle of having a tax levy placed on him. Historically, it was a fairly simple matter. I speak from some practical experience. If you worked in this country and you were a foreigner, you had to show that you had an income of £25,000 a year and you paid tax on that. That was in the early days. When I was in the banking world and we employed people, that was the case, but you did not pay capital tax on other issues. Equally, if you were a British subject working abroad, you were allowed to have 25 per cent of your income paid tax free.

The clear thing about taxation is that it should be transparent. My worry is that this Bill as presented to the external world may cause concern, because it might lead to a perfectly reasonable statement that this should apply to the House of Commons and possibly to those in elected Assemblies in the United Kingdom, who number in general 106,203—local authority is another level. The principle is there. The difference is that, other than a few of us in your Lordships’ House, no one is elected. The other difference is that no one here receives a salary in this field. My wish is that the Bill could be changed somewhat. I will speak later to the amendments suggesting that certain people should be excluded.

Within that framework, we come to the existing 734 Members of your Lordships’ House. I would willingly read out all the writs of summons and provide everything, because in this world I have probably more information on your Lordships’ House than anyone else. I did the original report for the Labour Party and I have had this stuff for over 45 years. I feel quite concerned that, even in the 1999 Act, people ignored the Commonwealth. There are 1.8 billion members of the British Commonwealth, which represents 30 per cent of the population and 20 per cent of the land area of the world. The assumption here is that no member of the Commonwealth may become a Member of the House of Lords unless he becomes domiciled in the United Kingdom and leaves his country behind.

Equally, within that framework, one must accept that one of the main revenue streams of the poorer countries, particularly in the Caribbean, is financial services. Those may not appeal and hold no interest to the Members in the Liberal party, who are assembled in serried ranks as though they must have a Whip on for something that is really not that important. That makes it look even worse; if it is presented to the outside world that the whole Liberal party believes that doms, or non-doms, or whatever, should be taxed, that is a worry.

I can produce representations that have been made to me. At the moment, the money flowing out of London is very significant indeed, and other people are competing for it. The noble Lord, Lord Desai, may pull me apart, but I see that there is added value in the movement of that money and that, whatever money comes in, some remains and some goes out, and it is not purely in the City of London. We are now the second largest international investor in the world.

My life has been in trade and I have dealt with many of the more difficult countries in the world—the second biggest being Algeria. Some of that trade is in oil. I want some reassurance from all Benches that it is not their intention to pursue further the taxation of people who are working in the United Kingdom as though they were domiciled here. Yes, they can be ordinary residents. Some people may be resident to an extent in several countries, or they may move.

I often represent groups of pensioners internationally. Anyone in your Lordships’ House can represent whom they like. I represent the 19 million people who did not vote at the last election. I also represent many of the groups abroad in areas where I worked—roughly 12 million people.

Then why do noble Lords declare that they have interests? If you declare an interest because you have a public job, are you representing something—as, for example, in the post offices debate today? I am not being flippant—

We are all having a laugh as well, but some of these issues are serious. The problem will not necessarily go away. The dangers here, frankly, are the politicians, of which I am not one; I never have been one and probably never will be. With this Bill in place, all three parties are effectively saying that they do not want people from the international community to be here unless they are domiciled and pay full tax on capital gains and on everything else. I can give noble Lords a list of where these people are, because part of my life has been in this field. Some are good and others are bad. But, in general, Switzerland, which is attracting large amounts of money again, does not have anonymous bank accounts and it negotiates and deals with people, who then set themselves up.

It would probably be better to debate the entire taxation system of international people, but I would like, in this case, the noble Lord, Lord Oakeshott, clearly to define what a domicile is, in terms of a foreign national who is living and working in this country. That may relate not only to a foreign national but to his wife of another nationality. Noble Lords will remember the poll tax; the Government are proposing a poll tax in another form. It is a tax on the individual. I know that it is difficult for me to make myself entirely clear—

I think that noble Lords will find that it is relevant. Could I please again have a definition of “domicile”? The definition is that domicile can be applied to a person in both countries: the host country and the country of his nationality. If you are German or French, you cannot necessarily change your domicile, as the noble Lord, Lord Goodhart, has done. “Domicile” is the word that worries me. Residency is not an issue, although initially domicile was linked to residency. The amendment would remove the word “domiciled”. I am suggesting that we either remove the word “domiciled” or explain it in a way that is acceptable to the international community in London.

I always thought that this was a simple Bill. The Liberal party, as yet, does not have the power to impose taxation on anyone; long may it remain so. The amendments that have been proposed by the noble Viscount need some discussion. The purpose of the Bill is not to exclude foreigners—money-earning bankers and everyone else. It is about the tax status of Members of your Lordships’ House. The simple argument for the Bill is that, if you are going to be a Member of this House, you should be a fully taxpaying person. That is an easy concept.

When I first inquired about the nature of domicile, I was told the story about the grave. I said that I happened to believe in cremation and, therefore, I did not know what I would do. Should I buy a little pot for my ashes? Is that enough to be domiciled? I think that the point is very simple. People take non-domiciled status to escape taxation in this country and we would like them to come clean and be honest if they want to join your Lordships’ House. If they do not want to do that, they can go and cheat as much as they like. It has nothing to do with me; it is to do with the tax officers. The principle is: if you want representation, you had better pay taxation.

I did not think that I had heard my noble friend aright when he said that you had to have a grave in order to be domiciled. I did not think that you had a grave until you were dead, so perhaps the noble Lord, Lord Desai, who subscribes to this theory, could explain what it means.

I should have said that you had to have a plot reserved in your name in a graveyard and that you had to give evidence of that. I went into this when I had no money from which to escape the tax. I found out that even then it was not worth my while buying a little urn for my ashes for the future.

Just on the question concerning graves. There is a lair certificate, which is issued to you in Scotland when you reach the age of 50. You receive it in a letter from the Writers to Her Majesty’s Signet, and it is also proof of being domiciled.

I should say at the outset that, echoing the words of my noble friend Lord Strathclyde at Second Reading, we have no particular difficulty with the broad principle behind the Bill, which in a nutshell is that there should be no representation without taxation. However, the debate that has already taken place has demonstrated some of the complexities and has started to explain why, as my noble friend Lord Strathclyde said at Second Reading, such matters would more appropriately be dealt with in a government Bill.

Furthermore, even if they are to be dealt with in a Private Member’s Bill, another Private Member’s Bill covering this subject is already under consideration in another place—Mr Gordon Prentice’s Disqualification from Parliament (Taxation Status) Bill. It is a rather more all-encompassing Bill in that it covers both Houses of Parliament, which I think I am right in saying would make this Bill superfluous. I am afraid that I fail to understand why the noble Lord, Lord Oakeshott, is aiming his guns exclusively at your Lordships’ House. If changes are needed in this area, surely they are needed every bit as much in another place. I shall return to this issue later when we discuss another amendment tabled to rectify that irregularity.

As regards this group of amendments, which concerns the inclusion or not of domiciliary status, I noticed that at Second Reading the Minister said:

“We would have to think very carefully indeed about an approach which involved deeming another group as UK domiciled”.—[Official Report, 14/3/08; col. 1720.]

I think that my noble friend Lord Selsdon has expanded adequately on concerns in this area.

This whole matter needs considerably more thought. If the issue is genuinely and simply one of taxation status, however defined, surely more than a few Members of your Lordships’ House have worked abroad while being Members and have not paid full UK tax, possibly—dare I suggest it?—even Liberal Democrat Members.

As regards my noble friend’s proposed deletion of the words,

“and in no other country for taxation purposes”,

I agree with what my noble friend Lord Strathclyde said when he pointed out at Second Reading that this Bill appears to argue that Members of your Lordships’ House cannot have tax residence in any country other than this one. In fact, it says that they are deemed not to. First, I suspect that it is possible to be resident in more than one country for tax purposes. Indeed, the noble Lord, Lord Oakeshott, acknowledged in his speech introducing his Bill at Second Reading that it is possible to be partly resident here and partly resident overseas. Therefore, if the Bill’s bottom line is to ensure that full UK tax is paid in this country, one problem that I think it will create is that some people will be subject to double taxation. I doubt whether the double taxation treaties all automatically result in the United Kingdom receiving its full share of tax, which definitively would mean that the other country did not receive the tax. Is that what is intended? Perhaps it is none of our business whether tax is paid additionally elsewhere, but I hope that that is not the case, because it seems somewhat unreasonable.

Secondly, the amendment of my noble friend Lord Astor quite rightly specifically allows residence in another EU member state, a view that appears to be shared by the noble Lord, Lord Goodhart, in his Amendment No. 3 in the next group. The fact that this was not dealt with in the Bill in the first place raises questions, as my noble friend Lord Astor said, about how serious the position of the Lib Dems is on the European Union. My noble friend is absolutely right to probe where the boundaries should be drawn. So far the debate has brought out some important issues which need to be explained.

Perhaps I might make an observation or two. For a few years, I used to decorate the passages of the Home Office. I always shuddered when domiciliary and residential matters were discussed because I found them deeply confusing and I have found them so ever since. I am not sure that I am more suitably enlightened this evening. The noble Lord, Lord Desai, said something quite important. He was a little mocking of the Liberal Democrats, although they are used to that. He said that they do not have the capacity to tax people and that he hoped that they never would. Surely this Bill is about taxing people; it would ensure that certain people are taxed. I always thought that your Lordships’ House was not allowed to discuss matters relevant to taxation because of what happened 100 or so years ago. Therefore, I am surprised that this Bill, which is basically a taxation Bill, should have come to your Lordships’ House. I am also surprised that the Liberal Democrats—as has been pointed out, their serried ranks are full—have three Bills on the reform of the House all at once. That seems slightly obtuse and unnecessary.

I am concerned about the remarks made by the noble Lord, Lord Oakeshott, in his Second Reading speech, to which I listened with interest. My noble friend Lord Selsdon referred to asperity of speech—that you do not say anything unpleasant to another person, particularly without letting him know in advance. I do not know whether the noble Lord let the noble Lord, Lord Laidlaw, know what he was going to say, but the noble Lord, Lord Oakeshott, said:

“What a tragic scene that must have been. You come straight out of a meeting, get into the Rolls-Royce, say ‘PricewaterhouseCoopers, James’ to the chauffeur and then suddenly have a terrible memory loss. Why on earth are you going to see your tax adviser? Obviously, you are feeling pretty ill so you go straight to the airport, get on the private jet and go back to Monte Carlo. Thank goodness the noble Lord’s memory returned a year later and he was able to remember to sell his business for £768 million. The effect of that was to cost the British taxpayer at least £50 million in capital gains tax that he would have had to pay if he had honoured his undertaking”.—[Official Report, 14/3/08; col. 1709.]

All that may have been true, but it is pretty offensive stuff to say about a person who was not here. I wonder whether the noble Lord, Lord Oakeshott, had the courtesy of letting him know. It puts a nasty smell over the noble Lord’s Bill.

This has been a fascinating debate. The noble Lord, Lord Oakeshott, is discovering what all us anoraks on House of Lords matters discover: that every matter concerning your Lordships’ House is always subject to extensive scrutiny and debate. The noble Earl, Lord Ferrers, whom I admire greatly, was very unfair when he criticised the Liberal Democrat Party for the three Private Members’ Bills currently before the House. There are those of us who like nothing other than debating matters concerning reform of your Lordships’ House, particularly on Fridays. Long may that continue.