If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Clause 12: Innovation prizes

Amendment 71

Before I speak to the amendment, I would like to make a few general points and seek a bit of clarification on innovation prizes. Of course, everyone thinks that they are a good idea. They are one of those things that you could not possibly oppose, because we all want innovation in the health service. However, there is a slight worry among health professionals to ensure that the prizes cover everyone working in the health service, not just eminent consultants and leaders of clinical teams—that if it is to be an innovation prize, it should cover doctors, nurses, professions allied to medicine, managers and all other people working in the health service who want improvement in the way healthcare is delivered. There is also concern—I am certainly concerned—about what body will decide who gets innovation prizes, and who will decide on the composition of that body. It is important to make sure that there is a general membership that reflects the whole health service, not just the clinical side.

Having worked in the health service—not as a consultant—I worried about and saw the competition and machinations that went on about the old merit awards in the past, and saw how unfair they were seen to be. Everyone was glad to see the back of them and to see the clinical excellence awards put in their place. However, there is still a nasty taste in people’s mouths about those things, so we need to make very sure that innovation prizes are separate from clinical excellence awards and that the two do not cross over. I would be grateful if the Minister would elucidate that point for me.

It would be useful to know whether the prize will be a reward for work done, or an award in the form of a grant for a good idea that someone needs the money to implement.

The subject of our amendment is that the money for innovation prizes must clearly not come out of existing research, training or education budgets.

The amendment, jointly tabled by the noble Baronesses, Lady Barker and Lady Tonge, seeks to ensure that innovation prizes will not be funded from a topslice of existing research, training or educational budgets. The issue was raised by the noble Baroness, Lady Barker, at Second Reading. I am happy to reassure the noble Baronesses that funding for innovation prizes will be met from the overall resource envelope allocated to the Department of Health for the implementation of the commitments in the next-stage review, so it is new money as part of the next-stage review. As such, the funding available for innovation prizes—including that for administration—is all new money and will come on stream in 2010.

At Second Reading, the noble Lord, Lord Turnberg— he is not in his seat—pointed out an ambiguity in the Bill’s Explanatory Notes regarding the proportion of the budget given over to administration. I am pleased to have this opportunity to put the facts on the record. The Government intend to allocate a prize fund of £5 million per year for three years from 2010, totalling £15 million. There will also be an allocation of £1 million towards the administration, spread over the three-year period.

The noble Baroness, Lady Tonge, asked who the prize covers. It is open to everyone working in the health service and many honorary appointments—people working in the health service but not necessarily employed by it. We are aware of many people with university appointments who do full clinical work in the health service on honorary contracts.

It is expected that the expert panel will have 10 members, consisting of leading medical scientists, people in hospital management, economists and other academic representation. The panel will recruit dedicated selection committees for each prize to undertake the initial sift of entries and put the best candidates forward for that assessment. As I said on Second Reading, we are working closely with the Academy of Medical Sciences and other stakeholders at a national level in identifying the expertise required in setting up the panel as well as its sub-committees.

As I said on Second Reading, there are two types of prizes. The one in the Bill is the achievement prize, but there are also challenge prizes, which the law permits the Secretary of State to award in the form of a grant. The expert panel and the sub-committee will decide, for example, what the challenges should be in the future. We have heard numerous ideas, including how to tackle childhood obesity. The achievement prize pays towards an achievement already established or a scientific discovery that has had a huge impact on the NHS and patient care.

The prizes are very different. The distinction or merit awards are personal bonuses for a clear establishment of a scientific discovery that has had a major impact on healthcare. If you look at the history of the NHS over the past 60 years, as most of us remember during the NHS 60 celebrations, there are many things we should be proud of that contributed not just to well-being and healthcare in this country but also globally.

I believe that I have answered most of the issues raised. I hope that I have reassured the noble Baroness sufficiently for her to withdraw the amendment.

I thank the Minister very much for that reply and apologise if he had to repeat some of the things he said at Second Reading. He must know that this sort of thing can cause a lot of feeling and debate among people who work in the health service and it is terribly important to get it clearly stated as many times as possible. In view of his response, I beg leave to withdraw the amendment.

I should like to spend a few minutes looking at Clause 12 in the round and, more especially, its policy rationale. Let me say immediately to the Minister that I have no difficulty accepting the argument made in the impact assessment that the NHS currently lacks an enterprise and innovation culture and that something needs to be done about that. The impact assessment advances a number of possible reasons for that situation: for example, a risk-averse mentality running through the NHS; short-termism in the way that priorities are set; a lack of the necessary leadership to support innovation; and little in the way of reward for either the innovator or the body for which he or she works.

It is thought that a series of innovation prizes may make all the difference in turning that situation around. Once people know that there is a pot of money on offer, so the thinking goes, and once there is visible evidence that innovation is regarded as being important to the NHS, people will get excited and innovative thinking will be stimulated. The idea, as we have heard, is for an expert panel to devise specific health challenges for which the prizes will be awarded and to recommend the winners to Ministers. We are led to understand that at the moment there is a legal bar to a prize scheme of that kind, which is that, although the Secretary of State has the power to award money prospectively, as with a research project, he may not do so retrospectively for work that has already been done.

I would very much welcome a more detailed explanation of that point. The impact assessment states that the Secretary of State's existing powers enable him to award grants “to backfill costs” in a research project. I am not sure what the difference is legally between backfilling costs and awarding a retrospective prize, but there clearly must be one. We are also told that it is intended to launch the first tranche of prizes during 2009,

“within the Secretary of State's existing powers”.

If a prize competition for innovation can be launched in the absence of the clause being enacted, the natural question that arises is what practical difference the clause will make to a scheme of that kind. Why, precisely, is it needed?

I have a difficulty with the general principle of public money being used to reward people retrospectively for having done something. My difficulty is the impossibility of demonstrating value for money. It is bound to be a completely hit and miss affair. You cannot know in advance of awarding the money what you are going to get for it. I know that that sounds like rather a purist view, but it is why, up to now, Treasury rules have prevented such a thing happening. In this case, at the point where the terms of the competition are set, there can be no way of knowing how many will enter or whether any of those who enter will be able to deliver innovation to a value at least equal to the value of the prize. If they do, that will be fortuitous.

We must remind ourselves that we are dealing with public money. It is not the same thing as a private individual using his personal money, which he would be entitled to splash around as liberally as he wants, regardless of whether he gets value for it.

My other doubt is whether the existence of a prize will of itself incentivise people in the health service sufficiently to imbed a culture of enterprise and innovation. I am not sure how many prizes there will be; that is to say, whether the money will be spread across several winners, in which case the amounts involved may be quite small, or whether there will be one or two bonanza wins. In either case, the degree for incentivisation of large numbers of NHS staff to launch themselves into innovation mode does not seem that great. The impact assessment talks about the prestige and kudos attached to winning and the attraction of associated publicity. I have no doubt that the Alan Johnson prize for innovation will indeed bring with it a lot of prestige and kudos, but will it imbed a culture of innovation? To my mind, much more is needed to do that than simply an annual prize.

To be fair, I acknowledge that Ministers themselves have made that point and mention is made in the impact assessment of the regional innovation funds held by strategic health authorities, and the setting up of NHS Evidence. We need to register that there still does not appear to be an agreed Memorandum of Understanding in place for the health innovation challenge fund—the Minister may correct me on that—let alone any money distributed. Equally, one has to wonder about the Health Innovation Council, whose creation was announced in October 2007. According to the DoH website, the council has met only twice and the last time was in April 2008. Personally, I still feel that the introduction of quality accounts is an opportunity to start creating the necessary culture in a way that would reach all levels of the health service very rapidly.

I add my note of scepticism to the notion of innovation prizes. I particularly want to ask the Minister about the timeframe. Major health innovations are often developed over many years. As regards the award of the Nobel Prize for chemistry, physics and medicine, over 10 or 15 years an innovation becomes gradually understood as constituting a fundamental change. An obvious example of that was the award of the Nobel Prize to Peter Mansfield for his MRI innovation, which has transformed the whole of imaging over the past 20 years. However, during the 20 years before he made the discovery for which he got the prize, he slogged away in a laboratory in Nottingham with nobody taking much notice of him at all. Is Peter Mansfield eligible for one of these innovation prizes? I hope so.

Many innovations in medicine have been actively opposed by colleagues in the NHS; for example, in my own field, the newer anti-psychotic medications have made a fantastic difference to a certain group of seriously ill psychotic people who were resistant to the old drugs. However, because they were so much more expensive, for many years there was massive resistance in mental health services to their being prescribed.

Are people going to apply for these prizes? I am trying to imagine myself as a consultant and my team applying for one. How much would the prize money be? Would it be enough to help us develop the service? Alternatively, would the prize be for me or one of my staff as an individual or for the whole team? I do not really understand how it is to work. However, I am interested in the timeframe. Like the noble Earl, Lord Howe, I have great difficulty in conceiving how the money attached to these prizes would be an advantage over the kudos that you are likely to experience within your peer group—your professional colleagues—as some years down the line your innovation gains recognition as a major contribution. The timeframe will be an important element in terms of changing services, and I am sceptical about whether a proposal for specific prizes can really change the culture of the NHS, although again I am not against the award of prizes for various other things.

I think that both noble Lords who have spoken are being a bit curmudgeonly about this. Prizes are much sought after, and it is a matter for debate whether for the kudos or the money. However, I do not think that anyone in the health service who wins such a prize would put the money into an offshore bank account or book a holiday to go around the world. They would plough it back into their research into what they want to do.

I have to have a little go at the noble Earl, Lord Howe, because for years the Conservative Party railed against ideas such as that children should be equal, that nothing should be competitive, that everyone must be given the same level of recognition and that it is bad to be a loser or a winner. Come on, here we are saying to people working in the health service, “Be a winner. Do something great. Think of something different”—if they have the time, that is. What I have not mentioned is that we need to have a bit of slack in the health service so that people have enough time to think of new ways of doing things. Let us be a bit more visionary about it.

The noble Baroness will not hear me speak one word against the idea of a contest and having winners. My question revolved around the use of public money.

I am grateful for the contributions made by noble Lords. Let me start by reminding the Committee of our debate at Second Reading, when I clearly said that the next-stage review, High Quality Care for All, made a significant commitment to changing the culture of the NHS by stating that quality will be its organising principle. We should also recognise that quality is a moving target, and the reason it is constantly moving is because of the innovations made by both those who work in the health service and those outside who translate such innovations into patient benefits. This policy is one of many set out in High Quality Care for All through which we are trying to address the challenges referred to by the noble Earl when it comes to the culture of the uptake of innovation in the health service. I believe that it is one of the most important enablers in the effort to ensure that quality remains in a state of constant improvement. Indeed, perhaps I may share an example over the past eight years where innovation has had a huge impact: the area of cardiovascular disease.

Post the NHS Plan and during the passage of the Health and Social Care Bill in 2003, many of our debates concerned the long waiting lists for patients requiring coronary artery bypass graft procedures. I see that the noble Lord, Lord Crisp, is here; at the time, we were trying to ensure that we increased the workforce, or at least the number of surgeons who were able to perform coronary artery bypass grafts, because we had an 18-month waiting list and many patients were dying while on the list.

It is fascinating to see what happened in the following five years. I shall go through them one by one. First, the major innovation, which was taken up in the NHS fairly quickly, was the concept of angioplasty and stents. A number of drug-eluting stents came in, and that is a fantastic example of innovation. Secondly, at the same time the statin trials were published. I am delighted to say that the bulk of those trials were carried out in this country on NHS patients, and they showed the benefits of statins. Thirdly, and I am sure there will be another debate on this, there was the ban on smoking in public places, which I am sure we will see the fruits of when it comes to cardiovascular disease. I have given the Committee three areas of innovation in five years that have reduced the overall mortality rates of cardiovascular disease in this country by 46 per cent to 47 per cent. That is why I talk about a moving target; innovation comes in, and the NHS needs to be ready for it.

I shall describe the package in High Quality Care for All. Innovation prizes are only a small part of our enablers in the system—the nudgers—to transform that culture. One of them, which the noble Earl referred to, is the innovation fund that we are about to launch through the strategic health authorities, which is, if I am correct, up to £200 million.

At the same time we are introducing a number of innovation vehicles into the health service with the creation of the academic health science centres. The Committee may be aware that this week a number of organisations have come to be interviewed by an international committee that is assessing their applications to become such centres, which are a vehicle by which universities and NHS providers can be brought together into a different type of governance structure, ultimately driving innovation in the health service. In addition, I have made reference to the health innovation and education clusters that we will be launching in due course.

I hope I have given a flavour of what innovation will be all about in the NHS in the next decade. I shall move on to Clause 12 and describe some of the specifics of the prize, how we see it being administered and some examples of the NHS’s contribution historically to innovation. Under existing legislation, the NHS Act 2006, my right honourable friend the Secretary of State for Health can currently award grants for future research purposes. That is clear. In terms of awarding prizes, the power is limited and does not extend to awarding money retrospectively to recognise and reward work that has already been completed.

I am grateful to the noble Baroness, Lady Murphy, who raised the issue of Peter Mansfield. I know something about this subject because imaging is an area of research that I have an interest in. She could not have picked a better example. It was 1967 in Nottingham when Peter Mansfield built the first MRI device. I think the point being made was that he was recognised as a Nobel laureate, but he was not recognised until 2005 for that achievement, and even then not in this country. The noble Baroness has made the case for such a prize being given to people who have made huge scientific contributions in this country. I am sad to say also that the fruit of Mansfield’s discovery did not happen in the NHS; there were more MRI machines and more patients being imaged with MRI across the pond, as they say. That is the culture. I am very grateful for the noble Baroness’s intervention. I do not think that we recognise our major contributors in this country, whether they are scientists or NHS workers, and this is our attempt to do so.

I thank the Minister for giving way, because I cannot resist intervening. While we are on the subject of innovation prizes, perhaps we could give a prize to every person working in the health service. The book Notes on Nursing, by Florence Nightingale, would help them tremendously in their fight against cross-infection.

I am grateful for that suggestion and I would be more than happy to look into it. I could not agree more that we should look at anything that will recognise the big contributions made by many people in this country in relation to clinical care—for example, nursing, midwifery and so on. I could go on and share with the Committee the innovations that have happened over the past 60 years.

To address some of the issues raised by the noble Earl, Lord Howe, in relation to private sponsorship, I cannot see any reason why, by establishing these prizes, we will not just work in partnerships in future but even attract funding. The distinction of these awards could be so great that people in the private sector and other sponsorships may wish to work with us. Many competitors in other sectors have previously been collectively willing to spend 10 to 16 times the cash value of a prize on relevant research to meet the objectives. The best example would be the X PRIZE Foundation in 2007.

I remind the Committee that the NHS has started to recognise its staff. We have the health and social care awards, which recognise achievement in the NHS. There are prizes to recognise a significant challenge and a significant achievement, such as the example of Peter Mansfield’s achievement. On many occasions we have debated the challenges that the health service will face over the next decade. Most of us are fully familiar with the ageing population, long-term conditions and lifestyle diseases. There are many challenges out there. If we can encourage our innovators to think about solutions for those major challenges, that will be money well spent.

I will return to backfill. Historically, most researchers who have received sums of money of this type have invested that money in further research. There are many examples of this. The seven Nobel Prize laureates for physiology and medicine who worked in the NHS are a good example of how that funding maintained and continued their research.

I have addressed how the expert panel will be constructed. As I said, we need expertise from outside to help us determine who these experts are, but not just to do the assessments. Let us not forget that the challenges need to be decided. It is not for me and the Department of Health to do that. It is for the expert panel to decide the challenges that will have the biggest impact on the health service. I believe that I have answered most of the issues raised by the noble Earl, Lord Howe. I very much hope that I have reassured him and that I have the support of the Committee in pushing this culture of innovation in the health service.

I thank the Minister for his reply. I know that I am a miserable old Tory Scrooge—I am sure that the noble Baroness, Lady Tonge, is right to berate me on that score—but the Minister gave me an entrée into something that I was going to say anyway when he talked about the need to ensure that innovation was adopted. That is the challenge that the noble Baroness, Lady Murphy, spoke about as well. It says to me that innovators really desire not so much a pot of money to reward them for their work but to see their innovations used widely in the NHS and quickly to improve patient care. In fact, it is as well to recall a passage from what the Health Committee in another place wrote in 2005:

“The UK is a world-leader and centre of excellence for the development of new medical technologies, but it lags behind many countries in the implementation of these innovative products”.

Therefore, we need better incentives designed to encourage the uptake of those innovations.

The noble Lord will know that, even today, there remain a whole host of innovative treatments, tools and therapies that the NHS is not adopting rapidly enough. I have a number of examples. One is new therapies for rheumatoid arthritis, where the UK lags behind other countries in adopting new drug treatments. Another is a tool called C-PORT, a wonderful innovation that improves access to cancer medicines and enables services to be planned better but at present not all hospitals with chemotherapy centres have taken advantage of it. There are all sorts of new diagnostic tests where the UK has been held up as a bad example among European countries for the rate at which we adopt them.

I am not sure—I would be delighted to be proved wrong—that the prize scheme will make a difference to those sorts of things. The noble Lord mentioned a number of government initiatives in this area, and I note all that he said. I could add one or two more in the review that he published that could do a good job of encouraging uptake, such as the CQUIN schemes. CQUIN is nominally designed to incentivise innovation, and could be used to encourage the system-wide uptake of innovative treatments and therapies. Were you to mandate the national adoption of CQUIN schemes, if they were specifically designed in the way that I have described, you could have a big impact on encouraging innovation across the health service.

I do not propose to draw out the debate any longer. At heart, there is a fair degree of agreement among us. I still have a number of niggling doubts about the prize fund. It could lever in some private money on top, which could be very positive, but I note from the impact assessment that the Government regard it very much as an experiment, the results of which they will evaluate in due course. Let us leave it on that basis and wish it all the best.

We move to Part 2 and the clauses relating to trust special administrators. I am moving Amendment 72 and speaking to Amendment 76, and it will be apparent from these amendments that I am not happy with the provisions in this part of the Bill as they relate to foundation trusts.

When foundation trusts were established, it was made clear by the Government that they would be a completely different sort of entity from a standard NHS trust. Although remaining part of the National Health Service, they would cease to be subject to performance management by strategic health authorities; they would be granted considerable operating and commercial freedoms; their governance would be totally different from that of an NHS trust; they would not be subject to the Secretary of State’s powers of direction; their fixed assets would be transferred to independent trustees; and they would be regulated by a dedicated new body quite separate from the Department of Health. The regulator we now know as Monitor would be responsible for authorising foundation trusts in the first instance, and would remain responsible for the oversight of their finances and performance from then onwards. The whole raison d’être of foundation trusts was therefore to distance the management of health services from Ministers and devolve decision-making to a local level, to transfer risk and to set NHS management free from top-down political diktat.

The Bill which passed these provisions into law became the Health and Social Care (Community Health and Standards Act) 2003. At that time, Ministers were quite open about the fact that the failure regime for foundation trusts represented unfinished business and that further legislation would be needed once the mechanisms for a suitable regime had been devised. It was expected that these mechanisms would dovetail with the arrangements set out in the 2003 Act; in other words, that the responsibility for implementing the failure regime for foundation trusts would rest with Monitor.

It has taken the Government the best part of six years to come forward with their final proposals, and what they have come up with is, frankly, a cop-out. The proposals in the Bill overlook the fact that within a very few years the vast majority of, if not all, NHS providers will be foundation trusts. Once this happens, as night follows day, there will be no role for the NHS chief executive as regards running hospitals and no role for strategic health authorities as the performance managers of hospitals. Almost the entire provider arm of the NHS will consist of autonomous enterprises subject to independent regulation under Monitor.

Yet what do we find in the Bill? It is as if none of this is even recognised; the tape is being wound back to the beginning. Monitor is being told to surrender its authority back to the Secretary of State, who will then take over. The message that this gives is that Monitor, as the economic regulator for foundation trusts, cannot be trusted to manage the failure regime, nor can it be trusted to fulfil its statutory duty to secure the assets of foundation trusts to maintain services for the NHS. That is a dismal state of affairs. The essential feature of a failure regime should be that the assets that are required for the maintenance of NHS services should continue to be available after insolvency has been declared. Therefore the regime should enable the regulator to step in and control those assets and services. It would do this while ensuring that the rights of creditors were recognised.

That broad procedure is consistent with a good deal of public service regulation in other sectors and other countries. It does not risk hospitals being closed because of financial failure but, crucially, it preserves the transfer of risk from the Department of Health, which these proposals seem to nullify, by offering what amounts to a government guarantee for all debts of all foundation trusts. If the Government now underwrite all the debts of foundation trusts, we need to consider what effect this will have. It is bound to affect, however subtly, the quality of decision-making on the part of management and governors of trusts simply by virtue of the way that they view business risk. Tight and prudent management and the disciplines that go with it, I contend, will be compromised by the existence of this failure regime. If we want to see foundation trusts using their freedoms ever more effectively and creatively, this is definitely not the way to do that.

I said that these proposals were a cop-out. They are also a far cry from what we were being told in 2002. The document published by the department in December of that year called A Guide to Foundation Trusts strongly implied that it would be the independent regulator who would be given powers to intervene in failing foundation trusts, and that in extremis a special administrator would be appointed to wind up the trust. At the Second Reading of what became the Health and Social Care (Community Health and Standards) Act 2003, John Hutton said:

“The new financial and operational freedoms for NHS foundation trusts will not be gained at the expense of other parts of the NHS because that would not be fair or equitable. There will therefore be no unfair advantages for some for which others pay. Peter will not be robbed to pay Paul”.—[Official Report, Commons, 7/5/03; col. 794.]

That is precisely what is happening with this Bill. Unfair advantages are being granted for which others will pay. Peter is being robbed to pay Paul. That is because the freedoms and independence which foundation trusts enjoy are now to be underwritten by the taxpayer. If the taxpayer were ever to end up settling the totality of the bill, it would be other arms of the health budget that would suffer.

I do not expect to get any change from the Minister on this. I very much hope I am wrong, because I view this as a seriously bad wrong turning on the part of the Government. I should make it clear that, in making this case, I have not been prompted in any way by Monitor which—the noble Baroness, Lady Murphy, will I am sure be able to confirm—has stood back from the issue. It is not really a matter for Monitor; it is a matter for Parliament, and therefore I beg to move.

I have no support from Monitor, although I am a member of that regulatory body, to speak on its behalf. Instead, I speak purely for myself today. This represents a terrible back-pedalling, and it is not the first time that it has happened over the past few months. For the chief executive of the NHS to intervene seems to represent a clawing back of powers yet again to the Secretary of State, where we had hoped that we were moving away from that position. I am surprised that the Treasury has espoused this plan because, if a foundation trust with joint capital ventures were to go bust, it would expose the Exchequer to considerable risk. I am rather surprised that when we had provisions that would have moved away from such a risk, this returns us to it.

I am very disappointed. After many months of negotiation, Monitor has stood back because it felt that it was getting nowhere. It is prepared to work within the framework set down in the Bill, but in my view it is a sad day.

What would happen if the noble Baroness had her way? If a trust got itself into trouble, who would fund its liabilities?

I am not sure I can talk about who would fund the liabilities, but certainly we would propose another scheme. In effect, you would intervene to ensure that services to be maintained were probably maintained by someone else. Indeed, Monitor has intervened in this past week in an unsatisfactory hospital to support the change of leadership in a trust where things were going wrong. It has used its powers of intervention far more willingly—though sparingly—than the NHS chief executive uses his powers. An organisation that has its finger on the performance of these organisations, is trusted with widespread intervention powers and is expected to rescue the organisations as we go along, trying to pick up on a compliance basis when they are likely to fail and intervening before they do, should then at the point of failure have to hand over to another system, back to the Secretary of State, for the final administration and interventions. I am surprised by this regime; it is unsatisfactory. I wholeheartedly agree with the noble Earl.

I support my noble friend and the noble Baroness, Lady Murphy, on this. I have a key question: what has changed in six years? Why are we rowing back? My perception of Monitor is that it has been a very effective regulator—as the noble Baroness has said, probably because it has used its powers sparingly but effectively. There has been minimal disruption but we have seen standards improve. When one compares foundation trusts with other trusts, there is no doubt that they excel. What has changed?

I am not sure that anyone other than the taxpayer in the end can bail out a hospital, whether you call it a foundation trust hospital or an NHS hospital. My concern is about procedural matters—the systems and the apparent unawareness on the part of the people who drafted the Bill of the way that things are done for foundation trusts. It is remarkable that under new Clause 65B(2), which is a slightly different bit from the lines the noble Earl referred to:

“An order may be made under subsection (1) only if the Secretary of State considers it appropriate”.

Why the Secretary of State? The Secretary of State has no role in relation to the foundation trusts. Before making the order, the Secretary of State must consult the strategic health authority. Why? It has no relation—

This is not for foundation trusts.

Not for foundation trusts at all? Then that is fine. Maybe the Minister can assure me that it will be Monitor that decides about systems for FTs. I thank him for the clarification.

I will spend a bit of time going through this group, Amendments 72 and 76, tabled by the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, and the question of whether Clause 14 should stand part. However, before I address these issues in detail, I shall set out some of the wider context behind these proposals, which will help frame this debate.

The majority of hospitals and trusts are performing well, providing high-quality services to patients and managing resources effectively. In the few cases where they are not, however, action must be taken. The first step to improve performance should be at a local level through the commissioners, the strategic health authority or, in the case of foundation trusts, through Monitor. In the rare cases where these interventions are unsuccessful, patients and staff rightly look to the Government to take action. It is therefore essential that we have a transparent process in place to resolve failures. The regime for unsustainable NHS providers, set out in Clause 13 and in the subsequent three clauses, is, in practice, the very last step for a provider which has been subject to these previous actions aimed at recovery.

The amendments would have the specific effect of disapplying the whole regime to foundation trusts. Let me be clear at the outset, as I have been saying throughout the Committee’s proceedings, that the process outlined in the Bill upholds the independence of foundation trusts and of Monitor. Indeed, the lack of a completed regime to tackle failure undermines the terms of authorisation that all foundation trusts have, as there is ambiguity about how any instance of failure would be dealt with. The Bill completes the final stage and demonstrates that the foundation trust regime is serious and enforceable.

As a Government, we are committed to the concept of foundation trusts. This is demonstrated by the fact that we have laid down an explicit timetable for strategic health authorities to support eligible trusts to become foundation trusts. Acute and mental health trusts that are capable of achieving NHS foundation trust status are expected to have applied to the Secretary of State by 31 December 2010 to go forward to Monitor to be considered for authorisation.

The process set out in the Bill does not remove any of Monitor’s powers. The same test is used to apply this regime as exists in the current legislation governing the dissolution of foundation trusts. Only Monitor can trigger the regime and request that a foundation trust is de-authorised, and that will remain the case. This would only happen if and when it was satisfied that a trust had failed to comply with a notice under Section 52 of the NHS Act and that a further notice would be unlikely to secure the provision of those services it is required to provide by its foundation trust authorisation. It is Monitor that will trigger the process and say, “We have done everything”.

I will now move to the specific points on insolvency. The Health and Social Care (Community Health and Standards) Act 2003, now consolidated into the National Health Service Act 2006, envisaged an insolvency procedure for NHS foundation trusts, drawing on aspects of the Insolvency Act 1986, but we have never found an appropriate way to take these plans forward. After careful consideration, we have concluded that it is not appropriate to apply an insolvency process to NHS foundation trusts. Fundamentally, insolvency would place financial failure above other considerations such as quality and patients’ interests when the cause of the organisational failure may well relate to a broader clinical issue. We are concerned that an insolvency-based approach, even in a modified form, would not be in the best interests of patients and would not meet the public’s expectation that the Government should step in and assist a failing NHS organisation.

The regime that we have outlined in the Bill allows consideration to be given to the most appropriate long-term outcome for the organisation. This is unlike the existing insolvency arrangements; they present dissolution of the organisation as the only option, which may not be the best outcome for patients and the public locally.

The regime also gives clarity to staff and patients about the process that will be followed, when decisions will be made, and how they can input into the process. Unlike in the insolvency provisions, staff and patient involvement in this process is guaranteed in the legislation. In addition, the process ensures that the Secretary of State’s final decision on the future of services is informed by an independent process involving evidence-based judgments, underpinned by accountability to the public and patients. I believe that this is a better approach.

The majority of respondents to our recent consultation on this approach agreed that it would not be appropriate to apply an insolvency regime to a state-owned healthcare service. For example, the Audit Commission commented:

“An insolvency regime is unlikely to protect the interests of either taxpayer or patient, but we do consider it right that there is a clearly identified regime for unsustainable NHS organisations”.

This has been a useful debate and I thank all those who have taken part in it. I am grateful to the Minister for his reply.

I was not concerned that the independence of Monitor was being interfered with within the framework of its current responsibilities; that was not the focus of my remarks. I am concerned that the Government have not looked creatively enough at the alternatives. I do not know what has led them to conclude that an insolvency regime would be less likely to deliver good value for money for the taxpayer than the alternatives—perhaps we can go into that—but for those who do business now with foundation trusts it is clear that there will be no such thing as an unsecured creditor.

Perhaps I may ask the noble Earl a question in order to assist people when they read Hansard. In the insolvency regime, to which he referred, what would happen where suppliers of services at a local level had outstanding invoices that had not been paid? Is it that as suppliers they may not be paid? What about wages in the trust? What about property liabilities, such as rentals or property held by the trust? Are the outstanding borrowings of the trust at risk in the insolvency regime to which the noble Earl refers? Alternatively, am I completely misunderstanding him and there would be no risk?

The noble Lord does not misunderstand me. There would be risk for some people. One would certainly hope that there would not be risk for the employees of the trust, who would be regarded as preferential creditors. But there would be some risk, which should be priced into leasing contracts and other arrangements that the trust makes currently. That is part of the whole idea of creating this new entity called a foundation trust. I do not think that it is healthy that doing business with a foundation trust should be regarded as a risk-free exercise. That was never meant to be the case.

Part of the significance of all this is the message that it sends out to the independent sector. Not only will it envy the fact that foundation trusts are to be 100 per cent underwritten by the taxpayer, it will also realise that the Department of Health’s view of what constitutes core NHS services does not include it. A medium secure mental health unit run by the private sector is every bit as integral to the delivery of core services as a foundation trust, yet the failure regime applicable to it would be quite different. How confident will the independent sector now be that it has a realistic long-term prospect of playing a significant role in the provision of NHS services? Not very.

Part of the context of the creation of foundation trusts was the desire of the Government to create a plurality of health provision under the NHS umbrella, with providers competing on level terms. I say to the Minister again that the measures outlined in the Bill undermine that aim. Nevertheless, I rather suspected that I was not going to make much headway with these arguments. I note that the noble Lord, Lord Campbell-Savours, is relieved about that. I beg leave to withdraw the amendment.

Amendments 73 and 75 deal with two separate but important issues. New Section 65B(2) of the National Health Service Act 2006, to be introduced under Clause 13, covers the trigger for the appointment of a trust special administrator. It states:

“An order may be made under subsection (1) only if the Secretary of State considers it appropriate in the interests of the health service”.

What does “appropriate” mean in this context? Does it mean that the Secretary of State does not have to consider and reject alternatives before deciding to make an order? One could imagine circumstances in which several options were open to the Secretary of State, administration being one. Most of us, I think, would agree that administration should be a last resort after eliminating other possibilities. Unless the pros and cons of all available options are examined thoroughly and unless administration is seen as not only appropriate but also necessary, I do not think that we will have a recipe for achieving the best outcome either for the NHS or for patients.

Putting an NHS trust into administration, were it ever to happen, would be a highly charged decision in terms of its local politics. I would like to see the Secretary of State legally bound to consider all options before going down that road. I do not say that I know of any case where local party politics have influenced a Secretary of State in a decision surrounding service reconfiguration. But once in a while suspicions of this sort arise and I believe that it is important to take steps to avoid them arising.

It is worth noting that new Section 65B(5) obliges the Secretary of State to lay a report before Parliament stating the reasons for making the order to appoint a trust special administrator. I welcome this but it is important to ensure that the mechanism, which is designed to promote transparency, is used to demonstrate that the logic of the Secretary of State’s decision was inescapable rather than merely persuasive.

Sentiment in a not dissimilar vein underlies Amendment 75: trust special administrators must be independent of Ministers. They must be allowed to act professionally and not be subject to direction, or even the threat of direction, from those who may have a political agenda to fulfil in relation to the failing trust. The trust special administrator must act in the best interests of the NHS, patients and the taxpayer, and he must take his decisions objectively, so far as possible, while taking into account the views of all those whom he has consulted. I repeat that the closure of any NHS hospital is going to be highly politically charged, if it ever happens, and we must protect the process from the possibility of gerrymandering and party-political bias. I hope that the Minister will look carefully at the amendments. I beg to move.

I support my noble friend in stating that administration would be the last resort. That goes without saying. I welcome the fact that in the event of administration a very specific timetable is laid out in the Bill. That is very helpful. My problem with the timetable, though, is that it takes a long time for the Minister or the Secretary of State to reach a final decision. If one takes it in terms not only of the working days but of weeks, which would include weekends and bank holidays, it could take up to five months. That is a long time before a final decision is made, and the people who are working in the trust and those who use it are left dangling, not knowing what that decision will be.

The Bill also states that at the end of those five months the Secretary of State may say to those people, “I’m very willing to reinstate you”. If I was a chairman or a member of the board and after five months was offered a return to my job, I would say, “Stuff your job”. I would be very upset about it.

I can see that this is very unlikely to happen, but we need to ensure that the legislation is precise. Will the Minister consider whether there are any methods to shorten the timescale so that it is not as long as five months? That would mean reducing some of the consultation and so on in terms of working days, but it would be preferable.

When there is a reconfiguration issue, the independent reconfiguration panel is brought in. We know that on some occasions the panel has overturned the proposals put forward by the strategic health authority. So the Secretary of State will have two sets of advice, one from the independent reconfiguration panel and one from the special trust administrator. I wonder whether that is a clear way forward or whether it could cause quite a bit of confusion. Perhaps there needs to be something in legislation to clarify the roles of each so that the Secretary of State is not left with conflicting advice, which would be unhelpful for those who were subject to administration.

Amendments 73 and 75 seek clarification on how the powers will be used in relation to triggering the regime and the powers to direct the trust special administrator. Amendment 73 seeks to limit how the Secretary of State could use the provisions outlined in the Bill.

In drafting the legislation, we have drawn on the existing text in the National Health Service Act which relates to orders dissolving NHS trusts, where the test for making the order is that the Secretary of State considers it,

“appropriate in the interests of the health service”.

The amendment removes some of the flexibility that exists in the application of the regime. Using “necessary” rather than just “appropriate”, as the amendment proposes, imposes a higher standard before the Secretary of State can appoint a trust special administrator. This means that if there were other options for addressing a trust's problems that were deemed to be appropriate, the appointment of a trust special administrator could not be said to be necessary, even if doing so might offer the best outcome. The noble Baroness, Lady Cumberlege, mentioned that in terms of timings and appointments. We do not want to be prevented from using the regime where it is most needed.

Let me clarify what we mean by “appropriate”. The established term, used in existing legislation, is,

“appropriate in the interests of the health service”.

In making the decision, the Secretary of State will be guided by the principles of the regime, particularly that patients’ interests must come first. That is a judgment that the Secretary of State will take into account with other relevant factors.

As I have said, the vast majority of hospitals and trusts are performing well, providing high-quality services to patients and managing resources effectively. Where they are not, interventions will have to be made through the NHS performance framework or Monitor’s compliance framework. In the very rare cases where these interventions are unsuccessful or the strategic health authority is not able to get plans agreed on how to address the situation, that may include recommendations from the independent reconfiguration panel, which I believe comes well before a trust reaches the stage when a trust special administrator might be appointed.

Let me also reassure noble Lords that these provisions outlined in the Bill will not simply be used to tackle management issues; earlier stages of performance intervention will address such issues. They might, however, be applied to address fundamental, perhaps systemic issues, where local interventions have not been successful.

Amendment 75 attempts to make it clear that the Secretary of State is not able to direct the trust special administrator with regard to the preparation of the draft report, the consultation process, or the final report. Let me reassure the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, that I understand their concerns. For this reason, I would like to place it on record that although the Secretary of State has general powers of direction in the 2006 Act, this applies only to direct the trust itself and not to direct the trust special administrator. The Secretary of State has no powers of direction on the outcome of the trust special administrator’s final report.

The Secretary of State will issue guidance under new Section 65N, but this will act as an aide to the trust special administrator. It will cover general issues in relation to persons to be consulted, the factors to be taken into account and relevant publications to consider when preparing reports and information on the publication of notices. It will not be an instrument for dealing with specific cases, as trust special administrators will be required to use their judgment to adapt to the individual situation.

The noble Baroness, Lady Cumberlege, referred to the independent reconfiguration panel. That panel plays an extremely important role, as we know, in advising the Secretary of State. I acknowledge that many local reports have ended up with the independent reconfiguration panels, and some have been rejected. The trust special administrator’s guidance will make that information available if the independent reconfiguration panel has carried out a review and that review has not been implemented, as a result of which the trust has ended up in the failure regime.

I hope that I have been able to give sufficient explanation and background to allow the noble Earl to withdraw the amendment.

I thank the Minister for his reply; I shall have to read in Hansard the first part of it, which I did not totally follow—the part that referred to the difference between “necessary” and “appropriate”. I must admit that I got confused when listening to him. That is not his fault, but it is important that I totally understand what he is saying.

However, I cannot help observing—I hope that the Minister will take this point away—that he mentioned that the wording in this part of the Bill is modelled directly on the wording of the 2006 Act. It is worth noting that although the Secretary of State needs only to consider it “appropriate” to make an order appointing a trust special administrator, Monitor under new Section 65D must be “satisfied” that the foundation trust is failing and likely to continue to fail. I suggest that that is a much stiffer test for Monitor. I wonder why the Government have not put the two on an equal footing.

I shall just pick up one other point that the Minister made. He said that the Secretary of State did not have power to direct an individual, only the NHS body. In that case, I wonder why new Section 65H(7) refers to the Secretary of State directing the administrator. I am not taking issue with that provision, because if there are people whom the Secretary of State believes that the administrator should consult, he should consult them, but it does imply that there is a power of direction.

The Secretary of State can direct the trust special administrator on how to consult. That is only a power of direction rather than a power over the trust or the report of the trust's special administrator. The Secretary of State has no power over the report itself, but he has power to direct the trust special administrator on issues of consultation and process.

I understand and I am grateful to the Minister for that clarification. I beg leave to withdraw the amendment.

I shall speak at the same time to Amendments 77, 78 and 80. The amendments can be dealt with very simply. They are all to do with who is consulted on what and when. In new Section 65B(4), before making an order to appoint a trust special administrator, the Secretary of State must consult a number of people. He must consult the trust, any SHA in which the trust has facilities and the trust's customers.

No mention is made there of the staff at the trust, and I ask the Minister why that is. No one would deny that the most important people in this equation are the service users—the patients—but we need to remember that there are others with important rights here, and those are the people who work for the trust and provide the services which, in the circumstances envisaged, would be under threat of closure. Those are the people whose jobs are at risk. There is a strong case for putting the staff in the Act as statutory consultees. For the same reason, the staff of a foundation trust deserve to be consulted by Monitor before it gives the Secretary of State a notice that would serve to put the administration process into motion.

Again, later on, when the trust special administrator prepares his draft report, provision is made in new Section 65F for him to consult any relevant strategic health authority and the service users, but no mention is made of the staff of the trust. That is wrong. The employees have a highly relevant interest in what the report recommends and their views should be heard.

There is another dimension to the consultation issue, which relates to foundation trusts. In new Section 65D we find that, before giving a notice to the Secretary of State that a foundation trust is failing and is likely to continue to fail, Monitor must consult the trust, any relevant SHA and the trust’s service users. I have already mentioned the absence of staff in that list, but in the context of a foundation trust there are surely others with an extremely important set of interests who are not referred to here.

The first group is the board of governors—in other words, the group of individuals who are elected to represent the members. We should remind ourselves that the members of a foundation trust are its local owners. The second group not referred to is the trustees of the fixed assets used by the trust. Again, we need to remind ourselves that under Section 51 of the NHS Act 2006 provision is made for trustees to hold trust property on behalf of the foundation trust. We would surely wish to say that these people would have a relevant interest if ever there were a question of their fiduciary duties being affected by the appointment of a trust special administrator. I hope that the Minister will at least wish to give careful thought to these amendments, and I beg to move.

The effects of Amendments 74, 77, 78 and 80, tabled by the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, would be twofold: Amendments 74, 77 and 78 would add requirements to consult staff, governors and trustees prior to the trust special administrator being appointed, while Amendment 80 would require the trust special administrator to consult staff when preparing the draft report. I understand why the noble Earl and the noble Baroness have tabled the amendments and I could not agree more with the sentiments behind them. Having worked in the NHS for many years, I passionately believe that achieving high staff morale through effective engagement is central to obtaining high-quality care in the NHS. I also believe that many of the staff have the solutions. That is why staff engagement is one of the essential principles of this regime.

My understanding is that when a trust becomes unsustainable it will, understandably, be an extremely unsettling time for the staff. To help address that point we have designed the regime to produce a swift resolution while ensuring that staff are engaged throughout that process. I want to place on record that the staff should be engaged through the process, and that essential principle will be further strengthened in the statutory guidance that we will produce.

Amendments 74 and 77 would require staff to be consulted prior to the appointment of the trust special administrator. It is important to consider who would be the most appropriate person or body to engage with staff at that stage. The Bill includes a requirement for the Secretary of State for the NHS trust, or Monitor for a foundation trust, to consult the trust prior to the trust special administrator’s appointment. In turn, we would expect the organisation in question to engage its staff prior to that appointment. It would be most appropriate for the individual trust or foundation trust to do so. The Secretary of State, or Monitor, should not bypass the existing leadership of the trust or foundation trust at that stage, which is probably quite a sensitive stage. We have built in a delay of up to five working days between the announcement of the trust special administrator and them taking up their post to allow time for staff in the organisation to be briefed on the issue, to understand how the process will work and to understand how they will be able to engage with and influence it. Once the trust special administrator is appointed, they will communicate to the staff about their role and, again, will set out how individuals can input into that process.

I welcome the Minister’s reassurance as to what he expects to happen prior to and during an administration as regards who is consulted and when. Nevertheless, it still seems a little odd that some of the key groups which he recognises are important are not mentioned specifically in the Bill as consultees. I hope that the words he has just uttered will be noted. If ever there is a time when, sad to say, an NHS trust is put into administration, I can only trust that this will happen and that Ministers at the time will ensure that the good intentions the noble Lord has outlined are carried through. For now, however, I beg leave to withdraw the amendment.

Continuing with the theme of consultation, the three amendments in this group would include the Care Quality Commission within the scope of the Secretary of State’s consultation, first, for the appointment of a trust special administrator; secondly, for the giving of a regulator’s notice by Monitor in the case of a foundation trust; and, thirdly, in the preparation of a draft report by a trust special administrator which recommends the appropriate remedial action to the Secretary of State.

There is a strong argument that as the main regulator of quality in health and social care, the Care Quality Commission needs to be included in the list of those to be consulted. If the trust is failing on grounds of the quality of the services it provides, which is likely to be the case in most instances, the CQC needs to be consulted in order to advise on the decision to appoint a trust special administrator. The CQC, in carrying out its duty to make an assessment of the current quality of services, will have important information which may be critical in reaching the very important decision. The CQC is likely to have been involved in the earlier stages of managing the failure through its duty of registration, which may be followed by enforcement action. Again, it will have information to inform the decision.

The processes of registration and of managing serious failure through appointing trust special administrators are inextricably linked and this escalation needs to be smooth and co-ordinated. To enable that, the CQC needs to be involved in the whole process, which I think needs recognition in primary legislation. Once the trust special administrator is appointed and has published a draft report stating the actions he or she recommends to the Secretary of State, there is a 30-day consultation period of the plan. While a number of other relevant organisations must be consulted—we have already discussed staff—I find it really surprising that it does not include the Care Quality Commission. The CQC should be included on this list because any changes made to services would involve it in varying the registration of those services. We could easily land ourselves in the unfortunate position of a trust special administrator proposing a reconfiguration which the CQC found to be unregistrable.

I can understand that the Minister may wish to argue that if this exception is made it may open the floodgates to many other organisations which wish to be a statutory consultee. However, in my mind, none would seem to be quite as relevant as the CQC, with its special duties and the information it possesses. Alternatively, the Minister may argue that the CQC would be consulted as a matter of course. However, given that the CQC will be inextricably linked in these processes, it seems sensible to eliminate doubt and to make it clear in the Bill. I beg to move.

Amendments 74A, 78A and 80A, laid by the noble Baroness, Lady Cumberlege, would require the Care Quality Commission to be consulted before a trust special administrator is appointed and in the production of the draft report. Let me begin by making it clear that the CQC will play a vital role within the overall quality framework and in our reform agenda more broadly. The CQC, through its statutory functions, has a key improvement role in terms of demonstrating solid improvement in the safety and quality of care over time. Done well, the CQC’s registration and assurance roles, which demonstrate that providers are getting the essentials right and taking independent enforcement action to bring them back into compliance where they are not, have very real potential to shift the improvement bell curve on a permanent, sustained basis and to drive real local ownership and leadership for quality.

Amendments 74A and 78A would add a requirement for the Secretary of State in the case of NHS trusts, and Monitor in the case of foundation trusts, to consult the CQC in advance of the trust special administrator being appointed. The CQC will be aware of any quality issues that result in unsustainability from its ongoing assessment and registration process. In the case of NHS trusts, discussions are currently under way between the department and the CQC on how registration and assessment can feed directly into the NHS performance regime.

The decision to enter an organisation into an unsustainable provider regime is a performance management issue. Any quality assessment made by the CQC is likely to affect that decision, but the decision to trigger the regime is a performance management one. This is why the Secretary of State and Monitor consult only the strategic health authority and relevant commissioners. It is likely to be the last stage in a long stream of interventions, some of which, in terms of quality, may actually have been made by the CQC.

It is important to be clear that at the moment of appointment, the trust special administrator makes no decision about the organisation’s future and existing services are all maintained. A decision will not be made until approximately six months later, after the trust special administrator has had an opportunity to research the issues and consult on the proposals, and has made a recommendation to the Secretary of State. The appointment itself has no impact on the provision of services or on quality so there is no need for the CQC to be directly involved before the trust special administrator is appointed.

If the CQC has concerns about quality of services at any time, it will be able to raise these with the Secretary of State through powers in the Health and Social Care Act 2008. The provisions do not change this.

Therefore, I am happy to offer reassurance that, were the regime to be triggered, my right honourable friend the Secretary of State, in addition to laying a notice in Parliament, would also notify the CQC of this action.

Amendment 80A places a requirement on the trust special administrator to consult the CQC when preparing the draft report. I recognise the concerns that have been raised, highlighting that unsustainable organisations are likely to have quality issues, particularly as there is often a link between poor quality and financial problems, but this is not always the case. Indeed, the Healthcare Commission’s annual health check identified several organisations that scored “good” on quality of services and “weak” on the use of resources. This demonstrates that it is possible that some organisations may fall into the unsustainable provider regime for solely financial reasons. In these situations it may not always be appropriate for the trust special administrator to be required to consult the CQC in producing a draft report.

I know that this is probably infringing the Addison rules yet again, but so be it. The point that needs to be drawn out on Amendment 80A is not necessarily that of the CQC’s role as the quality regulator but the fact that it has to register the pattern of services to be permitted to operate. If the pattern of services proposed by the special administrator was one that the CQC did not find registrable, it would therefore be at odds with the special administrator’s proposals. It seems to me that the amendment of the noble Baroness, Lady Cumberlege, avoids the risk of the special administrator coming forward with something that the CQC did not find registrable. It would be unfortunate if the special administrator put a proposal to the Secretary of State that was challenged by the quality regulator during the consultation period on the ground that he considered it was not sustainable.

I am trying desperately to think of an example. A special administrator could come forward with a proposition to dissolve the services of a trust and reconfigure them into a different configuration with other trusts that the regulator did not feel were capable of being carried out at the requisite level of quality because it already had doubts about the trust or felt that the guidance given by a particular professional body, or by NICE or other independent source, militated against the proposed configuration being a good one. It is better to avoid to avoid that sort of debate arising after the special administrator has put forward his proposition rather than before. Indeed, the noble Baroness, Lady Cumberlege, has rightly pointed out the issue.

I am grateful for the intervention of the noble Baroness in relation to the CQC’s role after a draft report has been issued by the trust special administrator. New Section 65N makes it clear that the guidance will make reference to,

“(a) persons to be consulted;

(b) factors to be taken into account;

(c) relevant publications”.

I expect the trust special administrator to engage directly with the CQC where appropriate, and the guidance will support that. However, the issue is whether the trust special administrator should consult the CQC before the report is published. The noble Baroness makes the important point about the service in question being registered; I cannot see the logic of the administrator not consulting the CQC while the draft is being put together to ensure that it at least has the buy-in of the regulator before the report is published.

I think that I made it clear that once this is triggered, it is a performance rather than a quality issue, but if the report concerns reconfiguring services, no doubt bodies such as the independent reconfiguration panel will have more information about how services should be run. I hope that through the process itself, a high regard will be given to the registration requirements of the regulator before the draft report is put together—not only the regulator, but also the commissioners involved in issuing it.

I hope that my explanation about the operation of the scheme reassures the noble Baroness. I have no doubt that we shall debate this further, but I hope that she will feel able to withdraw the amendment.

I thank the Minister for that response, and I thank the noble Baroness, Lady Young, for her intervention. I am also grateful for the information about the notification issue. I understand the noble Lord’s reluctance concerning the appointment of a trust special administrator, and that may be something I need to reconsider. In return, perhaps the Minister will take away his last thoughts on the registration issue. It would be a good idea to get that clarity into the Bill so that we all know where we stand. I beg leave to withdraw the amendment.

In moving this amendment, I descend once again and with some apologies into the realms of drafting. I do not understand why throughout new Chapter 5A of the 2006 Act, an NHS trust is referred to as an “NHS trust” except on line 14 of page 12, where suddenly it is referred to in its unabbreviated form as a “National Health Service trust”. I hope that the Minister can enlighten me on why this should be, and I beg to move.

This is the lawyers at their best. Amendment 79 is a technical amendment to replace the words, “a National Health Service” with the words “an NHS” when referring to de-authorised foundation trusts. The drafting of the Bill and the use of the full title is intentional, as new Section 65E of the National Health Service Act 2006, to be introduced under Clause 13, creates an entirely new type of National Health Service trust; that is, a trust that used to be an NHS foundation trust and was not established in the usual way by order of the Secretary of State.

In these circumstances, the full National Health Service trust title is used in new Section 65E(4) for two reasons. First, the term “NHS trust” is just a shorthand way of referring to National Health Service trusts, so I am advised that it is appropriate that the first time we refer to this new species of National Health Service trust, we use the full designation and not the shorthand title. Secondly, Section 25 of the National Health Service Act 2006, which provides for the Secretary of State to establish National Health Service trusts by order, uses the full designation. New Section 65E(4) will do a similar job for the new type of National Health Service trust to the job done by Section 25 of the Act for ordinary trusts. They both provide for the creation of a type of National Health Service trust and the full designation is appropriate.

I should also point out that Clause 16(9) amends the interpretation provision of the 2006 Act. This is so that the shorthand references to “NHS trust” elsewhere in the Act include both trusts established under Section 25 of the Act and those created by new Section 65E. This ensures that the provisions of the Act governing NHS trusts apply to the de-authorised foundation trusts.

I hope that that careful, complex explanation will allow the noble Earl, Lord Howe, to withdraw his amendment.

I am glad I asked that question. We have discovered a new species, which must always be a good thing. I am grateful to the Minister for enlightening us as he has. I beg leave to withdraw the amendment.

I mentioned earlier that when the Secretary of State makes an order to appoint a trust special administrator, he must lay before Parliament a report stating the reasons for making the order. In the same way, I believe that there is a strong argument for insisting on transparency when the Secretary of State takes a decision in the light of the report that he receives from the trust special administrator. That report will contain a recommendation for certain action to be taken. The Secretary of State will either accept that recommendation or not accept it. In either case, I believe he has a duty to explain his reasons.

New Section 65K obliges the Secretary of State simply to publish a notice of his decision and lay a copy of the notice before Parliament. I stand to be corrected on this, but I believe that the notice will say nothing of the rationale that lies behind it. Of course, the administrator’s final report will already be in the public domain, as we see from new Section 65I. If the Secretary of State decides to follow the recommendation in that report, he need only cite as his reasons for doing so those which the administrator has himself given. If on the other hand the Secretary of State decides to follow a different course, what then? Are we to fall back on the Freedom of Information Act before being able to discover why? That does not seem satisfactory when one considers what a highly charged decision this will be in political terms.

I would be grateful if the Minister could tell us why in this part of the Bill there is an apparent lack of transparency in the sense to which I have referred. I beg to move.

Amendment 81 requires the Secretary of State to lay a report before Parliament along with the notice of his final decision. Having listened carefully to the concerns raised, I hope that I can assure the noble Earl and the noble Baroness that the amendment is not necessary and set their minds at rest.

First, the Secretary of State has a duty to take into account the report of the trust special administrator when he makes his final decision. In making the decision, the Secretary of State is under a duty to act reasonably and to take into account any relevant information in doing so in accordance with the ordinary principles of public law. He will have to have good reasons for departing from the trust special administrator’s recommendations.

The Bill requires the Secretary of State to publish the trust special administrator’s final report and lay both the draft and final reports before Parliament. It also requires the Secretary of State to lay the decision before Parliament, which means that Parliament will of course be able to scrutinise this decision through its usual mechanisms. I hope that I have been able to reassure the noble Earl and the noble Baroness that there is a duty on the Secretary of State to lay the draft and final reports of the trust special administrator as well as the decision before Parliament.

I thank the Minister for that reply, which partially reassures me. I am always anxious to spare Ministers the prospect of judicial review. If we can arrange things so that the law obliges Ministers to be as transparent and open as possible about the reasons for their decisions, it will avoid unnecessary heartache, effort and expense for those who object to those decisions. I take the point that Parliament will be able to scrutinise the decision. It would be helpful to Parliament if there were an explanation of the Minister’s decision published at the same time as the decision itself. Nevertheless, I note what the Minister has said; I do not think that there is anything more I can add, and I beg leave to withdraw the amendment.

We move now to Part 3, the provisions relating to tobacco control, and I raise a question in relation to Clause 18. The Tobacco Advertising and Promotion Act 2002 included an explicit exemption for specialist tobacconists from the legislation banning advertising. It did so subject to three conditions: that the advertisement had to be inside or fixed to the outside of the premises; that it could not be for cigarettes or hand-rolling tobacco; and it had to comply with regulations governing advertising in specialist tobacconists. Clause 18 removes this explicit exemption by giving the Secretary of State the power to decide whether the exemption should remain. In other words, it removes the existing certainty for specialist tobacconists under the 2002 Act. Questions need to be asked about why the explicit exemption currently in place needs to be removed and why the existing power to make regulations under the 2002 Act is insufficient. The Explanatory Notes shed no light on these issues.

I support my noble friend on the Front Bench. I do not want to be repetitious but if you are running a specialist tobacco shop you must have a degree of certainty about the future. The one thing you cannot have when taking a new lease, extending a lease or entering into contractual arrangements with anyone else is a situation where it is entirely at the whim of the Secretary of State to amend the regulations. As it stands in the existing tobacco Bill, the matter is quite clear and such forward planning is possible. Under what is proposed here, it is not possible, and that is desperately unfair to anyone trying to run a business.

The clause, together with Schedule 4, replaces the automatic exclusion for specialist tobacconists from existing legislation on tobacco advertising currently provided by Section 6(1) of the Tobacco Advertising and Promotion Act 2002. It instead enables the Secretary of State, Welsh Ministers and the Department of Health, Social Services and Public Safety in Northern Ireland to make separate regulations on when and where tobacco specialists, as defined by the Tobacco Advertising and Promotion Act 2002, may be exempt from the prohibition on tobacco advertising.

The current provision in the Tobacco Advertising and Promotion Act 2002 provides an automatic exemption for specialist tobacconists from all the prohibition on advertising specialist tobacco products on their premises. That means tobacco products other than cigarettes or hand-rolling tobacco, such as cigars and pipe tobacco.

In line with the proposed prohibition of tobacco displays, the Government’s overall aim is to remove all promotion or advertising of tobacco that is regularly accessible to children. It would be inconsistent to remove tobacco displays from all other shops but to allow specialist tobacconists to continue with a blanket exemption, but we are mindful of the need to take a proportionate approach.

The clause will allow the Government to extend existing rules on tobacco advertising to specialist tobacconists, while still being able to exempt them where that is deemed appropriate. The Government’s intention is to maintain the general exemption but the power would enable us, for example, to prohibit advertisements outside specialist tobacco shops or in shop windows where these are in view of the general public, including children and young people.

Our intention is that specialist tobacconists will still be able to advertise tobacco products other than cigarettes or hand-rolling tobacco and display tobacco products inside their shops. We understand from our contact and discussion with the specialist tobacco industry that approximately 50 shops in England fall into this category. We also understand that many specialist tobacconists have voluntary policies in place not to admit persons under the age of 18 on to their premises. That is a highly responsible practice that the Government would encourage across the specialist tobacconist sector. We also understand from the industry that the majority of customers of specialist tobacconist shops, a very stable customer base, are aged between 36 and 60 years of age, and generally have already decided to purchase specialist tobacco products, such as pipe tobacco or cigars before entering the shop.

We will work with representatives of the specialist tobacco retail trade to develop the detail of how the powers will be used in practice. Any requirements would be introduced with a long lead-in time and would not come into effect until 2013, in line with display requirements for smaller shops. We intend that regulations made under this new provision will help to ensure that children are effectively and comprehensively protected from the promotion of tobacco, while ensuring that any restrictions on specialist tobacconists remain proportionate to the problem.

For these reasons, we consider Clause 18 to provide a vital element of the new tobacco controls proposed in this Bill, without which the overall package on removing tobacco displays would be incomplete. I therefore recommend that Clause 18 stand part of the Bill.

I thank the Minister for her reply. I still do not quite understand why the existing provisions in the 2002 Act, which enabled Ministers to make regulations, are not sufficient for the purposes that she outlined.

I think that I have given a reasonable explanation. We intend to consult and are indeed in discussion with the Association of Independent Tobacco Specialists. We want to be sure that the prohibition of tobacco advertising intended to protect children and young people from the promotion of smoking is comprehensive. Therefore, we need to consider the regime that covers independent tobacco specialists, but we are doing that in consultation with them. The clause would still allow advertising outside their shops.

That is nonsense. There is an existing provision; we have 50 outlets; the age group who go in to the outlets are in their mid-30s or beyond, into their 70s. In any case, the ministry is consulting. No young people go into those shops. I suppose someone sitting in the ministry wants to achieve this for pure tidiness, but it is nonsense and I hope that the Government will think about the provision once again before Report and perhaps withdraw it.

There are only 50 shops. Did I hear that right?

Yes.

Are we not taking a rather large hammer to hit a very small nut? It seems absurd that the Government are legislating in this form for 50 shops. Is that 50 shops in England, in England and Wales, or in England, Wales and Scotland? This really is absurd and brings the legislation into disrepute.

Having spoken with newsagents, what comes across to me is their concern about the amount of bureaucracy involved in their work. It would be helpful to minimise that bureaucracy as far as possible, which might make newsagents more sympathetic to the necessary regulation in regard to, for instance, children.

How is the consultation with the 50 shops proceeding? Is it proceeding slowly or quickly? What is under discussion?

We have had a series of discussions with the whole of the tobacco industry and retailers. The 50 shops are in England only. We propose to take regulation-making powers to restrict advertising on the outside of the shops that might be seen by children. For very many shops, nothing may change at all.

I beg the noble Baroness’s pardon but she has not answered my question. What is under discussion? Does it involve anything different from what is already being done?

When we make regulations there will be a formal consultation process, as the noble Baroness will know. As I said, we have had several conversations and consultation with the specialist tobacco industry, partly to reassure it that, as long as it is fulfilling the overall aim not to have tobacco products visible to children, nothing will necessarily change at all.

We are talking about 50 shops. How many children will see these advertisements, or whatever they may be, in those 50 shops? Where are they? I do not know how many towns there are in the country. There must be hundreds, if not thousands, if you include hamlets and villages. I do not know why the Government are putting further burdens on specialist tobacconists—they are already covered by the law anyway—through a clause in a health Act. I simply do not know what the Government are about. I hope that they will agree to take the measure back and have another look at it.

This has been a useful short debate. I am grateful to the noble Baroness for her answer although I share the scepticism of the noble Lord, Lord Stoddart, as we are dealing with a very small number of outlets. I say to the noble Earl, Lord Listowel, that we are not dealing with newsagents in this part of the Bill but with specialist tobacconists, which comprise a very different sort of outlet. I shall read the noble Baroness’s reply in Hansard before deciding what more should be done about the clause. However, in the interests of expedition, it is time to move on.

I shall speak also to Amendments 83 and 84. These amendments are designed as a means of asking the Minister how she believes the proposals for so-called “requested” displays of tobacco products will work in practice. A “requested display” is defined in new Section 7B as being,

“a display to an individual following a particular request by the individual to purchase a tobacco product, or for information about a tobacco product”.

The individual concerned must be 18 years old or over.

All kinds of questions rear their heads in this context. For example, in the regulatory impact assessment, the Government have suggested that a curtain could be used to hide tobacco products. If a parent requests to view tobacco products at a supermarket but is accompanied by their child, is the retailer allowed to comply with the request? If a customer asks for a tobacco product in a small shop while schoolchildren are present, what should the retailer do? In a busy supermarket it is also likely that requests for tobacco will be made every minute, or even more frequently at peak times, and displays will therefore be almost permanently on view, unlike in small shops. Would that be legally acceptable? If a retailer were to employ someone aged over 18 whose job it was to peruse products over long periods, would this be a means of circumventing the legislation? How long would a reasonable period be for viewing products prior to purchase? In thinking about questions of this kind, I cannot help feeling that the provisions here are a nonsense; they will be unworkable.

Another aspect is the underlying principle involved. Part of the Government’s aim is to denormalise smoking and thereby to denormalise adults who choose to smoke. I hate the word “denormalise” but that is the one that is bandied about. How reasonable is it in pursuit of that aim for an individual to be forced to request to view a product which they can legally buy? Can the Minister cite an example of any other kind of product where this rule applies? We have to keep reminding ourselves that the buying and selling of tobacco is perfectly legal. Why should someone who wants to buy a legal product have to make a special request to view it? We will come on to the wider principles at play in Clause 19 in a moment, but the whole idea of wanting to humiliate smokers—which is really what this amounts to—is neither civilised nor proportionate. Before we go any further, the Minister needs to explain to the Committee why this odd device of a requested display has been put into the Bill. I beg to move.

I fully understand the points made by the noble Earl, Lord Howe. I hope the Minister has got an answer—goodness knows what—to the difficult points that he has made.

Sir Liam Donaldson, in his report last year, Smokefree England—One Year On, said that the ban on smoking in enclosed public places, which began in 2007, had been a great success in terms of both compliance and improved health. That is one of the most basic reasons, especially when there is going to be a review next year, for asking the Government a number of questions on this part of the Bill, including what is the basis for at this point going further and requiring restrictions of some kind.

On the matter raised by the noble Earl, surely his example of an adult and a child together at a supermarket is illustrative of how fantastical it would be if Clause 19 went through without any amendment. The business of trying to distinguish between adults and those under 18 in deciding whether a display should be permitted is fantastic and unworkable. However, I am not in favour of the noble Earl’s amendment in the sense of wanting it to be passed. I think the best way of dealing with this matter, with arguments that I hope to deploy later but which it would be premature to use now, is through a clause stand part debate.

My noble friend and the noble Earl are right: we will be discussing the substantive issues on clause stand part.

Amendments 82 to 84 would fundamentally change the legislation so that the prohibition on tobacco displays would apply only to those displays seen by children. Displaying tobacco products to children would remain an offence, but display to adults would not be. Although I appreciate that this appears to acknowledge our primary aim of protecting children, it would fail to tackle the secondary aim of helping adults who wish to quit.

The amendments would create an unworkable and ineffective prohibition on tobacco displays. They effectively require that retailers who wish to display tobacco allow only adults on to their premises. That is clearly impractical, as many retailers who sell tobacco, whether corner shops or supermarkets, also sell other products, such as sweets, for which children and young people are major consumers, or are where the whole family shops, as was mentioned by the noble Earl. On the other hand, if the retailer made sure that no child were in his shop at the time, he could display tobacco products, only covering them once a child entered the premises. Clearly both those options raise practical difficulties in enforcement—we have acknowledged that. How could local authorities be sure that a shop was only accessed by adults? What about covering windows through which children could view tobacco displays? What about premises accessed by children but which, when no children are present, display tobacco products to their customers?

That may sound like a more proportionate, targeted approach, but it would be totally impractical to implement or enforce. Our approach is proportionate and effective, only adding burdens to local authorities and business that can be justified by the gain to public health. For the reasons outlined above, I cannot accept the amendment. Regulations under new Section 7B(3) will contain the detail of when requested display seen by someone other than the individual who made the request is or is not an offence. We will cover that in more detail under the Clause 19 stand part debate.

The Government are not seeking to humiliate smokers. It is surely only right—we will discuss this in more detail with evidence that we can present to the Committee—that we should protect children and young people and support adults who want to quit by removing tobacco promotion. We will discuss that further under Clause 19 stand part, so I hope that the noble Lord may feel able to withdraw his amendment.

So we are no further forward at all. The purpose of the amendment was to ask the Minister how on earth these provisions will work. They are unworkable in my view. We have not had an answer from the Minister in any way, shape or form. She took the amendment as being literal, which is a trap that we often fall into in Committee. I would not dream of pressing the amendment or even wanting it to be agreed. The point of it was to probe the intent behind the provision. I am very sorry that the Minister was not better briefed to give me a reply.

It might help if I went into slightly more detail.

As the Bill is drafted, a retailer may display tobacco products to individuals aged 18 or over without committing an offence, provided that the individual has requested that display. The term “requested display” has a specific meaning defined in new Section 7B(8) as a display to an individual following their request either to purchase a tobacco product or for information about such a product. It is only sensible, therefore, as it allows a customer, as is perfectly reasonable, as we have discussed, to handle the product before deciding whether to purchase it. My point was that the amendment would remove the need for an adult to ask to see the product. The Bill effectively enables retailers to sell tobacco in a practical manner. That is our intention. Furthermore, under new Section 7C, we would allow a full price and availability list to be displayed, including what products the retailer carried, allowing the customer to be fully informed.

Section 7B(3) provides regulation-making powers for the appropriate Minister in England, Wales and Northern Ireland to make further exemptions to the prohibition on display. We could use that power to exempt particular businesses if, for example, we were satisfied that they could never be entered by someone under 18. As we have discussed, I understand that specialist tobacconists may fall into that category. I hope that that may help the noble Earl.

I must confess that I am more confused now than when we started the debate. It is difficult legislation to follow. What happens when someone goes into a corner shop near a school at lunchtime to buy tobacco, but a whole crowd of children are already in there wanting to buy sweets, chocolate and other things that make them fat and obese, which is not acceptable these days? If someone asks to see which cigarettes are in stock, does the shopkeeper have to refuse the request or should he say, “Out, children, until I have served this customer”. He would not be allowed to mention cigarettes. It seems that the retailer has either to say to the customer, “I’ll have to serve these children first, although you were here before them”, and for the next quarter of an hour he must dish out sweets and chocolates before he can return to the adult customer who wants to buy cigarettes. He then says, “I can show you what I’ve got now”. Can the noble Baroness explain that to me?

Can I take the comments of the noble Lord, Lord Stoddart, a little further? It is controllable in a corner shop, but not in a supermarket. In my local Tesco, the cigarette counter is near the door, where people constantly go in and out with their children, and just beyond it is where the newspapers are laid out. People do their shopping, pay at the tills and then come to the cigarette counter. But it is also the counter for exchanging and returning goods. On a practical level, I cannot see how this is going to work. My noble friend Lord Howe said that you would have to have curtains, but you would be for ever pulling the curtains back and forth in case a child came to the counter. My supermarket is very busy, so in practical terms I cannot see how this would work.

I, too, have been thinking about how what we have been discussing would work in practice. I imagine that only infrequently would a customer ask to see a packet of cigarettes or tin of tobacco because they had not decided what they wanted. It may happen, but I imagine that it is quite rare. If I have understood the Minister correctly, will there be these difficulties in practice? What we are worried about and what the Bill addresses is the daily occurrence of children going into a newsagent to buy their confectionary and seeing in front of them displays of cigarettes. I am trying to think through what the Minister has said.

The noble Earl has expressed it better than I could myself and he is absolutely right. The majority of adult smokers will simply ask for their usual brand. They will not need to ask either for a display or for prices. The regulations are likely to define the maximum area or number of packets that can be seen, so instead of a huge, brightly lit display of literally dozens of packets of cigarettes of the same brand, a much smaller area will be given over to them. We have included “request to display” in the Bill because it is right that customers should be able to see and handle a product before buying it. For example, in Canada, retailers open a small flap to show tobacco products on request. They can have a small display even if it is seen by other people, including children, because that is permitted under the legislation. The point is to not have what the advertisers call a power wall display. That is the point of this part of the legislation. It recognises the need to show the tobacco product to the potential purchaser, should they so desire. These issues will be discussed as the regulations are developed.

I imagine that the Minister must have been to Canada and seen Saskatchewan. I have had the privilege of going there. Will she tell us how many brands are normally on display in Canada and what the size of the displays is there?

I have not been to Canada, but I do not think I need to have been there to understand what its policies are, any more than I need to have been to South Africa to know what its policies are. We will be discussing the size of displays later, so I will not be drawn into discussing specific details; they will be discussed when we talk about the regulations on how to remove the huge flashing walls of cigarettes and tobacco products that all our children see.

The Minister cannot get away with that. I did not introduce Canada, the size of its displays and the allegedly limited number of brands in that country. How can the Committee come to any considered viewpoint on what the Government are proposing if we do not know with regard to the base condition—which, apparently, is Canada—what size its displays are or what brands are allowed there?

I promise the noble Lord that I will go into greater detail about Canada under clause stand part. He will be satisfied—indeed, he will be bored—by hearing about Canada and the size of its displays by the end of this Committee.

We cannot tell in advance how frequently this procedure will take place and it is idle to speculate how often it will occur, but occur it will. The points that I raised earlier were designed to throw up what I see as severe practical problems in the implementation of this legislation. We have not had any answers to those. We may get some answers as we proceed but it is unlikely that we will get any if we stay on this group of amendments, so it behoves me to beg leave to withdraw the amendment.

Amendment 85 and the consequential Amendments 108, 110 and 111 are intended to probe what the Government mean in new Section 7C in Clause 19 about the display of prices. I crafted the amendments some weeks ago before several trees’ worth of briefing from all sides descended on my desk; they are not the product of any lobby group. Before I talk about the intention behind them, I want to point out to the Committee that in the space of half an hour the words “impractical”, “enforceable”, “proportionate” and “effective” have been bandied around by all sides. That is not surprising; for many of us, the largely regulatory powers set out in this part of the Bill are so vague that we are not able to come to an assessment until we hear more detail from the Government about the extent to which they are practical, enforceable, proportional and effective, in pursuit of the policy that the Minister rightly set out: to protect children from advertising. We all share that aim.

The reason for moving this amendment was to ask the Government what their intention is. What is their reason for seeking to remove the display of a fact—that is, a price for a product that, at the moment, is legal to buy? Can the Minister help me by citing another legal product that is sold not under restricted licence and is treated in the same way? I have been trying to think of an equivalent and I cannot. This is not a sinister set of amendments; they genuinely seek to probe what the Government are trying to achieve by banning the display of a small fact. I beg to move.

Amendment 85 is the lead amendment of this group. The amendments would remove the power for the appropriate Minister to regulate price lists. I assume that the concern behind the amendments is to avoid burdensome regulation and to minimise the potential impact on business of removing tobacco displays by allowing shop keepers free rein to display price lists. However, from previous experience, we consider that there is a very real risk that if displays are removed, the tobacco industry will next turn its attention to exploiting price lists as a means of promoting tobacco products. It has a long record in this respect—when one avenue of advertising is closed down, it opens up another one with huge imagination and very large resources. It is therefore vital that we are able to regulate price lists in order to avoid them being used to undermine the effectiveness of removing tobacco advertising and display.

I can confirm that the Government will enable retailers to display a price and availability list detailing the tobacco products they carry. I can also confirm that we are committed to involving all the stakeholders in the development of regulations in order to minimise new burdens on business, as far as that is compatible with protecting public health.

Department of Health officials are already talking to stakeholders such as the Association of Convenience Stores and the British Retail Consortium. We will conduct a full three-month formal public consultation on draft regulations after Royal Assent. The regulations will be subject to approval by affirmative resolution by Parliament, the National Assembly for Wales or the Northern Ireland Assembly, as appropriate.

The aim is to have clear, plain price lists which will ensure that retailers are able to continue carrying out their business efficiently while protecting children and young people from the promotion of tobacco products and supporting those people who smoke but wish to quit. For these reasons, I am not able to accept the amendment and I hope that, with my assurances, the noble Baroness will withdraw it.

The Minister mentioned the concern that shop keepers have about this new regulation. What steps have the Government taken to reassure small businesses, specifically newsagents, about the impact of these provisions? The newsagents I have spoken to have expressed concern about the impact; they have talked about having to reach underneath the counter to reach cigarettes in future, giving children or adults an opportunity to steal from the shop. They have raised concerns about the great cost they understand there to be in this new display prohibition. These are misperceptions, and I wonder what the Government are doing to address them.

I am happy to answer that point. We will probably discuss those issues in more detail as time goes on. From the countries that have removed cigarettes from display, we have not had any evidence—and we have asked—of increases in staff injury or crime. We have no intention of dictating that tobacco products have to be located in a particular place, such as under the counter. Currently shop assistants often need to turn their back on customers momentarily to reach cigarettes or other products. Depending on the solution chosen, prohibiting the display of cigarettes would not necessarily increase the time it takes to serve a customer.

We are working with the Association of Convenience Stores and the British Retail Consortium to develop straightforward regulations that would avoid imposing any solution or create unacceptable risks to staff, health or safety. The lead-in time for small retailers for this legislation is considerable, as it will not come into effect until 2013.

Is it not a fact that under the 2004 point-of-sale regulations, there was a definition of a point of sale and, furthermore, that no regulations have ever been tabled by the Government in relation to that? In 2006, the trading standards organisations, in conjunction with the industry, carried out a survey and found very good compliance. An invitation was made to the Department of Health to make suggestions for any amendments that should be made, and none was forthcoming.

The noble Baroness says that the tobacco industry is very prone to thinking up ingenious new ideas, and one of them will be to do with price lists. It is not good enough that, particularly when prices change at every Budget—inevitably so, and I suspect that they will continue to do so—price lists will now be viewed as point-of-sale material. The Government will presumably define type size and maybe even which type should be used. The consumer—who is, after all, the key person—simply wants to know what the price is.

The plain truth is that following the Tobacco Advertising and Promotion Act 2002, the tobacco industry put enormous imagination and resource into the point of sale, product and advertising. On this occasion we are trying to find a balance between price lists not being used to promote or advertise tobacco products and the reasonable requirement that price lists should be available, seen and easily comprehensible. That is what we will discuss with the retail industry.

In replying to the noble Earl, Lord Listowel, the Minister suggested that there would be no question of compelling retailers to keep cigarettes under the counter in order to sell them. However, in replying to Amendment 82, moved by the noble Earl, Lord Howe, she said that in practice retailers would no longer be able to take cigarettes from a display cabinet mounted at a relatively high level and hand them to the purchaser. The display cabinets would be much smaller and show perhaps only one packet of each type, and the cigarettes would have to be obtained from somewhere else. If they are not going to be kept under the counter, will there be a parallel drawer or something mounted at a high level from which the cigarettes can be taken?

LACORS approached the tobacco industry for its 2006 review of point-of-sale displays. It seeks to reduce what have become known as the “power walls” of cigarettes that greet people and it believes that covering that up by gantries will be perfectly straightforward.

I will just make a point on trading standards and then I will sit down. The Minister said that trading standards suggested that it was perfectly possible to put a screen up or something. What is the reference for that? I cannot find anything from trading standards to that effect.

As the noble Baroness, Lady Barker, indicated, large quantities of briefing material have been circulated. I have seen it and I would be happy to make available to the noble Lord illustrations of existing displays and how they might look if gantries were used. I shall also be happy to make available to the noble Lord the 2008 LACORS consultation response, Tobacco Advertising Point of Sale Report, so that he can see what I am talking about.

I appreciate that people feel strongly about this and do not agree with the proposal. I wish to be quite clear: I said that there is no intention of dictating that tobacco products have to be located in any particular place such as under the counter or overhead. The objective—which will be discussed, which will be part of the regulations and which will have a considerable lead-in time to allow retailers to achieve it—is that the advertising of tobacco products will not be visible to children and young people when they enter shops.

This morning I called in to my local tobacconist/newsagent. He was standing outside the shop, smoking a cigarette and having a break and I discussed this with him. In particular we discussed the inconvenience and expense of putting up gantries or at least keeping tobacco out of sight. He said, “I have already got one. This does not bother me at all. I have got one that at the moment I use for security purposes. If I need to go out to the back for anything I pull it down, and at night I certainly pull it down. I cannot see what the problem is. It would not bother me”.

Coming from Northern Ireland, I am pleased to say that earlier this week the Assembly there passed a motion, supported by all parties, to adopt the non-display of tobacco and its prices at the first available opportunity. It is interesting to note that, probably because of the proximity of the Irish Republic to Northern Ireland, we believe that our thinking on this issue is ahead of the rest of the kingdom. It is interesting to note that among the groups that support the ban—all the political parties do—are the retailers. The retailers in Northern Ireland have come to terms with this; why would they be different in any other part of the kingdom?

I think I would like to thank everyone who took part in the debate. I thank the Minister for her answer, but she was wrong. I was not concerned about the burden of regulation on shop keepers; people will know from Second Reading that I have not found those arguments particularly compelling. My concern was about something different altogether: smuggling. It is entirely possible to go into shops in this country and buy cigarettes that are not on display and are not on any price lists. They come from abroad and there is a good reason why they are not on display: they are part of an illegal activity. My colleagues and I remain concerned that the more you move towards prohibition, the more you can open up opportunities for markets that are illegal.

It was helpful that the Minister explained that the intention is that prices will be visible but will not be able to be used as an advertising and promotional tool. That clarity is very welcome, and on that basis I beg leave to withdraw the amendment.

With the opportunity of this clause stand part debate, we can now discuss what is undoubtedly the most contentious issue in the Bill—the Government’s proposal to ban point-of-sale displays of tobacco products. I said at Second Reading that I did not regard such a measure as being justified. Since then I have made it my business to read extensively on the whole subject and have had a number of meetings with, among others, ASH and Cancer Research UK. On Monday I had a long discussion on the telephone with Professor Gerard Hastings, who has done a great deal of work on behalf of the Centre for Tobacco Control Research and who was kind enough to come and give a presentation to noble Lords a few days ago. I have to tell the Committee that not only have I not changed my mind but I am even more firmly persuaded of the opinion that I previously expressed. I shall try to explain why.

We are dealing here with a proposal that the Government justify with reference to public health objectives. I am not disputing those objectives; indeed, I am fully signed up to them. As with any proposal to extend the criminal law, though, we have to be clear about two things: first, that the evidence justifying the policy is robust and, secondly, that the collateral damage likely to be caused by the measure in question is proportionate to the good that we are trying to achieve. The proposal does not pass either test.

The principal justification for a point-of-sale display ban, in the view of the Government, is that it will remove an important influence on would-be smokers to take up smoking, more especially teenagers. What evidence is there that displays of cigarettes have that effect? We are told that since the passing of the Tobacco Advertising and Promotion Act 2002, tobacco companies have sought to get around the spirit of the law on advertising by encouraging retailers to install ever larger and more elaborate gantries to display cigarettes, and that these have in effect become a means of advertising. If that statement is to be believed, we need to show that that is happening on a wide scale and, moreover, that display gantries in themselves act as an enticement to people to take up smoking. Evidence for large gantries exists. Many of us have seen photographs of them. However, the Government said in their consultation paper at paragraph 31:

“Increases in size or prominence of display of tobacco products since TAPA came into force have yet to be confirmed by research”.

I am not sure therefore whether we can say more at this stage other than that some examples of large gantries have been observed. We cannot say that they are typical.

However, more importantly, what actual effect are displays having? At the presentation attended by noble Lords last week—I shall paraphrase—it was said that awareness of new packs among the young has increased since the ad ban; that young people still know their brands; and that this must be a function of point of sale display. A greater leap of logic, especially from an academic source, is not often found. We are supposed to believe that young people never see a cigarette pack other than in shops. A moment’s reflection should make us realise that that proposition is ridiculous. We need therefore to look more widely for evidence that point-of-sale displays influence the take-up of smoking.

There are various jurisdictions around the world where display bans have been implemented. The Department of Health place reliance on two in particular; namely, Iceland and the province of Saskatchewan in Canada. In neither of those places do the data, when examined, prove the department’s case or go anywhere near showing that it may even have a ghost of a case. I am talking here about proving cause and effect. In Canada as a whole, smoking prevalence has reduced pretty steadily over the past 10 years. In Saskatchewan, where a display ban was first introduced in 2002, the rate of decline in smoking prevalence has been less steep than in a number of provinces where there has been no display ban in force. So I am far from convinced that Saskatchewan has anything useful to tell us.

Before the noble Earl leaves that point, has he consulted the Saskatchewan Government on that and asked their opinion on whether they think that the display ban in their province has made a difference? My understanding is that they are absolutely convinced that this has made a profound difference to the number of young people who smoke.

I am aware that the Saskatchewan Government believe that this has made a contribution to the decline in smoking prevalence. On what they base that decision, I do not know.

I should like to ask a further question, but I ask the Committee to forgive me because I know very little about Canada except that my half-sister used to live in Alberta. It is possible that the states are different. Some states may be arable, while others are city-based. Therefore, that might help to explain this disparity in the reduction of smoking. What is the character of Saskatchewan that perhaps makes it more difficult to reduce the level of smoking? One might say that, from the level of smoking at which it started, it has moved a long way. It might not have moved as far as other states because they might have a different character. Perhaps we could have a discussion on this after Committee stage, because it is a point of detail.

It is a very important point of detail and I am grateful to the noble Earl. I have a list of all the provinces in Canada, all of which show a decline in smoking prevalence over a 10-year period. The point I was seeking to make was that in a number of them, including Nova Scotia, British Colombia and Ontario—although that is not all—the decline in smoking prevalence has been steeper and in none of those places has there been, until very recently, a display ban.

I can help my noble friend on that. Saskatchewan is a province, not a state, in a rural part of Canada. Saskatoon is a normal town with a population, I would guess, of 150,000, and it is pretty poor. The most effective results have been in Ontario, which is very urban. I think that that validates totally what my noble friend has been saying.

Yes, my noble friend is right in that those are broadly the characteristics of that province. If one looks at some of the other provinces that I listed, the characteristics are rather different. But there are indeed others of a rural nature which have done better. I do not think that one can conclude much from Saskatchewan.

I thank the noble Earl, Lord Howe, for letting me intervene. What we are discussing is important, but if we are going to take it seriously, we need to know about all the other factors that might affect smokers in those Canadian states. It is difficult to draw any conclusions without knowing about the other factors.

The noble Baroness is absolutely right, and that point can be made with particular force in relation to Iceland. A display ban was introduced in 2001 and the evidence is pretty equivocal. There is some evidence for a decline in smoking prevalence amongst the young but, depending on what figures you look at, in my submission the trends are not conclusive. More to the point, though, what is not mentioned when people talk about Iceland is that, simultaneously with the introduction of the display ban, the Icelandic Government did three other things: they put up the price of cigarettes; they introduced restrictions on smoking in public places and they introduced a positive licensing system for retail sales. There is no way that anyone can say that the display ban has of itself influenced smoking behaviour in Iceland.

It has helped.

You cannot say that.

I have immense admiration for the noble Earl, but I find it quite difficult to understand where he is coming from. I should like to challenge him on the issue of evidence, and I want to say rather more about this clause at some stage.

If an environmental issue is so serious that it may cause lasting damage, everybody runs around and tries to gather as much evidence as possible to find remedies that might remove the risk. If sufficient evidence cannot be adduced to justify measures to reduce the risk because it simply does not exist, nevertheless measures that look as if they might help and make a contribution are put in place on the basis of the precautionary principle. There is an acknowledged global principle that says: if something is really so serious that one has considerable worries about it, one will try measures even if there is no cast-iron evidence—on the basis that you have to do something to try to tackle the problem. We are facing the real problem of children smoking, which is possibly made worse by point-of-sale advertising. Indeed, I find it difficult to understand why, in the face of something like this, we are demanding evidence that is so cast-iron that it is irrefutable when it is clear that the public and indeed many retailers, when asked about point-of-sale advertising, would be quite content for it to be removed.

The issue is not point-of-sale advertising, it is point-of-sale display. As the noble Baroness knows, retailers may not advertise cigarettes. I am sorry that she does not understand where I am coming from. We are talking about an extension to the criminal law. To me that means that a policy has to be based on something substantive. I ask her to allow me to finish my speech because I think she will understand better where I am coming from when I have done so. I believe that the collateral damage that we are likely to inflict if we impose this policy is unacceptable. The noble Baroness will know from her experience in the environment field that decisions there have to be weighed up in terms of the benefit that they will do versus the unintended or adverse consequences of the measures.

Before we leave that point, if there is evidence from around the world where a ban has been imposed it is important that we evaluate it, not just turn a blind eye to it. My noble friend has analysed two examples given by Her Majesty’s Government and shot them through. A third one has just come in from New Zealand: a call to ban tobacco displays from shops does not have the support of the national Government, says Prime Minister John Key. The reason is that there is no evidence that it actually works and it is hugely expensive to do. The evidence so far is that it does not work. That is what we in this House are charged with doing: looking at evidence and coming to conclusions.

I am grateful to my noble friend. It is not just me who is saying this; the Norwegian Ministry of Health commented on the Icelandic data showing a reduction in overall smoking prevalence. It said:

“There are no indications to prove that this reduction is a result of the ban more than other tobacco preventive measures introduced at the same time”.

In that case, why has Norway decided that it will impose a ban on public display by this November?

That is a question for the Norwegian Government.

I now turn to the other part of the equation, the collateral damage that will be caused if this measure were approved. It is striking how little we hear from the Department of Health about commercial rights and freedoms. In the document called Smoking Kills in 1998, the Government referred to,

“the legitimate desire of retailers to display products for sale”.

That is in paragraph 3.12. The same phrase was used in consultation on the 2002 Act. The Health Minister, Yvette Cooper, speaking in the other place in 2001, said:

“It is perfectly legitimate … for products to be displayed, with prices, so that they can be sold because after all, tobacco is a legal product”.—[Official Report, Commons, 13/2/01; col. 220.]

We need to remind ourselves of those words. To prevent a retailer from displaying a product that may be legally sold is a step that we should take only with the firmest of evidence that it is justified for overriding reasons. The supermarkets are big enough to look after themselves. The retailers that I am worried about are the small shopkeepers, the proprietors of corner shops. There are about 50,000 small corner shops in the UK. The organisations representing those small shop keepers have told me of their acute worry that a point-of-sale ban on the display of tobacco will do serious harm to their trade.

The level of concern is very high. A year ago, before the proposals were published, the Tobacco Retailers Alliance had 16,000 members; it now has 26,000. They are most worried about the effect that a display ban will have on the footfall in their shops. Tobacco sales represent the bedrock of a small shop’s turnover. People who come in to buy cigarettes typically buy other things as well—often goods with a higher profit margin than tobacco. If those people cease to patronise small shops, first, because they cannot see the product and, secondly, because they believe that supermarkets are bound to carry a larger range of goods at lower prices, the effect on trade for many small shops could well be terminal.

What do the Government think they are doing in bearing down on small shops at a time when retailers are already under acute pressure from the economic downturn? From the start of this whole consultation, retailers have been consistently excluded. No Minister has met a representative of the National Federation of Retail Newsagents. The concerns of the trade and the evidence that it has produced for those concerns are simply dismissed.

I am meeting them next week. I have been trying to meet them for about a month.

That is good news. I know that the retailers have been trying to meet Ministers for a lot longer than the last month.

Has the noble Earl discussed this with the retailers in Northern Ireland who support the ban? Has he discussed it with the political party in Northern Ireland which is now in a relationship with his political party, which also supports the ban?

I have not done either of those things although I would be very willing to. I am always willing to listen to views of whatever kind on this subject.

The Minister’s announcement is welcome but, for her information, I should tell her prior to that meeting that when the response to the public consultation was published, the department, in its eagerness to publish what it felt was the right answer, omitted to reflect the scale and volume of the retailers’ responses. The whole exercise was conducted as if a point-of-sale display ban were a done deal. It is not a done deal because Parliament has yet to accept it.

The more I have examined the proposal, the more I am of the belief that it is both misconceived and disproportionate. By disproportionate I mean that if we consider the risks involved, the damage that we are likely to inflict by regulating in this area is unacceptably greater than the damage that we are likely to do by not regulating. I hope that collectively we can persuade the Government that they have made a serious error. I look forward to hearing what other Members of the Committee have to say.

Does the noble Earl have any information about the impact of these display bans on small newsagents in other countries? He has referred to the evidence of its impact on young people smoking, but does he have any evidence that it really does have a major impact on newsagents?

The representatives of Canadian small shops have asked to see me and I shall be meeting them in a few days. They have expressed the concern to me that since the display ban in a number of provinces, newsagents and small shops are closing. I want to hear further and better particulars about that.

I follow the noble Earl, who made an impressive and powerful speech. One can sum it up by indicating his view that an inadequate case has been made by the Government for the ban on the display of tobacco products. The Government’s case ignores the fact that the display one sees—I hope no one is blind to this—contains the words “smoking kills”, and each packet of cigarettes has rather unpleasant information on it, pictorial and otherwise, because only three months ago the Government devised regulations for these hard-hitting indications of what smoking can do.

The noble Earl’s description of the evidence from Saskatchewan in particular, other Canadian provinces and Iceland, is surely correct. What one sees from those provinces and from Iceland is a coincidence between a fall in smoking and the ban on display at the same time as other things have been going on, including, of course, the rise in prices and the rise in taxes, let alone the perfectly good propaganda—I am sorry if that is a bad word—which other Governments indulge in, as indeed does ours.

The noble Earl quoted most effectively from Yvette Cooper’s statements in the early part of this decade at the time of the Tobacco Advertising and Promotion Act 2002. I repeat her point that it is perfectly legitimate for products to be displayed with prices so that they can be sold because, after all, tobacco is a legal product. I emphasise that it is a legal product. The Government must know that it would be ridiculous to try to use this as an undercover way of making it illegal.

We have to remember that 20 per cent of the population smoke. They surely have some expectation of consideration in what is being done by the Government in furthering their perfectly legitimate aim of reducing smoking among young people, if not among the population generally. That is a perfectly good objective. However, as I indicated on a previous amendment, we have a hugely successful ban on smoking in public places. I am not a smoker and I have benefited from being able to go to meetings, pubs and restaurants without having other people’s unpleasant smoke affecting my enjoyment of the environment. There is to be a review next year and it seems to me entirely premature to start introducing new restrictions. Further to the powerful points made by the noble Earl, Lord Howe, I add that removing point-of-sale displays would have an adverse effect on manufacturers and retailers and are particularly damaging in a recession. Fancy introducing this when retailers, particularly SMEs, are in economic difficulty.

It would be hard for me to disagree more with what my noble friend has said. I should declare an unpaid interest as a trustee of Action on Smoking and Health and a patron of the Roy Castle Lung Cancer Foundation. I am rather depressed at the way propaganda from the tobacco industry seems to be repeated in this Committee. Back in the 1950s it attempted to deny Professor Doll’s evidence that there was a link between ill-health and smoking. Then it attempted to deny that nicotine was an addictive substance. Then it attempted to deny that second-hand smoke was dangerous. At each of those stages it resisted legislation designed to deal with those issues. When it became impossible for it to advertise, following the legislation passed in 2002, it turned its ingenuity to new forms of marketing and promotion, of which displays in shops are probably the most spectacular examples. I am pleased that the noble Earl has had a conversation with Professor Gerard Hastings. If, like other Members of the Committee, he had attended the presentation, seen the pictures of the displays and realised how they have taken over as the most powerful form of advertising—cigarettes are on sale alongside chocolate and other confectionery, and look like an absolutely normal product to children who go into the shops—he would have realised that Professor Hastings’ case is a substantive one.

The noble Baroness asked why tobacco is different from any other product and why it has to be treated in this way. The answer is very simple: it is the only product which, when used in accordance with the manufacturer’s instructions, is likely to kill you. It is a dangerous product and it leads to ill-health. This House and the other place have a responsibility to dissuade young people from taking up the habit. I do not know whether these measures on point-of-sale display will achieve everything that the Government hope for them, but it is the case that 190,000 11 to 15 year-olds smoke. In Scotland, the Scottish Schools Adolescent Lifestyle and Substance Abuse Survey found that 47 per cent of 13 year-olds and 82 per cent of 15 year-olds had bought cigarettes in shops. That demonstrates that we have to do something about the problem of young people acquiring cigarettes from retail outlets.

I hope very much that when we consider this provision at later stages, the House will agree to pass the legislation. What we are doing is in accord certainly with what most provinces in Canada and Iceland have already done. It is also much more relevant than the case of New Zealand, where no definite decision has been taken to go back on the prohibition of point-of-sale display. The new right-wing Government are simply reviewing the decision. We have had a decision from Northern Ireland this week to which the noble Lord, Lord Laird, has referred, and we have had a decision from the Irish Republic; we have had a decision from Scotland and we have had a decision from Norway. We are in the vanguard with them in the same way as we were in the vanguard for introducing the ban on smoking in public places. I am very proud of what we did in this House and in this country in terms of making public places more pleasant and safer for people because they do not have to suffer the effects of second-hand smoke. This is a logical extension of that policy, and it is very important that we support it.

I want to return to those points. I am somewhat surprised that the noble Earl, Lord Howe, seeks to talk on behalf of retailers in the kingdom, but has not sought any briefing or spoken to retailers in the area I come from, which is Northern Ireland. If anyone is going to speak against this ban, I would like them to tell me what they think is the difference between retailers in Northern Ireland and Scotland, and retailers in England. Why is it that the retailers of Northern Ireland support this ban? What is the difference?

I totally agree with the arguments made by the noble Lord, Lord Faulkner. The whole thrust of the tobacco industry since the removal of advertising has been to get as many young kids as possible on to the idea of smoking because they are their future customers. I know a little bit about this topic, and it is not acceptable because it is like the drug pusher on the housing estate whose aim is to get as many children as possible on to his drugs. Tobacco manufacturers will use any means to get young people on to tobacco because they are their future customers. It would be terribly irresponsible of this Committee if we allowed this ban to be removed.

The noble Earl and others have mentioned the legality of the product. Indeed, the noble Earl quoted Yvette Cooper saying that it is legal. But surely he is aware that if we had known of the damaging effects of smoking tobacco when it was first widely used, it almost certainly would not have been given a product licence. Now that we know about its lethal effects, is it justifiable to say that the profitability of small tobacconists is more important than reducing the take-up of smoking and the risk of becoming addicted to tobacco among young children? We have no evidence that the profits of tobacconists are going to go down, unless they sell only tobacco. However, most of them sell a lot of other products and they will have an opportunity to diversify.

I want to make one other point. A couple of years ago, Geoff Good, the global brand director of the Imperial Tobacco Group, speaking at a conference, described the UK as a “dark market” since the tobacco advertising legislation of 2003. He went on to say that new methods of maintaining sales and attracting young people to tobacco smoking must be devised. I think that the noble Earl would agree that since the tobacco advertising ban, the size and gaudiness of tobacco displays in tobacconists has increased. These gantries are very unpleasant to look at because I know what they are selling. There is absolutely no doubt that the size and prominence of the area where tobacco is sold in tobacconists has increased. The cost of those large gantries is, of course, met by the tobacco companies.

To answer the noble Lord, we are in a situation where Parliament is clearly not going to outlaw tobacco. Given that that is the case, any measures to restrict what is still a legal product have to be weighed up in terms of the evidence for and against them. I make no apology for bringing the affairs of small traders into this. It is germane that we look at the effect that this measure would have on small businesses, and the noble Lord, Lord Borrie, was right to emphasise the points that he did. Unless Parliament is going to ban tobacco—let us have a debate about that if we want to—we have to have this kind of discussion.

The Government’s rationale for Clause 19 seems to be based on the curious assumption that teenagers are driven to a frenzy of craving by the sight of a small inert cigarette packet, which, as other noble Lords have pointed out, will still be seen all over the place, even if Clause 19 goes through, in the form of discarded packets in gutters, overflowing dustbins and so on. Surely what really turns teenagers on is the sight of attractive or glamorous people smoking, far more so than the sight of a cigarette packet. If the Government are really concerned, they will have to start censoring every film and television programme made before the mid-1980s, and even more recent ones such as the splendid new series “Mad Men”, which is set in the New York advertising world of the early 1960s in which 90 per cent of the fairly glamorous characters smoke 90 per cent of the time. The programme has a tremendous cult following, or so I believe. That is the path down which the Government will have to go if they want to stop teenagers taking up smoking.

The noble Lord, Lord Laird, asked why some of us in England were opposed to this legislation. I can tell him that we have had representations from the National Federation of Retail Newsagents, which is very concerned about the Bill because it will affect its trade, and it believes that many of its members will go out of business. We have also had representations from the Tobacco Retailers Alliance saying exactly the same thing—that this is going to hurt its business. We have had the same message from the Tobacco Advisory Council and from the British Brands Group about the plain packaging of tobacco products, saying that that is going to hurt the industry as well.

No.

Yes—heart trouble and cancer. Red wine was going to cure everything. That is why drinking went up. People thought, “I will live longer”.

The second article is on the same page of the Daily Telegraph of 25 February and states:

“Obesity is as deadly as smoking, say doctors”.

I repeat:

“Obesity is as deadly as smoking, say doctors”.

It is not me but doctors who are saying it. The article continues:

“Being obese as a teenager carries the same risk of premature death as smoking 10 cigarettes a day”.

So?

So?

That is from the medical profession. There is another article in the Daily Mail of Friday, 27 February 2009, which states:

“Our lifestyles are killing us. Poor diets, drinking and lack of exercise blamed for 78,000 cancer cases a year”.

There is nothing about smoking in that headline. That 78,000 cancer deaths compares to 87,000 smoking deaths, which means that other lifestyles are rapidly catching up.

So exactly where are we going? If we are going to ban the display of cigarettes because they are dangerous to lifestyles, are we going to ban all the things that make us obese? Are all those going to go under the counter? Are chocolates going to go under the counter? When I take my grandchildren, not very often, to the shops, they do not say, “Can I have a packet of cigarettes?”. They say, “Grandad, can I have some chocolate?”. So are we going to ban all the things that are said to make us obese? Are we going to stop eating certain things in public places? Are we going to ban the display of all the things which will make us obese? That is the question I am raising, and that is why I believe we are going along a dangerous road. If, as our doctors say, although I do not believe it, 78,000 people are dying because they are fat, then before long some ASH-ite organisation will come along saying that the Government ought to take greater action to put all these things under the counter and that we ought to close down all the McDonald’s.

That is where we are going. We are saying to tobacconists, “You may not display a legal product”. That is bound to lead eventually to restrictions on other trades. Take the drink trade: Scotland is going to put a minimum price on it. In my view, the most dangerous drug in this country—indeed, the world—is alcohol. I have to tell the breweries and the distillers that the Government will be coming for them next. They have already started. I have to say that Hitler was a rabid anti-smoker—worse than many Members of the Committee.

Not possible.

I am being kind. The fact is, though, that he never did anything of this sort. It did not even enter his mind that the Germans would put up with not being able to display their tobacco products, particularly pipe products. That is what I am saying. Where are we going? If we start along this path, there may be a long and difficult road ahead.

Most of the arguments that I would have used have already been made so I will not delay the Committee any longer. I was intrigued to hear the noble Lord, Lord Faulkner, say that nicotine was the problem. I did not think that that was the case.

If I may correct the noble Lord, I said that one of the tobacco industry’s great lies, after it had lost the argument that tobacco smoking is dangerous and kills you, was its attempt to argue that nicotine was not addictive. A great film was made about RJ Reynolds called “The Insider”, in which a scientist at RJ Reynolds had convincing proof that the company knew that nicotine was addictive but covered up the facts. It is the addictive nature of nicotine that matters.

Yes, but it is not the nicotine that kills. Nicotine does not cause lung cancer. It may be addictive, but it is not the nicotine that is the problem. It is the materials in the smoke, as I understand it from the medical profession, that cause the problems with lung cancer and other respiratory diseases.

But if you are addicted to a product and you therefore use more of it, and you then have to suffer the ill effects of using the product, then the nicotine is indirectly leading you to become ill because you cannot get rid of the habit. Surely the noble Lord understands that.

I see now where the noble Lord is going. And of course the more chocolate you eat, the more addicted you become. There are many other—

Drink.

Drink, indeed. Not only drink, but chocolate. I have to restrict my intake very firmly, otherwise I would quickly become a chocolate addict. So it is not only nicotine that is addictive; there are all sorts of other things, including, as my noble friend says, drink.

I am extremely worried about where we are going. I have to thank the noble Baroness, Lady Thornton, for sending me a letter on 24 February. I did say that I would go into some of these matters more deeply in Grand Committee, but the time is getting on so I had better not go through them in great detail. The noble Baroness provided smoking related mortality figures, and I have some things to say about them, but I am not going to say them now; I shall come back to them at the Report stage. She also sought to allay my fears that some retailers would go out of business because of the cost of putting up different displays. She said that it would cost only a couple of hundred pounds to do and would not put them out of business.

I remember our last debates about tobacco and the ban on smoking in public places. One of the points we raised was that it would have a devastating effect on public houses. The argument was pooh-poohed. We were told that people would use public houses more; that they would flock to them once we had got rid of the smokers. Well, they got rid of the smokers all right, and public houses are now closing at a rapid rate. Indeed, a parliamentary group called Save the Pub has been set up. What was predicted then has actually happened and the law of unintended consequences certainly operated in that area. We have to be careful about exactly what we are doing in this legislation.

When we banned smoking in public places, restaurants and pubs, in spite of the fact that there was an alternative and still is an alternative—that is, to separate the smoker from the non-smoker—we drove the smoker into his house, where he drinks more because it is cheaper than in the pub, and he probably smokes more in front of his children. What is the next step? Are we going to ban smoking in homes as well? Beware of unintended consequences because they sometimes go against what was actually intended. For those reasons, I am against this clause and the other clauses related to smoking in the Bill. No doubt we shall have more to say in Grand Committee and perhaps at length at the Report stage as well.

As someone who was mentioned by the noble Lord, I should say that on most occasions I agree with him, and I enjoyed his interesting and entertaining remarks. The question I posed was this: what is the difference between Northern Ireland traders who support the ban and traders in the rest of the United Kingdom who do not seem to support it? That is quite important because, with respect, too many noble Lords who have spoken in this Committee have talked about the entirety of retailers, but they are not. Northern Ireland retailers support the ban.

My father used to live in Northern Ireland; it is a great place with great people. I welcome the fact that they are of independent mind and that they will do things in their way rather than in our way. So Northern Ireland is different.

I do not smoke. I am a non-smoker and I ought to declare an interest as an auxiliary member of the Lords and Commons Cigar and Pipe Smokers’ Club.

As to not being affected by second-hand obesity or second-hand drinking, by God, there are some second-hand consequences from drinking and alcohol abuse. The number of people who are killed, knifed or gunned down outside public houses is quite significant, and the number of women and children who are badly beaten as a result of drunkenness runs into many thousands every year. But, as I said earlier, the Government will be coming for the drinks industry anyway, so perhaps some of those problems will be solved in the future.

I shall speak briefly on this issue, about which everyone in the Room obviously feels strongly whichever side of the argument they are on. I have an enormous respect for the noble Earl, Lord Howe, and the noble Baroness, Lady Cumberlege, but we part company on this issue. Albeit that I listened with great interest to the noble Earl’s persuasive speech—I sat here thinking, “Well, yes”—I am hanging on to my position.

Before I looked into the amendment I was concerned about the possible impact of Clause 19 on newsagents but, on reflection, it is of course true that if someone goes to a newsagent to buy cigarettes, they will have made that decision before going in and the display will not affect them when they walk into the shop. Such people may then, if they wish, make other purchases. We know that a major part of the attraction of cigarettes for newsagents is that people come in, buy the cigarettes and then spot other things they want to buy. So, on that basis, I do not think this clause will have much impact on newsagents, but it is true that if people come in to buy other things, they will be less likely to make spontaneous purchases of cigarettes.

I know that the noble Earl is busy. However, I should like an assurance from him that he would regard it as a good thing if a person was to go into a newsagent to buy some pencils, but was less likely to spot some cigarettes and think, “Oh my gosh, I would really like some of those”. There is a clear benefit in terms of stopping the spontaneous purchase of cigarettes.

I accept that for newsagents the more serious issue is that, if Clause 19 leads to a reduction in young people and teenagers smoking, over time, there will be an enormous drop in the number of smokers in general and in the demand for cigarettes from newsagents. Surely that is what we all want, which is why I am confused. The noble Earl has argued that this proposal will not have any effect, but other Members of the Committee have argued quite desperately that it will have a major effect. In a sense, one can have it one way or another. I know that in part the noble Earl was indicating that people might go from smaller newsagents to supermarkets. But my contention is that for every 100 young people who did not go into a newsagent, not all of that 100 would go along to a supermarket. There would be an effect.

My case is that trade will be deflected from small shops to supermarkets, but also on to the black market. We have not talked much about that, but I am really concerned about it. On the noble Baroness’s point about spontaneous purchases, she is right that existing smokers often make impulsive purchases in shops when they see a packet of cigarettes. However, it is a far cry from saying that to saying that someone will impulsively take up smoking because they see a packet of cigarettes in a shop.

In response to that point, I would simply suggest that I am not so confident about that when a group of young kids goes into a shop.

I am impressed by the point-of-sale evidence. The fact is that it has taken over as the main marketing tool for cigarettes. If it had no effect on demand, would tobacco companies really be so desperate for the Government not to introduce this change? That seems to be the best evidence that this is a good measure and will reduce the demand for cigarettes. I find the absolute horror on the part of the tobacco companies that this might happen quite impressive. There is now research to show that point-of-sale marketing influences young people. It is horrifying that 46 per cent of UK teens are aware of tobacco marketing at point of sale, which surely must influence what they are doing. I do not believe that it does not: I believe that it does.

Point-of-sale marketing also undermines efforts to quit, which I believe is a major issue. I know that that is not so much about the very young people. But we know about the terrific addictive qualities of tobacco. I have never smoked, but I have watched others who have. We all have friends and relatives who have tried desperately over the years to give up cigarettes and we do not want to make that more difficult, which is what these displays do. In my view, it is illogical to ban advertising and then to do nothing about point-of-sale marketing when they are exactly the same thing and aim to do exactly the same thing. There is logic here.

I shall end on a personal note. One of my daughters was enticed into smoking tobacco in her mid-teens. It took her 10 years to give up the habit. She tried and tried. In the end she cracked it. She is now a doctor and was horrified to find herself on a surgical ward treating a ward full of people, including amputees, almost every one of whom was there because they had been a smoker. If most tobacconists were taken on to those wards and saw those amputees and others dying, I believe that they would support Clause 19.

I thank the noble Earl, Lord Howe, for listening carefully to the concerns of small businesses. After all, many of them are family businesses, and the welfare of their children and their economic well-being is important too. It is quite right to listen very carefully to those newsagents. I listened very carefully to what the noble Earl said about the evidence in this matter, and it certainly makes me want to look again at it.

I also listened very carefully to my noble friend Lady Young, who spoke about priorities and what is at stake. I was grateful that the noble Earl had taken the trouble to talk to Professor Hastings, whose presentation I found very impressive. He said that 70 per cent of those under 20 who have a child are smokers and that 40 to 50 per cent of them are smokers while they are pregnant. That is an extraordinary figure, but it reflects the fact that most of those under 20 year-olds will be from the most deprived communities. Eighty per cent of smokers start before the age of 18; as a smoker, I started at the age of 15. So the preponderance of smokers start before the age of 18.

The most vulnerable young people are the most likely to be influenced into starting smoking. For instance, if a woman under the age of 20 smokes in the course of her pregnancy, her child may be born prematurely or underweight and there is a higher risk of disability. So we must weigh up the well-being of the small businesses involved and think carefully about the evidence. We have to think about the terrible consequences for children if they get drawn into smoking. My noble friend Lady Young made a strong point, but the evidence to which the noble Earl refers reminded me that in children's homes and provision for looked-after children, we often talk about needing an evidence base before we act and introduce new policy.

I was struck by an academic, a pedagogue from Germany who came to this country, who said to me, “It is wonderful that you have so much evidence here about the outcomes for children in care. You know so well how they end up; we do not have this evidence in our country”. I thought to myself, “We know how poorly they do; and it seems that they do far better in your country”. The situation is different in Denmark and Germany. Only about 20 per cent of staff in our children's homes have a degree-level qualification, which contrasts with 90 per cent in Denmark. They do not necessarily know how well those children are doing, but they seem to be doing the right thing by them.

One always wants as much and as robust evidence as possible when making policy decisions of this importance, but one also has to bear in mind the risks and the possible consequences. There are certain risks that one wants to avoid so much that one will take measures that one may not be 100 per cent confident in because the possible harm is so awful. I am not expressing myself very well; I apologise.

I shall probably save more remarks on that for another time, but, as I said, I am very concerned. I see this as an important measure to protect children. It is an important welfare measure. I recognise that it needs to be considered very carefully. From my point of view, I emphasise that this is an important step forward in child protection.

I support the noble Earl, Lord Howe. I, too, have never smoked and have no desire to smoke. However, I consider that this measure infringes people’s liberties to far too great an extent. I, too, spoke to a small shopkeeper last weekend and I asked him what effect the measure would have on his business. He told me that five small corner shops had already closed near him in the past couple of years and that his shop was one of the few remaining. He said, “I challenge everybody who looks under 25 before I sell them cigarettes—not under 18, not under 21, but under 25. I am fed up with taking the responsibility that is put on me. My sons do not want to take over this shop”. I told him that the measure would not affect him until 2013. He said, “I am not worried about it because I will have gone before then. I am not prepared to put up with any more of this pressure. My sons don’t want it. Another small corner shop will shut down”. That is something we should worry about, especially in view of what is happening to shops at the moment.

Today, I spoke to a friend who works in the tobacco industry and who smokes. I asked him how the measure was affecting him and his friends. He said, “Some of them smoke, some of them don’t, but I go outside the factory to smoke. I used to have a brief break and perhaps have a cigarette or just a cup of coffee. Now we go outside and we have two cigarettes quickly because we don’t know when we’ll ever be able to get outside again”. It is nonsense. It is not limiting the amount that people smoke.

I also had a young schoolchild come in this week on work experience. I asked her whether she wished to attend the Committee this afternoon and explained briefly what it was all about. She looked at me and said, “I couldn’t possibly go in that Committee. I would have to stand up and tell them what rubbish they were talking. I am in school. Children bring cigarettes to school. They sell them to each other. They experiment. Most of them will give up by the time they leave, but to think that they go into shops and buy them at their age is absolute nonsense. They get them from home and from various places, but they don’t go into shops and say ‘I’m going to try it’”. I said, “Well, they’re going to put curtains up”. She said, “Curtains, lovely. Something you can’t have so you tell the child, ‘No, you mustn’t look at that. If you look at that, you’ll be tempted’, so the child is tempted and thinks, ‘What a good idea. I’ll have a go at that. Next time I’m in school and somebody offers me cigarettes, I’ll buy them and try them’. It has the reverse effect. It is absolutely stupid. I wouldn’t be able to sit there and think that adult people who are supposed to be protecting us are doing so”. I replied, “Well, the thing is, the Government are very concerned that everyone dies healthy”. She said, “Well that makes sense, but what they are trying to do is absolute nonsense”. She added, “I also know that many of my friends go on holiday, buy cigarettes abroad, bring them back, and sell them on to their friends, making a bit of pocket money. A lot of that goes on. As for covering up displays in shops, that is absolute nonsense. You really need to talk to young people before you do anything like that. You’re just tempting us to go further down the road”. She does not smoke and has no inclination to do so, but she said that lots of people felt the same way as she did.

The Committee is supposed to wind up at six o’clock. It seems that we are unlikely to get through this important debate in that time; in fact, we are now over time. Therefore, I wish to move two Motions. I beg to move that the debate on the Question that Clause 19 stand part of the Bill be adjourned.

I beg to move that the Committee do now adjourn until Monday 9 March at 3.30 pm, when we can resume this very important debate.

Motion agreed.

The Committee stands adjourned until next Monday.