asked Her Majesty's Government:

Whether their relationship with the press is satisfactory.

My Lords, a functioning democracy requires a competent government and a free press. Both exist in this country at this time. The relationship is therefore entirely satisfactory.

My Lords, I am delighted to see that the Government and the country still believe in a free press. But why, with a free press, do the Government feel obliged to spend so much time, effort and taxpayers' money in manipulating the press to see things from their point of view? Spin is self-defeating in the end and the Government must know that. Meanwhile, how much is the Government's publicity machine costing and is the taxpayer given value for money?

My Lords, doing the job I do I try to emulate the lily of the field: I toil not, neither do I spin.

My Lords, has the Leader of the House yet had the opportunity to read Hugo Young in this morning's Guardian? He gives a good assessment of the Government's record as a news provider. He says,

"It has not been a reliable bearer of honest news about its own record. It has not been good with statistics. It promised much, claimed too much and delivered too little [in] the era when spin equated with mendacity".

Is not that a more accurate description of this Government's record in their relations with the press than the rather complacent response of the noble and learned Lord?

My Lords, complacent? Moi? The fact is that all political organisations, however unsuccessful—for instance, the Liberal Democrats and the Conservatives—expend money on press relations. Speaking for myself as an entirely helpful and impartial observer, if the Liberal Democrat and Conservative Central Offices are paying money to have their message put across, I advise them to ask for the money back.

My Lords, are not the Government the biggest advertiser in this country? Will the noble and learned Lord tell us what is the total spend of taxpayers' money on advertising by all government departments?

My Lords, of course the Government advertise. We have been advertising for police officers and so at the moment have the largest number of police officers there have ever been. We shall have 130,000 police officers on the beat next year. The figure the noble Baroness may be looking for is the Central Office of Information advertising spend which, in 1986–87, at modern-day prices, was £191,600; at 2001 prices the spend in 2001 was £192,000—hardly any difference at all. I advise those noble Lords who may be obsessed with spin to consider whether or not there is too much froth in the approach generally. All organisations want to put their message over. The Government: have done that rather well in two successful general elections.

asked Her Majesty's Government:

Whether Parliament is free to refuse or amend the European arrest warrant as agreed by Her Majesty's Government on 13th June in the Justice and Home Affairs Council of the European Union.

My Lords, the framework decision on the European arrest warrant was adopted at the Justice and Home Affairs Council on 13th June and cannot itself be amended. However, the European arrest warrant will come into operation in the United Kingdom if the Bill to give effect to it is approved by this Parliament. Naturally Parliament is free to refuse or amend the Bill, the draft of which was published on 27th June.

My Lords, I thank the noble Lord for that reply. But if the British Parliament refuses or amends the arrest warrant, will we be in breach of our treaty obligations? Is not one of the most unsatisfactory aspects of our relationship with the European Union and one of the least known that once the executive has agreed or been out-voted on a new law in Brussels, Parliament must rubber stamp it or the United Kingdom is in breach of its treaty obligations? Sometimes, though not in this case, that can result in payment of unlimited fines in the Luxembourg court. Therefore what is the point of Parliament debating and scrutinising EU legislation if the executive signs up to it anyway and we become a rubber stamp?

My Lords, I repeat that Parliament has a completely free hand in this respect and there is nothing that the executive can do to compel it to respond in a certain way. However, I am confident that, when we have properly considered the draft Bill, Parliament will approve it because it is in the interests of the British public. We have an extensive system of scrutiny in this House and the other place to ensure that the United Kingdom does not sign up to any measure of the Justice and Home Affairs Council before we have had clearance of the scrutiny processes and are sure that it is in the interests of the British public to do so.

My Lords, can the Minister confirm that the power to refuse extradition on human rights grounds, as set out in the draft Bill and the White Paper, will cover cases where conviction of the defendant involves a breach of his human rights; for example, where it would be contrary to his right to freedom of speech?

My Lords, the noble Lord is exactly right. To put it beyond any doubt, the draft Bill will make clear that we will not extradite in any circumstances where we consider there is a probability that doing so would breach the prisoner's human rights.

My Lords, at the meeting of Sub-Committee E the noble Lord told myself and other Members that if Parliament decides not to pass this legislation in a Bill there can be no infraction procedures by the Commission. I understand, however, that the Commission believes that it can introduce infraction procedures. Can the Minister tell us whether he or the Commission is right? If Parliament does not agree to the provisions for the European arrest warrant, will there be political rather than legal consequences? What would those consequences be?

My Lords, the noble Lord's question invites a relatively easy answer. I shall not change my view. Therefore, he must draw his own inference as to who is right or wrong. It is of course possible that there has been a misunderstanding as to exactly what are the respective roles.

The position is clear. In the unlikely event that Parliament decided not to pass legislation to put the framework document on to the face of European legislation, as is its right Westminster law would prevail. It would be open to a member state, if it so wished, to take action for non-compliance against the British Government in the European Court. I do not envisage those circumstances coming about for reasons I have already explained.

My Lords, the noble Lord thinks this is a reasonable measure. He also says that there has been pre-scrutiny. My recollection is that there was a proposal to introduce a European arrest warrant in legislation that passed through this House and that that provision was removed. Is that the pre-scrutiny he was referring to, or has there been some other?

My Lords, the noble Lord has the advantage on me. I am not certain that I connect with what he has referred to. The pre-scrutiny I was referring to was the deposition in October last year in both this House and the other place of the draft framework agreement which led to a most careful and thorough process of scrutiny in both Houses. The British Government reserved their agreement to the framework agreement until scrutiny had been cleared in both Houses.

My Lords, does the Minister agree that the most practical place to hold the European Council of Ministers accountable is in the European Parliament? When did he last hear the noble Lord, Lord Pearson of Rannoch, recommend that course?

My Lords, the honest answer is that I cannot recollect the noble Lord, Lord Pearson of Rannoch, having recommended that course.

My Lords, with great respect, I was under the impression that the appropriate committee did not receive sufficient time for scrutiny. I should like to hear from the noble Lord whether the legislation before the House will or will not provide that persons who have committed an act which is a crime in other European countries but not in ours will not be extradited. That has been the position so far. The proposal was that that should change. Can he tell us what the situation is and what the legislation will provide for?

My Lords, as the House may well know, the draft legislation is available to be inspected. It was deposited in draft form at the end of June, allowing a three-month consultation period. No doubt parliamentarians will contribute to that as much as ever. With regard to dual-scrutiny, the position is that if someone commits in, say, France, an offence which is covered by one of the 32 generic headings—for example, terrorism, trafficking in human beings, laundering the proceeds of crime, kidnapping, rape or murder—it will be possible to apply for his extradition from this country to France. That will be a quicker process. It will bring to justice sooner people who have committed crimes. By reverse, it will make possible people facing justice in this country who have fled justice by going abroad. It is in the interests of British society that they should be held to account in British courts rather than being able to avoid justice—for many years in some cases.

My Lords, does the Minister agree that the lifting of a scrutiny reserve by the Select Committee of both Houses is not the same as full agreement in debate in both Houses? Secondly, when he says that the arrest warrant was not agreed by the Government until the scrutiny reserve had been lifted, does he agree that the British Government gave provisional agreement to the arrest warrant a long time before the scrutiny reserve was lifted? Can he clarify what is the legal source of provisional agreement in the European Union?

My Lords, provisional contracts, like draft contracts in that sense, have no force at all. They are an indication that the British Government thought that the framework agreement was moving in the right direction. They were seeking to achieve objectives that were in the interests of British people. The reserve is put down, as the noble Lord, Lord Pearson, well knows, to preserve the position of scrutiny so that proper scrutiny can take place. Scrutiny can influence the final shaping of such documents, as I believe happened in respect of the framework agreement on the arrest warrant. Therefore, the scrutiny processes in this House had a positive effect on the final document.

My Lords, can the Minister say what would happen if someone in the Channel Islands were accused of uttering a xenophobic remark, say, about Belgians or Greeks? The Channel Islands are not part of the United Kingdom; nor are they part of the EU. However, the United Kingdom is responsible for their external relations. Could an arrest warrant be issued in such a case?

My Lords, it is one of my many failings that I am not an expert on Channel Islands law. If someone made xenophobic remarks in the United Kingdom about another country he could not be extradited under the framework agreement. We are firm that if anyone undertakes an act in this country which is not an offence in this country he cannot be extradited.

My Lords, am I right in thinking that, if the Government had wished, on 13th June they could have placed a full parliamentary reserve on the matter, saying that they would wait until Parliament had had the opportunity to approve the legislation? On reflection, would that not have been a better approach?

No, my Lords, I do not think so, unless one thinks that there is absolutely no benefit to this country from the processes of collective working and co-operation in the European Union. We think that there are significant benefits to Britain from the European arrest warrant. Having negotiated what we felt was an improvement to it, and having allowed both Houses of Parliament to scrutinise it thoroughly, we lifted our reserve. I repeat: it is still open to Parliament, if it so wishes, not to incorporate the framework agreement into domestic legislation.

asked Her Majesty's Government:

Whether they are taking sufficient action to tackle violence in the National Health Service.

My Lords, action has been taken to tackle the problem of violence as part of the NHS zero-tolerance zone campaign. For the first time ever, that includes central funding to support a large number of local initiatives being introduced to protect staff.

My Lords, I thank the Minister for that reply. The Government have talked tough on violence in the NHS for years now, but the latest survey from the Department of Health shows a rise from 65,000 to 85,000 violent incidents during the past two years. How will the department reduce violent incidents by 30 per cent during the next year, as its target states? Is it riot time to ensure that violent patients are banned from National Health Service treatment and prosecuted?

My Lords, prosecutions have taken place. There are many examples of good practice. We have a policy on withholding treatment. I cite the example of Bart's and The London NHS Trust, which produced a policy on withdrawal of treatment from violent patients in September 2000. That has been an effective deterrent.

As for the baseline survey, of course the number increased. The original survey was incomplete because it lacked robust data requirements. The baseline figure of 85,000 reported incidents is for 2000–01. We are now beginning to measure the most recent financial year; we shall continue to measure. The target of 30 per cent is for financial year 2003–04.

My Lords, can the Minister tell us how many charges have been brought against those violent people?

No, my Lords. that information is not held centrally, nor is it held by the Crown Prosecution Service. But there are recent examples of prosecutions. For instance, in the East Anglian Ambulance NHS Trust area, a man was sent to prison for four months for threatening paramedics with a crossbow and a replica gun. There are other examples of successful prosecutions. The key is getting across the message that we shall not tolerate violent action against our staff.

My Lords, does the Minister agree that not only staff but patients need protection? There have been several cases of rape. Does he agree that it may be worth considering breathalysing disruptive and disorderly people on National Health Service premises for drugs and alcohol?

My Lords, I am not sure about breathalysing, but I certainly agree with the noble Baroness that members of the publicpatients—have been the victims of violent assaults on NHS premises. That makes it important that the NHS has effective policies in place at local level to protect patients. Many of the measures that are being taken, including the introduction of closed-circuit television and the use of swipe cards in selected areas will have a protective effect for both patients and staff. At the same time, we are stepping up staff training so that they can deal with those difficult situations and, we hope, defuse what can otherwise become extremely nasty incidents.

My Lords, can the Minister tell us what proportion of those violent offences occur at weekends compared to other parts of the week? Anecdotally, it appears that many of those are alcohol-related incidents on Friday, Saturday and Sunday evenings. Would it not be wise for the Government to recommend that a higher number of security guards be available at times when those incidents are likely to take place?

My Lords, clearly, the experience of each individual NHS trust is different, but I certainly agree with the noble Lord that many accident and emergency departments face especial problems in the late hours of the weekends and the early hours of Saturday and Sunday mornings. As for the use of security officers, I agree that a proper security policy in each trust would consider the number of incidents and match the presence of security personnel and other staff to ensure that sufficient people are present to deal with such incidents. My impression is that from almost a standing position several years ago, the NHS has become much more fully geared-up to deal with those issues.

My Lords, were not the previous two supplementary questions an attempt to get the Minister to remark on alcohol and other substances? Is it not unusual for people in this country to become violent unless they are mentally unstable, have been taking either alcohol or other drugs or, possibly, have just got out of their motor car? If we removed all such cases from the incidence of violence in hospitals, would there be any violence left?

My Lords, I am afraid that the extensive research that I have undertaken—which is of course available—does not help to answer that question. We do not know the causes of each of those 85,000 recorded incidents of violence. The noble Viscount is absolutely right: substance misuse and alcohol are a cause of many incidents. Sometimes, where there has been a violent incident in the community—whether or not caused by drink—the trouble can follow injured people into the casualty department and NHS staff have to pick up the pieces.

In common with many other sectors of society, members of the public in hospitals are less patient than they used to be. Staff often have to deal with incidents of rage. We need to give out a clear message to the public that we will not tolerate such incidents in future. The zero-tolerance campaign is beginning to work. The example of Bart's and other hospitals, which have withheld treatment, shows that we are taking the matter seriously.

My Lords, does the Minister agree that the continued use of mixed-sex wards increases the chance of attacks—especially on women? Will the promise completely to phase out such wards by the end of 2002 be kept? When we speak of single-sex wards, we mean real single-sex wards, not merely partitions and curtains.

My Lords, the noble Lord has raised the question of mixed-sex wards on several occasions. I agree that they add to problems of security and violence, as well as being disliked by many patients in normal situations. We are well on the way to meeting that target.

My Lords, did the Minister read the balanced and responsible press release issued by the British Medical Association last November, which supported the zero-tolerance policy but also pointed out the ethical and practical difficulties for doctors in withdrawing treatment from violent patients? Does he accept that there may be genuine medical reasons why a patient may behave violently or abusively? Does not that present an ethical dilemma for the staff involved?

My Lords, I do not always associate the BMA with balanced press releases, but there is always hope. Yes, of course we must accept that there are ethical dimensions to the withholding of treatment. But we have discussed that carefully with representatives of the National Health Service. Life-saving treatment will always be available.

I mentioned the example of the approach taken at Bart's. There, they have introduced a policy of withdrawal of treatment from violent patients, known as the yellow and red card scheme. The use of yellow cards has a deterrent effect, and, although the trust has issued 12 yellow cards, it has proved necessary to issue only one red card.

There is a balance to be struck, and there is an ethical dimension. However, if we are to get over to the public the fact that such incidents will not be tolerated, we must show that we mean business.

asked Her Majesty's Government:

Whether they accept the conclusion of the International Corporate Governance Network that pressure from the international market-place is not a justification for rapidly rising boardroom salaries.

My Lords, it is for shareholders and remuneration committees to decide whether international market comparisons should be taken into account in setting the level of their directors' pay. The main concern for the Government is that there should be an effective linkage between pay and performance. The Directors' Remuneration Report Regulations, which we recently laid before Parliament, will improve the transparency, accountability and disclosure of linkage to performance.

My Lords, I welcome the steps to which my noble friend referred. Does he agree, however, with the finding of the International Corporate Governance Network that the attempts to justify boardroom pay increases averaging 10 per cent year on year—three times the average for the rest of the workforce—on the grounds of international market performance are spurious and unsustainable? Does the Minister agree with John Monks that the scrutiny of the work of remuneration committees by annual general meetings of shareholders—fewer than half of whom bother to vote—would be more credible if there were worker representation on the committees, as in the successful economies of Scandinavia?

My Lords, the report to which my noble friend refers—the International Corporate Governance Network report, Executive remuneration—the caucus race,was probably right to say that there was no clear justification for the continuous leap-frogging of settlements taking place in many cases. The information that the network provided on international comparisons was rather scant. The report said that more than 10 per cent of FTSE 100 companies now have a chief executive or chairman from another country. There is, therefore, some merit in the argument about international comparisons but not as much as to justify the use that has been made of it.

My noble friend referred to the representation of workers on remuneration committees. Under UK corporate governance structures, it is for shareholders and non-executive directors to make the decisions about remuneration. It is important to realise that best practice guidance states clearly that remuneration committees should be sensitive to the wider scene, including pay and employment conditions elsewhere in the group.

My Lords, the Minister referred to the reference in the report to the fact that 10 per cent of chief executives of FTSE 100 companies are of international origin. Does he accept that a significant number of chief executives of FTSE 100 companies bear no international comparison with regard to their remuneration?

The Minister probably answers this question at least once a month—certainly once every two months—from where he sits. Does he accept that Her Majesty's Government must make up their mind? Do they think that this is something to do with them, and, if so, what will they do about it? Or, do they think that it has nothing to do with them, in which case why does not the Minister say so?

My Lords, I agree with the noble Lord that many directors have no opportunity to go abroad to get another job and should not be compared to people on the international market.

The Government's line has been clear and consistent on the many occasions on which I have answered the question: it is for shareholders and remuneration committees to make the decisions. It is the Government's role to make certain that there is a proper framework, including transparency and accountability. That is why we are bringing in the regulations, which will mean that shareholders will have a chance to vote on the remuneration report produced by the directors. That is the right division of responsibility between the Government and the shareholders.

My Lords, on this occasion, I agree with what the Minister says. It must be up to shareholders to make the decision. The real resentment lies not in the initial salary of the board or the chief executive but in the fact that, when a company goes pear-shaped, it often seems that the chief executive walks away with a huge amount of compensation. Is not that the area on which the major shareholders—life companies, pension funds and so on—should concentrate? They should make certain that, at the point at which a company fails under particular boardroom leadership, salaries should be reduced and bonuses and stock options removed.

My Lords, as the noble Lord paid me the compliment of agreeing with me, I shall return the compliment and agree entirely with what he said. If a company fails, it is for shareholders to make certain that there is a proper linkage between pay and performance.

My Lords, my noble friend Lord Lea of Crondall is to be congratulated on bringing the matter to your Lordships' attention. As has been said, it depends on what the Government will do about it. My noble friend the Minister spoke about relating the payments to performance, but does he agree that the sort of huge increases that we see almost every week are paid when the companies are, in fact, losing money? That cannot be justified in any circumstances.

Does my noble friend agree that the Greenbury report of 1995 promised many things but has been a failure? Will he tell us—however briefly—the essential difference between that report and the report on the statutory instrument that is now before the House?

My Lords, we come again to the question of the linkage of pay and performance. The reason why the Government are bringing in the regulations is that the Greenbury report effectively recommended that boards should take new measures. Those measures have not, in fact, been taken, and it is clear to the Government that, unless there is legislation, best practice will not be followed. That is why we are introducing the regulations.

My Lords, at a convenient time after 3.30 p.m., my noble friend Lady Ashton of Upholland will, with the leave of the House, repeat a Statement which is being made in another place on education spending.

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

Moved, That the House do now resolve itself into Committee.—(Lord Sainsbury of Turville.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 [The Office of Fair Trading]:

moved Amendment No. 1:

Page 1, line 8, at end insert—

"() In discharging its general functions the OFT must, so far as is reasonably practicable, have regard to—

(a) the desirability of maintaining the competitive position of the UK;

(b) the need to minimise the adverse effects on competition that may arise from anything done in the discharge of those functions; and

(c) the objective of minimising the regulatory burdens placed on UK business and commerce.

() The OFT must make and maintain effective arrangements for consulting practitioners, consumers and organisations and individuals in UK business and commerce.

() In managing its affairs, the OFT must have regard to such generally accepted principles of good corporate governments as it is reasonable to regard as applicable to it"

The noble Lord said: Amendment No. 1 is one of a series of probing amendments designed to tease out the Government's views on what might generally be described as corporate management. Noble Lords will be aware that the Director-General of Fair Trading and his organisation are bodies established separate from government. That means that the Secretary of State for Trade and Industry is not directly accountable to your Lordships' House for the conduct of the Director-General of Fair Trading.

Since that is the case, it is extremely important that a constitutional system is established in the Bill which will ensure that the director-general and his board are fully accountable to Parliament. Amendment No. 1 is one of the amendments designed to achieve that objective.

Other amendments seek, first, to ensure that the chairman of the new board and the director-general of the new board are not one and the same person; secondly, to establish a system of reporting on an annual basis that will entitle your Lordships' House and another place to scrutinise fully the conduct of the director-general, his team and his board during the course of the previous year; and, thirdly, although it has not been made explicit on the face of the amendment, to enable the appointment of the director-general, before it is finally made by the Secretary of State, to be examined by the Select Committee on Trade and Industry of another place.

Bearing that in mind, I suggest to the Minister that a good example of how the relationship of an independent regulatory authority to the Government and to the Crown should function is to be found in the Financial Services and Markets Act 2000. The Minister will note that Section 2 of the Act sets out the authority's general duties, while subsection (3) of the section states:

"In discharging its general functions the Authority must have regard to".

The purpose of the section is to provide a framework of law within which the Financial Services Authority should operate. If it exceeds that framework, then the courts may entertain judicial review actions against the board or against any individual member of the board.

I seek to secure in Clause 1 the same objective with regard to this Bill; that is, to set out the general functions to which, so far as is reasonably practicable, the OFT must have regard. That will provide a statutory discipline within which the OFT has to operate.

Noble Lords will note that I have been extremely kind to the Minister. Instead of setting out seven or eight matters to which the OFT should have regard, I have listed only three. However, they are all important. The first is,

"the desirability of maintaining the competitive position of the UK".

That is not the same as ensuring that a particular market is competitive. I would submit that, when the OFT undertakes its work, it is appropriate to look at the competitive position of the United Kingdom in the international economy.

There is no point in reaching a certain decision on competition in the context of a special market only to discover that the scale of enterprises in that market is so small that they are incapable of taking on their major international competitors. Of course the scale of a company is only one factor, but the general point is pertinent. When the OFT examines the competitive position in the market, it should address the overall competitive position in the European and, indeed, the global market.

Paragraph (b) of my amendment complements paragraph (a) by declaring that if, as a result of having to intervene in the market, the OFT requires companies to observe certain regulatory standards, those standards should then be the minimum necessary. I do not think that the Minister will have any difficulty in entertaining that proposition because it is part of the Government's overall objective with regard to deregulation.

Finally, paragraph (c) asks the OFT to have regard to,

"the objective of minimising the regulatory burdens placed on UK business and commerce".

This form of wording would require the OFT to look further than individual companies functioning in the market and address the regulations that the Government themselves are making for particular markets. That mirrors a provision in the Financial Services and Markets Act where, as the noble Lord is very well aware, the Financial Services Authority is responsible for setting the overall competitiveness of its regulatory measures. It seeks simply to reflect that very important provision in the proposed Bill.

Turning from the amendment before the Committee to the general intention of the Bill, perhaps I may say at the outset that I look forward with enthusiasm to the Committee stage. I had the honour of sitting on the Opposition Front Bench during the passage of the 1998 Bill and the pleasure of looking straight in the eye of the noble Lord, Lord Borrie. I believe that he participated as regularly as I did.

When they have completed their assessment of the amendment, will the Government say why they think that this Bill is necessary at all. I ask that because less than four years have passed since the Competition Act became law, while many provisions of that Act did not take effect until several years later. In my judgment, we have not yet been able to assess clearly whether what was done in 1998 was sufficient to guarantee the competitive market that we all seek.

I suggest to the Government therefore that, in so far as the Bill addresses market competition, much of what is in it is premature. If the Bill completes its course and becomes an Act, the Government should think carefully about delaying the onset of its content until we see how the measures already in place have worked themselves through the economy.

I have taken a slight advantage on the opening amendment to raise a general point, and I hope that the Minister will forgive me for doing so. It is a matter that may well arise again later in the proceedings. I beg to move.

I shall say a few words in support of the amendment moved by my noble friend, in particular as regards the competitive position of the UK. It must be our objective, no matter what may be our political affiliation, to create within Britain world-class companies that can lead the way in their fields. That was a point I made on Second Reading. It is extremely important to ensure that the actions of the authority should not in any way inhibit such developments. There are altogether too many difficulties for British businesses competing on the world stage. The competition authority should have regard to any barriers they seek to put in the way of success.

A further important point was made by my noble friend with regard to the regulatory burden. It is something that arrives like barnacles on a ship, one by one. Each barnacle of itself may seem reasonable. Each barnacle has a protagonist who declares that, "This is an essential barnacle". However, over a period of time the ship of British business is slowed down by those barnacles. Unless a real effort is made to ensure that the ship is streamlined, our competitive position in the world will be affected.

I support both the important points made by my noble friend.

The question of why the Bill is necessary was covered in detail at Second Reading, but perhaps I may repeat the main issue which emerged from that debate. The Bill tackles issues which were not tackled by the Competition Act 1998 and seeks to develop our policies in those areas. We shall need to debate the Bill clause by clause. I am happy to debate any part of the Bill which Members of the Committee feel is not necessary and does not achieve new and important aims.

The amendment would place a number of demands on the OFT, not all of which are relevant to its remit. The first subsection of the amendment is particularly problematic. The OFT's goal is to,

"make markets work well for consumers".

Markets work well when there is vigorous competition between fair-dealing businesses. When markets work well, good businesses flourish. Competitive markets provide the best means of ensuring that the economy's resources are put to their best use by encouraging enterprise and efficiency and widening choice. Where markets work well, they provide strong incentives for good performance, encouraging firms to improve productivity, to reduce prices and to innovate, while rewarding consumers with lower prices, higher quality and wider choice. By encouraging efficiency, competition in the domestic market—whether between domestic firms alone or between those and overseas firms—also contributes to our international competitiveness.

The noble Lords, Lord Kingsland and Lord Hodgson, both commented on the desirability of maintaining the competitive position of the United Kingdom. That struck me as a throwback to the world of national champions and Japanese industrial policy, which I did not expect to hear from noble Lords opposite. Most of the accumulated evidence on national competitiveness shows clearly that people perform best in international markets where there is strong competition in home markets. Different countries strongly support the view that strong competition at home produces the champions who are successful in international markets. Attempts to choose national champions to protect businesses on the basis that they can build up a strong position in their home markets from which to launch attacks on international markets have again and again proved to be wrong.

Focusing on the broader objective in the way that the amendment suggests could lead the OFT to make short-term, narrow-sighted decisions. We believe that the right approach is for the OFT to focus on targeted functions, which will in turn drive up productivity. We want UK businesses to prosper through fair competition which plays by the rules. That is what the OFT should ensure.

The second issue in the first subsection relates to adverse effects on competition. Given the OFT's goal to,

"make markets work well for consumers",

the OFT is already well placed to ensure that the anticompetitive impacts of any of its actions are minimised.

The third issue in the subsection relates to minimising the regulatory burdens on UK businesses. This is not something which is wholly within the OFT's gift. The OFT must enforce laws and regulations made by Parliament. It does not itself make regulations. It will be consulting fully on how it intends to carry out many of its responsibilities under this Bill. The OFT is already fully seized of the importance of less regulatory approaches. For example, under Clause 8 of the Bill it will actively promote the use of good quality consumer codes of practice to help consumers to identify reputable traders and to give those traders a marketing edge.

As to the second subsection of the amendment, I agree that it is important that the OFT should consult widely on its activities. As I have said, it will do so on many of its responsibilities under the Bill. Indeed, it has already published three draft guideline documents on aspects of the Bill, with each one sent directly to a substantial number of business and consumer organisations and law firms. The drafts are also available to the wider public on the OFT website. The OFT will consult widely on its annual plan.

As to the final subsection of the amendment, I expect the OFT to act in accordance with the principles of good governance in so far as they are relevant to the OFT. I am not convinced, however, of the need to set this out in the Bill. That is more appropriate for documents such as the statement of purpose—the mission statement—and the annual plan. The OFT chairman can be summoned by parliamentary Select Committees. I am sure that the Trade and Industry Select Committee and others will be very interested indeed if they think at any time that the OFT has acted in a way that is contrary to good governance principles. This is a matter of good administration rather than something which is appropriate for the Bill.

I hope that I have reassured the noble Lord that some elements of his amendment are already catered for elsewhere and that others are not strictly relevant to the Bill. In view of these arguments, I invite the noble Lord to withdraw his amendment.

The Minister referred to giving reputable traders a market edge. I attended a meeting this morning where concern was expressed about the monopolistic position occupied by a very large company in the field of IT and software which could leave the Government and many traders vulnerable. Representations have been made to the current OFT—which it has not taken up—that it should do something about this abuse of a monopolistic position. I hope that the new OFT will, in this particular case, ensure that open sources and open standards for software are adopted. This would give people a competitive edge and ensure that one person does not dominate the market place. I agree that reputable traders should get a market edge, but we have to be careful not to buildup monopolistic positions which may be abused. This may be happening already.

I cannot comment on a situation when I do not know what it is. Clearly the Bill is directed towards ensuring, above all, that small companies are not put in an adverse position because of monopolistic companies in the market place. That is one of the main purposes of the Bill.

As to the point I made about reputable traders having a marketing edge, I simply meant that companies which sign up to codes of practice should have an advantage when it is known to their customers that they have done so.

In the case I have referred to it will be large companies and the Government which will be most disadvantaged. I shall tell the Minister about it later.

If the noble Earl writes to me, I shall certainly look into the situation.

I thank the Minister for his reply. The Minister will recall that, in the opening phases of my moving of the amendment, I drew his attention to the Financial Services and Markets Act 2000. Section 2(3)(e) of that Act mirrors paragraph (a) of the first subsection of my amendment. My amendment refers to,

"the desirability of maintaining the competitive position of the UK".

Section 2(3)(e) of the Financial Services and Markets Act states:

"In discharging its general functions the Authority must have regard to … the international character of financial services and markets and the desirability of maintaining the competitive position of the United Kingdom".

Why is it desirable that the Financial Services Authority should have this objective but undesirable that the OFT should have it?

Section 2(3)(f) of the Financial Services and Market Act refers to,

"the need to minimise the adverse effects on competition that may arise from anything done in the discharge of those functions".

If the Minister turns to paragraph (b) of my amendment, he will see,

"the need to minimise the adverse effects on competition that may arise from anything done in the discharge of those functions".

Paragraph (c) of my amendment mirrors almost entirely paragraph (g) in the Financial Services and Markets Act. What I am trying to elicit from the Minister is an understanding as to why the constitutional position of the Financial Services Authority should be so very different from that of the OFT.

I mean no disrespect to the Minister when I say that he made a rather disparaging remark about the commitment of myself and my colleagues on these Benches to central planning. I must say that I find that a hit rich coming from the Government Benches. But that aside, it was quite clear that the Government were prepared to adopt this formula in the Financial Services Act. So to the extent that the Minister's remark is a criticism of me, it must be a criticism also of the Government.

We are talking about organisations which are constituted to do radically different things. This is a body which is constituted specifically to deal with issues relating to competition. The Financial Services Act clearly has a different remit; namely, to control the financial services industry in this country. That is clearly completely different. There is no reason why every organisation should have the same set of objectives when they are doing completely different things.

With respect to the noble Lord, surely that strengthens my point. If the specific responsibilities of the OFT are exclusively about the management of competition, then the requirement that they address the international competitive context is all the more important.

I am most grateful to the Minister for his opening remarks and subsequent comments. I shall look at them closely in Hansard. I suspect that I shall wish to return to them on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

I beg to move that the House do now resume.

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

House resumed.

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by right honourable friend the Secretary of State for Education and Skills. The Statement is as follows:

"Yesterday, my right honourable friend the Chancellor confirmed that education is this Government's number one priority. Since 1997, we have broken the cycle of under-funding in education. But we have done more than that. We have demonstrated that our policies of resources for reform work.

"In 1997, we took the tough decision to focus our extra resources and reforms on early years and primary schools because we know that we have to get the basics right. The results are there to see: more nursery places; 500 Sure Start areas; and the biggest ever expansion in childcare. Every primary teacher has been re-trained in the teaching of literacy and numeracy and the result has been a huge leap in the performance of our 11 year-olds.

"We also laid the foundations for raising standards in secondary education. Again, where we committed resources for reform, we delivered results. The number of specialist schools increased from 181 in 1997 to 982 by September this year; and in these schools GCSE results are rising more swiftly. In our Excellence in Cities areas results are increasing faster than elsewhere. Our record is one of investment and reform, and thousands of pupils and parents have benefited from it.

"Because we know it works, it is now time to step up the pace of investment, matched by a step up in the pace of reform. England will now see education spending rise by an average of 6 per cent a year over the next three years. That is a £12.8 billion increase, a total investment of nearly £58 billion a year in 2005–06—more than £1,000 per pupil more in real terms than we inherited in 1997.

"In the time available to me today, I cannot do justice to every issue covered by my responsibilities as Secretary of State. Today I intend to focus on the reform of secondary education. But when we have completed our consultation on our reform document for further education, I will make further announcements. I can confirm that, subject to agreement to this reform, core unit funding in further education will increase by 1 per cent per annum in real terms over the next three years.

"We will publish in the autumn a 10-year strategy for our universities, setting out how we 'will deliver the twin goals of excellence in teaching and research and widening access and participation. But I can announce today, as part of the Government's commitment to research excellence, that we will substantially increase recurrent funding for research, raising the additional investment by over £200 million by 2005–06. Alongside the investment in the science budget announced by the Chancellor yesterday, this will enable our research to be truly world class.

"To carry on now to raise standards in our secondary schools, we need to make a decisive break with those parts of the existing comprehensive system that hold us back.

"In saying this, I want to be clear about one thing. This is not a return to the old, failed two-tier system. The comprehensive principle was right and remains right. Every child is of equal worth; where ability is not determined by the family or background you are born into; and where every child has a right to an education that meets their highest aspirations and helps them to achieve their individual potential. That is as true now as it has ever been.

"Without doubt, the move to comprehensive education brought progress. It has given more people the qualifications for higher education, and more children are gaining good GCSEs. It has led to an entitlement to a broad and balanced curriculum for all children; huge progress in the achievement of girls; and more life chances for many young people.

"But progress at secondary level has not been fast enough, and no one can say that what we have now is good enough. Too many pupils still go backwards between 11 and 14. Pupil behaviour too often deteriorates at secondary school. Half of 16 year-olds do not get five or more GCSEs at A to C. The UK still has one of the greatest class divides in education. Too many schools are failing or coasting along without stretching all their pupils.

"It has not achieved all we hoped for. So we need to be bolder and change our secondary system if we are deliver high standards for all our children. We need radical reform in four areas: school structures; school leadership; teaching and learning; and the link between rights and responsibilities both within schools and between schools and the broader community.

"First, the reform of school structures. In the past, the comprehensive system has been too uniform. There have been insufficient incentives for schools to improve. Excellence has been isolated and has not been used to raise standards across the school system as a whole.

"So we need a secondary system which, instead, promotes specialism and diversity; where every school is honest about its strengths and weaknesses and has clear incentives to improve; and where our best schools are rewarded for levering up standards in the rest.

"The new secondary system must have schools that are in some respects the same as each other. They must have high aspirations, a broad and balanced curriculum, good-quality teaching and leadership, fair admissions and clear routes of progression.

"But every school should be different as well. That is why specialist schools are central to our school reform. Their specialism is in addition to the national curriculum and encourages them to develop their own ethos and mission. Let me be clear: our aim is that, over time, every school which wants to be, and can be, a specialist school will be able to do so. I can announce today that we will increase the number of specialist schools to 2000 by 2006. More than half of our secondary schools will be specialist within four years.

But it is not just specialist schools. We will create at least 33 new academies by 2006, and new extended schools—each school with its own mission, each school with its own strengths, all contributing to raising standards.

"We need to build a ladder of achievement to make sure that every school has clear incentives to improve, a system in which every school knows where it stands, is challenged to raise its level, is incentivised and is supported when it does so. Rather than "one size fits all", we need an acknowledgement of the truth: that different schools are at different stages in school improvement and need different levels of challenge and support, freedoms and responsibilities.

"On this ladder of improvement, weak and failing schools will have extra resources, but matched to tough improvement programmes. And if schools do not improve, there will be quicker action to close them down, re-open them as academies, replace their leadership or let them be taken over by more successful schools. For coasting schools there will be incentives to develop school improvement plans and work towards the specialist status. For good schools, such as our specialist schools, training schools, and extended schools, there will be extra resources matched to the development of real centres of excellence in each school, whether in curriculum, teaching, inclusion, or partnerships for improvement. For our best schools there will be new resources and new freedom, but matched to new responsibilities to improve the school system as a whole.

"As a result of this ladder of improvement, a vital new principle for our new secondary system will be that for the first time we will be using our best schools and head teachers to lever up the rest. That is why we will encourage our best schools to expand. That is why we will promote our best schools taking over and running weak and failing schools. That is why we will provide incentives for our best schools to federate and improve standards in our weaker and coasting schools. That is why we will reward our best heads for taking on new roles as chief executives of clusters of schools.

"Today we are announcing that we will designate 300 advanced schools over the next four years. These schools will be charged with helping to lever up standards in our weaker schools and will have the resources to do so.

"But it is not only school structures we need to reform. Leadership is essential to the success of any school. We have already established the National College for School Leadership as the world's first institution dedicated to identifying and training excellent leaders in the school system. The college will ensure that every new head is properly qualified and that existing heads are properly supported and trained, with access to mentors from outside education. The college will take on new roles in developing a new generation of transformational leaders.

"We recognise that it is vital to get the best possible leadership for schools that face the toughest challenges. So from next year we will introduce a leadership incentive grant to make sure excellent leadership is in place in our most challenging secondary schools. The grant of about £125,000 a school will be paid to about 1,400 schools in Excellence in Cities areas, excellence clusters and schools in challenging circumstances outside those areas. Where schools are well led, the grant will be paid directly with no strings attached. Where leadership is weaker, the head and governors will need to agree a development plan with the director of education in their local authority. Where necessary, these plans will include the replacement of the head teacher if this is in the best interests of the school and its pupils.

"The third area for reform is teaching and learning. Every child realising their potential is what every teacher wants for their pupils and what every parent wants for their child. Increasingly, the new specialist secondary school system will be able to tailor education to the needs of each child. But that needs a radical change in how teachers use their expertise and their time, in the professional development they have, in how they use technology—in fact, in how they do their job.

"We have already been discussing with the profession how we can bring about these changes. Now we can back up these discussions with resources.

"The money schools receive through the standard spending assessment will rise 3.5 per cent in real terms for each of the next three years. On top of that record sum, the Chancellor has also announced a substantial increase in the school standards grant, paid direct to schools. The grant will increase by £325 million in 2003–04 and by £375 million in each of the following two years. That means that from next year, direct payments will rise by £50,000 a year to at least £165,000 for a typical secondary school in England. Direct payments to a typical primary school will rise by £10,000 to at least £50,000.

"This, together with the increase in general funding, can be used at head teachers' discretion. But I want to make absolutely clear that the extra school standards grant is conditional on reform of the way schools work. It must be matched by a commitment from across the schools sector to a restructured teaching profession and a reformed school workforce—more flexible, more diverse and focused on raising standards. We need a commitment to new professional roles for teachers. We need a commitment to new roles for school paraprofessionals, taking on new tasks in schools and supporting teachers. We need commitment to an improved pay and performance management regime that rewards excellent teaching and eliminates poor teaching. So we will set out in the autumn our more specific proposals and the process for achieving this agreement.

"We know we need to do more to tackle bureaucracy. We will reduce reporting requirements on the Standards Fund to a single annual return, with schools having additional flexibility on how grants can be spent.

"Finally, we must strengthen dramatically the link between rights and responsibilities. This new system needs to capture not only what schools can do for themselves, but how parents and the wider community can play their part. We must have zero tolerance of indiscipline in schools. Today I can announce a significant expansion of the measures taken earlier this year to tackle poor behaviour and crack down on indiscipline. We have already seen the success of learning support units—on-site centres that can better deal with the small minority of pupils who cannot settle and who disrupt others in the classroom. As part of a national behaviour strategy to be launched in the autumn, we are now able to announce that we will provide learning support units for every school where these are needed. There will be more police on site at our toughest schools. Outside schools, truancy sweeps will be extended.

"But broader than this, I want to break down the walls and do more to help schools become a central part of their communities. We will therefore be developing new extended schools, which will provide a range of services on site.

"Moving to the new comprehensive ideal means higher standards, zero tolerance of bad behaviour and a greater choice of good schools for parents.

"The Government have made their choice. We have chosen to make education our number one priority. We have backed this choice with sustained investment on an unprecedented scale, matched by reform of unprecedented ambition. We have a proven model of reform. We have the best teachers ever in our schools. We have the resources and the ambition to achieve the change. And the prize is worth winning".

My Lords, that concludes the Statement.

My Lords, I am grateful to the Minister for repeating the Statement made by her right honourable friend in another place. We already know that the Secretary of State is flexible in her use of language. For example, we read in today's papers that the Secretary of State deliberately used different language when negotiating with the Prime Minister from that she used when negotiating with the Chancellor. Nevertheless, she has been very successful and for that we congratulate her. However, the British people are less easily fooled and will make their own judgment over time.

This is a complex Statement and in parts it is a confusing one. The gap between rhetoric and reality haunts the Statement. It makes no mention of special educational needs. Every other part of education is mentioned, but not special educational needs. Reference is made to there being more than £1,000 more per pupil in real terms than was inherited in 1997. However, the Statement does not say that an unprecedented proportion of that money is controlled and allocated from the centre. Indeed, the Statement goes on to exacerbate that problem.

The Statement says:

"But when we have completed our consultation on our reform document for further education I will make further announcements".

It goes on:

"We will publish in the autumn a 10-year strategy for our universities".

What is the residual total sum available to answer the strategy for further education? What is the residual global sum that will be available to fund the 10-year strategy? At least the total sums should be known at this stage.

One could be forgiven for being confused by the Secretary of State's Statement, which includes the following:

"The comprehensive principle was right and remains right.…Without doubt the move to comprehensive education brought progress. It has given more people the qualifications for higher education; more children gaining good GCSEs; an entitlement to a broad and balanced curriculum for all children; huge progress in the achievement of girls; and more life chances for many young people".

It goes on:

"Too many pupils still go backwards between 11 and 14. Pupil behaviour too often deteriorates at secondary school. Half of 16 year-olds do not get five or more GCSEs at A to C. The UK still has one of the greatest class divides in education. Too many schools are coasting along without stretching all their pupils.… The comprehensive system has been too uniform: insufficient incentives for schools to improve; and excellence has been isolated and not used to raise standards across the school system as a whole".

Yet the Government claim that the comprehensive system was right and remains so. That is very confusing.

The noble Baroness referred to the ladder of improvement. She said that weak and failing schools would get extra resources, coasting schools would get extra resources, good schools, such as specialist schools, training schools and extended schools, would get extra resources and our best schools would get new resources and new freedom to match their new responsibilities. How much more money will be held back at the centre, thus denying core funding to all of our schools, in order to provide for the fairly large number of civil servants needed to make judgments on weak and failing schools, coasting schools, good schools such as specialist schools, and the so-called "best schools"? Which are the "best schools"? Are they the beacon schools, the extended schools or the advanced schools? Let us know what they are and who will be making that judgment.

There is only one mention in the Statement of bureaucracy, the one issue that dogs every school in the land. After our consideration of the Education Bill and our discussion of the bureaucracy issue, the noble Baroness now knows that, in every staff room in every school, there is a poster which states, "Please do what you can to persuade the House of Commons not to overturn the Secretary of State's duty to reduce the amount of regulation and bumf going into schools". All the Statement says is:

"To free up headteachers and teachers we know we need to do more to tackle bureaucracy. We will reduce reporting requirements on the Standards Fund to a single annual return, with schools having additional flexibility on how grants can be spent".

There is nothing about regulation, the daily bumf or the other forms of bureaucracy.

What we do know is that the Secretary of State is travelling even further down the path of central direction, second guessing from the centre and nitpicking interference in our schools. Today's Statement will not promote any improvement in what parents worry about. It will not help to solve the crisis in discipline, whatever has been said, which has seen 130 teachers seriously injured in violent incidents in schools in the past year alone. It will not help teachers to spend more time teaching rather than dealing with bureaucracy.

The Secretary of State already sends 4,500 pages of guidance and advice to every school annually. One thing that is surely predictable is the extra paperwork that will be generated by the changes announced today. This is not real reform, and it is certainly not reform that our schools need.

The Secretary of State talks tough about closing schools that miss their targets. It is proposed that teachers who miss their targets will probably lose their jobs. But what about government targets such as their truancy target? In 1998, the department set a target to cut truancy. In 2000, that target was strengthened. This year, however, the old target was scrapped and replaced with a new one which aims at a reduction that is 70 per cent less than the original target. Does the noble Baroness accept that this is an appalling example of double standards? If teachers miss a target, the teacher will be sacked. If Ministers miss a target, the target is sacked.

The centrepiece of the Statement is the introduction of new types of school. Will they replace beacon schools and centres of excellence? What will be the criteria to decide whether they should be extended and/or advanced schools? How will they be different from beacon schools and those in the centres of excellence? What will happen when a super head and/or a chief executive of an advanced school is tasked to take over four or five poorly performing schools? Will those poorly performing schools be headless? Will the new chief executive become the head of all of the schools? Or will those head teachers, who have a sovereign responsibility for their own school, Find themselves superseded by the new chief executive? How will a chief executive of four to six schools get to know the children and the staff in those schools? These are important practical issues which the Minister will have to address.

What message does the Minister have for the head teacher Janette Smith, from Lealands High School, in Luton? She is quoted today as saying of the Government's spending plans,

"It's always been tied up, attached to this initiative or that scheme. I need to be trusted to decide what my school needs".

I think that she is absolutely right. Many good heads are good precisely because they concentrate on every detail in their school. Today's proposals would take the best heads out of schools and make them strategic chief executives of half the schools in their area. What evidence does the Minister have that this is the best way of improving all the schools that the Secretary of State would not touch with a barge pole? There will be real worries, especially among parents with children at schools with good heads, that this is a gimmick that will do more harm than good.

What is the logic behind concentrating on 300 schools, out of 25,000, to solve the crisis? Would it not be better to focus directly on the failing schools, dealing with their problems, rather than proposing yet more gimmickry and interference?

For a Statement that is meant to set the course for education policy in this Parliament, there are several glaring gaps. There is nothing about reducing exam load in secondary schools and nothing about slimming down the national curriculum. As for further education—well, whither further education? Nothing has been said about the universities—where morale among both students and teachers is even lower than it is in the schools sector—other than a promise of more tomorrow. Does the noble Baroness accept that the dithering over student funding, on which we were promised a decision early in the new year, has contributed to this collapse in morale?

This Statement is a sad waste of an opportunity by the Government. Instead of retreating from the path of dictating to schools and too much bureaucracy and intervention, the Government have chosen to go further down that route than ever before. There will be more quangos, more targets and more regulation. When will they ever learn that micro-management from the centre is not the way to create world class schools'? The devil as always will be in the detail. We await the details, as will all teachers, governors and parents.

Finally, money without real reform will be wasted, as it has been over the past few years. There is an alternative vision for our schools whereby heads control the discipline policy; teachers are allowed to concentrate on teaching, not form filling; and parents know that the school is concerned with their children's needs and not with the latest initiative from the Government, such as that in regard to running ill thought through companies. The Government have chosen instead the dead hand of central control.

When the euphoria over additional money has settled to an air of reality, it will dawn on everyone that this is not reform but a recipe for continued crisis in our schools, colleges and universities. The Government talk devolution, but I am afraid that they do not understand the meaning of the word.

My Lords, given the time constraints, I shall try to be as brief as possible.

We on these Benches welcome the extra money that is going into education. It is long overdue. In 1997, the Government were elected on the back of the slogan "education, education, education", after which they proceeded to reduce the proportion of resources going into education. They are now, at long last, putting in what is necessary. Average annual spending per pupil in our state secondary schools is about £2,800. Average annual spending in private schools per secondary pupil is £6,000. It is not surprising that private schools do better in achievement as measured by examinations and so forth than state schools. It is long past the time when we needed more resources for our state schools. So we welcome that money.

We welcome, too, the leadership initiatives. For too long we have neglected leadership in schools. The training now being given to heads and deputy heads is necessary and long overdue. We also welcome the initiatives to increase the number of in-school learning support units. As far as possible, disruptive pupils must be kept within the school framework rather than expelled.

We have some reservations, however, about the tone of the Statement. The noble Baroness, Lady 131atch, mentioned the article in The Times today which described the two tones adopted by the Secretary of State. I feel that this Statement very much adopts the "new Labour lexicon", as David Charter put it. The emphasis is very much on centres of excellence, beacons of success and "radical reform" of the comprehensive system. However, I am a little unhappy about language such as,

"we will promote our best schools taking over and running weak and failing schools. That's why we will provide incentives for our best schools to federate and improve standards in our weaker…schools".

Yet, only a month or six weeks ago, in Committee in this House, when we discussed federation, we were assured by the Minister that federations will work only if they are entered into because schools want them and are committed to them. She said that federations will only be in the best interests of schools arid that it was vital that the decision to federate must be entirely voluntary. However, we find someone from No. 10 boasting on the front page of the Observer that we will force failing schools into federations. Thal is not what we want or the way in which we should be running the education system. I hope that that is not the intention. That appears to be the language of No. 10 rather than of No. 11, which is a little more emollient and, as David Charter says, in which the socialist semantics come forward.

We on these Benches are also concerned about the fact that the money will go directly to the schools. It is nice to see money going into the pockets of schools but that is yet another step towards getting rid of or bypassing LEAs because the money is put directly into the hands of the head. It will not be very long before those bodies are completely bypassed. Schools forums have been set up, as primary care trusts have been in the health service, to be shadow administrations and to ensure that there will be a convenient group of professionals and lay members who can take over the running of the schools at a local level when we no longer need the duly elected and accountable LEAs. We are worried by the moves that appear to be afoot in the Statement.

I echo the words of the noble Baroness, Lady Blatch, and point out that the Statement was billed as a Statement on education. However, it is not about education; it is about secondary schools. There was nothing about further education, although educational maintenance allowances were a big issue in yesterday's review. We are worried about work-based learning, which is a big issue. All the money from education or maintenance allowances will go to those who will continue in education. We had a very useful little debate last night on skills. One of the key issues is to involve those who start in work-based learning. For many who leave school with relatively low GCSE qualifications, work-based learning is a better route. It is important that we discuss further education at some point.

What about higher education? It has lacked resources for a very long time, but we heard absolutely nothing about it in the Statement. The issue has been put off once again until the autumn.

The money that has been routed to schools has gone into recruiting teachers—or the attempt to recruit teachers. One problem is that we have not got the teachers to fill the vacancies that are being created. Do the Government really believe that they can meet the needs for teaching that the funds will generate? How will they cope with that?

Finally, I am glad that extra resources are going into capital spending. We are on the verge of a huge digital revolution in schools. Whiteboards, individual laptops for school kids and so on will become essential within the next five years or so. Will there be enough money in schools to provide the necessary capital equipment that will be needed to keep up with that revolution?

My Lords, in view of the time, I shall be brief.

Special educational needs are a fundamental part of our inclusion strategy. In the Statement, I referred to the important issue of inclusion. I was sorry that the noble Baroness, Lady Blatch—unlike the noble Baroness, Lady Sharp—was unable to welcome at least in part the announcement of extra money for education.

We have discussed centralisation. The direct contributions to schools that were referred to in the Statement are an important part of ensuring that schools are able to spend the money directly. There will be £50,000 extra at the secondary level and 10,000 at the primary level. I am sorry that the noble Baroness, Lady Sharp, feels that that involves bypassing LEAs. I somehow feel that we cannot win in that regard. I make it clear to the noble Baroness that LEAs are crucial to the work that we do. We believe that direct payments involve a shared responsibility between central and local government for our educational system. The great majority of funding will continue through LEAs and the 3.5 per cent real terms increase each year should be welcomed.

The noble Baroness, Lady Blatch, referred to the comprehensive system and the importance of recognising where we have come from and where we are heading. The difference—it is fundamental to understand this—is that a system that decides, when children are 11, what kind of education they can access is fundamentally wrong. It is wrong in terms of what happens to those children and in terms of economics because it does not enable us to make high-quality education available to all children. We recognise the need to ensure that our education system is fit for its purpose in relation to the young people whom it serves.

The noble Baroness, Lady Blatch, asked about the ways of defining which schools were coasting and which were good schools. We have many measures. We are very pleased with our accountability framework, which enables us—through Ofsted and our "value added" tables, which are coming in—to see which schools perhaps need extra support.

The noble Baroness has previously raised the issue of bureaucracy. We are seeking to do something about that, as she said. It is worth pointing out that DfES administration costs account for less than 1 per cent of its overall budget. The administration costs settlement in the SR 2002 represents a 1.7 per cent reduction in real terms, which will not allow for large increases in the numbers of civil servants.

I turn to the issue of violence in schools. I said in the Statement that we are expanding our learning support units to all schools that feel that they need them. The noble Baroness, Lady Sharp, welcomed that. Those units, which play a crucial role, are having a dramatic effect dealing with behavioural issues in schools. We want that to expand. We are sticking to the existing truancy targets. It is important to address those issues carefully and rapidly. We recognise that there is still much that we have to do in that regard.

I turn to the role of head teachers who are truly excellent. Noble Lords on all sides of the House will have met many such head teachers in their time. We want to get those skills out into the schools sector. That does not mean that we will seek to make schools headless; rather, we want a more strategic role for those who wish to, are able to and can develop that role. The issue, in a sense, involves asking: where do they go next, having been an excellent head? Noble Lords will be aware of many examples of heads who have moved from one school to another for a short time in order to support the school and other head teachers have come in to continue their work. It is very important to expand that process.

My Lords, my noble friend Lady Blatch said that the Statement was in many ways complex and self-contradictory. I want to ask the Minister two general questions. First, how does she justify saying that the Government need to do more to tackle bureaucracy and, at the same time, making announcements that increase enormously the power of central government over the provision of education throughout the country? That will be the effect of the Government's approach.

Secondly, how does the Minister justify praising the principles of the comprehensive system when at the same time she is effectively scrapping it—rightly so—by recognising the importance of specialist different schools? She goes so far as to take credit for the fact that 50 per cent—I believe that that is the figure that she quoted—of our pupils will in future be in specialist different schools. Is it not unfortunate for the generation that has just left school that the Labour Party did not earlier take a more sensible view of education and recognise the damage that the comprehensive system was doing?

My Lords, it will not surprise the noble Lord, Lord Carlisle, that I believe that the comprehensive system has been a fundamental part of the achievement of all of our young people—of the generations who have had the benefit of that system. It is important for the noble Lord to understand our approach. With regard to our lack of desire to return to what went before, I repeat what I said earlier: this approach is not about deciding at the age of 11 which children are suitable for high-quality education and which children are suitable for another kind of education. Our approach involves a system in which admissions policies are fair and children in schools have the benefit of a broad and balanced curriculum and of specialisms within that school and other schools in the area. As new technology expands, I foresee real opportunities for children to benefit more widely from other schools and to have the education that helps them to achieve the best that they can. I should not wish to return to a system about which many people felt that at the age of 11 they were denied access to A-levels and university. That system is not appropriate.

I turn to bureaucracy. We recognise that there is an issue about ensuring that our teachers do not feel burdened by bureaucracy but we want to ensure that there is continuous improvement in our school system. We have a vital role to play in that regard.

My Lords, I congratulate the Minister and her colleagues on achieving a 1 per cent increase in GDP for education, as advocated in this House. However, perhaps I may mention to her that the cost of crime committed by those released from prisons exceeds that figure. According to the report from No. 10 issued this month by the Social Exclusion Unit, those who have not received education or training in prison are three times more likely to reengage in crime than those who did receive education and training.

Is the Minister aware that the report indicates that, whereas the money for pure education is ring-fenced, the money for vocational education—an issue that we debated last night—is not? In recent years, the sums spent on such education in the construction industry— an issue with which we were particularly concerned in our debate last night—have been greatly reduced. Will the Minister undertake to consider very carefully the wisdom of investing in people in prison to make them more fit to engage constructively in life after release? I know that the Minister feels strongly about that matter, but I should be grateful for her reassurance.

My Lords, I agree totally with the noble Lord, Lord Dearing, which will come as no surprise to him. It is most important that we tackle such issues, especially in relation to young men, who are of particular concern. The percentage of young men who have a criminal conviction by the time they are 30 is very high and that is deeply worrying. I cannot recall the figure off-hand but it is of the order of 25 per cent. In a previous life, I was involved in examining ways of engaging industry in supporting training within prisons. In many cases, remarkable results were achieved, and I believe that that work will continue. The noble Lord made a very valid point, which I shall consider.

My Lords, the response from these Benches is, "Yes, but" I shall not go into the "yeses" because there is not time, but I want to highlight one or two points. First, over the past few months I have been carrying out a tour of schools in the diocese. In doing so, I have picked up a growing concern about the resourcing of special needs—a point that I raised in a previous debate in your Lordlships' House. That also echoes what the noble Baroness, Lady Blatch, said.

Perhaps I may push the question theoretically. Is it possible to conceive that a school might fail because it is inadequately resourced in the area of special needs? That may be like asking whether it is possible for an angel to dance on a pinhead. But I put the question sharply because it concerns an issue which is felt increasingly keenly by our schools. I hasten to add that the issue is not one of failing but of the resourcing of special needs. I know that I speak for schools situated not only in my own patch.

The second point that I want to ernphasise goes back to what was said by the noble Baroness, Lady Sharp. There is a need for a strategy for further education. From recent meetings that I have had with principals of colleges of further education, I sense an enormous amount of courage among them. But increasingly I also sense that, while developments are taking place in education on other fronts—in secondary and higher education—those in further education are feeling neglected and squeezed out of the picture. I ask the Minister to urge the Minister for Education to address this very important area. It concerns many of our young people as well as those involved in adult learning.

My Lords, the right reverend Prelate has raised two very important points. The first concerns special educational needs. In my view, it is not a question of schools failing because they have inadequate resources. Some interesting discussions could be had about the word "adequate". However, we are clear that the aim of our investment in special educational needs is to support schools in funding the resources that they need. We have worked closely with local education authorities to achieve that.

As I am sure the right reverend Prelate would do, I pay tribute to all the schools that do fantastic work with children with special educational needs. Within our settlement, we want to ensure that we support those schools. As was mentioned in the Statement, we talk about inclusion as being an important part of that.

The right reverend Prelate referred to further education. The 1 per cent real terms annual increase is important. We shall obviously look closely at the subject of further education and there will be a great deal more to say on the issues that the right reverend Prelate raised. We want to see better rewards for high-performing staff in FE colleges. We want to ensure that the funding gap between school sixth-forms and colleges is acknowledged and examined, and we shall return to your Lordships' House with more details on that.

My Lords, clearly education is, or should be, child-centred. That issue has been raised by many other noble Lords today. I want to focus on the issue of child-centredness and ask my noble friend about the educational pathway that the child goes through from pre-school to further education. We all know that there are certain hiatuses where children experience difficulty. They dip and they fail, for example, between primary and secondary school.

This money is clearly welcome. Let us not be mean about that. But how will the extra funding serve to ease the way for young people to move successfully through the system from nursery school to higher education?

My Lords, my noble friend has posed a deeply philosophical question. As she said, there are important moments in a child's pathway through education where more must be done. The particular issue highlighted in the Statement is what we call the "transition" between primary and secondary school. That is one of the most important, and often the most memorable, experiences of any person's life, including, I suggest, that of most noble Lords.

We want to ensure that we engage in the links between our children's early years education and the foundation stage through to the end of the reception year. We want them to have a breadth of experience that will enable them better to engage in a formal education, if I may describe it as such, through to key stage 2. There, we must ensure that their basic needs are met so that they can access a secondary curriculum. An increasing number of our young people should feel able to continue in or rejoin further and higher education through to adult skills.

Education presents a long journey from cradle to grave. My noble friend is absolutely right. A key part of what we do must focus on the important issues of education, maintenance allowances, the transition to secondary school, and foundation to key stage 1, where children need extra support.

My Lords, I begin by declaring an interest as the president of the Association for Science Education. In that context, I ask the noble Baroness whether her attention has been drawn to a recent report showing a severely deteriorating supply of quality teachers of science in our schools and particularly in the subjects of mathematics and physics.

In yesterday's Statement we were told that the DTI has won a significant increase in money for science and scientific research. But where will the people come from if the schools cannot recruit the necessary qualified teachers to teach young people science and get them into university in that subject? Is it not clear that the Government must be brave and recognise that for many scientific disciplines recruitment is taking place in a market situation? Unless the market rate of pay for such teachers is met by the schools and those schools can offer jobs, they will not be able to obtain the necessary quality of teachers. Is it not clear that there needs to be more joined-up government so that the noble Baroness's department can match the aspirations of the Office of Science and Technology? The noble Lord, Lord Sainsbury of Turville, is in his place. The present situation does not add up. There must be an approach that will give schools far greater flexibility in what they pay to science teachers.

My Lords, perhaps I may say to the noble Lord, Lord Jenkin, that there is a degree of flexibility within the budgets now within schools which enables teachers to be paid differentially, if that is what schools want. I take the point made by the noble Lord. From memory, I believe that figures show that the number of science teachers is increasing. However, in certain disciplines within science we are not seeing the inroads we should like. I suspect that the noble Lord referred to one such discipline. I think also of the Roberts report in that regard.

We shall match the increased investment in the science budget by a significant increase in HEFCE's recurrent funding for university research. That is an important part of the spending review. My noble friend Lord Sainsbury and I are working closely together. As noble Lords may be aware from a recent announcement, we have extended science year for a further year, which will perhaps become, "science year plus one", in order to begin to develop for our secondary schools in particular curriculum-wide new methods and techniques. We are working with our best teachers carefully to consider mentoring roles, the role of business in supporting our young scientists and the important issue of the recruitment and retention of science teachers, as raised by the noble Lord, Lord Jenkin.

My Lords, what is my noble friend's response to the accusations made today and, indeed, during our education debates in recent weeks that the Government are deliberately seeking to reduce the role and work of local education authorities? The financial aspect is perhaps of most importance.

From time to time there have been specific examples of the newly proposed forums in which LEA representatives are barred from taking part. It would seem to me, perhaps because of my age and experience, that members of LEAs have an important and particular role to play. I am a little concerned that the contributions made by LEAs over many years should now be diminished or, indeed, in some cases abolished. I hope that my noble friend will say something positive about that criticism.

My Lords, during the passage of the Education Bill I spent much time trying to reassure noble Lords and, indeed, put it on the face of the Bill—I believe the noble Baroness, Lady Sharp, will agree that it is now on the face of the Bill in several places—that local education authorities have a key role to play. There is no question but that they have a vital and continuing role to play in education. However, individually they do not manage schools.

We have to consider the relationship between schools and local and central government. That has always been a dynamic and, dare I say, on occasions shifting relationship which needs to be constantly monitored if we are to ensure that it works effectively. The increase of 3.5 per cent will go through local education authorities. We have announced direct payments to schools in some cases. We believe that it is appropriate for it to be done in that way. However, local education authorities continue to play a vital role within schools and our education system. In my view, that role is not diminished but may change over time, as all good relationships should.

Noble Lords who may have watched what happened in another place last night will know that we thought long and hard about how to ensure that local education authorities are involved with our schools forums. Part of their purpose has always been to provide the opportunity for schools to understand the role of local education authorities as much as for local education authorities to be involved in schools. That is an important and continuing role.

My Lords, I declare the same interest that I declared yesterday; that is as deputy chairman of the council of the University of London. When I asked then about the restoration and renewal of our world-class universities, I was reminded about research spending but otherwise referred to today's Statement. In the past year the research assessments have not been fully funded. Is there anything else the Minister can say about universities in advance of the autumn strategy statement, the delay of which has so far been unexplained?

My Lords, I do not believe that the statement referred to by the noble Lord, Lord Brooke, has been delayed. We promised to put forward a strategy statement which will encompass the range of issues across higher education. Noble Lords involved in universities have been asking for that for some time. I have often been challenged about our desire to have 50 per cent of young people by the age of 30 involved in higher education and the consequences and implications of that for the university sector.

The purpose behind the strategy statement is to think more broadly about the way forward on that issue. I hope that noble Lords will welcome that. However, I recognise that many noble Lords involved in universities will want to see substantial statements made at that time in order to encompass the different issues raised. We are obviously committed to the targets we set ourselves. We expect the Comprehensive Spending Review to be good news for our universities and students. I look forward to being able to give much more detail to noble Lords at that time.

My Lords, I thank my noble friend for repeating the Statement and wonder whether she can expand a little on two aspects. First, have decisions been taken about the geographical spread of the specialist schools and the advanced schools? Secondly, I refer to the question of zero tolerance of bad behaviour. The effect on schools of disruptive behaviour has been mentioned several times and is important. Is it too early to ask about the kind of measures that will be considered to deal with disruptive behaviour?

My Lords, we have not yet made decisions about the geographical spread of schools. However, we hope to ensure that areas of the country have the opportunity to come forward. That is particularly pertinent in our rural communities, where we are in discussion. As noble Lords will be aware, schools are in discussion with each other about specialist schools status. In Stevenage, for example, the seven secondary schools are discussing a collaborative model of specialist school, and such discussion is common. We shall ensure that the specialist schools that come into existence represent our country and that schools in more challenging circumstances will not feel that they cannot participate.

As regards zero tolerance of bad behaviour, our learning support units have been a success. That is why I made clear in the Statement that every school that needs a learning support unit will be able to have one on site, providing opportunities to work with young people and keep them within the school. It is also important to remind the House of the important work done by pupil referral units and educational psychologists, and of the way in which we have now moved to ensure that any child who is permanently excluded from school is still in full-time education. From September next that will be a requirement across all education authorities, which are working well towards that. That is important.

moved Amendment No. 2:

Page 191, line 5, leave out "a" and insert "an independent"

The noble Lord said: In moving Amendment No. 5 I shall start by making a brief declaration of tangential interest. Until last week I was secretary of the All-Party Group on Retail Industry. I had served in that post for 20 years and someone else has now taken my place. Furthermore, I have a lifelong association with the Co-operative movement. I have consulted with and been consulted by the British Retail Consortium which, as the Committee will be aware, represents 90 per cent of retail sales in this country. Therefore, I know that the Committee will understand that it takes a keen interest in these matters.

The Minister will not need reminding that in its submission at an earlier time the BRC welcomed the proposal to establish the OFT as the statutory authority; called for guidelines to distinguish between day-to-day and strategic matters; and supported a degree of flexibility in the structure and size of the board with a minimum and maximum number of voting members to be specified in the legislation to avoid expanding the board as a way of changing the general tenor of its decisions. It is envisaged that co-opted, non-voting members will provide additional expertise and a majority of outsiders.

As the Minister and Members of the Committee are aware, at present the Bill provides for a chairman and at least four other members. The members may be removed only for incapacity or misbehaviour, which, to some extent, covers the concerns over the nature of the board being changed. During the consultation period, the BRC certainly advised the Minister in no uncertain terms that it was strongly opposed to the idea that the Director-General of Fair Trading should automatically chair the board, and called for an independent chairman. It also called for board members with experience and a reasonable balance of experience and interests to be represented on the board.

Having given the Committee that outline explanation, I simply want to point out that the intention behind these amendments is to try to tackle what one might call the "governance" of the new arrangements. The idea of an independent chairman has been proposed as an alternative to leaving this as an option and appointing the Director-General of Fair Trading as chairman which, I understand, is the current intention. It would remove officials from the OFT board, leaving them the option of being co-opted and thereby retaining the possibility of sitting on working groups and sub-committees.

The amendments tabled in my name seek to limit the maximum number of board members to avoid the possibility of the board being expanded if its decisions are not acceptable to the Secretary of State. We are really talking about four, five, or six members, though the intended number under the Bill is four. Amendment No. 4 seeks to insert reference to a number "no greater than six", and there is a further amendment in this group tabled in the name of the noble Lord, Lord Hodgson, which proposes that instead of four members there should be six. These are matters of judgment and of experience.

The amendments tabled in my name are what I call "benign". Others would call them "probing" amendments; in other words, they are not intended to damage the Bill. The intention is to seek from the Minister some assurance that the fears and concerns that I have expressed may very well be unfounded. I beg to move.

Amendment No. 3A, which is tabled in my name, has been included in this grouping. I must say that I find myself in agreement with much of what the noble Lord, Lord Graham of Edmonton, has just said. In particular, I believe that it is most important to emphasise the independence of the chairman because the heart of this Bill is the creation of a body that is free from political interference.

My amendment seeks to expand the board from four to six members, simply because I believe that four is too small a number. There is a danger that this provision could be too narrowly drawn and, possibly, too introverted. When the matter was raised in debate in another place, the Minister said, "We've put down four, but we always expect to have more than four". I never like that kind of response; indeed, I never feel very happy about it. If we want to have more than four members, it seems to me that we should have more than four and that the Bill should specify that number.

We are talking about a body with a strategic function that is very important to British industry. When we deal later with Amendment No. 14, tabled in the name of the noble Lord, Lord Borrie, we shall no doubt discuss its function and its approach. However, it definitely needs to command public respect and confidence. In my view, a board of four members is insufficiently widely drawn to be able to achieve that aim.

I support the general principle behind these amendments. When he spoke earlier, the Minister dismissed the parallels between this Bill and the Financial Services and Markets Act 2000 when it was being considered in this House—the legislation that created the Financial Services Authority. Essentially, we are dealing with the whole issue of corporate governance and accountability. It is the division of responsibility as between an executive authority and those who will govern or supervise it.

When creating bodies that are quangos with enormous power, it seems to me to be eminently sensible for the Government to follow the best principles of corporate governance, which is what these amendments seek to do. The position of chairman and that of chief executive should be separate; there is no rationale for combining them. There should be a sensible division of those responsibilities. I support the amendments.

The noble Lord, Lord Graham, should be congratulated on tabling some very relevant amendments. I thank my noble friend Lord Hodgson for adding some important points as regards the number of board members involved. As the noble Lord, Lord Sharman, has just pointed out, there is something of an anomaly in the Minister's refusal to acknowledge that there is any precedent in the Financial Services and Markets Act. Indeed, in a rather challenging statement the noble Lord virtually accused my noble friend Lord Kingsland of being a Little Englander—"a throwback to the world of national champions" and Japanese industrialists. In fact, all my noble friend was doing was quoting from the Minister's own Act; namely, the Financial Services and Markets Act 2000.

We are moving to yet another important area that I suppose in many ways lies behind a large part of this Bill. There is a paradox here. At present, everyone refers to the OFT, the Office of Fair Trading; but, in fact, there is no such organisation. There is only a Director-General of Fair Trading. The Government now seek to establish the OFT, which everyone thought was already established—but was not—and to abolish the post of Director-General of Fair Trading. We shall deal shortly with amendments in respect of which I shall be asking the Minister to justify that move.

As regards the setting up of the OFT, the noble Lord, Lord Graham, is quite right to advise us to perhaps draw back and review exactly what we are seeking to establish under the Bill. This is an excellent opportunity to do so. There is a confusion in the mind of the Government regarding the chairman, the chief executive and the director-general. That confusion came to light during the debate in Standing Committee B in another place on 16th April. No doubt Members of the Committee have spent some time reading carefully the Official Report of such debates. When discussing the Office of Fair Trading, Miss Melanie Johnson said that the Director-General of Fair Trading,

"currently has a wide range of functions in the areas of competition and consumer protection, many of which are being reformed in the Bill. The Government believe that in the light of the reforms, it is no longer appropriate for all those powers to be vested in one individual".— [Official Report, Commons, Standing Committee B, 16/4/02; col. 12.]

I return to the confusion. The noble Lord, Lord Borrie, did me a great favour: he referred me to The Sunday Times advertisement, which seeks to preview what the Government are expecting us to do; namely, to rubber-stamp their Bill. In seeking non-executive directors for this strategic board, there is a bland statement in that advertisement that the present Director-General of Fair Trading will be the chairman and chief executive of the board. I repeat what the Minister said in another place; namely, that it is no longer appropriate for such powers to be vested in one individual.

The noble Lord, Lord Sharman, is quite right. No doubt we shall return to the issue a little later in our debates—the issue of vesting all the powers in the chairman and the chief executive and of both those positions being taken by one individual. This emphasises the importance of the points being made by my noble friend Lord Hodgson and by the noble Lord, Lord Graham of Edmonton. We should examine what kind of people will be serving on the board.

Some later amendments seek to ensure that. there will be on the board people who are active in industry and commerce, but the amendments now before the Committee give us an opportunity to consider 'whether members of the board should be employees of the OFT. Presumably, the chief executive would be an employee of the OFT. Some confusion arises, which I hope the Minister will put right.

Then we turn to numbers. With all the powers vested in one person—the chairman and chief executive—it is essential that there be some strong directors. But we are told that if we wish to apply for the position, we will need to commit only a minimum of 30 days out of a total of 365. So that is not 30 days a month, as I suspect the present director-general would say he works; it is a minimum of 30 days a year.

What do applicants need to qualify? They need a strong record at senior level in their own field. There is nothing in the advertisement about independence; nothing about being employees. I am happy to join with the noble Lord, Lord Graham, in requesting an explanation of those matters.

How many board members are there to be? The initial view was that there would be four or five. That was contained in the original press release. But then Melanie Johnson—helpful, as she always is—said in Standing Committee B,

"We are looking at five to seven members".— [Officiai Report. Commons, Standing Committee B, col. 19]

Can the Minister clarify how many will serve on the board? Presumably the department is receiving lots of applications as a result of the advertisement last month, no doubt anticipating a speedy Royal Assent—not, of course, something they can predict. However, when all the applications are in, the department must have in mind exactly how many members there are to be.

We shall discuss in a moment what parts of the economy the board members are to be drawn from. But the only response to the suggestion that the powers must not be vested in one individual is, "We will have five to seven and they need only sit 30 days a year". That is not adequate. I look forward to the Minister's response.

I am glad I was able to assist the noble Lord, Lord Hunt of Wirral, by pointing to the advertisement in the Sunday Times. That revealed a number of things, including the fact that the present Director-General of Fair Trading—not myself; I have not held that role for 10 years—Mr John Vickers, is expected to be the chairman and chief executive.

I want to make two points in relation to my noble friend's amendment. First, unlike some Members of the Committee—for example, the noble Lord, Lord Sharman—I do not see any necessary play across from corporate governance and how a specific governmental authority should be run. Therefore I do not automatically see that, in relation to the Office of Fair Trading, the chairman and chief executive should be two separate persons. I remind those Members of the Committee on the Opposition Front Bench who are so fond of the Financial Services Authority that Sir Howard Davies is both chairman and chief executive of that body, although the noble Lord, Lord Kingsland, will remember, as I do, how much disputed that was at the time the Bill went through.

The noble Lord will recall that these Benches fought extremely hard to try to ensure that the position of chairman and director-general of the Financial Services Authority were separately held. It was a battle which, in the end, we lost.

That is absolutely correct.

I draw the noble Lord's attention to the annual report of the Financial Services Authority in which it justifies the combining of the titles of chairman and chief executive by reference to the fact that executive responsibility is divided among other members of the board, including members who are "managing directors". It concludes, as verified by the independent auditors of that body, that they are in compliance with the Cadbury code which recommends the division of those separate responsibilities.

I am grateful to the noble Lord, Lord Sharman. I persist with my original point that I do not necessarily see any write-across from corporate governance in the private field of companies to how a governmental authority should be run.

My other point on Amendment No. 2 is that, as I see it, it is not intended that Mr Vickers should be an employee of the OFT or that the members of the new body will be employees. As the schedule indicates at various points, they will be appointed on a certain salary for a certain period of time and will clearly be different from and unlike the employees of the OFT who would normally be full-time members of the Civil Service. That has been the case since the Office of Fair Trading was set up in 1973. All members of staff were civil servants except the Director-General of Fair Trading whose special provisions, closely followed in Schedule 1, meant that dismissal could only occur on grounds of incapacity or misbehaviour and that the occupant of the post had a five-year contract which, indeed, is being continued.

Therefore the intention is already established that the chairman should be independent and should not be an employee. As for the numbers, I do not have a view. I shall be just as interested as other Members of the Committee in what the Minister has to say.

Before it becomes part of the mythology of this debate perhaps I can say that in no way did I dismiss the Financial Services Authority. I felt I was being rather precise in saying that there was not an automatic read-across from the objectives of a Financial Services Authority to the OFT, which is a rather more modest statement of my position.

Amendment No. 2 aims to make the chairman independent. We are doing much in this Bill to increase the independence of the OFT from Ministers and the chairman's role will be consistent with that.

Taken with Amendment No. 3, this amendment would prevent an employee of the OFT being appointed chairman. That is not necessarily the right way forward. As drafted the Bill does not limit who may be appointed chairman. Employees could apply for the post when advertised and be considered alongside other candidates. As Members of the Committee will be aware, we are intending to appoint John Vickers as the first chairman for the remainder of his existing Director-General of Fair Trading term.

In terms of independence we are already taking a significant step in depersonalising regulation by abolishing the post of DGFT and replacing it with a statutory authority—a board. Because of his particular skills and to provide for some continuity through this period of change at OFT. we intend to appoint John Vickers as chairman with no separate appointment of chief executive. I do not accept that there is a parallel here between having a chairman and chief executive and having a board; it is having a board which goes a long way to depersonalise the role. We have said that that is what we are doing. There is no parallel between doing that on the one hand and having the same person as chairman and chief executive, on the other.

The Bill provides for flexibility in the future in this area. John Vickers will lead the OFT through the upcoming period of change, working together with the board. He will be independent of Ministers and accountable for the OFT's actions. Similarly, Amendment No. 5 would prevent OFT employees taking up any OFT board appointment. I am sympathetic to the idea that the board should have strong non-executive representation; that is, people who have not been employed by the OFT. Indeed, we expect the final board to have more non-executive members. But I am not convinced that the board should be entirely non-executive. The Bill does not preclude OFT employees being appointed to the board. It is vital as OFT moves forward that its senior managers, through executive members of the board, are fully engaged in the board process. The board will play an important role in steering OFT through a period of change as it takes forward its new powers and responsibilities and its increased independence from Ministers. It is crucial that the executive team is part of that process. But both executive and non-executive members of the board will be independent of Ministers and bound by the rules on conflict of interest.

Amendment No. 4 would set a maximum number of six members of the OFT board. Amendment No. 3A would change the minimum number of members from four to six.

We have not set a maximum size for the board in the Bill because we believe that some flexibility is important if the Bill is to stand the test of time. We believe that the board will need to have at least five members if it is to hold a sufficient balance and range of skills and experience. I am happy to confirm that, as my honourable colleague said in another place, we expect the final board to be between five and seven members, including the chairman, and with more non-executives than executives. That seems to be about the right size to ensure a good range of expert views and expertise without becoming too unwieldy. But, by building some flexibility into the board size, we can ensure that the practice of board appointment reflects the realities of the time.

I accept that the amendments of my noble friend Lord Graham are benign but I think that they are taken account of in the way that we are setting up the board. In view of these arguments I invite him to withdraw his amendment.

I am grateful to the Minister. The past 23 minutes has been well spent. I plead in aid the advice I have received from the British Retail Consortium. Its members have expressed their fears, concerns or alarms that what is on the face of the Bill appears to be detrimental to their interests. When I discuss today's proceedings with them, I suspect they will point out how the Minister has explained how he envisages the board developing. With the flexibility that will be given to the new board, I imagine that my colleagues outside the House will be reasonably reassured. I shall consult with them. If necessary, I shall return with another amendment at a later stage. At this point, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 6:

Page 191, line 6, at end insert "of whom at least 50% will be currently active in industry or commerce at the time of their appointment"

The noble Lord said: Amendment No. 6 seeks to provide that at least 50 per cent of board appointees will be currently active in industry or commerce. My concern relates to the advertisement in the The Sunday Times on 30th June. The extract from the advertisement stated that candidates for the non-executive posts on the strategic board will need to demonstrate a strong track record at senior level in their own field,

"which could include business".

Those are hardly comforting words when I look at the importance of this body and the need for hands-on industrial or commercial activity.

Obviously, I would not want to proscribe too tightly the importance of having a wide range of interests on the board. Equally, we would not want it to be a parking place for former civil servants, although I have considerable respect, as a former Civil Service Minister, for former members of that great service. But, with the OFT having such a key part to play in the economy, we need to ensure that at least half the members, if not more, will have that activity in industry or commerce at the time of their appointment.

I recall a much greater reassurance being given at the time that the Bill was previewed by Mr Byers, the then Secretary of State. In May 2000, in a Department of Trade and Industry press release, he stated that,

"board members will give a wider range of expertise to the organisation, rather than executive power resting with one person. This will give businesses a stronger voice at the heart of the OFT".

Obviously consumers need to have a stronger voice, and I am sure that they will. But why is the advertisement so quiet on that clear commitment that businesses would have a stronger voice by just saying that,

"candidates could come from business".

My concern is reinforced by knowledge of the action by the Director-General of Fair Trading since he took over from Mr Bridgeman. I know John Vickers and I have enormous respect for his experience and expertise. On the Financial Services and Markets Bill we had equal respect for Howard Davies. But it should not in any way influence our overall altitude to legislation which has to last for generations to come.

Mr Vickers has set up a four-member advisory panel that meets monthly to discuss policy., strategy, research and communication. It includes a former editor of the Financial Times and a leading competition academic and author. It may be made clear to me by the Minister that this body is purely advisory. No doubt it was in no way intended to be a shadow board or a pre-cursor to the statutory hoard. But it gives us a feel for the kind of relationship that may exist in the future between the chairman and the chief executive and his strategic board.

I suppose that we could guess from the reaction of the OFT and the director-general that the composition of the new board would be different from that of the advisory panel. It would be helpful if the Minister could give us his more detailed thinking on that point.

When one analyses the powers that will be within this new body, one recognises immediately the 'vital need for people from the heart of industry and commerce to be well represented. That is why I very much hope the Minister will carefully consider the amendment. I beg to move.

I support what my noble friend has just said. His amendment is rather more elegant than mine which refers to the,

"directors of public limited companies".

A great deal of the burden of this legislation will fall on the public limited companies. Therefore, people with practical experience of working on a board of a plc will know what it is like at the sharp end; to be on the receiving end of the decisions of this body. That applies widely, but its sharpest application will be on that body of companies. As my noble friend has said, if this body is to be effective and garner respect for what it is doing it will need real experience. I look forward to hearing what the Minister has to say in order to reassure us on those points.

I shall be extremely brief, but I also rise to support my noble friend on the Front Bench—in particular, his reference to the advertisement and its reference to business. I have previously cited in this House an advertisement in the Church Times in the 1930s: "Rural curate required (slow left-arm bowler preferred)". On many occasions, the words inside parentheses are more revealing than those outside them. The whole Committee should be grateful to my noble friend and, I gather, indirectly to the noble Lord, Lord Borrie, for having drawn that matter to our attention.

It was helpful of the noble Lord, Lord Hunt, to supply that quotation, but it would have been more helpful if he had cited the whole sentence, not just a part of it. Perhaps I may do so. It states:

"Candidates will need to demonstrate expertise in competition or consumer protection issues, with a strong track record at senior level in their own field, which could include business, regulated industries, or public bodies including NGOs".

In other words, the word "include" applies to those other bodies, it is in no way diminishing to the word "business". Such an interpretation would be wrong.

I am pretty sure—this will appear in Hansard, so I hope that this is so—that, among the five to seven members, there will be two people from the world of business, who may well be directors of public limited companies. But, having been a distinguished Minister for many years, the noble Lord, Lord Hunt, knows only too well that it is not appropriate for Ministers to suggest a close limiting of the formula set out in legislation for appointments to such boards.

The amendments would write into the Bill that a proportion of the Office of Fair Trading board must be active businessmen at the time of their appointment. I share the Committee's desire for strong candidates from business to apply to be members of the OFT board. Clearly, their experience and insight would be extremely valuable. But we will run a fair and open competition to appoint those members. We want to appoint people with a range of skills, expertise and abilities, as the advertisement demonstrates.

We will be looking for at least some candidates to have a wide ranging and in-depth experience of competition and consumer issues. I see no reason why a former editor of the Financial Times, or a former academic expert on competition policy should not be able to play a part on the board. I draw the Committee's attention to the long and distinguished career of my noble friend Lord Borrie as Director-General of Fair Trading. I may be mistaken, but I do not think that he had long business experience. We want those who are the best people to do the job and who have experience from a wide variety of backgrounds.

I do not think that it would right or fair to say now that any proportion or number of those appointed will come from one background or another—to impose a quota. If we stipulate that a certain number should come from industry, should we then also stipulate that a number should represent consumers? We will appoint the best candidates from the recruitment process. Because of their experience, I hope that a number of those will come from the business community. That would add great value to the board.

In view of those arguments, I invite the noble Lord to withdraw the amendment.

I thought that the case for the amendment had been so eloquently and convincingly made by my noble friend that there would be no point in my intervening. Knowing and respecting the Minister as I do, I was reasonably confident that he would say that he could not accept the amendment because he did not like its drafting or because the point was made sufficiently elsewhere in the Bill. The latter is a powerful argument when dealing with a Bill of this length. I should be the first to admit that there are many things in the Bill that may still surprise me. I am not aware of what every line in this compendium says.

What caught my ear and my attention was the Minister saying, "We will choose the best people". I should be happy to think that all Ministers had the same acumen, intelligence and experience as has the noble Lord. But unfortunately and unhappily, that is not so. Were another Government to be in power, I can well hear myself saying exactly the same. I do not always feel total confidence in Ministers when they say that they intend to appoint the best possible people.

Personally, like my noble friends, I look for some assurance that people with adequate current experience of business—people who know what can be the impact of such laws—will be on the board as a certainty. That is not much to ask. I am astonished by my moderation, but the very least that the noble Lord should say is that he has been much impressed by the weight of argument, that he will take the matter away to consider it and may return to it later.

What a wonderful performance by my noble friend Lord Peyton. When I hear him make speeches in this wonderful Chamber, I am always impressed by the cogency of his argument. When his argument is in support of an amendment that I have moved, I find it overwhelming. He is absolutely right. Although the noble Lord, Lord Borrie, may like to read the whole of the advertisement, there is a huge difference between an advertisement that says that a strong track record,

"that could include business, regulated industries, or public bodies including NGOs",

and what Mr Byers said of the setting up of this new body. He said:

"This will give businesses a stronger voice at the heart of the OFT".

My noble friend Lord Hodgson made a good point: we are discussing a new body—I almost said, "a new body, not an old Borrie"; but that would not be courteous. I am sure that the noble Lord, Lord Borrie will agree that the Director-General of Fair Trading is now—and in particular, will be in the new body—a different person with a different range of functions from those which the noble Lord assumed when he was first appointed.

We shall have to go away to think carefully about what the Minister has said, because he has not given us the reassurance that we sought. But for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 7:

Page 191, line 7, after "chairman", insert "and shall secure his consent"

The noble Lord said: I can be extremely telegraphic in moving this amendment. Schedule 1(1)(2) states:

"The Secretary of State shall consult the chairman before appointing any other member".

The amendment would add, after the word "chairman", the words "and shall secure his consent".

The purpose of the amendment will be patently clear to the Minister: there is not much point consulting the chairman if he is then ignored. The chairman is entitled to a board with which he is confident that he can work. Consequently, the drafting of Schedule 1(1)(2) is inadequate. I have suggested the expression "and shall secure his consent". I should be perfectly content with another form of words that had the same effect. I beg to move.

The amendment would give the chairman of the Office of Fair Trading a veto over appointments to the OFT board. It is certainly our intention that the chairman should play a full and active role in the selection of board members. The schedule already provides for him to be consulted by the Secretary of State on such matters. It is important that the chairman has board members with whom he can work, but it would be wrong for the chairman to have the final say. OFT board members will, ultimately, carry out their responsibilities on behalf of the Crown. It is imperative that the Secretary of State has confidence in board members, and, for that reason, she should have the final say in appointments.

Appointments to the OFT board will be made following Nolan procedures, with an open competition. For the first appointments, John Vickers will be a member of the selection panel that will make recommendations to the Secretary of State on the final appointments. He will therefore be fully involved. Future appointments will also be made in an open and accountable way, following the Nolan rules.

I hope that that reassures the noble Lord, and I invite him to withdraw the amendment.

I am grateful to the Minister for his response, but it did not surprise me. I shall reflect on what he said. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 8:

Page 191, line 8, at end insert—

"(3) The Board shall be broadly representative of interests in the area of responsibility of the OF."

The noble Lord said: In moving Amendment No. 8, I shall speak also to Amendment No. 9.

I am one of those people who, sometimes, get irritated when people insist that they want words in the Bill, rather than accept ministerial assurances. I am in the happy position of being able to say that, if the Minister can assure me that the purport of the amendments is in his mind and the mind of his advisers, I shall be content. He has already gone some way towards that in the debates in the past hour. I want the Minister to say that the thrust and intention of the amendments is well understood, even if it is not necessary to make them.

So far, the Minister has eased the situation somewhat. He told us that the size of the board could go up to seven members, rather than sticking rigidly to a membership of four. That strengthens the board. In his responses to other amendments, the Minister has clearly indicated that the scope of the Bill is important. It will have a huge impact on business and economic affairs in this country. A great deal of expertise is available, and I hope that, when we hear of the appointments, we can be satisfied that all sectors of the economy and of life in this country will feel that there is somebody there with experience of their position. I have some little knowledge of retail, and it will be good if there is someone on the board—not necessarily a retailer—who can be seen by the retail world as knowing what he or she is talking about.

I put forward the amendments in the confident hope that the Minister will tell us that they are unnecessary and that the Bill will, as intended by his ministerial colleagues, give effect to the provisions in the amendments in some other way. I beg to move.

I support the amendment proposed by the noble Lord, Lord Graham of Edmonton, but I must start by saying how surprised I was that the Minister—I looked in his direction—did not respond to the telling intervention of my noble friend Lord Peyton of Yeovil. The amendments proposed by the noble Lord, Lord Graham of Edmonton, make the same telling point. I hope that the Minister will do my noble friend the courtesy of responding to him.

It is vitally necessary for the board to be broadly representative of interests in the OFT's area of responsibility. I did not intend, in any way, to disparage the editor of the Financial Times; there can be a wide range of interests represented on a board. However, if the board is to be composed of retired civil servants, authors and journalists, it will lack the substance that we seek. It was not necessary for the Minister to defend the editor of the Financial Times. The director-general had already said, as had the OFT, that the advisory committee was, in no way, intended to mirror the board that might be set up or its character.

The Committee wants reassurance from the Minister about the sort of people that he and his colleagues intend to appoint. Normally, as my noble friend Lord Peyton of Yeovil would remind me, when a Minister places an advertisement in a newspaper, not only does he approve the wording but he will probably have in mind already the range of people that he would like to see responding to it. The Minister does not just sit in his office and hope that someone somewhere will apply. He should already have some view of the ideal board.

Why does not the Minister throw away the brief, just for a moment? He should certainly not listen to the whispered comments of the noble Lord, Lord McIntosh of Haringey. The Minister should tell us about the ideal board and tell us what he would he like to see. If he did, influential people such as my noble friend Lord Peyton of Yeovil and the noble Lord, Lord Borrie, will leave the Chamber and go out as emissaries for that ideal board, so that we can ensure that the necessary people apply—if only we had some idea of what the Minister intends. Will he tell us?

I am happy to reply to the noble Lord, Lord Peyton of Yeovil. I did not think that it was necessary because the main burden of his speech was that the noble Lord, Lord Hunt of Wirral, had spoken brilliantly in support of the amendment and that it had his full support. Then, there were some charming comments aimed at blandishing the Minister into changing his views. I did not think that it was for me to intervene as the noble Lord paid those compliments to the noble Lord, Lord Hunt of Wirral. I thought that the compliments were entirely justified, just as I do not agree with the argument put forward.

I was making a simple point. Without being too confident, I had a slight hope that the Minister might be moved to say that he would consider the point—nothing more. It greases the wheels and makes everyone feel better when such remarks are made. They do not always lead to a useful result, but they help. I am much obliged to my noble friend Lord Hunt of Wirral for his support. If, every now and again, Ministers could rub out the word "reject", which appears at the bottom of the brief, it would make a nice change. We might feel that summer was here at last.

I have rubbed out a few, but they come later in the proceedings.

The amendments seek to ensure that the OFT board is made up of people who are representative of the key areas of OFT responsibility and that such people would not be disqualified from taking up board appointments on grounds of conflict of interest. The noble Lord, Lord Hunt of Wirral, suggested that I state clearly what sort of people we want to see on the board. Above all, we want to see a range of people who can represent different interests; they may be businessmen, academics, lawyers or representatives of consumers' interests. They should be united by the fact that they represent a range of interests, and they should be extremely able people who can bring different kinds of experience to the board.

However, I do not think that we should lay down quotas of what is needed. As I have said, we are holding a fair and open competition for board posts in accordance with Nolan procedures. We want to appoint the best people in order to give the OFT a strong and strategic board with a balance of skills, expertise and abilities. We shall be looking for at least some candidates with a wide-ranging and in-depth experience of competition and consumer issues, but we are also looking for other forms of experience which will be of value to the board.

The range of skills and qualities that we seek may indeed mean that some members of the board are drawn, for example, from competition, consumer or business backgrounds. But our aim is to appoint the best candidates, not to fulfil quotas or make de facto appointments representing certain interests. Although board members are likely to have other outside interests, they will be appointed to the board in their own right, not as representatives of any particular interest. Their role on the board will be to see that the OFT takes the right strategic decisions effectively to fulfil its functions and achieve its goal of making markets work for consumers.

I agree with my noble friend that candidates with backgrounds relevant to the OFT's responsibilities should not automatically be disqualified from taking up board appointments on the ground of conflict of interest. There is no need for them to be disqualified provided that they comply with the OFT's procedures on conflicts of interest.

The OFT will be extending those procedures and it will consult the Secretary of State on them. The office expects the revised procedures to follow the same general principles as currently apply for OFT staff. That would mean that, at the outset, board members would have to declare all actual and potential conflicts of interest involving themselves, their families and significant others. They would be expected to discuss with the chairman or board secretary any actual or potential conflict of interest raised by an agenda item in advance of the meeting itself, or immediately if an item is raised under any other business in which potentially there could be a conflict. And, of course, board members would be expected to withdraw from discussion of any items which could present a perceived conflict of interest.

The OFT must consult the Secretary of State on its procedures for dealing with conflicts of interest or any revision to those procedures. Furthermore, under her power to remove the chairman or any board member for misbehaviour, the Secretary of State could remove any board member breaching those procedures.

Therefore, while I agree with my noble friend that the kind of candidate about which he is concerned should not automatically be disqualified from being appointed to the OFT board on grounds of conflict of interest, it is unnecessary to set that out on the face of the Bill. The legislation already makes it clear that the OFT will have procedures for dealing with conflicts of interest and board members will have to act in accordance with them or face removal by the Secretary of State. I do not think that we need to add anything more to the Bill.

In view of those arguments and my assurances, I invite my noble friend to withdraw his amendment.

Once more I am grateful to my noble friend on the Front Bench. His explanations have gone a considerable way towards satisfying me that some of the fears or concerns may be ill founded. When we see the list, I hope that my noble friend and his colleagues will have ensured that no significant sector of commerce, industry or social life would perceive that there is not at least one person on the board having at least the appearance of knowing about their particular problems.

The Minister has given me the assurance I seek. Although he has five to seven members already, common sense would indicate that, because he wants the board to get off to a good start and there are some very good people about, even seven may be insufficient. I do not wish to comment on which fields I would include, although if I had to take on the difficult job of making the selection, no doubt I would be able to do so.

I started off by saying that I am not one of those who insists, in the face of a ministerial assurance, that the words of the amendment should appear on the face of the Bill. I am quite certain that, after I have consulted with colleagues outside the Committee, I shall not have to return to the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 10:

Page 191, line 25, at end insert "and approved by affirmative resolution of the House of Commons"

The noble Lord said: With this amendment we move on to considering the financial provisions for the terms of appointment, specifically remuneration and pensions. Amendment No. 10 seeks to ensure that any payment made under paragraph 4(1) of Schedule 1 should be approved by an affirmative resolution of the other place. If there were to be a "golden goodbye" or a "golden handshake" agreed by the Secretary of State, such compensation should be subject to approval by the other place. Furthermore, the general terms and conditions of service and appointments of staff should also be subject to such scrutiny. Many precedents have been set whereby such resolutions are necessary for payments of this nature.

The Minister has not yet indicated clearly the level of payments, the number of people involved and the arrangements for travel allowances and so forth. The amendment provides an excellent opportunity for the Minister to give us some idea of what he proposes should be the remuneration of the individuals on the board. I realise that he could refer me to the pack now being sent to all the candidates, for which I could apply by e-mail or telephone. However, I thought that he might do the Committee the courtesy of explaining exactly what I would be told with regard to remuneration.

In giving those details, can the Minister also indicate the size of the organisation he envisages under the legislation and the number of people to be employed? Would he further agree that, in particular where the levels of remuneration are not yet specified—certainly not on the face of the Bill—facilities should be put in place for compensation to be paid for loss of office? However, such compensation should be subject first to scrutiny by the other place. I beg to move.

These amendments would require House of Commons approval by affirmative resolution for matters relating to the operational framework of the OFT. They would mean that approval would be needed for setting levels of remuneration, travelling and other allowances for OFT board members, for determining the amount of compensation that should be awarded to someone who ceases to hold office as OFT chairman or an OFT board member, and for setting the numbers, terms and conditions of service for OFT staff; that is, the civil servants.

All that would impose a significant new procedural burden on the operation of the OFT. It is a burden that I am not convinced is either appropriate or necessary. At present, my department sets the framework for the OFT's remuneration and for compensation issues for board members. That is entirely appropriate since the appointments are made by the Secretary of State. The numbers, terms and conditions of OFT staff—the civil servants—are determined by the OFT itself, with the approval of the Minister for the Civil Service. Again that is entirely right, mirroring the arrangements in other government departments, leaving as it does day-to-day management decisions in the hands of the OFT board within an overall framework set by Ministers.

I am not convinced that it would be a good use of parliamentary time to become involved in matters of this detail at the OFT. The office's annual plan and report will be laid before Parliament. If Members of the Committee are concerned about anything relating to the OFT, they can of course request a debate at any time, but I do not think that it is necessary for discussions on these matters of detail to take place as a matter of course.

I do not think that agreed levels of remuneration and so forth have been set for board members. In view of the arguments that I have put to the Committee, I invite the noble Lord to withdraw his amendment.

Perhaps I may press the Minister further because I am not sure that he has given the Committee any information at all. It is quite important in matters of this nature that there should be some visibility as to the level of remuneration. That is what the amendment seeks to ensure. I invited the Minister to share with us what Members of the Committee would be told if they said that they were interested in becoming non-executive directors committing a minimum of 30 days. I understand that the Minister's department is already giving some indication to applicants as to the level of remuneration. I said that the Minister could refer me to e-mail RYXN@SAXBAM.CO.UK. but, instead of referring the Committee to the information pack, perhaps he will share a little information with us.

I can only repeat that, as far as I know, no agreed levels have been set for board members. I shall check on that point. If I am wrong and information has been given out or agreed, I shall write to the noble Lord.

I am grateful to the Minister. I hope that he will accept that my point covered allowances, travel expenses and all kinds of remuneration in addition to direct pay. The Minister is nodding in answer to my question. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 13:

Page 192, line 12, at end insert "and shall publish in full the procedures and criteria in dealing with conflicts of interest"

The noble Lord said: Again I can be brief. Paragraph 7(2) of Schedule 1 states:

"The OFT shall consult the Secretary of State before making or revising its procedures for dealing with conflicts of interest".

My amendment seeks to require the OFT to publish in full the procedures and criteria which deal with conflicts of interest.

As the Minister is aware, conflicts of interest is a very sensitive topic and has a crucial bearing on the legitimacy of decisions which can sometimes cost entrepreneurs and consumers many millions of pounds. It is in the interests of everyone concerned with the operation of the Bill that the public should know exactly what the rules are. I should be grateful if the Minister could let us know what his intentions are in that respect. I beg to move.

I support my noble friend's amendment. We have already discussed the fact that this will be a small body, the actions of which will be carefully scrutinised. It therefore needs to be absolutely above reproach. There have been debates in the House recently about the decline in public confidence in the probity of our corporate governance. This body, which will be at the heart of British industry and making, as my noble friend said, decisions which will affect millions of pounds and thousands of people, should be prepared to make its corporate governance in regard to conflicts of interest absolutely clear and beyond peradventure. There would then be no room for any misapprehension or misunderstanding, or for any subsequent recrimination and regret.

The amendment would require the OFT to publish its procedures for dealing with conflicts of interest. This is an excellent point. The Bill already requires the OFT to consult the Secretary of State on these procedures but, in principle, I can see no reason why they should not be published. I am quite happy to take the matter away and to consider further how it may be set out in the Bill.

I am grateful to the Minister for his extremely constructive response. On that basis, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 14:

Page 192, line 12, at end insert—

"() Otherwise than in exceptional circumstances, all operational decisions shall be made by the chairman of the OFT following such consultation with the other members of the OFT as he thinks appropriate."

The noble Lord said: At Second Reading I expressed the view that in the field of mergers and take-overs, more than in any other aspect of competition policy, swift and firm decision making was particularly important for all concerned—that is, the shareholders and employees of companies—because if there are no particular public interest reasons why a merger should be prevented it should be allowed to go ahead as soon as possible. If there are serious concerns that the merger might adversely affect competition, then the public interest is surely that those concerns are speedily addressed and a decision as to whether the merger should be either stopped or allowed arrived at after due process but without undue delay.

It was in that context that I was concerned about the proposal in the Bill to replace the Director-General of Fair Trading with a board of which, as we heard earlier, he will be the chairman and chief executive. If decisions on whether or not to refer mergers to the Competition Commission have to go routinely to this new board, consisting in the main of part-timers, I foresee the risks of serious delays and a serious reduction in efficient decision making.

I drew attention to the advertisement in the Sunday Times, which was referred to by the noble Lord, Lord Hunt of Wirral, and others, for non-executive directors of the board. I was struck by the fact that, according to the advertisement, the non-executive directors are to put in only 21/2, days a month. They are, in other words, to be very much part-timers. I wanted a reassurance from Her Majesty's Government that the board of the Office of Fair Trading would not be involved in case-by-case, day-to-day, routine decision making in regard to, for example, prohibitions of cartels, abuses of monopoly position under Chapters I and II of the Competition Act 1988, merger references to the Competition Commission or market investigation references to the Competition Commission, but would concern itself only with strategy, broad principles and priorities.

My noble friend Lord McIntosh of Haringey, who replied for the Government, gave me a degree of reassurance. He said that the new board would focus on the Office of Fair Trading's strategic vision and direction, prioritisation and monitoring progress against targets. He then added:

"We expect the board to delegate most operational decisions to the Chairman and OFT officials".—[Official Report, 2/7/02; col. 184.]

My amendment—which I shall not read out because it is in front of the Committee—seeks to put the Minister's assurance on the face of the Bill. I do so, in part, because the advertisement for members of the board to which I have referred is somewhat ambiguous. It refers to the board being responsible for,

"overall strategic direction, priorities, plans and performance",

but it adds that,

"it will also be directly involved in decisions on individual market studies".

It then goes on to state that the board may exceptionally be involved in matters of strategic importance, to which I have no objection.

If the board is to be directly involved in individual market studies, that suggests to me that it could veto a proposal from the chairman to engage in a market study into a particular market or a proposal to refer a particular market to the Competition Commission. I ask the Minister, is that so?

The 21/2 days a month that the part-timers on the board will work could be accounted for by a day for a meeting and a day or so for reading the papers. If it is more than that, the advertisement may be misleading to those splendid members of the community who offer themselves to the Minister as willing to become part-time non-executive directors of the board.

I am, of course, aware of the trend in recent years away from individual regulators to regulatory boards. I believe that it was desirable for the director-general of Ofgas to be replaced by a board under the Utilities Act 2000 because where a single industry was dominated by one firm, for example, British Gas, and the regulator was a single individual, there was undue personalisation of regulatory powers. It is a matter of record that relations between the gas regulator and the chairman of British Gas were at times so confrontational that they were barely on speaking terms. Undue personality clash and confrontation could not be good either for the industry or for the public interest.

I suggest that the work of the Office of Fair Trading is markedly different from that of a single industry regulator because its consumer and competition remits stretch across the whole of industry and commerce. The chance of daily confrontations between individuals is too remote to be thought at all likely.

My case, therefore, to the Government in bringing forward this amendment is to let John Vickers who will be chairman and chief executive of the board—at present he is the Director-General of Fair Trading—continue as now to take all operational decisions otherwise than in exceptional circumstances. The board will be a valuable sounding board for consultation and will deal with strategy. As the noble Lord, Lord Hunt of Wirral, pointed out earlier, there is at present an advisory board. In future there will be the board provided for under Clause 1. But if the board's statutory remit is left uncertain under the Bill, it may at some stage be tempted to interfere in day-to-day decisions at the cost of the efficiency of the organisation and at the cost of the public interest. Diffusion of responsibility could be a recipe for feebleness or delay or both in decision-making. I beg to move.

I had a dim feeling while the noble Lord, Lord Borrie, was speaking that he had in mind his own past experience and was speaking perhaps from a somewhat subjective point of view. I do not believe that it would be in any way desirable to underline the power of the chairman by giving him this added provision. He already has a good pair of braces with which to keep up his trousers; he does not need a belt as well. For once I am rather hopeful that the Minister and I will be on the same side and that he will see strength in rejecting his noble friend's amendment.

I register our opposition in regard to the amendment. We are getting into a terrible tangle over the governance and management of the new body. The Bill states that it is a body corporate with a board. It is proposed that the chairman and chief executive should have unbridled power in all matters operational. I completely lack understanding as to how one can justify such a system or how it meets any kind of sensible approach to corporate governance. Surely what we must seek here is a sensible balance in a board adequately representative of the interests which it oversees and composed of executive and non-executive members who can provide the necessary checks and balances. To imbue the chairman and chief executive with the authority to make all operational decisions after having made such consultations as he thinks fit leaves me breathless with disbelief.

I believe that I can help the Minister to some extent. Under paragraph 11 of Schedule I there is a section entitled Performance of functions. There it seems to me clear that,

"Anything authorised or required to be done by the OFT … may be done by—

(a) any member or employee of the OFT … or …

(b) any committee of the OFT".

Therefore, it is clear that the board has statutory powers of delegation to any authorised section of the directorate.

What I think is more worrying is the fact that the board itself seems to have a structural power imbalance in that there is a full-time chief executive and chairman who is an acknowledged expert in the field flanked by non-executive directors who, however distinguished, will be there only for 30 days a year. In my submission the issue is not so much whether or not the Bill contains powers to provide effective operational decision-making—I believe that it does—but rather that superficially the OFT is a board but in fact one member of that board is so strong that it is almost a misrepresentation to call it board management.

There is a further concern. The noble Lord, Lord Sharman, is one of the great experts in the United Kingdom on non-executive directorships, not, I hasten to add, because he has a large number of them but because it is a function that he has studied in some depth. It is well known that although non-executive directors do not have intimate involvement with day-to-day management of companies, they have in law equivalent responsibility to other directors who have full executive responsibility.

I endorse the approach of the Government to having a board for the OFT. I think that that is the right route down which to go, but I wonder whether the board in terms of the powers of its members other than the director-general is sufficiently well balanced in terms of its power structure. To say that I should be wary is perhaps putting it too strongly. However, if I were considering applying to be a member of the board, I should want more guarantees about my capacity to influence its strategy than appear to be on the face of the Bill.

This is not meant to be a cynical observation but the section of Schedule 1 entitled, Terms of appointment, remuneration, pensions amounts to 31 lines whereas the section entitled Performance of functions—a crucial part of the schedule—amounts to seven lines. I do not suggest for a moment that that disproportionality is necessarily unjustified, but I think that the noble Lord, Lord Borrie, has put his finger on a very important issue which in my submission merits further consideration by the Government in everyone's interest. I hope that the Minister will accept that I am not making in any way a party political point. I make the point because I believe that we all want the system that the Government seek to devise to work properly. It merits some further reflection.

The amendment seeks to ensure that the OFT board will not automatically have a role in operational decisions. It would specify that, unless the circumstances were exceptional, these decisions would be taken by the chairman of the OFT following such consultation with the other members of the OFT as he thought appropriate.

At Second Reading, my noble friend Lord Borrie explained his concern that the board could intervene in routine decision making with regard to mergers, cartels or market investigations and that by doing so it could slow down the decision-making process. He has sought reassurance that the board will be concerned only with strategy and broad principles.

I can offer my noble friend this reassurance. It has always been the intention that the board should focus on strategic issues, not on day-to-day decisions. However, at the same time it is important that the possibility of the board taking a role in case decisions of strategic significance is maintained. That will be the case with most corporate bodies. Most boards are concerned with strategic decisions, but there will be operational decisions of strategic importance with which the board will want to be involved.

The board is being introduced in order to widen the input into consumer and competition decisions—to depersonalise this important area of regulatory activity. To say that the board should not as a matter of principle play a role in these decisions would undermine this move. For that reason, I do not believe that it is wise to set out on the face of the Bill the detailed role of the board. However, I offer my noble friend my reassurance that it is not the intention that the board should slow down routine decisions.

I turn to my noble friend's particular concerns about the potential for the OFT board to slow down decisions leading to feebleness and delay. On some mergers, where decision making is time critical, the timetables are very tight. This would severely limit the ability of the board to become involved. On markets, the speed of decision making is less critical and the decision to investigate a market can be a strategic decision—and one which would benefit from board involvement. On cartels, the board could be involved in decisions relating to cases of strategic significance. However, one would always want those to be of strategic significance for the board. It would not be involved in decisions relating to the issue of intrusive surveillance powers as such decisions are reserved for the chairman and may involve timing considerations. But, as with markets, there is no reason to prevent board involvement in the strategic decision of whether to begin an investigation in the first place.

I hope that that clarifies the way in which we see the role of the board, which is clearly a strategic one. I am happy to be able to offer that reassurance to my noble friend and I in view of those arguments I invite him to withdraw his amendment.

I am most grateful to Members of the Committee who have spoken in the debate, even including the noble Lord, Lord Peyton of Yeovil. He was undoubtedly right in noticing a subjective element from my past in tabling the amendment. I would call it an element of nostalgia, which I hope he will accept.

I am grateful to the noble Lords, Lord Sharman and Lord Kingsland, because this is an important matter. I do not share their collective view that there is a great read-across between corporate governance in the private world and that of public authorities. Directors of boards of companies do not have statutory powers which need to be exercised in the public interest with reasonable promptitude. They do not have statutory functions of any kind and one has to look at each public authority separately—not even collectively—to see how best they ought to be run.

My noble friend the Minister described the board of the Office of Fair Trading working on a day-to-day, week-by-week, month-by-month basis and he gave me reassurance on that matter. However, a great deal needs to be done in terms of the different types of decisions which the public authority will have to make. He has given me reassurances and I am happy to beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 2 [The Director General of Fair Trading]:

moved Amendment No. 15:

Page 2, line 2, after first "The" insert "position, power and the"

The noble Lord said: In rising to move the amendment, I want to stress that one of the questions which the Government have not yet fully explained is why there is a need to abolish the office of Director-General of Fair Trading. Implicit in some of our debates, is the confusion in the two roles of chairman and chief executive. I therefore should have thought—perhaps the Minister will tell us whether it was considered—that one of the options should have been the transfer of the functions, position and power of the Director-General of Fair Trading into the new statutory body with the creation of a board and a chairman. In that way, the question of corporate governance, which has been the subject of considerable debate today, would have been more easily tackled.

The second area I want to probe with the Minister is the difficulty—I found it virtually impossible—of finding a document in which all the functions, property rights, liabilities and powers of the Director-General of Fair Trading are to be found. There is the opportunity of ploughing through the 46 pages of Schedule 25 which, although described as minor and transitional provisions, contain a number of the powers.

I wonder whether the Minister could make available to us a document setting out the functions which are now being transferred. Clause 2(1) states that they are being transferred but it does not detail exactly what is being transferred. It seeks to do so generically. I do not know whether it is possible to express it more clearly, but it would be easier for us to make progress in the Committee if they were set out more clearly in a separate document.

Thirdly, I return to the words of Miss Melanie Johnson about it being no longer appropriate for all the powers to be vested in one individual; namely, the Director-General of Fair Trading. If it is no longer appropriate for all those powers to be vested in one individual, why do we need to abolish the office? Why cannot those powers be made subject to the board, and the statutory board be put in charge of those powers? The director-general would carry on exercising his powers, which it is proposed should be transferred from a person to a body. That gives rise to the confusion about who will exercise the powers. We have had an interesting discussion about that.

I hope that the amendment will give the Minister an opportunity to justify why the position of director-general is being abolished. Whether or not he and his colleagues considered the matter prior to their announcement, might it not be possible to continue with the post? That would enable us to do away with a substantial part of the schedules to the Bill and would enable a board to be set up in the new body which will oversee the work of the director-general and his staff. I am probing the Minister to share with us a little more of the background to the decision and I beg to move.

The second of these amendments, Amendment No. 16, would retain the post of Director-General of Fair Trading. The first amendment would transfer the position, powers and functions of that post to the OFT board.

The Government are quite clear that we should abolish the post of Director-General of Fair Trading and transfer his property, rights, liabilities and functions—which include his powers—to a new statutory authority, the OFT. The OFT will consist of a board headed by a chairman. This will broaden the decision-making base and de-personalise this important area of regulatory enforcement.

I cannot see that this is a very difficult exercise. We are transferring those functions and powers to the new organisation, and it is clear that they should be set out on the basis of what the new organisation will do. To transfer to the OFT the functions of a post that we are clearly changing seems to me to be a recipe for confusion. The way to do this is to abolish one post, to transfer all the functions to the new body, and then to set out, as we hope we have done, how that new body will operate and what its powers and responsibilities will be.

I am merely asking the Minister: where are the functions of the Director-General of Fair Trading set out?

They are set out in a number of pieces of legislation. I am happy to provide the noble Lord with a list. Then, I think it will be quite clear that this is a sensible move. Many of the functions of the DGFT are being reformed in this Bill In the light of this, we believe that it is no longer appropriate for all of these powers to be vested in one individual. We consulted on this move in September 2000, and it has received wide support. I am happy to let the noble Lord have a list of the pieces of legislation; and in view of my response I hope that the noble Lord will withdraw the amendment.

Following the point made by the noble Lord, Lord Hunt of Wirral, would it make sense to have a definition of "functions" in this Bill—as, for example, in the Education Act 1996? The word is used throughout the long clauses that the Bill contains. It would be a clarification that the Government might consider.

I am not quite sure of the noble Lord's point. If it relates to the functions of the whole board, we covered it when we considered the first amendment. Here, we are talking about what will happen as regards the duties of the Director-General of Fair Trading. It is clear that they will move across and are redefined in the schedule on the Office of Fair Trading.

I did not make myself as clear as I should have done. I was referring to the definition of the word "functions" as such. I do not think that the Bill contains such a definition. It occurs in the Education Act 1996, where the concept is much used. Quite apart from the issue of what the functions are, I suggest that it would be useful for those who have to implement the Bill's provisions if it contained a definition of that word itself, given its prominence. If the Bill does contain such a definition, I apologise. I could not find one—and I made a long search.

I shall look into the matter and write to the noble Lord.

I am grateful to the Minister for agreeing to supply the list of functions. Rather than merely providing a list of sections, it would be very helpful if he could list the powers of the Director-General of Fair Trading—then, if necessary, giving the sections containing them. I think that Members of the Committee would find this matter much easier to follow if the powers were set out, without having to run to 160 different Acts of Parliament. As the Minister is so readily agreeing to that, so do I readily beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 17:

Page 2, line 13, leave out "consult such persons as it considers appropriate" and insert "lay the draft plan before Parliament and shall consult as widely as is reasonably practicable"

The noble Lord said: I join with my noble friend in challenging Clause 3. With reference to the annual plan which the OFT will publish under the terms of Clause 3(1) containing a statement of its main objectives and priorities for the year, subsection (2) provides that,

"Before publishing the annual plan … the OFT shall consult such persons as it considers appropriate".

That is a little rich. In setting up this body with these wide-ranging powers, I hope that the Minister might carefully consider, first, my amendment which would leave out the words enabling the OFT to decide whom it would consult and would insert a provision for the draft plan to be laid before Parliament. The OFT would then consult,

"as widely as is reasonably practicable".

My noble friend Lord Hodgson of Astley Abbotts has rightly put a further suggestion; namely, that the consultation should include recognised bodies representing business opinion and consumer bodies designated under Clause 11(5).

When the Bill was in the other place, Miss Melanie Johnson stressed time and again that the OFT would be fully accountable to Parliament and to the public. In terms of that accountability, the procedure as regards the annual plan is very important. I noted that Miss Melanie Johnson said:

"there may be an interest in who the OFT plans to consult, but it is part of its accountability that it will have to explain who it is consulting and why".—[Official Report, Commons Standing Committee B, 16/4/02; col. 32.]

I am not sure that that is the right way round. I do not think that the OFT should decide whom it is going to consult and then tell us. I believe that Parliament has a role to play here and I hope that the Minister will accept that. In that context, I beg to move.

As my noble friend has said, I have an amendment in this group. I felt that this provision was not merely "a little rich"; it was very rich—that the OFT can decide whom it should consult "as it considers appropriate". The OFT is a standalone body. Its independence is the keystone of much that we have been discussing: it will affect many groups of people, and in particular businesses and consumers. I do not suggest that the wording of my amendment is the right wording, but there ought to be some provision to force the OFT to have regard to, to listen to, and to consult with business opinion and consumer opinion.

The wording that I have used is merely to make the OFT focus on consulting the two groups that will be particularly affected by its plans and actions. That is important. Consultation with academics and economists is no doubt very worthwhile and very worthy, but we need consultation with people who are at the real life cutting edge.

These amendments seek to set out further provisions in regard to whom the OFT must consult on its annual plan. The Bill already provides for consultation by the OFT on its annual plan; and the OFT certainly intends to consult widely. It would intend such consultation to include leading business groups, consumer organisations and other interested parties. By publishing the consultation on its website, the OFT would ensure that the wider public could put their views forward. Members of both Houses of Parliament are, of course, always able to participate in such consultation.

However, I agree with Members of the Committee that the ultimate weasel world of politics is appropriate, as so few people are prepared to come forward to say that things that may seem inappropriate should be done. In view of the concerns expressed, I am happy to take this matter away and to consider further what might be put on the face of the Bill, including how Parliament can be engaged in the consultation process.

I am very grateful to the Minister for those assurances and for the way in which he has so swiftly met my concerns and those of my noble friend. It is therefore with pleasure that I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 19:

Page 2, line 24, at end insert "; and

(c) an assessment of the extent to which the OFT has—

(i) advanced the objectives of promoting competition and competitiveness;

(ii) maintained a fair balance of rights and duties for consumers and business;

(iii) assessed the costs for business of its decisions; and

(iv) observed the Enforcement Concordat."

The noble Lord said: I shall speak also to the other amendments in the group. Clause 4 deals with annual and other reports. It states:

"The OFT shall, as soon as practicable after the end of each financial year, make to the Secretary of State a report (the 'annual report') on its activities".

The clause goes on to spell out some of the things that the Minister and his colleagues feel should be in the report. The Marshalled List shows that, as well as my amendment, others have further ideas. We do not disagree with the idea of an annual report, but we would like an understanding that there will be more in it. The amendments tabled by the noble Lords, Lord Razzall and Lord Sharman, would pointedly bring the report to the attention not of the general public—although they are important—but of Parliament, which should be able to look at it through the Select Committee procedure.

As well as providing information, the OFT should give an account of how and why it has done what it has done. Paragraph (c)(iii) of the amendment would require an assessment of how the OFT has,

"assessed the costs for business of its decisions".

I focus on that in passing because we are very concerned about all kinds of costs on business. We are all law-abiding people in this House and we all generally want the Bill, but if there is agitation that it will be more costly than expected to put into effect, we need to pause and hear the Minister talk about that.

Sub-paragraph (ii) refers to the way in which the OFT has,

"maintained a fair balance of rights and duties for consumers and business".

That may not be so easy to codify or quantify, but at least the Minister and his colleagues ought to be in a position to have a stab at giving us their assessment of what has happened. There is no doubt that there are two sides—the rights of consumers and those of business. One may be looked on as the beneficiary and the other may be looked on as the cause of concern.

As with other amendments, the aim is to give the Minister a chance to tell us how he sees this playing once the provisions are put into operation. I beg to move.

I have two amendments in this group—Amendments Nos. 20 and 21. Amendment No. 21 is almost identical to paragraph (c)(iii) of Amendment No. 19, tabled by the noble Lord, Lord Graham of Edmonton. I was delighted to hear that the noble Lord was concerned about the costs to business of the legislation. I share that view. I would rather rely on the silken tongue of the noble Lord, Lord Graham, than on my pedestrian meanderings in justifying the logic behind the amendment. I shall leave it at that.

In Amendment No. 20, I am looking for a detailed summary of OFT decisions and investigations over the preceding year. My text for that is the practice pursued by the European Commission in Brussels, which every year produces an excellent account of its decisions and of the decisions of the court of first instance and the European Court of Justice in so far as they have a bearing on competition matters.

That account is particularly import ant because, by setting out those decisions, it provides a framework of precedents that helps to provide some certainty for the business community in dealing with competition and merger officials. I can see no plausible reason why the Government should shy away from adopting a similar practice. I look forward to hearing the Minister's reaction to that.

I have two amendments in the group—Amendments Nos. 21A and 177A. Both deal with accountability to Parliament. I strongly support what the noble Lords, Lord Graham of Edmonton and Lord Kingsland, have said. We are creating yet another hugely powerful and influential quango. In addition to covering what we need to see in an annual report from that immensely powerful body, it is essential that we place on the face of the Bill provisions that ensure that those who are charged with the stewardship and operation of the body are fully accountable to Parliament.

Other parts of the Bill make a significant difference to the influence of Ministers in decisions on competition and investigations and the like. We [LORD SHARMAN] wholly support the removal of that to an independent body, but it is vital that that independent body is not only accountable to Parliament, but seen to be so properly and in the best possible manner.

My remarks will be brief. I support my noble friends on the Front Bench. When we discussed the 1998 Competition Bill in Committee in another place there was a considerable discrepancy between the views expressed by the Opposition on the costs to business arising from the Bill and the Government's forecast in their assessments. I have read Miss Johnson's response in Committee in the Commons on this occasion to amendments similar to those that we are talking about. I am surprised that there is no reference to the comparative outcome between 1998 and 2001. That suggests at first blush that perhaps the Government are not anxious to revisit the subject.

Amendments Nos. 19, 20 and 21 would set out on the face of the Bill certain material that the OFT must include in its annual report. The Bill was drafted on the basis that such specific detail was not appropriate for primary legislation. We have included in the Bill only the minor broad minimum criteria that the annual report must fulfil. That allows flexibility in the light of experience and ensures that the Bill can stand the test of time.

The annual report will have to include a general survey of developments on matters relating to the OFT's functions and an assessment of the extent to which the OFT's main objectives and priorities for the year, as set out in the annual plan, are met. In doing so, the OFT will need and wish to include the sort of information covered by Amendment No. 20. The Director-General of Fair Trading already includes such information in his current annual reports. I expect the new OFT to continue to do so.

I turn to the specific issues raised by Amendment No. 19. Under Clause 6, the OFT has a very general function to promote the benefit of competition to the public. This function is, by its nature, not capable of quantification in terms of success. All the OFT can do is to outline in its annual report any initiatives that it has taken during the course of the year, and any feedback it has received on the results. We have considered that it would be inappropriate to require in the legislation that it must provide such details.

The OFT's present statement of purpose, published on its website, is,

"to make markets work well for consumers. Markets work well when there is vigorous competition between fair-dealing businesses. When markets work well, good businesses flourish".

This recognition that good businesses, as well as consumers, benefit from markets that work well is important. OFT activity is not, and will not be, about pitching businesses against consumers, but about seeing both benefit from competition in markets. This is one reason why I do not agree with the idea that the OFT's annual report should include an assessment of the costs to business of its decisions, which is also the focus of Amendment No. 21.

A more fundamental reason is that the OFT will only be exercising the powers granted to it by Parliament. There are appropriate checks on the OFT. For example, the OFT is not able to make a market reference unless it has reasonable grounds for suspecting that the reference criteria are satisfied. The OFT will not use its powers without good reason, and the Bill includes measures to build the OFT's accountability into the system at all levels.

Finally, on the content of the annual report, as Amendment No. 19 recognises, enforcement of competition and consumer protection rules is a key area of OFT activity. The OFT has publicly accepted the principles of good enforcement set out in the Cabinet Office's Enforcement Concordat. The OFT and all who subscribe to the concordat are committed to good enforcement policies and procedures, and the principles of the concordat form the basis of the OFT's enforcement procedures. This includes helping businesses to meet their obligations through giving advice and assistance with compliance, as well as more formal enforcement action when proportionate to the risks to consumers.

I turn to Amendments Nos. 21A and 177A. The Bill already states that the OFT and the Competition Commission must lay their annual reports before Parliament. If Members of this House or of the other place wish to examine these or other reports published by the OFT in more detail, or propose at any time that a report should be considered in depth, it is open to them to do so. In any event, I should imagine that the Trade and Industry Select Committee would take a good deal of interest in both the OFT's annual report and that of the Competition Commission. In addition, the chairman of the OFT board will be accountable to Parliament for the OFT's performance, and both he and the chairman of the Competition Commission can be summoned to appear before Select Committees at any time. I therefore do not think it necessary to specify in the Bill further possibilities for parliamentary scrutiny of either body's activities. Such possibilities already exist and it is open to Members of both Houses to use them.

I hope that I have helped the Committee to understand the rationale for our drafting this clause in broad terms. However, given the strength of the concerns expressed today about the content of the OFT annual report, I propose to consider further what we might set out in the Bill, paying particular regard to noble Lords' concerns over the impact on business, and to come back with something at Report.

I think that that is the nearest I am going to get to a concession. I shall certainly not put words into the Minister's mouth, but I am very grateful indeed for his indication that there may be scope to look again at the provisions. I was also interested in his repeated use of the word "inappropriate". If the provision we seek is inappropriate, to whom or for whom is it inappropriate? It is not inappropriate to those who are asking for it, because they genuinely believe that it would he helpful. However, the Minister himself has been very helpful by indicating that he will examine the whole situation and return to it at the next stage or later. In those circumstances, I am very pleased to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

A clause like this one makes my nerve ends twitch a bit. Before giving very wide powers to a body which has yet to prove its virtue to obtain almost any type of information that it thinks would he helpful, appropriate or relevant, we should consider such a possibility and ask ourselves: just how far is this to go?

I am prompted to make these brief comments by the conduct of the Financial Services Authority in pushing, pressing and cadging every banker, stockbroker and accountant to chivvy and vex their clients, some of whom they have known for many years, to discover whether or not they are money launderers. I do not want to discuss the vices of the Financial Services Authority at great length. However, I hope that the Minister will take on board the fact that people are reluctant to give to such official bodies the power to collect such information as they think fit. Some of those bodies have an overweening and excessive curiosity to poke their noses into things that are none of their business.

I am most grateful to my noble friend Lord Peyton for raising this issue in his inimitable fashion. I should like to develop it, if I may, by reminding the Minister of the remarks I made in support of Amendment No. 1. I drew his attention to Section 2 of the Financial Services and Markets Act 2000 and pointed out how the Government had set out in that legislation with quite considerable rigour—although not quite the amount of rigour that I sought when the Bill was passing through Parliament; nevertheless with some rigour—the regulatory objectives and other matters to which the Financial Services Authority should have regard.

That is in stark contrast to Clause 5, the first in a series of clauses headed "General functions of OFT". If noble Lords care to glance through those clauses, they will see that the general functions amount simply to a set of powers, if the OFT so wishes, to acquire information, to provide information, to obtain information and to promote good consumer practice. What is lacking here is an expression of functions. At an earlier stage, the Minister responded to a question from the noble Lord, Lord Phillips of Sudbury, by saying, "It is true that we have not consolidated the functions under the Bill, but they are in other legislative measures". It seems strange that the Government have given themselves an opportunity to set out and consolidate the functions of the OFT in this series of clauses but have not taken advantage of that opportunity.

I should therefore like to encourage the Minister, in the spirit of what was just said by my noble friend Lord Peyton, to try to tighten up this part of the Bill; to draw together from other bits of legislation the various functions that, as we know, the OFT already has; and to set out those functions in a logical manner. This would have two benefits. First, it would let us all know where we stand. Secondly, it would enable us to see in exactly what circumstances the OFT was acting within the law and in what circumstances it was acting without.

What is lacking in this regard, apart from generality, is a requirement to be cost effective. The body is permitted to do almost anything and not necessarily ensure that there is a real return—a real benefit—to the consumer, a business, the country or whatever. My noble friend Lord Peyton raised the issue of money laundering, about which I know he feels very strongly. That initiative began with very good intentions but now thousands of reports are produced and there are, I believe, 12 people looking after the inquiries in NCIS. Most of us believe that nothing ever happens as a result; all of the information is filed away and never used again. One can foresee something similar happening under subsections (1), (2) and (3) of the clause. Huge amounts of research will be commissioned, no doubt for all sorts of very good reasons at the time and no doubt at very great cost, but it will all be put in a pigeonhole and no one will ever follow it through. That is rather like what most of us believe has been happening with money laundering. The idea was very good but the system is now so thorough that it has overwhelmed those who run it. We need to get down to some cost-effective requirements with regard to the acquisition of information under Clause 5.

Later on. I anticipate, we shall hear from the noble Lord, Lord Kingsland, subtle arguments about the basis on which the OFT is entitled to conduct investigations and to make references to the Competition Commission. He will probably argue—I do not wish to put words in his mouth—that the OFT should have a very strong basis or reasonable cause for believing, rather than suspicion, that this or that has happened. I suspect that he will base those arguments on the need for the OFT to have a good sound basis before it spends money and sends a matter to the Competition Commission. However, the noble Lord cannot have it both ways. If the OFT is to have a solid basis for doing its work and for raising individual investigations before sending matters to the Competition Commission—let alone for dealing with and prohibiting cartels and abuses of a monopoly position—it must carry out work and research and keep up to date with what the markets are doing.

[LORD BORRIE] The provisions in the clause are very general provisions. The word "general" in the heading above Clause 5 can be somewhat misinterpreted. The powers are general instead of specific. The noble Lord knows very well that there are specific provisions in the Competition Act and later in the Bill. The provisions in the clause are broad information-seeking matters; they are very broad general functions but they are necessary for the reasons that I have described.

My intervention was not intended to add to the point made by my noble friend Lord Peyton because he had expressed himself so coherently on this point but I may further sharpen what he said. The distinction at which my noble friend was getting was that between targeted information gathering, which he regarded as perfectly legitimate, and the conduct of general fishing expeditions, which he emphatically does not think are legitimate. He concluded, having examined the provisions, that they were a recipe for fishing expeditions rather than targeted investigations.

I am very much obliged to my noble friend, who is absolutely right. I was concerned that the new body would fall for the temptation of following the very bad example of the Financial Services Authority in pursuing those who are in no way relevant to its affairs and who are nothing to do with money laundering.

I support all those who have spoken, which may appear to be an impossibility. I take the point of the noble Lord, Lord Borrie, and that made on this side of the Committee, which was that the acquisition of information by the state has become a new disease. We are well acquainted with the warehousing of that information in our debates on the Regulation of Investigatory Powers Act and the Antiterrorism, Crime and Security Act.

Clause 5(1) states:

"The OFT has the function of obtaining … information".

Will the Minister confirm—I hope that this question is not unfair—that that is a general statement giving the OFT a general power to engage in the collection of information but that it gives the OFT no specific powers at all? I also seek confirmation—these matters have now become so complex that one cannot really rely on common sense—of the fact that giving that general power will not have any repercussive effects vis-à-vis the dormant powers that lie in RIPA, the Anti-terrorism, Crime and Security Act or any of the other information-gathering Acts. I should hate the House subsequently to learn that this apparent innocence of expression triggers an existing clause in existing legislation.

I start by going back to the point made by the noble Lord, Lord Phillips, a short while ago. The term "function" covers both powers and duties and has generally accepted legal meanings. The general function is set out in Part 1 and the specific functions are set out in other parts of the Bill and other legislation. Clause 5 will give the OFT the function of obtaining and reviewing information relating to any of its functions in respect of competition and consumer matters. That information-gathering role, which may involve research, is with a view to the OFT having the information it needs to make decisions and carry out functions. I should have thought that we all agree that the essential nature of the OFT's work means that it should have good information so that it does not refer matters when there is not a strong or good case or a real knowledge of the markets.

I do not know the answer to the noble Lord's specific question about whether the provision triggers powers in existing legislation. I shall take that away and if it does trigger such powers I shall write to the noble Lord explaining the powers that it releases in existing legislation. The power is very clear and relates clearly to the function of the OFT. I cannot see how the OFT could operate effectively without such a power. I urge that the clause should stand part of the Bill.

If the Minister will allow me to say so, I am profoundly disappointed that he has not bothered to take much notice of what has been said. We have an example of what concerns me. I do not remember when the debate took place, but presumably the FSA was given powers which were considered reasonable, sensible and necessary for it to achieve its purposes. In fact, in the exercise of those powers, it annoyed and vexed a whole lot of people for no reason whatever. The Government seem to take no notice of that; they simply go on with their huge inquisitive appetite. That is intensely irritating to people who have never thought of money laundering and who have never been involved in the issue with which the body that has the powers is concerned.

Clause 5 agreed to.

moved Amendment No. 22:

Page 3, line 2, at end insert—

"() promoting awareness of the need to reduce the regulatory burden on UK business and commerce;"

The noble Lord said: I can, I trust, move this amendment relatively briefly. I once again remind the Minister of my Amendment No. 1. If he glances at it, he will see that in paragraph (c), I suggest that one of the objectives of the OFT should be the minimisation of,

"the regulatory burdens placed on UK business and commerce".

It must follow therefore that in dealing with the matters set out at the top of page 3 of the Bill, one of the duties that the OFT should have would be to promote awareness of the need to reduce the regulatory burden on UK business and commerce.

One of the central functions of the OFT should be to monitor the impact of other ministries' legislation on the effectiveness of competition. In order to achieve that purpose, in my submission it is essential that the OFT uses the powers that have been given to it in Clause 6 to look very carefully each year at what needs to be done to reduce the overall regulatory burden and publicise those requirements as widely as possible. I beg to move.

I rise to speak to Amendment No. 23, which stands in my name. The noble Lord, Lord Joffe, also put his name to the amendment, and it is a matter of inadvertence that the name of my noble friend Lord Holme of Cheltenham was omitted from it. I mention that in particular because, together with the noble Lord, Lord Joffe, he has huge business experience. My noble friend Lord Holme is an officer of the All-Party Corporate Social Responsibility Group of both Houses.

Clause 6 would be of only passing interest to me if it had confined itself to Clause 6(1). That states that the OFT's functions are to help public awareness of the ways in which competition may benefit consumers and to give information and advice. But subsection (2) also gives the OFT a discretion—it is expressed as a function which it "may" carry out—to publish educational materials, to carry out other educational activities and to support others who may be doing so or who propose to do so. I declare an interest as president of the Citizenship Foundation, which is a charity devoted to helping young people, in particular, to understand the complex society of which they are part.

Therefore, given that that is obviously a very intentional allowance and given that the OFT will, I hope, use the power given here to publish educational materials, I am anxious that it should do so on a platform consistent with citizenship education. I believe that that is more appropriate than is presently the case by dint of the language of Clause 6(1).

In saying that, I pay tribute to the Government for the fact that citizenship will enter the school secondary curriculum this autumn. It will be the first time in our history that that has happened and, in view of the fact that the subject will be taught on a wide scale, I believe that it represents a first world-wide. Every child in every year of his secondary education will have citizenship education to GCSE level.

I refer the Committee to the debate that we had in this House on these proposals some while ago and also to the debate in the other place. It has been of perfectly reasonable concern that citizenship education should be absolutely unbiased. It should not be prescriptive or, as some would say, propagandist. It should not endeavour to peddle a particular line but should strive to open the minds of young people so that they can decide for themselves what they consider to be right and proper. It is because the language of Clause 6(1)(a) is unnecessarily prescriptive that I propose its replacement by the words before the Committee.

Before I sit down, perhaps I may read from the statutory order that came before this House recently. It embedded citizenship education in the secondary curriculum. I hope that it will illustrate far better than I have been able to do in these few words the tenor and style of citizenship education which is to be provided to all secondary school pupils. It says:

"During key stage 3"—

that is, the 13 to 14 year-old age group—

"pupils study, reflect upon arid discuss topical political, spiritual, moral, social and cultural issues, problems and events. They learn to identify the role of the legal, political, religious, social and economic institutions and systems that influence their lives and communities. They continue to be actively involved in the life of their school, neighbourhood and wider communities and learn to become more effective in public life. They learn about fairness, social justice, respect for democracy and diversity",

and so on. That language is clearly far wider, broader and more culturally rich than it would be if it were to refer simply to telling the public about the benefits of competition. Therefore, hope that, in considering the amendment, the Government will have regard to what the Department for Education and Skills is assiduously trying to do in its citizenship programme. Indeed, I hope that they will have regard to the assurances given in both Houses that that would be the nature of citizenship education.

I close by saying that in key stage 4, which covers the 15 to 16 year-old age group, it is specifically stated in the statutory order that pupils should be taught about,

"how the economy functions, including the role of business and financial services … the rights and responsibilities of consumers, employers and employees … the wider issues and challenges of global interdependence and responsibility, including sustainable development".

As I said, I hope that the Committee, and the Government in particular, will consider that, against that background, the amendment is entirely consonant with what the department is trying to achieve.

I find myself in sympathy with much of what the noble Lord, Lord Phillips, has just said. I tabled Amendment No. 24 because of the nature of the wording in Clause 6(1)(a). It seems to me that the use of the word "benefit" is inappropriate, and I seek to replace it with the word "affect". I am afraid that my writing is very had, and the word should be "affect" and not "effect", as it appears in the Marshalled List. I hope that the Minister will forgive me on that point.

The purpose of the amendment is rather along the lines of what the noble Lord, Lord Phillips, has just said. It is to require the OFT to be even-handed in its approach in explaining the pluses and minuses of competition. Important and vital a body though it is, I do not see the OFT as a missionary or propagandist for competition. It is a regulator of competition. It ensures that competition survives—a very important function. But it should not have to trumpet its virtues all the time.

One reason that I am concerned about this matter is that, when one talks about the benefits of competition, very often one comes down to discussing it in terms of quantifiable elements, of which price is often the most easily assessable. Price is vital but it is not everything. There are less quantifiable elements—for example, service and availability—which are equally important.

I give a simple example. The food distribution world is now dominated by supermarkets, as the Minister knows. They offer long hours of opening, a huge range of foods and low prices. They meet the aspirations of the vast majority of people but not everyone. For some people—the elderly, the infirm and those living alone—a local shop is more attractive. It is not only the fact that such shops are physically close to the individuals; they provide an opportunity for a chat and the chance to pass the time of day.

How will that be dealt with when we discuss the benefits of competition? Competition from the supermarkets is driving out small shops, and, for some people, that is not a benefit. It may or may not be a loss, but it certainly affects the consumer. If the OFT is to have an educational role—I am happy for it to have one—then it must talk in a more balanced way about what is happening as a result of competition: who is winning, who is losing and what is coming from it. I do not doubt that the OFT can do that, but it should not have to talk just about the benefits. There are negatives to the way in which services are provided to some sections of society, as in the example I have given and in other similar cases.

I hope that the Minister will carefully consider how we can make the wording of Clause 6(1)(a) more evenhanded and more appropriate to the role of this important independent body.

I welcome the place given by the Government in Clause 6 to public accountability as distinct from simply parliamentary accountability. At the same time I welcome the timely amendment. I add my support to the qualifications which would be given to the clause as drafted by words such as "free and fair" and "ethical and social responsibility". I believe that that will give a degree of comfort to the public at a time when evidence of matters such as share dealings indicates that public confidence in business and competition has been seriously undermined.

The right reverend Prelate underlined points made by other noble Lords and in particular the point made by the noble Lord, Lord Phillips of Sudbury, of the desirability of the public knowing about matters of ethical and social responsibility. The noble Lord, Lord Phillips, also made a number of other important points, including on the subject of the education of children.

One of the difficulties about each of the three amendments in this group is that they come within a clause concerned with the functions of the OFT. It is unfortunate that we are discussing them at the beginning of the Bill rather than at the end. Whatever the desirability of the public having knowledge of those matters and of discussing regulatory burdens and the ethical aspects of business, there is a question mark over whether that is a function for the Office of Fair Trading, which is to pursue and promote competition; to remove difficulties in the way of competition and to promote consumer benefit. I deliberately use the word "promote" in that context because the noble Lord, Lord Hodgson, wanted the function of the OFT to be much more balanced in that regard.

However, it strikes me that the specific functions of the OFT in the Bill and in the Competition Act are partisan in the promotion of competition. More balanced judgments are made by the Competition Commission and others. In future, it will be part of the job of the Office of Fair Trading, as it has been in the past 30 years, to be partisan in those respects. In its role—as distinct from the role of other people—in giving information to the public and in educating children it seems appropriate that it should do so in the terms of Clause 6 in relation to the benefits of competition, consumer protection and so forth.

We have said a few words today about resources. The OFT can carry out its informational and educational work only on the back of its experience, which is in terms of the economic benefits of competition and consumer protection. It does not have those other functions which we should like someone to have in terms of information and education.

I am grateful to the noble Lord, Lord Borrie, for giving way. Surely, we are talking of the Office of Fair Trading; not the office of trading. There are public interest considerations in the Bill. In Clause 8, for example, the OFT has a function to promote good practice. The Bill is littered with value judgments. Does the noble Lord seriously suggest that none of those matters is to be considered by the OFT?

All I suggest is that if we examine all the specific functions, powers and duties of the Office of Fair Trading, 90 per cent or more of its time is taken up with case law, studying cases and markets, and promoting the economic benefits of competition. It does not concern itself beyond those specific duties. It is principally an enforcement body. In so far as it can be educational and helpful to that extent, it can be so only on the back of its normal day-to-day role; otherwise it would have to import other resources, bring in other people and have a much broader function than it has had for the past 30 years. It is not intended by the Bill that it should have a much broader function.

Amendments Nos. 22, 23 and 24 all seek to amend the function of the Office of Fair Trading of making the public aware of the ways in which competition may benefit consumers and the economy.

I begin by reminding noble Lords of the purpose of Clause 6. A key role of the OFT, as its mission statement states, is to make markets work better for consumers. That is reflected in the clause, which gives the OFT the function of promoting to the public the benefits that competition has for consumers and the economy, and of providing the public with information or advice on matters relating to its functions. Competition does indeed benefit consumers. The best form of consumer protection is choice. The clause will help to create knowledgeable consumers who are more aware of the importance of competition, more confident of their rights and more demanding. Such empowered consumers drive quality improvements and innovation.

Amendment No. 24 proposes that the OFT will have the function of making the public aware of the ways in which competition may affect rather than benefit consumers and the economy. The intention of the clause is very much that the public should become aware of the benefits of competition. That is what the Bill is about: believing passionately that competition brings benefits. That is why the clause states "benefit" rather than a more neutral word such as "affect". In my view the amendment would dilute the intention of the clause. I am surprised that noble Lords on the other side of the Chamber do not share our belief that competition brings benefits. The noble Lord, Lord Hodgson—

I thank the Minister for giving way. I am rather puzzled by that remark. Can the Minister explain why he believes that this side of the Chamber does not believe in competition?

We are discussing a clause which states that the OFT should put forward the benefits of competition. The amendment suggests that that is too strong a task for the OFT; that essentially it should put forward a neutral view and state that competition has benefits but also some disbenefits. It is a rather strange view that competition involves only price and does not involve innovation, service or quality. That is an extraordinary view of competition. This is about the benefits of competition. We are saying in this clause that the OFT, the job of which is to promote competition, should strongly put forward those views. The amendment seems to suggest that that should not be done.

I am grateful to the Minister for giving way. The clause is headed,

"Provision of information etc. to the public",

which is propagandist. That is not to say that there is not value in competition. Of course competition is good, otherwise one would oppose the principle of the Bill. However, there is a question as to whether a body such as the OFT, which is set up independently, should be missionary or propagandist, or whether one should state, "Your job is to regulate the competitive field and to leave someone else to describe the benefits; both pluses and minuses". However, to state that that body should be propagandist seems to be moving away from being fair to the public.

That might be so if the whole tenor of the debate had been that the OFT should have no information at all. However, we have another amendment that suggests that it should have a propagandist role on the question of regulations, which, of course, is not central to its functions. I am not quite certain whether this constitutes an objection to competition or an objection to the OFT having any informatory role. It seems to me that the proposals are directed at saying that we must have a more qualified view of competition, and not highlight the benefits.

Amendments Nos. 22 and 23 both seek to amend the description of what the OFT should be promoting awareness of. Amendment No. 22 seeks to give the OFT the general function of promoting awareness of the need to reduce the regulatory burden on UK business and commerce. I should emphasise that this Government are committed to ensuring that they regulate only when there is good reason to do so, and when the benefits clearly outweigh the costs. When they regulate, the Government want to do it as simply and as effectively as possible.

The Enterprise Bill makes existing regulations more streamlined, targeted and transparent. It does not impose additional regulations on business. Indeed, businesses will benefit from a more effective and predictable competition regime, the reduction in unfair competition from those traders who do not meet their legal obligations, and a modernised insolvency regime that promotes enterprise.

We agree with the importance of reducing unnecessary regulatory burdens on business, but we do not consider it appropriate that the OFT should be given a general function to promote awareness in this respect. I very much agree with my noble friend Lord Borrie that this approach would not fit in with the intention of the clause; nor, indeed, with the general purpose of the OFT. The question of how to reduce regulatory burdens on business should be addressed in government policy and legislation, rather than by way of an "awareness raising" role for the OFT.

Amendment No. 23 seeks to amend the clause so that the OFT would have the function of making the public aware of the role of free and fair competition in the economy within the context of business commitment to "ethical and social responsibility". I certainly agree with the importance of ethical and social responsibility in business. However, I must disagree with what the noble Lord, Lord Phillips, said at Second Reading; namely, that an excess of competition is anti-social. As I said earlier, strong competition is good news for consumers. The clause is not, to use the noble Lord's word, "propagandist"; it is designed to help empower consumers. It is not in line with the OFT's functions to have a general function to promote ethical and social responsibility in business, and certainly not the focus of this clause.

However, that is not to say that we do not believe that the ethical and social responsibility of business should not be promoted. Indeed, as the noble Lord will know, we do that through a whole series of different routes—for example, through our promotion of social enterprise, through our promotion of corporate social responsibility, and by way of the review of company law. As the noble Lord, rightly pointed out, bringing citizenship into the national curriculum is also a way of encouraging ethical and social responsibility. These are the ways to do it, not through a body, the Office of Fair Trading, which is concerned with promoting competition.

Quite simply, I believe that we should require the OFT to concentrate and focus on its primary task; namely, the promotion of competition. We should have the confidence to let it promote the benefits of competition, because that is its role. If we did not believe in that, we should not have such a competitive authority. On that basis, I invite the noble Lord to withdraw his amendment.

For me to say that I am grateful for the Minister's response would, perhaps, be insincere. I am deeply disappointed in the Minister's remarks. I do not understand the impression that I gain from his comments; namely, that, for him—he said it himself—I am "passionately" in favour of competition, as if competition was a clearly defined modus operandi. Under the guise of competition exist many and various forms of business organisation and activity. When I said at Second Reading that I thought that an excess of competition could be anti-social, I meant that passionately. Surely we see evidence of that on all sides, especially at this time.

No one in this Chamber of whom I am aware—indeed, no noble Lord on Benches that hitherto had many doubts about competition—any longer doubts the central role of free market enterprise in our society. The Minister said that we should not worry the head of the OFT with all this, while the noble Lord, Lord Borrie, said that it is all far too complicated for the OFT to start thinking through what constitutes good practice, or fair trade. I believe he then went on to suggest that other people would have to be brought in—and a damn good thing!

Frankly, I simply do not understand the intention to leave the issue of business education—if you want to call it that—within the ambit of the Office of Fair Trading, which is a hugely powerful body with statutory powers to spend state funds in entering into the realm of citizenship education, without putting it into a broader cultural context and one with which the Minister agreed at the end of his speech when he talked about "corporate social responsibility".

I should be most grateful if the Minister would reconsider the matter. In the reality of the delivery of citizenship there will be many competitive influences as to what should be taught. I have in mind the opportunities and the available resources that will deal with issues of business, enterprise, competition, and social responsibility. There will not be many hours or resources devoted to that end. It would be a tragic mistake to extract from that situation the possibility of the OFT, which will be the most important element in all of this, engaging in that part of the citizenship curriculum.

Having been lampooned by the Labour Party throughout most of my political life as a proponent of Manchester School market economics, it is somewhat bizarre to find myself in the position of being accused of not believing in competition. Just for the record, I refute that allegation. In any case, my amendment—

I should point out to the noble Lord that "to refute" is to prove the opposite.

Exactly.

In any event, Amendment No. 22 is the one amendment in this group that does not refer to competition; it refers to regulation and the desirability of engaging the OFT in the battle,

"to reduce the regulatory burden on UK business and commerce".

I take it that the Minister wishes to reduce that burden on business and commerce. I know that the Bill foresees a role for the OFT in that respect. I hope, therefore, that I can reasonably conclude that he supports the spirit of my amendment, if not its proposed position in the Bill.

Perhaps I may reflect on the other part of the debate on the amendment that took place as a result of the amendments tabled by the noble Lords, Lord Phillips and Lord Joffe, and by my noble friend Lord Hodgson. In my view, it is very difficult to divorce ethical judgment from the concept of competition. For example, in some competitive societies it might be wholly acceptable for a powerful firm in a market to cut its price ruthlessly over a period of time to drive out other competition. In the United Kingdom, I hope that we would regard that as unfair competition.

However, there may be other market economies in the world that have not yet reached that stage of maturity. Equally, I suppose, there may be some societies that permit child labour—something that we once did in the 19th century—in order to steal a competitive march over their rivals. Nowadays, we would regard that as unfair competition and wholly unethical. In my judgment, one cannot divorce ethics from a competitive market-place. If one looks back to the competitive market-place in 19th-century Britain, one would see that it was an entirely different ethical sub-structure to competitive activities than the one that we have today. Thank Heavens that we have made such progress.

I entirely understand why the noble Lord, Lord Borrie, suggested that we should not introduce factors that are not germane to the judgments that the OFT has to make. However, underlying the judgments that the OFT is asked to make in this Bill are important ethical propositions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 25:

Page 3, line 13, at beginning insert "Subject to the overriding requirement to keep sensitive business information confidential"

The noble Lord said: I reinforce the words of my noble friend Lord Kingsland. I sat on the Front Bench from 1977 to 1995 and heard the Labour Party criticise the Conservative policies of full, fair and free competition, so I am not surprised that the noble Lord, Lord Phillips, was a little confused. The Minister has gone charging off in the completely opposite direction to the policy the party pursued for many years and has perhaps gone too far in denying the ethical considerations and social context laid down by the noble Lord, Lord Phillips of Sudbury.

I turn to another area where I had hoped to see more from the Government; namely, the Freedom of Information Act. It may be of assistance if the Minister could tell us where the Act is. There appears to be general confusion, not only in this Chamber but also within the Government, as to when and where it is corning into effect. Perhaps he will daily a moment or two and give us a little background as to the whereabouts of the Freedom of Information Act.

Amendment No. 25 deals with the publication of the information and advice provided to Ministers. I had responsibility for open government and, indeed, also for the code of open government. I recall that the Labour Government came to office on a pledge to implement legislation to ensure that information and advice to Ministers from outside bodies was published. Therefore I make no apology for now giving them the opportunity to deliver on that promise. Amendment No. 25 would insert into Clause 7 the words,

"Subject to the overriding requirement to keep sensitive business information confidential",

and Amendment No. 27 would add, on page 3 line 22, the words,

"any such proposals, information and/or advice made or given to a Minister of the Crown or other public authority shall be published".

There is also a proviso that where the proposals or advice have been published, there should be a reasoned response within six weeks. However, I do not press that amendment as hard as I press Amendments Nos. 25 and 27, which would ensure, subject to confidentiality, that the proposals are published.

Clause 7 would presumably enable the OFT—the Minister can confirm this—to make Ministers aware of areas where, in its view, laws and regulations were creating barriers to entry to markets and competition or where markets were being channelled in a specific direction which was holding back innovation and progress. I mention that because I heard Melanie Johnson say—I cannot remember the context—that that was the purpose of Clause 7.

If the clause deals with general trends, and if the Government believe in transparency, what is the problem in making that advice public? It would greatly assist a wider discussion of those barriers and the problems holding back innovation and progress if there was to be publication of the advice. It would not greatly assist fair trading for such advice to be kept private behind the scenes, known only to Ministers and not even to Parliament. If the problems exist, then Parliament should be made aware of them and general publication would be a good idea. I hope that the Minister agrees. I beg to move.

In reply to the comments on competition and ethical and social responsibility, one of the things of which I am most proud is that in both my business life and my political life I have held to the same line throughout; that is, to believe strongly in the value of competition that stimulates innovation and gives value to consumers, believing that alongside that one can put ethical and social responsibility on the shoulders of business.

The issue that we were discussing was whether or not a specific body should have the responsibility for dealing with questions of ethical and social responsibility which were not included in its function. If the noble Lord, Lord Hunt, was saying that we should have competition alongside strong views on the ethical and social responsibility of business. I am totally in agreement.

Amendment No. 25 seeks to make the OFT's provision of information and advice to Ministers or public authorities subject to an overriding requirement to keep sensitive business information confidential. The clause is aimed at the OFT commenting on general trends and specific legislation, not on specific companies. In any case I can reassure Members of the Committee that "specified information" cannot be disclosed by the OFT without having regard to the criteria in Clause 240 in Part 9 of the Bill. That criteria includes considering the need to exclude commercial information which may harm legitimate business interests. I suggest therefore that the amendment is unnecessary. In addition, the amendment as drafted might also hinder the capacity of the OFT to advise government and public authorities.

Amendments Nos. 27 and 28 seek to ensure that all proposals, information and/or advice to a Minister from the OFT is published and that any Minister of the Crown who receives proposals or advice from the OFT shall deliver (and publish) a reasoned response within six weeks of receipt.

Both of those amendments could place significant and unnecessary burdens on the OFT, Ministers and other public authorities. Publication of such material would not always be necessary or appropriate, and there is the possibility that it might harm individual and business interests. And it would not always be appropriate or necessary for the Government to publish their response to each piece of advice or proposal from the OFT. We intend to respond publicly when the OFT advise that laws and regulations create barriers to entry to markets and competition, or channel markets in a particular direction thereby holding back innovation and progress. The Government have committed themselves in the competition White Paper to publishing a response within 90 days of receiving such a report. But requiring a response within six weeks to every piece of advice that Clause 7 covers would be inflexible and unnecessary.

In view of those arguments I invite the noble Lord to withdraw his amendment.

Can the Minister say where we are with the implementation of the Freedom of Information Act?

That comes into effect in January 2005.

Under that Act, if it is to come into effect in 2005, would it not assist in ensuring that the proposals from the OFT were published if the amendment were to be accepted? As I understand it, under the Act the Minister's responses would have to be published. Against that background, why is the Minister not willing to consider the amendment? It may be that he will want more time to do so.

We shall need to look at that detail. We are talking about a reasoned response being given within six weeks of receipt thereof. That is rather a strong requirement. We think it is an inflexible one. Obviously, the Freedom of Information Act—when it comes into force—will take over that issue.

I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 26:

Page 3, line 22, at end insert—

"() it shall also be a function of the OFT to issue guidance to trading standards departments about the use of their powers to obtain "Stop Now" orders and to ensure that such powers are used consistently."

The noble Lord said: We now turn to stop now orders. I believe that the Government intend to improve the consistency of approach in the use of stop now orders. The amendment seeks an additional function for the OFT to issue guidance to trading standards departments about the use of their powers to obtain stop now orders and to ensure that such powers are used consistently.

There are considerable concerns as to how the 200 trading standards departments across the country use their powers. They have varying amounts of resources to devote to particular abuses. They have different priorities. There have been failed attempts to ring-fence resources. Some trading standards departments have been hard hit by cuts in expenditure. The Trading Standards Institute and the Local Government Association have strong views about that.

This all produces a rather disparate accumulation of differing standards in different parts of the country. The subject of the amendment is inconsistency between different trading standards departments in different local councils. Surely, the OFT should have some overview of how stop now orders are carried out in practice.

The OFT has a duty to issue guidance on stop now orders under the Stop Now Orders Regulations 2001. I appreciate that we are not debating those at the present time. Under Clause 224 there is a duty to issue guidance on the corresponding provisions in Part 8 of the Bill.

Interim draft guidance was published by the OFT on stop now orders last year. After extensive consultation, the final version was published a few weeks ago. These are complicated documents. I hope that the Minister will agree that it would be helpful to have some reassurance about the emergence of these differing standards, and to find some way—if not with this amendment—for the OFT to have a general overview to ensure that such differing standards do not emerge. I beg to move.

The amendment seeks to improve the consistency of approach in the way in which stop now orders are used, and I thoroughly support its intention.

The amendment aims to do two things: first, to give the OFT a duty to issue guidance. As the noble Lord pointed out, this is unnecessary because the OFT is already under a duty to issue guidance on stop now orders under the Stop Now Order Regulations. Clause 224 puts the OFT under a duty to issue guidance on the corresponding provisions in Part 8. Again as the noble Lord said, the OFT issued interim draft guidance on stop now orders last year, and, after extensive consultation, the final version was published on 10th April 2002.

The amendment also seeks to place a duty on the OFT to ensure that stop now order powers are used consistently. We also want the powers in the Stop Now Order Regulations and Part 8 of the Bill to be used consistently by enforcers. The OFT's guidance has the aim of promoting consistency. It can direct that enforcers—other than Community enforcers—may not take a case to court if another enforcer is already doing so, to prevent business facing duplicate proceedings. But the OFT does not have a general power to direct the activities of trading standards departments which are part of local authorities. We do not think that it would be appropriate to give the OFT such a power. We would expect the OFT to do everything it could to support and encourage the consistent use of these powers, but it would not be right to put the OFT under a duty to ensure that when it does not have the power to do so. These powers rest really with the local authorities.

There is nothing between us on wishing to see consistency on the matter. I believe that we are giving the OFT the powers it needs to do the job as far as it should be doing it, but leaving that ultimate responsibility with the local authorities. I hope that with that reassurance the noble Lord will withdraw his amendment.

I am grateful to the Minister for so clearly acknowledging the problem. I should like further time to consider what he has said about the inappropriateness of a general power for the OFT to direct the activities of trading standards departments. He said that it was a matter for local authorities. Of course there is no overall power that could look across the country at how different local authorities utilise those powers. Under Amendment No. 30 we shall have a further discussion of this subject and I hope that we might return to it at a later stage. Perhaps at that later stage the Minister might think again, given that the OFT is the only body—not a local authority—which could look over the whole country at the differing standards. I am very grateful to him for his words. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 29:

Page 3, line 25, leave out "the economic interest of"

The noble Lord said: I should like to ask the Government why the phrase "the economic interests of" has crept into Clause 8(1). It states:

"The OFT has the function of promoting good practice in the carrying out of activities which may affect"—

not "consumers in the United Kingdom", but—

"the economic interests of consumers in the United Kingdom".

Subsection (6) refers to a "consumer code",

"safeguarding or promoting the interests of consumers",

not the "economic interests of consumers". Can the Minister explain why he has restricted the OFT's function in that way? One of the key issues—certainly when the Bill was considered in another place—was this constant emphasis on looking after the interests of consumers. I could not understand why, in promoting good consumer practice, it was only when the consumers' economic interests were affected that this particular function applied. I beg to move.

My answer can be very short. The amendment effectively widens the OFT's function to promote good practice in all areas of interest to consumers. Everyone would agree that that would be impractical as it would include areas such as health and safety where the OFT has no powers or interests.

The principle of the clause is that by approving codes of practice the OFT will help consumers to find reliable traders. It is in order to differentiate their economic interests that we have drafted this part of the Bill in this way. I hope that noble Lords will agree that the responsibilities of the OFT should not include areas such as health and safety, which the clause would if it was widened in this way. I hope that the noble Lord will withdraw the amendment.

I am grateful to the Minister for his comments. I should like to reflect on what he said and, perhaps, return to the issue on Report. I beg leave to withdraw the amendment.

I beg to move that the House do now resume. In moving that Motion, I suggest that Committee begin again not before half-past eight.

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

House resumed.

rose to move, That the draft order laid before the House on 18th June be approved [33rd Report .from the Joint Committee].

The noble Lord said: My Lords, tackling homelessness is a vital strand of the Government's wider housing strategy to ensure that everyone has the opportunity and choice of a decent home. Homelessness legislation provides an important safety net for people who are homeless through no fault of their own and who have a priority need for accommodation. Where applicants meet those criteria, the housing authority must ensure that they have suitable temporary accommodation available until a settled housing solution becomes available for them.

This priority need order extends the categories of those for whom the housing authority must secure accommodation if they are unintentionally homeless. Currently, such persons include families with dependent children, households that include someone who is pregnant or vulnerable as a result of age, mental illness, physical disability or some other special reason, and people who are homeless as a result of a disaster, such as flood or fire. Both existing and new categories focus on those likely to have the greatest need for housing.

The order will ensure that, where necessary, housing authorities must secure suitable accommodation for all 16 and 17 year-olds who are genuinely homeless, unless they are owed a duty under social services legislation. Of course, wherever possible, housing authorities should explore the possibility of reconciling 16 and 17 year-olds with their families as a first priority, to allow them to return home. Where 16 and 17 year-olds are estranged and cannot return home, there can be no question but that they will be at risk if they have nowhere to live. The order will also give priority need to people who are vulnerable as a result of fleeing their home because of violence or threats of violence that are likely to be carried out.

Plenty of evidence demonstrates that a high proportion of people who end up homeless come from institutionalised backgrounds. The order will also extend priority need to young people aged 18 to 20 who have previously been in care—a group who may be at risk because of a less-than-propitious start in life.

Other categories of people who will have priority need for accommodation under the order include people aged 21 or over who are vulnerable as a result of having spent time in local authority care and those who are vulnerable as a result of having spent time in the Armed Forces or in prison. The key test in relation to those categories is whether applicants are vulnerable: that will be for local housing authorities to decide in individual cases.

I am sure that noble Lords will agree that a proper statutory safety net for those most vulnerable and at risk is essential to protect them from the damage that homelessness and rough sleeping can inflict on them and to help them rebuild their lives.

The other place has considered the order. By building on previous legislation, it will strengthen the protection available to homeless people. It is proof of the commitment of the Government and of all sides of the House to improve housing for all and to tackle social exclusion. I commend the order to the House. I beg to move.

Moved, That the draft order laid before the House on 18th June be approved [33rd Report from the Joint Committee].—(Lord Rooker.)

My Lords, first, I thank the Minister for his courtesy in sending the code of guidance in advance of our consideration of the order. I appreciate that. Although it was nothing to do with him, it would have been nice to have received it during consideration of the Bill, but better late than never. No doubt at some stage we shall have the chance to return to some questions raised by the code of guidance.

Extension of priorities was discussed at length during the passage earlier this year of the Homelessness Act 2002. As I said then, we broadly support the extension of the categories under that Act—certainly those to whom the Minister referred: young children or young people who have been in or are leaving care. It is perfectly proper that the local authority should stay in loco parentis until they are standing on their own two feet, part of which must mean that they have somewhere secure to live. It is interesting that those priority categories now catch those young people who become separated from their families, and that responsibility for them is placed on the local authority.

Our concern remains that, however worthy that extension may be, local authorities are already struggling to deal with those who are entitled to be given help under existing homelessness legislation. Those additions will mean even more prioritisation than already occurs. That prioritisation will have to be applied by assessing the degree of vulnerability of one applicant against another.

As the Minister is well aware, there is a chronic shortage of housing available for those who require it, especially in London, and local authorities are daily having to decide where they can house the homeless as well as trying to deal with those who are in need of housing help, but are not in the homeless category.

Of course, the Chancellor has now voted zillions of pounds to housing. But with the best will in the world, the Housing Corporation will struggle to spend it in the short term, and, as has been made clear by the Deputy Prime Minister, much of it will be absorbed in dealing with key workers. Local authorities are also now under a duty to find alternatives to bed and breakfast accommodation, which is another pressure point.

In the other place, a question was raised by the shadow Secretary of State about the application of the test to which the Minister referred, which is set out in the Explanatory Note, by which a local authority determines a person's vulnerability. My honourable friend asked whether the test would now apply to all those stipulated not only in the order but in previous legislation. In reply, the Minister in the other place said that he thought that that referred only to the additional categories in the order and no one else. Can the Minister enlighten us as to whether that is the case? The Minister in the other place said that he would let my honourable friend know, but I am unclear whether that matter has been decided.

During the debates on the Homelessness Act 2002, questions were asked about which local authority would be responsible for those considered to be vulnerable as a result of leaving the Armed Forces and prison. Concern was expressed that it might be the authority in which the prison lay, in the case of prisons, and any local authority in the case of those from the Armed Forces. Although I am concerned that that is not dealt with by Armed Forces personnel or the prisons, that could put great pressure on a small number of authorities, if a large number of former members of the Armed Forces decided to go to their areas—in particular, those that provide the best services. It could also put great pressure on the areas in which prisons are located.

Perhaps the Minister could give us further information on that. Finally, I simply reiterate that although the implementation of the order is likely to be fraught with practical complications, we do not oppose the principle behind it.

My Lords, I welcome the Minister to his new role as a housing Minister. I know that he has said that few Members of this House are interested in housing. I fear that as a housing Minister, he will get to know the familiar faces. Tonight perhaps represents a start.

We on these Benches welcome the order. It is an important adjunct to the Homelessness Act 2002. We supported the Act; indeed, we worked hard with Ministers in both Houses to try to improve it. The order is supported by many people who work in the field of homelessness. I am particularly grateful for briefings from Shelter on the order.

The extension of priority need for accommodation to new categories of homeless people will strengthen the homelessness safety net. It will help those who, statistics show, are most at risk of ending up on the streets. The categories that we heard about this evening correspond to the groups who find themselves in acute housing need. However, I want clarification from the Minister on two areas of concern. Some of the issues were raised in another place. First, the code of guidance is only in draft form. Can the Minister tell us when the code will come out and how long the consultation will be? I shall return to that matter. Secondly, there is the issue of financial support for local authorities to carry out their duties. I shall say more about that in a minute.

The inclusion of 16 to 17 year-olds is, obviously, welcome. Paragraph 8.39 of the draft guidance recognises the possibility of reconciliation between young people leaving home and their parents, which means that they may need only temporary accommodation. However, if reconciliation is not possible, young people will require permanent accommodation. In particular, they will require continuing support. The guidance talks about collusion between parents and young people. I do not know whether the Government have evidence of collusion between young people and their parents to get accommodation or evidence that the practice is widespread. If it is widespread, we have a problem; if it is not, I am concerned at its inclusion in the guidance.

Many people working in the field particularly welcome the inclusion of 18 to 21 year-olds leaving care. That group of people lack support from family and others. It is particularly welcome that the order includes those who left care before the introduction of the Children (Leaving Care) Act 2000. Paragraph 8.14 of the draft guidance refers to joint working between social services and housing authorities. It could be strengthened to be more specific and spell out that it means accommodation and support services.

Some of us feel that greater clarity is needed with regard to the vulnerability of people leaving institutional care. Some local authorities may look for a direct causal link between leaving the Armed Forces and being vulnerable to homelessness. I hope that the Minister will reassure us that the final version of the code will make it clear that the presence of an institutional background should be seen as a strong indicator of vulnerability. Importantly, such vulnerability may not be apparent immediately after people leave an institution; the effects of living in an institution can come out many years later.

Like others, I welcome the inclusion of people who have left the armed services. Anyone who has visited a night shelter will know that a large number of people there will have a background in the services. In another place, my honourable friend the Member for Bath raised a point about what was happening in Wales. I am sure that the Minister has read what was said in another place. I refer particularly to service personnel who have been discharged following detention in the Military Corrective Training Centre. Provisions similar to those in the order have been in place since last year, and there is some evidence that local authorities, having accepted applicants who have been dishonourably discharged as being in priority need, find such people intentionally homeless, on the basis that they should have known that their offence would lead to their being discharged and losing their accommodation. The Minister in another place said that he did not think that that should happen. I would be grateful if the Minister here could give a commitment that the final version of the code of guidance will explicitly advise against that practice.

The treatment of ex-offenders has been a controversial issue in some areas. Recent research has shown that people coming out of prison without a home are far more likely to re-offend quickly. That is why I and others support what is in the order. I hope that the Minister can assure us that the guidance will make it clear that local authorities cannot use the fact that ex-offenders have run up rent arrears while in prison to claim that such people are intentionally homeless.

I would like to see the definition of domestic violence in the guidance strengthened. I welcome moves by the Government to deal with confidentiality. There are other categories of people who often suffer violence, on account of their gender, race, colour, ethnic or national origin, religion or sexual orientation. Such groups will also be vulnerable. I hope that the final version of the code will make it clear that it is not always necessary for applications to be supported by statements from the police. Not all applicants will have the support of the police; often, they will go to the GP as their first port of call. I hope that the guidance will make that clear.

We know that the Government have given local authorities 10 million to carry out their extra duties under the Homelessness Act 2002. Can the Minister say how that money will be distributed? That question was also raised in another place. It is clear that some authorities deal with a greater number of people presenting themselves as vulnerable and in need of housing. Can the Minister tell us the Government's thinking on that?

We support the order. It is an important part of ensuring that the Homelessness Act 2002 is effective. I have said many times that I am disappointed that it has taken so long. The problem has been exacerbated by the fact that we have such low figures for house building. That has not happened overnight. The figures for the past few years show that the problem has crept up on us. I am pleased that the Government have realised that there is a problem, but it has taken them a long time. We now have more households than we have homes, something that has not happened for many years. We welcome the order, and I hope that the Minister will answer the points that I raised about the code of guidance.

My Lords, I assure the Minister that the whole of the Labour Party on these Benches is behind him. I came here at 2.30 p.m., and I have rarely moved from the Bench since. My interest today was the Enterprise Bill. However, when I saw the two noble Baronesses and the Minister coming, in, I knew that there was something on, so I looked at the Order Paper. I must confess that the importance of the subject had escaped me because of my interest in the Enterprise Bill.

I am exceedingly glad to hear of the legislation. The Minister entered the other place with me in 1974. Having represented the seat that he did, he will be familiar with the problems. At that time, housing was the priority, above education, crime and transport. Housing problems now are just as pressing, but the nature of housing needs has changed.

Last night, the noble Baroness, Lady Maddock, and I discussed with the Minister the problems faced by people living in mobile homes. That was an almost unheard-of problem once, but it is a problem now. I can remember more than one occasion on which I left my surgery, got into my car, behind my constituency office, and cried because I could not do anything to help the people who were in need.

The greatest aggravation we face in the year 2002 is that, while I genuinely believe that we have a government and a Minister who want to do something about it and know what needs to be done, they are beaten back by the appalling building rate referred to by the noble Baroness. My noble friend on the Front Bench referred to it in another context. I say "all power to his elbow". That is because, ultimately, a good house, a decent home, a good family and the future of the children is secured. As a constituency MP, the greatest misery I came across was when I found myself powerless to help good people who, through no fault of their own, found themselves in a terrible situation where either they had appalling housing or no housing at all.

I listened to the two noble Baronesses explaining the matter, and I see the order as a tiny step in the right direction. I wish it well.

My Lords, I rise briefly to welcome the provision. I welcome too the cross-party agreement and unanimity of the House that this is the right direction in which to proceed.

This morning HM Chief Inspector of Prisons visited the House to discuss her work. She told us that prison overcrowding is now so great that many prisoners have to share two to a single cell. In practice this means that there may be a single lavatory in a cell shared by two men, with no screen or shield. The inspector cited an instance where a man with a catheter shared a cell with a young man who was self-harming. That example drives home the importance of reducing the rate of reoffending by ensuring that prisoners and others leaving institutions are prioritised in terms of housing.

My Lords, I shall do my best to answer all the points raised by the noble Baronesses, my noble friend and the noble Earl. I shall jump the gun and respond to a point put to me by the noble Baroness, Lady Maddock. By the Recess, I shall have been in post for eight weeks. During that time I have taken one Parliamentary Question which concerned something that was nothing to do with my department; that is, the mortgage rate. Since I moved to the department, I have not had to come to the Dispatch Box and answer a single Question on housing. That says something about the overall interest. That is not meant to be a criticism—although it is—but this issue is central to our fellow citizens. While I do not want to go wider than the order before us, I welcome the contribution of all Members of the House tonight and the opportunity to respond.

As the noble Baroness, Lady Hanham, remarked, local authorities have to struggle with this problem. We have increased resources, although I suspect that they will never be enough. But we have made a conscious effort to increase resources as a direct result of the legislation. A genuine complaint often made by local authorities is that resources are not tied. We shall monitor that.

Consultation has taken place with the Local Government Association about the £10 million allocation. That is not all; a huge amount of money is being put into housing. It would be totally unfair to divide the extra £10 million equally among housing authorities because they bear different levels of burden. Shortly we shall announce how the money is to be allocated.

Particular pressure affects London and other urban areas. On the subject of the Housing Corporation, I do not think that it will struggle with its new resources. My experience of the corporation is that it is a real go-go body. Given the announcements made yesterday and the further detailed announcements to be made by my right honourable friend the Deputy Prime Minister on Thursday, the Housing Corporation will be let off the leash, so to speak. We expect to see quick action.

I turn now to the test for homelessness. I read swiftly through the debate held in the other place. While I am not familiar with every detail of that debate, I have to say that, on balance, the test has got to be the same. We cannot have two categories of vulnerable homeless people because of the way that the legislation has been drafted. My honourable friend in the other place, Tony McNulty, responded to the points raised by the honourable Member for Bath. I shall not repeat all the details, but he confirmed that the definition of vulnerability in the proposed guidance is set out at paragraph 8.13:

"The critical test of vulnerability for applicants of all these categories is whether, when homeless, the applicant would be less able to fend for himself than an ordinary homeless person so that he would be likely to suffer injury or detriment, in circumstances where a less vulnerable person would be able to cope without harmful effects'. That definition is already well established by the courts".—[Official Report, Commons Second Standing Committee on Delegated Legislation, 1/7/02; col. 15.]

So the test of vulnerability is one for local authorities to assess; it is not one for government. People at the sharp end are much better qualified to deal with this.

I should make a point about prisoners. Being in prison does not qualify someone as a resident in a locality. I should make that absolutely clear and put it on the record. Just because the prison is in a certain locality a prisoner does not acquire rights of residence with regard to that local authority if the prisoner is making a claim of homelessness as a result of being vulnerable.

So far as former servicemen are concerned, while I cannot be specific, my view is this—although I stand to be corrected: the person would have had a home base before they joined the services. Therefore the claim may have to be made in that area rather than wherever the discharge from the armed services took place. However, it says something about the way that the Armed Forces have run this country over generations. We have a massive proportion of vulnerable homeless people who were in the Armed Forces. I know this and my noble friend on the Benches behind me will confirm that that was my experience in my own constituency. It is quite appalling. Qualified, skilled, trained and assertive individuals, prepared to lay down their lives for their country, become so totally institutionalised that they cannot cope when they leave the services. But they are not spotted before they leave and that is the tragedy of the situation.

With proper planning and exit strategies, the problem could be dealt with before servicemen leave. Then we would not need to prioritise such people as vulnerable. Nevertheless, we have reached a point where we have to do so and we have to take steps to look after them. They must be helped to stand up on their feet because homelessness brings with it many consequential problems of which we are all well aware. I do not need to detail them, but they relate to former prisoners as well.

On the subject of domestic violence, I accept the point made by the noble Baroness. Exceptions occur if someone has to flee a violent domestic situation and then out of necessity move away from the relevant local authority. They may have to present themselves to another authority. The test would be: is this a vulnerable person who is homeless? This concerns women in the main, usually accompanied by their children.

I should tell the noble Baroness that the guidelines were published on 8th July and they will have statutory force when the homelessness provisions come into force on 31st July. However, the guidance is open to consultation until 31st October. I can assure both noble Baronesses that the points they have raised tonight will be taken on board by my officials when we consider the consultation process. There is no obligation to write in separately. What has been said in our debate tonight is good enough and is on the record. I shall make sure that all the comments are fed into the process.

The noble Baroness, Lady Maddock, asked about the issue of young people colluding with their parents. I know that the noble Baroness was briefly a Member of the other place. I cannot remember for how long she was a Member of Parliament and I cannot remember the constituency, but I recall that it was not a roughed-up urban area.

My Lords, I rise simply to confirm that my constituency was Christchurch, but for nine years I served as a councillor on a housing committee in Southampton. That was quite a different kind of place.

My Lords, it is my experience that young people feel a sense of desperation with regard to housing. There are not too many cases, but the temptation to enter into collusion with parents in order to get housing is very great. I have to say to the noble Baroness that the notion that such collusion has never happened simply does not reflect the real world. For that reason, checks have to be made with parents and other family members; the statements cannot be taken at face value.

The main priority for 16 and 17 year-olds is to try to reconcile them with their families. In checking to see whether that would be possible, an experienced housing officer would be able to assess whether the state of homelessness is genuine. The person has to be unintentionally homeless—that is part of the test—and vulnerable, and officers should take that on board.

I should say to the noble Baroness that I am not fully briefed in regard to Wales. When I noticed that the order refers only to England—and I deal only with England—I regret that I did not pick up on the issue of Wales. I shall get one of my other colleagues in government to address that issue and perhaps write to the noble Baroness.

My Lords, in his reply the Minister said that he had read the proceedings in the other place. Obviously we cannot decide precisely what happens in Wales here, but local authorities have used the excuse that people had made themselves intentionally homeless when they were dismissed from the Armed Forces. We should try to make clear in the guidance that they are not allowed to do that. If the Minister reads what was said in the other place it will become quite clear.

My Lords, I shall take that point on board when looking at the guidance. If someone otherwise meets the test of being homeless unintentionally, it would be wholly unreasonable and irrational for public institutions to make the connection that he has made himself intentionally homeless as a result of losing a job.

I accept the point made by the noble Earl, Lord Listowel. Everyone accepts the propensity of ex-offenders to re-offend when they are homeless. That was made clear in the recent report of the Social Exclusion Unit.

I believe that I have covered all the points that have been raised. I am grateful for the support of the House. I came late as Minister to this legislation. It passed through the House during the last Session, when I was at the Home Office. The legislation itself goes back to a Private Member's Bill introduced by the former Liberal Democrat Member for the Isle of Wight, Stephen Ross. I pay tribute to that legislation. It was the gateway through which Parliament dealt with homelessness in a different way than in the past. I am pleased that we have taken the legislation to the point it has now reached. I commend the order to the House.

On Question, Motion agreed to.

rose to move, That the draft regulations laid before the House on 27th June be approved [34th Report from the Joint Committee].

The noble Lord said: My Lords, in moving these regulations on behalf of my noble friend Lady Scotland, I shall speak also to the draft Representation of the People (Scotland) (Amendment) Regulations 2002.

The two sets of regulations are very similar save for some differences reflecting differing electoral provisions and institutions in Scotland, but their effect is the same. Similar regulations have been laid relating to Northern Ireland, but they differ in some important points of detail and are being considered separately. I shall refer primarily to the England and Wales regulations and mention any important differences which appear in the Scottish draft regulations.

These regulations are necessary to implement Section 9 of the Representation of the People Act 2000. Your Lordships will be aware that this provides for two versions of the electoral registers to be compiled—that is, a full register containing, as now, the names and addresses of every elector and an edited version to contain the details of only those electors who have not indicated via an opt-out box that they object to their details appearing on the version of the register which is available for commercial purposes.

These regulations seek to strike a balance between the right of individual electors to their personal privacy and the needs of industry to have access to personal information when this can clearly be demonstrated to be in the public interest. The regulations we are debating today represent the results of wide consultation. They are constrained, as with all legislation, by the need to be compliant with the Human Rights and Data Protection Acts. By proposing to permit access to the registers for specified, defined commercial purposes these regulations provide a reduction to the financial burdens placed on some sectors of the financial services industry, a move welcomed by the companies concerned.

I do not intend to speak on each of the new regulations but I shall say something on the major provisions. New Regulations 92 to 94 place general restrictions on the sale of and access to the full registers and on the use which recipients of the register may make of the data. I emphasise that nothing in these regulations prevents members of the general public from inspecting the full registers. Indeed, it is essential that electors should continue to be able to do so, so that they can check to see that they themselves are correctly registered and also be able to object to the registration of anyone who they think is not entitled to be included. The full registers will be open for inspection at council offices and other appropriate places, where they can be supervised to prevent unauthorised copying. The public will be able to take hand-written notes but not to make photocopies.

New Regulation 103 provides for the supply of the full register to elected representatives—that is to MPs, MEPs, Members of the National Assembly for Wales, local councillors, the Mayor of London and London Assembly members and elected mayors. They may receive free of charge the parts of the register covering the areas which they represent and can use the information for all electoral purposes and for any purpose connected with their office. For example, if an elected representative wants to contact a group of his constituents, he may refer to the register to ascertain its address. He may pass the register to his research assistant to assist with constituency matters. The full registers may continue to be used as a tool in the work which representatives are elected to carry out.

New Regulation 108 provides for the supply of the full register to candidates at a parliamentary, European parliamentary or local government elections for electoral purposes. This allows candidates to know precisely who the electors are so that they can carry out their canvassing in the traditional way. Provision for copies of the full register for electoral purposes to holders of elective offices in terms of the Scottish Parliament are not made in these regulations. They will be provided for in a new order to be made under Section 12 of the Scotland Act later in the year. That will deal with a range of matters concerned with elections to the Scottish Parliament.

New Regulation 104 allows MPs, MEPs, members of the devolved Parliament and Assemblies, local councillors, elected mayors, and so on, and also candidates at parliamentary, local government or authority elections, to have free copies of all the full registers to enable them to comply with the statutory controls on political donations contained in Schedule 7 to the Political Parties, Elections and Referendums Act 2000 and Schedule 2A to the Representation of the People Act 1983.

New Regulation 105 provides for the supply of the full register to local constituency parties for electoral and electoral registration purposes. These purposes have been deliberately defined in a very broad way so that electioneering can continue unhindered. There are no restrictions on elected representatives using the full registers for canvassing or for any other activities connected with the electoral process. It is however not permitted for the full registers to be passed to charities which might previously have used them for local fundraising.

I am aware that fundamental questions were asked in another place about the nature of "electoral purposes". It is a broad concept and it is right to adopt a broad interpretation of its meaning. The Government's view is that it should include anything that is for the purpose of seeking election and representing the public in a democracy. It is right that it includes fundraising by a party or a politician for purposes connected with elections. It would be a different matter if money were to be raised to buy equipment for a local hospital or for the refurbishing of a party's offices. But fundraising for the core purpose of communicating with electors and campaigning clearly counts as "electoral purposes". The Government do not wish to tie this down too much in regulations. If we were to do so we would create the contrary effect and restrict various things that we might all agree should be legitimately part of the electoral process.

New Regulation 113 provides for the sale of the full register to government departments and restricts its use to the prevention and detection of crime and the enforcement of the criminal law; the vetting of employees and applicants for employment where such vetting, is required; and the supply and disclosure of information to an "authorised person", who may not disclose information contained in it except to other authorised persons, and only for use for the purposes for which such a person could obtain the full register directly under these regulations.

This provides the means for legislative support to secure the effective participation of all local authorities in the LASER project now being proposed by the Improvement and Development Agency to clean and standardise electoral register data in electronic format. I should make it clear that we are currently considering the agency's business case, received at the end of last month, and while we strongly support developing an electronic register we have yet to decide whether the current proposals will be the best way forward for everyone.

I now come to that section of the regulations which specifies what limited commercial use is to be permitted of the full registers. Many commercial companies have used information from the electoral registers for many years and for a range of purposes, including direct marketing and credit reference checks. A High Court case last year made it clear that electoral registration officers had been wrong to sell the registers for those purposes without first giving electors the right to opt-out of having their personal details sold in that way.

The Government have carefully considered the situation and have consulted with bodies representing commercial interests such as the British Bankers' Association, the Finance and Leasing Association, the Direct Marketing Association, the credit reference agencies themselves and numerous others. All have impressed on us the importance of the electoral registers as a tool in checking a person's identity and consequently their credit-worthiness.

In addition, banks and financial institutions have a statutory obligation under the Money Laundering Regulations to verify the identity of their clients. In complying with the Money Laundering Regulations, banks and financial institutions make extensive use of the electoral register to verify information about the identity and address of their customers. They usually carry out these checks using credit reference agencies as their agents. If institutions were denied access to the full register to make these checks and had to rely on lower and poorer quality information, there would be a lower level of compliance with the Money Laundering Regulations.

The Government are, however, very much aware of the importance of the human rights of individuals, in this case the right to a private life and to participate in free and fair elections. Although such rights are qualified ones, which can be interfered with in the pursuit of a legitimate objective of the state, we are mindful that the extent and nature of any such interference must be proportionate to the importance of and benefits to be obtained from the interference. We have therefore given very careful consideration to the balance to be struck between any interference with individual rights and the public benefits obtained.

The Government are proposing regulations that permit the sale of the full register to credit reference agencies; first, to enable financial institutions to meet their statutory obligations to prevent money laundering and, secondly, to enable credit checks to be fully undertaken.

In relation to money laundering, the credit reference agencies will be permitted to provide information, from a full register that they have obtained, to banks and financial institutions for the purposes of these bodies meeting their statutory obligations. It is clear that the strong public interest in enforcing the laws against money-laundering and the relatively limited purposes for which access is permitted, result in the balance being in favour of those purposes.

The second category of cases where the Government have concluded that there should be continued access to the full register is for credit reference agencies when vetting applications for credit. Without access to the full register it would be more difficult for lenders to verify an applicant's identity and hence assess the credit risk.

The consequences of denying credit reference agencies access to the full register in terms of increased fraud, increased cost of credit, and reduced availability of credit, especially to those at risk of financial exclusion, amounts to a strong public interest for continued full access. This public interest can be balanced against the following two factors which relate to the extent of the interference with human rights which will be permitted.

In cases where an application for credit is the first transaction between any individual and a financial institution, there is, in any event, a statutory obligation to verify identity under the Money Laundering Regulations. That will usually be fulfilled through a check with a credit reference agency. Applicants for credit are always told that their details will be checked as part of the assessment process and their consent to such checks is required before these can be undertaken.

There is a clear public interest in there being efficient and prudent availability of credit to all sectors of the economy. It is the Government's view that there would be a real risk to this continued availability of credit if the full registers were no longer available.

Given the strong public interests in facilitating the use of this information for identity checking in relation to the provision of credit, the overlap between the use of the full register for money laundering and credit assessment checks, and the fact that people have to consent to the checks being made, the Government consider that the interference with individual privacy is proportionate to the public benefits obtained.

I am satisfied that this limited commercial access represents an important public service and pursues a legitimate public aim in a manner which is proportionate to the intrusion into individual privacy and is therefore compliant with the Human Rights Act 1998 and the European Convention on Human Rights. The Electoral Commission, while maintaining its own basic view that electoral registers should not be made available for any commercial purposes, has publicly stated that it welcomes the Government's intention to put in place a comprehensive regulatory framework to ensure compliance with the human rights requirements.

Should the limits imposed by these regulations on authorised recipients of the full registers be breached, new Regulation 115 creates a criminal offence for information from the full registers to be passed to an unauthorised person, or for an unauthorised person to use such data, however he or she came by them.

The regulations implement the decision of Parliament to allow electors to decide, subject to some exceptions in the public interest, the limit to which their personal information may be used. They represent a legitimate balance between individual rights and the public interest. I commend them to the House. I beg to move.

Moved, That the draft regulations laid before the House on 27th June be approved [34th Report from the Joint Commit tee].—(Lord Bassam of Brighton.)