My Lords, the best estimate by the English Tourism Council of the loss to the tourism industry in England is that it is in the order of £100 million a week and that it could reach £250 million a week if the consequential implications of the foot and mouth outbreak continue well into the summer season.

My Lords, I thank the Minister for that Answer. In light of those worrying figures, will the Government ensure that interest-free loans are available as art emergency measure to tourism businesses that cannot pay their bills or keep on staff as a direct result of the catastrophe? Have the Government been successful in persuading the German agriculture ministry to drop its current advice, which is that people should not travel to this country?

My Lords, on the noble Baroness's second point, the British Tourist Authority is working hard to persuade people from Germany that a very large part of Britain, including a very large part of its countryside, is open for tourism. However, Germany is not the worst case in this regard. If the noble Baroness has watched the news on CNN recently, she will know that some extraordinary ideas are circulating in the United States about the way in which foot and mouth disease is affecting Britain as a tourist destination. We are working hard to eradicate those: damaging ideas.

On the noble Baroness's first question, providing interest-free loans is one measure that the task force is considering. The list of measures was made available last week and I am sure that the matter will be followed up.

My Lords, the Minister may like to know that I held a university reunion at the Malvern Hills Hotel Fast weekend and that we drank Malvern water but did not trespass on the Malvern Hills. Will he comment on the fact that tourism is a more important industry economically to Britain that the agricultural sector?

My Lords, if my noble friend's university reunion was like other reunions. I rather assume that he was drinking more than just Malvern water, admirable though it may be to drink that water. When this issue was raised last week, I referred to the situation at Porlock in Somerset where it is said that 90 per cent of the land is agricultural but that 90 per cent of employment is from tourism. That is true of a large part of the country.

My Lords, does the Minister agree that the division between tourism and agriculture is unfortunate? In most rural areas, tourism depends on the agricultural sector's contribution to the landscape and on its produce, and agriculture depends on tourism to a large extent now that farmers have diversified and because they sell their produce to tourists. Does he think that developing a false sense of competition about whom one should feel the most sorry for is not a constructive way forward?

My Lords, I very much agree with the noble Baroness's comments. I hope that nobody in government or in any position of responsibility is helping to develop a sense of division between tourism and agriculture. The point is not just that the two sectors feed off each other, so to speak, but that a large number of people are engaged in both.

My Lords, can the Minister use his influence with our New Zealand cousins? My daughter-in-law's New Zealand family have said that they will not come over here next September because of foot and mouth disease. However, I have prevailed on them to come.

Also, to follow on from the question asked by the noble Baroness, Lady Miller, does the Minister agree that British farm produce that is sold at farm shops and farmers' markets is essential? Will he do what he can to prevail on various ministries and agencies to sort out the provision of comprehensive advice to specialist cheese-makers?

My Lords, those are two very different points. On the noble Countess's point about New Zealand, the British Tourist Authority will work there as it does elsewhere. I am delighted to hear that she has persuaded her family to come. I hope that they will persuade their friends and neighbours to come as well.

The issue of specialist cheese manufacturers is slightly too precise for me to give a helpful response. There is a widespread misunderstanding in this context. Some claim that British farm produce of any kind is dangerous to health; it is not.

My Lords, did the figures in the Minister's original Answer include the cost of unemployment benefit, which, sadly, will become payable to a considerable extent in the affected industries?

My Lords, the figures are intended to cover that as well. The noble Lord will recognise that it is very difficult to calculate those figures. One cannot simply use the price of a hotel room, for example. One has to examine the opportunity cost, the mix between fixed and variable costs and the public costs of losing jobs. Tourism is a highly labour-intensive industry. If one loses £30,000 in turnover one has probably lost a job.

My Lords, the Minister said in his Answer that the Government were working hard to counter misconceptions abroad. Would the Government consider making special funds available through the Central Office of Information and our embassies to aid in that task?

My Lords, that could involve duplication of effort. The British Tourist Authority has that primary responsibility. In areas in which it does not have direct representation, it works through our posts overseas.

My Lords, can the Minister encourage the English Tourism Council to carry out regular surveys of the damage caused to the tourism industry? That would ensure that if financial help was forthcoming, it would be distributed quickly and effectively.

My Lords, I think it is fair to say that more than regular surveys are carried out. Continuous surveys are carried out by the English Tourism Council, by economists and statisticians in the Department for Culture, Media and Sport and by other departments that may have a contribution to make.

My Lords, does the Minister think it would boost English and British tourism if some of our political leaders announced now that they were planning to holiday in England this year?

My Lords, I heard a suggestion that Ministers should travel around the world in order to boost efforts to bring overseas tourists to Britain. The two are not incompatible.

My Lords, does the Minister agree that the agricultural and tourist industries have exactly the same priority of ridding the country of this pestilence?

My Lords, yes. But there are differences of emphasis in the sense that those affected in the tourism industry are not necessarily in the same areas as those in the agricultural industry who are affected. The message we have to get across is that a large part of this country is not directly affected by foot and mouth disease and its tourist industry therefore should not have to suffer. That is far from being the case at the moment.

My Lords, the latest available figures are for the 12 months from 31st March 1999 to 1st April 2000. Those show a 4 per cent increase when compared with the preceding 12 months in the total number of police vehicle accidents. The figures are 18,068 incidents in 1999–2000, with 17,338 in the year before. They include all incidents ranging from minor collisions in police station yards right through to more serious accidents on public roads.

My Lords, I thank the noble Lord for his reply. Can he confirm that some police forces are refusing to divulge figures on this subject to the media, despite the public's concern? Honourable exceptions are the Metropolitan Police, for whom the Home Secretary is responsible, and also the Manchester police.

My Lords, I am pleased that the noble Lord recognises that several police forces are being explicit in their publication of figures in relation to this situation. He may also know that the Metropolitan Police introduced an additional feature into police vehicles in terms of black box recorders. They help to ensure that vehicles are used economically and managed properly, as well as providing evidence when any serious accident occurs. I recognise however that several police forces are not being so open at the present time.

My Lords, has the Minister himself witnessed the turmoil and trail of mayhem left by a police vehicle charging at speed through a succession of red lights in a city or urban area?

My Lords, I have not witnessed such incidents although I am aware of them. We have recorded in the past the number of serious incidents which led to deaths. However, I draw to the attention of the House the Minton report which produced 33 recommendations on how we should improve the operation of police vehicles at times of emergency. Clearly a necessary balance must be struck between the public's requirement that police act promptly, efficiently and speedily to an emergency which may involve threats to life and the obvious safety for the ordinary member of the public when the police vehicle is rushing to the emergency. The Minton report indicated the kind of training that is required and should be enhanced. I am pleased to be able to indicate that essential parts of the report are being adopted by a substantial number of police forces.

My Lords, is the Minister aware that with the airways project, which all forces hope to have in place within the next four years, automatic location devices within vehicles will make it much easier for police vehicles to attend accidents? The site can be pinpointed enabling the nearest vehicle to attend. That will avoid vehicles travelling all over the place at high speed and be a much safer way of proceeding in the future.

My Lords, I am grateful to the noble Baroness for drawing attention to one aspect of technology which will enhance the efficiency with which police vehicles are dispatched to emergencies. Other aspects of technology are also being introduced. Police vehicles which are likely to be involved in accidents and emergencies have more highly trained drivers and they also have markers on their roofs so that they can be provided with helicopter support. That again can reduce the necessity for rapid travel along the ground, the helicopter being able to guide the nearest vehicles more accurately from the air.

My Lords, does the Minister agree that if he or a member of his family were, unhappily, mugged or being burgled, he would be thankful to know that a police car was travelling at high speed, through several red lights, in order to come to his rescue?

My Lords, I am grateful to the noble Earl, Lord Ferrers, for introducing an element of balance to this debate. It is important that the police are able to respond to clearly identified emergencies. Again, technology and the managerial structure of police forces play their part in identifying real emergencies to which we expect the police to move with all dispatch. But it is always a cause for concern when it is found that a police vehicle has travelled too fast to an incident which is not in fact a high priority emergency. A balance has to be struck. I can assure the House that the Minton report and the work of police authorities throughout the country are fully aware of public concern and the need to strike that balance.

My Lords, my noble friend will be aware, as will other noble Lords, that I frequently go out on traffic patrols. In response to questions raised by other noble Lords, perhaps I may say that I have been through red traffic lights, but only when necessary. Does my noble friend agree that traffic officers are trained to a higher standard than drivers of other police vehicles? Consequently, training to a far more advanced standard for drivers of other police vehicles could lead to fewer accidents. Does he also agree that a police accident can be classed as such even if just a tail-light is broken?

My Lords, I am grateful to my noble friend. My noble friend stated that he had been through red lights. I hasten to assure the House that I know it to be the case that he was in an authorised police car, bent upon attending exactly the kind of emergency that we have been discussing. He is right that the emphasis behind the Minton report and the management of the police forces is that drivers who are on duty with the requisite cars to be able to respond to emergencies require a higher level of training than do other police drivers. We expect all police drivers to set exemplary standards. However, driving in authorised emergency conditions which at times require the breaking of traffic Acts requires a higher level of skill. As my noble friend indicated, that is reflected in the intensification of the training of such drivers.

My Lords, we shall announce our decisions on the reform of the local government finance system in a White Paper later this year.

My Lords, I am grateful to the Minister for that immensely helpful reply. Can he assure the House that there is no truth in the reports, which have appeared on occasion in the press, that the Government are planning a major shift in resources from the South East of England to the North?

No, my Lords. We are considering the requirements of local authorities across the board. We are conducting a fundamental review to find a fairer way to distribute grants. The final effect of such distribution between different sort of authorities and geographical areas will be seen at the end of that process. There is no strategy to shift resources away from the South East.

My Lords, does the Minister accept that although the South may be wealthier than parts of the North, within the South, and particularly London, are areas of enormous deprivation? Three of the most deprived boroughs in the country are in London. Do the Government accept that the review needs to be in fine detail not broad-brush?

My Lords, yes. That is precisely what we are doing. We are considering every aspect of local authority provision and the demographic and physical areas they cover. We are taking into account all such dimensions. There is no discrimination against London in that process.

My Lords, will the Government bear in mind that the foot and mouth crisis will diminish the income and increase costs of local authorities in rural areas?

My Lords, we recognise that the immediate effect may be that of further costs to local authorities and, to some extent, diminishing income. We hope that that is a temporary change and that the system of local government finance which we are addressing here will stand us in good stead for many years. Clearly, whatever adjustments have to be made in the short term following the foot and mouth outbreak will need to be taken on a separate basis from the long-term financial structure.

My Lords, the judgment is long and complex and we are unable to offer any comment until we have had the opportunity to assess it carefully.

My Lords, I am grateful to my noble friend; but would he at least accept Mr Justice Burton's core finding that the supplier of blood to NHS patients has a legal duty to supply clean blood? Is he aware that, of 4,800 people with haemophilia who have been infected with hepatitis C by contaminated NHS blood and blood products, 114 have now died of liver disease and that of 1,200 infected with HIV, 900 have since died of AIDS? Would it not thus be cruelly unfair to deny a stricken haemophilia community even the benefit of the High Court's core finding? Is it not time now to let right be done?

My Lords, I agree with my noble friend that the community in relation to whom he addresses his remarks has suffered very much. We feel a great deal of sympathy for those people. The issues are distinct. Prior to 1985, the technology to make blood products free from hepatitis C in sufficient quantities to treat all haemophiliacs in the UK was simply not possible. Once it was, the NHS introduced it. Government policy in this case is that compensation or other financial help is not payable. That decision was reached by the previous government. The judgment given on Monday does not affect that decision as the Consumer Protection Act did not come into force until March 1988.

My Lords, the Minister mentioned that it was too early for the department to have made an assessment. However, his officials seem to be warning journalists about the implications. The Independent stated:

"Department of Health officials privately warned that the implications of the 173-page judgment were that the NHS could face claims for hundreds of millions of pounds in compensation if the same reasoning was applied in other cases where patients suffered unpreventable injury".

Despite the timing, is that not so in the case of haemophiliacs who have been infected with hepatitis C? Would not it be far better if the department finally came up with a compensation scheme after all these years? That would save the cost of litigation and the eventual damages to be paid.

No, my Lords, there are two distinct issues. The judgment is very long. It was published on Monday of this week. It is important that we have enough time to consider the full implications. When we have done so we shall give our views and an assessment of the implications for the NHS as a whole.

As regards compensation, I can only repeat what I said earlier. We have reviewed the decision taken by the previous government not to offer financial assistance to haemophiliacs infected with hepatitis C through blood products. We met the Haemophilia Society and spent a good deal of time considering the evidence it presented. The decision was not easy. However, the decision was that we could not make an exception in this case to the general rule that compensation or financial help is only given when the NHS or individuals working in it are at fault.

My Lords, does not my noble friend find his own Answer somewhat surprising if one applies to it even the most elementary ethical principles? The logic of his position seems to be that we could not know that we were to produce this catastrophe, and because we did not know, we cannot compensate people for the consequences of our actions. I well understand the technicalities of my noble friend's Answer. However, I do not understand the ethical position now adopted by the Government. People have died as a result of these actions and others are in danger. I should have thought—on all sorts of grounds in which once, at least, our party used to believe—that compensation is exactly the right path to take.

My Lords, the position is clear and has been stated policy by successive governments. It is that, in general, compensation is paid only where legal liability can be established. Compensation is therefore paid when it can be shown that a duty of care is owed by the NHS body; that there has been negligence; that there has been harm; and that the harm was caused by the negligence.

Of course the Government have every sympathy with the people who were so affected, but I do not believe that sympathy can lead us to change that general principle.

My Lords, will the Minister confirm that this case was the first to be brought under consumer legislation and that it therefore opens up many new concerns, particularly in the part of the NHS? Can that consumer legislation apply in the case of anyone who dies as a result of a blood transfusion, even a life-saving blood transfusion which subsequently develops into a disease such as BSE'? Furthermore, is it correct that the Government are appealing against the decision?

My Lords, the question of appeal will be considered when we have received full advice from the lawyers involved. I repeat that this is an extensive judgment, 320 pages long. Potentially, it has wider implications for the NHS and we need to give careful thought to it before deciding what further action might be taken.

As regards the NHS, this is the first judgment under the Consumer Protection Act 1987. The judge's main findings were that the public are entitled to expect that the blood they receive will be 100 per cent safe. The judge's conclusion was that the knowledge of the medical profession is not relevant in determining the legitimate expectation of the public, nor is it a relevant circumstance that that effect could not have been avoided. The judge concluded that once the risk is known about, the product is defective even if the risk could not be identified in the product. As noble Lords will realise, we must give careful consideration to those implications.

My Lords, some 10 years ago there were extensive discussions in this House about the possible introduction of a no-fault compensation scheme along the lines of those which exist in New Zealand and certain other countries. At the time, the government of the day said that they did not want to introduce such a scheme but that they would give the matter further consideration.

That proposal has fallen by the wayside. When these blood products were produced no one could have known that they were likely to transmit these viral infections. Hence, in my view, it would be impossible to come to a decision that the Government were negligent. However, is it not time that the question of no-fault compensation should be reconsidered?

My Lords, I assure the noble Lord that we are reviewing a range of issues surrounding compensation, in particular the problem of litigation in the NHS and the best way to tackle that, including the process used to deal with clinical negligence claims and how we can improve it. We shall continue that work in considering how best to take the matter forward.

In the context of the NHS, no-fault compensation schemes offer some advantages, but there are disadvantages, too. Once one examines the position in detail, one sees that it is not easy to reach a simple conclusion on that matter.

My Lords, since the Government came into power, what has been the cost of litigation within the NHS? Are those costs balanced against compensation which might be paid to individuals who are aggrieved?

My Lords, I shall give clinical negligence payments over the past five years. In 1994–95 they were £160 million; 1995–96 they were £173 million; in 1996–97 they were £235 million; in 1997–98 they were £144 million; and in 1998–99 they were £221 million. Those are substantial payments and anyone concerned with the well being of the NHS must be worried that such a degree of resources is being spent in negligence payments.

Two issues are involved. The first is the question of whether we can improve the whole clinical negligence process. The second is to improve our procedures within hospitals and other healthcare services so that we are less vulnerable to claims in future.

My Lords, will the Minister try to persuade his department to publicise the fact that it is beneficial to health, particularly of men, to give blood on a regular basis? Furthermore, are there any age limits on blood donors?

My Lords, I believe that there are age limits but we want to encourage as many people as possible within those limits to give blood. It would be fair to say that, under new leadership in the National Blood Service, during the past two or three years the stocks have blood have increased enormously. I echo the noble Lord's remark that we must encourage more people to give generously in that respect.

My Lords, it may be for the convenience of the House if I make a brief statement announcing the dates of the Easter Recess. Subject as always to the progress of business, the House will sit at 11 a.m. on Tuesday 10th April and rise for the Recess at the end of business that day. The House will return on Monday 23rd April.

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

Moved, That the Lord Tordoff be appointed to take the Chair in all Committees for the remainder of this Session.—(Baroness Jay of Paddington.)

On Question, Motion agreed to nemine dissentiente.

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

Moved, That the Lord Brabazon of Tara be appointed Principal Deputy Chairman of Committees for the remainder of this Session.—(Baroness Jay of Paddington.)

On Question, Motion agreed to nemine dissentiente.

My Lords, I beg to move that the Commons amendments be now considered. In doing so—I am sure that this is totally out of order—perhaps I may thank the House for putting me into the job that I now hold. However, I am conscious of the tragic circumstance which created the vacancy and I shall not forget it.

Moved, That the Commons amendments be now considered.—(The Chairman of Committees.)

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 74.

Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 74.—(The Chairman of Committees.)

My Lords, what do they do?

My Lords, I had hoped that the noble Earl would have read the Commons amendments. If it would assist him, I could write to him with details at a later date.

On Question, Motion agreed to.

My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.—(The Chairman of Committees.)

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 17 en bloc.

Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 17.—(The Chairman of Committees.)

On Question, Motion agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 18.

Moved, That the House do agree with the Commons in their Amendment No. 18.—(The Chairman of Committees.)

moved, as an amendment to the Motion that the House do agree with the Commons in their amendment, leave out "agree" and insert "disagree".

The noble and learned Lord said: My Lords, I rise to move Amendment No. 18A, that the House do agree with the Commons in their Amendment No. 18. Perhaps I may detain the House for no more than one minute to explain the purpose of the amendment. In their consideration of the parallel Kent County Council Bill the Commons disagreed to the proposed amendment which corresponded to Amendment No.18 in the Medway Council Bill. It was common ground that, so far as practicable, there should be no disparity between the provisions of these two Bills which, inter alia, regulate certain activities of dealers in secondhand goods.

By inadvertence, however, when the Commons thereafter considered the Medway Council Bill Amendment No. 18 was agreed to. It is to remove the unintended disparity between the two Bills resulting from Amendment No. 18 that Amendment No. 18A is required. I beg to move.

Moved, as an amendment to the Motion that the House do agree with the Commons in their Amendment No. 18, to leave out "agree" and insert "disagree".—(Lord Mayhew of Twysden.)

My Lords, I am glad that the noble and learned Lord, Lord Mayhew, moves his amendment because it puts right an error. The only reason I moved the original amendment was to allow the noble and learned Lord to move his. I hope that the House agrees with his amendment.

On Question, amendment agreed to.

On Question, Motion, as amended, agreed to.

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 19 to 74 en bloc.

Moved, That the House do agree with the Commons in their Amendments Nos. 19 to 74.—(The Chairman of Committees.)

On Question, Motion agreed to.

My Lords, I beg to move that the Second Report from the Select Committee (HL Paper 54) be agreed to. Perhaps I may say a word or two on the two subjects of smoking and accommodation. This is about as near a baptism of fire as one can get. The Offices Committee met following a letter from 18 Members who had written to the noble Lord, Lord Mackay of Ardbrecknish, in December requesting changes to the House's smoking policy. As a result, both the Offices Committee and its subcommittees have reviewed the rules and made proposals which are contained in the report.

This is a compromise. People at either end of the spectrum will not be totally satisfied, but the Offices Committee believes that this offers provision for both smokers and non-smokers. The details are in the report. I shall go into the details later if noble Lords wish. I hope that noble Lords accept that this is a reasonable compromise. This subject arose yesterday in the Second Reading debate. The message from the House was that there had to be reason and compromise in these difficult matters. I hope that noble Lords accept this.

I turn to the question of accommodation. There has been considerable worry about the amount of accommodation available to noble Lords. I believe that this has become particularly acute since another place has built a rather large building in which to accommodate itself. That shows up the disparity in accommodation between the two Houses. The noble Lord, Lord Trefgarne, will move an amendment in a moment and I shall reply to that in detail. But perhaps should tell noble Lords immediately that the Leaders of the three main parties and the Convenor have written to the Leader of the House of Commons to request the return of 43 rooms located on the upper committee corridor south, which is above the Lords end of the committee corridor. The rooms were not identified in the report, because at that stage a letter had not been sent to the Commons and we did not want to frighten them off before they received it. No response has been received so far, but that is only because it is fairly recent.

Moved, That the Second Report from the Select Committee (HL Paper 54) be agreed to.—(The Chairman of Committees.)

rose move, as an amendment to the above Motion, at end to insert "and that this House, while in no way wishing to replicate the scale or the degree of comfort that the House of Commons has seen proper to provide for its Members, considers that the conditions for its own Members are in need of drastic improvement and believes that it should set itself the same target as the House of Commons set for itself in 1987, namely of providing an office for every Member who wants one, and accordingly:

(i) requests the House authorities to ascertain as soon as possible how many Members wish to have (a) an office to themselves, (b) shared office space and (c) office space for a secretary/researcher; and

(ii) asks the Leader of the House to open discussions with the Leader of the House of Commons with a view to a division of the Palace of Westminster on all floors on a line running through the Central Lobby on the axis of St. Stephen's Hall".

My Lords, it is not very often that I find myself agreeing with the noble Lord, Lord Trefgarne. Over the past decade or so we have disagreed on a number of issues. But perhaps I may say to him that the thrust of what he is saying is absolutely right. There is no doubt that the House has changed radically in the past few years. It is a busier House. It is—dare I say—a more professional House than perhaps it was before. It seems to be given, and is doing, more work. In terms of legislation, the burden of the legislative efforts of this House appears to be on the increase rather than diminishing.

In those circumstances it is quite wrong that the House does not have the facilities to do the job which the constitution demands of it. If they do not want us to do the job, they must tell us. If they do want us to do the job, we deserve rather more consideration from the authorities down the other end than perhaps we have had.

I am not wedded to the precise terms of the noble Lord's amendment. The idea of bisecting the Palace of Westminster is a trifle fanciful, but the thrust of what he is trying to do is right. The difficulty is not at this end but at the other end. It always was. When one tries to negotiate with the House of Commons one is left with the idea, and it is still fairly prevalent, that this House is of very little consequence; that it is an amateur House; that it should be treated like an amateur House; and really that one should just pick up one's tent and quietly go away. I do not think that this House should pick up its tent and quietly go away. Therefore, what is important today is that the House gives its support to the thrust of the noble Lord's amendment so that the voice of this House is clear and unambiguous in its negotiations with the authorities at the other end of the building. I support the amendment.

My Lords, in supporting the amendment of my noble friend Lord Trefgarne, I should like to enlarge a little on it. I do so for the sake of both the Government and the Opposition Front Benches. I consider that the Opposition Front Bench works in conditions of squalor. Noble Lords share minute spaces. They are jolly lucky if they share with noble Lords who do not smoke as much as me. So there is bad accommodation both for Ministers and for the Opposition.

I make a further point. If one has an important foreign visitor, and one has to be in the House because of a Whip, there is no room to receive, interview and talk to that visitor. American congressmen who come over here are amazed at the squalor in which we have to receive them. In the past I have had to borrow an office to have serious meetings with foreign agriculture Ministers. It is disgraceful that we have no room set aside which can be used for important conversations with people who are not of this House. When the whole matter is being looked at I urge that not only is the accommodation of the Government Front Bench looked at but that of the Opposition Members of your Lordships' House.

My Lords, it is some 15 months since I became Convenor. One of the most intractable problems has been the allocation of accommodation and desks to the Cross-Bench Peers. On many occasions I have argued for a better allocation than we have so far achieved.

I am very concerned that shortly we shall add to our number 15 new independent Peers. They will come to this House not only as an honour but also to work as parliamentarians. It is essential that the House and the Cross-Bench Peers are better able to make accommodation available for them. Perhaps the full frontal attack that the noble Lord, Lord Trefgarne, has suggested is not the right one, but the step-by-step approach which the Office Committee has advanced will, I hope, achieve results.

My Lords, 1 endorse everything that has been said about accommodation by noble Lords on both sides of the House. Perhaps it would help the House if I speak briefly about Annex B to the Second Report from the Select Committee on the House of Lords' Offices.

I was one of the signatories to a letter written to the late Chairman of Committees, to which the Chairman of Committees earlier referred. That letter was signed by Members of all parties, including the health spokesmen of the Liberal Democrat Party and the Conservative Party. It represented a fairly wide cross-section of opinion. Underlying the sentiments expressed in that letter were three principles: first, that we should make a reality of the statement contained in the House of Lords' Staff Handbook, that staff are entitled to work in a smoke-free atmosphere; secondly, that we should ensure the provision of defined areas where Members of your Lordships' House who wish to smoke could be left in peace to do so; and, thirdly, to ensure that those of us who prefer to read, eat and drink, work and, dare I say, sleep, in smoke-free areas, be able to do that.

The sub-committees which reported to the Offices' Committee have clearly done their best. Certainly, the proposals for the Library Committee meet all three criteria. They are seen as a huge improvement by the members of the Library staff to whom I have spoken.

The refreshment proposals also represent a step forward, although many of us are disappointed that there is not yet any provision for smokers in the Barry Room. There the ventilation is not good enough to keep drifting smoke away from the tables of diners who would rather enjoy their food and drink than taste other people's cigarette, pipe or tobacco smoke. Perhaps we can come back to that matter later.

Given that this House is not renowned for making change at a lightning speed, I am very happy to welcome these proposals. I congratulate the Offices Committee on proposing what is for many of us an acceptable compromise.

My Lords, although I support the amendment moved by my noble friend Lord Trefgarne and supported by others, we must bear a sense of proportion about the matter. It would be absurd for us to attempt to provide special office accommodation for hundreds of Members of your Lordships' House.

Perhaps I may speak from my own experience. I have been a Member of this House for 21 years. I was told that because of my seniority as a parliamentarian I could have a room in which to work. I did not want one. I have a flat in Lincoln's Inn in London where I stay. I prefer working in the Library, which is so easily accessible and where all the references that one could possibly want are quickly obtainable, whereas if I had a room somewhere up in the zenith of the building, it would take me extra time coming and going every day and I would be isolated from the references. Let us by all means ensure that Front-Benchers on both sides of the House have the accommodation they require and other noble Lords have accommodation if they require it, but let us not plan for hundreds of us to be provided with this accommodation, which geographically would be a nonsense.

My Lords, I strongly disagree with the noble Lord, Lord Renton. The modern office is not a place of isolation. One of the worst aspects of your Lordships' House is the dreadful support electronically that is given to noble Lords. The need to be on-line is increasing. The fact is that a huge amount of work which needs to be done electronically cannot be done. At the moment I am using a telephone line with a modem because we do not have Internet connections on this side of the Palace of Westminster. That is quite extraordinary in this day and age. It is costly for the House and unnecessary. It would be much better if I were able to use the Internet, but I cannot do so because in my present position I am not connected. One needs space in which to work. Very few noble Lords who, like me, have a job outside the House could: disagree with the fact that it is necessary to do some of that work inside the House between debates. Without that space, one cannot attend the House regularly and make a proper contribution to the proceedings of Parliament.

My Lords, before the noble Lord sits down, is he aware that it is perfectly easy to gain access to the Internet from the House of Lords as long as one has a modem and access to the PDVN? Through that one can browse the Internet and have all the electronic support one needs.

My Lords, with respect, if one has a Macintosh computer, which is what a large number of academics have, that is not possible.

My Lords. perhaps I may add a few points to those made by other noble Lords. I was a member of the Offices Committee for some years. During the whole of that time the subject of accommodation rose and rose in importance in our deliberations. It is a matter of grave concern, particularly for those Peers who are new to the House and are simply not used to having to work in such conditions.

My second point relates to a different matter. I am lucky enough to have had a desk to myself ever since I became a Member of the House because I came in as a Front-Bencher. I share a room with four other Front Benchers, so we have five Front-Benchers in the room. A few days ago a person came into the office to measure up to see whether another desk could be put into the office, which is already extremely crowded, as one might suppose. In the course of conversation with that person it became apparent that no provision is made for those who assist noble Lords in their work. I have to share my desk, not with another noble Lord but with the person who comes in on a regular basis to help me. It is not convenient. Those are not the kind of conditions to which people who work hard in other walks of life—we do work hard here—are used.

I congratulate the noble Lord, Lord Gilbert, on his persistence in this matter. I would point out to the noble Lord, Lord Renton, that paragraph (i) of the amendment requests the House authorities to find out who wants an office and who does not, so that point is taken care of. I hope that we will make progress as rapidly as possible. Paragraph (ii) of the amendment may be a little farfetched. We are talking about a virtual division of the Palace of Westminster. Who knows where that line should fall. Perhaps the noble Lord the Chairman of Committees will be able to tell us a little more about that.

My Lords, I support the remarks that have been made on accommodation. Perhaps I may make two or three additional points to the excellent ones that have been made. First, we should concentrate on the needs of the House in the future and not go over all the ground of the catastrophic experience that we all have here. We need to be ambitious. As I, and I think most colleagues, take the House seriously as a legislative and revising Chamber, we need the facilities that enable us to do our job; or, more importantly, our successors need them. Therefore, we need not merely the sticking plaster of these rooms—a point to which I shall return later—but we need to be ambitious for the future.

The Commons started their building in 1987 and got it last year. We will be long gone if we start, but that is what we ought to do. I believe that £250 million, or whatever the figure would be even at the current low rate of inflation, is a cheap price to pay for us to have a proper purpose-built building. I simply throw that idea in for the committee to consider. In other words, one has no objection to the committee's suggestions other than how minor and trivial they are compared with the needs of the Chamber.

Perhaps I may say en passant that as soon as I read about the five square metres I brought in my tape measure. I measured up this morning. I do not have five square metres and nor does anyone in my room. I should like to know where the five square metres comes from. Depending on how I measure I might have four square metres, so I should like to have my 25 per cent in the next hour.

I congratulate the new Chairman of Committees. Does he remember that he and I have sat on all these committees over many years? I think that the last time we demanded back the rooms was eight years ago. Eight years go by and nothing happens. Do we have any reason to believe—this echoes some of what my noble friend Lord Richard said—that the new letter that we are going to write will get anything for us; or will our successors eight years from now also write yet another pathetic letter?

I turn to smoking. Unlike the noble Lord, Lord Faulkner, I am not in the least impressed by the smoking suggestions. They are not a compromise and they are certainly not a reasonable compromise. The fact remains that the smokers occupy a disproportionate amount of the space in this building and it is about time someone just said "no". We should just say that it is going to stop. To take the obvious examples, if a noble Lord wants a drink in a nonsmoking environment, the Bishops' Bar is captured by the smokers and so is the Peers' Guest Room. There is nowhere to go. The least we could have—

My Lords, half of the Bishops' Bar is non-smoking.

My Lords, the noble Baroness is completely mistaken. The half of the Bishops' Bar that is non-smoking is the sandwich part, which is not a drinking area. The two drinking areas are smoking areas. In my judgment, one of them—namely, the Peers' Guest Room—should be non-smoking. We should just decide to do that. If the smokers want to poison themselves in the Bishops' Bar, good luck to them.

In the restaurants themselves—I speak as a former chairman of the Refreshment Sub-Committee—people smoke, no matter what the rules are. That has to be brought to a stop. We are the only body that I know of anywhere in the country that stands for this nonsense. It is about time that we stopped. There is a particular problem in the dining room upstairs. No matter what the rules are, people smoke. Peers do not tell their guests not to do it. Are we to go to the staff and say, "You go and tell some Peer that his guests cannot smoke"? Who is enforcing the rule? The way to solve the problem is to say to people, "You are not to smoke in any of our eating areas". All over the country, people can live with that. It is about time that your Lordships, instead of talking this nonsense of reasonable compromise, showed a little backbone and did something.

Lastly, I should like to say a few words in support of the report; namely, the medical screening. That facility will be an absolute breakthrough. All I hope is that, by 2002, some of us are still alive to see the screening begin. Given that I have argued that what really matters are the conditions for the future, we know now that our successors will be medically screened and will be told either that their blood pressure is OK or that it is about time they made their will.

My Lords, before the noble Lord sits down, although I am impressed by his Cromwellian determination, what tactics does he suggest that we deploy against the House of Commons?

My Lords, in so far as the rooms belong to us—I was under the impression that that was the case, although the Chairman of Committees may well tell the House that they do not—I would occupy them. I do not doubt that if people will not respond to sweet reason— I have spent my life supporting sweet reason—there are times when someone ought to take a bit of action.

My Lords, perhaps I may add my support to the amendment. It is important that in the future we are given better accommodation. I have been through this process twice, as have many other noble Lords who have come from another place. Way back in the 1960s, I would meet my secretary on a bench in a corridor. Eventually I secured a half share of a room and, finally, I had a room. Having a room makes a significant difference. One can spread out, install computer equipment and stack books and the Companion on shelves.

When I was lucky enough to come to this place, I started again. First, I did not have anything; then I secured a half-share in a desk, followed by a share of a desk in a room shared with 10 other people. I should certainly miss their congenial and friendly company were we each to have a room to ourselves; on the other hand, it would be valuable to have a place to meet visitors, conduct interviews and so forth, as well as to have a little additional space. I do not know how much space I would need, although five square metres does not sound very much.

Perhaps I may put one point to the noble Lord the Chairman of Committees. On no account must we be fobbed off with more rooms down at Millbank. It is too far away for Division purposes. One cannot keep running to and fro between the two buildings. Indeed, that would rather scupper the idea put forward by the noble Lord who has just spoken as regards a new building. Not only would that never be achieved in our lifetime, but there is nowhere to put another building adjacent to this one, thus allowing speedy access.

We must claim back from the Commons rooms such as those on the Upper Committee Corridor, which would be more than adequate. We should put all our efforts into obtaining the space we deserve from another place. Good luck to the noble Lord the Chairman of Committees in his deliberations.

My Lords, I apologise for taking up any more time on this debate, but I should like to make one further point which reflects the view of a new and junior Member of this House. Four years ago I gave up all of my private work and have since worked only in the public sector. I have enjoyed my work more and I enjoy this House enormously.

However, it does seem quite absurd that those like myself who make such a decision should have to accept that, as a quid pro quo for working in the public sector, there are fewer resources and fewer facilities. As a result, I am less able to work professionally than has been the case during the 40 years I have been in business.

My Lords, I should like to ask the noble Lord the Chairman of Committees about the average allocation of five square metres of space, although I note that the noble Lord opposite mentioned that he does not have anything like that amount of space. In this House we say that we try to abide by national legislation, even though we are not hound by it. Does the allocation of space conform with that provided for in the Offices, Shops and Railway Premises Act? The Act specifies a minimum amount of space to which any worker is entitled.

If the noble Lord opposite does not have at least that amount of space, how is that to be remedied unless we can secure more rooms from the other place? However. I believe that we shall achieve our aim only by negotiation. Although the noble Lord's suggestion that we adopt direct action was very amusing—on another occasion, I should have liked to join him—we do best in our dealings with another place when we work by negotiation and compromise. I feel certain that it will not be necessary to go as far as the noble Lord has suggested. When the other place learns of what has been said during this afternoon's debate and it appreciates the disparity between its House and our own, it will be disposed to agree.

The perennial problem of the Pugin Room ought to be solved with ease. However, if it is not, we shall face a problem. As the noble Lord pointed out, we must reconsider our smoking policy. The Truro Room in the Library is still allocated to smokers. I believe that we must have the only major library in the United Kingdom that still allows people to smoke. If we have nowhere else to put the smokers, we shall be forced to accept them in the Library. For that reason, the occupation, the annexation or even the exchange—to use a less confrontational term—of the Pugin Room is an essential preliminary to achieving a total nonsmoking policy in the Library. I hope that the noble Lord the Chairman of Committees will be able to put that point to our colleagues in another place when he embarks on the negotiations.

My Lords, I agree with the noble Lord, Lord Avebury, that these arrangements must be achieved by negotiation with another place. We cannot take the advice of the noble Lord, Lord Peston, with whom we so often agree, and simply squat in another place's areas. That simply cannot be done. However, it is obvious that the Pugin Room ought to be returned to this House and I hope that the noble Lord the Chairman of Committees will achieve that.

I understand the arguments put forward by the noble Lords, Lord Winston and Lord Puttnam., who feel that everything must be electronic and up to date. However. I think that we should be careful not to make life too cosy by half. I agree with my noble friend Lord Renton: if Lords' rooms are made extremely comfortable and convenient—so much so that the noble Baroness, Lady Thomas of Walliswood, can have her assistant working with her—what will happen then? As soon as a debate commences, everyone will disappear, like mice running into their holes, to their comfortable rooms. They will switch on the television and watch—

The football.

If they do not watch the football. they will watch the proceedings of your Lordships' House from the comfort of their rooms. No one will come to the Chamber. One simply has to look at what has happened in another place. It is always empty. I believe that that would be a bad thing for this House.

Once the new wave of enthusiasm for becoming more professional and hiring more assistants takes hold, two things will happen. First, Peers will need to he paid—I am sure that that will be put on to the agenda. Secondly, Peers will see what the other place has done— it has built a huge building costing more than £250 million—and will say, "We want one of those". I did not think that I would hear that request articulated quite so soon, but the noble Lord, Lord Peston, said it. It would be an absolute disaster for us to say that we want a great big new building like that for the House of Commons. What would happen? We would all disappear, not merely out of the Chamber but out of the House. That, too, would be an extremely bad thing.

Of course, we need to modernise the rooms and bring them up to date, but for goodness sake, the centre of operations for this House is here in this Chamber. I have every sympathy for the noble Lord, Lord Puttnam, who told the House that he has given up his private pursuits in order to enter into public service, but who has since been horrified to find that there are so few facilities. Although we should think carefully about whether sufficient facilities should be provided for people to pursue their private businesses from here—I do not think that we should be quite as lavish as that—our facilities ought to be brought as up to date as is reasonably possible.

My Lords, we have had 34 minutes of interesting discussion. Many questions have been answered by other noble Lords, who have then posed further questions to be answered by yet other noble Lords.

We start from a position where we occupy a building that was not designed for modern purposes. Sir Charles Barry had no idea of the purposes for which this building would eventually be used. That is a problem that we all share. Given what I have learned from the Offices Committee, there is no doubt that it is determined to make progress on improving accommodation for noble Lords in this House. The noble Lord, Lord Monro, has pointed out that in the 1960s the facilities provided in the Commons were dreadful. I can recall Lord Winstanley—then Dr Michael Winstanley, Member of Parliament for Cheadle—saying, "You would not believe that after all the effort you put into getting me sent to the House of Commons, once I arrived, I found that I had to enter a raffle to secure a desk!" Things have improved there and things are improving here.

I know that not everyone is happy with offices across the road, but there is a limit to the number of people that we can cram into this building. In recent times, we have acquired 18 offices in Little College Street; we have five rooms that are being returned from the Commons, two of which have already been handed over and three of which will be handed over at Easter; we have 107 desks in Millbank House; we have 27 desks in Old Palace Yard; and we have 12 extra offices in the Palace of Westminster, which is around 61 desks. Between December 2000 and October 2001 the House will have gained 69 offices, making a total of 153 desks. So progress is being made. That does not take into account the 43 rooms referred to earlier.

A letter has been sent to the Commons, in quite clear terms, setting out precisely the problem that we have and that, in justice, those 43 rooms should come to this House. I should say to the noble Lord, Lord Peston, that those rooms—although they may be in territory which is this side of the imaginary line—were never House of Lords rooms. They were put in, I think in 1965, for the Commons to improve its accommodation.

We are getting to the stage where, very shortly, every Member of the House will be able to have a desk—not necessarily within the Palace but within the area round about. It will average five square metres, which is not adequate; the Commons have somewhere between 12 and 15 square metres. This will be the subject of continuing discussions with the Commons to try to improve our share of the space in the Palace.

I am perfectly willing to accept the first two-thirds of the amendment of the noble Lord, Lord Trefgarne, but I have difficulty with paragraph (ii). If we were to draw a line, as he suggests—I know that this is one of the specialities of the noble Lord, Lord Gilbert—through the centre of the Palace, we would gain another seven committee rooms, the Commons tea tent, the Churchill Room and the five dining rooms on the bottom corridor. Desirable though that may be, the chances of getting that in sensible negotiations are rather slim. I believe that it would be better to keep up the pressure and to take this step by step. We should not put things onto the record in this Chamber which may frighten away the horses at the other end.

My Lords, before the noble Lord sits down, will he bear in mind my plea for better accommodation and a decent room for foreign visitors?

My Lords, I have been fortunate in my recent incarnation; I have a very good room on the West Front. However, I am conscious of the comparison between that and some Ministers' rooms, who also have visitors. I have received a number of visitors from overseas, particularly from Europe. The noble Baroness is absolutely right. That is one of the things that we have to factor into the equation when we are trying to find out how much accommodation we need and how we are going to get it.

I come back to paragraph (i) of the amendment of the noble Lord, Lord Trefgarne. I agree that it would be a very good thing to have some kind of survey to ascertain how much accommodation people feel that they need. I have listened to the noble Lord, Lord Renton, and to other people—some want a lot, some want none—but we do not know at the moment precisely how much accommodation is needed. Nor do we know the size and shape of the House in the future. There are a number of intangibles in the whole business.

The Pugin Room was mentioned several times. Yes, it would be very nice to have the Pugin Room, but the idea that it was stolen from us a few years ago is not quite accurate. It was exchanged for a committee room in 1906—which, in your Lordships' eyes, might be recent, but I think that is stretching it a bit.

Perhaps I may say a word about smoking. While I am grateful to the noble Lord, Lord Peston, for his support on the medical side, I was not so happy with what he said about smoking. I think that a reasonable compromise has been made for the moment. We can keep the issue under review; we are making progress. There are a number of smokers in the House who want proper provision to enable them to indulge themselves in their disgusting habit. I speak as a reformed smoker.

As to the issue of smoke in the Barry Room, I understand from the chairman of the Refreshment Sub-Committee that steps are being taken to improve ventilation in the Barry Room, which is inadequate at the moment. He is also looking at the possibility of obtaining more refreshment facilities within the Palace. But do not press him—just let him quietly go about his job—because, again, we have made a lot of progress in the years since I first came here.

With the assurance that I accept the first two parts of the amendment of the noble Lord, Lord Trefgarne, I hope that he will not press the third part. That might send the wrong signals down the corridor at a time when fairly delicate negotiations are ongoing.

My Lords, I am grateful to the Chairman of Committees and to all noble Lords who have spoken and largely supported the thrust of my amendment. The Chairman of Committees has undertaken to inquire into the needs of noble Lords, as suggested in paragraph (i) of the amendment, and he has told us that he will campaign for the return of the 43 rooms above the committee corridor, which would represent an admirable proportion of the space that we need.

He has been a little less encouraging about the return of the Pugin Room. As I recall—I confess that my memory is a little hazy—prior to 1983, when the late Lord Whitelaw became Leader of the House, I think we had the shared use of that room.

No.

My Lords, whatever the position was then, we now have no access to it. Perhaps the Chairman of Committees will see whether he can acquire—even if we did not have it before—shared access to that room. That would be a step in the right direction. If the noble Lord is nodding—as he seems to be—that he will attempt that, then, on that basis, I am happy with the assurances that he has given and I beg leave to withdraw the amendment.

rose to move, That this House takes note of the progress in addressing concerns and explaining and implementing the public private partnership in relation to National Air Traffic Services, as established by the Transport Act 2000.

The noble Lord said: My Lords, during the final stages of the Transport Act in November last year, amendments were made to defer the implementation of the planned public/private partnership for National Air Traffic Services Limited until three months after Royal Assent. I said then that the Government remained firmly committed to setting up the PPP but that we undertook to use the time to consult interested parties further on the detail of the proposal and to report back to Parliament at the end of that period. The Government have placed a copy of their report in the Libraries of your Lordships' House and of another place.

In our previous debate, the noble Lord, Lord Brabazon of Tara, suggested that we would also use the lime to select the strategic partner for NATS, and so we have. As announced on Tuesday, the Government have selected the Airline Group as their preferred bidder for NATS. I shall refer further to that in the course of my remarks today. I know that the selection will be a matter of considerable interest to your Lordships.

I should like, first, to remind your Lordships of the commitments that we made on the 29th November and to illustrate how we have met them. We assured the House that we would, in consultation with interested parties, work on the detail of the PPP and make sure that we had got it right. We undertook to ensure that all concerned fully understood the proposals, and that action was taken to deal with the real concerns that had been expressed.

As we promised, we have consulted air users both through meetings and through written consultation. Commercial airlines, business aviation, leisure flyers, passengers and airport operators have all been given an opportunity to air their views. The general message was that there should be safe, efficient and economic provision of services and management of airspace, supported by proper consultation by NATS on a continuing basis about strategic and detailed operational matters, and that there should be no discrimination in the provision of services. That is a message with which the Government agree, and there are safeguards in both the Act itself and in the air traffic services licence—which is enforceable through the Act—to ensure that safe, efficient and economic services are provided, and that airspace is managed in a way which recognises the legitimate needs of all classes of user.

Membership of the stakeholder council—the formal body for consultation on strategic and policy matters—was discussed at a meeting between users and Ministers, and I can assure your Lordships that users, and in particular general aviation—including leisure flyers—will be properly represented on it.

We attach particular importance to fulfilling our commitment to talk to staff and their representatives. We have brought the unions and the bidders together: a team of IPMS and PCS members met members of the three consortia who submitted final bids in January and took the opportunity to discuss a range of staffing and strategic issues with them. We have continued to hold meetings with the unions on matters of concern; and my colleagues and I have visited NATS' main sites to talk to staff at all levels and address their concerns.

With the leave of the House, I shall dwell a little on the matters discussed there. To my regret, the unions are still not in favour of the PPP, although I was pleased to see that they welcomed the choice of the Airline Group as the preferred bidder. They expressed concern that the PPP may prove incompatible with safety, notwithstanding the safeguards that the Government have put in place. The unions' commitment to safety is admirable and we all share it, but I trust that they will come to appreciate the efforts of noble Lords here today in strengthening those safeguards and in enhancing the benefits of the PPP.

The safeguards are enumerated in the report, but I briefly remind your Lordships that the safety matters covered include: the separation of regulation from service provision; a statutory obligation on the Government and the CAA to set safety ahead of all other regulatory considerations; a statutory obligation on holders of air traffic services licences to provide a safe system; powers for the CAA to direct a service provider, in the interests of safety, to provide such services as the CAA considers appropriate; and the establishment of a board-level safety review committee within NATS which will be chaired by a government-appointed partnership director.

Safety is paramount for all of us. We do not accept that private sector status is incompatible with the maintenance of the highest safety standards, but we have none the less done all that has been asked of us, and more, to protect safety. We believe that we are putting into place a robust safety structure in which we can all repose confidence. We can be sure that the Airline Group will have every incentive to operate a safe system.

We believe that we are putting equally robust safeguards in place to protect the public interest and national security. I can assure your Lordships, as I can assure NATS trade unions, that the Ministry of Defence has worked with my department in developing many of the details of the public/private partnership. The MoD's contribution to key issues such as the legislative provisions in respect of crisis, war and emergency; the institutional structure for airspace policy—especially the air navigation directions to be given under Section 66 of the Act; the air traffic services licence; and the evaluation of the bids for the PPP has been considerable and very welcome. The joint, integrated provision of services will continue and there will be no discernible change after the PPP is set up.

National security is well protected through the Act and the wider PPP framework, as the report describes. The Government are taking extensive powers through the Act, through certain provisions in the air traffic services licence, through the appointment of partnership directors, and through the strategic partnership agreement and the golden share provisions to ensure that we can influence NATS whenever and wherever the wider public interest dictates. The PPP will free NATS from those public sector controls which are inhibiting its development, and the strategic partner will control the day-to-day running of the company. This is very far from being a cut and run privatisation.

The main "public sector control" which is inhibiting NATS—and arguably UK aviation—is, of course, the financial one. I can assure your Lordships, and NATS staff, that we have made very sure that our preferred bidder is committed to making the investment we need, and has demonstrated the ability to take the investment programme forward. As we have said many times, NATS' operational skills are second to none, but there is room for further improvement in areas such as project and investment management. Our preferred bidder, the Airline Group, will strengthen NATS' skills base in these and other respects.

Commitment to making the investment is, of course, crucial. The strategic partnership agreement will bind the partner to the investment programme. But I remind your Lordships that we have also made provisions within the initial price controls so as to make doubly sure that there would be a smooth transition to the PPP, and that management could focus on getting the change and investment programmes right during the early years. Even though the CAA had made allowances in the price cap it recommended to me, I set a somewhat lighter price control in the early years of the PPP.

Perhaps I may refer briefly to other measures that we have put in place to protect—

My Lords, before my noble friend continues, will he explain why NATS, as presently constituted, could not do what he wants? It may be that some change in legislation would be required, but the point is fundamental in our assessment of what he has to say.

My Lords, if I understand the noble Lord's question, it relates to an area that we have debated thoroughly in this House on many occasions; namely, the concern that over the span of initially a decade and beyond, with the vagaries of public financing, it might not have been possible given the competition with other priorities in government to ensure that NATS had the necessary level of investment and could produce the value for money required by the Government in that time.

Perhaps I may proceed to the other measures that we have put in place to protect the interests of NATS' staff. In addition to the measures that I have mentioned, we have safeguarded membership of the CAA pension scheme—or a scheme identical in all other material aspects—for existing NATS' staff. We have ensured that no individual member of the scheme is materially worse off as a result of the restructuring of the scheme. We are making 5 per cent of the equity in the NATS PPP available to staff in acknowledgement of their contribution, past and to come, to the success of the company, including an initial gift of £500 of employee partnership shares for each and every member of staff; and the staff will be represented on the stakeholder council.

When I visited them recently, staff at Prestwick welcomed the legislative guarantee that the new Scottish centre would go ahead, but sought our assurances over the services that the centre will provide. The new Scottish centre will service the Scottish flight information region, which is part of the UK's national airspace, and the oceanic region, and will provide contingency cover in case of systems failure at Swanwick or West Drayton. I can assure your Lordships, and NATS staff at Prestwick, that the Airline Group is committed to the two centre strategy of which the new Scottish centre is an integral part.

We are committed to the PPP and our selection of the Airline Group as preferred bidder is a key milestone in the implementation of the Government's transport strategy. We have, throughout the process, listened and responded positively to the concerns expressed by NATS staff, by the aviation industry, by your Lordships and in another place. We have subjected our proposals for the PPP to continuous scrutiny, and we are satisfied that the PPP is the right course of action. It will contribute to safety by effecting complete separation between regulation and service provision, keeping regulation in the public sector and in the hands of an experienced regulator with wide-ranging powers; ensuring that NATS has access to essential investment capital, outside the bounds of government control, to maintain existing safety standards against predicted increases in traffic levels; and by bringing in new skills to improve NATS' project management capability.

The PPP will also allow long-term investment planning unhampered by government spending constraints. The contract that we have signed with the Airline Group will secure over £1 billion of investment in NATS over the next 10 years, with an accelerated programme to deliver the great majority of that spending in the first seven years. It will also provide the right structure of incentives and disciplines to maximise efficiency through economic regulation; introduce new management skills—for example, in investment and project management—to supplement NATS' operational strengths, and develop best private sector practice; provide NATS with the opportunity to develop its business, for example, by expanding overseas; and provide greater transparency in charges.

In the Airline Group we have selected a preferred bidder who will help us achieve all our objectives from the PPP, and who will bring their expertise and commitment, as users, to this partnership—a commitment that includes commitment to a high standard or safety. After all, who has greater interest in robust safety management than air users who depend on the provision of safe and efficient services? They will provide the management capability and investment to ensure that NATS can continue safely to meet the growing demand of air travellers in the future. They will also introduce appropriate management skills to NATS while maintaining good industrial relations. The Government look forward to working with the Airline Group to provide a highly successful future for NATS through a true partnership between the public and private sectors. I beg to move.

Moved, That this House takes note of the progress in addressing concerns and explaining and implementing the public private partnership in relation to National Air Traffic Services, as established by the Transport Act 2000.—(Lord Macdonald of Tradeston.)

My Lords, the House will be grateful to the Minister for introducing his Motion this afternoon. He undertook to do so during the passage of the legislation a few months ago. Speaking for myself, I support the privatisation of NATS—and, I believe, that I speak for all of us on this side of the House. This is not, of course, full privatisation; it is partial privatisation. None the less, it is welcome.

I was most grateful to the noble Lord, Lord Marshall of Knightsbridge, who was good enough the other day to invite me and my colleagues from the Popular Flying Association to a briefing on the proposals, which we found most impressive. Of course, general aviation did not take a position as to which of the various bidders was the one we preferred; indeed, that was a matter for others. However, what we heard from the Airline Group, as those involved have come to be called, was certainly impressive. Whatever one may think of the various proposals, they will all end up by bringing more capital and investment into NATS. That is clearly very much to be desired and welcomed.

However, there is one matter that has not as yet been satisfactorily resolved. I trust that the Minister will be able to give me some assurances in that respect. The noble Lord will not be surprised when I remind him of the problems of general aviation just outside controlled airspace which, in some areas. presently enjoys the provision of what is called the "lower airspace radar service". NATS has no duty to provide that service. It is not provided for in the licence that will be issued. However., it is fair to say that it does provide such a service in a few cases where the facilities available enable it to do so. I am told that something like £1 million or £1.5 million a year is spent on the provision of that service, but it is far from comprehensive. It is not available everywhere. Moreover, in a number of other areas, that service is provided by the Ministry of Defence where it can be obtained through the radar facilities available to the RAF or Royal Naval aerodromes.

However, the provision of the lower airspace radar service is steadily reducing these days. A number of services have been withdrawn in recent months and years to the considerable concern of the general aviation movement. It is said that the problem arises from the fact that there is no money for the provision of the service; that general aviation would not be willing to pay for it; and, that, therefore, it must he withdrawn. I am not sure that the Government are right in that view—if, indeed, that is the view that they take. Through the duty on aviation gasoline, general aviation provides between£10 million and £12 million to the Exchequer each year. I am told that the Chicago Convention, which governs such matters, provides that that revenue ought to be used for the provision of aviation infrastructure. So we do have a problem with the provision of the lower airspace radar service—

My Lords, I find it something of a contradiction in terms when the noble Lord says that he is in favour of complete privatisation, but then proceeds to make a special plea for such a service to be provided for nothing.

My Lords, I am not for one moment saying that it should be provided "for nothing". I was just explaining that it ought to be paid for by the revenue already provided by general aviation for that very purpose. As I said, the duty on aviation gasoline—the fuel largely, but not exclusively, used by general aviation aircraft—generates a revenue of between £10 million and £12 million a year to the Treasury. Under the provisions of the Chicago Convention, that revenue is supposed to be used for the provision of aviation infrastructure. I hope that it can be so used.

We should be quite happy if NATS had a duty to provide such a service. Of course, there would then need to be a mechanism for providing the revenue; it cannot be assumed that the airlines would be willing to pay for all of the service. Indeed, that would not be right. However, to some extent, the service is to the benefit of the airlines in any event. Therefore, there is room for discussion on that point.

I am more concerned that the lower airspace radar service should be operated one way or another. I give way.

My Lords, I am obliged. Can the noble Lord explain how the airlines would benefit from what he said? That is an absolutely crucial point.

My Lords, the interface between non-controlled airspace and controlled airspace is one in which the airlines are very much interested. There is an interface, for example, in the Stansted area, where there are real problems with integrating general and commercial aviation, which is not covered by the provision of the services available from so-called "Essex radar". The latter provides no service for general aviation. Thus there is an interface between the boundary of the Stansted area and where general aviation operates which is causing great difficulties, both for commercial air transport and for general aviation. Indeed, I have been in discussion with the Civil Aviation Authority and NATS as to how we can resolve the matter. As it happens, there are no military aerodromes in that particular region, so the service cannot be provided in that way.

There is a problem with flights outside controlled airspace. I agree that that is largely an issue for general aviation to resolve. However, as I said, there is an interface between general and commercial aviation. Another example is the Luton control area, where there are difficulties as to the provision of the services for general aviation and where it would be of benefit to commercial aviation if the interface could be made more "user friendly", if I may use that expression.

I recognise that there is no case for a large contribution from NATS—which, inevitably, comes from the commercial airlines—for the provision of services for general aviation. However, I believe that there is considerably more scope for co-operation between the two at no real cost to either, which would provide a more efficient and effective service. In any event, there is a significant revenue stream available from general aviation that comes from aviation gasoline. Of course, no such revenue derives from commercial aviation because, by and large, it does not operate on gasoline and the turbine fuel is not taxed in the same way. I hope that the Minister will take that into account when deciding what steps he can take to resolve the problem.

My Lords, I, too, am grateful that the Minister has fulfilled his commitment to report back to us three months after the passing of the legislation. By any measure, this has been a particularly bad week for government transport policy—not, for that matter, that there have been many good ones. It has been especially bad for that part of their policy which is based, if that is not too strong a word for so shaky a concept, on their PFI/PPP schemes. First, there has been the damning report from the National Audit Office, which heavily criticised both Conservative and Labour governments for the way in which PFI has been applied to the financing of the Channel Tunnel rail link. Creative accountancy of a de Lorean kind seems to have been adopted to fudge the figures. That comes as no surprise.

My Lords, I am grateful to the noble Lord for giving way. Many of us are very tempted to explore the possibilities with which the noble Lord has prefaced his remarks. But I do not believe that it is an advantage to put together all the aspects of part privatisation or nationalisation. Each issue ought to be considered on its own merits. I believe that the noble Lord is inviting the House to come to a conclusion about forming a view on the whole issue.

My Lords, the noble Lord, Lord Clinton-Davis, may be anticipating that that is what I am going to do, but I am developing a point which has direct relevance to the development of the NATS/PPP. Such fudging is implicit in all PFI/PPP schemes precisely because they themselves are the result of an intellectually flawed idea: the underlying premise is incoherent. The cost overruns, which private sector management techniques were alleged to prevent, have been very considerable. The risk of such overruns were meant to be borne by the private investors. That has been one of the central claims made by the advocates of the PFI/PPP. In reality, the small print escape clauses now require the public to pick up the tab. It appears that the private backers in PFI/PPP schemes are in an almost win-win situation.

Secondly, this week has seen the collapse of the talks between the DETR and Mr Bob Kiley, the Transport Commissioner for London, over the future funding and management of London Underground. The Government have doggedly stood by their PPP proposals to fund Tube modernisation which the highly expert Mr Kiley condemns as highly flawed and unworkable, and place the travelling public at very great risk in terms of safety. That is his opinion. It is one that is supported by those papers which have seriously investigated the matter. Earlier, Mr Hague, seeing the way the wind was blowing for once, thought it prudent to U-turn and reversed Tory policy for privatising the Tube.

Thirdly, we have today the announcement that the airlines consortium has emerged as the "preferred bidder" for the Government's PPP for the National Air Traffic Control Services.

We on the Liberal Democrat Benches have been alone in our total opposition to taking NATS out of public ownership. No good argument has ever been advanced for the privatisation or part-privatisation of NATS. However, in the light of the dogmatic stance of the Chancellor of the Exchequer that NATS would not continue to be funded by government, even though that is by far the cheaper option, we pressed, along with others, that a not-for-profit public trust along the lines of NavCanada was the next best option to public ownership. We stood by our guns and, in the event, almost alone, we divided your Lordships' House on the issue.

In selecting the airlines consortium as their preferred bidder, by their own standards the Government may well have fallen between two stools. On the one hand, they have belatedly acknowledged the weight of public opinion and the views of the relevant unions because the consortium appears to be offering itself as a "not-for-profit" undertaking, whatever that may mean operationally. Is this another de Lorian-type gimmick? Perhaps the Minister can enlighten us. How will he guarantee that other airlines, which are not part of the consortium, will not be discriminated against? After all, the consortium can raise air traffic fares and that is merely a bookkeeping transfer in their own accounts, but it will bear heavily on the profitability of other airlines.

On the other hand, during the passage of the legislation setting up the Act the Minister made much play of the need to bring in private sector techniques in the management of NATS: indeed it was his only tune. Yet clearly he has not chosen the best bidder on this criterion. The recent commercial performance of many of the airlines involved has not been good and they possess no relevant experience. Moreover, the Government's choice breaches the cardinal business principle that users of services should be separated from the suppliers. There is a real risk that we shall see a repetition of the ill-fated attempts to let British shipowners run the lighthouses.

The Novares Consortium, led by New Zealand air traffic control, which is one of the most technologically advanced and profitable in the world, would have been more likely to introduce the private sector techniques that are so slavishly worshipped by the Government. How does the Minister reconcile the choice of preferred bidder with the earlier stance he took so strongly as regards both the management techniques he wanted and the importance he attached to the incentives provided by the profit motive which he staunchly asserted would add to safety in the air?

More importantly—and this is the crux of the matter— how do the Government think that they will be better at negotiating this PPP than they have been in the past as the NAO report demonstrates? Neither do the protracted and excruciating negotiations over the London Underground give grounds for confidence: indeed, quite the opposite.

Quite specifically, I ask the noble Lord the following questions. How will he avoid get-out clauses in the small print of the contract so that the private partners can evade their financial commitments? In the negotiations, will the future strategy for air traffic control be based on explicit criteria for measurable improvement? How will that strategy regain the position of the United Kingdom as the best air traffic control system in Europe—it has slipped because of the confusion and procrastination over the future of NATS—which will be necessary as a competitive advantage in the negotiations for the creation of an integrated European control system?

These questions must be answered and the Government must really smarten up their act if this NATS/PPP is not to go the same way as the Channel Tunnel rail link. The deal must not just be allowed to evolve.

My Lords, I do riot wish to be churlish, so I should like to begin by congratulating my noble friend on fulfilling his promise to the House to come back, after a decent interval, to present his proposals to us. I believe that is almost the Fast word of comfort that I can offer him. I believe that he has made a serious error and he has not explained it. It would be of great service to the House and the public if we were able to get to the bottom of this extraordinary enterprise. Why are we changing fundamentally a system which, on the whole, has performed remarkably well? What is the case for breaking up a system which quite clearly gives enormous priority to safety, which is recognised as such, and which gives great confidence to pilots, air controllers and the general public?

Why are we making this radical change and introducing a new element, a so-called strategic partner which, once it has been done, opens the door for further change? I noted what my noble friend said about golden shares and so on, but I am not sure that they are not shortly to be outlawed by the European Court of Justice. They are not universally accepted in the European Union. We may well be opening the path to what the noble Lord opposite would welcome; namely, full privatisation. There is case for it, but I find it very difficult even to begin to formulate a case, as did my noble friend in his opening remarks.

What reasons have been put forward? I think we have had two. The one in which the greatest investment has been made is the alleged costs of maintaining a modern system of air traffic control. Quite frankly, that is wholly unconvincing. We are rolling in surplus money and redeeming the national debt because there is nowhere else sensibly that we can think to put that money. Many years ago I was in charge of our air services and, heaven forbid, president of Eurocontrol for a short period. In my view, more sensible policies were being pursued in those days. There has never been a problem of financing the modernisation of the air traffic control system.

However, we have a problem and we all know what it is. The massive investment that was put into the modernisation via the Swanwick development has been delayed for so long that it has put us, and particularly our air controllers, under severe stress. I believe that it is at last to begin to come into operation later this year. That undoubtedly will be a vast improvement and a great release from the strain. But that, apparently, is not good enough. The moment the new regime is put in place it is intended to scrap the system which will have been inherited, and over a seven-year period replace it with another system whose reputation, provenance and nature I know not of, nor does the Minister I suspect, or anyone else. The new system may be even less successful than the inherited system which will be scrapped. As we said, that will cost £1,000 million over a seven-year period. Financing is, frankly, not a problem. We must lay that on one side.

But having done that, the question then arises: if that is not the reason, what is? My noble friend hastily asserts—although, to be fair, he has said this on other occasions—that it is not just a matter of important investment, but of project management skills. I am not overwhelmed by that argument. It is a shot in the dark. Project management skills in this vast area on the frontier of technology are very uncertain. I seem to recall that British Airways, for which I have normally a high regard, suffered a crashed computer system worldwide only a week or two ago. I am not saying that that would happen if it took over air traffic control, but it is no good just asserting that we shall have better project management. I cannot accept that as a convincing argument.

I turn to the scheme which my noble friend has put forward. I suppose one could say that it is the best of a bad lot. Of the bidders at least this one has adopted the guise of non-profit making; that is, it will not seek to make commercial profit pressures, or rather avoidance of loss pressures—that is what the problem would be—a factor in making its decisions. To that extent, safety will have overriding priority.

But there is another factor. My noble friend will recall his Written Answer to a Question tabled by my noble friend Lord Brett as recently as 23rd January when he was asked about the efficiency charge, as it were, the cap, that the CAA will in future impose upon the new NATS or its successor. It is, of course, to be a so-called "efficiency saving". Something like 5 per cent per annum must be, as it were, provided for. I am not quite sure how the calculation is arrived at, but nevertheless if the operator experiences delays or falls down on its performance it will be subject to pre-agreed penalties amounting to 5 per cent—of precisely what I do not know—in money terms, rising to at least £5 million in three years' time.

I do not like the process of imposing penalties for delays and poor performance when safety is the overriding consideration. Railtrack gave a terrible demonstration of what happens if penalties are threatened. Operators cease to give safety the overriding consideration that it should have. I know that my noble friend will say, "I have slightly eased the proposed regime". However, I am not sure whether that is good enough. I should certainly like to hear much more detail as regards why he feels confident that that is not a factor which need concern us.

I have tried to think about this whole problem. We know that there will be a great increase in air traffic over the next 15 years, as there has been over the past 20. That is nothing new. We must cater for that. We are also aware that flights can be delayed. Only yesterday in the newspapers there was a list of charter flights that had been delayed. Scheduled flights may also be subject to delay. Clearly we want to have as efficient a system as we possibly can. What are the factors that make for efficiency? How relevant is the formation of the new partnerships company to those factors?

If I may detain the House a little longer, I would say that there are two categories which have to be considered with regard to safety. First, who regulates the air routes across Europe, of which the United Kingdom obviously is part? Who determines the space between one air corridor and another? Who determines the frequency of flights and take-offs? Those matters comprise the very core of regulation.

As I understand it, we are about to hand over that regulation to a European authority which has hardly featured in our debates. Eurocontrol is almost on the eve of being handed over to a body, basically the European Commission—no doubt it will give itself a slightly different title—which will acquire at once majority control over all decision-making in Eurocontrol. It will cease to be an intergovernmental body and will become an extension of the European Union's common policy. Is it not odd that we have not had a word of explanation of how that fits into the present scheme of things? Perhaps it does not fit in at all.

Let us face the fact that the regulations that will now be made by majority decision by the new Eurocontrol will be one of the key ingredients in achieving safety, regularity and good service for Britain in its traffic with Europe—and not only with Europe because the new body will take over negotiating our air traffic rights with countries outside Europe. We fly occasionally to places like North America, South Africa, Australasia and elsewhere, do we not? Why should all that fall into the hands of the European Union with its offensively described "single European sky"? I have never heard such nonsense as a "single European sky". There is a global sky of which we are a part, and there is a British sky which is a component in it. The European sky is a fiction. It is simply another example of the endless ambition of the European Union to take over every aspect of our national life.

I have mentioned the major factor of safety in air service provisions. I wish to touch on a few others. Do we have enough air traffic controllers? Will numbers be a problem? We have enough, just about. The figures are quite promising. We had 1,162 controllers in 1991; the number rose to 1,700 in 1997; and at the beginning of this year the figure was 1,957. That is a fairly large increase. Looking to the future, the number of air traffic controllers under training has been increased by about 50 per cent. So handing over NATS to a new body, with the new system introduced for European air traffic, will have no effect on one of the key components—the supply of air traffic controllers. That is in hand. It is doing very well, thank you, and does not need to be disturbed.

What about other factors? There is the possibility of considerable adjustments and savings of space if we can get the right regime between civil and military air use. But that is a British internal problem which is not to be decided outside these shores by Brussels. Indeed, it could have quite serious implications for our defence, military planning and general secrecy. The noble Lord, Lord Tebbit, intervened recently to point out that British air space stretches to about 20 degrees west. In other words, it covers a large area of the Atlantic particularly sensitive to American military transport. To have all that brought within a Brussels civil regime and reported on will not necessarily be welcomed on the other side of the Atlantic. No doubt we could make improvements in dividing our space between civil and military use. But that is now wholly within our own authority and capacity to deal with.

In the last annual report of NATS, the figure for delays in taking off over the UK was 23 per cent down in the year 1999. That is quite remarkable. It was 24 per cent up on the European continent. Most people accept that density and overcrowding of the skies is on the continental side rather than over the British Isles or Scandinavia. So that factor does not affects us directly, although perhaps indirectly.

On safety, it was good to have the NATS report that despite the increase in air traffic the number of so-called air proxies—the near misses; the worrying ones—has decreased in recent years.

The only factor which would greatly affect the adequacy of air traffic facilities, and so on, in Britain is airport policy. If we had more airports we would have potentially less overcrowding. If we had more runways, we might also achieve the same effect. But I know nothing about proposals for increasing that capacity. It has nothing to do with the proposals that the Minister has brought before us. So I am left with a genuine puzzle. What on earth is all this about? One does not undertake an exercise simply for the fun of humiliating the Chief Secretary to the Treasury. There must be a more serious purpose. So when the Minister replies, will he please give us some of the information that this debate lacks so desperately?

My Lords, like other noble Lords I welcome the content of the Minister's statement. My welcome may not be echoed by air traffic controllers. They may probably have had a sense of relief that the choice made was the most sensible of those available. I think that they would have agreed with many of the sentiments in the early part of the speech of my noble friend Lord Shore of Stepney. They would have admired his tenacity in fighting this single battle on so many fronts. They would probably not have agreed that all air routes lead to Brussels; and my noble friend may have lost them somewhat towards the end of his contribution. However, my noble friend asked a number of questions which I am sure the Minister will be delighted to answer. It will relieve me of the temptation so to do.

We have heard about choices made and legislation already enacted. That is why I do not feel tempted to reopen arguments. That does not mean that the policy adopted by the Government was the correct one. However, in the aftermath of that decision, the Airline Group has put together a proposal which has borrowed a number of features some of which are in the Canadian model to which some of us were very attached. The Government have declared it to be a not-for-profit model. To be fair, some of the airlines in the consortium have been "not-for-profit"—but on those occasions it was accidental. On this occasion, it is more deliberate.

There is a slight problem about the 5 per cent shareholding in a not-for-profit organisation. I urge the Minister to ask the Airline Group and the trade unions to discuss fairly quickly how that conundrum is to be resolved.

By instinct and training, air traffic controllers do not dwell on the past. It would not be in the interests of those of us who fly if they spent their time worrying about the flight that passed 20 minutes ago and had already landed. They move on. I believe that they will move on from the legislative decision to have a PPP. They will be greatly relieved, and will have greater confidence, that they have in the strategic partner in the Airline Group those with a vested interest in safety and those who have given assurances which are believed in terms of long-term investment. In the main, airlines have a long-established and reasonable record of good industrial relations. It is a record built on the exchanges between strong trade unions and strong management. I should be happy to see that continuing in the future.

Air traffic controllers to whom I have spoken in the past 24 hours have some concerns. In so many cases where there are franchises—from railways to proposals for commercial television—what is said on the first day of a company creation, or bid, may not be repeated two to three years later.

Comparing the three bidders, the trade union representatives and their colleagues were impressed by the fact that the Airline Group does not have an exit strategy. To use an aviation term, it is in there for the long haul. It is a bit churlish to say that we have made the best of a bad job. The group has a better track record for the future than that—if it is possible to have a track record for the future. It is willing to give a good account of the air traffic control operation. Issues such as the distance between flight levels and the ordering of airline take-offs and landings are operational, not regulatory matters. We have to concentrate on ensuring that the operation is safe and expeditious, in that order. In that sense, because of the Airline Group's enlightened self-interest—its members carry the passengers and they watch each other hawkishly—there is a good prospect that it will make a success of the operation.

Like some of my noble friends, I should have preferred it if we had not gone down this route but, given that we have done so, the Minister has handled it with commendable skill in this House and outside. From a very difficult situation, he has put forward a proposal in which I have more hope and faith than I had three months ago when we last debated the subject.

My Lords, first, I ought to declare a number of interests. I am a former aviation Minister and served under the guidance of my noble friend Lord Shore. I looked after transport and the environment in the European Commission. I am also President of BALPA—the British Airline Pilots Association.

I should come to the rescue of my noble friend the Minister, although I do not really have to do that. My noble friend Lord Shore attacked him for not having put forward a policy on airports, but he is proscribed from making the most important decision of all—on Heathrow. He cannot say whether he supports a fifth terminal. My noble friend is entitled to the benefit of my defence.

I have listened carefully to the Minister. He has not totally convinced me that NATS should be completely changed. I should have preferred the solution that commended itself to previous Labour Governments and to my noble friend Lord Shore of making no essential changes to NATS. Of course some changes can be made, but it is a mistake to change the personality, so to speak, of NATS beyond anything that we recognise.

It is important that the public interest should be underpinned. We may require additional legislation for that. That may be the province of my noble friend the Minister. However, although I would have preferred NATS to be financially supported and improved in the manner that I have described, it is clear that NATS and its staff are prepared to go down the route that the Minister has outlined today.

The airlines that have formed the Airline Group have given a great deal of thought to what can be achieved to ensure their safety and that of the passengers whom they carry. As I understand it, the Conservative view is that everything could be left to the free market. I hope that I am not doing the House a disservice by mentioning the possibility that that view could prevail. I do not think that it will. It is not viable or acceptable to public opinion. The British Market Research Bureau conducted a poll in October 1999 with a sample of 1,019 adults—over 16—across the UK. It found that 72 per cent opposed privatisation, while 16 per cent supported it. Some 84 per cent came to the view that air safety should be the priority for air traffic control. That underlines what the Minister said today. In addition, 68 per cent believed that air safety standards would be damaged by privatisation. Those views still apply today.

The Minister has said—in no uncertain terms—that air safety must never be compromised. If there is to be a change, what route should be followed? As I have already said, I would prefer no essential change. However, there is an urgent ongoing need for parties such as the Airline Group, the stakeholder council and the flight crews to come together before the idea is cemented. Their involvement is key to the issue.

The Airline Group has declared that it is a not-for-profit organisation. That will be totally different from all other bidders. It is very important to emphasise that. BALPA, of which I am proud to be president, strongly approves of that, as does the IPMS, of which my noble friend Lord Brett was the general secretary until he took his place in this House. The group should be held to that in no uncertain way. I trust that the Government will take that view and I look to the Minister to reinforce that point when he replies.

As I said, I have finally come to the view that the Airline Group put together a reasonable bid. I came to that view for seven reasons. I am sorry to weary the House with them. First, the income from air traffic control would be re-invested, not channelled to shareholders. Secondly, the group would provide a stable structure in terms of finance and technology. The Airline Group's partners are committed to the long term, particularly in the area of finance, which is crucial for investment. Thirdly, as all noble Lords who have spoken in this debate have acknowledged, the group would provide the greatest expertise in terms of managing the UK's congested, capacity-constrained airspace. Fourthly, the Airline Group would reinforce and extend the safety culture that makes NATS a world leader in terms of safe and efficient ATC management. Fifthly, it would put the UK's ATC system first. However, in the longer term, the Airline Group would seek to develop "unlicensed business"—I stress that I use those words with quotation marks—overseas. Sixthly, I hope and believe that the company will provide an inclusive stakeholder council with input from controllers and pilots. We heard something about that today. Seventhly, the group would emphasise the need for better people management as the key to delivering a successful partnership.

Finally, I turn to the question of conflicts of interest, which is raised in today's Guardian. There is no essential conflict of interest so far as the Airline Group and good air traffic control is concerned. I also believe that the matter is minimised by the way in which the group put forward its bid. Importantly, it offers stewardship of the United Kingdom air traffic control resource through its most committed customers and users. The group has a fundamental and inherent interest in maintaining and upgrading the air traffic control system.

As I said earlier, although I should have preferred us to go down the route that I have described, I commend my noble friend for listening carefully to what controllers and pilots have to say on this issue. However, they, too, would have preferred the situation that I referred to earlier. They have been careful to demonstrate that they could accept the route that the Minister has taken. I commend him for going to airports and listening to air traffic controllers and pilots. As he recognises, they are in the front line.

My Lords, I have made my position on this subject perfectly clear. I was in favour of NATS remaining in the state sector but I understand that just remaining in the state sector was not all that was required. I should have preferred a free-standing company in the state sector. I say that because of my experiences on the Select Committee on Trade and Industry in another place. We saw how the Post Office's profits were being clawed back by the Treasury. It would have been important for the Post Office to stand alone. However, we went through that argument in another place and in my view the argument is now dead and we have to look to the future. The Airline Group offers the best prospect in that regard, particularly in the long term. We have been assured that it is coming in to stay.

I also welcome the fact that the Airline Group is what it says it is; namely, a non-profit making commercial enterprise. That, too, is very important. That arrangement resembles another of the ideas that we advanced in relation to the Canadian trust, which was a non-profit making venture.

I understand that in certain respects the group may have a vested interest in running the system. However, above all else it will be interested in safety. After all, it is their planes and those of other airlines that have to be brought down and guided to airports safely. It will pay for the operating costs through licences, which means that it has an interest in maintaining efficiency along with safety. I therefore welcome the proposal.

Like my noble friend Lord Clinton-Davis, I thank the Minister for the way in which he dealt with the matter. The situation was very difficult for him—he came in rather later than some others. He was always receptive to people—he would meet them—and he would always discuss the situation with us. I am glad to put that on the record.

I thank the directors and staff of NATS for the way in which they behaved in very difficult circumstances. They did not know what the future would be but they ran an important service efficiently and co-operated by looking at the choices and advising people—Ministers and Civil Servants in particular. They gave their full co-operation to whatever proposal would apply.

I also pay tribute—in view of my background, one would expect me to do so—to the trade unions. We have in the House two previous general-secretaries of the unions, including my noble friend Lord Brett. The unions did not want to go down this path but they looked at it and asked, "What is the best for the future? What is best for consumers and our members? Where should we go?" They could have made life very difficult. I am pleased to pay tribute to them.

I want to ask the Minister several questions, which I hope he will answer. He said that the pension arrangements were in place, but I should like him to go into a little more detail on that and say whether that includes the "trust of promise". He answered one of the questions I intended asking when he said that each employer would receive £500. Initially there was discussion as to whether it would be £500 or £1,000.

I turn to the three directors to be appointed by the Government. One of those directors is to be approved by the trade unions. How far has my noble friend gone down that road? What discussions has he had with trade unions in that regard? I believe that if we want to carry the unions with us and they are to have confidence in us, the sooner those discussions begin the better.

Another point relates to the safety review committee. That too will be chaired by a government director. That committee is absolutely crucial in relation to the future of air traffic control. I know we cannot be privy to all the negotiations, but can my noble friend say what progress has been made in finding a suitable person to chair that committee?

We have been talking about the long-term interests; that the airlines should be encouraged to stay and not withdraw. What provision has been made to make it, while not impossible, difficult for the airlines to withdraw? Also, if they enter into partnerships, what veto does my noble friend hold if he believes that one of the partners is unsuitable, particularly when safety must be the top priority in this matter? I look forward to hearing my noble friend's response to those questions.

My Lords, I thank the Minister for his report to us today in fulfilment of the promise he made at the end of our work on what seemed like an extraordinarily long and difficult piece of legislation, although it takes up only a small part of the Transport Bill. The Minister assured the noble Lord, Lord Brabazon—he can no longer play his normal part on these Benches in this discussion because of his new role—that he would produce the report, and he has fulfilled that commitment. His account of his contact with the unions, the employees and a wide number of other interests was extremely valuable and I look forward to reading the report in full.

I shall briefly go backwards before I turn to the later part of the Minister's report. Liberal Democrats in both Houses objected forcefully and consistently to the NATS PPP. As my noble friend said, we still have strong doubts about the long-term value of the PPP process as a means of raising the —1 billion needed over the next 10 years to modernise the air traffic control system in this country. As we have learnt in recent weeks, joint funding arrangements often require a larger investment from the public sector than at first envisaged; and, of course, the investment has to be paid off at a higher rate than government borrowing or a bond issue would attract.

All in all, Liberal Democrats remain totally at odds with the Government in their fascination for this inappropriate model for public services. However, as the noble Lord, Lord Brett, elegantly reminded us, this battle is lost, at any rate for the time being, and we now have to consider what the current negotiations have yielded to those who have taken an interest and to the service.

My noble friend drew attention to the weakness of the preferred bidder, and I look forward to hearing the Minister's response to my noble friend's comments and questions. But using the SWAT analysis, the airlines' bid also had some advantages as compared with the other two players in the field who were apparently still interested in taking over the PPP. They have a strong interest in safety. As the noble Lord, Lord Hoyle, said, that balances their natural interest in keeping fees to a reasonable level. That balance of interest should reassure those who, inside and outside Parliament, expressed fears that safety would be compromised by the PPP.

The transfer of safety regulations to the CAA is also to be welcomed. In his opening statement the Minister referred to the importance of the economic regulation under which the PPP will operate. Can he tell the House how the CAA will reconcile its dual responsibility for both safety and economic regulation? How will it work in practice? For example, is the body to be divided into two halves? Will different people think about the two subjects and fight internally before advice is published? How will it work in practice?

Here I repeat my thanks to the Minister for responding to a suggestion which I made in a moment of desperation; that is, that the overriding importance of safety—a matter with which many of us struggled during the early part of our discussions on the Bill in this Chamber—should be written into the beginning of Part I of the Transport Act. Indeed, the noble Lord fully and generously satisfied that requirement. It is characteristic of his responses—he does not always respond; Ministers do not—that he does so wholeheartedly and we are grateful for that.

Before I move away from this area, I should like to ask what the phrase "not for commercial return" actually means. It does not seem to mean something around which I can easily get my head. I believe I understand what "not for profit" means, and certainly understand what "not for operating profit" and "not for profit beyond operating costs" means; but I do not understand the meaning of, "not for commercial return". It would be helpful if the Minister could give us a little more information in that regard.

Another aspect of the bid which concerns me is the fact that foreign airlines may worry that a take-over of NATS by the UK airlines will disadvantage them. That could happen in a number of ways. There are already a continuing series of disagreements between other airlines and the major British airlines, particularly BA—a major shareholder in the new bid—as to slots. Have such concerns been expressed? If so, what reassurance has the Minister been able to give?

A point on which nobody has touched is what happens to the employee shareholding after it has first been distributed. The Minister was kind enough to write to me on 5th March which covered some of the questions I raised in the debate on the draft order on 27th February and I understand how the system will work in the initial period. However, it is clear that these shareholders will not be able to take their shareholding out of the business. Does that mean that, in return for their shareholding, they will get a director of the new company? If they do not profit from the shareholding, I am not sure what benefit there would be.

In his discussions with the Airline Consortium, I wonder whether the Minister has thought further about what would happen in the event of there being an increase in the total number of shares by one means or another. Would the then employees share equally in the increased number of shares, as they will with the existing number of shares?

Concerns were expressed at an earlier stage by those employees of the CAA who are not air traffic controllers or anything to do with that side of the CAA's business. They will therefore remain with the CAA and not go over to the new company. Their concerns were about their future pensions. Can the Minister reassure the House that such pensions are fully safeguarded?

This is the last performance of a long-running show. We all hope that there will not be a sequel. As sometimes happens in the theatre, interest has waned and the curtain is falling. Other shows will soon take to the road. Perhaps the actors will move on to new roles. There is nothing left for me to say except how much I have enjoyed the camaraderie established across all Benches during the debates on the Bill, and how grateful I am for the solid support given to the Front Benches by my colleagues behind me.

My Lords, I, too, welcome the opportunity to discuss once again the emotive issue of the Government's proposed public/private partnership for our National Air Traffic Services. It is somewhat ironic that the Government are scrambling to push this matter through Parliament just as there is every prospect of a general election, while at the same time they profess to believe that our national air traffic interests would best be served by a single European system, as it seems was discussed by the Prime Minister in Stockholm last week. Are we to assume that the views of the Government are tailored by the audience to which they speak?

It is widely accepted that the National Air Traffic Services (NATS) urgently needs greatly increased investment to allow it to develop and operate a world-class system for the 21st century. We have supported the principle that NATS should be transferred to the private sector, particularly to release NATs from capital programme controls and Treasury controls. Where we take issue with the Government is in their chosen scheme. We would have floated the business to create a great, new, independent, British plc, able to benefit from partnerships of their own choosing with arrangements to protect national security, and immune from EU interference.

To those who believe that that would be rash, I cite the example of the UK aviation industry, one of Britain's great success stories. The reforms of the 1980s, when it was taken from national control, helped to create an aviation industry second only to the USA and pre-eminent in Europe. It contributes more than £10 billion, over 1.4 per cent, to the UK's GDP; it directly employs over 180,000 and supports a further 380,000 jobs. It contributes £2.5 billion in taxes and accounts for 11 per cent of UK exports of services. It is also an industry with an unrivalled safety record. That is the benefit of privatisation.

The Government have announced that the Airline Group should be a strategic partner for NATS. We congratulate the Airline Group on its success. It has a deep appreciation of the safety issues involved. The public will be able to have full confidence in the safety of the service in future. The Conservatives will honour those contracts after the general election, if the hoped-for result arises, and ensure that NATS is able to operate in a stable and positive framework. That said, and although we welcome the announcement, I find myself wondering quietly if it might not have been better if the announcement had been made in the normal way, on the Floor of this House rather than through a press report. That is a minor matter. I do not wish to lower the tone on what is a generally happy and joyous occasion.

We have discussed the problems of the PPP for NATS on many occasions. As the Minister is aware, my noble friend Lord Brabazon of Tara tabled an amendment to the Transport Bill which gained the support of Members of this House and, I am pleased to say, of all parties. It sought to delay this ill thought-through and rather convoluted compromise until the Government had given it the proper consideration that it both requires and deserves.

When the Government used their considerable majority in the other place to send the Bill back to us, we agreed to allow the Bill to progress on the condition that the Government report to this House in three months' time with progress on its further consideration. As I have said, I am grateful to the Minister for calling this debate. However, so far the Minister has been unable to answer the majority of concerns raised by my noble friend, people in the industry and members of the Labour Party.

Today, the Minister has not been able to answer one of our reasons for objecting to this deeply unpopular compromise; that is, that the Government still have no mandate to privatise NATS, especially after the virulent anti-privatisation comments such as those made by Andrew Smith in 1996 when he said,

"our air is not for sale".

We believe that the electorate should have had an opportunity to see the proposals in the Labour Party manifesto before the next election. As has been said, there is a precedent for such a delay. In 1982, the privatisation of BT was delayed until after th.e next election because it was seen as a controversial proposal which had not been in a manifesto.

There are other concerns. As was mentioned by the noble Lord, Lord Shore of Stepney, last year, the EU Commission issued an opinion challenging the legality of so-called "golden shares" on the grounds that they are a barrier to the freedom of capital and the freedom of establishment within the European Union. That means that no government can any longer rely on any provision in UK law to protect the national interest.

Given the Government's record in choosing selected bidders or strategic partners, as exemplified by the sale of the Dome, and the present hiatus over the London Underground, are the Government satisfied that they will be able to reach a satisfactory conclusion to the negotiations with the Airline Group? Is it a question of third time lucky?

The possibility of foreign control of NATS has serious national security implications. The concerns are amplified by recent cases before the European Court of Justice which ruled that issues of national security are not immune from European Court of Justice jurisdiction. That means that government directions to the privatised NATS to secure the national interest in the future could be ruled illegal by the European Court of Justice. How does the Minister foresee our national interest being protected under the PPP in any future emergency?

What have the Government done or said in the past three months to reassure the DETR Select Committee in another place, which stated,

"The current proposal for public-private partnership for NATS is, in our view, the worst of all the possible options for the future structure of the company"?

I have not heard the answer to that. What have they done to reassure members of the Labour Party, such as the former Labour Transport Minister, who said:

"the key dialogue in air traffic control is that between the pilot and the air traffic controller, and the Government would make a great mistake if they proceeded with a policy that is opposed by airline pilots. I urge the Government to reconsider and accept one of the alternative models—the independent publicly owned company or the not-for-profit trust"?

I believe that to some extent the Minister has answered the staff but he has not answered the former Labour Transport Minister.

What have the Government done to reassure those who work in the aviation sector? The Institution of Professionals, Managers and Specialists seems far from convinced by the Government's plans, despite numerous meetings. In a letter to my noble friend dated 12th March, the general secretary, Paul Noon, stated:

"NATS staff remain opposed to the planned privatisation of NATS. If anything, the views of our members …have hardened as more detail becomes known and discussions have taken place with bidders. Indeed, NATS staff have voted by a very large percentage (91 per cent) in a high turnout to be balloted on industrial action should their safety concerns not be met".

How does the Minister now view the possibility of industrial action? Is he satisfied that he can resolve the concerns of the staff involved?

Perhaps the Minister will answer some of our concerns over the future of NATS under the Government's plans. What contingency plan do the Government have in the event of the strategic partner selling its share in NATS? Would the Government have any say in what was to happen if their selected bidder chose to sell out to some other business enterprise?

Can the Minister be sure that the Government's plans will prevent our air traffic services being controlled by a foreign company which might compromise our national interest or security in the future? Are the Government sure that fines for delayed flights will not constrain management decisions about incentive remuneration and safety management? Will the Minister tell the House how much NATS currently owes on outstanding loans?

The noble Lords, Lord Brett and Lord Hoyle, posed another question: what is the value of the 5 per cent of the equity which is to be held in trust for the staff? We hear that perhaps 500 shares will be issued to each member of staff. If there is to be a non-commercial return on the enterprise, how are the staff to benefit from their holding in the equity if at the end of their careers it must be handed back to the staffs share trust? The staff will need to have those questions answered clearly. Finally, can the Minister tell us when Swanwick is expected to come into operation?

The only things which are clear from the Government's handling of the sell-off of NATS is that, four years on, the delay in finding a solution to the funding crisis has not so far been helpful or beneficial to the industry; and concerns within the industry, the Labour Party and the House at large have not been fully addressed. How do the Government justify pressing ahead with these plans when they have failed to reassure those whom they most affect? Although we welcome the fact that we now know the selected bidder, we cannot approve of the methods the Government have employed to bring this matter to a conclusion.

My Lords, we have had many interesting debates on the subject and today's debate has been no exception. The comments and questions raised have been so dense and so well informed that I quail at the prospect of trying to answer them all in the time available. However, your Lordships can be assured, that any questions I do not deal with adequately I shall deal with subsequently in correspondence.

We have all come to the debate knowing that the volumes of air traffic continue to increase. We all accept that air users, airlines, general aviation and the travelling public expect that aircraft movements will be managed in a way which avoids undue delay and does not impose excessive costs and maintains safety, which is the paramount consideration. Your Lordships reflected those concerns, together with the concerns of staff and shareholders, throughout the period we have been planning for the PPP and have successfully done so again today.

We are on the brink of establishing the PPP. We have fulfilled our commitments which we gave to your Lordships in November and I am grateful for the compliments offered in regard to the extent of our consultation. We have talked to key shareholders and have tried to address their concerns. We have now selected a strategic partner, we have signed the necessary documents and we are moving towards completion and, I hope, a satisfactory conclusion.

I now turn to the individual points raised and I shall begin with the noble Lord, Lord Trefgarne, who asked about the provision of lower air space radar services. He will remember that recently we had a thorough, informative and worthwhile debate on the issue. It is true that NATS will not have a duty in its licence to provide for lower air space radar. That is because the services are provided by different operators in different places according to the facilities available.

However, I am pleased to reassure the noble Lord that a duty is being laid on the CAA to organise an acceptable level of provision. That is confirmed in the air navigation directions which the Secretary of State has today given to the CAA. I am aware of the issues which have arisen at Stansted and Luton and I know that the CAA is considering them carefully. I am also delighted that the noble Lord met the noble Lord, Lord Marshall, to discuss some of the issues and I look to him to take them forward in a spirit of co- operation with the Airline Group as it comes into operational control of NATS.

My Lords, I am most grateful to the Minister for that assurance. It is most reassuring. I have a meeting in the near future with a senior CAA official who will no doubt confirm it. I am grateful to the Minister.

My Lords, I am grateful for that intervention. I turn to the questions raised by the noble Lord, Lord Smith of Clifton. Perhaps he will forgive me for not going too deeply into some of the other transport matters he raised as I have been dealing with them in other ways and at other times this week. He asked specifically about the financial "get out" clause. We have tried to build on the experience of previous transactions in order to develop a more robust contractual framework which will bind in the strategic partner. We believe that the government partnership directors on the board of NATS will help ensure that the NATS PPP delivers on its undertakings.

As regards the objective criteria by which we try to define and measure success. the Airline Group and the Government will agree a business plan which will contain certain specified "deliverables", as the jargon has it. They will all be set out clearly. The CAA in the public sector will, as ever, deploy best practice economic regulation to keep the company up to the mark.

As to the single sky, we believe that under the PPP NATS will be well placed in Europe. The Airline Group has already developed relationships with neighbouring ATC providers. That will form the basis of a very strong position in what we anticipate from previous debates will be rationalisation across European skies in the years ahead. We have tried to make clear that the criteria on which we have made our judgment are based on an objective and impartial assessment. Any implication that somehow we made the decision for political convenience, or to try to match some of the demands made with great conviction in earlier debates by noble Lords, must be placed in the context of a very rigorous, objective and impartial analysis of a number of important criteria. At the end of that assessment there was clear blue sky between the bid of the Airline Group and that of its nearest competitor.

I turn to the point raised by my noble friend Lord Shore about replacement of the Swanwick systems over the years ahead. I am not entirely clear as to what the replacements would be. I accept the general point that technology should not remain in service as long as some of that with which our air traffic controllers must work at the moment. Some of the screens of circular design to be seen when one visits Prestwick appear to be quite quaint. From my discussions with air traffic controllers, like all professionals they appear to be very pleased by the anticipated investment which will give them new equipment. I anticipate that if we have an accelerated pace of technology, under the new system Swanwick will be the first to benefit from it.

These days advanced systems like Swanwick are subject to very regular upgrading and replacement, and often the process is a very organic one. I for one am pleased that the Airline Group stands ready to enhance the level of investment to modernise the systems, and its concept of running competitions to ensure that it has the best systems for UK air traffic control appears to make good sense.

My noble friend Lord Shore also queried the wisdom of a penalty for delays caused by air traffic control in relation to any particular flight. I entirely agree with him that safety must be paramount and there must be no incentive to compromise. I have gone to some lengths to analyse the suggestions put to me by the CAA in trying to find a middle way with the management of NATS and its aspirations. My noble friend referred to the suggested 5 per cent as a tightening of the charge regime for each year up to 2005 for NATS en route services. Perhaps my noble friend will be pleased to hear that I modified that and set a cap which began at 2.2 per cent, rather than 5 per cent, arid then went to 3 per cent, 4 per cent and finally 5 per cent in 2005. That has been greeted very warmly by NATS management and there has been no complaint about it.

Similarly, in relation to delay, it was put to me by NATS management that the proposals of the CAA, based on one year of operation, might be tough to meet. I asked the CAA and our own officials to look at an average across four years to try to get a fairer datum line. They have come up with a system on which the CAA is prepared to compromise and NATS management very much welcomes it. I have tried to meet my noble friend's point.

My Lords, I am grateful to my noble friend for giving way. In his very full Written Answer in January my noble friend spelt out a helpful and more relaxed charging system. But I did ask: of what exactly is it a percentage? My noble friend was good enough to tell the House what the charge would be in three years' time; namely, a figure in excess of £5 million, and that thereafter it would be 5 per cent, but 5 per cent of what?

My Lords, since NATS is a monopoly service provider it is regulated by the RPI minus x formula. Therefore, the .x factor has been set for the period of five years. That factor would have been 5 per cent. Therefore, my noble friend can see how cumulatively 5 per cent over five years coming off RPI might be a considerable tightening of the screw. I hope that that satisfies my noble friend's inquiry on that matter.

As to the single skies initiative, noble Lords will be aware that, faced with the kind of expertise from noble Lords to my right who have been both Ministers and closely involved in European operations, in some of these areas my remarks are somewhat tentative. But 1 believe that the single sky is fundamentally a benign attempt simply to rationalise the way in which the various jurisdictions in air traffic control co-operate. In particular, we are trying to do that through institutional reform. We believe that through a single sky policy we shall be able to reduce air transport delays and their costs in Europe and provide the infrastructure to increase capacity, because by 2015 Europe will be coping with 7 million more flights and 1 billion more passengers than in 2000. Therefore, the provision of systems across Europe to handle that level of traffic safely represents a substantial challenge.

As I argued from the beginning of this debate, if consolidation is inevitable, when scores of national jurisdictions can be handled by half a dozen centres across Europe, we want to try to ensure that we in Britain not only control our own skies but are able to offer our expertise, based on an improved technological platform, to countries all over Europe, particularly small ones. Let us not forget that, if we want to, we can control Siberia from Swanwick, so there is a very real opportunity for a British-based company to help others to rationalise their skies.

I will now deal with some points raised by my noble friend Lord Hoyle about partnership directors. We have held discussions with the trade unions on the whole process of selecting the partnership directors to be appointed by the Government. Those discussions have centred on the types of people who might be suitable and what criteria should be used in their selection. That will include how they might best fulfil a role in safeguarding the safety of NATS. We have advertised for people to put their names forward under the new process, and we have arranged for people to consider putting forward their names. That process is ongoing, and I do not believe that I can properly say much more about it. We hope to have directors selected by the time that the PPP is due for completion, and as to that we are aiming for 1st June.

My noble friend Lord Hoyle also asked about pensions and the trust of promise. I can assure my noble friend that we are in the final stages of discussing the trust of promise deed with NATS and the Law Debenture Trust Corporation which is likely to act as trustees. The trust will be in place before completion of the PPP. As outlined earlier by my noble friend Lord McIntosh, we believe it will guarantee that while NATS employees remain within that they can also continue in membership of the CAAPS scheme. Staff who transfer with their work to another employer will be entitled to membership of a scheme that is identical in all material respects to CAAPS.

My noble friends Lord Clinton-Davis and Lord Brett have played a remarkably positive role. I bring that matter to noble Lords' attention because at times we may have seemed to have been at odds. But, with their collective experience of IPMS, BALPA and of public life, they have helped me enormously in understanding some of the difficulties that the staff have had in accepting some of our policies. They pointed me toward areas of the legislation where our Bill might be, and indeed was, improved. Both noble Lords have served the public interest very well.

My noble friend Lord Clinton-Davis asked about the public interest in the context of the stakeholder council. There will be three government-appointed directors. Like the noble Lord, we believe that the stakeholder council will allow people to come together and for broader interests to be represented by the government-appointed directors on our partnership board and the PPP board. Therefore, 1 readily reinforce his call for partnership. I endorse his comprehensive seven-point appraisal of the positive aspects of the winning Airline Group bid.

I am particularly delighted to be able to share my noble friend Lord Brett's optimism. I, too, believe that the winning bidders are well positioned to keep their promise. They have no exit strategy. Clearly, they are locked into the proper functioning of this new company by the most powerful of all self-interests. Again I should like to thank the noble Lord for the robust role that he played in helping us to improve the Transport Act.

I thank the noble Baroness, Lady Thomas of Walliswood, for her complimentary remarks. I understand her party's reservations about the public/private partnership. I hope that the noble Baroness will accept that the CAA can be both an economic and a safety regulator. I foresee no difficulty there. The economic and safety groups within the CAA are used to acting together; for example, the advice given to the Government by the economic regulator on the setting of the NATS charges was reviewed by the safety regulator. Should there be any conflict, the CAA board would address the issue.

On the question of the staff shares, I can reassure the noble Baroness that the pension position of staff, while remaining in the CAA, will be unchanged by the separation of NATS. On the new shares for employees—I anticipate the question of the noble Lord opposite—of the over £100 million of equity involved in the bid, 5 per cent will go to staff and £500 will be free. The share scheme would be for the initial allocation only. Any further staff proposals would be for the strategic partner to decide in consultation with the other shareholders and the Government.

I was asked what the value might be in the future. With regard to the total sum in cash received for the transaction, your Lordships may remember that we were looking at removing a debt of some £330 million and perhaps receiving £300 million on top of that. Therefore, in the past, I have offered £650 million as a possible total. The total amount is around £800 million. The valuation of the company is probably over £900 million and nearer to £1 billion now. So noble Lords can see that if people get a percentage of this company at an early stage on what would be a percentage of £100 million, were the company to be floated in future and a proper valuation put on it, there would be a considerable upside for those who held the shares.

My Lords, I am sorry to press the matter further. But if these shares are to be returned on an employee's retirement to an employees' shareholding trust, the value of the appreciation would not then be available to retirees. Perhaps the Minister could inform me further.

My Lords, I would look for a negotiation which puts in place a system that reflects a shared judgment of the value of the company as the scheme goes forward. The monies that we have received have been taken on by the Airline Group together with the debt and so on.

A question was asked about the phrase "not for commercial return". The noble Baroness will be able to ask the Airline Group because it is for that group to define exactly what nuances it means by "not for commercial return". As I understand the matter, it is simply that the Airline Group does not intend to extract profit. So whatever profits there are, in terms of its operating profit, would be reinvested in the group. Although the group has made it clear to us that in the early years the priority will be in ensuring that investment goes into Britain and the focus of its activities is in improving our air traffic control services, in the years ahead, it has said that if there is any expansion of the group, it will try to expand the business internationally as well. I believe that that will bring with it extra value.

The noble Lord, Lord Dixon-Smith, implied that somehow my being here today signalled the onset of an election. He need not be unnerved. This matter was promised a long time ago and for some time 1st April has been the deadline for the deal. I agree with the noble Lord on the importance of the UK aviation industry. I was pleased that he greeted the Airline Group's success so warmly. The noble Lord asked whether we have a mandate to privatise NATS. We have no intention of privatising NATS. Our air is not for sale. Our air is to be managed in partnership. It will be managed in the partnership of public and private skills.

We believe that the golden share, which also exercised the noble Lord's concern, will protect the strategic dimension of NATS. We have no concerns about that special share. The special share arrangements are only one part of a comprehensive range of safeguards for the various government and public interests in the provision of air traffic services. The main significance of the special share is in the event of a flotation of NATS, for which the Government have no current plans.

The Government believe that the provisions included in the Transport Act and in NATS' articles of association in relation to that special share are not inconsistent with the provisions of the Treaty of Rome. The Government do not consider that any of the existing special share arrangements in UK companies are inconsistent with Community law. They are committed to defending very vigorously all challenges to such arrangements.

On the question of national security, the Government will ensure that the strategic partner can be entrusted with the national security and aviation safety. NATS' licence requires the licensee to inform the Secretary of State if control of its operations, or even the ability to exercise material influence, changes hands. The licence may be revoked if such a change goes ahead, despite being deemed by the Secretary of State to be detrimental to the national interest. That will enable the Government to see that after the initial sale the PPP remains in the hands of fit and proper persons. I am delighted that so many noble Lords have seen the Airline Group as very fit and very proper persons.

Conscious of the time, I end by saying again how valued are the contributions noble Lords have made to our thinking on this matter. I should like to thank in absentia the noble Lord, Lord Brabazon of Tara, for his courtesy, good humour, his incisive arguments and, of course, his encyclopaedic knowledge of aviation affairs, which is so resonant in his name. We shall all miss his involvement with the transport portfolio, but we wish him well in his new role.

On Question, Motion agreed to.

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, on behalf of my noble friend Lord Bassam of Brighton, I beg to move that the order of commitment be discharged.

Moved, That the order of commitment be discharged.—(Lord Davies of Oldham.)

On Question, Motion agreed to.

Then, Standing Order 46 having been dispensed with (pursuant to Resolution of 28th March), Bill read a third time, and passed.

rose to move, That this House takes note of the report of the Science and Technology Committee on Complementary and Alternative Medicine (6th Report, Session 1999–2000. HL Paper 123).

The noble Lord said: My Lords, I cannot but feel that those rumbles of thunder suggest that it is unusual that someone steeped in the practice and principles of conventional scientific medicine should be presenting a report on complementary and alternative medicine, but I am delighted to do so for a variety of reasons. To have chaired the sub-committee that produced the report was a challenging and, at times, daunting task. It was a long and detailed inquiry. I should like to pay a very special tribute to the members of my sub-. committee whose support and vigorous argument. throughout made this a most fascinating experience. They were at all times interested, dedicated and willing to put forward their individual points of view, often trenchantly. It was to their credit that, at the end of the day, we were able to publish a unanimous report on a difficult and controversial topic.

I should also like to pay a special tribute to our two specialist advisers, Professor Stephen Holgate, Professor of Immunopharmacology, University of Southampton, and Mr Simon Mills, Director of the Department for Complementary and Alternative Medicine, University of Exeter. I would be remiss if I did not also say that our Clerk, Chloe Mawson, throughout was a tower of strength. It was a difficult task as it was her first major commitment on becoming a Clerk in this House and she fulfilled it outstandingly. We received great support too from Andrew Makower and Adam Heathfield in the Select Committee Office.

The objectives of our inquiry were to examine what we felt could be reasonable definitions of complementary and alternative medicine, to look at the usage of those disciplines in the UK and abroad, and to examine matters relating to regulation, education, research, the production of information and NHS provision of the disciplines. We were riot primarily concerned with efficacy but, inevitably, in the course of our inquiry, we were drawn into making some value judgments about individual disciplines and about their respective evidence basis. We received in all 180 submissions from organisations and individuals and we conducted 44 oral hearings. My committee and I were grateful to all of those who gave us written evidence and who came to give oral evidence to us.

The first issue we examined was the question of a definition. We found it impossible to produce an all-embracing definition. Perhaps the one that came closest to satisfying our wishes was that of the Cochrane Collaboration. It defined CAM—complementary and alternative medicine—as,

"a broad domain of healing resources that encompasses all health systems, modalities and practices and their accompanying theories and beliefs other than those intrinsic to the politically dominant health systems of a particular society or culture in a given historical period".

While no firm distinction was possible, we regarded complementary disciplines as those which are usually, if not invariably, used to complement conventional medical treatment, while the alternative disciplines are those which purport to offer diagnostic and therapeutic alternatives to conventional medicine.

Since the report was published we have had much subsequent correspondence and even one or two informal meetings. Our broad divisions enabled us to look at four possible groupings. First, in group one we classified what are often called the big five in the CAM field. They are osteopathy, chiropractic, herbal medicine, acupuncture and homeopathy. Osteopathy and chiropractic are already regulated by law in that each of them has its individual Act of Parliament regulating its activities. There is a General Osteopathic Council and a General Chiropractic Council. The General Osteopathic Council has run into certain problems over registration of those calling themselves osteopaths. But I am sure that that matter is outside the terms of reference of our inquiry and that it will ultimately be resolved. The General Chiropractic Council pointed out to us a minor error in our report where we referred to its policy on retrospective recognition of qualifications. But the council is now functioning extremely well.

Our view was that herbal medicine and acupuncture as practised in the West have now become so well organised through their individual bodies—they are voluntary regulatory bodies—that the time is approaching when it is right that they should seek statutory regulation under the Health Act 1999. I am delighted that the Government's response to the report, published only yesterday, suggests that the time has come when discussions with the Department of Health on behalf of those professions should proceed with that end in view.

Homeopathy has been practised for a very long time by doctors in the NHS; not least in London and Glasgow, but also in other parts of the country. Those doctors are regulated by the General Medical Council. But the non-medical homeopaths have an active society. They are self-regulating but as yet they have not come to any kind of formal agreement with the medical homeopaths—the Faculty of Homeopathy—as to common standards of practice and principles which should guide their practice. We believe that such discussions should be undertaken. We further believe that the time will not be far distant when non-medical homeopathy should also seek statutory regulation.

In group two we classified many disciplines. They are largely complementary in that they are generally used either privately or, in many instances, within the National Health Service to complement conventional medical treatment. They include disciplines such as aromatherapy, reflexology, healing, yoga, massage, shiatsu and many more. Those disciplines do not claim cure. They do not carry diagnostic capability. But, from the evidence we received from many quarters, there is no doubt that they give comfort and succour not only to the elderly but also to many patients suffering from terminal illness. For that purpose, they are commonly used and employed within hospices and in the hospitals of our National Health Service.

One problem with regard to this group is that many diverse organisations claim to represent them. However, one example of a group that has come together—I shall turn to regulation in a moment—is the Aromatherapy Organisations Council, which has brought together all but one of the bodies purporting to represent aromatherapists.

The most controversial group in our classification was Group 3. We divided that group into two sections; Group 3a included traditional, long-established systems of medicine which have been offered to the public in other parts of the world, sometimes for centuries. These included Ayurvedic and Ancient Chinese medicine. In a moment I shall turn to the problems relating to the disciplines, but because we were concerned about certain aspects of these particular disciplines we put them into a category in which we said that, at the moment, there was no convincing evidence—no convincing scientific evidence base—to support their diagnostic capability or to support all the forms of treatment that they provide.

Our Group 3b comprised a list of disciplines including, for example, dowsing, iridology and other methods such as radionics and crystal therapy, where we found no scientific evidence base to support their use and, indeed, no evidence was brought forward to suggest that they had a credible evidence base.

The evidence we have received has shown that in the United Kingdom, more than 40 per cent of the population has turned, at different times, to complementary and alternative medicine. The Royal Pharmaceutical Society told us that, in 1998, £93 million was spent on complementary remedies and that the figure was rising rapidly. If one takes into account the costs of consultation, it was thought that people in the UK probably spend £1.6 billion a year on complementary and alternative therapies. In the United States the figure is staggering: 27 billion dollars spent annually on complementary and alternative medicine, but much more statistical information is required.

Perhaps I may return to the somewhat controversial issues of Ayurvedic medicine and Ancient Chinese medicine. As I said at the beginning of my remarks, the problem is that these traditional disciplines have been used for centuries. In Ayurveda, the difficulty we encountered was that, not only the philosophy that underlies the discipline, but also the concepts relating to the five elements and the doshas could not be sustained in modern medical parlance. Equally, we could not wholly accept the yin and yang concepts of ancient Chinese medicine. But what we did accept without any hesitation was that many of the herbal remedies used in Ayurveda and in Ancient Chinese medicine, when tested thoroughly, have been introduced into western herbal medicine to good effect.

After all. acupuncture was developed in China. However, western acupuncture, which now has a sound neurophysiological basis, is quite different from the acupuncture of the ancient Chinese practitioner, who believes that certain acupuncture points correspond to individual organs of the body and in the concept of meridians and changes in the pulse that may result from various techniques of acupuncture. We could find no solid evidence for these concepts.

However, quite recently we were shown a demonstration of certain remedies used in Ayurvedic medicine at the Indian High Commission. Effectively, very careful scientific study has demonstrated these to be beneficial in certain fields of medicine. However, what we were being shown was modern herbal medicine. For that reason, we wholly accept that some of the herbal remedies of Ayurveda and, indeed, of Ancient Chinese medicine properly can be included in Group 1; namely, they can be brought under the umbrella of herbal medicine as can some of the other methods used in the disciplines, including massage, counselling and so forth. I hope that that deals with those particular problems.

Throughout, we were looking for evidence and evidence base. It was our clear understanding that it was important to recognise that the efficacy of these remedies had to be demonstrated by careful study and by research using not only double blind control trials—we made comments on many other methods of research. Those trials had to prove the remedies to be better than the placebo effect, which we know from many medicinal trials to be extremely effective. Of course we were also conscious of the fact that complementary and alternative practitioners can offer long consultations which provide the tender loving care which has been a part of traditional conventional medicine, but which many doctors have found difficult to offer because of the sheer pressure of work and time constraints. We were satisfied that it was important to demonstrate a greater degree of efficacy than can be shown from the placebo effect.

On regulation, I have already said that in Group 1 we believe that regulation by statute is either appropriate in the near future or will soon become so. As regards the Group 2 disciplines, we have made it clear that the individual disciplines should all come together under a single, voluntary, self-regulating body with principles clearly laid down relating to training and practice. When and if they do that, the time may come when it would be appropriate for them, too, to seek statutory regulation. But that must be the first principle. We made some trenchant comments and proposals on training courses for complementary practitioners, in particular for those in Groups 1 and 3 where it is important that they should gain a level of basic understanding of medical science in order to be able to offer diagnostic skills as well as therapeutic interventions. That is not so necessary in the Group 2 disciplines but, nevertheless, they need to lay down principles as regards their training.

We were quite satisfied that it is important that doctors, nurses and other healthcare professionals who wish to practise complementary medicine—many now do—should acquire a level of training comparable to the standards expected of non-medical practitioners. Equally, we have made firm recommendations to the effect that, in their training, medical students, nursing and other students in the healthcare field should be trained not to practise complementary medicine, but should attend courses of familiarisation in order to learn what kind of procedures and disciplines their patients are likely to seek.

We were very concerned about research. Most practitioners in this field practise in private and have little, if any, opportunity to embark on research. There are some islands of excellence: in Exeter, in Southampton, at the Marylebone Health Centre in London and elsewhere. These are centres where doctors and complementary health practitioners work together in order to carry out research which seeks to confirm or, if necessary and if possible, to refute the efficacy of the procedures. But we are in no doubt that much more is needed by way of research. We have made strong recommendations to the Government that, through the NHS research and development mechanism, funds should be made available for training fellowships to train complementary practitioners in research and to establish centres in relation to or in collaboration with conventional medical schools so that integrated medicine can be practised and research can be conducted in order to strengthen the evidence base of these various disciplines.

We are glad to see that the Government, in their response, accepted virtually all of the recommendations we made and further recommended that support should be given for training fellowships and for research through the NHS R&D procedure, along with the support of the Medical Research Council and charities. The only thing missing from the Government's response, as we anticipated, was a pound sign. The exact sum available is as yet uncertain, but at least they made a declaration of intent, which is most welcome. Furthermore, we believe that academic units in this field should be developed.

One perfect example—which I hope will inspire the Government—was the establishment some years ago of the National Center for Complementary and Alternative Medicine in the United States, chaired by a very distinguished biomedical scientist, Dr Stephen Straus, who gave evidence to the Committee. That organisation is now receiving from the National Institutes of Health 73 million US dollars per year and is carrying out, and granting money for, a whole series of excellent reports and research projects in the field of complementary and alternative medicine. It is an example which—much more modestly, no doubt—we hope that the Government will be able to follow.

Let me make one or two final points. My first point relates to information. We have been impressed by work that has been carried out by the British Complementary Medicine Association, by the Research Council for Complementary Medicine, and by the databases that have already been established by them to identify not only research carried out in the field but, more particularly, facilities throughout the United Kingdom where complementary and alternative medicine are practised and where such facilities can be provided.

However, much more is needed. We are happy that the Government have accepted that through, for example, NHS Direct, the NHS Centre for Reviews and Dissemination at York and the Cochrane Centre, it is intended to clarify and produce a much more formal and comprehensive database so that patients in all parts of the country will know where to turn to find information about the best practice of complementary medicine in their locality.

It remains for me to mention the issue of NHS provision. There has been increasing NHS provision in this field. It increased markedly under the fund-holding system of general practice introduced by the previous government in that quite a number of general practices commissioned complementary practitioners and paid for their services. There is some evidence that under the NHS as now reformed, with primary care groups and trusts, that provision may have shown some decline, but we did not have firm statistical information upon this. We urge that more opportunity be made for such provision to be given under the National Health Service.

However, we were firm in our conclusion—a conclusion which was supported by organisations such as the Foundation for Integrated Medicine, a foundation which has fulfilled a seminal role in the field of bringing doctors and complementary practitioners together—that it would only be proper to provide complementary and alternative medicine from public funds once a firm evidence base has been established and once these professions and disciplines have become organised into either statutorily regulated organisations or have developed a single system of professional self-regulation for each of the mechanisms.

It is our firm belief that once that is achieved, it will be perfectly proper for doctors in primary care to refer patients to such practitioners, and for individuals in the other healthcaring professions—nurses, physiotherapists and so on—to have a similar facility, both in primary care and in secondary or tertiary care in the hospitals, wherever it seems to be appropriate. In other words, our recommendation is that the general practitioners and the other healthcare professionals—who are becoming much better informed about the value of complementary and alternative medicine but who, nevertheless, need more information and, indeed, more education on this issue—should still be the gatekeepers through which complementary and alternative medicine are provided under the NHS. I beg to move.

Moved, That this House take note of the report of the Science and Technology Committee on Complementary and Alternative Medicine (6th Report. Session 1999–2000, HL Paper 123).—(Lord Walton of Detchant.)

My Lords, perhaps my first job today is to thank the noble Lord, Lord Walton, for a piece of conventional rather than alternative medicine. In my absence yesterday I was given credit in the newspapers for a piece of medicine that in fact the noble Lord, Lord Walton, undertook; that is, the treatment that he gave to my noble friend Lady Castle. Certainly, we on this side of the House are deeply grateful to him for that. I am sorry that it seems that I have been given the credit for a piece of medicine I am not trained to deliver. Indeed, I understand that the noble Baroness was somewhat alarmed when she saw my name associated with the medicine that she was receiving. Your Lordships may draw the appropriate conclusion from that.

My second reason for thanking the noble Lord is for his outstanding chairmanship of the sub-committee, the parent committee of which I chair. His chairmanship follows the long tradition of chairmen of this wonderful committee, on which it has been a privilege to serve. He displayed great tact during what was, for many reasons, a quite difficult investigation; it is a vast, blurred field and there were very strong feelings on all sides. Any chairman who can lead my noble friend Lord Howie docilely to agree with him deserves very great credit. This was a very successful investigation indeed.

We are also grateful to the Government because essentially they have agreed, as far as I can see, looking at the response very quickly, with nearly all of the points raised during the course of our deliberations. It will be interesting to see what funding there may be for research, but at least there is a commitment. That in itself may stimulate more research in this area. Certainly, I know of certain ongoing research projects.

Perhaps I may be rather specific today. I should declare an interest. In giving my maiden speech some five and a half years ago, I know that I upset a number of your Lordships. The noble Earl, Lord Baldwin, was somewhat concerned about my criticisms of alternative medicine. That was not entirely fair—I support alternative medicine—but I was incensed about the way in which it was being delivered in my specific area of medicine, and I made no bones about that at the time. I have reflected on how that has continued in the past five years.

Looking back at my own unit, I should declare an interest because we have been practising stress management for 15 years; we have been doing acupuncture for people with reproductive and pelvic disorders for certainly that amount of time, if not longer; and we have also promoted the use of a number of adjunctive therapies, such as aromatherapy, which undoubtedly have helped the well-being and welfare of a great number of our patients, particularly women attending for infertility treatment.

But there is a real problem which illustrates what is of concern about some aspects of alternative medicine. When I deliver treatment as a registered medical practitioner, I am subject to all kinds of careful statutory restrictions. I am required by the National Health Service to undergo appraisal. Indeed, your Lordships may be interested to hear that I underwent appraisal only last week and my appraiser was not at all certain that I was any longer competent to practice surgery because I was spending too much time in your Lordships' House.

Be that as it may, there is undoubtedly now vigorous and rigorous governance in the health service. I am required to audit my treatments and to make sure that they are genuinely effective. One of the problems is that this is not yet true in many areas of alternative medicine. That is why I believe that statutory regulation of some kind in certain areas is very much desired, and probably essential.

In particular, I wish to draw your Lordships' attention to the problem of reproductive medicine. About one in 10 couples, remarkably, have difficulties in conceiving. Infertility is extremely common. Very often when infertile people conceive, they lose the life within them; they miscarry. It is a tragic event which causes a deep emotional scar. Infertility starts off by people merely feeling rather anxious and a bit surprised that they are not conceiving; but it ends up with the most serious threat to their self-esteem, in a way that is difficult to imagine if you do not come into contact with these patients.

The threat to self-esteem often leads to quite severe depression; it leads to great anxiety, and to an attempt to clutch at straws. It also poses a real threat to people's sexuality—so much so that they often lose libido and find that there is no longer any point in taking part in the great pleasures of marital life. They often withdraw from young people around them. Loss of self-esteem affects their progress at work, because it affects every aspect of their being. It is quite common for women who are infertile and who have been trying to get pregnant for a long time not to be able to walk into a room where there are pregnant women.

Because of their desperation, such people are greatly open to being exploited. I regret to tell the House that this certainly happens in my field at present, through the offices of a certain type of alternative medicine. One organisation claims great efficacy in diagnosing the levels of trace elements in patients who are infertile. It recommends treatment with trace elements which it does not find to be in the right proportion. The organisation is particularly interested in a number of substances: selenium, manganese, zinc, copper, molybdenum and iron. Some of these substances may have some relationship to reproductive processes, but it is by no means clear exactly how valuable they are and what a deficit in those substances really means. One organisation, Foresight, as I understand it, takes hair samples from patients, measures each hair sample and provides a print-out to the couples, saying that they are deficient in some of the trace elements.

It is well known from research in the United States that analysing hair samples in this way is not a reliable means of examining levels of any kind of substance in blood or tissue. It may reflect historically what was the case several months ago, but even then there is a large amount of evidence to suggest that hair samples do not correlate with what is actually happening in the bloodstream or in the body as a whole. It is, I believe, a fallacious test.

Once the patients have a print-out, they may be given an address where they may seek tablets to replace the substances that they are missing. Often, the tablets contain 10 to 100 times the amounts of each trace element that might be required to adjust their body balances. They may pay £50; they may pay £200 a month each if both partners are diagnosed.

The problem is that these poor patients are not subjected to any proper medical tests and no proper medical history is taken. They are prey to exaggerated claims; for example, it is common for them to hear that there is an 80 per cent chance of the woman becoming pregnant if they undergo this treatment. I believe that there has never been any peer review to demonstrate the truth of such claims.

Because I have been critical of this practice, I have been bombarded with letters from one particular organisation in the United Kingdom. I know that the letters are orchestrated, because they are all couched in similar language. Parliamentarians are familiar with that tactic. It gives the impression that there is much greater support in the community for a particular course of action, way of life or belief than is actually the case. It is signally clear that these organisations have failed to produce proper peer-reviewed evidence, properly carried out blind trials, to demonstrate that this medicine is efficacious.

Does it matter? No one dies from infertility. But as infertility is ineffectively treated, these patients age; as they become older, becoming pregnant is more and more difficult. The delay can be critical, particularly for a woman in her late 30s. That is a paradigm of what may happen to some extent in other areas where these sorts of medicines are not properly controlled.

It seems to me that there is a very real need to look at some proper regulation in regard to how patients are "prescribed". I say "prescribed" in inverted commas because, as I understand it, many of those who hand out these drugs, if I can call them that, are not registered pharmacists. The tablets are not obtained from a chemist's shop but usually through the organisation itself or through a friend of the organisation.

That said, let me emphasise that I am not in any way opposed to alternative medicine. I have seen the value of alternative medicine; it is undoubtedly of increasing importance in medical practice in this country. There is no doubt that one of the problems that people face, particularly in the National Health Service, is the hurried, stressed doctor who sometimes does not spend as much time as he should do communicating with his patients. For that reason, if for no other, the alternative practitioner offers a valuable service, because one of the most important aspects of medicine is listening to what a patient has to say about his or her predicament. That undoubtedly has a huge and beneficial effect, not excluding any other therapy.

However, there is no doubt that in this country we have accepted that medical practice needs to be audited. It needs to be demonstrated to have an evidence base. If the evidence-based approach is good enough for registered medical practitioners, it is essential that anything that is given to patients who are effectively not well, who have a problem with their physiology, should be given on the same basis as applies in regular medicine.

My Lords, I should like to echo the comments made by the noble Lord, Lord Winston, about the chairmanship of the noble Lord, Lord Walton of Detchant. He guided us through the examination of some 29 disciplines that are grouped together under the rubric "complementary and alternative medicines". They are a heterogeneous group based on hygienic, diagnostic and therapeutic philosophies and practices whose theoretical bases and techniques may diverge substantially from modern scientific medicine, veterinary medicine or dental medicine. Their heterogeneity is exemplified in the fact that some have roots in ancient, or indeed modern, philosophies or religious systems. Some are based on notions of anatomy, physiology or pharmacology which are not consistent with current scientific knowledge. Some are based on beliefs that contradict established scientific principles and there is little or no scientific evidence to support their efficacy, and especially their safety.

Among this array of disciplines, the committee discerned three major groups, the third of which was divided into two groups, 3a and 3b, based on the evidence that we could ascertain. In relation to groups 3a and 3b, our chairman in particular and some members of the committee came under a degree of criticism from bodies that were included in that grouping. We all admired the composure of our chairman in dealing with the dissent levelled against him and others. When we met at the Indian Consulate to discuss some of these, he was the soul of discretion and charmed his critics very well indeed.

The issue in relation to complementary and alternative medicine and its veracity is the provision of a critical mass of evidence to support claims for efficacy and safety which would lead to regulation. Two therapies—acupuncture and herbal medicine—appear to be at the stage where it would be beneficial to strive for statutory regulation under the Health Act 1999. Osteopathy and chiropractice are already suitably regulated. Obviously, a major concern is the lack of the type of evidence that one would require for the registration of conventional, therapeutic molecules, which is accepted as being a very expensive and drawn-out process. The usual quotation of time is 10 years, and the usual quotation as regards finance is 100 million dollars. Very few, if any, of the complementary and alternative medicines could generate that sort of expenditure in order to become registered.

As the noble Lord, Lord Walton, mentioned, the evidence may well be there; it is a question of producing it by determined work. Indeed, we found at the Indian Consulate that they had produced the sort of evidence on four substances that would be accepted for registration. Hence, that changed our minds somewhat for the Ayurvedic medicine type of approach. However, it seems to me that there are several reasons for this lack of evidence. The first is the critical lack of a mass of research workers in any institution. In many of the institutions where CAM medicine is taught, the teaching is carried out by one person who may in fact be working part time. Hence it is very difficult, if not totally impossible, to mount a research programme under such circumstances.

Secondly, as has been mentioned, some of the teachers of CAM approaches are not research workers. They have never been trained in research and have never carried out such work. Therefore, they are unable to write the sort of research proposal that would generate support and interest from the major funding bodies. Nevertheless, we have been given to understand that funding would be forthcoming from some of the major medical charities, such as the Wellcome Foundation, were quality research proposals placed before them. That raises the question of ring-fencing research funding; in other words, whether special funding should be given to this area in order to kick-start research on the various complementary therapies.

While organisations like the Medical Research Council would reject ring-fencing, as the noble Lord, Lord Walton, pointed out, this is done in the United States by the national institutes of health. Indeed, between 80 million and 100 million dollars are made available for the purpose. With this large amount of grant funding available, we heard in committee that the major research groups went after such money and were willing to carry out the research. So the research followed the money, rather than the money following the research. We do not know whether that would happen in this country, but I suspect that the same thing would occur. If funding is made available in substantial sums, there is no doubt that research workers will follow it.

The way forward in the United Kingdom would seem to be to establish one or two critical centres of excellence where the necessary research can be undertaken and developed. Some of these centres already exist; for example, in Exeter and Southampton. One would hope that there will be increased effort as regards research funding for such work.

A further area that is poorly attended to in this country is education in CAM. That applies both at the undergraduate level—not only in medical schools but also in veterinary schools and, I presume, also in dental schools—and also in CPD, or continuing professional development, to practitioners in medicine and veterinary medicine. It is no easy task to insert yet another instruction in an undergraduate course in medicine, in what is usually already a crowded curriculum. There is also the possibility that this might be dealt with on an elective basis. However, where that instruction is given, it is important that the provider should have a fairly broad view of the various disciplines; in other words, he should provide a broad-view outlook and not concentrate on his own specific area of interest.

The provision of further information on CAM via CPD is an important area of development. The committee recommended that as one of the ways forward in dealing with the education of doctors, vets and dentists in this area. In the delivery of CAM therapies, we strongly believe that a progressive integration between CAM and conventional medicine should be encouraged; for example, we recommend—and, interestingly, the Government agree—that patients wishing to try CAM therapy should be encouraged to discuss their conditions with a medical practitioner beforehand.

In my own profession of veterinary medicine, the delivery of CAM therapy is covered under the veterinary surgeons' Act. Under its provisions, only veterinary surgeons may practise acupuncture and other CAM therapies. However, it is now possible for the practice of those disciplines to be devolved to non-veterinarians, provided that they are carried out under the direction of a veterinary surgeon. This means that one can bring into these areas highly trained auxiliaries for the benefit of animals.

There is widespread use of the wide range of CAM therapies. There is a strong case for a greater understanding. of such therapies, both by the provision of more evidence of efficacy and safety and by the provision of self-regulation. Given these, a more useful integration of the conventional health delivery and CAM delivery would be possible.

I believe that the report looked in great detail at these therapies. I also believe that the recommendations contained within it are not only considered but also constructive. Attention to them will lead to a more beneficial appreciation and integration of the use of both complementary and conventional medicine. I believe that, together, the conventional and the alternative in medicine could work to the benefit of the patient. Indeed, that is what we aim for in the long run.

My Lords, I, too, should like to attest to the remarkable chairmanship skills of the noble Lord, Lord Walton of Detchant. He had to deal not only with a wide range of CAM therapies, but also with a wide range of disciplines represented by members of the committee. When I was co-opted to the committee, I saw this array of medical, veterinary, pharmacological and scientific expertise and felt it necessary to establish my own provenance. I remarked that I was bringing to the committee's deliberations the perspectives of a serious hypochondriac. I should declare an interest and say that in the royal fellowship of serious hypochondriacs I have been gratified to appoint myself its life president—but not for long, you understand!

In a more serious vein, I turn to the point made the noble Lord, Lord Soulsby of Swaffham Prior, and emphasise the importance of the role of research in the area of CAM. The noble Lord, Lord Walton, drew attention to that as well. It is gratifying to note that the Government have more or less accepted all our recommendations. I think that is common ground. We made a timely review given the enormous recourse to CAM by the public, which is likely to show no signs of abatement in the future. It is absolutely vital that, if the public and the relevant professionals are to be properly informed, an adequate research base is developed. I am slightly less optimistic than the other two noble Lords who have referred to this. I believe that it will be a major step to get that established.

I would like to add one other point which has not been made. I believe that it has to be done with a great deal of sensitivity and, in a non-patronising sense, hand-holding. This is almost virgin territory for many of the CAM therapists. For that reason, I believe that the sensibilities of the practitioners in CAM need to be a major concern.

It is therefore important that the Government have acknowledged their role there. When we were taking evidence I frequently remarked that while most people agreed that a greater research effort was needed to produce the sort of evidence base required, people were often waltzing around the subject. I am gratified to note that our recommendation that the Department of Health must really own this subject and be the main drive behind it will be taken on board. As I have said, I am not as optimistic as other noble Lords that we shall really get this matter moving. It will require money, which may be forthcoming in due course. It will require a major commitment on the part of the Department of Health in order to co-ordinate the various agencies which finance research in the medical area so that we can build up a fairly major critical mass at an early stage rather than letting it dribble along.

My Lords, I would like to add my congratulations to those of other noble Lords to the noble Lord, Lord Walton, and the Select Committee on an excellent report. I bellieve that it is a balanced and important report which will serve as a bench-mark in our understanding of complementary and alternative medicines and in helping us assess the value and place of what is a very widely disparate group of therapists.

I would like to focus on the section dealing with research in this field covered so admirably in Chapter 7. I believe that research is the key as to whether an independent observer—I suppose that there are such people in this rather controversial field—can conclude which, if any, of these treatments can be accepted as valid, that they work and they are safe. I note the remarks of the noble Lord, Lord Smith, about sensitivity in this field. Indeed, some of the CAM therapists have been able to demonstrate effectiveness by research because it is only through research that we can hope to collect the evidence on which we can base any confidence about others.

It is certainly the case that before any new conventional therapy is introduced and used, there has to be reasonable evidence that it is likely to be effective. After all, that is what the National Institute of Clinical Excellence (NICE) was set up to ensure and it is the basis of rational medical practice. So we should expect no less of complementary and alternative medicine.

Now the reasons why the necessary research is not done as much as it should be is said to be because there is not enough funding from grant-giving bodies. I shall speak about that in a moment or two. But it may also be said that there is a reluctance on the part of practitioners to engage in research because they know in their bones that what they do helps people. They are right to the extent that any sympathetic, kindly practitioner can produce remarkable improvements in patients' sense of well-being by what is effectively comfort and a mixture of psychotherapy and placebo effect. Most, if not all so-called conventional doctors know that and indeed practise it or try to do so.

But where complementary and alternative medicine practitioners go beyond that and suggest that what they do for patients has a specific effect over and above those non-specific results, and where those specific effects are the reasons they are in business—in many instances it is a business largely outside the NHS—then the public deserves to know what is the evidence for the effectiveness of the therapies that they are paying for. Therefore, I have little sympathy with the idea that research for evidence is not necessary.

Perhaps I may now turn to funding. Those who want to carry out research say that there is little or no funding available. But the Association of Medical Research Charities—here I should express an interest because I am the scientific adviser to the AMRC, which has over 100 medical charities as members—made a survey of its members asking what their position was on complementary and alternative medicines. It transpired that very few had ever received any application for CAM research. Those that had said most of these were unacceptable because they were so poorly formulated.

Some charities, most notably the Arthritis Research Council (ARC), have leaned over backwards to try to encourage high quality research proposals and have had some limited success. But it is not as though there is no money available. One of the important recommendations of the report is that the manufacturers of the CAM remedies and preventatives sold over the counter and which are so profitable, should plough a small percentage of their profits into research. The rest of the pharmaceutical industry puts much more into R&D, so why not the others? Could it be that they fear that research will reveal that their products are not effective? Your Lordships may detect a note of provocation here. Perhaps I might provoke a positive response.

Most of the charities in the AMRC were set up by patients, parents or carers because they thought that not enough research was being done into arthritis, for example, or Alzheimer's disease, strokes or cancer and they did something about it. They began raising funds directly from the public. While they are open to receive requests from any researcher wanting to do any research which will improve the lot of the patients relevant to the charity, including requests from complementary and alternative medicine researchers, some charities have asked why it is that with the enormous public interest in CAM there has been no real concerted effort to raise funds directly from the public for research in this field. There is some, but why not more? Why go to other charities when funding from the public might be easier?

What I am trying to say is that many complementary and alternative medicines have an important role to play in easing the discomfort and symptoms of patients. But in order to go beyond that to having a specific effect in the cure or relief of disease, it is only by carefully controlled research that evidence of effectiveness can be obtained and only then can the public be reassured about what they are receiving.

My Lords, in thanking the noble Lord, Lord Walton, for his excellent chairmanship of the committee, I should like also to thank the members of the committee, some who remained sceptics to the end, some who may perhaps have been influenced by some of the evidence and some who may even have changed their minds.

I collected my copy of the Government's response but have only had a short time in which to look through it. In his speech this evening the noble Lord, Lord Walton, has dealt with many of the queries that have arisen since publication, particularly the reactions from the long established and traditional systems of healthcare that felt they were being ignored in our Group 3 classification. I am sure that on reflection practitioners of these systems will realise that it would not have been possible to examine the detail and theory of those entities in a 14-month inquiry. It might have taken two or three years. Grouping them together showed the respect which they are due and, in reality, took them outside the scope of our inquiry.

I should like also to thank the various organisations which have written to the sub-committee and to me personally since the publication of the report. I hope that our responses have offered sufficient explanation of the grouping arrangement. Perhaps I should declare an interest as president of the All-Party Parliamentary Group on Alternative and Complementary Medicine. I am president of the Natural Medicines Society and a practising dental surgeon who uses some of these techniques.

The modern, research-based scientific advances in medicine over the past 50 years have been spectacular and have brought relief, healing and sometimes health to countless numbers of patients. This growth of knowledge has been such that different specialties have developed, each competing for and making legitimate demands on the NHS budget, which has always, and will always, fall short of the personnel and materials needed to benefit all those patients who are perceived by conventional methods of diagnosis to be ill. It has been estimated that about one-third of all patients with chronic symptoms have no organic disease and another third have symptoms that are unrelated to their organic condition. The skill to understand and relieve the suffering of those patients is just not available within the accepted framework of conventional medicine.

Scientific advances in medicine have also affected the patient-doctor relationship and caused difficulty in communication. The committee heard that such misconceptions might be why help is sought from complementary practitioners, where patients can be assured of a listening ear. Very often the therapy involves the active participation of the patient. That has obvious appeal in an age when authority, including that of the medical profession, is being challenged and health is considered to lie in self-help.

In January, the all-party parliamentary group was addressed by Andrew Weil, the director of the Programme of Integrative Medicine of the Department of Medicine at the University of Arizona School of Medicine. He told us that American healthcare institutions have been engulfed by an economic crisis of unprecedented proportions that has alienated patients and eroded the job satisfaction of physicians. Simply, medicine has become too expensive. All over the world insurance systems are breaking down and hospitals are going bankrupt. He thought that in the not too distant future, when many smaller and community hospitals have disappeared, large areas will be left with only one central hospital— the only one that will be able to afford the hardware.

One of the great attractions of medicine as a profession was the promise of autonomy, an area where one could be one's own boss. We heard that few physicians today in the US can succeed in solo practice; most must work in corporate settings where someone tells them how many patients to see an hour, which treatments are authorised and which are not. The Minister will be aware of this already happening in my own profession of dentistry in this country. A very high proportion of new graduates cannot afford to set up on their own or buy into established practices. In a recent survey, 70 per cent of newly qualified dentists said they would choose to go down the corporate route, where someone else makes the decisions and pays the bills.

The Minister will have seen the report in last Sunday's Times, where 80 per cent of doctors surveyed on the Medix website believed that the incentive payments for GPs to enter general practice would make no difference and that,

"medicine is losing its allure as a career".

By eliminating much of the incidence of infectious disease—the major killer of the 20th century—modern scientific medicine has to assume the responsibility for this situation. We have been left to deal with chronic degenerative illness, a much more stubborn and costly problem. Medical expenses go up the more elderly people there are. The generation to which I belong—the generation that will soon constitute a gigantic demographic bulge of old people—has not yet reached the age where its medical costs will skyrocket. We have not seen anything yet!

Another reason for the expense of conventional medicine is its extreme dependence on technology. Medical technology is inherently costly and unless we change that dependence there is no hope of cutting costs. Consumers are very clear about their desires for natural, complementary and alternative therapies. It should be obvious by now that this is not a passing fad but rather a worldwide sociocultural trend with deep roots and great economic significance.

Much of the evidence we heard showed that patients want more involvement with medical interactions and want doctors who share their views about health and healing. They want physicians who have time to help them understand the nature of their problems and who will not just promote drugs and surgery as the only ways of doing things. They want physicians who are aware of nutritional influences on health and who can answer intelligently questions about the bewildering array of dietary supplements and natural interactions, who are willing to look at patients as mental/emotional beings, spiritual entities and community members as well as physical bodies. And they want physicians who will not laugh at them for inquiring about Chinese, Anthroposophic, Ayurvedic medicine or kinesiology. I mention kinesiology specifically because we relegated it to Group 3 in our list as having no evidence base. I use it every day of my life in my surgery as a diagnostic tool. It works brilliantly but I have no idea why.

The report recommends that there should be more consistent training offered to complementary therapists in all the different disciplines and that formal training should be offered to doctors, dentists, nurses and physiotherapists who wish to practise complementary disciplines. The setting up of a formal training structure should then produce practitioners and therapists who have a research-based background. It is our recommendation that the Government and the Medical Research Council pump prime the area of research by producing funds over a 10-year period in order to establish centres of excellence for those wishing to undertake research in this field. It is important that we follow the example of the National Committee for Complementary and Alternative Medicine in the USA, which is funding research projects with a budget of 73 million dollars a year.

In their response the Government say that they recognise the need to develop research capacity and they will consider the best way to achieve that objective. The noble Lord, Lord Walton, mentioned the lack of a pound sign. The noble Lord, Lord Burlison, can make himself world famous. How about offering £5 million this evening?

The challenge is to create a new approach to medicine, one that is based on a model of health rather than disease, one that trains practitioners to take time to listen, to value nutritional and lifestyle influences on health and illness, to offer treatments in addition to drugs and surgery and to understand the innate potential of the organism for self-repair and healing. This approach operates from the premise that prevention is one of the primary responsibilities of practitioners and that, whenever possible, simple, safe, cost-effective treatments should be offered before invasive, expensive ones.

In conclusion, I hope that the Government's response is bold enough to take steps to endorse the integration of complementary and alternative therapists into routine NHS practice. The integration of the theories of complementary medicine at undergraduate and postgraduate level can go some of the way to meeting the demand for good quality care, to the provision of care that respects the dignity of patients.

Integrated medicine shifts the orientation of medicine to one of healing, engaging the mind, spirit and community as well as the body. This approach is based on a partnership of patients and practitioner within which conventional and complementary modalities are used to stimulate the body's healing potential. It is committed to the practice of good medicine, whether its origins are conventional or complementary and recognises that good medicine must always be based in good science that is inquiry driven and open to new paradigms.

The last page of the response is encouraging. It states:

"The Government agrees that there is scope for closer integration of CAM and conventional medicine. This is in the interests of all relevant disciplines and, above all, in the interests of their patients".

I hope that the rest of the document is just as supportive.

My Lords, I am glad of the chance to speak in this debate, just as I was grateful to be co-opted to Sub-Committee I together with the noble Lord, Lord Colwyn. He and I have helped to run the Parliamentary Group for Alternative and Complementary Medicine for a good number of years, and are patrons of a number of organisations within CAM.

It would not be sensible for me to go over the whole field covered by our recommendations, since this has been admirably dealt with by my noble friend Lord Walton of Detchant. From our conversations early in the proceedings he knows my views on the difficulty of a medical person chairing an inquiry into a domain which until very recently has been at loggerheads with the medical profession, and many of whose philosophies and assumptions will not have featured—shall we say?—in the medical curriculum. I can only pay tribute to his fairness, efficiency and skill in guiding us through a welter of paper, discussion and examination of witnesses which has resulted in this comprehensive and unanimous report.

That it has not pleased everyone is not surprising. It was almost inevitable that our attempt to categorise the various therapies at the beginning of Chapter 2 would upset some people. Like my noble friend, I have tried to explain to those who wrote in that it was not unreasonable to accept some of the therapeutic claims, for example for herbal medicines or acupuncture which feature in Group 1, while viewing the diagnostic criteria and the whole framework of Ayurveda or Traditional Chinese Medicine in a different light.

Speaking personally, I have little difficulty with the latter. If they are clinically useful, that is what chiefly matters. Colleagues may remember our visit to the Marylebone Health Centre, where the acupuncturist told us that her TCM approach often made more sense out of the symptoms of heart-sink patients than did the diagnostic tools of the GP, and consequently she was able to help them where others could not. There is more than one possible lens through which to view the human condition. I recently came across an attractive one I had not met before, when I read Plato's view that,

"medicine may be regarded … as the knowledge of the loves and desires of the body, and how to satisfy them or not: …he who knows how to eradicate and how to implant love, whichever is required, and can reconcile the most hostile elements in the constitution and make them loving friends, is a skilful practitioner".

It is surely no insult to say that until the frameworks of ancient Greece, or in our case India and China—for which, as I say, I have the greatest respect—attain at least some form of scientific validation, it is logical, in a society dominated by western concepts of medical science, to place them in a category of their own. If we had called this "1b" instead of "3a", maybe we would have avoided much misunderstanding and, sadly, abuse. It is not as though we were recommending that they should be prevented from practising, or from doing good research, or from achieving a high standard of self-regulation.

I would highlight this evening just three recommendations in the report. In doing so, I would remark that it has been quite difficult to react to the Government's late response, which I have seen today for the first time. Other noble Lords, I think, have found the same. Some of what I say may be optimistic in the light of what at first sight appears to be a lukewarm response to one or two of our proposals, but I shall say it nevertheless, encouraged by my noble friend's review of the response, which is certainly more considered than my own.

Patients and doctors need full and reliable information about therapies and practitioners. There has been no thought of banning anyone: that would stifle innovation, as well as remove the patient's right to choose. But the corollary is that therapists should display their wares so that the public knows exactly what it is getting. I know from experience how hard it is to find one's way through the complementary medical maze. Much information will have to await good-quality research—other noble Lords have spoken about this— into efficacy and effectiveness in comparison with other treatments and in terms of cost. But there needs to be a central place, or places, where registers of practitioners are held, with details of their training and qualifications—what all those different initials mean, for a start—and assurances about regulation in all its aspects, and with enough unbiased information about such research findings as there are. Because the NHS already has structures that could handle this, and because patients turn to their GPs for information on most other aspects of healthcare, we thought that the NHS would be the best place to start.

A development close to my own heart has been the increasing acceptance by the medical profession of what CAM has to offer, or at least, where this is contentious, of the patient's right to follow the treatment of his or her choice. We met this in most, though not all, of our oral evidence sessions. We recommend that doctors. whether in training or long established, become familiar with CAM—not to the extent of practising, say, acupuncture or nutritional therapy, but of understanding enough of the principles and practices of the commonest therapies to be able to discuss treatment programmes and prospects with their patients. who in some cases at present know more about the CAM world than they do.

As a frequent CAM patient, and as the husband of someone with a serious illness to which conventional treatment has no adequate answer, I cannot stress too highly the importance of this. If you have to deal with a doctor who is all the time trying subtly to undermine what you are doing, it is dispiriting and it saps the energy you should he devoting to the disease. We have been fortunate in this; but at the same time the lack of anyone who can professionally oversee all aspects of the case, who will understand why an alternative approach may succeed where chemotherapy may not, who will give it due weight, understand its mechanisms and particular patterns of healing, be aware of any contraindications and of what to do when problems arise, has been a source of constant stress. If anyone tells you that patients recover in cases like this because of their commitment to their own healing, do not believe them. Managing a complex regime, and being responsible for life-and-death decisions because there is nobody else to help you take them, is no bed of roses. We need the multilingual physician, in the words of Dr George Lewith, one who understands the grammar and syntax of more than one system of healing, and when and how to use each.

Finally, there are the funding implications of the need, which most informed observers agree on, for more and better quality research. I hope the Government will see our recommendation for pump-priming money for a few centres of excellence as an investment which offers a good chance, not only of cures in areas where few existed before, but of economies in a healthcare budget which—the noble Lord, Lord Colwyn, mentioned this—if continually linked to the latest developments in high-technology medicine, will spiral out of control. If government cannot rise to this challenge, at a time when so many patients are seeking and find help in the field of CAM, then there is comparatively little that small-time therapy bodies or manufacturers can achieve on their own. It needs, as so often, the initial impetus to set the ball rolling. I hope government will make an imaginative response to this as to other proposals in what I believe to be a sensible and forward-looking report. At present less than 0.1 per cent of the national research budget goes on complementary and alternative treatments. And here we are not asking for the moon.

Although there is as yet no definitive picture of why patients are flocking to CAM, and we have made no recommendations for further surveys, I believe there is evidence that Vickers and Zollman were correct when they wrote in the British Medical Journal of 25th September 1999 that people usually go for,

"long-standing conditions for which conventional medicine has not provided a satisfactory solution, either because it is insufficiently effective or because it causes adverse effects".

The latter should not be underestimated. 1 t has resource implications as well.

We also know that patients report high satisfaction with their non-conventional treatments. Doctors like to ascribe this to the extra time available to CAM practitioners—a notion contradicted by the one chronic patient, at Southampton, to whom we put the question—and to the placebo effect. Neither of these entirely convinces me, though they are satisfying to some and may well play a part. But if complementary practitioners have learnt how to harness the placebo effect more effectively than their medical counterparts, then they deserve every encouragement.

Of course, this is not the last word on complementary medicine. To those therapy bodies who felt affronted by aspects of our report, I would say that they are quite at liberty to regard it as a product of a particular time and place. They could draw attention, if they like, to the fact that we were 11 white professional males with an average age of 71, and they could couple this with the view of Charles Darwin, who wrote in his autobiography,

"What a good thing it would be, if every scientific mail was to die, when sixty years old, as afterwards he would be sure to oppose all new doctrines".

I hope, nevertheless, that CAM organisations will take to heart what we have said in our chapters on regulation and training, together with the need constantly to question and test what they do in an effort to improve their evidence base.

Despite criticisms, I do not believe we have done badly. I think this is recognised at what one might call the senior end of the CAM world. We have looked exhaustively, and sometimes exhaustingly, at the key issues facing complementary and alternative medicine in this country, and have produced a set of sensible and practical recommendations. On the acid test of whether our recommendations, if implemented, will improve the lot of the patient, I think we have succeeded. And that is the most important thing.

My Lords, it was a great privilege to be a member of the sub-committee that carried out the inquiry. Our chairman, our expert advisers and our excellent clerk mobilised the flood of evidence that came our way and steered us through it safely and competently. Our three external visits, to Exeter, Southampton and the Marylebone integrated practice, gave us a flavour of what it is like to be a CAM patient and showed us that high-quality research into CAM is possible. I shall use the abbreviation CAM throughout my speech because I shall be referring to it a lot and it will probably save me about 10 minutes.

Some of that research, particularly that being done in Professor Edzard Ernst's department at Exeter, showed that certain forms of CAM gave better results than the inert placebo treatment with which they were being compared, but others showed no benefit beyond that provided by placebo treatment. As a result, his department is not universally popular with the CAM fraternity. It is important to note that even when the placebo results were not greatly different from those of the treatment in question, both treatment and placebo usually had a beneficial effect. While we did not think that the placebo effect was the only reason for the benefits attributed to CAM, it always needs to be borne in mind when assessing the effects of different treatments.

I shall centre my remarks on the reasons why CAM is so popular today and look at some of the weaknesses of mainstream or scientifically based medicine that may lead patients to seek alternative remedies. Chapter 3 of the report gives the committee's thoughts after we received evidence on the factors underlying patient satisfaction with CAM treatment in general. In our view, the approach of the therapist to the patient and the power of the placebo effect of any treatment are crucial in understanding that satisfaction. CAM practitioners are usually more relaxed, friendly and welcoming and their premises are often more domestic in character and less formal and clinical—more like home. Although we do not know the exact mechanism of the placebo response, some of our witnesses gave clues as to which factors enhance it.

Paragraph 3.27 of the report says:

"Research on therapist variables has shown that those therapists who exhibit greater interest in their patients, greater confidence in their treatments and higher professional status, whatever their background of training, all appear to promote stronger placebo responses in their patients. … It is also possible that the almost 'magical' approach of some complicated and unusual therapies may have a similar effect to highly sophisticated technologies in inducing wonder in patients".

As my noble friend Lord Turnberg pointed out clearly, the placebo response is present in mainstream medicine as well. Impressive technology sometimes appears to enhance that effect. The effect is not merely psychological, but may result in an enhancement of the immune response that is measurable by laboratory methods. An effective placebo response should not be dismissed as valueless. A hurried consultation in mainstream medicine may not evoke as effective a therapeutic response as an encounter with a caring CAM practitioner.

In mainstream medicine there is a common impression among patients that the doctor's time is precious and must not be wasted. As the report says in paragraph 3.8:

"Constraints on time and other pressures on the NHS, and the reliance on drug prescribing in conventional medicine, have eroded the time patients spend with doctors and has tended to lead to a forced discussion of 'the problem' rather than also embracing the context in which the problem needs to be considered".

Paragraph 3.12 says:

"conventional medicine as presently practised may lack something so that some patients are left feeling that not all their needs have been met".

As a former National Health Service GP, I am only too aware of the truth of that, even though, like many other doctors, I was often fully aware of the social and psychological factors that lay behind the problems presented by patients. It is easy to blame a patient's dissatisfaction on the lack of time in an average GP consultation—seven and a half minutes—but that may not be the only problem. Even in a short consultation it is possible, although not always easy, to establish some understanding and mutual trust that can carry forward over subsequent meetings into a long-term therapeutic relationship. Many noble Lords who have a good relationship with their GPx2014;or their consultant, if they have had the misfortune to get that far—know that to be true. Unfortunately, that is not the rule in modern medicine. The sheer volume of technical knowledge that medical students have to encompass today can easily squeeze out the compassionate motivation of the young adult who entered medical school.

Academic medicine and the General Medical Council are much more aware than previously of the basic importance of good doctor-patient communication in diagnosis and treatment. However, the technically expert doctor is always in danger of losing touch with the caring person within. Final qualifying examinations overwhelmingly test technical knowledge and competence. That is understandable. In today's technological and health environment, turning out a safe and competent doctor must be high on the priority list of the General Medical Council or any medical school. It is often said that psychological skills and sensitivity in a doctor are either innate or learnt very early and that only a minority of those in the caring professions are so endowed. However, I contend that a great deal can be done during training to instil into even the most blinkered student an understanding of the need to listen to and empathise with patients, if only because it makes for much more effective consultations and saves time and National Health Service money in the long run.

We found repeatedly in our inquiries that the symptoms and conditions that were best helped by complementary medicine were complex and long-term and did riot respond adequately, if at all, to mainstream treatment with drugs. The noble Lord, Lord Colwyn, and the noble Earl, Lord Baldwin, both made that point. The conditions include migraine, asthma, irritable bowel syndrome, chronic joint or back pain, chronic fatigue syndrome, eczema or allergies. Most GPs find such conditions time-consuming and difficult to treat. They are often the "thick file" patients. The pain of cancer patients was also often helped and their wellbeing enhanced by complementary medicine.

The common factor in all those problems is that stress, due to psychological or social factors, often plays a part in their origin or continuation. Some studies have found that the "worried well"—those with higher than average anxiety levels—are frequent users of complementary medicine. They often find that it helps them better than mainstream care. That may well be because the psychological or social help that would help them to get to the bottom of their problem is either not available through mainstream medicine or, more probably, not acceptable to them because they—and sometimes their doctors—prefer to regard their symptoms as having a completely physical cause. The approach of CAM therapists is ideal for such people because, while concentrating on their physical symptoms and often laying hands on the affected part of the body, the therapist subtly plays the role of a psychotherapist by another name, because he or she allows the patients to talk holistically about their life problems as well as their symptoms. Many GPs have found that a CAM approach is very appropriate for a sizeable proportion of their patients who have chronic symptoms but few detectable signs of organic pathology. It is not surprising that 40 per cent of GPs now either practise some form of CAM or collaborate closely with one or more complementary therapists.

It may be demonstrated that such collaboration can save NHS resources by reducing the number of GP consultations, prescriptions and referrals to outpatient consultant clinics. More research into the cost-effectiveness of CAM and the extent to which it could save NHS resources should be commissioned in addition to the research that is already being carried out. We were shown the results of a few studies that demonstrated its cost-effectiveness but more, larger and more soundly planned studies are needed.

In fact, research into CAM, as nearly all noble Lords who have spoken have said, is woefully under-funded and the CAM professions lack the research expertise and training that underlies the development of mainstream medicine. In chapter 7 the report examines the whole problem of research and development in CAM. Other noble Lords have already discussed that more effectively than I was going to so I shall not discuss it further.

It was good to read in the Government's response on page 14 that they,

"recognise the need to develop the research capacity in this field".

I was particularly pleased to note that they will include "the funding of fellowships", as was pointed out by the noble Lord, Lord Walton. However, their response was disappointing in that they did not feel able to respond positively to the report's recommendation that they should "pump prime" in order to create centres of excellence for CAM research. We have already heard about the way in which that has been done successfully in the United States.

In conclusion, it is fair to say that the report has for the first time put together a comprehensive description of CAM in Britain: its extent and varied nature and some of the reasons why it is so popular. The report also discussed some of the problems that are connected with complementary medicine, including its standards of training, its regulation and its lack of a good research basis. The report also points out some serious deficiencies in mainstream medicine as it is currently practised. I join the noble Lord, Lord Soulsby, in the hope that both complementary medicine and conventional, science-based medicine can learn something from the report.

My Lords, I begin by congratulating members of the committee and its chairman, the noble Lord, Lord Walton of Detchant, on producing a fascinating report. I was not a member of the committee so I apologise to its members, many of whom are in the Chamber this evening, for scrambling up the learning curve behind them.

I first became interested in CAM about 20 years ago for two simple reasons. The first arose because I was then a Member of another place representing Walsall, North, and I saw a constituent of mine at an advice surgery. She came to me in an extraordinarily stressed and tearful condition. She had a familiar tale—she was a single mother with three children and she lived in a high-rise block of flats. She had been prescribed some pills by her orthodox medical practitioner to deal with her stress; the practitioner did so entirely in good faith. A side effect of the pills was that they gave her vertigo, which is not good if one lives on the 15th floor. When she came to me she was at the end of her tether and it was extremely difficult to offer her advice. I knew another doctor in my constituency—a conventional medical practitioner—who undertook complementary medicine. He was for that reason regarded as something of a maverick. He saw her and prescribed a homeopathic remedy, which proved to be extremely effective.

When, 18 months later, there was a threat to close down the Royal Homeopathic Hospital, I met and was extremely impressed by several doctors there, many of whom were orthodox medical practitioners as well. From those two episodes came my interest in CAM.

The attitude of the medical profession then—20 years ago—was, to say the least, disdainful. We have, if the committee's report is any yardstick, come a long way since then. I congratulate the medical profession on that. It has had a lot of stick in recent months and years but this more positive approach is greatly to be welcomed. The noble Lord, Lord Walton, has no doubt provided the leadership necessary to change those attitudes and I congratulate him on that. I say to him that in 1980 it would have been inconceivable for an orthodox medical practitioner, especially one of his eminence, to have agreed to lead an inquiry of this sort. That is evidence of how much attitudes have changed.

We have seen progress in the medical profession but now it is time to see it in the Department of Health. The Government's response to the report, at least in writing, seems to be encouraging although there are some uncertainties, especially about time-scales. The intentions seem to be good but what about the delivery? What concerns me—I hope that the Minister will forgive me if I sound churlish—was the Government's response to the Psychotherapy Bill, which was introduced by the noble Lord, Lord Alderdice. Mental illness is an omnipresent feature of our society. One in four Members will experience it at some time in their lives. Like CAM, it is bedevilled by uncertainty about clinical outcomes and general fear; lack of clear guidelines on quality standards for training and treatments; and some embarrassment among users. Such users may feel that mental health is for wimps and that having a cold is okay but that with mental health one should have a good brisk walk and a cold bath, after which one will feel better.

The noble Lord, Lord Alderdice, managed to stitch together the elements of the psychotherapy profession and put forward a proposal along the lines of the recognised professional bodies for chiropractors and osteopaths. I am afraid that the Minister's response on Second Reading was to push the proposal into the long grass. I was very disappointed by that. He said, in effect, "Yes, it is a good idea, but the time is not yet right". I hope that there is no long grass in the Government's response to the report.

There is a huge pent-up demand for CAM out there. I have three simple examples. Boots the Chemist, our largest high street chemist shop, is now changing several of its branches so that they provide alternative medical treatment. At its High Street Kensington branch, in an extremely valuable piece of retailing space—the whole of the second floor—electrical appliances, greetings cards, records and CDs have been got rid of in favour of a CAM centre.

On my second example I declare an interest as the director of a hospital company with 1,000 beds in 20 hospitals around the country. The company does acute and mostly elective surgery and all the time we see a demand for alternative therapies. As a company we cannot vet practitioners. We need a series of clear yardsticks. We have that in conventional medicine because admitting rights can be tied to consultants who have had, or who have, NHS contracts or who can be subject to the medical advisory committee, which is made up of doctors practising locally. For CAM we have no such yardstick. Our reputation, if we allow people to practice in our hospitals, is at stake. We need a regulatory framework for CAM on which we can rely.

Thirdly, finally and most critically for me, I had a brief personal journey to alternative medicine. A year ago I was diagnosed as having prostate cancer. I had a radical prostatectomy—that is, to speak plainly, removal of the prostate—and subsequently six weeks of radiotherapy. It was all handled with care and 100 per cent professional skill and diligence.

The noble Lord, Lord Winston, talked about the vulnerability of patients. Believe me, one is vulnerable when one has had one's prostate removed, when one is told that one's PSA is rising again, when the doctors are saying, "Once the radiology is finished, that's about it", and when only palliative not curative options are available. In doctors' speak, that means that one is going to die but die slowly. One is vulnerable. In that situation, one is going to cast around. One is no longer a statistic—it is you who is affected. That is when, for people like myself, a benchmark provided by a proper regulatory framework would be very helpful. Moreover, as the noble Lord said, patients in that condition get a bit depressed. That is a combination of the effects of the treatment and the options that lie ahead. It was then that I was introduced to a reflexologist who specialised in gynaecological and prostate bladder problems. It was that or more pills on the NHS—pills on the NHS which were paid for by the taxpayer or reflexology which I paid for myself. I have since then used, slightly cynically I have to say, reflexology in various 30-minute sessions and it has been remarkably successful. I have felt better; the NHS has saved money; and a conventional orthodox doctor's time, which I would have occupied in consultation, is available for others.

Given all that evidence, the Government need to move with urgency. There are always reasons for not acting urgently. When I was in the other place we worked on a report called, Prevention and healthcare: Everybody's Business. Two of our key recommendations were turned down. I read from the Government's response:

"In making some recommendations the Sub-Committee may have assumed certainty where none in fact exists. Examples are recommendations 42 and 45 which propose action by the Government to inform the public of risks arising from the consumption of certain foods including fats, and recommendation 53 which suggests the introduction of a national breast cancer screening service for women. Whilst the Government accepts that decisions must sometimes be taken in the face of uncertainty about consequences, its assessment, in the light of expert advice … leads it to conclusions which differ from those which the Sub-Committee reached. Clearly the Government cannot wait for absolute certainty before taking action; on the other hand, it would seem wrong to use resources or interfere with individual liberty if there is real doubt".

Breast screening and fat in the diet: those of us who were not doctors who were on that committee could see the statistics that showed breast cancer rising year by year; we could see that overweight people died of heart attacks more often than thin people. Yet for some reason at that stage the Government could not give the urgency required to those two problems. I hope that will not be the Minister's reaction in his reply tonight.

I ask the Government, amid the many splendid reactions and proposals of this report, to adopt two priorities; first, to improve education and knowledge so as to close the gap between orthodox and alternative medicine. As the noble Lord, Lord Walton, said, it means that there is a need for medical students to be educated about CAM; for nurses, midwives and health visitors to become familiar with it; and for us to ensure that continuing professional education of all doctors and other health professionals takes place. After all, this is an area where knowledge, information and expertise is advancing all the time.

The Government must encourage the publication of research into alternative medicine. I felt that one of the most depressing sentences in the report was on page 121 where the committee received evidence from Exeter University that,

"the paper based on orthodox medicine treatment was more likely to be accepted for publication by an orthodox medicine journal than the identical paper which provided the same results for a CAM treatment".

It is a shame if that is true because information is what we need.

Secondly, the Government must encourage the emergence of professional organisations which will lead to a regulatory and training framework. I am sure that that will need some pump priming. From my knowledge the professions are still too weak and fragmented. The efforts of the noble Lord, Lord Alderdice, were remarkable in pulling together the psychotherapy profession. They need to be duplicated elsewhere and where there is a will there is a way.

I conclude by saying that I am not starry-eyed about CAM. I would not trust my prostate cancer to a practitioner of, for example, crystal therapy. I wanted and received conventional invasive surgery and radiological follow-up. Equally, orthodox medicine does not provide all the answers. The trick must be for the various disciplines to work in harmony; to relieve the hard-pressed NHS; to spread the burden currently carried primarily by orthodox medical practitioners and thus, above all, to improve the health of the country.

My Lords, I too begin by congratulating the noble Lord, Lord Walton. As somebody who sometimes cannot remember what I had for breakfast, I congratulate him on his encyclopaedic knowledge of medicine and his instant recall of matters medical. It amazed me and many of our witnesses on many occasions. The noble Lord also set a tone of tolerance for this inquiry and that was well judged, because I soon found out what my noble friend Lord Winston knew already: CAM is something about which people have particularly strong feelings and not a few prejudices.

I know nothing about medicine—orthodox, contemporary or alternative; but I have my prejudices and they were generally pro-orthodox and anti-complementary. But during our work I learnt that that attitude is not universally shared. As our report states, some 40 per cent of the UK population had used an alternative or complementary medicine or therapy, and Professor Strauss told us that the equivalent proportion in the United States is 42 per cent. In Asia, the number must be nearly 100 per cent. So CAM plays an important role in people's health.

That was brought home to me by the media response to our report. Almost all the broadcasters, magazines and newspapers reported our paper. So I should not have been surprised at the large number of individuals and organisations who responded to your Lordships' committee. As the noble Lord, Lord Walton, said, those responses were numerous and varied. Many welcomed our report, particularly our call for regulating accreditation and training and setting high standards. Others criticised it. A few angrily rejected it. One letter was quite the most acerbic I have read for many years.

The noble Lord, Lord Soulsby, referred to angry responses. The reason for that anger was that we had either omitted a therapy or did not accept that some treatments were effective, regulated and professional. Indeed, the practitioners of the Ayurvedic medicine were so outraged that, as the noble Lord, Lord Walton, told us, they arranged a seminar for us at the Indian High Commission and brought over several eminent practitioners and researchers to convince us. I found their evidence was convincing.

But that was after our report was published. Of course we explained that they should have done all that beforehand. We explained how the system works and that we are a committee of your Lordships' House. Of course all correspondents and organisations, pleased or angry, received a courteous reply from the noble Lord, Lord Walton, one of the members of the committee or from the committee's Clerk. But I wonder whether that is good enough. Perhaps we should do better.

Some correspondents accused us of arrogance. I do not agree. But perhaps that could be justified if we do not respond adequately. Members of Parliament respond because they are elected representatives. If voters do not like their response, they can vote them out of Parliament. People cannot do that with us and that is a reason why we should be more and not less responsive.

It seems to me that we should have a mechanism that allows people to discuss our reports, whether or not they agree with our recommendations—remember, we are creating yet more committees dealing with matters of great public concern such as animal testing and stem cells. After all, only five weeks ago, in this very Chamber, we were emphasising the importance of this kind of dialogue when we were debating science in society. We said how important dialogue is in building up public trust when dealing with scientific matters that affect people's everyday life. We spoke of how public dialogue assists decision-making and acceptance, especially where information is incomplete. It is also more democratic.

The point about democracy is important because many of the responses to our report on CAM came from minority ethnic and religious groups. They were obviously unaware of how the call for evidence works and how the House of Lords committee system works. I would hate to think that, because of that, they feel excluded from debate and from the democratic process. It seems to me that those arguments point towards a structured dialogue to follow up our reports. Perhaps this is the structure within which we can revisit topics. Perhaps this is an initiative that can be taken up by POST or the Parliamentary and Scientific Committee on some kind of systematic basis. I hope that the House authorities and the committee will give that matter consideration.

How would I justify our report to those who have responded, especially to those who think that we have double standards: one for orthodox medicine and one for their particular therapy? I would start by saying that in science there is an uneasy balance between dispute and consensus. The evidence clearly showed that some CAM practices, such as Chinese herbal medicine, rely on consensus for justification that may go back a thousand years, but much of which has not been tested.

A number of those therapies, such as osteopathy, have proved to be safe and effective and have been assimilated into medical practice. They appear in the first group, as described by the noble Lord, Lord Walton. They have been accepted because people disputed the earlier consensus. That led to trials and research, which in turn led to a deeper understanding of the therapies and established the fact that they are safe and effective beyond the placebo effect.

Other therapies have yet to go through that process. It is essential that they should because our now deeper understanding of science may help to explain those therapies. Indeed, we are now beginning to learn that if the human body is reduced to its tiniest components, something is lost. A more holistic approach is perhaps more in keeping with the human condition. Our greater understanding of the immune system is beginning to explain how herbal treatments or acupuncture can boost our resistance. We are also learning how our immune system responds to stress and what meditation can do to reduce stress. That is why we are strongly in favour of research to determine those matters and of regulation to ensure that the treatments are properly administered.

The Government, in their response, rightly mention the need for regulation to be light so as not to stifle innovation and progress. Our purpose in seeking more regulation is to ensure safety and high standards. I welcome the Government's support in their response. My noble friend Lord Rea reminded us that some of the work to achieve those high standards is being carried out at Exeter and Southampton Universities. I compliment them on their work and the time and trouble they took to assist the committee.

I agree with my noble friend Lord Turnberg: research shows up the dangers and, once revealed, orthodox medicine is quick to react. That does not appear to be the case with CAM. It is often the case with CAM therapies that safety is based on tradition and philosophy, whereas in today's world we demand scientific research as evidence. No longer can it be claimed that because people feel that a therapy is helping them, it cannot be harmful. During our work we learnt that St John's Wort was shown to be harmful when taken together with other drugs. I want all therapies, complementary or orthodox, to take their place in modern medicine, but all must justify their place by regulation and research.

That does not mean that orthodox medicine and CAM should be polarised. On the contrary, we need both. As the noble Lords, Lord Winston and Lord Hodgson, reminded us, CAM operates well in areas where orthodox medicine fails, in disorders such as allergies or chronic fatigue syndrome, and in quality of life therapies. We never have all the knowledge that we would like, so there is always risk.

In our Science and Society paper we discussed risk. We discussed the fact that if people are convinced of the benefits of a certain science, they will be more accepting of its risks. Surely CAM is the supreme example of that. The noble Earl, Lord Baldwin, told us of the high satisfaction of patients. Some people are so convinced of the benefits of a particular therapy that they are prepared to accept any risk. Indeed, that conviction has been the justification for some therapies by CAM practitioners over the years. But time has moved on. In this day and age we have to define those risks to enable people to make an informed choice. That is one of the main reasons for our recommendations.

I cannot close without thanking Stephen Holgate and Simon Mills, our specialist advisers. We had the unique experience of visiting Simon Mills's clinic where we saw herbal medicine being prepared for despatch around the world, and the therapists in action. We also had the opportunity to speak to some of his patients. All that provided me with an important insight for our work, as did the visit to the homeopathic hospital.

Our clerk, Chloe Mawson, coped with an extraordinary amount of evidence: 180 submissions. I extend my grateful thanks to her for making that manageable. I thank, too, my colleagues for their companionship. Some are eminent in the field of medicine, but not for one moment was I made to feel inferior. This was a fascinating study. I hope that it will change attitudes and, in that way, that it will help to improve the nation's health.

My Lords, I start by declaring an interest as patron of the Register of Chinese Herbal Medicine, which, with some 400 members, is the main body of Chinese herbal medicine practitioners in this country. It forms part of the European Herbal Practitioners Association, which represents professional herbalists throughout Europe and which gave evidence to your Lordships' committee. The RCHM also works closely with the Chinese Medicine Association of Suppliers, about which I shall say more shortly.

I am happy to add my congratulations to the noble Lord, Lord Walton of Detchant, and his committee on their landmark report. As he may be aware, the conclusions are not entirely satisfactory to our Chinese herbal medicine practitioners. Nevertheless, the fact that your Lordships' House has provided such a wide-ranging and penetrating report on complementary and alternative medicine is a great step forward. CAM is at last being taken seriously.

In common with many other noble Lords I was somewhat dismayed when the original membership of your Lordships' committee to consider this matter was first proposed in the autumn of 1999. Accordingly, I wrote to the noble Lord, Lord Walton, as did other noble Lords. The cause of our dismay was that the membership of the committee as proposed by your Lordships' Science and Technology Committee did not appear to include any noble Lord with specialised knowledge of CAM. Perhaps I may take this opportunity to thank the noble Lord, Lord Walton, publicly for his letter of 12th October 1999 in which he said that he and his committee would have in mind the possibility of co-options to its membership when the future membership of your Lordships' House was known. As your Lordships will recall, that was somewhat in doubt at that time.

I, and other noble Lords, am grateful that the noble Lord, Lord Walton, was as good as his word and that his committee subsequently co-opted the noble Earl, Lord Baldwin of Bewdley and my noble friend Lord Colwyn. I feel sure that their presence on the committee contributed to the wisdom and balance of the report that we now have before us.

As it is the practice in your Lordships' House to speak from personal experience when possible, perhaps I should reveal how I came to be such a firm supporter of Chinese herbal medicine and Chinese acupuncture. Some 15 years ago my former wife was unfortunate enough to grow a lump on her throat. It was diagnosed by Harley Street as being a nonmalignant thyroglossal cyst and was duly removed by surgery, leaving a rather nasty four-inch scar. The operation concerned is not a matter of simple skin surgery. It requires several days in hospital and involves quite deep surgery into the neck and throat.

After about three years another lump grew and Harley Street duly obliged with another operation and another scar. When a third lump appeared some time later, my wife heard of Chinese medicine and consulted one of our leading practitioners, Mr Ken Lloyd. By treating the constitutional cause of the cyst and not merely cutting out the symptom, or the lump itself, he was able to make the lump disappear. That was 10 years ago and no lump has since reappeared. From time to time it shows signs of doing so, but a short course of herbs sends it away immediately.

Then three years ago my 17-year old mentally handicapped daughter developed violent eczema on the back of her head, about which the conventional trichologist could do nothing. And so my daughter eventually ended up on cortisone ointment, which also failed. She was cured completely in three months by a course of Chinese herbs.

I could tell your Lordships several similar stories from among my friends, as word spread of the extraordinary efficacy of Chinese medicine when western medicine had failed. There was, for instance, the lively 12-year old daughter of the chief president of St John Ambulance, who is an entirely practical lady, I assure your Lordships, and not one to dabble in the "mumbo-jumbo of Chinese herbs", as she put it, unless sufficiently desperate.

Her daughter had picked up a kidney infection in an NHS hospital and after three years of treatment on antibiotics from an expensive Harley Street consultant, was getting rapidly weaker. She had to he taken out of school and was told that she would have to be on antibiotics for the rest of her life. We began I o fear that she was losing the battle.

In desperation, her mother took her off to Mr Lloyd, who first strengthened her immune system, which had been severely compromised by such a long period of ever stronger antibiotics, and then he killed the infection itself. Four months after starting on Chinese herbs, she was back in the netball team and eight years later remains entirely healthy.

I could go on. Your Lordships could have a word with no less a personage than the chairman of the 1922 Committee in the other place, one of whose daughters had a similar experience and who has also now been cured for several years of a very serious illness which conventional medicine failed to cure and for which she was told she would have to remain on western drugs for the rest of her life. So much for a little of my personal experience of Chinese herbal medicines and acupuncture.

As I fear that I shall be accused by those who adhere solely to conventional medicine of being anecdotal. or even giving in to delusions caused by the placebo effect, I suppose that I had better come to my main criticism of this report, which is so laudable in so many other ways. It is that although the report rightly places herbal medicine in Group 1 as a professionally organised alternative therapy, it manages to relegate Chinese herbal medicine to Group 3. Likewise, although it places acupuncture in Group 1, it demotes traditional Chinese medicine (TCM), (which, as I understand it, invented acupuncture some 5,000 years ago and has been at the forefront of the craft ever since), to Group 3. Relegation to Group 3 is a serious matter, given the committee's view expressed in the second paragraph of the report's summary, which I now quote:

"While the question of efficacy was not included in our initial terms of reference, in the absence of a credible evidence base it is our opinion that the therapies listed in our Group 3 cannot be supported unless and until convincing research evidence of efficacy, based upon the results of well designed trials, can be produced. Such evidence must be capable of showing that the effects of any therapeutic discipline are superior to those of the placebo effect. It is our view that for those therapies in our Group 3, no such evidence base exists at present".

I can only assume that because the question of efficacy was nothing included in the committee's initial terms of reference, they did not exactly exert themselves in the quest for the colossal and credible evidence base which does indeed exist.

I understand that there is a growing body of research available in the English language to add to the many volumes in Chinese and Japanese, all of which demonstrate both the efficacy and the physiological mechanisms which lead to its positive outcome.

Indeed, if the definition of "useful research evidence" extends beyond randomised controlled trials—and that is one of the welcome approaches recommended in the report—I gather that the evidence base for Chinese herbal medicine would be supported by literally thousands of Chinese and Japanese research papers which use collected histories and outcome studies to demonstrate efficacy.

In these circumstances, I have to ask the noble Lord, Lord Walton, and his committee how many cases such as those I have quoted from personal experience, of which there are many thousands of examples in this country, would be necessary to convince them to withdraw their strictures. Perhaps the noble Lord would care to give me some form of answer when he comes to wind up.

However, the committee's conclusions are even more perplexing when one comes to a recent article written by Mr Michael McIntyre in the Journal of Alternative and Complementary Medicine in which he criticises your Lordships' report in the following way. Mr McIntyre is Chairman of the European Herbal Practitioners Association and I believe that his strictures must be taken seriously. He states that:

"their Lordships were incorrect in saying that no evidence of efficacy exists for Group Three therapies. Both written and oral evidence was presented to the Select Committee, mentioning trials involving Chinese herbal medicine. One trial that was specifically mentioned, published in 1998 in The Journal of the American Medical Association (Bensoussan et al., 1998) showed Chinese herbal treatment to be effective for treating irritable bowel syndrome. Another trial that was brought to the Committee's attention was one carried out by doctors from the Great Ormond Street, Royal Free and Middlesex Hospitals in London demonstrating the efficacy of Chinese herbal treatment in the treatment of atopic eczema (Sheehan et al., 1992). The dermatologists who wrote this paper commented that Chinese herbal treatment 'affords substantial clinical benefit in patients whose atopic dermatitis has been unresponsive to chemical therapy'."

He goes on to state:

"Had it been clear that the Select Committee would consider questions of efficacy as part of its terms of reference and that this could lead to the demotion of traditional medicines systems of China, India, and the Middle East to Group Three, practitioners of these modalities would have been able to provide a wealth of scientific evidence in support of their effectiveness".

He gives other examples but the evidence appears in the magazine. He continues:

"While there may be concerns about the quality and safety of some Asian medicines, there is surely no reason to question the efficacy of TCM and Ayurveda, which are used by approximately half of the world's population with published research on a worldwide basis. The fact that the Select Committee placed homoeopathy, the scientific rationale of which continues to be rejected by the scientific community, in Group One merely underlines the report's blatant Eurocentric bias in its evaluation of traditional medicine systems in the Near and Far East".

That is strong stuff and I hope that your Lordships do not think me cowardly if I quote Mr McIntyre at such length. I do so because he speaks with greater authority than can I.

As Mr McIntyre also says, the report is not justified in relegating Chinese acupuncture and herbal medicine to Group 3 because of any self-regulatory shortcomings. The RCHM has a clearly defined code of ethics and good practice; a core curriculum, together with other herbal traditions, which is being implemented and properly accredited; a dynamic programme of continuing professional development; a research programme which publishes regular safety and efficacy data; and a democratically elected council supported by a busy central London office. The RCHM is a member of the European Herbal Practitioners Association and is actively participating in the rigorous process of applying to the Department of Health for statutory self-regulation.

I am aware that in the past there have been some problems with some supplies of Chinese herbs but the RCHM now works closely with the Chinese Medicine Association of Suppliers, which meets once a month. Together they submit to good manufacturing practices (GMP) as originally established for the manufacture of pharmaceutical drugs in the USA. Requirements to qualify for GMP status vary from country to country but it is generally recognised that the Australian Government's Therapeutic Goods Administration's standards are equivalent to the highest international GMP standards in the world; higher in fact than the United States FDA. It is to the Australian TGA standards that RCHM and CMA now submit and the best factories in China have made great efforts to upgrade their facilities in order to be internationally certified under this rigorous Australian GMP regime.

I heard the noble Lord's introduction to the debate, but I must still ask him whether he and his committee will think again about the placement of Chinese herbal medicine and acupuncture in Group 3. I feel sure that there may be other disciplines, such as Ayurvedic medicine, which would merit a similar review. I am sure that the noble Lord and his committee will be aware that there has been quite a bit of negative press comment, picking up on the lack of support in the report, and so it is important to resolve this matter as soon as possible.

Finally, there is in addition one other lacuna in the report which it might be helpful to put on the record. In paragraph 1.20 the committee reported that overall UK retail sales of herbal medicine in 1999 were around £100 million. It helpfully reported that those sales were rising fast, up from £63 million in 1994 and predicted to be £126 million in 2002, reflecting the growing use of herbal medicines. But I feel that it would have been helpful if the committee had given comparative figures for the total pharmaceutical market sales so that we could have some idea of the size of the conventional medicines industry compared with that of herbal medicine.

According to the Royal Pharmaceutical Society, which is the source of the figures for herbal medicines that I have just mentioned, total pharmaceutical market sales, excluding hospital sales, amounted to £7,593.4 million. On that basis, the conventional medicines market is at least 75 times larger than the herbal medicines market. I mention these figures because they help to show the colossal size of the conventional medicines market. Of course, that is only one way to compare the size of the two sectors. Conventional medicine, through the drug companies and other institutions, also spends huge amounts of money on research which herbal medicine does not need to spend in quite the same way, because most of the research has been conducted over the ages and the ingredients do not need a laboratory for their manufacture.

In short, what we are looking at in conventional medicine is one of the planet's most powerful vested interests. Human nature being what it is, it must be very frustrating to those powerful vested interests to see their market undercut and undermined by a very much cheaper, and sometimes very much more efficacious, competitor.

It is against that background that I was very relieved to read in paragraph 14 of the Government's response to the report that they will recognise the diversity of practice and hold discussions with herbal interest groups to consider the way forward. I am sure that that we are all most grateful for that. I remember, too, that in 1994 the Department of Health was leaned on by the Foreign Office to be extra good "Europeans", and so fool's gold-plated an EU directive to propose a massive licence fee for each herbal medicine of, I believe, some £80,000. This total folly would simply have sent the whole herbal medicines practice underground, including Chinese herbal medicine which in this country uses about 400 herbs.

So, those of us who have benefited from herbal medicine and wish to see it grow and prosper will have to be on our guard, and we shall be. Of course we wish to see herbal medicines adequately regulated, but with as light a touch as possible consistent with the aims of this largely excellent report upon which, once again, I should like to commend the noble Lord, Lord Walton, and his committee. However, I should be most grateful if perhaps he could reassure me on the major point which I put to him when he comes to reply.

My Lords, the noble Lord, Lord Pearson of Rannoch, made a very powerful and impressive case. It tailed off towards the end when Europe came up, but that did not surprise the House very much. However, the noble Lord might have been more conciliatory towards the noble Lord, Lord Walton of Detchant, who I believe offered an olive branch to the Chinese herbal business, as far as I understood his remarks at the beginning of the debate. The welcome given by the noble Lord, Lord Pearson, was rather more lukewarm than I thought appropriate.

I turn to more immediate and joyous matters. I enjoyed the committee very much, although my own background in technological matters lies in physics, especially that branch described as "mechanics". I understand things like structures and was not at home with the kind of science with which the committee dealt. However, I listened with great care.

The spread of the committee was interesting. There were two true believers, two healthy sceptics, of whom I was one—I remain so—and in between was a rainbow coalition of people with a variety of views, some of which changed and some of which remained the same. The report was described as "unanimous". I thought that that was going a little too far. I would have agreed to "nem con" because of the guidance of the chairman, who was not only firm and fair but also extremely cunning. The noble Lord did not persuade me to support the report with the zeal and enthusiasm that he would have liked, but he made me give in. I thought that that was quite reasonable on my part.

As a sceptic, I ask what "medicine" means and what qualities a therapy requires to come within the meaning of that word as I understand it as a lay person. I would have thought that there are two or three characteristics. First, there must be a diagnostic element; otherwise to me it is not medicine. Secondly, it must have curative, not just "feel good", properties. Thirdly, there must be a scientific basis to understand how it works. We must also understand how it continues to work or, possibly, does not continue to work.

It is against the background of those three characteristics that I look at the classifications in the report. It is not enough to make a patient feel good, nor, as one witness put it, to promote spiritual and physical wellbeing. One can do that by a walk on the heath, but that is not really medicine, is it? If one turns to the classifications, the first group appears to be reasonably sound, with the qualification that has been made in respect of the Chinese objections. I have my doubts about homeopathy. I have diluted a little of what-you-like-does-you-good. I shall get on; otherwise, we shall be here all night.

The second group does not embrace diagnostic skills. That makes me feel uneasy, especially as it includes meditation and healing. I worry about that.

The third classification is divided into two parts. Some of them offer diagnosis but are indifferent to the scientific principles of orthodox medicine, and some are based on philosophies. During the committee hearings a number of philosophers outlined their philosophies. Some of them were very interesting, by which I mean weird or somewhat strange. Some of them were not weird. I believe that to base a medical therapy on a peculiar philosophy is unsound; or at any rate a Newtonian physicist would not like it. Others had no credible evidence base.

While there were critical comments relating to the classifications in the report, I believe that they were too general. I would have been much happier had we itemised each of the therapies—I cannot remember how many there were—and set against them our appreciation of their strengths and weaknesses, dealing with each one individually. I tried to persuade the committee to do that but apparently it had better ideas of its own.

I turn to one of the therapies. I refer to the therapy known as healing or spiritual healing, which is, as one of the witnesses told us, akin to prayer. People have been praying for good health for many years, and a great deal of good it has done them.

I should like to point to two questions in the oral evidence. They are Questions 1693 and 1694. Unless someone points it out, they were put to the healer by me. I asked about distant healing. It was alleged that one could cure by healing at some distance. It did not require the laying on of hands, although I am told that that sometimes happens. They had carried out some studies. The interesting reply was:

"Certainly in one of the studies that was carried out, the patients did not know that they were receiving distant healing in the form of prayer and also their doctors did not know that they were receiving distant healing in the form of prayer and yet the results were very very positive".

There we are.

The healers also claimed to be able to carry out group distant healing. Therefore; if there is a group of people who are all ill they can be treated from a distance, presumably without them or their doctors knowing. I asked them to suppose that this group, however large—they mentioned a group of 1,000 in the United States in some test that they had done—suffered from a great variety of different illness, some of them diseases, some of them sore backs and a variety of things—eczema and so on—did that pose a problem for the spirit healer? The answer was no. Apparently one can heal people with a variety of diseases at a distance although they and the doctors do not know that one is doing it. We should have these people immediately in high places in the National Health Service. There is a good deal of talk about saving money. They would save a great deal of money.

I did not find that terribly convincing. The word "magic" came into my mind. Some of my friends described it as "mumbo-jumbo", but that is not the kind of language we should use in this House. The word "magic" is adequate. It reminded me of something that all noble Lords and their families will have experience of. That is of a child playing in the street who trips over his feet. It would always be a boy. He trips over his feet and grazes his knee. He immediately creates a hullabaloo and cries of pain emerge from him. His mother comes along. She cuddles him. She almost always says, "There, there now. It'll be all right in a wee while". Then she says, "I'll kiss it better", and she does.

Does anyone actually believe that the cuddle, the kissing better and the kindly words really heal the grazed knee? They make the child feel better. That is a good thing. That is the good thing in quite a number of these therapies about which we were informed. They make people feel better. They should be commended for that because making people feel better is clearly good. But it is not the feel-good factor which heals the grazed knee. In all probability the grazed knee, even if one puts Vaseline on it—or whatever one does—heals itself. That is a recurrent feature of the curative qualities of orthodox as well as unorthodox medicine.

That is almost all I have to say about the report, but I want say something about the manner in which we deal with committee reports in this House. We try to get a consensus or a unanimous report. The chairman feels that if the report shows clear indications of dissent, or even disagreement, as it were, that would diminish his report. I do not believe that. One result is that we are very reluctant, although it sometimes happens, to permit amendments to the report during consideration of the debate of the final version of it.

I do not think that that is sound. We should follow the practice of the other place which permits amendments. It votes upon them and the reports are not diminished in any way. I am supported in this matter by looking at the Companion to the Standing Orders. It is paragraph 9.32 of the recently revised version of the Standing Orders. It states:

"A report from a committee embodies the text agreed by the majority of the committee."—

" Not unanimous, not even nem con but the majority of the committee.—

"Members of a committee may not make a minority report".

We accept that.

"However, members who wish to express dissent may move amendments to the chairman's draft report or propose an alternative draft report. Amendments moved or alternative drafts proposed are recorded in the minutes of proceedings of the committee, together with a record of any vote. The minutes of proceedings are published with the report whenever a difference of opinion has been recorded in a division".

That is a general remark about the general procedure in this House. It is not in any way a reflection of the procedures of the committee. I wish that to be made absolutely clear in case anyone is in any doubt.

I conclude by quoting the comment which cheered me up most in the evidence which we received. It came from Professor Lewis Wolpert. It is at paragraph 2.17 of the report. Professor Lewis Wolpert of the Academy of Medical Sciences told us that:

"Medicine aims to base itself upon science. I am sorry that any complementary or alternative medicine procedure for which one can see no reasonable scientific basis should be supported".

I agree with that. That means that I am very sceptical about many of the CAM proposals which came before us. That raises a question which I must answer. Since I am sceptical, does that mean that I would wish to ban these therapies? The answer must be no. I am not a banner. We have tried twice this week to ban things in this House. On Monday we tried to ban fox hunting. I disapprove of that ban thoroughly. Yesterday, we set out to ban tobacco advertising. That is also preposterous and an interference with the liberty of subjects. In this case we are talking about the rights of people to treat their ailments in whatever manner they think and in whatever manner suits them best. Regardless of what I think, they should be permitted to do so. The report permits them to do so and I commend it.

My Lords, tonight we have had a fascinating and expert debate. Before the very lively speech of the noble Lord, Lord Howie, I was going to say that the committee speakers tonight had really demonstrated how well integrated their perspectives were, as they appeared to be in the report.

I join other noble Lords in congratulating the noble Lord, Lord Walton, on the report and on his chairmanship of the committee. I congratulate him on his stamina in so doing and also his stamina this week, because his prodigious speech-making efforts have resulted in his speaking in all three of the debates just mentioned by the noble Lord, Lord Howie.

The timing of the report was excellent. Shortly after the publication of the committee's report, a major conference in London organised by the Royal College of Physicians and the US Government's National Centre for Complementary and Alternative Medicine took place. They took great heart from the committee's report. In fact, the BMJ published a special edition on integrated medicine to coincide with that conference. That, itself, was significant. It is a far cry from its "Beyond Science" editorial of 20 years ago, which decried complementary medicine. We have come a very long way.

I have always been broadly sympathetic to complementary medicine because of my background. Research into enkephalins conducted by my late wife, Dr Vicky Clement-Jones, demonstrated the physiological basis of acupuncture. I am also connected with the British School of Osteopathy and have benefited from osteopathy myself. I am glad that the committee gave great encouragement to those in category 1 to seek registration, in particular, those engaged in acupuncture. I welcome the Government's encouragement to acupuncture practitioners in particular.

I am clearly not alone in being sympathetic to complementary medicine. We heard from the noble Lord, Lord 'Walton, how —1.6 billion a year is spent on complementary treatments. A recent NHS survey showed that 5 million patients consulted a CAM practitioner in 1999. We have heard the percentage of the population which now uses alternative and complementary medicine and how that percentage is higher both in the US and in Germany, where it has reached 65 per cent. The fact is, however, as the Chief Executive of the Foundation for Integrated Medicine recently said:

"Unfortunately those patients who would most benefit from integrated healthcare are those who can least afford to pay for it".

A sign of the times, as the noble Lord, Lord Hodgson, pointed out, is that Boots the Chemists has opened two pilot stores in Kensington and Milton Keynes which have available professionals such as homoeopaths, physiotherapists, reflexologists, herbalists and osteopaths. That is an extremely interesting development. There is growing professional support for it too, as is charted in the report. At the NHS Alliance annual conference in October, 63 per cent approved expanding NHS provision of complementary medicine. As we have heard today, CAM is increasingly practised in a conventional medicine setting. The noble Lord, Lord Rea, was particularly interesting in that respect. General practitioners are now offering access to CAM and 40 per cent of medical schools in the United Kingdom now offer courses in CAM. Primary care groups are establishing contracts with CAM practitioners.

The cause of a sensible evidence-based approach to complementary and alternative medicine has been much advanced by the committee's report on its superb examination of CAM, its therapies, practitioners, the state of research and the relationship with conventional practitioners. Its key conclusions have been rehearsed today and I shall not repeat them, especially now that the Government have come up with their response. I would say, however, that, caught as the Government now are between the hammer of the Prince of Wales and the anvil of the House of Lords Select Committee, I very much hope that they will be devoting adequate resources to research in this area. I rather share the views of those noble Lords who looked askance at the precise nature of the Government's commitment in this respect. The use of the words "research capacity" rather than "research resource" is rather significant. I hope that the noble Lord, Lord Burlison, can give an assurance in that respect.

The amount currently spent on CAM research is pitiful. As the Prince of Wales, the Foundation for Integrated Medicine and the committee in its report have pointed out, it is inadequate. Only 8p is spent for every £100 spent on orthodox research. The King's Fund, in its typically farsighted way, has started the ball rolling with a grant of £1 million and I hope that more private donations will be forthcoming as the profile of complementary medicine and research into it rises. The quality and quantity of research are clearly improving, as the BMJ recently pointed out, but research is inadequate even in disciplines such as acupuncture.

Sometimes, however, even where the research is adequate, there is poor communication about what research exists. A respectable broadsheet paper such as the Independent—1 notice it with my background—can still say as it recently did about acupuncture:

"The process by which it works remains a mystery but that it could have some effect is scientifically plausible".

If the paper had done five minutes' research work, it would have found that there is considerable evidence in that respect. That is fairly ignorant even in the light of the existing research. How much worse is the situation in other areas of complementary medicine?

The report has had some criticism, principally from the noble Lord, Lord Pearson. I take some comfort from the fact that, while that may be criticism from one end of the spectrum, there was equal criticism from the other end. The late lamented John Diamond made considerable criticisms of the report from his perspective as a diehard anti-complementary medicine journalist, but the one key point that he did make was a powerful case for there to be no double standards as between complementary and orthodox medicine. I firmly agree with him on that. I thought that the committee struck the right balance in that respect.

It is extraordinary, however, to think that the research base of conventional medicine—randomised controlled trials—which we now regard as a scientific yardstick for evidence-based medicine is only a postwar development. Major pharmaceutical advances have been made from natural substances. After all, we know that Taxol is derived from yew and aspirin from willow bark. As a result, conventional practitioners should respect the benefits when the evidence is there that certain herbal remedies such as St John's Wort for depression—its pedigree goes back to Hippocrates—or gingko for dementia are effective. On the other hand, practitioners need to make it clear that they support an evidence-based approach. By the same token, we should all recognise danger when it is present, particularly when products are sold as food supplements.

However, I offer a few words of caution on the purely evidence-based approach. I was very taken by what was said by Dr Andrew Weil when he came over to speak to the committee, as regards not dismissing the placebo response. He has already been mentioned by the noble Lord, Lord Colwyn. Dr Weil is a well-known American practitioner of complementary medicine and is the director of a key programme on complementary therapies in Tucson. I hope that most doctors would agree that a positive mind-body response, if it cures, is in fact better than a course of drugs. I also entirely agree with him about the desire of patients to spend some time with their doctor, along with their desire to be treated holistically, as a spiritual entity as well as a physical body. Many noble Lords have touched on that aspect of complementary healing. I believe that conventional medicine has much to learn in this respect and that, as Dr Weil has suggested, the integrated medicine movement will become much stronger over the years.

I shall offer a further word of caution: the paradox here is that the public appears to prefer personal recommendations on CAM treatments to any kind of scientific evidence. Indeed, one of our key tasks is to restore trust in science and scientists. The noble Lord, Lord Haskel, quite rightly raised this point.

I do not normally sell House of Lords publications, but in this context, I always recommend another report from the Select Committee on Science and Technology, Science and Society, which was published in February and which we debated recently. The report tackles in depth the issue of public trust. I hope that we can sell the two reports in companion volumes. That would be the best way forward.

My Lords, I, too, add my congratulations to the noble Lord, Lord Walton of Detchant, on what can only be described as an extremely important and thorough piece of work and altogether a brilliant job, especially when one considers the great variety of views and numerous conflicting interests in this field. No doubt he also had a little difficulty in controlling the noble Lord, Lord Howie of Troon.

Much of what I had planned to say has already been covered and emphasised by many noble Lords who have contributed to the debate. But I should like to stress that one of the strong points of our National Health Service is that the general practitioner acts as the gatekeeper. There are very good reasons for that. The patient is protected against too many eager beaver practitioners of whatever kind, and the GP keeps track of what medications the patient is receiving. I am sure that the Select Committee was absolutely right to recommend in paragraph 9.37 that,

"all NHS provision of CAM should continue to be through GP referral (or by referral from doctors or other healthcare professionals working in primary, secondary and tertiary care).

Most of the speeches from noble Lords have rightly stressed the need for research into CAM, but it also has to be said that we need to continue to look critically at the efficacy of orthodox medicine. It is essential to keep an open mind in scientific research because so often it reveals surprises. Some while ago a carefully conducted trial was carried out to see what would be the best treatment for warts. Four methods were tested: cutting them out; burning them out; freezing them out; and charming them. The most successful treatment was charming them out. Several conclusions could be drawn from that, but there is no doubt that high morale does boost the immune system. Of course the reverse is also true: low morale diminishes the effectiveness of the immune system. If a man loses his wife, if she dies after they have been married for some years, he is then in danger of dying within a year of cancer or recurrent infections. That is especially the case if he does not grieve properly. Thus high morale is very important to ensure that the immune system functions well.

In the past, people have made the mistake of disregarding unlikely therapies. In Holland it was said for years that liquorice was good for healing duodenal ulcers, but that was pooh-poohed. Eventually it was proved to be the case and the active principal, carbonoxylone sodium, was isolated. Nearer to home, a dry-cleaner noticed that a fluid he was using in his business made him rather drowsy. He wondered whether it would be an effective anaesthetic agent. Because he believed in trying things out, he successfully anaesthetised his wife. When he approached one of the Royal Colleges with his discovery, at first he was received enthusiastically and taken in. But when he was asked which hospital he worked in, he said that he was only a dry-cleaner, so he was dismissed out of hand. We have to keep an open mind and seek evidence-based orthodox medicine and alternative medicine. Even more important than keeping an open mind is to retain a touch of humility.

It is often not only a shortage of resources which keeps people from doing effective research; it is also a shortage of good ideas and determination. As has already been said, acupuncture is widely integrated with mainstream medicine and is used in more than 80 per cent of chronic pain services. There is sound neurophysiological evidence to support its efficacy.

As the noble Lord, Lord Clement-Jones, said, some of the earliest work was performed by the late Vicky Clement-Jones, who demonstrated an increase in endorphin levels in the cerebral spinal fluid after acupuncture in patients with chronic pain. Research workers now believe that they have found the mechanism responsible for the sustained effect of acupuncture, which has been apparent to clinicians who are familiar with these techniques.

A high proportion of musculoskeletal pain arises in trigger points. One of the best recognised trigger points lies in the muscle that is responsible for the shrugging of the shoulders; on deep palpation it is tender in almost every subject. Anatomically, it equates to the site of the acupuncture point known as GB21. There are many more examples of this close correspondence between trigger points and acupuncture points.

As has been mentioned, the randomised control clinical trial is the gold standard in evidence-based medicine. It is, of course, vital to find whether a treatment is more effective than an apparently identical placebo treatment. When testing new drugs, this is quite straightforward; but in research into the relief of pain by acupuncture it is difficult to devise a valid control procedure for the subjects, and virtually impossible to have the therapist in the dark about what treatments he is giving. Placebo relief of pain appears to work by stimulating endogenous opioids, which is a mechanism shared at least in part by acupuncture. The problem is that if you have a placebo effect by sticking needles in elsewhere, they too will work.

To try to overcome this difficulty, an attempt was made to compare four groups of patients with pain in their neck. It was done in four different ways: first, standard needling; secondly, superficial needling; thirdly, a drug called diazepam; fourthly, a placebo diazepam. All the groups, apart from the placebo diazepam group, had significant improvement in their pain. There is now good scientific evidence for relief by acupuncture of pain, nausea, vomiting, dental pain and low back pain.

What should acupuncture practitioners be called? Doctors who use acupuncture would like to retain the term "acupuncturists". Perhaps they should be called "medical acupuncturists", as opposed to those who practice traditional forms, who could perhaps be called "traditional acupuncturists".

So far as concerns teaching, we shall have a major problem if there is any suggestion of doctors having to undergo several hundred hours of instruction in traditional acupuncture theory. This would require the suspension of belief in much of the conventional and neurophysiological bases.

In summary, the report of the committee of the noble Lord, Lord Walton, has made an enormous contribution to the subject. It will be a great move forward towards having a much better system, which I trust will be better for patients, practitioners and science.

My Lords, the Government have already welcomed the Select Committee report. In fact, our response shows that we have already begun to implement many of the recommendations in which we have a role to play. Although I know that noble Lords have had little time to consider the Government's response, I thank them for their general acceptance of the report and their kind comments during this excellent debate.

However, I should like to add my voice to the many notes of appreciation for the work of the sub-committee that have been expressed during the course of the debate. The fact that the report has been so well received in both Houses is testimony to the professionalism and objectivity with which the subcommittee approached its task and, if I may say so, to the quality of the chairman—a great man, of course, from my own county, Durham.

We are most fortunate to have so many medical experts in your Lordships' House. My noble friend Lady Castle was particularly grateful that the noble Lord, Lord Walton, was on hand yesterday to help her. I am pleased to say that she has now returned to her home. We look forward to her return to your Lordships' House.

The report published the results of what I believe to be the first comprehensive inquiry into complementary and alternative medicine in the UK by a parliamentary Select Committee. The committee received written evidence from many leading individual experts and professional organisations on both complementary and orthodox medicine.

This debate has touched on the main themes in the report: regulation, education and training, research and the evidence base, information and National Health Service use. It has also mentioned the way in which the report has introduced some structure to the CAM world by classifying CAM therapies into three groups.

I recognise the difficulty in making any generalisation about such a diverse range of therapies. But I think it important that we begin to introduce more structure into the very diverse world of complementary medicine. This might at least help patients and the general public to understand better what they are dealing with.

We do, of course, recognise the difficulty of classifying traditional health systems which, being rooted in cultures that are very different from ours, have not yet come to be fully understood by western science. We have therefore suggested a collaborative arrangement between organisations representing those systems and the professional bodies which regulate the leading components of these traditional systems; namely, acupuncture and herbal medicine.

The structure suggested in the report also provides a useful basis for improving the regulation of complementary therapies. Those practising the complementary therapies listed in Group 1 are already regulated on a statutory basis, or are recommended to give serious consideration to applying for regulation. The acupuncture and herbal medicine professions were specifically recommended as early candidates for statutory regulation under the Health Act 1999.

In view of the potential public health risks posed by unskilled practitioners of acupuncture and herbal medicine, the Government accept that statutory regulation of these therapies is desirable and should be achieved as soon as practicable. Officials have held preliminary discussions with organisations representing both therapies.

Other groups need to progress to the point where each therapy has a single organisation to regulate it on a voluntary basis. In time, the Government would be prepared to consider extending statutory regulation to some therapies in Group 2. But a good case would have to be made for each candidate; most of its practitioners would have to support this move; and there should be a single organisation to regulate the whole profession concerned.

The noble Lord, Lord Hodgson, referred to the Bill introduced by the noble Lord, Lord Alderdice, on the regulation of psychotherapists. The Bill is currently going through Parliament. The noble Lord suggested that I had tended to kick it into the long grass. The Government would support the statutory regulation of psychotherapy, but they were not persuaded that the model that has been proposed is the best way of achieving that. I am sure that we shall continue those discussions with the noble Lord, Lord Alderdice. Whatever may develop from them, the ability and efforts of the noble Lord, Lord Alderdice, in pulling together the various groups of psychotherapists was an achievement which, I admit, was not within the ability of the National Health Service.

What really matters is that, if complementary medicine practitioners are to be recognised as respected members of the caring professions, each of their professions must put in place a sound regulatory framework that will raise standards and protect patients. We have emphasised that in our response. We also emphatically agree with the report's recommendation that only those therapies which are fully regulated could be made available to National Health Service patients.

I should tell my noble friend Lord Winston and the noble Lord. Lord Soulsby, that it will take time to put strong regulation in place in all therapies. However, improved sources of information will educate the public as to the qualifications and regulation to look for in practitioners. At the same time, we have made available a guide on continuous professional development for practitioners, which should help them audit their practice with the guidance of their professional body.

Regulation of products is also important. Following extensive consultation with UK interest groups, we are now working with our partners in Europe on proposals for a directive on traditionally used medicines. The aim is to provide a framework for the effective regulation of traditionally used medicines, including herbal remedies, balancing public safety and consumer choice.

In fairness, I turn to the question for the need to recognise the Ayurvedic and traditional Chinese herbal medicines, as raised by the noble Lord, Lord Walton. In the European discussions on the draft traditional medicines directive, the UK is arguing that that measure should take account of the herbal traditions from outside the European Union. I hesitate to say this to the noble Lord, Lord Pearson of Rannoch, although I know that he will take it in the right spirit, but it is possible that Europe could come to his rescue on this particular issue.

An important function of professional regulation is that of setting standards for training and education. More work needs to be done in setting standards for the training of new complementary medicine practitioners, and of existing healthcare practitioners who want to practise complementary medicine. It is important for the professional bodies involved to agree clear standards, and to work closely together in the process.

The Government agree that all qualifications in complementary medicine should be assessed by the regulatory body that grants the licence to practise the therapy concerned. We should also welcome more standardisation of qualifications within each therapy. This would simplify the recognition of qualifications and make it easier for members of the public to judge the qualifications that practitioners claim to offer.

Healthwork UK, as the national training organisation for the health sector, has a key role to play in developing national occupational standards in complementary medicine. We have now commissioned that body to undertake further work in the area, which should help clarify the standards to which new practitioners should be trained before they begin practising.

Mention has also been made of the need for more research in complementary medicine. However, I believe it is understood that what complementary medicine needs is better, not just more, research. The most popular therapies need at least to be underpinned by more definitive, high-quality research evidence. That will take time to produce, but the opportunities are there for researchers to train in the techniques that they will require. The academic expertise is beginning to come together to help co-ordinate research efforts. However, we recognise the need to develop further research capacity in this field. We shall, therefore, be asking the National Health Service Research and Development Workforce Capacity Implementation Group to consider research capacity development needs in complementary medicine, and how these might be met. One option to explore is that of funding fellowships within the department's priority areas, including funding for pilot projects.

The noble Lord, Lord Colwyn, and other speakers, mentioned the issue of financing. Indeed, the noble Lord even suggested that it might be my way to fame, but I doubt that very much. I can tell the noble Lord that the exact amount of funding will depend on the outcome of the early discussions with those who can take forward such matters. As regards what the Government are likely to do in this area, I can tell the noble Lord, Lord Smith of Clifton, that we have received written strategies for taking forward research in complementary medicine from three organisations. We find it very encouraging that people are now looking at research in a strategic way. Our response addresses many of the proposals in those strategies, but we shall now go on to discuss with those organisations how to develop and take forward a common strategy for research in complementary medicine.

In the meantime, the Department of Health welcomes applications to fund research projects which include complementary medicine provided that they offer a clear link to one of the NHS priority areas. For example, the NHS Cancer Plan identifies the need to review the evidence of complementary therapies in relation to supportive and palliative care and, as our response states, the department will be seeking high quality proposals for work in this area.

I fully accept that information on complementary medicine, such as it is, needs to be carefully synthesised and made available in a more user-friendly way both to the wider public and to health professionals. The provision of better information for patients is a key feature of the NHS Plan, and work is now in hand to include complementary medicine in the information that will be made widely available.

Our response makes it clear that we expect the National Electronic Library for Health and NHS Direct to be the main conduits through which information on complementary medicine will be made more widely available in the future.

NHS Direct Online already includes some basic information on complementary medicine, and is planning to run a specific feature in April this year. The possibility of including electronic links from NHS Direct Online to other reliable sources of information will also be considered.

To complement that, the Government have already commissioned the Foundation for Integrated Medicine to produce an information leaflet on complementary medicine for patients and the public and provide supporting electronic information.

Complementary medicine can, of course, play a part in treating NHS patients. But if complementary medicine is to be accepted alongside other forms of NHS treatment it must meet the same standards. It must be clear and realistic about the contributions that it can make. It should work in an integrated way with other forms of treatment. Effective regulation of practitioners is essential, as is an appropriate evidence base for the treatments that they offer.

The noble Lord, Lord Walton of Detchant, made a point about primary care groups. We are aware that some concerns have been raised about the impact that these groups are having on the amount of complementary medicine available via GP practices. We agree that the situation should be monitored and the medical care research unit at Sheffield University is already doing that on our behalf.

The Government have issued a basic information pack on complementary medicine for primary care groups. The pack focuses on those therapies which are most commonly encountered in NHS primary care and offer advice as to how they might be incorporated into local services. The feedback that we have received suggests that many found it helpful.

Towards the end of this year the National Institute for Clinical Excellence will publish evidence-based guidance to the NHS on supportive and palliative care for cancer patients. The guidance will aim to improve the quality of life for all those affected by cancer. One of the issues that NICE is considering is the potential benefit that cancer patients can derive from complementary therapies.

The Committee's report sets out an authoritative agenda for change. Some of the complementary medicine professions have begun making the improvements they need to secure a more lasting place in public affection. They must now drive forward these changes more decisively, and the professions which have still to put those changes in hand must do so more urgently.

I close by reiterating the Government's welcome for the report. We believe that its main recommendations will do much to protect the interests of patients and consumers. We have been as supportive as possible in our response to the report's recommendations and I hope that that will help to reinforce them. The report will undoubtedly be regarded as a benchmark for complementary and alternative medicine for some years to come.

My Lords, it is customary on these occasions when winding up to spend most of one's time responding to what the Government have said about one's report. One of the good reasons underlying that principle is that—I speak from experience in having presented several such reports in the past—on many, many occasions the Government have not found it possible to accept the recommendations set out by a Select Committee. It is rare, in fact unknown in my experience, to find that every single recommendation set out in a Select Committee report is approved and accepted by government. For that reason I can only express on behalf of the sub-committee, which I had the privilege of chairing, our gratitude for the fact that the report has been so greatly welcomed by government.

As the noble Lord, Lord Burlison, has said, it is crucially important that regulatory frameworks be devised for those professions in CAM which are not yet properly regulated in the interests not only of the professions but, above all, in order to protect patients.

I shall return to one or two points made by certain members of my sub-committee. I am deeply grateful for their support, as I said at the outset, and for their endorsement of the principles underlying our report. I offer to the noble Lord, Lord Winston, my thanks for his support and endorsement as chairman of the parent Select Committee. Many of us are sad that his term of chairmanship of that Select Committee has come to an end.

I say to the noble Lord, Lord Soulsby, that it is important—as he rightly said—that safety is one of the paramount features of our report. The noble Lord stressed that. Reference was made to the crucial importance of regulating herbal medicine. That relates to a point made by the noble Lord, Lord Pearson of Rannoch. That was one of the cornerstones of our recommendations.

I shall return to the comments of the noble Lord, Lord Pearson, in a moment. I can only repeat that we recognise to the full that in Ayurvedic medicine, as practised for centuries in India and in ancient Chinese medicine as practised for centuries in China, many valuable herbal remedies have been identified and many of them have been introduced into western medicine with great success and great efficacy. Indeed, the seminar on Ayurveda that we attended at the Indian High Commission was not concerned with the principles set out in some of the documentation relating to the diagnostic capability of Ayurveda and the principles underlying the practice, but presented to us the scientific results of carefully designed trials of single herbal remedies which would certainly fall into our Group 1 of herbal medicine. That was stressed at the seminar. We would do exactly the same in relation to ancient Chinese herbal remedies. Our problem is that some of those consist of huge concoctions of herbal preparations where it is not easy to obtain consistency and where it is very difficult to determine the active principles involved. But as Ayurveda and Chinese medicine begin to develop the same kind of procedures as are practised now in western herbal medicine clearly those preparations will come into our Group I. There is no doubt of that at all.

As the noble Lord, Lord McColl, said, acupuncture has become an important part of western medical practice. But, on the other hand, as regards the ancient Chinese system of depending upon changes in the pulse resulting from acupuncture and of the identification of acupuncture points corresponding to organs of the body, there is no scientific or credible evidence to support that concept. We encountered difficulties on those issues and on the diagnostic capabilities of ancient Chinese medicine and Ayurveda which is why we classified them in Group 3.

The noble Lord, Lord Smith, spoke about a non-patronising attitude of the conventional medical profession. The report demonstrates that patronising attitudes are a thing of the past. Equally, as the noble Lord made clear, we were aware of the sensitivities involved in analysing the situation.

The noble Lord, Lord Turnberg, stressed the crucial importance of research. The Minister referred to that. We believe that the nature of these mechanisms and therapies are subject to examination by research. The noble Lord, Lord Pearson, and others will agree that there is not just the randomised double-blind control trial. That is still the gold standard in conventional medicine. There are other mechanisms of research. One can do sequential trials, comparing one remedy with another in sequence; one can do cross-over trials, comparing remedies by crossing over from one to another; and one can carry out trials comparing the best known conventional treatment against a complementary or alternative treatment. Many techniques of research are available. One of the cornerstones of the government response is their wish to see funding devoted from the government R&D budget to research fellowships to train complementary practitioners in research methods and to help them to associate in an integrated way with schools of medicine and other centres of excellence. My committee will greatly welcome that desire.

The noble Lord, Lord Colwyn, referred to the partnership between the doctor and the patient. The relationship between the patient and healthcare professionals is crucial. As the noble Lord said, much of what we learned about complementary and alternative medicine has proved to be effective, in particular (although not entirely) in chronic, degenerative and progressive diseases. There are circumstances where some complementary remedies have been shown to be helpful in acute illness. But many have worked best largely in the chronic disorders.

I felt a little uncomfortable—I fastened my jacket—when the noble Earl, Lord Baldwin, talked about the bulge of the elderly. But as he said, we were an elderly committee. That is perfectly true. On the other hand, we were people of experience not only in conventional medicine but also complementary and alternative medicine. The outstanding support of noble Lords as co-opted members, and their enthusiastic but critical discussion of the evidence, were enormously valuable.

The noble Lords, Lord Rea, and Lord Turnberg, stressed the placebo effect. We know that the placebo was the cornerstone of medical practice before the Second World War because we had at that time so few effective remedies in conventional medicine. But, as the noble Lord, Lord Rea, said, in conventional medicine, we have concentrated on compassion, communication, understanding, release of stress and on the management of the worried well—a group of people in whom complementary and alternative practitioners often produce such effective results.

The personal testament of the noble Lord, Lord Hodgson, was moving. His help and support for integration between conventional medical treatment and complementary treatment were one of the cornerstones of the report.

I am grateful for the comments of the noble Lord, Lord Haskel, about my memory. I am grateful for the support of the report in general terms by the noble Lord, Lord Howie. I clearly remember our discussions about whether the noble Lord would wish to table an amendment. He may remember that we agonised over a specific section of the report; the noble Lord had an alternative to offer. Before lunch he indicated that he would wish to propose an amendment, the procedure for which is set out in the Companion to the Standing Orders. The committee agreed to return to the discussion after lunch, by which time, I regret to say, the noble Lord was no longer present in the Committee.

My Lords, that was when I gave in.

In any event, my Lords, I am very grateful for the noble Lord's support and I appreciate the points that he made. He made a number of comments about spiritual healing, which was one of the disciplines about which we had some difficulties and anxieties. The same applied, to some extent, to homoeopathy, although it has been practised in the National Health Service for many years. Some of the scientists who gave us evidence said that they could not understand how a remedy that did not contain a single molecule of active substance could work, yet the noble Lord, Lord Soulsby, and his colleagues were able to produce some evidence that homoeopathic remedies worked in the animal kingdom, where it was difficult to see that the placebo effect could be active.

Those are some of the problems that we faced. Throughout, we were aware of the words of the Bard:

"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy".

Some of what we learned was not easily subject to scientific explanation, but nevertheless required further validation and investigation. We were concerned to find no fewer than 12 UK organisations purporting to support healing and spiritual healing. We had no concrete evidence, although we learned of certain trials that had failed to demonstrate any effect. We wished to give warm support to regulation and further investigation in that area.

We are grateful to the noble Lord, Lord Clement-Jones, for the welcome that he gave on behalf of his colleagues to the report. He is right that there has been a sea change in attitude on the part of the medical profession towards complementary and alternative medicine. The situation now is quite different from what the British Medical Journal published 20 years ago.

The noble Lord, Lord McColl, rightly told us that the evidence base of some conventional medicine—indeed, much of it—is still weak. He gave us a number of important examples. He stressed, as we did, the role of the GP gatekeeper as regards access to complementary and alternative medicine in the NHS. We were certain of the crucial importance of that. As a surgeon, the noble Lord knows that millions of dollars have sometimes been spent on research into various aspects of conventional medicine. He will remember that millions of dollars were spent on trying to discover whether, after a stroke, an intracranial-extracranial bypass made any difference. Many surgeons believed that it did, but after five years of investigation it was shown that that procedure, which is no longer performed, was ineffective. Those lessons from conventional medicine need to be taken on board as the whole field of complementary medicine is studied.

Finally, I am grateful to the noble Lord, Lord Burlison, for pointing out one important aspect of our report that I did not stress before. Herbal medicine needs closer regulation. We recommend that it should become regulated under the Health Act. The Government have confirmed that. The important point is that herbal remedies can never achieve the same standard of safety and regulation as is necessary in standard pharmacology, but under the European directive they require much closer and more effective regulation than exists at present. We are glad that the Government have confirmed that view.

I do not propose to speak any longer except to say that it has been a privilege to have chaired the inquiry and I am grateful for the warm response given by the House and for the kind things that my colleagues have said. We are particularly grateful to the Government for their positive response to our recommendations.

On Question, Motion agreed to.

rose to move, That the draft order laid before the House on 16th March be approved [11th Report from the Joint Committee].

The noble Lord said: My Lords, I shall explain the purpose of the order, mention some of its key features and draw the attention of the House to some of the key exemptions. In my view, the provisions of the order are compatible with the convention rights within the meaning of the Human Rights Act 1998.

Section 21 of the Financial Services and Markets Act restricts the promotion of financial services unless they are made or approved by an FSA-authorised person. The order defines which financial services are to be subject to that restriction. That is in Schedule 1 to the order.

The order also defines the circumstances in which promotions are exempt from the restriction. There are 60 different exemptions, in some cases applying to the person making the promotion—for example, a passive communicator of data such as the Post Office—and in others to promotions made to certain persons, such as investment professionals. Whether, and to what extent, many of the exemptions apply depends on whether the promotion has been sought by its recipient; in the language of the order, that depends on whether it is solicited or unsolicited. The immediacy of the promotion—again, in the language of the order—depends on whether it is in real time or non-real time.

First, the order consolidates existing restrictions on financial promotion. There is a single restriction on financial promotion under the Act, and a single set of exemptions under the order. Secondly, the order reflects the pace of legislative and technological development. It focuses on the content of a communication rather than on the medium through which it is made. That means that it will not become outdated as new methods of communication are used to promote financial services. As secondary legislation, the order can be updated relatively easily. However, noble Lords should be clear about the fact that any proposal to extend the financial promotion restriction in circumstances in which it did not previously apply will require a statutory instrument subject to the affirmative resolution procedure. Unlike some of the legislation that it replaces, all the boundaries of the financial promotion restriction will be set by Treasury Ministers, who are accountable to Parliament, rather than by the regulator. Thirdly, the order maintains, broadly speaking, the scope of the existing financial promotion regimes.

Let me turn now to two of the key exemptions under the order. The first of these is our proposed exemption for journalists. That has been the subject of much comment. Let me take this opportunity to consider a couple of its aspects. First, it is, as I have just said, an exemption. What we have done is to exempt promotions by journalists precisely because we do not think that it is the role of financial services legislation to regulate responsible financial journalism. As the beneficiaries of an exemption, journalists will not be subject to the financial promotion restriction. That point has often been lost.

Particular attention has been paid to a condition that we have set for the exemption to apply; namely, that, if a journalist promotes a share in which he or she has an interest, that interest is required to be declared. It is a condition for the exemption to apply. It is not in any way a control on what journalists write. Nor will the condition even impinge on a journalist when he merely writes about a company, even if he has shares in that company. The condition will need to be met only if a journalist makes a promotion; that is, an invitation or inducement to engage in investment activity and he or she is likely to—not just "may"—benefit financially.

The Government's objective in introducing the condition for disclosure of interest by journalists was to ensure that consumers were not misled by promotions by a journalist of shares in which the journalist has an interest. That objective remains. We have also made it clear that we will consult further on how that objective can be achieved; there are other ways of achieving it in addition to the disclosure condition that is in the order. In particular, following consultation with the Press Complaints Commission, the Government are satisfied that new guidance on the PCC's code of practice, which was published on 19th March, will adequately protect consumers from being misled. The order now reflects that view. Having spoken to the noble Lord, Lord Wakeham, earlier this evening, I can confirm that that is the PCC's view. It also disapplies the condition for any publication that has systems and procedures in place to prevent promotions without a disclosure of interest. I should make clear that, in light of our commitment to further consultation, we welcome discussion with other relevant regulatory, or self-regulatory, bodies on that issue. Indeed, discussions have already started.

We have made some important exemptions affecting the territorial scope of the financial promotion restriction. We seek a regulatory framework that does not put in place unnecessary or over-burdensome barriers to cross-border financial promotions. In the EU context, that means a "home state" regime, regulation by the UK of promotions from the UK to overseas but no additional restrictions on promotions from other members states to the UK.

The Government have listened to a large number of representations that moving now to a system of home state regulation, in the absence of moves to do so elsewhere, would be over-burdensome in imposing dual regulation on UK firms. We have therefore provided an exemption for most promotions from the UK to overseas. However, I should make it clear that our commitment to a home state regime remains. We will seek this House's approval of legislation to implement a home state regime as and when that is developed. In particular, we will as necessary seek approval to amend this order to implement the forthcoming e-commerce directive before it comes into force next year.

We will also impose a home state regime if it is clear that that is required for reasons of consumer protection. We would if necessary seek approval to amend this order to require all promotions to a certain country or of a certain type to be approved by an authorised person.

As I said at the outset, there are 60 exemptions to the financial promotion restriction. I do not want to try the patience of the House by describing all of them. I have restricted detailed comments to how we have proceeded in respect of journalists and on territorial scope and I hope that is acceptable to the House. I commend the order to the House.

Moved, that the draft order laid before the House on 16th March be approved [11th Report from the Joint Committee.]—(Lord McIntosh of Haringey.)

My Lords, I thank the Minister for his explanation of what is a complex and far-reaching order. I begin by declaring an interest. I am a director of the Securities and Futures Authority, one of the self-regulatory authorities that is going to be swept up in the new Financial Services Authority. My term of office ends on 31st March—two days from now—but as of this moment I remain a director.

I have a couple of specific points on which I should like the Minister's clarification. However, in view of the volume of statutory instruments, and particularly the length and complexity of this one relating to the Financial Services and Markets Act, perhaps I may seek his view on just one brief general point.

The regulatory objectives of the Act are set out in Section 2(2) as being, inter alia, the establishment of market confidence and the protection of consumers—both worthwhile objectives. But it lays on the authority a number of other requirements, notably in Section 2(3)(d):

"The desirability of facilitating innovation in connection with regulated activities".

and paragraph (e),

"the international character of financial services and markets and the desirability of maintaining the competitive position of the United Kingdom".

This statutory instrument alone is 74 pages long and we must constantly think how we are reconciling those sets of objectives. I tabled a Question today to the Minister asking him how many statutory instruments we will need to pass through before N2 comes about in October and how far we are through that process.

The volume of legislation now hitting financial services is very great. By and large, I am not concerned about big firms; they can look after themselves. If necessary, they will just decamp and leave London. But I am concerned about small firms; and for a small firm to try to pick the bones out of this legislation, let alone the many other instruments coming through, is a grave task indeed. Smaller firms have been the City's lifeblood. They are the ones which often provide new approaches and new services and, as such, they nip competitively at the heels of their larger, lumbering brethren.

But for the most part regulators do not like smaller firms; they represent risk. Above all, they represent risk to the regulator's career when things go wrong. It is much easier to deal with fewer and larger firms which can be more easily regulated. The general view of regulators is to put up a high barrier and have a bias to say "no". If that means that small firms are put out of business, are not formed, or do not begin, so much the better.

Against the background of this instrument, which is complicated and difficult to understand, and the volume of others coming through, I take the opportunity to urge the Minister to keep the issue of preserving London's competitive, innovative edge, as required by the Act, at the forefront of his mind as the flood of statutory instruments continues and, where possible, to restrict, reduce and eliminate them. I hope that during the course of the next few months the Minister will not mind if I remind him of that from time to time.

I turn to the specific statutory instrument before us. I want to ask the Minister about the cold-calling provisions. Cold-calling is the uninvited or unsolicited attempt to sell securities to individuals. It is a pernicious practice which can permit the greedy and predatory to prey on the innocent and unsophisticated. I am pleased to see that the statutory instrument contains the concept of the certified high net worth individual. That is a welcome flexibility which allows people who know what they are doing in the securities markets to be approached with plenty of opportunities.

I turn to the non-expert individual and refer to article 6(a), which relates to approaching individuals. The market practice tends to operate in the following way. An individual salesman will call a non-expert and invite that person, not to buy securities or any financial instrument, but merely to meet the salesman for a cup of coffee to discuss his financial affairs. The salesman will take the initiative that the meeting never takes place in the individual's house; he will ensure that the individual is asked to come somewhere, so he has made the effort to travel. It is only then, when the individual has made that move that any transactions are entered into or attempts to sell are engaged in. That practice is not dissimilar to some of the pernicious ways in which timeshares were sold.

It is difficult to understand whether invitation or inducement to engage in investment activity in article 6(a) covers cases of that nature. Would it cover the case where a neutral telephone call is made, as a result of which an individual goes to meet a salesman for a cup of coffee and activities selling financial services follow? If not, there is a potential major hole in the statutory instrument.

I refer the Minister to Article 36(b), which relates to activities conducted in other states within the European Community. This relates to telephone calls into the United Kingdom under the host state regulation, to which the Minister referred in his opening remarks. Some of the worst problems of cold-calling in the UK markets have occurred from boilerhouses established in Amsterdam, in which there are batteries of telephones with salesmen operating on innocent people in the United Kingdom. Those have now largely been closed down. However, they have moved elsewhere. There is evidence of similar operations in Athens. I am not clear whether under the host state regulation we shall be able effectively to protect unsophisticated UK investors from practices of that nature coming from within another member state of the European Union.

Finally, I turn to Article 62 which deals with the operation of a lighter regulatory regime on the sale of a company with a small number of shareholders. Article 62(3)(c) refers to the lighter regulatory regime being available where the shareholders include a group of connected individuals. That is defined in Article 62 (4)(a)(i) as including a director or manager of a body corporate. I want to know of the Minister why that definition does not include the word "employee", too. It would then read,

"a director, manager or employee of a body corporate".

In such cases we are now often considering not management buy-outs but employee buy-outs where large numbers of staff participate in the purchase of a firm and in due course want to realise that investment at a profit. The regulations as drawn mean that an employee buy-out, where a large number of employees own the shares, would not be able to take advantage of the lighter regulatory regime offered in Article 62.

I am sorry to have spoken at length and in such detail. I understand that the Minister may want to write to me subsequently because I have raised detailed questions. However, they are important matters for the City of London, for the firms which work there, and, last but not least, for the investors and the clients who use those services.

My Lords, the Act is long and complicated and the order is detailed. Fortunately, it is not very controversial. It was not very controversial in the other place and, subject to a number of questions being asked, I trust that it will not be very controversial here.

It seems to me that the Act is being implemented in a sensible way, as one would expect from the FSA in its present form. It is sensible that three sets of regulations should become one. The new exemptions appear to be sensible: the high net-worth investors; the mere conduits; the exemption of communications by content not the medium; and the exemption of journalists.

I have only one question to ask the Minister. It relates to Article 12, the issue of territorial scope. I am not quite clear where we are on the question of mutual recognition. I understand that if there is no mutual recognition, we do not regulate promotions from the UK to overseas in order to avoid a dual burden. I also understand that if there is dual recognition, we do regulate it but we do not regulate promotions from overseas into the United Kingdom. Is mutual recognition a regime which will come into being in total when everyone has the necessary regulation, or will it be introduced gradually? If so, how will it work? How will the regulations be amended?

I am a little puzzled by one comment the Minister made. He said that the Government will also impose a home state regime if it is clear that that is required for reasons of consumer protection. Does he mean that even if the system of mutual recognition is generally in place we shall disregard it because we believe that one of the members of the EU does not have an adequate system of home regulation? Is that what it is about? That seems to be totally contrary to the spirit of mutual recognition as it is envisaged for financial services. I did not understand that phrase in the Minister's speech and I should be grateful if he could explain it.

My Lords, we are pleased to see that the Government have responded positively to a number of suggestions in respect of their earlier draft. However, there remain some outstanding matters which give us cause for concern.

As with the previous orders, my approach will be to propose particular amendments that I would have tabled had the rules of your Lordships' House permitted me to do so. I comfort myself with the knowledge that the Government have allowed themselves enough time to produce a further revised order to accommodate the amendments that I propose.

I turn first to Article 12. We welcome the Government's decision to drop the home state regulation of financial promotion communications where they are received outside the United Kingdom. We also accept the need to place some restriction on unsolicited real time communications, or, more colloquially, cold calls.

However, the exemption for cold calls to overseas recipients still depends on the communicator not carrying on the same business in the United Kingdom. If he does, he is prohibited from making them. We believe it is irrelevant that the communicator carries on the same business in the United Kingdom. If he does so, he is likely to be authorised under the FISMA, in which case the financial promotion restrictions would not apply at all. The importance of widening the exemption is that a financial services firm making a communication from outside the United Kingdom would not be subject to the FSA's financial promotion rules if, as the FSA has indicated, it will not apply those rules to exempted financial promotion communications.

Alternatively, a person may lawfully be carrying on in the United Kingdom a business which involves controlled activities to which the financial promotion restrictions apply, even if he is not authorised under the FISMA. That is because a controlled activity includes not only regulated activities but also activities which would be regulated activities apart from any exemption. Even if an exemption from the need for authorisation applies, the communication may thus, none the less, still be a communication relating to a controlled activity—and so subject to the financial promotion restrictions.

Accordingly, in paragraph (2)(b) of Article 12 the words,

"and which is not carried on in the United Kingdom",

should be deleted.

We also accept that there should be proper procedures to prevent the accidental transmission of exempted communications to non-permitted recipients in the United Kingdom. However, as the prohibition is extended to dealings with close relatives, or group companies, it is important to restrict the prohibition so that it applies only in relation to the communication concerned. For example, a group company may be entitled to make its own communications to the recipient if it was previously a client. Accordingly, in line 3 of Article 12, after the expression,

"engaging",

we propose the insertion of the expression,

"(as a result directly or indirectly of that communication)".

We agree that a communication will still he treated as directed only at persons outside the United Kingdom, even if it is also directed at permitted recipients in the United Kingdom. However, we believe that it would make much more sense to the reader if it is made clear in the order that the permitted recipients are in the United Kingdom. Accordingly, in line 2 of sub-paragraph (a) of paragraph (5) we recommend the deletion of the expression,

"falling",

and the substitution of,

"who are in the United Kingdom and fall".

Similarly, in sub-paragraph (b), after,

"high net worth persons",

we propose the insertion of,

"in the United Kingdom".

The condition that a communication must not be acted upon by persons in the United Kingdom is supposed to be amended by paragraph (6) of Article 12 so as to allow for the fact that permitted recipients in the United Kingdom may none the less act on it. However, sub-paragraph (b), on its true construction, means that the communication must indicate that it cannot be acted upon by persons who are not permitted recipients, even if those persons are outside the United Kingdom. Instead of extending the prohibition to cover non-permitted recipients outside the United Kingdom, the prohibition should apply only to these non-permitted recipients if they are in the United Kingdom.

In other words, the good intentions of paragraph 6(a) are undermined by the unintended drafting effect of paragraph 6(b). As things stand, the paragraph now covers only individuals outside the United Kingdom if they are high net worth persons.

Accordingly, we propose in sub-paragraph (a), line 2 of paragraph 6, after,

"all persons".

to insert,

"inside the United kingdom",

and in sub-paragraph (b) to make the following amendments: (a) in line 2, delete,

"or by",

and substitute,

"unless they ale";

(b) in line 3, delete,

"do not";

(c) in line 4, delete,

"not".

I turn now to Article 13. The exemption here applies to communications made by a recipient of an investment service. It should cover corporate venturing—for example, advertising the fact that the communicator has money available to invest in startups. That is something which we know that the Chancellor of the Exchequer wants to promote. If in the Minister's view the exemption is not wide enough to cover corporate venturing, we urge that such an exemption is provided.

So far as concerns Article 15, we do not understand why the exemption for communications consisting of introductions to FISMA-authorised or exempted firms only applies to so-called real-time communications. If the exemption is so restricted, it means that. if someone writes a letter to effect the introduction, he will be committing a criminal offence. The previous draft of the order did not have any such restriction.

I turn to Article 18. It is sensible to provide an exemption to those who merely publish communications written by someone else, such as newspapers and Internet servers. However, the exemption should apply even if the principal purpose of the business carried out by the conduit is not, as presently required, transmitting or receiving material provided by others—for example, a newspaper or Internet server, such as Reuters, communicates both its own news items and information supplied by other persons.

We also believe that two other conditions to this exemption are too restrictive. Clearly, the communication should be mainly devised by someone other than the conduit. However, to say that it must be wholly devised by that other person may mean that the exemption will not apply if the conduit—for example, for reasons of space—changes only one or two words. Moreover, although it is right to provide that the conduit should only exercise control over the contents of a communication in certain specified cases. it must be inappropriate to provide that acting at the request of a regulator should only provide an exemption where the regulator is actually empowered to make the request. That would throw the risk of a regulator acting beyond its powers wholly on the conduit which, surely, the Minister must agree, is unfair.

Accordingly, we ask the Minister to make the following amendments to Article 18: first, in paragraph 2(a), line 1, delete the words after,

"carried on by him".

and, in paragraph (2)(b), delete the words,

"wholly devised by another person"

and substitute,

"mainly devised by another person who is identified in it and the communication clearly identifies that that is the case".

Secondly, in paragraph (3)(b), line 1, after "which", we propose the insertion of,

"that person reasonably thinks".

I now turn to Article 30. This is an exemption allowing persons outside the United Kingdom to respond by telephone, or, as they say nowadays, other real time communication, to persons in the United Kingdom who have asked him to contact them. However, as currently written, the exemption does not apply if the overseas communicator carries on the same investment activities from a UK branch. This means that, if he has a UK branch, he cannot carry on a conversation with a person who telephones him from the United Kingdom, even if the financial promotion relates to his non-UK business. We do not understand why somebody who is outside the United Kingdom cannot talk to somebody who is inside the United Kingdom, and who wants to talk to him. merely because he is carrying on the same activity in the United Kingdom.

Accordingly, in the definition of "overseas communicator", we propose to delete everything after "means a person who" and to substitute "makes the communication", and then move down after "communication" the last two lines of paragraph (1).

Your Lordships will be relieved to hear that my final remarks are addressed to Article 48, which concerns high net worth individuals. The exemption for communications to certified high net worth individuals should be expanded to apply to communications to recipients who, the communicator reasonably believes, meet the financial tests for high net worth. This is the only way to ensure that the communicator does not commit a criminal offence when he tries to find out whether the recipient falls within the exemption. If the exemption applies only if he really is a certified high net worth individual, the communicator will be committing a criminal offence if he gets it wrong—because experience shows that most high net worth individuals will not, without knowing what the investment opportunity is all about, want to indicate that they are, indeed, properly certified.

Accordingly, in paragraph (1)(b) of Article 48, we suggest the deletion of the word "certified" and the substitution of,

"person the communicator reasonably believes to be a",

and after "individual" the insertion of,

"because he falls within paragraph (3)(c)(i) or (ii)".

In addition, at the end of paragraph (1)(d), I suggest the insertion of,

"and (e) results in the recipient engaging in the investment activity referred to in it if he signifies to the communicator that he is a certified high net worth individual".

The certificate has now been amended so that it relates to future promotions. However, the change has not been made throughout the certificate. Accordingly, further changes ought to be made to paragraph (2)(b) to that effect. Article 50, which deals with so-called sophisticated investors, ought to be amended to the same effect.

I apologise for inserting so many oral amendments in my remarks, but it is a sad fact that your Lordships are unable to amend orders. In these days of skeleton legislation, often the most important rules appear not in the Acts themselves but in the regulations. I hope that one day your Lordships will think that these matters are sufficiently important to change the rules of the House so as to permit amendments in the circumstances of tonight's order.

My Lords, I am grateful to all noble Lords who have taken part in this debate. Perhaps I may begin by saying to the noble Lord, Lord Hodgson, that I very much appreciate and sympathise with the point he made about small firms and the need for them to be given an opportunity to understand the regulations to which they are subject. If I then go on to say that we have already tabled 15 statutory instruments and that there are likely to be a further 50 instruments, I do not think that he will be much reassured.

I am not sure that I agree with him that regulators tend to fear that infringements will be made by small firms. If I think of some of the debacle regulations under the previous regime, I first call to mind BCCI and Barings rather than any small firms which may have committed infringements. That may not give the noble Lord much comfort, but in my view that is the truth of the matter.

The noble Lord asked me about Article 6(1) concerning cold calling. I understood him to say that he was appreciative of the definition of high net worth, although I do not believe that the noble Lord, Lord Kingsland, was appreciative in the same way. He asked me how cold calling would qualify in the case of an invitation to what appeared to be a neutral meeting outside the recipient's premises. According to the definition of when a call is solicited, it is solicited only if it is clear that the meeting has been requested by the customer, who knows that financial promotions are going to be made during the meeting or conversation. That is made clear in Article 8(3)(b) of the order.

The noble Lord also asked about Article 36(b) which concerns the protection of UK investors from other states in the European Economic Area. The article makes it clear that any promotion of that kind has to conform with FSA financial promotion rules which will provide the appropriate safeguards. I do not know the answer to his question about Article 62 as regards whether employees are included. I shall write to the noble Lord on that point.

I am grateful for what was said by the noble Lord, Lord Taverne. Clearly he has picked up one of the most important aspects of this order; namely, the question of the move towards home state from host state regulation. He asked me why I should have said that we would consider introducing home state regulation for the sake of consumer protection. If I understand his thinking, he is right to say that we are considering here a gradual move rather than an all-in-one move towards home state regulation.

On the issue of consumer protection, only when it is clear, for example, with "boiler room" operations from the United Kingdom, would we require these communications to be approved. We are dealing not only with EU member states in this regard, but also with promotions from third countries. The UK may not be able to question the adequacy of a regime set up under a Community instrument. It might want to scrutinise the adequacy of the regime in a third country.

I believe that I have already dealt with the issue of mutual recognition and how it will come in gradually. However, we want to manage the transition in a way which continues to protect UK consumers, to minimise the burden on business of double regulation and. as I said, to take into account the position of non-EU countries.

I shall turn now to the points made by the noble Lord, Lord Kingsland. I must say that, while I have heard of manuscript amendments, I do think that oral amendments go a little further. I think that the noble Lord will understand if I say that, to listen to amendments produced in such a way, does not encourage me to believe that I can understand them as fully as he would wish.

I have to make it clear at the outset that we intend this order to proceed as drafted. The noble Lord's comments and his oral amendments are on record in Hansard; I have no doubt that the appropriate authorities will pay attention to them. I shall try to respond to the points he made, if not to their drafting.

The noble Lord spoke, first, about the need for restrictions on cold calls; on unsolicited real-time communications. He suggested that the exemptions for cold calls to overseas recipients still depend on whether the communicator conducts the same business in the United Kingdom. Where unsolicited real-time communications are by a promoter who does no UK business and the recipient is also not in the UK, then, although the promotion may be,

"capable of having effect in the UK"—

perhaps because it relates to a UK investment—it is indeed exempt.

But where a promotion is made from outside the UK, is not directed at the UK but the promoter does do business in the UK, issues of consumer protection arise. A complete exemption would allow UK firms, or firms which operate in the UK, to avoid UK regulation simply by promoting UK products from a branch in another country. We do not think that that is acceptable. I would not accept the noble Lord's amendments on that basis.

The noble Lord, Lord Kingsland, then said that he hoped that Article 12 would provide that a communication would be treated as directed only at a person outside the United Kingdom even if it were directed at investment professionals and persons of high net worth. I can confirm that a communication can still be regarded as not directed at the United Kingdom even if it is directed at investment professionals and high net worth companies—but not high net worth individuals—in the United Kingdom. I can further confirm that Article 12(6)(b), on which the noble Lord suggested there was some doubt, should not be construed as meaning that promotion to investment professionals and high net worth companies outside the United Kingdom are outside the exemption for promotions to recipients outside the United Kingdom.

The noble Lord queried the drafting of the territorial provisions in rule 3(4) of the FSA rules. Section 145(3) of the Act—which he called skeleton legislation but I do not think anyone who was involved in the legislation last year would call it skeleton legislation—prevents the FSA from making financial promotion rules for authorised persons other than in circumstances in which, if the person were not authorised, he would contravene the financial promotion restriction. If the current draft of the FSA rules do not meet its requirement, they will have to be amended.

As to Article 13 and corporate venturing, I wish to make it clear that Article 13 is not intended to cover corporate venturing. The exemption in the article applies to communications made to one other person only.

Article 15 refers to an exemption for communications which consist of introductions to firms authorised or exempted by the Financial Services and Markets Act applying only to real-time communications. That is because there is a separate exemption in Article 28 for one-off communications, which should cover introductions to firms, which applies to all non-real-time communications.

The noble Lord suggested that the exemption in Article 18 should apply even if the principal purpose of the business carried on by the conduit is not that of transmitting or receiving material provided by others. Those who pass on promotions should exercise some due diligence in ensuring that the promotion is either exempt or has been approved by an authorised person. Organisations such as the Post Office or Freeserve, whose principal purpose is transmitting or receiving material provided by others, cannot he expected to undertake such due diligence for information which they transmit, but that does not apply to companies which, although they do not exercise control, are not merely passive transmitters. We think that it is appropriate that such companies which do not meet the principal purpose test should be required to operate a degree of due diligence or restrict their promotions to those who fall within one of the other exemptions.

The noble Lord suggested that the communication should be devised by someone other than the conduit—in other words devised wholly by the other person. He said that the provision could mean that the exemption could be challenged. What matters is the extent to which the communicator, under the provision in Article 18 in respect of promotion, selects, modifies or otherwise exercises control over its content. This could only be considered on a case by case basis. But if a communicator is more than a passive transmitter of information, then he is not a mere conduit.

The noble Lord suggested that it is inappropriate that in certain cases we provide that acting at the request of a regulator should provide an exemption only when the regulator is empowered to make the request. If the mere conduit acts reasonably in responding to the request of the statutory body but it later turns out that the body did not have the power to make the request, the mere conduit would be able to rely on the defence in Section 25(2)(b) of the Act:

"that he took all reasonable precautions and exercised all due diligence to avoid committing the offence".

The noble Lord then referred to Article 30 and queried why someone who is outside the United Kingdom cannot talk to someone who is in the United Kingdom just because the person outside the United Kingdom is carrying out the same activity within the United Kingdom. Articles 30 to 33 essentially replicate the position for overseas communicators in previous legislation. There is a risk of persons doing business in the UK avoiding UK regulation if they can simply locate their promotional activity in another country. People outside the United Kingdom who are also doing business in the UK can, of course, take advantage of all the other exemptions.

The noble Lord queried in some detail the definition of,

"certified high net worth individuals"

in Article 48. The whole point is that it is selfdefinition—that those who have chosen to be certified should receive these promotions, not all high net worth investors. Those who do not want them do not need to have them, because they do not need to go through the certification process. So we propose to retain the requirement that a third party should certify and that certification should be a prior condition for receiving a promotion. The same applies to sophisticated investors.

I hope that that has covered the majority of the detailed points raised by the noble Lord, Lord Kingsland. I do not believe that he has dented the wording of the regulation and I commend it to the House.

On Question, Motion agreed to.

House adjourned at twenty-two minutes before eleven o'clock.