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Baroness Cumberlege: My Lords, I am very grateful to my noble friend. He is right in that we owe a huge debt in this country to the number of people who serve as mental health managers. Sometimes they have not only a difficult but an impossible task to carry out. They are expected to make some very difficult judgments. I would like to be associated with my noble friend's comments.

Lord Finsberg: My Lords, is my noble friend aware that there is one point that worries me very much? I first became associated with mental health when I went over Friern Barnet hospital with Richard Crossman and another Jay, Mrs. Peggy Jay--a much underrated person. I saw those enormous buildings and it was a ghastly sight.

As a junior health Minister I had the responsibility for taking the 1983 Bill through the House. I could never be satisfied that the mechanism was there to ensure that some over-zealous doctor did not discharge a patient just because he had been told by a town hall bureaucrat that they could look after him. I always felt that that was not possible. I would like to know whether we now feel that this problem can be overcome. One of the reasons why people are still drifting around is the semi-promises given to hospital doctors which are not carried out.

Baroness Cumberlege: My Lords, I hope that psychiatrists are robust enough to follow their clinical judgment and that undue pressures are not put on them. It is very difficult for them because they have to balance human rights with containment and the interests of the patient coming first. There are also the interests of the general public to be considered. I believe that in time, with the care programme approach, more careful assessment and more appropriate facilities supplied for these people, not only in the community but with the 24-hour nursed beds, the crisis teams, the working of 24-hour community teams, intensive home support and a whole range of other services that need to be supplied, we will make the psychiatrist's job that much easier.

Baroness Jay of Paddington: My Lords, before the noble Baroness sits down, will she confirm that her reply to her noble friend Lord Mottistone about the five documents to be published did not include the full review of health authority mental health services, on which we understood the Statement was based?

Baroness Cumberlege: My Lords, I should have made that plain. It is actually sub-titled The Spectrum of Care.

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Housing Grants, Construction and Regeneration Bill [H.L.]

4.58 p.m.

Second Reading debate resumed.

Viscount Ullswater: My Lords, my noble friend the Minister has introduced the Housing Grants, Construction and Regeneration Bill in his normally clear and eloquent manner. He should be congratulated on presenting a complicated Bill in such a user-friendly manner. It contains important new provisions for housing grants. There is no doubt that action of the kind proposed in Part I of the Bill to help a local authority move from a requirement to approve mandatory grants to a more strategic, discretionary approach, is very welcome. Unlike the noble Lord, Lord Williams of Elvel, I believe that authorities should be free to decide their priorities in this regard.

These proposals should allow the same amount of investment and therefore maximise the impact on the repair of unfit dwellings. I understand that disabled facilities grants will continue to be mandatory. This Bill should make it easier for disabled people living with a relative to get grants.

I know from my own experience how pleased architects will be with Part III. They have been campaigning for some time to amend the Architects Registration Acts of 1931 to 1969. The proposals in the Bill will allow the profession to create a much smaller and more efficient body for the registration of architects. Demands on qualified architects become more complex and far-reaching every year. Statutory independent registration will assist in the development of the profession and with the protection of the public.

The proposals in Part IV will provide a single statutory basis for the single regeneration budget and are designed to assist good management of the Government's regeneration policy. I would have no quarrel with that.

However, it is on Part II that I should like to concentrate my few remarks. As we have heard from my noble friend, Part II concerns the construction industry and seeks to provide a framework for fairer contractual arrangements and better working relationships in the construction industry. That part of the Bill has its origin in the 1994 Latham Report, Constructing the Team, as indicated by the noble Lord, Lord Williams of Elvel, and as my noble friend commented in his introduction. It was an heroic effort by Sir Michael Latham to identify some of the problems in the construction industry, particularly the adversarial nature of the way in which it conducts business and the extent to which it resorts to litigation to resolve disputes. The Latham Report suggested that the industry should change the culture of the way in which it does business and move to one based on co-operation. At the same time, as we have heard, a target has been set to achieve a 30 per cent. real cost reduction by the year 2000 across the UK construction industry as a whole.

I should like to pay tribute to Sir Michael for the important contribution that he has made not only in preparing that important document, but in the continuing

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work that he now does as chairman of the Construction Industry Board, which was set up in February 1995. My right honourable friend the Secretary of State for the Environment acts as president of the CIB. That demonstrates the Government's commitment to support the desire of the industry to change its ways.

The provisions in Part II concentrate on two areas that were examined in the Latham Report and would apply to all construction contracts except those signed by a householder or those involving process engineering. It is important that the Bill includes public sector contracts as well as private sector contracts.

Clause 102(2) lists the exclusions from the provisions of the Bill. There may be some need to review that list in Committee, as some concern has already been expressed in the House that too many contracts would fall outside the scope of those provisions. Is it really intended, for instance, that, as the noble Baroness, Lady Hamwee, suggested, all maintenance contracts should be excluded? Should all off-site fabrication, so much a part of modern construction technique, be excluded? Will Clause 102(2)(c) put the construction of a supermarket outside the scope of the Bill?

The noble Lord, Lord Williams of Elvel, criticised Clause 102(4) which gives the Secretary of State powers to alter the provisions of the previous subsections. We shall have to wait and see what the report of the Delegated Powers Scrutiny Committee says, but the Secretary of State has to make any of those changes by order. I believe that Clause 140 would make those subject to the negative resolution procedure in Parliament, and in my view that provides a sufficient safeguard.

The first important proposal is contained in Clause 105 which introduces a right to refer a dispute arising under a contract for resolution by a speedy adjudication procedure under a scheme for construction contracts, unless the contract contains an equivalent procedure.

Although the scheme I mentioned will be brought forward by the Government under secondary legislation and the negative resolution procedure, there are on the face of the Bill what are intended to be the criteria for this speedy adjudication procedure involving timings and the duties of the adjudicator. It is interesting to note that at present even the GC Works 1 Edition 3 government contract, as I am advised, would have a faulty adjudication procedure judged by these standards, and the Def Con 2000 contract (just published) would not meet the criteria. Whereas I believe it to be quite right that the criteria should be spelt out on the face of the Bill, they will be underpinned by the scheme for construction contracts which has yet to see the light of day. It would be of great assistance to the House at Committee stage if a draft of the scheme for construction contracts could be available at that time, and I would ask my noble friend Lord Lucas to inform the House this evening if that will be the case.

The second proposal would require contracts to provide an adequate mechanism for determining the amount and timing of payments. The parties are free to agree the amounts of the stage payments and the intervals, but must include a final date for each payment.

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In Clause 105 the criteria for the procedure of adjudication are set out on the face of the Bill. Perhaps there is a case for the same treatment to cover "an adequate mechanism" and the criteria for this mechanism should be placed on the face of the Bill rather than having to delve into the scheme for construction contracts.

Furthermore, I should like to draw my noble friend's attention to the phrase in the Bill in Clause 106(2) which indicates that parties are "free to agree". I do not believe that phrase should be capable of interpretation to mean that small sub-contractors should be forced to agree wholly onerous conditions on a "take it or leave it" approach by a main contractor. Perhaps that condition in the contract could also be referred to the adjudicator. This is again a matter to be dealt with at Committee stage, and I would not expect my noble friend to deal with it tonight.

"Set-off" is a well-established principle in common law, but in the construction industry has been subject to grave abuse. Clause 108 sets out a way of regulating any form of withholding payments, including the use of the adjudicator under the scheme of construction contracts. A new right is given to contractors if a payment is not made without the proper notification. The contractor now has the right to suspend work on the contract after seven days' notice and can even leave the site without the risk of breaching the contract and the contract being terminated as would be the position at present. Another important change is introduced by Clause 110 which prohibits the so-called "pay when paid" clauses in contracts; or more strictly makes any such clause in a contract to be unenforceable except where a third party has become insolvent.

The Bill represents an important collection of improvements to contracts in the construction industry and I am pleased to learn that the industry is in agreement that this legislation is needed. One might ask: if it is agreed, why is there a need for legislation? However, it is important to achieve a level playing field for the industry and to make sure that all parts of the industry should be bound by these sensible provisions.

As the noble Lord, Lord Williams of Elvel, said, not all of the recommendations in the Latham Report have been agreed by the industry in time for this legislation. I believe that that is a matter for regret. In this context, I would mention three rather important areas where agreement has not yet been reached: trust funds, liability law reform, and compulsory latent defect insurance.

Trust funds are designed to make the cascade system of payment in the industry--client to main contractor, main contractor to subcontractor and so on--less exposed to the insolvency of one participant. If a main contractor fails the subcontractors will be treated as unsecured creditors for work they have already done. Bad debt insurance is possible but is another overhead cost at a time when most firms are trying to cut their overhead costs. However trust funds would tie up a huge amount of capital which could have a serious effect on the industry and the wider economy and clients still retain the worry that there remains a serious risk of paying twice in the event of a main contractor insolvency.

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With regard to liability law reform, I understand that that has been passed to the Law Commission for its consideration. I can only say I hope that it can proceed expeditiously for as regards the construction industry a mass of reports have dealt with this matter; from the 1988 Building Users Insurance Against Latent Defects known as the BUILD report to the 1989 report prepared by Professor Likierman entitled Professional Liability--report of the study teams published by HMSO and of course the more recent Latham Report of 1994 and even since then there have been three reports from the working group of experts set up under the "follow-up" to the Latham Report. There may be other professions not so far advanced in this matter, but that should not prevent the Law Commission concentrating on the gaps rather than going back to square one.

The problem with latent defects is that there remains an unacceptable level of defective work and "no-fault insurance" will do nothing to reduce that level. Even then, I understand that there are no satisfactory policies of insurance available at reasonable cost.

As I have indicated, the industry has not reached agreement on those matters and further consultation will be needed before progress can be made. In my view it would be premature to try to amend the Bill in the knowledge that consensus has not been reached.

I have been able to welcome these proposals put forward by the Government as sensible, timely and an appropriate response to the wishes of the industry as identified in the Latham Report. There may be one or two suggestions to be made at Committee stage to improve the Bill, as I have indicated. In the meantime, it seems to me that the Government and the industry are moving in the right direction.

5.12 p.m.

Lord Howie of Troon: My Lords, I should begin, under the current dispensation, by reminding the House, if it needs reminding, of my interest in the construction industry as a civil engineer of 50 years or so standing, although it is quite a long time since anyone paid me for doing any civil engineering. I approach the Bill as a civil engineer, since once a civil engineer, always a civil engineer.

I intend to deal with Part II and touch briefly on Part III. I welcome Part II, in part. I have a substantial number of niggles which I shall touch on only briefly this afternoon, but which will surely arise in Committee and at later stages of the Bill.

I must start with a welcome which might appear to many noble Lords as somewhat trivial, but it is not to an engineer. Nor will it be to architects. Clause 102(1)(a) makes a distinction between buildings and structures. That might not strike lawyers or other people as important, but it is significant to engineers. It is something that I have pressed upon the House many times since 1988. I achieved a considerable amount of success a year ago in the Environment Bill when the noble Viscount, Lord Ullswater, agreed with me that that distinction should be made. He brought it into that Bill. However, this is the first time that it has appeared in a Bill as originally drafted. I have the noble Viscount to thank for that small

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matter. I do so publicly, honestly, and openly, and if he is around later, I shall buy him a small, inexpensive drink on the strength of it.

What worries me about Part II is that large parts of it depend upon the scheme which has been mentioned and which appears in Clause 111. It is difficult to discuss a Bill sensibly if the scheme has not been published. I know that discussions are going on, and no doubt at some stage the scheme will be published. I believe that the scheme, or at any rate a substantial part of it, should be published before we come to the end of the proceedings on the Bill in this House and not at some later stage. We should know, at least before Third Reading, and preferably before Report, what the scheme is all about, because as it stands it could be about more or less anything. When will it appear? I have no doubt that we shall be told. When it appears we should be told--the noble Viscount mentioned this--how it is to be presented to the House and debated here.

I have one minor point to make. It is a Committee point which I am sure the noble Earl will remember in due course. I wonder why in Clause 111(3) the Minister who deals with the scheme is the Secretary of State, presumably for the Environment, in England and Wales, but the Lord Advocate in Scotland. I cannot remember who the Lord Advocate is for the minute, but I am sure that he is an excellent and eloquent man. I know what his job is but I cannot remember who he is. I am sure that he is a splendid fellow, but he is not the first man I would go to for advice on the construction industry. I am sure that some reply on that will be forthcoming.

I shall turn briefly to Clause 102. My noble friend Lord Williams of Elvel dealt with it fairly convincingly. The clause is, quite frankly, a shambles. It cannot be permitted to stand in its present form. We have a situation where, for example, tunnelling turns up in Clause 102(1)(e) as though it were a subsidiary matter. The Channel Tunnel is not a subsidiary matter. Tunnelling should appear in Clause 102(1)(b). It is a Committee point and it is one to which we should come. It is a Committee point, but it is typical of the shambles which Clause 102 represents.

The point that really worries me is the second part of the clause where the exceptions are set out. I spent a large part of my life as a young engineer designing structural steelwork: columns, beams, gantries, roof trusses and such things. They are all excluded. That is ridiculous. They cannot be excluded. I do not know how on earth anyone can exclude a nuclear power station. Perhaps I have misunderstood the Bill. It seems to me that nuclear power stations and some other things are excluded for some peculiar reason. The noble Baroness, Lady Hamwee, thought that it might be because some of them are privatised industries. I do not believe that the Government would approach it in such a manner, or do I? I am not too sure.

I turn to adjudication. The noble Earl said that adjudication was quite recent. He was right in a technical sense in that the word has been used only recently, but traditionally the adjudicator in the construction industry has been the engineer or the

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architect. I have been an adjudicator on many occasions dealing with disputes in the course of a contract. I have dealt with them all in my customary bumbling manner and I have hoped to produce a reasonable result at the end of the day. The idea of adjudication is not new, it is merely the name "adjudicator" that is new.

There is a problem with that clause because I am sure that the draftsmen are in total confusion as regards adjudication and arbitration. Adjudication is an interim process which takes place during the construction period, deals with disputes as they arise and reaches a resolution. However, it is not a final resolution because the contractor and the client can then go to arbitration. The difference between adjudication and arbitration is that the decision of the arbitrator is final and cannot be appealed against, which is not true of the activities of the adjudicator. The paragraph in Clause 105(4) which refers to the Arbitration Act should be removed because it demonstrates a mistake.

Furthermore, I am sure that the timescale given in the Bill for adjudication is wrong. It could apply to certain small disputes. However, anyone who has dealt with civil engineering contracts and is aware of the famous Clause 12 in the standard conditions of contracts of the Institution of Civil Engineers, which deals with unforeseen obstacles and circumstances in particular as regards foundation excavations, knows that no adjudication can take place within the timescale proposed in the Bill. That must be reconsidered.

I agree with the strictures of my noble friend Lord Williams as regards the Government's somersault on the registration of architects. However, I believe that for all their peculiarities of acrobatic activity the Government landed on their feet. They have got it right, subject to any reservations which the noble Lord, Lord Rodgers of Quarry Bank, may have. Whatever reservations he has I shall certainly agree with them.

I believe that the registration of architects is a good idea and although it is outwith the ambit of the Bill I would like to see a similar registration scheme applied to consulting engineers. I am not sure that the various engineering institutions will agree with me, but that is my final comment for which I hope the institution will forgive me.

5.22 p.m.

Lord Rodgers of Quarry Bank: My Lords, using a colourful image, the noble Lord, Lord Williams of Elvel, called the Bill a mishmash and a curate's egg. I assume that he meant a scrambled curate's egg. I should describe the Bill as a conglomerate which was crying out for demerger. If each part were floated on its merits, Part I might sink without trace, given the depressing analysis of it by my noble friend Lady Hamwee.

On the other hand, Part II, with all the reservations that have been made today, and Part III would find their backers and it is to those two parts that I wish to refer. I believe that they might be better as separate Bills but, nevertheless, I welcome them and commend the intentions behind them.

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I ought to say something that has not yet been said. Any discussion of the future arrangements for the construction industry and for architects who work within it must be prefaced by a reminder that we are not dealing with a confident and prosperous industry but one which has enjoyed few of the benefits of economic recovery and feels very worried indeed about its prospects.

I noticed, for example, that the CBI's economic situation report for January 1996 stated that a balance of firms in the constructions industry expect to cut back on investment in buildings.


    "Cuts on buildings are foreseen by all firm sizes, except those employing more than 5,000 staff who expect a very small increase".

Referring to building materials it stated:


    "The downturn in building material trends has intensified since October with both output and orders suffering a heavy fall, the biggest decline amongst the main sectors. This reflects the deteriorating climate in the construction industry".

I am sure that that view is echoed in the statistics of the Minister's department. It is a depressing picture and we should not forget the uncertainty within the industry.

Given the contents of the Bill, perhaps I may say in parenthesis that I greatly regret the continued uncertainty about the future of the Building Research Establishment. It has served industry with great distinction for many years. I believe that it is wrong to privatise it if improving efficiency and effectiveness are now on the Government's agenda, as Part II of the Bill shows. It is relevant to consider the comments of the Building Material Producers, which is a free enterprise group and not too committed to the public sector. In its January bulletin it states:


    "Any effort to sell the BRE to the highest commercial bidder, with no thought for the consequences for the industry, must be resisted, as must any effort to break up the existing multi-disciplinary core of the Building Research Establishment".

That is an important message that we should not forget, although it is not directly relevant to today's Bill. It is in sharp contrast with the endorsement given by the Building Material Producers to the Government's proposals in Part II to implement the Latham Report. I broadly welcome those proposals and wish to add my congratulations to Sir. Michael Latham on producing a detailed and interesting report remarkably quickly.

As I cannot forbear to give congratulations today, including to the Government, perhaps I may say that I welcome the fact that, although there is still a good deal of unfinished business, they have brought forward Part II of the Bill, even though it might have formed a separate Bill. As other noble Lords have said, Part II is best dealt with in detail during later stages of the Bill.

I agree with other noble Lords about the importance of Clause 105 and the necessity to get it absolutely right. That will need the most careful scrutiny.

The noble Lord, Lord Williams of Elvel, was harsh in his strictures on the building industry. I do not wholly dissent from every one of them, but recently the building industry has made remarkable strides to put its own house in order. One of the best developments is the emergence of the Construction Industry Council which represents more than 49 organisations in the industry, which in turn represent nearly 350,000 constituent

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professionals. I was involved at the birth of the council and was active for five years. It is right to remember the late Professor Sir Ted Happeold who was a remarkably visionary structural engineer within the industry and a moving force behind its creation. I believe that the council in its present form owes much to Sir Ian Dixon for his robust and effective leadership. In none of those respects would I exclude the present chairman Sir Robin Wilson. It has been a significant development and I have been glad to be associated with it.

I turn to Part III. As the noble Earl said in his introductory remarks, I have an interest to declare. The noble Lord, Lord Howie of Troon, was most foolish in saying that he would follow me wherever I led him. Perhaps I may make two matters clear. First, I was director general of the RIBA until February 1994 and a consultant to it for a year after that. Therefore, I was closely associated with the negotiations between the profession and DoE Ministers and officials about what are the contents of Part III. On the other hand, I speak on Second Reading and at subsequent stages very much for myself and I must not claim in any way to be a representative of the RIBA, which will make its views more widely known to noble Lords if it wishes to.

Part III of the Bill effectively implements an undertaking on the main features of the agreement reached with Sir George Young, who was the Minister concerned, on 21st June 1994 and the details which were subject to six months' negotiation thereafter. Without going into the history of the matter, I am glad that the DoE recognised defeat and abandoned in October 1993 its initial and declared intention to get rid of registration altogether. The noble Earl rather wisely glossed over that reversal, but I agree entirely with the noble Lord, Lord Howie, that the Government landed on their feet the right way up in that regard.

I am glad also that the Government recognised and abandoned last summer the hopeless, and in my view inappropriate, attempt to amend the Architects Registration Acts by means of a Private Member's Bill.

What we have before us today reflects credit both on the RIBA--the professional body of architects which tends to have individual and non-conforming views--and ARCUK, the existing registration body which has not always found it easy to speak with a single clear voice. In a sense, Part III is a result of discussion and co-operation and I am glad about that. To that extent it represents an agreed solution to the problem of architects' registration.

I say to the noble Lord, Lord Williams, that since 1834 the RIBA has represented the profession itself, but the role of this new registration body, like the old one, is to represent the public interest. Those are distinct and separate roles. It will be for your Lordships' House and another place to ensure that the new body does indeed represent the public interest in the fullest possible way.

I make four other brief observations. First, although the RIBA represents some 70 to 80 per cent. of the members of the profession--and I did so for six years as its director general--it is important that the new arrangements are fair to the so-called unattached

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architects who choose not to join the RIBA. The Bill should and indeed does recognise the anxieties that they have expressed from time to time.

Secondly--and this follows from what I said earlier about the respective roles of the professional organisation and the body which represents the public interest--the new body should not be allowed to become a rival to the RIBA. In representing the public interest, its task is quite different and it should not at any time forget that.

Thirdly--and here I refer to the role of the profession--the profession will serve its clients and the public best if standards in education are set and maintained by the RIBA, which should also have an important role in ensuring a higher standard of discipline and competence.

There have been references today to the Warne Report, which the Government first endorsed and then abandoned. I think that Mr. John Warne was a notable public servant and although I disagreed with the conclusions of his report, there was a great deal of good sense in what he said in the course of writing it. The whole profession should take note of that, however much it wishes to retain registration, as it is now able to do.

Fourthly--and again it follows from what I said previously--it is important that the eight lay members of the new board are carefully chosen so that they are not from other professions which may be seen to be competitive with architects or from the supply side of the industry. Its members should comprise independent men and women who wish to perform a public service and represent the clients. Such members may come from housing associations, the National Consumer Council and similar backgrounds.

In deciding what that composition should be, I ask those responsible to bear in mind that a large proportion of architects are either single-handed or working in small practices. Many of their clients are small, once-in-a-lifetime clients. It is they who must be remembered and represented in the lay membership of the board.

I know that there are those within the profession and the RIBA who are deeply concerned about, as they see it, handing over their future to a body in which there is a majority of lay members. I understand that anxiety and it is for that reason that I ask the Government to consider very carefully who those lay members will be. But I supported that principle when I had some direct responsibility in the negotiations and I support it now because I believe that it is consistent with a body charged with the public interest by Parliament that there should be a lay majority in future. If this Bill in any sense pioneers, it is pointing in the direction in which other legislation should go.

We shall wish to scrutinise Part III and the other parts with our usual care, but I hope very much that in due course Part III at least--I shall not commit myself on the other parts--will receive your Lordships blessing.

5.36 p.m.

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Lord Finsberg: My Lords, I address my remarks almost completely to Clause 139 which deals with the Commission for the New Towns, and I declare my interest as its deputy chairman.

In what I am saying I do not ask in any way for the life of the commission to be extended beyond its planned dissolution in March 1998. Taking together Clauses 137 to 140, I believe that an opportunity presents itself both to save money and to increase public receipts from property sales.

I urge my noble friend to consider using the powers which are to be given in those clauses in the best interest of the taxpayer and in the best interest of the residents and businesses in the areas where government land and vacant buildings exist.

First, as regards the taxpayer, there are many thousands of acres and millions of square feet of such government-owned property, not just in the Commission for the New Towns, in the urban development corporations, and HATs, but also in other parts of government; for example, the MoD, NHS and the Post Office. At the moment, each part of government must retain its own in-house staff or external agents to handle its disposal activities, thereby duplicating, triplicating and even quadruplicating much of what each does, and in some cases preventing the left hand of the Government from knowing what the right hand of the Government is doing. The sensible disposal of that property can bring several billion pounds to the Exchequer if handled prudently. We must avoid an unseemly and costly competition between different parts of government which will considerably depress the price achieved.

Let us consider the Peterborough area. The Commission for the New Towns owns there some 900 acres of government land available for residential, or commercial purposes, together with some 1 million square feet of commercial buildings. It is busy selling all this property at the rate the market will take and passing the proceeds to the Exchequer. Competition to sell property there is already fierce, and has become even fiercer as a result of the recent launch of the Hanson Group's 2,000 acre Peterborough southern township site in the old brickpits. So it is already difficult to achieve the best deal for the taxpayer. Yet a few miles south down the A.1 is the massive 1,000 acre Alconbury air base recently vacated by our US allies; and it is believed the MoD is about to offer this to the market either as a whole or in a few blocks. That could severely disrupt the property market in the area and make it even more difficult to get a good deal for the taxpayer. No private owner would flood the market in that way. A slim new organisation co-ordinating disposal of government land and buildings would make a lot of sense in such circumstances and produce better net current value for the Exchequer.

Secondly, I turn to the residents and businesses in the areas where surplus government land and buildings exist. It is important that their interests should be carefully planned, and that they get good quality development. That is more likely to come from a single, widely experienced team with appropriate experts than

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from a multiplicity of teams less likely to have appropriate expertise. It is important not only for local residents and businesses, but also for the UK as a whole that maximum effort should be devoted to encouraging inward investment--from, for example, North America, continental Europe and the Far East--in the course of such development because it creates new jobs, it raises the GNP, it swells tax revenue, and so on. If disposal of government surplus land and buildings is mainly in the hands of a single body, that body is likely to be much more effective in working alongside the Invest in Britain Bureau to achieve inward investment than a multiplicity of agencies, one per department.

As we found out in the Commission for the New Towns, to maintain a good flow of inward investment from the USA, Germany, Japan, Taiwan, and so on, you need the kind of rapid response which that single combination of two national agencies could provide. Surely it is unwise to jeopardise this competitive advantage that is available to the UK by spreading the Government's ownership of the raw material of inward investment--surplus land and buildings--over a plethora of different departments and agencies.

I urge that the order-making powers in the clauses to which I referred should be used to create a new organisation with wide-ranging responsibilities for the disposal of surplus government land and buildings--not necessarily universal responsibility, but responsibility in most cases--and certainly on the basis that the net proceeds would go to the originating department. The one purpose would be to achieve good results for the taxpayer and to stimulate the economy in the areas in question. There need not be significant conflict between those two activities, as I found out from my own association with the CNT which has been vigorously carrying out both functions for some years.

Let us just imagine what would happen if each agency had its own staff for disposal. Because each would be small, they would not be able to get the best people available; the infrastructure would be bureaucratic; and we would have the situation in area after area where competition in the public sector would bring down the ultimate value to the taxpayer. I know that my noble friend will say--and I have been in correspondence, as has the commission, for some time with the Government--that the Government do not want to create a centralised department because they feel that it would be much better for each department, "to do its own thing". With my experience of the Commission for the New Towns where we have on our property committee the leading property experts in Britain, I can only say that the latter totally disagree with the Government's point of view.

I suggest to my noble friend that it is not too late for the Government to think again. I am sure that my noble friend knows from my background that I hate bureaucracy and centralisation; indeed, such things are an anathema to my philosophy. What I suggest would do neither of those things; indeed, it would find a way of getting more proceeds for the Treasury. I find it impossible to understand why the Treasury does not back this 100 per cent. I know why some government departments may not do so, and we all know the

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"Sir Humphreys" who will get together in their clubs and say, "No, we can't do this; we will be giving up control of our property". Of course they will. But, anticipating that, I said that the proceeds should go back to the originating department. It means that they would have no work to do--which would make them happy--the taxpayer would get a bonus, and we would be able to plan the distribution of surplus property in a much better fashion.

Although I am not here as often as I would like to be because of my Council of Europe and WEU duties, I may be tempted--although, in the light of what I may hear from my noble friend the Minister, I may not need to do so--to consider tabling an amendment in Committee just to try to flesh out the ideas that I have tried to put forward. I would not do so in a destructive manner; indeed, I want to be constructive. I first came into contact with the new towns when I became Minister responsible for new towns back in 1979. I found them fascinating places. I also found that the disposals, which, in the first instance, went to the sitting tenants if they wanted them, helped to build up the community spirit in those new towns.

Some 15 or 16 years later I was fortunate enough to be appointed as deputy chairman of the commission. I found that the development of the new towns was a model. They are talked about throughout the civilised world as the best examples of planning, but planning in a sense that is not bureaucratic and which fits into the area for which such towns were designed. I have in mind the planning for Telford and, indeed, for Milton Keynes which owes so much to the late Jock Campbell--and I should like to pay a warm tribute to him. The planning of both of them was different, and yet they had a thread running through them; namely, the creation of a place where people could live, work and be entertained.

Before I sit down I must say how pleased I am that Milton Keynes is to receive some £19 million from the National Lottery to build a theatre which will complete what I call the entertainment and cultural life of that city. I hope that my noble friend the Minister will really consider my suggestions and not accept the advice that has come from the Treasury. I have reason to believe that the Department of the Environment is not totally unsympathetic to my proposals; but, of course, as those of us who have been Ministers know, big brother Treasury has a rather bigger say in such matters than any individual department. However, my noble friend the Minister is a much bigger man and I hope that he will exert his influence to get something done along those lines.

5.47 p.m.

Lord Berkeley: My Lords, in speaking this afternoon I shall confine my remarks to Part II of the Bill. I do so because I have spent most of my career in construction with consulting engineers, civil engineering contractors and of course latterly with Eurotunnel. I have seen at first hand the damage to progress, overall costs and relationships between the parties that such disputes cause.

20 Feb 1996 : Column 1017

The Latham Report has produced an excellent blueprint for changing the atmosphere as regards speed and the comfort that the parties will achieve when disputes arise. I believe that it has been accepted by most, if not all, of the industry's representatives. The important thing is that the principle of being paid at specific and fixed times is vital to the owner, to main contractors, to sub-contractors and to suppliers, whether they be very large or very small. It does not really matter if a contractor is paid annually or monthly, as long as he knows what will happen when he prices the job; for example, if he is to be paid annually, he can make financial arrangements. What really hurts is when the contractor thinks that he will be paid monthly and he then gets paid annually, or, worse still, if the other party who is supposed to be paying him goes into liquidation.

I welcome the principles contained in Part II of the Bill, but there are many concerns which obviously will have to be dealt with in Committee. I should like to discuss just a few of them today. One of the most worrying comments I have heard is one that was made yesterday by a leading lawyer in the construction industry. He said that there was nothing wrong with the Bill--he can obviously see the pound notes flying. I worry about that because an old saying that we used to have when I was dealing with such matters was that when the cost of the lawyers exceeded the cost that you were claiming, you would probably reach agreement with the other side. This Bill is designed to stop that. It used to be called claims engineering. It is more law than engineering. I suppose it is business, but I am sure that it accounts for what the noble Earl, Lord Ferrers, said earlier when he mentioned that the costs were probably up by 30 per cent. on what they should be.

I turn now to Clause 102 and what is included and what is not. The noble Lord, Lord Howie of Troon, said that this area was a shambles and I entirely agree with him. I must compliment the Government on including Crown contracts in this provision. They are setting an example and that is good news. But why is the installation of burglar alarms excluded? As regards the extraction of minerals, when one is building a motorway, one needs material to make embankments. Sometimes one makes a cutting and sometimes one digs the material out of an adjacent borrow pit, as we call it. It looks as if one of those provisions is included and the other is excluded. There is no logic to that at all. If one is making precast beams for a bridge, if one casts them on the site they are included in the provisions but if one casts them off the site they are not. It is much more efficient and cheaper to cast them off site and that results in a much better quality. Of course there is a catch-all at the end of subsection (4) of the clause which I suppose means that the Government can change what they like later. We need proper definitions which cannot be changed later as a result of lobbying on the part of particular suppliers.

I now turn to definitions generally. Clause 105 is a case in point. Several words in this clause need defining. I note in Clauses 62 and 75 in Part I of the Bill that there are about three pages of definitions but poor old Part II does not contain any definitions at all. What is

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adjudication? As the noble Lord, Lord Howie of Troon, said, that needs to be defined. What is resolution? Is it final, interim or what? What is a dispute? There are written disputes and verbal disputes. We need to know what constitutes a dispute. Is adjudication linked to arbitration? I certainly hope that it is not.

Does the Bill provide for interim payments to keep a contract moving? I think that it does, but are these interim payments final and binding on the parties or can they be subject to later arbitration? In the case of a large contract, one cannot expect to have matters that are final and binding decided in 28 days.

As regards Clause 106, is it meant to refer to stage payments or interim payments? Stage payments mean that one is paid when one has, for example, completed the floor of a block of flats. In the case of interim payments, these are time related. Or does the Bill mean to refer to payments on account? There is a little tidying up to be done there. What does,


    "a final date for payment",

mean in Clause 107? This clause has been mentioned earlier in our debate. It states:


    "Every construction contract shall--provide an adequate mechanism for determining what payments become due under the contract".

I envisage the lawyers getting excited over that provision, too.

What constitutes an award under Clause 108(4)? I believe that that should be the decision of an adjudicator. We must discuss later how that is to be enforced. Is it final and binding?

My next point has already been mentioned. I, too, am worried about the lack of a scheme of construction contracts which must provide the detail of how these measures are intended to operate. I do not see how this House can discuss this measure in detail without at least seeing the first draft of the document. I hope that the Minister can indicate that we shall see it before we reach the next stages of the Bill.

In conclusion, I warmly welcome this Bill and I believe that the industry does too. As I have said, some major and many minor changes will have to be discussed during later stages of the Bill. However, subject to that proviso, I believe that the Bill will be a great help in raising the professionalism, the image and the effectiveness of the British construction industry and that it will help to reduce costs.

5.54 p.m.

The Earl of Mar and Kellie: My Lords, I intend to speak briefly in this debate from a Scottish perspective and with a particular focus on Part II and its relationship to Scots law. But, first, I wish to make some general observations. I am interested that Part I of the Bill, dealing with housing grants, does not apply to Scotland. I look forward to hearing whether any alternative provisions will be made for Scotland in this respect.

With regard to Part III, I have no problem with the toughening up of the registration for architects. On the basis that architects design enclosed space for what is usually human activity, there is no case for anything but

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the highest standards of competence. A civilisation is judged, in part, by the quality of its buildings. Today's new buildings are the heritage structures of the future. Both the owners and the public as users must be confident that the new building will perform well in respect of its function, design, services and longevity. Clearly, architects have a substantial responsibility.

In Part IV it is suggested that the Secretary of State for Scotland will be given wider powers to assist with the regeneration of Scottish housing, towns and villages. I wonder whether I am correct in believing that this provision does not have any money attached to it. If there were money attached to it, it would be welcome as regeneration continues to be important in Scotland.

I now come to Part II of the Bill. As someone who recently worked in the building industry as a break from my normal career in social work, who worked within a slating and plastering firm and was in possession of a 714 labour only sub-contractor certificate and who is the proud possessor of a Scotvec Certificate in Building--please do not be too impressed!--I certainly recognise the circumstances in which the proposals in Part II would be relevant.

The whole atmosphere of the building industry can seem to be riddled with distrust. It is only necessary to read a bill of quantity, with its strange language, to realise that distrust runs deep. These bills of quantity have a demeaning effect on the craftsmen who will carry out the work. While I acknowledge that the architect and the quantity surveyor must transmit the specification, and have an essential right to do so, this is not always well received at craft level. It feels as if there is nothing left for the craftsmen to sort out.

I must oppose the extension of Part II of the Bill to Scotland. This is not because of any better relationships within the construction industry but because of the implications Part II has in Scots law. Broadly, Scots law is derived, as I am certain your Lordships will know, from principle rather than from precedent. I am encouraged to explain that there is an objection to "stand alone" legislation being established in Scotland for any particular industry. I acknowledge that the construction industry has its mid-contract problems, but it is not the only industry with complex problems. There is no justification for a special regime of law relating to the construction industry. No matter how uncertain or unsatisfactory the law may be, the construction industry is not the only one affected by legal complexities. The building industry is not so different from other activities in the economy as to require specific legislation such as that proposed in Part II. This is a view shared by the Law Society of Scotland and the Scottish Law Commission. That was alluded to by the noble Lord, Lord Williams of Elvel.

To be more specific, the adjudication process which is described in Clause 105 is premature in the Scottish context. There has been an extensive review of civil law by Lord Cullen. I suggest that the changes which are recommended in the report of Lord Cullen, should be allowed an opportunity to develop before an alternative system is introduced.

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In Clauses 106 to 110 the problems relating to the payment of debts are not exclusive to the construction industry, and that makes a stand alone reform inappropriate. This is a matter of general interest to all creditors and debtors.

Under Clause 111, which deals with the scheme for construction contracts, there is a risk that any model terms and conditions issued by the Lord Advocate or the Secretary of State for Scotland will come to be considered as the norm by the industry. The prescription of contractual provisions does not sit well in a free market. Parties should be able to meet their own requirements by devising their own terms and conditions, tailored to the always unique project they are undertaking. Trying to approach such a disparate activity as building without complete flexibility seems to me to be unwise. Altering a model contract would probably be more difficult than starting from scratch.

I look forward to the remarks of the noble Lord, Lord Lucas, about the future of the Bill in Scotland.

6 p.m.

Lord Monkswell: My Lords, I hope that the House will forgive me if I do not take issue with the noble Earl, Lord Mar and Kellie, although I am very tempted to take issue with the noble Lord, Lord Finsberg. I do not believe that the House would appreciate a national property sales agency given the experience with the Property Services Agency, which ran the government estate and had to be dealt with by this Government because of various problems.

One of the advantages of being tail-end Charlie in this type of debate is that one has the opportunity to respond to remarks made by previous speakers. I am glad that I do not need to do that to any great extent because there appears to be a fairly wide consensus about the problems that the Bill presents and the amendments that we shall have to consider in Committee and at the later stages. However, I thought that I might take the opportunity to mention one or two minor aspects. I hope that that will be useful, but I shall not speak at length.

One of the advantages of the part of the Bill which deals with the registration of architects is that it gives us the opportunity to write into the Bill the need for the Architects Registration Council to be aware of the needs of disabled people, although I am sure that in most cases architects take those needs into account. For example, one might require the Architects Registration Council to develop a code of practice and perhaps to ensure that members of the council are aware of and have some expertise in meeting the needs of disabled people.

We also need to be aware that disability is not necessarily a permanent condition. In certain circumstances people who have severe difficulties are relieved of those disabilities. One can think of the miracles of hip replacement operations. I know of at least a couple of cases of individuals who were seriously disabled and could hardly get about; yet after hip replacement operations, although they are not running around like spring chickens, the change in their disability is very marked.

20 Feb 1996 : Column 1021

Surely it would be wrong to penalise financially such people through the means-testing element in the Bill. They may be poor people. Why should we lay a financial penalty on them if their disability is relieved? My reading of the Bill suggests that they would have to repay any grant that they had received. That is an issue that we need to examine closely.

The other matter that we need to consider closely is what I would describe as the anti-Tebbit clause. I hope that the noble Lord, Lord Tebbit, will not take it amiss that I use his name in this connection. However, it is not right that because they move house in order to get work relatively poor people should be penalised financially by having to repay a grant they have received. People are not penalised if they move house in order to look after a disabled or elderly and infirm relative, but if they find work in another town within a three-year period they must repay the grant. That is not a good thing.

Many speakers have mentioned that there will be a need to go through the Bill very carefully during the Committee and later stages. I am hopeful that, in view of the support that exists on all sides of the House, we shall make significant amendments which will make this a better Bill.

6.5 p.m.

Lord Ezra: My Lords, the difficulty in dealing with this Bill is that it is really three or four Bills in one. It is particularly regrettable that Part II, dealing with the construction industry, does not form a separate Bill. It is a matter of vital importance. In introducing this Second Reading debate the noble Earl, Lord Ferrers, graphically described the contractual complexities in the building industry, the large part it plays in the economy and the need to get this right.

There was general praise for the Latham Report, and the Bill is an attempt to introduce its main provisions. The trouble is that it does not deal with the whole of the report, which Sir Michael emphasised should be how his report was handled. Furthermore, various aspects of the Bill have raised questions. Clauses 102 and 105 have been referred to specifically, as has the fact that there is no scheme for us to consider.

Therefore, in relation to Part II of the Bill--and as I said, it is a pity that it does not form a Bill on its own--there is general support for its intent, but a number of amendments appear to be required and will no doubt be moved at subsequent stages to try to improve it.

With regard to Part III of the Bill, my noble friend Lord Rodgers made it clear that in his opinion the solution proposed here is satisfactory. That view appears to be shared by others who spoke on the subject from the point of view of architects.

Part I of the Bill causes me most concern. Here I should declare an interest, because for many years I have been President of the National Home Improvement Council and I have followed the whole question of the improvement of Britain's housing stock with great care. Unfortunately, I have come to the conclusion that the

20 Feb 1996 : Column 1022

underlying purpose of Part I of the Bill is to save money. That does not emerge clearly from the Bill itself, but it is stated on page iv of the memorandum indicating the financial effects of the Bill. That refers to the:


    "resources released as a result of the change from mandatory to discretionary renovation grants".

Therefore, the underlying purpose of the changes is to reduce the funding in this vital area.

If there is one area in our economy where we should not do that it is this one. As the noble Lord, Lord Williams, and my noble friend Lady Hamwee pointed out, according to the last housing condition survey there are 1.5 million houses which are recognised as being unfit for human habitation in the housing stock in England and at least another million require major improvement and repair. Most of those homes are inhabited by people on low incomes. Many of them are elderly. Many are single occupants. They suffer great hardship. The social implications are very considerable. Age Concern has estimated that the diseases resulting from living in cold and damp homes cost the NHS £800 million a year.

Statistics indicate that the mortality rate in Britain in winter compared with summer is higher than any other West European country. The situation arises from the poor quality of housing lived in by people who do not have the resources to put it right.

What is being done by the Government involves a successive series of make do and mend policies. What is required--it is not apparent in the Bill--is a statement of strategy for dealing with the problem. Is it simply our intention to pass this off to future generations? With the way in which we are dealing with the issue now, it can only get worse.

I would have accepted a change from the mandatory to the discretionary form of grant if it had been set alongside a clearly defined strategy developed over a period of years with identified resources attached thereto. We would have known where we were going. There is indeed an argument for giving more discretion to local authorities. But to use the change from mandatory to discretionary grants merely to reduce the amounts of money used for this vital purpose strikes me as entirely wrong.

My noble friend Lady Hamwee said that I would wish to say something on Clause 136, which relates to the home energy efficiency scheme. On the face of it, what is proposed in Clause 136 is thoroughly reasonable. The clause proposes that the scheme should be widened to apply to other forms of energy saving quite apart from the basic elements of insulation hitherto covered. The trouble is that here again there is a major reduction of resources. I have an interest to declare in this case also. I am the patron of NEA, the charitable organisation which operates the scheme. About a year ago the Government gave a commitment that £100 million would be made available on a three-year basis to ensure that the homes of people, mainly elderly, on low incomes could be improved by a modicum of insulation. Within less than a year that sum was cut by a third. Having geared up the operation to improve the living conditions of those people, the Government cut the

20 Feb 1996 : Column 1023

scheme. They now suggest that that reduced sum of money should be used for a wider range of purposes. It does not make much sense.

While we welcome Parts II and III of the Bill, subject to some amendment, I hope that we shall indicate by amendments to Part I and Clause 136 that we have serious reservations in those regards.

6.14 p.m.

Lord Dubs: My Lords, I would judge the Bill in relation to two criteria: first, what will be the effect of the Bill in improving the housing stock of this country; and, secondly, to what extent does the Bill help to improve the working of the construction industry? As regards the first question, I think that the Bill fails. It will not improve significantly the housing stock of this country. Indeed it might well contribute to making it worse. With regard to the construction industry, the Bill helps, but there are detailed flaws.

Let me deal first with the question of grants. It seems to me that one part of the Bill makes an admission that the Local Government and Housing Act 1989 has failed. I do not say that it has failed, but the Government seem to think that it has failed and are therefore replacing that Act rather quickly. However, my anxiety is that the removal of the mandatory grants is being used more as a mechanism to reduce funding than to add sensible flexibility to the way in which we deal with houses which are below standard.

We have heard many statistics this afternoon. Let me give one more: 21 per cent. of our private housing stock is below standard. Yet public expenditure to improve by grants the condition of that stock is less than a third of the 1983 level in real terms. There are many other figures regarding the poor quality of housing occupied by elderly people and the problems faced by those who are disabled. It adds up to a depressing picture.

There is a danger that in dealing with some of these matters the Government have added to the possible delays--for example, by making it possible for grants for the disabled to be delayed for up to 12 months instead of up to six months. That will have a knock-on effect on small builders who will have to wait that much longer for their payments. I am not happy about the delays. However, the main principle that less money will be made available bothers me most.

I turn to the single regeneration budget and the moving of that on to a statutory basis. It is not a bad idea. However, I am concerned that there will be a continued lack of transparency in the allocation process. In moving to a statutory basis, I hope that some of the criticisms of the SRB expressed in this House and elsewhere will be dealt with by the Government. I believe that the process should be more open. Bidders should have a better sense of what they are about; and the arbitrary nature of the competition should be lessened as many small organisations which make bids for the SRB are being penalised by the current process. I hope that it will be improved.

The noble Lord, Lord Ezra, referred to the home energy efficiency scheme. I welcome the fact that it will be widened in scope, but regret very much that the

20 Feb 1996 : Column 1024

amount of money available will be reduced significantly, thereby negating the benefits of widening the scheme.

I turn briefly to Clause 102 which I considered at great length. I find it complicated and the reasons for it are somewhat obscure. I simply cannot believe that that is the only definition at which we can arrive. It is a definition which excludes half the construction industry. The Government say, "We'll change it if it does not work". Surely we can arrive at a definition which does not exclude such a large part of the industry and which is more meaningful and precise. I shall not give my suggestions now. The Committee stage will give ample opportunity. It would be better still if the Government came back with an improved definition. I have talked to people in the building industry who say, "It must be a mistake. The Government could not have intended Clause 102 as it stands, a clause which excludes so much of the industry which the Bill is intended to help". Yet here we have a clause which is so complicated, with so many exclusions, that it will negate many of the good purposes of Part II of the Bill. Therefore I ask the Government to consider the matter again. I am sure that they can do better.

I turn, finally, to the part of the Bill to which the noble Lord, Lord Finsberg, and my noble friend Lord Monkswell referred--the miscellaneous and general provisions. I note with interest what the noble Lord, Lord Finsberg, said. I wish to think about it. He clearly puts forward a proposal to make the sales of disposal of land, in particular Ministry of Defence land, more cost effective. I do not think that one could dissent from that aim. However, I have another concern: the growth of the quango culture which is implicit in this part of the Bill. I regret very much that the Bill seems to suggest that the Government will set up other residuary bodies to replace UDCs, commissions for new towns, housing action trusts and so on. The experience of London and Londoners and the difficulties we have had with the London Residuary Body since the decline of the GLC would suggest that the Government ought not to go down that path any further. All the Bill does is to say that local authorities will have no part to play and that on a permanent basis there will be other structures which will be unaccountable, bureaucratic and lacking in transparency of operations.

I ask the Government to think again. I do not see why some of the bodies cannot be restored to local authorities. Some years ago, when the Government carried out their action, there was an indication that local authorities would be considered to take over the bodies. Now the Government are saying no to that. I hope that they will take the problems on board and go some way towards meeting our anxieties.

6.20 p.m.

Lord Lucas: My Lords, I have listened with interest to the Second Reading debate and with a great deal of pleasure. I even find myself recalling the speech of the noble Lord, Lord Williams, with pleasure. It is clear that most noble Lords share our aims of a more efficient and

20 Feb 1996 : Column 1025

competitive construction industry and ensuring that help to home owners is spent effectively and goes to those who need it most.

We seem to have a few differences of principle, but many more differences of detail. Given the experience and enthusiasm evident from today's debate and the open minds which we have in government, we have an excellent foundation for a fruitful Committee stage in the best traditions of the House. A number of detailed points have been made today and I shall not have the opportunity to reply to them all. However, if it would be helpful, I shall write in response to points made so that we can get our retaliation in first--as the noble Lord, Lord Williams, would have it--before the Committee stage.

I wish to address the main points raised and in doing so follow my noble friend's order rather than that in the Bill. First, perhaps I may give the noble Lord, Lord Williams, some comfort that the lost clause (almost something by Sir Arthur Sullivan) will not reappear in the Bill. It may emerge in a Bill of its own at a later stage, but it will not be added to this one.

On the construction industry, the noble Lord, Lord Williams, and everyone else supported the thrust of the legislation. I found his comments extremely helpful, he gave us a large helping of the good parts of the egg, although he ground a considerable amount of pepper on to them, perhaps in an attempt to make us sneeze. The legislation is merely a small part of a major change which we hope is taking place in the construction industry. The proposals in the Bill come as a result of a long process of consultation and consensus. We shall listen with an open mind to what noble Lords have to say about it, but everyone should be aware that if we make the wrong changes we shall put at risk the consensus which has been achieved and the basis which is necessary for our proposals to succeed at all.

Everyone who covered the construction industry mentioned Clause 102 and expressed doubts of greater or less severity. We shall consider what has been said today and will have a further opportunity to do so in Committee. Perhaps it would be helpful, however, if I explained how the clause reached its present state. The construction industry is very diverse, from plumbers to decorators, from scaffolders to architects. We have sought to ring-fence the wide variety of traditional construction and civil engineering activities. The provisions are specifically designed to address the contractual arrangements for such activities. For the sake of clarity, we have specifically excluded a number of operations on the margins.

In drawing up that definition, we have drawn heavily on a known definition of construction operations: that contained in the Income and Corporation Taxes Act 1988. It is important to appreciate that there will always be grey areas. Some fine tuning may well be called for, not least because construction operations themselves may evolve over time. That is why it is important that the Secretary of State should have the power to amend the definition by order.

20 Feb 1996 : Column 1026

The noble Lord, Lord Williams, and others remarked on the exclusion of process plant engineering. The engineering work involved in assembling plant to carry out a process is subject to very different contractual arrangements from traditional construction work. There is a strong feeling in the process plant engineering sector that such operations should be excluded from any legislation on the grounds that existing contractual relationships in the sector operate satisfactorily and without conflict.

Various other general points were picked up which I shall cover now. The noble Lord, Lord Williams, mentioned trust funds and pointed out that we have not chosen to implement the Latham proposal to introduce them. We made clear to the industry that we would consider any proposals along those lines that had the full backing of the industry. No such proposals have been put forward. Any trust fund arrangement which did not have the full backing and confidence of the industry would be unlikely to be successful. As my noble friend Lord Ullswater pointed out, there are considerable fears about the risk of double payment. That is one good reason why no consensus has emerged.

As regards latent defects, the noble Lord, Lord Williams, recognised that some of the Latham recommendations, including those about liability for latent defects, had been referred to the Law Commission. The commission has recently reported on them and concludes that no action is required. There is now a consultation exercise and if the construction industry feels that there should be change in the law of liability, it has the opportunity to say so. We will, of course, take notice of what is said.

My noble friend Lord Ullswater and the noble Lord, Lord Howie of Troon, asked that the scheme for construction contracts should be made available for the Committee stage. I shall certainly arrange for a detailed description of our current proposals to be available through the Printed Paper Office before the Committee stage. However, we have no intention of introducing the scheme without consultation and discussion. Its final shape must depend to some extent on the primary legislation.

The noble Earl, Lord Mar and Kellie, asked about the application of the Bill in Scotland. It would not make sense to give English and Welsh construction contracts the benefit of speedy payment procedures and informal dispute resolution procedures but not Scotland. I recognise that there are significant differences between English and Scottish law in relation to contracts. I can give the noble Lord an assurance that they are well understood, but it is the Government's judgment that the legislation should apply throughout Britain.

The noble Lords, Lord Howie of Troon and Lord Rodgers of Quarry Bank, were quite eloquent on the subject of adjudication. Our provisions tackle conflict in the industry from two different angles. First, they will provide access by all parties to construction contracts to an alternative dispute resolution mechanism. Let me emphasise this. We are providing a right to have disputes referred to a quick, informal and impartial

20 Feb 1996 : Column 1027

mechanism to deal with them on site. Secondly, the provisions are to deal with one of the root causes of disputes: payment and payment abuses. I firmly believe that our proposals to give a statutory right to adjudication are the right way forward in the circumstances of the industry. Sir Michael Latham was enthusiastic about the merits of alternative dispute resolution and about adjudication in particular. The industry understands adjudication and values it and that is what we are giving the industry.

The noble Lord, Lord Howie, made many detailed points and perhaps I may select two for reply. First, we are not confusing adjudication and arbitration, but there are a number of safeguards and technical points in the Arbitration Bill of which we might like to make use in the scheme. So a reference is appropriate in the Bill. As to the timescale for adjudication, we will listen to industry's views, but we are determined to set a challenging target and also to avoid delays in appointing adjudicators.


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