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Viscount Ullswater: I oppose the suggestion of the noble Lords, Lord Williams and Lord Howie of Troon, in part because of a whole series of logistics. If Clause 111 is deleted, it will remove any further opportunity that the House might have to make comments on the scheme at Report stage and on Third Reading. All of us have difficulties with some of the words of the scheme. The noble Baroness, Lady Hamwee, indicated that the more it was looked at the more there was to consider. The scheme has only just come before us and there has been only a relatively short time in which to look at it.

Lord Williams of Elvel: Perhaps I may intervene with the leave of the noble Viscount. The scheme is referred to in Clause 105(3), so even if this clause is removed from the Bill, there will still be an opportunity to refer to the scheme for construction contracts when we come to discuss that clause on Report.

Viscount Ullswater: I understand what the noble Lord says. However, Clause 111 gives it a statutory base. A scheme without a statutory base is not worth discussing in your Lordships' House. We need to make certain that it has that statutory base. I was about to tell the Committee that my noble friend the Minister has already indicated that the scheme is out for consultation. The Government and the industry will have plenty of opportunity to look at it. The Government will hear what noble Lords say in the discussions to date and will have an opportunity to hear what noble Lords say on the next two stages of the Bill.

The right course of action is not to remove the scheme from the Bill at this moment but to make known our views on whether what is in the scheme is right, whether it is too close to arbitration and not close enough to adjudication, and so forth. All those considerations will

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be taken into account by my noble friend. I believe that the course of action proposed by the noble Lords, Lord Williams of Elvel and Lord Howie of Troon, is wrong.

Lord Howie of Troon: Can the noble Viscount tell the Committee at which stage the Government should remove the scheme, if it should not be removed now?

Viscount Ullswater: As my noble friend has already indicated, it is a draft scheme. The word "draft" is written all over it. It will have to be put before Parliament before it becomes "the" scheme.

Earl Ferrers: I have a certain amount of sympathy with the noble Lord, Lord Williams of Elvel. I commiserate with him. I do not wish to take advantage of him. Whenever he gets up to speak the Chamber seems to evacuate itself (as the scientists would say). That happens because the noble Lord always seems to get up just after Question Time. I do not think he should worry that it is anything to do with him. The Chamber probably feels that there are other things to deal with which are of more pressing importance than the noble Lord's speech. The noble Lord should not become too depressed by it.

He began his speech this afternoon by saying that we did not have enough people here last Thursday night to support the Government. That is perfectly true. If I may say so without impertinence, I do not believe that the noble Lord had too many people to listen to his erudite speeches. There were only eight on his side. Of course, it is the job of the Government to keep a House. When this side was in opposition and I was a young fellow with dark hair, it was thought to be rather good fun to ambush people. However, when in government one regards it as rather childish. One takes a different point of view depending on where one is. The noble Lord had his fun last Thursday. There was not a House. We were counted out and therefore had to come back to the same matter today.

The noble Lord, Lord Howie, said that there were so few people in the Chamber to listen on that occasion that he believed everyone must be in favour of his amendment. He was quite sure that everyone had studied his speech. I know that most noble Lords make a point of studying the speeches of the noble Lord, Lord Howie, rather than anyone else's. Whether that happened on this occasion, I am not certain; but there are more people here to make up for it today than there were the other day.

Lord Howie of Troon: I wonder whether the noble Earl would tempt me into repeating the whole of my speech last Thursday, lest noble Lords have not had the advantage of reading it in Hansard. They may enjoy it all the more.

Earl Ferrers: I would not wish to weary the intellectual capacity of your Lordships by doing that.

The fact is that we are trying to deal with a difficult matter. There is a difference between arbitration and adjudication. Put simply, in arbitration one waits until the end of the contract. One has a full-blown argument about it, perhaps in the courts with barristers and heaven

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knows what. It may take a year or two years to get to the end of it. Adjudication is an attempt to resolve the matter forthwith. On too many occasions in the past contracts have been made with adjudication clauses in them; but they have been cut out because the big boys believe it is easier not to have such clauses. Therefore, any matter that arises falls to be dealt with by arbitration. That can be adverse for the small contractor.

All that we have tried to do here is to ensure that if the process proposed in the Bill is adhered to, there should be an adjudication process which will end up in a decision. If the two parties to the contract do not want to make that decision binding, they have to say so before they go to adjudication. If they do not say so, then they agree that it should be binding. The adjudicator makes his decision, and it is binding.

If one were to accept that that was a pity and that there was cause for complaint or appeal, it means that the adjudication process is almost meaningless because it can be rehashed at the end of the contract by going to arbitration. The whole point of the clause is to try to avoid that. All I would say to the noble Lord, Lord Howie, is that if they do not want to do that, most contractors would have their own contracts setting out the terms and conditions of the contract; the terms and conditions of adjudication; and the terms of arbitration. It is only if the parties do not do that that the clause falls to operate. If Clause 111 is a little more harsh than most contracts, so be it. That may encourage people to include a more modest clause in their contracts.

One must remember that the whole point of Clause 111 is to provide something which has not been provided for in the contract between the two parties. If they want to avoid Clause 111, all they have to do is to set out their own requirements in their own contract. The noble Lord, Lord Berkeley, said that this is arbitration and adjudication muddled up, and that we should ask the industry. That is precisely what we are doing. The noble Lord, Lord Berkeley, and the noble Earl, Lord Mar and Kellie, said on Second Reading that they wanted to see what the Government had in mind. So we tried to produce a draft scheme--my noble friend Lord Ullswater was right; it is a draft scheme--to show the kind of things that we have in mind. We tried to be helpful. It is always fatal to try to be helpful when in government because if one is the Tower of Babel falls down upon one, and everyone says, "You should not do that."

We tried to be helpful. We produced the draft scheme to show what we have in mind. The draft scheme has gone out not just to Members of this place, but to members of the industry. When we have heard the results of that consultation--of which, if I may say so with respect, this Committee stage is one aspect--we shall decide what shall be put into the draft proposals. They will go out for statutory consultation once the Bill becomes law. There has been a considerable amount of consultation over this point.

I do not for one moment suggest that we have the thing 100 per cent. right. But Members of the Committee asked what it is that the Government intend to do, so we have produced a draft scheme to show what

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it is we intend to do. Some Members of the Committee have said, "Let us take it away and produce another one". I believe that it was the noble Lord, Lord Williams, and I think that that was a churlish suggestion. How can we take something away that we have just issued to other people to consider, and produce another one? We want to get the preliminary consultation over. We want to find out what people say and what the Committee says. We shall produce a further document in due course.

I come back to the original point. So much time in the past has been wasted by people arguing about construction contracts, and so forth, and there has been no method of conciliation. We have put into the Bill a fall-back position which means that if contracts do not have within them a method of arbitration or adjudication, then the parties can fall back to Clause 111. If they do not want to fall back to Clause 111, all they have to do is to put it in their own contracts. That is why I believe that Clause 111 is important.

Lord Howie of Troon: There is no point the Minister saying that adjudication should be introduced, because it has been there since time immemorial. The ideas he has put forward are the common currency of construction contracts, and he knows that. I am greatly encouraged by the speech the Minister has just made. It is clear that he is now beginning to understand the difference between arbitration and adjudication. That was not clear on Second Reading. It is clear that he has now grasped that distinction. It is a distinction which is extremely important in the construction industry.

I have just one last thing to say. Although the Minister now grasps that distinction, the scheme does not grasp that distinction. As I said, the scheme is largely lifted, holus-bolus, from the Arbitration Bill, which is a different thing, and deals with different matters. That has now to be thought about.

Now that the Minister has reconstructed his attitude towards the distinction that I have been making for some time, will he make that same distinction in the scheme? When I suggested that the scheme should be replaced by the scheme for conciliation from the Institution of Civil Engineers, their sixth edition scheme, I was proposing something with which the industry is already well acquainted, and with which it is already comfortable. It is much more significant since the whole point of this part of the Bill is to reduce costs, conflict, and dispute, and to put in propositions which the industry already understands and with which it is already comfortable.

I am, as I say, greatly pleased by the Minister's movement in thinking. I urge him to continue that progress just a little further. Then he and I are in some kind of asymptotic condition--coming closer together--although I should say that the problem here is that asymptotes never actually meet. I am hoping that we achieve a readjustment of geometry, and that on this occasion the asymptotes actually meet.

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