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Lord Elton: My Lords, both the noble Lord, Lord Howie of Troon, and the noble Lord, Lord Williams of Elvel, have helpfully reduced this to a debate about a major principle, and that is the way in which Parliament will be satisfied--and the industry will know--in relation to what the scheme will contain. Both of them have come to the conclusion, by different routes, that the scheme should be on the face of the Bill. I hope your Lordships will pause over that suggestion and not immediately say that it has the great attraction that it gives parliamentary control over what is happening and gives security to the industry because it will know what will happen for a long time.

As I understand it, the Bill breaks new ground in two respects: first, because it applies to an area which has not hitherto been subject to such legislation and, secondly, because it seeks to be as broadly as possible consensual in its nature. It is dealing with an area of great complexity in which there is insufficient experience in the official world of the relationships which will develop under this legislation. It follows, does it not, that however wise we may be in preparing the scheme we are likely to be surprised in some respects by its effect. As a result of that surprise we are likely to wish to change it. If it is inscribed in the statute, we may have to wait five, 10 or 15 years for an opportunity to do it. If it can be achieved in some other way, we are more likely to remedy defects before they have caused too much damage. The question then is what that alternative should be.

One way is to proceed by a statutory instrument which should be either subject to the affirmative or the negative procedure. That is a change. As I understand

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it, the Government originally had a proposal that the scheme should be written by Ministers and could be altered by Ministers at will. That has the great advantage that defects can be remedied almost overnight. It has the disadvantage that your Lordships and another place would be surrendering all control as to what happened in the field for the foreseeable future because it would be up to Ministers, and they would not be controlled by Parliament.

I believe that we should choose between those two methods. It would be a mistake to inscribe the provision on the face of the Bill with the necessary rigidity and delay that that would cause.

Lord Williams of Elvel: My Lords, I am sorry to interrupt the noble Lord. Schedule 1 of the Financial Services Act has exactly that provision. It can be amended by affirmative resolution. That is what I am proposing.

Lord Elton: My Lords, that is a combination of the two approaches. I thought that a moment ago the noble Lord argued against affirmative action.

If your Lordships are in favour of affirmative resolution, you accept some delay in the effect of your Lordships' wishes in changing legislation. But once it is in print, as the noble Lord said, there is no further power to amend.

The answer to that is surely for the Government to consult extensively before they draw up their statutory instrument. Subject to what my noble friend on the Front Bench will say, my view is that that would be a happy issue. If the Government were to consult both industry and informally among those interested politicians before they drafted such an instrument, I believe that the affirmative resolution would be a sufficient safeguard. However, I would not recommend that it be put on the face of the Bill.

Lord Ackner: My Lords, I have not intervened at any stage of the Bill until now. It was certainly not my intention to do so until quite recently. I had anticipated a quiet, peaceful evening recovering from the frustrations of an unsatisfactory Answer to a Starred Question.

However, I was telephoned by the head of my old chambers who specialises in construction disputes. He had with him a senior representative of the Official Referees' Solicitors Association. They were both deeply worried about the scheme that the Government proposed. They were joined subsequently by the chairman of the specialist group of the Bar dealing with building and construction disputes--a very experienced QC.

Their concern was a fairly simple one. They reckoned that the Government were misunderstanding what was required by an adjudication. Their concern seemed to me to be wholly understandable. What I have always understood to be required by the adjudication process was a quick, enforceable interim decision which lasted until practical completion when, if not acceptable, it would be the subject matter of arbitration or litigation.

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That was a highly satisfactory process. It came under the rubric of "pay now argue later", which was a sensible way of dealing expeditiously and relatively inexpensively with disputes which might hold up the completion of important contracts.

What is being proposed here is a speedy, fast-track arbitration which produces a binding conclusion, not open to any challenge after practical completion, but fixed and firm for all time in a wholly unrealistic timescale. I have been shown articles in the press that indicate that the industry is anxious about it and that Sir Michael Latham says that it is quite contrary to what he proposed. Hence the new scheme which has been suggested by the amendments to the schedule.

I invite the Minister to deal with the crucial point of principle. What on earth is the point of rushing through an arbitration which is to be final and binding in a situation probably of great complexity and, what is worse, one where the speed can be frustrated by applications to the court of the kind envisaged by the new Arbitration Bill which will become an Act in 1996? Because of the finality which it is suggested is to be ingrained in the adjudication, the courts will obviously be listened to. So there will be delay and frustration in the sense that payment will be put off and the adjudication process which is designed will be self-defeating for a reason which I find difficult to follow.

The Arbitration Bill is admirable. It has been praised in this House through all the stages which have so far been completed. But it is designed for arbitrations. It is designed to improve the arbitration procedure and to give the arbitrator more power. It is designed to stop the courts interfering in the way that they have been able to so far. That is a non-interference of which the courts thoroughly approve. My respectful submission to your Lordships is that the question of the adjudication ought to be dealt with clearly and firmly by the Government in answering the amendments.

9.30 p.m.

Viscount Ullswater: My Lords, Clause 106 does not allow adjudication to be struck out of a contract. That is where we started. Under the provisions of Clause 106 certain criteria will have to be fulfilled, and we are all clear about that. So the scheme that we are discussing, the subject of the amendment of the noble Lord, Lord Williams, is very much a fall-back provision. The scheme is still in draft, as everyone will accept, and therefore what we say about it in Parliament is important. However, the consultation that I believe is probably more important, very important indeed, is with the industry.

Before we went to dinner, my noble friend indicated that he was of a mind to bring in a proposal that would make a non-binding form of adjudication in the scheme. That is welcome, and perhaps the noble and learned Lord, Lord Ackner, was not in his place to hear my noble friend's words. What is contained in Amendment No. 192 should command respect. The noble and learned Lord, Lord Ackner, is quite correct in that in preparing his report Constructing the Team, Sir Michael

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Latham recommended a simple form of adjudication to keep the contracts running and the payments flowing. In his summary, he states--and I paraphrase--that the award of the adjudicator should be implemented immediately; any appeals to arbitration or the courts should be after practical completion and should not be permitted to delay the implementation of the award.

I am, therefore, not in favour of putting a scheme and a method such as is proposed by the noble Lord, Lord Williams, into the Bill as a schedule. I understand and agree that it is a very useful way of discussing the contents of the scheme. Not only does the scheme need consultation during the course of parliamentary scrutiny both in this House and in another place, but, as I have indicated, the industry should be given constant access to consultation as the Bill is going through Parliament. Therefore it needs consultation up to and after Royal Assent. As my noble friend indicated, it may be possible to bring the scheme forward under a form of affirmative resolution. I suppose that the regulations to make the scheme in Clause 141 would be under affirmative resolution. That would be the right way of dealing with the matter.

In Committee, I started by saying that the scheme as proposed was draconian. I still believe that to be the case. Therefore I am extremely pleased to hear the way in which my noble friend on the Front Bench feels he can move. That is extremely practical. However, having said that, he must listen very carefully to what the industry says all the way through this process.

Lord Berkeley: My Lords, I shall speak briefly to my Amendments Nos. 197A to 197N, which support the amendment tabled by the noble Lord, Lord Howie of Troon. I do not need to say much about them. I was heartened by the wise advice from the noble and learned Lord, Lord Ackner, who has obviously examined the recommendations. I am pleased to hear his remarks about flexibility and speed and the problems of adjudication. All I tried to do in tabling my amendments was tighten up the procedures of the Institution of Civil Engineers, which I believe the noble Lord, Lord Howie, used in his drafting, to try to get decisions out of recommendations and a few consequential amendments.

All through the debate this evening and at previous stages of the Bill we have talked about consultation. This is not a political matter. All parts of the House want to see the industry flourish and receive support. As the Minister said earlier, he does not want to raise hostility.

Nevertheless, I have to mention a sheaf of press cuttings I have received in the past week which, frankly, express unanimous hostility, not to the Bill itself but to the scheme. I shall quote one or two:


    "Furious construction professionals say they are no longer prepared to support the Bill".
That is from Construction News.


    "Latham gives warning on Construction Bill ... The ACE [Association of Consultant Engineers] supports the aims of the bill, but we reject the scheme entirely".
So it goes on. I could continue for a very long time, but I shall not detain the House at this late hour.

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The Association of Consultant Architects (you can have a consultant architect, returning to Amendment No. 142) says that the Government have,


    "ignored the comments made by a large section of the construction industry".
I shall end my quotations with that example. Consultation has to go on. But I have never seen such unanimity of criticism for the scheme that the Government put forward. I have no view as to where it should end up and whether or not it should be part of the legislation. However, I hope that as the Bill moves forward consultation will be wide and that the Government will listen to what the industry has to say. Like other noble Lords, I was very heartened to hear the Minister's remarks just before we broke for supper.


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