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Lord Stoddart of Swindon: My Lords, before my noble friend sits down, could he assure me of one thing? The Federation of Small Businesses obviously feels that it has not been properly consulted. May I ask my noble friend to look into that complaint to see whether some improvements can be made which will satisfy the FSB that its views are really being taken into account?

Lord Whitty: My Lords, I am happy to undertake to look into relations with the FSB. What I am not prepared to undertake is that the Government will reply to every single submission that we have in our consultations. That has never been the practice, and certainly the FSB was treated no differently from anybody else in that respect.

Lord Pearson of Rannoch: My Lords, I am very grateful to all noble Lords who have supported the amendment. I am also very grateful, as usual, to the noble Lord the Minister.

As to what the noble Lord had to say, I must say I am very surprised if an organisation that represents 135,000 small businesses in this country does not merit a reply from the noble Lord's department when it writes in the terms in which it obviously wrote about a matter of this significance. I will have to leave that there for the moment.

When the noble Lord the Minister says that the Environmental Protection Act did apply to small businesses, of course he is quite right; but they got BATNEEC under that Act. Now they have lost it. They knew where they stood then, and now they do not. They feel that that is very serious. Depending on how the regulators behave and how the Bill eventually is carried out, they clearly have very good reason to be worried.

I certainly did not mean to insult the Minister when I said that the Second Reading was a low-key affair. Obviously, his presence raises it above that description. But, nevertheless, it is true that not many people took part and that there was not a single speaker from either Conservative or Labour Back Benches--or, indeed, from the Front Bench of the Conservative Party--which means that people really were not awake to it.

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As to the Minister's final point, I agree that the amendment is not perfectly worded.

Baroness Farrington of Ribbleton: My Lords, perhaps I may help the noble Lord by pointing out that I was the Whip on duty that night and no one was prevented from speaking.

Lord Pearson of Rannoch: I was not suggesting that anyone was prevented from speaking. I was merely saying that it is obvious that the House did not accord the Second Reading of this Bill much significance because there were very few speakers--two notable contributions from the noble Baronesses, Lady Hamwee and Lady Byford, but no other speakers at all. My point was that we have all been asleep at the switch on this one and I think it is time we woke up before Third Reading.

I agree that the amendment is not perfectly worded. I have no intention of pressing the amendment this evening, but I think we may well need to come back to it at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 5:

Page 2, line 26, after ("industry") insert (", agriculture")

The noble Lord said: My Lords, Amendment No. 5 is small but important. Clause 1(6) states:

    "Before making any regulations under this section, the Secretary of State shall consult ... such bodies or persons appearing to him to be representative of the interests of local government, industry and small businesses respectively as he may consider appropriate".

I have always considered agriculture to be a business, but there are those outside who need reassurance on this point. The Minister could deal quickly with the matter either by giving a very clear reassurance that it was always intended that agriculture was recognised as an "industry" or a "small business", or both, perhaps; or by accepting the amendment. I beg to move.

Lord Whitty: My Lords, perhaps I may save the time of the House by saying that I accept completely what the noble Lord, Lord Dixon-Smith, said and I support the amendment.

On Question, amendment agreed to.

Lord Pearson of Rannoch moved Amendment No. 6:

Page 2, line 34, leave out from ("section") to end of line 6 on page 3 and insert ("shall be laid in draft before, and subject to approval by a resolution of, each House of Parliament.")

The noble Lord said: My Lords, I shall attempt to deal with this one very quickly. It simply removes from the clause the provisions which decide what sort of resolution is to be reached by each House of Parliament under this Bill and makes them all affirmative resolutions. I would be very interested to hear the Minister's reply to this because, given the complications that we are facing and the assurances that we have been given about the way the Bill is going to work, it certainly would be very much safer and give comfort

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to small businesses if they thought that Parliament was actually going to look at all these regulations in some detail and have the duty to agree them, rather than just leaving them on the Table and forgetting about them, which is when they are slipped in at moments when, perhaps, no one is looking. I beg to move.

Baroness Blatch: I believe that without exception all officials in every department intensely dislike affirmative resolutions. They will use every argument at their disposal to counter their use. In many instances, they are right. Their arguments are sound and good and relate to wasting time.

However, in some cases, those officials are not right--and that is the case here. I support my noble friend. This Bill has received the most damning indictment from the Delegated Powers and Deregulation Committee. It is a skeletal Bill. The regulations which will flow from it will be extremely important indeed. If we are to give some comfort to those outside who will be subject to the rigours of the Bill when it becomes an Act, it seems to me important that both Houses of Parliament should have an opportunity to scrutinise the regulations. For that reason, the affirmative resolution is extremely important.

Lord Stoddart of Swindon: My Lords, I too support this amendment. I do so simply because I want to be consistent. My noble friend perhaps was not here when I very often rose to criticise the same sort of legislation as that before us and the suggestion that regulations should be made by the negative resolution procedure. I called the Opposition, when they were in government, all sorts of names in relation to legislation like this. Therefore, I feel that I must be consistent.

Parliament should not be ignored. When orders which involve business and the conduct of business--perhaps the bankruptcies of business--are brought forward I believe that both Houses should have a proper chance to scrutinise that legislation properly and, of course, in the case of this House, to be able to put down some sort of amendment or reject the orders out of hand.

9.15 p.m.

Lord Whitty: My Lords, I remind the House that the Delegated Powers and Deregulation Committee made a number of very specific recommendations as to whether the affirmative resolution was more appropriate than what we had originally in the Bill. In every single instance, we have agreed and amended the Bill in accordance with the recommendations.

The noble Lords' amendment goes way beyond what the committee proposed and would apply the affirmative resolution procedure even to the most minor change in regulations. I do not consider that an appropriate use of parliamentary procedure and clearly neither did the Delegated Powers and Deregulation Committee. As I say, we have met all its requirements in this respect. I can perhaps give the noble Lord a limited degree of comfort and perhaps through him the small businesses with whom he is concerned. The Bill as it stands provides the Secretary of State with a choice of procedure. I can give an undertaking that any

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amendments to the regulations which affect matters which were previously included on the face of the Employment Protection Act 1990 will be put to Parliament for consideration under the affirmative procedure.

I hope that with that reassurance the noble Lord will recognise that we have already moved a long way down the road and have met the requirements of the Select Committee. I hope therefore that he will see fit not to pursue his amendment.

Lord Pearson of Rannoch: My Lords, I am very grateful to the Minister for that crumb of comfort. We shall have to examine and make up our minds as to whether at Third Reading we want to widen the affirmative resolution procedure beyond that recommended by the Delegated Powers and Deregulation Committee. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Pearson of Rannoch moved Amendment No. 7:

After Clause 3, insert the following new clause--


(" . This Act shall not come into force until a Minister of the Crown has laid before each House of Parliament a report setting out the legal basis on which Council Directive 96/61/EC was agreed to, and that report has been approved by resolution of each House.")

The noble Lord said: My Lords, I propose the amendment because it occurs to me that the famous Directive 96/61 is probably ultra vires under the treaty establishing the European Community or under European Community law. I hope that that is helpful to the Minister because, if so, the Government can forget about this troublesome Bill and carry on with the Environmental Protection Act which is working so well anyway.

I suggest that the directive may not be legal under EC law because at least two articles in the treaty do not appear to have been met by the Community or, more precisely, by the European Commission. The first is Article 174 which, until the Amsterdam Treaty, was Article 130r. It is fairly well known. The article states clearly in paragraph 3,

    "In preparing its policy on the environment, the Community shall take account of: available scientific and technical data; environmental conditions in the various regions of the Community; the potential benefits and costs of action or lack of action; the economic and social development of the Community as a whole and the balanced development of its regions".

I rather suspect that the Commission did not comply with any of those requirements when drawing up Directive 96/61 which, as the Minister confirmed, is the only cause of this Bill. I say that because in my fairly recent experience of your Lordships' Select Committee the Commission never does with an environmental directive. It simply issues often crazy environmental edicts, such as the bathing water directive and many others, without bothering to meet the terms of the article.

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Be that as it may, the particular condition upon which I wish to focus is the third requirement of the article, namely that the Community should have taken into account the potential benefits and costs of action or lack of action. In other words, for the directive to be valid the Commission should have produced a cost benefit analysis of its effects if implemented. The Minister may tell me that the Commission has indeed produced such an analysis, in which case I will be pleasantly surprised and will be grateful to have a look at it. Can the noble Minister confirm the point?

The second article under the treaty establishing the European Community is, of course, Article 5 as it now is, Article 3b as it was, the famous subsidiarity clause. In view of the lateness of the hour I shall not quote it in its entirety, but I would point out that the Community can only take action if it wishes to issue a directive by reason of the scale or effects of the proposed action. In order for that to be valid, we have to be aware of the scale and effect of this directive, and I do not mind betting that we are not. For instance, has the Minister asked the Commission what the other countries of the European Union have done on this directive? What is the scale and effect? If we do not know that, or the answer to Clause 174 is unsatisfactory, the Government are in a position to say that they will not carry out the directive and will take the risk--I believe a very slim risk--of being taken to the court in Luxembourg for the matter to be adjudicated.

I appreciate that that may run contrary to the Government's well-known "charm offensive" in Brussels. Nevertheless, it is a simple way out if the Government wish to take it. I beg to move.

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