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Baroness Andrews: The first wave applications will all be required to have three-star status as a threshold. If the noble Earl considers how we have approached the whole business of raising standards in the NHS—in the document of that name—and the additional funding given to work with trusts, especially the weaker trusts that have not done very well, he will see that we are tailoring support to a range of trust performance, so that we can give the best and most appropriate support where it is needed. We intend every trust in the country to be as good as it can be, and an improvement programme is designed to achieve that. As for whether they will all get three-star status

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in due course, that is a question that I cannot answer at this point. I refer the noble Earl to the measures in place to have them achieve the highest standards.

Earl Howe: I have no quarrel with getting the lowest status hospitals up to the standards of the best. We all want that. However, either it is a requirement for three-star status to be achieved, or it is not. The Minister seems to be saying that the requirement will not be strict; if that is so, why is it strict now?

One aspect of the Bill that vitiates it is that staggering the entrance to foundation status will create a very unlevel playing field and the risk of a dog-eat-dog culture. It would be much better if there were a big bang solution rather than a gradual one, so I doubt whether the star rating system has as central a place in the process as the Government appear to want it to have.

We may return to the matter, but I am grateful to the Minister for her comments. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Noakes moved Amendment No. 134:

    Page 3, line 36, after "provide," insert—

"( ) the applicant has adequate financial controls and financial management procedures,"

The noble Baroness said: This amendment also relates to Clause 6(2). My noble friend Lord Howe has already said that the list in that subsection is largely an administrative one. The amendment probes another matter of substance, alongside the one to which he referred under the previous amendment.

The amendment would add another requirement that the regulator must be satisfied about the applicant's,

    "financial controls and financial management procedures".

I hope that the Government would not dream of allowing a foundation trust to be created unless it had adequate procedures, so my amendment is in part a probing one, to discover how that will be done.

In the guide to foundation trusts, the Government said that applicants would be asked to submit an independent financial review, undertaken by the Department of Health. In a Written Answer, the Minister confirmed that accountants—including KPMG, that excellent firm, in which I have no financial interest—have carried out an exercise costing #1.1 million. If we add that to the money already being poured into applicant trusts, we begin to build up a picture of the application process as quite expensive.

Putting that issue on one side, we know who has been appointed, but we do not know what the accountants are being asked to do and what the Government will get for their money. Will the Minister say what the accountants' terms of reference are? Will they cover both financial controls and financial management procedures? Will the accountants' report be made public before the decision to confirm or deny foundation trust status? That is to say, will other people be allowed to see the strength of the finances of the applicants?

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I hope that the Government see those requirements as straightforward matters that need to be demonstrated and that they will be able to accept the amendment. I beg to move.

Baroness Andrews: I can use the same arguments as I used in the previous debate, in respect of ensuring appropriate financial controls as a condition for authorisation. We believe that the application process includes sufficient checks to ensure that that is the case. As part of the application process, there will be a requirement for applicants to prepare a service development strategy, setting out their vision and plans, including costings and information on financing for the next five years. We have prepared guidance on what is required in seeking the Secretary of State's support, including details of what should be included in the service development strategy.

The noble Baroness asked specific questions about the independent health check. I cannot answer all her questions, but I can tell her that the aim is to provide an independent evidence-based review to ensure that the service, the systems and assumptions are robust and that the right management systems are in place. There will be an opportunity for applicants to address any issues that arise from that. Organisations will need to allocate dedicated resources to support that process. An action plan will be prepared detailing any shortcomings or areas of concern.

Given the hour I would prefer to write to the noble Baroness to answer the questions that she raised. I shall refer to the guidance and make that correspondence available to other Members of the Committee with similar interests. As has been said, the regulator has discretion over whether to authorise an applicant and would not do so where he was not satisfied with the financial arrangements. Under Clause 6(2)(f) he can impose any additional requirements on applicants which must be met prior to authorisation. If he had concerns about an applicant's finances, he could require further information from the applicant, or even require the applicant to take steps to improve their finances as a condition of authorisation. With those assurances and the promise to write to the noble Baroness, I hope that she will withdraw the amendment.

Baroness Noakes: I thank the Minister for that reply. She will be aware that she did not answer the questions that I asked although her reply was very interesting. I hope that she will publish the terms of reference, that she will confirm that the results of the work by the accountants will be made public and that she will comment in particular on whether or not financial controls and financial management procedures will be covered as I do not think that she mentioned that in relation to a service development strategy, although I may be wrong. Clearly, I cannot turn down the generous offer of a letter copied to all Members of the Committee who have an interest in financial issues. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Davies of Oldham: I beg to move that the House do now resume. In moving that Motion, I suggest that the Committee begins again not before 8.32 p.m.

Moved accordingly, and, on Question, Motion agreed to.

World Trade Organisation: Cancun

7.32 p.m.

Lord Dubs rose to ask Her Majesty's Government what action they propose to take following the outcome of the World Trade Organisation talks in Cancun.

The noble Lord said: My Lords, those present at Cancun said that the outcome was somewhere between a setback and a disaster. Clearly, the key issue is not to have a detailed post mortem but to move forward. However, unless we understand what went wrong at Cancun, it is not easy to see what the next steps should be.

Let me say at the outset that I am grateful to CAFOD, Oxfam and other development agencies for the help that they have given in providing me with background information for this debate. I should like to discuss the issues under four headings: agriculture, what are called the Singapore issues, the processes of the World Trade Organisation and how we move forward, particularly with reference to discussions that are due to take place in Geneva and terminate by the middle of December.

It is perfectly clear that agriculture was the most difficult and most important issue that faced the negotiations in Cancun. I give a few figures: 97 per cent of people in the developing world are engaged in agriculture yet large western subsidies to western agriculture undermine the livelihood of many people in poor countries. I give an example. Since 1994 the United States has doubled its subsidies rather than phasing them out as was agreed at Doha. As regards cotton, which I put under the broad heading of agriculture, the United States refused to tackle the problem of cotton subsidies. Twenty-five thousand United States farmers get 3 billion dollars a year in support yet 10 million people in Africa depend on the cultivation of cotton. Cotton is one of three cash crops for a large section of the rural population of west Africa.

As regards the CAP, European Union farmers get more subsidies in 12 days than the rich countries give in aid to Africa in a whole year. The average European Union cow gets in total 2.20 dollars' support per day. That is more than the income of half the world's population. As if that were not enough, European Union and United States' agricultural export subsidies amount to 60 times their aid to developing countries. It is quite clear that from the point of view of the future of the developing world, what we do about agriculture in the affluent West is crucial. Those are the issues that should have come up at Cancun and been dealt with before new issues were raised. The case for them is absolutely clear-cut.

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I turn to the new issues that were raised which come under the title of the Singapore issues. They concern investment and competition, transparency in government procurement and trade facilitation. As the Cancun discussions developed, the developing countries were faced with being asked to make concessions on the Singapore issues with nothing being given in return despite the fact that many people warned the EU that that would happen. Many people told the EU that it was not right to proceed with the Singapore issues in the way envisaged.

I fully understand that Pascal Lamy, the European Union trade commissioner, was mandated by the European Union to take the line he did but it was a pity that it was not until 14th September that he dropped his insistence on dealing with those issues. By then it was too late and the talks collapsed. It is very clear that by asking the developing countries to accept the Singapore issues, they were asked to make concessions before they got anything in return through the trade negotiations, particularly on agriculture. That surely was neither a sensible nor a principled and ethical way of proceeding. I know that the United Kingdom Government's position was not in favour of the Singapore issues being pushed. On the other hand, I wonder how robust we were in urging that that should be the case. I look forward to my noble friend's response. The issue was badly handled by the European Union and led directly to the breakdown of the talks.

My next point concerns the processes of the World Trade Organisation itself. There are 148 countries in the WTO. It was Pascal Lamy, the EU trade commissioner, who said that the organisation of the World Trade Organisation was medieval but suggested that neolithic might be a more apt way of describing it. It is difficult to organise 148 countries in terms of negotiations at the best of times, but the way they were handled was not very sensible. For example, the director-general has no power of initiative. On the first day of the discussions in Cancun the whole time was taken up with non-substantial matters such as the appointment of facilitators of the working group. That occurred at a time when 148 countries had a large number of representatives present to take part in urgent negotiations.

I also note that at least 300 parliamentarians were present. Normally I would welcome that but some people have put it to me that their presence made for less flexibility in the negotiations. Frankly, I do not think that is a point of great substance and I do not put it forward. What I am putting forward is that we have to look differently at the way in which the WTO organises itself. It was simply not satisfactory at Cancun.

But the most important part of this debate has to be how we move forward. It is absolutely crucial that progress is made, particularly if we bear in mind that the United States' elections are getting closer and therefore it will be harder to persuade Washington to make concessions given the electoral implications of some of the issues that I mentioned earlier, such as the cotton subsidies. The difficulty is that there may now

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be a temptation for Washington, the EU and other rich western countries to say that a bilateral or regional approach might be the way forward given the breakdown at Cancun. I suggest that that is an undesirable way of proceeding. I say that for the following reason: a bilateral negotiation between the United States and a poor country or between the EU and a poor country tips the balance very much in favour of either the United States or the EU. It is an unfair way of negotiating because the developing countries simply do not have the necessary bargaining power. They are in a better position and can argue more effectively when allied with a number of other developing countries. Indeed, even regional negotiations would still tip the balance against the developing countries, although I note that that is the approach that the United States seems to want.

There are other ways forward. One suggestion is that we go back to the method used in the earlier Tokyo round; namely, that the 30 key countries—the rich countries—should get together and decide how they wish to move forward without demanding any reciprocal concessions from the smaller and poorer countries. Let us, the richer countries of the world, take it as a responsibility that we have to resolve the matter. Let us not spend our time trying to get concessions from some smaller countries, but say how we approach it in the light of Cancun. It worked in the Tokyo round and could work this time.

I welcome the fact that the British Government support a multilateral approach. I hope that they will persist in that and use all our influence on the other key countries. It is absolutely crucial that the United States and EU make a better agricultural offer, perhaps on the basis of the type of approach that I have mentioned. I also think it crucial to look again at the World Trade Organisation's processes and procedures. It simply is not good enough to build up the hopes of the poor countries of this world, and then see them dashed through cumbersome, bureaucratic and ineffective methods.

I wish to raise one other matter, that of EU trade policy. I have criticised the United States Government once or twice, so let me criticise the EU as well. There is a need for a thorough look at the way EU trade policy is developed. I do not think that the Cancun outcome reflects well on how the EU went into the discussions, as I have said. Some EU trade-policy discussions seem to take place in a less transparent manner than one would wish. The suspicion has been put to me that even the British Government had only a hazy idea of what the Commission was up to in developing its stance for Cancun. That is not desirable.

It is crucial that we make progress. The high-level talks in Geneva are an opportunity for making such progress and learning from Cancun. Above all, we need political will. I look to the British Government to persuade other EU countries and the United States that it is time to exercise that political will and provide the poor countries in the world with a fairer deal than they have got up to now.

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7.42 p.m.

Lord Judd: My Lords, I am sure that we are all grateful to my noble friend for having introduced the debate, just as we are to the organisations that he mentioned for their assiduous monitoring of the situation. I am particularly glad that my noble friend the Leader of the House will reply to the debate. It is significant that the Leader of this House takes the issue as central to her own agenda. She brings a lot of ministerial experience to the debate.

From having listened to my noble friend Lord Dubs, I want to put some specific questions to my noble friend Lady Amos for when she replies. Will she reassure the House on exactly how we monitor the development of Commission policy in the European Union, and are we really satisfied that the policy totally reflects what we believe should be put forward? Secondly, will she also reassure the House on the matrix dimension of the development of policy in this country? When we are preparing for the likes of Cancun, how far do departments that have a very significant interest in what is happening have an opportunity to take part in devising the strategies that we will advocate? The Treasury speaks for itself and the Department of Trade and Industry is obvious, but the Department for Environment, Food and Rural Affairs and the Department for International Development are relevant, as are the Foreign Office and the Ministry of Defence in terms of international security.

Cancun is, of course, central to the issue of global stability and our fight against global terrorism. I have argued before in this House, and I am sure that I will argue again, that very often I reflect that the world is in a classic pre-revolutionary situation. We have the many millions of utterly deprived and excluded, but also some very bright and well-educated people around the world who may, in personal terms, not be materially badly off but feel excluded from access to the decision-making processes in the world. If we are to have stability and security, we have to address not only economic and social justice, but the redistribution of power. Cancun demonstrates that very clearly. Whose was the agenda at Cancun? Was it the agenda of the international community, or was it still, however refined and presented, the agenda of the powerful in the world, to which the rest were asked to respond or on which they were asked to comment?

The matter is very well illustrated by the difference between the Singapore issues and the agricultural issues to which my noble friend referred. The Singapore issues—competition, trade facilitation, investment, transparency in government procurement—are all very worthwhile objectives. However, they are not central to the agenda of poor countries desperately endeavouring to survive. For them, the contradiction in the subsidies to cotton or our own iniquitous common agricultural policy, the distortions that those introduce into their economies, and the punishment that they mete out to their own people are much higher priorities.

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The issue that goes alongside who owns the agenda, if we are talking about fairness, is the resources available in preparation and in the negotiations themselves, particularly when it comes to the small hours in the morning. Some of us who have participated in such negotiations know the game of brinkmanship right up to the last moment. Some of our delegations have immense resources at their disposal to handle that situation. Others dealing with desperately poor people in the world and their needs have virtually no such resources at their disposal to keep up with the game.

We are faced with the breakdown of Cancun. As my noble friend argued, we could see a threat to the commitment to multilateralism. I was recently in the States and heard people arguing that, in a sense, there had been emancipation and we could now get on with the job on a piecemeal basis, country by country or region by region. Divide and rule would, of course, be disastrous for the poor. We have to help the World Trade Organisation to overcome its difficulties and become more effective. Reform of the World Trade Organisation and its methods of operation is therefore crucial. My noble friend referred to that. It is not an either/or situation. That will take time.

In the meantime, there is the issue of will and commitment. If we want to see a stable world, we have to take the issue of power and justice very seriously. It is no good talking about level playing fields when, for many countries, the question is how one gets fit enough to be on the playing field and start playing. It is no good talking about environmental responsibility when we are telling people to do as we say and not as we do. It is no good being preoccupied, as we are, with migration and barriers that we must put up to the movement of people if we are not looking at what causes migration.

I simply argue that we must reform the World Trade Organisation. However, much more important in the immediate setting is a will to see justice for the poor.

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