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Viscount Ullswater: The amendment of the noble Lord, Lord Howie of Troon, is a comprehensive definition of construction operations which is much closer to the definition of the Latham Review Working Group 10 definition that I mentioned earlier. I recognise the problem of trying to include some contracts and exclude others from the provisions of the Bill. It is the later provisions of the Bill that are helpful to the industry and, though we are having long discussions about what contractual operations mean, it is the later provisions that are of benefit.

The noble Lord's definition will affect every construction site, as he indicated, whether it is a building site, a civil engineering site or even a process engineering site. It would make all the construction operations on that site subject to the provisions of the Bill. I know that that is what the noble Lord intends because that is what he says, in a rather provocative way, because he wants to be persuaded that the process engineering industries have a title to be excluded. As I indicated, that may lead to severe problems within the industry.

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I am content therefore to see the definition remain as it stands in the Bill, with some of the amendments that we have been discussing for the past hour or so. The noble Lord, Lord Howie, indicates that he wants the minimum of exclusions and indicated some of those in his amendment. I should like to mention one exclusion which has not been mentioned in an amendment but I feel that I should raise it at this stage. I wonder whether there should be some de minimis exclusions for relatively small contracts. I mentioned that point to my noble friend when I had a meeting with him. Are we expecting the repair to a broken window in some commercial property which has been requested in writing to be subject to all the provisions of the Bill? I believe that there should be a limit of perhaps £25,000 on any one contract so that the Bill is seen to apply more particularly to the larger contracts instead of bogging down small business in a whole series of red tape.

The reason I make that suggestion is because I believe there is a precedent for it. That comes into the construction, design and maintenance regulations of 1994 which I understand are health and safety regulations and therefore not similar to the de minimis provision I have in mind. However, it excludes small sites from those regulations where the number of workers is less than five. There is therefore a good precedent for that and perhaps my noble friend can say something about it at this stage.

Lord Monkswell: In rising to support the amendment of my noble friend Lord Howie of Troon, perhaps I can put forward a different viewpoint for consideration. The noble Viscount, Lord Ullswater, suggested that there is a need to exclude certain aspects from the operation of the Bill because they are not wanted by those specific industries--mining, the process plant industry and small contracts. I wonder whether that is because of a misconception of what the Bill is about.

I may have misconstrued it altogether but it seems to me that the Bill seeks to ensure that where we have a contractual morass within the construction industry there is a fall-back position to protect everyone in the industry from the previous regime of litigation concerning contracts that have not been fulfilled adequately and endless arbitration and disputes procedures. It is a fall-back position to protect the people operating within the industry rather than an imposition of some new series of regulations, red tape and other paraphernalia. If one looks at it in that light, the arguments from the processing industry, the mining industry and the small contractor effectively fall away.

I am concerned that, because of the way the Government seem to have drawn the exclusions so far, we could end up with the core of the construction industry being covered by the Bill and the periphery that affects the construction industry being covered by other legislation such as the Sale of Goods Act, but there could be a grey area between the core and the periphery that would not be covered either by the Bill or by the Sale of Goods Act. That could develop into a morass of its own and interested parties would no doubt feel that

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they could get an advantage by operating within that grey area. It may be that my interpretation of what the Bill sets out to do is completely erroneous, but my view may also have some merit and therefore should colour the way the Government and the noble Viscount, Lord Ullswater, consider the issue.

5.30 p.m.

Lord Berkeley: I strongly support the amendment proposed by the noble Lord, Lord Howie of Troon. Perhaps I may follow on from some of the remarks made by the noble Lord, Lord Monkswell. Since the noble Lord, Lord Howie, and I started in the industry the enormous change has been the increase in subcontracting--and not just one but several different layers. As the noble Lord, Lord Monkswell, said, it is often the small people at the end of the chain who will suffer. I therefore believe that having a lower limit would be counterproductive. This should be seen as a simplification and a benefit for them and I am sure they all welcome it, as do many of the of the organisations listed by the noble Lord, Lord Howie.

One item may be missing from the noble Lord's otherwise excellent definition. I go back to our supply of precast concrete beams and whether or not they are special. If the Minister looks with favour on the amendment, perhaps that part could be looked at again.

Baroness Hamwee: Perhaps I may take this opportunity to pursue a point made by the noble Lord, Lord Howie of Troon, and to ask for the Government's thinking on it. I refer to professionals. Normally there is a distinction between the supply of goods and the supply of services. I should be interested to know a little of the Government's thinking in revising that to the extent that they have in Clause 102.

Another question has been put to me. I do not share this concern but if others do it is a concern that should be addressed. The question is about whether certain further exclusions ought to be made. I do not read them as being included within the Bill but the contracts that have been mentioned to me are contracts such as insurance and guarantee, including the provision of bonds, the financing of construction operations and joint venture agreements. Can the Government confirm that arrangements of that type are not covered?

Earl Ferrers: The noble Lord, Lord Howie, has given us a fairly complex amendment to deal with. He was kind enough to say that he put down the amendment so that I could give my reasons for what we have put down and that as I had already done so I need not do so again. That delightfully gets me off that hook and I am grateful to him for that.

Many people complained that the clause is too long. However, the noble Lord's amendment is even longer. I can only say that if the noble Lord constructs a building like he constructs a clause it must be a very decorative and interesting building at which we would all have to look, even though it may not necessarily be one of artistic merit. I shall consider the merits, artistic or otherwise, of his amendment.

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We have had the advantage of the views of the noble Lord, Lord Monkswell. I did not realise that he is such an expert on these matters. I understand that among other great attributes that he has he is a jobbing electrician and that he has even done work in your Lordships' House. It was very brave of the works directorate to give such a desperately important job of work to the noble Lord; that probably explains why the lights in my room always go "phut"!

Lord Monkswell: Perhaps I may explain to the noble Earl that I had no involvement in making any connections with regard to the electrical work, so any faults he may find are not down to me. I would also advise him that I had a period in the construction industry some 30 years ago, and it advises me even today. I also have contacts within the construction industry even now.

Earl Ferrers: I am deeply relieved to know that the noble Lord did not have any responsibility for connecting electricity in the House. Obviously when my lights went "phut" it was only the bulb and not due to the misapplication of any sophisticated technique.

The amendment tries to provide a more comprehensive definition of the construction industry not only by adding in certain areas of work which we believe should not be there but also by going over some fairly undisputed ground in much greater detail. I think that very often less is more. In other words, it is better to have less than to have more. The amendment is designed to define the construction industry in respect of a different issue in that the noble Lord uses the working group 10 definition. That was based on a totally different issue; namely, the liability for latent defects, which was also commented upon in the Latham review. It specifically included the suppliers of components, which we have already discussed. The working group definition may serve well for the purpose the working group had in mind but I do not think it is satisfactory for our purposes.

I do not think it is necessary, for example, to add "conversion" and "restoration" to the list of activities in subsection (1)(a). Those are already covered by "alteration" and "repair". It is unnecessary to refer specifically to "water-proofing" in new subsection (1)(e). I would hope that the construction of a building, even one designed by the noble Lord, Lord Howie of Troon, would always be taken to mean that the finished product will at least be waterproof and will keep out the rain.

In its enthusiasm to ensure that no conceivable construction activity should fail to get a mention in the Bill, the amendment provides a new definition which is very extravagant in its coverage. For example, under the amendment having a car resprayed would count as a construction activity under new subsection (1)(e). That is a very remarkable thought and a quite acute misdirection of effort for this part of the Bill: any obvious error can be rectified easily. But it illustrates the point that many activities which take place in the construction industry also take place in other industries. The boundary has to be drawn with care and restraint.

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The original Clause 102 allows for the exclusion of work on plant, machinery and steel work for the process engineering industry. I hope that we may be able to discuss this fully when we reach a number of the detailed amendments later on. I point out that one of the Government's main difficulties with the noble Lord's alternative definition is that it does not deal appropriately with process plant.

There are always good things in anything which the noble Lord, Lord Howie, suggests: we have to hunt for them sometimes, but they are there. He will find that the Government are prepared to move some of the way towards him. They have done so. I forget the word which the noble Lord, Lord Howie, used, but I believe he said that he was satisfied or encouraged, and they were words of an approbatory nature as regards Amendment No. 134.

My noble friend Lord Ullswater thought that there should be a de minimis exclusion of small works of about £25,000. I understand why he said that. He was concerned that if one asked a person to put a new window in one's house, one should not have to go through all this rigmarole. In fact, I do not believe that it will be necessary to do all that. The danger of fixing a downward limit is that contractors may find it convenient to split up a large contract into a number of smaller ones so that they are below the figure of, say, £25,000. Oddly enough, if one took my noble friend's suggestion on board, one would have to realise that it is very often the small contractors who are most hit. For all that, I quite agree with my noble friend that if one has a contract for £100 one would not necessarily expect to have all the rigmarole of this part of the Bill attached to such a contract.

I wish to think about what my noble friend has suggested and find out whether there is some way of making it clear that it does not refer to the ordinary jobbing builder or electrician, if one may so put it, but that it does not also fall within the trap of enabling people to split up large contracts into a number of smaller ones, which would have a bad effect.

The noble Baroness, Lady Hamwee, asked whether the professionals were included. This measure has been put forward deliberately because there are professionals of different kinds whose work affects so much of what goes on in the construction industry. She also asked whether insurance was covered. An insurance contract as such is not in the Bill. If it is construction work it will be covered, but the insurance itself will not.

I understand the reason why the noble Lord, Lord Howie, has tabled this amendment. I know that he means the amendment to be helpful, but it is not helpful to try to define too many things, as his amendment does, because it constrains the operation of the Bill very considerably. I shall certainly take account of what has been said, but I suggest to the Committee that it would be better to accept the clause as it is in the Bill and to see whether there are any ways in which we can make it better, having considered all the views which have been expressed in Committee today.

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5.45 p.m.

Lord Howie of Troon: When I seemed to speak in praise of Amendment No. 134, which I did, gladly, I was trying to intimate to the Committee that in bringing forward that very small amendment the Government had become dimly aware of the fact that their definition was unsatisfactory and that they were trying to make amends, albeit in far too modest a way. I am pleased with what little we got. I have high hopes that our debate so far will produce further amendments and improvements to the Bill.

The Minister mentioned the phrase "less means more". He will realise that that phrase was coined by Mies van der Rohe, the famous architect; therefore, it is totally appropriate for a debate about the construction industry. The noble Earl suggested that I put too much in the amendment, and he could be right. I shall leave it at that. There is one merciful thing in what he said. He did not say that in the size of the definition the Government "had got it about right". That is what they usually say on these occasions. They usually say that the precise number of words that have been put in are right. In fact, there is no doubt at all that their definition is too scanty and I have tried to make it less so and more inclusive.

The noble Viscount, Lord Ullswater, put his finger on my reason for bringing forward this amendment and it is this. I welcome Part II of the Bill in general terms and I have done on numerous occasions. It is intended to help the industry. It can only do that to the extent to which the industry is included. We know from our examination of Clause 101 as it stands at the moment that that leaves out about half of what is normally considered to be the construction industry. So one pleases half of the construction industry and the other half is left weeping into its beer. That is why I have tried to extend the element of inclusion so that the aim which the noble Viscount, Lord Ullswater, identified can be properly met and not only have half a job done, which the Government seem to be content so to do. As regards the exclusions, I speak purely from memory, but I believe I am right in saying that they were WG10 exclusions. I may be mistaken, but that is my recollection.

My last word on the subject at the moment is this. The Minister reminded us of latent defects. I can recall several unhappy hours in this Chamber debating at great length the latent defects Bill several years ago. We ended up with an Act which was totally unsatisfactory. One of the unsatisfactory parts of this Bill--and I shall not press the matter at the moment--is that it does not include latent defects. It should, because the present legislation is very poor.

However, I have high hopes that the noble Earl will be convinced, even persuaded, by the arguments which have been put forward from all sides of the Committee this evening and that he will consider what has been said and redraft Clause 102 nearer to the kind of perfection that we seek. In that hope, I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.

Clause 102, as amended, agreed to.

Clause 103 [Provisions not applicable to contract with residential occupier]:

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