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Lord Lucas: My Lords, the noble Lord, Lord Berkeley, has got it pretty well right, as one would expect. The phrasing here is,

as we have just discussed--

    "on a site where the primary activity is".
The governing phrase is,

    "construction, installation or demolition of plant, machinery".
That is what we are talking about. There are grey areas enough in relation to that, if we think of building a sewerage works, for instance, as to which part is construction and which part is machinery. It is quite clear that the dividing line is there, and that in the wording of the Bill as drafted we confine the process section to that which has to do with plant and machinery.

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Within that, it is quite clear to us that industries such as,

    "nuclear processing, power generation, or water or effluent treatment",
are at their heart, when it comes down to machinery, process industries and ought to be within the exclusion. But the construction operations that go with them, subject to the inevitable grey area, should be without the exclusion.

Lord Berkeley: My Lords, perhaps I may offer to the Minister a point of clarification. What has confused me, and possibly some other noble Lords, is the use of the word "construction" in this instance. I do not think that you ever "construct" plant or machinery. You fabricate it, and then you install it. It may be that we are so used to "construction" being civil engineering construction that we are becoming confused. (Perhaps it is I who am becoming confused.)

Lord Lucas: My Lords, we shall certainly take that point on board.

Lord Howie of Troon: My Lords, as always, I am indebted to my noble friend Lord Berkeley for pointing out the hole in my argument, which he did with what might be called unerring aim. I agree with him.

My purpose in tabling this amendment was to have on record, which is important, an admission by the Government that those construction elements as we understand them in the various process plants are included within the Bill. Having received that assurance--it should have been clear to me; but then I struggle with these matters--I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 130:

Page 59, line 17, leave out ("or water or effluent treatment").

The noble Lord said: My Lords, this amendment reflects an amendment moved in Committee and is rather more narrowly focused than the amendment we recently discussed in the name of my noble friend Lord Howie of Troon.

It is our continuing contention--in spite of the arguments put forward by the Government--that water and effluent treatment are fundamentally construction activities; that is, they are activities which properly fall within the construction industry. We contend that such treatment involves not merely the installation or demolition of plant and machinery. Much of the work is carried out by firms which we recognise as being part of the construction industry.

The water industry frequently uses what is known as form G90, which offers a reasonable form of protection for main contractors. However, subcontracts are frequently one-off documents on the main contractor's own terms which produce problems for subcontractors in the building industry which the Bill seeks to address.

We come back to the difficulty of main contractors, subcontractors and sub-subcontractors. Main contractors may be reasonably protected, though form G90 does not contain any adjudication provisions. However,

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subcontractors, often smaller businesses, need the protection afforded by the Bill. Amendment No. 130 seeks to ensure that water and effluent treatment are accepted as a construction industry activity because all water and sewerage plants are produced and undertaken by construction companies. Any machinery outside their ambit is brought in in the context of a construction activity. Therefore, where the Bill reads,

    "construction, installation or demolition of plant, machinery or steelwork on a site where the primary activity is ... water or effluent treatment",
our contention is that water and effluent treatment are fundamentally construction industry activities and should not be included here. However, subcontractors should be given the protection of the Bill.

Again, I understand that this is a grey area. We discussed this matter at Committee stage but I hope the Government will look at it again. I am advised by people who know much better than I that this expression in the Bill is something that they would like reconsidered. I beg to move.

Lord Monkswell: My Lords, I rise to support my noble friend on Amendment No. 130. It may be useful to draw a distinction between water or effluent treatment and the other two elements that are contained in this section of the Bill; that is, nuclear processing and power generation. As an engineer I am concerned that nuclear processing, power generation and water or effluent treatment are lumped together. I can see a great distinction between them and perhaps I may explain my reasoning to the House.

When one looks at nuclear processing or power generation activities, one sees that a large part of the operation of the plant as a whole will be precision engineering. When one talks of nuclear processing or power generation one expects there to be complex and precise engineering and specialist scientific plant that will be part of the whole site. In that sense a large proportion of the value of the whole contract will be concerned with precision engineering, which is rather different from the normal construction site type of operation. Therefore, the pure construction side--concrete laying, steel erecting and so forth--will make up only a small proportion of the cost of the overall project.

When we consider water and effluent treatment, that element of precision engineering which will no doubt be carried out by an engineering company and be built and delivered to the site will make up a much smaller proportion of the cost of the whole project. I hesitate to argue percentages, but it will be generally understood that the construction activities in building a water or effluent treatment plant will make up a large proportion of the total project cost. In that sense it is sensible--that is why I support my noble friend's amendment--to separate the water or effluent treatment activity from nuclear processing and power generation. I hope that the Government respond sympathetically to the amendment.

Lord Lucas: My Lords, yet again we find ourselves discussing the division between process and

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construction. The water industry is a particularly difficult area. On the one hand, there is a great deal of construction involved in its activities and, on the other, the industry spends around £500 million a year on processed plant and therefore has a large element of process in it.

We promised to look again at the introduction of subsection (2)(c) to make sure that the right line is drawn between process engineering and other types of construction activity. Until we have done that and reached our conclusions, we do not want to look at how it will work within specific industries. For the moment we want to keep the water industry in the section. To a large extent it is a process industry and we do not want to lose that element in the generality of construction for reasons we outlined when discussing the first amendment this afternoon.

Lord Williams of Elvel: My Lords, I am glad that the Minister reaffirmed that the Government are looking at the whole question again. As I said, I received advice from somebody who knows much more about these matters than myself. I am sure that the Government will consult with those who know more about the problem.

This was a specific point which was felt to be particularly sensitive. Nuclear processing and power generation were not brought to my attention but water and effluent treatment were. I am sure that in considering their position the Government will talk to those who advised me on this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 131:

Page 59, line 20, leave out ("chemicals, pharmaceuticals,").

The noble Lord said: My Lords, in moving Amendment No. 131 I shall speak also to Amendments Nos. 132 and 133. All three amendments stand in my name and that of my noble friend Lord Dubs.

The discussion in Committee took us some way forward. The Government eliminated warehousing from this section. It may be a matter of drafting and of substance as to why chemicals, pharmaceuticals, food and drink are singled out for bulk storage or production purposes. It seems to me that if the subsection which we are now addressing simply said,

    "the production, transmission, processing or bulk storage"
of any commodity, that would probably meet the case. I would like to know why chemicals and pharmaceuticals appear where other things which, after all, are stored in bulk do not appear, and why food and drink is singled out as being a specific matter which needs to be mentioned here.

Once we have admitted that warehousing may well be a construction activity and, therefore, within the ambit of the Bill, it does seem to me that almost all food and drink, other than the bulk storage of what goes into the final product, is relevant for the purposes of this section.

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Again, these are purely probing amendments to find out why the drafting resulting from the discussions we had is the way it is and whether there is any justification for keeping in these elements here. I beg to move.

6 p.m.

Lord Swinfen: My Lords, I wish to raise a small point: should it not be "food or drink", rather than "food and drink"? Otherwise, I wonder whether it has to be a warehouse with both food and drink in it and, if the warehouse has either food in it or drink in it on its own, whether it falls outside the Bill.

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