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Earl Howe: I wish to speak to Amendments Nos. 178, 180, 181 and 182. One of the standard features of recent legislation giving government the power to control the prices and profits of a particular industry is a section setting out a clear statement on the face of the Bill of the objectives which underlie these powers. An example of this is Section 3 of the Electricity Act 1989. If we look at this Bill, however, the powers are there but the context is not. Indeed the powers proposed in the Bill are far more discretionary than the statutory powers which apply in industries such as the privatised utilities. With the privatised utilities the power to control prices rests effectively with an independent regulator. The Bill should state in clear terms the Secretary of State's obligation to have regard to defined statutory purposes in exercising the powers confered upon him. These purposes ought best to be a restatement of the objectives underlying the PPRS. That is what Amendment No. 178 seeks to achieve.

Statutory control of the prices and profits of private companies is very much a course of last resort for any government--even, I suspect, for this Government. Clause 31(4) of the Bill attempts to hedge in these powers by including a test of reasonableness. But, on reading that subsection, I wonder whether the wording could be made clearer and more direct. I have attempted to do that in Amendments Nos. 181 and 182. In Amendment No. 180 I have suggested that there ought to be exactly the same test of reasonableness applied to anything the Secretary of State does under Clause 26 relating to the voluntary scheme.

Baroness Hayman: I hope I can be helpful to the Committee, although I am not certain that I can accept specifically either the amendment of the noble Baroness, Amendment No. 173, or the later amendments, as they stand, of the noble Earl, Lord Howe. Amendment No. 173 would place on the face of the Bill a requirement for the Secretary of State to have particular regard to the priorities of the NHS for research and development in the field of pharmaceuticals in the exercise of any statutory scheme. The purpose of the statutory scheme--as is the purpose of a voluntary agreement--is to ensure that the prices paid by the NHS for its medicines are fair and reasonable. As I have said before, deciding what is a fair and reasonable price is a process involving many factors, one of which is the amount of profit made by suppliers and manufacturers from the sale of medicines to the NHS.

However, it is not the only one. The amendment points to the importance of research and development to pharmaceutical products. That importance has long been recognised by the NHS. In the pharmaceutical industry the cost of that research and development is high and is met from profit. It is reasonable to take account of research and development costs because the NHS ultimately benefits from the supply of safe, effective and innovative medicines. I assure the Committee that the

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recognition of the importance of research and development will continue in the event of the introduction of a statutory scheme. I am not sure that it is necessary to have such a commitment on the face of the Bill. The Secretary of State, in not having regard to the importance of research and development in setting prices and profits would be acting against the long-term interests of the NHS.

Amendment No. 178 is a similar but more comprehensive amendment proposed by the noble Earl, Lord Howe. It raises a number of questions. First, there is the issue of whether it is desirable to have a statement of objectives on the face of the Bill. This is a difficult matter requiring some care. It runs the risk of the objectives being followed so closely that they restrict the operation of the Bill and make it unworkable. There is also the issue of whether it is desirable to give a separate set of objectives to one part of the Bill with the statutory scheme, and potentially other objectives set out in the voluntary scheme, which is not yet decided upon.

The objectives proposed, as they are laid out, seem perfectly acceptable principles--I would not wish to dissociate myself from any of them--but we would be setting the courts a near impossible task if we were to ask them to consider not simply whether a company's profits were in accordance with the rules of the scheme but whether the Secretary of State's actions could be considered best calculated to achieve the objectives set out here.

It is vital that we work on a co-operative basis with the pharmaceutical industry, and we hope that this co-operation will be through a voluntary agreement. It is in that agreement that a statement of objectives, such as those proposed, should reside. They are then capable of change in the light of changed circumstances and renegotiation. I do not believe that it would help to have an inflexible statement of objectives on the face of the Bill if they were subsequently relied on as a key to the operation of the legislation.

However, I have some sympathy with regard to the issue of whether we could find a way of placing on the face of the Bill some general principles against which a Secretary of State would work in drawing up a statutory scheme. I hesitate to say that I am certain that we will be able to do that--because of the difficulties in the proposals before us--but I am certainly happy to take this away to see whether we can do something that is perhaps more specific than the reference to be reasonable in all the circumstances to which the noble Earl, Lord Howe, referred and which is, I have to accept, fairly broad.

We shall look to see whether we can produce something that would not introduce possibly excessive scrutiny of the operation of what is intended to be a light touch scheme but something that more clearly defines general principles and general circumstances. Perhaps I may take this away and see whether we can bring something forward at a later stage.

Baroness Sharp of Guildford: I am most grateful to the Minister for her very forthcoming reply. In the light of what she said, I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.

[Amendment No. 174 not moved.]

Clause 29 agreed to.

Clause 30 [Enforcement]:

[Amendments Nos. 175 and 176 not moved.]

Earl Howe moved Amendment No. 177:

Page 23, line 15, at end insert--
("( ) An order under subsection (6) shall be laid before both Houses of Parliament in draft and shall be subject to approval by resolution of each House.").

The noble Earl said: Clause 30 lays down penalties for infringements of any of the regulations or directions which may arise from the preceding four clauses covering either the voluntary scheme or the statutory controls that may be imposed by the Secretary of State. This amendment is concerned not with the principle of having penalties but with the power of the Secretary of State to increase those penalties without further reference to Parliament. This is a Henry VIII power and it is one about which the Delegated Powers and Deregulation Committee expressed particular concern.

I strongly share that concern because, even setting to one side for a moment all our disagreements about statutory versus voluntary schemes, it seems wholly wrong for Parliament to give a blanket power to the Secretary of State to enable him to set literally any amount as a penalty. I do not believe that that kind of power exists in law in respect of other types of fine or penalty. Nor do I see any argument for it existing here, more especially because these penalties apply not just to the infringement of the statutory controls but to the voluntary scheme as well. I beg to move.

Lord Clement-Jones: We on the Liberal Democrat Benches strongly endorse the comments of the noble Earl, Lord Howe, and support the amendment. As he mentioned, it was strongly recommended by the Delegated Powers and Deregulation Committee and we believe that there are eminently good reasons for making subsection (6) subject to the affirmative procedure.

12.30 a.m.

Baroness Hayman: It is certainly our hope that the powers conferred under Clause 30(6) would not often be used over the lifetime of the Bill. The provision is there to ensure that the penalties for non-compliance with either the voluntary agreement or the statutory scheme should remain at appropriate levels.

Noble Lords are correct in pointing out their own view and that of the Delegated Powers and Deregulation Committee that provisions such as these should be made by affirmative resolution. I referred earlier to our intention to bring forward amendments at a later stage to bring the Bill into line with the suggestions made by the Select Committee. Perhaps this is one of a number of areas in the Bill in which that could be done.

Perhaps the Committee will allow me just a moment's leeway, for the sake of completeness, to deal with other government amendments which it may be helpful to foreshadow that we intend to bring forward. I made

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reference earlier to issues surrounding unified budgets. We also want to bring forward an addition to the section of the Bill dealing with evasion of charges and fraud to cover the introduction of a penalty charge for non-payment of an NHS charge or the incorrect claiming of a benefit. That would respond to the recommendations of the efficiency scrutiny on fraud published in June 1997.

I also hope, in response to the point raised by the noble Lord, Lord Colwyn, at Second Reading, to bring forward a government amendment on the issue of professional indemnity insurance and to introduce an amendment responding to concerns raised by the professions relating to the role of local medical and dental representative committees in relation to primary care Act pilots. I am grateful to the Committee for allowing me to make that clear as well as our intentions in relation to this amendment.

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