My Lords, I beg to move that this Bill be now read a second time. The Bill has come to us from another place, having been sponsored there by Mr Richard Ottaway, the Member for Croydon South.

The Motor Car Act of 1903 introduced measures to identify vehicles and their drivers, due to the rise in traffic at the time. There were 5,000 vehicles on the road then; we now have around 33 million, with most, it seems, driving around the M25 at eight o'clock in the morning. All vehicles were to be registered and to display registration marks—the vehicle number—on a plate in a prominent position. I believe that the police refer to them as index numbers. Since then, there have been many reforms to road traffic and vehicle numbers legislation, including the Vehicle Excise and Registration Act 1994—VERA—and, even more recently, the Road Vehicles (Registration and Licensing) Regulations 2002.

The first registration was A 1, issued to the second Earl Russell, who wanted the registration so much he camped out all night to secure it. Vehicle registration marks vary greatly in price. I understand that one of the most expensive ever sold was M 1, bought for £331,000. Most of the numbers transferred are much less than that—typically from £500 to £1,500. Thousands of motorists display vehicle number plates that individualise their cars, making it easier for it to be recognised by them and indeed the police. A number plate could spell out a name. For example 51 NGH, which can look like Singh, was sold by the DVLA for £254,000 in 2006. Or a plate could convey an interesting message. I have fond memories of an old number plate of mine, FIB 4157. For a politician, it was probably better than 1 FIB.

The Bill is designed to remedy an imperfection in the existing legislation, VERA. If my car with the number plate FIB 4157 expired, as it did, and I wanted to keep the number, I would apply to the DVLA to retain it separately from the vehicle. If I wanted to sell my right to the number to a dealer or an individual, as the grantee, I would be involved in the subsequent process until another car was nominated to take the number. That could take some time, and I would be contacted every 12 months, when the retention needed to be extended. I cannot make a quick, clean-break sale. For the buyer or dealer, there is the possibility of fraud or financial loss, as he will have to trust my integrity to assign the number as agreed and not renege. The dealer may have expended considerable effort in marketing the number.

The current arrangements clearly lack flexibility in not allowing the person, other than the current or original keeper, to hold the right of retention, as only the grantee can apply to assign a number to a vehicle registered in his name or that of a nominee. That is because entitlement to the number cannot be passed on while it is held on retention, as the nominee has no legal entitlement to the registration mark before its assignment to a vehicle. A dealer may transfer a valuable number to a cheap vehicle, but that would cost £80 each time. He would also then have to store many vehicles—that is clearly inappropriate for low-value numbers. Although the original intention of the legislation was to safeguard an individual's right to display a number, it creates an unnecessary administrative burden for those trading in numbers and can prevent the quick conclusion of the transaction. The retention certificate costs £25, and an additional fee of £80 is payable for the assignment of the registration mark to another vehicle. During the past financial year, the Driver and Vehicle Licensing Agency handled almost half a million cherished transfer and retention applications. Your Lordships will now understand why Ministers are so supportive of the Bill.

Under the Bill, the registered keeper would be involved in the process only when making the initial application for a right of attention in favour of his chosen purchaser, unless he wants to retain the number himself. Once the initial right of retention has been granted, it will be non-transferable, unless the person holding the entitlement to the number—the grantee—wishes to pass his entitlement to another party via the existing nominee arrangements. The seller will be able to make a clean-break sale, and the buyer will acquire entitlement to the number before assigning it to the vehicle.

Clause 1 amends the Secretary of State's powers, and subsection (1) extends the power to give a right of retention to someone other than the registered keeper. Subsections (2) and (3) make consequential amendments. The Bill enables the DVLA to conduct its business more effectively in respect of the sale of vehicle registration marks. It will also benefit both buyers and sellers of vehicle numbers and intermediaries in the trade.

Although the Bill improves the system associated with vehicle numbers, I am aware that there is another problem with cherished number plates. That is the misrepresentation of number plates for amusement or for criminal purpose. The misuse of different fonts and fasteners is a good example. Misrepresented vehicle registration plates are illegal, and difficulties have arisen in respect of automatic number plate recognition. There is also evidence of the growing use of non-UK-style plates. Vehicles are displaying number plates that carry the car's UK registration but, due to the style, appear to be from another country. That can impact on the ability of ANPR to read the plates correctly. However, although those problems are real, the Bill does not attempt to address them. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Earl Attlee.)