House of Lords

Tuesday 21st December 2010 Lords Chamber

Tuesday, 21 December 2010.

14:15

Prayers—read by the Lord Bishop of Derby.

Introduction: Lord Cormack

Tuesday 21st December 2010 Lords Chamber

14:22

Sir Patrick Thomas Cormack, Knight, having been created Baron Cormack, of Enville in the County of Staffordshire, was introduced and took the oath, supported by Lord Crathorne and Lord Lamont of Lerwick, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Sharkey

Tuesday 21st December 2010 Lords Chamber

14:28

John Kevin Sharkey, Esquire, having been created Baron Sharkey, of Niton Undercliff in the County of Isle of Wight, was introduced and made the solemn affirmation, supported by Baroness Scott of Needham Market and Baroness Bonham-Carter of Yarnbury, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Ribeiro

Tuesday 21st December 2010 Lords Chamber

14:34

Sir Bernard Francisco Ribeiro, Knight, CBE, having been created Baron Ribeiro, of Achimota in the Republic of Ghana and of Ovington in the County of Hampshire, was introduced and took the oath, supported by Lord McColl of Dulwich and Lord Patel, and signed an undertaking to abide by the Code of Conduct.

Peers

Tuesday 21st December 2010 Lords Chamber

Question

14:39

Asked by

[Lord Selsdon]

To ask Her Majesty’s Government, in the light of the announcements by the Prime Minister to appoint a number of new life Peers as “working Peers”, what is their definition of a “working Peer”.

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, the term “working Peer” has been used since the 1950s to refer to Peers appointed to the House of Lords following nomination by one of the political parties. Such nominations are subject to vetting for propriety by the House of Lords Appointments Commission.

[Lord Selsdon]

My Lords, I am most grateful to my noble friend for that little bit of history, but is he aware that the official advice given to me is that there is no term “working Peer” and that Members of your Lordships' House, other than the 20 who hold positions and are paid from the public purse, do not work? Will he therefore explain to me whether I am right or wrong, and whether the only term of comparison that I can find in my research is correct; that is, that the nearest relationship is the worker bee? If we do not work, are we all known as drones?

[Lord Strathclyde]

My Lords, I know that my noble friend speaks for himself in posing these questions. He said that he was glad of my little history lesson. I know that he has done endless research on this question. He is broadly right: there is no statutory basis for the term “working Peer”. It does not appear in the Companion or in our Standing Orders. It has been used in the past as a term of convenience. My view is that all Peers come here to work; no Peer comes here except as a volunteer; and they fully understand the duties that they will have to perform when they get here.

[Lord Hunt of Kings Heath]

My Lords, I am sure that the noble Lord is right to say that all Peers come here to work, but is not the question whether there is enough room for them to come given the propensity of the Government to appoint many more of their own Peers to flood this place?

[Lord Strathclyde]

We know, my Lords, that there is not enough room. However, I am delighted to say that, very shortly, I shall be receiving from my noble friend Lord Hunt of Wirral a report on retirement from the House. I hope that will point us in the right direction of finding ways to reduce our numbers voluntarily or perhaps even otherwise.

[Noble Lords]

Oh!

[Lord Geddes]

My Lords, is there not an implication in the style of “working Peer” that those of us who are not deemed to be such are idle?

[Lord Strathclyde]

That was certainly the view in the 1950s when the term was first introduced. I do not think that it is necessary to use the phrase “working Peer” any more. It is certainly not one that I will use from now on and I shall encourage others not to use it either. I do not think that Peers should encourage being described either as working or non-working Peers.

[Lord Faulkner of Worcester]

Could I ask the Leader of the House about working Ministers? Is he satisfied that a significant number of his Front-Bench colleagues are not in receipt of a ministerial salary? Is that not an undesirable trend, which was started by the previous Administration and continued by this one? I declare an interest as someone who was for a considerable time unpaid and latterly was paid.

[Lord Strathclyde]

My Lords, I am sure that the noble Lord deserved exactly what he got. The noble Lord tempts me. This is slightly beyond the scope of the Question. There is a statutory limit to the number of Ministers. I regret that there are Ministers who are unpaid in your Lordships' House but they are all volunteers. They all signed up and knew what they were getting when they started. It is a great honour and a privilege to serve Her Majesty's Government in this House.

[Lord Campbell-Savours]

When the next crop of Peers is finally in, what will be the proportion of Peers on each of the Benches?

[Lord Strathclyde]

My Lords, appointments are entirely in the hands of the Prime Minister, but the coalition agreement indicated that, pending long-term reform of the House, we would gradually move towards appointments made more in proportion to the political parties in the House of Commons.

[Lord Phillips of Sudbury]

My Lords, after the noble Lord, Lord Hunt of Wirral, reports on retirement arrangements, what does my noble friend think should be done, if anything, about those Peers who do not take the enticement but do not speak, do not vote, do not serve on committees and often do not attend?

[Lord Strathclyde]

That is exactly why I will await the final report of my noble friend: to see whether or not he raises any of those issues.

[Lord Howarth of Newport]

My Lords, could a working definition of a working Peer be a Member of your Lordships' House who spends a lot of hours in the Chamber very properly scrutinising ill thought-out, badly prepared and excessive legislation such as the Parliamentary Voting System and Constituencies Bill brought in by this Government?

[Lord Strathclyde]

My Lords, in many ways, that may well have been a definition of those Peers who worked bravely on behalf of the Opposition in the dark years between 1997 and 2010. However, I indicated in answer to an earlier question that I thought the term “working Peer” was now outdated.

[The Earl of Sandwich]

My Lords, would the noble Lord agree that without financial inducements there is no possibility of any Peer—or very few Peers—retiring?

[Lord Strathclyde]

My Lords, when the leave of absence scheme was introduced, several hundred Peers—or in the low hundreds—took advantage of it without financial inducement, so I do not agree with the noble Earl’s premise. I also think that the public would find it very hard to understand why many who had been given the honour of being a Member of the House of Lords should then be paid to leave it.

Prisoners: Diet

Tuesday 21st December 2010 Lords Chamber

Question

14:45

Asked by

[Lord Sheldon]

To ask Her Majesty’s Government what action they are taking to ensure that prisoners receive a healthy diet and are treated reasonably.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, prisoners are provided with three meals a day and can choose from a multichoice, preselected menu system which is compiled to cover a minimum of four weeks. This menu format takes account of seasonal variations and prisoner preference and is capable of meeting different dietary requirements, such as religious, cultural, medical and lifestyle needs.

[Lord Sheldon]

I thank the Minister for that reply. Each of the 85,000 people in our prisons costs £38,000 a year, with as many as seven out of 10 offenders who have been in prison ending up in prison once again. Short-term sentences often bring moderate offenders into long-term crimes. Those who start a probation rather than imprisonment limit the increasing rise in the prison population. Should not the Government support Ken Clarke MP in limiting the increasing rise in prison population?

[Lord McNally]

I warmly endorse the noble Lord’s last comment, and hope that all noble Lords will take home for their Christmas reading the Green Paper which my department has published. However, welcome as his point was, it was a little far from the Question. I shall just say that the amount that we spend per day on prisoner meals is £2.20.

[Baroness Trumpington]

Does the Minister think that it was a good idea to get rid of the prison farms, which supplied pork, vegetables and other necessities for prisoners’ well-being?

[Lord McNally]

My Lords, I do think that it was wrong to get rid of the prison farms. One thing that we are looking at as part of making prison terms working terms is looking again at the idea of prisoners doing farm work. I think that it would be a very good thing to return to.

[Lord Ramsbotham]

My Lords, I declare an interest as vice-chairman of Natural Justice, an organisation which in 1997 conducted a random double-blind trial in the young offender establishment in Aylesbury, proving that, given the right mixture of vitamins, minerals and fatty acids, offending and antisocial behaviour came down by 40 per cent. We are currently conducting a second trial. Can the Minister assure me that the second trial will be given a more favourable reception than the previous one, after which it took 11 years to convince government that replication was sensible?

[Lord McNally]

My Lords, we are following this research very closely. It was conducted by Oxford University and funded by the Wellcome Trust. We understand that it is due to report in 2011 and we will build on the work to which the noble Lord referred, which was based on the Aylesbury Young Offenders' Institute. There is a lot of evidence tying in diet and behaviour, and we look forward to the report, after which the noble Lord will have to wait for our response. I hope that it will be a positive one.

[Lord Mackenzie of Framwellgate]

My Lords, given the laudable wish to improve the conditions of prisoners, should we not spare a thought at this time of year for the victims of crime, who far outnumber the perpetrators?

[Lord McNally]

Absolutely. There is no part of the programme that the Ministry of Justice has put forward that puts the perpetrators of crime ahead of the victims. Victims of crime are central to our policy, and all our measures are designed both to help victims and to avoid future victims.

[Viscount Falkland]

My Lords, will the Minister confirm reports in the newspapers that there has been a marked increase in the number of people serving custodial sentences who are over the age of 65? Is it not possible that many of them will have conditions that require dietary control? How will the Government deal with that? Will it make it much more expensive to look after these people who, in my opinion, should not really be there anyway?

[Lord McNally]

My Lords, one of the aspects of penal policy at the moment, with longer sentences and a larger prison population, is that there is now a significant number of older prisoners who face many of the problems that my noble friend refers to. That is one of the reasons why in our Green Paper we invite a fundamental and radical look at prisons, at what they are intended to do and at how we respond to these issues.

[Lord Sheikh]

My Lords, what is being done to arrange for halal meat to be served to Muslim prisoners?

[Lord McNally]

There is a halal option for all prisoners, and Muslim prisoners take advantage of that option.

[Lord Bach]

My Lords, I was delighted to hear the Minister say that the Government support victims in just the same way as the previous Government did. However, why is the victims panel being abolished? What is going to happen to the Victims Commission? Will he tell the House about the Government’s plans for funding for the Victim Support scheme? My understanding is that they are cutting back severely on funding for victims. How does that work if they are still in favour of victims, as we were?

[Lord McNally]

A number of these issues will be discussed in the Public Bodies Bill that is going through this House. I am hoping, at some stage during that Bill, to be at this Dispatch Box explaining our policies on these matters. The issue of victims is not simply about victim support groups; it is central to getting at the basic causes of crime and of reoffending. We have a system where 50 per cent of our prisoners reoffend. If we can cut into that, we are cutting down the numbers of prisoners and the victims of crime.

[Baroness Howe of Idlicote]

My Lords, does the Minister agree that one way both to improve the health of the prisoners and to train for the future might be to run a celebrity chefs course as part of the full-time work that the coalition Government are going to be introducing?

[Lord McNally]

I am not a great fan of celebrity chefs, but that is just a personal opinion; I know how popular they are. The Prison Service has recently been invited to consult on food, nutrition and behaviour within the young offender institutions, and the School Food Trust, a non-departmental body set up by the Department for Education and Skills, is looking into that with the Howard League for Penal Reform. I understand that it is operating on the basis of work done by Mr Jamie Oliver.

[Baroness Farrington of Ribbleton]

My Lords, will the Minister care to comment on the fact that the Government seem reluctant to accept the benefits for children of high-quality and suitable diets at midday and, in schools in deprived areas, at breakfast? Will he transfer his commitment to good quality food for young offenders to all children?

[Lord McNally]

Absolutely, the noble Baroness is talking common sense, as she often does.

Universities: Alternative Medicine

Tuesday 21st December 2010 Lords Chamber

Question

14:55

Asked by

[Lord Taverne]

To ask Her Majesty’s Government what steps they are taking to discourage United Kingdom universities from offering Bachelor of Science degrees for courses in alternative medicines such as aromatherapy, reflexology and Chinese medicine.

[Lord Taverne]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest as chairman of Sense About Science, a charity that promotes evidence-based medicine.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)]

My Lords, universities decide what they should or should not teach. This is a key protection of academic freedom and helps to maintain the world-class reputation of our higher education institutions.

[Lord Taverne]

My Lords, with great respect, as lawyers used to say when they meant the opposite, will the Minister convey to his department that that is not an entirely satisfactory Answer? How can the Government justify supporting universities that show no regard for academic standards and offer science degrees in courses which teach that certain essential oils cure specific diseases, areas of the foot lead to pathways to certain inner organs, and health depends on the pattern of energy flows within the body? If the Government believe in evidence-based science, can they really remain indifferent to the fact that some of their funds are used to promote quackery and mumbo-jumbo and call it science?

[Lord Henley]

My Lords, I again remind my noble friend that it is very important to remember that universities are autonomous bodies and it is for them to make decisions about these matters. The Government have no power to intervene. I have some sympathy with the message that my noble friend is getting across but it would be wrong for the Government to intervene in these matters.

[Lord Harris of Haringey]

My Lords, is it not the case that the Government have differentially removed resources from universities on the basis of some of the courses concerned? Does the fact that resources are not being withdrawn from these Bachelor of Science courses suggest that the Government are endorsing the pseudo-science that is implicit within them? If they are not endorsing that pseudo-science, why are they allowing the funding to continue?

[Lord Henley]

My Lords, the noble Lord is trying to take us back to a debate we had last week. Those matters have been dealt with. I am making clear that it is not for the Government to interfere. We offer guidance to HEFCE. The letter to HEFCE from Dr Vince Cable and David Willetts went out yesterday. That sets out the parameters for HEFCE to make the appropriate decisions about university funding, but it is not right that we should do that.

[Lord Willis of Knaresborough]

My Lords, given the legislation that went through this House last week, which will now see the taxpayer underwriting degree courses at £9,000 a year, does the Minister accept that the taxpayer should not fund what is little less than quackery in universities such as Thames Valley which offer BSc honours courses in homeopathy?

[Lord Henley]

My Lords, again I make it clear that it is for the higher education institutions themselves to make these decisions. It would not be right for the Government to interfere.

[Lord Krebs]

My Lords, in choosing to fund these courses in universities, will HEFCE treat them as science, technology, engineering and medicine courses, in which case they will receive a higher allocation than if they were not treated as such?

[Lord Henley]

My Lords, the noble Lord makes a very good point. I do not know the answer to it but I will certainly make inquiries and write to him. Again, I reiterate the fundamental point that these are matters for HEFCE to decide, not the Government.

[Lord Marlesford]

My Lords, does the Minister agree that it would be a mistake to dismiss the emerging evidence of the benefits of traditional Chinese medicine? I declare two interests. I represented the All-Party Parliamentary China Group at a seminar at Cambridge University last summer in which some very striking evidence was produced. That seminar was attended by six fellows of the Royal Society. I also declare a personal interest in that for the past 10 years I have taken a Chinese mushroom pill daily.

[Lord Henley]

My Lords, my noble friend is obviously flourishing on his Chinese mushroom pill. I have no strong views about Chinese mushroom pills or other aspects of complementary medicine. However, I want to make it clear that the Government remain neutral on the whole area of complementary and alternative medicines, and we leave all decisions on commissioning and funding in that area to the NHS.

[Lord Pearson of Rannoch]

My Lords, I declare an interest as the patron of the Register of Chinese Herbal Medicine in this country and as someone who has benefited much from it over the years, like the noble Lord, Lord Marlesford. In that capacity, can I ask the Government to do nothing to discourage these courses, many of which are of very high quality and give assurance to the millions of people in this country who have benefited from alternative and complementary medicine?

[Lord Henley]

I am sure that the noble Lord has also benefited from his mushrooms over the years. Some noble Lords do and some do not, and different noble Lords have different views. I just want to make it clear that we remain neutral on this issue.

[Lord Howarth of Newport]

My Lords, the noble Lord says that it is at the discretion of HEFCE as to how university courses should be funded differentially. Is he actually saying to the House that it is a matter for HEFCE as to whether or not funding for the humanities and social sciences teaching is to be cut by 100 per cent?

[Lord Henley]

My Lords, we have offered guidance to HEFCE in the letter that I mentioned, which was published yesterday. I will make a copy available to the noble Lord. It is then for HEFCE to make its decisions.

[Lord Harris of Haringey]

My Lords, what does that guidance say about pseudo-science and the courses which the noble Lord, Lord Taverne, mentioned in the first place?

[Lord Henley]

My Lords, I will make the letter available to the noble Lord as well.

Africa: Ivory Coast

Tuesday 21st December 2010 Lords Chamber

Question

15:01

Asked by

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what discussions they have had with the United Nations, the European Union and the African Union about the results of the presidential election in the Ivory Coast.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, Her Majesty’s Government have had extensive contact with key international partners in the United Nations, the European Union, the African Union and the west African regional security body ECOWAS in attempts to forestall conflict in the Côte d’Ivoire, following the disputed presidential election. My right honourable friend the Foreign Secretary agreed with other EU Foreign Ministers on 16 December that the EU would adopt restrictive measures against those obstructing the peace process, including Laurent Gbagbo.

[Baroness Falkner of Margravine]

My Lords, I thank the Minister for that reply, but I fear that the EU’s limited sanctions and travel restrictions will not go quite far enough. Not only has Laurent Gbagbo stolen the election from Dr Ouattara, but he has mobilised paramilitary troops, and it has been discovered that nearly 1,000 people are missing. Does the noble Lord agree that the international community now faces a potential Srebrenica moment, whereby the UN may need to withdraw under fire and atrocities will be committed on a large scale? Will he suggest to his right honourable friend the Foreign Secretary that ECOWAS, and potentially UN peacekeeping troops from Liberia, need to be mobilised to intervene in a more substantive manner than mere sanctions?

[Lord Howell of Guildford]

My noble friend may well be right to say that pressures do not go far enough. Indeed, the EU is now moving on from the proposed targeted travel ban, which includes Mr Gbagbo, his wives and others associated with him, and is considering much more targeted sanctions and freezing assets. On the EU side, more proposals are being put forward, with the active involvement of British officials and colleagues.

At the UN level, the Security Council has expressed very deep concern. There are further problems about trying to get UN sanctions in place, not least because it is supposed that some countries, certainly among the permanent five members of the Security Council, would oppose them. However, the United Nations has rightly insisted, with our full support, that the UN operation in the Côte d’Ivoire—the so-called UNOCI—stays there, despite the fact that ex-President Gbagbo has insisted that it goes. UNOCI is embedded there; it intends to stay there and does not intend to leave. Further pressures will certainly be considered and may well be necessary.

As for Liberia and Senegal becoming involved in other areas, there are difficulties and it is not quite clear what their remit would be. For the moment, the French troops are still there, although they have been told to leave, and the UN troops are there. That is the position at the moment.

[Lord Hannay of Chiswick]

Does the Minister not agree that the United Nations force may need something more muscular than what is available to it in the Côte d’Ivoire now? Does not the experience of Sierra Leone show that having an over-the-horizon capability, which can be provided only by countries with fairly sophisticated military forces, is often the best way of deterring the outbreak of fighting?

[Lord Howell of Guildford]

The noble Lord has great experience of these things, but different situations demand different approaches. Preventing the rising and particularly ugly conflict in this country from spreading to other areas and affecting everyone's interests may well need a larger military mobilisation. However, for the moment there is a precarious situation in which the UNOCI has insisted on staying there, the army appears to be under the control of ex-President Gbagbo—or President, as he would style himself—and there is a sharp stand-off between the two. That is the position at the moment and it is very hard to comment beyond that. Certainly, any remit for a larger military force would not be at all clear in the present complex situation.

[Lord Judd]

Does the noble Lord agree that there is a danger of a trend towards tokenism in the international presence in these situations, and that this is disastrous for the effectiveness of the UN? Does he also agree that if this is to be put right, it is absolutely essential that in the Government's approach to the reform of the UN they give priority to increasing the effectiveness of the military planning staff at the disposal of the Secretary-General?

[Lord Howell of Guildford]

The noble Lord is right that a more effective arrangement of that kind should be followed through in precisely the way that he suggests. However, “putting right” is a big phrase in the present situation. The pressures from outside are bound to have some limitation on them, and within this hapless country there are hideous and dangerous rivalries that I am afraid have been there for many years and are nowhere near being resolved at the moment.

[Lord Brett]

Quite often, the problems that confront the African public are discussed in your Lordships' House and the solutions seem quite simple. They are not simple in this case, as we well know. Does the noble Lord agree that building up the African Union so that it has both presence and political authority is the only long-term solution to dealing with these kinds of unfortunate events in Africa, although they are becoming rarer? Could I also tempt him, in the spirit of Christmas and given that dictatorship is not limited to Africa, to comment on representations made on the arrest of candidates in the recent election in Belarus?

[Lord Howell of Guildford]

Belarus is a shade distant from the Côte d'Ivoire, but I will be delighted, in the Christmas spirit, to talk afterwards to the noble Lord about Belarus and indeed about many other places. As for this situation, it is complex and dangerous. We are working to reinforce the will of the African Union in general, and the economic organisation of west African states in particular, to take stronger views. ECOWAS has been quite forward and firm in what it said. It has behind it the driving forces of both Nigeria, which is a gigantic country, and Ghana, which is a successful smaller country. These are sources of authority, and pressure from them, encouraged by us, might make some progress and prevent further slaughter.

[Lord Chidgey]

Does my noble friend agree that in spite of more than 20 years of internal conflicts, civil war and endemic corruption, the Côte d'Ivoire remains a focus of economic stability in the region? While a solution to the return of democracy and the rule of law may well be best led by UN and African efforts, will our Government commit to providing essential support for the thousands of refugees now fleeing to Liberia and Guinea to escape the massive human rights abuses cited by the UNHCR?

[Lord Howell of Guildford]

My Lords, I wish that that was right, and I hope that it becomes right. The areas of stability in the region are Ghana in particular, which is a well governed country, and other countries around such as Nigeria, all of which have some problems but which are large and influential. We hope to see the Côte d'Ivoire come back to being an area of stability, but I am afraid that at this moment it certainly is not.

European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Republic of Indonesia) Order 2010

Tuesday 21st December 2010 Lords Chamber

Motion to Approve

15:09

Moved by

[Lord Howell of Guildford]

That the draft order laid before the House on 15 November be approved.

Relevant Documents: 8th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 20 December.

Motion agreed.

Welfare of Farmed Animals (England) (Amendment) Regulations 2010

Tuesday 21st December 2010 Lords Chamber

Mutilations (Permitted Procedures) (England) (Amendment) Regulations 2010

Motion to Approve

15:10

Moved by

[Lord Henley]

That the draft regulations laid before the House on 8 November be approved.

Relevant Documents: 7th and 8th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 8 December.

Motion agreed.

Re-Export Controls Bill [HL]

Tuesday 21st December 2010 Lords Chamber

Order of Commitment Discharged

15:10

Moved by

[Lord Alton of Liverpool]

That the order of commitment be discharged.

[Lord Alton of Liverpool]

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.

Identity Documents Bill

Tuesday 21st December 2010 Lords Chamber

Consideration of Commons Reason

15:11

[The Minister of State, Home Office (Baroness Neville-Jones)]

My Lords, I beg to move that the Commons reason be now considered.

[Lord Hunt of Kings Heath]

My Lords, I must say that I am rather disappointed that the Minister has not sought to give any explanation at all as to why the Government have not given further consideration to this matter. In fact, it is quite extraordinary that she gave no explanation at all to your Lordships’ House.

On 12 November, this House agreed by a substantial majority to an amendment to give compensation to ID cardholders whose cards are due to be cancelled. The Commons have now sent it back to us on the grounds of financial privilege. As it is a privilege reason, my understanding is that it would be contrary to convention to send back another amendment, which would clearly invite the same response. The debate this afternoon none the less affords an opportunity to the House to indicate to the Minister the strength of feeling on this matter and, even at this late stage, to ask the Government to reconsider.

The introduction of ID cards was subject to intense debate in your Lordships’ House. We on this side saw the ID card scheme as a convenient and secure way of asserting one’s identity in everyday life.

[The Minister of State, Ministry of Justice (Lord McNally)]

I am advised that there is nothing before the House to debate at the moment.

[The Lord Speaker (Baroness Hayman)]

There is a Question before the House that the Commons reason be now considered. Afterwards, a Motion will be called, to which the noble Baroness will speak, and there will then be an opportunity for debate. However, if the noble Lord, Lord Hunt, wants to contest the consideration at this moment, I understand that it is possible for him so to do. If that is his intention, then we are debating procedurally whether or not to debate Motion A.

[Lord Hunt of Kings Heath]

My Lords, shall I carry on? Perhaps we can have a debate on the general issue. I am most grateful to the Lord Speaker for helping us through that.

Following the introduction of ID cards, 12,000 or so members of the public purchased a card for £30. The cards were for a period of 10 years. As a result of the Bill, these cards are to be cancelled within a short time, many years before their due expiry date.

Whatever one’s views on ID cards, noble Lords from all sides of the House were concerned about the Government’s mean-spirited decision to refuse to refund the £30 to those who purchased an ID card. The Home Office Minister, the noble Baroness, has appeared—

[Lord Higgins]

Can the noble Lord say which Motion he is debating?

[Earl Attlee]

My Lords, perhaps I may help the House. We are debating whether we should consider the Commons reason. We are not yet debating the Commons reason. If the noble Lord opposite wants to take advantage of our procedure, he is able to do so, but I hope that he will not speak at great length.

[Lord Hunt of Kings Heath]

My Lords, I am in the hands of the House. I want to debate the issue, as this amendment has been returned from the Commons, but if the House would prefer the noble Baroness to move her Motion first, I can resume speaking afterwards. Clearly that would be helpful.

[The Lord Speaker]

I sense that that is the will of the House; so we shall take the procedural Motion now, and I am sure that there will be an opportunity for debate when we get on to Motion A. The question, therefore, is that the Commons reason be now considered.

Motion agreed.

Motion A

Moved by

[Baroness Neville-Jones]

That the House do not insist on its amendment, to which the Commons have disagreed for the reason given.

Page 2, line 5, at end insert—
“( ) giving cardholders the option of being reimbursed £30 on surrendering their ID cards by such a date and pursuant to such arrangements as the Secretary of State considers appropriate”

The Commons disagreed to the Lords amendment for the following reason—

Because it would impose a charge on the public revenue, and the Commons do not offer any further reason, trusting that this reason may be deemed sufficient.

[Baroness Neville-Jones]

My Lords, consideration of the Bill during its passage through this House and the other place has recognised that the decision to scrap the ID card and destroy the national identity register was a commitment in the general election manifestos of the Conservative Party and the Liberal Democratic Party. That commitment formed part of the coalition agreement published on 12 May, and the Government introduced this Bill to Parliament on 26 May. We have acted swiftly in achieving our manifesto commitment and believe that the Bill’s purpose, which is to remove the intrusive ID card scheme and the national identity register from the statute book, has widespread support in the country.

Noble Lords are today focusing on the detail of the decommissioning process rather than on the significance of a Government destroying a national database. The Bill is a major step in removing the state from unnecessary and undesirable intrusion in the personal life of the individual. We should not forget the significance of the Bill, nor should we minimise the landmark action of a Government legislating to get rid of a national database. However, there are costs associated with dismantling the scheme. In incurring those costs, the public must be confident that taxpayers’ money is being spent effectively and efficiently. The ID card scheme and associated work on biometrics and policy development has to date cost the taxpayer £292 million. Further costs of about £5 million will be incurred in dismantling the scheme.

Further spending would be required if we were to provide refunds. I am aware of the strength of sentiment that has been expressed on this point, but this proposal would cost around £400,000. That may not seem much in the grand scheme of spending to date by the previous Administration on ID cards, and it may be that some Members of this House consider it an insignificant sum, but this is not how the coalition Government look at public finance. We are tackling the deficit which we inherited. We are doing that by ensuring that moneys are spent only where necessary and that such spending delivers more for less. Providing a refund on ID cards does not meet any of those criteria.

I am not ignoring the fact that cardholders spent £30 each on a card for which there will be no further use on enactment of this Bill.

[Lord Maxton]

If no compensation is to be paid, then presumably the card will become the property of the person who holds it. We briefly debated that point when we considered the Bill. Does that mean that the person who now holds the card as their own property, as they are not being given any compensation for it, will be able to use it to prove their identity in certain circumstances, such as for young people in pubs, or whatever else it might be?

[Earl Attlee]

My Lords, I think that it would be for the convenience of the House if we allowed the Minister to lay out her stall, as in doing so she may very well answer the noble Lord’s point. I know that the Minister is very keen that all noble Lords’ questions are answered.

[Baroness Neville-Jones]

I will respond to the noble Lord’s point. The answer is no. The card does not have value or efficacy because it is no longer attached to a database which would enable it to be a valid document that could prove your identity. It is simply a piece of paper, because there is nothing behind it.

I am not ignoring the fact that the cardholder spent £30 on a card for which there is no further use. During debates here and in the other place opponents of the Bill indicated that the decision to refuse to issue refunds will affect the poorest or the less well off members of society. However, there is no socioeconomic breakdown of cardholders, so neither noble Lords opposite nor the Identity and Passport Service can indicate the economic status of cardholders. I cannot imagine the circumstances in which a person struggling to make ends meet would think that buying an ID card was a necessity. If the ID card scheme was intended to allow travel to Europe or to provide proof of identity to get into pubs and clubs, then, frankly, it is doubtful that we should consider this form of purchase to satisfy the criterion of core household spending.

There is no provision in the Identity Cards Act, which the Benches opposite passed in 2006, for applicants short of cash or on a limited income—

[Lord Davies of Stamford]

My Lords—

[Earl Attlee]

My Lords, long experience shows that the best way of dealing with this type of business is to allow the Minister to lay out the current situation and update the House. The noble Lord will have plenty of opportunity to make his points. As I have said before, my noble friend will be very keen to answer them.

[Lord Davies of Stamford]

I have to say that I think it is quite extraordinary that the noble Earl should find it necessary to try to protect his Minister, who is doing her job and defending as best she can the policy of the Government of the day. I hope that no Minister worthy of the name would need protection of that kind. I would be grateful if the Minister will just answer a simple question. Do the Government realise that there is a fundamental moral issue here? It is not a matter of complex socioeconomic categories—it is a very simple moral issue, is it not? Citizens have bought in good faith from the Government a good or a service and a new Government are now proposing not to deliver. Is that not the action of a dishonest trader? Is that the sort of example which this Government believe it is right to set for the nation?

[Lord McNally]

My Lords, as there have been a number of interruptions, and we are perhaps following precedents which perhaps should have been challenged before, I shall just read to Members on both sides what the Companion says on this matter:

“A member of the House who is speaking may be interrupted with a brief question for clarification. Giving way accords with the traditions and customary courtesy of the House. It is, however, recognised that a member may justifiably refuse to give way, for instance, in the middle of an argument, or to repeated interruption, or in time-limited proceedings when time is short. Lengthy or frequent interventions should not be made, even with the consent of the member speaking”.

I suggest that we stick to the Companion.

[Baroness Neville-Jones]

That legislation did not put in place a scheme to offer financial support to buy cards at the point of issue, nor was there any provision for specific groups, based on social or economic factors, or both, to have cards free of charge or at a reduced rate. It was not considered an issue. Clearly the previous Administration did not consider that ID cards were an essential household purchase or a requirement for those who have to live on low levels of income. That remains the case with the refunds policy.

I acknowledge that the intention of noble Lords is to ensure that the individual is protected where appropriate. That is a key and important function of this House. In this case, however, we have to protect the interests of the taxpayer. We should not be spending yet further sums of taxpayers’ money on a scheme that has very little public support and that would be scrapped on enactment of this legislation by Parliament. I beg to move.

[Lord Hunt of Kings Heath]

My Lords, first, I apologise to the House for intervening rather too early in proceedings. I have listened very carefully to the Minister but, although she says that she has listened, she appears surprisingly unsympathetic to the thousands of people affected. What really worries me is that she is completely oblivious to the precedent that is being set.

At Second Reading, she said that,

“those who chose to buy a card did so in the full knowledge of the unambiguous statements by the coalition parties that the scheme would be scrapped if we came to office. They cannot now expect taxpayers to bail them out”.

She went on to say that,

“citizens have to be aware of what is going on around them. It was clear that this scheme would have a risky future ahead of it”.—[Official Report, 18/10/10; col. 715.]

She dismissed the potential refund of £30 as,

“rather less than probably most people pay for a monthly subscription to Sky”.—[Official Report, 18/10/10; col. 742.]

On Report, the argument had advanced. The noble Baroness said:

“We do not believe that the statutory basis of the issue of ID cards creates a contract or anything akin to a contract in relations between the Secretary of State and the cardholder. Remedies that would be available in the courts if the contract were governed by the law of contract or consumer legislation … is not available for identity cards”.—[Official Report, 17/11/10; col. 792.]

Today, we hear this argument about the socioeconomic background of holders of the card. What on earth has that got to do with it? This is a matter of principle.

Let us just think about the wider principle, not just in relation to ID cards and the sum of £30. For example, an incoming Government say that because they disagreed with the original policy of a previous Government, it is just tough luck on members of the public who decided to act on the provision that became available as a result of the actions of the previous Government. Does the Minister not see that, in refusing to refund the £30, she is developing a new principle that will essentially reduce trust in Governments generally?

What policies might this apply to in the future? If we were to accept the logic of the noble Baroness’s argument, it would be open to an opposition party to say, “We don’t agree to a policy being brought in by the current Government”. If, subsequently, that opposition party came into Government, they could simply rescind the policy and refuse to pay any compensation if that policy had involved an outlay of money by members of the public. That is simply not the right way to treat people in this country. For instance, that was not the way in which the previous Government dealt with the assisted places scheme. We abolished that scheme but we allowed children in receipt of an assisted place to complete the remainder of that phase of their education.

It is no wonder that on Report the noble Baroness’s noble friend Lord Vinson described the Government’s position as “morally indefensible”. What is her response to my noble friend Lord Richard who pointed out that,

“identity cards were not sold on the basis of, ‘You are buying it from a Labour Government, but if another one come in, things may change and you may have to renegotiate it’”? —[Official Report, 17/11/10; col. 789.]

What does she say to the noble Earl, Lord Erroll, who thought that the Government were guilty of mis-selling? As he said,

“If you expect a member of the public, seven months ahead of the general election, to be able to predict its outcome, there are a lot of geniuses among the public whom we ought immediately to recruit to become pollsters”.—[Official Report, 17/11/10; col. 787.]

Has she taken on board the comments made by her noble friend Lord Phillips of Sudbury? On Report, he said:

“Governments must set an example of the standards they expect of private industry. Had private industry engaged in a tactic of this sort, noble Lords on all the Benches would have been up in arms, and rightly so”.—[Official Report, 17/11/10; col. 785.]

On Report, the noble Baroness said that she would look at the matter again. The defeat of the Government after her comments required no less. I would ask her what form her further consideration took. Will she say why the Government are not taking on board the views of this House? She cannot simply hide behind financial privilege.

She also said on Report that she would seek advice on whether the Government risked legal challenge from the holders of ID cards since the Government are essentially confiscating cards without compensation. She was asked by the noble and learned Lord Morris of Aberavon to confirm that the advice she received came from the law officers. Will she inform the House whether the law officers gave such advice?

Finally, I appeal to the noble Baroness to consider the matter again. The Government are setting an extraordinary and dangerous precedent by not paying compensation. Such a precedent goes much wider than ID cards and would be very unfortunate as regards trust in government. She should think again.

15:30

[Lord Howarth of Newport]

My Lords, it is one more noxious constitutional innovation on the part of the coalition that the Government seek to pray in aid financial privilege when they do not want to face up to the consequences of their policies and their legislative actions in this House. Historically, I believe, privilege has not been claimed in relation to matters of expenditure. I am very willing to be corrected by noble Lords who are former Speakers or Deputy Speakers of the House of Commons, but that is my belief. There is hardly a policy, a Bill or a statutory instrument introduced by Governments into Parliament that does not involve expenditure. If it ceases to be in order and permissible for this House seriously to consider the legislation and the policies brought in by the Government on the basis that financial privilege means that it is not appropriate for us to do so, we might as well pack up and go home. Such a situation would make an absolute mockery of our claim to be a revising Chamber or, indeed, a proper debating Chamber.

On that point, I appreciate that the noble Earl, Lord Attlee, always seeks to act in the best interests of the House, as does the noble Lord, Lord McNally, but I would say to them that we are a debating Chamber. As my noble friend Lord Davies said, the noble Baroness, Lady Neville-Jones, is very well able to look after herself. The House respects her and I am sure that she is personally willing to enter into debate.

On the constitutional point, I think that this really is of the greatest importance. It seems both cowardly on the part of the Government and contemptuous of this House that they seek to evade debate and, under a new and bogus claim of financial privilege, seek to prevent us from voting on issues on which we have traditionally been entitled to vote. This is a constitutional innovation of which your Lordships’ House should be aware and upon which it should reflect very carefully indeed.

[Baroness O'Cathain]

My Lords, we have just listened to the most toe-curling self-righteousness from Members of the Opposition, who were, after all, the ones who introduced the ID cards scheme in the first place. They encouraged people to think that it would be a great thing to have an ID card. The fact that 30,000 people or thereabouts bought ID cards does not necessarily mean that those people thought about whether the cards were a good thing; they were encouraged to think so by the previous Government. Now we have the noble Lord, Lord Howarth, whom I have a lot of time for, saying that the Government will have to face up to the consequences of their policies in this House.

I say to noble Lords opposite that they should all face up to the consequences of their policy of bringing in ID legislation in the first place and of encouraging people to go and buy the identity cards. I am not taking sides on this one—

[Noble Lords]

Oh!

[Baroness O'Cathain]

No, I am not. Please listen to what I have said. The self-righteousness coming from the other side is quite sickening.

I abstained in the debate because I felt that there was a moral justification for the money to be repaid to the people who were conned by those opposite into spending money on ID cards. There is no point in denying that by trying to be the people who support everybody out there and by adopting a high moral tone and self-righteousness. Rubbish.

[Lord Pannick]

My Lords, I hope that I will not be accused of being self-righteous if I say that I share the concerns that have been expressed by the noble Lords, Lord Hunt of Kings Heath and Lord Howarth of Newport.

Behind the moral issue and the issue of principle, I think that there is a legal issue. The Minister will recall, as mentioned by the noble Lord, Lord Hunt of Kings Heath, that it was suggested to her on the previous occasion when we debated the matter that she might wish to take specific advice from the law officers as to whether the Government’s approach is consistent with this country’s obligations under the European Convention on Human Rights. The concern, which is very simple indeed, is that the Bill removes a property right without any compensation, in breach of Article 1 of the First Protocol to the ECHR and, therefore, that the amendment that noble Lords approved was not only wise but necessary.

When we last debated this matter, the Minister’s answer was that the ID card remained the property of the Government and therefore there was no difficulty. With respect, however, that is no answer at all. It is very well established in the case law of the European Court of Human Rights—indeed, it is common sense—that, when the Government grant a licence or an authorisation to do something, that of itself establishes a property right. If that licence or that authorisation is then removed by the Government, contrary to the expectation that has been created, the Government have a duty, other than in the most exceptional circumstances, to pay compensation. That legal obligation is precisely consistent with the substance of our debate on the previous occasion and with the amendment that was approved by noble Lords.

I therefore join the noble Lord, Lord Hunt of Kings Heath, in asking the Minister to explain whether she has indeed taken specific advice from the law officers, to deal in more detail with the substance of this concern and to explain to noble Lords how it can be that what the Government intend to do is consistent with this country’s international obligations.

[Lord Campbell of Alloway]

If there is a breach of human rights, of course that is a worry, but it is the job of the Court of Human Rights to put it right. If we are concerned with a matter of principle—I understand what the noble Lord is saying—surely the policy of a previous Government cannot be constitutionally binding on the next Government. Whether it is unfortunate and whether there is criticism, the policy of this Government was in fact accepted by this House. If we have got it wrong and the noble Lord is right, that will not affect the validity of this piece of legislation in this country. However, if an application is later made to the Court of Human Rights, it may decide that the point of principle here is that this Government—I do not always agree with them or, indeed, with any Government—have the entitlement in constitutional principle to reject the advice of the previous Government.

[Lord Pannick]

I have, of course, enormous respect for the knowledge and judgment of the noble Lord, Lord Campbell of Alloway, but on this occasion, with respect, I do not agree with his opinion. It is part of the law of this country that the Minister, like all other Ministers, has a positive duty under the Human Rights Act to confirm to this House and the other place that the legislation that the Government are bringing forward is consistent with the European Convention on Human Rights. That is the law of this country. I respectfully ask the noble Baroness to tell this House, consistent with her duty under the law of this land, why she is confident—if she is—that this proposal is consistent with our international obligations.

[Baroness Hamwee]

On all previous occasions when we discussed this matter, I was honest with the House that I had some difficulty with it, but is what was the substantive issue then in fact the issue for today? I have been waiting to hear some comment on the Commons reason for disagreeing with this House’s amendment. The noble Lord, Lord Howarth of Newport, addressed the issue of financial privilege and suggested that we should not accept it. However—and this is an entirely personal view—I think that this may well be an issue that goes to heart of the relationship between the two Houses. I have grave doubts as to whether we should tackle that convention on the back of this Bill. This is an important, stand-alone issue, but it is not one that we should seek to overturn in this manner.

[Lord Howarth of Newport]

My Lords, I agree with the noble Baroness, Lady Hamwee. Before she sits down—

[Lord Morris of Aberavon]

My Lords—

[Earl Attlee]

We should listen to the quick intervention of the noble Lord, Lord Howarth.

[Lord Howarth of Newport]

I agree with the noble Baroness that the constitution issue has to be disentangled from the question of what is immediately to be done about the practical issue—the substance of the policy—in the Government’s rejection of the amendment that was made in this House. I hope that the noble Baroness, Lady Hayman, the Lord Speaker, is already engaged in this matter—I am sure that she is—and that she will wish to hold discussions with the Speaker of the House of Commons about the possibility that the doctrine of financial privilege is being extended in a manner that is dangerous to the interests of this House and the fulfilment of its proper responsibilities.

[Lord Morris of Aberavon]

My Lords, the noble Lord, Lord Pannick, made a powerful case on whether or not a right of property has been established. He made an equally powerful case on the last occasion that we debated the matter. I asked then whether advice had been sought by the Minister, particularly from the law officers, as that would have been helpful. I understood that we might be told before Third Reading that that advice had been sought. In the Bill there is a declaration that the legislation is compatible with the European Convention on Human Rights. Having heard the powerful arguments of the noble Lord, Lord Pannick, is the Minister satisfied that that is the case?

[Lord Phillips of Sudbury]

My name was on the amendment and I have listened carefully to what my noble friend the Minister said in opening the debate. Three issues need clarifying before we can safely push this matter forward. The first has been well aired—namely, whether this is compatible with the European Convention on Human Rights. The noble Baroness will tell us very soon whether she has had clear advice from the law officers that it is compatible. I line up with the noble Lord, Lord Pannick: it is difficult to comprehend that this confiscatory measure can be consistent with the protocol. That is the first issue.

The second issue has also been well aired—my noble friend Lady Hamwee has just referred to it—namely, whether we can at this juncture pick a fight with the Commons on its reasons. I listened carefully to what the noble Lord, Lord Howarth, said and I would be the first to leap on to the barricades if I felt that the privileges of this House were being undermined, but we need clear advice on that. Perhaps the learned Clerk may have something to say. I am very disappointed to see him shake his bewigged head. My own sense, for what it is worth, is that the Commons have a case. The amendment is a specifically money amendment; it specifically commits the Exchequer to compensation at the rate of £30 per ID card surrendered.

15:45

[Lord Howarth of Newport]

Does the noble Lord agree that this is about expenditure and not about revenue raising? It is a relevant distinction.

[Lord Phillips of Sudbury]

My understanding of the conventions is that we have no right to impose expenditure on the Commons and this is an expenditure provision—an expenditure of £30 per card surrendered. However, that is another matter on which we must have absolutely clear advice. It would be folly for us to go ahead today—

[Lord Low of Dalston]

If we cannot contest the issue of financial privilege, why is it being raised at this stage when it was not raised when we debated the matter previously? If it is a matter of financial privilege, why was it permissible for this House to debate the matter previously and to pass the amendment that it did? Would it not have been appropriate to make the point that this was a matter of financial privilege and not open to the House at that stage?

[Lord Phillips of Sudbury]

I am obliged to the noble Lord for his intervention—of course, he is right—but I took some comfort on the day that we debated and passed the amendment from the fact that my noble friend the Minister made no reference to privilege. I took that, obviously fallaciously, as indicating a potential open-mindedness on the part of the coalition Government, my Government, to think again on this issue were we in this House to pass the amendment that we did. That is my third point: regardless of whether the two legal issues here are stoppers, I would have hoped—even at this stage, given that views across this House have been expressed with not a single voice in favour of what the Commons are proposing to do vis-à-vis the amendment—that my noble friend would be able with my other friends in government to do the right thing. The right thing is abundantly clear. My noble friend talked of effectiveness and efficiency. It is not effectiveness or efficiency that we are talking about here; it is fairness, which is the single most important claim made by my Government. I want to see them walk the talk.

[Lord Soley]

To follow the noble Lord’s speech is rather pleasant, because he put more passion into it than I could hope to put into mine and because I agree with him. I had not intended to intervene, so I shall brief, but I am increasingly concerned about the way in which the procedures both on issues of this nature and in the House more generally are being changed. As my noble friend pointed out, supported by the noble Baroness, Lady Hamwee, there is a problem about us overturning what the Commons have done. I am not saying that we should do that now, but I am becoming less clear about financial provisions. Very few issues come back to this House that do not involve some expenditure. If the rule is to be no expenditure, there will be an awful lot of things that we will be unable to pursue. That will affect all sides of this House.

I say again, as I have said on many other issues, that the Government are driving through and changing procedures, which is deeply unsatisfactory for this House. We saw it from the Front Bench today. I know that the noble Earl, Lord Attlee, is keen to help the House, but to have a Minister telling another Member of the House not to intervene when the other Minister has already accepted the intervention does not fit with the guidance that the House offers. I have my reservations about whether this really is a self-regulating House, but, if it is, one Minister should not intervene to tell a Back-Bencher to sit down and not intervene on a Minister who has already accepted the intervention. It must be wrong. For the noble Lord, Lord McNally, who is sadly not in his place, to follow that up in the way that he did was not helpful. The Government have to recognise that they are not in charge of Parliament. Parliament controls government; government should not control Parliament. We are seeing far too much of this. I support my noble friend Lord Howarth in his request to the Speakers of the two Houses to try to clarify this important issue of expenditure and finance-raising.

On the issue itself, the noble Baroness has strayed into the area of the pros and cons of ID cards. I was always unsympathetic to the idea of ID cards, but the Minister has problems coming down the line. She might want to have a word with her colleague the Minister for Health in this House, who was very helpful to me. A couple of months ago, I raised with him the situation that is developing in the health service where GPs’ surgeries are refusing to register patients unless they produce their passports as ID. They will not accept any other form of ID. By taking away the ID card, we are creating a situation where other things become an ID card. Please do not think that this issue is going away. It will be difficult.

That is another part of the noble Baroness’s problem. Frankly, what the noble Lord, Lord Phillips, said in his intervention is absolutely right. It is sheer common decency that when a Government take over and choose to reverse a policy taken by the previous Government, which is a perfectly reasonable thing to do, they must make sure that ordinary citizens do not lose out. That is what is wrong with this. I am afraid that it also fits in with the danger of the Government trying to run Parliament and not the other way round.

[Lord Faulks]

My Lords, the noble Lord, Lord Pannick, and other noble Lords speak with great authority on the Human Rights Act, the convention and our obligation to follow the Human Rights Act. On this issue, there are strong cases to be made on both sides and there are abstentions. The reason why the Government may have decided that the Bill is compatible with the Human Rights Act is simply that the Act is concerned with substantial matters; it is concerned with violation of rights of real value. Whatever one may say about the value of £30, I respectfully suggest to the House that that is not what the Human Rights Act is concerned with. That is one of the reasons why the Human Rights Act has not always been welcomed on all sides of the House.

[Lord Sewel]

I briefly follow my noble friend Lord Howarth on the substantive issue of the Commons reason. This is a sensitive issue and there are clear conventions that we should not in this House criticise the proceedings of another place—and I would not dream of doing so. However, I wonder whether I can take Members of this House back to another period of Conservative government. I recognise that a declining number of Members of this House were in here at the time of the last Conservative Government. Those of us who were used to delight in the tussles between my noble friend Lady Hollis and my friend but, alas, noble opponent at the time, Lord Mackay of Ardbrecknish, on pensions legislation. Frequently, Lord Mackay of Ardbrecknish had to make concessions and was sometimes defeated. The effect of those concessions and defeats was that this House increased government expenditure. That Conservative Government never cried financial privilege.

[Lord Maclennan of Rogart]

My Lords, before the House reaches a judgment on the Commons reason, there ought to be absolute clarity about the intention of the House of Commons. It is far from clear in the reasons that have been provided that it is the intention of the House of Commons to claim financial privilege. A single reason is given and that is that the amendment that we are considering, which was carried in this place, would impose a charge on the public revenue. In opening the debate, my noble friend explained that as the Government giving priority consideration to the taxpayer over those who have paid for their identity cards. That does not sound like the invocation of the right of the House of Commons in respect of financial privilege. Without some greater authority indicating that that was the Government’s intention, there seems no bar to this House paying serious consideration to the law officers’ views on the legality of what is proposed under the terms of the human rights convention. I hope that the House will not be forced to take a decision without those views being made abundantly clear and without absolute clarity about the intentions of the Commons in bringing forward this sole reason for their disagreement. To my mind it is far from clear. We will establish a bad precedent if we determine that claims can be made lightly, not by the Commons themselves, that their privilege in this respect has been breached.

[Lord Maxton]

I shall be brief, although I thought that the actions of the noble Earl, Lord Attlee, and the noble Lord, Lord McNally, were provocative, to say the least, forcing some of us to make longer speeches than we would have done otherwise.

On the relationship between ourselves and the House of Commons, the important question was asked why we were allowed to vote on the amendment in the first place if, in fact, it was not legally our right to do so. If we voted for it and it went back to the Commons, surely we should be allowed to look at it again and vote on it again if we so wish.

I am one of very few people in the House who came out publicly in support of the ID card and opposed this piece of legislation. I think that we will come back to the issue. I listened to some of the debates last night on the register and the census and that sort of thing and I thought to myself that, if we all had ID cards, it would all be irrelevant and we would not need to go through that process. I am still not at all clear in my own mind as to what the standing is of the ID cards that have been issued. The Government are claiming that the cards are their property, so surely they should ensure that every one of them is returned to them. They should not be leaving that in the hands of private individuals; it is up to the Government to say that the cost of claiming back all the ID cards would be as much as paying compensation to those who have them.

The other point is one that I have consistently raised. Can someone actually use the ID card—perhaps in an exchange between two people, such as a barman or pub owner and a young person? The youngster might say, “I’ve got an ID card”, and show it to the barman, and the barman could say as a result, “That’s fine, I accept you’re over 18”. Is it legal for that person to do that? If the card belongs to the Government, surely the person has no right to use it in that way. Can we get an answer to that question from the Minister? We seem to be in limbo on it. I do not quite know what the standing is of the ID cards held by individuals if they are not being compensated for them in any way whatever.

[Lord Palmer]

As a compromise to this extraordinarily heated debate, would it not be worth considering that those people who have invested £30 on an ID card could put that cost against their next tax return?

[Baroness Neville-Jones]

My Lords, we have had another lively debate on this subject. Perhaps I can deal with some of the issues to which it has given rise. On compatibility with the European Convention on Human Rights, the Government would not put forward legislation that they did not believe to be compatible with the convention. We believe this Bill to be compatible with the convention. I hope that that is a clear statement. We believe it to be compatible with the European Convention on Human Rights.

[Lord Hunt of Kings Heath]

Can the Minister confirm that the law officers have given such advice? She said on Report that she would find out. I am surprised that here we are, over a month away, and noble Lords who took part in that debate have not yet been informed of that.

16:00

[Baroness Neville-Jones]

I repeat to the House that the Government believe that this legislation is compatible with the European Convention on Human Rights. I do not think that I am obliged to say whether or not we have consulted the law officers, nor to say what legal advice we have taken. However, we believe it to be compatible with the convention. As we take our duties seriously, that is a clear statement to the House that we believe that we are acting lawfully.

[Lord Pannick]

Does the Minister appreciate that the question is not simply whether or not the Government are satisfied that the Bill that they are putting forward is compatible with the convention? Will she address the point that on the previous occasion, and in the debate today, a specific concern has been raised about why it is feared that the Government’s position is incompatible with the convention? That is why it was suggested to the Minister on the previous occasion that specific advice should be taken from the law officers on this precise point. I am sure that it would assist the House if the Minister were at least able to say whether she went back to the law officers in the light of the debate on the previous occasion, and in the light of the specific concern that was raised, in order to assure herself and noble Lords that that point had been considered and the Government were satisfied with regard to it.

[Baroness Neville-Jones]

I do not think that I am able to enlighten the House any further on the question of taking legal advice. We believe our actions to be lawful.

[Lord Morris of Aberavon]

I have the record of our debate on the previous occasion in Hansard. I asked, and my noble friend Lord Hunt has referred to this:

“On the assumption that no advice has been obtained from the law officers on these matters, would it be prudent before the next stage of the Bill to obtain such advice?”.

The Minister replied:

“My Lords, I will confirm the advice that I have received”.

I asked:

“Is the advice from the law officers?”,

and the Minister replied:

“I am not sure that I can confirm that. I will seek to do so before Third Reading”—

that is, confirmation that advice had been received from the law officers.

[Baroness Neville-Jones]

My Lords, I think the House knows that it is a strong convention that we do not reveal the source of legal advice. I am confirming to the House that we believe that we are acting lawfully.

[Lord Sewel]

As I understood it, it is quite right and proper that a Minister does not reveal the nature of the advice that has been received from law officers. It is another matter for the Minister to confirm whether or not advice has been sought, and it is that second question that the House wants an answer to.

[Baroness Neville-Jones]

Advice is sought on legal points in the normal course of events.

[Lord Higgins]

The question is really quite simple. When this was debated last time, we understood that my noble friend would go back and take advice from the law officers. What that advice may be is one thing, but can she confirm that she did in fact go back to the law officers and seek their advice?

[Baroness Neville-Jones]

I think what I said was that I could not confirm that the law officers had been consulted, and I cannot confirm that today either. I am afraid that I cannot take this issue any further. We believe that we are acting lawfully; I would hope that that was a good answer to the House. We are acting lawfully.

[Lord Low of Dalston]

If it is the case that the Minister cannot confirm whether or not the law officers were consulted, is she in fact confirming that she did not go back and seek the advice of the law officers, as the House had requested and as she had undertaken?

[Baroness Neville-Jones]

I am neither confirming nor denying; I am simply saying that I cannot take this any further.

[Lord Howarth of Newport]

Is it the case that the noble Baroness does not know whether advice has been sought from the law officers, or is it that she thinks it is inappropriate to tell the House whether advice has been sought from the law officers?

[Baroness Neville-Jones]

I really have nothing more that I can say on this subject. Could I go on to the question of financial—

[Noble Lords]

No!

[Lord Clinton-Davis]

Why is the noble Baroness unable to answer the very relevant question put by my noble friend?

[Baroness Neville-Jones]

Because I think it is inappropriate to answer it and I cannot take the matter any further. I am very sorry, but I do not think that I can take this any further. The House has made its point and I have given an answer. The House may not regard this answer as satisfactory.

[Lord Morris of Aberavon]

On the specific point, the noble Baroness said:

“I will seek to do so before Third Reading”.

That was a promise made to the House in the course of the deliberations. Did she seek to do so before today’s proceedings? Has she made any attempt to do so? We know the conventions, which have been broken over the years. One could give a series of examples of the law officers coming to another place to give advice. They can do so, so it is not a convention that cannot be breached at all, but I come back to the simple statement that the noble Baroness made:

“I will seek to do so before Third Reading”.—[Official Report, 17/11/2010; col. 792.]

Did she seek to do so?

[Baroness Neville-Jones]

This is becoming rather a sterile exchange. I am not able to enlighten the House further.

[Lord Howie of Troon]

My Lords, this has become somewhat unsatisfactory. Is it not time to send for the Leader of the House?

[Baroness Neville-Jones]

This is a matter for the House, but I should like to answer the other points that have been made.

[Lord Pannick]

I am very grateful to the noble Baroness but she really has not answered the substance of the concern. I suggest that the only way she can do that is by telling the House whether or not the law officers have been consulted. It is a matter for the House what step to take but I suggest to the noble Baroness that the appropriate step for it to take is to adjourn further consideration of this matter until she is able at least to assure it that the concerns that have been expressed by a number of noble Lords have been considered by the law officers. I entirely accept that there is no obligation on the Government to tell the House what the advice of law officers is but it must be assured that they have been consulted on this matter. Therefore, I ask the noble Baroness to accept that the appropriate step is for further consideration to be adjourned.

[Earl Attlee]

I think that it is appropriate for the Minister to carry on with the rest of her speech, answer the other questions that noble Lords have asked and wait to see whether further inspiration arrives.

[Lord Dholakia]

My Lords, may I make a suggestion? Would it not be appropriate for the House to adjourn to enable the Minister to seek the advice that is being asked for and then the House could resume soon after that?

[Earl Attlee]

My Lords, my noble friend has numerous points to answer. Let us hear what she says and whether she can convince the House to agree with another place.

[Lord Soley]

That is unacceptable because the noble Baroness gave a commitment to this House, as has been quoted. The answer to the question is a simple yes or no. If she gave that commitment and then did not deliver on it, she needs to say that. The House will not necessarily hang, draw and quarter on the issue, but we need to know the answer. If the Minister cannot answer that question, I am afraid that the Government have to answer the wider question of what they are doing in this regard, given that they are responsible for this department. If she cannot answer the question, the case for adjourning the House while she finds the answer, as the noble Lord has just suggested, or summoning the Leader of the House is very strong. We cannot have a situation whereby other Ministers keep jumping up to defend this Minister; that cannot be right. The Minister must be responsible for what she said at a previous stage and for what she is saying today. If she is not responsible for that, it is a serious matter.

[Lord Hunt of Kings Heath]

My Lords, I am glad to see the Captain of the Gentlemen-at-Arms in her place. The position is that the noble Baroness, Lady Neville-Jones, on Report, told that House that she would seek to take certain actions. It has now become clear that for the House to come to a view on this matter, it is important that it knows the information that noble Lords requested on Report in relation to the law officers. It is equally clear that up to this point the noble Baroness has not been able to satisfy the House. Given that this is almost the end point for the Bill, I would suggest that if she is unable to answer the point, a short adjournment would in fact be sensible and in order.

[Lord Waddington]

My Lords, I am getting rather exasperated by all these exchanges. Surely, if the House is not satisfied with the replies given by the Minister, the time will come when that can bear on noble Lords’ judgment when they vote. However, the Minister has given her reply and I, for one, think it is high time that this debate came to a conclusion. The Minister has been very generous in giving way. Perhaps I may remind her that she is not obliged to give way. That has been made quite clear already this afternoon, when a long passage from the Companion was read to the House. I respectfully submit that it is about time we followed normal procedures and, if the House does not like the replies given by the Minister, that can be reflected in its vote. However, noble Lords must not disrupt the business of the House by silly points of order.

[Noble Lords]

No!

[Lord Howarth of Newport]

My Lords, the noble Lord, Lord Waddington, suggested that we should resolve this matter by a vote. I am not entirely clear whether it is the position of the Minister that the House should not be entitled to vote because the Government are claiming financial privilege.

[Lord Phillips of Sudbury]

Perhaps I may intervene briefly because I—

[Baroness Anelay of St Johns]

My Lords, it is customary, when one Peer in this House asks a question, that permission is granted for an answer to be given, if the Minister wishes to do so, before another Peer gets up. I merely ask that we might follow some of the usual courtesies today.

[Lord Phillips of Sudbury]

I am grateful for the noble Baroness allowing me to respond to the argument of the noble Lord, Lord Waddington, on which, although he is my friend, I have to say I disagree. The points being made are not remotely trivial and I really believe that the House will be much clearer in its mind if we deal with this preliminary matter first, because, frankly, to go ahead and vote when a crucial, central and legal matter is unresolved seems to be the worst of all worlds. That is why I would favour an adjournment, as suggested by my noble friend Lord Dholakia.

[Lord Davies of Stamford]

My Lords, does this not go to the heart of parliamentary government as we know it and understand it in this country? The Minister gave a clear and solemn undertaking on a previous occasion that she would seek the law officers’ advice on a specific point. How can it possibly be “inappropriate”, to use her term, for her now to tell the House whether or not she fulfilled that solemn commitment? It is quite clear to me that if the Minister gives a solemn commitment and then refuses to say even whether that commitment has been fulfilled, and the House does nothing about it and simply goes away, we have abdicated our responsibilities as a Parliament.

[Baroness Neville-Jones]

My Lords, I am just not in a position to advise what information has been provided by the law officers, but I can confirm that we are satisfied that the provisions of the Bill are compatible with the ECHR. I have an answer on the substance. Could we perhaps turn to the question of financial privilege?

[Noble Lords]

No!

[Baroness Neville-Jones]

The question has been asked as to whether the Government are “sheltering behind financial privilege”. The Government are quite clear that they do not actually think that it is justified to refund this money. The Government’s position is very clear on the substance. As regards the issue of financial privilege, the Commons cannot even make a determination without the House of Lords itself putting forward a proposition. One has to have the proposition from the Lords before the House of Commons can take a view on that. It is obviously then a matter for the Commons to determine. The Government are not going to avail themselves—

16:15

[Lord Hunt of Kings Heath]

My Lords, that is well understood. The Commons did not consider this matter; it was simply returned to this House with financial privilege. I have no doubt that that might happen again. The point is that the Government were given a number of weeks to reconsider the matter. The noble Baroness, on Report, wished to dissuade the House from voting and said that she would give the matter further consideration. She has not explained what further consideration has been given and why the Government are sticking to the principle of no compensation despite the clear majority of votes on the matter in your Lordships' House.

[Baroness Neville-Jones]

My Lords, the Government have given it further consideration and decided that they are not going to supply refunds. That was the position of the House of Commons. It is very clear that the Government are not going to avail themselves of the opportunity to waive financial privilege. This amendment would impose a charge on the taxpayer. Our view is that the taxpayer should be saved from having the charge imposed. Citizens are also taxpayers, not simply purchasers of ID cards.

On the substance of the matter, I say that we should have a sense of proportion about £30. It is absolutely not the same as, for instance, the example cited by the noble Lord opposite of assisted places for children. Of course, if a child had an assisted place, their educational career depended on it, and the policy changed, one would not cut off a child who was in mid-educational career. That is utterly different from a payment of £30. We should keep a sense of proportion. We do not believe that the purchase of the card constitutes any kind of contract between the Government and the taxpayer. Therefore, we do not believe that there is an obligation on the Government to refund the money, so the Government do not intend to do so.

The card will no longer have a database behind it to demonstrate its validity. Of course, it will not be an illegal act for someone to use it when they go to the pub. However, it has no legal validity, and one could perfectly well use a passport or driving licence for that purpose. For all these reasons, the Government do not believe that it is right—

[Lord Berkeley]

Will the Minister explain what would happen if someone used one of these ID cards to go for a short holiday on the continent? It is a lot cheaper to buy an ID card than a passport. She may say that £30 is nothing to people who go on holiday, but that is a slightly arrogant approach. She says that the card could be used in pubs that ask for ID, but that no one will be able to check it against a database. However, we all know, from going into and out of this country, that there are different ways of being checked by electronic means. Will these identity cards still work when one goes through immigration or will they be cancelled?

The Minister says that the database has been abolished. I doubt whether any database ever gets abolished, because MI5 or someone else will want to keep it. At what stage will the ID card not work when one goes through immigration, and what is the other solution? Not everyone has a driving licence—why should they? Will it be the case that one cannot go abroad unless one has a passport, so that going abroad will not be possible for people who cannot afford a passport? I would be glad if the Minister would respond to some of those questions.

[Baroness Neville-Jones]

The ID cards will not have a database behind them. The previous Government decided that the database should be separate from the passport database. It is not possible to join up the two databases because they are not compatible; that is one of the problems. This database will not exist. Therefore, the ID card, although it might be regarded as a courtesy proof of age, for instance in a pub, will have no legal validity at the border. The receiving country might be willing to accept it, but I fear that the individual might not get back into this country because they would have to show a document that had a database behind it.

[Lord Morris of Handsworth]

My Lords, can we return to the point raised by the noble Lord, Lord Pannick? It is a very simple point. The citizen acquires an identity card that becomes his or her possession. The Government, as is their right, withdraw the card and it is nullified. Have the Government fulfilled their obligation not under the Human Rights Act, as we have been invited to do, but under the European convention, as the noble Lord, Lord Pannick, reminded us? That, for me, is the crucial issue. It is crucial because the Government are required to declare that their legislation complies with the European convention. Can the Minister give that assurance?

[Baroness Neville-Jones]

Yes, my Lords, I give the assurance that we believe this legislation to be compatible with our commitments under the European Convention on Human Rights. I have tried very hard to answer the House’s points and I beg to move.

[Lord Hunt of Kings Heath]

My Lords—

[Earl Attlee]

After the question has been put, no one can speak.

[Lord Hunt of Kings Heath]

My Lords, I wish to move that the House do adjourn to allow the noble Baroness the Minister to seek further advice so that the House may be allowed to hear the response that she should have given to noble Lords following her commitment on Report. I should like to move that further consideration of Motion A be adjourned.

[Earl Attlee]

My Lords, I strongly oppose the question that the House do now adjourn. We need to determine this matter now.

[The Lord Speaker]

It is perfectly in order for the noble Earl to oppose the question after I have put it to the House, so perhaps I may do that. The question, as I understand it, is that further consideration of Motion A be now adjourned.

[Earl Attlee]

My Lords, I strongly oppose the question that we adjourn this debate. We have had a good and tough debate. I understand the sensitivities and it has been difficult but we need to determine this matter.

16:23

Division 1

Ayes: 156

---

Labour: 100
Crossbench: 37
Liberal Democrat: 10
Independent: 3
Bishops: 1
UK Independence Party: 1
Ulster Unionist Party: 1

Noes: 112

---

Conservative: 77
Liberal Democrat: 32
Crossbench: 1

16:35

Sitting suspended.

16:45

[Baroness Anelay of St Johns]

My Lords, it may be for the convenience of the House if I make a brief business statement at this point. With the consent of the usual channels, it is proposed that we should first continue with the normal business on the Order Paper, which means that we will now deal with the Second Reading and remaining stages of the Consolidated Fund Bill, which I understand are merely formal. We will then begin Second Reading on the Loans to Ireland Bill and take the first three speakers; that is, my noble friend Lord Sassoon, the noble Lord, Lord Liddle, and my noble friend Lord Newby. The proposal is that the House will then adjourn proceedings on Second Reading so that we might return to consideration of the proceedings on the Identity Documents Bill, at which point I will invite my noble friend Lady Neville-Jones to make a statement to the House to clarify matters which have clearly been of great concern to noble Lords. I hope that this clarifies the issues. I appreciate that the Clerks and the Lord Speaker will advise on the words of procedure that I should now adopt.

[Lord Bassam of Brighton]

My Lords, I should like to clarify that on this side of the House we are entirely in agreement with what the noble Baroness has put before your Lordships. It is a sensible way to proceed.

[Baroness Anelay of St Johns]

My Lords, I am grateful to the noble Lord. I understand that there are two Motions, the first of which is that further consideration on Motion A should be postponed. I beg to move.

Motion agreed.

[Baroness Anelay of St Johns]

My Lords, the second Motion is that that further consideration of the Commons reason be now adjourned. I beg to move.

Motion agreed.

Consolidated Fund Bill

Tuesday 21st December 2010 Lords Chamber

Second Reading (and remaining stages)

16:47

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Loans to Ireland Bill

Tuesday 21st December 2010 Lords Chamber

Second Reading (and remaining stages)

16:48

Moved by

[Lord Sassoon]

That the Bill be read a second time.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, it is the Government’s intention to ask for authority to make a bilateral loan to Ireland as part of the multinational assistance programme for that country. This is the right action to take, given our country’s close economic, financial and political connections to Ireland. By passing this Bill today, the UK will be ready, come the new year, to meet its commitments to one of our closest international partners.

The legislation before the House today is narrow in scope but it is still enabling legislation. It will sit alongside the actual loan agreement, which will set out the details of what we offer Ireland. I intend to address the substance of both the legislation and the loan agreement. Before that, however, I would like to remind the House of how Ireland ended up in its current predicament.

Over this year, it became increasingly clear that the situation in the Irish economy was unsustainable. Irish banks had become almost wholly reliant on central bank funding to maintain their operations. At the same time, Ireland’s market interest rates rose to record levels and its sovereign debt markets have now effectively closed, with little prospect of reopening.

This situation cannot go on. So, on the weekend of 20 November, Ireland’s Prime Minister, Brian Cowen, made a formal request for international financial assistance. The United Kingdom, alongside the IMF, the EU, the euro area and other member states, made an agreement in principle to take part in an assistance package to Ireland. At the end of November, Ireland agreed with the IMF and the EU a three-year financial assistance package worth €85 billion. The money will be used as follows: from that total, €35 billion will be used to support Ireland’s banking sector, with €10 billion going towards immediate bank recapitalisation. The remaining €50 billion will be used for sovereign debt support.

In terms of contributions to the cost of the package, Ireland itself will provide €17.5 billion towards the total. The remaining €67.5 billion will be split, with one-third coming from the IMF, one-third from the European financial stability mechanism and one-third from the euro area facility and bilateral loans from the UK, Sweden and Denmark.

This is a significant package that will help Ireland deal with its problems and restore stability to its economy. It will help it recapitalise its banks and set up a contingency reserve for future problems. It will also help the Irish authorities cover the shortfall in their budget, which was presented to the Irish Parliament earlier this month.

I understand that some noble Lords may have concerns about the size and the timing of the loan. Indeed, some may be asking why we are extending a loan to Ireland in the first instance. We are doing this because it is overwhelmingly in our national interest that we have a strong Irish economy and a stable banking system. This is not just about the Irish economy and Irish jobs; it is about the British economy and British jobs.

A loan does not add to our deficit; any increase in borrowing is matched by the commitment of Ireland to repay it with interest. Ireland is the fifth-largest market for British exporters, and accounts for 5 per cent of our total exports. Ireland is also the only country with which we share a land border, and in Northern Ireland our economies have particularly close ties.

Just as our two economies are linked, our business and banking sectors are also interconnected. More Irish companies are listed in London than companies from any other foreign country. In Northern Ireland, two of the four largest high-street banks are Irish-owned, accounting for almost a quarter of personal accounts. Our own banking sector has a considerable exposure to Ireland.

I should stress, however, that the UK’s banks are sufficiently well capitalised to more than manage the impact from the situation in Ireland. But one thing is clear: it is undoubtedly in Britain’s national interest that we have a growing Irish economy and a stable Irish banking system. That is the purpose of this Bill.

The Bill has two substantive clauses. Clause 1 sets out the parameters under which the Treasury may make payments under UK loans to Ireland. The total international assistance package, including our contribution, is denominated in euros. However, our bilateral loan will be made in sterling. Subsection (3) includes a cap on the total size of our bilateral loan of £3.25 billion. This will be the total size of our bilateral loan to Ireland, and the period over which these loans may be paid out will end on 8 December 2015, five years after the Bill was first published.

I would like to make it clear that there is no expectation that we will have to make further loans to Ireland in the future. This is reflected in subsection (4), which is intended to prevent an increase in the size of the loan unless an order is made by statutory instrument. But because the loan is denominated in sterling, a mechanism is needed to accommodate potential changes in the exchange rate in the period between the publication of the Bill and the signing of the loan agreement. Therefore, the Bill allows the Treasury, under subsections (4) to (7), to make an order once the Bill is in force to increase the limit, as long as this is done solely to take account of exchange rate fluctuations between now and 30 days after Royal Assent without further parliamentary procedure. Let me be clear: any increase in any other circumstances or for any other reason would require approval in another place. This is something that I and my right honourable friend the Chancellor of the Exchequer do not envisage happening. We also expect full repayment to be made over the term of the loan.

We want the process to be as open and transparent as possible. Clause 2 therefore creates a requirement for the Treasury to prepare and lay before Parliament a report every six months on any payments made by the Treasury by way of a loan to Ireland, the original term of each loan, any sums received by the Treasury by way of interest or repayment of such loans, the amounts outstanding, and the remaining terms of any outstanding loans.

I would like to update the House on the main terms of the bilateral loan, which we have agreed in principle with the Irish authorities and have made available in the Library of the House. The loan will be drawn in eight tranches, each with a seven-and-a-half-year term. This is in line with the terms for both the European and IMF loans. The first tranche of our loan will be available to be disbursed in September 2011 and the interest rate charged on each tranche of the loan will be fixed specifically for that tranche. This will be set by adding a fixed margin of 2.25 percentage points to the appropriate market-determined interest rate, the sterling seven-and-a-half-year swap rate, at the time of disbursement. For example, at present, the estimated interest rate on the first tranche of the UK loan would be the sterling seven-a-and-a-half-year swap rate in September 2011 plus 2.25 percentage points. That margin was set to give an estimated interest rate of 5.9 per cent for the first tranche of the loan.

The rate on our bilateral loan is slightly higher than the estimated rate of 5.7 per cent for the first tranche of IMF and EFSM funds, but it is also slightly lower than the estimated 6.1 per cent rate the EFSF will charge on its first tranche of lending. This reflects the different costs of funding and is a measure of the international confidence in the UK’s public finances. We will charge interest every six months and there will be a repayment of principal at the end of the seven-and-a-half-year term of each tranche. As with the IMF, there will also be a commitment fee for making this loan. We will charge half a percentage point on the total amounts that may be drawn down under the loan agreement for the forthcoming 12-month period. If the loan is drawn the fee will be waived, effectively replaced with the interest charged on the loan.

There are two conditions on the loan set out in the terms, to which I would like to draw the attention of the House. The first condition is that the IMF as well as the EU must be satisfied that Ireland is complying with the agreed restructuring plan. This is a very important safeguard. The second crucial condition is that there are to be no amendments to the restructuring plan that could have a material adverse financial impact on the UK operations of Anglo Irish Bank, Allied Irish Banks and Bank of Ireland. Given the scale of their operation in the UK, this is vital.

The official advice from the Treasury is that this loan represents value for money for the British taxpayer while being in line with the terms offered by both the IMF and the euro area. A summary of the key terms of the agreement and a final written agreement will be forthcoming shortly.

One thing is clear: Ireland is a friend, and a friend in need. Because of the steps we have taken, our economy is currently in a far stronger position than Ireland’s; that is why we are able to offer such reasonable and sensible terms for our bilateral loan to Ireland.

I should like to talk briefly about a related matter which I know is of interest to this House: the proposed permanent stability mechanism for euro area economies. Both my right honourable friends the Prime Minister and the Chancellor of the Exchequer have been very clear that when it comes to putting in place a permanent mechanism, the UK should not be part of it. The time has come for the euro area to put in place its own mechanism for dealing with the imbalances. It needs to be part of a comprehensive solution that sees countries addressing more decisively their own problems, including in their banking systems. As my right honourable friend the Prime Minister said yesterday, it is clear from the recent Council conclusions that the mechanism will be for:

“Member states whose currency is in the euro”.

Britain therefore will not be part of it.

Since our coalition Government came into office, we have taken action to put our own house in order. We are now in a strong position that enables us to help Ireland, our closest neighbour, in its hour of need. As I have said, this is clearly in our national interest. A strong Ireland—indeed, a strong Europe—is vital to the success of the British economy. Today’s Bill will help to ensure this. I beg to move.

17:01

[Lord Liddle]

My Lords, first I apologise most sincerely to the Minister for not being in the House for the start of his speech. I was trying to catch what his ministerial colleague Mr Lidington was saying to us in evidence in the EU Committee about the permanent mechanism.

I support very strongly the principle of helping Ireland in its hour of need. The case seems self-evident given the interconnectedness of our economies, with 5 per cent of our exports going to the Republic, and the consequences for us of a collapse of its economy, which would be serious, not least for British banks.

No simple solution such as coming out of the euro is available for Ireland, as a lot of people who opposed the legislation seemed to think. It is worth bearing in mind that, were a member state to try to come out of the euro, there would be a very big devaluation. That would cause a collapse in living standards and purchasing power, which would have knock-on economic consequences particularly, in Ireland’s case, for Britain. Moreover, its debt would continue to be denominated in euro. As the new currency had depreciated, there would almost certainly be a default that required a restructuring of that debt, again with very severe consequences for the British financial system.

However, while I fully support the objectives of the Bill, I dislike it considerably. I dislike it because of its bilateral nature. The Government are profoundly wrong in the working assumptions that lie behind this bilateral Bill: that the euro problem is a problem for the eurozone, that it is for the eurozone to sort itself out, and that it is none of our business. That is profoundly misguided and not in the UK’s national interest.

It is wrong for three reasons. First, as we in Britain seek the necessary rebalancing of our economy towards exports and investment, it is absolutely clear that we are dependent on very strong growth in the euro area, which is our biggest market. I know that the rest of the world is growing much more strongly and Asia is growing very strongly indeed, but Germany, more than the United Kingdom and other members of the European Union, is getting the most benefit out of that global expansion. We will be the beneficiaries of that German growth in the eurozone. We live in Britain today in an economy that is deeply integrated into the rest of Europe. Our fortunes are dependent on the rest of Europe. It is completely misleading to talk about their problems over there and think that we can sort out our problems over here as though they are completely separate questions.

Secondly, our banks are extremely interconnected. I was reading the Bank of England’s report on financial stability, which was published last week. It states:

“UK banks’ holdings of sovereign debt issued by countries under heightened strain are relatively small. But total claims on these economies, including lending to households and businesses, are larger ... Losses on such lending could increase were heightened sovereign concerns to be accompanied by weakening economic conditions. Credit risk could also be amplified by the interconnectedness of European banking systems. UK banks have claims of almost £300 billion on France and Germany, whose banking systems are more heavily exposed to the most affected economies”.

The Bank of England argues that there is strong interconnectedness, and we must think in those terms, not that we are something separate and apart.

Thirdly, when there is a crisis, we will end up paying for it just as if we were in the eurozone. I looked at the Hansard report of the debate in the other place on this subject and at what the Chancellor of the Exchequer had to say about it. He said that,

“our contribution has been calculated on the basis of what we would have paid if we had been part of the facility”.—[Official Report, Commons, 15/12/10; col. 946.]

In other words, it is a bilateral contribution but it is based on a calculation of what we would have paid if we had joined. Mr George Osborne goes on to say:

“We are paying pretty much exactly what we would have paid if we had been a member of the euro”.—[Official Report, Commons, 15/12/10; col. 948.]

We cannot avoid our obligations to the rest of the European Union by pretending that this is something apart from us.

What is going on here is that UK politics is taking priority over the national interest. Clearly, we in Britain are in this up to our necks. Our banks are in it up to their necks and our prospects for growth are dependent on the euro area. Instead of the Prime Minister saying, “This is nothing to do with us”, he should be doing today what Gordon Brown did in October 2008; he should go to the summit of the eurozone countries and say, “Here is the plan to rescue the banks in the area. Britain has a vital interest in being part of this”. Instead, we get a washing of the hands of Britain's role. It is clear that this policy will not last. I looked at what various economic experts were saying about the likely pattern of what was likely to happen in the eurozone. It is difficult for the Government to comment on this because no Government can forecast that there will be defaults.

I looked at an article by the one professor who forecast the crash of 2007 and 2008—Professor Roubini. In his view, what he describes as the current strategy of kicking the can down the road will soon reach its limits. He goes on to argue that,

“Europe must … implement early orderly restructurings of distressed sovereigns’ public debt”.

The consequence of the orderly restructuring of distressed foreign debt would be the necessity also to carry out another restructuring of the European banking system, in which Britain’s banks are intimately involved. Instead of doing these bilateral things, we should be putting ourselves at the heart of Europe and of the argument about what needs to be done in order to rescue the European economy. What we are seeing here is a policy for marginalising Britain that is profoundly against our national interests. We will pay a very high price for it in future, because when the new mechanism is set up the key economic decisions will be taken by the eurozone, which will go along to ECOFIN, and Britain will be forced to agree with what the eurozone has decided because decisions are taken by qualified majority voting.

This principle of staying out and doing bilateral deals is a very bad policy for Britain. It is putting playing the politics of the Daily Mail and Rupert Murdoch before a real, patriotic sense of where our national interest lies.

[Lord Pearson of Rannoch]

My Lords, during the noble Lord’s remarks I think that I heard him say that British prospects for growth depend on the eurozone. Could he enlighten us as to his views on the prospects for trade in the rest of the world?

[Lord Liddle]

I touched on that subject, because I said that Germany was taking far better advantage of global growth than we are at present. The Prime Minister is absolutely right to try to expand our exports in India, China and other countries, but the fact is that German export success benefits us in the growth in the eurozone, which accounts for half our exports.

17:13

[Lord Newby]

I thank the Minister for his very clear introduction to the debate. I was slightly concerned, however, that he did not refer the House with the degree of attention that it may deserve to paragraph 21 of the Explanatory Notes, which deals with the compatibility with the European Convention on Human Rights. I was tempted to ask him whether the law officers had been consulted before the Chancellor of the Exchequer made the statement that,

“pursuant to section 19 of the Human Rights Act 1998 … the Bill is compatible with the Convention rights”.

As this is the first time that we have debated the Bill, the Minister has not had the chance to give any undertaking to speak to the law officers, and it would be invidious to ask him to do so. However, one hopes that that will not be necessary.

Was there any alternative to the loan and the Bill? As the noble Lord, Lord Liddle, has explained, there was not. If the EU had not intervened in the dramatic way in which it did, it is almost certain that Ireland would have had to default and leave the euro. That would have been bad not only for the eurozone but for the UK. It would have been bad for the UK for trade reasons—I shall come back to the point made by the noble Lord, Lord Pearson, a bit later in my speech—as we have a large volume of exports to Ireland. Indeed, 40 per cent of Northern Ireland’s exports go to the Republic. I am sure that the noble Lord, Lord Bew, will expand on that point.

The prospect of Northern Ireland, as a depressed region of the United Kingdom, suffering significantly as the result of a major crisis in the Republic would have had not just a severe impact on Northern Ireland but, obviously, a severe knock-on effect here, including to the public finances. We would have had, in effect, to have filled in some of the hole that would have been knocked in the Northern Ireland economy. Such a crisis would also have been bad for the UK because of the exposure of UK banks. Again, as the noble Lord, Lord Liddle, pointed out, the Bank of England has set out starkly the scale of that issue. A default would have led to instability in sovereign debt markets more generally and could have increased the costs of UK government borrowing.

That does not necessarily mean that we agree with absolutely everything that is being done to restructure the Irish banking system. The arguments for establishing the National Asset Management Agency can be made either way. Effectively nationalising all the risks taken by all the Irish banks raises moral-hazard issues, which we have sought to avoid to a considerable extent in the United Kingdom.

Another issue is whether, even with all this activity, we will have been successful in stabilising the Irish economy. To pose the question that Martin Wolf posed in the Financial Times recently, the question is not whether the Irish banking sector is too big to fail but whether it is too big to save. Hopefully, the answer is that the Irish banking sector can be saved as—heaven knows—it is not lacking resources. The amount that has gone in both from the Irish Government and, via them, from the EU is now considerable.

It would have been irresponsible for the UK not to participate in the Irish bailout, but the Irish problem is not the only issue facing the eurozone. There are broader issues that relate to Greece, Portugal and now Spain and Italy. Given that we are outside the eurozone, it is a logical if inglorious position for us not to commit to taking part in any further bailouts of other member states.

When contemplating this debate, I cast my mind back to the debates that we had a decade ago on whether Britain should join the euro subsequent to, as many noble Lords will remember, the famous five tests. I am pleased to see the noble Lord, Lord Morris, in his place. Uniquely in my hearing, he was able to make a joke—which at least I laughed at at the time—about whether we should join the euro. At a TUC summer reception, he said that, having been asked by the then Chancellor, Gordon Brown, what he thought about the five tests, he had replied, “Well, we’ve won one, we’ve lost one, we’ve drawn one, but I think we might win the series in Sydney”. A decade on, a lot has changed both in cricket and in our perceptions of the euro.

At that time, many of us on these Benches supported Britain’s attempts to join the euro. One of the joys of doing a considerable amount of work with Charles Kennedy, as I was doing then, was that we were summoned from time to time to see the Prime Minister for an uplifting talk on matters of common interest and concern, of which the euro was one. At that point, Charles Kennedy was keen to press the case for British membership of the euro on a Prime Minister who was keen but extremely nervous about that prospect. Indeed, he said at the time that he would like to join the euro but he thought that it was impossible to beat both public opinion and the popular press—he could beat one, he thought, but not both—so he did not attempt it. As a result, we are now in a situation in which nobody seriously thinks that we should join the euro in the foreseeable future. Although it is inconceivable—for the reasons given by Tony Blair among many other reasons—that we should join the euro at this point, some of us at least are not absolutely convinced that we took the right decision a decade ago.

However, if I were to dilate on that argument and those tests, I would no doubt keep your Lordships here all evening. I know how much Members—particularly those opposite—hate overlong speeches. The noble Lord, Lord Hunt, is clearly already extremely impatient with me, and I can understand why that might be the case.

Even though we are agreed that we should not join the euro, two interlinked questions need to be considered—we cannot amend the Bill, and it would be foolish to attempt to do so—in this discussion on the Bill, which gives us an opportunity to range slightly wider. Realistically, what should our role be in terms of ensuring financial stability within Europe? And what should the eurozone do now? As I say, the two issues are inextricably linked, but the first principle should surely be to support eurozone members in doing whatever they agree is prudent to strengthen the working of the eurozone. For example, it would surely be perverse and ridiculous if the Government committed themselves to having a referendum on changes to the EU treaties that eurozone members decided were necessary to allow eurozone members to support each other more effectively. Can the Minister assure us that, as a non-eurozone member, we will wave through any proposed changes to the EU treaties without requiring a referendum in the United Kingdom?

As the noble Lord, Lord Liddle, has pointed out, the Chancellor is more generally in an extremely odd position when considering the development of the eurozone. The eurozone’s success or failure is obviously of crucial importance to the future of the British economy, as has been exemplified by the situation in Ireland. However, as the noble Lord pointed out, there are three reasons why the success or failure of the euro and the eurozone is important to us. The first of those reasons, to which he referred—and on which he was challenged by the noble Lord, Lord Pearson of Rannoch—relates to trade. It seems to me bizarre and sad that we export more to Ireland than to the BRICs combined. However, that may be a slightly misleading figure, as I suspect that the figure includes all the re-exports of goods that come from the rest of the world to Ireland via the UK. For example, I suspect that goods that are shipped from France to Ireland by road through the UK count as UK exports to Ireland. I may be wrong on that, but that may slightly inflate the figure. Even if that is not the case, the figure is still very high.

However, if one wants suddenly to change gear completely and export significantly greater amounts to the BRICs, the problem is that, frankly, that is easier said than done. It is not easy for a small business suddenly to decide to sell its products in China or Brazil, given the problems of language and distance. Therefore, even with the best will in the world, it would take a while before we could re-orientate our trade significantly away from the eurozone, particularly given that our strength rests in exports of services, many of which are easier to export to the eurozone than to the BRICs. That is particularly the case in countries where there are institutional barriers to exports of services. It is not simply that a lawyer or accountant seeking to open an office in India has their work cut out for them but that they cannot do it. Therefore, it would be an extremely difficult challenge for the UK simply to do a handbrake turn and suddenly start newly exporting huge quantities of goods to the BRICs. Therefore, we need the eurozone to do well, because that is where many of our exporters already have links and where, as we grow, they could develop those links significantly more.

[Lord Pearson of Rannoch]

My Lords, of course I admit that our trade with the eurozone is important, but is the noble Lord aware that our trade with the rest of the world—both inwards and outwards—is in fact increasing very much faster than that with the eurozone? Surely that points the way to the future rather than to the past.

[Lord Newby]

My Lords, the fact that such trade may be increasing more quickly is not surprising for two reasons. First, it is increasing from a smaller base, so it is easier to achieve a higher percentage increase. Secondly, most of those economies are growing more quickly than the eurozone, so you are feeding into a more buoyant economy. I completely accept that, but my point was slightly different. Incidentally, another problem about exporting to some of those other countries is that the newly passed Bribery Act is making many companies, not least small-to-medium-sized companies, very wary about their ability to export to China or India, for example, because they fear—sometimes rightly and sometimes, no doubt, incorrectly—that they may be faced with business practices there which they need to follow in order to gain access to a market but which they would not have to follow in the eurozone. In the medium term, I am extremely optimistic about the prospects for exports to the BRICs, but in the short term, given that we are starting from a relatively low base, it is a forlorn hope to think that the BRICs can solve our export problems.

[Lord McAvoy]

My Lords, I hope that the noble Lord will forgive me, but I will be extremely brief. In the interests of transparency, would the noble Lord care to share with your Lordships’ House the contents of the note that he has received from his Chief Whip?

[Lord Newby]

I may be mistaken—I do not know the noble Lord desperately well—but I think that, in a former incarnation, he was a Whip. It is not normal, when asked a question, to pose a question back, but I would be inclined to ask the noble Lord, if the House so allowed me, whether, when he was a Whip, he thought it a good idea that everyone who received a note from him in another place be required to divulge the contents of that note. My guess—I may be wrong—is that he would not necessarily have been desperately happy at that.

[Lord McAvoy]

I did not have to send notes. I just looked encouraging.

[Lord Newby]

Well, as I am sure the noble Lord is learning, we do things differently in your Lordships' House. I realise that I must make progress.

[Lord Pearson of Rannoch]

Even in your Lordships' House, I believe that I am right in saying that the Companion suggests that Second Reading speeches should be curtailed to some 15 minutes. We are now in the 17th minute of the noble Lord's peroration.

[Lord Newby]

My Lords, I am extremely grateful to the noble Lord for making that point. He will be aware that I have been interrupted on a number of occasions. However, I am well aware of the conventions of the House and will happily draw my speech to a conclusion by saying, as I said at the beginning, that we support the Bill.

Identity Documents Bill

Tuesday 21st December 2010 Lords Chamber

Consideration of Commons Reason (Continued)

17:31

Debate on Motion A resumed.

[The Minister of State, Home Office (Baroness Neville-Jones)]

My Lords, I acknowledge that Members of your Lordships’ House sought earlier to determine whether I had, following Report, sought to obtain further legal advice. At the risk of repeating myself, let me say that the House will be aware that, by long-standing convention observed by successive Administrations and embodied in the Ministerial Code, the fact that law officers have or have not advised on a particular issue and the content of any advice are not disclosable outside the Government.

I have consulted Hansard and spoken to officials during the adjournment. I did say on Report that I would confirm the advice that we had received on legal aspects. I am able to confirm that I did just that, that the contents of the Bill are compatible with ECHR requirements and that I have given that commitment based on legal advice. I have taken appropriate legal advice at all stages of the Bill, including Report. I hope that noble Lords will appreciate that the convention of the House, which I have tried to follow, does not enable me to disclose the source of that advice, but I am satisfied that I have taken it.

[Lord Howarth of Newport]

My Lords—

[Baroness Anelay of St Johns]

My Lords, the Minister is fulfilling a commitment to the House. I think that the noble Lord is now graciously allowing her to do so.

[Baroness Neville-Jones]

My Lords, my main intent during the debate has been to fulfil my duty to your Lordships’ House and I have done everything that I can to do that.

[Lord Hunt of Kings Heath]

My Lords, we are grateful to the noble Baroness for coming back to the House and to the noble Lord, Lord Newby, for entertaining us for so many minutes before she was able to do so. I will be very clear. The Minister has answered one specific point that was raised on Report. However, I remind her that she was asked whether advice was received from the law officers. The noble Baroness said, “I will confirm the advice that I have received”. She has now answered that point. However, she was also asked by my noble and learned friend, Lord Morris of Aberavon, who is a former law officer, whether the advice was from the law officers. The noble Baroness said:

“I am not sure that I can confirm that. I will seek to do so before Third Reading”.—[Official Report, 17/11/10; col. 792.]

She has not answered that point, nor has she given an assurance to the House that, following Report, she did anything at all in relation to the commitments that she gave.

I hear what the noble Baroness says about the disclosure of the law officers’ advice. That is a separate point to the one asked by my noble and learned friend, who asked whether advice had been sought from the law officers. That is a different issue. On the issue of the availability of advice from the law officers, would the noble Baroness be prepared to let me see that advice on Privy Council terms? The substantive issue that this raises is about Ministers making commitments to the House and then following them up. It is a matter that I will return to in the fullness of time.

The further substantive issue is one of fairness. Thousands of people bought ID cards on the basis that they were for a 10-year period. The Government have decided to withdraw those cards and this Bill enables them to do so. That is parliamentary democracy. We did not oppose the Bill, because we recognised that commitments were made in the manifestos of both parties in the coalition Government. However, as the noble Lord, Lord Phillips of Sudbury, said, the issue is one of fairness. How can it possibly be fair, when a person has bought a card for 10 years, for it to be withdrawn after a matter of months and for no compensation to be given? It is an absolute disgrace.

[Lord Howarth of Newport]

My Lords, I will speak briefly about two issues. We certainly accept the convention that the noble Baroness is under no obligation to tell the House what the advice of the law officers was. However, I am surprised, not least in the light of the earlier observations by my noble and learned friend Lord Morris of Aberavon, to hear her assert that she is under no obligation to tell the House whether she received advice from the law officers. I wonder whether part of the reason for her difficulty earlier in the afternoon was that the advice of the law officers was not consistent. Perhaps they disagreed among themselves, which put her in an embarrassing and difficult position. Perhaps she would be willing to cast any light on that; if she would, I think that the House would be interested.

The second issue is the one that I raised earlier. I am genuinely unclear, from what the Minister said this afternoon, whether the Government are asserting financial privilege and hiding behind a ruling of the Speaker and whether they are content that this extension of the doctrine of financial privilege to cover matters of expenditure as well as measures concerned with revenue raising is an appropriate new doctrine for them to espouse and to use for their political convenience. As I suggested earlier, if that is the case, there are large implications for this House, which we should ponder and take seriously. Will the Minister tell us in plain terms whether the Government consider that this is a matter of financial privilege and therefore outside the authority and competence of this House to vote on?

[Lord Pannick]

My Lords—

[Baroness Anelay of St Johns]

My Lords, perhaps I might remind the House that we have in a sense invented procedure this afternoon to assist the Minister to make a statement of explanation. Noble Lords will understand that of course we expect a noble Lord on the opposition Front Bench to be able to put the opposition view. Other noble Lords might wish to put very brief questions. We allowed a little latitude to the noble Lord, Lord Howarth. Perhaps we might now return to the normal convention of making brief interventions so that my noble friend can return to the assurance, which she has given very clearly to the House, that at all times she has taken the appropriate legal advice and, as she has tried to assure the House, that the Government have acted properly. Of course I understand that matters of parliamentary procedure and privilege, and constitutional issues, have been raised by the opposition Front and Back Benches. I also understand that these will be debated on another day. Our minds today are concentrated on one Bill and one or two Motions.

[Lord Pannick]

I am grateful to the noble Baroness. I shall confine myself to brief questions. First, the Minister indicated that legal advice had been taken. Will she accept that there is a difference, which concerns noble Lords, between taking legal advice on these matters and taking legal advice from the law officers?

The second matter arises out of the noble Baroness’s statement that it is a convention that Ministers do not confirm whether or not legal advice has been sought from the law officers. Does she accept that it is a different matter if she has given a specific assurance to the House that legal advice will be sought from the law officers and that it is entirely appropriate that she should confirm to the House whether her own assurance has been fulfilled?

My third and final question is: will she also accept that it is not a universal rule that the Government do not tell the House whether legal advice has been sought from the law officers? There are many, many examples of the Government telling this House and the other place that legal advice has been sought from the law officers. Professor Edwards’s book, Law Officers of the Crown, gives many examples, the most recent of which, of course, relates to the legality of the invasion of Iraq.

[Baroness Neville-Jones]

My Lords, it is not clear to me how much more help I can be to the House. I have tried very hard to be of help. Perhaps I can take up the points that have been made. I was asked in the House—I am looking at Hansard—whether the advice was from the law officers. I said that I was not sure but would seek to confirm it. That is indeed what I undertook to do. I am advised that I am not in a position to disclose either the fact of seeking that legal advice or its contents. That is why I am not able to take what I have said to the House this afternoon any further. The only way that I could do that would be—

[Lord Hunt of Kings Heath]

My Lords, the noble Baroness may find this disagreeable, but we are fully entitled to ask these questions. She says that she is not in a position to do so but, first, why did she not write to noble Lords following Report? Why does she treat this House with such disrespect? This is not the first time that she has not followed up debates by writing to noble Lords. Secondly, as the noble Lord, Lord Pannick, made clear, when she says that she is not in a position to disclose, I think that she is saying that, as a Minister, she is not prepared to do so, whereas in fact she could very easily do so.

[Baroness Neville-Jones]

My Lords, I do not accept what the noble Lord has just said. I treat this House with the greatest possible respect and I hope that I command it. I am acting on advice. I am not in a position to comment any further on whether advice was sought from the law officers. I have confirmed to the House that appropriate legal advice was sought at all stages of this legislation.

Motion A agreed.

Loans to Ireland Bill

Tuesday 21st December 2010 Lords Chamber

Second Reading (and remaining stages) (Continued)

17:43

[Lord Bew]

My Lords, I thank the Minister for the skilful way in which he introduced the Bill. I approach this subject from a slightly different angle. Both in this House this afternoon and in the other place the main focus of the discussion on the Bill has been, for entirely excellent reasons, economic matters. A case has to be made for the British taxpayer supporting such a loan and it has been very well made in terms of the interdependence of the two economies, particularly the fragility of the Irish banking system and the possible negative knock-on effects within the United Kingdom. Indeed, if I may put it even more bluntly, so far as concerns Northern Ireland there is a great deal to be feared from an implosion of the Irish economy. Therefore, the steps that have been taken on Treasury advice with respect to the Bill seem entirely reasonable and entirely worthy of support.

Although I accept the economic argument that was put so effectively today by the noble Lord, Lord Sassoon, I suggest that we should look at the Bill in a wider and more historical context. The fact is that historically there has been a traditional Irish suspicion of Britain and its role, which has been reflected in Irish support for whoever the enemy of the United Kingdom has been at a given time, going back to Philip II of Spain and Napoleon of France. In 1916 at the time of the Easter Rising, the insurrectionists made an appeal to their gallant allies in Germany. Therefore, at different points in Irish history, there has been an explicable yearning for an alliance with major continental powers against Britain.

In February 1920, Eamonn de Valera said that if Ireland became independent, it would become the closest possible ally of Britain,

“in a moment of real national danger to either”.

The fact is that Ireland did become independent shortly thereafter but, for much of the time since then, that has not been true. It is hard to say that in the summer of 1940, for example, Ireland acted as the closest possible ally at a moment of real national danger, and there are many other such instances.

However, in recent years there have been attempts to bring about better relations between the two countries. Following what, in the end, turned out to be a false start with the Anglo-Irish agreement of 1985 and the Good Friday agreement of 1998, we have moved to a new and better place. Not the least of the reasons why it is right for the British Government to take the step that they are now taking is that we are, when faced with dissident terrorism, now dependent to an unusual degree on the excellent security support that we receive from the Irish Government. That is one of many reasons why it is indeed in our national self-interest to behave in the way that the Government now propose.

So we are now in a somewhat better place and we are in a moment when we can, on our side, try to fulfil de Valera’s promise to be the closest possible ally in a moment of real national danger. To make it absolutely clear, this is a moment of real national danger for Ireland and the Irish people. There are moments of great political and economic uncertainty ahead. It is also an interesting moment in that in Irish public debate over the past month there has been much criticism of things that have been said by the German Chancellor, the governor of the Portuguese bank and the governor of the Spanish central bank, but there has been no criticism of substance of anything said by senior politicians in London. In fact, there has been a recognition that the British Government have behaved well in this matter. The noble Lord, Lord Cope, who will speak after me, is the co-chairman of the British-Irish Parliamentary Assembly and he will recall the warmth with which the Irish Members of Parliament responded to the initiative taken by the Chancellor of the Exchequer.

Therefore, we are in a new moment—a potentially more benign moment—and I want to talk about politics and history, as well as economics, because I think that it is very important that we build on the politics of this moment, as well as fulfil the economic commitments into which we are about to enter. It is very important that we now try to achieve a new relationship between Britain and Ireland—often promised but often illusory following agreement after agreement. That relationship has not been delivered in the way that it was supposed to be. However, since 1998 we have been steadily getting to understand each other better and this is an important moment. At present, I offer my support for the Bill, but I ask the Government not simply to confine their actions here to the narrow economic sphere but to build on all the other political options that are open to them in order to strengthen the association with Dublin and to turn a new page in the history of the relationship between Ireland and Britain.

17:49

[Lord Cope of Berkeley]

My Lords, first, I should perhaps confirm that I am indeed the British co-chairman of the British-Irish Parliamentary Assembly, although in what I say this afternoon I am speaking entirely for myself and not in any way for the assembly. I do not think that this is an interest in the strict sense that your Lordships’ House understands, but for that matter, a lot of the interests that are declared in the course of your Lordships’ debates are not, in the strict sense, interests either. The House is quite right to err on the side of disclosure in that matter.

As the noble Lord, Lord Bew, has just indicated, as it happened, our last joint meeting as representatives of the legislatures of these islands occurred on 20 and 21 November, at exactly the time that the crisis which is the reason for the Bill was coming to a head. Our Irish colleagues were, indeed, somewhat distracted during our meetings over those days, as your Lordships will guess. It certainly gave us all a greater insight into the stresses that they were under and the political as well as the economic effects of the crisis. I can confirm, as the noble Lord, Lord Bew, has just said, that a great deal of gratitude was expressed by our Irish colleagues for the attitude of UK Ministers and, in particular, for some of the Chancellor’s remarks at that time. That has a political importance quite separate from the economic importance of the Bill and the loans it allows.

I strongly support the Bill. As my noble friend the Commercial Secretary has explained, the Bill and the loans it permits are part of the underpinning of the economy and banking system of the Irish Republic. It is important, as other noble Lords have said, for our economy and particularly for the economy of Northern Ireland. It is difficult to express that aspect of this too strongly.

I go along with the noble Lord, Lord Liddle, to the extent that this is not, of course, the end of such matters. We must expect further strains within the eurozone and, clearly, EU Finance Ministers, including our own, are right to seek agreement on a debt restructuring mechanism, and so on. We in Britain are necessarily involved because our banks are involved, as has been said, but that does not make the Bill wrong. On the contrary, it is right and I support it.

I also support the use of the fast-track procedure, which was devised, after all, by our Constitution Committee and which has proved its worth in this case, although it was questioned in debates in another place. Her Majesty’s Government are to be congratulated on seeking specific legislative authority before signing up to the loans, rather than relying on so-called common-law powers and coming to Parliament afterwards for ratification, which is something that they could have done. The previous Government were accused of having breached the spirit and, arguably, the letter of the Public Accounts Committee Concordat of 1932 which governs these matters. This Government were right not to have risked such condemnation in this case. At the same time, if the Bill had followed normal timings through Parliament, it would have been delayed until well after the loan agreements were likely to be agreed. That is the first reason for the fast-tracking.

The Government also say in the Explanatory Memorandum that fast-tracking is necessary to give confidence to our international partners. I understand that, but it is only part of the matter. The important fact which underlies all this is that markets these days move very swiftly and fast, firm decisions are required to deal with that. I was a Treasury Minister at the time we left the ERM—although I was not involved with that side of the department—so I need no convincing about the power of the markets and the speed with which they can influence events.

Incidentally, there is a tendency to dismiss currency market operations as purely speculators speculating. Of course, there are some operators within those markets who are pure speculators, but the foundation of currency markets—the size of them reflects this—is legitimate traders trying to offset potential currency fluctuations. A board deciding to invest in a new major plant whose operations and building will extend over decades to come needs to insure itself as much as it can against possible currency fluctuations during the time taken to bring it to fruition. Similarly, someone buying or selling large items which take time to deliver can easily find that the profit or loss on the exchange rate can be greater than the profit on the goods themselves. They need to ensure that they are not penalised by currency fluctuations by buying or selling forward. Which of us planning a holiday overseas has not thought about buying some local currency in advance if rates are likely to change? That is not speculation; it is prudent foresight.

I make one further point before I sit down. My right honourable friend the Chancellor of the Exchequer was not quite accurate when, in debates in another place, he compared the affirmative procedure in Clause 1(4) for agreeing any increase of these loans to new primary legislation. He said that the effect is exactly the same, but it is not; certainly not in this House, which is not involved in the affirmative procedure in Clause 1(5)—quite rightly, given the nature of the Bill. The effect of affirmative orders and primary legislation is not the same, and certainly was not when I was a Member of another place a decade and a half ago. I realise that the timetabling of Bills in another place has made things rather different from when I was there. It means that there is less distinction between affirmative orders and Bills in another place, but what a commentary that is on the way in which primary legislation is now scrutinised there.

However, that is by the way. I support the making of these loans to our friends and neighbours in the Republic and I support the mechanism by which it is being accomplished; namely, this fast-tracked Bill.

17:57

[Lord Davies of Stamford]

My Lords, I begin by asking the Minister a question. I would have intervened on him earlier, but since I was hoping to speak in the debate I did not want to interrupt him unnecessarily. I think I heard him say that this potential transaction by which we lend three point something billion pounds to the state of Ireland will not increase our borrowing, because the Irish have an obligation to repay. I see the Minister shaking his head, so perhaps I misheard him. If I misheard him, I apologise. Clearly it may not increase net borrowing, because we have a corresponding asset—the Irish obligation to repay—but government borrowing figures are always stated on a gross basis, otherwise they would not be positive at all, because we always have substantial net assets. I thought that there was some confusion about that one phrase that the Minister used, but perhaps he will deal with that in his response. I am grateful to him.

I am very much in favour of the Bill. It seems to me to be absolutely the right measure for two reasons. One reason, which the Government seem rather to dismiss, is that Ireland is a neighbour, a great friend for all the reasons that the noble Lord, Lord Bew, set out, and a member of the European Union. I believe in the notion and the value of solidarity among nations, as in other branches of human affairs. I believe in soft power as well as hard power, in friendship and in good will. I believe in the value of these things, in the value of creating and maintaining them and that it is a mistake if you throw them away. That is an important consideration and I shall come, in a moment, to what I think of the Government’s attitude on that subject.

Secondly, I approve for the reasons that the Government appear to approve of it, which is that we have a very specific, practical and concrete interest in avoiding the kind of systemic crisis which could well be generated by a default by the Irish Government on their bond and other financial obligations, or, indeed, a default by the Irish banks, which are currently being guaranteed by the Irish Government. One default could well trigger another. Clearly, that would create a very difficult situation for us.

My regret about the Bill, how it has been brought before the two Houses of Parliament and the way in which the whole issue has been conducted by the Government is that the Government have given away a lot of the good will that might have been achieved by this gesture by an extremely grudging approach to this transaction. As my noble friend Lord Liddle pointed out, we deliberately decided that we do not want to be part of a collective solution; we want to do these things individually and bilaterally. The Government’s is a rather strange gesture to make, a rather strange signal to send. The Chancellor has been at pains to make clear that he was not responsible for Alistair Darling's agreement that we should join the stability mechanism back in May. Indeed, the Chancellor said in another place:

“I am doing everything I can to ensure that the UK is extricated from the commitment that was entered into, and we are making good progress”.—[Official Report, Commons, 15/12/10; col. 944.]

He said elsewhere in that debate that we will certainly not be part of the permanent mechanism when that is established.

I regret all those things for two reasons. The first is the practical and concrete reason of hard financial national interest; the other relates to my point about good will. In the first instance, there may well be other crises in future. It would be idiotic to exclude the possibility of our need to take part in such support operations in future to avoid some systemic crisis. It is always foolish in life to give up any flexibility. You want to maintain flexibility to respond in different ways. Excluding the idea of being part of a collective mechanism in the EU makes no sense. The other reason, as I said, is that it sends quite the wrong signal, and to my mind reduces the good will created by our decision to support Ireland in this way.

All that reflects an uneasy compromise in the coalition Government. I suspect that the Lib Dems in the Government very much take the view that I take and would have been in favour of this whole operation instinctively on principle in the first place, would then have wanted to negotiate details with our EU partners jointly, and would have had no inhibitions about doing that because they are European partners or members of the eurozone.

I suspect that the advice that the Government received from officials in the Foreign Office was that it would be disastrous, particularly after the centuries of Anglo-Irish history to which my colleague, the noble Lord, Lord Bew, referred—many incidents that are very much to the shame of this country. If we were the only major EU country that declined to take part in the support operation, it would have the most appalling effects on our relationship with Ireland. I imagine that the Foreign Office took that line—at the official level, at least. I imagine that the Treasury and the Bank of England were concerned with the potential systemic crisis and therefore urged the Government to take part.

I suspect that, against that, there were the Tories who, for Eurosceptic and chauvinistic ideological reasons, were reluctant to become party to this transaction and were certainly very keen to ensure that it had nothing to do with our European Union membership or the existence of the eurozone.

That uneasy compromise is reflected in the very grudging way in which the money has been advanced and the very grudging statement that I have just cited from the Chancellor, which I very much regret. I am sorry that I cannot come up with entirely effusive, uncompromising congratulations for the Government on this move, but I am glad that they have taken the right decision, however grudgingly, and I shall be delighted to support them if there is a vote on the subject, which I doubt that there will be.

I have a couple of remarks to make about the general context. So much complete nonsense, and dangerous nonsense, has been talked about the relationship between the euro, the banking crisis and the sovereign debt crisis that we have faced over the past year or two that I feel inspired to comment on it in this debate. It has been said openly and frequently in the Eurosceptic press in this country and by a number of Conservatives in the House of Commons that it shows the weakness of the euro system. It has also been suggested that the solution would be the break-up of the euro and that the countries with substantial debt should leave the eurozone. I regard both those comments as either completely incompetent, if people really do not understand what the logical consequences would be of the actions that they are urging, or frankly irresponsible and unpatriotic, because they do not take into account the interests of this country or are willing to sacrifice the interests of the people of this country for purely ideological, emotional or symbolic reasons.

Of course, the euro had nothing whatever to do with the banking crisis or the sovereign debt crisis. In fact, the sovereign debt crisis would almost certainly have been worse if the euro had not existed. I should be the first to admit that the fiscal rules in the Maastricht treaty—the maximum 3 per cent fiscal deficit unless there was the consent of the Union, and so forth—have not been enforced sufficiently strictly. We all know that now, and we need a tougher and tighter regime with proper monitoring and sanctions in future. Nevertheless, if that regime had not existed at all, people would have had even greater deficits. There is no doubt about that.

There was possibly some accounting fraud in the case of Greece, but if there had been no rules, constraints or restrictions at all, the situation would have been a great deal worse. The euro, far from contributing to the crisis, might—albeit too modestly to have greatly affected the outcome—have had a benign influence. As for the idea that the solution lies in breaking up the euro, my noble friend Lord Liddle has already commented on that. I thoroughly agree with him that that would be an astonishingly self-destructive, and therefore I say advisedly irresponsible and unpatriotic, view.

Undoubtedly, if the countries that are affected by the sovereign debt crisis—Spain, Ireland, Portugal or Greece— were to leave the euro, their currencies, whatever they might be, the successor drachma or punt No. 2, would suffer the most tremendous devaluation. As their liabilities are largely denominated in euros, they would find it completely impossible even to begin to meet the burden of that indebtedness. The result would be defaults or a massive restructuring that was far greater than any restructuring that might take place in an orderly fashion in the context of agreement within the EU or the eurozone. That would mean that our banks would have to write off substantial assets, reduce the size of their balance sheets and reduce their credit creation in this country; that the economy would suffer; that jobs would be lost; and so forth. That would be a deeply regrettable state of affairs and it is thoroughly irresponsible to wish that to happen.

I trust that people will be guided by a rational assessment of the national interest rather than by an emotional desire to see the eurozone collapse irrespective of the consequence for either our partners in the eurozone or us. There is no doubt that the euro is not a part of this crisis. It is not a part of the problem and it is not a contributor to the problem. It has been at least a minor reducer of the scale of the problem. It must be an essential part of the solution.

[Lord Lamont of Lerwick]

I do not disagree with much of what the noble Lord has said, but I think he is slightly overstating his case. It reminds me of when I went to Brussels and the European Commission told me that absolute disaster was going to follow when the rouble broke up into individual countries. The Commission sounded just like the noble Lord. However, let us leave that aside.

The noble Lord slightly overstated his case. Does he not think that the convergence of bond yields within the eurozone was a contributor to what happened, because the bond markets ceased to look at countries individually and the convergence of yields encouraged countries to spend too much and to borrow too much? The failure of the markets to distinguish between countries and that convergence of bond yields, which came from the view that Germany would ultimately bail out the other countries, was a contributing factor.

[Lord Davies of Stamford]

I agree entirely with the noble Lord’s indictment of the financial markets and a lot of lenders. I should say that I was a banker myself and sat on the board of a bank, Morgan Grenfell, which had a considerable lending book as well as being an investment bank at the time, and frequently sat on the credit committee meetings we had. I am appalled by the mistakes made by professional bankers in not wanting to look at the nature and unravel the packages of a class of asset—securitised debt packages, essentially, which were becoming very important as a class of their assets. I equally quite agree with the noble Lord that the bond markets were failing to price risk correctly in exactly the way that he describes. The rating agencies bear a tremendous part of the failings, the fault and the guilt for creating this crisis. Many bankers’ excuse is, “We thought we were buying paper with an AAA credit rating and in fact the credit agencies weren’t doing their job properly in unravelling these packages and seeing that what was in them was absolutely rubbish”.

I agree totally with—I think of calling him “my right honourable friend”—the noble Lord in what he said in indictment of the financial markets. I think that is the problem. It is not an indictment of the currency in existence at the time any more than you can say that the enormous failings of the American banking markets, the American bond markets or the American rating agencies were the fault of the fact that they have a currency called the dollar.

[Lord Lamont of Lerwick]

I hesitate to remind the noble Lord, but I remember him making speeches telling us that if only we were in the euro, we, too, could enjoy these very low bond rates.

[Lord Davies of Stamford]

Undoubtedly had we been in the euro—and I totally agree with the noble Lord that I was, and remain, a partisan of our joining the euro—as a result we would have had to adopt tighter fiscal policies. The noble Lord may feel that the result of that might not have been entirely unfortunate for the future history of the country. Nevertheless, we would have done, and the counterpart to that would have been that we would have had lower nominal and real interest rates throughout that period. I happen to think that that would have been a good thing as well.

[Lord Pearson of Rannoch]

My Lords, I am sorry to press the noble Lord, but is he really saying that the predicaments in which economies such as Ireland or Greece, which would have kept their own currency, which would have over a period of years—in Greece’s case, 10 years—floated down on the international markets and which would have their own interest rates and exchange rates, find themselves now have nothing to do with their participation in the euro?

[Lord Davies of Stamford]

I am very happy to give, I hope, a very unambiguous answer to that as well. I do not believe that there is any virtue in the fluctuation of exchange rates. I believe that exchange rate markets, like other asset markets, fluctuate quite irrationally. They swing far too far, an enormous amount of damage is created, they are never at the theoretical point of equilibrium which some people read about in their textbooks 50 years ago and enormous economic costs are caused by these fluctuations. If you can replace them with a stable currency system, as we did before 1914 with gold, as the eurozone has done, as the United States has done with the dollar and so forth, that is a very good idea, all other things being equal. We can get into the “all other things being equal” on another occasion perhaps. I think that if you take the long 20-year view, Greece, Ireland and Spain have all benefited enormously from their membership of the European Union and the eurozone, and that will continue to be the case. We now have a momentary crisis, which looks very grim at present, but we should not throw the baby out with the bath-water.

18:13

[Lord Tugendhat]

My Lords, like other noble Lords who have spoken, I applaud the Government’s decision to offer Ireland a loan, and I also applaud the manner in which it was done. I do not agree with the noble Lord, Lord Davies of Stamford, that it was grudging or anything of that nature. I rather agree with the noble Lord, Lord Bew, that the Irish reaction has shown that they recognise that this was done in a full-hearted and generous fashion, and I am very pleased about that. It was done without strings, it was done quickly and the Chancellor of the Exchequer was quite right to emphasise that it was done in the British interest. Britain and Ireland are two neighbouring countries, their economies are very much bound up with each other, what is good for Ireland in terms of prosperity is good for Britain, and it is right that this should be recognised. Others have spoken of the extent to which Ireland is a major export market, of the way that the economies of Northern Ireland and the Republic are very much bound together, of the number of British companies that operate in the Republic and, of course, of the exposure of British banks, especially the Royal Bank of Scotland, to the Irish financial sector. In helping Ireland, the Government are not diverting money from worthy causes in the United Kingdom, but are acting to safeguard British jobs, British interests and British taxpayers’ money. The sooner Ireland can return to prosperity, the better for us that will be.

I got the impression, but perhaps I am wrong, that the Minister felt that the measures that have been taken would secure that. I hope he is right, but I have to say that I am not so sure. I feel that further pain may be on the way and that some of the pain may be felt by private lenders. That remains to be seen, and I certainly hope that the measures taken by us and by the other participants in the rescue operation have the desired effect. Like the noble Lord, Lord Bew, I see this very much in the context of the Anglo-Irish relationship, both present day and historical.

There are some who suggest—it may even be that the noble Lord, Lord Pearson of Rannoch, will express this view—that because Ireland is a member of the eurozone, and we are not, we should somehow stand aloof from it. I think that is absurd. The Prime Minister and the Chancellor of the Exchequer, as well as the Minister this evening, have repeatedly said that it is in Britain’s interest that the eurozone should be a success. Of course, that does not mean that we have the same responsibilities towards each other as the members of the eurozone, but it does mean that we should recognise the nature of our links with it and the existence of our exposure to it. We are not an offshore island in that sense with a financial system separate and distinct from that of our European neighbours. The whole apparatus of British financial services and the City of London as a great international centre are intimately bound up in the wider European financial system. They are, of course, intimately bound up in the global financial system, but most intimately and most directly they are bound up within the European, and through the European, in the global financial system. The two are not mutually inconsistent. This has been a great source of profit to the United Kingdom. It continues to be so, and Mayor Boris Johnson never ceases to point out the benefits that accrue to London as well as to the United Kingdom.

It is very much in our interest that we should participate, but I part company from the noble Lord, Lord Liddle, so far as the permanent mechanism is concerned, and I find myself much closer to the position of the Minister. As I said, we do not have the same obligations and responsibilities to the members of the eurozone as they have to each other, so I feel it is right for us not to sign up to something that would involve us in a permanent obligation. I do not mean by that that we would necessarily wish to stand apart on some future occasion. We might, or we might not. I felt that the noble Lord, Lord Liddle, drew too much on the Irish example. Our relationship with Ireland is quite different from our relationship with any other European country. However, I can well imagine that circumstances might arise—

[Lord Davies of Stamford]

It is not surprising that as a man of the world and a former European commissioner, the noble Lord is not someone who is so foolish as to want to exclude any possibility in the future and lose flexibility, but does he not agree that if we are not part of the permanent mechanism, we will not be part of the conversations, we will not be part of the analysis and we will not be part of the decision-making mechanism? We might have the opportunity to come in later on to a deal that has already been put together by others or to try to find some bilateral solution in the face of a much bigger multinational arrangement, but surely that is not a very sensible way of conducting our country’s affairs.

[Lord Tugendhat]

No, I do not agree with the noble Lord. He draws too clear a distinction between membership and non-membership. I do not want to get diverted, as others have, from the main theme of my speech, but I think that Britain is a substantial member of the European Union. Therefore, conversations do not take place in one room with Britain being excluded entirely. People need to know what Britain is thinking and there has to be a certain interchange.

There are people who thought that if we did not join the euro, we would somehow be excluded from a lot of discussions. There are certainly discussions in which we do not take part and it may be that Ministers are rather relieved sometimes that they do not have to. But Britain is too big an entity to be entirely excluded and only brought in at the end of the discussion when everything has been decided. If Britain is to play a role in a future crisis, people will want to know beforehand what our attitude is likely to be, how far we might be able to go and under what terms we might be able to participate.

That brings me back to my line of march. When perhaps future problems arise, we should look at each of them and take a decision on their merits—certainly recognising our considerable interests in the eurozone; certainly recognising the importance of our membership of the European Union; and certainly recognising our interests in the political stability of different countries. But we should look at these things on their merits, decide our position on each one as it comes along and ensure that the decisions we take are subject to parliamentary approval. We are much more likely to carry confidence in the country and have support from the electorate if we are seen to do it on the merits, rather than if we are seen to have signed up to a certain automaticity.

[Lord Liddle]

My Lords, I have a great deal of respect for what I have described as the pro-European pragmatism of the noble Lord, Lord Tugendhat. He has shown that over the years in many of his contributions to the European debate. But what is being ignored is the point that came out in the Bank of England report from which I quoted; that is, the interconnectedness of our banking systems. Although it may not be the case that British banks have a lot of sovereign debt in Greece, Portugal and Spain, they have a lot of relationships with French and German banks, which have those obligations. Therefore, we would be inextricably bound up if there was a crisis. We should be trying to take a lead in sorting this out, not waiting for the telephone call from Mrs Merkel.

[Lord Tugendhat]

Again I am grateful for the kind words of the noble Lord, but I do not think that the world works that way. Perhaps I might refer to his former distinguished leader, Gordon Brown. We were not of course part of the eurozone, but, as the noble Lord says, our financial centre is intimately bound up with the rest of Europe. It is a considerable interest of ours. It is a source of profit and a great many things.

When the crisis hit, and the Lehmann Brothers went down in the September, the fact that we were not part of the eurozone did not stop President Sarkozy calling Gordon Brown over to Paris or stop Gordon Brown playing a considerable role in the decisions which were taken. We are not going to have a situation in the European Union where a country as big as this, and as significant as this, is in one place and everyone else is huddled in another, and they do not talk until they have made up their mind. They need to know what we think, they need to know what terms we would come in on and they need to know whether we would be willing to help at one level or at another level.

Of course, I recognise our interconnectedness. Like the noble Lord, I have devoted a good deal of my life to trying to make the interconnectedness greater. But I do not think that if we are not members of the eurozone, we ought to sign up to something which carries with it the automaticity of the permanent mechanism.

I do not entirely expect the Minister to make a comment on my final point. What goes around comes around. I am delighted that the Chancellor of the Exchequer can claim that on this occasion we are not part of the problem, but that we are part of the solution. He is right. On this occasion, we are part of the solution.

All of us in this House have long memories. All of us know that there have been many times when the United Kingdom has needed support from its friends. All of us know that there have been moments when the United Kingdom has run into difficulty and has looked to others for help. It would be a brave man or woman who would assert that such a situation could never occur again. I am sure that under the stewardship of the Chancellor of the Exchequer and my noble friend Lord Sassoon, it will not occur under this regime. But who knows when it might and it certainly behoves us in dealing with others to do as thou wouldst be done by.

18:26

[Lord Pearson of Rannoch]

My Lords, I start by confirming the clear illegality of bailing out the eurozone, which includes these loans to Ireland. I do so by quoting the French Finance Minister, Christine Lagarde, from two days ago. She said:

“We violated all the rules because we wanted to close ranks and really rescue the euro zone. The Treaty of Lisbon was very straight-forward. No bailout”.

She went on to add that the Greek and Irish rescues, as well as the creation of the bailout funds, are,

“major transgressions of the treaty”.

Perhaps I may ask Her Majesty’s Government whether they agree with her.

The fact that what it is doing is illegal has never stopped or troubled the EU juggernaut. I have previously regaled your Lordships with its illegal use of Article 308 of the treaty of Nice. Students of the history of the eventual collapse of the European Union may care to look up a summary of that abuse in our debates on the Lisbon treaty at col. 1073 on 18 June 2008. More recently, we have the EU’s legislation on hedge funds—the alternative investment fund managers directive—which is designed to do much damage to the City of London and hence our tax base. That directive depends for its legal base on Article 53.1 of Lisbon, which is about the mutual recognition of diplomas. Can you believe it?

There is no point in appealing to the Luxembourg Court about any of this because it is not a court of law at all. It is merely the engine of the treaties, as it has often proved in the past. Even so, history suggests that trouble lies ahead when a regime is free to break its own laws with impunity; when it is supported by a puppet court and Parliament; and when its people are powerless to remove it.

I have a couple of questions that were not answered by the Government yesterday in our debate on last week’s European Council. The first came somewhat surprisingly and most welcomely from the noble Lord, Lord Hunt, on the opposition Front Bench. He reminded the Prime Minister of his promise that, if he got any chance of reopening the Lisbon treaty and having a referendum on it, he would take it. The Prime Minister also promised that we would take the first opportunity to repatriate powers to this country, especially social and labour policy, but he has broken that promise, too. Will the noble Lord explain that behaviour today?

The second unanswered question yesterday came from me. It was on whether the Government have made any estimation of the cost for Ireland and in due course, no doubt, for Portugal, Greece, Spain, Italy and Belgium to return to their national currencies. What would the cost be? The Government tried to say that this would not be a decision that would affect the United Kingdom, so they refused to answer the question, as they have done in their response to a Written Question. But of course such a decision would affect us, because Ireland and the other countries could devalue their currencies and fix their own interest rates and then have a sporting chance of trading their way out of their present impossible situation. That would mean that we would no longer have to go on pouring billions down the hopeless euro drain, so we are interested in at least knowing the cost involved. Perhaps we could even help them with it. That might be a tremendous bargain, especially as the Government made it clear yesterday and again today that they do not at all rule out sending even more colossal sums to the other countries that I have mentioned. Therefore, I look forward to hearing the answer today.

The Government keep making great play of our trade with the eurozone and with Ireland in particular. It is to safeguard this trade, they say, that we have to borrow such huge sums, which we probably will not get back, when we are cutting our own services at home in an attempt to reduce our deficit and debt. The Minister said in his opening remarks that 5 per cent of our total exports go to Ireland, but do the Government realise that only about 1 per cent of our GDP—of our total economy—goes in trade with Ireland? That is because only 9 per cent of our GDP goes in trade, in deficit, with the EU overall, of which Ireland accounts for about 10 per cent, so that makes 10 per cent of 9 per cent, or 1 per cent to be generous. Then 11 per cent of our GDP goes to the rest of the world, in surplus, and 80 per cent stays right here in the domestic economy. Yet the wonderful deal that we have done as a member of the EU means that Brussels diktats apply to and strangle the whole 100 per cent of our economy. Would the Government care to justify this position? Why is it worth borrowing so much money to safeguard only 1 per cent of our GDP, which would not be lost if we did not? Are we really saying that we would lose all that trade if we did not do this? It is not realistic.

The Government and the Martians in Brussels talk much about growth, how they are stimulating growth and how their bailouts and loans will help it along. Every now and again, I read the Government’s Written Statements about the meetings of the so-called Competition Council in Brussels and I must say that they make me weep. I have yet to detect any bureaucrat or council member contributing to those meetings who has the slightest experience of international competition in the real world. That is no doubt why they and their colleagues in the vast bureaucracy of Brussels have lumbered us with perhaps the most overregulated and least competitive regime in the world. Indeed, even their own Competition Commissioner, Mr Gunter Verheugen, said a couple of years ago that EU overregulation was costing all EU economies some 6 per cent of GDP, or over £60 billion per annum in our case. Just to be jolly, the demographic trend is moving against the continent of Europe as well, so I do not see much hope for growth. I fear that we are on the “Titanic”.

It is not just wild-eyed Eurosceptics like me who are saying that the euro cannot survive and that the sooner it goes, the better. Just yesterday, the head of the world’s largest bond fund called on Greece, Ireland and Portugal to leave the euro and restructure their debts, unless the eurozone is to submit to complete fiscal union, which seems unlikely. He went on to say that EU leaders were too quick to congratulate themselves on saving the euro last week, with a permanent bailout fund from 2013, which in his view comes far too late. But the EU strategy of forcing heavily indebted countries to undergo draconian fiscal austerity without offsetting stimulus is unworkable. The austerity policies are stifling the growth that is needed to stabilise debt levels. He is not alone in that. The chief European economist at RBS says that last week’s Europe summit failed to grasp the nettle:

“None of the policy responses put in place in Europe since the start of the crisis provides a credible backstop to prevent further contagion”.

Those policy responses include our loans to Ireland. We should not be making them.

It is not just the euro that was designed for disaster; so was the whole project of European integration, for which the euro was supposed to be the cement to hold it together. The idea behind the great project was honourable enough, but it has turned out to be misguided. That idea was that the nation states had been responsible for the bloodshed of two world wars and the long history of carnage in Europe. Those nation states therefore had to be emasculated and diluted into a new form of supranational government, run by bureaucrats. That is the big idea. That is why the Commission still has the monopoly of proposing and enforcing EU laws, which I remind noble Lords are made in secret. It is why there is a sham Parliament and a sham court, with all of their denizens interested only in the gravy train which rolls on without the consent of the people.

If there is one small candle of light in all this gloom, I hope that it is that more of the people of Europe will come to see that the whole EU project is also misguided. Those who are suffering from the euro are already getting very angry. The riots and strikes in Greece, Portugal, Ireland and Spain are entirely caused by the project of European integration and its misguided currency and, alas, there is more to come.

In conclusion, I invite your Lordships to stand back for just a moment and consider a Europe without the European Union, without Brussels and Strasbourg, without the Luxembourg Court of so-called Justice. Consider a Europe of 27 national democracies trading freely among themselves and with the other 190 or so countries of the world, none of which has been foolish to join anything like the EU or the euro. What benefit does the EU bring that we could not have through genuine democracy, free trade and friendly collaboration? None, I submit. I hope that none of your Lordships will suggest peace, which was secured by NATO, and for which the EU gets no credit at all. So the EU emperor has no clothes and the quicker the people of Europe realise it, the better for all of us. If the collapse of the euro helps them to do so, that may yet prove to be a blessing in disguise. In the mean time, we should not be helping to prop it up.

18:37

[Lord McFall of Alcluith]

My Lords, I commend the Government for this loan to Ireland initiative and I commend in particular the speech of the noble Lord, Lord Bew, which emphasised the social relationships. I come from Dumbarton, which has a very big Irish population. Indeed, my own family is part of the Irish diaspora. For many years, we have had very solid social contacts, and there is a part of my former constituency that is known as “Little Donegal”. When the 2001 election was put off until June due to the foot and mouth outbreak, I was advised to go and knock on a number of doors in Donegal to shore up my support, but I felt that my majority was big enough that I did not have to cross the Irish Sea, which proved to be the case. So these social contacts are very important. There have been many fine Irish men and women living in my community for many years, a lot of whom fought with the British Army in the Second World War. They adapted to and assimilated the culture of the UK, notwithstanding the problems existing at a wider level between Ireland and the United Kingdom.

In its latest manifestation, we see the concept of a private debt crisis being transferred to a sovereign debt crisis. To repeat a phrase that has been used a lot in the other place, we are all in this together. That is because what is happening in Ireland affects every other country in the EU, including ourselves here in the UK. The situation is that the banks in Ireland have brought that country to the verge of bankruptcy. The tensions in Ireland that were mentioned earlier have been experienced in other countries. Ireland itself is contributing €17.5 billion from its pension funds to the very important €67 billion bailout, so the people of Ireland are already saying, “It is our money. We are contributing to this. The problem started off in the banks, but as a result of that situation, it has ended up on the streets”.

We all have a responsibility to ensure that we manage this economic process well, taking account of the social instabilities, so that we end up with a sound economic system and a stable social system. As was said earlier, there are good reasons for the UK to provide the loan, not least of which is the fact that Ireland is a major trading partner and that UK banks are exposed in Ireland. Only last week, Lloyds and HBOS declared a £4.3 billion loss on the banking group’s Irish loans. Lloyds said that it had sufficient capital to withstand the loss, but that situation is an illustration of the interdependence that exists between the UK and the Republic of Ireland.

As a former Minister for Northern Ireland, I am very much aware of the border between Northern Ireland and the Republic—it is so porous that it really is not a border. I well remember chairing an inquiry into the euro in 2002, when I chaired the Treasury Select Committee. One of our visits was to Newry, where the currency in use included the euro because people were travelling there from across the border. That interlink between Northern Ireland and the Republic should make certain that we provide a friend in need with a loan.

If instead of doing that we were to sit on our hands, economic stagnation would take place. We need a strong Europe if we are to make the most of our competitive exchange rate. That is what the Bank of England said. The loan makes historical, economic and social sense, so I commend the Bill to the House.

18:41

[Lord Davies of Oldham]

My Lords, I suppose that, as it is almost the last day before the Christmas Recess, it is right that the Minister should have a good day. He got the Consolidated Fund Bill through the House in four minutes and here he has another Bill that has produced consensual responses from all parts of the House. Indeed, Her Majesty’s Opposition support the measure that the Minister has introduced, which means that he can bask in the general approval of the House for doing so.

However, the Minister would not expect to sit through an hour and a half’s debate without having to reply to a few questions. He would not expect an entirely straightforward ride. I am glad that tonight’s debate has ranged so widely and that we have heard so many expert and considered opinions. The Minister will have a tough job in responding to it. The debate has put the Bill and the Irish loan into context, and for that we should be grateful.

Indeed, I was grateful to the noble Lord, Lord Bew, who put our relationship with Ireland into an historic context. Other noble Lords, including my noble friend Lord McFall, emphasised the ties between the United Kingdom and Ireland. It is right that we should come to the aid of a nation in great need with which we have close ties and, as the Minister said in his opening remarks, that is also in the British national self-interest. It is important that we put a stop to the catastrophic developments that have set the world back during the past two to three years. Unless those are tackled in a forthright and effective fashion, they will adversely affect our own people in the years to come.

I am grateful to my noble friend Lord Liddle for emphasising that there are no easy solutions to the situation—and certainly not for Ireland. We see the price that has to be paid for the loan. It is also important to recognise that, given the degree of interconnectedness of our economies, the British response to the situation needs to be one of concern for our neighbours. We have already heard of the significant role that the Irish economy plays in relation to the British economy, but, in terms of a wider Europe, we recognise that without growth in Europe there is no possibility of the British economy developing on an export-led basis out of the present position and into a degree of prosperity and security. We should recognise just how much this Government have invested in such a strategy and that, without growth in Europe, there is no possibility of the British people being able to enjoy the fruits of the sacrifices that we can see are being made on all sides following the Government’s fiscal tightening, of which we have seen only the first stages.

The Minister must also respond to the wider debate reflected in the points made by my noble friend Lord Liddle and, from a different perspective, by my noble friend Lord Davies of Stamford. As regards the different issues that the noble Lord, Lord Tugendhat, mentioned, we recognise that there was a sophisticated debate about the nature in which Britain should relate to Europe—two somewhat different perspectives about future possibilities. I must say that Her Majesty’s Opposition are more in favour of the analysis put forward by the noble Lord, Lord Tugendhat—namely, that of course Britain must be close to Europe and integrate with Europe in crucial economic decisions. That is bound to be the case as a result of the sheer size of the British economy in relation to the European position and the levels of trade that we carry on. However, there is a strong case for a degree of independence that gives us a position in relation to Europe and also enables us to pursue our own strategies.

The noble Lord, Lord Pearson of Rannoch, takes that point to the outer extreme by calling for withdrawal from the EU. We are all familiar with the onslaught on the European Community that he has presented tonight with his usual fervour. It is as though he does not recognise that the American economy, which is bigger than Europe’s, has been in colossal trouble over the past couple of years. It is as though only Europe is being faced by these challenges. Of course, that is not so. Another big, major continental economy—the United States—has been suffering the most acute strains. One does not have to go anywhere near Detroit or any of the other major cities—

[Lord Pearson of Rannoch]

My Lords, the noble Lord makes an interesting point. However, can he tell us who bailed out the United States?

[Lord Davies of Oldham]

Well, who has bailed out Europe? We are talking about an economy in Europe that is receiving some assistance—that is the Irish economy. I hope that the noble Lord, Lord Pearson, is not forecasting that it will not be long before the British are bailing out the German economy, or anything as ridiculous as that.

Given that many great economies have suffered serious difficulties in the past few years, we should recognise that this Irish crisis is reflective of a global crisis. The problem means that we have to have solutions wider than the national perspective. It also means that the solution proposed for Ireland is not in fact a solution but a bailout. The bailout creates time for the Irish economy and prevents it from descending into the abyss that it had faced. However, let us not pretend that the package is a solution to the needs of the Irish economy and the Irish people or that we will see health in European economies without more obvious programmes and developments on a more extensive scale than we have seen thus far.

I hope that the Minister will recognise that, in the early days of the crisis when Lehman Brothers was in collapse and when the British banks were under tremendous pressure, the previous Administration adopted a global process in response. The then Prime Minister, Gordon Brown, was concerned to obtain a degree of consensus that would enable the world economies to come to each other’s aid and to present a development that gave some security about growth. We are still looking for that. The Bill is important to one beleaguered economy in Europe but—as the strength of the debate on all sides has shown—it has to be put in the context that we need wider solutions to the issues than bailouts. We are faced with a global crisis.

It is also quite clear that, despite the myth which the Opposition seeks to perpetrate about the British economy, the crisis was not caused by government overspending but by the banks, which had got their structures and investment wrong. That is a common feature across all the significant world economies, and that needs to be recognised.

The Irish are of course to be involved in some degree of austerity, as are the British people under this Government’s perspective—excessive austerity in the view of Her Majesty’s Opposition in comparison to what is needed. The Government have set a limited time in which fiscal balance has to be achieved, but it must surely be recognised that austerity alone is not the answer. After all, the Irish have been through several years of austerity and for 17 continuous months their economy showed negative growth, but they have not been able to avoid the need for a bailout despite the fact that they have been subjected to exactly the fiscal solutions that this Government suggest are the answer for this economy.

I have one or two key questions for the Minister, who I know will enjoy himself before Christmas only if there is sufficient challenge in the debate. He has already been blessed by the consensual approach, on which the whole House is to be congratulated, but I should like to ask him one or two questions. First, is he aware that the size of the UK’s contribution to the rescue package will, over the spending review period, more than outweigh the debt interest savings of which the Chancellor made such play in the spending review Statement? On the basis of the Chancellor’s approach, we are loaning that which we have saved. Secondly, why are we able to find billions for Ireland but could not afford £90 million of strategic investment for Sheffield Forgemasters and the role that it could play in the future of our economy? Thirdly, when will the Government accept the obvious point that, unless we have an approach to the broader issues faced by Europe, we will not get the growth necessary because the markets will not be there to purchase the goods that we hope to produce?

Finally, does not the crisis in Ireland remind us all that the economic crisis was global and that the Government, with their full responsibility for the economy and the welfare of the British people, must recognise that the solutions lie only within a global framework and not in one pursued alone?

18:54

[Lord Sassoon]

My Lords, it has been an interesting debate and I am grateful for the contributions. The noble Lord, Lord Davies, referred to the range of contributions made by noble Lords but I think that there has been some polarisation: on one pole, a noble Lord stands in rather lonely isolation, whereas most of the rest of the speakers have been closer to a dramatically different pole.

[Lord Pearson of Rannoch]

The Minister is very generous, but is he aware that the majority of the British people now wish to leave the European Union?

[Lord Sassoon]

My Lords, I was talking about where Members of the House stood on the Bill, which is where I ought to concentrate if the noble Lord will permit me.

I began to feel grateful to the noble Lord, Lord Davies of Oldham, when he started his response to the debate; I thought that he was going to relieve me of some of my responsibilities. However, his comments then turned in a different direction. He went into an analysis of the UK’s economic challenges—an essay that I do not quite share with him—and then he asked some questions. I shall attempt to respond to his questions and to those of other noble Lords.

The starting point, clearly, is that over the past two years Ireland has faced a series of extraordinarily difficult economic and financial challenges which have resulted in the country having debts of more than 90 per cent of its national income, high unemployment and low levels of growth—and the Irish economy, of course, remains on the brink.

The noble Lord, Lord McFall of Alcluith, reminded us of the centrality of the Irish banking situation to the Irish crisis and how the Irish banks became increasingly reliant on central bank funding. In his analysis, the noble Lord, Lord Pearson of Rannoch, referred to trading but made no mention of the interconnectedness of our two banking systems, which is central to the Irish problem and to why it is so important to the UK that we should contribute to finding a solution.

In contrast to Britain’s situation, Ireland’s credit rating remains under threat and its economy continues to struggle. The package we are discussing today is designed to contribute towards Ireland’s solution to its problem. It starts by contributing to the recapitalisation of Ireland’s banks; sets up a contingency reserve to deal with any future problems; and covers the current shortfall in the Irish budget. My noble friend Lord Tugendhat quite rightly questioned whether Ireland will grow sufficiently out of its problems. However, I remind noble Lords that the IMF has been central to the construction of the package and, from its wide experience of similar situations, it understands the importance of growth in an economy such as Ireland’s. I recommend to noble Lords the IMF’s interesting, well written and cogent analysis of the reasons for Ireland getting into this situation, and the logic for the construction of the package which is central to putting the Irish economy back on its feet.

The Bill gives the Treasury the statutory authority to deliver the UK’s bilateral contribution to the package. In this way, the UK will be ready in the new year to help one of our closest international partners in its hour of need. I was particularly grateful to the noble Lord, Lord Bew, and to my noble friends Lord Cope of Berkeley and Lord Tugendhat for pointing out the good will that has been created in Ireland by our response. We are doing this because it is in the economic interests of the UK to do so; nevertheless, it is good that we are doing it for a close friend. The noble Lord, Lord Bew, succinctly put the matter into its Irish historical context. I very much take his point that we need to think about how we build on the good will that has now been created. That point was indirectly touched on by the noble Lord, Lord McFall. It sits somewhat at odds with the stance taken by the noble Lord, Lord Liddle, who painted a picture that I do not recognise. He tried to paint us into an “our problems, their problems” situation. I thought that my noble friend Lord Tugendhat, who has deep and distinguished European experience and contributions to draw on, painted a much more nuanced and balanced picture. Of course, we are at the centre of the European debate. We are engaged with our European partners, not least for the reason that my noble friend gave: that we are one of the largest economies in Europe. Whether it is leading the way on bank stress tests and getting Europe to follow where the UK started on short-term stabilisation, or looking at the other end of the range of issues that needs now to be considered—for example, questions about structural reform programmes, the Europe 2020 vision and the lessons of this crisis—the UK is absolutely at the centre of the discussions.

[Lord Liddle]

What plan have the British Government and the Prime Minister put forward for the eurozone? Why does the Prime Minister keep saying that it is for the eurozone to sort out its problems, while knowing that so much of the growth that is being forecast, which is absolutely essential to British interests and his own prospects of re-election, requires there to be robust export growth to the eurozone?

[Lord Sassoon]

These are all factors that mean that we need, with the EU 27, to make sure that the structural reforms are driven through and that we get the benefits of completing the single market project and so on. However, my noble friend Lord Tugendhat again got it exactly right—I would not agree with every nuance of his analysis, but he got the essential point right—in saying that just because we are very positively engaged at the centre of all those other issues does not mean that there are not critical differences, because we are not part of the eurozone and this Government will not take us into it. It is therefore for the eurozone to sort out its own permanent mechanism for dealing with any other issues that arise out of membership of the euro. That is the fundamental difference between the UK’s position and that of other of our partners in Europe. I genuinely fail to see why the noble Lord, Lord Liddle, seeks to paint the position in such stark colours. The fact is that we are in a different position from that of a number of the largest trading partners in Europe, which needs to be reflected in the permanent arrangements that will be put in place. My noble friend Lord Tugendhat explained that in much more masterly terms than I will ever be able to do.

Some questions were asked about the economic and market analysis of the situation, not only of how we got here but how we go forward. I listened with interest to the exchange between the noble Lord, Lord Davies of Stamford, and my noble friend Lord Lamont of Lerwick. The rather succinct and pithy remarks of my noble friend better encapsulated the situation in which Europe finds itself and in which it is clear that the fact of the euro cannot be ignored. That takes us back to why the eurozone needs to think about the consequences and the lessons of this crisis for a permanent mechanism.

In answer to the specific question of the noble Lord, Lord Davies of Stamford, I restate that the loan to Ireland does not add to our deficit. It increases the borrowing on one side of the UK’s balance sheet, but we have an asset in terms of the money that will be owed to us by Ireland. There will be an increment to the fiscal position by the net interest margin, estimated at current interest rates to be some £440 million. That is the only element that should go through the current balance.

One or two comments were made on the process of the Bill. I am grateful to my noble friends Lord Cope of Berkeley and Lord Tugendhat for their endorsement and recognition of the fast-track approach that we have taken. It is necessary that we give confidence to our European partners and the IMF in putting this package together that the UK is ready at the earliest time to deliver on our commitments. I accept my noble friend Lord Cope’s analysis of the constitutional position in another place.

[Lord Davies of Stamford]

Perhaps may I press the Minister a little more on what he said about this Irish loan not adding to the fiscal deficit. I understand that he is saying that it does not add to the fiscal deficit because he is setting off one financial asset against a financial liability. Will he confirm, however, that it will add to the public sector borrowing requirement? Some £2.5 billion will have to be borrowed on the financial markets and be accounted for as part of the public sector borrowing requirement which otherwise would not.

[Lord Sassoon]

Indeed, my Lords, the money advanced to Ireland needs to be funded, but it is precisely because we have stabilised the fiscal position and secured the UK’s AAA credit rating that this matter is not a cause for particular concern.

I have already said why the Government believe that it is right that we should not be part of a permanent bailout mechanism—indeed, this is recognised in the recent Council conclusions. My noble friend Lord Newby asked about the process for adopting the treaty amendment that will be necessary. Parliament must of course give its approval to any treaty change that is agreed by member states, and ratification in the UK will be subject to the terms of the EU Bill that we are bringing forward. A treaty change will be subject to primary legislation. Since there is no question of transfer of competences in this case, the question of a referendum does not arise.

[Lord Pearson of Rannoch]

I do not know whether the Minister will come to some of my questions later, but this might be a convenient point to remind him that the amendment in fact gives the Prime Minister the opportunity to fulfil his promise that, if there were to be any treaty changes, he would use them to repatriate powers, particularly social and labour policy. Why does he not do that?

[Lord Sassoon]

The position is as I have explained it. There is no question of change of competencies in this case and therefore no referendum is required, but it will be the subject of primary legislation. This is not the time, if the noble Lord will permit me to say so, to start talking about other things that may or not may not be done in our relationship with Europe. We are talking about the Loans to Ireland Bill and its consequences and the position is completely clear. If the noble Lord would like me to give way, it will only eat into the time to answer his questions and other points that noble Lords have made. I am grateful to him.

I will come to his points immediately. The noble Lord, Lord Pearson, questioned the legality of this operation. The first thing that I hope we are completely clear about is that the bilateral loan is being made under domestic UK legislation. That is why we are here today. Provided that your Lordships see fit to give this Bill a clean passage, the question of the legality of this loan will not arise.

If the noble Lord was also, as I suspect he was, harking back to the question of the so-called no-bailout provision in Article 122(2) and the creation of the €60 billion fund, that was agreed by the previous Government. We said at the time that we did not approve of the use of this provision, which was originally intended for natural disasters, to create this mechanism. But it was, and we are where we are. The critical thing is that the current coalition Government have a clear commitment that when in 2013 the new mechanism is put in place this will fall away and not be used again. The question of illegality does not arise. It may be regrettable, but the position is legal.

[Lord Pearson of Rannoch]

My Lords, the noble Lord is being a little unfair to the previous Government. Surely, the decision was taken under Article 122(2) which is by qualified majority vote. That is the very reason the Eurocrats chose the clause that allows mutual support in the event of natural disasters to pass this Act. Through our membership of the European Union and the terms of the treaties that we have signed, there was nothing that the previous Government could do about it. I asked the Minister whether he agreed with the French Finance Minister who said that the whole bailout process is illegal.

[Lord Sassoon]

The noble Lord is possibly putting a spin on Madame Lagarde’s words that she would not entirely accept. If he wished to correspond with her I am sure she would explain her position. All I can do is explain the Government's position. I was not trying to be unfair to the previous Government but merely stating the facts of the situation as to when the €60 billion bailout fund was agreed. Yes, I accept that if the UK had opposed it, it would have been a matter dealt with under qualified majority voting.

I will spend one minute responding to points made by the noble Lord, Lord Davies of Oldham. I am grateful to him for being clear about the Official Opposition’s support for the Bill. He asked about the amount of the loan and why, if we could devote this amount of money to Ireland, we could not devote it to other causes. He quoted one possible use of funds. As I explained, the loan to Ireland does not affect the fiscal position. We are able to make it without in any way affecting the fiscal position. If it did affect it, we might need to look for other savings, but we are in a position that that is fortunately not required.

The noble Lord mentioned the global dimension. We have talked a lot about the need for the UK to be at the heart of the European debate on this. I completely agree that the global dimension is an important one. We have heard about the importance of global growth and we will continue to engage with the G20 and the other international forums which will reinforce the ongoing drive to make sure that we learn all the lessons on fiscal and financial stability.

It has been an interesting debate and it is understandable, given the size of the proposed package, that the importance of what we are discussing to Ireland, to our economy and to the wider European context has been fully debated. The financial crisis has shown just how closely linked the economies of Europe and the world have become. In times of prosperity we reap the rewards but in times of hardship, one nation's problems can quickly extend beyond its own borders. That is why we must act now and early to restore stability to Ireland’s economy. That is why we must be prepared and have been prepared to take the necessary steps including through the Bill. It is good for the recovery and good for growth and I ask the House to give the Bill a Second Reading.

[Lord Pearson of Rannoch]

Before the noble Lord sits down, there was one other important question that I asked him and I have asked it also in a Question for Written Answer. Have the Government made any estimation of the cost of Ireland going back to the punt, and if not will they do so?

[Lord Sassoon]

No and no.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Public Bodies Bill [HL]

Tuesday 21st December 2010 Lords Chamber

Committee (5th Day)

19:16

Schedule 1 : Power to abolish: bodies and offices

Amendment 27

Moved by

[Lord McKenzie of Luton]

27: Schedule 1, page 16, line 19, leave out “Child Maintenance and Enforcement Commission.”

[Lord McKenzie of Luton]

My Lords, the purpose of this amendment is to seek fully to understand and evaluate the rationale for including the Child Maintenance and Enforcement Commission in Schedule 1 and the reason for its conversion announced on 14 October back to an executive agency of the DWP.

Noble Lords will be aware that CMEC is a relatively new body—a crown non-departmental public body—created by primary legislation in the Child Maintenance and Other Payments Act just two years ago. It was then the subject of considerable debate. Accepting its demise via the process in this Bill therefore needs considerable justification.

CMEC was charged with completing the operational improvement plan and to carry out a fundamental redesign of the child maintenance system. The operational improvement plan was part of a twin-track approach to radically improve the performance of the Child Support Agency.

The CSA was established in 1993 to assess, collect and enforce child maintenance payments from non-resident parents. It was set up because the system of collecting maintenance through the courts was perceived as failing to establish fair and consistent awards which were not necessarily kept up to date or indeed enforced. Despite the best efforts of CSA staff, the complicated calculation process, IT failures and inadequate enforcement contributed to poor performance and unacceptable outcomes for children.

The CSA struggled to administer the complex rules in the child maintenance system and to handle the difficult and emotional circumstances that often surround parents when child maintenance becomes an issue. It was widely seen as a means of clawing back benefit rather than providing additional resources for children. Reforms in 2000 brought some simplification to the maintenance calculation. The introduction of a child maintenance premium where those in receipt of benefit kept some of the maintenance payments was a positive development. However, the changes still did not deliver the improvements expected. In particular, there were chronic problems with the IT and operational systems, which meant that old scheme cases could not be transferred to the new, simplified system.

Again, the result was that too many children did not receive the benefit of maintenance, which led to the approach of a three-year operational improvement plan, and the call for a longer term redesign of the child maintenance system. The latter was the subject of a report commissioned by the noble Lord, Lord Hutton, when he was Secretary of State at the DWP, from Sir David Henshaw. Sir David argued that the system’s failings reflected both policy and operational problems, and recommended a break with the past to create a new start for child maintenance arrangements. CMEC was to be that new start. It was established with the primary statutory objective of maximising the number of effective maintenance arrangements. This was bolstered by subsidiary objectives of encouraging and supporting voluntary maintenance arrangements and the operation of a statutory scheme.

CMEC is specifically charged with the promotion of raising awareness among parents of the importance of taking responsibility for and making arrangements for child maintenance. It also has a duty to provide information and guidance to parents for the purpose of helping to secure effective maintenance arrangements. Its role is to seek to ensure that all parents who live apart put in place effective arrangements to maintain their children, whether they do this privately, through the courts, or through the statutory service. This is much different from the old CSA, run directly by the DWP, which had only one function—the statutory maintenance service. The enhanced role with a new focus was considered at the time to be best undertaken by a new body, an NDPB, to be led by a commissioner for child maintenance. For certain very practical reasons, the NDPB was set up as a crown body. It was intended to operate at arm’s length from government and through its commissioning powers to be able to develop a high-quality and efficient service. Its board would be focused entirely on delivering a successful child maintenance system, not distracted at the top from the shared responsibilities which the very senior managers would have as an executive agency of the DWP.

The timeline for change was planned to span from the launch of CMEC in October 2008 until 2014, when the new unified child maintenance system is planned to be fully in place. Major steps have already been completed and these include the setting up of the options service, fulfilling the information and guidance obligation for all parents, the removal of the compulsion for parents with care claiming benefits to use the CSA, implementation from April 2010 of a full maintenance disregard, and the deployment of at least some the new debt and enforcement powers. However, CMEC has just completed its first full year of operation, and the forward programme still shows much to do. In fact, 2011 is the year in which the new basis of calculation is due for introduction with a gradual migration of old cases to the new system until in 2014 when there will be a closure of all existing CSA cases and a unified system in place.

CMEC's business plan for 2010-11 is clear that the current year will be a critical year for CMEC as it moves to the launch of the new system. The options service has, seemingly, made a good start. In its evidence to the DWP Select Committee, CMEC set out its focus on promoting the service to new and separating lone parents. It records how Jobcentre Plus and HMRC refer parents to the service when they claim relevant benefits and tax credits.

There can be little doubt that over the period of the operational improvement plan and since, performance of the CSA has improved despite continuing problems with the CS2 system. Currently, its performance under CMEC is the best it has ever been. The number of children benefiting from statutory maintenance has exceeded 850,000, with more than £1.14 million collected. Uncleared applications, a particular bugbear of the past, have declined by over 90 per cent to under 20,000. Telephony has improved out of all recognition. Running costs have reduced from £600 million to under £500 million a year. Nevertheless, the Select Committee report shows that more remains to be done in terms of collection of arrears and maintenance outcomes.

Unlike most of the other bodies included in this schedule, CMEC is not yet in steady state. It is part way through a programme which will finally lead to the clean break recommended by Sir David Henshaw. As the Work and Pensions Select Committee reported, it will be a challenging phase with the continuing problems with the CS2 IT programme, and the operation of three different maintenance systems through to 2014 when it was planned for there to finally be just one simplified statutory system. So in seeking to understand the decision for CMEC to become an agency of the DWP, I should be grateful if the Minister could answer the following questions.

First, what are the type of clear policy and decision-making responsibilities which Ministers consider they are precluded from taking at present in respect of child maintenance, which drives this approach? Secondly, is there any basic change in policy for the child maintenance system? Is it still planned to proceed with the new system, starting at 2011, with the gradual migration of the old and current systems? Is it envisaged that this process will be completed before the operation becomes an executive agency? Thirdly, will the full disregard for benefits remain and will this apply also for the purposes of the universal credit? Fourthly, given that CMEC is currently a crown NDPB, what will its changed status as an agency mean for the staff? Fifthly, given that the decision has already been taken for a transfer to an executive agency, is it considered that being run by DWP will bring operational efficiencies not available to CMEC? If so, what are these, and what evidence base is available to support such a conclusion?

Sixthly, what analysis has been undertaken of the costs involved in any transfer back to the DWP, including novation of supplier contracts, changes to enforcement notifications, et cetera? Are there any VAT ramifications of a transfer, and how does this differ from transfers from non-crown NDPB's? Seventhly, on what grounds is it considered that CMEC fails all the three tests set out by the Minister for the Cabinet Office in October: does it perform a technical function; do its activities require political impartiality; and does it act independently to establish facts? Eighthly, what is the future for the options service under any changed arrangements? Is it not right that considerable effort has gone into branding this service as being at arm’s length from government? What assessment has been undertaken of how parents would react to this becoming an executive agency of the DWP? Would any different requirements apply in respect of information sharing—say, income details of non-resident parents for the DWP, in contrast to CMEC as an NDPB?

Fundamentally, on what basis can we be reassured that the switch to an executive agency will neither disrupt the vital work of getting the new maintenance system up and running as quickly as possible? Moreover, will there continue to be a clear focus on improving child maintenance outcomes as an integral part of the challenge of tackling child poverty?

Our anxiety over this issue has been heightened by the most recent briefing note from the IFS covering child and working age poverty. Clearly, progress in improving child maintenance outcomes should contribute positively to reducing child poverty and any disruption to current arrangements need to be examined from this perspective, especially given the IFS report. This analysis makes grim reading. The conclusion is that the coalition Government’s reforms have no discernable impact on absolute and relative child poverty in 2011-12, but for 2012-13, the IFS estimates that the Government's reforms will increase relative poverty for children by 100,000 and absolute poverty by 200,000. For 2013-14, it is considered that the reforms will increase relative poverty by about 200,000 children and absolute poverty by 300,000 children. So much for the claim that the Government’s reforms will not have a measurable impact on child poverty. They clearly will. What role does the Minister see, therefore, for the child maintenance system in combating child poverty, especially given the shocking figures in the IFS report? I beg to move.

19:30

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, this seems to be a relatively short debate, which has shown evidence of the great knowledge and experience that the noble Lord, Lord McKenzie, has in this field. There was a debate recently on the Child Maintenance and Other Payments Act 2008, which informs a lot of his questions and points. However, I have not heard anything in those arguments that undermines the primary objective of the coalition Government to restore ministerial accountability for child maintenance.

The amendment would remove the Child Maintenance and Enforcement Commission from the list of bodies to which the Public Bodies Bill applies. The Government’s intention is to increase the accountability of Ministers for public services. This amendment would go directly against that intention.

The change of status for CMEC from a non-departmental public body to an executive agency within the DWP is driven by the coalition Government’s desire to have greater accountability for the hugely important issue of child maintenance. We feel that it is important to strengthen ministerial accountability when the Government are considering the role that the child maintenance system can play in their overall commitment to support shared parenting and promote parental responsibility.

We acknowledge that CMEC has built a stable base, following on from the success of the operational improvement plan to which the noble Lord referred. As it currently stands, however, with CMEC operating at arm’s length from the Government, the Government feel that it does not have the right level of responsibility and ministerial accountability. In order to regain that control, this change in status will make that happen. Removing the commission from Schedule 1 to the Bill would adversely impact on that intention.

There is a long and often painful history of poor performance within the child support system, as the noble Lord pointed out. A simple picture could suggest that the Child Support Agency was a failure and that only the introduction of the Child Maintenance and Enforcement Commission turned performance around. I would like to point out that that is not entirely the case. From 2006 to 2009, the Child Support Agency’s operational improvement plan significantly improved the performance of the administration of child maintenance. That was because of the activity taken forward by the Child Support Agency, at that point an agency of the Department for Work and Pensions. Responsibility for child support functions transferred to the Child Maintenance and Enforcement Commission in November 2008, near the end of the period covered by the operational improvement plan.

Since its formation in 2008, CMEC has taken these improvements much further. It has also been given a much broader remit than the CSA ever had. Most notably, it has developed a very effective information and support service, Child Maintenance Options, which has received much praise in dealing sensitively with separating and separated parents. Indeed, the noble Lord endorsed it a few minutes ago. The Government want to maintain and build on the progress that CMEC has already delivered. In response to the noble Lord’s question, that is one of the areas where we want to see further progress.

Let me be clear: this is not about scrapping the commission, nor is it about undoing the progress that the commission has made through the hard work and dedication of its people. I can confirm, in answer to the noble Lord’s question in this area, that we are looking to see the progress made and the plans that it has. We are looking closely at our own plans for improving the position in this area.

As the noble Lord said, however, the major reforms that were set out in the Child Maintenance and Other Payments Act 2008 are still to come. The improvements that the Child Maintenance and Enforcement Commission has made to date have been despite the inadequacies of its IT infrastructure. The legacy of past problems still casts a long shadow over the administration of the child maintenance system.

The Government believe that it is right—indeed, essential—that Ministers are directly accountable for the significant changes that still need to happen within the child maintenance system, not least the introduction of a new scheme for calculating child maintenance and the associated new IT platform. This Government, in including CMEC in the Bill, are clear that we must avoid reintroducing the well catalogued problems of the past.

To avoid destabilising the organisation at such a critical time, the new executive agency would essentially have the structure and functions of CMEC. The key difference, and the key purpose of this reform, would be the direct accountability and governance lines to Ministers. Many of the questions that the noble Lord raised are answered in that assurance about what will be happening.

I recognise that noble Lords have a keen interest in this matter, given their involvement in the redesign of the child maintenance system in 2006. I am referring, of course, to the noble Lords, Lord Hunt and Lord Kirkwood, who, alongside the noble Lord, Lord McKenzie, have proposed the amendment.

The independent review undertaken by Sir David Henshaw made some strong recommendations about the steps required to reform child maintenance. However, the review recognised that the issue of whether or not that should be administered in a body positioned at arm’s length from the Government was a finely balanced debate. The key argument on which the Government rest our position was the need for a clean break, as it was then called—I think that it was referred to today as some other kind of break, but anyway those are the essential grounds on which the argument was made, in response to the well publicised problems that the CSA had been enduring.

I reiterate that this reform is not about dismantling the Child Maintenance and Enforcement Commission in its current form. Neither is it about jeopardising the performance improvements that have been made in recent years. It is fundamentally about restoring ministerial leadership and accountability at a time when child maintenance reforms are reaching a critical stage.

I shall pick up one or two of the questions that I have not already dealt with. The implications for staff are relatively few, given the nature of the transfer. What we are trying to do in the universal credit, in terms of information, may become highly relevant here. We still need to look at that; obviously, it is at a very early stage.

We have looked at costs overall as part of SR10. We are determined that, in undertaking the transfer, we do not divert attention away from the need to get systems up and running. Clearly, this area is vital in tackling child poverty. Family breakdown is one of the main drivers of child poverty. We are determined to move forward on this and maintain targets. As the noble Lord will know, the introduction of the universal credit will have a powerful impact on child poverty. That is not yet included in the IFS calculations, although I imagine that it is working on that. We will be looking closely at other ways of ensuring that we stem the problems arising from family breakdown. Given all this, I ask the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I am most grateful to the Minister for that very full reply. I have no intention of pressing this amendment, as I tabled it in order to seek information. I am comforted by what he said about the progress and planned progress of the child maintenance system and that it is still the objective to try to introduce the new basis of calculation next year and the systems that will support that. I understand that it is intended that all the CSA cases will eventually migrate to the new system by 2014.

However, I am still a little mystified by this issue of ministerial accountability, as there is accountability to Parliament through the Secretary of State. I am a little curious as to what difference the measure would make for Ministers in practice, as for most, if not all, NDPBs there is a way for Ministers to engage and influence. A framework agreement defines not only the financing of NDPBs but their governance arrangements and their relationship with Ministers, so the argument that the Government are switching just to achieve that purpose is a little thin.

I wish to make it clear that I certainly do not contend that improvements came about only once CMEC came into being. Improvements were made under the operational improvement plan before CMEC came into being. I certainly assert—I think that the Minister agreed with this—that CMEC has carried that on and has made continuing progress, although matters still remain to be resolved. I am comforted by the fact that this will not be done in a way that would disrupt the progress that has been made and disrupt the introduction of the new systems.

[Baroness Hollis of Heigham]

Before my noble friend decides what to do with his amendment, as he may be drawing his remarks to a close, I wish to ask the Minister a question through him, so to speak. Do I understand that what the Minister is doing is maintaining the policy drive of CMEC while reinventing the structure of the old CSA? As he may know from his briefing, that structure was that there was a chief executive, who reported quarterly or at six-month intervals to the Minister, supported by an advisory board and shadowed, so to speak, by a policy directorate within the department—a grade 5 and above that a grade 3—who would, so to speak, act as the interface between the policy development and the operational work done by the CSA, headed by its chief executive. Is that the proposed structure that the Minister seeks to reinvent or has he a different version in mind? It would be helpful to know how he thinks the organisation will function at the top level and what independent advice—research advice and expertise—he can expect to draw on, which obviously CMEC has taken further and developed in a far more effective way than under the old CSA.

19:45

[Lord McKenzie of Luton]

That is probably a belated intervention on the Minister if he wishes to answer it. One of my questions concerned what would happen to the board and whether and how it would be reconstituted.

[Lord Knight of Weymouth]

My Lords, specifically on that question on the board, if the Minister is minded to comment further, it would be interesting to know, if the board is to continue, what sort of remuneration it would have for what purpose, if the Minister is now to be much more accountable and have that proper oversight.

[Lord McKenzie of Luton]

If the Minister wants to pick up those points now, perhaps I can come back to my points later.

[Lord Freud]

We want to move to the new arrangements as soon as we can. The details of the arrangements for the agency will be elaborated on, but our intention is basically to leave the CMEC structure unaffected. The accountability point is much more political. I imagine that it would delight any Opposition, and slightly worry any Minister, to be directly responsible for what this very important agency does. That is the key difference. There is direct accountability for what is happening across these Dispatch Boxes and, of course, those in another place. We think that that is right, given the very many millions of parents and children affected. The figure is not quite 10 million on my count but it is getting on for that. For that reason, it is vital that there is direct political responsibility.

[Lord Knight of Weymouth]

My Lords—

[Baroness Anelay of St Johns]

I wonder if I might assist the Committee. We are in Committee and we try to enable as much discussion and latitude as possible. I appreciate that the noble Lord, Lord Knight, may not be aware that the procedure is that, once the Minister has concluded his answer, and then the person moving the amendment seeks to sum up and decide what to do with the amendment, the Minister should not then be subject to further questioning. Naturally, the Minister has wanted to assist the Committee as much as possible but the noble Lord has trespassed a little far on our usual procedures. I invite the Minister not to comment further. However, I am sure that, like all Ministers—as the noble Baroness, Lady Hollis of Heigham, used to do when she was a Minister—he will be pleased to consider constructive discussions between now and Report.

[Lord McKenzie of Luton]

I am grateful to the Minister for participating in the additional exchanges. However, we still need clarity over what the structure will look like in the future and what in practice enhanced ministerial responsibility and accountability will come from that. Having heard the Minister’s comments, I cannot see a great difference from current practice.

I return to the options service, which was not a responsibility of the DWP or the CSA before the creation of the commission. It has been heavily, and properly, marketed as offering support for parents and information and guidance that is independent of government. I have not heard the Minister address my next point directly, but it seems to me that we need to think through the consequences of putting at risk the status that that service has achieved, where parents with care and non-resident parents can feel that they can genuinely and confidentially engage with the service and get impartial advice. I remember that during the passage of the Bill we had interesting discussions about the obligations on that service in terms of reporting its findings if it became aware of information that was inconsistent with other information in the system on benefits and income. One of my questions is whether that will change with the service no longer being conducted by an NDPB but directly by an executive agency of the DWP. It would be good to have clarity on those sorts of issues.

We have probably had a useful starting exchange on this. We would now like to read the record and reflect. If there is an opportunity, perhaps we can get some clarity on these issues even before we reach Report stage. My colleagues and I would greatly appreciate that. For the time being, I beg leave to withdraw the amendment.

Amendment 27 withdrawn.

[The Deputy Chairman of Committees (Viscount Simon)]

We come to Amendment 28. I call the noble Lord, Lord Greaves.

[Lord Greaves]

My Lords, I expected that we were breaking for dinner. Do we not break for dinner in Committee?

[Lord Hunt of Kings Heath]

No.

[Lord Greaves]

No? I thought that we were. All right. It is a good job I did not go and have my dinner, isn’t it?

Amendment 28

Moved by

[Lord Greaves]

28: Schedule 1, page 16, line 20, leave out “Commission for Rural Communities.”

[Lord Greaves]

This amendment would leave out the Commission for Rural Communities from the list of organisations in Schedule 1. This amendment, like the previous one, is a probing amendment to ask questions of the Government and, one hopes, to get the Government to set out clearly on the record how they see the CRC’s functions being carried out in future, which of those functions will be carried out in future, and which are to be abandoned.

The Commission for Rural Communities was created by Section 17 of the Natural Environment and Rural Communities Act 2006—which many noble Lords, and perhaps refugees from the House of Commons as well, will remember took up a considerable amount of discussion at the time. The Commission for Rural Communities, which was created by primary legislation, was therefore thoroughly discussed and thrashed out in your Lordships' House.

The Commission for Rural Communities sets out its purpose and functions as follows. It is a statutory body,

“funded by government to help ensure that policies, programmes and decisions take proper account of the circumstances of rural communities. We have a particular focus on disadvantaged people and areas suffering from economic under-performance”.

In essence, it has,

“three key functions: Advocate: acting as a voice for rural people, businesses and communities; Expert adviser: giving evidence-based, objective advice to government and others; and Independent watchdog: monitoring and reporting on the delivery of policies nationally, regionally and locally”.

That is a summary of what it does.

The commission's work since it was set up has been widely praised. Much of it consists of research, and the work of the chairman, Dr Stuart Burgess, as advocate for rural areas—particularly disadvantaged rural areas—has been notable. On 29 June 2010, Caroline Spelman, the Secretary of State, announced that the CRC will be abolished and partly replaced with a strengthened rural communities policy unit within Defra.

This amendment, like the previous one, goes to the heart of the way in which the new Government intend to carry out many of the functions that are currently carried out by autonomous bodies. In her statement on 29 June, Caroline Spelman said:

“With an urgent need to drive down debt and reduce Government spending we will have to make some tough decisions”.

Secondly, she said:

“We are committed to improving the quality of life for those living in rural areas and we will put the fair treatment of rural communities at the centre of Government”.

Thirdly, she said:

“Focusing rural policy making within the department will give rural communities and interest groups a direct link to central policymakers and a stronger champion for rural issues at the heart of Government”.

I think that that is what, a few years ago, used to be called rural proofing—the attempt to make sure that government policies across the patch were all checked for their effect in rural areas.

So there are really two main reasons for this policy, and they are both clearly set out in the statement—the first is to save money, and the other is to have a more effective service. The underlying promise is that it will not prejudice government actions for rural areas. Those are the issues that we need to probe, and the first is cost.

There are some questions that I should like to ask the Minister. What is the transitional cost? The Government briefing suggests that it is £2.5 million. Can he tell us what makes up that figure? What is the extra cost of taking on this work within Defra, and therefore what is the net saving? The suggestion, again from the government briefing, is that the existing cost of the CRC is £5.8 million;, that there will be a saving of £4.5 million once the transitional costs have been paid; and that the spend within Defra will therefore be only £1.3 million compared with £5.8 million at the moment. I can believe that efficiencies might be gained by doing this within Defra, and that it might be possible to do it more cheaply; but, nevertheless, that difference is so great—£5.8 million to £1.3 million—that one has to ask what things are being done at the moment that will not be done in the future.

Can the Minister tell us something about the transitional period? My understanding is that the intention is that the CRC should cease on 31 March 2011, but there may be transitional things to be done after that. How will that be managed?

How many staff does the CRC have at the moment? How many have transferred into Defra, and are any more expected to do so? What will be the size of the new unit within Defra which will carry out the work that the CRC has been carrying out?

The second broad area of questions has to be about the effectiveness of the new system. The proposal is to strengthen the rural team in Defra, to improve existing policy work, and to carry out the following functions. The first is to support Ministers, who will have much more direct accountability in future for the rural work. The second is to act as a centre of rural expertise. The third is to champion,

“rural needs and issues across government departments and other bodies”;

and the fourth is to work,

“with the civic sector to promote rural solutions at the local level”.

The last one is a quote and I do not understand what it means. Perhaps the Minister can tell me.

The Secretary of State also said:

“Ministers will lead rural policy from within my Department … The Government believe policy advice should be carried out by Departments, not arm's-length bodies”.—[Official Report, Commons, 29/6/10; col. 36WS.]

That is okay as far as it goes, but there are questions to be asked. The Campaign to Protect Rural England suggests that the advice to Ministers should be,

“robust, independent and evidence-based policy advocacy”.

That is what the CRC has been doing. For example, its report on uplands, published in June, called High Ground, High Potential—A Future for England’s Upland Communities, was a model of its kind. It was well researched, evidence-based and put forward a series of proposals on behalf of the rural areas of England that are most disadvantaged. It is difficult to see how a unit within Defra could do that with the style and commitment that was evident in that report.

20:00

Perhaps more important is the annual State of the Countryside report that—again according to the CPRE— provides a key yardstick of the social, economic and environmental trends in rural England. The report for 2010 is divided into three main sections. One is on living in the countryside and population services; one is on the economy of rural England; and one is on land and environment, including farming. This is a substantial, evidential report that is published and available to everybody. Will that report be produced in future by Defra with the same thoroughness and evidential base? I hope that the Minister will be able to satisfy me that that will be the case.

In summary, I will ask first about the strength of research in the new unit. What resources will be given to it? Will the research be on a par with that which now takes place in the arm’s-length body? How will the system work of having a rural champion in the department? At the moment the Rural Affairs Minister is Richard Benyon, who is energetic, keen and capable. However, the problem with Ministers is that they come and go. Who knows whether a future Minister will take on this work with the same enthusiasm? Will a Minister who is not a Secretary of State but is more junior have the clout across government to do the advocacy, the work and the rural proofing that is required?

How transparent will the new processes be? Government departments are notoriously secretive. Advice to Ministers is supposed to be confidential, as we heard earlier. When my younger daughter got a temporary job in the Government Office for the North West, she said: “I’ve got to sign this thing called the Official Secrets Act. Is that all right, Dad?”. I said: “You’d better do it if your job depends on it”. When junior staff such as her have to sign the Official Secrets Act, the prospect of transparency and openness of the kind that one gets with an arm's-length body seems remote. Will the policy advice that Ministers get be genuinely independent and evidence-based? How will ministerial accountability to Parliament differ from how it is now? We know that the system exists, but we also know that it is imperfect.

This is a typical example of a body that was set up by a substantial piece of primary legislation. The proposal is to create a system whereby it can and will be abolished by ministerial order. If the Bill goes through in its present form, this is the best opportunity that we will have before the order is made to scrutinise the proposal. I hope that the Minister will be able to provide a great deal of the information that I am asking for today. If he cannot answer all the questions this evening, I hope that he will be able to answer them between now and Report, whenever that may be.

My final question is the one that I started with. Is this just about doing the same thing in a different, perhaps better, way: and will the Minister tell us which of the existing functions of the Commission for Rural Communities will not be performed in future? That is the crunch point. I beg to move.

[Lord Knight of Weymouth]

My Lords, I was very pleased to put my name to the amendment of the noble Lord, Lord Greaves. I pay tribute to him for the way in which he is scrutinising this Bill, and in particular the arm's-length bodies in the Defra family, as we lovingly call it. My interest in this is as the midwife of the Commission for Rural Communities. I was the Rural Affairs Minister responsible for the Natural Environment and Rural Communities Bill, and for the creation of the Commission for Rural Communities in 2005.

For noble Lords who are not familiar with the subject, I will give a potted history. In 1999, the Countryside Agency was established out of the Rural Development Commission and the Countryside Commission. It was ably headed by the noble Lord, Lord Cameron of Dillington, who also served as the rural advocate. Just prior to my taking over from Alun Michael as Rural Affairs Minister, Stuart Burgess was asked to take over the rural advocate’s responsibilities. At the same time, the recommendations of the review carried out in 2003 by the noble Lord, Lord Haskins, were being implemented through the Natural Environment and Rural Communities Bill that I was pleased to steward through Parliament. The Bill took English Nature, a rural development service within Defra and the Countryside Agency, and created from those three bodies Natural England. A small element around rural advocacy was retained as the Commission for Rural Communities.

After some searching around the real estate of government, it found a home in Cheltenham, which was where the Countryside Agency had been. On the longest day of 2005—23 June—we debated at length in Committee primary legislation that would create the Commission for Rural Communities. It is ironic that five years later, on the shortest day of the year, we are now debating its demise. Currently it has just over 60 staff based in Cheltenham, and a budget just shy of £6 million. As we have heard, its closure was announced in June. Looking through the local press cuttings, it is notable that the Member of Parliament for Cheltenham, Martin Horwood, said back in June:

“There hasn’t been any obvious consultation and I think it leaves questions unanswered about how important independent roles are going to be fulfilled”.

I think that the Liberal Democrat Member for Cheltenham puts his finger on the need for independent advocacy and independent rural-proofing, and the noble Lord, Lord Greaves, echoes his questions about how those functions will now be performed if the Commission for Rural Communities is allowed to go.

When I was thinking about this debate today, I also noticed a fine article in the Daily Telegraph—not a paper that I normally peruse with great interest—of 2 July this year by Geoffrey Lean, who is easily the longest-serving environment correspondent writing in any of our national newspapers. He has been following these issues for a considerable number of years. I think it is worth quoting some of the things that he said in that article. I know that it may not be the most popular newspaper today among the government Front Benches but in an article headed “The countryside will be the poorer” Geoffrey Lean says:

“Think about poverty in Britain, and the mind jumps to grim inner-city estates. But deprivation can be just as great amid some of the loveliest landscapes. About one in five rural families live beneath the poverty line, a rate increasing three times as fast as in the cities”.

He goes on:

“The commission’s job was to tackle this. It could, perhaps, have done so more dynamically—and it could have sold itself better—but it did make a difference ... It produced regular State of the Countryside reports—the last, as it happens, comes out next week”—

this was written in July—

“keeping a focus on rural poverty. And it persuaded the last government to stump up £180 million to maintain village post offices and enable them to provide banking services, and to propose a 50p tax on all phone bills to finance rural broadband. Now, a coalition of two parties that traditionally represented the countryside is betraying it. First to go was the broadband tax, scrapped in George Osborne’s Budget. And now Ms Spelman has killed off the commission”.

He finishes:

“This will save money—but not a great deal. The £3.5 million a year won’t help much towards the £750 million reduction in the department’s budget demanded by the Chancellor, and seems outweighed by the cost to the countryside … So who will speak for the countryside? The Conservative and Lib Dem backbenches, perhaps? But many of the Tory knights of the shire have retired behind their moats, leaving the party more Bullingdon than bucolic, while their coalition partners seem cowed by power. The NFU, and the Country Land and Business Association, are effective, but represent sectional interests as, in a different way, does the Countryside Alliance. And the much diminished Campaign to Protect Rural England has disbanded its rural policy team”.

Finally, there is a quotation in the article from Tim Farron:

“’The role of somebody outside government to look at rural policy and decisions taken by all departments is very, very important’”.

I could not say that better. I apologise for reading to your Lordships from the Daily Telegraph at such length but I think that Geoffrey Lean makes a really good argument.

It is true that at times the Commission for Rural Communities has not pulled its punches—sometimes, I am afraid, at the expense of the Government of whom I was proud to be a member until May of this year. I found a cutting from the Times—this must have been before the paywall was invented because it is dated 6 June 2008—on the report by Stuart Burgess as the rural advocate. The report states bluntly:

“Rural issues are given little recognition in keynote speeches, only passing reference in policy papers, and rare places on platforms of major economic and regeneration conferences. Urban-based officials and organisations are rarely challenged to upgrade their understanding and commitment to the substantial rural part of the national economy”.

Stuart Burgess and his lean team of staff based in Cheltenham did an admirable job in holding us to account. It is great to see the noble Lord, Lord Hill, in his place as a schools Minister. Stuart would regularly come to see me, encouraging me to ensure that the rural schools group established by the noble Baroness, Lady Ashton, was allowed to continue and to ensure that I attended it and listened to what it had to say. He was also keen to ensure that we properly rural-proofed what we were doing in education, that the presumption in favour of keeping rural schools would be retained, and that things such as the academic broadband network that schools are able to take advantage of could be piggy-backed to help to tackle the rural broadband issues that the Commission for Rural Communities was so keen to advocate.

I have a document from the commission dated 11 May 2010 which lists some of the successes of 2009-10 alone. They relate to areas such as affordable rural housing, fuel poverty, climate change, transport, digital communications, health, post offices, financial inclusion and market towns. There is a whole list of areas where the commission has been active, has been reporting and has been challenging the Government to do their job. That should be allowed to continue. I hope that the noble Lord, Lord Greaves, will be assertive and perhaps even put it to a vote and challenge the government on this, if not now, then at some future point. This is a commission that the Government can and should be proud of and should allow to continue.

20:15

Will the Minister answer a couple of questions? The commission has oversight for the England Rural Development Programme; how will that continue? Will it be passed on to Natural England, or will it be dealt with in-house by Defra? It is an important source of European money for rural England and there will be some concern as to how it will continue. Similarly, I ask him to put his mind to what will happen to the rural affairs fora in the various regions. They provide a more localised form of rural-proofing. They were serviced by the Government Offices for the Regions, which are now to be disbanded, so I do not know how they are now to be serviced. If we are getting rid of the Commission for Rural Communities and, in turn, the rural affairs fora are not going to be allowed to function properly, I do not understand how there is to be any check or balance on what the Executive is up to in rural England.

Finally, or almost finally, I ask noble Lords to cast their eyes to the future and think about the need for rural-proofing as we go forward. There are real questions at the moment around the closure of the magistrates’ courts and access to justice. Who is going to give a genuinely independent voice, free of any government interference, or any suspicion of government interference, as to whether people in rural areas are going to get access to justice? There are questions around police numbers as the fiscal constraints bite on police authorities. There are questions around school closures, the significant and radical reorganisation of the National Health Service, doing away with PCTs and strategic health authorities and how GPs in rural areas will continue to provide the full range of service to people in rural England. I have already mentioned broadband.

Dr Stuart Burgess has been interested for a number of years in migrant labour, trying to ensure that migrants working in agriculture, particularly in rural England, who are often very low paid with very poor conditions, are properly served in communities that are not used to dealing with people who do not have English as their first language. The jobcentre network, wind farms, housing, the impact of the Localism Bill, the impact of giving all this freedom in planning and whether that will deliver on the affordable housing needs of rural areas—these need an independent rural advocate.

I cannot speak highly enough of Dr Stuart Burgess, or of the job that Ewen Cameron, now the noble Lord, Lord Cameron, did before him. I would like to see that role continue independently of government, even if some of the other functions need to be brought in-house, in order to allow the independent rural advocate to continue. Having been a rural affairs Minister, I can tell the noble Lord, Lord Greaves, that we do not, as Parliamentary Under-Secretaries of State, or even as Secretaries of State, as Alun Michael was, have the clout across government that an independent person does. Such a person has the capacity to name and shame and the statutory right to go to see the Prime Minister and present his report.

I say finally to the Minister, listen to the voices that I have read out from newspapers and the media, listen to other Members of this House, listen to the countryside and at least retain an independent voice for rural-proofing. If at some point down the line the Minister wants to reorganise functions, it is set out in the Natural Environment and Rural Communities Act, in Part 8, “Flexible administrative arrangements”, which allows Defra functions to be transferred between Defra and Defra bodies and gives the Government the legislative freedom to do what they want to do without rushing at it here and now.

[Lord Newton of Braintree]

My Lords, I shall join in briefly, even though I am far from being an expert on this commission like my noble friend Lord Greaves and, from what he has just said, the noble Lord, Lord Knight. What I do have is some 18 years’ ministerial experience, man and boy, continuously from 1979 to 1997, at every level of government, including several years as a Parliamentary Under-Secretary, before becoming what was, in terms of nomenclature, rather more grand. In that, I share some experience with my noble friend on the Front Bench: we overlapped each other at the old DHSS, or was it by then the DSS? It might have had yet another title: they change more or less every week. I want to contribute a priori from that, picking up a couple of the points that have been made.

First, I just do not understand the general arguments that are being put forward for the proposition in the real world, as distinct from some hypothetical world. It is said that there should be greater direct accountability by Ministers within the department and that the department should be the champion. We all know that if the Ministry of Justice decides to abolish magistrates’ courts, another department cannot act as the champion for anything. We all know that what happens is that, by and large, these matters are settled at meetings of relatively junior Ministers, where you may or may not carry the day, but you cannot then go round outside that Cabinet committee saying, “I championed this but the rest would not agree”. You cannot say, “We lost on this, but we will now campaign to have it reversed or to make people think again”.

Equally, when I was such a junior Minister faced with those difficulties, I welcomed having an authoritative external body to which I could point as a support for what I wanted to get my colleagues to agree to. Far more convincing than saying, “My unit in the department tells me that this is what we want”, is to say, “We have this great and good body of external people who really know what they are talking about and who have done some research, and this is what they are advocating”. Some of this thinking does not connect with the real world. I would be most grateful if my noble friend would comment, if he feels able. The only other thing that I would say is that I hope that the noble Lord, Lord Greaves, will not press his amendment, because I think we could have a much more productive argument when Ministers have had a chance to think about just what it is that they want to do.

[Lord Clark of Windermere]

I am pleased to follow the noble Lord, Lord Newton, because I want to pick up some of the themes which he touched on which I thought were worthy of further reflection. I am also grateful to the noble Lord, Lord Greaves, for introducing the debate and for the manner in which he did so. It was very reasoned, trying to tease out answers. Indeed, he has probably posed most of the questions which I would pose.

I also want to take this opportunity to add my tribute to Stuart Burgess. I worked with him very closely in the days when I was chair of the Forestry Commission. We met regularly, and I found him a tower of strength. He was a most admirable individual, a very knowledgeable man and, above all, a real champion for the countryside—not for any particular vested interest in the countryside but for the people in the countryside, especially the disadvantaged. It is interesting that the report which is imminent, probably the last report from the commission, will be on that issue.

I am a little surprised that the coalition is proposing that action. I read the local papers, as does the noble Lord, Lord Henley. We probably read the same local papers, after we have read the back page, where we share a common interest. I am always finding the coalition partners, whether it is in Penrith and the Border, Westmorland, or wherever, appearing to champion the rural areas and saying that the Labour politicians from the west of the county—although they represent huge rural areas—have no concern for the rural areas. That could not be further wrong.

Indeed, as we have heard, it was the Labour Government who established the Commission for Rural Communities, which I believe did a great deal of good work. The great advantage was that I frequently met Stuart Burgess on the train going on a fact-finding visit, or going to hold a public meeting, a public consultation, in some village hall on housing, broadband, or whatever. Like the noble Lord, Lord Newton, as a Minister I certainly found it incredibly valuable to be able to call in experts, especially people who were as independent as the chair of the Commission for Rural Communities. It was very useful for a politician to be able to call these people in aid because one of the things I found was that—this is just a fact of life in a sense—any politician has a certain struggle, not only with his opponents across the Chamber but, inevitably, with his own department. His own civil servants may have slightly different interests in certain respects than he may have. Indeed, they may be right, because they are there for the long term and most politicians are there for the shorter term.

What I found interesting, and the issue that I would pose to the Minister, is this. I cannot imagine civil servants in a unit in Defra going out into rural communities on winter or even summer evenings, going to village halls, meeting ordinary people and listening to them, bearing in mind that, because of the nature of the occupation, the overwhelming majority of those civil servants, most of the policy people and the people with the real authority are based here in south-east England in the Greater London area. I simply do not believe that they will be going out and collecting the information for themselves. I believe that if the Government really want the big society notion to work, they are really going to have to engage with people and to communicate with them. Quite honestly, I believe that members of a commission are much better at doing that than civil servants in Defra or in any other department.

That brings me to the second point that the noble Lord, Lord Newton, made. It is a killing point. It is about who is the lead authority. Let us take broadband, which has been mentioned several times. Broadband in rural areas is difficult, but it can be piggybacked on the school network. In Cumbria, the Member for Penrith and The Border has led a campaign in the north of the county to try to get broadband, quite rightly, into these rural communities. Defra will actually have very little authority when the execution of this plan comes to the fore because, quite frankly, it is not Defra’s responsibility. It is another government department’s responsibility. We heard about the power of the Under-Secretary of State, but it is more than that, it is the power of the civil servants, with their pecking orders, as well. I believe that rural communities will lose out by this abolition.

I think it was my noble friend Lord Knight who made the point about listening. I hope that the Government will listen especially to people such as Geoffrey Lean, who for many years has been the finest environmental journalist in this country and for the past 40 years has been prepared to take unpopular stances against Governments of all political hues. I thought the quote that my noble friend used was most telling, and I hope the Minister will not dismiss this and will listen to some of these points of view.

20:30

[Lord Grantchester]

I pay tribute to the noble Lord, Lord Greaves, for the excellent way that he has put forward his amendment tonight. I thank my noble friend for his parental advocacy of this body. I also thank other noble Lords who have spoken with great passion on this amendment, which goes to the heart of this Government’s attitude to rural livelihoods and rural communities.

The Commission for Rural Communities was set up to promote awareness of the social and economic needs of people who live and work in rural areas, and to help decision makers across and beyond government to identify how these needs can best be addressed. It has given valuable independent advice to the Government and has produced a number of excellent reports, many of which have been referred to approvingly in recent rural affairs debates in your Lordships’ House.

The arguments about the usefulness of outside, independent and impartial advice, rather than simply relying on departmental in-house sources of advice from civil servants, have been well aired in relation to a variety of bodies proposed to be scrapped in the Public Bodies Bill. In particular, the debate on the pesticides advisory committees and the remarks made by my noble friends Lord Whitty and Lady Quin, and others on 29 November, were very pertinent. The value of the report of the Commission for Rural Communities was mentioned in a debate on rural affairs initiated once again by the noble Lord, Lord Greaves, on 15 July. That then informed your Lordships’ later debate on the Prince’s Countryside Fund.

The CRC focuses on practical outcomes for people who live and work in our rural areas. I pay tribute to Stuart Burgess who with his team accompanied a tour on the work being done in market towns, which was a strong initiative in my local area in Cheshire. The second round of the town centre initiative fund expanded excellent help towards 15 further rural local authorities; that is, 38 per cent of recipient authorities compared to only 6 per cent in the first round of that initiative. It has been involved in collaboration and partnerships through local areas, and in working to find the most effective solutions at the least cost. It has picked up on local challenges and strengths, and has been part of local economic assessments, which have been vital to the work of regional development agencies and, through the rural development of England proposals, has worked with the development agencies, which is another body we will look at after the new year. It has become a repository of expert advice and opinion to take advice of rural needs to the heart of government.

It is clear that there has been no real consultation about the abolition of this commission, despite the assurances from the noble Lord, Lord Taylor of Holbeach, about consultations in an earlier debate. In answer to a Written Question, HL2837, the Minister, the noble Lord, Lord Henley, said:

“The decision to abolish the Commission for Rural Communities was made after full consideration within Defra and the usual consultation across government”.—[Official Report, 25/10/10; col. WA 224.]

No wider consultations have been undertaken.

Has the effect on rural areas really been considered? The noble Lord, Lord Greaves, referred to costs and rightly pointed out that the upfront abolition costs are in the region of £2.5 million. Unlike many of the other Defra bodies where cost savings are negligible or non-existent, this could be one where some costs may be at issue. However, one has to look at the value for money that this expenditure has produced. If the Government commission reports in the future on the kinds of subjects that have previously been considered by the CRC, there would presumably be considerable costs in undertaking them. Furthermore, independent, impartial advice is a valuable commodity.

The Defra Minister, Richard Benyon, has also said that proposed changes to Defra’s public bodies will create modest savings. The main benefits of the proposals in the Public Bodies Bill are to increase transparency and accountability in public bodies. But how can accountability be improved if existing bodies, such as those we are discussing tonight, which publish their reports and proceedings and have excellent websites, high visibility in rural areas, and make minutes of their meetings available to everyone, are abolished and replaced by Defra in-house bodies? The CRC made a difference. This simply does not make sense.

I turn now to the announcement made on 29 June by the Secretary of State. A new policy unit is to be set up within her department covering rural communities. It will work across government to ensure that rural interests are reflected in programmes. I join other noble Lords who have asked the Minister how an internal policy unit can have the profile to cut across and into other departmental activities. Can these new arrangements be effective? What evidence will he require of his department to support the Government’s contention that the work done so admirably by the Commission for Rural Communities will still be carried out as effectively in the future?

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)]

My Lords, I shall now address the amendment and put things into an appropriate perspective. I welcome the remarks of all noble Lords who have spoken about the CRC. The noble Lord, Lord Knight of Weymouth, described himself as the midwife of the body, but he was then described as its father by the noble Lord, Lord Grantchester. We are getting our metaphors a bit mixed up on this occasion. However, as I said, I want to put this into perspective, so I shall start by reminding the Committee, as other noble Lords have done, that we announced our intention way back on 29 June that, subject to the passing of legislation, we would abolish the Commission for Rural Communities along with its statutory functions as just one part of the Bill before us.

I think I can speak for all my fellow Ministers and future Ministers once my time is up when I say that the decision to abolish the commission does not reflect in any way a reduction in the Government’s rural commitment. On the contrary, the Government are committed to improving the quality of life for people living and working in rural areas and intend to put the fair treatment of rural communities at the centre of government. There are already many rural organisations and commentators who will continue to hold the Government to account, as happened with the previous Government. I think that noble Lords might remember one faintly rural community, the Women’s Institute, which I seem to remember a former Prime Minister going to address but not coming away from that occasion exactly unbloodied. However, I think he enjoyed the experience.

I remind the Committee of what the name Defra stands for. It is the department responsible for the environment, food and rural affairs. It is the department that works to promote the interests of rural people within all government policies. I can speak for all my colleagues in the department—I am sure it will be true of all future Ministers and, dare I say it, those like the noble Lords, Lord Knight of Weymouth and Lord Clark, who have served in similar departments in previous Governments—by saying that we will continue to push for rural affairs. Many of us have a strong rural background. The noble Lord, Lord Clark of Windermere, comes from my part of the world and I was grateful for his reference to the fact that we support the same football team and read the same newspaper. We will continue, as he and the noble Lord, Lord Knight, and others have done, to champion rural issues across the Government.

I must make it clear that we as a department will continue to work with a vast range of departments on issues of importance to rural people. This will include working with the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport on broadband. It is an important issue and I am glad that noble Lords mentioned it. The noble Lord, Lord Clark, referred to what my honourable friend in another place is doing in Penrith and the border region for north Cumberland in trying to bring the project forward. He has had long discussions with both the DCMS and my colleague, Richard Benyon, who has responsibility for these matters in Defra on that issue. We will continue to work with the Department for Communities and Local Government on housing and planning and with the Department for Transport on rural transport issues.

My noble friend Lord Newton kept emphasising that he was a junior Minister, but he was actually the first Secretary of State I served under in the Department of Social Security, and I hope that I learnt a great deal from him in doing so.

[Lord Newton of Braintree]

I am tempted to intervene. I am grateful to my noble friend because I now remember. He was War Pensions Minister, if I remember rightly, and I am willing to bet that he found the external campaigning of what was then called COBSEO—it may be called something else now—very useful in trying to get money out of me for war pensions.

[Lord Henley]

My noble friend touches a sore point: I remember many issues relating to war pensions and other matters that caused him and me a great many problems. I can also remember taking social security Bills through this House for my noble friend when he was the Secretary of State and that I suffered a number of defeats which ran into millions, billions and trillions of pounds and which my noble friend then had to overturn. The point I am trying to make is that what this House and another place can do is equally important. I always used to feel that any Secretary of State from another place with whom I worked needed two or three defeats in this House before they understood its importance. My noble friend learned that and we dealt with the problems.

We talk to a large number of different departments; we will continue to do so and we will continue to be the rural advocate. As part of our changes to rural policy, Defra’s rural capacity will be significantly increased to create a new rural communities policy unit. That unit will expand on the existing policy work of the department, moving to a single organisation to act as the rural champion within government—and that rural champion is Defra. This will remove duplication, improve efficiency and improve our focus on priority issues for rural communities.

In moving the amendment, my noble friend Lord Greaves asked about staffing issues and the transitional period. This is very important. I can assure my noble friend that 14 staff from the CRC have already transferred to Defra as they are connected to work which will be undertaken in the rural communities policy unit. This will assist in building upon the relationships that the commission has built up. In addition, any vacant posts in the new unit—and we expect there to be at least some—will be advertised so that commission staff without an automatic right of transfer can apply for those positions.

The noble Lord, Lord Knight, asked about the RDPE and whether the CRC was responsible for that network. That function has been transferred to Defra and the three CRC staff undertaking the work have been transferred; they are among the 14. I must make it clear to the noble Lord that the CRC was not responsible for the full RDPE programme, which is a wider matter.

One of the most important issues to address is costs. What we are doing is not only about saving money, but we expect significant savings to come from this action. This is important in terms of our contribution to reducing the deficit. We, as a Government, inherited a very large deficit from the party opposite when they were in government and we all have to do our bit to reduce it. Obviously there will be up-front costs as a result of the change and redundancies, and those are estimated at less than £2.5 million. These will be far outweighed by the long-term savings, estimated to be in the region of £4.5 million a year. That is a significant sum. There are very good reasons for wanting to continue to attack the deficit and we will continue to do so. However, as I have made clear to the Committee, that is not the sole reason for our doing this.

20:45

I hope that I have given sufficient reassurance to the Committee—I think that it is fairly obvious—that we are committed to rural people and rural communities. The department will continue to do all it can for them, but we will also continue to pay tribute to the commitment of, and quality of work undertaken by, the CRC, midwifed by the noble Lord, Lord Knight of Weymouth, some years ago. However, I think that its time has come—

[Lord Knight of Weymouth]

My Lords—

[Lord Henley]

I will give way to the noble Lord when I have finished that sentence. It is my right to decide when I give way. I pay tribute to the work of the Commission for Rural Communities during the past four years, but I think that its time has come.

[Lord Knight of Weymouth]

Will the noble Lord also pay tribute to the work of the rural advocate and address the points made by all speakers in this debate about the importance of having a voice for rural England that is independent of government? Does he think that that role should continue, even if the other functions can be absorbed within his rural policy unit?

[Lord Henley]

The noble Lord looks for an independent rural advocate. I do not think that we will be short of any number of independent rural advocates or that they necessarily need to be government funded. He referred in terms of environmental matters to Geoffrey Lean. There are many others who will offer us advice and make their views known, as will the noble Lord himself, this House and another place. I can assure the noble Lord that we will not be short of advice. I therefore hope that my noble friend Lord Greaves will consider withdrawing his amendment.

[Lord Maclennan of Rogart]

While I recognise the strength of what my noble friend said about the department’s commitment, is not the problem that the department is only part of government and that there can be much stronger departments—for example, the Treasury and the department for business? We have witnessed the National Grid announce a consultation on covering large parts of rural England with pylons from the North Sea. When that issue comes to be debated within government, we will hear the voices of the Treasury and the Department of Energy and Climate Change, but those debates will be internal. Would it not enormously strengthen my noble friend’s department to have an authoritative voice—not just local women’s institutes—from an objective body set up for the purpose of giving a view which is clearly not parti pris but is committed to the benefit of the rural areas of this country?

[Lord Henley]

My Lords, I appreciate that some departments are more equal than others. One of the first things that I learnt sitting at the feet of my noble friend Lord Newton was that the Treasury had a slightly greater say on these matters than other departments. Nevertheless, Defra will play its role in arguing these views in government. I do not think that the CRC would be able to stand up to the Treasury with any greater authority than, for example, my own department, but, as I said in response to earlier remarks, there are a great many other bodies outside that will also make the case for rural communities very strongly. I do not think that spending £4.5 million per year on the CRC is certain to give more prominence to the arguments of rural communities. We will do that, and do it far more cheaply than the CRC.

[Lord Greaves]

My Lords, before I respond to what the Minister said, I would like to thank everybody who has taken part in the debate. I was delighted that the noble Lord, Lord Grantchester, was representing the Labour Front Bench because at least somebody apart from me was not a past or present Minister. At one stage, the debate was developing into a past and present Ministers’ club, with lots of gossip that the rest of us did not quite understand. However, I am grateful to everybody and particularly the former Ministers—midwives and everybody else—who have taken part.

I am not one of those who think that Ministers, even at a junior level, do not have any influence and cannot, with enough energy and commitment, achieve things within their departments and perhaps outside. I spent last Christmas reading Chris Mullin's diaries about his time as various kinds of junior Minister, which give a very cynical view of the person with a minor position and no power whatever. I suspect that he laid it on a little. The diaries are extremely amusing, but I think that he probably overstresses his lack of power and influence.

Having looked at it all from the outside over many years, I have seen that Ministers with energy can achieve things, but one problem that faces all Governments and all ministerial teams is that at some stage they run out of energy and new inspiration. I would not accuse the present Government of having a lack of energy or a lack of determination to do things. In fact, I think that they sometimes rush into things far too quickly, when a little more thought and careful consideration might be helpful, although I understand why they do so. However, such energy does not last. The idea that a Minister at a middle or junior level within Defra will have the presence and ability to promote causes on behalf of rural areas, particularly disadvantaged rural areas, that the CRC and its chairman have at the moment is arguable at the very least and possibly wishful thinking.

I understand that the Government have an agenda, which I share to quite a considerable degree, of looking hard at quangos, reducing their costs and doing away with them when they are not doing a useful job or where what they do can be done more efficiently or democratically. I do not disagree with that fundamental wish in any way whatever, but the quangos have to be looked at one by one.

One specific question that I asked, to which I did not get an answer, was whether the State of the countryside report, as a basic piece of essential impartial, independent research, will continue in future even if within Defra. I hope that the Minister might write to us with an answer to that.

I would also like much more information on exactly how the rural champion across government will work. One of the things that a lot of us on the Liberal Democrat Benches have learnt in the past few months is how busy Ministers are and how much of their time is taken up with activities, some of which are clearly extremely vital and some of which I wonder why they are bothering with. I wonder why they do not just say no and get on with doing something useful. It is absolutely clear that competent, keen Ministers have their time and energies fully occupied by the job that they do. Some will cynically say that such Ministers are just being run by civil servants, but I do not think that that is true of good Ministers. Nevertheless, Ministers are very busy people. To have the job of co-ordinating rural policies across government is a pretty big job. The noble Lord, Lord Knight, can tell us how he got on trying to do that kind of thing when he was recently a rural Minister.

The other fundamental question to which I do not think that I have an answer is this: what does the CRC do at present that will not be done in future? The noble Lord, Lord Knight, set out clearly what the CRC does now. What we would like to know is which of those tasks will not be done in future, by Defra or by anybody else. If £4.5 million is to be saved—as the Minister quite rightly said, that is not a small sum, even in these days—what jobs are not going to be done because that money is not being spent? The noble Lord, Lord Henley, said, “I think that its time has come”. It is probably inevitable that its time has come, no matter how much we debate it in Committee and at later stages, but it is important that we understand who is going to do what in future. I do not think that we understand that yet.

Some of the quangos—the arm’s-length bodies, or whatever they are called—that are being done away with in the long lists in this Bill will not be missed in future. In five or 10 years’ time, we will look back at the list and ask ourselves, “What an earth were they? What did they do?”. Such quangos will not be missed and we will wonder why we argued about them, but some of the quangos will be missed, including, I suspect, the CRC. Life goes round in circles, as we know, and some of those quangos will have to be reinvented in future. It is far better either that we get it right now and do not drive the bulldozer through those that are necessary or, if the organisational arrangements are to change, that we understand at least that robust structures will be set up that will deliver the same kind of thing.

Finally, the Minister said that he did not believe that the CRC could stand up to the Treasury better than a rural advocate within Defra. That may be true in some respects, but the real difference is that the rural advocate within Defra will operate within government and behind the closed doors of government. Some of what he is doing will come out, because we will have debates in Parliament, reports will be produced and leaks will appear in newspapers. By and large, however, that process will take place within government, whereas what the CRC and other similar bodies can do is to take it all out into the public domain so that the research is published. The proposals are public proposals and, as Members of Parliament and your Lordships' House, we can use that information to call Ministers to account, to take part in debates and to take part in legislation. It is much more difficult to prise information from within the department. That is a fundamental difference, which the Government have not got quite right in a number of these issues.

It is customary on these occasions to ask the Minister to write to us and to give us answers to the questions that have been asked that have not been answered. I hope that he will do that after this debate. I will certainly collate the questions that have been asked from all parts of the House, write them down and hope to get more thorough answers from the Government and from the civil servants in Defra and everybody else involved before we come back to Report. We may have to come back to this issue on Report, but in the mean time I beg leave to withdraw the amendment.

Amendment 28 withdrawn.

21:00

Amendment 29

Moved by

[Lord Grantchester]

29: Schedule 1, page 16, line 21, leave out “Committee on Agricultural Valuation (the body established under section 92 of the Agricultural Holdings Act 1986).”

[Lord Grantchester]

I shall speak also to Amendments 35, 36, 38 and 48, which are grouped with this one. Amendment 29 is in my name and that of the noble Baroness, Lady Quin, who apologises to the House that she cannot be present today. I declare my interest as a farmer in Cheshire and I apologise to the House for it having slipped my mind to mention this interest on the previous amendment.

The public bodies within the government department of Defra are what we are discussing today. Some, as the previous amendment showed, go to the heart of the Government’s strategic vision for the countryside. I concur that we may well need to look at those issues later as this legislation goes through the House.

One could probably describe the bodies that I shall refer to in relation to this batch of amendments as not of strategic importance; this is more of a tidying-up exercise. Nevertheless, it is important to bring them to the attention of the House and to ask the Minister to try to clarify what he thinks will be the work of the department, how it will be structured and how the activities undertaken by these bodies will be done within the Government, either by independent experts or within his own department as advisory committees.

Amendment 29 concerns the Committee on Agricultural Valuation. As the Minister said, it is recognised on all sides of the House that the deficit that has been created is consequential on the banking situation, and all sides of the House have proposals to tackle the deficit. We on this side were looking at that committee as a key one to tidy up and abolish in this period. It has not sat for over 10 years and, when it did so, it was largely made up of members of the Central Association of Agricultural Valuers, which has been instrumental in providing advice to Defra and indeed does so now as part of the Tenancy Reform Industry Group, which has been carrying on the work of that committee to great advantage. I understand that the group is looking at draft replacement statutory instruments to be brought in on the end of tenancy valuations, concerning such erudite matters as residual manurial values—before all eyes mist over in a glaze of appreciation—and the volatility of fertiliser prices that make this job so important to the nation.

Amendment 35 is on environment protection advisory committees. On these, we understand that the aim is to establish more flexible non-statutory engagement arrangements at a more local level. The Environment Agency must be able to engage more actively locally with society, the public and business. Effective stakeholder engagement and partnerships are key to successful delivery on the ground. With these amendments, we are seeking to engage the Minister to clarify the successor arrangements that will be put in place. We understand and agree that the design of the detail of this new approach is an important next step. The Environment Agency will be working closely with the chairs and members of the current committees to develop thinking on how best to maximise future local community engagement and to ensure smooth transition with partnerships and local stakeholders. Can the Minister tell us what stage these discussions have reached and clarify that, as this Bill passes through its stages in this House and is enacted, these new arrangements will be programmed to come into being in parallel with these committees being wound up?

Amendment 36 concerns Food from Britain and is a tidying-up exercise, as the body has already been administratively wound down. However, once again, it would be instrumental and helpful to be told what headway the successor arrangements are making with the activity that was carried out by Food from Britain. Looking to my interests in the farming industry, I know that that body has been very important in the past in promoting food from Britain both within this country and overseas. It would be helpful to understand how the successor bodies are being taken forward.

Amendment 48 concerns regional and local fisheries advisory committees. Will the Minister advise the House on the successor arrangements in that regard? I beg to move.

[Lord Clark of Windermere]

My Lords, I rise to speak to Amendment 38, which concerns the Home Grown Timber Advisory Committee. I do so in the same spirit as my noble friend on the Front Bench in that I seek to ascertain whether the Government have the right processes in place to take over any jobs that this body may have undertaken. It would be foolish of me to oppose the abolition of this committee, as we stopped it meeting under my watch as chair of the Forestry Commission. I remember it well because we reviewed all our advisory committees and considered that there was no real justification for the Home Grown Timber Advisory Committee. According to the Minister’s Answer to a Parliamentary Question, it has not met since September 2005 and fell into abeyance in June 2006 when the members’ terms of office expired. In the second part of the Parliamentary Question, I asked what the cost of the body was. The Minister replied that it had cost £625 since November 2005, which is about £125 a year. I suspect that it does not cost that much and that most of that money was incurred in winding up the body in the latter part of 2005 and in 2006, so in essence it is a no-cost body. That is an important point.

I spent this afternoon looking at the Second Reading of the Forestry Bill on 5 August 1919—I was able to do so in view of the delays incurred when another matter was being discussed in the House—which set up the Forestry Commission. It is interesting how much wise debate took place when the Forestry Commission was being established. One thing that was debated at great length was whether Scotland should have its own, separate Forestry Commission. That has not changed. Almost 80 years later devolution took place to a certain extent and great powers were given back to Scotland and to Wales, as well as to England, to run their part of the forestry estate. Flexibility was also built into that legislation, which was then carried forward into the subsequent Acts affecting forestry. There was no Home Grown Timber Advisory Committee; it was simply a central advisory committee. I have never been quite sure why the Government are so intent on abolishing it.

I come back to my other point about the big society, which seems to be the Government’s underlying philosophy. This committee was a radical proposal for the time, in 1919. A very radical and progressive Liberal Prime Minister, Lloyd George, was trying—

[Lord Henley]

In a coalition Government.

[Lord Clark of Windermere]

Perhaps the coalitions in those days were a bit more radical than the current one. But we will let that lie.

That advisory committee was a link in the new concept of state forestry—forestry belonging to the citizens—being challenged by and running side by side with the private forest interest. The Act said that between six and eight members of the advisory committee would be appointed after consultations with forest owners—who I suggest were not exactly supporters of the Labour Party or the Opposition—and that six to eight would come from the timber merchants and allied trades. It was a genuine attempt to try to draw in expertise and to be aware of the interests not so much of those who were involved in state forestry but of those who had great knowledge of the industry. It certainly served the state forest service very well, helped to build up the Forestry Commission and also helped private forestry. That is one reason why, even today, a large body in private forestry wishes to retain the state forest service. However, we will come back to that in later amendments.

I am simply suggesting that this is perhaps a little more than tokenism. Perhaps it is just tidying up—I concede that straight away—but if the committee does not cost anything, why abolish it? Interestingly, the Home Grown Timber Advisory Committee was not set up until 1939, when there was the threat of war and the need for timber. It was established to try to ensure that that need was met. It resonates today that the first edict that it set out, facing the demands of war—it sounds obvious now—was that one should go first for the mature timber, then for the semi-mature timber, and, lastly, for the timber which should be used only in dire emergency. It classified the various parts of the country as to where the main felling should take place. It is relevant today that the two areas that the committee singled out for more or less immediate felling, because the trees were mature, were the New Forest and the Forest of Dean. I was interested that the Business Secretary in the other place, Dr Cable, who I think has a cottage in the New Forest, said recently that the New Forest certainly would not be privatised. I know also that the Forest of Dean is of great concern to my noble friend Lady Royall. We should bear in mind that forestry is a long-term game. It is many years since the end of the war, and those trees that were replanted just after it are now coming to maturity.

I will make a further point about tokenism. When the 1919 Bill had its Second Reading in this House, much of the discussion was about devolution. The term was not used then, but that was what the discussion was about. One of my early tasks at the Forestry Commission was to devise a system of governance that allowed us to have a devolved forestry enterprise, yet at the same time keep a GB entity. We did not have a sufficient critical mass of timber in the three separate countries to sustain a viable body. We had a lot of difficulty with this until we discovered that, just as there was a central advisory committee, it was possible under the original Act to establish three national advisory committees. By reviving these committees that were there in statute, we were able to form a system of governance that has withstood almost a decade and, depending on this Bill, will probably stand the test of time for a while longer. My overall point is that if you have a system of governance with a certain amount of flexibility, it will allow you to deal with contingencies that are unexpected at the time, but which occur in long-term businesses.

I will make two or three further points. The reason why the Forestry Commission and the Home Grown Timber Advisory Committee were established was that in 1919, after the war, only 4 per cent of the land in Britain was covered by trees. That figure was almost the lowest in Europe. Over the past 91 years, it has increased to 12 per cent. One may not think that is a huge rise. However, bearing in mind the long-term nature of forestry, it is true that Britain is one of the few countries in the world—if not the only country—that has reafforested. It is quite remarkable, and is recognised by bodies such as the United Nations and by countries such as China that are trying to move into the reafforestation process. Bodies such as the advisory committees have been very helpful to the Forestry Commission in developing that expertise.

My next point concerns the flip side of this, which is timber. We still use a massive amount of timber, even in this world of plastic and synthetics. The Parliamentary Secretary to the Board of Agriculture in 1919 told noble Lords of the day in this House that Britain imported 92 per cent of the timber that it used. The situation has got better—but not a lot. We now import in the region of 85 per cent of the timber supply of this country. This is an important reason why we need advisory committees. We are trying to establish timber and wood-using industries in this country. These are often very labour-intensive. When these companies are considering establishing themselves in the UK, their first question is: can we guarantee a sufficient supply of timber? They almost always come to the Forestry Commission—often through its advisory committees—and say, “Will you guarantee us that supply of 30 or 40 per cent?”.

I cite as an example the quite large wood-using power station that was built on Teesside. People would not have gone ahead with that if there had not been a sufficient supply of timber from the state forest to guarantee a critical mass. One might ask, “Why just the state forest?”. The answer is simply that the elasticity of supply and demand very much applies. Timber prices go up and down. When they fall, any private owner thinks, “I am not going to put my timber on the market. I’ll withhold it and, when the prices rise, I’ll put it on the market then”. I accept immediately that that makes sense to the forest owner. However, it does not make sense to the timber and wood user, whether it is someone making pallets, chipboard, paper or whatever. Therefore, we need that critical supply. Is the Minister confident that without advisory committees—we should remember that this is only an advisory committee—there will be sufficient advice for government?

My final point relates to one that I made earlier and it concerns the amount of forest cover. Again, when I was at the Forestry Commission, we decided to look at carbon sequestration and the question of meeting our carbon demands. I start with a couple of statistics which I have used in this House before but which I think are worth repeating. Twenty per cent of the world’s greenhouse gas emissions are due to deafforestation, and that is equal to the total emissions from the world’s transport industries. Reafforestation is a win-win situation and, because we have reafforested our country to a certain extent and are acknowledged as having done so, we believe that we have a role to play. However, that role is effective only if we have advisory committees.

In order to challenge ourselves on that premise, we established an eminent advisory committee to look at the issue under the chairmanship of Professor Reed. The committee was composed of foresters, climatologists and scientists. We basically came up with the recommendation that a great deal of carbon capture was involved in afforestation. The committee came up with the second statistic that I shall cite to your Lordships. A 4 per cent increase in tree cover in this country would allow us to capture 10 per cent of our carbon emissions. It is something that the previous Government committed to do and I hope that this Government will pursue it. However, without advisory committees, it would not have been possible to come to that conclusion.

I simply ask the Government to bear these points in mind. Instead of abolishing the Home Grown Timber Advisory Committee, which I view as tokenism, why not leave it as an advisory committee and it can be used for some unforeseen contingent problem that may occur in the future?

[The Earl of Selborne]

My Lords, I defer to no one in my admiration for the noble Lord, Lord Clark, for his distinguished period as chairman of the Forestry Commission. He has made a very powerful case for the role that forestry plays, whether in the public or the private sector. However, the question for the Committee today is whether the Home Grown Timber Advisory Committee will contribute to carbon sequestration and whether it will add to the contribution that forestry makes in this country. A moment’s thought suggests that a committee that has not met for quite a long time is perhaps past its sell-by date.

Having said that, I do not want to denigrate in any way the contribution that forestry makes to land management and to meeting some of our essential needs. It is very important that the forestry estate be increased. Whether the Home Grown Timber Advisory Committee has a role to play, I rather doubt. Looking at this group of amendments, we recognise also that the Committee on Agricultural Valuation, as the noble Lord, Lord Grantchester, reminded us, has not met for over 10 years. I think that we can assume that that is a committee that has also met its sell-by date.

I speak, very briefly, to draw attention to Food From Britain. I have enormous admiration for the work of my late friend Lord Walker, who created Food From Britain when he was Minister of Agriculture at a time when he was appalled by agriculture’s inability to react to the markets. We had been used to the socialist concept of marketing boards. The farmers—I have to declare an interest, as a farmer and an apple grower—were lamentably incapable of reacting to the needs of supermarkets as those were evolving and to the demands of the market. He pointed out that, unless we had an organisation within Government—within the Ministry of Agriculture, as it was then—that could relate the farmers’ priorities adequately and make farmers more aware of the realities of the market, we would lose out to our competitors. That was very successful.

I am sorry that my noble friend Lady O’Cathain is not in her place because I remember vividly that she was one of the five advisers that Peter Walker—as he was then—appointed. While recognising that all good organisations have to recognise the realities of time, I would not wish this provision, which will consign Food From Britain to history, to go without record. I am personally enormously grateful for the contribution that it made.

[Lord Henley]

I shall respond to one particularly lengthy speech from my fellow Cumbrian, the noble Lord, Lord Clark of Windermere, who spoke at some length, allegedly about the Home Grown Timber Advisory Committee, although most of his remarks related to debates that we will have later on the Forestry Commission. Those debates will, fortunately, not be tonight and I will respond to those remarks on that occasion.

With these amendments, those noble Lords who can remember their Monty Python were dealing with dead parrots. Amendment 29, in the name of the noble Lord, Lord Grantchester, relates to the Committee on Agricultural Valuation, which, as he said, has not met for something like 10 years. From a sedentary position I said, on two or three occasions, “19 years”. Is there any purpose in keeping such a body going? It has withered on the vine; it is a dead parrot.

Moving on to Food From Britain, as I think others have said, FFB ceased its activities in 2009 following a decision by the previous Administration to reduce its grant in aid—one of those rare occasions on which the previous Government did something to reduce expenditure. It is another dead parrot.

Coming to the Home Grown Timber Advisory Committee, we will address during later debates the matters relating to the Forestry Commission that the noble Lord, Lord Clark, regaled us with at some length, but he was kind enough to remind us that, under his chairmanship of the Forestry Commission, that body last met in, I think he said, September 2005. Yet again, it is another dead parrot, which I do not think it is necessary to keep going. The noble Lord said that abolishing the advisory committee is not going to save any money and he carefully quoted from, I think, my Written Answer that it had cost something like £625 in total since 2005. He reckoned, quite rightly, that most of that money was probably in the earlier years—there were very little savings. However, I do not think that we should keep bodies going merely because they are costing nothing. If they are not doing anything, why not wind them up? This is a very useful tidying-up operation.

21:30

[Lord Clark of Windermere]

I just want to make myself absolutely clear. The Home Grown Timber Advisory Committee was not set up until 1939. The original Act did not include such a body, but it did include an advisory committee that could be used for different purposes. My point is: if it is not costing any money, is it not useful to have in your armoury an advisory committee that can change its interest to face the problem that you may have to deal with? That is the thrust of what I am arguing.

[Lord Henley]

I see things differently from the noble Lord. If it is not doing anything, if it has not met since 2005, if it is what I have described in Monty Python terms as a dead parrot, why do we not get rid of it? We do not need to have it in our armoury. Should we need such a thing again, we can set up an appropriate panel as necessary. It is not necessary to keep it going as the noble Lord wishes.

We have dealt with quite a few dead parrots. I am sure that the noble Lord, Lord Grantchester, would accept that they are dead, dead and very dead, particularly the one that has not sat since 2005.

I now turn to the two remaining bodies: the environment protection advisory committees and the regional and local fisheries advisory committees. They are statutory committees that advise the Environment Agency. The Government's aim in proposing the abolition of those committees in Schedule 1 is not to remove that advisory function. Indeed, both committees have provided valuable advice to the agency, and it will continue to need that advice. However, having two sets of committees on a regional, statutory basis creates a degree of inflexibility and inefficiency that is now proving unduly restrictive.

Defra now wishes the Environment Agency to establish more flexible non-statutory arrangements that will enable better local engagement of all interested parties at the catchment level, including in delivery, together with a more integrated approach between environmental protection, conservation and fisheries. Such a structure will have the flexibility to evolve as needed, without the constraints of a prescriptive statutory remit at the regional level, and will better address local priorities while working with partners and communities to deliver improved local engagement. That will enable civil society to take the lead where appropriate, rather than continue the current focus on advising the Environment Agency.

I hope that noble Lords will accept that. I appreciate that those two bodies are slightly different from the earlier ones, but I hope that the noble Lord will accept my basic premise that certainly three out of the five are very, very dead parrots indeed. I therefore hope that he will feel that he can withdraw his amendment.

[Lord Grantchester]

I thank the Minister for that clarification. On this side of the House, we will not be tempted to enter into his script of re-enacting Monty Python and claim that the parrot is only half dead. We will agree to withdraw the amendment.

Amendment 29 withdrawn.

Amendment 30

Moved by

[Lord Borrie]

30: Schedule 1, page 16, line 23, leave out “Competition Service.”

[Lord Borrie]

My Lords, the Competition Service, to which the amendment applies, is a very small cog in the wheel of competition policy, which this Government, the previous Government and most Governments over many years have regarded as a vital part of policy for the British economy. Competition is good for the economy. I question the Government's reasoning for listing the Competition Service among the bodies that should be abolished under Schedule 1.

It was created under the Enterprise Act 2002 as an executive non-departmental public body to fund and provide support services for the Competition Appeal Tribunal, the top body in court terms, which hears appeals on matters relating to competition. The Competition Service’s work is dedicated entirely to the Competition Appeal Tribunal. I do not know whether it has been officially announced, and the Minister will no doubt tell me if I am wrong, but I understand that the Government have in mind that in future the Competition Appeal Tribunal, which will no longer have this dedicated service of the Competition Service to assist it, will be supported and serviced by the general Tribunals Service, which was not in existence in 2007, and therefore the Government could not then make it available for the Competition Appeal Tribunal.

The function of the Competition Appeal Tribunal, as I have indicated, is as an appeal body from the Competition Commission, and it is obvious to everyone concerned that its independent judicial role must be backed up by an independent administrative service. That is so at present. The Competition Appeal Tribunal gets an independent service and, as I understand it, is very satisfied with the service it receives from this body that the Government wish to abolish. There is no question of this public body, the Competition Service—I revert to the discussion on the previous matter—being a dead parrot, having no function. It has an important and useful administrative function.

It should be said that the Competition Appeal Tribunal has a UK-wide jurisdiction. It covers not just England and Wales, but Scotland too. It hears appeals and judicial reviews on competition matters and other related regulated matters, and it has a High Court judge as president, so it is a high-powered, much-respected body. My understanding is that when competition judges from different parts of the world meet together, this body we have in Britain is regarded as a very efficient and effective judicial body. The small—the Minister will, no doubt, indicate how much it costs and so on—Competition Service, which supports the Competition Appeal Tribunal, is virtually part of it. In effect, the Competition Appeal Tribunal administers itself, so if it is abolished, it would be in a much weaker position and would have to go to the more general body, the Tribunals Service, where people would have to be specially trained for the relatively rare cases it received on matters of competition. It would be very different if the Competition Appeal Tribunal was dependent on the large, general Tribunal Services for its support. I think that should be a matter of concern. Any savings from the abolition of the Competition Service seem to me to be most unlikely. It may, indeed, cost more because of the training required for the staff of the general Tribunals Service in order to cope with competition cases.

Moreover—and this is a matter on which I should be grateful for an answer—I understand that the Competition Appeal Tribunal and the Competition Service have UK-wide jurisdiction. I think I said that a little earlier, but what I want to say now is that the Tribunals Service, to which the Government seem to intend this body should go for administrative support, has jurisdiction in England and Wales only, and it is being considered by the Government for merger with the Courts Service, which makes a certain amount of sense. The Courts Service covers England and Wales, and the Tribunals Service is largely England and Wales, but it would not be in this particular instance. I wonder whether it is intended that if the Competition Appeal Tribunal is dealing with, say, a Scottish case, it would be administered differently from when it is dealing with an English case. Certainly, there would be expense, trouble and difficulty in training if it were otherwise. I beg to move.

[Lord Young of Norwood Green]

My Lords, noble Lords will be relieved to hear that I do not propose detaining us for long, because my noble friend Lord Borrie has put the kernel of the case. I just want to make a couple of points. We are told that a working group is currently examining the case for abolishing this body. Early in 2011, it will report to the Secretary of State for Justice and the Secretary of State for Business with its recommendations. No final decisions will be taken before then. Apparently, the working group consists of BIS, TS, HMT and Competition Service officials. It is examining all the relevant aspects of a possible transfer and abolition, including financial, legal, judicial and policy. It aims to produce a report for Ministers that sets out the pros and cons of such an abolition and transfer. If that consultation is taking place, it seems to us rather strange that this should appear in Schedule 1. Would it not be preferable if we awaited the outcome of the consultation process? All the other points in relation to this have been made. Given the time, I await eagerly the Minister’s response.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, I thank the noble Lord, Lord Borrie, for his amendment because it means that we have to look carefully at what we have said and what we are doing. With his background in the Office of Fair Trading and my experience of working with him over the years, I know how valuable his opinion is in these matters. He has rightly said that the Competition Appeal Tribunal was created by the Enterprise Act 2002. It hears appeals on competition and regulated industry cases and is independent from other competition bodies, such as the OFT and the Competition Commission, because it hears appeals against their decisions. Rightly, he explained how special it is.

The Competition Service was created by the Enterprise Act to provide administrative and other support to the Competition Appeal Tribunal. It has no function other than being a service for the Competition Appeal Tribunal. The Government believe that the way in which this function is being provided is not making the most effective use of resources and that there may be cost savings and increased efficiencies if the functions of the Competition Service were transferred to the Tribunals Service, to which the noble Lord referred.

The consequence of this would be transferring the Competition Appeal Tribunal, which would then receive its support from the Tribunals Service. The Competition Service would then be abolished. However, no final decision has been taken. As the noble Lord, Lord Young, said, a working group has been set up to test the case for making this proposed abolition and transfer. It is a decision that we will not take lightly. The working group will report to Ministers in BIS and the Minister of Justice in early 2011. They will then decide whether to proceed with the abolition and the transfer. In carrying out this review, the Government are clear that there should be no adverse impact on the operation of the Competition Appeal Tribunal, which would operate as an independent tribunal under the aegis of the Tribunals Service. I hope that the noble Lord, Lord Borrie, finds that reassuring.

21:45

The objective of putting the Competition Service into Schedule 1 is therefore to allow the Government to increase efficiency and effectiveness, and to provide better value for money in a way that ensures that the Competition Appeal Tribunal is supported pending the outcome of the review process that I have described. That covers the question put by the noble Lord, Lord Young, on why the Competition Service is included in Schedule 1 rather than Schedule 7 when the decision to abolish it has not yet been taken. I repeat that we are currently testing the case for abolishing the service, so we have included it in Schedule 1 to facilitate the proposed abolition. However, the decision to abolish is subject to further discussion and final advice to Ministers in 2011.

On the Scottish case and the question of devolution put by the noble Lord, Lord Borrie, this issue is being looked at by the working group. Other tribunals are in a similar position and do not have any problems, but I emphasise to the noble Lord that this is being looked at by the group. I expect the review to reach its conclusions before the Bill reaches the statute book and I assure both noble Lords, Lord Borrie and Lord Young, that the comments they have made in the debate will be taken into account in coming to a final decision. I should also say that Edward Davey, the Minister responsible for competition issues in another place, met only last night with Sir Gerald Barling, the president of the Competition Appeal Tribunal, to listen to his concerns. Should the working group conclude that if there is not a convincing case for abolition and transfer, it just will not happen.

Given that and any other conversations that the noble Lord, Lord Borrie or Lord Young, may wish to hold with me between now and Report and by the time the report comes in, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Borrie]

My Lords, I am most grateful to my noble friend Lord Young of Norwood Green for speaking. He made a significant point in saying that if the Government have not yet entirely made up their mind about abolition, this body should never have been included in Schedule 1. I do not think, with respect to the noble Baroness, that she answered that satisfactorily because it could have been included in Schedule 7 if there is such a degree of uncertainty. But I add that I am delighted that there is uncertainty because it shows that the Government are willing to think again about the matter. Further, the fact that they are having discussions with Sir Gerald Barling, the president of the tribunal, is a good thing because, as I indicated earlier, the tribunal and the Competition Service are really one and the same body. I am sure that no one, neither the Government nor anyone else, would want that body to be less effective and efficient than it appears to be according to its worldwide reputation at the moment.

I am also delighted to learn from the noble Baroness that the matter of UK-wide jurisdiction is being considered by the working group. All I can say in a more general way, if I may be permitted, is that it is a great pity that working groups, whether on this particular public body or on others, were not set up before we rushed into a long list of bodies to be abolished in Schedule 1. I thank the noble Baroness and of course I shall withdraw my amendment.

Amendment 30 withdrawn.

House resumed.

Royal Assent

Tuesday 21st December 2010 Lords Chamber

21:49

The following Acts were given Royal Assent:

Consolidated Fund Act,

Identity Documents Act,

Loans to Ireland Act.

House adjourned at 9.49 pm.