House of Lords

Tuesday 8th March 2011 Lords Chamber

Tuesday, 8 March 2011.

14:30

Prayers—read by the Lord Bishop of Leicester.

Introduction: Lord Glasman

Tuesday 8th March 2011 Lords Chamber

14:38

Maurice Mark Glasman Esquire, having been created Baron Glasman, of Stoke Newington and Stamford Hill in the London Borough of Hackney, was introduced and took the oath, supported by Lord Falconer of Thoroton and Baroness Healy of Primrose Hill, and signed an undertaking to abide by the Code of Conduct.

Introduction: The Lord Bishop of St Edmundsbury and Ipswich

Tuesday 8th March 2011 Lords Chamber

14:43

William Nigel, Lord Bishop of St Edmundsbury and Ipswich, was introduced and took the oath, supported by the Bishop of Chester and the Bishop of Leicester, and signed an undertaking to abide by the Code of Conduct.

Big Society: Women’s Organisations

Tuesday 8th March 2011 Lords Chamber

Question

14:48

Asked By

[Baroness Gould of Potternewton]

To ask Her Majesty’s Government how local and regional women’s organisations will be involved in the Big Society agenda.

[Baroness Warsi]

My Lords, it is a pleasure to answer this Question on the day of the centenary celebrations of International Women’s Day. I am sure that the House will join me in paying tribute to the millions of women around the world who continue to struggle and campaign for equality, dignity and respect. The big society is about a volunteering, social action, philanthropic approach to life, but it is also about the opening up of public services to local control and the devolution of power from Whitehall to local communities. This offers women’s groups and organisations an excellent opportunity to get more involved in their local communities and to have a say.

[Baroness Gould of Potternewton]

My Lords, I thank the Minister for that reply, but it seems a little contradictory that, at the same time as the Government are setting up this rather costly structure of community organisers, experienced and committed women’s organisations such as Refuge and outreach organisations are being closed down through lack of funding. Would it not be much more sensible to use what we already have, train them up and get them to be part of the big society?

[Baroness Warsi]

My Lords, I have said on many occasions that it is a shame that we are having to deliver the big society against the backdrop of the financial circumstances that we find ourselves in. In relation to commitment to women’s organisations, I know that the noble Baroness has given a huge amount of her life to chairing the Women’s National Commission, which has done much to be proud of, including tackling violence against women, increasing involvement in public life and promoting gender equality both in Britain and internationally. The consultation published yesterday by my colleague in another place, Lynne Featherstone, is specifically geared towards engaging women in a way that is reliant not only on umbrella bodies but also across a range of organisations and expertise. I am sure that the noble Baroness will agree that that is a step forward.

[Baroness Trumpington]

My Lords, is the Minister aware, as I am, that women have great difficulty in taking their proper place in society? Is she also aware that I consider this Chamber a funny old place? Last Thursday I stood in here surrounded by 45 women and began my speech with, “My Lords”.

[Baroness Warsi]

My Lords—

[Noble Lords]

Oh!

[Baroness Warsi]

The noble Baroness makes an interesting point. I always revert to her for her experience and I am sure that she will be able to teach me much about the constitutional background to the term, “My Lords”.

[Baroness Afshar]

My Lords, I declare an interest both as an outgoing member of the Women’s National Commission and as the honorary president of the Muslim Women’s Network. In the context of current Islamophobia, who is going to help networks such as the Muslim Women’s Network that were supported by the commission and need resources in order to campaign against daily experiences of harassment and hardship?

[Baroness Warsi]

My Lords, the noble Baroness will be aware that I have recently raised the issue of anti-Muslim hatred and Islamophobia. This is a growing issue and it is right that women’s organisations such as the Muslim Women’s Network should play a key role in taking forward the concerns that I have raised. The Government are looking at the issue of Islamophobia in much detail and we will bring forward a paper to look at concerns that have been raised. I assure the noble Baroness that we will be consulting many groups, including the Muslim Women’s Network.

[Baroness Barker]

My Lords, in the light of the abolition of the Audit Commission and comprehensive area assessments, what mechanisms will be available to assess the impact of funding cuts on women’s voluntary organisations at local level?

[Baroness Warsi]

My Lords, as I said, the consultation that was announced yesterday by my honourable friend Lynne Featherstone in the other place is all about seeing how we can engage with women’s organisations on the ground that have to deal with the issues that affect women in local communities. There are a number of questions in the consultation document, which, among other things, looks at the equality assessment impact of funding decisions.

[The Lord Bishop of Leicester]

My Lords, can the Minister explain to the House how the dramatic reductions in the staffing of national charities such as the Children’s Society assists the cause of women within the big society, in the light of the deficit reduction programme?

[Baroness Warsi]

My Lords, this is a recurring concern. When we are having to make difficult funding decisions —I say again that this is because of the economic circumstances that this Government inherited from the last one—it is important that local authorities make those decisions in a way that preserves those much needed front-line services. I can also say that the transition fund, which was brought in specifically to support voluntary and charitable organisations in these difficult times, has already made grants, of which two are specifically to women’s groups: the Domestic Violence Integrated Response Project in Leicester, which received £103,000, and the Incest and Sexual Abuse Survivors network in Newark in Nottinghamshire, which received £26,800. I hope that noble Lords will see that the Government, even in these very difficult times, are prioritising the needs of women.

[Baroness Pitkeathley]

My Lords, the Minister will know that the transition fund that she has just mentioned was already oversubscribed almost before it was announced. Is there any possibility that the Cabinet Office will make more money available to women’s groups and others in the voluntary sector that do such important work on the themes that she has described?

[Baroness Warsi]

My Lords, we are in discussions at all times with local authorities to ask them to prioritise the areas that the noble Baroness has mentioned. However, she will also be aware that the big society bank, which among other things will be able to fund the projects to which she referred, will be on stream soon.

[Baroness Farrington of Ribbleton]

Would the Minister care to comment on the fact that local authorities of all political persuasions are getting increasingly irritated by Ministers washing their hands of responsibility for cuts that the local authorities are being forced to make? Before the noble Baroness refers to the economic climate, let me say that the Government had two opportunities: first, to ensure that local authorities did not suffer more savage cuts than central government departments; and, secondly, to ensure the phasing that has been advised by local authorities of all political persuasions.

[Baroness Warsi]

My Lords, this Government firmly believe that the devolution of power to local authorities, including the responsibility to make decisions on funding—more so because of the taking away of ring-fencing, which this Government have implemented—is the right way forward. However, I think that it is right for us to accept that, when councils such as Labour-run Manchester City Council feel that, in these difficult economic circumstances, they can still advertise to recruit a “Twitter tsar”, that is money not well spent.

Credit Unions

Tuesday 8th March 2011 Lords Chamber

Question

14:57

Asked By

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what plans they have to support the development of credit unions in the United Kingdom.

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

My Lords, the Government are bringing forward legislative reforms to help modernise the way in which credit unions do business and to remove barriers to their development and growth. We have recently announced funding of up to £73 million for the expansion of credit union services. The Government also intend to bring Northern Ireland credit unions under FSA regulation to give their members access to the Financial Services Compensation Scheme and the Financial Ombudsman Service.

[Lord Kennedy of Southwark]

I thank the Minister for his response. Does he agree with me that, today of all days, the Government must pledge themselves to urgent action to deal with illegal loan sharks, who in some cases revert to physical and sexual violence against women as they bully and threaten families to pay interest rates of hundreds of thousands of per cent? Will he agree to meet a delegation from the Association of British Credit Unions to discuss a link-up between credit unions and the Post Office, as a way of providing cheap, affordable credit to all?

[Lord Sassoon]

My Lords, I am certainly happy to confirm that credit unions play an important part in the Government’s priority to see diversity and choice in financial services and to support financial inclusion, given that in areas of the highest economic and social deprivation credit unions are able to achieve the most impact. The credit union movement is growing significantly, with government support and following the support of the previous Government. We will certainly work to do whatever is reasonable to continue with that growth of the credit union movement.

[Lord Newby]

My Lords, does the Minister agree that a key role of credit unions is to provide basic bank accounts for people who are currently unbanked? Could he therefore confirm whether the £73 million that the Government are making available to credit unions will be used in part to set up a shared banking platform for credit unions that would be available in all post offices?

[Lord Sassoon]

My Lords, I am happy to confirm to my noble friend that Ministers expect the post office network to play a central role in enabling credit unions to reach more families. Part of the funding, which I have already mentioned, is going towards projects related to that end—projects that are in the capable hands of my noble friend Lord Freud. He is running with that project; it is in safe hands and the Post Office is central to it.

[The Lord Bishop of Liverpool]

My Lords, is the Minister aware of the commission into personal debt that was chaired by the noble Lord, Lord Griffiths of Fforestfach? I declare an interest as a member of that commission. Will the Minister consider the proposals and recommendations of the commission, in particular, the proposal to set up a community finance trust that would assist community finance projects such as credit unions?

[Lord Sassoon]

My Lords, I am happy to look at any suggestions for furthering the development of credit unions and similar savings channels. I am grateful to the right reverend Prelate for drawing my attention to those recommendations.

[Lord Elystan-Morgan]

My Lords, while I welcome most warmly the initiative announced on behalf of the Government, does the Minister agree that a great deal of suffering and injustice could be alleviated and avoided by giving judges in our civil courts the right to strike down claims that arise from loan contracts with unconscionably harsh conditions, particularly extortionate interest rates?

[Lord Sassoon]

My Lords, it is very much at the forefront of the Government’s thinking in this area to make sure that all appropriate steps and options are available so that those at the more deprived end of the economic and social spectrum are not ripped off by loan sharks or whoever. The credit unions that we are talking about have a central role to play in that.

[Lord Touhig]

My Lords, when the Government end the social fund maternity grant for the birth of the second child in April, many poorer families will be tempted to turn to loan sharks to borrow money. Will the Government help these families by promoting credit unions as a better way to save and borrow? In asking that question I declare an interest as a member and president of the Islwyn Community Credit Union.

[Lord Sassoon]

My Lords, that is exactly what we are doing by bringing forward the various reforms that I have described, which will help to modernise and drive forward the credit union movement—a movement that now numbers some 760,000 members in Great Britain. In Northern Ireland, where the movement has a different history, it has some 400,000 members. We wish to see the total in the United Kingdom growing, which is why the measures that we are bringing forward will promote this area of financial activity.

[Lord Phillips of Sudbury]

My Lords, is it not the case that the Governor of the Bank of England, Mervyn King, less than a week ago drew attention to the exploitation by the clearing banks of what he called unsuspecting and unsophisticated depositors through their wholly unethical manipulation of interest rates? Should the strictures that the noble Minister has placed on loan sharks not be somewhat directed at the clearing banks as well?

[Lord Sassoon]

My Lords, we are talking about credit unions this afternoon. I have explained what an important and growing role they have to play in the diversity and choice of our financial services sector in the UK. That is what we should work to promote.

Women: Assistance in Pregnancy

Tuesday 8th March 2011 Lords Chamber

Question

15:03

Asked By

[Baroness Gale]

To ask Her Majesty’s Government what measures they are taking to assist pregnant women who no longer qualify for a maternity grant and a health in pregnancy grant.

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

My Lords, addressing the deficit presents difficult choices. We are focusing resources on those in greatest need. Pregnant women on low incomes will benefit from the increases to the child element of child tax credit above indexation by £180 in 2011-12 and £110 in 2012-13. All eligible women will still receive Healthy Start vouchers and will still qualify for a £500 maternity grant for their first child. We are also extending budgeting loans to include maternity needs.

[Baroness Gale]

I thank the Minister for his reply. What help will be given to women having a second child given that the grant will end in April and the new Social Fund amendments to allow them to claim for maternity items will not come into force until eight to 12 months’ time, so there will be a gap? What are those women supposed to do? The link has now been broken with the health in pregnancy grant, which ended in January, under which midwives and doctors gave advice to pregnant women on healthy pregnancy. How will the Minister ensure that those mothers receive good advice to make sure that they have a healthy pregnancy?

[Lord Freud]

There are two areas of financial help. The first is the budgeting loans. As I said yesterday, we are encouraging people to look at budgeting loans in the widest possible way. The second area is community care grants. Again, we expect that many people in the most difficult circumstances will be able to take advantage of those. The noble Baroness’s second question concerned what we were doing to help pregnant women. The Department of Health and the Department for Children, Schools and Families are developing a project, Preparing for Pregnancy, Birth and Beyond, which is looking at a renewed model of universal antenatal education and preparation for parenthood.

[The Earl of Listowel]

My Lords, is the Minister aware that young women in care are two and a half times more likely to become pregnant than their peers and that a quarter of young women leaving care are either pregnant or have a child already? Will he consider asking his colleagues who talk with local authorities whether all best practice in the area of support for such young women is collated and being shared as it should be?

[Lord Freud]

My Lords, I share the noble Earl’s great concern for children in care and take his point about the relatively much higher rate of pregnancy. I shall look closely at what we can do in that area.

[Lord German]

My Lords, there will be a moment of time between the outgoing regulations and the incoming regulations in respect of budgeting loans to which the Minister has just referred. Given that most people will be looking for low-cost, low-interest loans to buy such things as a buggy, a pram or a cot, what advice is the Minister giving to his department on exercising flexibility in this regard to ensure that the current regulations may be as widely accessible as possible so that people are not disadvantaged during the short period between the old and the new regulations?

[Lord Freud]

I thank my noble friend for reinforcing this important point. There will be a gap, probably of around nine months, before we can formally change the budgeting loans. We are making the very firm point—I made that firm point formally in the Chamber yesterday—that we are encouraging people to use the scheme to the utmost extent that they can and to apply it to slightly wider items than those around budgeting for the baby.

[Lord McKenzie of Luton]

My Lords, the Minister has confirmed again, as he did in the debate yesterday, that families will eventually be able to access budgeting loans. However, is he aware that just last week the Minister for Pensions announced a further tightening of the screw on the availability of crisis loans from the Social Fund on the basis that this would enable the trickle of budgeting loans to continue? Is this not making the very poor pay for the poor?

[Lord Freud]

My Lords, the trouble was that the crisis loans were being used in a non-crisis context to buy ordinary items of household expenditure, so we were in danger of running out of funding for the whole system because of the way it was being used. Our concern with controlling the crisis loan situation was to make sure that funding was left available for budgeting loans for exactly this kind of thing.

[Lord Northbourne]

Is the noble Lord aware that there is a large and growing body of research which shows that the quality of parenting and parental care during the weeks before birth and the months after birth is absolutely crucial to the way in which the child’s brain develops? Surely any kind of penny-pinching at that stage of the child’s development is a false economy.

[Lord Freud]

My Lords, we have to look at a holistic system of support for people who are the most disadvantaged in this country. Having bits and pieces of things that do not work is the wrong way to go. This was an example of support that was directed at the wrong point in maternity. If you want to really help in terms of what women eat, it is better to do it in the first trimester, not in the last. The structure of what we are doing with the universal credit involves a system that puts in coherent support for the most disadvantaged right the way through and, by definition, will catch people at the beginning of pregnancy, not at the end.

[Lord McAvoy]

My Lords, the Minister has admitted rushing through these regulations, totally against time conventions, in order to deprive new mothers of claiming after 11 April. Does he realise that this conjures up a picture of Tory and Liberal hard-faced men sitting around a table in Westminster plotting to deprive the poorest people of some financial aid? Is he proud of that?

[Lord Freud]

My Lords, I am not proud of a previous Government who threw bits and pieces of money around like an out-of-control farmyard muckspreader. We are making coherent provision for the most disadvantaged in a way that you could not.

[Noble Lords]

Oh!

Insurance: Gender Discrimination

Tuesday 8th March 2011 Lords Chamber

Question

15:11

Asked By

[Lord Gordon of Strathblane]

To ask Her Majesty’s Government whether they intervened in the case before the European Court of Justice on gender discrimination in insurance policies and annuities.

[Baroness Verma]

My Lords, the UK Government, along with a number of other member states, the European Council and the Commission made oral and written representations to the European Court of Justice during legal proceedings. The representations argued that, rather than preventing true equality, the article in question ensured that different cases could be treated differently, thereby ensuring true equality. However, the court has ruled that the practice of using gender as a factor in the calculation of premiums and benefits must cease, with effect from 21 December 2012.

[Lord Gordon of Strathblane]

I thank the Minister for that reply, and I sense that she was as unhappy with it as I and, I suspect, most of the House will be. The problem is that article 5.2 of the gender directive, as the Minister indicated, allowed an opt-out where there was clear, up-to-date statistical evidence that gender was a major risk factor in insurance. That evidence still exists. It is a fact that women tend to live longer than men, yet an insurer is required by the court to ignore that in computing either insurance premiums or annuity rates. Does the Minister agree that it is likely that all of us will be worse off, because a sensible and prudent insurer must provide for the worst-case scenario and cannot predict whether the uptake will be mainly male or female? What steps are the Government taking to remedy this situation, bearing in mind, as she said, that we are not alone? Indeed, the European Commission itself intervened in the case.

[Baroness Verma]

My Lords, the noble Lord has referred to a number of very difficult decisions that had to be taken. We are disappointed by the ruling. The previous Government made written representations and we made oral representations, but the judges unfortunately decided that by 21 December 2012 it will be illegal to discriminate on the basis of gender. It is clearly undesirable to treat people unfairly because of their sex. However, financial services providers will be allowed a period in which to make the changes. We are encouraged that people have supported our drive for equality. Unfortunately, things such as this make our task much more difficult. I am pleased to say that the insurance industry has adopted a can-do attitude to this ruling, and I am sure that we will do our very best as a Government to assist it.

[Lord Thomas of Gresford]

My Lords, what steps have the Government taken to discuss this judgment with the insurance industry in order to prevent profiteering? Why has my stepdaughter's motor premium gone up now, when there will be no difference until December 2012?

[Baroness Verma]

My noble friend raises another very important issue. We cannot dictate to insurance companies how they should make judgments on how their premiums should be costed. However, we are working closely with insurance companies and the financial services sector to ensure that they do not roll out unfair premiums on the back of this ruling.

[Lord Davies of Stamford]

My Lords, it is a pretty remarkable day when an insurance market is instructed to operate contrary to actuarial principles. Are there not two things that could flow from this? Either everybody will be forced to buy their insurance within the EU by some means or other, which would surely be contrary to both the spirit and the letter of our WTO commitments; or those categories of people disadvantaged under the new ruling will simply buy their annuities or motor cover offshore, outside the EU, in the United States, Canada, Bermuda, the Channel Islands or wherever. In those circumstances, a substantial industry will develop offshore to supply those important segments of the EU market at the expense of the EU economy.

[Baroness Verma]

My Lords, the noble Lord raises a question that I posed to civil servants. The response I received was that any insurance sold in the EU, whether or not it is from outside the EU, will be applicable under these rules.

[Baroness Howe of Idlicote]

My Lords, I have some sympathy with the predicament of the noble Baroness, but perhaps she would tell the House whether the Government, if they had the choice, would support the payment of equal annuities to men and women who have earned an equal financial entitlement to them, rather than continuing with the existing system in which a woman gets considerably less just because her average life expectancy is a few months more.

[Baroness Verma]

My Lords, the noble Baroness raises very important questions. However, the responses to these questions are for the industry to make.

[Lord Peston]

My Lords—

[Lord Pearson of Rannoch]

My Lords—

[Lord Cormack]

My Lords, does not this demonstrate that on this occasion the Court behaved as a court of injustice?

[Baroness Verma]

My noble friend raises a good point, but I am afraid that I have to go by the ruling, as we all do as members of the EU.

[Lord Pearson of Rannoch]

My Lords—

[Lord Lloyd of Berwick]

My Lords—

[Lord Peston]

It is about time a Labour speaker was allowed to join in, unless they have changed the rules of the House. First, I will break a lifetime's habit and congratulate the Minister on the excellence of her answers. Is she absolutely certain that there is nothing Her Majesty's Government can do to move back on this matter? It is immensely damaging to the workings of the insurance market, which will be immensely damaging for our country in particular. Can nothing be done to get this reversed?

[Baroness Verma]

My Lords, the Government will continue, with other member states, to press to see what can be done, but I am afraid that there is no appeals process under the ruling.

Business of the House

Tuesday 8th March 2011 Lords Chamber

Motion on Standing Orders

15:19

Moved by

[Lord Strathclyde]

That Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with on Wednesday 9 March to allow the Consolidated Fund (Appropriation) (No. 2) Bill to be taken through its remaining stages that day.

Motion agreed.

Draft Detention of Terrorist Suspects (Temporary Extension) Bills

Tuesday 8th March 2011 Lords Chamber

Motion to Appoint Committee

15:19

Moved by

[Lord Strathclyde]

That it is expedient that a joint committee of Lords and Commons be appointed to consider and report on the draft Detention of Terrorist Suspects (Temporary Extension) Bills presented to both Houses on 11 February (Cm 8018) and that the committee should report on the draft Bills by 9 June.

Motion agreed, and a message was sent to the Commons.

Jobseeker’s Allowance (Work Experience) (Amendment) Regulations 2011

Tuesday 8th March 2011 Lords Chamber

Motion to Approve

15:19

Moved By

[Lord Freud]

That the draft regulations laid before the House on 26 January be approved.

Relevant document: 15th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 2 March.

Motion agreed.

Postal Services Bill

Tuesday 8th March 2011 Lords Chamber

Committee (1st Day)

Relevant document: 9th Report from the Delegated Powers Committee.

15:20

Clause 1 : Removal of restrictions on ownership of Royal Mail Holdings plc etc

Amendment 1

Moved by

[Lord Young of Norwood Green]

1: Clause 1, page 1, line 7, at end insert “but they shall come into force again if any sale is not completed by 31 December 2012.”

[Lord Young of Norwood Green]

My Lords, the Government propose to sell off 100 per cent of Royal Mail, which may be regarded as one of our oldest public services, dating back to the 17th century. It will be the sale of one of our greatest and most cherished national institutions. It has a noble history in the development of the culture, social cohesion and economic strength of this nation, and today it still provides a vital public service. Richard Hooper has described the sale as a momentous step by any standard, as I am sure the whole House appreciates, whether or not they support the move.

We and fellow Peers of several and no party affiliations have submitted amendments which seek to ensure that, if the sale of Royal Mail goes ahead, it meets four main objectives: first, that it is done in a timely fashion that does not present the prospect of an endless cloud of doubt hanging over the future of the company; secondly, that proper measures are taken to ensure that value for money is gained for the taxpayer and that the company is not sold at too low a price; thirdly, that there is greater clarity and greater accountability than the Bill currently provides; and, fourthly, that a privatised Royal Mail is put on a secure footing and is not subject to the ravages of asset-stripping and disintegration or doomed to failure because of the circumstances that the Bill creates.

The amendment to make provision for a sunset clause aims to meet the first of those objectives, ensuring that any sale takes place in a timely fashion without a long-lasting aura of uncertainty besetting the company. Sunset clauses are well recognised. Indeed, Members, regardless of party affiliation, have argued for them in the past in various pieces of legislation, as I well remember. In fact, the Minister for Culture, Communications and Creative Industries, Ed Vaizey, stated in another place in June 2009:

“I also welcome the fact that there is a sunset clause. As other hon. Members have pointed out, sunset clauses are, in principle, a very good thing to include in any legislation”.—[Official Report, Commons, Holocaust (Stolen Art) Restitution Public Bill Committee, 10/06/09; col. 13.]

If the Government had provided for a sunset clause in the Bill, there would be no need to debate this amendment. As they have not, perhaps a few examples of sunset clauses and their use would help the Committee. In 2009, interestingly, the Conservatives in Scotland argued that sunset clauses should be added to all Scottish legislation. I am sure that Conservative Members of this House will support that position, given that it was stated in their party’s manifesto in 2007. The debt relief Act 2010 has a sunset clause which expires on 7 June 2011, which neither of the coalition parties voted against. In the Budget of June last year, regulatory sunset clauses were announced—a well tried and recognised tool for Parliament and, indeed, the Government to use.

How would the amendment assist in the progress of this Bill? The answer is fairly straightforward: it would add clarity. The Labour Party’s position on 100 per cent privatisation of Royal Mail has been made clear. However, if the Government’s proposals to privatise Royal Mail completely were approved by this House and the other place, the amendment would put a time limit on the Government’s ability to sell off Royal Mail. Setting a relevant date would add certainty for the business and, indeed, for the workforce—certainty that is currently lacking in the Bill.

As it stands, the Bill empowers not only this Government but future Governments to sell off Royal Mail. That process could go on and on. The Minister in the other place has made it clear that he would not intend to sell Royal Mail however low the price. That is a sound position and one with which we would agree. The Bill permits a period of uncertainty to continue not just into next year but possibly into the year after and even longer. That would be an intolerable position for Royal Mail, its management and its workforce. It would place the chief executive of the company in a perilous and uncertain position, which perhaps could be compared with that of a modern-day Premier League football manager at certain clubs, where team continuity has little value. It would damage the morale among the workforce too.

If the amendment were passed, it would not, of course, rule out a future disposal of some or all of the company; but it would require the Government to return to the House if they failed to dispose of Royal Mail by 31 December 2012. We deliberately selected a date which we felt is achievable and viable, rather than a date that could lead to this being characterised as a wrecking amendment.

As we proceed we shall put to the Minister other proposals that outline other areas where we would want them to come back to the House in order to do certain things. This amendment would not prevent the Government selling Royal Mail at another point in the future provided that the sunset clause is repealed. However, the Government have given no indication of a timetable for the sell-off. These amendments—one of which I hope the Government will accept—would enable this Government or a future Government to sell off Royal Mail and also ensure that the matter is not drawn out over many years. Without a sunset clause, the business, the employees, the partners in the Post Office, not to mention its business customers and the public, would be left in a strange limbo-land with no conclusion in sight. That would create massive uncertainty for the business. That could not be seen as an attraction to potential employees and customers, who could be driven away from the business by such massive uncertainty.

An unrestricted time limit could also act as a mechanism to drive down the price of the business. We are told that letter volumes will continue to fall and that the business can modernise only with private investment—so how would a long delay be helpful? The Minister needs to address that issue. Market conditions would likely get worse, and a period of uncertainty would surely make it very difficult to succeed in modernisation or to make proper investment decisions. Can the Minister tell us what impact an extended period of uncertainty would have on the value of the business, and therefore on the value for taxpayers? What will be the impact on employees of the falling value of the share participation scheme, if the legislation is approved?

As for the counterargument that a sunset clause would lead the Government to go for a fire sale of Royal Mail to get ahead of the time limit, the Government have already said that they will not sell Royal Mail at “any price”. As I said, that is a sound position. It would show very little faith in the current Government to think that they would put making an expedient sale before gaining best value for money.

This amendment is reasonable and necessary. It is called holding the Government to account. The legislation timetable is in the Government’s control. If the Government have the will, we will encourage and support the Minister—as we expect her to support our amendments. We will support her in bringing matters to the House and dealing with them as quickly as possible.

The Bill currently provides for the creation of a situation which is similar to the perpetual “sales” at retail outlets. As we all know, there is no rush to get to Currys, Dixons or wherever to buy new electrical goods because the “sale” does not really exist—it is perpetual. A perpetual sale drives down the price. Nothing in the Bill seems to prevent Royal Mail being sold off piecemeal over an extended period, as I said. Even the Minister must agree that that cannot be an acceptable solution. If the Government cannot complete a sale by one of the dates stipulated in the amendments, my honourable friends and I think it right and proper for the sunset clause to be enacted.

The amendments would impose on the Government a requirement to focus on their ambitions—which, as I said, are contrary to mine and those of my honourable friends. The alternative of death by a thousand cuts would wreck the Royal Mail and the improvements made recently, which even Richard Hooper could not envisage happening in 2008, at the time of his first report. The second Hooper report showed that good progress can be made with public ownership of the Royal Mail. It is vital that that is not unpicked and allowed to fall into disarray. The Bill, however, creates the opportunity for that kind of uncertainty. If the Minister and the Government are so sure that selling it off is a good thing, they should tell the Committee about the dangers of an extended period of sale. Indeed, it could be said that an extended sale period for Royal Mail might lead to a Dutch auction of sorts, which may suit some potential buyers more than others.

15:30

Through these and other amendments, the Committee will see that the Opposition have the best interests of Royal Mail and the post office network in this country at heart. We would not want anything done to them that puts in jeopardy the very things that they stand for—through the universal service obligation, the inter-business agreement, access points and the social benefit provided to us by post offices.

I bring the House's attention to another analogy. I am sure that many Members of this House have been involved in selling a house, and we can apply the logic of that scenario to the sale of Royal Mail. Anything that is up for sale for a long time and does not sell attracts a buyer only when the price is reduced. Is that what the Minister wants? If not, she should support the amendment; otherwise, that will damage the business. If the Government cannot bring Royal Mail to market and secure a deal by the stipulated date in the amendment, a stable future for it must be delivered by removing their ability to sell off the business.

The Government will be able to provide proof to those who may doubt the Minister's ability to secure a good, strong and long-lasting future for Royal Mail in the private sector by striking while the iron is hot and driving up the interest by putting a closing date on the sale.

It is interesting that, during her evidence to the Committee in another place, Ms Moya Greene, the chief executive of Royal Mail, in response to a question asked by the honourable Member for Telford, was bullish about the possibility of a sale. She said:

“Should we wait? I think we should sell the company and get it the capital that it needs as soon as we can. I hope that that will be some time in 2012.—[Official Report, Commons, Postal Services Public Bill Committee, 9/11/10; c. 12.]

We are therefore asking the Government to show their support for the aims and aspirations of Ms Greene, the chief executive of Royal Mail. She believes that a sale can take place during 2012. Inserting an end date into the legislation would focus the minds of all involved to either bring forward the conclusion or admit failure. The Government can show their support for Ms Greene by inserting a date of no later than 31 December 2012.

Mr Brydon, the chairman of Royal Mail Group, told the Committee in another place that he believed it would be easier to attract investment after the sale to carry on future modernisation. Indeed, it could be taken from his evidence that a 2012 sale was imperative to the future of the business, because he felt that the negotiation period to get us to the current modernisation programme was too extensive. He said:

“You have to be flexible and quick. A system that takes a year and a half to agree to get capital to do things just does not work”.—[Official Report, Commons, Postal Services Public Bill Committee, 9/11/10; c. 15.]

As I understand it, Mr Brydon is also advocating a sale, in line with Ms Greene's aspirations, because a failure to attract capital will be significantly detrimental to the business.

It is not only the Minister's best intentions that the amendment has at heart, but those of Ms Greene and Mr Brydon. I am asking the Government, through the amendment, whether they actually support the aspirations of Royal Mail's management and, in particular, whether they agree with Mr Brydon that we need to be quick and flexible. The Minister may claim that there is flexibility in the Bill, but the clause's omission of a date jeopardises the quickness advocated by Mr Brydon.

What will the Minister's position be on continued investment if no sale occurs before the end of the current modernisation period? Will the Government commit to further investment of capital or not? In their evidence to which I referred, Mr Brydon and Ms Greene recognised the need for continued investment to modernise the business. Ms Greene commented that a further £2 billion will be needed. If a further investment of £2 billion is required for the business and the sale has not been concluded on time, will the Minister commit to providing that funding stream? I somehow doubt it. Will the Minister comment on what difficulties could be encountered in a future sale process if Royal Mail has been starved of cash for a period after the end of the current modernisation programme?

Do the Government believe that the insertion of a date in the legislation would also have an impact on our post office network? If, as the Minister pointed out, the Government see the post office network as the natural partner for a privatised Royal Mail, does she see any difficulty from the network's point of view as a result of a completion date for the sale of Royal Mail? Can she confirm that the current inter-business agreement will expire over the next couple of years?

Where will delay leave the sub-postmasters and sub-postmistresses of this country, many of whom are already in a perilous state? If there are such difficulties for the Post Office, how will they be eradicated by legislation without a clear and firm date? I ask the Government to accept the insertion of an appropriate date by which the sale should be completed, because to do anything else would be damaging to Royal Mail. Royal Mail management seems to believe that a 2012 date is acceptable. Why does the Minister not believe that? I am sure that she will reflect on the strength of the presentation I have put before her. I await her response with significant interest. I urge the House to support the amendment. I beg to move.

[Lord Hunt of Wirral]

My Lords, what a remarkable performance. I enjoyed the 14-minute speech by the noble Lord, Lord Young of Norwood Green, for a number of reasons, but first, I join him in paying tribute to Richard Hooper and say what a remarkable job he has done for Royal Mail. We were all thrilled when he was present at the Oscar ceremony when his son Tom won the best director award, one of the many awards for “The King’s Speech”.

The noble Lord made a remarkable presentation arguing in favour of a sunset clause when, thanks to the noble Lord when he was in Government, we are still awaiting sunrise. The great period of massive uncertainty that he described is wholly as a result of the previous Government’s inability to take the previous Bill through the other place after we had spent many hours improving it. I also heard him say that we must not have the Royal Mail engaging in some strange limbo-land. All I will say is that that is exactly what we had. The great thing now is that we have a Government determined to realise the ambitions of all those of us who care deeply about the Royal Mail and make it a great success. I share the noble Lord’s four principles, but I say to him that when he makes the first principle “timely”, I wish that he might have expressed some regret about the fact that the previous Bill did not proceed any further when it should have done. Of course he is right to say that we have to look for value for money, clarity and a secure footing. The great thing I have learnt from that remarkable lady, Moya Greene, is that she is determined to make Royal Mail the most respected institution in the UK. That is something she achieved with Canada Post, and I am a great admirer. Please, whatever the arguments for or against sunset clauses, let us have sunrise, let us get on with it.

[Lord Hoyle]

I was not going to rise, but I am going to rise and there may be other occasions when I rise when we hear the eloquence of the noble Lord opposite. I notice that he did not reply to the argument being put forward here about the uncertainty that would rest with Royal Mail unless there is a conclusion date. The question that was being asked was, “Are they going to give it away?”. I know that the Minister is a more reasonable person, and I expect that she will deal with the arguments rather than going round the periphery and talking about what might or might not have been. The pair of us had a little discussion. We did not always agree, although on other subjects in the past we have agreed, so we have something in common, but not on this. I hope the noble Lord will not rise again unless he is going to deal with the arguments in a constructive way and say why we should not have it. The reason is that we cannot allow uncertainty to continue. That will happen. How can management plan ahead if it has to keep asking itself: When will we be selling it off? How will we sell it off? Where are we going to go? No planning can take place in such circumstances. It not only affects the Royal Mail; it affects the Post Office network as well. We need to know what the Government are thinking. They have said, and I completely agree with them, that it will not be a giveaway. They are trying to get the right price with the right company that will serve the interest. I, of course, am totally against that, as is known. The point is that we are where we are in discussing this Bill, and it is reasonable to put a limit on this. After all, we are only at the beginning of 2011 and we are talking about the end of 2012. What is wrong with that? I do hope that we get a more constructive reply from the Minister.

[Baroness Kramer]

My Lords, I should, I suppose, confess to something of a wicked past. Back when I was a banker in the United States, part of my work was advising companies that were making purchases and selling off subsidiaries. If I was advising a potential buyer of Royal Mail, I would be hoping very much that this amendment would pass, because, frankly, nothing would give more leverage to a potential purchaser than what in effect is being described here as a drop-dead date.

We have seen government in the past sell assets at far below their appropriate value. I was very involved from the other side when I was on the board of Transport for London and the Government insisted on the Tube public/private partnership. TfL set itself internal deadlines. I do not believe that they were externally set, although I would have to check that. The ability to negotiate in effect collapsed in the final days as those deadlines approached and were very much exploited by the private partners and the banks on the other side, so I beg this House not to fall back into that trap.

The noble Lord discussed uncertainty, but what greater uncertainty could there be than the knowledge that the Government might find themselves coming back to this House at the time of a sunset clause for leave to continue with a sales programme. That maximises uncertainty for Royal Mail and for the other parts of the group that will, we hope, go on to their new future.

[Lord Jones of Birmingham]

My Lords, I concur with the noble Baroness. If this amendment was passed, there would be no activity whatever until about November 2012. As noble Lords will know, I spend a lot of my time in the corporate private sector, and I can tell the House that a lot of companies would just wait. There would then be a lot of activity in December 2012, and the Government would find themselves selling this at a price that none of us would want.

[Lord Skelmersdale]

My Lords, I must be the only person in this Committee, certainly in the House, who regrets not having spoken on this Bill at Second Reading. I did not do so because I was pursuing my day job as a director of a mail-order company. There is a temptation on these occasions to give a Second Reading speech, but I have no intention whatever of doing that. On this amendment, however, I agree with both my noble friend and the noble Lord, Lord Jones, that putting a final date into this legislation would make things even more difficult for the Post Office management. I have been advised that the point that I really want to make about Clause 1, and would have made on Clause 1 stand part, is deprecated by Standing Orders. Therefore, I am sorry to disappoint the noble Lord, Lord Hoyle, but I will speak no more about my reactions to this amendment.

I bring to the House’s attention Clause 1(2), which is gratuitous. The nuts and bolts of this Bill are contained in Clauses 1 and 4. Clause 1(1) removes from the statute book Sections 65 and 67 of the Postal Services Act 2000, and Clause 4 replaces them with a new formulation. My contention is that it would be far better drafting of this legislation if those two clauses were combined and we therefore left out Clause 1(2).

Over many years, I have been interested in the size and length of the statute book. Anything we can do to reduce the number of words or even the number of pages we should certainly do. I do not expect an answer on this conundrum that I have set myself from the Minister today. She has already instructed officials to give me some sort of answer, which I do not find particularly convincing. I would be happy to have discussions with her and them between now and the next stage of the Bill.

15:45

[Lord Borrie]

Like the noble Lord, Lord Skelmersdale, I have been interested to read Clause 1(2). It seems to be inelegantly worded, confusing and surplus to requirements. Why is it inelegant? Does one normally have the words “But see” another clause? It seems more like a text message or an e-mail rather than a provision in a Bill. Why is it confusing? Its position is confusing because essentially the first three clauses deal with Royal Mail. Clause 4 deals with the Post Office network. The Government properly have a different attitude from one to the other and so, I am sure, does my own Front Bench. Subsequent clauses deal with the network and there is no need for this cross-reference inelegantly expressed in Clause 1(2). I share the noble Lord’s view about that.

[Viscount Eccles]

My Lords, I, too, apologise for not having been present at Second Reading, but I support my noble friend Lady Kramer and the noble Lord, Lord Jones, on the Cross Benches. This amendment may be based on a misunderstanding. If there is to be a successful deal to move Royal Mail on and to bring in private capital, that deal will need to be set up by the board of Royal Mail and the chief executive of Royal Mail. It will not be set up by the Secretary of State, who I hope will stay right out of any negotiations that might take place to achieve that deal. The noble Lord, Lord Young of Norwood Green, seemed to expect the Secretary of State to play an active role, which is completely mistaken.

[Lord Christopher]

I was not going to speak on this amendment, but I have been provoked. I hope that the Minister will answer directly the question just asked from behind her on whether the Government will have some say on the sale or whether it will be left exclusively to the board of Royal Mail. I do not think that it should. One issue has not been mentioned in this discussion. While there may be much anxiety about the hope that by Christmas 2012 we can all go back to where we were, underlying this is another issue—on this matter I hope that the noble Baroness will have something to say. As I said at Second Reading, it is easier to say to whom you would not wish to sell Royal Mail than it is to say to whom you would. There is such a lack of clarity on this that the Government need to give reassurance. Would we, for example, be prepared to see it sold to a hedge fund? Would we be prepared to see it sold to a private equity fund? Would we be prepared to see it sold to a sovereign wealth fund? If so, would that be to all, to none or to some?

I have one final point on this issue. Would we sell it to any buyer with a reputation for asset stripping? I hope to come to this point on a later amendment, but I believe that unless we get the price right, there are assets in Royal Mail which could easily be sold at a very significant profit.

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

My Lords, I wonder whether it would be okay with your Lordships if I deal with the question put by my noble friend Lord Skelmersdale and supported by the noble Lord, Lord Borrie, before moving on to the amendment. Clause 1(2) ensures that the two major issues under Part 1, the ownership of Royal Mail and the ownership of Post Office Ltd, are addressed in the very first clause. We believe that, given their importance, this is appropriate. The purpose of subsection (2) is to assist the reader in understanding the full implications of the Bill. It is intended to highlight the relevant provisions that appear further on in the Bill and of which the reader might not yet be aware. Without subsection (2), the clause may read as lifting the restrictions on ownership of Post Office Ltd with no indication that new restrictions have been put in place further on in the Bill.

While the majority of readers will look at the full Bill and draw up relevant connections, we believe it is important to consider how to make the Bill accessible to those who may be unfamiliar with legislative text or to those with an interest in one particular aspect of the policy. It is these readers who may look at what they believe are the relevant provisions and then fail to see the other relevant provisions further on. Provisions such as Clause 1(2) are designed to assist readers by making explicit any interdependencies between clauses. Furthermore, subsection (2) ensures that the two major issues in Part 1—ownership of Royal Mail and ownership of Post Office Ltd—are addressed in the very first clause, thus reflecting their importance. I hope that this explanation addresses the concerns of noble Lords, but I am sure that they will come back for further clarification if they feel that we have not been able to cover the point at this stage.

[Lord Lea of Crondall]

As someone who is not directly involved in this, perhaps I may make an observation. It is plain common sense for the noble Baroness to say, in the light of the remarks made by the noble Lord, Lord Skelmersdale, and my noble friend Lord Borrie, that it is no big deal, but this is not language appropriate to an Act of Parliament. Quite simply, will she agree to think about some answers on the back of a postcard before we move on to the next stage of the Bill?

[Lord Skelmersdale]

My Lords, I would not put it quite as rudely or as crudely as the noble Lord opposite has just done. However, I did suggest in my few words that the draftsmen ought to look at combining Clause 1(1) with Clause 4 and then putting that at the very beginning of the Bill. I noted that my noble friend did not respond to the suggestion, but as I said, I do not expect her to do so now. I am sure she has many more important things to do, such as responding to the amendment moved by the noble Lord, Lord Young of Norwood Green, which I am sure she will do in her usual adequate fashion. All I am asking for is future discussions, and from what my noble friend has just said, I am sure that she would find that acceptable.

[Baroness Wilcox]

I thank my noble friend and of course I will be happy to speak to him afterwards, at any time that is convenient to him. I should now turn to the amendment tabled by the noble Lord, Lord Young, otherwise we may be here for much longer than we anticipated.

I believe that Clause 1 exposes the real difference between the previous Government’s approach as set out in their 2009 Bill to the fundamental problems facing Royal Mail, and the approach that this Government are taking to secure the company’s future. Setting aside the ownership issue for a moment, I think it is clear to everyone that the powers in the Bill to tackle the pension deficit and regulation are either the same as or very similar to those provided in the 2009 Bill. This is perhaps not surprising as we have based our Bill on the same evidence, that of the Hooper report, as the previous Government. However, we have not simply produced a cut-and-paste Bill. As we will discuss during this Committee stage, we have included new regulatory measures to safeguard the universal postal service and introduced fresh ideas on employee ownership and the potential of a mutual ownership structure for the post office network.

All sides of the House agreed with the analysis contained in Richard Hooper’s 2008 report. We all agreed that the current framework was untenable and that urgent action needed to be taken if we were to secure the universal postal service for the benefit of all postal service users, both business and social.

Richard Hooper’s recent update showed that the situation is now much worse than it was in 2008. In fact, he described the Royal Mail’s current position as being “even more precarious”. The noble Lord, Lord Young, asked about the effect on the value of Royal Mail of prolonged uncertainty. I would say to him that it was the failure of the previous Government’s Bill that has caused prolonged uncertainty for Royal Mail and all other postal operators. That is what is putting the universal postal service at risk.

The Bill addresses those problems and creates a framework that will help to secure the future of Royal Mail and maintain the universal postal service. Part 1 sets out provisions relating to the restructuring of the Royal Mail group of companies. The Government committed in the coalition agreement to injecting private sector capital into Royal Mail, including opportunities for employee ownership. We also said that we would retain Post Office Ltd in public ownership, on which the noble Lord, Lord Young, raised a number of points. We will have plenty of opportunity to discuss the Post Office when we debate those clauses dealing specifically with it.

I turn to Amendment 1. The disposal of shares in Royal Mail will be a commercial transaction. The Government’s objective is to ensure that the transaction represents value for money for the taxpayer and secures the future of Royal Mail. In doing so, our overriding objective is to secure the future of the universal postal service. I cannot understand, therefore, why the noble Lords have brought forward this amendment, the substance of which was fully debated in the other place.

By setting a deadline for a disposal, all the commercial advantage would be given to the buyer if we were selling the business by auction. The buyer would know that the Government were up against a deadline, giving him the whip hand in any negotiation, and all sorts of demands could be made as the deadline approached. The amendment would not therefore allow the Government to ensure that they could get value for money from a sale and secure the best future owners for Royal Mail; in our view, it would do the opposite. When I was on the opposition Benches, I was very keen on sunset clauses in legislation and I am not opposed to them now—in fact, in most cases I encourage them—but the proposal set out in this amendment is simply not appropriate to the circumstances.

A failing of the previous Government’s policy on Royal Mail was that it tried to do too much at the same time by running the legislative and the sale processes in parallel. We have decided to take a staged approach; our first priority is passing the Postal Services Bill to allow the framework for action. The Government will then bring into force the new regulatory regime. Only then will we start the process to introduce private sector investment, including the employee share scheme and the pension solution.

The noble Lord, Lord Young, asked what the Government would do if they could not sell Royal Mail before the end of the current modernisation plan. Through this Bill, the Government are taking the preparatory steps necessary to enable Royal Mail to attract the private capital that it needs. As noble Lords will appreciate, the timing will depend on when we can best secure our twin objectives of the best outcome for Royal Mail and the best outcome for the taxpayer. The Government are focused on ensuring that Royal Mail can attract private investment, not on putting new obstacles in its way.

An integral aspect of the Bill is that it allows flexibility, because that is what any sensible commercial shareholder would retain for themselves. Such flexibility enables the Government to decide when to conduct a disposal of shares and how to do it, either through a trade sale or a flotation. I agree with my noble friend Lord Hunt, who said, as did the noble Lord, Lord Jones, that we want no artificial deadlines. Although I do not agree with everything that the noble Lord, Lord Hoyle, said, I do agree that we want the right price and the right company, and for that we must wait our time until the right moment. I thank my noble friends Lady Kramer and Lord Eccles for their support.

I say to the noble Lord, Lord Christopher, that I hope we will be flexible, get a really good deal for the taxpayer and make sure, as always, that we support the universal service. The proposal in the amendment is, I fear, impractical and would risk the future of the very universal postal service that we are all trying to save. I therefore ask the noble Lord, Lord Young, to withdraw his amendment.

16:00

[Lord Young of Norwood Green]

My Lords, I have obviously reflected on the range of answers and it is no surprise that I do not agree with all the analyses. What is past is past but perhaps there will be a new dawn, to paraphrase the noble Lord, Lord Hunt.

I agree with my noble friend Lord Hoyle that the amendment is justified. I was confused by the contribution of the noble Baroness, Lady Kramer. I was not sure whether or not she was supporting the amendment but, at the end, I gathered not because she tended to concur with the noble Lord, Lord Jones, that, apparently, no one is going to do anything at all and they are going to wait until 20 December, or whenever it is. I find that unlikely.

As regards the contributions of the noble Lord, Lord Skelmersdale, and my noble friend Lord Borrie, I quite like the idea of the Bill being drafted by committee. It would take a long time and I doubt whether it would be any more elegant or inelegant than it is currently. From my experience of dealing with parliamentary draftsmen, it is a painful and tortuous process to sort out what is required or what they tell you is required. I wish the Minister the best of luck in sorting out that particular problem.

I agree with my noble friend Lord Christopher; I am sure the Government will be involved in the sale. The Minister pointed out the possibilities and I cannot conceive of a situation where the Government will hand this over lock, stock and barrel to Royal Mail. She did not answer the question posed by my noble friend Lord Christopher about whether it could be sold to a hedge fund or a sovereign wealth fund and the dangers of asset-strippers.

I made clear at the outset that this is not intended to be a wrecking amendment; that is why it refers to 31 December 2012. As to whether the situation is much worse, it is challenging but, in one respect, it is better because we have an agreement on Royal Mail transformation with the union and modernisation is going ahead, which is a profound step forward. I will not say that mistakes were not made but there is now a good foundation and a good relationship between management and the union, which is fundamentally important to long-term success.

As to the deadline giving buyers the advantage, that depends on whether you believe that everyone will wait until the end. I find that unlikely.

We will obviously reflect on what has been said by the Minister. However, we would ask her to reflect on whether or not there should be any timescale at all in relation to the projected sale. Nevertheless, in the light of the debate, I will withdraw the amendment.

Amendment 1 withdrawn.

Clause 1 agreed.

Amendment 2

Moved by

[Lord Young of Norwood Green]

2: Before Clause 2, insert the following new Clause—
“Royal Mail companies to be publicly owned
(1) Each Royal Mail company must at all times be publicly owned.
(2) Accordingly—
(a) any issue or transfer of shares in a company will have no effect if it would cause a Royal Mail company to cease to be publicly owned, and(b) any issue or transfer of share rights to a person will have no effect if the acquisition by the person of the shares to which the share rights relate would cause a Royal Mail company to cease to be publicly owned.”

[Lord Young of Norwood Green]

Under Clause 1, the Government have made it clear that they propose to sell off 100 per cent, albeit with 10 per cent employee shares, of Royal Mail—which may, as I have already said, be regarded as one our of oldest public services. It is the sale of a great public institution; it has a noble history in the development of the culture, social cohesion and economic strength of the nation and still provides a vital public service.

For 350 years, Royal Mail has been, to all intents and purposes, a public service and is seen as a huge and valuable asset run in the national interest. One should not underestimate the importance of a trusted, secure and relatively efficient means of common communication for our economic and social development as a nation. Indeed, it became a template copied around the world. The penny post introduced by Rowland Hill was arguably as vital to this country’s development as the railway or the electricity grid.

Turning to the modern day, I also pay tribute to Richard Hooper, who described the Royal Mail and the service it provides as part of the UK’s “economic and social glue”, binding communities together. That is an elegant and apposite description. Many noble Lords have praised the work of the Royal Mail and the social value of the country’s 11,900 local post offices. Let us also remember that, despite the fact that we send fewer letters than we used to, in common with people in developed countries around the world, the Royal Mail still delivers some 70 millions letters a day to the 28 million homes and businesses in the United Kingdom.

The 100 per cent sale of one of our greatest and most cherished national institutions is therefore a momentous step by any standard, as I am sure all noble Lords appreciate, whether or not they support this move. We on these Benches will ensure that the Bill receives the line-by-line scrutiny at which this House excels in order to gain greater clarity and provide greater assurance for the future.

It is a pity that the noble Lord, Lord Hunt of Wirral, has disappeared from his vantage point because at Second Reading he remarked that the debate seemed to him a little like Groundhog Day. My noble friend behind me has explored the relative merits and demerits of Groundhog Day and I am not going to go through that again. He said the debate had,

“a remarkably similar feel to it to many others that we have had. Of course, we had the Second Reading of a Postal Services Bill on Tuesday 10 March 2009”.—[Official Report, 16/2/11; col. 734.]

Yet perhaps his mind was wandering back to an earlier era because the history of attempts to privatise the Post Office goes back much further than just two years. The noble Lord was a serving member of the previous Conservative Government as Secretary of State for Wales from 1990 to 1993 and then in a number of positions. He earned a great deal of respect across the political spectrum for the way in which he conducted himself during that time but I must remind the noble Lord and the House that, for a good deal of that period, the privatisation of the Post Office was a burning issue of debate, especially between 1992 and 1995.

On 30 July 1992, the Financial Times reported:

“In a departure from previous policy, Mr Michael Heseltine”—

as he was at that time—

“trade and industry secretary, put privatisation of the Post Office on the political agenda”.

Some 18 months later, on 14 December 1993, the Independent newspaper reported under the headline,

“Post Office in ‘crisis’ over Tory delay”,

that,

“the Government came under a barrage of criticism yesterday over the year-long delay in deciding whether to privatise the Post Office”.

Delay and privatisation has an honourable—or dishonourable—history. There have certainly been a number of attempts to resolve this problem.

On 2 February 1994, the Independent reported that full-scale,

“privatisation of the Post Office is still on the political agenda, Michael Heseltine said last night … after it had been shelved by the Cabinet in the face of opposition from ministerial colleagues”.

There is certainly a sense of déjà vu about that.

On 19 May 1994, a Green Paper on postal reform was at long last published. It proposed 100 per cent privatisation of the Royal Mail with a Stock Exchange flotation to the public and employees, and another option of 51 per cent privatisation of Royal Mail. The Post Office network would be kept under the existing arrangements and the Post Office management supported a 100 per cent sale. However, the records show that that met with considerable opposition from much of the public and Back-Bench Conservative MPs. That is an interesting scenario.

In November 1994, a newspaper reported that:

“Michael Heseltine put a last-ditch compromise to leading Tory backbench rebels”.

It certainly was the last ditch; although he did not die in it, the attempt to privatise certainly did. So there are certainly a few echoes in that report.

There was a further twist in the tale. The Cabinet considered the privatisation plan and decided against it. Some members of that Cabinet at the time are Members of this House today. I feel sure that the noble Lord, Lord Hunt, will remember why they concluded that privatising the Royal Mail was a privatisation too far. Maybe these thoughts were in the noble Lord’s mind when he was experiencing his bout of déjà vu and teasing the Opposition Front Bench today.

I make these remarks not only as a mild riposte to the comments of the noble Lord, Lord Hunt, about the 2009 Bill but to illustrate that the future of Royal Mail and the Post Office network is an important issue that has prompted heated debate for many years. What a shame we cannot rewind—but Hansard will reveal all.

The noble Lord reminded us that all the Front Benches were in favour of the Postal Services Bill 2009. Indeed they were, but I remind noble Lords that the Bill before the House at that time did not propose 100 per cent privatisation of Royal Mail. Indeed, it was remarked at the time that no one was proposing 100 per cent privatisation. The Bill stated explicitly that each Royal Mail company must be publicly owned; that is, they must be in overall public ownership. The previous Bill of 2000, still in force today, permits joint ventures between Royal Mail and private companies. That has been a good thing—for example, in relation to GLS. The 2009 Bill permitted a minority partnership. What neither Bill permitted was 100 per cent privatisation, which the Bill before us proposes. That is the nub of the difference and, I suppose, of this amendment.

Amendment 2 is intended to reinsert the provision of the 2009 Bill that each Royal Mail company must be in overall—I stress “overall”—public ownership. As the noble Lord, Lord Hunt, observed, all the Front Benches at the time and indeed the Liberal Democrats supported that proposition.

Perhaps there was a change of heart at the general election. One might find a clue in the manifestos of the two parties that came together to form the Government. If you search for the privatisation proposals contained in the Postal Services Bill in the Conservative or Liberal Democrat manifestos of 2010, though, I am afraid that you will search in vain. The Liberal Democrat manifesto clearly rejected 100 per cent privatisation of Royal Mail. It pledged to:

“Give both Royal Mail and post offices a long-term future, by separating Post Office Ltd from the Royal Mail and retaining Post Office Ltd in full public ownership. 49 per cent of Royal Mail will be sold to create funds for investment. The ownership of the other 51 per cent will be divided between an employee trust and the government”.

No doubt Liberal Democrat Members will tell us that things have changed fundamentally since they wrote that manifesto, as they have done on a whole range of other issues that I will not refer to today.

Perhaps the Conservative manifesto will be more enlightening. It was enticingly entitled Invitation to Join the Government of Britain. Did we miss something? Was it really an exclusive appeal to Liberal Democrat MPs and Peers? One can scour the contents of the Conservative manifesto from start to finish but there is no mention at all of Post Office privatisation.

During debates in 2009, the noble Lord, Lord Hunt, criticised the previous Secretary of State for introducing a Bill with insufficient consultation, but by comparison this Bill is being pressed through with breathtaking speed. The Government carried out no public consultation on their proposal to privatise 100 per cent of Royal Mail. There was no Green Paper or White Paper. Questioned in another place, the Minister for Postal Affairs did not deny this but seemed unapologetic in the extreme. He said,

“We could, of course, consult again on some other idea. We could consult again and keep consulting. We could never take a decision”.—[Official Report, Commons, 16/11/10; col. 222.]

We are not suggesting that the Government should keep consulting but some consultation might have been of value, given the number of times that I remember receiving criticism when we were in government if there was not enough pre-legislative scrutiny or consultation. Our debates on Royal Mail have been usefully informed by Richard Hooper’s panel producing two reports in May and December 2008, and being asked by the current Government, sitting alone this time, to review his work in 2010.

We all recognise the technological, social and competitive pressures on postal operators in modern times, including new ways of communicating. Last year Royal Mail experienced a drop of 7 per cent in letter volumes. Other operators are taking advantage of liberalisation and what are now regarded as generous terms for access to Royal Mail networks. If I am pleased about nothing else about my ministerial contribution, our prominent pledge that we were going to get regulation right is something that I hope will be achieved.

16:15

Having taken over upstream business faster than expected, Royal Mail’s competitors have already won more than 60 per cent of the upstream pre-sorted bulk mail market by, ironically, delivering their customers’ mail into the Royal Mail system for final delivery. The rate of technological change continues apace, through e-mail, web-based advertising, text messaging, mobile phones and all the other means that we have of communicating with each other. Other developed countries are facing the same issues: the worldwide postal market is expected to decline by 25 per cent to 40 per cent over the next five years. When the problems with the Royal Mail’s pension fund—which had their origin in the 13-year pension holiday to 2001—mounted, there was a consensus that action needed to be taken.

Just over two years ago, in December 2008, Richard Hooper’s report Modernise or Decline ran through the challenging market conditions facing Royal Mail. His team recommended a series of proposals, including dealing with the pension deficit and changes to regulation. He called for two major changes in Royal Mail’s structure: the injection of private capital and, closely related to that, the involvement of private sector management. However, at that time, he rejected full privatisation, which he said,

“would not deliver the access to corporate experience which we believe Royal Mail requires”.

Royal Mail certainly has that corporate experience now, in the shape of Moya Greene. I give my support and approbation not only to her experience but to the way in which she has gone about the task. Hooper’s 2008 report continued:

“Moreover, the company’s poor financial performance and the market uncertainty driven by e-substitution and liberalisation would make it difficult to raise the required capital, if the company were to be listed now. This option would only be appropriate and feasible if modernisation had been completed. Royal Mail’s pension deficit would need to be more manageable, the business would need to have restructured, the company would have plans to expand in the mail market and be capable of paying a dividend”.

Although Royal Mail has made good progress, we know that it still has a long way to go. In short, we believe that partnership is the only approach that can deliver a universal service.

At that time, there was a wide degree of consensus in this House about the nature of the action that needed to be taken. Royal Mail needed to be transformed to become more efficient and competitive, and that transformation would need new management and vastly improved industrial relations—I think that those two factors have already been achieved. There was agreement that regulatory oversight should be by Ofcom, which deals with the wider world of communications, rather than by a regulatory body that is restricted to the postal sector—I am pleased that the Government have also gone in that direction. There was also consensus that access pricing needed to be addressed. Although the Government have not acted on that, we would like to hear much more about access pricing as we proceed to discuss the practicalities of regulation in detail.

Hooper’s 2010 report also identified a need for private sector capital, but it was markedly more confident about the quality of existing management and the capacity for change, given the changes that have already taken place. The 2010 report states:

“The specific need for corporate experience is reduced today”,

and it praises the progress made by Royal Mail management and the CWU in adopting a groundbreaking modernisation agreement. When the Royal Mail CEO, Moya Greene, gave evidence to the Bill committee in another place on 9 November, she said:

“I look at what Royal Mail has been able to do in just two short years, when they finally got access to capital, and it has been amazing. We have been able to consolidate 10 mail centres. We have been able to introduce innovations, such as 47,000 new PDAs”—

those are hand-held postal digital assistants to help with tracking and tracing postal items—

“for all of our letter carriers”.—[Official Report, Commons, Postal Services Bill Committee, 9/11/10; col. 8.]

She said that Royal Mail had been able to introduce 10 new world-class mail sites, which she invited people to come and visit. Indeed, I recommend that noble Lords go and have a look at the centre at Gatwick, which is well worth seeing.

Although Hooper came down 100 per cent in favour of the introduction of private sector capital, he did not seem quite as confident when, on 11 November, he told the committee:

“The important point I want to make is that private sector capital is needed in this business—it is needed urgently, it was needed two years ago and it is needed now. Whether it is a minority or majority shareholding, I would prefer to leave that to the political process”.—[Official Report, Commons, Postal Services Bill, 11/11/10; col. 108.]

Our amendment is fundamentally different, for the reasons that I have already outlined. We believe that 100 per cent privatisation of Royal Mail is a step too far and unnecessary in the current circumstances. I ask the House to support the amendment.

[Lord Cotter]

This amendment is a direct attack on the fundamental principles of the Bill and, indeed, on the necessity of addressing the serious situation of declining turnover and decline in the use of the mail service. The Bill needs to be effective to attract fresh capital and, as has frequently been said, to achieve the spin-off of securing the post office network at the same time. Surely no one can forget—the public certainly cannot—the continuing programme of closures in the post office network over the past few years. That is what the Bill is needed to address. The important part is for the Bill to bring in capital to address not only the issue of the mail service but the matter of the post offices. The input of private-sector capital is essential and the Bill, as it stands, is vital to secure this for the country.

The noble Lord, Lord Young, said that the Bill is being pushed through with breathtaking speed. He also described the attempts over many years to address the concerns about the mail service. Surely he can see that this is not breathtaking speed. Surely he will agree that we cannot afford to lose any more time. We must proceed to get a solution to our need for a universal mail service in this country.

[Lord Skelmersdale]

It strikes me that if you juxtapose the first amendment of the noble Lord, Lord Young of Norwood Green, and this amendment, they are diametrically opposed.

[Baroness Turner of Camden]

I support my noble friend who introduced this amendment. He is quite right: we are talking about a major public institution which—despite what some noble Lords have said—has a great deal of public respect and support. It is always assumed by the present Government that if there is anything wrong you have to privatise. Privatisation is supposed to produce greater efficiency and more investment. That is not always true. I speak as a consumer of several recently privatised services. The first thing that a privatised company does is usually to economise in order to increase the share price for shareholders. That often involves decreasing the number of staff so that when you phone them, instead of talking to a human being, you talk to an automated voice, which says, “If you want this press 1, if you want the other press 2, if you want something else press 3, or hang on to talk to an adviser”. Twenty minutes later, you are still hanging on. That has been my experience of a good many privatised companies. I would not like that to happen to the Royal Mail.

We are talking, as I said, about an organisation that has a lot of public support. I very much hope that the full statement which my noble friend made from the Front Bench will receive intense investigation from the Government, because it is worth considering. This is an important issue and a major one for this Bill.

[Lord Hoyle]

Does my noble friend not press all the right buttons when she addresses the House? I cannot understand why the Government are going down this road. My noble friend Lord Young remarked on the ability of the new chief executive. She comes with a highly successful track record. Why do we not give her an opportunity to develop the Royal Mail, rather than going down the avenue of selling it off to any Tom, Dick or Harry?

The Government have said that they will try to get an adequate price for Royal Mail. That does not seem to me to be a good reason for what they are doing. Agreement has been reached between the unions and the management on the way forward, and they are willing to co-operate. We do not need to go over the past, as the noble Lord who spoke from the Cross Benches has suggested. We know where we are going. The capital is there. The important difference is that the Government have undertaken to underwrite the pension liability which will lift a great burden from the back of the Post Office.

I come back to the point that we have achieved an awful lot. The capital is available and the unions and management are co-operating. Everybody on both sides admits that we have a new chief executive who is very forward looking and will do all that she can to make the Royal Mail a success, so why are the Government kicking away the ground again? They do not appear to have much idea who will make a bid for Royal Mail. We certainly know that, given the recession, they will not get a good price for it. It seems to me that we are going down the wrong avenue. We on this side certainly support the amendment. My noble friend who spoke from the Front Bench made a very intelligent speech in which he outlined why we want the measure to go ahead. I hope that the Government are listening to what we are saying. I would like them to give the new management of Royal Mail the opportunity to carry out the modernisation. If they do so, I see no reason at all why the privatisation should go ahead.

[Lord Lea of Crondall]

My Lords, following on the same theme as my noble friend Lord Hoyle, it is pertinent to point out that the Minister did not accept the importance of the question posed by my noble friend Lord Christopher on the previous amendment. We have had a broad sweep of what a marvellous idea private capital is. However, we have no idea about guarantees relating to asset-stripping or about country of ownership, sovereign funds and all the other items on the long list. Does that not dent the picture that we are expected to believe in, given that the picture could be this one, that one or another? Would it not be more relevant to mention the interests of the British people, as we are here to represent the interests of society as a whole? They are interested in such things as the universal service, obviously, and in not selling off public assets. It is said that a big profit will not be made from selling the Royal Mail to private business. Is it not relevant to remind noble Lords that in the great wave of privatisations in the 1980s, the undervaluation of British Airways, British Gas and British Telecom alone on the first day of trading amounted to more than £2 billion? That will happen again prima facie unless the noble Baroness can say how the Bill will ensure that that will not occur.

16:30

[Baroness Wilcox]

Amendment 2 seeks to keep Royal Mail in public ownership and reflects the position set out in the previous Government’s Postal Services Bill, which this House considered in 2009, although it never completed its passage through the other place and on to the statute book.

I reassure the noble Baroness, Lady Turner, that I have great respect for the noble Lord, Lord Young. I take what he says most seriously. I always listen to him and will be doing so throughout the Bill. I say to the noble Lord, Lord Hoyle, that we are listening and will continue to do so.

I should say first that I am pleased that the amendment indicates that the Opposition continue to accept that the sale of shares in Royal Mail is the right way to secure the future of the universal service and that, as Richard Hooper recommended, an injection of private capital into the company is necessary. My noble friend Lord Cotter supported that also.

The noble Lord, Lord Young, suggested that the Government had not consulted appropriately. The Bill actually draws heavily of the year-long independent review of the universal postal service chaired by Richard Hooper, as did the previous Government’s Bill in 2009. The Bill also draws on the subsequent update by Richard Hooper published in September last year, which was commissioned by the Secretary of State. The original review and the update took evidence from hundreds of organisations and individuals with an interest in the future of the postal sector. For the original report, there were some 200 meetings and 70 written submissions. All major stakeholders in the sector made an input into the review. We feel that that constitutes consultation.

However, the difference between the positions of this Government and the previous Government is that we do not believe that it is necessary for government to retain overall ownership of Royal Mail. The noble Lord, Lord Young, argued that there is no public mandate for this privatisation. The Liberal Democrat manifesto was explicit about the need for private-sector investment and employee shares. The coalition agreement also was explicit. It stated:

“We will seek to ensure an injection of private capital into Royal Mail, including opportunities for employee ownership. We will retain Post Office Ltd in public ownership”.

The Bill is doing exactly what we said we would do.

Indeed, we believe that the Government are the wrong shareholders for Royal Mail, especially at a time when the postal market is undergoing significant change and Royal Mail has to respond to that change. We are not alone in thinking this. Moya Greene, the chief executive officer of Royal Mail, who has been complimented from all sides of the House today, made this clear to the Public Bill Committee in the other place. As I said during the Second Reading of the Bill, public ownership has failed Royal Mail and has not helped it to move with the times and make the changes which it needs to succeed. That is why we need a different approach if we are to safeguard the universal postal service.

Government cannot provide capital fast enough and, as the House knows, every investment that we make has to be cleared by the European Union under state aid rules. With so many competing calls on the public finances, we cannot guarantee that Royal Mail will always have access to the capital that it needs. In addition, we believe that limiting a sale to only a minority of Royal Mail’s shares will reduce our ability to attract the best future owners for the company and secure the best value for the taxpayer. For example, private investors are likely to find it more attractive to invest in Royal Mail if there are no barriers to owning a majority of shares and they can therefore have real control to ensure the future success of the company. I suspect that this was one of the reasons why a buyer could not be found in 2009.

The noble Lord, Lord Lea of Crondall, asked what specific protections against asset-stripping are in the Bill. A number of protections are in place if asset-stripping or other shareholders’ actions become a concern. The protections are contained in the Bill and in other legislation. Ofcom has the power in Clause 35 to imposed designated USP conditions, akin to condition 16 in Royal Mail’s existing licence, that do not allow it to do anything such as asset disposal or make a dividend payment that,

“creates any significant risk that necessary resources will not be available to”,

continue its business. If Royal Mail is found to be breach of its regulatory obligations—

[Lord Hoyle]

I am listening intently to the Minister, but there is a whining noise and I cannot hear clearly what is being said.

[Baroness Wilcox]

I think that it was someone's hearing aid that they have now switched off. I will return to the specific protections in the Bill against asset-stripping that could affect the universal service. A number of protections are in place in case asset-stripping or other shareholder actions become a concern. These protections are contained both in the Bill and in other legislation. Ofcom has the power to impose designated USP conditions akin to condition 16 in Royal Mail's existing licence, which does not allow it to do anything that would create a significant risk that necessary resources would not be available to continue its business. If Royal Mail is found to be in breach of its regulatory obligations, Ofcom could fine it up to 10 per cent of the annual turnover of its postal business. On current turnover, this would be more than £650 million.

Directors of a company must act in the way that they consider most likely to promote the success of the company for the benefit of its members as a whole. If an asset disposal or dividend payment did not meet that test, they would be in breach of that obligation. Royal Mail's debt is secured on its assets, so it is simply not possible to transfer assets away from the business and its debts. The Pensions Regulator may also not allow such behaviour, as it would weaken Royal Mail's covenant to its pensioners. I hope that the noble Lord, Lord Lea of Crondall, will find that helpful.

[Lord Christopher]

I hear what the noble Baroness says, and I will certainly have another look at the Bill. However, it does not seem that the sale of a particular asset would necessarily interfere one way or the other with the service. For example, if I provide a much cheaper-sited sorting office and sell one that is very valuable for another use, that may not alter the delivery service at all.

[Lord Lea of Crondall]

Perhaps it would be convenient if I asked for confirmation from the noble Baroness at the same time as she answers the noble Lord, Lord Christopher. We all have the Bill in front of us. If I heard correctly, Clause 35 was drawn to our attention. That does not provide all the requirements that the noble Baroness referred to.

[Baroness Wilcox]

I am sorry. Ofcom has the power under Clause 35 to impose designated USP conditions akin to condition 16 in Royal Mail's existing licence, which does not allow it to do anything that would create a significant risk that necessary resources would not be available to continue its business. Is the noble Lord saying that his point is not there?

[Lord Lea of Crondall]

That point covers the universal service. The question of sovereign funds, and the other questions, are not covered by the clause; that is all I am saying.

[Baroness Wilcox]

Perhaps I may deal with that when we get to Section 35. I turn to the point of noble Lord, Lord Christopher.

[Lord Christopher]

I will put it in simple terms. If I owned a big sorting office in Oxford, I could sell the site at a good price to the university and build a sorting office outside Oxford. I would not have interfered with the universal service, but I would have made a nice profit.

[Viscount Eccles]

Perhaps I might ask the noble Lord whether he would describe that as asset-stripping.

[Lord Christopher]

Of course.

[Viscount Eccles]

Many of us would describe it as a very sensible piece of business.

[Lord Skelmersdale]

Not only that, but the Post Office could do the same thing under the current arrangements and no one would complain.

[Baroness Kramer]

Is it not correct that in negotiating the sale of the shares, the value of property that could be disposed of would be considered as part of the mechanism for valuing the company?

[Baroness Wilcox]

I am much supported by my noble friends on this side. They have given every answer that I could give at this stage and I am very grateful to them. I return to Amendment 2 and ask the noble Lord to withdraw it. I am sorry that it is such a long time since I made my argument. I hope that he has kindly remembered it.

[Lord Young of Norwood Green]

My Lords, I shall address a few of the points that were made. The noble Lord, Lord Cotter, and I do not normally find ourselves so diametrically opposed. We do not see this as a fundamental attack; we see it as a different approach and one that we believe is well worth opposing, given the importance of the decision to privatise Royal Mail 100 per cent. We do not think that putting to the Committee an alternative solution, which was almost unanimously approved by this House, is a fundamental attack.

The noble Lord, Lord Skelmersdale, said that I contradicted myself with Amendments 1 and 2. I do not believe that that is the case. We have to take into account a number of eventualities, depending on how the Bill progresses.

My noble friend Lady Turner reminded us that privatisation is not necessarily always beneficial or effective. My noble friend Lord Lea made an interesting point about undervaluations in previous privatisations, and that should be a warning to the Minister about the importance of getting the sale right.

The sale of shares draws heavily on the Hooper report, and I would not disagree with that. We are not proposing that there should not be any external investment, but there is a fundamental difference between that and a 100 per cent sale. As we go through the Bill, I think that it will pose some difficult problems, one of which—the inter-business agreement and the ability to get satisfactory assurances in that area—we will explore in greater detail.

I shall obviously reflect on this debate. I await Report stage with interest, and we shall see whether we return to this subject then. In those circumstances, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Clause 2 : Report on decision to dispose of shares in a Royal Mail company etc

Amendment 3

Moved by

[Lord Stevenson of Balmacara]

3: Clause 2, page 1, line 15, at end insert—
“( ) Before making a decision referred to in subsection (1), the Secretary of State shall cause to be laid before Parliament a report setting out how the value of the shares in the Royal Mail Group to be disposed of has been assessed, including an independent overall valuation placed on the business.”

[Lord Stevenson of Balmacara]

My Lords, I was sorry to hear the Minister say a few moments ago that she was looking forward to debating with my noble friend Lord Young and to listening to what he had to say, because I am going to interpose in that relationship. I hope that that is not to her discomfort or concern. However, we want to give my noble friend a rest and to allow him to come back even more vigorously.

This amendment places a duty on the Secretary of State such that, before making a relevant disposal, the Secretary of State must lay before Parliament a report setting out how the value of shares in the Royal Mail Group has been assessed and, with this, she or he must provide an independent report of the value being placed on the business.

This is a straightforward amendment and it has, perhaps uniquely, the support of such diverse groups as the TaxPayers’ Alliance and the Communication Workers Union. If I may say so, its beauty is in its simplicity, but its logic is derived from the experience of privatisations long past.

Several noble Lords have mentioned the sell-offs of British Gas and British Telecom. The British Gas share issue totalled £9 billion in 1986—at that time, the highest-ever equity sale on the UK stock market. However, within a year the value of those shares, initially at £1.35, had risen significantly. A few years before that, in 1982 in the first of the big privatisations, the share price of British Telecom rose 40p on the day after the shares were sold, making an immediate and tidy profit for investors.

Of course, those were different times, and a privatised Royal Mail is neither British Gas nor British Telecom, but what links these original privatisations to the present day is a worry that, in the rush to get this show on the road, the Government appear to be glossing over the fundamental question which would surely occur to anyone selling anything, whether it is a watch on eBay, a second-hand car or a company the size of Royal Mail. What is it worth?

Valuation is an art. Some of the value can of course be derived from the assets, the stocks and the history of trading. Removing the pension liabilities is a huge start in this case, but it is also worth pointing out that a long-run inter-business agreement with the Post Office and a firm commitment to use the Royal Mail by government departments will be material facts in any calculation of value. Valuation is a two-way process. It is often conceived as a willing-buyer/willing-seller situation, and we hope that that will be the case in this sale. How different would it be if there were a forced sale or no ready buyer and we had to think of other ways to try to get rid of the assets? That would change the way in which the valuation was approached.

16:45

There is a real prospect that Royal Mail can be under- or even over-valued by the Government. We have searched through the documentation with which we have been provided and through the written debates in the other place, and we have yet to sense what Ministers think the Royal Mail will be worth. If they have a sense of the valuation, they are very coy about it. I have seen estimates that have suggested that the value could be as low as £700 million, which seems ridiculously low, or as much as £7 billion, which may be ridiculously high.

Of course, many internal factors will impact on the value of the business—the regulatory regime, the industrial relations climate, the nature of the obligations being placed on the Royal Mail and the arrangements for the Post Office. All those factors and others will determine the value of the business and its share price on flotation. Taxpayers and the employees of Royal Mail, who stand to gain 10 per cent or more of the business, deserve not to be kept in the dark about its value. After all, 10 per cent of £700 million is far less than 10 per cent of £7 billion.

This amendment calls on the Minister to lay before Parliament an accurate value for the Royal Mail and the rationale for the setting-out of its price prior to its sale. The work will have to be done in any case; the City will expect a rigorous and detailed valuation so that it can make a judgment on the share price issue. The underwriters who facilitate the sale will have to do likewise. We feel very strongly that Parliament should be kept fully informed as well, and we would like to see all aspects of the sale disclosed to Parliament before it goes forward. I beg to move.

[Lord Lea of Crondall]

My Lords, it is often said that it is a fallacy that the price is much lower than the value soon after privatisation. It is a matter of the scale of the difference. I have some data on the big privatisations that took place under the Conservative Government. In one year, the average share issue premium on major shares issued was 7 per cent. On privatisation issues the average premium on the first day of trading was 77 per cent. That is 10 times more. Is that not prima facie evidence that the public tend not to get a good deal on these big privatisation issues?

[Viscount Eccles]

My Lords, we are dealing with a very different situation here. Unless and until the Bill becomes an Act and the pension issue is resolved for the time being, it would be a very bold person who said that you could put any value on Royal Mail. In the context of a willing-buyer willing-seller market, I do not think that you will find a willing buyer. Even if the buyer thought that the business was residually worth something, he would not want to enter into the deal. This amendment goes to the same point. In a willing-buyer willing-seller deal, neither the seller nor the buyer wants to know exactly how the sums have been worked out and if they thought that the sums had to be submitted to a third party and debated in this Chamber as a matter of parliamentary interest, I think you would scupper almost any deal.

[Lord Christopher]

My Lords, I do not understand what has just been said. However it is done, someone somewhere in Government has to decide whether the Royal Mail is worth X. The issue in front of us is how to arrive at X. I am very sceptical about whether Royal Mail knows what it owns.

To take a trite example, there are some valuable stamp collections in this country: Her Majesty has one, the Board of Inland Revenue has another and, I understand, the Post Office has one. The Revenue’s collection used to be displayed in cases as you walked into Somerset House. A representative of Stanley Gibbons walked in to ask the chairman, “Do you know what you have in those glass cases?”—there were three big ones. The answer was that it was worth well over £1 million. I think that the Post Office has a stamp collection, but I am pretty sure that no one there knows what it is worth. The outfit could well be sold lock, stock and barrel and then someone opens a safe one day and finds all those stamps.

There should be a proper valuation of all the assets of Royal Mail and the Post Office, because it will be divided up. Until that is done, we cannot satisfy the British people that we are asking a fair price. I do not complain about a modest discount, but we should have a clear idea of what assets we have. I will use my mythical Oxford sorting office as an example. What is it worth? An acre of land in most parts of the country is worth £5,000. With planning permission, it is worth nearly £1 million. Unless we explore the assets and ensure that we have an objective valuation of what is there, we will never feel that we have sold the Royal Mail properly.

Others have mentioned previous experiences. There have been two relatively recent ones, one by us of a company whose name I can never get my tongue around— QinetiQ—where people have walked away with millions. I have talked to many Members opposite who would never have privatised our railways in the way they did. Over the first two or three years, people walked away with very large sums of money. We have to avoid that. We cannot value the company in the way that companies are generally valued. Price/earnings ratios and so on have no relevance in that context. We must be sure that when we say to the British company, “We are trying to sell this for X”, that X is a reasonable, accurate figure.

[Baroness Kramer]

My Lords, I fully understand the concern of the noble Lord, Lord Christopher, that Royal Mail fully assesses the value of what it is, what it owns and what it has to offer, so that it understands its full value in the marketplace. That is an important process. I agree that that has not always been done when public entities have been sold. Indeed, there has often been an anxiety to achieve a sale quickly. I think that Governments have sometimes been seduced by investment bankers who would like a cheap, easy deal rather than trying to ensure that they get the maximum for the seller—in this case, the public. I hope that those lessons can be learnt. I agree that internal due diligence is critical.

However, I must say to the noble Lord that, although I care a great deal about transparency and openness, the day that this House or the Government put a value—£700 million or £800 million—on the asset, no bidder will offer a penny more. The art in a negotiation when you are selling a property is to get the buyer on the other side to decide what value he will bring to the table and give up some of that value to the seller. The goal is not just to achieve the value of the assets as they stand in some neutral and abstract form but to extract further value because of the benefits that a particular buyer sees because of their business plan and goals.

All of that disappears the day that the Government come out and publicly say, “This is what it is worth. You will not get X plus a penny, you will only ever get X”. I think that that is unadvisable for the taxpayer.

[Lord Christopher]

How would the noble Baroness value it? How would she put a price on it?

[Baroness Kramer]

Internally, due diligence is critical. The specifications and the instructions to the investment bankers, accountants and others engaged in the valuation have to be tough and in the monitoring and examination rigour should be applied to the response that they come back with. However, it still has to be in an internal setting, not a public setting. People will have many opinions across this House, but this will be a highly complex process with a great deal of detail. While this House has the ability to understand all that, there may be a subset of people who might be interested in being part of the consultation process by taking a look at that on behalf of the House. However, to me, it certainly would not be possible to do it in a public setting without giving the buyer the most impossible leverage.

[Lord Hoyle]

The noble Baroness said that if we value it, we will not get a penny more. In past privatisations, it was not that we got the value for the business, but that we sold it at a loss, at a low price. That is what we are asking her to deal with.

[Baroness Kramer]

I fully understand what the noble Lord is saying. In the past, privatisations have been naive. We have to use pressure to make sure that the Government do not go through that naive process once again. I suggest that the remedy being proposed here—that the value is discussed in detail out in the public arena—does not achieve the purpose. It simply has the effect of making sure that in the end there is a cap on the sale price and creates another set of problems without necessarily disposing of the first set. We need to be pressing to make sure that the internal work is up to standard, but to my mind—and that is one person’s opinion—bringing it into the public arena does not achieve that.

[Lord Brookman]

My Lords, I had no intention of making a contribution in this debate but as someone who was involved in going from public to private in the steel industry I shall make one point. Who owns things is quite important. When the British Steel Corporation was formed when I was a young man, it had 267,000 employees. Tata Steel, formerly Corus, now employs between 15,000 and 20,000 people. Put that aside. We are a country that used to take pride in what we had and what we owned. I want to be reassured that if the Post Office or any other publicly owned business is hived off to foreign competition the interest of the British people is safeguarded. I just wanted to make that point.

[Lord Brooke of Alverthorpe]

My Lords, if the Royal Mail had gone bankrupt as so many people predicted it would, a value would ultimately be placed on it. Administration would see to that, and we would all know what it was worth at the end of the day. I believe that the government shareholder executive, which holds the shares for Royal Mail, will broadly have some idea of what Royal Mail is worth at the moment and of what it would be likely to fetch if it went, for example, to another mail company, such as TNT. If it went to private equity, it could be a different basis entirely because its approach to running the business would be quite different. It is not easy. I freely concede to the noble Baroness, Lady Kramer, that having this out in the public domain is not simple and straightforward. We all speak with one voice when we say that we want to ensure that the British public are not taken for the usual ride that arises on privatisation but get value for money.

I believe that the Liberal Democrat party had the solution to the problem, and so did we. We wanted to retain a stake in Royal Mail so that, regardless of the final valuation when the deal was done, the British public would know what it was, would continue to have a stake in it and would be able to redeem that, if they so chose, at the appropriate time. The Liberal Democrat party went for 49 per cent in its manifesto, which it has now abandoned for reasons that have not been explained, although it recognises that there is a problem, and no easy solution on the way forward is forthcoming from that part of the Government. We presented an amendment today that I freely recognise has some difficulties with it, but I believe that, for reasons that I just described, there are ways in which valuations in a broad sense can be made of government assets. I also believe, in the light of our previous experience, that an attempt should be made this time around, notwithstanding the obstacles to be overcome, and that that should be reported to Parliament.

17:00

[Baroness Wilcox]

My Lords, I thank the noble Lord, Lord Stevenson, for being as succinct as he was in proposing Amendment 3. It seems a long time ago now, but he presented his amendment in three minutes flat, which was very kind of him.

Before I go on, I will put the mind of the noble Lord, Lord Christopher, at rest on at least point today. He was concerned about what will happen to Royal Mail’s valuable collection of stamps, including iconic and historic stamps such as the penny blacks. Collections of such stamps are classified as public records. These are deposited with the British Postal Museum and Archive, and under the Bill they will remain public records. The ownership of Royal Mail’s museum collection, which contains artefacts that are not classified as public records, has been transferred to the BPMA, and as a charitable trust the BPMA cannot sell off this collection—so at least there is a little good news there.

The proposal in Amendment 3, like the one in Amendment 1, does not seem to reflect the fact that the disposal of shares in Royal Mail is a commercial transaction. In particular, if the Government decided to conduct an auction and invite bids from trade buyers, it would make no commercial sense to advertise to bidders our own view of the value of Royal Mail. As my noble friend Lady Kramer has pointed out, that is not exactly the art of negotiation, because all anyone would do would be to bid to that price. We really feel that we will not do that. No trade buyer would bid above the value, and it would therefore reduce the Government’s ability to get the best result for the company and for the taxpayer, because that is what we are about. The Government will, of course, work with their advisers to consider the potential value of Royal Mail so that we can properly assess bids from buyers. However, as my noble friend Lord Eccles clearly said, there is little logic in revealing what we consider the value of the company to be before any sale.

As I have said previously, the Government have not decided how they will dispose of the shares. We wish to retain flexibility, and in this way get the best result for the company and for the taxpayers, but we expect that both the National Audit Office and the Public Accounts Committee in the other place might wish to review the sale process after a sale had been completed. They would both provide their own independent view to Parliament on whether the Government had achieved value for money for the taxpayer.

I have of course listened to what has been said, and it will of course go on the record. I know that there are Members of your Lordships' House who would rather that Royal Mail was not sold at all, and I understand people who have been associated with Royal Mail for many years finding all discussions of this sort very difficult, especially having gone through all this a year ago with the previous Government—a Government of their own. Yet that Government, too, could not successfully find a way out. We need to find the right buyer for Royal Mail who will keep it alive and well. These are very difficult times. No one is writing letters. We have exercised these arguments over and over again, which I am sure everyone in the House knows. We think that this is the best way forward and that flexibility until the very last minute will be needed so that we can get the best price. I therefore ask the noble Lord if he will kindly withdraw his amendment at this stage.

[Lord Stevenson of Balmacara]

Dash it, I thought that the noble Baroness had forgotten that. I was going to enjoy wondering what to do if she had not asked me to withdraw—clearly, she was supportive. The point that we are trying to get across in this useful and interesting debate is that if there is no valuation process we will have two problems. The public will not necessarily know that we are getting value for money, which they should, and we would lose transparency, which is an important part of any transaction involving public assets. These are important principles to hold in our mind.

I fully accept what has been said, particularly by the noble Baroness, Lady Kramer, that public bodies are not in the normal business of valuing themselves. That is not what they are about. Their job is to provide a utilitarian service that is specified in statute. If they devote time to worrying about whether or not they have caught all the assets that they have acquired while they have been in existence and working out what their market value might be, they would not be focusing on what they should be doing and we do not want much of that.

However, if the Government are selling off the family silver, we should have a full inventory of all the aspects of that before it happens. The Minister is saying that that will happen and I hope that we will have a record. A compromise would not necessarily want to go all down this route, but we would get a much better Domesday Book of what the Royal Mail consists of and, thus, a better sense of what it might be valued at. We would therefore be in a better position to assess whether the bids received subsequently would be appropriate. Therefore, if the pound signs are removed, we would know about what we are talking a bit more at the time of the sale.

My noble friend Lord Christopher is eloquent in his ability to run the market in Oxfordshire—I am not sure why it is Oxfordshire—in terms of the sale he has clearly eyed up for the Post Office service stations there. I think that we would want to help him in ensuring his long retirement on the proceeds. I jest of course.

The second strand that comes through is that the valuation, or at least the lining up, of the assets that we are selling is not the same as disclosing to all and sundry what we want for them. But we can be a bit too coy about that. Clearly, we want to be in a position where we force someone to bid higher than we would have ever dreamed of receiving for the assets that we are putting up for sale. That is what we do all the time in our domestic lives.

I have always been perplexed by why the English do not adopt the Scottish system of selling houses, for example. In that situation, the seller seems to have all the cards. You say that your flat or house is for sale. What it consists of is advertised publicly and you say that you will accept offers in excess of £X where £X is the largest figure that you could possibly think of. Then you sit back and hope. It may have changed since I last sold a house up there, but the three times when I have done it I have been astonished by the braveness of those who have bid for the house and, disclosing no secrets, I have achieved many times more than I thought that I would get every time I have sold. I recommend that to all ye English and perhaps even to the Government in respect of the Royal Mail.

Yes, we want someone to bid more than we are prepared to disclose that we are prepared to accept. But there is a chap called Rupert Murdoch out there who is publicly engaged in bidding for part of his empire, which he only partly holds; yet I read every day about what price people are prepared to accept and what price they think it will be worth. The share prices down to even the last penny are mentioned. I do not think that we should be too worried about where we are going on this. It would not be wrong to say—privately if we want—what we will not accept. In other words, we would expect better bids.

The last thing we want to be part of is a post-hoc analysis of what went wrong in this case. Surely, we have got beyond that. The noble Lord, Lord Lea, made the point absolutely clear. If there is a 7 per cent premium on average sales of new or existing companies and it is 77 per cent on privatisations, there is clearly an issue to be addressed. I am jolly glad to hear that the stamps are being saved for the future, although it is a bit odd that they are going in the archive and not a museum where one would want them to be, but that is how it is.

Whenever one hears of public assets being sold, one has to think of the experience of other countries. It may be to the benefit of English football that this worked well in countries in the East, but we do not want that to be said of here. We want a good and sensible sale that is done in as open and transparent a way as possible. We want to be able to comment on the commerciality of what we are about and to do it so that no one feels that we have in any sense lost out. Those are conditions which I suggest should be taken into consideration of the Bill. We will reflect on what has been said, but at this stage I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Amendment 4

Moved by

[Lord Young of Norwood Green]

4: Clause 2, page 1, line 16, leave out subsection (2) and insert—
“( ) A disposal of the Crown’s interest in a Royal Mail company will not be authorised until the Secretary of State has secured a written contract from the proposed purchaser that at least one representative from those directly employed by Royal Mail or its successors will sit on the board of the new body.”

[Lord Young of Norwood Green]

My Lords, postal workers already have a major stake in the company, and their livelihoods are dependent on its viability. This is more than just an issue of immediate employment, of course. It is the final guarantee of rent or mortgage repayments. Working for Royal Mail is the means whereby their children will be educated and cared for. I make the point because it is sometimes suggested that postal workers lack motivation because they do not identify with Royal Mail. Postal workers may not always see eye to eye with management, but they are acutely aware that a viable and successful Royal Mail is in their own interests.

Through their own organising efforts, postal workers have achieved a high level of unionisation in Royal Mail. They have also, over many years, secured comprehensive negotiating rights on matters of national and local significance. This has meant that members of the workforce have some elements of control in their own working lives. Management, for its part, has learnt to accept and live with the fact that the workforce does have a say in workplace relations. Sometimes there are conflicts, but 99 per cent of those cases are resolved by the usual patterns of industrial relations which have been established in the industry. This is important because those endeavours have been made by postal workers themselves, and they have made the workplace a better, safer, more comfortable and rewarding place. So we should leave aside any suggestion that postal workers are unable to express themselves, unable to organise themselves, or unable to exercise their rights in the workplace.

Recently there has been a much-trailed comparison on rights of representation or share ownership with John Lewis workers, although we believe that that is misunderstood. In comparison, postal workers have many more rights than John Lewis workers, who are not even unionised. That said, if there is to be an employee share scheme, it is only right that it should be introduced with employee involvement and voice, and placing at least one member on the board would be of benefit both to the workforce and the employer. Members of the workforce would see that it had someone who could reflect their experiences and concerns in the most powerful part of management, and the employer would have an immediate expression of the wider concerns of the workforce in the deliberations of the central management team.

In the past, there has been some experience of trade union involvement on the board. Although not a postal worker, my noble friend Lady Prosser, who unfortunately is not in her place, was until recently a widely respected and influential trade union leader before she became a member of the Royal Mail board. Certainly, management believes that it has benefited from her experience in the working of the Royal Mail board. Failure to introduce representation of postal workers on the board would, in my view, risk missing a real opportunity to create trust and confidence. It is widely known that employee representation exists on management boards in other European countries, and surely it is time that this became more general in Britain. I welcome the coalition Government’s espousal of mutualisation in another part of the Bill, and the requirement that we are suggesting here would strike a chord with that principle and approach. I therefore commend the amendment to the Committee. I beg to move.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall)]

I should inform the Committee that if this amendment is agreed, I cannot call Amendments 5 to 7 inclusive by reason of pre-emption.

[Lord Lea of Crondall]

My Lords, perhaps I may make a point for clarity. The discussion we have just had about the wider public interest and stakeholders around the country suggests to me that what we are looking at is a sort of supervisory board. Does that not frighten the horses so far as the Minister is concerned? Does she acknowledge that the maximum number of different stakeholders should be somehow involved in this exercise since that would help to put our worries at rest on a number of other aspects that we have just been taking on board, such as asset-stripping and all the rest of it, and where ambiguities still remain in the Bill?

17:15

[Baroness Turner of Camden]

I support the amendment and have put my name to it. When the Bill was discussed previously, concern was expressed about the state of labour relations at Royal Mail. At Second Reading, I pointed out that the union was in discussion with management about modernisation and that the indications were that poor labour relations had been overcome. The union wants to co-operate, but believes that amendments to the Bill could be useful towards that end. It is for that reason that I have put my name to the amendment. It would be useful for the Bill to make it a requirement that the staff of the company be involved at the very highest level. To that end, it is proposed that a seat be reserved on the company board and that, before a sale takes place, Parliament should be assured that this proviso is a part of the deal.

The Government have already committed to an employee interest as Clause 3 makes provision for an employee share scheme. The proposal for staff representation at the highest level is in tune with that kind of thinking and helps to confirm employee interest in the well-being of the company and, most importantly, in its service to the public. As I indicated previously, I believe that the public still hold in high esteem the Royal Mail and the staff who work for it. I therefore hope that the Government will be prepared to accept the amendment or that, if they do not like the wording—as has sometimes happened—they will accept the notion and perhaps come back with different wording that incorporates the same idea. We think that it is a very good idea, because it involves the participation of staff in, and their commitment to, the well-being of the company.

[Lord Cotter]

My Lords, I thank the noble Baroness, Lady Turner, and others for raising an issue whose importance I am aware of from my own experience. I was managing director of a small plastics manufacturing company. It had only 30 employees, but it was important to me to bring those employees with me. Our discussion today is an important part of that approach. That employees will have shareholdings in Royal Mail is to be welcomed. It is disappointing that many other companies, of all sizes, do not recognise the importance of involving their workforce. As the noble Baroness and others said, a welcome improvement in labour relations has been seen within Royal Mail. I know that the Minister will take this issue very seriously and I am sure that she will give adequate answers to the points that have been raised. It is crucial that employees have not only shares but a real voice in one way or the other. Without that, so many companies fail. We want the new conglomerate to succeed, to go forward and to bring its employees with it, as opposed to management and employees being at each other’s throats as has sometimes been the case in the past.

[Lord Brooke of Alverthorpe]

I, too, support the amendment and agree with the line taken by the noble Lord, Lord Cotter. As the Minister knows I was a partnership director of NATS, where, when the PPP was created, 5 per cent of the shares were allocated to the employees. I acted as the director responsible for that element of the share distribution and had conversations with the staff about it. However, it was not entirely satisfactory; I was still at a distance from them because I was also involved in the management side of the business. While anyone who went on to a board would have to be involved in the management side too, if the Government were to accept the amendment there would certainly be someone there who was better able to speak directly for the feelings of the workforce than someone doing so one removed, in the way that I did.

I have been to a number of meetings recently at which coalition government Ministers have spoken about employee ownership and share involvement and extending it over a wider front. Many have spoken about providing greater opportunities for the workforce to be more directly involved with management of companies, particularly where they have a stake in the shares.

The amendment presents a modest proposal—I would have preferred it to suggest that two places should be allocated—but I am reasonably content today to go along with opening the door through one seat being made available for the employees. I hope there will now be an opportunity for the Minister to display, not only to her noble friend Lord Cotter but to a variety of Ministers who have spoken recently on this at meetings, that extending employee ownership will be put into practice when the opportunity is immediately before the Government.

[Lord Myners]

My Lords, I add my support to the amendment and endorse the views expressed by my noble friend Lord Brooke and the noble Lord, Lord Cotter, on the Liberal Democrat Benches.

There are two issues involved here. First, in a conventional private sector situation where another company or body of investors has a large shareholding, it is quite customary for it to seek board representation, recognising that when it sits on the board it shares the responsibilities of other directors to the company as a unitary board. I note the presence of the noble Lord, Lord St John of Fawsley, in his place on the government Benches and it immediately reminds me that News International, as a particularly large shareholder, has always had its interests represented on the board of BSkyB. It is entirely logical and consistent with good private sector practice for the workers in the Post Office to have such representation on the board of directors until such time as they cease to be significant shareholders.

However, on my second point, I have regard to the fact that the Minister not only brings considerable business experience to her position but also speaks on issues of corporate governance. There is a bigger issue at heart here: the shareholders in a privatised Post Office—whether it is a large corporation, perhaps based overseas, or is floated on the stock market with a large number of investors—will nevertheless individually have a very modest interest in the company. If it is bought by a Dutch company and that company is floated, the ultimate shareholders will be institutions spread across the world, few of whom will own more than 1 per cent of the company; they will have diversified their risk through portfolio construction. The employees cannot do that; they will have what investors would call a high-conviction portfolio, with all their money invested in a single share and all their employment in one place of work. It is surely right that people who exhibit such a high conviction to a company should have some voice in the leadership and management of the business. Some of the malfunctioning of companies over recent years might not have happened had there been a voice around the board table reflecting the views, knowledge and insights of the employees of the company, as opposed to executives who sit in executive suites at the top of the tower building or non-executives who turn up for two or three hours a month. There is a broader issue here and I hope that the Minister, given her responsibilities for corporate governance, will speak to that broader issue in addition to giving us some welcoming encouragement on this amendment.

[Lord Hoyle]

I agree with those who have spoken in support of the amendment, and particularly with the comments of my noble friend Lord Myners. Although some people can walk away from a company if it is not successful, those who are employed there cannot; it is their—and their family’s—livelihood. I know that the Minister will take into account all that we have said when making her reply, and I hope that it will be a positive and constructive reply. I agree with my noble friend Lord Brooke that one representative is a modest request. I would have asked for at least two—but here we are, with a suggestion that everyone who has spoken agrees is both modest and important.

I am glad that it is recognised that employees matter. Speaking of his own, small company, the noble Lord, Lord Cotter, said that he tried wherever possible to take his staff with him. If staff feel that the company they work for is being sold from underneath them, they can have no loyalty to the new group that comes in. Staff have to be won over, and is there a better way of doing that than by making them part of the decision-making? As employees of the company, they will be able to reflect back. Rather than having somebody external—who could do a job for the employers, as my noble friend Lord Brooke said—would it not be better to have these staff representing the company so that they could take the views at the highest level on why certain decisions are being made to achieve what one hopes will be their future prosperity? I totally agree, and repeat again, that this is a modest suggestion.

[Viscount Eccles]

Employee participation is indeed a big subject, and I have no quarrel or difficulty with many of the views that have been expressed. However, as I read this amendment, it would be satisfied if the successor company asked Moya Greene to sit on the board. She is directly employed by Royal Mail and it is likely that the successor company would want her on the board. After all, she is extremely well qualified to be on the board of any mail company. If noble Lords opposite really wish to pursue this, they might need to do so in a rather different way.

17:30

[Baroness Wilcox]

The Government recognise the important role that employees will play in the modernisation of Royal Mail. The implementation of the business transformation agreement reached in March 2010 is vital to the success of the company. This requires changes in the way in which people work and will impact on everybody employed by the company.

This agreement sets out a new relationship between the management and the union in Royal Mail which seeks to improve industrial relations, which have been so poor in recent years. Progress on the implementation of the agreement has been encouraging, and we encourage both sides of the agreement to build on this promising start. Nobody inside or outside the House wants to see a return to the national strikes that so damaged Royal Mail and the postal market in 2007 and 2009.

The current position is that there is no employee representation on the board of the Royal Mail. My understanding is that there has been no pressure or suggestion that there should be an employee representative on the board. In public ownership the Royal Mail is being run on a commercial basis, so I fail to see that a change in ownership should automatically require that there should be an employer representative on the board, a requirement that the amendment proposes should be written into primary legislation. I have listened to the noble Lord, Lord Lea, and the noble Baroness, Lady Turner of Camden, with her terrific record within the union movement. The noble Lord, Lord Cotter, talked about bringing staff with you; I have done that myself. In a small company, especially, you are all working together very closely and you can really involve the workforce in a way that large companies sometimes cannot.

The noble Lord, Lord Brooke of Alverthorpe, talked about shares and NATS. I know how well he did there. On the point made by the noble Lord, Lord Myners, with his corporate governance, and the noble Lord, Lord Hoyle, on employee participation, a seat on the board is not the only way to actively encourage employee participation. For example, the concept of world-class mail at Gatwick and elsewhere has shown what increased engagement can achieve. We hope that there will be increased engagement. That is one of the reasons for making sure that shares are passed in such a large number to employees of the company.

I am not at all clear how such an arrangement as proposed in the amendment would work in practice. For example, how does it link up with the CWU and Unite’s representation of the workforce and their roles in collective bargaining?

I should say that the Government are not saying that there should never be an employee representative on the board. Royal Mail may decide in future that there are advantages to doing exactly that. I refer us back to my noble friend Lord Eccles, who suggested that Moya Greene might be a wonderful example of someone who could be brought on to the board to the benefit of the company, as she is at the moment the chief executive. However, I do not believe that it is appropriate to impose such a requirement through legislation.

Issues relating to board composition are properly issues for the company and its shareholders who, thanks to the Bill, will include its employees. I therefore ask the noble Lord to withdraw his amendment.

[Lord Myners]

The Minister started her answer by saying that as things were as they are, and there was no good reason for changing that, they should remain as they are. Surely, however, the Government are making changes, and that is the appropriate trigger for consideration of this factor. From these Benches we are urging that it is essential that the workers in this company, which has always been a very delicate organisation, who have served it loyally over many decades, are entitled to believe—almost as part of the concept of the “big society”—that the Government recognise that there is a degree of mutualisation. After all, that is why the Government are gifting shares to the workforce. So why go only halfway? Why stop at the point of gifting shares and not empower those shareholders to give voice and expression around the board table?

[Baroness Wilcox]

I can only repeat that, as we all know, the previous Bill failed. We hope that this Bill will succeed. We want as much flexibility as possible when it comes to selling Royal Mail. We have faith in the fact that the people who have worked for this company for so long should be offered the best possible opportunity. We are offering the biggest ever issue of shares to the employees of the company—over 10 per cent. That is a wonderful voice that they will have. No one is saying that no one will finish up on the board. We are saying that we cannot put this in legislation. We need to keep this as flexible as possible to get the best possible price and the best possible deal. The noble Lord, Lord Myners, of all people, City man that he is, knows what I am talking about. I ask that the noble Lord, Lord Young, withdraw his amendment.

[Lord Young of Norwood Green]

My Lords, it has been a fascinating debate; I did not expect quite as much of a debate as this. This is an important issue. I agree with my noble friend Lady Turner about the value of employee involvement. It is nice to return to agreeing with the noble Lord, Lord Cotter, in his evaluation of the importance of involving the workforce; I wholeheartedly endorse that. My noble friend Lord Brooke demonstrated the value of his experience as a partnership director in NATS.

Several times in this debate people have talked about there being only one representative. The Minister had trouble dealing with that. In fact, I remind the House that the amendment says “at least one”.

My noble friend Lord Myners made a fascinating contribution. I am glad that he told me what a high-conviction portfolio was; I would have thought it was someone being detained at Her Majesty’s pleasure if he had not explained that. His argument was valid when he talked about the question of risk and the way that other shareholders may be able to diversify their risk, but in many cases those employees are pledging all their working life to the company.

The noble Viscount, Lord Eccles, pointed out that there might be a flaw in the amendment, but I remind him that it says “at least one”.

I must admit that I was somewhat disappointed in the Minister’s response. The only argument that she could give us was the need to retain flexibility. Are we really saying that one employee representative—if indeed it were one—would wreck that flexibility? If that were the case, if you wanted ultimate flexibility, then why has she boasted about the 10 per cent employee shareholding? I do not believe that that was a valid argument against the very reasonable suggestion in this amendment.

Having reflected on the debate, I will withdraw the amendment at this stage. We were somewhat puzzled by the pre-emption, but as we are not going to invoke that we can have that argument outside the Chamber. We will certainly return to this subject, probably on Report. In the circumstances, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Amendment 5

Moved by

[Lord Young of Norwood Green]

5: Clause 2, page 1, line 16, leave out from “after” to end of line 3 on page 2 and insert “identifying the preferred successful bidder, the Secretary of State must deliver an oral statement to Parliament on the matter and lay an order on the proposed disposal which will be the subject to the affirmative procedure”

[Lord Young of Norwood Green]

My Lords, I am sure that a number of amendments to the Bill will come from all sides of the House as we progress. I am seeking more information about the Government’s plans for postal services in the UK. The purpose of the amendment would be to ensure that the Secretary of State reported back to Parliament on the disposal of Royal Mail. The Secretary of State would have to deliver an Oral Statement and lay an order subject to the affirmative procedure.

There are real concerns about what the Bill will mean for people who live in rural areas, for small businesses, for those who receive specialist services for the blind, for the taxpayer and for the employees and agents of Royal Mail and Post Office Ltd. Rarely can a government Bill have given rise to as many questions as it seeks to answer.

Noble Lords have argued eloquently that it is essential for Parliament to receive more detail about the financial value of Royal Mail, the future of universal and affordable postal services and the impact of privatisation on services in the devolved Administrations. The Government are urged to respond to these concerns with written and oral reports to the House at the time when Ministers decide to dispose of some or all of the Government’s shares in Royal Mail. Only the Government appear to suggest that these concerns are not legitimate, otherwise they would happily accept these amendments and the Minister would produce the reports requested in advance of the sale.

At times the Government appear to be in an unseemly haste to complete all the stages of the Bill. The danger is that, if the Bill is not itself flawed, then there are significant gaps in it that need filling. There are simply too many questions unanswered, too many concerns about the Government’s intentions and too little of substance in the way that the Government have responded to these concerns for Parliament simply to give its assent to this measure and then depart the field. It is the firm belief of the Opposition that the lack of a fully worked-out proposal, linked to a wait of possibly two, three or four years before a disposal takes place, necessitates Parliament being able to review this matter once again.

As the Bill stands, the Secretary of State will make a decision about a full or partial disposal of Royal Mail and then make a report to Parliament. There is no requirement even for the report to be accompanied by an Oral Statement; there is no commitment that Oral Questions should be able to be put to Ministers; and there is no commitment for Parliament to have a vote of any kind. Moreover, the report will be made after the Secretary of State has made the decision. That is, I am sure many in this House would agree, simply not adequate. As I said earlier, it is interesting how often, in dealing with other Bills when we were in government, the affirmative procedure was required and demanded.

The current Postal Services Bill has a number of similarities to the 2009 Postal Services Bill, but the fact that this Bill seeks to privatise Royal Mail in its entirety makes it distinct from the 2009 Bill. One of our difficulties is in trying to grasp the detail to discover exactly what information is in the Bill about whether there will be an initial public offering or a trade sale at auction. The Government have not set a clear timetable. They have not explained whether there will be a general sale of shares to the public, an IPO, a restricted sale to certain categories of buyer or a trade sale by auction to a single buyer, such as a private equity firm or a postal competitor, which might raise competition issues.

Nor have the Government explained any measures to ensure value for money for the taxpayer. They have not explained whether they would sell the whole company all at once—with all the risk involved of selling cheaply, as has been mentioned—or whether they would be prepared to sell in tranches. They have not been clear about how valuable public assets will be allocated among Post Office Ltd, the pension funds and Royal Mail—and thus find their way into private hands. They have not indicated how the board might be consulted. They have not ruled out dismantling the Royal Mail and cherry-picking the most profitable parts, such as Royal Mail’s successful European parcels service GLS and Parcelforce. They have not indicated how they will guard against a buyer with a short-term horizon that seeks to squeeze costs and cherry-pick the assets.

Before any sale takes places, this House will want to be assured about the future of the universal service, the exact regulatory regime and the future of the post office network. What state has been reached in obtaining state aid clearance from the Commission? What is the expected timetable for that state aid clearance?

The other amendments in this group seek to require a further Bill or a super-affirmative procedure to allow Parliament properly to scrutinise and have a say about the method of sale and the sort of Royal Mail that will emerge in the private sector; our amendment provides for a less stringent parliamentary test, but I feel that it is the very minimum that is owed in the name of proper parliamentary scrutiny. Of course there is no wish to constrain the Government unreasonably in carrying out a sale if the Bill is passed with Clause 1 intact. The House will of course recognise the reasonable constraints of commercial confidentiality, but for such a momentous decision as this to be carried to its conclusion without further reference to Parliament, in a way that gives Parliament a proper say, would be highly regrettable.

If the Government are not willing to report back to Parliament on the specific concerns set out in other amendments, they should accept our amendment and agree to allow a general scrutiny of the disposal of Royal Mail at the point that that takes place. They should do so under the affirmative procedure, so that there is a genuine opportunity to consider and debate the sale.

There is genuine, non-partisan, cross-party concern about this measure, so it is right that Parliament is given the opportunity to debate the matter again when the Government are in a better position to answer the questions that they have so far failed to answer. I hope that the Minister will take this opportunity to improve the Bill by accepting a more accountable route for parliamentary accountability, which would involve not just an ex post facto report after the decision has been taken. I beg to move.

[The Deputy Chairman of Committees]

I should tell the Committee that, if Amendment 5 is agreed to, I shall not be able to call Amendments 6 or 7 by reason of pre-emption.

17:45

[Baroness Drake]

My Lords, I wish to speak to Amendments 6 and 17 in this group, which stand in my name.

As currently drafted, Clause 2 requires the Secretary of State to make a report to Parliament only when a decision has been made to dispose of shares or share rights in Royal Mail. That report is to include both the type and the timing of any disposal. Amendment 6 seeks to ensure both that the Secretary of State is more fully accountable to Parliament for any decision that he or she may take regarding the sale of Royal Mail and that the decision is consistent with best practice and legislation governing regulatory reform.

Amendment 6 seeks to do that by means of a super-affirmative order and an explanatory document accompanying the proposed disposal order that are to be laid at the point of a decision on a sale. The amendment would not undermine the Bill’s three main proposals, which are to allow the unrestricted sale of shares in Royal Mail, to introduce a new regulatory regime and to provide for the transfer of pension liabilities. Rather, because of the implications that would flow from an unrestricted sale, I believe that the super-affirmative procedure is appropriate.

Many noble Lords are concerned at the haste with which the Government have sought to complete the passage of the Bill, and one is left anxious about the scrutiny of matters that will arise from the implementation of the Bill potentially at some point significantly in the future. Amendment 6 would require the Secretary of State to return to Parliament to seek approval when a decision is taken on a specific disposal of Royal Mail—a decision that may not occur for, say, another three years. That is very important. The Bill is significant, given that its provisions will have a major impact on business and personal users of the service, on citizens’ interests and on the employees and agents of Royal Mail and Post Office Ltd. It will also have a significant impact on the Exchequer. Such a decision deserves close scrutiny.

The super-affirmative resolution procedure would allow Parliament the right fully to consider the proposals for the sale in a way that is provided for in the Legislative and Regulatory Reform Act 2006. Under that Act, Ministers have wide-ranging powers to amend primary legislation by order and the Act makes provision for determining the parliamentary procedures for such orders. If noble Lords would indulge me—as a new Member of the House, I am all too conscious of the paucity of my knowledge of parliamentary procedures compared to the depth of knowledge held by so many noble Lords—sometimes one feels that a matter is of such significance that one must split an infinitive and be prepared to boldly go. I am advised that there is no simple definition of the super-affirmative procedure, so it is necessary to lay it out fully in the Bill; hence the tabling of Amendment 17, which seeks to do precisely that.

I shall give the briefest of summaries. Under the super-affirmative resolution procedure, during a 60-day period when the draft order is laid the Minister must have regard to any representations received, any resolution of either House and any recommendations made by a scrutiny committee of either House. At the end of the 60-day period, the Minister can decide to proceed with the draft or lay a revised draft with, in either instance, a statement about any representations made and revisions proposed. In each case, the order then proceeds as a normal affirmative order. However, if a scrutiny committee of either House recommends, after the laying of the statement or of the revised draft order and statement, that the order should not proceed, then the order may not proceed unless the House concerned rejects the recommendation.

In the circumstances of this important Bill, the merit of the super-affirmative procedure is that the process would take place over a 60-day period and it would allow the Minister to amend any draft order, if Parliament decides it appropriate, but that decision would not undermine the whole basis of the proposal. Such an approach would have three key benefits: it would allow effective scrutiny at the time that it matters—at the point of sale—which may be some few years hence; it would ensure that the impact of the terms of sale could be understood; and it would ensure democratic accountability on matters flowing from an enabling Bill. In this instance the super-affirmative procedure would be good for users and the taxpayer, who will benefit from Parliament scrutinising a Royal Mail disposal at the precise time that the Government make their decision.

I turn to the explanatory document. Parliament is being asked to consider the Bill one, two, three or maybe even four years prior to the sale of Royal Mail. By adopting the super-affirmative procedure, together with requiring an explanatory document when a disposal order is laid, Parliament has the opportunity to scrutinise the decision of the Secretary of State at the very point at which the sale is due to take place. This scrutiny will also allow more transparency on the valuing of Royal Mail in relation to the proposed sale price. That applies to a post-final-bid situation, about which the noble Baroness, Lady Kramer, was so concerned. Having that transparency prior to the bidding process would undermine the Government’s ability to leverage the price that they could secure. Such an explanatory document would give transparency, but only in a post-final-bid situation.

Amendment 6 sets out what the explanatory document should cover. The terms of agreement for the sale of Royal Mail will be highly significant but they are not yet known. A buyer has to be found and negotiations have to take place. No one at this point knows what the terms will definitely contain but their impact is of public interest. An explanatory document should provide a report on consultations and representations received, which should include those from user groups, bodies representing rural communities, pensioners, those with disabilities, businesses including small businesses, other operators, employee representatives and the devolved Administrations. The amendment provides for certain persons making representations to be afforded confidentiality. I understand that this is consistent with the provisions in the 2006 Act. One can also understand that there may be matters of commercial confidentiality, including some from the bidder and other private carriers, which would require this. The report would also provide a detailed regulatory impact assessment and such other information as the Minister considers would be of assistance to Parliament in considering the proposed disposal.

A number of concerns about the Bill necessitate the Minister returning to Parliament with the proposed disposal order and an explanatory document at the point of sale. These concerns have been reflected in the amendments tabled to the Bill, both here and in the other place, and in contributions by noble Lords from all sides of the House. The central part of the Bill enables legislation; it enables the Government to privatise Royal Mail. However, that is not the end of the story. As the Minister said in replying to Amendment 4, the Government are looking for maximum flexibility in this Bill. There is much detail yet to crystallise. Royal Mail needs capital investment and a buyer will want to see a business case. Therefore, the highest price, or even an acceptable price, may come from giving the buyer the greatest freedom to be profitable. A Government keen to secure a buyer will be under pressure to maximise freedom for the purchaser. There is a great deal left to regulations. Many uncertainties still exist and will require parliamentary scrutiny.

I will recap some of those concerns and uncertainties. While I acknowledge the merits of the transition to Ofcom as the regulator, there is still uncertainty about the regulatory regime, including how the move from licensing to regulatory authorisation will impact on the maintenance of the minimum universal service requirements over time and the robustness of any universal postal service obligation placed on a universal service provider. It is important that the terms of any sale or disposal do not pre-empt the setting or delivery of those obligations in any way that would be detrimental to users’ needs, business needs and citizens’ social and economic interests. We do not know the terms of the sale—no one can know them prior to negotiation or the detail being settled—so there could be a tension between the terms of sale and the regulatory principles in the Bill.

There will be a need for reassurance that the terms of the sale do not qualify or pre-empt the ability of Ofcom to discharge its duties under, for example, Clause 28 on such matters as access points, universal service and financial sustainability; Clause 42 and the financial obligations that could be placed on a universal provider; or Clause 35, to which the Minister referred, and Clause 37 on the universal service provider’s network access and universal service conditions. Ofcom is unlikely to be able to override the terms of any sale agreed by the Government when Ofcom seeks to set or impose regulatory requirements on universal service provision.

A further area of uncertainty is the future of the post office network and the commercial relationship between the Royal Mail and Post Office Ltd. The Government are anxious to suggest that the Bill is not about the post office network. However, one cannot entirely divorce Post Office Counters from this Bill. Parliament has been assured that a commercial relationship between these two businesses will be sustained. The key test here, however, is of whether it is sustained at current levels or is slowly eroded by Royal Mail to the detriment of the nationwide network of post offices. No one can truly answer the question of how the terms of sale with any bidder will impact on those assurances at the moment. Once privatisation has taken place, it will be difficult for a Government to influence an inter-business agreement between a privatised Royal Mail and Post Office Ltd. The Government have not specified to date a minimum number of outlets across the UK where counter services must be provided, notwithstanding that in other countries legislation does so specify.

A primary driver for full privatisation of Royal Mail is the need to secure private capital investment. Securing that investment will be heavily influenced by the viability of the business model captured by the terms of sale. This will not be solely a matter of asset price or of how much the Oxford sorting office can be sold for, but will be about the extent of regulation and commercial freedom and network access conditions. Market conditions for postal service operators are challenging because of the growth of e-substitution and the digital media. Any potential buyer will know this. Any analyst will look at the regulatory framework within which a privatised Post Office will have to operate.

These are weighty issues, which will determine how a future privatised Royal Mail will continue to perform its functions as a provider of affordable, non-discriminatory, universal postal services. Currently no one can truly assert what the full terms of any sale to a purchaser will be because those negotiations have not taken place. That is precisely why scrutiny at the level of a super-affirmative procedure, accompanied by an order with an explanatory document, is appropriate. I accept that Parliament cannot micromanage postal services. However, it should try its hardest, given that the sale may not take place for some years, to ensure that the interests of the user, the citizen, the taxpayer and the Exchequer are protected by directing the Secretary of State to return to Parliament with a proposed disposal order and an explanatory document at the point of the disposal that will be the subject of a super-affirmative order.

18:00

[Viscount Eccles]

My Lords, we can only admire the way in which the noble Baroness, Lady Drake, put forward her amendments. She has carried out a lot of due diligence and her speech was wholly admirable. However, my problem with it is—noble Lords will guess that I have a problem with it—that I do not see any way of removing uncertainty now or in the medium term or, as she suggested, in three or four years. I hope that that pessimistic estimate turns out to be wrong and that this matter is resolved in a lot less time than four years.

The uncertainty arises primarily from the behaviour of the market. We have talked a bit about other privatisations. The steel industry was mentioned. That industry was in decline when it was privatised. However, the opposite was the case with British Telecom. A lot of our experience of privatisations is highly coloured by the market conditions prevailing at the time. If what I have picked up turns out to be true, one of the issues which faces a mail operator is to find new streams of business and not to rely just on the mail and the universal obligation to deliver it at the same price to every household in the country. That brings me to one of the uncertainties about any deal that might be proposed by the Royal Mail to the Secretary of State as being a deal that he or she might wish to approve. I think that I have mentioned this before. There could be two bidders—there might even be three—with very different solutions. It is not a question of there being one deal. In a negotiation you may well find that not only is there more than one bidder but their bids are so different that you have to have two completely separate sets of due diligence to make sense of them and to make a recommendation to the Secretary of State. As I see it, that is the way that this matter will go forward.

In those circumstances I am very doubtful about the role of Parliament except in an ex-post involvement through the National Audit Office and the Public Accounts Committee, as my noble friend on the Front Bench said earlier. Then Parliament will have its opportunity to say whether it thinks that the Secretary of State made a good or bad decision in backing one of the recommendations made to him or her. Parliament will have to be satisfied with an ex-post role.

As regards the super-affirmative procedure and the 60 day period, 60 days is a long time for a bid to remain open without being reneged on or altered. In my opinion it simply is not practical to think that any bidder will be willing to go through this process. Given my past experience of buying and selling businesses, if I was faced with these amendments in the Bill, I think that I would say, “Please will you assure me that this part of the Bill is not going to be triggered because if it is my bid is withdrawn?” or I would not enter the negotiation in the first place. The intentions behind these amendments are absolutely clear to all of us and if the circumstances of the Royal Mail and the mail market were entirely different we might be able to live with such a procedure. However, I do not think that we can live with it in these circumstances.

[Baroness Wilcox]

My Lords, this group of amendments seeks to add to the Bill a requirement for the Secretary of State to make an Oral Statement and obtain additional parliamentary approval before there can be a relevant disposal of shares in a Royal Mail company.

Amendment 5 of the noble Lord, Lord Young, proposes that an order on the disposal should be subject to the affirmative procedure. The noble Baroness’s Amendments 6 and 17 seek to insert into the Bill a requirement for a super-affirmative procedure before there can be a disposal of shares. Like my noble friend Lord Eccles, I congratulate her on the thoroughness of these amendments which set out clearly the process that is required under the super-affirmative procedure. The noble Baroness may be new to your Lordships’ House but from these amendments it is clear that her knowledge and attention to detail will ensure that its business receives proper and close scrutiny in the years to come. I congratulate her on that. From my noble friend Lord Eccles we received a master class in how to buy and sell businesses. I suspect that I shall lean on him heavily as this Bill goes through to make speeches like that again.

I do not believe that further parliamentary procedures should be required before there can be a disposal of shares in Royal Mail. A committee in the other place has fully debated the disposal of shares as set out in this Bill and this Committee of the Whole House is now debating the issue. The disposal of shares to enable an injection of private capital into Royal Mail is part of a package of measures set out in this Bill which should be scrutinised as a package. The disposal of shares should not be looked at in isolation but alongside the other two essential parts of the package—tackling the pension deficit and reforming the regulatory regime. Richard Hooper emphasised the importance of this package when he gave evidence to the committee in the other place. The noble Lord, Lord Young, asked about the timetable for state aid clearance. We have not at this stage notified the European Commission of the proposed aid but we will do so as soon as we are ready. As I said earlier, this Government have learnt the lessons of 2009. We will take a staged approach to all the steps we need to take before a sale can be completed.

The Opposition’s Postal Services Bill in 2009 did not include a requirement for additional parliamentary procedures before there could be a disposal of shares. As noble Lords opposite themselves said in 2009, additional parliamentary procedures would be unwelcome because they would create uncertainty for potential investors. During the passage of that Bill, noble Lords representing the then Government suggested that noble Lords would agree that the appropriate place for commercial negotiations to take place was not on the Floor of the House.

Noble Lords opposite have expressed interest in the value of Royal Mail. The uncertainty that would exist if a disposal is subject to voting in Parliament would only further reduce the value of the business. This would damage the chances of achieving the best deal for the taxpayer and the company from any future disposal. I fail to see how this amendment fits with other amendments tabled by noble Lords where there has been an emphasis to take forward a sale of shares quickly. These amendments would insert time-consuming mechanisms that would add delay to a disposal.

With regard to legislative provision for the Secretary of State to make an Oral Statement, we do not think that is necessary whenever there is a sale of shares. The Bill is setting the minimum requirements for government action. What is important is the principle that information on this sale should be provided to Parliament. The requirement for a report in Clause 2 applies not only to the first sale of shares but any subsequent sale of shares. I fully accept that an Oral Statement might, of course, be appropriate for the first sale of shares, but would it also be a good use of time if, for instance, five years later Ministers decided to put an extra 100 shares into the employee share scheme? We are committing in Clause 2 that there should be a report to Parliament every time the Government reduce their stake in Royal Mail. We will, of course, discuss with the House authorities the appropriate format for such reports at the relevant times, including whether or not an Oral Statement is appropriate.

Finally, the noble Baroness, Lady Drake, asks in her amendments for evidence of consultation and an impact assessment. I point the noble Baroness to the extensive consultation carried out by Richard Hooper in his two independent reviews on the future of the Royal Mail and the impact assessment published alongside the Bill. On this basis, I ask the noble Lord to withdraw the amendment.

[Lord Young of Norwood Green]

My Lords, I thank the Minister for her response to the contributions. It was another interesting debate. I feel that I have been trumped by my noble friend Lady Drake in her forensic analysis of the super-affirmative procedure. She certainly demonstrated her knowledge of it and her diligence.

This issue is a matter of judgment. I did not expect the noble Viscount, Lord Eccles, to leap to his feet and say, “Yes, I agree with this”. He referred to the behaviour of the market and the introduction of more uncertainty. We balance that against accountability and the ability of Parliament to scrutinise but not negotiate. I look forward to hearing from the Minister when she notifies the European Commission, because that is an important point. She rightly pointed out that there was no provision for an affirmative procedure in the 2009 Bill. However, we were not going for a 100 per cent disposal. As the Bill is further scrutinised, we will analyse the issue of whether Oral Statements are required for a range of future share sales.

I will reflect on the nature of this debate and the Minister’s response. I warn that I may well return to this matter on Report but, in the circumstances, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6 not moved.

Amendment 7

Moved by

[Lord Young of Norwood Green]

7: Clause 2, page 1, line 16, after “decision,” insert “before any sale,”

[Lord Young of Norwood Green]

My Lords, Clause 2 relates to the Government reporting on their decision to dispose of shares in a Royal Mail company. As the Bill stands, the Secretary of State must, as soon as reasonably practicable after making a decision about arrangements for the sale of Royal Mail, lay a report before Parliament on the detail of those arrangements. The report will be made after the decision has been taken. It can also be made after that decision has begun to be enacted. The report must state the kind of relevant disposal that the Secretary of State intends to make and the expected timescale for undertaking it.

As currently drafted, there is nothing in the Bill to prevent the Secretary of State proceeding with a disposal of shares in all or part of Royal Mail before a report is laid before Parliament. The Bill requires only that the report is laid before Parliament as soon as is reasonably practicable. This is a cause for significant concern. Opportunities for proper accountability and oversight are potentially compromised by this arrangement. It does not allow for suitable scrutiny of the proposals. The Government must be accountable to Parliament for their actions. Parliament must have oversight of such important policy before it is enacted.

The amendment provides simply for greater accountability and transparency in the Government’s plans. It does not prevent a sale but restricts it to after such a time as Parliament has had an opportunity to be fully informed of the Secretary of State’s plans. Royal Mail is an incredibly important and valuable asset. It touches the lives of everyone in this country, employs 160,000 of them and has an annual turnover of more than £9 billion.

Royal Mail has struggled with a tumultuous history in recent years. Post Office closures and the impact of competition and regulation have taken their toll on the business and the public’s experience of engaging with the company. It is important that any further change is right for Royal Mail and is implemented correctly. A key way to ensure that this happens is to allow for an adequate level of parliamentary scrutiny of the Government’s plans. It is essential that Parliament follows the detail of the share disposal and ensures that the Government seek to maximise their return on the value of this asset and secure a sustainable future for Royal Mail and the UK postal industry.

I therefore urge support for the amendment, which requires the Secretary of State to lay his report on the detail of his decision regarding the sale of Royal Mail before any such sale takes place. I beg to move.

18:15

[Lord Hoyle]

I am sure that the Minister will accept the amendment because it makes sense to have a report before any sale takes place. What is the point of reporting to us if the sale has already been completed? There is no point whatever to that. I am certain that she will agree to the amendment with a view to the application of democracy. It might be the first success that we have had this Session. I notice the noble Lord, Lord Hunt, shaking his head behind her. I know that he is the Minister’s mentor, but I ask her to disregard him. Why not be a democrat and accept this?

[Viscount Eccles]

I must say that the noble Lord, Lord Hoyle, said that with great charm. However, what will we do in Parliament if the bidder says that he will not make his bid unconditional if the matter is to be submitted to Parliament?

[Baroness Wilcox]

My Lords, the amendment seeks to ensure that the Secretary of State lays a report before Parliament before there is a sale of shares. I shall talk quickly, because I am worried about the blandishments of the noble Lord, Lord Hoyle, influencing me before I reach the end. I believe that the drafting of the clause makes it clear that the report should be laid before a disposal of shares is made. The clause requires the Secretary of State to lay a report as soon as reasonably practicable after a decision has been made to undertake a sale of shares.

The arrangements needed to organise a disposal of shares in Royal Mail to a trade buyer through a competition or to conduct a public flotation would take several months. It would not be the case that the Secretary of State would decide over breakfast to sell shares in Royal Mail and then complete the sale by the time we in this House enjoy our evening dinner. It simply would not happen that way. The starting gun for work on the specific arrangements for a sale would be a decision by the Secretary of State to undertake a sale. Under the Bill, the Secretary of State has to lay a report before Parliament as soon as reasonably practicable after a decision is taken to dispose of shares. This would be before a sale of shares. I therefore kindly ask the noble Lord to withdraw the amendment.

[Lord Young of Norwood Green]

I thank the Minister for her response. I must admit that had I known that the blandishments of the noble Lord, Lord Hoyle, would be that effective I would deploy him more regularly and more often. That way, we might achieve acceptance of at least one amendment. We have gone from considering affirmative and super-affirmative procedures to a report. Blandishments from me or the noble Lord, Lord Hoyle, seem to be of no use whatever. Nevertheless, we still believe that this is a reasonable request. It is part of what we would describe as accountability and scrutiny. For the time being, I beg leave to withdraw the amendment—again, on the understanding that I may well return to this matter on Report.

Amendment 7 withdrawn.

House resumed.

18:19

Sitting suspended.

Energy Bill [HL]

Tuesday 8th March 2011 Lords Chamber

Report (2nd Day)

18:25

Amendment 167

Tabled by

[Lord Whitty]

167: Before Clause 99, insert the following new Clause—
“Compensation where the Secretary of State requests termination of offshore lease or agreement to lease
(1) The Secretary of State shall make a scheme (in this section, an “early termination compensation scheme”) to have effect where—
(a) a lease granted or agreement to lease has been made by the Crown Estates for the purpose of construction and operation of a generating station powered by wind, wave or tidal energy, or of equipment for transmission of electricity at a site in United Kingdom territorial waters or the REZ;(b) that lease or agreement to lease gives the landlord power to determine the lease or agreement where the Secretary of State so requests on the basis that the whole site, or any part of it, is required in connection with oil or gas works or rights; and(c) the landlord proposes to determine the lease or agreement, as regards the whole site or any part of it, as a result of such a request.(2) An early termination compensation scheme—
(a) must require the owner of, or person seeking to exploit, the oil or gas works or rights in question to pay compensation to the full extent of the loss which is likely to be incurred including the recovery of any wasted expenditure, loss of profits and any consequential loss suffered as a result of such works, by the lessee or holder of the agreement to lease as a result of the determination;(b) may, subject to paragraph (a), make such provision as the Secretary of State considers appropriate for the computation of compensation;(c) must make provision for the procedure applicable to the making and determination of claims, including provision for resolution of matters, in the event of disagreement, by an independent body;(d) must provide for the Secretary of State, when satisfied that compensation as required by the scheme has been agreed or resolved, so to certify in writing; and(e) may contain such other provision as the Secretary of State considers appropriate.(3) The landlord must not determine the lease or agreement to lease until the Secretary of State has certified the determination in accordance with subsection (2)(d).
(4) Subsections (1), (2), (5), (6), (7)(b) and (8) of section 33 apply, with the necessary modifications, to an early termination compensation scheme.”

[Lord Davies of Oldham]

My Lords, I had hoped that we would have a replacement to move the amendment of the noble Lord, Lord Whitty, who is not able to be here. However, we have no one, so the amendment is not moved.

Amendment 167 not moved.

Amendment 168

Moved by

[Lord Judd]

168: After Clause 99, insert the following new Clause—
“Bodies able to produce and supply renewable energyProduction and supply of renewable energy by National Park authorities and the Broads Authority
(1) Section 11 of the Local Government (Miscellaneous Provisions) Act 1976 (production and supply of heat etc. by local authorities) is amended as follows.
(2) After subsection (1) insert—
“(1A) In subsection (1) the definition of a “local authority” shall be understood to include the Broads Authority and National Park authorities when applied to subsection (1)(a), (b) and (d) (production of heat or electricity or both; establishment and operation of generating stations for production of heat or electricity or both; and use or sale of heat or electricity).”
(3) In subsection (3), after “a local authority” insert “including the Broads Authority and National Park authorities”.”

[Lord Judd]

My Lords, we live in an age of communication, but I was in a meeting at the other end and there was no Lords screen; it was just intuition that brought me back. The amendment is intended to raise on Report a matter that we discussed in Committee. The aim is to put the parks and broads authorities on the same footing as local authorities in being able to develop alternative energy possibilities in the national parks and in the broads authority area, and to feed back into the national system. That has been made possible by legislation for other local authorities, but somehow these authorities were not included. The purpose of the amendment is simply to ensure that they are put on an equal footing.

I will make two points. First, the park authorities are very keen to do this. They have found all sorts of imaginative ways in which it could be done, and which would be very much in keeping with the purposes, environment and character of the parks. Small projects done appropriately by park authorities could be a great generator of interest in the possibilities that could be undertaken by other people; they could have great demonstrative value. For all these reasons, I hope that we will get some firm reassurance from the Minister that we will see the possibilities opened up for the park authorities without further delay. I beg to move.

[Lord Deben]

My Lords, having been rather critical of the national parks in the past, I support the comments of the noble Lord, Lord Judd. They should be accepted with one small caveat; namely, that the national parks ought in these circumstances to do everything in their power to make sure that others who are in the national parks should be able to play a part in this, and do things independently as well. My one concern is that the national parks should not feel that this is something only for them. It should be something for everyone who lives in the national parks, and when it is more suitable for other people to do something, I hope that they will be able to do it. Not all, but one or two national parks are inclined to believe that only what they do is acceptable. With that caveat, I hope that the Minister will help the House to agree with what the noble Lord, Lord Judd, seeks to do.

[Lord Davies of Oldham]

My Lords, I am grateful for that last contribution from the noble Lord, Lord Deben. He indicated that past experience of the national parks was not always entirely satisfactory. As we all recognise, what Minister ever finds that a group for which he is responsible is entirely satisfactory? However, the noble Lord indicated that he did not quite subscribe to the perspective that my noble friend Lord Judd proposes in his amendment, and I am very glad that today he has indicated that he supports the amendment, which is an important contribution to the Bill. I am sure that the Minister will look upon it favourably. The national parks will not be asking for anything outrageous, merely that they should play their part.

We all recognise the uniqueness of the national parks' ability to commit themselves to aspects of renewable energy. I agree with the noble Lord, Lord Deben. The national parks should not be able to operate in an exclusive manner; they must also look towards canalising within their areas others that can make this contribution. However, there is no doubt that providing an opportunity for the national parks to contribute to these renewable energy developments will be advantageous, and I hope that the Minister takes the same view.

18:31

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, I very much welcome the amendment of the noble Lord, Lord Judd. In Committee, we all spoke very favourably about this particular aspect. At the time, I said that I would, through my officials, actively look to see whether we could include this measure, and I have good news. We have consulted and carried out research, though counsel, and the good news is that the national parks have the authority to undertake this role. We now have to encourage them to understand that they have that opportunity. I know that, in addition to the message that I shall be sending the national parks myself, I can count on noble Lords here to ensure that this message gets back to them. I am extremely pleased with this development, as, I hope, is the noble Lord, because it saves us having to move a government amendment, which would only have taken more of your Lordships’ time.

I re-emphasise what my noble friend Lord Deben said. It is important that national parks understand their responsibility and how they transfer that responsibility to the people who live within them. It is important that they exercise the authority that they have through this amendment, and that they support renewable activities and microgeneration for those who live in national parks. I hope that that satisfies the noble Lord, Lord Judd, and I ask him to withdraw his amendment.

[Lord Judd]

This is very encouraging news and I hope that it is not just in the world of aspiration. I have absolutely no doubt about the Minister’s personal commitment to, and hopes for, this area. However, I hope that a way will be found by the Government to get firmly on the record what the parks’ powers are in this respect. I hope that he can give me an assurance on that.

[Lord Marland]

Perhaps I may reassure the noble Lord that we will get something on the record, and I shall be very happy to write to him outlining the details.

[Lord Judd]

In those circumstances, I thank the Minister. His response has been very constructive throughout our deliberations on this matter, and this is very encouraging news. I just say to the noble Lord, Lord Deben, that every time he speaks on the national parks, I am dying to know which two national parks so obviously got under his skin when he was Secretary of State.

With regard to the point about the role of the parks and the role of the people within them, as I understand it, that is very much how the authorities envisage the future. They have to be certain that people who undertake projects of this or any other kind do so in the context of the purposes of the parks and that they do it in the most sensitive, environmentally friendly way, respecting the objectives and not breaking them. However, if people want to undertake possibilities of this kind within that firm commitment, I am sure that the park authorities will welcome such co-operation with those who want to play a part.

Above all, I thank the Minister and, at this stage, I beg leave to withdraw the amendment.

Amendment 168 withdrawn.

Amendment 169

Moved by

[Lord Lea of Crondall]

169: After Clause 101, insert the following new Clause—
“PART 4AEnergy revenues, taxes and subsidies: equitable price effectsEnergy revenues, taxes and subsidies: equitable price effects
(1) The Treasury shall publish an annual financial abstract of all fiscal and quasi-fiscal instruments, including revenues, tax expenditures and subsidies, which relate to the supply of energy, including hydrocarbons.
(2) The Office for Budget Responsibility shall produce annual assessments, having regard to each carbon budgetary period specified under the Climate Change Act 2008, of the incidence on each sector of the economy, including—
(a) manufacturing and services;(b) public and private transport, including—(i) road travel (by bus and private vehicles),(ii) rail and air travel (both personal and freight);(c) home and industrial heating.(3) The Office for National Statistics shall publish in easily assimilable form an assessment of how each fiscal instrument or market intervention affects consumers with different levels of income.
(4) Both assessments shall be tabled for discussion at a periodic forum of industry, trade unions, consumers and other stakeholders; and the forum shall publish its minutes and executive summaries of documentation shall be circulated widely.”

[Lord Lea of Crondall]

My Lords, the proposal in this amendment is, in some respects, complementary to the green industrial strategy. I think that the Government are doing rather well, in terms of the co-ordination within government, in getting their act together on a green industrial strategy, and this Bill bears witness to that. I know that a couple of weeks ago the Green Economy Council had its first meeting on the green industrial strategy. The council is chaired by Vince Cable and attended by Chris Huhne and Caroline Spelman, together with, I believe, junior Ministers from the Treasury and other departments. Apart from Ministers, there is very wide participation from members of industry, including the modern energy industries, and trade unions.

However, that is totally separate from where I think there is currently a gap in the narrative so far as concerns the general public, although it is in the same family of issues relating to carbon and so on. I refer to the tax subsidy side of the jigsaw puzzle. There is concern at the lack of an easily understandable narrative about how the tax and price side affects industry and how what one might call the fiscal energy accounts affect the consumer.

At the end of my speech I shall come back to the nature of the body that I am proposing to deal with this issue but, first, the question to be asked is: what sort of information flow on the taxation and price effect side is needed? I have set out briefly in the amendment the role of the Office for Budget Responsibility in providing verification of, and therefore greater credibility to, the picture presented by the Treasury. I also mention the role of the Office for National Statistics. It is a very important part of the governance of Britain but in some respects it has its own independent role, as must be the case in all countries. We all go round the world talking about the independence of audit and statistics as being central to a properly run modern mixed economy. Statistical bodies certainly have to be seen to be independent, and the ONS can, separately from the Treasury, produce independent studies—for example, on the income distribution aspect, which is measured in several ways, including through the composition of the retail prices index and the consumer prices index.

However, we need two sorts of information. One is what one might call a flow chart of the final incidence of all the taxes and subsidies faced directly by consumers today and indirectly through industrial sectors—transport being a notable example of that, given the weight of hydrocarbon fiscal imposts, and heating being another good example. Of course, that is information that can be presented at a point in time, but more significant in the dynamics of the hugely changing scenario over the next five to 10 years—and it is more or less a revolution in how the fiscal context of energy is governed—is the carbon floor. Over time, there will be a hugely important set of indirect subsidies relating to the carbon floor compared with if it were not there. Broadly speaking—you could have a very complicated debate on this—you can underpin a carbon price agreed nationally or internationally, or you can have a carbon tax, and we could debate that.

Another idea is the new entry tariff for electricity. That was announced by the Treasury and DECC in a Statement last December. You do not have to look into a crystal ball when you can read the book. A straightforward carbon tax—I shall use that as a proxy for all other hydrocarbon taxes—is highly regressive. We know that four times as much share of income is spent on carbon by the bottom decile compared with the top decile. That information is often fed to journalists. The person in the Rolls-Royce pays more but not as a percentage of his or her income. Unless people are deliberately setting out to mislead, it is not sensible to say that.

It is also not sensible for people to say on the BBC or anywhere else, unless they want to be mendacious, that people who no longer own cars because they cannot afford them are no longer part of the calculation under the heading of cars. Although that is the rule in the Office for National Statistics, there is a linking mechanism. If you are a youth looking for a job and you do not have a car, there is not much comfort in someone saying, “By the way, you haven’t got a car so this is not a cost to you as measured in the retail prices index”. People have to get their brains round that—this is the central theme of my speech and my amendment—so that they do not think they are being sold a pup. On home heating, currently the top decile of people pay 2 per cent of their income and the bottom decile pay no less than 16 per cent of their income.

I think the Treasury, DECC and others collect an amazingly interesting variety of statistics, some of which are hidden. Officials very kindly took me through some of the things available. I thought I knew roughly what was available but there were two or three things I had not heard of. That is not hiding one's light under a bushel; it is a failure to factor in or agree, a priori, the fact that statistics do not speak for themselves but they need some relevance to a narrative that is presented to people in Burton upon Trent. That does not happen at the moment. It is vital and it will be increasingly challenging to ensure that that happens in future. I put it to the Treasury—some of my best friends work in the Treasury—that they deliberately confuse the need for confidentiality and secrecy when it comes to the Budget. There is a question of how open they should be when it comes to simplifying information for popular consumption. You cannot get away from the fact that the Treasury is a highly political department because it and the Chancellor take a lot of heat from the public and the media on the big issues of the economy, taxation, employment and so on.

Against that background, I strongly welcome the creation of the Office for Budgetary Responsibility. I shall be corrected if I am wrong, but I think that the precursor to that was a statement by Gordon Brown or Alistair Darling before the election; they were present at the conception. I think it is now separate from the Treasury in terms of the building; it has its own Act of Parliament and I think it even has a telephone number. I spent months trying to ring it up and someone said, “Who do you want?”. I said, “Who are you?”, and he said, “I’m in the Treasury”. I said, “I’m trying to get the Office for Budget Responsibility”. There was a lot of shuffling around and then I heard, “Jonathan, are you the Office for Budget Responsibility?”—I am caricaturing it of course. That will be an increasingly important part of the national governance furniture.

18:45

The OBR fits the requirement in my amendment like a glove. It is a cross between the Treasury and the Institute for Fiscal Studies. In other words, you can ring it up, you can go and see the people, you can discuss things and you can say, “How does that add up?”, and so on. That will be a bit of a culture shock for the Treasury, but I am sure it will get used to it and come to love the OBR.

I am underlining this so heavily because the analysis on this increasingly complex area—I echo a phrase from the noble Baroness, Lady Noakes, who I believe is on a skiing holiday at the moment, although I do not think that should be in Hansard—has to be at the unimpeachable end of the spectrum. It will be open to ordinary mortals as well as to Select Committees and so on to ask questions. Those questions will not be batted off, as questions to the Treasury often are, on the grounds that the Treasury high priesthood is not running public seminars in understanding statistics.

Another reason why transparency is highly important —comparing apples with apples—is that to gauge the subsidies per kilowatt hour of different forms of generating electricity, it is essential to make sense of the economics of each source and maybe that can be monitored and corroborated by the forum on carbon taxation, the body that I am suggesting in my amendment.

I draw attention to an interesting supplement in this week’s New Statesman, where there are various examples of why it is very important that people are not conned into giving large amounts of money to different interests on different forms of energy without total clarity about what is coming in return. I quote from one of the authors:

“certainly with potentially very large amounts of money to be made—and lost—by different energy industries there will be some intense lobbying on all sides”.

You can say that again.

Another aspect of the playing field—

[Baroness Northover]

Perhaps I could remind the noble Lord that, according to the Companion, he is expected to keep to 15 minutes. Given the time on the clock, he might want to draw his remarks to a close.

[Lord Lea of Crondall]

I am sorry. I have read the Companion. I am moving on amendment so the time limit is 20 minutes.

[Baroness Northover]

The important thing is for us to focus on the matter in hand; perhaps the noble Lord might bring his remarks to a sharp conclusion.

[Lord Lea of Crondall]

No, I am sorry, but I think that that is a bit rough when I planned on the basis of what I was told this afternoon was the interpretation of the Companion. Are you making a ruling?

[Baroness Northover]

I am reading what it says in the Companion. We are losing time. Whether it is 15 minutes or 20 minutes, I am sure that the noble Lord will wish to bring his remarks to a clear conclusion.

[Lord Lea of Crondall]

I will take another three minutes as a compromise, if I may, because I am not there yet.

Carbon capture and storage is another good example where lobbyists say that they need to give confidence that they can recover their up-front costs. That is in fact a demand for an open-ended subsidy. I could go on. Those are all difficult questions to put into the jigsaw puzzle that the statisticians have to put together. We cannot just have random subsidies all round.

I could mention the electricity market reform proposals, where there are four options—the noble Baroness, Lady Northover, will be pleased to know that I will not read them all out. How many people in this country —how many people in this House—know about them? If we are talking about baseload nuclear and the problems of making wind power work, we cannot shut down wind power, so will nuclear have to shut down when the range of electricity use between the summer night and the winter night is between 25 gigawatts in summer and 50 gigawatts in winter? What will the rules be about that?

I make my last point. We may think that this is complicated, but it is against the background of a spike in the world price. We must be clear which is the world price effect and which is domestic subsidies for people in the street. That is essential politically. I hope that no one thinks that I am talking in a partisan sense. It can mean less need for higher indirect taxation if people take the view that the important thing is the reduction of carbon growth, but the Treasury will not be keen on seeing that as a scope for lowering indirect taxation.

I am on my last thought. I am very pleased that the noble Baroness, Lady Northover, in our last day in Committee, said that she agreed with a few ideas in my amendment then—there were some things with which she disagreed, which I have therefore taken out. The Government are ticking the box of transparency. Secondly, they are taking the first tentative steps to what I call saleability. We still have to jump the next fence of how to get a high degree of responsibility around the country. That is the signal, which I hope can be taken on board, that there is a good deal of convergence on the view that the approach of the amendment is rational and reasonable. It is very much in the Government’s interest, as well as the wider public interest. I hope that the Minister will now, having heard about the rationale and future adjustments that can be made, give careful consideration with her colleagues before the Bill reaches the other place.

[Lord Jenkin of Roding]

My Lords, the noble Lord, Lord Lea of Crondall, has adumbrated a number of very important issues. I do not dispute that for a moment. It was not altogether easy to follow all the details, but there is no doubt that we have been moving through a consumer revolution in how energy is priced and sold, and the impact of that on the population at large. There are clearly attractions to the noble Lord’s proposal. He mentioned the new green economy council. I, too, have studied the proposals for that and welcome that initiative. We look forward to seeing what comes from that. I am not sure how far that differs from the forum that he proposes in the last paragraph of his amendment.

The noble Lord’s amendment goes very wide. It covers not just prices but taxes and the whole question of the impact on different sections of the community. There is a need for more clarity on this. I cite just two examples. In case some noble Lords feel that they are being singled out, I shall not mention any names. I find it absurd that people can in two successive amendments or speeches demand that this or that renewable should be supported by the renewables obligation certificate—which, as we all know, is fed straight through the supplier companies and falls on to the bills of consumers—and then in the next amendment set up a great cry of woe because of the impact that this will have on the fuel poor. Some people do not seem to have been adding those two things together and realising that there must be some conflict between them: to ask for more subsidy and say that they are very sorry that it will put the price up.

I agree totally with the noble Lord that there is a need for more public understanding of what this is all about. I give another example very briefly. When the Secretary of State for Energy and Climate Change made an extremely important Statement last October heralding electricity market reform—the noble Lord referred to that in his speech—he drew on the paper published by the department last July entitled Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills. At least, I think he was drawing on that. However, there was a freedom of information appeal to the department reported in the Times this January. The headline read:

“Energy shake-up will lift electricity bills to £1,000 in 20 years”.

That may be a massive exaggeration; I do not know, but there are great uncertainties in all this. That seems to be what the noble Lord, Lord Lea of Crondall, is seeking to identify and to provide a process whereby there can be more public understanding. I am sure that we would all applaud that.

The noble Lord proposes to add a major measure, or series of measures, to this Bill, which is quite specific. The Energy Bill is primarily dealing with the Green Deal.

[Lord Lea of Crondall]

I have a problem with what the noble Lord said. Is he suggesting that the Table Office did not think that this amendment could be made to the Bill?

[Lord Jenkin of Roding]

If the noble Lord will just wait a moment, that is the point that I am coming to. I think there is a lot in what he said, but I find it extremely difficult to see how we could add at virtually the last stage—although he raised it in Committee and mentioned it at Second Reading—a series of major proposals.

[Lord Lea of Crondall]

My Lords—

[Lord Jenkin of Roding]

The noble Lord must allow me to finish my sentence. How could we add a major series of constitutional and economic innovations which would clearly need infinitely more discussion? The House is extremely full at the moment, and we could go on discussing this for some time, but it is not for this Bill. I hope that the noble Lord will find other opportunities to bring this forward on other occasions, because there are many things that could be discussed; but at the moment, at this stage—on the last day on Report; we will have Third Reading next week—I just do not feel that we should accept this amendment.

I do not know what my noble friend is going to say from the Front Bench, but I think that it would be a somewhat bizarre action for this House, at this stage of the Bill, to add the very far-reaching amendment that the noble Lord has tabled. He has spoken to it eloquently and explained what he is trying to achieve. I have indicated that I think there is much merit in that for generating public understanding. However, I would advise the House against trying at this stage, with what would inevitably be a comparatively limited debate, to add a wholly new process of government in order to fulfil the requirements of the amendment. I just do not think that we should do that.

19:00

[Lord Lea of Crondall]

Before the noble Lord sits down, I have to come back and say that he is totally misinformed about how this amendment was written, when it was written, where it has been placed in the Bill, and so on. This amendment was written for debate in Committee—just like the innumerable amendments that were debated with speeches of several hours at a time by the noble Lord, Lord Jenkin. That is the first thing. The second thing is that the fact that it has been placed at the end of the Bill was not my doing. I could have had it in Clause 2, and then that argument would have fallen. Thirdly, I have made it clear that we have reached a stage where a lot of noble Lords have said that the points are interesting in terms of scrutiny. The amendment also has to go to the House of Commons. I find it amazing that that is the best argument that the noble Lord can offer regarding an amendment to which I have given a lot of study and thought. I have looked at statistics and discussed it with civil servants—

[Baroness Northover]

I remind the noble Lord that he will have the opportunity to respond to all the points made in this mini-debate at the end of the debate, after the Minister has replied.

[Lord Jenkin of Roding]

I shall finish my speech, as I gave way to the noble Lord to allow him to make his intervention.

I am not complaining that the amendment is placed at the end of the Bill. Of course the noble Lord has placed his amendment where it appears to fit. I am concerned that he is proposing a major series of changes to the whole way in which all the organs of government—the Treasury, the Office for National Statistics and all the others—should conduct themselves, and a new forum to examine the assessments. With the greatest respect, I do not think that this can be added to a Bill of the very specific nature that we have before us.

[Lord Deben]

My Lords, I hesitated to break into my old mentor’s speech, but I want to agree with him and to say to the noble Lord, Lord Lea of Crondall, that in his speech he proved why this is impossible. In this amendment, the Office for National Statistics is supposed to publish all this in an easily assimilable form. Your Lordships' House might suggest that after listening to the noble Lord, Lord Lea, it is quite difficult to feel that it would be easy to produce an easily assimilable form.

The second thing I would say to the noble Lord, Lord Lea, is very important. It is always true that the poorer you are, the more heavily any imposition weighs upon you. It is not new to say that a particular sum is heavier on somebody who has a small income than on somebody who has a large income. That is why it is very important in the way in which we deal with these matters to see that it falls as lightly as possible on those who are least able to bear it. To spend a great deal of time producing this material in a form that I fear will not be easily assimilable and will probably not be read by the very people for whom it is intended does not help this issue. This issue is that in everything the Government do, in everything the coalition do, they have to seek to do it in a way that is as equable as possible. I say to your Lordships that we are already placing huge responsibilities upon the system of government, and to add to those this very detailed, extremely expensive and, I have to say, probably not used collection of new statistics without any real indication that it is going to be of any practical value is unnecessary not only at this stage of the Bill but at any stage of the Bill.

Finally, the thing we should be concentrating upon is enabling individuals to influence their spending. That is what matters, not what the Office for National Statistics says. Individuals should be able to see how much energy they are using, how they can best prevent that energy being used, how they can opt-in to the Green Deal and how they can make their lives more comfortable and happier. That is what we should be concentrating on. We should be moving away from this determination constantly and centrally to mull over, reproduce, redo, represent and reargue all these cases and get down to the real issue. How does Mrs Jones do something about her own energy use? How does she make her home more energy efficient? How does she know when she is using that energy? How is she able to take advantage of lower tariffs by, for example, doing her washing at a time that is not a peak time? All those things demand the fast installation of smart meters. I hope they will not be prescriptive but will merely say what they are supposed to do rather than how they do it. I hear some rather unnerving information from the ministry that sounds as though it wants to be terribly detailed about it. I hope it is not going to be like that. That is what we should be emphasising: helping individuals to make choices that benefit them rather than providing a lot of statistics that I suggest will be read by nobody. If they will be read by nobody, they will do nobody any good.

[Lord Oxburgh]

My Lords, I, too, have some sympathy with the interest of the noble Lord, Lord Lea of Crondall, in proposing this amendment. However, I, too, do not feel that this is the way forward. This is a very big matter and requires very careful consideration. At this point, I think I have an opportunity to offend all political parties in the House by saying that within the energy industry there is bewilderment that pretty much all the political parties believe that energy poverty should be treated separately from every other sort of poverty at the expense of distorting our energy market and our energy costing. In the view of many outside, it would be much more sensible to let energy prices do what they must. It is inevitable that we go into a more expensive energy world and handle the whole poverty problem together.

[Lord Teverson]

My Lords, I, too, sympathise with a number of the themes that the noble Lord, Lord Lea, has brought forward, but I remind the House that this is Report stage and, to be honest, I find this amendment quite muddled. I find it very difficult to understand its detail or even what it is trying to achieve in terms of its words. I understand from the noble Lord, Lord Lea, what he is trying to achieve, but I am not even sure that if we put this into the Bill it would achieve that. Subsection (1) of the proposed new clause refers to a range of things including quasi-fiscal instruments. I do not know whether that is a technical Treasury term that the noble Lord, Lord Lea, has got from his friends in the Treasury, but I do not understand it.

I seriously do not understand what proposed new subsection (2) means. It seems to connect carbon budget periods, which as we know are five years, with annual assessments, and I am not sure what it is trying to do. The list in proposed new subsection (2)(a) to (c) exclude the industry that paid for my mortgage in the first 20 years—the road freight industry—inland waterways and shipping, and I am not sure that its purpose is comprehensive.

Proposed new subsections (3) and (4), again, come back to statistics that I think are generally available. It has not been difficult for me to find most energy statistics that I have tried to find.

I agree that we have an issue with the amount of money that ROCs and feed-in tariffs actually cost consumers, as my noble friend Lord Jenkin of Roding reminded us, and with the way in which these charges affect groups in fuel poverty differently. However, I honestly do not feel that this amendment achieves what we want to achieve within a reasonable understanding of what this amendment actually says. For that reason, I find it impossible to support it at this stage of the Bill.

[Lord Davies of Oldham]

My Lords, this has been a fairly substantial debate that justifies at least one decision which the House came to the other evening: that we would not be able to rush consideration of this and the other amendment and deal with them within the time limit that we had at that time. I am grateful to my noble friend for having generated quite a significant debate on the issues.

It is a little unfair to suggest that this amendment comes somewhat late in the Bill, as we discussed it extensively in Committee. I indicated from the opposition Front Bench that we did not find parts of it entirely acceptable at that stage. In particular, we could see Treasury colleagues bridling at the concept of hypothecated taxation, which is an additional complicating dimension to the proposals. My noble friend Lord Lea has worked hard, and harder, to take out that part of his amendment and still retain the merits of the original amendment.

This amendment has come in its proper place in our consideration of the Bill. It is not as though we are at the last stages of our consideration of this Bill in Parliament. The Bill started in this House, and our job in a sense is to clarify the issues and to make amendments where we think amendments should be made so that our colleagues in the other place can address the Bill with the benefit of the considerable expertise that this House brings to bear on matters of this kind. We therefore owe my noble friend a considerable debt for having raised these issues.

Does this matter fit within the Bill? I understand the point made by the noble Lord, Lord Jenkin, but I fear that that point can be made about every Bill that is likely to come before the House. I can think of Bills that relate to energy, Bills that relate to the environment and green issues, and Bills that relate to a Treasury position. All will say that their Bill focuses on particular issues, as the noble Lord, Lord Deben, spelled out accurately, and that we should not try to drop a load of matters into it that are not extraneous but that bring other dimensions into the Bill that are not its primary purpose.

19:15

The danger is that we fail to address the very issues which my noble friend Lord Lea has worked so hard to address. How do we get coherent energy policy that is transparent enough to be conveyed effectively to our fellow citizens? Of course I presume, as my noble friend Lord Lea did in his opening remarks, that we are all straining towards the same objective. We all know that to hit the carbon reduction targets and to tackle the energy crisis over the next 30 to 40 years we will need a consensus that goes beyond all of us in this House. It will have to be a consensus that obtains on Governments who are 20 years away and who will be composed of the next generation or the one after of our fellow citizens, so of course we seek to be consensual. However, to be consensual we need to take our citizens with us.

The merit of this amendment is that my noble friend is struggling to identify the framework in which we establish degrees of transparency and orderliness on issues that span government departments and successive Bills on energy and other matters but that need to be seriously considered. My noble friend must be right when he says that the danger is that we identify meritorious things for subsidy and are then involved in an accumulation of individual actions and support that lack coherence and that do not have a strategy that is necessary for the task that we face.

I respect the reservations of noble Lords who have spoken in this debate, but surely it must be right for the Government to face up to the complexity of this issue. We ought to take as many opportunities as we can to identify this complexity. If by accepting this amendment we send a signal to the other place that it, too, must engage in this debate, and even if at the end the Government are not convinced that they can make the strategy in this amendment workable—and we know the strength of the Government when it comes to their majority position—at least we will have significantly advanced the cause of identifying for our fellow citizens crucial aspects of energy policy that it will certainly be difficult to win their support for and agreement to. Excessive division on some objectives would render nugatory the whole consensus that we require in such a crucial area.

I hope that the Minister, when he comes to respond to this amendment, will take it warts and all and accept that its broad proposals are worth continuing to debate, given that we are far from the final stages in Parliament of consideration of this very important Bill.

[Lord Marland]

My Lords, I am very grateful to all noble Lords who have spoken on this matter. Indeed, the noble Lord, Lord Lea, has yet again provoked a substantial debate—43 minutes on Report so far, and an hour and 15 minutes in Committee—on a very complicated subject. He identified in his speech the complications of getting to grips with this. To some extent—and I will make a partisan point here—we have in his view inherited a complicated situation that could perhaps have been solved over previous years but that is so complicated it is probably very difficult so to do. In fact, he has spent time with our officials, and with Treasury officials whom we put at his disposal, discussing this matter and, I hope, better understanding the complications.

The noble Lord is perhaps concerned that there is not enough information. Well, there is the Office for Budget Responsibility. There is the National Audit Office, which produces annual statistics. There is our own departmental publication, our annual report, which produces the statistics that are being mentioned. We have the Digest of United Kingdom Energy Statistics and an annual publication on energy prices. I could go on.

My noble friend Lord Deben makes an extremely good point. How much continual burden of statistics and information are we going to put on people, which they would have to digest in order to work out what is going on, in the name of transparency? As we have agreed through these debates, transparency is fundamental. That is one reason why we are bringing the smart meter into people’s homes to make readily available the information on the electricity that they will be spending. We have discussed throughout the merits of smart meters, a fundamental platform for this Bill.

I agree with the noble Lord, Lord Jenkin, it is fundamental that we have better public understanding of the cost of electricity and it must be the aim of the Government to do that. Not for one moment do we not accept that the noble Lord, Lord Lea, makes some important points, but we cannot sort this out in nine months of government or, with a click of the fingers, in the short period of time that has been available to this Bill.

However, it should be reviewed and we should look at it. We should embrace it in our electricity market reform programme, which is under consultation, and we will consider it through that process. Perhaps appropriately, as the noble Lord, Lord Jenkin, suggests, it will be part of a Bill that looks at this area and not be part of one which has fundamentally been driven by the Green Deal, admittedly with a few add-on bits. The noble Lord, Lord Judd, recently proposed an addition in an excellent amendment.

The Government do not feel that this is an appropriate amendment for this Bill. We believe that it is something that we should consider. Like the previous Government, we constantly believe in transparency and helping the general public to better understand this complicated issue of energy and electricity prices. Perhaps I may remind noble Lords that we are committed to this. On that basis and with that assurance, and in recognising the important and great value that this amendment has brought to the debate, I hope that the noble Lord, Lord Lea, will withdraw his amendment accordingly.

[Lord Lea of Crondall]

My Lords, I hope that I do not have to come back in three years’ time because there are riots in the streets and name all noble Lords who said that this did not need to be done. There will be great anxiety in the everyday lives of people because matters will have got mixed up in their minds about the obligation. I am sorry that the noble Lord, Lord Deben, is now so intellectually confused that he does not remember that it was he, following Kyoto, who brought in a degree of hypothecation whereby we are transferring funds to mitigation in Bangladesh and so on. These are all part of the deal. It involves a huge amount of money, which soon will approach $500 billion a year. Therefore, people should have a chance to understand.

I am afraid that everyone from the noble Lord, Lord Jenkin, on has contradicted themselves and has made totally inconsistent remarks. It seems that if people do not understand the statistics, presumably that is their fault and the poor dears will never be able to understand them. We should put the statistics in a form that people can own and understand, giving them a picture of the problems, and reasons for the price increases, that they can accept. I do not know whether the noble Lord thinks that he is living in ancient Athens, but we have a wider electorate than they had there.

[Lord Jenkin of Roding]

I think that the noble Lord has totally misunderstood what I said. I went to great pains to indicate that I thought that the noble Lord, Lord Lea, had raised a number of extremely important points. My only argument, which has been supported by other speakers around the House, is that this is not the right Bill in which to do it. There needs to be much more discussion and probably a separate Bill—perhaps the next energy Bill.

[Lord Lea of Crondall]

On that point we can both read tomorrow’s Hansard to check who used which argument. Certainly, the noble Lord, Lord Deben, and, I think, the noble Lord, Lord Teverson, deployed the argument—no doubt one of them will put their hand up and say whether it was them—that this is an expensive statistics-gathering exercise. I do not think that we are talking about gathering more statistics, which are very expensive to produce. We are talking about £60 billion or £80 billion. What a ridiculous argument.

I hope that Ministers will think about this proposal before the Bill goes to the Commons and that our opposition colleagues in the other place will want to take it forward. We are moving into a dangerous area of potential misunderstanding. We have a huge spike in the world oil price and on top of that an alternative between a carbon floor and a carbon tax—not exactly the same thing—both of which will be regressive.

I am sorry that the noble Lord, Lord Oxburgh, is no longer in his place because he made a sweeping statement of socioeconomic doctrine that we should achieve all this through original income distribution and not try to help people with their home heating Bills. I do not know what responsibilities he has had in the world of meeting actual citizens—he is a very distinguished scientist—but we have to look at the wider public interest and the acceptability of peaceful governance of this country. I think that there is something like that in one of the prayers that the right reverend Prelates read from time to time. Something along those lines at least is in the Book of Common Prayer of the Church of England. That argument is a total red herring at this stage. It has been put down as an amendment just like the amendments of the noble Lord, Lord Jenkin. We will have to consider what to say at Third Reading.

Things are changing fast. In another astonishing aside, the Minister said words to the effect that we are rushing things. For a coalition, which has an agreement to change the world, the constitution, the Parliament, the way in which we elect people, this dog’s breakfast of the Public Bodies Bill, and a long list of other things coming forward, such as the health services Bill, to say that we cannot take these measures in this sort of timescale is not a very telling argument.

In my opening remarks, I made the point that this is not a partisan amendment at all. I am very sorry that the Minister felt that he had to say that this mess, or words like that, has been inherited from the Labour Government. That is ridiculous. Things are happening all the time. We have the world oil shock and the new EU framework, which I understand is about transparency and subsidies as regards renewable energy. All these things are happening and we are trying to get ahead of the curve. All that I can say to noble Lords is “Mark my words”. For the moment, I beg leave to withdraw the amendment.

Amendment 169 withdrawn.

Clause 103 : Extent

Amendments 170 to 173

Moved by

[Lord Marland]

170: Clause 103, page 77, line 18, leave out “sections 9 and 11(2) to (4) and (8)” and insert “section 9”

171: Clause 103, page 77, line 21, at end insert—
“( ) section (Acknowledgment of green deal plan in connection with other transactions etc)(3) (further provision made in regulations for acknowledgment of such a plan);”

172: Clause 103, page 77, line 28, leave out “sections 10 and 11(5) to (7) and (9)” and insert “section 10”

173: Clause 103, page 77, line 31, at end insert—
“( ) section (Acknowledgment of green deal plan in connection with other transactions etc)(4) (further provision made in regulations for acknowledgment of such a plan);”

Amendments 170 to 173 agreed.

Clause 104 : Commencement

Amendments 174 to 180

Moved by

[Lord Marland]

174: Clause 104, page 78, line 7, leave out “sections 10 and 11(5) to (7) and (9)” and insert “section 10”

175: Clause 104, page 78, line 10, at end insert—
“( ) section (Acknowledgment of green deal plan in connection with other transactions etc)(4) (further provision made in regulations for acknowledgment of such a plan);”

176: Clause 104, page 78, line 22, leave out “88” and insert “(Amendment of section 166 of the Energy Act 2004)”

177: Clause 104, page 78, line 35, leave out “, 8(1) and (5)(a)”

178: Clause 104, page 78, line 35, after “11” insert “, 12(1), (2)(a), (3)(a) and (4)”

179: Clause 104, page 78, line 38, leave out “(except sub-paragraphs (1) and (5)(a) of that paragraph)”

180: Clause 104, page 78, line 39, after “12” insert “(2)(b), (3)(b) and (5)”

Amendments 174 to 180 agreed.

Prevention of Terrorism Act 2005 (Continuance in Force of Sections 1 to 9) Order 2011

Tuesday 8th March 2011 Lords Chamber

Motion to Approve

19:30

Moved By

[Baroness Neville-Jones]

That the draft order laid before the House on 3 February be approved.

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 8th Report from the Joint Committee on Human Rights

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

My Lords, the purpose of the order before the House today is to renew Sections 1 to 9 of the Prevention of Terrorism Act 2005 pending their repeal and replacement with an alternative regime. These sections expire after one year unless renewed by order subject to the affirmative resolution of both Houses. The effect of this order will be to maintain the control orders powers until 31 December 2011, and I emphasise that this is a limited and temporary renewal. As the Home Secretary said on 26 January in another place, this allows us to bring forward the legislation introducing a replacement system. In due course the House will obviously be able to debate the new legislation in detail.

By way of a preliminary I should like to set out the context for the proposal before the House. Sadly, I have to say that the threat to the United Kingdom from terrorism is as serious as we have faced at any time, and it remains assessed by the Joint Terrorism Analysis Centre as “severe”. Since the beginning of the year, there have been a number of major terrorist attacks that have resulted in the deaths of many innocent people. These attacks have occurred in different countries from Russia to Afghanistan to Yemen and to the Philippines, and they show that a large number of fatalities still result from terrorist attacks. This country has been well protected, but nevertheless in the UK we have witnessed a number of significant terrorist plots that have been uncovered over the past year, and recent investigations and trials show that terrorist networks are continuing to plan and to attempt to carry out attacks. The threat we face continues to evolve, and I do not think that it is going to diminish or change to any material extent in the near future. That is the background against which we have to look at the temporary legislation and the new regime.

The coalition’s commitment to redress the balance in our counterterrorism powers was made in the run-up to the election and we therefore conducted a review of the counterterrorism and security powers. That review included consideration of the necessity, effectiveness and proportionality of control orders. On behalf of the Government I thank the independent oversight given to that review by the noble Lord, and now my noble friend Lord Macdonald. The review underlined that the Government’s absolute priority is to prosecute suspected terrorists in open court and that imposing restrictions on suspected terrorists who have not been convicted in open court should be the last resort. I want to emphasise that prosecution is our objective. Where restrictions are required they should, as far as possible but given the need to protect the public, continue to support the primary objective of prosecution.

The review concluded that for the foreseeable future there is likely to continue to be a small number of people in the United Kingdom who pose a real threat to our security but who, despite our best efforts, cannot be prosecuted or, in the case of foreign nationals, deported. Our reluctant conclusion is that there will therefore continue to be a need for a mechanism to protect the public from the threat of such individuals.

Noble Lords may be aware that the noble Lord, Lord Carlile of Berriew, reached the same conclusion in his most recent and, indeed, his last independent report on control orders, and the other statutory consultees support the proposal to renew the control order powers. I should like to say to the noble Lord, Lord Carlile, and I am sure that other noble Lords will want to join me in this, that the Government thank him for his very thorough work over the past 10 years on the review process. His reports have been a model of clarity and succinctness and a great aid towards everyone’s understanding of what was at issue.

I am aware that a number of Members of this House and members of committees have said that they would have liked to have been able to see, at the time of the renewal of this order, the legislation that we are going to bring forward. I have to say that we will bring forward that legislation as soon as we can. We regard it as extremely important to get it right. We do not want to get ourselves into a position where subsequently we are reviewed and changed in our intentions through court action.

However, it is only right, as we have already done, to give the highlights of the provisions that we intend to bring forward, which mark real changes in the regime. It will provide, among other things, a two-year maximum time limit on the measures, which will clearly demonstrate that these are targeted and temporary. It will be possible to impose a further measure on an individual only if there is evidence of new terrorism-related activity after the original measure was imposed, which of course is different from the current situation. Measures will have to meet the evidential test of reasonable belief that a person is or has been involved in terrorist-related activity, and this of course is a higher threshold than the test of reasonable suspicion of such involvement, which of course exists under the current control order regime.

The police will be under a strengthened legal duty to inform the Home Secretary about their ongoing review of a person’s conduct with a view to bringing a prosecution. A more flexible overnight residence requirement will replace the current curfew arrangements. Forcible relocation to other parts of the country will be ended. Geographical boundaries will be replaced with a power to impose much more tightly defined exclusion from particular places only. There will be no power to exclude someone, for instance, from the totality of, say, a London borough. Individuals will have greater freedom of communication, which will include access to a mobile phone and to a home computer with internet access, subject to certain conditions such as providing passwords. They will have greater freedom to associate. For example, there will be no blanket restrictions on visitors or meetings. They will be prohibited only from associating with people who may facilitate terrorism-related activity. And of course they will be free to work and to study, subject again to any restrictions necessary to protect the public.

These changes will allow individuals to continue to lead a normal life as far as possible, subject only to the restrictions necessary to prevent or disrupt involvement in terrorism-related activity. We are clear that the more limited restrictions that may be imposed may indeed facilitate further investigation as well as prevent terrorism-related activities. The new regime will be accompanied by an increase in funding for the police and the Security Service to enhance their investigative capabilities. That is an absolutely key part of the new measures. We intend to bring forward legislation to this effect shortly and, as I have said, it must be properly prepared so that it may be properly scrutinised by this House. We welcome the support given by the noble Lord, Lord Carlile, to these measures and, indeed, the comments that have been made by the Joint Committee on Human Rights in its recent reports. The committee has expressed some welcome, even if perhaps only cautious, to the new system. The Government will of course reply formally to the detailed recommendations that have been made in those reports.

In the mean time, the Government are clear that it would be irresponsible to allow the current regime to lapse in the absence of alternative measures and while the investigative capabilities of the law enforcement and security agencies remain to be developed. As I say, that is a key part of the new regime. It is therefore important to underline that, for the time being, control orders should remain legally viable. While they may be imperfect, they have had some success in protecting the public and they are fully compliant with the European Convention on Human Rights.

It is sometimes asserted that controlled individuals do not know why they are subject to a control order. I remind the House that, as a result of the Law Lords judgment of June 2009 in AF and others, this is no longer the case. That judgment specified that controlled individuals must be given sufficient information about the case against them to enable them to give effective instructions to the special advocate.

Pending the introduction of the replacement to control orders, we believe that it is right, proper, proportionate and essential that these powers continue to be available in order to protect the public. As I have said, we are currently preparing the legislation to introduce the replacement system, which we will bring forward in the coming weeks. I have no doubt that noble Lords will want to give the new measures thorough scrutiny and we must have time to do that. While that process is under way, it would not be responsible for us to leave a gap in public protection. Therefore, we believe that it is right to ask the House to renew the powers for this temporary period, the alternative being a situation in which those who pose a threat to our safety could go about their activities with far too great freedom.

This is the last occasion on which the House will be asked to renew these powers. Before transition to the new regime is complete, the risk to the public would be grave indeed were the control order powers not to be renewed. I therefore ask the House to approve the renewal of the powers for the transitional period. I commend the order to the House.

[Lord Lloyd of Berwick]

My Lords, as all your Lordships know, control orders were introduced in March 2005 as an emergency measure. We in this House, after an all-night sitting which I shall never forget, insisted that the Government should have to come back after 12 months in order to justify the extraordinary powers which had been conferred on the then Home Secretary. They were indeed extraordinary powers, because they enabled him, on suspicion, to impose what amounted in effect to house arrest on an individual who had never been charged with any offence. Yet here we are, six years later, being asked to renew those very same powers yet again.

In a powerful briefing note which I am sure the Minister has read with care, Liberty describes the control order regime as being “completely discredited”. It would be difficult indeed to disagree with that view. However, Liberty is equally critical of what is now proposed in place of the control order regime, the so-called terrorism prevention and investigation measures —TPIM for short. We do not, of course, know what the Bill will contain, and it is the greatest pity that we do not have a draft of the Bill before us today. When we do get it, I hope that it will be subject to pre-legislative review.

The present indications are that the Bill will contain many of the objectionable features of the existing control order regime. Indeed, Liberty describes the new regime in its briefing note as simply control orders under a different name. Whether or not that is right is not a question for discussion today; that will be a matter for great debate when we see the Bill. No doubt the Government will then argue—as the Minister has indicated already—that there is a real difference between the Home Secretary being required to believe that a person is a terrorist and the Home Secretary being required to suspect that he is. Similarly, the Government will no doubt argue that the overnight residence requirement is much less restrictive than the curfew, which is to be abolished, and no doubt they will argue that the TPIM will allow access to the internet and much greater freedom to communicate and associate with others.

19:45

As I say, that is an argument for another day. For the purpose of today’s discussion, I am prepared to assume that the Government are right about all that. We know that eight individuals are currently subject to control orders. One has been subject to a control order for more than four years; three have been subject to a control order for between two and three years; and four have been subject to a control order for between one and two years. No doubt they will all have been glad to hear that control orders are to be abolished at any rate by December. To extend the control orders beyond December—I understand the Minister to say that that will not happen—in the light of what may then be yet another emergency, would be the gravest injustice. Is there not something else that we could and should be doing now for those wretched individuals in anticipation of the regime? I have already mentioned that under the new regime the Home Secretary must believe that an individual is a terrorist; it is not enough that she should suspect. That being so, surely she should now review each of those eight cases and see whether they satisfy the stricter test which will be the order of the day from December onwards. If they do not in any case satisfy the stricter test, it is surely the duty of the Home Secretary now to quash those control orders rather than to wait and see what the new Bill says when it is ultimately in force.

Even if the Home Secretary decides in the case of all eight individuals that the control orders satisfy the stricter test, there is still much that could be done. There is a body of which the Minister will be aware called the control order review group. It is its duty to keep under continuous review the obligations to which each of those eight individuals is subject and to ensure that their current obligations are proportional to the risk that they currently pose. One of the eight individuals currently subject to a control order is subject to a 14-hour curfew. Happily, the curfew will be abolished in December, or at least not later, and replaced by what is called the overnight residence requirement. On no view would an overnight residence requirement extend to 14 hours. Surely it is therefore the duty of this body, CORG, and of the Secretary of State to consider that case and to see whether there is any ground for keeping the curfew as long as 14 hours. Surely it could be reduced now to eight hours, or whatever is thought to be a likely period of an overnight residence requirement.

It may be said that there is no harm in asking those individuals, who have waited so long without being charged, to wait at least until the new regime is in force. We are dealing here with human beings who have been subjected to the most unusual restrictions on their liberty for many years, under a system which is now discredited. In the cases that I mentioned, it has been in operation for more than two years, which will be the maximum under the new regime. Surely it is time to show these individuals a little humanity. It might even increase the chances of mounting a successful prosecution against one or more of them if we take the course which has been so strongly advocated by the noble Lord, Lord Macdonald—who I am glad to see in his place—in the report on the review.

I hope that the noble Baroness will take the points that I have made back to the Secretary of State and let us know in due course whether there is not something that can be done now in anticipation of what will be in the Bill.

[Lord Judd]

My Lords, we all recognise that this is an immensely difficult issue. Before I say anything about it, I take this opportunity to yet again express, without qualification, my admiration for Ministers, the security services and the police in the heavy responsibilities they carry on our behalf in protecting society. I hope that anything I say today will be seen in the context of that sincere recognition of what is being done on our behalf and will be constructive.

The Minister referred to the Joint Committee on Human Rights and I shall concentrate on its report. She said that there will be a government reply to the Joint Committee. However, the Joint Committee serves and reports to us and it is not satisfactory for us to consider the report in the absence of the detailed ministerial response to it, because we ought to be able to take that into account in evaluating the observations of the Joint Committee. I pay tribute to the hard work which is done consistently by the committee on these matters.

Without any observations of my own, I shall concentrate on highlighting what the Joint Committee has said. I thought the Minister was a little ungenerous in her comment on its comment. I read as quite positive its remark that,

“we welcome the Government’s commitment to repealing the control order regime and its renewed commitment to the priority of criminal prosecution”.

Those are splendid words from a committee which is not renowned for making observations of that kind and I endorse them wholeheartedly.

The report then, of course, introduces the word “however” and questions,

“whether the renewal of the control order regime through the draft Order is consistent with the recommendations of the Government’s Review of Counter-Terrorism and Security Powers”.

In the committee’s view,

“the Government should urgently review all existing control orders to ensure they are compatible with the findings of the Review of Counter-Terrorism and Security Powers. Where the Review found that certain requirements cannot be justified because they are too intrusive, those obligations in existing control orders should be removed or reduced so as to be no greater than those which will be permissible under the proposed Terrorism Prevention and Investigation Measures regime. This should also apply to any new control orders made under the existing regime if it is renewed”.

The Joint Committee then goes on to make some specific recommendations. The Government should explain to us—in this debate, presumably—

“why it is considered justifiable to maintain control orders on individuals for more than two years in the absence of any new evidence of their involvement in terrorism and whether TPIMs will be imposed on persons already subject to control orders for two years”.

It also recommends that:

“The Director of Public Prosecutions should be asked to consider whether a criminal investigation is justified in relation to each of the eight individuals subject to existing control orders and whether, in each case, everything possible is being done to investigate and gather evidence with a view to such prosecution”.

The committee then makes a very important point about which I am quite concerned. Until a few years ago I was a member of this committee and I remember coming up against it even then. It recommends that:

“The Minister should meet with representatives of the special advocates to discuss their continuing concerns about the fairness of the special advocates system”.

This troubles me because, when I was on the committee, the special advocates shared their concerns with us. They said it was very stressful being expected to operate in a way which was quite alien to their professional training and the way in which they normally would expect to conduct themselves in court and in the fulfilment of their professional responsibilities.

This brings me to why these matters are so important not only in terms of abstract principle but in practical terms. First, we say that we are protecting society with all these measures, but what are we protecting? Our system of law is absolutely crucial to what makes Britain a society worth defending, and I am always anxious that, inadvertently, over a long period of time, we are eroding the quality of that law and undermining the professional commitment of the people within it by what they are expected to do with the special arrangements in place.

Secondly, we are, in a sense, in this dreadful ongoing challenge that confronts us, also involved in psychological warfare. In psychological warfare, highly manipulative extremists are always looking for opportunities to exploit doubts or misgivings. Therefore, our ability to demonstrate that we are doing things transparently and keeping within the law as it has always operated in this country is terribly important to winning the battle for the minds of people. This gives poignancy to the recommendations of the Joint Committee.

The Minister referred to her commitment to pre-legislative scrutiny before the new arrangements are brought into play. I am glad that she did so because there is evidently a misunderstanding. In its report, the Joint Committee draws attention to the fact that, in giving evidence, the Minister did not seem to suggest that pre-legislative scrutiny would be appropriate. To have that reassurance from her tonight—I would be grateful if she could underline it in anything she says later—is important.

Another point on the findings of the Joint Committee which should be emphasised is that it also recommends that,

“the Government publish a summary of the views of the Crown Prosecution Service, the police, the security and intelligence agencies and Government departments on the Review of Counter-Terrorism and Security Powers, to facilitate parliamentary scrutiny of the Review; and a summary of the views of the Director of Public Prosecutions and the Director-General of the Security Service about the proposed renewal of the control order regime”.

I do not want us ever inadvertently to give a victory to the extremists and terrorists. If we are not to do so, a resolute commitment to transparent justice—to people knowing why they are being held and the reasons for it—is absolutely essential. If we are not doing that, then all kinds of genuinely concerned, not sceptical or cynical, young people—and not only young people—in society will be very anxious and will not be full-heartedly behind the Government in the responsibilities that they are trying to discharge on our behalf.

20:00

[Lord Macdonald of River Glaven]

My Lords, I declare an interest as the independent overseer of the review of counterterrorism and security powers. Like the Joint Committee on Human Rights in its recently published report, I strongly welcome the Government’s conclusion that the current control order regime can and should be repealed, consistent with public safety. It is obviously essential that it is replaced with something that is very different in character and not simply a pale imitation. We shall have to look closely at the legislation that comes forward to ensure that that is not what the Government have in mind. The review has clearly shown that the present regime is inefficient, grants excessive power to the Government, and undermines traditional British norms and respect for the rule of law. This may not be surprising. It was introduced by accident, following a series of court judgments adverse to the last Government. It has been a bad mistake.

I also strongly welcome the Government’s renewed and strengthened commitment, expressed in their response to the review, to the absolute priority of criminal prosecution. Where people are involved in terrorism they must be detected with all the considerable power at the disposal of the state, then prosecuted and locked up. It is not just public confidence that demands this but also our traditional common-law attachment to the supremacy of due process in criminal justice and our courts. The fact is that the evidence gathered by the review has made it clear that the present control order regime acts as a fundamental impediment to prosecution. This is because the restrictions placed upon controlees forbid the very contact and activity that, under proper surveillance and investigation, lead to evidence fit for prosecution. It is also because far too many controlees are simply warehoused under the supervision of the security services, beyond the scrutiny of criminal investigation, and therefore beyond any real possibility of prosecution.

For good reasons, the instincts of the security services are protective rather than prosecutorial in nature but this practice, and the Security Service’s primacy within it, means that some serious terrorist activity remains completely unpunished by criminal law. This is a serious and continuing failure of public policy. Any new scheme introduced by the Government must not replicate this failure. To give reality to the primacy of prosecution, which is the Government’s stated aim, it should clearly become an intrinsic part of any new regime that restrictions placed upon individuals should be linked to a continuing criminal investigation. After all, if the Home Secretary, under the new regime, is to go to the High Court to assert her belief that an individual is involved in acts of terrorism so that she may obtain an order placing restrictions upon that person, it would be quite absurd for there to be no active criminal investigation into the individual in question attendant upon the Home Secretary’s application. Yet that is the position that we are in at the moment.

Of course, if there were always such an investigation in progress, court-approved restrictions mandated for the duration of that investigation, up to a maximum period of two years, would become much more constitutionally acceptable—a form of pre-charge bail. I have no doubt that such a reform would garner broad support for the Government’s new regime, including among those most bitterly critical of the current arrangements. This reform would encourage evidence gathering and therefore increase the likelihood of prosecution. It would bring the new regime much closer to criminal justice, which is an obvious good in itself with all the protections that criminal justice implies for suspects. The Government should urgently reconsider their preliminary view on this issue which, frankly, has been hostile.

Again frankly, any Security Service opposition to intense police activity around controlees should not be a trump card. The public interest is wider than the instincts of the Security Service. In fact, the trump card should always be found in locking up those people who want to wreak violence upon our communities and putting them in prison cells for long, long years. This is the true deterrent and it is also the process that truly protects the public in a way that control orders never have.

There is a separate issue. A further conclusion of the review was that relocation—the practice under which people were forced to move to other parts of the country away from home, family and friends—should be abolished, and that long curfews should go. These were among the most bitterly resented aspects of the old regime and for good reason. They were also the most offensive to our traditional norms, imposed as they were without prosecution let alone conviction, and without the controlees being told any more than the mere gist of the allegations against them. Whoever would have thought that in Britain we would have a form of internal exile without prosecution or conviction?

The Government have now agreed that these provisions are excessive, disproportionate and, unnecessary—and I would add offensive. We do not need them, as the Government have now determined. They intend to abolish relocation and long curfews under their new regime. In those circumstances, they should do so now. How can it be right for this House to be invited to extend powers that the Government themselves have conceded are wrong in principle and excessive in practice, particularly when those powers impact so vividly upon civil liberties? I invite my noble friend to consider a way to proceed that does not include renewal of these quite excessive and, as we now know, unnecessary intrusions. Those subjected to them should not have to labour under these oppressive measures any longer. There can be no conceivable public interest in obliging them to do so when the measures themselves are serving no useful purpose.

Finally, it will be critical for this House and the other place to examine with great care the legislative proposals that come forward. It is always tempting for the bad old stuff to slip back into a piece of draft legislation. We must not end up in the position of approving a system later this year or early next year which is a form, as some people have put it, of “control order light”. We need real reform in this area. If there are to be restrictions, they must be coterminous with criminal investigation. There must be no restrictions which destroy the ability of the state to obtain evidence against people who might have been involved in terrorism, which is precisely the effect of the present regime. It has failed and must stop.

[Baroness Kennedy of The Shaws]

My Lords, I will be brief. First, I suspect I am one of few people in the House who has been involved in some of these cases in the courts. I have seen them at close quarters.

Many noble Lords will also remember that I was one of those on the Labour Benches who strongly opposed the Labour Government introducing control orders. I opposed them then and ever since. I welcomed the fact that noble Lords on the other side of the House, whose faces are familiar, all went through the Lobbies with me opposing control orders. Now they are sitting in government and I want to remind them of the principled stand that they all took on control orders. It is easy, once in government, to hear poured into their ears the position taken by the security services that somehow this is the only way forward. With regard to the issue of dealing with persons suspected of links with terrorism where it would be difficult to bring them to trial, I have always advocated that surveillance, the use of intercept and so on can be done, but without interfering with liberty in the excessive way that control orders have meant. I am saddened and disappointed that the siren voices of the security services have persuaded the Government that something not very different from control orders should be the way forward. I am sure that I will be one of the people who take part in the debates when the legislation is presented to this House, and I will rigorously test some of the suggestions that have been made.

I strongly support what has been said by the noble and learned Lord, Lord Lloyd, and indeed the noble Lord, Lord Macdonald: given the principled position that the Government are going to do away with control orders, and even if the position is that something else will come in of a lesser order but somewhat similar, it is quite wrong at this moment to keep the thing that they have criticised for so long with regard to the eight people currently subject to the level of suspicion that we have heard about. It cannot be right to continue that until the end of this year. At the very least, the Government should be reducing the constraints upon liberty to the standard that they are intending to introduce, and then that can be revisited in December. However, it cannot be right for them to continue with control orders when they so bitterly opposed their existence once they had been introduced by new Labour in government. I ask that, in the spirit not just of decency but of appropriateness, the cases that we have spoken about and the noble and learned Lord, Lord Lloyd, mentioned be revisited.

I reiterate what my noble friend Lord Judd has said: one of the jewels in our crown, one of the great limbs of our democracy, is the way in which we interpret the rule of law. I am a proud champion of the common law. We have always believed that due process was vital before we in any way encroached upon the liberty of human beings. That is a proud tradition here and it is a sort of ceding to the terrorists if you abandon those values, which are so precious in our society. I strongly urge that we do not go down the road of introducing something similar, because it is a poison in the system. It is a way of saying that it was not just a temporary measure; somehow we have bought into this idea, and an alternative to the things that we have always believed in can now be introduced. I urge that we think again about that.

I was interested to hear that the noble Lord, Lord Macdonald, said that there are alternatives, and I hope that in the months to come the Government will look again at what they are intending to do.

[Baroness Afshar]

My Lords, I add my thanks for the decision by the Minister to abandon forced relocation. However, I have been given to understand by Liberty that this weekend a young man with a young family was forcibly sent off. I want to highlight the law of unintended consequences: a young family is left behind that will be deprived of rights that this very same young man is going to have in the very near future. That means that a child will be raised apart from the care of the father of the household, but that child has committed no crime. My understanding was that the House has always agreed that the interests of children should be put first. It surprises me that at this stage we still are forcibly sending off young people who may or may not be guilty and punishing their family in the process.

20:15

[Lord Ahmad of Wimbledon]

My Lords, I thank my noble friend for her earlier statement. I join her in thanking the noble Lord, Lord Carlile, for his stewardship of what has been a very sensitive area.

I am reminded of when control orders came about, how they were introduced and the sense of the terrorism that gripped our very shores. I remember 7/7 vividly for various reasons: first, as someone who was travelling at that time; secondly, as someone who would have been impacted directly through both friends and family; and, thirdly, because of what happened in the aftermath when it was perceived that a particular faith or a particular community had indulged in, or been involved in, those acts. For all those reasons, a chill went down my back. It was important at that time that action was taken.

Britain, as many noble Lords have said, is a place of great liberty and freedoms, and that is right. However, the people who enact these crimes or even conceive of them do not respect that. They do not respect these laws, freedoms and liberties. Somewhat ironically, it is the very freedoms that are provided by our country that allow them, not to act, but to conceive of acting in that way.

We have heard from many noble Lords that control orders are not the perceived way forward. The Government accept that; indeed, my right honourable friend the Home Secretary has said that quite clearly. However, I am concerned. Until the revisions are introduced, what is the option? What do we do in the interim? The threat of terrorism is alive today. If we cast our mind across the world to Pakistan, in Faisalabad today there has been yet another terrorist attack. As the Minister has said, this is not a threat just to the UK; it is a threat internationally, and we must react to it. Britain is a great place for civil liberties and freedoms, but equally the first responsibility of the Government must be to the citizens and residents in this great country—to protect their freedoms and their rights, yes, but also their safety and security.

While the extension of control orders is not perceived in this House as welcome, until we fill that vacuum there is an absolute need to ensure that our citizens are protected. I am sure that as the new legislation comes forward there will, with the wisdom possessed by this House, be robust debate. For tonight, though, I support the Minister in ensuring that control orders are extended to protect that majority. It is the exception who fall victim to control orders, but the majority must be protected. I lend my support to the extension of these orders, with the hope that the new legislation that we will see will be right for Britain and will continue to protect the residents and citizens of our country.

[Lord Bew]

My Lords, I would like to thank the noble Baroness, Lady Neville-Jones, for introducing this statutory instrument, which has of course a narrow, technical and short-term focus. In doing so, she displayed her customary vigilance in these matters. I am happy to support the instrument and, indeed, the Government’s plans for liberalisation in this area. Like other noble Lords, I particularly welcome the decision to increase access to internet and mobile phones under certain conditions for those affected by these orders, and I am glad, too, that the ability to relocate terrorist suspects in new areas will in all likelihood go. These are necessary, explicable and entirely defensible liberalisations.

We have heard much tonight about the case made by Liberty in a very fine document sent to many noble Lords, but I simply want to make one point on the other side of the argument regarding the extent to which all of this is shrouded in mystery. I simply think that it is possible for all of us to read some of the open-source evidence, including the High Court documentation, on these matters. If one does so, it is much more difficult for one to say that what is at stake here is a mystery of some sort. In fact, there is a significant amount of evidence in the public domain. Perhaps this bears on the argument about the role of the security forces in making a case behind the scenes—no doubt that goes on in all Governments—but, even without access to that sort of information and discussion, which most of us do not have, there is none the less a lot of material in the public domain that the Government have to take seriously. That is a balancing point that is worth making.

I am happy to support this temporary instrument as a necessary measure for public protection.

[Baroness Hamwee]

My Lords, the Minister started by giving the context for this order; my personal context falls into two parts. Like the noble Lord, Lord Ahmad of Wimbledon, the events of 7 July 2005 had an enormous impact on me personally, as much as on anyone who was not actually on one of the tube trains or on the bus. In addition, I am hugely aware of the capacity for restrictive measures to act as a recruiting sergeant for actions that seek to achieve destabilisation and that rack up calls for more measures that are contrary to our democratic principles. I have said that because I do not want what I will go on to say to be thought of as being a sort of hearts-and-flowers approach.

The points made in the report done by my noble friend Lord Macdonald of River Glaven and in the recent report by the Joint Committee on Human Rights are issues that I hope the Government take on board in the next stage of dealing with these matters. I hope that both reports will feed into the final design of the measures. Like others, I will not attempt to cover all the ground tonight, but I will make a number of points on which I personally feel particularly strongly.

Respecting the principles of the rule of law and, to the greatest extent possible, applying the normal principles and processes of the criminal law and the criminal justice system are to me, as to other noble Lords, fundamental and indeed essential. I mention simply these requirements: due process within the criminal justice system; judicial, not executive, action; special advocates—the noble Lord, Lord Judd, talked of how what they are required to do is alien to their professional training, but I suspect that it is alien to their instincts as well; the role of the DPP; and that the new measures should be a point on a road to prosecution rather than an end in themselves, which the Minister this evening has confirmed is the objective.

On the issue of curfew, as my noble friend’s report recommends—I will put it more crudely than he did—giving those who are suspected of terrorist activity enough rope to hang themselves is in itself very persuasive, quite apart from the other issues. On the objections to curfews, both in principle and in practice, I have to say that I have never been persuaded that ordering someone to stay at home for up to 16 hours a day would deter him if he was determined to commit terrorist actions. Like others, I am pleased to hear that relocations are to cease. Can the Minister tell us any more about that? A residence requirement, which I hope will mean a requirement just to have a normal residential address, is not a curfew and I hope that such a requirement will not come anywhere near being a curfew.

It is important that, as far as possible, the new measures allow the person subject to them, and, importantly, his family, to get on with life. I have read comments by someone who was subject to a control order saying that the arrangements for signing in at a police station could not have precluded work or study more, and that they made normal life completely impossible. Points have been made around the House about the Government reviewing the current orders now and relaxing the regime to one that they have already decided is appropriate. The noble Baroness, Lady Afshar, asked the Minister whether it is the case that a young man and his family have been relocated in only the past few days.

In evidence to the JCHR the Minister argued that, despite there being lower numbers of controlees compared with the past, resources for surveillance are not currently adequate to reduce numbers to the level that several noble Lords have described. That may be something that the independent reviewer will be able to consider. No doubt there will be a review before we get to the end of this process. Like others, I hope that there is wide consultation on the legislation and the draft emergency legislation, which the Government propose to create and keep on the stocks in case it is needed. Confining consultation on that to the Opposition on Privy Council terms would not garner the expertise that is available to the Government.

[Lord Judd]

On one point that the noble Baroness has made, would she not agree with me that the special emergency measures are absolutely a priority for scrutiny because of their very nature? The way that they will be used in an emergency means that it is terribly important that Parliament should look at them thoroughly and think through in advance what their implications will be.

[Baroness Hamwee]

I almost always agree with the noble Lord; I certainly do on this point. If they are to be introduced as a matter of urgency—no doubt in a climate in which calm judgment will be difficult—that in itself argues for calmer judgment at an earlier point.

The current system is hardly perfect. I recently met someone who had been controlled, although the control order had been quashed. He said that all he understood of the reasons for the order was that he had been assessed as having been trained in countersurveillance. What techniques did he have? He was on the top deck of a bus with his son and turned his back on the CCTV camera. The Minister has anticipated this, but I have recounted the tale because it is part of what we are considering. It indicates how we need to move forward. The controlee does not want his name to be mentioned. I found his story and the comments of Dr Michael Korzinski—the psychologist and clinical director of the Helen Bamber Foundation, whose client he was—profoundly affecting. He talked about the practical, legal, health, emotional and relationship issues and the impact on his family. Dr Korzinski talked about how social isolation, ostracism and stigma affect the brain, saying that his client “was essentially driven mad”. I understand from him that there has been no mechanism for oversight or review of the impact of the orders on the mental and physical health of the individuals and their families. People who have been seen at the Helen Bamber Foundation have developed serious mental health problems as a direct consequence of control orders.

It occurs to me that the role of the independent reviewer, with access to an expert panel of mental health and other relevant professionals, could be extended to ensure proper monitoring and review in this regard as well as others. We must be very careful how we treat individuals and how—here I think that I echo the noble Lord, Lord Judd, almost word for word—we protect our society from becoming a society which we as citizens would not in our turn wish to support.

20:30

[Baroness O'Loan]

My Lords, I will be extremely brief on this issue. It is very clear that everyone in this House is opposed to terrorism but the question we must ask is how effective the control orders have been. The noble Baroness, Lady Afshar, asked what their impact had been on those who have been affected by them, not simply those who are subject to the orders but their families and those who suffer the effects of these exclusion orders. The noble Baroness, Lady Kennedy, and the noble Lord, Lord Macdonald, referred to alternative forms of investigation and surveillance.

One of the consequences of not using powers of surveillance and investigation in Northern Ireland to the extent that they led to prosecution was that we saw a development in criminal activity. I am not suggesting that the control orders would lead to that but one of the consequences of repressive anti-terrorist legislation is that it grows the terrorism which it seeks to defeat by virtue of the impact it has on the communities on whom it is imposed and on which it impacts. The evidence is very clear that legislation which is neither proportionate nor necessary has the effect of growing resentment in those communities, and that that resentment can lead ultimately to people becoming involved in, or possibly supporting in some very minor way, the very terrorism which it seeks to defeat. Is it not possible for the control order to slip into oblivion, for the new measures to be introduced in December, and in the mean time to make use of the very extensive powers of investigation and surveillance available under the Regulation of Investigatory Powers Act and other legislation?

[Lord Hunt of Kings Heath]

My Lords, I am most grateful to the noble Baroness, Lady Neville-Jones, for introducing the order. I echo my noble friend Lord Judd in thanking our security services and police for their co-ordinated work in keeping us safe. We know that plots have been foiled recently. It is clearly our duty to provide the police and security services with the tools and procedures that they need to do their job effectively. As we have heard today and in previous debates, that sometimes means walking a very difficult line in balancing individual freedom with collective safety—the noble Lord, Lord Ahmad, put that very well—with the rights of the wider community sometimes outweighing the rights of the individual. Control orders have been the tool for that and I thought that the Minister said that they had had some success. In an ideal world we would not wish to use control orders. It would be greatly preferable if our criminal justice system could deal with terrorists who wished to cause us harm but the view was taken by the previous Government and previous Home Secretaries that control orders were a necessary evil.

The order before us provides for the continuation of the power to make a control order against an individual when the Secretary of State has reasonable grounds for suspecting that the individual is, or has been, involved in terrorism-related activity. I echo the noble Baroness’s tribute to the noble Lord, Lord Carlile, for the work that he has done. We know that eight people are subject to control orders at the moment. My understanding—perhaps the noble Baroness will confirm this—is that some of these orders have been made since the coalition Government came to power. The implication of what the Minister has said is that the Government recognise that a number of people pose a real threat to our security who cannot be prosecuted or deported. Therefore, the Government have come face to face with reality in recognising the need for a mechanism to protect the public from the threat that such individuals pose. The Sixth Report of the Independent Reviewer states clearly:

“The control orders system, or an alternative system providing equivalent and proportionate public protection, remains necessary, but only for a small number of cases where robust information is available to the effect that the individual in question presents a considerable risk to national security, and conventional prosecution is not realistic”.

It looks like the Government have gone through a steep learning curve in the past few months, but one of the results is an absurd situation whereby the order on 28-day detention was allowed to lapse without the draft emergency legislation being in place. Legislation has now been published but, as yet, we do not know when Parliament will discuss it.

A number of noble Lords referred to the report of the Joint Committee on Human Rights that examines whether Parliament should be given the opportunity to conduct pre-legislative scrutiny of the proposed emergency legislation. The noble Baroness will know that the Select Committee said that it does not accept the Government’s reasoning for not providing this opportunity and recommends that the legislation should be published and made available to Parliament for pre-legislative scrutiny. I invite the noble Baroness to comment on that specific recommendation. I also echo the point raised by my noble friend Lord Judd, who referred to the recommendation in the committee’s report that the Government should publish a summary of the views of a number of the agencies involved in counterterrorism in order to facilitate parliamentary scrutiny of the review. I accept that the report was published only a few days ago and I would not expect the Government already to be able to come to your Lordships’ House with a full response. That would be unreasonable. However, the noble Baroness should be able to say broadly whether she accepts those recommendations and can respond to them.

It is noticeable that the proposed new control order regime pays particular attention to surveillance. We are told that sufficient finance will be available to the police and security services for that resource-intensive proposal. Will new money be made available? The noble Baroness owes it to the House to inform us as to how continuation of the current control order regime will be dealt with, given the financial cuts that the police and the security services are facing. I pray in aid to the noble Baroness the report published today that details some of those cuts.

Will the noble Baroness inform the House about the impact on the capability of our counterterrorism work of the changes proposed in the Police Reform Bill that is now in the other place? That is highly relevant to this order and to what is likely to take place over the next few months. I have great reservations about the proposal to impose elected police commissioners on our police forces. I have no doubt whatever that it risks politicisation of our forces and inevitably corruption. That is a debate for another day, but I am concerned about the impact on national strategic policing issues, which are relevant to this debate.

There can be little doubt that police commissioners will be elected on manifestos that are bound to focus on local policing issues. I suspect that it will be a question of which candidate proposes more bobbies on the beat. That is fair enough, but what if these elected police commissioners neglect their national responsibilities? What if they do not make appropriate resources available for counterterrorism work? The noble Baroness speaks with great authority on this issue. Is she convinced that there will be sufficient intervention powers at a national level to ensure that elected police commissioners do not inhibit national security work in which the police have a major role to play? I assure her that we will come back to that issue.

These are not easy issues. As every noble Lord who spoke today said, we in this country have a long tradition of individual rights and freedoms. We are all very proud of that. As the noble Lord, Lord Ahmad, said, we have responsibilities for the safety and security of the public in very challenging times. It is a very difficult balance to achieve. The Official Opposition support the extension of the order this evening. We look forward to the new legislation on how we can scrutinise what happens. I hope that we will be able to reach consensus that meets the requirements of individual freedoms while keeping the safety of our country to the fore.

[Baroness Neville-Jones]

My Lords, I thank the House for the thoughtful tone of the debate that followed my opening remarks. It demonstrated, not surprisingly, that there is a range of views on these issues. There are strong principles involved and I do not resile in any way from the principled stand that I took in opposition. However, I always said—and it is still the case—that one has to measure what one does against the security needs of the country, and what one does must be consistent with those needs. It is a matter of regret that we came to the conclusion that we cannot simply revert to a situation in which we can rely on open and normal prosecution through the courts. It is much to be desired that that is where we will come to. However, after detailed examination—this was a very thorough process—we came to the reluctant conclusion that we could not dispense entirely with the measures that lie alongside the normal judicial system.

I am grateful to noble Lords for many of their remarks. Perhaps I might have wished that more recognition had been given to the differences that exist between the measures that we are proposing and those that exist at the moment. We had regard to what was said, in particular about the psychological effects of relocation; we took a view on the necessity of a very long curfew; and we did our best to create a situation in which normal life will be open to those who are under restrictions and they will be able to work. Many of them do not, but we would like those who have work to be able to do it. We are trying extremely hard not to distort the lives of those individuals who are under restrictions any more than is necessary.

There will be an opportunity for scrutiny of this legislation. That is one reason for wanting to have in place a temporary regime. I was asked about pre-legislative scrutiny. The Government have no problem with this. It is partly a question of the amount of time available to do various things. I am sure that the House will attach importance to us not continuing the existing control order regime longer than we need to. We must allow enough time for scrutiny on the Floor of the House, not only of the TPIMs but also, as the noble Lord, Lord Judd, remarked, of the emergency provisions. I take his point and put it to noble Lords that we need to be practical about how we go about giving the scrutiny that this House and the other place will want to give to this legislation. I am not saying that the Government see an obstacle to it in principle; it is simply that we have doubts about the practicality.

I was asked whether there will be new money for the extra surveillance. The answer is yes, and I shall come back to that in a moment. I was also asked whether we will give information about, or publish, the evidence given by some of the services in the process of the review. I am not going to promise that. I think it will be perfectly understandable to Members of this House why it is necessary to keep the confidence of the security services, in particular, but also the police in this matter. We will do our best to—

20:45

[Lord Hunt of Kings Heath]

The Select Committee’s report came out only a few days ago. Is that a considered response in the light of the report? I entirely understand the point that she is making but I wonder whether the Government need to give a little more time to that.

[Baroness Neville-Jones]

As I said, I am not going to make that promise. I was about to add a sentence when the noble Lord rose. We will take this under advisement and see whether we can give some kind of summary, but if the noble Lord does not mind, I do not want to give a totally definitive answer to that point this evening.

I was asked a number of detailed points and I shall try, without detaining the House for too long, to go through some of them. Right at the beginning, the noble and learned Lord, Lord Lloyd, asked a number of questions which I think bear on points made subsequently in debate. The implication of his remarks was: would we honour seriously what we have said about the importance of continuing to seek prosecutions? I have three things to say about that. One is that the CORG which he mentioned will conduct serious work. I think that it has always been a serious body but the Government are going to make absolutely certain that the conduct of the CORG—the review body that keeps these cases under continuous and pretty close scrutiny—is serious. We have, I hope, created a situation in which there will be greater possibilities for prosecution. I stress to the House that I think it is only fair to say that the primary purpose of these measures is still protective. Nevertheless, within the scope that is offered, we will certainly be looking at the possibility of continuing and bringing prosecutions. Indeed, the operation of the TPIMs themselves may allow that to happen.

I was also asked why, if we believe that the control orders are imperfect—as, indeed, I said myself—we do not abolish them straightaway. I was asked whether it would not be right to do just that. I remind the House of the condition which is very important to our ability to move to a looser regime, and that is the surveillance that needs to be put in place in order to provide the public with the necessary security. That surveillance does not exist at the moment. Individuals have to be recruited; people have to be trained; and we have to have extra capacity and capability in that area, which we do not have at the moment. I do not think it is reasonable to say that you should be able to abolish the existing regime for the individuals who are currently under control orders in the absence of the necessary conditions for a new regime. Having said that, clearly the current control orders come up for regular review. We shall be reviewing them and of course we will be looking at individuals’ cases in the light of their situations. As I have said, there is clearly a transition to be undertaken. I do not think that I can go further than that at the moment. I understand perfectly well the point that has been made but I hope that noble Lords will also understand the constraints that we are under in moving quickly from one regime to another.

[Baroness Kennedy of The Shaws]

My Lords, perhaps I can deal with the issue of moving people to places like Leicester or up to Norfolk and so on. We have decided that that is abhorrent and that it will not be sought by the Home Secretary. Therefore, can we not now bring back from exile the people who have been put on those orders?

[Baroness Neville-Jones]

When the circumstances are in place and we have the necessary surveillance and protection for the public, we will be able to do so. First we must put in place the conditions that will enable us to operate the new regime.

The noble Lord, Lord Judd, is absolutely right to say, as I should have said, that the Government are extremely pleased that the Joint Committee on Human Rights has welcomed the change. He will also have observed that I did not miss the fact that there were some qualifications in the views expressed by the committee. We shall certainly take those seriously. In particular, he mentioned the unhappiness about the conditions under which special advocates have to operate. In the report there are one or two instances of the special advocates’ conditions of work being eased. It is a big issue and it goes wider than control orders. That will be taken up and examined, and part of the Green Paper that the Government are to bring forward will be devoted to the use of special advocates and the conditions under which they should be able to work for their clients.

I would like to reiterate my thanks to the noble Lord, Lord Macdonald. He did us the honour of saying that he felt that the process had been an honest and thorough one. I am extremely grateful for that, as it is valuable to have that endorsement. I have to be honest and say that there is some light between us on the balance to be struck between protection and prosecution. That is an issue that we shall want to explore further in debate. We entirely agree with him about the supremacy of due process and I do not deny at all that the control order regime inhibits prosecution. We are trying to strike a balance that will enable us to have greater emphasis on the prosecution side of things. However, I cannot conceal from the House that the protective element in the TPIMs is a primary objective.

I believe that I have covered most points. One noble Lord mentioned the role of the reviewer. We now have a new statutory reviewer and, having met him, I have total confidence that he will do an extremely thorough and careful job. I think that he will be a safeguard against the danger to which the noble Lord, Lord Macdonald, pointed—the difference that turns out to be not a difference but a continuation of the existing situation. I do not believe that that is the Government’s intention or the effect of implementation, but there will be that safeguard. He will also report on individual cases. It is right that we should leave that role to him; I do not want to do that role myself.

I hope that I have covered the main points raised in the debate. Perhaps not surprisingly, the noble Lord opposite tried to get me on to the effect of the police reform Bill. I remind him that the budget for counterterrorism is protected. There will be more information about the whole role of the National Crime Agency. I assure him that the national functions of the police will be just as protected as our desire to ensure that the accountability to local authorities on the part of the police and crime commissioners is also a feature of modern policing.

Given the prospect of scrutinising the new regime with the thoroughness that I know this House will wish to apply, and with the clarification that I have been able to give, I hope the House will agree that the order can be renewed, and I commend it to the House.

Motion agreed.

House adjourned at 8.56 pm.