House of Commons (22) - Written Statements (13) / Commons Chamber (6) / Westminster Hall (3)
House of Lords (13) - Lords Chamber (13)
(13 years, 5 months ago)
Lords Chamber
To ask Her Majesty’s Government what progress is being made in improving gender and ethnic diversity in judicial appointments.
My Lords, in February 2010, the independent advisory panel on judicial diversity published its report, which detailed a number of recommendations to deliver speedier and sustained progress to a more diverse judiciary without diminishing appointments on merit. In response, the judicial diversity taskforce was established to oversee the assessment and implementation of those recommendations. The taskforce met last Monday to review what has been achieved to date, and will publish its report on progress shortly.
My Lords, I thank my noble friend for his helpful Answer, but given the lamentably low number of women judges and the virtual absence of ethnic minority judges among our senior judiciary, which bears a very poor comparison with those of other European and other common law jurisdictions, does he agree that it is time for urgent and effective action and that all necessary steps should be taken to ensure that the recommendations of the taskforce that he mentioned, set up as a result of the recommendations of the advisory panel chaired last year by my noble friend Lady Neuberger, are implemented in full and without delay?
My noble friend makes a correct assessment of the figures for judicial appointments. The meeting last Monday was my first with the diversity group, and I made it very clear that as far as I am concerned, the concept of trickle-up is not a response to the diversity problem that we face in the judiciary.
My Lords, we have hardly started. There is time for both noble Lords. Only one of us can be standing up at one time.
Given the nature of the issue, I think that giving way was appropriate.
I remember that when I started at the Bar there were sets of chambers that used to say, “We don't take women”. We then made a great advance where chambers would say, “Women? We've got one”. We now have one woman in the Supreme Court. That has been the situation for seven years. It is not good enough. What is being done? There are four wonderful women in the Court of Appeal. Why is not one of them, such as Dame Mary Arden, being promoted to our Supreme Court?
My Lords, I understand that there are two imminent vacancies to the Supreme Court. I am sure that everyone will be watching as to what happens with those appointments. The noble Baroness touches on another point. The professions themselves— the Bar, the Bar Council, the Law Society and their members—should show leadership in encouraging more women into the legal profession.
My Lords, does the Minister agree that the establishment of the Judicial Appointments Commission acted like a litmus paper in highlighting the barriers which impede progress in this area? Does he further agree that more concerted action is needed by the Ministry of Justice, the judiciary and the professions in order to make a difference?
I most certainly agree with the noble Baroness and I pay tribute to her contribution to making the Judicial Appointments Commission so valuable. I recently met the new chairman, Mr Christopher Stephens. As well as many other attributes, he is the son of a former Clerk of the Parliaments, which should reassure this House.
My Lords, while giving every welcome to the much needed improvements in diversity over recent years, will the Minister ensure that, in the pursuit of these very proper and important aims, quality and merit will never be sacrificed by those who are responsible for appointments? Further, does the Minister agree that all these aims, including quality and merit, should apply to those who are responsible for the appointment of Queen’s Counsel as well?
I hear what the noble and learned Lord said. I can only say that 30 years ago when I was in government in the Foreign Office, women advisers were a rarity at any meeting. Returning to government 30 years later, I quite often sit in meetings where the majority of my advisers are able and talented women. I wonder why the legal profession has not made the same progress in the past 30 years as has been made in public appointments. I suspect that, perhaps not intentionally, the idea of quality and suitability is embedded in the thought “people like us”.
Does the noble Lord agree that the previous question implied that women and ethnic minorities possibly do not have the merit or the suitable qualifications, which should not be allowed to stand? Will he tell the House whether the judicial appointments review will set targets? If that other bastion of male privilege, the City of London, can have targets, is it not time that the senior judiciary did as well?
I think that targetry would be the wrong approach but it is worth remembering the figures. Just over 20 per cent of our judges are women. Even in the magistracy under 8 per cent represent black and ethnic minorities. I understand selection on merit but there are still signs of old selection prejudices that produce these appalling figures. They have to be broken into.
My Lords, I declare an interest as a deputy High Court judge of the Family Division. The noble Lord will know that that appointment was a very long time ago and that the opportunity to be a deputy is very important. Will the noble Lord tell me how many other ethnic minority women of some quality are now appointed in relation to the deputy’s role?
My Lords, I do not have the figures here, but I will write to the noble and learned Baroness. Let me say this about quality. This is not an attack on our judiciary. One of my other responsibilities is as deputy to the Lord Chancellor in his international role. Time and time again, we find ourselves in areas where the judiciary is corrupt and the justice system deeply flawed. I pay tribute to the quality of our judiciary, but I must say that, when the figures show that it is 80 per cent male, we are wasting half our talent. Other professions have shown the ability to change. It is time for the legal profession to change as well.
(13 years, 5 months ago)
Lords Chamber
To ask Her Majesty’s Government whether they will clarify the comments made by the Chancellor of the Exchequer to the Governor of the Bank of England in his letter of 15 February on inflation targets.
My Lords, consistent with the Monetary Policy Committee remit, the governor is required to write to the Chancellor if inflation deviates from the target of 2 per cent as measured by the 12-month increase in the consumer prices index by more than one percentage point. In his response to the governor, the Chancellor noted the Monetary Policy Committee’s assessment of inflation prospects relative to the inflation target and welcomed the committee’s determination to ensure that inflation returns to target in the medium term.
My Lords, I congratulate the noble Lord on the variety of ways that he finds not to answer a question. There are only two answers to the big issue on interest rates: whether or not you agree that they should go up. The Chancellor, in reply to the Governor of the Bank of England, who had said that increasing interest rates would be a futile gesture at the moment, said that he had “complete confidence” in the governor. In those circumstances, and given that this Government are the most transparent in history, can the Minister tell us the Chancellor’s view? Is he for or against an increase in interest rates?
My Lords, first, I am grateful for the congratulations, however backhanded, offered by the noble Lord, Lord Barnett, and I will bank them. We are discussing the letter from my right honourable friend the Chancellor to the governor. In that letter, as I attempted to explain in my first Answer, he does not express any view about interest rates because, as the noble Lord well knows, the setting of interest rates is an independent matter for the Monetary Policy Committee of the Bank of England. I am sorry if I have to be boring about this, but there seems to be some misunderstanding. It is absolutely not for the Chancellor to express any view on this matter. What he does, as the noble Lord recognises, is to express confidence in the governor and the MPC structure and to support their independence.
My Lords, the Chancellor’s letter, which is suitably bland and opaque, contains an intriguing suggestion. It says that the Government are committed to reducing the drivers of inflation, including,
“demand for energy and supply constraints in food markets”.
Can the Minister say what the Government are doing on those two matters?
My Lords, I am grateful to my noble friend for recognising that the Chancellor’s letter was indeed couched in suitable terms. What my right honourable friend said on these points related specifically to commodity markets with our G20 partners—this is a particular focus of the G20 presidency, now with the French—to make sure that we have some global understanding of the drivers and an analysis of what might follow from that.
My Lords, does the Minister agree that the problem is that the only instrument available to the MPC is the interest rate? The present rise in price levels is externally driven, which an increase in the interest rate can influence only by strengthening sterling. That would shift demand away from British markets to overseas markets and totally undermine the Government’s strategy. We know that the rules are that the Chancellor cannot say any of that, for obvious reasons, but is the Minister aware that three members of the MPC voted for a rise in interest rates, each one of whom is supposedly an economist? I do not know whether that is a source of enormous embarrassment to the Chancellor, but it certainly is to me.
I am grateful to the noble Lord, Lord Peston, as ever, for his insights and for pointing out that he did not expect the Chancellor to answer the question that was posed. Therefore, by extension, he would not expect me to do so. There are a number of very serious points here, the most important of which for the Government is that we need to stick to our fiscal policies as they were set out in the Budget and the spending plans last year. Only yesterday, the OECD endorsed the Government’s fiscal consolidation plans and structural reforms, pointing out that, in its view, this rebalancing was necessary for stronger growth. That is what we must stick to as a background against which the independent MPC is best able to make its interest rate decisions.
(13 years, 5 months ago)
Lords Chamber
To ask Her Majesty’s Government, further to the statement repeated by Baroness Neville-Jones on 16 February (HL Deb, cols. 714–15) on the sex offenders register, to what extent the statement took account of ministers’ duty to uphold the independence of the judiciary under section 3 of the Constitutional Reform Act 2005.
My Lords, Ministers are fully mindful of their duty under the Act. HMG took account of their duty to uphold the independence of the judiciary by taking steps to remedy the incompatibility identified by the court.
My Lords, I am grateful to the Minister for that Answer. It is clearly right that we do everything we can to protect the public from sex offenders, but does she accept that the Home Secretary went too far when she described an eminently reasonable judgment of the Supreme Court as appalling? Has her right honourable friend the Home Secretary been reprimanded by the Lord Chancellor and, if not, why not?
My Lords, I should like to make two points in response to that. First, there was real public anxiety about some of the potential consequences of the judgment, which was being reflected by the Government. The Government have taken appropriate action to meet the court’s judgment and to protect the public interest. Secondly, the Lord Chancellor has no doubt spoken to his colleagues.
My Lords, it is always a pleasure for us on the Cross Benches when the pot calls the kettle black. No doubt the Minister will recall that it was a Labour Home Secretary, Mr Blunkett, who wrote in the Evening Standard that he would not give in to the judges. Would the Minister therefore suggest to her right honourable friend that she would do better to follow the line taken by another Labour Home Secretary, Alan Johnson, who, when asked to comment on an adverse court decision, of which there were a great many, would only ever say that he was disappointed?
My Lords, it is not a question of giving in to the courts; it is undoubtedly a question of the proper implementation of court judgments and the role of Parliament in making legislation.
My Lords, we all respect the independence of the judiciary, but does not this case illustrate one of the difficulties caused by the Human Rights Act, which requires judges to go beyond their traditional role of interpreting the will of Parliament and to substitute their own views on proportionality? Is it not that which justifies the concerns of those of us who believe that these matters should be decided by Parliament?
I am sure that the whole House recognises the importance of proportionality and it will note the important point that has just been made.
In light of the decision of the court on the right of sex offenders to be able to appeal against their place on the register after 15 years, why did the Government come to the view that it was right to exclude a mental health tribunal or any other judicial body from that review process? It is fatuous for the Minister to say, as she did, that a policeman—she meant a police officer, I am sure—will know far more about the person whom he has been supervising than anyone else. Does she not realise that police officers, like offenders, move around? We cannot expect police officers to be as independent as professional and experienced people. A police officer can have a role in going to a tribunal to put a point of view. Will she think again about this?
My Lords, the Government do not accept that the procedure being proposed is fatuous. Police officers concerned have a much better idea than many others about the nature of the conduct of the defendant, both in prison and later, and they are appropriate people to take a view on this. Moreover, they will do so in consultation with other agencies, as the MAPPA process, in which other specialists will be involved, will be taken into account.
Does the Minister acknowledge that there is great disappointment on these Benches too at the tone of the Home Secretary’s Statement and that we had hoped that that sort of language had been left behind by the coalition Government. Can she explain how the Prime Minister’s statement in connection with the same case, that the Government would do the “minimum necessary” to comply with a judgment of the United Kingdom Supreme Court, was calculated to encourage respect for the rule of law?
I think that the Government should be judged by their actions. In this instance, they have put forward a reasonable, proportionate and effective proposal to meet the judgment of the court.
My Lords, would the noble Baroness not agree that the making of judgments, not just about matters of proportionality but also about reasonableness, is an inherent part of the judicial process, which is not just a matter of mechanistically interpreting the law?
I am sure that the Government and the House would agree with that sentiment.
My Lords, does the noble Baroness agree that it is right that the judge’s ruling should be observed by the Government and that they should take steps to implement such rulings which are in accordance with our present law? There is no question of the judges usurping the responsibilities of Parliament because of the way in which the Human Rights Act is framed, but we have an obligation, as a matter of treaty and convention, to obey the provisions of the Convention for the Protection of Human Rights and Fundamental Freedoms.
The Government accept that the convention has to be observed and that the Act has to be interpreted and they will act on their duties under both.
(13 years, 5 months ago)
Lords Chamber
To ask Her Majesty’s Government what is their assessment of the political situation in Bahrain.
My Lords, the Government are gravely concerned about the deteriorating security situation in Bahrain and are monitoring the situation closely. The Prime Minister spoke by telephone to King Hamad bin Isa Al Khalifa on 15 March and called on him to end the violent oppression of street protests in Bahrain. The Prime Minister said that it was vital that the Bahraini authorities responded through reform, not repression, and he called for restraint on all sides. My right honourable friend the Foreign Secretary reiterated those points when he spoke to the Bahraini Foreign Minister yesterday. The Government call on the authorities in Bahrain to respect the right to peaceful protest and to respond to the legitimate concerns of the Bahraini people. There must be open access to hospitals and medical care. The Government call on the protesters to refrain from violence and we urge them to respond positively to the offer of national dialogue.
Does my noble friend accept that Britain has a special moral responsibility in the case of Bahrain, as it promised independence and constitutional government when it handed independence to Bahrain in 1971? Given the invitation from the Bahraini royal family for the Saudis to intervene, does my noble friend agree that this has eerie resonances of the Warsaw pact in 1956 and 1968 and, most recently, of Afghanistan in 1979? Does he intend calling in the Saudi ambassador and asking what the Saudis’ intentions are and when they expect to go back over the causeway to oppress their own people, which they seem to do rather well?
With respect to my noble friend, the historical analogies can be overdone. The situation in Bahrain is different, as the king and the ruling authorities have sought dialogue, although it is perfectly true that this pattern does not seem to be working out at present. As to the position of Saudi Arabia, it is correct that Gulf security forces—I emphasise that it is not just Saudi but GCC forces, including a UAE deployment—have been deployed in Bahrain. We are of course concerned at the escalating situation and it is clearly vital the outside forces exercise the highest restraint and avoid violence. I am informed that the incoming forces are not involved in direct policing but are concerned with safeguarding installations. Dialogue and discussions with the Saudi Arabian ambassador are no doubt in hand and the Foreign Office will have close contact with him and other authorities.
My Lords, is not the United Kingdom’s position somewhat compromised since we have not only been an ally of the Bahraini kingdom but supplied equipment to be used in riots and so forth? What is being done to review those exports?
It is perfectly correct that we have regarded Bahrain as a friend. Indeed, the GCC forces, which include Bahraini forces, have a variety of equipment, some of which is of British origin. As the Trade Minister told your Lordships the other day, all export licences are considered on a case-by-case basis in the light of prevailing circumstances and, once approved, are kept under review. Every licence is scrutinised in the light of changing facts on the ground and if the situation in a country changes significantly, as is clearly happening not just in Bahrain but in other Middle Eastern countries, it is normal practice to review licences, as was done for Bahrain back in February. Of course there are dilemmas and difficulties, but we seek to support those aspects of the situation—in this case, national dialogue—that will bring stability and peace and minimise bloodshed.
My Lords, I am sure the House is very grateful to the noble Lord for giving us that update on the political situation in Bahrain. However, the Foreign Office is having to assess not only the political situation in Bahrain but the consular implications, given that we hear today that Britons are being advised to move out of Bahrain if they can. This is not the only crisis that the Foreign Office is dealing with, as there is the crisis in Japan—of which we are all acutely aware—and the crisis in Libya, too. We have three major crises, any of which would at one time be a huge burden on Foreign Office capacity. We have heard that there have been slip-ups over people going into Japan. I am not making an issue out of that but I am saying to the noble Lord that the Foreign Office is working all hours with this huge burden of three simultaneous crises. The noble Lord is a wise man and a very sensible man, and I do not say that in a back-handed way but because I think he is the most experienced head around the ministerial table. Will the noble Lord now ask his colleagues to look again at Foreign Office staffing, and in particular at the staffing for consular issues that arise out of such crises?
The noble Baroness speaks from considerable experience and she offered, I think, some kind words—I am not quite sure how kind they were. She is absolutely right that these crises come not in ones and twos but in battalions. I actually make it that we are dealing with five major crises at the moment in the Foreign and Commonwealth Office, and this of course places a considerable strain on our extremely dedicated and hard-working staff. The question of support at the consular and other levels is under constant review. We believe that in the present situation—she has mentioned Japan, but there is also the Libyan problem, the Middle East generally and Bahrain, which we are talking about—we can cope with these matters efficiently and are doing so in terms of giving the right travel advice. For those who have been advised to get out of Bahrain, we are offering support for their travel and removal with charter flights. These things can be done. Occasionally there are, inevitably, some hiccups and problems, but we believe we are on top of the situation, and the question of staffing is under constant review.
My Lords, while welcoming the statement by the Prime Minister yesterday calling for reform and not repression, is it not a fact that we have spent years cosying up to the hereditary dictators in Bahrain, which makes it difficult for us to change our line to suit current circumstances? Is the noble Lord doing anything about the killing of six peaceful demonstrators yesterday, the importation of the foreign mercenaries and the re-arrest of six opposition leaders who have only just been released from weeks and weeks of illegal detention and torture?
I have considerable respect for my noble friend, who is constantly campaigning for human rights and justice in all these areas, as he is right to do, even among those with whom we have had good relations in the past. I think that “cosying up” is slightly the language of the media. We were dealing with a country which was at peace, was well administered and was supportive of dialogue and reform. There is no comparison at all with Gaddafi and his crazed approach in Libya, where there is a different situation.
However, my noble friend is also quite right that the arrests of political figures give us great concern. We do not want to see a reversion to the days when Bahrain routinely held political prisoners. We argued against that. The Government and the security forces must respect the civil rights of peaceful protestors, including the rights to freedom of expression and freedom of assembly. We make those points to those who have been our friends and we believe that, having had well intentioned relationships in the past, we can carry more influence. Of course, in the present situation we have to work hard to get that influence through.
(13 years, 5 months ago)
Lords Chamber
That the debates on the motions in the names of Baroness Williams of Crosby and Baroness Walmsley set down for today shall each be limited to two and a half hours.
That the Commons message of 16 March be considered and that a Committee of six Lords members be appointed to join with the Committee appointed by the Commons 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 2011;
That, as proposed by the Committee of Selection, the following members be appointed to the Committee:
L. Armstrong of Ilminster, L. Davies of Stamford, L. Faulks, L. Freeman, L. Goodhart, B. Liddell of Coatdyke;
That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman;
That the Committee have power to send for persons, papers and records;
That the Committee have power to appoint specialist advisers;
That the Committee have leave to report from time to time;
That the Committee have power to adjourn from place to place within the United Kingdom;
That the reports of the Committee from time to time shall be printed, regardless of any adjournment of the House;
That the evidence taken by the Committee shall, if the Committee so wishes, be published; and
That the Committee meet with the Committee appointed by the Commons on Monday 21 March at 4.00pm.
That Lord Foulkes of Cumnock be appointed a member of the Select Committee in place of Lord Liddle, resigned.
That the amendments for the Report stage be marshalled and considered in the following order: Clause 1, Schedule 1, Clause 2, Schedule 2, Clause 3, Schedule 3, Clause 4, Schedule 4, Clause 5, Schedule 5, Clause 6, Schedule 6, Clauses 7 to 28.
My Lords, I beg to move the Motion standing in the name of my noble friend Lord Taylor of Holbeach on the Order Paper.
(13 years, 5 months ago)
Lords Chamber
To call attention to the United Kingdom’s record on legislation regarding bribery, tax avoidance, corruption and money laundering; and to move for papers.
My Lords, it gives me great pleasure to be the first to congratulate my noble friend on her extremely and expectedly impressive speech. She has given us the grand sweep, as I would have expected. I am afraid that I will take a slightly different tack. I will give a worm’s-eye view. Before I adopt the position of the worm, I need to declare some interests, because I am a director of, and am involved with, companies that export goods and services around the world. I am anxious about some of the practical implications of the Bribery Act and the money-laundering regulations. However, I shall focus on the bribery ambiguities to which my noble friend referred a few minutes ago.
To cut to the chase, I urge my noble friend the Minister, who was for a number of years our distinguished representative on the Financial Action Task Force, to hold his nerve, continue with the period of consultation and extend it if necessary, because it is absolutely vital that we get the guidance right, particularly in respect of small and medium-sized businesses, which are not surrounded by armies of lawyers and advisers to provide them with comfort.
I do not want my noble friend to think that I am soft on bribery. It corrupts the recipient and also the giver. In my experience, firms that are slack about oversees payments are often slack about internal procedures such as management expenses, and sometimes confuse what is the company's—the shareholders’—money and what is the management’s. But—and this is a very big but—the Bribery Act poses considerable challenges for UK-based small and medium-sized companies. The crux of the problem is Section 7, which creates the new offence of failure to prevent bribery and is linked to Section 8, which defines “associated person” very widely.
I will give the House an example. I am afraid that it is detailed, but it is the only way to explain the practicalities we face on the ground, where they do not seem as easy as they do in the calm and rarefied atmosphere of your Lordships' House. The company I have in mind is a mid-sized one. It has a good product and it sells well abroad. It is growing and is increasing its employment in the United Kingdom. In short, it is just the sort of company that politicians of all political parties wish to encourage. One of our export markets, which is not yet large but is growing, requires us to pay a transport tax. We pay that through our agent. I am afraid that it is not a tax in the conventional sense. It is a payment to customs officials and to transport union officials to ensure prompt and timely delivery of our goods. We know that our continental European competitors also pay it.
We are advised that when the Act comes into force, the transport tax will constitute a bribe. We do not know whether any comparable legislation will affect our continental competitors; we think probably not. My noble friend referred to the Foreign Corrupt Practices Act in the United States. We know that they will get round this because that Act has a specific carve-out for “facilitation payments”, of which this transport tax would be one. Noble Lords may cite proportionality and ask what UK Government would pursue a minor payment of this nature. Quite so—but one Government might one day do it, and the prospect of 10 years in jail and an unlimited fine concentrates the mind.
However, our major concern lies in a quite different direction. In this market, our major competitor is local and does not pay the transport tax. He ships direct from his factory to the customer. We are advised that there is a considerable risk that this competitor, who will be aware of the transport tax, will make an official complaint to his Government that a UK company has been bribing individuals under the terms of the Bribery Act, and the UK Government will be asked to undertake a prosecution. Who knows what will happen then? My noble friend Lady Williams talked about ambiguities. There are many more like this. They are the sort of practical issues on which our legal advisers will need guidance before they in turn can advise us.
I will make one thing clear. If the guidance does not give us sufficient comfort, we shall withdraw from the market, and from others where we face similar challenges. We will leave them to our competitors. Exporting is hard enough work without risking the very grave penalties that this Act carries with it. Therefore, although we all, understandably and rightly, work ourselves into an indignant frame of mind on what I appreciate is a very important topic, please may we not forget my little company, and thousands like it, which are concerned with how to meet the requirements of the Bribery Act while dealing with the complex and varied demands of customers and social systems in highly competitive markets across the world.
My Lords, “Dictum meum pactum”—“My word is my bond”—has been the motto of the London Stock Exchange since 1801. It embodies an important statement about the role of trust in the operation of markets—not just financial markets but the capitalist economy in general. Trust is a fundamental component of the operation of any successful capital economy. In the absence of trust—trust in the financial system; trust in the rule of law; trust in the ultimate fairness of economic and social organisation—the efficient operation of a market economy is seriously compromised.
The importance of today’s debate does not rest on the specifics of legislation on bribery, tax avoidance, corruption and money-laundering. After all, all these activities have a very different legal status. Bribery is not yet illegal in the manner that Parliament intends, and the Minister must explain why the declared will of Parliament is being frustrated by the Government’s persistent delay in introducing the Bribery Act. The noble Lord, Lord Hodgson, should recall that just the same sort of fears as those that he expressed preceded the introduction of anti-insider trading legislation.
Tax avoidance is not illegal—that would be evasion—but it is clearly undesirable, and I applaud the Government’s request to Graham Aaronson to lead a study as to whether to establish a general anti-avoidance rule.
Corruption is in principle illegal but in practice not as illegal as it should be. For example, the Dodd-Frank Act that reforms US financial regulation also requires US-listed companies involved in extractive industries anywhere in the world to report all payments that they make to Governments project by project and country by country. Those that fail to do so will be excluded from US capital markets. Will the Minster tell us whether the Government would support a similar law here, and will the Government legislate to ensure that reporting failures identified in US legislation, whether at home or abroad, result in exclusion from the London financial markets as well?
Money-laundering is illegal, principally because its very definition relates to criminal or terrorist activities. What unites all these activities, legal and illegal, is that they destroy justice and fairness, and, by destroying trust, they weaken both our society and our economy. Particularly today, when the many are suffering from the greed and folly of the few, restoring trust should be at the very heart of the Government’s legislative programme.
A persistent argument—we have just heard it again—against legislation in all these areas, with the possible exception of money-laundering, although perhaps not, is that an honest economic environment will be an uncompetitive one: contracts will be lost to the foreign firm willing and able to grease a sufficient number of palms. It would be a serious error to fall into the trap of the “Everyone’s doing it, therefore so must we” argument. Condoning illegality, dishonesty or even just sharp practice is no foundation for building a strong economy or a vibrant international financial centre.
Indeed, one characteristic of the British economy which is an unambiguous success story is the recent history of financial innovation. However, Britain’s success has a dark underbelly. The very innovation that has multiplied the volume and sophistication of financial transactions has also multiplied the opportunities for money-laundering and tax evasion. A significant proportion of all financial innovation is driven not by the demands of economic efficiency but by the desire to avoid taxes and/or the strictures of financial regulation. In such an environment, bribery and corruption follow not far behind.
As a world financial centre, the UK has a peculiar responsibility to maintain the highest standards of transparency and accountability, and to have the very strictest legislation covering financial transactions and taxation. The world of finance cannot operate without trust. Lose trust and London is finished.
If a general anti-avoidance rule is to be effective in limiting tax avoidance, then fundamental structural reforms are required to the tax system. Complexity and obscurity in taxation are the mother and father of tax avoidance; simplicity and clarity are the enemies of the cheats; and because even simplification will not eliminate avoidance, in the interests of fairness and trust there should be a minimum tax—a rate that no accounting artifice can reduce.
We must not be complacent. Ten years ago Transparency International’s corruption index ranked Britain tenth among the countries of the world, with Finland and Denmark being the least corrupt. In 2010, Denmark was still ranked least corrupt—Finland had slipped to fourth—and our ranking had plummeted to twentieth. The abuse of economic power undermines the economy and destroys trust, and it destroys Britain’s reputation as an international financial and trading centre. Practices that are unfair divide and weaken. That is why effective legislation to tackle bribery, tax avoidance, corruption and money-laundering is of far greater value than the monetary value of the offence. It is also why the Government’s failure to implement the Bribery Act is doing so much damage to Britain’s economy and reputation around the world.
My Lords, we in the United Kingdom have been painfully slow in penalising businesses that bribe. The main legislation is out of date, with Acts passed in 1889, 1906 and 1916. After a slow process of reports and consultations, starting in 1998, the previous Government published a draft Bill in 2009, which they referred to pre-legislative scrutiny by a Joint Committee. I was a member of that committee, and we worked very hard at that.
In general the draft was good, but one part of it was seriously defective. Under the law as it existed then—and indeed as it will exist until the Bribery Act is brought into force—a company could be prosecuted only if a senior officer of the company who was its controlling mind was him or herself personally responsible for the bribery. This was somewhat strengthened in the original version of the draft Bill by the liability of a responsible officer of the company who personally is negligent and fails to prevent the bribery. However, it became apparent to the Joint Committee that that was also inadequate. What was needed, in our view, was that a company should be liable for bribery committed on its behalf unless it could prove that it had in place adequate procedures to prevent bribery. That was accepted by the Joint Committee and by Parliament and now appears as Sections 7 and 8 of the Act. However, we accepted that the Secretary of State should provide guidance about what procedure should be treated as adequate, and that appears in Section 9 of the Act.
The Bribery Act received Royal Assent on 8 April 2010, nearly a year ago. The House of Lords Library has produced a very useful note about the Bribery Act. It reports complaints about possible damage to British companies through being denied the ability to do dubious things which some competitors might be allowed to do. That is the attitude taken by my noble friend Lord Hodgson—that nothing must be done as long as competitors are allowed to do it. I do not agree that that is a serious argument. It is proposing that the United Kingdom should enforce only the lowest common denominator of restrictions on bribery. But that is no defence. We will never cut back on bribery unless we are prepared to put ourselves alongside the countries that lead on the prevention of bribery and not with countries that drag along behind.
As the noble Lord, Lord Eatwell, just said, we are steadily sliding down the anti-corruption list published by Transparency International, which I should say is an organisation of which I am a member. Up to four years ago, we were far better than we are now. On bribery, we are behind the United States, and also outside Germany and France—yes, France. We will remain there until the Government provide proper guidance with sufficient strength and then bring it into effect.
The Library note also shows comments criticising the delays in implementing the Act. I shall read the statement made here by Mark Peith, to whom my noble friend Lady Williams referred. He said, on behalf of the OECD, where he was head of the working group:
“It is very disappointing that despite public commitments, the UK will further delay this important Act to tackle bribery and corruption … Establishing a level playing field for international business is as important now as ever and will help strengthen the global economic recovery. As a G20 country, the UK bears a special global responsibility and should lead by example”.
It must give that example.
I remember one evening some five or six years ago when I was working at my desk upstairs in this building at about 6 pm on a Thursday evening, when most Members had gone home. The Annunciator came up unexpectedly with an announcement that the Attorney-General, then the noble and learned Lord, Lord Goldsmith, would shortly make a Statement. Out of curiosity, I went down to the Chamber to hear it. What I heard was that the director of the Serious Fraud Office had, plainly under pressure from the Prime Minister, decided to cancel the bribery investigation against BAE. I never want to hear anything like that again. I left the House on that evening with a feeling of shame.
My Lords, I know that I risk upsetting the sensibilities of some noble Lords when I say that I am glad that the Bribery Act has not yet been implemented. This is not because I take a cavalier attitude towards corruption, but because it is only fair to British business that the Act should not yet be in force. I do not suspect that our companies are all involved in shady practices and that they should be allowed to continue in that vein for as long as they can get away with it. On the contrary, I have sufficient faith in British business to believe that it can win contracts without resorting to buying them in one way or another. My qualms about the implementation of the Act coincide with those voiced so admirably by my noble friend Lord Hodgson.
I have listened to what the noble Lord, Lord Goodhart, has to say, and I cannot agree with him completely. To be critical of the Bribery Act is not to condone the payment of massive bungs to corrupt dictators and their chums, nor even to go along with expensive gifts being lavished on minor officials in the hope of winning their good will. It is merely to say that business, like life, has nuances that need to be understood. Yet the business world has been very slow to raise its voice publicly to query any aspect of the Act. It knows, as I do, that to question any aspect of this legislation is to risk being branded as somebody who condones crookery, as if one is either in favour of the Act or in favour of bribery—and this, of course, is nonsense. We need to remember that we are in complicated territory here, where perceptions differ.
In 1997, as noble Lords will surely recall, Formula 1 racing in the shape of Bernie Ecclestone wrote a cheque for £1 million and subsequently found that plans to ban Formula 1 from tobacco advertising, so important to its finances, had been put on hold. Naturally, there was no connection between the two occurrences. The then Prime Minister was appalled that anyone should think there might be. He was, as noble Lords will remember, a pretty straight sort of guy. Others saw things differently. As I say, we are in complicated territory. I found it as dispiriting as the noble Lord, Lord Goodhart, when the SFO inquiry into BAE was dropped; I think that it was that pretty straight sort of guy who was involved there, too.
The Bribery Act as drafted would subject business to a more draconian regime than even that of the United States. What is more, it attempts to throw its net over companies that are not even headquartered in the UK but do business here. A company that is based in Russia, with some link to the UK and doing business in Kazakhstan, for instance, could find its activities there making its directors guilty of breaking UK law. That would be quite a challenge for UK prosecutors. It seems that the impossibility of stretching the arms of British law quite so far have now been recognised and that reassurances are being given that a mere listing on the London Stock Exchange does not bring a company within the ambit of the Act. Look at the motley collection of overseas companies that now make up a large proportion of the FTSE 100 and you will understand why this point had to be clarified.
The previous Government were absolutely justified in their efforts to prevent potentates being paid large sums in exchange for contracts, but this Act goes too far. Not only does it risk disadvantaging British business, but it puts those who are striving to win much needed work for British people in the appalling position of not knowing what will or will not be considered legitimate business practice. Until we have clear guidance on matters such as facilitation payments and hospitality, this Act should not be implemented. Surely any facilitation payments are outlawed under the Bribery Act, despite them being allowed, as we have heard, even under the US Foreign Corrupt Practices Act. In parts of the world, a small sum ensures that goods or documents move from A to B. Presiding Governments condone that situation; it is part of the prevailing culture. We might wish that situation to change, as the noble Baroness, Lady Williams, does, but for Britain to say no when the rest of the world says yes is commercial madness. One leading UK company doing business in Colombia decided that it had better stop paying the minor payments that it made. The result was that every one of its vans was impounded and its drivers imprisoned. We have to move carefully on this, just as we do on hospitality.
Another issue is the fact that government has to set the lead in conduct rather than just in legislation. It is imperative that UK Trade and Investment and its special representative should be models of complete probity as they attempt to drum up business for Britain. Their aims are admirable, but there is widespread disquiet about some of the relationships that have arisen. This will not stop. Surely it is time for change. Some noble Lords have expressed concern about the reputation of British business abroad in the absence of implementation of the Bribery Act, but I fear that questions over UKTI might do at least as much damage, if not more.
My Lords, I spent much of the autumn teaching senior police officers in India. We explained the Bribery Act to them. They told me—
I thank the noble Lord. First, I congratulate the noble Baroness, Lady Williams, on such a timely and important debate on tax avoidance and fraud. I will draw attention to the importance of the debate in the context of the outlook for public finances.
There is a consensus across the House on the need to address the deficit and to make cuts. We realise that this adjustment will be painful and that the people who bear the brunt of it will not be the ones who caused the crisis but ordinary working people. The Office for Budget Responsibility estimated that half a million jobs would be lost in the public sector as a result of the cuts, and PricewaterhouseCoopers estimated that another half a million jobs would be lost as a result of private sector cuts.
Today, youth unemployment is at its highest level since 1992. At the end of last year, unemployment for those under 25 rose above 20 per cent, compared with less than 8 per cent for the general population. Youth unemployment in Germany is just 8.6 per cent at the moment, and 7.3 per cent for the general population. On top of this, working people and the vulnerable in society will be hit by cuts in their benefits and their public services, with job losses in the police, the NHS and schools already being reported. The background to this is the issue of fairness. When Amartya Sen spoke to the Treasury Committee a few years ago, he said that the link between effort and reward is how people understand a process to be fair. The word “fairness” needs to crop up continuously in our debate.
There is a concern that tax evasion is a growing problem. The current tax gap is £52 billion, according to the latest data from the Association of Revenue and Customs. That is nearly 9 per cent of the UK’s net tax revenue forecast for 2011-12. It also appears to be rising, with the latest estimate for 2008-09 showing a rise of £4 billion compared with the previous year. With that, the number of successful prosecutions by HMRC also declined by 41 per cent between 2007 and 2009. It is imperative that HMRC has the resources it needs to close that tax gap. I welcome the £917 million that the Government have pledged over the spending review period to tackle tax evasion, which aims to bring in an extra £7 billion of tax revenue. That is a recognition by the Government that investing in dedicated compliance staff at HMRC will save the taxpayer money by closing the tax gap.
The Public and Commercial Services Union, representing HMRC staff, estimates that an average member of staff dedicated to tax compliance yields £640,000 in tax revenue, net of staff costs. However, this extra funding could be more than cancelled out by cuts of £3 billion to HMRC’s budget over the same period, which could mean a loss of 10,000 staff. This also comes after efficiency savings at HMRC equivalent to 25 per cent of its budget, which has seen staffing levels fall by more than 25,000, and 200 of its offices closed since 2004. If efficiency savings mean anything they must surely mean saving money and not, in the long run, costing money. I feel that currently there is a falseness about the process.
This is also about the engagement with staff. During my chairmanship of the Treasury Committee in the other place we found that there had been a high turnover of staff in the organisation and that there was low morale among many employees. At the end of my tenure the committee was concerned that the merger of the Inland Revenue and Customs and Excise had had a knock-on effect on performance, and we were deeply concerned about employee engagement at HMRC. The current Treasury Committee has undertaken an inquiry into the performance of HMRC. In its evidence, the Chartered Institute of Taxation raised concerns about whether HMRC will be able to deliver the Government’s aim on tax compliance. The head of taxation at the Association of Chartered and Certified Accountants told the committee:
“Most people are compliant … [and] try to pay the right amount of tax at the right time”.
He went on to say that it is,
“probably the only thing that has been getting through the current problems ... It is the only reason why the Exchequer is still getting tax paid at the right time and roughly the right amounts”.
There is therefore a lot to concern us about the present situation with HMRC.
I want also to talk about offshore financial centres, because we must focus on those in ensuring that we close the tax gap. Tax havens have not only been used to avoid taxation: during the run-up to the financial crisis they helped bring about the explosion in securitisation in the financial sector. Many of us became aware of that at the time of the run on Northern Rock, when we learnt that the bank had a very large financial vehicle in Jersey. From there, Northern Rock issued securities which made up for 50 per cent of its funding. The need to re-engage with offshore financial centres is important. As my noble friend said, this issue is set against a background of trust and confidence in the system. If we do not maintain the integrity of London as a financial centre, which we all want, we will all lose in the long run.
My Lords, the issue that caused the most grief and anguish during the passage of the Bribery Act 2010, as it still does, was the scope of the statutory defence of adequate procedures contained in Section 7(2). Section 7(1) provides that a commercial organisation is guilty of an offence if a person associated with it bribes another person to gain an advantage in a commercial transaction. It was a deliberately wide net, bounded only by the need to demonstrate that the organisation is carrying on a business, whether it is an incorporated body or a partnership formed in this country, wherever in the world it carries on its business, or a foreign company or partnership carrying on business in the United Kingdom.
Attempts were made during the passage of the Bill to insert a requirement that the prosecution must prove that the organisation has, through its responsible managers, acted negligently. However, bribery, or the absence of any objection to bribery, is more often due to the slackness of the company, as the noble Lord, Lord Hodgson, pointed out, than to significant negligence that can be tied to specific directors or managers. Negligence by any individual director or manager is a heavy burden to prove beyond reasonable doubt, so there would be no convictions. Another amendment was proposed for the prosecution to prove that the organisation did not have in place adequate procedures to prevent bribery, but that was an impossible burden to place on the prosecution, as it would require it to delve into the files of the company in question.
The Government rightly rejected those suggestions and produced a strict liability offence subject only to the statutory defence contained in Section 7(2), the defence of adequate procedures. The burden is on the organisation to prove, on the balance of probabilities, that adequate procedures are in place. What are adequate procedures? I and others, both in the Joint Committee and in the Chamber, attempted to tie the previous Government down to a working definition of the concept of adequate procedures, but that proved impossible. The noble Lord, Lord Tunnicliffe, said in Hansard on 2 February last year that it was for the courts alone to determine in a specific case whether the procedures had been adequate, leaving the matter completely up in the air.
I suggested that a commercial organisation ought to be able to obtain specific advice from the Department for Business about the adequacy of its procedures to prevent bribery, or, if it proposed to trade in a new area or foreign jurisdiction, that it could get advice on facilitation, grease payments or entertainment. What is improper performance? Should the meaning be governed by the standards of the country with which the organisation is dealing or by the stringent standards of a British jury?
The Foreign Corrupt Practices Act in the United States provides that a rebuttable assumption will arise that a person acting in accordance with advice will not commit an offence. An advisory service in the Justice Department of the United States gives that advice. In Hong Kong, the Independent Commission Against Corruption, which has brought Hong Kong to number three in the Transparency International scale, stamped out corruption. As part of its organisation, it has the Hong Kong Ethics Development Centre, which offers a full range of consultancy services on corporate ethics. To date, it has advised more than 3,000 private companies and businesses. The ICAC, with which I have some connection, cannot believe how few charges of corruption have been brought in the United Kingdom as compared with its case load. It is satisfied that its advisory service works well.
Unfortunately, it was thought to be un-British to do that in this country when the Bill was going through Parliament. Clearly, the advice of a government department could not pre-empt the decision of prosecuting authorities to prosecute, nor could it be a complete defence, but it could provide an important piece of evidence in support of a defence of adequate procedures under Section 7(2).
The previous Government rejected that approach and preferred to rely on the guidance. We have already heard about the issuing of guidance. An industry then sprang into being. It reminds me of an evangelical Welsh preacher who spends two-thirds of his sermon convincing completely blameless people that they are sinners and will go to hell and then offers redemption in the last third. What has happened is that commercial lawyers are warning companies of dire consequences, saying that directors will go to prison. I am sure that that is why my noble friends Lord Hodgson and Lady Wheatcroft take the position that they do. Directors are being warned that they will go to hell if they are not prepared to pay for advice from commercial lawyers on current procedures. These lawyers are busy tailoring anti-bribery and corruption programmes appropriate for the size and risk profile of their clients. Therefore, instead of the state—the Government—giving advice to a firm, you have to go to very expensive lawyers and others to get that advice.
I have in front of me an anti-corruption and bribery conference brochure, which says:
“Attending this conference will allow you to answer the following questions … How far will the SFO go in prosecuting offences?”.
Who can know that?
“What is the meaning of ‘adequate procedures’?”
I have already given what the Government say and we are waiting for the guidelines.
“Will the Act be reviewed by the Government”?
Who knows? You will have to pay £600 individually to get this useless advice. That is the industry that has grown up and which, I am quite sure, has caused all the problems, the difficulties and the fears for my noble friend Lord Hodgson, just as that Welsh preacher induced fear in his congregation. I do not believe that you need these programmes. The Act is perfectly straightforward. The concepts are perfectly clear and common sense is required. The intensive lobbying that has been going on to delay the issue of these guidance notes and the implementation of the Act is wholly to be deplored.
My Lords, in no year since the turn of the century have there been more than 25 successful prosecutions for bribery in England and Wales. Indeed, in 2005 there was only one. Those numbers are ludicrously small. Anyone who believes that the numbers reflect a standard of probity in British business that leaves little to be desired is suffering from an excess of complacency or an excess of naivety that leaves them blind to the reality. Those prosecutions were brought under the old legislation, which was principally passed in 1906 and 1889. Those statutes were plainly not fit for purpose. It is a mark of the lack of seriousness with which we have treated bribery, particularly bribery in a commercial context, that it has taken so long to replace legislation which is more than a century old and which produced such a limited response to serious criminal activity.
The OECD anti-bribery convention, to which we are now signatories, marked a milestone in international co-operation in stamping out bribery in international business. However, the UK’s response to its obligations under the convention has to date been mediocre at best. That should all have been set to change with the passage of the Bribery Act last year, yet this admirable legislation has not come into force and we are now entitled to be impatient. It was supposed to come into force last October. In September, a brief consultation on the proposed guidance was announced, which would last until November, with a view to commencement in April this year. The consultation paper had draft guidance annexed to it. In January, further delay was announced and further work on the guidance was said to be needed.
My right honourable friend the Secretary of State for Justice says that we are back on track. He rightly says that corruption is bad for business and that we must be at the forefront of stamping it out, not only in the developing world but in international trade generally. That must mean that he completely rejects the argument that British businesses cannot compete with others that may be corrupt unless they, too, offer bribes. It is that argument that represents precisely the evil that the anti-bribery convention was designed to stamp out.
It is a pity that on occasions in recent months the CBI and the Multinational Chairman’s Group, to which my noble friend referred, have sounded close to rehearsing that argument in seeming to press for further delay and in their complaints about the implications of the Bill. That is the answer to the point powerfully and elegantly but, I suggest, wrongly advanced by my noble friends Lord Hodgson of Astley Abbotts and Lady Wheatcroft. It is no good saying that it is acceptable for small companies to pay small bribes, perhaps disguised as something else such as the transport tax that was referred to, and that it is only large bribes that the Act should outlaw. We have to rely on our markets wanting to buy British goods and services because they are competitive on price and quality.
I know that my noble friend has just six minutes, but it is a travesty of what my noble friend Lady Wheatcroft and I were saying to suggest that we were advocating small bribes. From the beginning, both of us have said that we are absolutely against bribery. It is the reality of the situation that we are asking the House to address.
My Lords, that is what was said, but the description of the transport tax being moneys paid to officials in small amounts to enable goods to be imported into those markets amounts to small bribes. I do not accept that they are acceptable. It is to be conceded by those who take our position that there may be a cost to that strict position, as my noble friends Lord Hodgson and Lady Wheatcroft point out. However, if it is a cost, it is a short-term cost, with the prize of a long-term business environment that is clean. The enforcement of the anti-bribery convention internationally and the Bribery Act in this country is a prize worth gaining.
The delay has been damaging to the reputation of this country and its business. As my noble friend Lady Williams explained, there is great anger with the United Kingdom in the United States and in the OECD. In the United States, the very strong legislation in the Foreign Corrupt Practices Act, which is rigorously enforced by the SEC and other federal enforcement agencies, has brought about a complete change of approach. The United Kingdom’s performance has been seen as hopeless and the delay in passing the Act has been seen as worse than that.
Meanwhile, we have regular reminders of the extent of the problem. Noble Lords have referred to the British Aerospace scandal and, in particular, to the previous Government’s extraordinary decision to stop investigating the Al Yamamah contract for the sale of aircraft to Saudi Arabia. The emergence even now of further evidence, which was highlighted in the past few days by my right honourable friend Sir Menzies Campbell, of a $70 million payment in connection with the contract makes the point
We have recently had the MW Kellogg engineering case, with a £7 million settlement over a contract for a gas liquefaction plant in Nigeria after payment of more than £100 million in bribes by the parent company. We had the disgraceful Innospec case last year, where a British company had paid bribes of $17 million to secure sales in Indonesia of a highly toxic lead fuel additive that is banned in the UK and elsewhere, the bribes having been paid to prevent the chemical from also being banned in Indonesia.
The list goes on. The evil of corruption is a cancer in our international trading system. It must be removed. The anti-bribery convention and the Bribery Act are powerful instruments. In Richard Alderman we have an energetic and effective director of the SFO, but we need the Bribery Act to become law. The guidance is needed fast. It needs to show a commitment to thorough enforcement. It must not be said that it waters down the effect or the effectiveness of the Act. Only in that way can Britain’s damaged reputation for probity in international business be restored.
My Lords, I think I must have led a very sheltered life. I knocked around the developing world for some 20 years during which I was involved with both commercial companies and the Commonwealth Development Corporation. The corporation brought with it some really quite attractive money, risk capital as well as relatively low-interest loan capital, and a lot of technology. It operated in 53 countries in the developing world and we had around 450 investments. I shall come later to the more commercial aspects. I suppose we had a reputation for being incorruptible or something really unlikely like that, if I listen to the dark messages that are coming from my noble friends to my right. I was never on any occasion offered a bribe, and never asked for one, although I spent a great deal of time with people who lived at a much higher standard than I did myself, another point I shall come back to.
I turn first to the certainties of the Bribery Act. I do not understand the degree of uncertainty in the legislation, but what I do understand is that no one working for a company in the UK would wish to go to prison, so people have a reasonable case for saying, “Please may we be as certain as possible as to what an infringement of this Act would be”. I want to give two examples, but I have to admit that they are not from the immediate past. On two occasions I negotiated in countries where you were required by law to have a local agent. You could not operate in those countries unless you could show that you had an agency agreement, which was signed off by the government of the country.
In one case, the agreed fee was 2.5 per cent of any contract you got in that country. In the event, we won a contract which, from memory, was worth around £10 million. It was to supply a major piece of equipment for a steelworks. The chairman of the company was a cigar-smoking general. I remember that when, in the middle of the negotiations, he came to stay in our spare bedroom, he put his shoes outside the door because he expected that someone would clean them, and indeed I did clean them. When we eventually got the contract, I remember the agents, a commercial company rather than an individual in that country, saying, “You know, the general has a great ambition to own a villa in Florida”. I said that I did not know, to which the response was, “We thought you might just like to know that”. The agents did not say any more and I did not ask any more questions. Noble Lords will have worked out that 2.5 per cent of £10 million is £250,000, and this was quite a long time ago. I leave this account with noble Lords as an example and would ask whether it was an offence. Was that an associated person? I do not know. Was it an offence under Section 7, or whichever section it is, or not?
I recall another occasion in a Middle Eastern country when we were one of the last two bidders for a contract, the other bidder being a German company. Again, we were required under the law of the country concerned to have formal representation. It became absolutely clear that it did not matter which of us got the contract because the adjudicating committee was going to collect a proportion of whatever was coming from the two different local agents. You did not have to be a genius to understand that that was what was going to happen. Up to a point we outflanked them, because although my company did not get the contract, the German company then very kindly gave us a large sub-contract. Everyone came out a winner from a business point of view, but what about the Bribery Act? I do not know the answer and I hope that there is someone in this House who does. But certainty about what is or is not an offence is much more important than the high moral line which, to be frank, I do not have much regard for.
Perhaps I may turn to tax avoidance. I understand from the excellent Library note that now I must remember that it is not avoidance, it is mitigation. If I put shares into my charitable trust, thus saving myself some tax, I am no longer an avoider, I have become a mitigator.
My Lords, the noble Viscount, Lord Eccles, is very fortunate indeed. Early on in my business career, I remember visiting an official overseas in a very protected market to obtain permission to sell some of our technology to a company there. In a bookcase behind his desk were the complete works of Shakespeare, the Oxford Shorter English Dictionary and the works of Dickens. I thought I would compliment the official on his interest in and knowledge of English literature. He looked at me in rather a peculiar way and handed me a copy of Dombey and Son. I opened it, and in the centre was a cut-out that exactly fitted US dollar bills. I would say to the noble Baroness, Lady Wheatcroft, that there was absolutely nothing nuanced about that. I am not sure if it was my distaste for corruption, my concern for the law or my love of books, but I never did conclude that deal because I wanted to preserve our reputation, and there were lots more deals to be done.
In another country, corruption was explained to me by the fact that because the laws and institutions were weak, largesse should be shared with those with whom you have ties of dependence, and therefore it was not corrupt to pay off somebody’s cousin. This is why we must not undermine our strong and independent institutions—institutions such as the police. I think that the proposed legislation to make the police accountable to political commissioners can lead to undermining their independence. They have that kind of arrangement in the United States, and their experience is not good. Instead, we should be strengthening our institutions: our free press, our freedom of information and of speech. Legal tricks such as super-injunctions and unaffordable libel actions weaken our defences against corruption, and this is where our laws need strengthening. I welcome the proposed although rather timid Defamation Bill, but I wonder why it does not go a lot further.
Where I do think we have institutionalised corruption is in the world of tax avoidance. There are armies of bankers, lawyers and accountants who ensure that even though the letter of the law is respected, increasingly immoral ways are found of perverting the spirit of the law to ensure that tax is avoided. This has been justified to me by quoting my noble friend Lord Mandelson. He has said that he does not mind people being filthy rich, but people forget the rest of his sentence. He does not mind people being filthy rich as long as they pay their taxes. To hide its true purpose, the tax avoidance industry adopts the language of real business, so technical innovation and reinventing your business model do not mean finding new products, services and markets, and new ways of supplying them. No, they mean registering your business in a tax haven and becoming a non dom to avoid tax while still enjoying the, admittedly decreasing, benefits and services which make this country the civilised place that it is.
Business leaders rely on the Government to regulate, to educate, to create a skilled workforce, to do research in science and to build the infrastructure, and they are quick to complain when there is not enough. Yet they use dubious means of avoiding the taxation necessary to pay for it all. As my noble friend Lord Eatwell put it, that is financial artifice. They make it very difficult to find out how much corporation tax is actually being paid by large firms because tax planning is a cat and mouse game played all over the world. For instance, we will never know about Cadbury because Kraft has moved its domicile to Switzerland. Most studies show that 28 per cent corporation tax is budgeted for, but is rarely the amount actually paid.
Caroline Lucas MP is today introducing in another place a Presentation Bill about disclosing the amount of corporation tax paid and the profits made. Will the Government support her?
The noble Baroness, Lady Williams, explained that the tax avoidance industry also ensures that we are a wonderful tax haven for those who are resident elsewhere, irrespective of how their wealth was earned. We now know that the Home Secretary plans to give immigration priority to those who want to participate in it. Is this wise?
All this poisons our politics. However much the Government talk about us all being in this together, as my noble friend Lord McFall said, there will be very little sense of shared pain until tax avoidance is tackled. Economic morality is an ethical issue, so I congratulate the noble Baroness on introducing this debate and on raising this ethical matter.
My Lords, I should start with a sort of disclaimer. This is, I think, my 53rd year full-time in the law as a solicitor—although I am not doing very much these days. Like a previous speaker, I have to say that, in the whole of that time, no one has offered me a bribe—I feel a bit resentful of that—and only twice have I been asked to do something corrupt by a client. I suspect that there is no other jurisdiction in the wide world where someone of my longevity could say that, and I have spent a lot of that time in the commercial world.
However, let us not kid ourselves: standards of probity and integrity are falling with a rapidity that should give us all cause for pause and alarm. If you look at the statistics of crime, you see that the incidence of financial fraud is on the increase in all respects in all quarters of our society and none is exempt. There is no way of denying that corruption is highly infectious. It is a bit like spiritual dry rot. Once you have crossed the threshold of corruption, it is very difficult to go back and very easy to go forward.
Nor should we overlook or consign to the past, as Mr Diamond wants us to do, the astonishing events of the past two or three years in the City—in effect, the partial collapse of the banking system, which would have collapsed totally but for the putting-into-the-pool of trillions of pounds of funds from here, from America and elsewhere. At the root of that—again, let us not deceive ourselves—was an increased level of straightforward corruption: insider dealing, concert parties rigging the markets long enough to get in and out and make a killing, and so on.
I have practised more than 40 years in the City of London. Anyone who you know well who is deeply involved in the City will privately tell you that it is unfortunately true that corruption is on the increase everywhere. The more globalised the market becomes, and the greater the diversity of nationalities, with little common cultural cohesion, the more the corruption spreads. That is why this debate, for which I thank my noble friend Lady Williams, is of such importance.
I shall touch briefly on the role of legislation, because “the United Kingdom’s record on legislation” is in the title of the debate. Legislation can be an impediment to integrity. Too much of it plays into the hands of the smart boys, the lawyers and the accountants. For people who are involved in the different aspects of the City, it reduces their sense of their own moral autonomy, their own ability to distinguish right from wrong and to do good rather than bad.
You have only to look at the statistics. We legislate between 200 per cent and 400 per cent more than any legislature in the democratic world. Forty per cent of our tax legislation is anti-avoidance. If you were to stuff all our tax legislation into a single volume, you would not be able to carry it. For example, the Charities Bill, a consolidation Bill, which has just had its First Reading in this House, is longer than the entirety of the legislation of 1905—charities, for God’s sake. There is no substitute for individual moral integrity, and I have to say that the huge corporations are not great encouragers of that.
I have some proposals. I entirely agree with what the noble Lord, Lord Haskel, said in relation to the Bill just introduced in the other place by Caroline Lucas. If companies domiciled or paying tax here had to disclose year by year where else they were operating, what the turnover was, how many employees they had there and what tax they paid, it would be a huge disincentive to the ludicrous exploitation of tax havens. Let us look at Barclays. It has admitted to some 150 subsidiaries in tax havens—I think that the true figure is more than 300—and that is true of so many organisations. There is no morality or sense of fairness in corporate tax-paying in so many instances. So let us have that.
Let us have principles-based tax law, because we are disappearing out of sight with trying to block one loophole after another. I accept that there are difficulties about principles-based tax legislation in terms of certainty, but with the support for and confidence in our courts that people have, it would be a far preferable solution to the problem of tax.
Next, I suggest that any contractor with any state agency should not be allowed to bid for a contract unless they have a clean tax record over the previous five years. Lastly, we cannot hope to deal with corruption, bribery and all the rest of it unless we have the people to do the job. The Serious Fraud Office has only around 300 staff and I am told by someone in there that it is losing some of its best people right now. The Inland Revenue is scheduled to lose 40 per cent of its entire staff over the next three years. What sense can that make if we are trying to implement the laws we have? The failure to implement tax legislation in particular is devastating. On official estimates, we lost £42 billion of tax that should been paid last year for want of the people to enforce the law.
My Lords, the subject of today’s debate is extremely topical, as was revealed by the rather unsatisfactory exchange in this House following an Oral Question I asked on 2 March about the regrettable and unjustifiable delay in the entry into force of the Bribery Act. I therefore congratulate the noble Baroness, Lady Williams of Crosby, on now providing an opportunity for us to go into these issues in greater depth. It is also an opportunity, I hope, for the Minister, when he replies to the debate, to update us on developments since that exchange and on the prospects for early progress on bringing the Bribery Act into effect. I shall focus my remarks, on the one hand, on that issue of bribery and corruption and, on the other, on money laundering, leaving the issue of tax avoidance to others who know more about it than I do.
There can surely be no doubt that bribery and corruption are rife the world over, but particularly so in countries with autocratic or weak systems of governance where the rule of law is either entirely absent or at least inadequate. Nor, I think, can it be doubted that bribery and corruption in developing countries levy a heavy toll on their economies, hampering their development and often meaning that foreign aid does not reach the intended recipients. Moreover, in the long run, it feeds instability and disorder, as we have seen recently in Tunisia, Egypt and Libya. This is not something that we cannot afford to tolerate, or dismiss with a weary and cynical shrug, as an inevitable part of the international scene and of doing business in developing countries.
The hard fact is that bribery, as the noble Baroness, Lady Williams, reminded us, requires more than one party and, far too often in the past, one of the parties has been based in a developed country. Hence the move in recent years for industrialised countries collectively to tighten up their laws on bribery and corruption and their implementation. That is welcome but, as others have said, Britain’s record is not very good. We have been operating, and we are still operating, under legislation dating from the 19th century which all recognise as inadequate. Our prosecuting record has been poor too. Hence the urgent need for the new Bribery Act and for a new attitude towards bringing prosecutions.
The campaign against the Bribery Act, which has been mounted recently in the press, anonymously for the most part, is in my view a disgraceful one, wide of the mark, and against the best interests of British business. It cannot be in the interests of British business that it should be thought, for one moment, that our companies can export successfully only by using such dubious practices, nor that we should be out of line with, and subject to sharp criticism by, our developed-country peers, as we are in the OECD and elsewhere. Business is quite right to insist—here I join the noble Lord, Lord Hodgson—that there must be clear guidelines on the application of the Act, but in my view it should be pushing for those guidelines to emerge sooner, rather than later, not trying to delay them. I very much hope that the Minister will be able to say when that damaging hiatus will be brought to an end.
Until we put our own house in order, we cannot possibly hope to operate effectively in bearing down on bribery and corruption worldwide. Nothing damaged our efforts in that respect more than when the previous Government gave in to pressure and brought a premature end to the investigation of British Aerospace’s contracts with Saudi Arabia. I hope that the Minister can assure the House that this Government will not give way to that sort of pressure. It would be useful to hear how the Government intend to pursue the issue of corruption in the context of our new development aid policy; that is, if and when we get our own house in order. The increases in foreign aid are welcome, but they must be accompanied by a drive against corruption in recipient countries.
It would also be good to hear about the Government’s assessment of the effectiveness of the Extractive Industries Transparency Initiative. Is it contributing to the fight against corruption? What progress is being made in getting more countries and more British companies signed up to it? Is something more needed if the discovery of rich natural resources in developing countries is not to be, as it has been so often in the past, a curse rather than a blessing? Are we looking seriously at making the EITI mandatory, perhaps within an EU context?
Turning to money laundering, some time ago the home affairs sub-committee, which I have the honour to chair, of the EU Select Committee produced a report covering money laundering. We expressed considerable concern that the Financial Action Task Force, of which the Minister has enormous experience and which is the international body that deals with money laundering, was doing so little—nothing in fact—to get to grips with the money laundering aspects of Somali piracy, the increasing sums of money which were being paid to the pirates in ransom. We also expressed even greater concern that some of the money might be getting into the hands of terrorist organisations. The then Government’s response on both points was, I thought, singularly limp. They said that they had “no evidence” that any of the ransom money was reaching terrorist organisations. Two weeks ago, the Times newspaper reported that some of the pirates had done a deal to share the proceeds of their crimes with al-Shabaab, which is undoubtedly a terrorist organisation. So what are the Government doing about that now? What are they doing to galvanise the FATF machinery in following up the serious possibility that those ransoms are now reaching terrorists? Is it really satisfactory that those who put together the ransom money, which is no offence under British law, do not have to file a suspicious activity report when they do so? Is that a satisfactory state of affairs?
Sometimes I feel that the Government—not just this one—are a bit behind the game or are playing catch-up on the burgeoning ingenuity of international criminals and are reluctant to challenge or to change existing practices and our law enforcement machinery so that we achieve an effective response to some of the most daunting criminal challenges of our time. I hope that the Minister can assure us that the sort of approach that I have spoken about is a thing of the past and that the Government will be much more proactive in the future.
My Lords, I, too, thank my noble friend Lady Williams for initiating this debate. In my brief remarks today I would like to cover the three issues of bribery, the tax gap in the UK and the tax gap in the developed world.
As my noble friend said in her introductory remarks, our bribery is someone else’s corruption. Although a number of noble Lords have talked about BAE in the context of Saudi Arabia, arguably even more damaging were the bribes paid, in connection with selling aircraft, to the ANC in South Africa to fund an election campaign. That has changed the political culture in South Africa to such an extent that bribery is now endemic and by all accounts getting worse. A British company was the catalyst for starting that process.
I share the view of my noble colleagues that the sooner the Bribery Act comes into force the better. I was heartened by press reports earlier this week that we might now get the guidance very quickly. It is not a completely straightforward issue, of course, although morally it appears to be. I have some sympathy with the noble Lord, Lord Hodgson of Astley Abbotts, on the issue of British exporting companies who will lose business as a result. There should be no doubt that there will be a tangible cost and a loss of business to British businesses if they abide by the Act. Although I would like to share the view of my noble friend Lord Marks, that this would just be a short-term cost, in some circumstances it will be a long-term cost. By putting the Bribery Act on the statute book we have accepted that there will be a cost, whether or not we recognised that at the time.
I have less sympathy with the concern mentioned by the noble Baroness, Lady Wheatcroft, in respect of mining companies and others listed in the UK but with no substantive operations here. Mining companies have been responsible for some of the worst abuses of corporate behaviour. It seems to me that, if they want the benefits of a London stock market listing, they should be prepared to take on the full responsibilities that that implies. I hope that the Minister can give me an assurance that there will not, in effect, be an opt-out for extractive industries with a listing here but with no operations here.
On the UK tax gap, the noble Lord, Lord McFall, pointed out that we are talking about an amount of as much as £50 billion, which covers all forms of taxation. Interestingly, the major components of that are VAT and the personal taxes—not corporate taxes, although there is a significant corporate tax loss as well. I am pleased that the Government are putting an additional £900 million into dealing with certain aspects of this, particularly tax evasion and offshore tax evasion and organised crime.
However, the cuts to HMRC, although justified in part because of the increased use of IT, have, in my view, hollowed out the organisation to such an extent that very often it cannot deal with the day-to-day tax affairs of taxpayers. That makes it easier for people, advertently or inadvertently, to pay less tax than they are due. Staffing needs to be looked at again. My suggestion, which I hope will go with the grain of the coalition thinking, is that we should incentivise the department by setting it a target for certain aspects of tax raising. If it exceeds the target, it should be allowed to keep a significant proportion of that excess to reinvest in staff—not in staff bonuses—so that there are more people the following year to devote to the task. There is no doubt that the cost of additional staff in the area of tax collection would be more than repaid.
Finally, on the international tax gap—which has barely been discussed today—the OECD recognises that poor countries are likely to lose more money through tax dodging than they receive in aid. Therefore, the more that they can collect tax themselves, the less dependent on aid they will be in the long term. Christian Aid and other development charities have described tax as the
“route out of aid dependency”.
I think we need to spend more time looking at how we can support that route. Christian Aid’s two specific proposals, which I support, are the extension of the multilateral and automatic exchange of tax information between jurisdictions and country-by-country reporting by companies, which has been mentioned by several noble Lords. On the latter, I believe that the Chancellor has said that he supports the extension of the Dodd-Frank provisions, which require the extractive industries to provide country-by-country reporting, and he has proposed that at EU and G20 level along with France and Germany. I would be grateful if the Minister will confirm that is the case and that the Government will keep the pressure on there.
The issues that we are debating today are typically seen by many of our colleagues as extremely technical, which some of them are, but of secondary importance, which they are certainly not. As today’s debate has demonstrated, these issues lie at the heart of economic development and governance. We need to keep the pressure on, to drive up standards and drive down corruption and tax evasion.
My Lords, the difference between tax evasion and tax avoidance was once said to be the thickness of a prison wall: evasion is illegal, whereas avoidance was and is legal, when one sticks to the letter if not the spirit of the law. In recent years the difference between evasion and avoidance has been less clear. In 2005, the UK’s chief inspector of taxes said that he wanted to get rid of the distinction and talk about the level of compliance, not avoidance and evasion.
Let me say at the start of my comments that if one reduces one’s tax bill to the lowest possible, which is within the spirit of the law, that is called tax mitigation, as mentioned by the noble Viscount, Lord Eccles, and is considered non-objectionable—even a duty to oneself so to do. It is when devices are created purely for avoiding tax that they become objectionable and can land the person in trouble.
A recent example of legal tax avoidance or mitigation which hit the newspapers was that of a captain of industry who was perceived to be the owner and operator of a large UK business—employing many employees, who, he said, pay tax—that pays VAT and corporation tax. However, the majority of the shares of that company are held in the name of the entrepreneur’s wife, who lives in a tax haven and to whom the company dividends are legally paid.
It is my belief that the UK needs to look further into these legal methods of taxation avoidance, which I believe do not obey the spirit of the law—indeed, in the view of some, they do not obey the law itself. Things are gradually changing, as significant cases have seen tax saving schemes struck down if the scheme lacks “a business purpose”. I am told that the term “money-laundering”—which we have mentioned here today—was coined to describe the activities of Al Capone, the Chicago mobster who used his laundry business to clean dirty money. Noble Lords may well remember that Mr Capone was imprisoned for tax evasion rather than for the other criminal activities.
Given that HMRC aims to stop tax evasion and discourage tax avoidance, I would like to spend a little time today talking about what is an effective agreement between the UK and Liechtenstein, whereby HMRC offers a genuine, if only partial, tax amnesty that is designed to stop evasion practice and—a point made by one noble Lord—bring in sizeable funds into UK tax coffers. In August 2009, HMRC announced the Liechtenstein disclosure facility, which is based on, and can operate because of, the tax information exchange agreement between the UK and Liechtenstein. The aim of the disclosure facility is to eliminate all UK tax evasion with a Liechtenstein connection. At the time, HMRC’s Permanent Secretary for Tax said:
“Those who have been evading UK tax on assets held in Liechtenstein banks must now settle with us. There are no alternatives”.
Financial intermediaries in Liechtenstein are now required to send a formal notification to any customers who have a UK tax exposure. The customer must provide evidence of UK tax compliance. Those who use that disclosure process benefit, in that only unpaid taxes from April 1999 are due—in other words, there is a real, if partial, amnesty. The fixed penalty is only 10 per cent of the tax due plus, of course, the tax itself. If innocent error can be shown, the settlement may be reduced to only six years of the tax with no penalty. The idea is to get people out of the cupboard and paying their taxes so that moneys they have been salting away are brought into the public sector.
As a practical way of raising taxation, both past and future, and of stopping the further hiding away of assets, the Liechtenstein disclosure facility must be applauded and encouraged, and spread to other jurisdictions and secretive tax havens mentioned by other noble Lords here today. It would be useful if the Minister could provide this House with details of the amounts raised by this scheme and indeed any similar schemes. Reducing tax avoidance and evasion is the best way for the UK to raise funds to carry out its duties and obligations in government areas such as social services and education—or whatever else noble Lords would think relevant—which I am grateful to the noble Lord, Lord McFall, for mentioning.
I have not dealt today with the loss of tax and income to the UK from non-doms, who by their very nature have assets abroad so behave differently from other UK citizens. Non-doms not only broadly pay no tax on foreign unremitted income but they use their funds deposited abroad to shop in Paris, Madrid and New York, and do not use those funds to shop and spend their money in the UK.
No one, including noble Lords, likes paying tax. When in the 18th century Benjamin Franklin said,
“nothing is certain but death and taxes”,
he was unaware of the era of tax avoidance and evasion. Regarding the comment made about tax conferences, I must tell you that many people in the industry—and I am a chartered accountant—believe that people go to these conferences to find out ways of avoiding, if not evading, taxes. Listening to the debate today, I was reminded of Sir Walter Scott, who said:
“Oh what a tangled web we weave,
When first we practise to deceive!”.
My Lords, I congratulate the noble Baroness, Lady Williams of Crosby, on and thank her for securing this debate and introducing it with such passion and eloquence. As she rightly pointed out, we generally tend to maintain fairly high standards in our internal affairs, both political and economic. However, when it comes to international transactions—whether foreign policy or economic—somehow our standards slip and we do not seem particularly worried. Our legislative record on dealing with bribery, tax avoidance and money-laundering is mixed. In some respects, it is better than other European countries but in others it is much worse. The number of convictions for bribery, for example, is lower in Great Britain than in many other European countries. That is not because our companies are well behaved; it is rather because the Government are unwilling or unable to prosecute them. The Bribery Act received Royal Assent in April 2010 and should have come into effect by the end of last year, but unfortunately it has not.
For money-laundering, we seem to provide more tax havens than most other countries and some of those funds find their way into the City of London. Our taxation system, which we have talked a great deal about, has many easily exploitable loopholes. I have never understood the distinction between the things called tax avoidance and tax evasion. Technically, of course, I do but morally and practically I do not. Supposing I were to do that in my own university by saying there, “No plagiarism or copying from other students”, but that the rule was so defined that if they were to copy from the internet or something else that would not count as plagiarism. How can we have a situation where rules are designed and defined so that they virtually allow you to get away with murder? Then we sanction it in the name of tax avoidance being all right but tax evasion not. The time has come to make sure that this distinction is fairly tightly defined and narrowed as much as possible.
It is because of that distinction that a large number of corporations, multinationals and banks have been able to get away with paying so little by way of taxation. Last year, the tax gap—the gap between the tax that should have been paid and that which was paid—was £42 billion. In the year before, it was £38 billion. I am told that in 2010-11 it could be as high as £80 billion to £100 billion, which is staggering. It is made easier by companies generally being set up so that we do not know what their home base is and where they could be taxed. In this country, as in many others, we allow this to happen by introducing easy mobility between the gamekeepers and the poachers, with the result that there is a serious conflict of interest. Those who should be monitoring and enforcing the system are confronted with all kinds of temptations, some of which are not easy to avoid.
My next remarks will be about, first, tax avoidance, and then money-laundering. We in this House do not seem to appreciate tax avoidance. Perhaps we do, but for the public at large it has undermined the legitimacy of the political system. People simply cannot understand how we can have designed a system in which people earning billions and billions of pounds can get away without having to pay our tax, while a small man somewhere earning no more than £30,000 or £40,000 has to pay an enormous amount of tax. How could this kind of system continue? Therefore there is enormous anger at the systematic undermining of our democratic legitimacy.
Concerning money-laundering, I shall make one point that has often been ignored. Think of a tyrant, whether it is Mubarak, Gaddafi or whoever. He plunders his people and collects billions because he is fully confident that he will be able to enjoy the fruits of the money that he has collected. What gives him that confidence? It is that his money will be easily siphoned off somewhere such as here so that he can quietly enjoy it when he is thrown out of the country. In other words, in so far as we continue to devise a system which allows those characters access to the money, we are complicit in the crimes that they have committed. The blood of their victims is, to some extent, on our hands because we have allowed the system that gives those guys the confidence. Therefore they continue to plunder their own people. We really need to appreciate how morally implicated we are in some of the activities that go on abroad.
I end by making one or two general suggestions. In this country, we ought to be fighting for agreed global norms. We must also make sure that there is rigorous monitoring with an enforcement mechanism. There should be absolute transparency on how the Government and multinationals conduct their business. We should close tax havens. All this is widely known and is nothing new but I will also make two suggestions that have, perhaps, not been explored.
First, there must be a way of naming and shaming those who avoid taxes, even when that is done by exploiting existing loopholes. We name and shame in the cases of schools that have failed and of criminals. Why should it be difficult for us to say, “These are the companies, this is the tax they paid and this is how they arrived at it”, to show how much gap there is between tax avoidance and tax evasion? Secondly, just as all legislation passing through this Parliament has a human rights compliance statement, there should be a declaration of compliance for every major government and multinational transaction: that no form of bribery or corrupt practice has taken place in the execution of that project. That kind of compliance declaration would go a long way in discouraging people from engaging in unacceptable practices and for us in shaming them afterwards, should they be caught.
My Lords, I very much agree with the words of the noble Lord, Lord Parekh, particularly his regret and sadness that people are greedy and avoid paying taxes when they can easily afford them. I, too, take pleasure in thanking my noble friend Lady Williams for launching this debate, as others have done. These matters are being raised at a very important time in this Session of Parliament. I shall declare two separate interests, if I may: as being a retired member of the Stock Exchange, after many years, and that I live in France because I particularly wanted to pick up on a reference made earlier.
It happened a short while ago that one of our senior ministerial friends in the coalition Government—for obvious reasons, I will not say who—took one of my colleagues aside to say: “You don’t have to worry, you know. You talk about all this trouble with bribery, corruption and tax avoidance in Britain but look at the situation in France”. Because I live in France, I happen to have had the opportunity on quite a few occasions of having close contacts with the political, official and parliamentary classes of people in France and that is not true at all. France has increased enormously the regulations and legislation governing bribery, corruption and tax avoidance and evasion, tightening them to such an extent that people there now live in fear of being apprehended. That is not the situation in the United Kingdom where there is enormous complacency about this subject.
My noble friend Lord Sassoon is famous, quite rightly, for taking conscientious notes about the contributions made in these debates. Various excellent speeches have been made today, marred only slightly, if I may say so, by the hesitations of our three or four Tory colleagues saying that it was perhaps not such a terrible subject after all. However, I appreciate their request for absolute clarity and transparency on the regulations governing their tax and payment duties, overseas and in Britain. Now is the opportunity for my noble friend Lord Sassoon not just to answer politely and routinely on this occasion, but to reassure us fundamentally about some of these matters.
The amount of tax avoidance in this country is colossal. There is a very cosy, conspiratorial attitude in the City of London. I know it well; I am there frequently and have many friends in the City. For obvious reasons, I will not mention some names today but that attitude is quite wrong too. I am glad that my noble friend Lady Williams mentioned the Multinational Chairman’s Group, which probably sidles into the back entrance of No. 10, as Rupert Murdoch apparently does, to discuss these matters in order to mitigate the obligations that other people quite naturally accept. What is the sin in people having to pay proper taxes, be they in corporate, commercial or ordinary human activity of all sorts, when other people do it routinely?
Does nobody here feel so sad personally for Sir Philip Green, with his self-created personal dividend coming out of his brilliant reorganisation of British Home Stores? That was because of his talents as a retailer, which I pay tribute to; and that BHS reorganisation was funded, I think, not just from his own resources but by private equity borrowings, as they usually are. A billion pounds of profit was, quite rightly, taken out as a dividend. However, instead of taking just that self-created dividend he absolutely insisted that, as his wife was a recipient of that dividend, he would not pay the £200 million extra of tax or whatever it was. Is that really not a very sad reflection on the greed in our modern society, which is a disgrace for businesspeople and for others? No wonder Labour Peers here such as the noble Lord, Lord McFall, reflect on the unfairness in our society created by that.
Although this is by definition probably a fairly unlimited figure I estimate, for example, as my City friends do, that over £150 billion of tax evasion occurs because of all the tax havens that the British Empire and others have created. It is also because of the authorities in London not tightening up, given all the agencies which they have at their disposal and the improvement in the SFO to which my noble friend referred. Yet that figure is almost the size of the deficit. Then there is the £15 billion of corporate taxes that are not paid properly by companies that simply disappear along with their directors. Those amounts of money are a reflection on the unfairness of society.
The newspapers, however—most of them, incidentally, apart from the FT, the Guardian and one or two others, owned by tycoons who live in tax havens abroad and do not pay UK direct taxes, while paying low corporation tax because of their international structures—give us long, learned, pompous leaders again and again about the disgrace of people defrauding their social security. They are right—that is a terrible thing to do—particularly the example yesterday of the Afghan family who are now about to be sentenced for claiming a huge amount of money. But that amount in total is probably £20 billion, maybe £25 billion—a tiny figure given the thousands of people involved—in comparison with the small number of elite members of our business society in Britain and abroad, a reflection of the British Empire, who abuse their position.
I conclude with a quote on Rupert Murdoch. We are all thinking about the forthcoming deal. I have even been told by someone, although I do not know whether it is true, that Jeremy Hunt was actually at the Christmas supper attended by the Prime Minister and Rebekah Brooks. A newspaper said, at the end of September last year:
“From Thatcher through Blair to Cameron, our democratically elected leaders have tugged their forelocks to an unelected foreign tax exile in gibbering fear of losing his papers’ support, allowing Murdoch to regard a change of government as the mere shuffling of junior personnel”.
Corruption is not just tax avoidance and bribery; it is that kind of behaviour as well.
My Lords, I have sat through this debate and found it extremely interesting. I took part in the proceedings on the Bribery Act, and I would certainly like to see it brought into effect as soon as possible. It was passed with support from all parties in its present form.
I am an honorary fellow of the Chartered Institute of Taxation. I think that I am right in saying that this House struck a very strong blow against tax avoidance in a case called Ramsay some years ago when it said that artificial transactions were to be ignored when it came to assessing the tax of a company or an individual. I just wonder what has happened to that principle. Has it been submerged by the terrific complication in the tax statutes that has taken place over recent years?
My Lords, this has been a fascinating debate and a challenging one for the Minister to respond to, not least because, although three distinct areas of legislation are referred to, all with a common theme, they each present their own enormous complexities.
The common theme was adumbrated immediately by the noble Baroness, Lady Williams, in her opening introduction to the debate in which she stressed in a very powerful way her concerns about fairness. That was buttressed by my noble friend Lord Eatwell indicating that our financial system also rested upon trust. The fact that the debate has a strong undercurrent of principle attached to it should come not as any surprise but as a realisation that such principles should underpin our legislation. In these areas they are efficacious in ensuring that we play our full part in the modern world, were our economy to recover and, in due course, flourish.
There were some discordant voices, such as the noble Lord, Lord Hodgson, and the noble Baroness, Lady Wheatcroft, with support to a certain extent from the noble Lord, Lord Newby, who is eager to look at the issues of businessmen on the ground. The noble Viscount, Lord Eccles, also gave us the benefit of his considerable experience in this area. While we recognise the problems that businessmen face, though, the issues that we face are clear. This is a debate about our legislation in these three areas and its effectiveness. As noble Lords have identified, we have not been coming out of international comparisons of effectiveness well. This is of colossal importance.
To take the first dimension of bribery that the noble Baroness, Lady Williams, identified, we all know the challenges that are presented by dealing with regimes that are different from our own. After all, it is not so long ago that the British Government also lived with a bribery culture. We should not suggest that somehow we have had 700 years of glorious history free from bribery; very far from it. It was an underlying principle of government for several hundred years. In fact the best quote that I know about bribery is from Lord Burghley, founder of the Cecil family, with their significance in our political life. He said, “I may be bought”—that is, I never refuse a present—“but I do not sell myself”—in other words, my judgment is not impugned. That is scarcely a democratic sentiment but it is a step along the road towards cleaner and more proper government. We have prided ourselves on the Governments that we have, and we ought to; they are relatively corruption-free, with very small exceptions, with regard to either Administration and the work that our civil servants do. We all know that we have limited issues there.
The Bribery Act, as the noble and learned Lord, Lord Mackay, emphasised, was passed by both Houses without serious division. It was part of a general view that we need this legislation in order to restore our reputation, which has been declining with regard to this issue. We are all party to that Act but the issue, as the noble Lord, Lord Hannay, emphasised in his contribution, is one of implementation. When is it going to be implemented? That has underpinned a number of contributions in this debate. I say to the Minister that we recognise that consultation is necessary—everything can be improved by hearing voices accurately—but this has gone through the full parliamentary process. We have all had our chance to talk to everyone outside and make our contributions, and so have our colleagues in the other place. We expect the implementation of an Act passed by Parliament. We are anxious about the degree of delay that there seems to be, not least because, as a number of noble Lords have emphasised in this debate, we look a lot weaker in this area than the United States, Hong Kong and direct business competitors on the international stage. That will not do. We require high morality to underpin both the basis of our legislation and the way that business conducts itself because, as my noble friend Lord Eatwell emphasised, the City depends on reputation as well.
I thought that we were going to spend a great deal of the debate on the issue of bribery, as indeed we have, because it was the most recent of our laws in this area to be passed and the one that has still not effectively been implemented. However, I was glad that my noble friends Lord McFall, Lord Haskel and Lord Eatwell and the noble Lord, Lord Phillips, commented on the issue of tax avoidance. We all recognise that we would benefit from simpler legislation because it is easier to comply with. We all know the challenges with regard to tax legislation. When one is seeking to give incentives and to deter specific practices, legislation becomes increasingly complex and, therefore, a challenge. As we all know, there is massive investment in the industry concerned with giving advice to businesses on how to avoid—not evade—certain commitments.
We must be strong and tough in this area. The situation is scandalous and the nation sees it as such. It is not just scandalous that banks had to be bailed out by the taxpayer to the extent that they were, and that some practices were considered to be on the wrong side of sound morality, but when it is subsequently identified that a bank such as Barclays pays such a small fraction of its total profits in corporation tax, of course our people view that as an extraordinary situation. Those institutions do not even pay adequate taxation when they are making so much profit and the vast majority of people in the country are suffering privation. That is why we should look at implementation. This is not about the law but whether the Inland Revenue has the resources to pursue the objectives which we set for it in law. I cannot understand why—I cannot think of any business that would understand this—we underprovide for a body that brings in revenue. The Government go in for profit maximisation. Putting extra resources into the Inland Revenue will produce extra returns, yet the Government are engaged in wholesale cutting in that regard.
I will conclude briefly as my time is very limited. Recently, we introduced legislation on money laundering as we were becoming increasingly anxious about the extent to which money laundering might fund international terrorism. Therefore, the relevant laws are in place. However, as the noble Lord, Lord Hannay, and other noble Lords have emphasised, this is a matter of implementation. We should be ashamed of a situation in which it is clear that those whom we knew to be tyrants and who paid scarce regard to the needs of their people have been able to salt away vast sums. On the whole those tyrants exploited countries with limited economies and very many poor people while keeping resources available in London for their own use.
The Minister will, of course, say that the relevant legislation is in place. That is certainly true but this matter is about good, resourceful government and the ability to implement a measure that the House wishes to see implemented.
My Lords, we have had an excellent debate and I thank all noble Lords who have spoken. I particularly thank my noble friend Lady Williams of Crosby, who comes at this whole subject from a position of great authority.
The noble Lord, Lord Davies of Oldham, has pointed out the challenge that I face in attempting to respond to the huge number of points that have been made. This has been a more than normally physically challenging debate to sit through. It is one thing to watch a tennis match that is being played out in front of me, but it is even more challenging to watch one that at times has been played out intensively behind me. However, it has been a fascinating debate.
I start by reminding noble Lords that Britain is, and continues to be, a great trading nation. This Government are committed to encouraging British business to seize opportunities around the world. We all know that globalisation brings huge opportunities not just for businesses themselves but for all those who work in those businesses and for the consumers of goods. However, there are significant threats and risks in this globalised world. We have discussed some of the most insidious threats that jurisdictions around the world face. My noble friend Lady Williams talked about the most serious issues. I certainly agree that some of the most insidious threats are those posed by bribery, corruption and money-laundering. I shall take in turn bribery, tax avoidance, corruption, if I have time, and money-laundering, which were the main areas covered in the debate.
I make it absolutely clear that the Government are committed—lest anybody doubts it—to implementing the Bribery Act. We are determined to ensure that it is implemented in a way that tackles corruption while not imposing unnecessary cost and uncertainty on legitimate business and trade. Bribery should not be considered an acceptable way to win business. It distorts free markets and causes immense damage in developing and emerging economies. The Government believe that the Bribery Act will have positive benefits for UK business through an enhanced reputation for ethical standards, reduced costs incurred in doing business and a clearer business framework. The Act will contribute towards a level playing field internationally. The UK stands alongside our partners, whether in the OECD, the UN, the EU or the Council of Europe, in recognising that bribery needs to be met with robust criminal offences. Indeed, the Act modernises and clarifies the existing law, which has rightly been criticised as complex, fragmented and out of date. However, I hope that the main issue concerns not the Government’s commitment to implementation but when the Act will be implemented and whether there has been unreasonable delay, as some have painted it.
I fully respect the views on both sides of the argument. On the one side, we had the pithy intervention of my noble and learned friend Lord Mackay of Clashfern and the contributions of my noble friends Lord Thomas of Gresford, Lord Marks of Henley-on-Thames, Lord Goodhart and Lady Williams. I very much appreciate their sentiments. However, I find it slightly harder to accept the criticism of the noble Lords, Lord Eatwell and Lord Davies of Oldham, on the timetable for implementation given, as we have been reminded, that it took until 2009 for the previous Government to introduce the relevant legislation.
On the other side of the discussion, we have heard powerful and relevant interventions from my noble friends Lord Hodgson of Astley Abbotts, Lady Wheatcroft and Lord Eccles—the noble Lord, Lord Hannay of Chiswick, also recognised this—regarding some of the difficulties for business in this area. We should not minimise those. There was a depressing lack of mutual appreciation by the two camps in this debate, with one notable exception. I am grateful to my noble friend Lord Newby for his contribution, to which I listened with interest. He recognised that two distinct interests are involved in implementation that need to be reconciled and that the implementation of the Act will indeed—certainly, in the short term—impose costs on business.
One of the questions asked by my noble friend Lady Williams concerned responsibility. Responsibility for implementation is with my right honourable friend the Justice Secretary, who is concerned to ensure that the Act is implemented in a way that tackles bribery effectively but avoids imposing costs or uncertainty on business and certainly does not make this another gold mine for lawyers advising on either implementing or picking up the consequences of the Act. It is the intention of my right honourable friend and the Government to publish guidance shortly. Implementation of the Act will follow publication after three months, in order to give businesses time to prepare themselves. On the other question about responsibility, I can confirm that enforcement of the legislation will be a matter for the Serious Fraud Office and the police.
Is it fair or unfair of me to ask my noble friend what his answer is to the circumstance enunciated by the noble Lord, Lord Hodgson of Astley Abbotts, where a business is faced with either compliance with the Bribery Act or losing a valuable order?
My Lords, that is a perfectly fair question, but I am not going to stand at the Dispatch Box—no Minister would—and suggest that anyone should break the law. I hope that that is a clear answer to the question.
The point that I wanted to make about implementation was that I know that my right honourable friend the Justice Secretary has been speaking regularly to the secretary-general of the OECD, because there has rightly been reference to the OECD’s important contribution to driving forward standards in this area. My right honourable friend has been speaking regularly, including this week and last month, to the secretary-general to keep the OECD informed and updated on our plans for implementation.
My noble friend Lord Phillips and the noble Lord, Lord Eatwell, mentioned the fall in the UK’s ranking. The noble Lord, Lord Eatwell, leads with the chin, but it is interesting to note that that fall in the ranking happened under the previous Administration. I hope that implementation of the Bribery Act will contribute to the UK’s ranking increasing again.
I acknowledge the point made by my noble friend Lord Hodgson about SMEs. In all that the Government are doing in the regulatory space, we need to be sensitive to the particular needs of SMEs. It is the intention to publish a quick-start guide, as it will be called, that focuses particularly on the needs of small businesses. UK Trade & Investment and overseas posts will be geared up to provide guidance and support on managing risks of corruption in particular export markets.
Lastly in this area, questions relating to extractive industries were raised by the noble Lord, Lord Hannay of Chiswick, and my noble friend Lord Newby. It is a topic that my right honourable friend the Chancellor has recently addressed. He drew particular attention to it at the February G20 Finance Ministers’ meeting in Paris, where he raised the issue of new international rules; he believes that this was the first time that that has happened. My right honourable friend, along with my right honourable friend the Business Secretary, will be arguing for a European agreement that matches the new standards set in the US in this area. This is very much on our agenda.
Let me turn now to the issue of tax avoidance. For the avoidance of doubt—I am sure that the noble Lord, Lord Haskel, has no doubt, but he raised the question—let me say again clearly that the Government are fully committed to making sure that everyone contributes to reducing the deficit by paying their fair share of tax. Tax avoidance and evasion damage the ability of the tax system to deliver its objectives. They impose additional costs on all taxpayers and undermine the tax system.
The noble Lord, Lord McFall of Alcluith, and others raised a number of questions about HMRC resources. I was grateful to the noble Lord for drawing attention to the announcement last year that more than £900 million will be made available to HMRC over the spending review period to raise additional revenues by tackling non-compliance. This is expected to bring in around £7 billion in additional tax each year by 2014-15. However, I recognise that the noble Lord bracketed, as did other noble Lords, recognition of that approach by HMRC with concerns about its resources more generally. That point was mentioned in particular by my noble friends Lord Newby and Lord Phillips of Sudbury. It is the case that HMRC workforce levels are projected to reduce. That reflects continuing improvements in the underlying efficiency in the way in which HMRC conducts its business. I should point out that, since the 2005 merger between the Inland Revenue and Her Majesty’s Customs and Excise, a reduction in headcount has had no negative impact on revenue flows. As with many other parts of the public sector, although there is a big challenge on management and implementation, HMRC has recently proved that it is able to rise to that challenge.
The noble Lords, Lord McFall and Lord Parekh, and others drew attention to the size of the tax gap, which is estimated to be around £42 billion, but I was pleased that there was recognition for some of the important steps that the Government are taking in this area, including the specific case to which my noble friend Lord Palmer of Childs Hill referred on the arrangements with Liechtenstein. That was the best answer to some of the concerns raised by my noble friend Lord Dykes. The steps that are being taken are very practical and raise considerable sums of money. In respect of Liechtenstein, the facility will run until the end of March 2015 and it is forecast that it will raise £940 million. These are considerably important initiatives to make sure that we tackle offshore financial centres and repatriate tax revenue to this country.
I recognise the questions around tax transparency. My noble friend Lord Goodhart touched on this area, but I will not repeat the names of all noble Lords who mentioned it. In the past year, we have seen unprecedented progress on tax information exchange. More than 500 tax information exchange agreements have been negotiated to the international standard. This means that there are fewer and fewer places for evaders to hide their money.
The noble Lord, Lord Haskel, raised the question of Caroline Lucas’s Bill in another place. My understanding is that the Second Reading of that 10-minute rule Bill is scheduled for June. The Government will decide at that stage whether to support it. I understand its import.
In my final couple of minutes, I will deal with the remaining two issues that were raised. The noble Lord, Lord Hannay of Chiswick, raised the issue of corruption. At the risk of stating the obvious, I stress that the Government recognise that corruption is bad for development, bad for people in developing countries and bad for business in those countries. As we maintain our aid budget, looked after by DfID, there will be great focus on raising standards of governance. It is very much on the agenda of my right honourable friend the Secretary of State.
I turn lastly to money-laundering. I am grateful to my noble friend Lady Williams for recognising that the Government have been assiduous on asset freezing. I say to the noble Lord, Lord Hannay, that we should not rely too much on reports in the newspapers. As my noble friend Lord Howell of Guildford said in the House a couple of days ago, we are investigating and watching carefully to see what links there may be between pirates and terrorism in the region linked to Somalia. However, as he said, we have no firm evidence of particular patterns of transactions, although we recognise that there may be personal, entrepreneurial or other links between groups. The noble Lord is right to emphasise that we need to be on the case, as we are. The noble Lord, Lord Parekh, raised general concerns in this area. As we discussed in the House recently, particularly in the context of Libya but also of other countries, the Government have been and continue to be at the forefront of calling for and implementing asset freezes against corrupt regimes.
My time is up. I have attempted to answer as many points as possible. It has been a very stimulating debate in which important questions were asked. I end by thanking my noble friend Lady Williams of Crosby for stimulating such an interesting two and a half hours.
My Lords, I thank all those who took part in the debate, which showed once again the extraordinary sweep of experience in this House. I agree with my noble friend Lord Sassoon that the debate has been searching and constructive. I thank him personally because what he said laid to rest many concerns and fears that noble Lords had about the implementation of the Bribery Act. That will be appreciated also in overseas circles, for which I am very grateful.
I end by saying that on the walls of my sitting-room I had a series of lithographs by William Hogarth called “The Election”. I am picking up on what the noble Lord, Lord Davies of Oldham, said when he reminded us that corruption and bribery are hardly new actors on the stage. It was perhaps appropriate that the whole set of lithographs was stolen; that seemed to be the proper end. The series was a reminder of how strong corruption in the democratic system was in the 17th and 18th centuries. We came out of that primarily because of the extraordinarily powerful legislation laid down for public service towards the end of the 19th century by William Gladstone and other famous Prime Ministers. It is perhaps worth putting on record our gratitude to public servants, in the way that the noble Lord, Lord Davies of Oldham, expressed, for their consistent very high standards and moral quality.
I thank the noble Lord, Lord Parekh, for what he said about the need for us to be more aware of a moral dimension to what we do in the financial and economic world—and, indeed, more generally—and about the danger that we could be slowly undermined by failing to pay attention to it, failing to bring our legislation up to date and failing to take it sufficiently seriously. I thank him for what he contributed to the debate and I thank all noble Lords who took part.
(13 years, 5 months ago)
Lords Chamber
To call attention to the cost-effectiveness, and impact on quality of life, of early intervention in the first few years of a child’s life; and to move for papers.
My Lords, I am grateful for the opportunity to debate this very important topic and look forward to hearing from the star-spangled cast assembled in the Chamber. In particular, I look forward to the maiden speeches of my noble friend Lord Storey and of the right reverend Prelate the Bishop of St Edmundsbury and Ipswich.
The successful development of our children is one of the most crucial responsibilities of government, both for their sake and for the sake of society and the economy as a whole. There are about 12 million children in the UK, of whom about 1.5 million are growing up in “at risk” situations. However, only 25,000 were on the “at risk” register when it was discontinued. Practitioners have had to raise the bar for intervention because of lack of resources. For example, if one or even both parents are drug addicts, that is no longer sufficient cause to act.
Each child has rights under Article 19 of the UNCRC which compels Governments to intervene on their behalf. It states:
“Governments should ensure that children are properly cared for, and protect them from violence, abuse and neglect by their parents or anyone else who looks after them”.
That is why, although in our culture government intervention in family life is a sensitive issue, we must respond to the evidence that is stacked up so high about the importance of the early years.
It is parents who should bring up their children, and we must help them do it well. In his recent report, Graham Allen states that,
“if we could equip parents to optimise … maternal responsiveness and their impact on their 0-3 year old children, we would be laying secure and strong foundations for all the work that the public sector did thereafter … Crucially, it would enable public expenditure to become developmental and not just remedial”.
The WAVE Trust states:
“The evidence overwhelmingly indicates that dysfunction strongly correlates with adverse experience in early life”.
The relationship with the mother or first carer is the most crucial in the whole of life. Unless there is attachment and attunement, the child will find it very difficult to form future relationships. Unless she feels warm and safe, is rocked and stimulated, has eye contact and a lot of love, her brain and the rest of her body will not develop to its full potential and may become very damaged. Damaged brains mean damaged people, damaged lives and damage and cost to society. To coin a popular phrase, it is a “no-brainer” that investing in that crucial relationship and the early years is money well spent.
There are multiple reasons why I was anxious to have this debate at this time, in the hope of influencing the Government. The Budget is next week. The Government have emphasised their firm intention to improve social mobility during their term of office, and their strategy will be published soon. We also await the child poverty strategy, which will no doubt respond to the report by Frank Field. Graham Allen produced last December his report entitled Early Intervention and its equivalent in Scotland, the Deacon report, has already had a major influence on the policy of the devolved Government. There has been a report on children's services from Professor Eileen Munro, and the important Green Paper on special educational needs. Dame Clare Tickell's review of the foundation years will be out soon. All these government-commissioned documents demonstrate the determination of this coalition Government to get things right for children. What we need to know now is how the Government are going to respond to all this well-evidenced advice, and I look forward to hearing about that from my noble friend the Minister.
There is an enormous amount of evidence which shows that the prenatal and first three to five years of a child’s life are the most important. This is because of the biological fact that the human brain is so complex and so large that we have to be born three years premature. In other words, our brain is not fully developed at birth. It reaches 85 per cent of its potential at age three, and development goes on into the teenage years. During this development, the brain is extremely vulnerable to trauma and responsive to the child’s experience.
Several studies show that it is possible to predict things about a child’s future from as early as 22 months. The Prime Minister himself is clearly aware of this. He said to the Local Government Association in 2007 that if you,
“ask a primary school teacher with a class of 5 year olds, which ones are likely to be in trouble”—
with the law—
“in 5 or 10 years’ time—and chances are, the teacher will be able to tell you with total accuracy”.
It is not just the law where effects will be seen. Education, health, working life and relationships will all be affected. A number of important longitudinal studies all point to the fact that, if we get things wrong in the early years, the results will be long-lasting and expensive.
So what do we mean by early intervention? The word “early” can be ambiguous. It can mean intervening early in a child’s life or early in the genesis of a problem that develops at any stage. All the evidence shows that, if you do enough of the first kind, you avoid the need to do a great deal of the second kind. It is also more cost-effective, bringing returns of £7, £9, £12 or even £19 for every pound invested in various programmes. A £600 family programme can save £45,000 to keep a child in custody for a year.
Some countries are leading the way—notably Sweden, where they start very early indeed with prenatal care. Nearer home, in Scotland, the Finance Committee of the Scottish Parliament has concluded a six-month investigation into preventive spending. It ended with the unanimous cross-party conclusion that a shift to investment in early-years preventive spending should be a priority for action by the Scottish Government, and that it should be carried forward in a non-partisan, all-party manner not just during the next Parliament but over the next 20 years. I believe that we should do the same in the rest of the UK because the problem extends well beyond today’s generation of children. Graham Allen said:
“Those who are dysfunctional have to be assisted not only because of the problems they create in the here and now for themselves and society, through their involvement in crime, drugs and violence. Even more importantly, they also need to be assisted because in their role as parents such problems will impact adversely on newborns and be perpetuated intergenerationally”.
Therefore, we need to take action now for the sake of future generations.
The economic costs of falling behind are enormous, and we are falling behind other countries. UNICEF’s Report Card 9 has a league table of inequalities in child well-being, which shows the UK in 21st position among other OECD countries. The consequences of this include the risk of poorer health and nutrition, more frequent visits to health services, impaired cognitive development and educational under-achievement, reduced linguistic ability, lower skills and aspirations, reduced productivity and adult earnings, higher rates of unemployment and welfare dependence, increased behavioural difficulties, crime and antisocial behaviour, and a greater likelihood of teenage pregnancy and drug or alcohol dependence. The significant costs are borne by business and the economy as a result of lower rates of return on investment, greater expenditure on social services and the justice system, and lower productivity and tax revenues. There is also a price tag on social cohesion and the overall quality of life.
Our Government are relying on growth to improve our economic situation, and growth relies on the abilities of the workforce. A recent report by the Nobel prize-winning economist, James Heckman, on the crucial importance of the pre-school years for skill formation, and the critical role of skill formation in programmes to reduce inequalities, shows that gaps in achievement are primarily due to gaps in skills; skills determine success; families are major producers of skills; gaps emerge early; and investment in the early lives of children in disadvantaged families will help to close achievement gaps. He points out, too, that the skills needed for success require more than cognition and IQ; also important are soft skills such as conscientiousness, perseverance, motivation, ability to work with others, and so on.
Frank Field has outlined the link between child poverty and achievement. He acknowledges the massive amounts of money that the previous Government spent on trying to get families out of poverty but accepts that they had limited success. He now believes that the spending was not sufficiently targeted at the early years and recommends that Governments concentrate not just on supplementing incomes but on providing services to support families. Poverty contributes to educational failure, family stress—which in its turn leads to poor child development—mental health problems, family separation and often violence, so its effects are not just about how big a television you can afford or even whether you can buy good, simple food.
So when and how is it best to intervene? The Chief Medical Officer for Scotland, Harry Burns, concluded that there are four key periods when one can make the greatest difference—pregnancy, age zero to one, pre-school, and the transition from primary to secondary school—and that we should focus investment on interventions for each of these periods based on the strongest evidence.
The Graham Allen report talked about a virtuous circle of interventions: a prenatal package, a postnatal programme, Sure Start children’s centres, primary school follow-on programmes, anti-drug and alcohol programmes, and pre-parenting education through PSHEE in schools for teenagers before they become the next generation of parents. He is right to start with the period before birth. Professor Michael Meaney from McGill University recently explained the important physical changes that take place in the brain as a result of early life experiences and that some of these changes persist throughout life. He did this via the science of epigenetics, which explains how the early life environment changes the function and structure of our very genes, such that twins with identical parental DNA could end up with very different effective DNA. He claimed that early family environment is correlated strongly with many health problems. He said that the child’s experiences affect messenger RNA—a substance through which DNA has its effect on our cells—and that the effects of various chemicals produced during abuse and stress affect the development of the brain and the personality. He emphasised the critical importance of protecting mothers from stress during pregnancy. Pregnancy is the peak period in relationships when domestic violence occurs. Whereas outside pregnancy men mainly hit their partners on the face, during pregnancy the principal target is the woman’s stomach. Therefore, in the argument between nature and nurture, nurture wins and it is the only one that Governments can affect.
All the evidence leads to the importance of fathers as well as mothers and the benefits of investing in parenting programmes. However, there is compelling evidence from the charity Relate that programmes that do not include work on the relationship between the parents are not as effective or enduring in their effect. It tells us that 70 per cent of relationships deteriorate in the first year of a child’s life and that 20 per cent break up. However, trained counsellors and health visitors can and do offer help, so Relate is calling for all health visitors to receive training on the importance of the parental relationship to child development and on how to identify and address the problems.
We can have effective early intervention only if we identify problems early. Here, I should like to mention my concern at the reduction in posts for educational psychologists, who play such an important professional role in identifying not just educational problems but many other mental and emotional problems. There are many effective interventions. Other colleagues will speak about the importance of early intervention in autism, speech and language therapy, child safeguarding, special educational needs, children in care, literacy and counselling in schools.
Getting children into high quality early education is vital, especially for the disadvantaged two year-olds who are now about to receive free early years provision. I am proud to tell the House that, even during all the budget cuts that local authorities have had to endure recently, not one Liberal Democrat authority has closed a single Sure Start centre. It is a matter of priorities and they have made the right decisions. When children get to school it is important that there are follow-on programmes which involve their parents. School Home Support and the FAST programme from Save the Children both help parents to get involved with their children’s learning. Programmes which help children to develop emotional resilience and relationships are also essential. I believe that the SEAL programme and a high quality PSHE come in here.
Where do we go from here? Graham Allen proposes a national assessment centre to do research and evaluate initiatives. Personally I feel that we already have plenty of evidence and need to get on with it. There is, of course, the need to measure the value for money of programmes so that local authorities have a good evidence base to help them to choose on what to spend their money, but that evaluation must be done well. There must be a political will, such as now exists in Scotland and Wales, and there must be money up front. But Graham Allen is talking to the banks about that.
In conclusion, we cannot affect the genes that a child receives—that is up to his parents. However, we can affect how his mother is treated and supported when she is pregnant. We can affect the information that parents receive about what babies need. We can set up a system to identify and work with families that need extra help and support. We must do all that or continue to fail our children.
My Lords, I thank my noble friend Lady Walmsley for bringing this important topic to the House for us to debate again. I know that the coalition Government take early intervention very seriously, and I am sure that they will be listening to our contributions—the Minister is with us. I know that they want to ensure that effective strategies are put in place throughout the country.
Early intervention has been proven to work by numerous anecdotes, individual programmes and—as my noble friend Lady Walmsley said—a lot of research both in Britain and overseas. However, as I said in my previous contributions on this topic, I am concerned that the effect of early intervention can only be seen in the very long term, and often it is quick results and short-termism that attract continued finance. Therefore, we must ensure that long-term funding, support and monitoring are all put in place for all early intervention programmes to ensure their effectiveness. It is difficult to prove the positive impact of early intervention as many of the projects have been funded for too short a time although they are showing excellent results. As the National Children’s Bureau has commented, the real research findings on the outcomes of Sure Start tend to show that results really become evidenced many years down the line. I declare an interest as president of the NCB.
Perhaps I may bring to the House’s attention the latest report from the Centre for Excellence and Outcomes in Children and Young People’s Services, also known as C4EO, which collates much of the work on outcomes for children and families, including work on early intervention. Grasping the Nettle is a joint report with the Association of Directors of Children’s Services and makes the very good point that although targeted approaches tend to be judged more cost-effective than universal approaches, there is little comparative evidence to determine which approach might be the right course of action. Indeed, the report concludes that it is likely to be a combination of both and that a range of interventions would support different levels of need.
However, one outcome is clear. It is far more cost-effective to put in place rigorous early intervention schemes than to have to deal with the cost of problems later on. A long-term scheme in the United States called the Nurse Family Partnership found that $9,000 spent per child had the average benefit of more than $26,000 per child in later life, and also that crime reduction was an important contributor to that benefit. The scheme is replicated in the UK as the Family Nurse Partnership, but a long-term evaluation has not yet been completed.
My second point is that parenting programmes, to which my noble friend Lady Walmsley referred, are an essential part of any early intervention support. International studies and effective local practice in the UK have shown very clearly that good parenting, regardless of background, is crucial to good outcomes for children and young people Effective parenting support leads to improved outcomes for children, parents and families. Parenting is one of the most difficult jobs and yet there is no training or recognition for this vital role in our society.
Again, I believe that we need properly funded long-term projects. It is not fair that some parents get support while a three or five-year project being run before closure possibly due to a lack of funding leaves other parents with no help. When resources are scarce we need to ensure that we have the vision—which I believe that this Government have—to lead the commissioning of good, evidenced-based, multi-agency targeting of parenting and other early intervention support. Evidence by the NCB suggests that multi-agency approaches are the most effective in complex families.
The OECD suggests that expenditure on children should be regarded as if it were an investment portfolio, with a continual process of evaluation and reallocation to ensure that child well-being is actually improved. I welcome the model that C4EO has developed to help assess the cost of effective interventions at a time of reducing resources, as the methodology up to now has been weak. I hope that local authorities will make use of it. All the international evidence suggests that spending more intensively earlier is cost-effective, particularly for children in disadvantaged families, and we need to ensure that we roll out successful early intervention support throughout the United Kingdom.
My Lords, I very much welcome the opportunity to contribute to this debate and to join others in congratulating the noble Baroness, Lady Walmsley, on initiating it. The noble Baroness has a long history of interest in this subject and it is good to hear that her passion has survived moving from opposition to government—and long may that be the case.
There is probably unanimity about the importance of this issue. I suspect that had we been discussing this 20 years ago, there would have been a debate about whether it was right for government to comment on or intervene in what happened in families. That battle has been won. If we are to move forward, it is important not only to stand on that as a basis but to realise that we have to sustain and protect that belief. I do not necessarily want to go through the evidence of how early intervention works; I believe in it passionately and have enjoyed listening to the evidence so far, and no doubt there will be other contributions on it. However, having won that battle, we need to be very careful about any government action that would take us back to where we were before.
I do not want to dwell on this for too long, but I also remember that, in 1997, parts of this country were a waste field as regards early intervention. Some local authorities had no provision for nursery education. However, the infrastructure has been built up over the past 15 years, and we now have more than 3,000 Sure Start centres covering 2.7 million people. The provision of a £2.2 billion budget just for Sure Start and early years intervention has led to a massive change. It has provided more than simply the fabric and the bricks; it has brought about a change in culture in this country, such that it would now be unimaginable for a politician from any party to say that they did not believe in early years intervention and support. That is how far we have moved and it is very important that we do not risk it. It is still early days and it may not be as rooted as I hope that it is.
I want to look forward on the two fronts by which I will judge the extent to which we are likely to build on the progress, or to throw it away. I shall consider, first, the amount of provision and, secondly, the quality of that provision in the coming years.
On both those issues, the Government’s record so far does not give me confidence that they will build on the past 15 years of investment and progress. There are three main threats to the amount of provision. First, there is the 13 per cent cut in cash terms to the intervention budget, which is real money out of the service and will have real consequences. Secondly, there is the un-ring-fencing of the budget, and, thirdly, the diminishing of our nation’s ambition for a universal service to a targeted service. I do not want to go into all of those in great depth, but this was a Government in which both parties went to the election promising to protect the early years and protect Sure Start. Now the Minister who is now responsible for that has said to people that if they want Sure Start to continue they must lobby their local council to let it happen. That is not government responsibility; the public have made clear their view about Sure Start and early intervention. They have done their lobbying and voted for parties at the general election that promised to keep Sure Start and the amount of investment in that sector—and that was all three of the major parties. I worry that what the Government have done in their early months is to give away every single lever they had to ensure that this work continues. That is what happens when you un-ring-fence a budget and say to local authorities, “Here is a smaller budget—you decide how it will work out”. I am left wondering where the Government’s levers are to deliver the pledges that they made before the election.
The next thing that I wanted to look at was the quality of provision, because there are some fairly ineffective things happening in this sector. It is bound to be the case. In education, we are quite good at carrying on doing ineffective things; we are not as good at actually changing our practice so that we build on the evidence of what works.
I shall talk about one error that the Government have made and then comment on one opportunity that they have. Frankly, it was a mistake to remove the requirement that at least one person with qualified teacher status or early years professional status should be in our children’s centres. I admire the Minister for his commitment to the quality of teaching and praise him for having made it clear in this House that the Government are committed to that at school level. I just cannot understand why he can care so passionately about the qualification of those who work with our children at five and above but less so about those who work with our children at five and below. We have the irony of a situation in which you can teach children only when you have a degree level of 2.2 or above but do not need a qualification to work with our under-fives.
The last point that I make is about evidence. I join the noble Baroness, Lady Walmsley, in saying that the work that Graham Allen has done in talking about an evidence base is crucial. However, I disagree with her in that I am not sure that we have the evidence. There is some lousy research around, and we do not write it down and equate it as we should.
I want to take from Graham Allen’s comments in my last few seconds. He talks about the need to evaluate programmes by randomised control trials and other things of really good quality. I declare my interest in that as a member of the Institute for Effective Education at the University of York. We must then classify those programmes by quality, impact and caste and only then allow the professionals to make wise decisions on behalf of the interventions they make.
My Lords, I first thank noble Lords for making my entry into the House so welcoming. Indeed, the generosity of that welcome and the support from attendants and staff has been truly remarkable. I am a city councillor forged in the political council chamber of Liverpool. Coming to the House and seeing respect, reflection, support, concern and friendship is quite remarkable.
I am a head teacher. I have been a teacher for 40 years and a head teacher for the past 25 years. My current school, of which I am head teacher, is a large three-form entry primary school, with 332 children at the last count and a 100-place nursery, in Knowsley on the outskirts of Liverpool. I am grateful to my noble friend Lady Walmsley for this opportunity to give my thoughts about early intervention as a practitioner. As she rightly says, the most important intervention for any child is made by the child’s parent or parents. The love and support that the parents give to that child is crucial. But we should also be supporting parents, particularly those parents who find themselves in vulnerable situations that perhaps are not of their own making. I note the comment made by Iain Duncan Smith a few days ago when he said, rightly in my view:
“Unless something changes in the adult's life, nothing changes for the child”.
How true those remarks are.
I know that we are talking about intervention in early years, and I shall come to that in a moment, but intervention in my view has to happen throughout the life of the child or young person. Those interventions cannot just be a fad which one minute we pick off the shelf because it is the in-thing to do. They have to be thought through very carefully and, when we know they are right, we have to make sure that they are consistently given time and resources to make them work.
I am glad to say that one of the most important interventions that the last Government made was with the Sure Start centres. They have made a huge difference, particularly in deprived communities, and especially in inner-city areas, to the lives of children and young people. I regret that in some local authorities those important Sure Start and children’s centres are being closed down. I have also scripted in my mind a comment that my noble friend Lady Walmsley made—that I am proud that in my party’s control of local authorities, not one Sure Start centre has closed down.
I shall spend a few minutes talking about the Graham Allen report, Early Intervention: The Next Steps. First of all, I commend this report as it is one of the best pieces of writing about early intervention that I have read. It is hugely important, and I commend those who had the foresight to ask for it and work on it. In this report Allen makes the comment to which I alluded a few moments ago:
“This is not to say that development stops at age … We need to keep supporting them throughout childhood in ways which help them reach the key milestones of social and emotional development”.
That is very important indeed.
In this report, Allen also identifies 19 possible intervention strategies. It is sad to reflect that of those 19 interventions nearly all originate in the United States of America and only one in the UK—reading recovery. I wonder why, and what happened to UK interventions. The other point made in the report is about the use of the private sector, and I caution concern about that because, although the private sector is important, we must be careful that we do not in some people’s minds subject our most vulnerable and needy to profit and loss. That might be something that we need to consider.
I know the support mechanisms that are around to help children. While I listened with interest to the comments of the noble Baroness, Lady Morris of Yardley, one of the most important steps now, as a head teacher, would be to use the pupil premium to decide how my teaching staff will target that money to help the most needy as well as those who need intervention in my school. I have seen my school budget increase, so I will be able to use my own resources to target the interventions, which we think will make a difference to the lives of children.
I end by saying that schools make a real difference to children’s lives, but they cannot do it alone. They need the support of other interventions. I thank noble Lords for having the patience to listen to me on my first very nervous speech in the House of Lords.
My Lords, it gives me enormous pleasure to follow my noble friend Lord Storey, and I congratulate him on a really excellent maiden speech. As he made clear, he has been a headmaster for 25 years, and he is a great expert in early childhood development. As well as guiding the development of many a young person in Knowsley, he has also been instrumental—he did not really say very much about this—in regenerating the proud city of Liverpool. He became a councillor in Liverpool in 1973 at the age of 23, and he has been a councillor for 37 years, becoming leader of Liverpool City Council in 1998 and lord mayor in 2009-10. It was during his leadership of Liverpool City Council that the city was transformed, becoming one of the best performing local authorities, having been one of the worst.
It was at my noble friend’s stimulation that the city bid to become the European capital of culture, and he was part of the team that delivered that most successful year of culture in Liverpool. He subsequently secured world heritage status for Liverpool. He brought to Liverpool, and Liverpool won, the largest leisure and retail development in Europe, as well as the new arena and conference centre which those of us who are Liberal Democrats enjoyed at our annual conference last September. He has also brought the cruise liner terminal and the science park to Liverpool. Indeed, under his leadership, Liverpool has emerged as one of the leading cities in the UK, and he has been very much responsible for its wholesale regeneration. We are delighted to have him here in this House; he will contribute a great deal to it and we look forward very much indeed to his further contributions.
I pay tribute to my noble friend Lady Walmsley and must say how grateful I am to her for bringing this important topic to our attention yet again. We have had a number of debates on this subject in this House recently, but it is certainly a subject that is worth debating. As the noble Baroness, Lady Morris of Yardley, said, not many of us need convincing of the importance of early intervention. The evidence is increasingly overwhelming; the noble Baroness, Lady Ritchie, has already mentioned some of it. One has only to look at some of the work quoted by Graham Allen in his report and in Feinstein’s work on the cohort studies here in the UK to see how important it is that we intervene early and help children at the earliest possible stage. Indeed, as my noble friend Lady Walmsley mentioned, we have had a series of reports—the Allen report, which I mentioned, and the Munro report—and we will have reports from Clare Tickell and Frank Field.
I was much influenced by the meeting on shared parenting held by the APPG on Family Law and the Court of Protection on Monday 14 March, at which Dame Clare Tickell stressed that what young parents need to be taught about parenting is actually very simple and very basic: the importance of talking to babies, communication and language, learning how to manage conflict, the difference between right and wrong, and above all showing love and affection. As she said, all those can be taught very quickly, and young couples of men and women, or of teenage boys and teenage girls for that matter, are immensely receptive in the run-up to the birth of the child and in the year that follows. They want to know and to help their children to be successful. Their aspirations at this point are sky high, and that is the time to catch them and teach them. Sadly, until now, we have failed to do this, and still far too many children slip through the net.
I, like others, pay tribute to the previous Government, who turned the spotlight on the importance of the early years and began the rapid rollout of such programmes as Sure Start, but still far too many people arriving at school are unprepared and unready for the experience. As a reception class teacher in the school of which I am a governor told me, “It’s no good trying to teach children to read if they don’t know how to talk”. In essence, getting them to talk and communicate with each other is a very important part of the whole programme. It is therefore important that intervention happens not just with very young children and babies but at this early stage when they are learning to read in primary school.
In the little time that I have left I will mention just two initiatives for which I have enormous admiration. One is the reading recovery programme, which came to this country from New Zealand and was picked up and developed in the early part of this century. It has shown enormous gains for the young people involved. It involves one-to-one teaching. The noble Lord, Lord Adonis, was in the Chamber earlier but is no longer here. I remember asking a question three or four years ago about reading recovery. He said:
“it is a very expensive programme—it costs about £2,500 per child”.
I replied:
“My Lords, does the Minister not agree that it is well worth spending £2,000 on a six year-old if you are not going to have to spend £60,000 on him when he is 16?”.—[Official Report, 4/12/06; col. 960.]
The second programme that is thoroughly worth while is The Place2Be, which has allowed 172 primary schools to enjoy the services of a trained child psychologist as a counsellor in the schools, helping the children with all kinds of problems. It is vital for schools to be able to serve deprived areas by having the services of a counsellor. I recommend this programme to the Minister, and I very much hope that it will be extended.
My Lords, I thank the noble Baroness, Lady Walmsley, for introducing this debate and for the brilliant way in which she explained the problem. I am extremely happy to be on the same side as her on this occasion.
The classic research of Bowlby, Ainsworth and others—indeed, almost all modern published work—confirms the importance for the child of secure loving attachment during the early years to a mother or surrogate mother. During the first year of life, infants learn to love, to feel confident and to deal with stressful circumstances and negative emotions in an organised manner. As an illustration of the importance of an appropriate environment in the early years of brain development, the noble Lord, Lord Winston, in an earlier debate on this subject, told the House that kittens are born blind, and that if you put a blindfold on one for no more than 21 days the cat will be blind for life.
Similarly the synapses in a child's brain are developed by that child's experiences. Key emotional and social development takes place in the early weeks and months. The human child needs regular positive interactions with nurturing adults in order to develop the complex networks of brain connections that they will need to form healthy relationships. I have been aware of this research and this story for some time, but I must admit that the full force of it has come to me only very recently when watching my daughter care for and play with her beloved first child. That child knows that she is safe and that she is valued more than anything else in the world. She is learning how to love and be loved.
Given that the emotional and social development of the nation's children depends so much on the quality of secure attachment to a mother or another secure attachment figure in those first months and years, does it not seem logical to argue that we as a society should be doing more to optimise the chances of child/mother relationships being secure and loving? This is the basic point which the noble Baroness and others have already made, but successive Governments have shied away from this proposition because intervention in the child/mother relationship can be intrusive. Indeed, the word “intervention” sounds just a little too much like interference. I would rather change the word, focusing in the opposite direction, and talk about prevention. I was extraordinarily happy to hear the noble Baroness and other speakers talking positively about prevention. In those terms, there are many things that we can do. I do not have time to go into them this afternoon, but one is better preparation for parenthood, starting perhaps in schools and certainly elsewhere too. There should be more support for first-time parents before and around the time of birth of the child, and in the first year of the child’s life. Also, we need to think about trying to create a society which more greatly values and encourages long-term parental commitment. There are also obvious elements that we must not forget, involving the improvement of the environment in which some parents are obliged to bring up their child. These include poverty, debt, ill health, violence, addiction and many more things that your Lordships know about.
I want to turn to the subject of grandparents. In all this work, there is a very important role for grandparents. In particular, they often have key roles as supporters of parents, as carers and often as surrogate parents. I was therefore most concerned recently to hear that before the end of April The Grandparents’ Association will have to close its helpline, manned mainly by volunteers but none the less costing money, because their financial support is to be withdrawn from 31 March. This helpline has been dealing with more than 8,000 calls a year, many involving legal advice or deeply complex and emotive problems faced by grandparents.
We all have to accept that cuts are necessary, but I cannot help wondering whether this cut will not cost a great deal more than it saves. In this context, I should be grateful if the Minister could give me an answer to three questions of which I have given him notice. First, do the Government recognise the important role which grandparents can play in supporting their grandchildren during their early years? Secondly, is the noble Lord aware that each year some 8,000 grandparents have been contacting The Grandparents’ Association helpline for advice and help, and that the association has been working with grandparents for more than 23 years? Thirdly, will the Minister please ask his right honourable friend to find some way at least to provide essential short-term financial support to The Grandparents’ Association helpline at least to give it time to seek other sources of funding for the helpline or, if necessary, to try to transfer its services in an orderly manner to some other provider?
My Lords, it is a great privilege to be a Member of this House and to be addressing you for this first time. I, too, would like to express my gratitude to those noble Lords who have already generously welcomed me. I would also like to acknowledge with gratitude the kindness and efficiency of the officers of the House in helping and supporting my introduction. It was a particular delight to meet Black Rod, whom I had last seen in his previous incarnation within the borders of my diocese when, as Colonel Commandant of the Royal Tank Regiment, he presented campaign medals to a squadron of the regiment on its return from Afghanistan.
I want also to pay tribute to the former Bishop of Lincoln, whose retirement was the reason for my Writ of Summons to this House. John Saxbee combined a refreshingly down-to-earth personality with a sharp intellect, which certainly enlivened bishops’ meetings and, I am sure, the proceedings of this House.
All those with Irish connections will know well that this is St Patrick’s Day. But I was introduced to the House on 8 March, which for a bishop whose diocese covers nearly all the county of Suffolk was particularly appropriate as it is the day on which we commemorate St Felix. While perhaps not the best known of saints, St Felix was the very first bishop to be recorded as exercising ministry in East Anglia in the 7th century. He established his See at Dunwich, in what is now the county of Suffolk. Dunwich was once a major east coast port, but has long since been reclaimed by the North Sea; however, Felix’s name is of course attached to the modern Suffolk port of Felixstowe that is of major significance to this country as a container port.
Suffolk is a county that attracts many visitors. It has many historical attractions, not least in the legacy of medieval churches, some of the finest in the country, built in times of local prosperity through the wool trade. These lovely buildings are of course an asset and a huge responsibility, but I assure your Lordships that often I find that these churches are at the centre of the life of the many small communities that make up rural Suffolk. They are certainly a major part of what attracts visitors to Suffolk. But this is of course not just a place of tourism. There is a significant contribution to the food production of the country from the farmers of Suffolk, and in these days of ecological awareness the county works hard to reduce food miles in the marketing of local produce. Indeed, the Greenest County programme attracts support from a very wide cross-section of the community.
However, this is not a static community. There are significant areas of new housing which the church seeks to serve, and there are likely to be more. But a place of historical and rural beauty is not immune from the challenges of modern society. Deprivation can be found in rural areas as well as some of the urban parts of the county. There have been many fine examples of both statutory and voluntary agencies seeking to break some of the cycles of deprivation and addiction which so often lead to tragic consequences, some of which we have been hearing about. These are areas where the church seeks to offer support across all denominations and indeed faiths.
The subject of this important debate that the noble Baroness, Lady Walmsley, brings to the House is those significant implications for human flourishing about which we have been hearing. I have read closely the proceedings of the debate last month, instigated by the noble Lord, Lord Northbourne, “Children: Parenting for Success in School”. That made clear to me that this House is able to draw on much expertise. The debate, together with the reports by Frank Field MP and Graham Allen MP, that have already been referred to, have left no doubt about how the development of children in early years has a crucial effect on human life and flourishing. That was recently underlined in the interim report of Professor Eileen Munro in her review of child protection.
In the debate last month, the right reverend Prelate the Bishop of Oxford spoke of the need to support stable and loving-couple relationships, support for volunteers who contribute to child well-being, and a commitment to continuity of provision. I note that in the county of Suffolk there are 48 children’s centres. While I am aware, as has already been referred to, that there are significant changes to the funding of these centres, these will remain open. Suffolk has, from the start, adopted a multiagency approach, and quite rightly seeks to work with families rather than doing things to them. That approach is reinforced in Professor Munro’s report. As of 1 April, 300 health visitors and school nurses will be transferring from health to children’s services in order to integrate provision further.
What I really want to plead for is an integrated approach of services, both statutory and voluntary. In a minor way, I was affected in my family when my youngest son was picked up in his early years as not developing certain speech patterns. It turned out to be a classic case of what is known as “glue ear”, which a minor operation could correct so that higher pitched sounds could be picked up and he could then develop normal speech patterns with the help of some speech therapy.
In responding to recent reports, I see that the chief executive of the Royal College of Speech and Language Therapies has emphasised the importance of early intervention, describing communication as,
“the foundation life skill and the single most significant factor in determining a child’s life chances”.
She also significantly says:
“With over 60 per cent of young people in custody demonstrating difficulties with speech, language and communication, the importance of early intervention to address communication needs cannot be ignored”.
There in itself is an area which speaks of the cost-effectiveness of early intervention.
Once again, my Lords, I thank you for your welcome, and I look forward to contributing to the work of this House.
My Lords, it is an enormous pleasure to follow the right reverend Prelate the Bishop of St Edmundsbury and Ipswich. I congratulate him on his excellent and most interesting maiden speech. He is a man of extremely wide experience and, obviously, deep humanity. I am particularly delighted by the fact that he was introduced to this House on St Felix’s Day—Felix being the name of both my grandfather and my eldest son—and my having spent a very happy time just before the birth of my eldest son at Dunwich, no less, which now hardly exists but then was still a recognisable place, not taken over by the sea, as the right reverend Prelate said. Apart from that, we have every reason to be very glad that he is now a Member of our House and look forward to his contributions over a wide field, not just what we have heard him talk about today. I need hardly make the speech that I was going to make now that he has made his.
I shall concentrate for a few minutes on the question of communication, as the most crucial field for early intervention in childhood. I have been mildly encouraged by the recent Green Paper on special educational needs, because the Government have treated education, health and the social circumstances of the child as a seamless whole. That is, as far as it goes, encouraging. My only question is whether any concrete changes will come from the fine words in the Green Paper. The battle to treat those three areas as one in the life of the child has been fought for a very long time. As the noble Baroness, Lady Morris, said, it seems to have been fought a great deal for the past 30 years and will, I hope, change in the right direction hereafter.
It struck me that, thinking back to the 1970s when the report of the Committee on Special Educational Needs, which I was privileged to chair, was published, we were charged by the then Government with what now seems a completely absurd and impossible task, which is to recommend what such children need without mentioning a deprived background as part of the problem from which many of them suffer. That now seems ridiculous, but at the time, we were still in the days when being educationally subnormal, as it used to be called, or handicapped, put you into a class apart, a separate race of people. It seemed that we had to rule out mentioning deprivation or not having English as the first language spoken at home when talking about education, because it would put the children suffering from deprivation into the category of the handicapped, and that was known to be inferior. It would have been snobbish, at best, and racist at worst, if we had mentioned deprivation.
It is worth reflecting on what an absurd embargo was put on us at the time. It could not happen now. That is good, but it is most important to recognise the role that teachers, as well as parents, must play in identifying, and knowing what to do when they recognise, the difficulties that some children are having and the special needs that they may be demonstrating in the classroom. That means that not only specialist teachers must be prepared to intervene but that all classroom teachers must be trained to recognise such children and take the next step.
I end my remarks on a more optimistic note. This week, I was present at the launch of a new website especially designed for teachers in training and in post in the classroom. It was launched at the Chelsea and Westminster Hospital School, which is a marvellous school. The website gives information and advice on an enormous number of difficulties that children may be experiencing in classrooms, starting with severe allergies and going through every possible educational obstacle. I very much hope that that website—which, incidentally, was financed entirely by Google—will be very widely used in teacher training establishments and by teachers as individuals when they are faced with a problem that they do not quite understand. I recommend that website very highly to all teacher training establishments. That may be a good example of the big society working.
My Lords, it is a great honour to follow that amazing campaigner, the noble Baroness, Lady Warnock. I am very happy that the noble Baroness, Lady Walmsley, has secured this debate. Like me, she campaigns for the well-being of children, and I appreciated her thoughtful speech. Indeed, all noble Lords present in the Chamber today are passionate about the well-being and achievement of children. As has been said, this is, or should be, an all-party issue. I should declare an interest as the chairman of the All-Party Group on Children. I hope that noble Lords will be able to exert their influence on the coalition Government to persuade them to look again at some of their policies on families. Children are at the receiving end of family problems, and government policies on tax, family support services, children on the edge of care, after-school services, children centres, employment, and under-fives grants will impact on families.
I am not talking just about poverty. I agree with what Frank Field said in his recent report that poverty is not the only factor to impinge on a child's quality of life. I understand that the Government will be producing a social mobility strategy, which will focus on the causes of poverty. I well understand that, but if we consider possible causes of poverty, for example, drug or alcohol addiction—I declare an interest as the chair of the National Treatment Agency—we have also to look at what causes the drug or alcohol problem. It becomes a cyclical argument. As we know, those causes are multifaceted, such as being in care, low educational achievement, low aspiration, unemployment, or inadequate early-years care, all leading to low self-esteem and feelings of worthlessness. Family poverty can contribute to that, and bring stress in relationships, as was mentioned earlier. Causes are not simple, and poverty is not simple.
The first few years of a child's life are, of course, crucial. Intervention will be, for the most part, from parents. Parents would not call it intervention. They would call it love and care through stimulus and health-giving activities. Where families do not supply such intervention, other measures are essential if the child is to flourish. Most families do not need intervention, but I agree with Graham Allen in his report that some families require specific intervention, such as with a family intervention project or a family nurse partnership. Some families need occasional help, such as from a GP, health visitor or child psychologist.
Some interventions can benefit all children, such as language enrichment, play opportunities for children, libraries, and so on. Some families have particular needs. The noble Lord, Lord Northbourne, was thinking of grandparents. I am thinking of grandparents with sole care of their grandchildren because their son or daughter is dead, in prison, or addicted to drugs or alcohol. I have raised the issue before in your Lordships' House, and some concessions have been made but, frankly, such grandparents are still in serious difficulty. Outcomes for children who go into care with family or friends are so much better, socially and academically, than those for children who go into other forms of care that such grandparents deserve more financial help and other support. They save the state millions but they sometimes have to scratch around, filling in endless forms, for a pittance. Do the Government have any plans to look at this situation again?
Maternal health, both physical and perhaps, particularly, mental, in the child’s early years, is essential, yet according to a Healthcare Commission survey more women have a more negative view of postnatal care than of any other part of maternity services. Pre-school healthcare is underfunded and tends to be a postcode lottery. Health visitors are key to all this. More than 70 per cent of parents have said that they want parenting support from a health visitor. What plans do the Government have to ensure that all families have regular access to a health visitor when they need one?
Family intervention projects are targeted and specific to the most problematic families. They have been shown to reduce the burden on other services, reduce anti-social behaviour, reduce housing enforcement action and, strikingly, reduce educational problems—for example, truancy, exclusion and bad behaviour. Family nurse partnerships focus on support for the family up to toddlerhood. They impact on the mother, for example, in birth spacing and in the take-up of education or employment. They improve parenting skills and attendance at children’s centres. To what level will such interventions continue to be funded and will children’s centres continue to thrive?
I have not yet talked about cost-effectiveness and I am not sure that we yet have enough highly rigorous cost-benefit analysis of such interventions. My noble friend Lady Morris called it lousy research. But let us hope that longitudinal studies will eventually produce more meaningful and measurable outcomes. It seems clear that encouraging people to be good parents who will look after the health and welfare of their children is bound to save money. The cost of poor literacy is, I believe, about £64,000 over a lifetime. It has been estimated that family intervention projects and family services can save £9 for every £1 spent.
We know that the costs of children in care, youth offending, preventable diseases and so on affect the economy. We know that poor self-image inculcated from an early age has a profound impact on life chances. We know what works and I ask the Government to cherish the notion that such interventions not only save money but protect the health and happiness of individuals and society.
My Lords, I, too, congratulate my noble friend Lady Walmsley on initiating this debate and on her wide-ranging and extraordinarily knowledgeable introductory speech. I also congratulate our two maiden speakers, who will clearly bring enormous wisdom and experience to this House on the topics that we are debating. I declare an interest as president of Ambitious about Autism, the national charity for children and young people with autism, which through TreeHouse School provides specialist education. As so many speakers in today’s debate have emphasised, early intervention is key to securing the best possible outcomes for children with special educational needs, particularly those who have autism.
Last October, the noble Baroness, Lady Warnock, instituted a debate on special educational needs. Throughout many speeches in that debate, including my own, ran the common theme of the need for early intervention, which was also called for in the very first manifesto of the All Party Parliamentary Group on Autism, of which I was vice-chairman, in 2003. But still, even now, too many children with autism are not getting diagnosed early enough. Early intervention can result in huge financial savings for society over the course of an individual's life.
The aggregate cost of supporting adults with autism in the UK is £27.5 billion annually. Some 85 per cent of adults with autism currently are not able to access the workplace and 90 per cent are dependent on their families or the state. Early intervention is particularly crucial in education. Children with special educational needs are eight times more likely to be excluded from school than their peers. The cost of failed education placements, which end in exclusion, pupil referral units, expensive specialist provision and even more expensive residential placements, is substantial. The cost of educating a pupil in a specialist school is four times that of a mainstream school. The evidence from parents and professionals is that getting the right level of support early on in school prevents the need for this expensive exclusion route.
The most effective interventions for children with autism focus on helping them to manage their behaviour, develop communication and social skills, and “learn to learn”. A recent review of research has identified a number of approaches that can result in improvements in communication skills, behaviour and social functioning. In particular, intensive behavioural interventions, such as the applied behaviour analysis that is used at TreeHouse School, have been widely evaluated and shown to be effective. There is clear evidence to support the use of ABA.
Other countries have shown a much stronger appetite for trialling early intervention approaches, but Birmingham City Council—which is Conservative-Liberal Democrat controlled—is currently trialling four interventions. The council is spending £41.7 million on early intervention programmes over 10 years in the belief that the investment will save it around £102 million over 15 years. Projects such as this are essential if we want to ensure positive outcomes for a whole range of children while delivering substantial savings. We also need to incentivise local authorities to provide appropriate support soon after a child’s needs have been identified, rather than allow costs to escalate through exclusion to more expensive provision. This would create better outcomes for children and families and a more cost-effective solution for local authorities.
We have talked about cost but, above all, a failure to identify autism and other special educational needs early on forms a barrier to delivering effective interventions. Without timely diagnosis, it is difficult for professionals to decide on appropriate intervention. There should be screening checks for SEN built in to children’s early years. There is also a lack of understanding of autism in the early years workforce, whether in health, social care or education. A host of government and independent inquiries, including that by Brian Lamb, have recommended improved training as key to identifying additional needs early and building the skills base to meet those needs.
Much of what I have proposed is reflected in the very welcome new coalition Government SEN Green Paper, Support and aspiration: A new approach to special educational needs and disability, which has been referred to in the debate. The Green Paper makes the case for early intervention and support far better than I can, so I congratulate my honourable friend Sarah Teather both on the care with which the paper has been prepared and on its content. In particular, the paper recognises that,
“identifying children’s support needs early is vital if they are to thrive, and enables parents and professionals to put the right approach in place quickly”.
That supports the findings from Graham Allen’s review, which has also been mentioned by other noble Lords, which concluded that early intervention creates benefits for wider society as well as the individual child and family.
Having seen the experience of so many parents faced with adversarial SEN tribunals, I particularly welcome the proposal that children and young people who would currently have a statement of SEN or learning difficulty assessment will, by 2014, have a single assessment process and an education, health and care plan for their support from birth to the age of 25. I also very much welcome the fact that the new plan will afford parents the same statutory protection as the statement of SEN, and that the Government will explore how to use the voluntary and community sector to introduce much-needed independence to the process.
There are many other positive things I could say about the Green Paper, but some questions arise from it which I hope will be answered by the Minister. Will the education, health and care plan be based on a strong legal right for families to access early support? Furthermore, what will the funding and training mechanisms be to allow early years professionals and health workers to identify needs earlier? I look forward to the Minister’s reply.
My Lords, I join in thanking the noble Baroness, Lady Walmsley, for introducing this debate so excellently and comprehensively. We seem to have had a number of debates recently on this subject, but that merely highlights the importance of the whole issue.
Many of the costly and damaging social problems that we face occur because we are not giving children the support that they need in their early years. When we do intervene, it is often too late and less effective, as problems have intensified. Because of this, disadvantaged groups more often than not face fairly disastrous personal outcomes. Studies find that when children experience impoverished, abusive or neglectful environments, they do not develop empathy or social skills and are at increased risk of mental health problems and anti-social or aggressive behavior. Even worse, research shows that boys assessed at age three as at risk have 2.5 times as many criminal convictions by the age of 21 as a control group.
The strong economic case for early intervention and for reducing the causes of poverty is clear. A 2008 report by the Joseph Rowntree Foundation estimated the cost to public services of the consequences of unaddressed poverty. However, I follow what others have said about the range of figures. They do not always seem to add up, so there is a strong case for rather more in-depth, long-term assessment.
As well as disadvantaged children, those with special educational or disability needs require even more support in the early years. As the noble Lord, Lord Clement-Jones, said, autism is an obvious example. I was going to quote much of what he said in his remarks, but I will now leave that out, but clearly the “learn to learn” approach can save considerable sums later on as young people with autism acquire skills.
Sadly, even though for some disabilities special ring-fenced funding is available, misinformation has apparently led to lost opportunities. My example here is deaf children, for whom, in order to develop their speech and language skills, it is vital that we intervene with specialist services as early as humanly possible after diagnosis. Yet some local authorities are apparently not aware that funding is available under the designated schools grant to help deaf children under the age of two. This was apparently the case in Sheffield. The charity NDCS has since rightly explained that the grant could and should be used for the support of very young deaf children and that the school finance regulations have now been revised to remove any doubt. However, this is apparently a persistent problem with other local authorities as well.
Inevitably, there is concern that, in this current horrendous economic climate, local authorities will look to make cuts of all kinds, including funds for special needs and disadvantaged children. Can the Minister please assure noble Lords that the Government are committed to sending a strong signal, and even incentives, to local authorities that certainly designated early intervention funding should be used and that, in any case, early funding for all children with special needs should be a priority, as it is both a socially effective and cost-effective long-term investment? Thankfully, I think that there are real signs of an increased perception that it is better to identify problems early and to intervene effectively to prevent their escalation. I pay tribute to what the previous Government did in terms of Sure Start and so on, and similarly to Frank Field and Graham Allen.
In all situations, the returns on early intervention are demonstrably beneficial. Overall benefit-to-cost ratios are as high as 17 per cent. One review of the economic benefits of early intervention education programmes found that for low-income three to four year-olds the benefits were 2.5 times the initial investment.
I expect that noble Lords will agree that the challenge for the Government in adopting an early intervention policy nationally is not just deciding whether it is a good idea—I hope that that is now firmly established—but its financing, because it is no good starting on this path unless the work can be carried through. The noble Lord, Lord Storey, made that point, too, in his excellent maiden speech.
I am sure that other noble Lords will have read with interest the paper sent to us for this debate by Save the Children, particularly the details of its FAST programme, which again emphasises the importance of early intervention for the future of those groups of children and their families whom we are discussing today. There are two points that I should like to make about this. First, I congratulate Save the Children on all the excellent work that it has done over very many years. Secondly, I note the partnership that Save the Children and FAST have entered into with Lloyds Banking Group and Morrisons—here I perhaps do not agree so much with the noble Lord, Lord Storey. The FAST programme, which has been widely and successfully tested and developed over 20 years in a number of different countries including the USA, has already gained an excellent reputation. With the £2.5 million that it has raised, it hopes to establish more than 120 new children’s centres and school sites in the UK during 2011-12, with even more ambitious programmes to improve the life chances of thousands of children by 2014. I hope that the Minister will reassure us that these kinds of big society partnerships are being encouraged nationwide. If, on top of government commitment and funding, this kind of business backing can be assured, working in partnership, of course, with the third sector and local communities, we will see real results.
My Lords, I thank the noble Baroness, Lady Walmsley, for securing this debate and especially for her excellent speech, which summarised the benefits of early intervention. I do not believe that it is hyperbole to say that the future of this country rests on whether we implement successful early intervention strategies—certainly, the future of our children rests on it. That is why politicians need to become experts on very young children and how their brains develop; it is not enough for us just to kiss them at elections. It is also why we desperately need to exempt this subject from party-political point-scoring. I commend Graham Allen and Iain Duncan Smith on their excellent report and the example they provided. I congratulate also the two noble Lords who made their maiden speeches in this debate and thank the noble Lord, Lord Storey, for his non-party-political praise of Sure Start programmes.
Many good speeches have been made, but I draw attention particularly to that of my noble friend Lady Morris, who outlined the perils of moving Sure Start from universal to targeted provision. What assurances can the Minister give on that point and on funding for Sure Start centres?
As the noble Baroness, Lady Walmsley, pointed out, we must respond to the evidence that is stacked a mile high here. As she said, we need to move spending to the developmental stage rather than it being remedial. Just how cost-effective is early intervention? Westminster Council calculates that damage caused by an unruly family costs it £273,000 every year, a figure that includes the costs of foster care, domestic violence and ASBOs. Action for Children has estimated that for every £1 spent on Sure Start children’s centres, society benefits by between £4 and £9 in the long term and that early investment can save the economy £486 billion over 20 years. I know that we are not great at thinking long term, but surely we cannot afford not to. If anyone remains unpersuaded, I ask them to read Why Love Matters by Sue Gerhardt; in fact, every politician should read this book. I realise that, at my citing a title such as this, noble Lords could be forgiven for thinking that I want to see a communal outbreak of “Kumbaya” in the Chamber. Nothing could be further from the truth. Although it might sound quite touchy-feely, that book explains precisely how we cannot afford to wait until later in a child’s development if we want that child to flourish.
Likes others, I shall not attempt to précis the excellent Graham Allen review, but I want to say something to those who say that early intervention smacks of the nanny state. It is quite ironic that those who seem to rail most against the nanny state are usually those who enjoyed the benefits of a nanny. A nanny helps children whose parents are not available to help them. I do not see why it should be only well-off children who receive that resource or, at the very least, I cannot understand why people should recoil from extending that help to the children who need it most. It is not just about those in greatest need; it is an issue that affects us all. If people talk about broken Britain, they should realise that they are more accurately talking about anti-social behaviour perpetrated by those who most often have had broken childhoods, whether in a one-parent family, a two-parent family or any other shape of family.
In seeking solutions, I mention the work of the charity 4Children. It is a national charity that provides services within Sure Start children’s centres, nurseries, youth programmes and other family services. In its submission to the Graham Allen review, it stated that,
“early intervention is not a programme, a scheme or a project. It is an approach which should run through all work with children and families … whilst there are excellent examples of early intervention projects and programmes around the country, we have not yet changed the fundamental mindset or approach—to one based on early intervention”.
Much of the work the state does with families does not take that approach. Its proposals include putting universal services at the heart of any early intervention strategy, ensuring families and communities play an important role, recognising and building on the success of children’s centres and the critical need for a whole-family approach, as that is what makes the difference.
The noble Baroness, Lady Walmsley, reminded us that by the time a child reaches the age of three 85 per cent of their brains have developed. Let us just hope that our own minds are not too inflexible to deliver the resources that early intervention desperately needs.
My Lords, I, too, congratulate my noble friend Lady Walmsley on securing this debate as it deals with matters very close to my heart. I congratulate my noble friend Lord Storey on his passionate maiden speech and the right reverend Prelate on his excellent speech too.
For many years now, because of my professional and charitable work with and for children and young people, I have always advocated that early intervention is the answer as regards prevention of much pain, suffering and unhappiness later in life. Research has shown that 40 per cent of children with conduct disorders at the age of eight will go on to have repeat convictions, and 90 per cent of convicted adolescent offenders show conduct disorders. Therefore it is crucial to put early intervention in place and to work with families when difficulties first become apparent or, better still, before damaging patterns in family relationships become entrenched.
Children need to valued and loved, and not blamed, vilified or labelled. One of the ways in which we can intervene to help children to find themselves and to come to terms with fears, anxieties, death, stress and being abandoned or unwanted is play therapy. Play therapy offers a way of working with the child that is child friendly and uses the language that all children understand: play. I declare an interest as patron of the British Association of Play Therapists, which believes that filial therapy—a child-centred, non-directive play therapy—is uniquely placed to help not just children but their parents to improve their emotional well-being, and that that should be in place almost as soon as a child is born in an “at risk” situation, with parents or carers learning from the start how to have empathy with the child, how to listen, how to respond, how to set boundaries, how to discipline and how to show the child love and affection. I always say that a hug a day keeps the doctor away and there is nothing like a hug to make a child feel special.
Filial therapy is an effective therapy to help children modify their behaviour, clarify their self-concept and build healthy relationships. In play therapy, children enter a dynamic relationship with the therapist that enables them to express, explore and make sense of their difficult and painful experiences. Play therapy helps children find healthier ways of communicating, develop fulfilling relationships and increase resilience, and it facilitates emotional literacy; it allows them to express things they cannot put in words. It also allows the play therapist to have a glimpse into the child’s inner world and to gain some insight into the way forward to help that child, from as young as three upwards, with this healing process. It is one of the safest ways of working with children of all cultures. This type of therapy is so valuable because it is in the child’s control: they can move as fast or as slowly as they feel safe, stop when they feel closer to being overwhelmed and engage in repetitive play for as long as it is necessary to gain mastery over whatever the issues are.
I believe not enough consideration is given to the effects of what nowadays have become almost everyday occurrences in some children’s lives: domestic violence, alcoholism, divorce, separation, sexual and physical abuse, neglect, adoption, and fostering. They all play a part in causing conduct disorder and the craving for a loving, safe and happy parental attachment. Therefore I strongly believe that it is important to raise the status of parenting, starting in schools with helping teenagers to understand that caring for children is not just about feeding and clothing them. It is about understanding the importance of attachment and attachment behaviours, which is more than bonding—it is the ongoing relationship of the child with its primary carer. Broken attachments have far-reaching consequences for children, who find it difficult to concentrate in school and therefore to learn. Boys particularly need good role models these days, yet we have so many children growing up without a strong positive role model—they find themselves drawn into gangs, who give them that feeling of security. Parents and carers who themselves have been neglected, abused or troubled in childhood are known to be more at risk of developing difficult relationships with their own children. A lack of a secure attachment relationship can negatively affect relationships for the whole of their family life.
Research has shown that the first emotional stage in a child's life occurs during the first 12 months. This is what is sometimes called the “trust versus mistrust” stage, which is so crucial in forming attachment to parents. Neglect, abuse and emotional deprivation can all prevent a child passing through this stage, in which they can become stuck and develop lasting problems.
However, play therapy can help move a child through this stage. Filial therapy is invaluable at helping the parent or carer to understand and meet the child's emotional needs. Good attachments mean that children are more likely to form successful relationships in adult life. With the advances in neuroscience and brain scans, there is now vital information about the impact of different types of parenting on a child's brain. A newborn baby has around 200 billion brain cells but very few connections; however, when they reach the age of about 12 months, the higher brain has developed many more connections. The way these are formed is directly due to the child's experiences and in particular his or her emotional experiences with a parent or carer. It is not until around the age of seven that this process slows down and the communication and pathways between brain cells strengthen, so there is some scientific truth in the saying: “Give me a child until the age of seven and I will give you the man”. I believe—
I apologise for interrupting but the time is up and we are right up against the clock at the moment.
I would like to finish. Many children are suffering. Some people believe that if we leave children like Baby P, they might go on to be abusers themselves and that the answer is to give them away. However, I believe that play therapy, delivered by highly experienced professionals, can offer a different chance for children.
While I know that we are living with cuts, will the Government seriously consider setting up a pilot scheme of filial therapy to work with at-risk children and their parents and to train more therapists to practise early intervention? That would save the Government money on NHS healthcare and the judicial system, and save money for society generally. Will the Minister also consider putting practical parenting classes on the curriculum to ensure that early intervention starts as early as possible? I always say that childhood lasts a lifetime, so let us do all we can to get it right from the start by using all the tools at our disposal. Thank you for being patient with me.
My Lords, I respectfully remind your Lordships that we are up against the clock with this debate. When the clock goes to six, you have finished your six minutes. Thank you.
My Lords, I join everyone who has congratulated the noble Baroness, Lady Walmsley, not only on obtaining this debate but on her masterly introduction to it. Perhaps I may add my admiration for her tireless championing of issues affecting children. As always, I find debates in this House on this sort of subject absolutely fascinating. I find myself nodding with agreement and learning a great deal. Every time this subject comes up I am reminded of those wonderful words of Winston Churchill, uttered in 1910, that there is a treasure in the heart of every man if only you can find it—with the urging that it is your job to find it. That is coupled with my being one of the people who believe that the only raw material which every nation has in common is its people. Woe betide a nation if it does not do everything it can to identify, nurture and develop the talents of all of its people because if it does not, it has only itself to blame if it fails.
This debate has been preceded by three weighty documents, among others. In November came the White Paper on public health, Healthy Lives, Healthy People. Then there were the two excellent documents, already referred to, by Frank Field MP and Graham Allen MP. Only last week we received Support and aspiration: A new approach to special educational needs and disability. Reading that document reminded me of my time in the Army. Whenever you were invited to do a report, you immediately looked up the previous reports on the same subject to see what had happened to their recommendations. One persistent offender, which I was always concerned about, was where people regularly checked that getting progressively less sleep meant that you worked progressively less well.
I was reminded of that because I saw that that document was a consultation document, but containing a commitment that by 2014, there would be a single assessment process and education, health and care plan which would support children from birth until 25. It went on to say:
“The plan will be clear about who is responsible for which services, and will include a commitment from all parties across education, health and social care to provide their services”.
For heaven’s sake, what on earth have we been doing for the past 100 years if that has to be said as an aim by a ministry in 2011? I then looked at the back of that document and found no fewer than 102 documents quoted, all of which contained many recommendations that seemed to have got nowhere. Why?
Here, I declare interests as chair of the all-party group on learning and communication difficulties and as vice-chair of an organisation called the Institute for Food, Brain and Behaviour. I was extremely interested that the noble Baroness, Lady Walmsley, began by talking about the developing brain because in the document that I referred to I was surprised to see no mention of nutrition and its vital role in pregnancy and the early years in helping to develop the brain. Then I looked to the list of documents and there they all were, so why has that been ignored? As chair of the all-party group, I am glad that that communication problem has come up over and over again. I am also grateful that the right reverend Prelate, in his excellent and thoughtful maiden speech, mentioned offenders.
If anyone ever wants to see the truth of the statement that is the subject of our debate, perhaps they would like to come with me into one of Her Majesty’s prisons. We could go to two places. We could go to any one of the landings, where every prisoner would be someone who had suffered from ineffective or non-existent early intervention. You see that repeated in spades and the costs cannot be quantified. Then we could go to the visiting centre and see the children of the people in prison. Those children are being deprived of one of the people who is so important in their early years, quite apart from having to go through the process of coming into that dreary place to visit the person who should be supporting them in that important process.
During my time as chief inspector I tried to get early intervention on young people, with regard to their communication skills or lack of them, properly investigated. A trial was carried out with speech and language therapists and it proved conclusively that, if they had only been able to connect with their education from an early stage, they might not have ended up there. I commend to the Minister the excellent briefing paper that has been produced for this debate by the Communication Trust, which has some very valuable information about the numbers of children who enter primary school without proper communication skills and who therefore cannot engage with a teacher. That is repeated at secondary school.
That last point has been mentioned over and again in this House in connection with legislation, which is why I conclude by asking the Minister why we have to wait until 2014 for a plan when all the evidence is already there. We do not need any more consultation; we have got it coming out of our ears. Who is actually going to be responsible for taking action rather than initiating yet another consultation?
My Lords, I thank the noble Baroness, Lady Walmsley, for introducing this timely debate. Recent debates in this House and in the other place have ensured that we are familiar with the challenging reports by MPs Frank Field and Graham Allen. As we await the Government’s response to those reports, as well as to Dame Clare Tickell’s review into the early years and foundation stage, I am particularly thankful that we continue to give significant time and thought to this hugely important area.
We know that the first few years determine profoundly how a child will be as an adult and as a citizen. More brain development takes place in the first 18 months than at any other time of life. Therefore, more damage can be done at that stage than at any other time if the environment is wrong and once that damage is done it is twice as hard to undo, so the child is hit by a double whammy.
Research tells us that by 22 months a bright child from a disadvantaged background begins to be overtaken in key abilities by a less bright but privileged child. Indeed, a child’s development score at 22 months is an accurate predictor of educational outcomes when that child is 26. Yet the public debate about life chances and social mobility often seems to pay more attention to what university a young adult of 18 should go to than to whether our three year-olds can hold a crayon or a simple conversation.
I shall focus on the importance of highly trained staff in early years education, also highlighted in Graham Allen’s report. In doing so, however, I should first like to record my support for Sure Start children’s centres in the current difficult financial climate. Giving our children the best possible start in life through improved childcare, early education, health and family support lay at the heart of the previous Government’s creation of Sure Start in 1998. Today these 3,500 life-enhancing children’s centres offer the earliest help to more than 2.5 million children and families. At their best they are hubs for community activity, offering a welcoming place to which families can turn, and, crucially, identifying difficulties before it is too late. Like many noble Lords, I am deeply concerned by reports of closures by local authorities charged with cutting budgets. The recent survey suggesting that some 250 Sure Start children’s centres could close within a year, affecting an estimated 60,000 families, is very distressing.
Of course, we cannot afford to waste money, but short-term measures mean that we risk wasting much more—what Graham Allen calls the wastage of human potential, social disruption and fractured lives. He cites the OECD in arguing that spending on young children is more likely to generate more positive changes than spending on older ones, and is likely to be fairer to more disadvantaged children. However, in the UK, for every £100 spent on the nought to five years, £135 is spent on the six to 11 years and £148 on the 12 to 17 years. As Allen points out, this is not a cost-effective way of treating society’s problems.
In championing cost-effective early intervention, I highlight the continuing need for high-quality care provided by highly trained staff. Like my noble friend Lady Morris, I am particularly concerned that children’s centres will no longer need a trained nursery teacher or early years professional of graduate status. This is a retrograde step. It goes to the heart of the call by Allen and Field to put the nought to five, or foundation years, on a par with primary and secondary education. Low-paid, low-qualified staff cannot give the expert remedial help that many families need.
I should declare an interest as my sister, an early years professional, has two nurseries in Nottingham, one rural and one urban. She sees every day the importance of an environment which is safe, secure, stimulating and loving. All these are essentials for a child’s proper development; missing any of these can be crucial. Many parents now lead unsettled, stressful, even chaotic lives. With the best will in the world, which most parents have, they are not able to provide this environment either through lack of time, money, resources or poor parenting experience themselves. Highly trained staff are, therefore, essential. High-quality childcare must be well managed and supervised. It is demanding work. Staff in children’s centres and nurseries need to be constantly aware of children, parents and each other, and vigilant about noticing change. As recent flaws in nursing care of the elderly demonstrate, the attitude of staff working in these challenging environments is critical. It must not be seen as an option for those who cannot think of any other line of work.
Training and continual professional development must be ongoing. We cannot continue with a situation whereby people can be paid more for stacking supermarket shelves than for looking after our youngest children. Will the Minister therefore endorse the schools White Paper proposal that the remit of the National College for Leadership of Schools and Children’s Services should be extended to provide training for children’s centre leaders?
We need to find a way to make the vocation attractive to more highly qualified candidates, and we need to encourage schools, colleges and universities to teach and develop resources for the future. Therefore, will the Minister consider the call for equal status and recognition for the foundation years of nought to five, on a par with primary and secondary education? In support of this, will he also seriously consider the proposal for a workforce development framework to establish training and salary structures which recognise the challenge faced by, and importance of, early years staff?
None of this can be done on the cheap—funding is, as ever, the critical question—but I believe that these steps are vital if the early years foundation stage is to deliver what we ask of it.
My Lords, there is nothing more important than giving all our children the best start in their lives, and there is nothing more shocking than the data which demonstrate that in the UK in the 21st century a child’s long-term future success is dictated by their place of birth and the socioeconomic status of his or her parents. I thank the noble Baroness, Lady Walmsley, for instigating this important debate and congratulate our two excellent maiden speakers. I welcome both the Frank Field and the Graham Allen reports.
It seems to me that much of our public debate over the past 13 years has been about ensuring that all children get access to early education, and that there has been dissent between experts and politicians about the formality and nature of the early years foundation curriculum. It is on the nature of these formal stages of education that I wish to focus.
There is absolutely no doubt that access to proper early years support enhances and changes children’s life chances but certain elements must be in place to make that happen. In the 1980s, Tennessee state educators ran the now famous STAR project, providing detailed longitudinal research into the performance of children starting in kindergarten in a small class of one teacher to 15 children, and following them, initially as they moved through to third grade, and then over the subsequent three decades. Formal education did not start until these children were well into the first grade—rising sixes, as our parlance would have it. I will return later to the question of the age at which children start formal education.
I remember the Tennessee STAR data being released in the early 1990s. It was very much an education mantra of the time: for each dollar invested in these children, $7 of public money were saved later on, because these children graduated from high school, went on in education, were more likely to find regular employment, were significantly less likely to need public support, and were very much less likely to end up in the criminal justice system. It is interesting that similar long-term savings are beginning to emerge in the UK.
Those of us responsible for UK local government education budgets then—following the recession of the late 1980s and with major public service cuts—were struggling to make the case for increased funding for early-years education. Does that sound familiar? However, we achieved that in Cambridgeshire, where we Liberal Democrats were in coalition with Labour. We targeted our limited funds on providing support to children in the most deprived areas for whom we knew that this could be life-changing. It has been mentioned already that no Liberal Democrat council is closing Sure Start centres, which demonstrates that they can be a real priority.
Since then, work has continued on tracking the STAR cohort, and it still holds true that, as these former pupils become parents themselves, the next generation of children benefit from the experience in this scheme and that lower class sizes and having trained early-years professionals are a cost-effective way of providing an excellent start in life for young children, from which society as a whole reaps the benefit.
I want to focus briefly on the nature of that early-years interaction with children, because I worry greatly about the previous Government’s focus on starting the formal part of education early. I am with Jean-Jacques Rousseau, who said in 1762:
“You are worried about seeing him spend his early years in doing nothing. What! Is it nothing to be happy? Nothing to skip, play, and run around all day long? Never in his life will he be so busy again”.
We need to view the world from a child’s perspective, learning at their own pace and developing their social abilities. A kindergarten should be exactly that—a place to learn to play, socialise, learn to talk and discover the world.
I am pleased that there is now a focus on providing the pedagogic specialism needed for children in these early years, because the holistic approach to a young child’s well-being must take precedence for the under-fives before enforced focus on letter recognition. I fear that much of our UK focus on early formal learning brings its own problems—hence the need for intervention, such as the highly regarded Reading Recovery and the Norfolk-based catch-up schemes for literacy, numeracy and maths. Children and teachers alike love the schemes, partly because they are much cheaper to deliver, given that they are run by teaching assistants and staff trained within the school.
It is interesting to compare the UK’s standing in the PISA education rankings of the OECD. Sadly, the UK has dropped to 21st in the rankings for reading and 22nd for maths. As a nation, we should be extremely concerned about this dip in performance, which was described as “stagnant at best”, while there has been a significant improvement in many other countries. It is interesting, however, to consider those countries nearer to the top of the rankings and examining when each starts their formal education. Finland, Canada, Japan, Australia and the US all have substantial early-years provision, but children do not start formal education until the age of six, or even when they are rising sevens, because those countries believe that the informal kindergarten stage of child self-development is so important.
Let us learn from these countries overseas that understand that balance between early years provision and the start of formal education, and make it an absolutely priority. We cannot afford to get it wrong for our country and its future, socially and economically, but most importantly for each and every child growing up in the UK today, and for those tomorrow who follow.
My Lords, it is a great privilege to follow the noble Baroness, Lady Brinton, who gave us such well informed and wise words about children being allowed to enjoy their childhoods and not being encouraged by their parents to start reading books on planets at the age of two—as a primary school head teacher told me only yesterday evening.
In our debate we have paid much attention to raising the status of the workforce, and to recruiting and retaining the best people to work with children. There has also been some mention of the evidence base for work in this area. I will make a brief comment on getting the balance right between those two things. Of course it is right to seek the best evidence for what we do: but it is also right to give professionals the autonomy to do what they think is best. I took from the very eloquent maiden speech of the noble Lord, Lord Storey, his ability as a head teacher, with money, to make the right choices for his school. Having spoken with many primary school head teachers who have been in place for some time, it did not surprise me that he got to know his local community, he got to know what was right for that area, and he went on to become an outstanding leader of the city—as we heard from the noble Baroness, Lady Sharp—because he understood so well the people in it.
The danger with overreliance and insistence on an evidence base—particularly the sort of evidence base that Dame Clare Tickell talked about, namely a Rolls-Royce, randomised control trial—is that those in government and local government become back-seat drivers. It reminds me of the experience of being driven by my girlfriend with her parents in the back, and the terrible discomfort of listening to them telling her how she should be driving. During my time in this House there has always been a danger of insisting too harshly on an evidence base and inhibiting those who are very well placed at the front line to make the right choices and take the right actions.
I will also take this opportunity to join others in thanking the Minister and his colleagues for their strong focus on the workforce, particularly teachers, in the White Paper on excellence in teaching and delivering the outcomes we want for children. That is a fantastic emphasis to have. I admire the way that the previous Government did the same thing. This is now beginning to spread to social work; we are insisting and recognising that high-quality expertise, keeping people in the service near the front line and allowing them to become experienced and to make the right judgments for children will give us the best results, as it does in Finland, where they recruit the best teachers.
Most of the models of evidence-based policy that the noble Lord referred to came from the United States. One came from the United Kingdom. How well does the United States do in terms of child welfare? Where is it placed in the developed countries' league table, and where are we placed? Do the continentals not do far better? I remember a comment made by a pedagogue from Germany who came to this country some years ago. He said how wonderful it was to come to a country where there was such clear evidence of the outcomes of looked-after children. I almost wept when I listened to him, because in his country and in Denmark they had the right professional framework for these children, with a far better balance than we had.
I will talk briefly about the Cassel Hospital, where the family service is closing. The hospital was established in 1963. It serves families with complex needs where parents are at serious risk of harming their children. It struggled for its existence for a long time. It brings together outstanding professionals from all disciplines to work in a residential setting. It has 25 bed units. A forensic psychiatrist who gives evidence to courts said to me that she had almost decided that a child had to be taken away from their parents but, knowing that the Cassel service was available, she agreed to say to the court, “Perhaps this can work”. She followed the child and their family for two years at the Cassel Hospital. The family were reunited and succeeded. The evidence from the outcomes of this service shows that if the families pass the assessment period and are taken in for therapy, most children will be able to stay with their families. Those who are removed and placed in foster care or adopted have stable placements, and there are very good outcomes. This is also an outstanding place for training new practitioners. The daughter of my noble friend Lady Hollins is a child psychotherapist who trained at this flagship NHS hospital, working with those families.
Therefore, my question to the Minister is: what services will now be available to families such as these? Local services have worked with these families for two years but their intervention has not been successful. What other options are available? I understand that multi-systemic therapy approaches are being employed and I should like to know more. I would appreciate it if the Minister could ask his colleague at the Department of Health to write to me with details. I should also like consideration to be given to making use of the huge experience that is to be found at the Cassel Hospital.
My Lords, first, I thank the noble Baroness, Lady Walmsley, for initiating this debate. It has proved to be topical, thought-provoking and controversial in equal measure. We have heard some immensely well-informed contributions this afternoon. It was a particular pleasure to hear the maiden speeches of the right reverend Prelate the Bishop of St Edmundsbury and Ipswich and the noble Lord, Lord Storey, who spoke with such authority and expertise. We all look forward to many more similar contributions in the coming years.
The noble Baroness chose the title of the debate very well, because it reflects the two strands of the argument for early intervention. First, there is the moral case, based on equality of opportunity for every child—about which more later—and, secondly, there is the hard-nosed economic case addressed in Graham Allen’s report, which says that the more society is prepared to spend on early years development, the less needs to be spent on remedial action and dysfunctional young people and adults later. It is a compelling argument but it also highlights the failings in this Government’s approach to strategic economic and social investment because, however much this Government claim to be persuaded by the arguments of Graham Allen and others, they have already shown themselves unable or unwilling to act on the logic of early intervention. The scale of the cuts that they are now imposing and their hands-off approach to local government expenditure are surely testament to that.
We all understand the need for economic efficiency, but surely the sensible approach is to focus on growth and jobs to stimulate the economy, rather than rely on major cuts to public services, which appears to be the preferred route of this Government and is already putting at risk some of the successful early intervention programmes that exist.
As we have heard from a number of noble Lords around the Chamber, the funding of Sure Start is a good illustration of that point. It is an example of successful early intervention in action. The previous Government established a nationwide network of children’s centres—more than 3,500 in total—with over 2.7 million young people and their families accessing the services. Although it will not be possible to measure their impact fully for many years, the national evaluation of Sure Start has already found better social development and behaviour among three year-olds, less negative parenting and fewer accidental injuries sustained by those who attend.
Indeed, before the election Mr Cameron and Mr Clegg made personal promises to keep children’s centres open but, regrettably, the Chancellor’s subsequent announcement that the funding would be protected only in cash terms means a real-terms cut. The reduction in the early intervention grant, which now covers Sure Start, is 11 per cent just in the first year. As a result, despite the supposed political support, a Daycare Trust survey found that 7 per cent of centre managers anticipate that their centres will close within a year and 56 per cent will offer a reduced service.
There is another reason why the Government do not appear to have the political will to invest effectively in early intervention and it is an issue that I have debated with the Minister in the past. It is also one that has been argued passionately today by my noble friend Lady Morris. By removing the ring-fencing from funding to local authorities at the same time as their budgets are cut, the Government are no longer in a position to have any control over how that shrinking pot of money is spent. The noble Baroness, Lady Eaton, the chair of the Local Government Association, has admitted that,
“councils are facing unprecedented cuts to their budgets following the toughest financial settlement in living memory, as well as an increased demand for services”.
It is an obvious worry for those in need of long-term or specialist care who do not have a local, vocal voice. It is also a worry for services such as those that we have been discussing today where, as the noble Baroness, Lady Ritchie, rightly argued, the benefits cannot be evaluated or the financial rewards reaped for many years to come.
It also strikes at the heart of the issue raised by my noble friends Lady Morris and Lady King, who made the case for universal rather than targeted provision to avoid families falling through the net. If the Minister is persuaded by the arguments in favour of early intervention, how can he guarantee that any of the initiatives taken by the Government will result in actual children’s services on the ground? If money is set aside for this work, such as in the form of the early intervention grant, how will the Government track whether it is used for this purpose? Does the Minister accept that the result of his hands-off approach will be a patchy set of unco-ordinated services which fail to bring about the benefits of the long-term cost-effectiveness that we have heard about today?
I am very aware that Graham Allen, in his report, made a virtue of saying that he would not be asking for any additional money to fund his proposals. Some might say that he had no choice in this and I wish him well in exploring alternative sources of funding. The noble Lord, Lord Storey, rightly sounded a note of caution over the use of the private sector in providing such services. As we all know, the voluntary sector is also being squeezed, with children’s charities having their grants cut. Even the newsletter of Philanthropy UK quotes a major funder as saying that it will be a challenge to find enough funding to make this initiative work, and that the Government should instead kick-start the process while encouraging match-funding from other sources over time. It is undoubtedly more of a challenge to lever in outside funding to a scheme whose very existence is predicated on the principle that the benefits will not be measurable for many years to come.
I return to the moral case for action. We have heard some inspiring examples from noble Lords this afternoon of schemes that are already making a difference to the lives of children and transforming their life chances. I cannot refer to them all but some very important points were made about the role of grandparents and the need for multi-agency interventions. A number of noble Lords highlighted the importance of communication skills at an early age. The need for autism and SEN was highlighted very successfully, and the case for play therapy and nutrition was argued well by noble Lords, as was the need for highly trained staff.
Like others, I shall not dwell on the evidence. Suffice it to say that these initiatives are supported by a wealth of academic research quoted by Frank Field, Graham Allen and others showing that, for example, the development of children as early as 22 months is a striking predictor of their ultimate qualifications and life chances. It is also clear that the Labour Government’s aspiration to abolish child poverty by 2020, which was repeated in the Conservative Party manifesto, is a crucial but challenging goal that could tackle the rich/poor attainment gap, but would also require a major investment by the Chancellor to target around 20 per cent of the population in order to lift children out of severe poverty.
Government policy initiatives on this scale really matter not only to avoid children becoming trapped in a cycle of low achievement and poverty but also to improve their broader well-being, which we know is an issue dear to the Prime Minister. I thought that the noble Baroness, Lady Brinton, made an excellent case for the importance of informal play and happiness in the role of children’s broader well-being. The Child Poverty Action Group research currently lists the UK as a lowly 24th in the European ranking on this issue. What will the Government do to address that? I have great respect for the Minister, and I have no doubt that he recognises the strength of the case for early intervention. However, does he have the strategy and funding to achieve it? How will he persuade cash-strapped local authorities, businesses and the voluntary sector to play their part, and where does this work sit in the list of priorities in his department?
We have had a good debate today, and the solution now lies in the Government’s hands. Are they prepared to act, or will we one day look back in time at a lost generation whose lives could have been transformed but who have instead had their lives blighted before they even reach the starting gate?
My Lords, like others I congratulate my noble friend Lady Walmsley on securing this important debate and on setting out the issues so clearly. It is a subject on which she speaks with great passion and authority, and she demonstrated both again today.
Like other noble Lords, I congratulate the right reverend Prelate the Bishop of St Edmundsbury and Ipswich on his maiden speech. I had not realised the connection at all between St Felix and Felixstowe, and I shall think of him every time I see an advertisement for a well known cat food product on the television. I also congratulate my noble friend Lord Storey, who clearly brings great experience to this House both as a teacher and as a head teacher. I was extremely interested to hear what he had to say in particular about the pupil premium, on which other members of his party have campaigned long and hard. I also agree with him about the crucial role of schools, but equally that we cannot expect schools to put everything right on their own.
Today’s debate follows the excellent debate we had five or six weeks ago led by the noble Lord, Lord Northbourne, on the importance of parenting, a point underlined today by my noble friends Lady Ritchie of Brompton and Lady Sharp. Both debates and the large number of speakers in each underline the importance that this House attaches to protecting the interests of children. As usual, today I have learnt a lot from the contributions made from all sides of the House. We have heard very clearly the moral arguments for why early intervention matters, and we have heard compelling financial ones. We have heard about academic research and we have heard about real-life practical examples. We have heard about the benefits for literacy, or tackling problems with speech, as the right reverend Prelate pointed out, and about communication more generally—a point made very forcefully by the noble Baroness, Lady Warnock. We have also heard about autism and listened with care to the points made by my noble friend Lord Clement-Jones. We have heard about development of the brain, perhaps above all from my noble friend Lady Walmsley. All those pieces of evidence underline the importance of this issue, but common sense and our own experience as parents—and there may be a few grandparents in your Lordships' House—tells that this is true.
I know that the last Government understood these points; I also believe that this Government understand these points. I agreed with the noble Baroness, Lady Morris of Yardley, on how far collectively we have travelled, and I hope to reassure her that we intend to build on that progress made in recent years. The Government agree that what happens in a child’s early years is crucial to that child’s future achievement, behaviour and happiness. That is why, in a difficult financial situation, we have put resources into the early years, extending 15 hours of free early education to disadvantaged two year-olds; providing an extra 4,200 health visitors; putting in the money to maintain a network of Sure Start centres—and I shall come back and respond to some of the concerns that have been raised about Sure Start centres; doubling up the number of places on the Family Nurse Partnership Programme from 2015; and, as we have already mentioned, introducing the pupil premium to target support in school for children on free school meals to help us narrow the attainment gap which exists between rich and poor.
While I understand the points that the noble Baroness, Lady Jones of Whitchurch, made about money, I thought that she was uncharacteristically grudging about the financial support that the Government have put in at a time when money overall is short. However, it is because this Government, like the previous Government, are committed to making progress on the early years that we are trying to look across the piece, with the aim of publishing a policy statement later this year that sets out our overall approach to early years. That work will be informed by the four reviews that have all been mentioned this afternoon: the review by Mr Frank Field into poverty and life changes, the review into early intervention by Mr Graham Allen, the review into the early years and foundation stage by Dame Clare Tickell, and the review into child protection by Eileen Munro.
I agree with the point that was made forcefully by the noble Baroness, Lady Morris of Yardley, about evaluation. I think she was saying that it is sometimes hard to get one’s hand around and pin down exactly what is being said, and, having looked at some of the research before this debate, I agree. I take the point made by the noble Earl, Lord Listowel, that there is a balance to be struck somewhere between the evidence and autonomy, and that we do not all want to become management consultant/KPI-type people, which I know would concern him greatly. However, I think there is a need to try to understand clearly what works and to learn the lessons.
My noble friend Lord Storey made the point about consistency, and I think that we can learn about that from looking carefully at what works.
The noble Earl, Lord Listowel, made a specific point about the Cassel Hospital. I will indeed talk to my noble friend Lord Howe and ask him to write to the noble Earl.
I will now try to respond to some of the concerns that have been raised about Sure Start children’s centres. The centres remain at the heart of the Government’s vision for early intervention. I accept the importance of training for early years, a point that was made particularly by the noble Baroness, Lady Warwick of Undercliffe. I will relay the points that she made to my honourable friend Sarah Teather and follow them up with her. It is because we are committed to a network of Sure Start children’s centres that the Government have, in a difficult financial situation, put resources into the system to maintain a network of Sure Start children’s centres.
We will further set out the role of Sure Start when we publish later this year the early years policy statement that I referred to earlier, and we will develop that in partnership with the sector and set out a vision for Sure Start children’s centres and the practical steps for achieving it. We are keen to try to increase voluntary and community sector involvement with children’s centres, to try to improve accountability arrangements, to increase the use of evidence-based interventions and to see whether it is possible to introduce greater payment by results.
We know that local authorities are looking at their budgets and working hard to make the right decisions. I was struck by the points made by my noble friends on the Liberal Democrat Benches about the record of Liberal Democrat councils in maintaining funding for Sure Start children’s centres. As noble Lords will know, Section 5D of the Childcare Act 2006 places a duty on those local authorities to consult before opening, closing or significantly changing children’s centres, and to make sure that there is sufficient children centres provision to meet local needs so far as is practical.
I do not dispute for a moment that people are concerned. This raises difficult issues, and there is a difference of opinion between the Government and the Opposition about the role of delegating responsibility to the local level. It is our view that it is better to give local authorities that discretion and flexibility so that services can be managed in ways that best meet local needs.
A number of noble Lords mentioned the SEN Green Paper. I recognise the impatience of the noble Lord, Lord Ramsbotham, for the Government to make progress, and I am sure that his words will ring in the ears of my honourable friend Sarah Teather, who is driving this work forward. I assure him, and I hope he will accept, that she is extremely committed to this area and to making progress. As has been mentioned, we published our Green Paper last week. It sets out proposals for a new approach to SEN to try to make the system less confrontational, to try to give parents more control and to try to give professionals on the front line more space. I agree with the point made by the noble Baroness, Lady Warnock, that the proof of the pudding will be in the eating. However, I hope that noble Lords will generally welcome the themes set out in the Green Paper and the direction in which the Government are seeking to move.
We hope to help professionals to identify and meet children’s needs through a new approach to identifying SEN in early-years settings in schools, and to have in place a new single assessment process and education, health and care plan. We want local authorities and other services to set out a local offer of all services available to support children who are disabled and have SEN; to consider the option of a personal budget by 2014, an issue raised in an earlier debate initiated by the noble Baroness, Lady Warnock; to give parents a choice of school, either mainstream or special; and to try to introduce greater independence to the assessment of children’s needs, testing how the voluntary and community sector could co-ordinate assessment and input from across education, health and social care as part of our proposals to move to a single assessment process.
We believe that the Green Paper marks a milestone in the development of the Government’s approach to supporting children and young people with SEN, or who are disabled, and their families. The consultation on these proposals will run until 30 June. I certainly hope that noble Lords will take the opportunity to respond to that. On the specific question about the statutory underpinning of the new SEN assessment raised by my noble friend Lord Clement-Jones, we are looking to test the key proposals in the Green Paper through local pathfinders from September 2011, and we will look to make any legislative changes that may be necessary to secure the new education, health and care plan and the offer of personal budgets, as well as any other necessary improvements to the system identified by the pathfinders from 2010.
We had an interesting discussion about the role of grandparents. I agree with the noble Lord, Lord Northbourne, about their importance, a point also made strongly by the noble Baroness, Lady Massey of Darwen. I do not believe that the Government have any plans to move on financial assistance, but I will take that point back. As anyone who has had children knows, the relationship between grandparent and grandchild is a very special one both ways, and is often far less complicated than the one between child and parent. I agree entirely about the importance of grandparents.
As regards the Grandparents’ Association, my understanding, which I will check, is that it was asking for new funding but that it was unsuccessful in its bid. I understand that it was for additional funding and that it has not been faced with a cut in existing funding. The noble Lord, Lord Northbourne, kindly alerted me to this issue and I have spoken to my officials, but having just seen him shake his head I will go back and follow up his points. Having done so, I will get back to him specifically in writing.
The noble Baroness, Lady Howe, raised the important point about funding for services for children with special educational needs under the age of two, and asked whether that could be funded under the dedicated schools grant. The short answer to that is yes. As she pointed out, there is a slightly longer, more technical answer, but I take her point about the need to ensure that local authorities are clear of that. We have written to them, but I am certainly happy to reflect again on whether there are further things we can do to ensure that her important point is properly understood.
A number of noble Lords talked about families with multiple problems. Several figures have been given, all of which have been compelling. The one I have seen is that having one professional working with a family costs on average £14,000 per family per year compared with costs to local services that could be up to £330,000 a year. There is therefore no doubt about the need for addressing these problems. In December, the Prime Minister set out his own ambition to address those concerns. As noble Lords have argued, there is a clear financial sense in that. Equally, and perhaps more compellingly, there is a strong moral need. All Governments have grappled with the problem of coming up with approaches that deal with the needs of these families in the round, rather than the traditional Whitehall way of dealing with things in silos, by department or by institution.
We will try to develop new approaches to support those families, underpinned by freedom for local authorities to establish community budgets, pulling together different streams of money and approaches. We are hoping to set those up in 16 local areas to pool budgets for families with complex needs, and then roll them out to other local areas across the spending review period.
I was asked about help and support for assessment of young children with specific needs. As I said, we plan to expand health visitor services to ensure as a priority that all families are offered the health and development review for children aged two to two and a half, so that children who need additional support can be identified. Where families need additional support, the health visitor service will have the support needed. Where parents have concerns about their child's development, they will be offered that support and, where appropriate, referred to another professional—for example, a speech and language therapist, as was mentioned.
We have talked about the Munro review of child protection. That is due to be completed by late spring. The Graham Allen review has also been mentioned. We had the first report from Mr Allen in January. As noble Lords have pointed out, he argues that we should all be actively promoting the principle of early intervention, particularly in the early years but from conception through to 18. He has given us thoughts on how to take that forward, including through evidence-based programmes and supporting reform. We will receive a second report focused more on social finance models—the point raised by the noble Baroness, Lady Jones of Whitchurch—this summer. In the mean time, the Government are carefully considering his recommendations and how we can respond to the challenge that he has set us to shift to a culture of early intervention rather than to continue late, reactive spending.
This has been a wide-reaching and thought-provoking debate. As is the whole House, I am grateful to my noble friend Lady Walmsley for giving us the opportunity to air these important issues. Listening to the debate, it is clear that there was widespread acceptance of her case; I do not think that a single voice was raised against any of her arguments.
A number of specific points have been made on which I will reflect and respond to noble Lords if I have failed to reply in the time that I have this afternoon. Overall, there has been agreement on the need to focus on the early years and to break down barriers and silos so that children and families are at the heart of early intervention, not structures and systems. A great deal of work is going on in this area on a number of different fronts. The Government look forward to pulling that work together in its early years policy statement, to which I referred earlier, which will be published later this year. When that is published, I very much look forward to the further debates that we will have then.
My Lords, I thank my noble friend and all those who have taken part in this debate today. Our two maiden speakers proved the truth of the saying that it is not just what you say, it is who you are when you say it, because we would not have had such respect for what they said without our knowledge of the experience that they bring to their opinions.
I take away a number of particular points from today's debate. My noble friend Lady Benjamin has given me a new mantra: a hug a day keeps the doctor away. I shall stick to that. The noble Baroness, Lady King of Bow, reminded us what 4Children has said so perceptively; the Minister reflected on the need for a culture shift. The noble Lord, Lord Ramsbotham, reminded us of the importance of food for thought; perhaps we should bring back school milk, orange juice and cod liver oil. The noble Baroness, Lady Brinton, brought us up short in a serious debate by reminding us that childhood is a time for happiness and fun.
The noble Baroness, Lady Warwick, made an important point about early-years staff and our ridiculous upside-down funding. Only this week, I was told that staff who work with the early years are paid half what teachers of five to 18 year-olds are paid. Does that not reflect the value we put on their work? There really is a need for a culture shift. I look forward very much to the statement, to which the Minister referred, in the summer of the Government’s early-years strategy when no doubt we will debate it again. With that, I beg leave to withdraw the Motion.
(13 years, 5 months ago)
Lords Chamber
That this House agrees the recommendation of the European Union Committee that Her Majesty’s Government should exercise their right, in accordance with the Protocol on the position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice, to take part in the adoption and application of the Proposal for a Directive of the European Parliament and of the Council on the use of Passenger Name Record data for the prevention, detection, investigation and prosecution of terrorist offences and serious crime (Document 6007/11) (11th Report, HL Paper 113).
My Lords, the Motion is in my name because I have the honour to chair the European Union Sub-Committee on Home Affairs, which prepared the report now before your Lordships’ House. In the normal course of events, when this House considers reports of the European Union Committee, almost invariably the terms of the Motion are that the House should “take note” of the report. Let me explain why this Motion invites your Lordships not to take note of the report but to agree with the recommendation made by the committee in its report.
The Motion refers to the,
“Area of Freedom, Security and Justice”,
which is treaty language for what are invariably in British parlance known as justice and home affairs. JHA matters first came within the purview of the European Union in 1999 and quite a lot of—perhaps most—JHA regulation at that stage required unanimity. For the JHA legislation which required only a qualified majority of member states’ votes, the Government at that time negotiated a protocol to give the United Kingdom the necessary flexibility. The effect of the protocol is that the United Kingdom does not take part in the negotiation and adoption of such measures and is not bound by them unless, within three months of a proposal for legislation being presented to the Council, the Government notify the president of the Council that they wish to take part in the negotiation, adoption and application of the proposed measure. That is what is known in the jargon as the UK opt-in.
The entry into force of the treaty of Lisbon in December 2009 has made a quantum difference in the number of matters that fall to be covered by the opt-in procedure, because it expands greatly the application of qualified majority voting in the JHA area. Now, virtually all JHA matters are adopted by qualified majority under what is called “the ordinary legislative procedure”. The United Kingdom opt-in therefore now extends to all these. In particular, the opt-in now applies to all provisions on police and judicial co-operation and law enforcement.
In anticipation of this important change, the European Union Select Committee negotiated with the previous Government an undertaking that, where the committee concludes that the question of whether or not to opt into a measure is important and should be debated, the Government would make time for the debate well before the end of the three-month period to enable them to take the views of the House into account when reaching a final decision on whether the UK should opt in. In January, the coalition Government renewed this undertaking. Together with all the committee I express my welcome for their decision to do so and my gratitude to them for having made time for this debate at a very timely and opportune moment when we are only just over half way through the three-month period for opting in on the directive that we are going to debate. In the first full year during which this procedure operated—we are now about 15 months into the operation of Lisbon—23 matters required the Government to decide whether the United Kingdom should opt in. Only one pair of proposals on two asylum directives was thought to be so important that a report and a debate were needed, so the report that is before your Lordships’ House today is thus only the second of its kind and the first since the House approved the procedure for such debates a year ago. This demonstrates the importance that the committee attaches to the directive and to the issue of whether the Government should opt in to it.
I come to the substance of what we are talking about. The report put forward by my committee and supported by the EU Select Committee explains that passenger name record data, otherwise known as PNR, are data about passengers collected by airlines which include information not on the machine-readable part of the ticket. They include such matters as the travel agent, form of payment, contact details, billing address, complete travel itinerary and baggage information, to mention the most prominent. These data, especially when taken in conjunction with the data contained on the machine-readable part of the ticket, are particularly valuable in identifying persons potentially involved in terrorist or other criminal activities who were not previously known to the authorities.
I think one has to recognise that the collection of such data involves a considerable invasion of privacy, and it is sometimes doubted whether this is justified by the benefits flowing from its collection. The committee, I have to say, has no such doubts, although when considering earlier EU proposals on PNR we did express some doubts. However, we do not any longer have those doubts. In fact, this is our third inquiry into PNR in five years, and basically we agree with the view of the Home Office that is summed up admirably succinctly by the following phrase,
“the use of PNR data is ‘a proven and vital tool for the protection and detection of serious crime and terrorism’”.
We are convinced that the Government are right in that respect.
We also agree with the Government about the case for action at the EU level—this is the vexed issue of subsidiarity which is now covered in all explanatory memorandums produced by the Government when a Commission proposal is tabled. The United Kingdom, at the moment alone among member states, already collects PNR data. If member states were to act unilaterally and have different PNR data systems, this could lead to differing requirements being imposed on carriers and there would be no clear basis for the data to be transferred from a carrier in one member state to the authorities of another member state. So we are quite clear that the Government themselves have made a strong case for having an EU directive in this area, given the conjunction of the view about the need to have a single system with the view that PNR data are clearly an effective tool to deal with serious crime and terrorism.
The directive we are looking at is currently in the form proposed by the Commission, and negotiations in Brussels have not really started yet. It is quite clear that there will be prolonged negotiations because these are complex matters, and they are just beginning. Currently, the directive covers only flights between member states and countries outside the EU, not flights from one member state to another. The Government regard this as a major defect which they will do their best to remedy in the course of the negotiations, and we agree with them. The volume of journeys between member states is admittedly three times greater than those of flights between member states on the one hand and third countries on the other, but to limit the directive in the way proposed by the Commission would in our view—I think that it is the view also of the Government, but the Minister will no doubt confirm that when she speaks in reply—seriously and unnecessarily limit the value of the directive.
I should explain at this point that we are not asking the House to take a view on the details of the directive—that would be premature; we have not ourselves conducted full scrutiny of it. We will continue to keep the directive under scrutiny because there are many features of it which still need serious examination, in particular the purposes for which the data can be used, the length of time for which they can be kept and the adequacy of the data protection provisions. I therefore emphasise to your Lordships that, at this early stage, there is only one matter for consideration by the House. That matter was identified in what is known as the Ashton undertakings, which were accepted by the Government at the time that Lisbon was ratified and which relate to whether the UK should opt in or not, and whether it should therefore participate actively in negotiating, make its influence felt and have its views taken fully into account or whether it should walk away and leave the directive to be applied to other member states but not to the UK.
I therefore emphasise that what we are debating is whether the Government should exercise the United Kingdom’s opt-in. For the reasons that I have given, the committee is firmly of the opinion that the Government should opt in. I would hope to hear from the Minister at the conclusion of the debate that this is their intention.
My Lords, I have the honour of being a member of Sub-Committee F, the home affairs sub-committee of the European Union Select Committee of your Lordships' House. We are, as your Lordships have heard, chaired by the noble Lord, Lord Hannay, who marshals us so efficiently and delicately that most of the time we are not really aware that we are being marshalled at all. He has laid out the case made and the conclusions reached in our report with the skill that I have come to expect. I do not want to repeat all the comments that he made, but there are a couple of issues that I should like to raise. However, I should first say that I firmly support the conclusions that our committee reached in the report, and I shall urge my noble friend on the Front Bench to tell us that the Government intend to opt into the proposal.
I should begin by underlining, as did the noble Lord, Lord Hannay, the issue of principle. It is excellent that we are taking the first steps in creating an established procedure for enhanced scrutiny of opt-in decisions, for, whether we like it or not, there is concern in the country at large about what is often seen as encroachment by European institutions on areas of our national life. I make no judgment on whether that is right or wrong, but enhanced scrutiny, which brings with it greater transparency, gives the opportunity for more searching debate, and so to set the issue in context is an important way of defusing, for better or worse, public concern. Thereafter, the cards of public opinion must fall where they may. I add my thanks to those offered by our chairman to the Government for having made time for us to have this debate today.
Perhaps I may raise a couple of issues about the proposed directive. The first is the information that it is proposed will be collected under the PNR agreement, which is listed in Appendix 2. There are there nine categories of API data and 19 further categories of PNR data. Some of them are duplicates; for example, the name is required under both sets. The noble Lord, Lord Hannay, mentioned some of them and quite rightly picked out those that are most salient and important: the address and contact information, the billing address, the baggage information, and the number and other names of travellers on the PNR. My concern about the list, as it is printed in our report, is that it looks like a shopping list drawn up by a committee, with everyone adding their own bits, with more and more marginal ideas and marginal pieces of data being requested. Why do I worry about that? I worry about it because I think it means that there is a lack of focus. The key data get lost. We are looking for needles in haystacks and the less the amount of background information we have to sift through, the more we shall be able to focus on the intensive and important points that we need to collect about people who are travelling. I hope that my noble friend’s officials will make an effort to try to keep the data to the minimum so as to achieve the maximum effect.
The second point is the extent. The noble Lord, Lord Hannay, has pointed out the advantages of the directive applying to flights within, as well as into, the EU. I share the view of the committee that we should support the Government’s proposal to extend this, but I am less convinced about the arguments for it. I regard this as a nice-to-have, not a must-have, principle. Why do I think like that? I think that as we are going to collect yet more data, which may or may not be analysed properly, we run the danger of failing to see the wood for the trees. On the issue of cost, as the noble Lord, Lord Hannay, said, there are three times as many flights within the EU as there are coming into the EU. There may also be inconvenience for travellers, although I am not sure how the procedure will work. Finally, potential criminals and terrorists are not foolish; they will merely shift their travel patterns to reflect the way that the PNR data are collected. That is not to say that we should not try to impede them—we should—and undoubtedly the Government are right that, if this is extended to internal flights, it will make their work more difficult. However, Europe is sufficiently small and the road and rail transport networks sufficiently good that you can drive from one end of Europe to the other in 36 or 48 hours and, therefore, I am not sure that the capture of airline data will add enormously to what we are trying to achieve. Therefore, I regard it as a nice-to-have principle, not a must-have principle, and the advantages probably do not outweigh the various costs.
On costs, my major concern is the civil liberties aspect. I instinctively dislike Governments collecting information about their citizens for unspecific reasons. I refer to central government, local government or governments of whatever colour. I have a principled dislike of it. When we negotiate the details of this I hope that we shall be looking very carefully at the rules for data collection, retention and disposal. They need to be carefully prescribed and carefully enforced.
In the earlier report that we produced on the EU/US passenger name record, which applied to the US, paragraphs 160 and 161 drew attention to some of the dangers. Paragraph 160 states:
“The principal risk of error in using PNR data seems to us to arise, not from the quality of the data, but from the erroneous interpretation of the data”.
One of the problems is that we have considerable concerns about how that might be interpreted and whether individuals about whom data has been collected are able to be assured about its accuracy. Paragraph 161 states:
“It is important that intending passengers should be aware of who will receive their personal data, and subject to what conditions”.
Those two recommendations of an earlier report need to be reflected when we come to the final directive on this occasion. Nevertheless, I believe that the Government should opt in, despite those tactical reservations.
Last summer I was rather disobliging to my noble friend when we were discussing the European investigations order. I was extremely concerned about it then because I felt there were no agreed standards on evidence gathering and handling, no minimum basic procedural safeguards, no coherent data protection regime and no agreement on important areas of proportionality, extra-territoriality and double jeopardy. I suggested to my noble friend that we might have done better to stay outside until the shape of the final directive became a bit clearer. She told me very firmly then that we were going to opt in because we could better influence events and shape it if we were inside having opted in than from the outside. On this occasion we have a much better structured directive, with a final shape in place—although not the final details as the noble Lord, Lord Hannay, made clear. If she felt that we should have opted in to the much looser investigations order last summer, I cannot see the logic of why we should not opt in to this one now.
My Lords, I am sure that the whole House is very grateful to the noble Lord, Lord Hannay, as chairman of Sub-Committee F, for presenting its report today and accompanying it with his recommendations, which also meet the Government’s own inclinations in this matter, and for his characteristic clarity and thoroughness in explaining the main issues. He is quite right to remind the House that there is further work to be done on the actual scrutiny process of the directive details themselves and that this is really just about the main issues that are encapsulated in the Motion that he has tabled today.
I welcome very much what I hope the Minister will be able to say in reply. This is an occasion, as has already been said, when the opt-in procedure is, prima facie, proceeding on a smooth basis and is one of a growing number now. The system appears to be settling in on the basis of the original Ashton procedure, set out two years ago. I welcome that too because it means that the United Kingdom can make more progress in the JHA field working with our partners than we would do on our own and can overcome some of those anxieties from some years ago about this pillar and whether we were conceding too much. For those of us who may sound old-fashioned nowadays in being enthusiastic Europeans, it seems to me that as the UK is a country renowned for having more opt-outs, exclusions, exceptions, derogations and “would you mind if we don’t” clauses in the whole system than the other member states, it does occasionally create a better impression when we do opt in with some enthusiasm, particularly in this growing field, which is becoming a major area of Community policy formation.
At the same time, I understand my noble friend’s apprehensions about some of these aspects of giving personal data in this way. This is a growing scenario in many fields of commerce as well as for many government departments and local authorities—not only in this country but all over the world and between countries. People are right to be apprehensive about what happens. Therefore, Governments and the international institutions involved need to reassure their own local and international publics that these data will be treated with the appropriate operational reverence to make sure that they do not get into the wrong hands and that there is some kind of lapsing period for the retention of data from people who are manifestly not even putative terrorists or dangerous criminals, according to the evidence.
My noble friend was also apprehensive about the list of things that can be included in the PNR list. I assume that the way in which the technology works is that people have the correct codes to feed in to the computer on the basis of the information they may have received from the security services, so that is a way in which they can do it in a tabulated process. It does not mean that they have literally to comb through every single item of data. I hasten to add that I am not an expert, but I assume that to be the case.
When the Minister comes to reply, I hope she will have time today to deal with a number of points, which I will mention quickly now, on the need for the EU-wide approach. That has already been dealt with and it does inevitably meet the Government’s ambition to make this apply to intra-EU journeys as well. It seems manifestly illogical for them not to be included and I think that the committee and the European Union Committee—the chairman is present and listening to the debate—would presumably support that wholeheartedly, as does Sub-Committee F.
A further detail that we will need to concentrate on in future is whether the committee is right to express a certain hesitation about a reply from the Under-Secretary of State at the Home Office. When it asked what he would think about opting in, he politely and rather commendably replied that the Government might want to wait for the committee to have time to give its own views and that the Government would pay attention to those. I refer here to paragraph 20 of the report. However, the chairman is quite right to add at the end of that paragraph:
“While this is a proper line for the Government to take in the light of the Ashton undertakings, it would have been helpful to have some indication of the Minister’s own views”.
I hope that habit will develop more and that the Government are not too shy of indicating even a preliminary position on that. I do not think that would be misused by members of the Select Committee or the sub-committees in their further investigation of particular subjects.
I move quickly, if I may, to paragraph 5.4.1 of the Commission’s own report to the Council of Ministers. Again, I am only speculating for the future, because it is not of course a matter for today’s debate, but there is that question of similar security procedures and the data collection of PNR in non-air travel as well as in the preliminary ticketing before PNR is collected. Paragraph 5.4.1 deals with that at some considerable length and there is something to be said for it.
Finally, I return to the other comments of my noble friend Lord Hodgson of Astley Abbots, when he referred, with some nervousness, to the encroachment of the European Union on some aspects of our domestic life. That is not a phrase I would use because if you are a keen member of the European Union as well as a patriotic Briton—the two go hand in hand, as far as I can see—you do not regard it as an encroachment. You consider the whole organisation to be a club of like-minded sovereign members, with their own intrinsic national sovereignty but working through agreed and integrated institutions. With more and more agreed majority voting in the future, as I hope, we will sometimes be doing what other members want as well as what we want. That is in the nature of a club. The European Union is therefore one of the finest clubs in the world in that sense. I hope that my noble friend will get reassurance from my words because he, too, can change his mind on that in future.
My Lords, I should have put my name down to speak and I am sorry that I did not. Briefly, first, I want to make it clear that I support fully all efforts to catch criminals, especially terrorists, so my objective here is not about that. However, we must not lose sight of the dangers that may sometimes be contained within well meaning measures. In the real world, an EU directive does not protect you if there is a failure in the implementation of security measures, electronic or physical. That is the bottom line.
We have a database being built up here of sensitive information. You can easily have unintended connections made, as the noble Lord, Lord Hodgson, said, such as guilt by association. What happens if, by chance, you travelled a few times and coincidence came into effect and someone who might have the wrong associations travelled on a seat not far away from you? The next danger is with the credit cards. Criminals use stolen credit card details; it could be yours on someone else’s ticket. The actions with these data are therefore dangerous. There is also a danger to you. Critical financial information is kept in here, not just the billing address but your credit card details. It has everything you need to get someone’s credit card details in order to commit a fraud. If you used a debit card, they can empty your bank account so these data have to be kept extremely securely— at least to a standard such as the PCI-DSS, I hope, if not higher.
Another question is: who will have access to this information abroad and in the future? Will it be in European countries or worldwide? I can think of certain foreign countries which I would not like to have my information under any circumstances whatever. I can think of a couple of European countries where I would not be too happy with that, particularly considering things such as the European arrest warrant and the way that different crimes are created to have a different sense of gravity in different countries. The data are supposed to be retained for serious crimes, but what is a serious crime? Look at the mission creep that was behind RIPA and where we ended up with that. We have to start worrying about this. We all treat crimes in different ways, and this measure will soon creep elsewhere.
The bottom line is that if we were worried by the national identity register, why on earth are we not worried about this? This contains almost more information about you. There is a huge privacy issue here about the state looking at who you are travelling with, when and in what circumstances. Should it be snooping into some people’s private lives in that way? I have nothing to fear on that score, which is why I can stand up and say that, but some people would be very uncomfortable if they knew that conclusions were being made that could be brought up to silence them if things got awkward, particularly if foreign Governments had access to those data. I can see huge dangers here. There is also the question of business intelligence for foreign purposes. We should tread much more cautiously. You can write what you like on a bit of paper, but it is not worth anything in the real world.
My Lords, I congratulate the committee, and indeed the sub-committee on home affairs, on producing this important report. I am grateful to the noble Lord, Lord Hannay, for the historical context in which he placed the debate today. The report was published on 11 March and here we are debating it on 17 March. This is in remarkably quick time and I commend this opportunity to have an early debate and, by the terms of the Motion, come to a considered view on the question of whether or not to have the opt-in. I note from paragraph 23 that the sub-committee hopes that this will allow the Government to be fully aware of the views of the committee and of the House itself. The Opposition certainly support that aim.
One should be in no doubt about the importance of this decision. As the Home Office memorandum makes clear—I am grateful for the clarity provided in that memorandum—passenger name record data are an essential supply of data for the security, intelligence and law enforcement agencies for investigations and operations, and are a proven and vital tool for the prevention and detection of serious crime and terrorism. As the committee points out, the collection of PNR data, their transfer to border and enforcement agencies and their retention for a number of years constitute a substantial invasion of privacy with major data protection implications. It is therefore right, as the committee states, that such collection is justified only if the benefits in combating terrorism and serious crime are as great as is stated.
I note the points raised by the noble Lord, Lord Hodgson, and the noble Earl, Lord Erroll, about the broader implications behind the collection, holding and security of such data. It is interesting to look back to 2007 when the original proposal was put to the European Parliament. Criticism was expressed at the time in that Parliament’s resolution about the need for the actions proposed to be fully justified. The European Parliament also questioned whether the proposal met the standard required for justifying interference with the right to data protection. With regard to data protection, the European Parliament called for a clear purpose limitation and emphasised that only specific authorities should have access to PNR data.
A lot of progress has been made subsequently. In the Explanatory Memorandum produced for the European Parliament and Council in February 2011, the Commission is now able to argue that the proposal is fully in line with the overall objectives of creating a European area of freedom, security and justice; that, because of the nature of the proposed provision, the proposal is subject to in-depth scrutiny to ensure that its provisions are compatible with the fundamental rights, especially the right to the protection of personal data enshrined in Article 8 of the Charter of Fundamental Rights of the EU; and that the proposal is in line with Article 16 of the TFEU, which guarantees everyone the right to the protection of personal data. Overall, it concludes that, in addition to being in line with existing data protection rules and principles, the proposal contains a number of safeguards to ensure full compliance with the proportionality principle and guarantee a high level of fundamental rights protection.
I note the committee’s conclusion that it has no hesitation in accepting the Home Office’s assessment of the value of PNR data for the prevention and detection of serious crime and terrorism. The committee agrees that the case for EU-wide legislation is compelling. I note, too, support for the directive to be extended to intra-EU flights. This seems to me a sensible approach, as explained in the committee’s memorandum.
The committee’s support for opt-in is entirely consistent with the thrust of its support generally. I would be interested to hear the Minister’s response on that point. Her ministerial colleague was reluctant to give a view when he gave evidence to the committee, and I hope that the noble Baroness will be able to clarify that point and reassure the House on it.
This is a very telling report. We are in a sense setting a new pattern for the House to consider these matters, in that the committee is inviting the House to express a view. I very much support that proposition and commend the report to the House.
My Lords, I join noble Lords in expressing my gratitude to the European Union Select Committee for organising this debate. I am also grateful to the noble Lord, Lord Hannay, for acknowledging the Government’s willingness to give practical effect to the procedural undertakings that they have given. As a result, we have had a discussion on the Floor of the House at an early stage of consideration. The Government will take very serious account of what has been said today.
One of the things that has emerged from the debate is that the European Union Committee, the Government and a number of noble Lords are in agreement that there is concrete evidence of the utility and benefits to be derived from the analysis of PNR data in terms of passengers’ security. Indeed, the noble Lord, Lord Hannay, put the case for the directive containing intra-EU PNR data as well as data on third-country flights as least as cogently as I could, if not more so. Therefore, I do not need to go over why the Government consider this to be an important part of the legislation, and why they wish to continue to strive to get it included. We have consistently argued that the directive should contain this information and that it should cover intra-EU routes.
I note what my noble friend Lord Hodgson said—that this is a “nice to have” rather than a “must have”. However, I shall seek to explain why the Government take a different view for two reasons. First, the argument that it is possible to evade the information that this provision might yield by choosing another form of transport may be valid. However, that is not itself a compelling argument for not obtaining the information if you believe it to be necessary to inhibit terrorism. Secondly—this is the major point—we have had ample evidence since earlier drafts of this legislation that aviation is a major terrorist target. We cannot ignore that. Therefore, it is right, consistent with individuals’ right to privacy—I entirely take the points that have been made about that and will return to them—to provide and maintain the maximum security that we can for passengers on aircraft, otherwise aircraft may well be blown up before they reach us.
Further to that point, with which I agree, does the Minister agree that it is remarkable that, although the security procedures at airports are extremely irritating for most passengers and that we all suffer, there is a high degree of psychological support for those measures among passengers, who know how vulnerable air flights are?
The noble Lord’s point is entirely well made. One of the things that the Government are nevertheless trying to do, with international co-operation, is to reduce as much as possible the burden of those procedures—a lot of them are physical. The more information we have that enables us to alleviate some of the other constraints and put them together in a package, the safer we will be and the less intrusive the security procedures will be.
The noble Earl, Lord Erroll, made various points. API information is already collected and it is possible to know with whom you are travelling. He is quite right to say that extra information will be collected. It is precisely because that information includes details of how the ticket was paid for, which is a major indicator of the kind of passenger with whom you are dealing, that it is thought wise and helpful to have it. This directive will go no further in the information that it asks for than that which is already contained in the agreements that the EU has negotiated with third countries, such as the United States, Australia, Canada and possibly others. I repeat that the Government’s first duty is to ensure the security of their citizens.
The UK has tabled an amendment that it hopes may form part of the negotiations. Our view is that the directive should allow member states—not oblige them, if that is unachievable—to require carriers to provide PNR data. That will increase effectiveness and help us to ensure that our borders are adequately protected. The committee and the House will entirely understand that this is a key consideration regarding our decision on whether we opt in.
We have been lobbying hard on this issue for some considerable time. I am pleased that an increasing number of member states are being persuaded by the arguments involved. However, I have to say that we do not yet believe that we have reached where we need to be to ensure that such a requirement becomes part of the directive. A great deal of work remains to be done. Even if we obtain the support we need in the Council, the Government are also conscious that many Members of the European Parliament hold strong views on data protection and on whether the proposed measure is proportionate. I know that many noble Lords have connections with Members of the European Parliament, and the Government would be extremely grateful if noble Lords, if they had occasion to, were able to persuade those MEPs of the merits of our case and reassure them on any concerns they may have.
I say to the noble Earl, Lord Erroll and others that the Government will take the whole question of the safeguarding of this information extremely seriously. There is a whole section of the proposed directive that addresses that issue, and we will scrutinise that as carefully as anyone. We understand and believe in the necessity of allowing security and privacy to ride together, and not allowing them to be put in opposition to each other. We believe that the directive is proportionate, and that it would continue to be proportionate if it included intra-EU PNR.
The House wishes to know whether the Government will be able to opt in. As I said, further work must be done on the directive and we must do more lobbying in order to get to the place where we feel we need to be. There will be further discussion of the directive at an important home affairs Council on 11 April. We are striving to ensure that the Council, in its final statement, will send a strong signal that intra-EU PNR will be the common position. If we can get that signal, it is likely—and that is a very positive “likely”—that we shall want to opt in to the directive from the outset.
I hope that the House will accept that at this stage the Government need to maximise their negotiating leverage. They will reflect very carefully on the points that have been made today before they reach a final decision; they take the points made by noble Lords extremely seriously. There may be points of detail between us, but not fundamental points. We will of course communicate our decision to the House as soon as it has been made.
My Lords, I thank all those who participated in this brief debate, which has been extremely useful and has shown a wide measure of agreement. I thank the Minister for her response which, although it may have fallen a scintilla short of what I might have hoped for, nevertheless went quite a long way in the direction that your Lordships' committee wishes to go. I will add on a personal note that she and I, so many years ago that I would not dream of embarrassing anyone by saying how many, dealt with some of the more complex aspects of EU policy, mainly the EU budget. That budget pales into insignificance compared with this system of opt-outs and opt-ins.
Perhaps I may respond to one or two contributions. The noble Lord, Lord Hodgson of Astley Abbotts, raised the possibility that the directive asks for too much data. I do not have a strong view on that; we do not have to have a view to support the resolution. However, it is only by opting in that we can affect the amount of data that are collected. That is yet another reason to opt in. I and the committee agree with the noble Lord—and here I part company slightly with the Minister, although I accept absolutely her plea that we should help the Government in their negotiating position by standing firmly in favour of the inclusion of intra-EU flights—that this is not a make or break issue. It is not and should not be a sine qua non for opting in. That is a personal opinion. However, the committee does support, without ambiguity, the Government's desire to include intra-EU flights.
One problem that may come up—I hope it does not, and that the Minister is right in anticipating that real progress will be made at the April council to include intra-EU flights—is that it may not be possible by the time we have to take a decision on opting in to be quite sure one way or the other. However, on one thing we can be quite certain: if we opt out, intra-EU flights will not be included, although I do not want to go further into that. I certainly did not mean in the report to criticise the honourable Member in another place, Mr Brokenshire, who gave evidence to us. He gave excellent evidence on our internal security strategy report, for which we are extremely grateful. He was entirely courteous on this matter and there is no reproach. It is, I think, due to the parliamentary timetable that we have had to publish the report and bring this debate forward at a rather early stage in the three-month period. Therefore, it is not a criticism of him in any way.
My noble friend Lord Erroll seemed a little worried about all the details being taken of his credit cards and other things. Of course, the reality is that they are taken by the Government anyway. I think that his objection is mainly that some foreigners might read them. I am sorry—we are in the European Union. There are an awful lot of things that we share with members of the European Union and this will be one of them. In my view and in the view of my committee, it will strengthen the security of this country if we are able to do that. However, as I said, that information is already being collected here.
Perhaps I may make it clear that I am not worried about the information being shared with the European Union, as of course I give my credit card details on the internet to buy things in Europe. The challenge is in the number of times that it will be propagated around systems where we do not know what the security levels are, and the Government do not have a good track record of maintaining security databases. That is my concern.
That is a question to be directed firmly towards the Minister and not to me, so I shall not take it further.
The noble Lord, Lord Hunt of Kings Heath, was very helpful and supportive about the report and the recommendations. He rightly pointed out that there is considerable intrusion into personal data and personal security and so on. It is perhaps worth pointing out that one of the changes to which I did not refer at great length is that, as a result of the Lisbon treaty, the European Parliament has now become the co-legislator on this matter. The one thing we can be quite sure of is that the European Parliament is not going to let this bone go without giving it several bites and worrying at it a good deal. Therefore, I do not think that we are at the end of that story. I believe that the privacy aspects will get a very thorough airing in the negotiations between the Council on the one hand and the Parliament on the other. I am sorry to say it again but that is yet another reason why we need to be there, exercising some influence.
Finally, the Minister asked those of us who were involved in this matter whether we could take it up with the European Parliament. So far as I am concerned, I would willingly do so. I can see my chairman, my noble friend Lord Roper, nodding sagely to my left. We are going to Brussels next week to have our six-monthly meeting with British Members of the European Parliament, and we will certainly raise this issue with them. We will try to persuade them to fan out a bit and explain why the inclusion of intra-EU flights is going to help with security for all of us.