House of Lords
Royal Assent
Phone Hacking
Lord Grantchester
To ask Her Majesty’s Government what measures they will take to prevent journalists from citing the protection of sources as a means of avoiding prosecution for illegal activities such as phone hacking.
Baroness Rawlings
My Lords, protection of sources is not a defence against prosecution of any illegal act. If journalists, like anyone else, break the law, they should expect, like anyone else, to be prosecuted.
Lord Grantchester
Given that the Bribery Act, which places an obligation on companies to put procedures in place in relation to the actions of their employees, came into force in July this year, what steps do the Government intend to take so that it is possible to discover whether owners or editors of newspapers have authorised or paid third parties for illegal activity? Will the Government ensure, through regulation or otherwise, that owners and editors are required to disclose information relating to such authorisation of payments?
Baroness Rawlings
My Lords, the noble Lord, Lord Grantchester, makes a very valid point. The most important point is that bribery and corruption are extremely serious offences, which the Government believe should be punished with the full force of the law. Journalists see themselves as having an ethical duty to protect their sources, and that is enshrined in the PCC’s code of practice. It is likely that anonymity is an important consideration for some people and that the provision of anonymity for the informant has led to stories that are in the public interest. Of course, journalists must also abide by other clauses of the code. Foremost among those is accuracy, and an editor must be sure that a story is accurate regardless of source.
Lord Fowler
My Lords, on phone hacking generally, has my noble friend noticed that there is now a campaign to deny the importance of the Leveson inquiry by some in the press who say that the matter should be left to the press to sort out for itself? Is it not the past failure of the press to take action that has led to this independent inquiry? Is its importance not further underlined by the mounting evidence that the phone hacking scandal extends beyond the News of the World to other papers?
Baroness Rawlings
My Lords, my noble friend is very expert in these matters and has gone to the core of the subject. The failure of some of the press to abide by the law has been evident. Regarding the Leveson inquiry, we all recognise the importance for our democratic process of a free and effective press that acts with integrity. That is what we all want. However, at the same time, we have to acknowledge that certain parts of the press have not abided by the law or the self-regulatory code to which they voluntarily signed up. As my noble friend says, it is the failures that the Leveson inquiry will seek to address.
Lord Collins of Highbury
My Lords, in view of the allegations in relation to unlawful payments made to serving police officers, can the Minister confirm that the Bribery Act 2010 applies with equal force to the proprietors and owners of newspapers, and indicate what steps, if any, Her Majesty’s Government intend to take to ensure that adequate procedures are put in place to prevent corrupt practices?
Baroness Rawlings
My Lords, we are all against, obviously, corrupt practices, and the making of payments to police officers by journalists is a serious crime. These allegations are being investigated by the Independent Police Complaints Commission. The IPCC is experienced in investigating allegations of corrupt behaviour by police. These range from allegations of corrupt relationships, misuse of public funds and abuse of powers to inappropriate sexual relationships. This is the first time that the IPCC has overseen an investigation concerning allegations of police payments specifically from journalists.
Lord Stoneham of Droxford
Assuming that a strengthened Press Complaints Commission emerges from the current public debate, will the Government consider withdrawing the VAT exemption on those newspapers which do not join the new regulation process?
Baroness Rawlings
My Lords, I have read about that and at the minute we are waiting for the Leveson report, which will be giving us details and assessing that point.
Baroness O'Cathain
My Lords, if there is any truth in the suggestion—I am sure that there is truth in the suggestion—by my noble friend Lord Fowler that there is a campaign against the Leveson inquiry, can the Government do anything to stop it? This seems to undermine the whole principle of a free press and free expression.
Baroness Rawlings
My Lords, we are not aware of a campaign against Leveson or his inquiry, which started yesterday. We wish it the best passage, because it is very important, as will be the Communications Act that we will be discussing here.
Baroness Farrington of Ribbleton
My Lords, will the noble Baroness define the difference between public interest as a defence and prurient interest? The noble Baroness seemed to imply that public interest could be used as a defence against an allegation of breaking the law.
Baroness Rawlings
My Lords, regarding public interest, editors are responsible for the truth and for what is published in a newspaper, not the source of the story. If a story is not accurate, a range of options is available: the editor, the PPC or the courts, depending on the nature and the scale of the inaccuracy. We do not believe that additional safeguards on this point are necessary, but of course we will await the results of Lord Justice Leveson’s inquiry into the wider ethics of the press.
Lord Inglewood
My Lords, I declare an interest as chairman of a local newspaper company. Would my noble friend the Minister not agree two things: first, that the bribery legislation applies equally to all citizens in this country, whether they are journalists or whether they are not; and secondly, that the decision whether to prosecute when evidence of a crime is available is something which is vested in the prosecution authorities?
Baroness Rawlings
My Lords, my noble friend goes really to the heart of the matter and brings out a very important point, which was stated clearly by my noble friend Lord Patten in his speech on Sunday, in which he said that the suggestion that a possible solution to the current crisis in confidence in the media today, which seems to be present as well in your Lordships’ House, would be a form of the Hippocratic oath,
“a watermark to distinguish proper, ethical journalism from the mass of intrusive and unregulated material”.
Airports: Heathrow
(13 years, 1 month ago)
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Lord Glentoran
To ask Her Majesty’s Government, in the light of the possible sale of British Midland International, what they are doing to protect Heathrow landing slots for flights to and from Northern Ireland.
Earl Attlee
My Lords, the allocation of take-off and landing slots at Heathrow is governed by EU law. We recognise the economic importance of air services from the devolved Administrations to Heathrow. However, airlines face competitive pressure to use their slots for the most commercially viable routes. Ultimately, decisions about which air services operate between UK airports are commercial ones for airlines to determine.
Lord Glentoran
My Lords, I thank the Minister for his reply. The background to this Question is that BMI is being sold. It is vital for the Northern Ireland economy to have a regular professional service from Heathrow to Belfast. Does not the Minister agree that the fortunes of a part of the United Kingdom should not be in the hands of an airline or its executives? What will Her Majesty’s Government do to ensure that Northern Ireland is not deprived of Heathrow landing slots, which are vital for badly needed inward investment into the Province?
Earl Attlee
My Lords, the proposals for the sale of BMI are a commercial matter for its owner, Lufthansa. There is no indication that there will be any changes to the current level of BMI services from Belfast City Airport to London Heathrow. A number of other airlines also operate services between Northern Ireland’s airports and London airports. Existing services also operate from Belfast International Airport to hub airports in northern Europe.
Lord Kilclooney
My Lords, does the Minister recall that there used to be two airlines flying from Belfast to Heathrow—British Airways and British Midland? However, British Airways withdrew that service and allocated the slots elsewhere. If it now takes over British Midland, will the Government do nothing to stop British Airways withdrawing those slots from the Belfast flight?
Earl Attlee
My Lords, at the moment we do not see a problem. However, it would be open to the Northern Ireland Assembly to apply to the Secretary of State for Transport to impose a public service obligation on an air route from Northern Ireland to London, should the Assembly feel that a case can be made which satisfies the EU regulations on PSOs. If approved, this would permit slots to be ring-fenced at a London airport. However, there is no other mechanism for the Government to intervene in the allocation of slots at Heathrow or other London airports. We do not see the need at the moment to impose a public service obligation.
Lord Kinnock
Does the Minister recognise that it is important to sustain the Heathrow slots for Northern Ireland simply because Heathrow is the most substantial hub? In the case of sustaining the economic interests of Northern Ireland, it is important that there is an absolutely dependable service from that hub into the Province. That is in the interests of the whole of the United Kingdom. Therefore, will the Minister maximise the use of public service obligations to ensure that when Lufthansa disposes of British Midland the slots will not disappear into a black hole as well?
Earl Attlee
The noble Lord is quite right in his initial analysis, with which I agree. However, at the moment we do not see a problem, and for that reason we would be unable to impose a public service obligation.
Lord Alderdice
My Lords, my noble friend may not see a problem, but will he take it from me that those of us from Northern Ireland who are users of the service do share the anxieties raised by the noble Lord about British Airways’ previous treatment of Northern Ireland? This is not just a question of the economy of a company but the economy of a part of the United Kingdom. Having slots to other airports is simply not an adequate replacement. Economy flexible flights with British Midland now cost well in excess of £500 return. It is clear that it is making a profit. Therefore, it does not seem reasonable to assume other than that the Government should take some responsibility and assist the Northern Ireland Assembly rather than simply leave this matter to the Assembly to deal with on its own.
Earl Attlee
My Lords, I hear what my noble friend says. There is a further difficulty with the public service obligation, which is that one can be imposed only if there is a difficulty with services to London as a whole, as a region. If there is a problem with services to London as a hub airport, that would not justify imposing a public service obligation, so at the moment it is difficult to have the effect that the noble Lord seeks.
Lord Davies of Oldham
My Lords, the House should have taken solace from the fact that the Minister has added to his very negative response in his first Answer by indicating that the Government can act if it proves to be necessary. Will he recognise that of course the interests of Northern Ireland are very much involved in this issue, but that it is not just Northern Ireland and Belfast? Edinburgh, too, has its anxieties about this situation. Is he aware that Willie Walsh, the egregious head of IAG, in welcoming the potential opportunities from this purchase, stated that in fact the great business opportunities, of course, lay with using these slots for long-haul aircraft, not for serving parts of the United Kingdom?
Earl Attlee
My Lords, I can definitely feel the heat from your Lordships. The sale of these slots to BA will increase the share of BA’s parent, IAG, of all Heathrow airport slots from 44 per cent to around 53 per cent, although IAG points out that even after the acquisition of BMI’s slots, its percentage of Heathrow slots would still be smaller than Lufthansa’s 60 per cent slot holding at Frankfurt.
Lord Forsyth of Drumlean
Will my noble friend give an undertaking to look at this issue more carefully? The noble Lord is perfectly correct that this is an issue not just for Northern Ireland but for Scotland, where the flights from Glasgow and Edinburgh have been greatly reduced, the fares are very substantial and it is undoubtedly the case that British Airways would use these slots for more lucrative transatlantic flights. It is no good looking at London as a whole. The point is that Heathrow is the hub from which it is possible to do business internationally.
Earl Attlee
My Lords, commercial aviation is a global business. This is reflected in the fact that airport slots in EC countries are managed within regulations that follow the worldwide slot guidelines determined by IATA. The EU slot regulations seek to ensure that non-discriminatory and transparent procedures for slot allocation exist across member states.
Immigration: Students
(13 years, 1 month ago)
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Lord Clement-Jones
To ask Her Majesty’s Government what evaluation they have made of the impact of the new student visa rules on the intake of overseas students in United Kingdom universities for the academic year 2011–12.
The Minister of State, Home Office (Lord Henley)
My Lords, the Government’s impact assessment concludes that the student visa reforms will have no impact on the number of visas issued to international students to attend UK universities either in the academic year 2011-12 or in subsequent years.
Lord Clement-Jones
My Lords, that shows that the impact assessment must be flawed. The early indications are that they are being heavily impacted, particularly from India, where the number of students is 20 per cent to 50 per cent down, as a result probably of the withdrawal of the post-study work route visa. Will the Government reconsider their policy before treating students as economic migrants and irreparable damage is done both to the finances and the reputation of UK universities?
Lord Henley
My Lords, I do not accept what my noble friend had to say, and I would refer him to the comments made by Universities UK about the reforms, saying that they will allow British universities to remain at the forefront of international student recruitment. I also refer my noble friend to the latest figures for non-EU university student applications for the 2012 academic year which are mostly for medical, dentistry, veterinary and Oxbridge courses, and those show an 8.8 per cent rise.
Baroness Prashar
My Lords, does the Minister agree that the Government should introduce a transitional measure for those students already in the UK whose colleges closed either as a result of action taken by the UK Border Agency or because many private and public sector providers voluntarily relinquished their licence because the system became too burdensome? It is estimated that there are some 5,000 internal students with no course, no sponsor and the majority have lost their fees. Would it not be more humane and less damaging for the reputation of the UK if those already here could retain their current visas and work entitlements while moving to an alternative sponsor? This would avoid students, particularly those from poor countries, staying here illegally.
Lord Henley
My Lords, we want to make sure that we continue to have high-quality students coming to the UK, and that is why I am very grateful for the support of Universities UK for the reforms that we are proposing. What we do not want are bogus students coming over for what might be called rather dubious or possibly non-existent institutions. As I have made clear, what we have done certainly has the support of Universities UK and will benefit universities in the UK, although it might not benefit what I would describe as the somewhat dubious institutions that have been acting in this field. We want to clamp down on the abuses of the immigration system that have crept in here.
The Lord Bishop of Norwich
My Lords, theological and bible colleges are generally small institutions but highly cross-cultural in character because of their international students. The chances of these international students abusing their immigration status seems tiny, yet these institutions have to go through the same procedures as large universities at a very high and unsustainable per capita cost. Can the Minister suggest how we might have a size-sensitive system which prevents these institutions operating with no international students at all?
Lord Henley
My Lords, I would hope, as I think would the whole House, that most theological colleges are reputable institutions. However, if some of them are facing problems because of their size, I will take away the right reverend Prelate’s point and have a look at it. As I said, we want to make sure that we get the right students into the right institutions but get rid of the abuse that has crept into the system.
Lord Turnberg
My Lords, is the noble Lord aware of the particular problems faced by overseas medical students? There are more than 3,000 of them in the UK at the moment and they have problems when they want to bring a spouse or children here. That is to say nothing of the fact that we have included these 3,000 in the calculation of the number of doctors that we are likely to need. Is this not counterproductive?
Lord Henley
My Lords, we have tightened up on dependants coming in, but only dependants wishing to study for first degrees. Dependants will still be able to come in for postgraduate courses. I will look at the point that the noble Lord makes in relation to medical students but I am not aware of a fall in the number of medical applications. As I said in answer to the first supplementary question, we seem to have seen a rise over the past year.
Baroness Brinton
The UK Border Agency has recently decided that it will no longer accept guarantees from UK higher education institutions for UK-based packages, including part-time work and bursaries. We do not understand the reason for this. Can the Minister explain why the rules have changed, especially given the soundness of most universities in this country?
Lord Henley
My Lords, we accept that most of our universities are proper, reputable institutions, and that is why we have given universities additional flexibility in some matters. However, I will look at the specific point that my noble friend has raised. In the main, UK universities are fine on this; the abuse occurs elsewhere.
Lord Hunt of Kings Heath
My Lords, the new student visa rules have placed a further responsibility on the UK Border Agency at the same time as it has received a 20 per cent cut in its budget for a four-year period. Is the noble Lord confident that the UKBA has the resources to do the job that it has been given?
Lord Henley
My Lords, yet again the noble Lord seems to be denying the need to make cuts as a result of the profligacy of the party opposite. Yes, we are confident that the UKBA has, and will continue to have, sufficient resources to deal with the job that it has. No doubt I shall be dealing with these matters later when the noble Lord raises a somewhat spurious amendment to the terrorism Bill.
Lord Naseby
Is it not enormously welcome that Her Majesty’s Government have taken action to close these bogus colleges, which defrauded young students and were useless so far as the UK was concerned? Perhaps I may suggest to my noble friend that he contacts the high commissioners for the genuine Indian sub-continent students to see whether over the next year we can help those genuine students to come here.
Lord Henley
I thank my noble friend for that contribution. I remind him that, as a result of this measure, we will see a reduction in net migration numbers of some 60,000 a year. We are committed to this and will want to go further in due course.
Iran
(13 years, 1 month ago)
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The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, this report from the International Atomic Energy Agency clearly indicates that Iran has worked on developing nuclear weapons and that some of this work is continuing. We support the production of this report by the agency and call on Iran to take the necessary steps to assure the international community that it is not pursuing a military nuclear programme. We will be pressing for strong action when the agency’s board of governors meets later this week.
Lord Luce
My Lords, since, as the Minister indicated, there is growingly credible evidence that Iran is developing a capability to introduce and develop nuclear devices, and against the background of a dangerously volatile region in the Middle East, would the Minister agree that we should work extremely hard to persuade China, Russia, Israel, the Arab nations—all of us, in all our interest—to work in a concerted fashion to introduce tougher international sanctions that hurt Iran, but keeping literally as a last resort the possibility of military measures?
Lord Howell of Guildford
Yes, I would certainly agree. We are all—and “all” means the entire planet—threatened by nuclear proliferation and the flouting of the proliferation regime which Iran has constantly demonstrated. The noble Lord is absolutely right that although we have an unprecedented degree of sanctions, and are thinking of more sanctions and more targeted sanctions, as long as China tends to be undermining these—and, to some extent, Russia as well—those sanctions are obviously weakened in their effect. So, he is right that we all have to work together to halt a threat that is really to the entire pattern of humanity.
Lord Alton of Liverpool
My Lords, in considering the kind of sanctions that might be imposed on Iran, will the Minister say whether that will include surveillance technology—the sort which has been sold to Iran by the British company Creativity Software, and which has been used in the past against democracy activists and human rights campaigners, leading to their systematic torture? What pride does it bring to this nation that we have been selling such technology to Iran?
Lord Howell of Guildford
We are discouraging every kind of trade and business with Iran, not only those covered by sanctions but also investment by oil companies, for instance, and a whole range of others as well. The specific product that the noble Lord mentioned is one that I will certainly examine, but my overall understanding is that we are discouraging in every possible way all areas of trade with Iran, over and beyond both the EU and the US sanctions.
Baroness Falkner of Margravine
My Lords, does my noble friend agree that, alongside the 3+3 talks, it would be very useful for the UK to advocate re-examining the Turkey-Brazil option which was on the table some months ago in order to keep open the door for future negotiations? Does he accept that unilateral military action by any state in a pre-emptive fashion would be deeply dangerous to the region as it stands today?
Lord Howell of Guildford
My Lords, I certainly accept the second point. On the first point about the Turkey-Brazil initiative, that was an interesting initiative but it did not actually deal with the major problem, which we have here, of proliferation. It was focused, as my noble friend knows, on the enrichment processes and the obtaining of enriched uranium which might be necessary for weapons-grade purposes. So, without saying that the Turkey-Brazil initiative was the answer, we certainly recognise that it might be part of the answer in the future.
Lord Triesman
My Lords, by an ironic twist of fate I now get to ask the noble Lord the very question that he asked me some short while ago. After I repeated the FCO brief on that occasion I tried to have an exchange that was of more use to the House. If there are to be further sanctions that are capable of having an impact on Iran’s trajectory, what is the Government’s view on the sort of sanctions they should be, the prospects for succeeding in achieving them at the UN, and the timeframe?
Lord Howell of Guildford
I hope that I can give as good an answer as the noble Lord did when I asked him the question. It might be even better. We are going to press for further sanctions but one has to be realistic, as I indicated in answering the noble Lord, Lord Luce. If the sanctions are undermined by trading activity and the import of products from China and other countries then they are bound to be limited in effect. However, we believe that sanctions of a financial kind can be tightened still further to make it ever harder for the mullahs and the Iranian Government to get the revenues for some of their oil and oil products. We also believe that more targeted sanctions can be developed and various loopholes can be closed. All these things can be done and probably will be done. However, the bigger issue is how the world unites as a whole to put pressure on the regime to cease to flout the non-proliferation regime and the rulings and the resolutions—six of them—of the UN Security Council.
Lord West of Spithead
My Lords, the elephant in the room seems to be the use of military force, as has been mentioned, though I quite understand why that has been left on the table. However, does the Minister agree that if you make a threat you have to have the willingness to carry it out? It seems to me that we are sleepwalking towards a situation where we may well find ourselves as a nation involved in military action the full implications of which we have not thought through. Does the Minister believe that that is a real risk?
Lord Howell of Guildford
The risks are there on all sides. The noble Lord says that we have not thought through the implications but one can think them through all too clearly. One has only to speculate for a moment on what would happen if Iran were to mine or threaten to mine the Straits of Hormuz: it would double the oil price straightaway. That is a major danger and there are many others as well. The implications have been thought through. As the noble Lord recognises, however, the message from Iran is that all options remain on the table. Meanwhile we concentrate on negotiations and ever tighter sanctions and we hope to achieve an effective outcome. However, the reality must be presented to Iran: the options, of all kinds, are on the table.
Bank of Ireland (UK) plc Bill
Statistics and Registration Service Act 2007 (Disclosure of Pupil Information by Welsh Ministers) Regulations 2011
(13 years, 1 month ago)
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Lord Wallace of Saltaire
That the draft regulations laid before the House on 19 July and 15 September be approved.
Relevant documents: 28th and 29th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 9 November.
Terrorism Prevention and Investigation Measures Bill
(13 years, 1 month ago)
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16:14 - Division on Amendment 1 - Ayes: 79 / Noes: 273 - Amendment 1 disagreed.
19:02 - Division on Amendment 53 - Ayes: 165 / Noes: 168 - Amendment 53 disagreed.
Lord Lloyd of Berwick
Lord Lloyd of Berwick
My Lords, we are all agreed that the measures which can be imposed by the Home Secretary under Clause 2 could place serious intrusions on personal freedom. On the second day in Committee the noble Lord, Lord Rosser, referred to the “profound impact” on the liberty of the individual of these exceptional measures. He was right. He might perhaps have added that these restrictions are by no means temporary. Of the 12 individuals currently subject to control orders, one is already in his fifth year of being subject to a control order and four have already been subject to control orders for between two and four years. It is my case that restrictions of that severity should not be imposed by the Home Secretary—more particularly when the individuals concerned have not been charged with or convicted of any offence—and it is right and proper that they should be imposed by the courts. That is the purpose of the first amendment. There are a number of subsequent amendments dealing with the same point, but this debate will turn on the first amendment, and the position is very simple.
The amendment has already received strong support from the Joint Committee on Human Rights. That report came too late to be considered in Committee by the noble Lord, Lord Henley, as fully as he would have wished. As the report presumably contains the Government’s best case for leaving Clause 2 as it stands, I shall deal with it in some detail. In their original response to the concerns of the Joint Committee on Human Rights, the Government relied upon,
“a well-established principle across our legal system of imposing”,
preventive restrictions,
“to protect the public from criminal behaviour”.
They cited numerous examples of such preventive orders: serious crime prevention orders, anti-social behaviour orders, risk of sexual harm orders and many others of the same kind. In every one of those instances, the order is made by the court, as it should be, and not by the Executive. That particular principle, although certainly well established, does not help the Government in any way in relation to Clause 2 and this amendment; indeed, it favours the amendment because it illustrates the way in which preventive orders are habitually made.
In their more recent response, the Government rely upon a different well established principle, that in national security cases it is the Home Secretary who makes the decision and not the court. What is the evidence of this other, and more restricted, principle? With one exception, which I will of course come to, the only example given by the Government in their response was the power of the Home Secretary to deport individuals on national security grounds. That was the power to which the noble Lord, Lord Carlile, referred in Committee. I am sorry not to see him in his place today. When I asked him whether he would accept that there is a distinction between deporting foreigners and deporting British citizens, he described the distinction I was seeking to make as “casuistic”, so I feel I had better make that distinction good.
The power to deport is contained in Section 3(5) of the Immigration Act 1971, an old and very familiar provision. It specifically excludes deportation of British subjects. One might ask: how could the Home Secretary claim the power to deport British subjects? Where would she deport them to? The same applies to the other example given by the noble Lord, Lord Carlile, that the Home Secretary has the power of deprivation of citizenship. That power, which is contained in Section 20 of the British Nationality Act 1948, applies only to those who have obtained British citizenship by fraud and other similar such cases. It has never applied—and could never have applied—to British citizens by birth. Therefore, we can forget about deportation orders and deprivation of citizenship orders made by the Home Secretary as being a valid precedent. I am somewhat surprised that that was even mentioned in the recent government response to the Joint Committee on Human Rights. That perhaps shows the extent to which the Government have had to scrape the barrel to find any precedent at all for Clause 2 of the Bill.
Lord Phillips of Sudbury
I am sorry that I did not give the noble and learned Lord leave of this question. I am entirely in sympathy with what he said in moving the amendment, but can he tell the House what happens if, as his amendment says, the court rather than the Secretary of State may,
“impose specified terrorism prevention and investigation measures”,
and if the court has to consider whether conditions A to C are met? Condition A reads that,
“the Secretary of State reasonably believes that the individual is, or has been, involved in terrorism-related activity”.
Does that then mean that the court has to make the order, but it has to consider whether the Secretary of State reasonably believes—or should there ideally be a removal of “Secretary of State” in Clause 3(1) and replacement by “the court”? I hope that I have made myself reasonably clear.
Lord Lloyd of Berwick
The noble Lord has been very clear. I fully understand—and that is exactly what is provided in a subsequent amendment. I think that it is Amendment 3. You have to read Amendment 1 with an amendment that strikes out the words,
“the Secretary of State reasonably believes”,
in Clause 3(1). So it does tie up.
Lord Goodhart
My Lords, I have supported the statements of the noble and learned Lord, Lord Lloyd of Berwick, at Second Reading and in Committee. I will take the same position yet again on Report.
I agree that terrorism is a great threat to the United Kingdom and that steps must be taken to prevent it. I agree that those steps may include civil penalties that restrict the activities of those who are probably involved in terrorism. But there are conditions that should be applied to those requirements and included in this Bill. The most important of those conditions is that the rule of law must be applied and observed. A fundamental rule of the rule of law is that penalties must be imposed only by people who are independent—either judges or, in the case of serious criminal proceedings, by a jury. In particular, the prosecutor should not also be the judge. Under this Bill, that is exactly what happens. The Secretary of State is both the prosecutor and the judge. That is doubly objectionable, not only because the Secretary of State imposes the penalty but because the defendant cannot give his own story in defence of the prosecution being brought against him.
It is true that under Clause 6 the court must give permission to the Secretary of State to impose measures that she has decided to apply. But as is stated by Clause 6(6), the court is applying a judicial review, which is not the same thing as a trial of the evidence. This means that the court cannot, in effect, question evidence supplied by the Secretary of State; it must refuse permission to impose the measures that the Secretary of State proposes, if, as is said in Clause 6(3),
“relevant decisions of the Secretary of State are obviously flawed”.
But what on earth does that mean? To whom must the flaw be obvious? I question the whole concept of something being obviously flawed, when more than one person may well be applied to in deciding whether the flaw is obvious or not. As I said, to whom must the flaw be obvious? Can counsel for a defendant argue that the flaws are obvious? I think probably not but one does not know. The fact is that the court has only a limited power over the imposition proposed by the Secretary of State. It is pretty clear that the court has no power to examine the facts of the case as presented by the Secretary of State.
This simply does not satisfy the rule of law. The rule of law is not wholly inflexible. We accept that, in certain circumstances, it is necessary in the interest of the nation to exclude relevant evidence from the presence of the defendant. But there is no justification for denying the court the right to consider the adequacy of that evidence. If it deals with this matter simply by a review process, that cannot happen.
I refer again to the report of the Joint Committee on Human Rights, published on 19 October. Paragraph 1.6 of the report, which I quoted in Committee on that date, states that,
“the well-established principle is that executive restrictions on liberty are such a radical departure from our common law tradition that they always require prior judicial authorisation after proper legal process. It is for the Government to justify this Bill’s departure from that fundamental principle”.
That is a statement with which I entirely agree and which I think those who were responsible for drafting this Bill should have taken into account. It does nothing to prevent procedures being taken up against the person who is understood to be involved in terrorism. It does not make the matter seriously more difficult for the Government. I do not think it does at all. The Secretary of State will clearly have come to a view that this person is liable to be prosecuted and made the subject of an order. I believe it is really a matter for the Secretary of State not to impose the measure herself but to present the evidence that she has to the member of the court who is in charge of this. It is for the member, or the members of the court, to take this up.
I will add one reason which might actually encourage the Government to accept the amendments. Having the judgment made by the court on the basis of an application by the Secretary of State—if the judgment is actually made by the court in all respects—would make the situation simpler or cheaper. In particular, since the court would not need to give itself permission to make the order which it wishes to make, the need for a directions hearing under Clause 8 would simply disappear. It would not only be a more justified and proper treatment of the evidence, it would also make it a simpler system for the Government.
Baroness Hayman
My Lords, I have added my name to these amendments and, given the speeches of the noble and learned Lord, Lord Lloyd of Berwick, and the noble Lord, Lord Goodhart, I can be relatively brief. I certainly will not challenge them in terms of legal expertise, having ended my legal career with a first degree in 1969, but I feel strongly on this issue because of my own experience as a parliamentarian. I had the honour to be a member of the Privy Council committee chaired by the noble Lord, Lord Newton of Braintree, who I am glad to see in his place, which reviewed the provisions of the Anti-terrorism, Crime and Security Act 2001, particularly Part 4 of that Act, which was considered by us and by many others to be unsatisfactory. The Government paid little heed to the results of that committee’s deliberations until the courts made them do so. We ended up with the 2005 Act, in which I played some part on the duration of control orders, an issue to which we will return, mutatis mutandis, later in today’s Report stage.
I came out of that experience, particularly the experience of the Privy Council review committee, with two clear views. One was that there was a problem that needed to be addressed and that there was some justification for going beyond the normal criminal legal procedures in terms of the threat of terrorism. Some of that was in terms of creating new offences—we saw the offence of “acts preparatory to terrorism” that came out of that review, which I believe has been helpful—but even that was not enough and there was the need, as I think the noble Lord, Lord Goodhart, has just said, for measures that were extraordinary. I do not need convincing on that score.
The other thing that became clear to me was that we should, as legislators, try to make those extraordinary measures deviate as little as humanly possible from the fundamental principles that we normally apply, through the criminal justice system and the whole of our legal processes, to the deprivation of liberty and to constraints upon movement and actions—the fundamental human rights of those living within our country, particularly our citizens. I look at the provisions of the Bill, which I believe are an improvement on control orders—limited but an improvement—and ask myself whether we are deviating as little as humanly possible.
I believe there would be a great improvement, without a balanced increase in risk to security, if we transferred that initial decision on the imposition of such measures from the Secretary of State—the Home Secretary—to the courts. That is the fundamental and simple reason why I support these measures. I was emboldened to do so partly because of the comments made by the chairman of the Privy Council committee, the noble Lord, Lord Newton of Braintree, as I always pay great respect to those who have been my chairs on committees. Perhaps we will hear from him later. However, I remember that, when we were discussing the 2005 Act and talking about analogous issues and the role of the judiciary, one of my colleagues who was not in sympathy with the position that I was taking turned on me and asked, “What’s so special about the judges?”, to which I replied, “They’re not the politicians”. That fundamentally remains my position today, and it is why I added my name and give my support to this group of amendments.
Lord Newton of Braintree
My Lords, on this occasion I have not actually been tempted. I had hoped to come in anyway, although I was a little late getting here, and I apologise for that. I would like to say to the noble Baroness, Lady Hayman, that I much appreciate the remarks she has just made. I well remember the experience we had together and the hugely valuable contribution that she made to that committee. I can also say that I share her views on absolutely everything that she has said, so I will not speak at great length. I agree also with what I have heard since I came into the Chamber. The Minister ought to know—if he was in any doubt—that there was not complete unanimity on this point on the Benches immediately behind him, even though the voices so far have come from elsewhere.
The arguments adduced on the previous occasion in Committee to which the noble Baroness has referred were, frankly, unbelievably thin. I do not blame the Minister for that—I suspect that they are inherently thin, and unless they are a lot thicker this evening then I will find myself in some difficulty, and he needs to know that.
Lord Macdonald of River Glaven
My Lords, I support these amendments. I declare an interest as the independent reviewer of the counterterrorism review. I should also like to pay tribute to the noble and learned Lord, Lord Lloyd, for the many hours that he has devoted to these issues over the years.
Why should it be the court rather than the Home Secretary? In my brief analysis, there are four reasons. First, on any analysis, the measures in this Bill are an exception to our normal rule-of-law principles for reasons set out very clearly by my noble friend Lord Goodhart. Secondly, they constitute a very serious potential stigmatisation of those subjected to them: a declaration of belief on the part of the state that the individual is involved in acts of terrorism. In my estimation it can hardly get much worse. Of course, the orders are anonymised, but family, friends and no doubt, the wider community, quickly become aware of the fact. Thirdly, our courts are very well used to adjudicating issues of national security, and they do it time and time again—for example, every time a question of public interest immunity arises, and in many other situations too. I am not aware of any credible argument that they do so incompetently. They may of course embarrass the Government and one or more of the agencies from time to time, but that is an entirely different point. Fourthly, and finally, our courts are independent, and they therefore bring the vigour of their independence to their decision making. In this area, that becomes a question of important public confidence.
My analysis is that it is the exceptionality of these measures, their severity, and the damage that they may do to their subject—who after all has heard no more than the gist of the case against him, quite exceptionally—that demands that they should be orders of the court rather than punitive and potentially damning directions of the Home Secretary.
Lord Pannick
I, too, support the noble and learned Lord, Lord Lloyd of Berwick, on Amendment 1, and his proposal that the imposition of a TPIM should be a judicial and not an administrative act. If restrictions of this nature on basic liberty are to be imposed, they are to be imposed on British citizens, and imposed entirely outside the criminal law process. Surely it is necessary for the procedure to require that they be imposed by judges, particularly when they are being imposed by reason of serious allegations of wrongdoing on the part of the individuals concerned?
The Minister said at Second Reading—and I reminded your Lordships in Committee—that the Government’s approach to this Bill was to try to balance civil liberties and security by ensuring that the Bill goes,
“no further than is absolutely necessary”—[Official Report, 5/10/11; col. 1137.]
in limiting people’s rights. Those were his words. Surely that test, that criterion—which must be the right criterion—requires that these restrictions be imposed only with judicial approval. If the security services, with all the information available to them, are unable to persuade a High Court judge in a closed session, where the material is not disclosed to the individual concerned, that the restrictions are needed, the restrictions should not be imposed at all.
If the Revenue requires a court order before it is able to raid a person’s house in order to seize his documents, surely the Home Secretary should require a court order before she can require that same individual to remain in his house overnight, or not to contact other specified persons, or before she can impose any of the other specific restrictions under a TPIM order.
Your Lordships should have no doubt that for these orders to be imposed by a judge on application by the Home Secretary, and not to be imposed administratively by the Home Secretary herself, would substantially increase confidence in these orders in those sections of the community most suspicious of them.
The Archbishop of York
My Lords, this clause gives the Home Secretary power to impose measures for terrorism prevention—so in many ways she is acting like a judge—and investigation, so she is behaving like the DPP. That is not right. You cannot combine functions that belong to the courts and the Director of Public Prosecutions into one person. That is always going to be problematic.
In this country, one of the greatest joys is that no one is deprived of their liberty unless they have committed an offence defined in law, been investigated and gone before a court, which in the end imposes the deprivation of liberty. Of course, you tell me, “This is the United Kingdom; the Home Secretary could never be near this”. In Uganda, if the President felt that you were committing treason, he made an order and you found yourself arrested, locked up and deprived of the possibility of any defence. Of course, you would say, “That is terrible; it should not be like that”. Friends, it happened to me.
Therefore, I feel where you are going at the moment, if you are going to deprive and impose specific measures on a person, surely it should be by application to the courts, and it would be the duty of the Home Secretary to present evidence that persuades a judge. Of course, we will be told that the Home Secretary will act very quickly. As the noble Lord, Lord Goodhart, and the noble and learned Lord, Lord Lloyd of Berwick, said, it can be done ex parte, very quickly; there is no reason that cannot happen. For the sake of those of us who came to enjoy the separation of the Executive from the judiciary and still see it as the greatest defence for the liberties of people, I hope that the Government will accept that this will be an improvement to the Bill if this separation is made.
There should be no doctrinaire stuff about it. In the end, it cannot really be the same person who does all this. Thank God, I will never be Home Secretary. If I were, I would find this clause terrifying, because in my conscience I would not want to be the judge, jury and executioner all in the same place—and the DPP as well, all combined into one. For the sake, therefore, of keeping this fantastic balance of the Executive and the judiciary never meddling with one another, this legislature would do well to accept all of the amendments that have been tabled by the noble and learned Lord, Lord Lloyd of Berwick. This is what I rejoice about in this country—its liberty and its separation of powers.
Baroness Kennedy of The Shaws
My Lords, I, too, support this amendment. I want to thank the most reverend Primate for his remarks. It would be very easy for this to become a debate in which lawyers hold the floor, but it should not be, because this is so fundamental to who we are and what our system is here in Britain. We are talking about the rule of law and about liberty and the protections we provide for it.
I wanted to pick up what my noble friend Lady Hayman said when she answered the question: what is so special about judges? Her answer was that they are not politicians. It is more than that. Our judiciary is independent. We spend time—I certainly do—speaking to lawyers and judges in other jurisdictions about what the meaning of an independent judiciary really is, and how it protects our politics. As the most reverend Primate has said, it is a protection for the politicians and for our polity that we hand over issues to do with something as precious as liberty to judges—even in these exceptional circumstances—because that way we are adding weight to the importance of liberty’s meaning in all of our lives.
Lord Phillips of Sudbury
My Lords, I support strongly the last point made by the noble Lord, Lord Pannick, which has been indirectly referred to by the noble Baronesses, Lady Kennedy and Lady Hayman, and by the noble Lord, Lord Macdonald of River Glaven. I hope that my noble friend will take full account of the political importance of this group of amendments. The psychology of extremism feeds on a sense of unfairness and oppression. The law as it stands, and indeed as it is improved in the Bill, will inadvertently provide to those who already feel hard done by, or the subject of extreme unfairness, a spur to yet further, potentially terrorist, activities. That will be the case if an important decision of this nature— which has, as other noble Lords have said, extreme repercussions—is not the decision of an independent judge but that of a politician. However good the politician is, the person who may be converted to extremism will view that politician as an agent of politics and not as an agent of justice. For that reason, among many others, I urge my noble friend to adopt these amendments.
Lord Condon
My Lords, I, too, support the amendment proposed by the noble and learned Lord, Lord Lloyd, on the grounds that have already been spoken of, but also on the very pragmatic grounds that, every time we as a country step beyond the normal bounds of the rule of law, or contemplate extra-judicial measures, or contemplate allowing the Executive to have powers in this area, we risk alienating young men and women who may be wavering around, or contemplating being drawn into, terrorism. We create war stories and martyrdom. Even though these are small in number, they can be used to recruit vulnerable young people into supporting or contemplating terrorism.
History tells us that every time Governments—here or abroad—have contemplated extra-judicial executive powers, in the long term those powers have tended to work against us. I understand the reasons why Governments want to maintain public confidence by being and appearing to be very tough on terrorism, and the pragmatism of police forces and intelligence services which want the widest battery of powers to be available to them immediately as they contemplate their response to terrorism. However, I fear that this power and others that I have previously spoken against in your Lordships’ House could be counterproductive in the long-term fight against terrorism. That is why I support the amendment that we are considering today.
Baroness Hamwee
My Lords, the noble Lord, Lord Newton of Braintree, warned the Minister that those directly behind him were not unanimously supportive of the Government’s position. I have previously warned the Minister that those at a bit of an angle to him are, similarly, not wholly with him.
I wish I had used the example given by the noble Baroness, Lady Hayman, when I recently brought some young cousins into the Chamber and attempted to explain the separation of powers. That is exactly what this is about. Recently the Government have sometimes responded to judgments of the courts as though the courts sought to usurp policy-making powers. They are not the first Government to do so. That very response demonstrates the importance of the role of the courts, and the need to demonstrate our integrity as a country for the reasons that the noble Lord, Lord Condon, has just explained.
Lord Faulks
My Lords, I have enormous respect for the noble and learned Lord, Lord Lloyd of Berwick, for his experience and the consistency of his approach to this issue. I also acknowledge how delicate the situation is, how important the liberty of the individual is and that any powers of this nature ought to be hedged by a great many safeguards. However, a decision of this nature is one that falls to the Home Secretary to take. So far, the judges who have these powers have exercised the right to scrutinise thoroughly in a way that we cannot feel is short of what might be desired. I respectfully submit that it is a power that should belong to the Home Secretary, who makes these decisions, no doubt with great anxiety and the consciousness that any decision that she makes will be looked at very carefully.
A judge will have an opportunity to look at a particular case on an ad hoc basis. However, we should not underestimate the strategic role of the Home Secretary to see an act or potential act of terrorism, or a terrorist, in the wider scope. Notwithstanding all the powerful speeches that have been made, I respectfully submit that this is a question that belongs to the Home Secretary and her alone.
Lord Rosser
My Lords, we do not feel moved to change our stance on the procedure that is associated with control orders. Therefore, we have a fundamental difference of view with those who have tabled the amendments that we are discussing and, indeed, with all noble Lords bar one who have so far spoken in this debate. The security of our citizens—protecting them from the risk of terrorism of the exceptional kind that we have seen and been under threat from in recent years—is the responsibility of an elected Government through the Home Secretary. It should be a matter for the Home Secretary, who is accountable to Parliament and the electorate, and not the courts, to make an executive decision on whether a TPIM and its associated conditions are needed if she or he reasonably believes, based on the intelligence available, that an individual is involved in terrorist activity that places the security of our citizens at risk. For that reason, we are not able to support these amendments.
Lord Henley
My Lords, I thank the noble Lord, Lord Rosser, for those remarks, just as I thank my noble friend Lord Faulks for his remarks. I believe that we are not alone in objecting to the amendments put forward so ably by the noble and learned Lord, Lord Lloyd, for whom I have the utmost respect. We have been debating matters of this sort, sometimes on the same side, sometimes on different sides, for many years. I acknowledge his expertise, but I have to say that I do not agree with the gist behind this large group of amendments that he has tabled with support from my noble friend Lord Goodhart, the noble Baroness, Lady Hayman, and others.
Put simply, the key change under these amendments would be that TPIM notices would be imposed by a judge rather than by the Secretary of State. We have heard a great many legal arguments put forward by a great many extraordinary and eminent noble Lords—some learned, some not learned, but many are more learned than even the most learned of learned Lords. If we can take an Occam’s razor to this point, the question is: do we think that this it right for the Home Secretary to make this decision or should it be a matter for the courts? It is as simple as that.
It is no secret that the Government take a different approach to that proposed by the noble and learned Lord and other noble Lords, be they learned or not. It is no secret that we take a different approach from that recommended by the Joint Committee on Human Rights and others who have spoken in this debate. These are matters that we have debated in the House during the Bill’s passage and to which the Government have responded, in full, to the Joint Committee on Human Rights, including their response to the report of 19 October issued earlier this month.
The arguments are well rehearsed. I appreciate that noble Lords have again set out their views that such restrictions that may be imposed under this Bill—and which I emphasise are preventive, not necessarily punitive—should only ever be imposed by a judge. It is a respectful and principled decision. It has consistently been held by some in this House in relation to control orders in the past and now to TPIMs, but we cannot agree with it. We do not accept, as the noble and learned Lord, Lord Lloyd, would put it, that it is unprecedented for decisions of this sort, based on national security cases or on sensitive material, to be taken by the Executive. As he is aware, there are a number of occasions when executive decisions are made by the Home Secretary and others.
The noble and learned Lord was wrong to suggest that deprivation of British citizenship applies only to citizenship obtained by fraud. It can also be used on grounds of being conducive to the public good if the citizen is of dual nationality, which the noble and learned Lord did not mention in his response. He did mention that it can also be used under asset freezing, under the Terrorist Asset-Freezing etc. Act 2010. Again I appreciate that the noble and learned Lord did not accept that Bill, but it is now an Act. It can be used on financial restrictions under the Counter-Terrorism Act 2008. It can also be used—and has been very recently—regarding decisions to proscribe organisations that the Home Secretary believes are involved in terrorism. It is a well established principle that it is the relevant Secretary of State who can take such decisions in, for example, cases of asset freezing and others such as immigration cases with a national security dimension, with subsequent judicial oversight. That is the important point to remember. My right honourable friend the Home Secretary will make that decision. She is the right person to make it, but it will be reviewed by the courts in due course. I give way to the noble and learned Lord.
Lord Lloyd of Berwick
Does the noble Lord accept that the only precedents on which he relies, other than the very recent terrorist asset-freezing legislation, are immigration decisions which have nothing whatever to do with what is before us? They deal basically with foreigners, not with British-born subjects.
Lord Henley
It is still a matter of national security. That is why we believe that it is for the Home Secretary to make the appropriate decision and for that to be reviewed by the courts. The noble and learned Lord mentioned the 2010 Act, with which he did not agree and which he opposed. I mentioned that but I also mentioned the Counter-Terrorism Act 2008 and the financial restrictions under that. That is another example. I accept that the other matters concern immigration decisions but they are important. I also mentioned the fact that the Home Secretary has the power to proscribe organisations which she believes are involved in terrorism. Again, that matter can be reviewed by the courts, as can the one we are discussing. Therefore, it is irrelevant whether the earlier matters concerned only immigration, as the noble and learned Lord put it. These matters go beyond that. They involve national security. I will give way to the noble Baroness in a minute when I have finished this point. Therefore, I think it is right that my right honourable friend the Home Secretary should be involved in those decisions.
Baroness Hayman
I am grateful to the Minister for giving way. Until I listened to the speech of the noble and learned Lord, Lord Lloyd of Berwick, I had not been aware of the argument put forward by the noble Lord, Lord Sassoon, as regards the executive nature of the terrorist freezing orders to be made, that there was a distinction and that these were justifiable because they dealt with financial matters, not individual liberties. Will he comment on that argument?
Lord Henley
The noble Baroness is right to mention what my noble friend Lord Sassoon said on that occasion. He drew a distinction between financial matters—that is, property—and individual liberties. However, both are matters that affect one’s human rights. Despite the noble Baroness’s socialist background —I am sorry if I make her laugh—I presume she would accept that the rights to property are matters which involve one’s human rights, just as the rights to liberty do. My noble friend Lord Sassoon drew the distinction that both of them are matters relating to one’s human rights.
Baroness Hayman
I would not wish the noble Lord, Lord Sassoon, to be tarred with the brush of having a socialist background because he seemed to distinguish between the two sorts of intrusions on individual liberty.
Lord Henley
There is obviously a distinction but both involve one’s human rights. That is the importance. The noble Baroness may have noticed that when my noble friend Lord Sassoon noticed on the television that the noble and learned Lord was making these points, he came in to have a quick word with me to make clear what he had discussed, and I will try to convey those feelings to the House. I hope that I have understood what my noble friend whispered to me on the Front Bench, and I hope that the noble Baroness will accept it.
As we also made clear, we believe that it is not just the view of the Executive that is crucial in these matters. That is why I quoted earlier the view expressed by the courts. It is consistent with the view expressed by the Court of Appeal in the case of MB, which the noble and learned Lord also referred to, in which the court said that,
“the Secretary of State is better placed than the court to decide the measures that are necessary to protect the public against the activities of a terrorist suspect”.
In the same judgment the Court of Appeal also noted that the principle that the courts should pay deference to the Executive on matters relating to state security has long been recognised by the courts in this country, including the Law Lords, and by the European Court of Human Rights.
As I said at the beginning of my speech—in asking, as it were, for something approaching an Occam’s razor to be put to this argument—it is just getting it down to the simple question: which do you think is the appropriate body to make this decision?
Lord Henley
I am not going to give way until I finish this point, and then I will give way to the noble Lord.
We believe that it is for the Home Secretary to make the decision, and for this decision to be subsequently reviewed, because the Home Secretary is a politician who is answerable to Parliament. I appreciate that some will knock the role of politicians but I would remind noble Lords of the very powerful speech made by the noble Lord, Lord Reid, at Second Reading, where he reminded us that most of our freedoms are the result of politicians and their acts, and not of the courts. The Home Secretary, as a politician answerable to Parliament, will make that decision and that decision will then be reviewed by the courts in due course. It is that very simple decision that we want to make. Should it be the Home Secretary or should it be the courts? We believe that it should be the Home Secretary. I will now give way to the noble Lord.
Lord Pannick
I am grateful to the noble Lord. I am puzzled by why he thinks that judicial control at the outset would undermine ministerial responsibility when he accepts that there should be judicial review on a merits approach at a later stage if the order is challenged. Why is the latter equally not an undermining of ministerial responsibility?
Lord Henley
Because my right honourable friend is responsible for security and, as I said, she is answerable to Parliament. We believe that she should make that initial decision and that later on it can be looked at by the courts. However, we think it right and proper that she should make it. That is the reason why, as I said, I am trying to strip this amendment down to its simplest point: do you want the decision made by my right honourable friend the Home Secretary or do you want it made by the courts? We believe it right that it should be made by my right honourable friend and then reviewed by the courts. For that reason I cannot support the amendment that the noble and learned Lord has moved.
Lord Lloyd of Berwick
The Minister has not dealt at all with the point on Section 4 of the 2005 Act. There is a clear case, as I am sure he realises, where the initial order is made by the court and not by the Secretary of State. Why should that not apply here? It is not an answer to say that that is a derogation order—or if that is an answer, why is it an answer?
Lord Henley
My Lords, if I had wanted to use up a great deal of the House’s time, I could have answered a great many points, and indeed the House may wish me to answer them. I was trying to bring this matter down to a simple question for the House: who would be the appropriate person to make this decision?
Section 4 was raised. The Government’s counter-terrorism review looked at that but did not consider that derogating control orders provided an appropriate parallel. No derogating control orders have ever been made and the context here would be different. Derogating control orders would impose obligations so stringent that the Government would, as I understand it, need to derogate from Article 5—that is, the right to liberty—of the European Convention on Human Rights before such orders could be imposed. Non-derogating control orders—the only kind ever used—can, by definition, impose only less restrictive obligations, and Parliament agreed that these should be made by the Secretary of State.
I go back to the very simple point that I want the House to address in the noble and learned Lord’s amendment: who do you think is the right person to make this order? We believe that the right person is the Home Secretary because the Home Secretary is answerable to Parliament and is responsible for national security. That will then be looked at by the courts, but we do not believe that it should be the courts ab initio. For that reason, I cannot support the noble and learned Lord’s amendment.
Lord Lloyd of Berwick
My Lords, I regret that I find the noble Lord’s reply to the debate pretty unsatisfactory. I have as great a respect for him as he says he has for me, and I just wish that he could have made a better case for the Government than he has. I think that the case is as weak as it could possibly be. I do not suppose that this amendment is likely to succeed, but it should and I therefore propose to divide the House.
Lord Hunt of Kings Heath
“Residence measureA1 (1) The Secretary of State may impose restrictions on the individual in relation to the residence in which the individual resides.
(2) The Secretary of State may, in particular, impose any of the following—
(a) a requirement to reside at a specified residence;
(b) a requirement not to allow others to reside at that residence without the permission of the Secretary of State;
(c) a requirement, applicable between such hours as are specified, to remain at the specified residence.
(a) may be in any locality in the United Kingdom that appears to the Secretary of State to be appropriate;
(b) may be a residence provided by or on behalf of the Secretary of State.
(a) the condition that the individual remains overnight at other agreed premises between such hours as the Secretary of State may require;
(b) the condition that the individual complies with such other restrictions in relation to the individual’s movements whilst away from the specified residence as may be so required.
(a) the generality of sub-paragraph (7) of paragraph 14 (power to impose conditions when granting permission), or
(b) the power to impose further conditions under that sub-paragraph in connection with permission granted by virtue of sub-paragraph (5) of this paragraph.
Lord Hunt of Kings Heath
My Lords, I have a number of amendments in this group and I should like to start with Amendment 44A. At Questions, the noble Lord, Lord Henley, seemed to think that this was peripheral to our debates today but I do not think that it is. Surely the context in which we consider the Bill is in relation to the measures that are necessary to prevent terrorism. We were offered a Statement in lieu of a PNQ in the other place on the matter to which I am going to refer, but it is just as appropriate to discuss it here.
Amendment 44A essentially asks the Secretary of State to commission an independent review to report on the operational effectiveness of the terrorism prevention measures in place at our international borders. That is set in the context of serious concern about the operation and effectiveness of the terrorism prevention measures in place at our international borders and the Bill has to be seen in this context. Of course, one has to refer to the significant reduction in the levels of security in border checks at UK points of entry in the summer of 2011, which has been the subject of considerable parliamentary debate and concern over the past two to three weeks. The noble Lord will be aware that the Home Secretary has yet to answer some very serious questions, particularly in regard to the scale of the security breaches that have taken place.
The subject of the PNQ in the other place today concerned reports this morning that thousands of passengers arriving on private jets from all over the world were allowed into this country this summer without any passport checks as a matter of official policy, at least according to information that appears to have come from UK Border Agency e-mails. The internal UKBA documents show that immigration and customs staff were instructed not to meet passengers arriving on private charter flights, including executive jets, as part of a so-called light touch targeted approach to border checks that was adopted this summer without, as far as I am aware, the information being put into the public domain.
These e-mails from the UKBA also reveal the extent to which full passport checks on European passengers were scaled back under the limited pilot scheme authorised by the Home Secretary on 28 July. I have to say that this is a very worrying state of affairs. In the context of the cuts that have taken place in the UKBA budget, it suggests that the UKBA is having great difficulty in carrying out its functions effectively. Essentially, since the Government came to power, a number of additional responsibilities have been placed on the UKBA at the same time as the huge reduction in its budget. No wonder we have reached such a difficult situation. The point that I put to the noble Lord, Lord Henley, is that this exposes general concerns about the operation and effectiveness of terrorism prevention measures, which is why I commend Amendment 44A to the House.
I return now to a group of amendments moved in Committee by the noble Lord, Lord Carlile. The noble Lord is not able to be with us this afternoon but I am grateful to him for putting his name to my amendments. Essentially, they propose keeping the existing control order provisions for relocation—which is the central point of many of our discussions on the Bill so far—until after the Olympic Games. From a chosen date after 1 January 2013, it would be open to the Government to come back to Parliament and replace the current relocation provisions with the provisions in the Bill, which would remove relocation subject to the emergency legislation that is also in the Bill.
The evidence given by the Deputy Assistant Commissioner to the Public Bill Committee in the other place was quite persuasive on the reason for and effectiveness of the use of control orders. The decision in the case of CD earlier this year was made after the Government argued, in the interest of national security, for a relocation component in CD’s control order. I remind the noble Lord, Lord Henley, that in Committee the noble Lord, Lord Carlile, asked if the Government had changed their mind about CD and, if so, why. If they have not changed their mind, why are they bringing the Bill before us?
On timing, is it really sensible to remove the relocation provisions at the current time? The Olympics are almost upon us. The noble Lord will know of reports in the media of US concerns about Olympic security. I fully accept that the Government have stated that this has not been reported accurately, but there is no denying the challenge facing us. My amendment does not seek to detract from the essential point of this legislation. All it does is keep the existing exclusion order provisions until after the Olympics. At that point, if the Government are satisfied that they no longer need the provisions, they merely have to bring an order to Parliament and the provisions in the Bill will take over. If I may so, it is a pretty good offer. It allows the Government to continue with these provisions over a particularly challenging time but does not undermine what they are essentially seeking to do. The noble Lord was not very warm towards these amendments in Committee. Let us hope that he is a little warmer to them at Report. I beg to move.
Lord Pannick
I support the Government in their decision not to include the relocation power in the Bill. The speech of the noble Lord, Lord Hunt of Kings Heath, was notable for what he did not say about relocation powers. He did not mention the central feature of such a power, which makes it particularly intrusive and particularly damaging to the life of the individual who is the subject of it as well as to the lives of all members of their family. That is why such a measure should surely only be available if the Government conclude that it is truly necessary to protect national security. My understanding is that they do not, as the Minister made clear in Committee. I support them in that.
Lord Faulks
I agree with what the noble Lord, Lord Pannick, said. I understand the reasons behind this change, yet I have some sympathy for what the noble Lord, Lord Hunt of Kings Heath, said. It is reasonable to ask for reassurance about what will be a massive event with security implications. I am sure that the Minister will answer that query. I wonder if there is also an issue in relation to the transition from control orders to TPIMs at the end of this year, as the 28-day transitional period will fall over Christmas and new year. I would be grateful if the Minister would provide some reassurance that the police will be able to manage this transition.
Lord Judd
I am grateful to the noble Lord, Lord Pannick. Of course, he is right. That is not the first time he has been right: nor, I imagine, will it be the last. I make one plea to my noble friend. I am concerned that, if the official position of the Opposition and the party which I support—and of which I am a member—is that it is not necessary, as was demonstrated on the last amendment, for action to originate with the courts and judges, this will extend still further the powers that will flow from an executive decision by the Secretary of State. To have such far-reaching powers—whether they are needed at all is a separate issue—without the action having originated in the courts becomes even more disturbing. I hope that my noble friend and his colleagues, in considering future policy over a longer period, will give this serious consideration.
The noble Lord, Lord Phillips, in the debate on the previous amendment, made what for me was the most powerful argument: that is, what are we trying to do? We are trying to promote the security and well-being of the British people. If we are going to do that we must have the maximum possible support for what is being done in all the communities that matter in this context. If that is to be the case, and if people are not to be prone to manipulation by extremists in the midst of their concern and anxiety, it is desperately important to demonstrate that when extensive powers are brought to bear, they have the authority of the courts and are part of the whole tradition of the administration of justice and the rule of law as we have understood it in this country.
Let us make no mistake. The objectives of the extremists are to undermine and destroy our commitment to the rule of law as we have understood it and to destroy the credibility of our claims about the rule of law. We must be careful that we do not play into the hands of the manipulative extremists and put the vulnerable and the impressionable under still more pressure to join their ranks.
Lord Newton of Braintree
My Lords, before I say anything else I had better warn my noble friends on the Front Bench that—to their surprise—I am about to support them, along with the noble Lord, Lord Pannick. However, that is in the context of having voted against them on the previous amendment and having agreed with every word that the noble Lord, Lord Judd, said, which built on what my noble friend Lord Phillips said in the previous debate. If these provisions had still been in the Bill during the previous debate, they would have been a major focus of it. The notion that one forces somebody away from their friends, takes their children out of their schools and breaks all their links by a relocation order, underlines the desirability of this being something that is sanctioned by the courts and not done as an executive fiat by the Home Secretary.
I will speak, but not at length, to the Labour Front Bench. This is a bit of a sad day for all of us except the 79 who formed a small group in the Lobby behind me. However, in the light of this debate, it is an even sadder day for the Labour Party—I suspect that the noble Lord, Lord Judd, would agree with me but I will not ask him to indicate that—when set against the background of much of what it has stood for over the years. One thing that pleased me when we got the coalition was that there were clear indications—and not just because it was a coalition—that the Conservative Party was occupying the freedom ground again rather than the authoritarian ground. There are now reasons to question that, but I will not go on down that line.
I want to conclude without repeating points that have already been made. Okay, there will be problems during the Olympics, but they will be a great showcase for our country: its values, qualities and abilities. Why do we want, in the course of the Games, to maintain a proposition that is, frankly, inimical to everything that most of the rest of the world thinks that this country stands for and to what most of us think is what our democracy stands for? That is my question and that is why I support the Minister.
Lord Macdonald of River Glaven
My Lords, I also support the Government’s position on these amendments. The counterterrorism review gathered a great deal of evidence about relocation, as well as other measures applicable under the control order regime. The evidence was considered extremely carefully, as far as I could see. After all, the review was conducted by no less a division of the Home Office than the Office for Security and Counter-Terrorism, which is to be found in the deepest bowels of that department of state. Its conclusion, which I thought was certainly in accordance with the evidence, was that relocation was disproportionate and unnecessary in the face of other measures available under the TPIM legislation and particularly in the light of the Government’s decision to increase the amount of funding for surveillance, which after all is the main technique used by countries like us around the world to deal with these sorts of issues. I agreed with the conclusions of the counterterrorism review, as I thought that they were clearly in line with the evidence, of which there is a great deal. I am sure that the Government’s position on these amendments is the right one.
The Archbishop of York
I, too, as someone who supported the noble and learned Lord, Lord Lloyd of Berwick, in his amendment, believe that it is the duty of the Home Secretary to make the application to the judge and the judge to determine. To bring back relocation would make the case worse—not because we lost the last Vote, but I generally feel that on this particular bit of the Bill the Government have got it right. So I hope that we do not have to go through the Lobby Doors again but that the amendment will be withdrawn. Nothing will cause me greater difficulty in my understanding of British justice than bringing back relocation. That actually causes more difficulty in our communities than anything else. If there is going to be relocation, the noble Lord, Lord Hunt, should in his amendment have said that it should be done on the orders of a judge and not the Secretary of State.
I go with the Government on this, as I think they have got it right. Of course, we lost the last and most important amendment, but there we are.
Lord Bew
My Lords, I support the amendment in the name of the noble Lord, Lord Hunt. Coming as I do from Northern Ireland, I regard control orders with great suspicion and concern, as with anything that smacks of internal exile. That is one of the implications of control orders and it is quite right that the House should take an extremely sceptical view of them.
None the less, there are two important considerations, one already alluded to by the noble Lord, Lord Hunt, which is the evidence given by the deputy assistant commissioner about the efficacy of control orders. The other crucial point is the recent public debate over concern about security during the Olympics. There is a balance to be struck here, and it is very difficult for the Government to get this right; but this is a very modest request—a timing issue, focused fundamentally and purely on the question of security during the Olympics. For that reason, I favour the terms of the amendment in the name of the noble Lord, Lord Hunt.
Lord Harris of Haringey
My Lords, I am grateful to have the opportunity to follow the noble Lord, Lord Bew, who has summed up the argument about prudence on this amendment. This is not a new power—it is making available during the Olympics year the existing powers. That is all that it does. It does not create a new power, despite what my noble friend Lord Judd has said. I am very conscious—and I do not think that the Minister answered this point on Second Reading or in Committee—that the power of relocation has been used in a very small number of cases, and it has been used by the present Home Secretary. This is not some hangover from the days of the previous Administration in terms of its use; it has been used by the present Government and the present Home Secretary.
I would like to be satisfied on why the Government think that a power that was used earlier this year, because the Home Secretary considered it necessary on the basis of the information that she had received is no longer necessary in the period during the Olympics when we know that the threat will be extremely difficult. That is extremely important.
Lord Lloyd of Berwick
Is not the possible answer to that question that, at that stage, the Home Secretary was not aware that she had sufficient resources by way of surveillance to do without relocation?
Lord Harris of Haringey
I am sure that it is helpful to the noble Lord, Lord Henley, to have the noble and learned Lord, Lord Lloyd, putting his arguments in advance. That may well be the argument on which the noble Lord, Lord Henley, will rely.
That brings me to my next point: can the Minister assure us that all of those extra surveillance arrangements will in fact be fully available, including the technical measures, by the end of this calendar year? Can he assure us that all of those arrangements are in place, and will be in place, and where there are technical measures, whether they have been adequately tested? The last thing any of us in this House would want to see is a situation in which new measures turned out not to be fully functioning when the need was greatest.
This is an amendment about prudence. I think it was relevant that the noble Lord, Lord Faulks, raised the point about the transition period. Again, I would be interested to hear the Minister’s response. It seems to me that the Minister has to satisfy the House today that not passing this amendment is a prudent, sensible and proportionate course of action. Those of us who are concerned about the security that will be available during the Olympics want to be satisfied that every necessary measure is available. Let us remember, this is not a mandatory obligation on the Secretary of State. Amendment 5 proposes that the Secretary of State “may impose restrictions”. It would only kick in under the very small number of instances where the Home Secretary was convinced, on the basis of information received, that this was something that was appropriate and proportionate to do. It would not be used on a blanket basis, and the number of instances in which relocation has been used under the existing control order regime is, as I understand it, extremely small.
I turn to Amendment 44A and the report on border controls to prevent terrorism. While I am not quite sure I understand the logic of the grouping which puts this with the other amendments, I none the less think it is extremely important. We have to recognise that, irrespective of the discussions there have been in the last week or so, there are issues about the security of our borders. This is nothing to do with whether the UK Border Agency has or has not been doing its job properly; has or has not exceeded the instructions of the Home Secretary; has or has not relaxed controls over and beyond that. It is about whether or not the controls could ever work. Therefore I think this report would be extremely valuable.
Could the Minister tell us what work is being done about people who arrive in this country by train through the Channel Tunnel, but whose destination may not have involved them having to go through passport control in either Paris or Brussels? To what extent are the Government considering what is going to happen at the point at which Lille, I think it is, is connected to a greater number of major train lines within the continent of Europe? What steps are in place to ensure that our borders are secure under those circumstances?
Can the Minister also satisfy us—and this has been the subject of debate in the last few days—what steps are in place to ensure that people who arrive in this country by coach are also adequately screened and whether the arrangements in place are able to cope with the volumes involved? Finally, for those who arrive by ferry, are arrangements in place to manage the numbers involved, and manage them properly?
Baroness Hamwee
My Lords, on the amendment on relocation the noble Lord, Lord Hunt, said that it does not detract from the essential point of this Bill. I think it does because the change to the measures which can be imposed is the essence of this Bill. Relocation is an extensive measure and can be particularly damaging—the noble Lord, Lord Newton, referred to this. I would add to his examples not just that of taking children out of their school and replanting them somewhere quite different but that of separating the individual who is the subject of the measure from his family, which has happened with relocation in a number of instances. I do not need to explain the impact of that.
Reference has been made to the evidence given to the Public Bill Committee in the Commons on behalf of the Metropolitan Police. I read that evidence as the sort of thing that any good copper would say in seeking to defend the police's position and ensure that as much money as possible was allocated to the activity, making quite understandable caveats about limits. Before the noble and learned Lord, Lord Lloyd of Berwick, mentioned it my reaction, too, to what happened earlier this year was that—as I think the Minister’s predecessor but one told the House on an earlier occasion—the extra surveillance measures were not then in force but would be, so the situation is changing.
I have always found a difficulty with pointing to the Olympic and Paralympic Games as a kind of watershed, not because I do not acknowledge that they could be a high-profile occasion for any terrorist to use but because we either are or are not equipped for dealing with terrorism. I cannot quite get my own head around whether, disregarding what the Americans may have said yesterday—they have always said that in relation to the Games—the Games are so very much more of a danger point. Indeed, is there not a danger for us in focusing on them as the critical time? It would be very damaging to the reputation of the Games and of this country if there was an attack earlier or later than that because we appeared to have relaxed our guard. I just find a difficulty in that.
Amendment 44A is exactly the opportunistic sort of amendment which I would entirely have expected the Opposition to table. Any Opposition would do so, but if the situation is as serious as they point out, then I, for one, do not want to wait a year. However, I am not sure whether this is in any way the right amendment. I would like to see an evaluation of the pilot that we have heard has been carried out, not to wait a year for that, but we are told that more dodgy people were picked up as a result of the pilot and it is important that we understand how that worked. This amendment, however, appears to go wider than the measures under this Bill because it does not use the term “measures”, which is defined in the Bill. I wonder whether the amendment is even within the scope of the Bill but leaving that technical thing aside, this is about immigration and controlees. The subjects of TPIMs are or will be British citizens, so although it raises important points I do not think those points are wholly relevant to this Bill. The subject is important but it is important to get it right, not to have it as a political football.
Lord Henley
My Lords, we have a curious group, as some noble Lords have put it, with the amendments relating to relocation, and Amendment 44A, put down by the noble Lord, Lord Hunt of Kings Heath, I believe late last night.
The noble Lord, Lord Harris of Haringey, who is a pretty experienced politician, curiously came over rather naïve about this and could not quite understand why these two amendments had been grouped together. That point was answered by my noble friend Lady Hamwee when she pointed out that it was possibly a somewhat opportunistic amendment to put down. I give way, as always, to the noble Lord.
Lord Harris of Haringey
I know this is fearful—every time the noble Lord mentions my name I stand up, and I will endeavour not to do that.
My puzzlement was associated with the grouping. Had this been freestanding as Amendment 44A, we could have had a nice little debate about that and about its place in the Bill. I was puzzled that it was grouped with these other amendments on the relocation powers.
Lord Henley
Given that the noble Lord is quite an experienced Member of this House, he will know that the grouping is not a matter, sadly, that the Government have any control over, and that it would be a matter for the noble Lord, Lord Hunt of Kings Heath, to decide that he wished to have this amendment grouped with the other amendments. Of course, the Government are more than happy to go along with that.
If I may, I will deal with that amendment very briefly. It is an amendment that asks for yet another report and I have to say that it is not necessary. As the noble Lord, Lord Hunt of Kings Heath, knows, there is ample provision already in place for independent review. We have the independent reviewer of counter-terrorism, currently David Anderson QC, and for 10 years before him we had my noble friend Lord Carlile of Berriew, who did that job exceedingly well. The independent chief inspector of the United Kingdom Border Agency, currently John Vine, is also required to review the operation and effectiveness of the measures in place at our ports and airports. They both report annually to the Home Secretary and their findings and reports are laid in Parliament.
I will not go much further than that and I will not deal with the specific points that noble Lords have raised in relation to recent events, partly because John Vine has been asked by the Home Secretary to make a report into these matters. There are also two other internal reports that deal with these issues—again, which have been promised by my right honourable friend—that will be made available when they come out. It would therefore not be right or proper to deal with those matters.
Referring on to the question of private planes coming in and what controls we have there, as my honourable friend in another place, Damian Green, made clear, we have absolutely nothing to hide. We have in fact strengthened the procedures there compared to what they were pre-2010 and we have made sure that we prioritise and make appropriate risk-based assessments on any planes that come in. A Statement was offered to the party opposite but for reasons of its own it wished not to take it.
I turn to relocation. Again, I accept that this is an issue that has been debated extensively throughout the Bill’s passage both in this House and in another place. Obviously there are strong views on all sides. We accept that relocation has proved effective in disrupting terrorism-related activities, but it does, as my noble friend Lord Macdonald made clear, raise particularly difficult questions of proportionality. The question is therefore, as I put it at Second Reading and which I repeat now, one of balance. Our review of counter-terrorism acknowledged these difficult questions and considered them carefully. The review concluded that the best balance lies in a more focused use of the robust restrictions that will be available under the Bill together with the increased resources that will be available for covert investigation. It concluded that it will be possible to protect the public without the powers of relocation being routinely available.
We must always remember not to look at this Bill on its own. It is part of that wider package of changes, including those in the counterterrorism review, aimed at striking a better balance across the whole range of counterterrorism and security powers, and it will be complemented by the significantly increased funding that we are providing for those purposes. We have also published the Draft Enhanced TPIM Bill, which will be introduced if necessary, in exceptional circumstances, after some degree of prelegislative scrutiny, as is found appropriate by the authorities in this House and another place. It would provide more stringent restrictions, including that power of relocation, if necessary.
I understand that the noble Lord, Lord Hunt, has concerns over timing, particularly in relation to the Olympics. Again, he ought to listen to what my noble friend Lord Newton had to say about that, and possibly the Olympics is the one occasion when we would not want to be showcasing to the world the fact that we have measures of this sort. However, I take his concerns about the Olympics. The Government have made very clear that arrangements will be in place to manage effectively the transition from control orders to TPIM notices. Security arrangements for the Olympics are being planned on the basis that the TPIM Bill, and the powers available under it, will be in force. These plans are also proceeding on the basis that the additional powers contained in the Draft Enhanced TPIM Bill will, we hope, not be needed or be necessary. As is right and proper, our planning for the Olympics is both flexible and risk-based, and we will continue to monitor the threat to ensure that we adopt the most appropriate response, including keeping this issue under review as necessary in the light of developments.
Finally, my noble friend Lord Faulks raised a detailed and very important question about the transition period when this Bill comes in, which will be over Christmas. He asked whether I could provide some reassurance that the police would be able to manage this transition during that period. As the House will be aware, the Bill includes provision for a transition period during which control orders will remain in force to enable the necessary arrangements for TPIMs to be put in place where appropriate. The Christmas and New Year holidays are likely to fall within that period because we are approaching the time when the Bill will complete its passage through both Houses, assuming that the Bill receives Royal Assent before the Christmas period. We have recently received advice from the Metropolitan Police that while extensive preparations are being made for the transition to the new regime, an extension to the transition period from 28 days to 42 days would be required to ensure that operational risks are minimised over the holiday period. I give an assurance to the House and to my noble friend that I undertake to bring forward an amendment to the Bill at Third Reading that will make that necessary change in Schedule 8 to the Bill—I think it is more or less the last sentence of the Bill.
I hope that with those explanations, and stressing again the need for balance and proportionality, the noble Lord, Lord Hunt, will feel able to withdraw his amendment.
Lord Hunt of Kings Heath
My Lords, I am very grateful to all noble Lords who have taken part in this short debate. I am disappointed that the noble Lord, Lord Henley, could not respond somewhat more positively to my Amendment 44A. My noble friend Lord Harris asked a number of pertinent questions. No doubt when the official inquiries report, we will get answers to them. There is an underlying concern about the security of our borders and the resources available to the UK Border Agency. I hope that we will have another opportunity to return to this in due course.
As for my other amendments, I say to the noble Lord, Lord Pannick, that at Second Reading I recognised the exceptional and intrusive measures that control orders imply and I do not at all detract from that. I just happen to think that they are one of the tools that should be open to the Government, with ample judicial review where they happen to be used.
I very rarely disagree with my noble friend. I was surprised at what the noble Lord, Lord Newton, said. After all, if the Opposition had indeed voted with the noble and learned Lord, Lord Lloyd, the Government would have been defeated. Government defeats are something that I usually rejoice in, but the fact is that I feel that it is right that we are consistent with the position that we took in Government and our view that, in the end, it is for the Home Secretary to make that judgment, rightly or wrongly. I do not think that it is a sad day for the Opposition. It would have been a sad day if we had taken an opportunist position.
The noble Lord, Lord Faulks, asked a very good question and I think that he got a very good answer. Forty-two days has a certain ring about it in the history of debating this legislation and I look forward to the debate at Third Reading when the noble Lord, Lord Henley, brings forward his amendment. At the end of the day, my noble friend Lord Harris and the noble Lord, Lord Bew, had it right: the amendments I am putting forward are modest ones. All they do is give the Government the opportunity to use exclusion orders for a very limited period to take us through a challenging period, with the option at the end—within just over a year—to come to this House with an order to remove those provisions from legislation and let this Bill follow its course. I still believe that that is, and would be, a sensible way forward, and I am disappointed that the Government are not going to take it.
The noble Baroness, Lady Hamwee, said that we are either equipped or we are not equipped. That is the Government’s position, to be either equipped or not equipped. They have made a great song and dance of getting rid of exclusion orders but have then said, “Just in case, we will have emergency legislation up our sleeve, and, by the way, there are certain circumstances when Parliament cannot be recalled, so we had better have it in this Bill as well”. We can talk about being equipped or not equipped: it is absolutely clear that the Government know that they might need these provisions in the future. That is why they are legislating for them, either through the emergency legislation, which is going through pre-legislative scrutiny at some point, or in this Bill. They ought to have welcomed the flexibility that my amendments would give them.
However, the most reverend Primate the Archbishop of York has advised me not to move the amendment on this occasion. He was a wonderful Bishop of Birmingham when I first met him. In this case, I will take spiritual advice and will not seek to press the House on this any further. I beg leave to withdraw the amendment.
Lord Henley
Lord Henley
My Lords, I beg to move Amendment 8, in my name. In doing so, I shall speak to Amendments 13, 30, 31, 45, 46, 47 and 48, all of which are in my name. Also in this group, I will touch upon Amendment 14, in the name of my noble friend Lady Hamwee, which is an amendment to my Amendment 13. These are a number of necessary technical amendments to the Bill. I hope that some noble Lords will have had the opportunity to read the letter that I sent last week explaining what each amendment achieves. However, for the benefit of the House and for the record, I should briefly explain why we need to make these amendments.
I shall start with Amendments 8 and 13. These amendments make two small but important changes to clarify the drafting of the residence and police reporting measures. The residence measure is intended to ensure that the individual can be required to reside at a specified address, and to remain there for specified periods overnight. The clear purpose of this is to manage risk. As part of this measure it may be necessary to require the individual to remain within the residence itself. This means that it could be necessary to prohibit them from entering any garden or outside area forming part of the property, or any communal areas in a shared property. As currently drafted, the provision does not necessarily make clear that the measure can be applied in this way. It is potentially ambiguous as to whether the requirement to remain at the residence includes any outside or communal areas. Therefore, it may be open to legal challenge on its meanings.
Baroness Hamwee
My Lords, I have Amendment 14 which is an amendment to the Minister’s Amendment 13. I am grateful for his confirmation that the wording that I have proposed is not necessary. I did not think that it was. I was relying on the word “and” at the end of the new paragraph (a), but I am glad to have that on the record.
Will it be open to an officer to direct reporting times? That presumably will be the case if the Secretary of State does not give a notice covering the matter. Will it always be the Secretary of State who gives that notice? The Minister will recall my concern that reporting should be required at a time which in general terms is reasonable and would particularly allow for the individual to carry out a course of study or to undertake work. As I probably said on the last occasion, one could not quite envisage applying for a job and saying to a prospective employer, “I am sorry, I am going to have to take two and half hours off three times a week in order to report in to a rather inconveniently located police station”. That was the reason for my amendment and if he can give any further assurances I will welcome them.
I welcome his amendment generally, because I think that it is helpful, and I also welcome Amendment 47. I did not have the technical considerations in my mind when I tabled this amendment at Committee stage. It was a much broader matter, but whatever the reason I am glad to see the paragraph going.
Can I ask the Minister a little more about Amendment 8? In the letter that he sent to your Lordships following the last stage giving the thinking behind all these amendments, which was very helpful, he said that in providing that an individual must stay within the premises,
“This is therefore a clarifying amendment. This is important for monitoring, enforcement and disruption purposes”.
Can I ask what is meant by “disruption” in this context? I would have expected that surveillance would be adequate to cover an individual being in the back garden. Presumably surveillance is going to be done largely through technology rather than through a pair of binoculars. Is there not electronic surveillance? Is it a matter of disrupting communications? If he is able to add a little flesh to that I would welcome it.
I am grateful to the Minister for his comments on my Amendment 14, which I will not seek to move when the time comes.
Lord Henley
My Lords, I hope that I can deal with my noble friend’s points. I am grateful to her for her comments. She asked whether it would be open to the police officer to direct reporting times. The point behind my amendments was that the Secretary of State would deal with such times. That would be in the order. Further directions may be given by the police in relation to someone coming to the police station but the times would be a matter for the Secretary of State.
As regards Amendment 8, we need to be able to disrupt any potential terrorist activities. For that reason one would not wish the individual to be able to leave the house and enter the garden at certain times as it might allow communication to take place on which it is not so easy to keep an eye. That was the reasoning behind government Amendment 8. I hope I have explained that clearly. If I have not, I will write to my noble friend in due course.
Baroness Hamwee
Baroness Hamwee
My Lords, in moving Amendment 9, I wish to speak also to Amendments 10, 11, 12, 20, 40, 42, 43 and 44. All these amendments, which stand in my name and that of the noble Baroness, Lady Stern, follow on from debates held in Committee. None challenges what I think is fashionably called the architecture of the Bill. All seek to ensure that within the framework of the Bill, and without harming the effectiveness of measures, TPIMs have regard to their impact on the individual, who has not been charged, let alone found guilty of any offence—in other words, under our legal system, he is innocent—and on his family.
I have spoken previously about the need to recognise the individual person at the centre of any proposed measure. This is a matter of human responsibility. The restrictions imposed through control orders have been very considerable and in some cases very damaging. I acknowledge and welcome the Government’s efforts to reduce the restrictions and to write legislation in a different way, spelling out the limits of restrictions, but there is still potential for a lot of damage. I suspect that, to an extent, this may depend on how a particular measure is applied. I welcome the assurances that the Minister gave at the previous stage but wish to pursue a number of matters a little further.
I mentioned the individual but, of course—the noble Lord, Lord Newton of Braintree, mentioned this—it is also a question of the individual’s family. It is difficult to imagine the impact of such a measure on children, wives—I have heard of at least one wife who has attempted suicide more than once—and the community in the widest sense. This aspect is in my mind directed also at the effectiveness of TPIMs in avoiding taking measures that may tip the individual, his more extended family, friends, acquaintances and associates into the very sort of action which the Bill seeks to prevent. There are restrictions on association and communication and I worry that they could have that effect.
Baroness Stern
My Lords, I support these amendments so ably spoken to by the noble Baroness, Lady Hamwee, and I express my gratitude to her for the tremendous amount of detailed work that she has done on this issue.
As I made clear at Second Reading and wish to make clear again, I very much appreciate the approach that the Minister is taking to the Bill and the improvements to the current regime that have been introduced. However, the noble Baroness, Lady Hamwee, has reminded us very usefully that at the centre of this is indeed a human being, and his family, who is subject to very demanding requirements to go at certain times to certain places, not to go into the garden, as the Minister has just explained, and to be subject possibly to 12 months’ imprisonment for failing to conform.
Perhaps I may concentrate solely on Amendments 40 and 42 to 44. Amendment 40 expresses the wish for a continuation of—and, I hope, improvement to—the Control Orders Review Group, which arose after many, many discussions in this House on the earlier regime. I look forward very much to hearing some reassurance from the Minister on a review group for TPIMs. Amendments 42 to 44, which concern oversight and review, go further than a projected review group. The measures that we are discussing here clearly will not lead to a complete deprivation of liberty but they will undoubtedly have a profound effect on the day-to-day life of the person who is subject to them and the family of that person. They are not compatible with living a normal life as we know it. Although, as the Minister made clear earlier, they are indeed preventive, they will feel—to use the word chosen by the noble and learned Lord, Lord Lloyd of Berwick—punitive. Their effect is punitive, and that is why we need to consider the proposals in these amendments. The person who is subject to these measures will feel that he is being punished, and the people implementing the measure, who come from a law enforcement background and are familiar with punitive measures, will see that the person has had imposed on him measures that are, in effect, punitive. These measures will indeed affect the liberty of the person and they will also affect very directly the lives of that person’s family members, so the family will also feel that they are being punished. In all cases where we punish, we have systems in place to ensure that the treatment of those undergoing sanctions and measures is subject to independent inspection and oversight.
Lord Henley
My Lords, I am grateful to my noble friend and the noble Baroness, Lady Stern, for speaking to this fairly varied group of amendments. My noble friend said that she had grouped them together because the Whips were very keen on that process. I think that the Government are often keen on grouping things together because that can speed up debate, particularly when the amendments are essentially probing.
The noble Baroness is quite rightly seeking some reassurances and statements from the Government on what certain things mean. I shall work through the amendments in the order that they are tabled and shall try to satisfy my noble friend and the noble Baroness, Lady Stern, about what is meant and shall try to deal with their concerns.
I start with Amendment 9. My noble friend asked for clarification on what is meant by an “area of a specified description”. I confirm that allowing the Secretary of State—the Home Secretary—to impose restrictions in relation to both places and areas of a specified description is necessary to avoid unhelpful uncertainty about whether somewhere is most accurately defined as a place or an area. For example, it may be clear that airports qualify as places of a specified description, but it may be less clear that all the areas surrounding an airport, such as car parks, drop-off points or other areas connected to or adjacent to an airport, are captured. In conjunction with the rest of paragraph 3, the provision therefore gives the Secretary of State the required powers to restrict individuals entering places or areas where this is necessary for reasons of national security. Again, I can assure my noble friend that the scope of that area will not be what she described as a huge geographical area.
Turning to Amendment 10, I am happy to confirm that the power for a constable to give directions, as provided by the movement directions measure in Schedule 1, extends only to directions in relation to measures imposed under this Bill. This is because of the effect of Clause 30(1) and Clause 2. The result of these provisions is that the reference to “specified measures” in the movement directions measure is a reference to the terrorism prevention and investigation measures imposed under this Bill and specified in the TPIM notice.
In relation to Amendment 11, I can confirm that, for the purposes of the financial services measures in Schedule 1, “financial services” means any service of a financial nature. This includes banking and other financial services, but is not limited to them. Where paragraph 5 provides that the restriction on the possession of cash does not extend to cash held by a person providing financial services, it therefore includes financial services provided by members of other professions such as the noble Baroness herself, lawyers or estate agents. That would involve them holding money on behalf of an individual.
Amendment 12 would mean that the Secretary of State could not restrict the individual’s ability to associate or communicate with “specified descriptions of persons”. This provision is necessary because, in appropriate cases, it may be necessary, for example, to prevent the individual communicating, without prior permission, with persons living outside the United Kingdom. In such a case, it is not practicable or possible to specify all the named individuals to whom this applies. In the case of this particular example, I can reassure my noble friend that this would not prevent the individual seeking permission to speak to particular individuals, such as family members, who are abroad. The effect of the provision would be that the individual would need to provide further details about individuals with whom he wished to communicate in order to allow the Secretary of State to make an informed decision about whether to permit the communication.
In relation to Amendment 20—an amendment to Condition D in Clause 3—I can confirm that, as currently drafted, the legislation will require the Secretary of State to consider issues of proportionality as part of the consideration of the necessity of individual measures to be imposed under a TPIM notice. I can therefore assure my noble friend that the additional words that she suggests are not necessary in order to achieve the desired effect.
I turn now to Amendment 40. The noble Baroness’s amendment would add two new subsections to Clause 11. That clause currently simply requires the Secretary of State to keep under review whether Condition C—the necessity for measures—and Condition D—the necessity for specific measures—continue to be met. Amendment 40 would put on a statutory footing the requirement for a review group of officials to consider cases on a quarterly basis and to report to the Secretary of State. This review function is undertaken in the control order context by the Control Order Review Group. I can confirm that a TPIM review group will be established for the new regime to perform this function on a quarterly basis.
I turn finally to Amendments 42, 43 and 44. They build on proposals that my noble friend put forward in Committee. When debating my noble friend’s previous set of amendments in this area, I made the point that the measures that can be imposed under TPIM notices are intentionally more limited in nature than those that can be imposed under control orders, with lengthy curfews, compulsory relocation to another part of the country and total bans on communication equipment no longer allowed. I also made clear that the Bill as drafted—together with the relevant control order case law and the duty of the Secretary of State to act compatibly with convention rights—already ensures that the Secretary of State will give careful consideration to the impact of the measures on individuals and their families, including the impact on their mental health, before imposing the TPIM notice and while it remains in force. There will be, as of course it is right that there should be, careful and ongoing consideration of the impact of the measures on the individuals subject to them and on their families, including any impact on their mental health. This will be thoroughly considered as part of the regular reviews that will take place under Clause 11.
There is an extensive framework of judicial oversight and full appeal rights in relation to the TPIM notice, the measures specified in it and their impact. The individual will have the opportunity to make their own representations on these matters, including submitting assessments prepared by any person they wish. If a measure is considered to have a disproportionate impact, it will be revoked by the Secretary of State, and if it is determined by the courts to have such an impact, the courts will be able to quash it or direct its revocation or variation. We should also remind ourselves that the overriding purpose of the Bill is to protect the public from a serious and sustained risk of terrorism. It is therefore right that the Government should weigh their responsibility to protect the public heavily when considering the proportionality of their decisions.
The Home Secretary can be faced with difficult decisions when considering what restrictions are necessary and where to strike the balance of proportionality between the rights of the individual and the rights of the wider public to be protected from that person. The High Court has specifically accepted that an individual’s mental health does not automatically trump the national security case against him and the right of the public to be protected from the risk of terrorism. This serves to underline the difficult balancing act that will have to be conducted by the Home Secretary in each and every case.
The Home Secretary’s decisions are necessarily informed by sensitive information about individuals’ involvement in terrorism-related activity and the threat they pose to the public. It is this information that tips the other side of the scales and against which the impact of the measures must be weighed in order to arrive at a reasonable and balanced decision that accords sufficient weight to the need to protect the public. This information would not be available to the commission proposed by these amendments, but it will be fully taken into account by the courts and the Home Secretary when reviewing the ongoing necessity and the impact of the measures.
It therefore seems that the amendments put forward by my noble friend do not provide exactly the right balance. The approach I have outlined of careful ongoing review and rigorous judicial oversight strikes the right balance between protection of the rights of the individual and protection of the public from a risk of terrorism. It will ensure that the measures imposed are both necessary and proportionate. I hope the explanations of the earlier amendments and reassurances on the last three will be sufficient for my noble friend and the noble Baroness, Lady Stern. I hope my noble friend will feel able to withdraw her amendment.
Baroness Hamwee
My Lords, before the Minister sits down, can he say whether the Government propose to publish the terms of reference of the TPIM review group? He may not be able to answer that.
Baroness Hamwee
My Lords, I certainly do not intend to press any of these amendments and I am grateful to the Minister for his explanations. I will comment on three of them. I am interested that a solicitor holding his client’s money might be providing financial services but am happy to accept that interpretation. On the first of the amendments, I take the Minister’s point about needing to use the correct terms, but I hope that every measure will be absolutely clear about the area as well as the place which is included—not, for instance, an “area around” or the “environs of” Heathrow Airport. If necessary, it would be proper for a map to be produced so that the individual as well as everybody else can be absolutely certain about what area is designated for this purpose. On the proposal for an independent commission, I am not seeking to challenge the architecture of the Bill and I am well aware of the court’s ruling that national security is not to be trumped. However, I hope that the Government and the new review group will take into account the points I have made, and the noble Baroness, Lady Stern, has made so powerfully, about, among other things, the need for an independent take on what is going on and to involve in the assessments people of experience and, where appropriate, non-members of the review group with that relevant experience. Having said that, and having thanked the Minister, I beg leave to withdraw Amendment 9.
Lord Henley
(a) to report to such a police station, at such times and in such manner, as the Secretary of State may by notice require, and(b) to comply with any directions given by a police officer in relation to such reporting.”
Lord Lloyd of Berwick
Lord Pannick
My Lords, with the consent of the noble and learned Lord, Lord Lloyd of Berwick, I shall speak to Amendment 16, which is in my name and the name of the noble Lord, Lord Macdonald of River Glaven.
A TPIM notice may be issued under the Bill by the Secretary of State where she reasonably believes that an individual is or has been involved in terrorism-related activity. Amendment 16 seeks to substitute a test of balance of probabilities. The argument in favour of this amendment is very brief. If the Secretary of State is not satisfied on a balance of probabilities that an individual is involved in terrorism-related activities, surely there is no justification for taking these exceptional legal measures against him.
I asked the Minister on the first day in Committee, at cols 312 to 313 of Hansard, whether there would be any impediment to national security if the balance of probabilities test were to be adopted. The Minister did not suggest that any such conclusion had been reached in any of the reviews that had been undertaken. I remind your Lordships also that on the first day in Committee, at col. 301 of Hansard, the noble Lord, Lord Carlile of Berriew, with his extensive experience, said that he would have no difficulty if the balance of probabilities test were to be the test adopted in the Bill. I hope the Minister will be able to accept the amendment.
The Deputy Speaker (Baroness Harris of Richmond)
My Lords, I must tell the House that if Amendment 15 is agreed to I cannot call Amendment 16 by reason of pre-emption.
Lord Lloyd of Berwick
My Lords, I support the amendment spoken to by the noble Lord, Lord Pannick. It covers the same ground as my amendment, which would have amended Clause 6 by substituting civil standards of proof for “obviously flawed”. I agree with every word that the noble Lord, Lord Pannick, has said.
The great advantage of the balance of probabilities as a test is that it is flexible. At the more serious end, it approaches the criminal standard. There could hardly be a more serious finding to make against an individual, as has been said often today, than that he has been engaged in terrorist activity. Therefore, the burden of proof in these cases ought to approach the criminal standard. There is not the slightest justification for a burden of proof which is less than the civil standard.
With one exception there is no precedent that I can find in English law for a serious finding, such as is involved here, being made on the basis of reasonable belief. In the earlier debate I referred to many instances of prevention orders being made by the civil courts, some in serious cases such as sexual harm and so on, and in every case the burden of proof has been the balance of probabilities, and so it should be here.
Lord Macdonald of River Glaven
My Lords, Clause 4 of the Bill indicates that the finding which will be made in relation to a TPIM is that an individual has been involved in,
“the commission, preparation or instigation of acts of terrorism”;
or in,
“conduct which facilitates the commission, preparation or instigation of such acts, or which is intended to do so”;
or in,
“conduct which gives encouragement to the commission, preparation or instigation of such acts, or is intended to do so”;
or in,
“conduct which gives support or assistance to individuals who are known or believed by the individual concerned to be involved in”,
such conduct.
This is a very grave finding. As I suggested earlier, it is a finding which justifies a standard of proof on the balance of probabilities rather than reasonable belief. I support the amendment for the reasons that have already been set out.
Baroness Kennedy of The Shaws
My Lords, I, too, support the amendment. It was always a great source of regret and sorrow to me that during Labour’s years in government we saw an erosion of the standards of proof on many different fronts. I remember getting support from the Conservative Benches and agreement that erosions of the standard of proof were taking place. Therefore, this rather strange volte-face by the coalition Government has come as a surprise to me. I want the Government to think again about this erosion of the standard of proof. As noble Lords who have already spoken have said, the consequences are serious. This House should not contemplate having anything less than the balance of probabilities.
Lord Judd
My Lords, I, too, support the amendment. Inevitably my argument relates back to what I said on a previous amendment, but it is absolutely crucial that we should have the maximum possible support across all communities for what is being done. If the Secretary of State is to have these great powers, which the House has reaffirmed today, then we must fall over backwards to ensure that justice is nevertheless seen to be done, and not just done. In that sense, it must be very convincing indeed when the Secretary of State acts. The amendment is wise and sensible. The absence of the provisions in the amendment again undermines the battle for the hearts and minds of the impressionable young.
Lord Mackay of Clashfern
My Lords, we have to bear in mind that as the Bill now stands, the initiator of this procedure is the Secretary of State with responsibility for national security. The Secretary of State has available to him or her all the information that the state can provide, including on a secrecy basis, on these matters.
When a court is deciding something, the balance of probabilities is a suitable standard because it is not expected to believe one thing or the other; it is to accept the balance of the evidence one way or the other. Requiring the Secretary of State to believe is a higher standard than the balance of probabilities. I cannot believe that the Secretary of State would be entitled, on a mere balance of probabilities, to come to the belief that this is what happened.
Of course, Secretaries of State might be rather special, and they might be able to come to a faith and belief without much in the way of evidence. However, that is taken care of by the language in the Bill as it stands, that the belief must be reasonable. So it is not only belief but a reasonable belief. In other words, the Secretary of State must have available to him or her information as a result of which he or she comes to be convinced that the person has engaged in the activities that the noble Lord kindly laid out for us. I agree that it is an extremely serious matter but the language in the Bill is suitable to a situation in which a decision has to be made, not by someone who has to review the evidence as an impartial judge but by someone who comes to the evidence with the executive responsibility to take the necessary action. In my view, this requirement that the Secretary of State should reasonably believe that the person in question has been involved in these activities, is a stronger and more reliable basis for going forward than a mere balance of probabilities. It is difficult to see how one could be convinced on the balance of probabilities alone.
Lord Lloyd of Berwick
The noble and learned Lord refers to a “mere” balance of probabilities. He will of course be aware of the many cases decided in the highest courts where what he calls a “mere” balance of probabilities can approach the criminal standard, specifically in cases such as these.
Lord Mackay of Clashfern
I agree with that and am very much aware of it, but it is still a mere balance of probabilities. Although it can go very close to the criminal standard, it is still a balance of probabilities that is being used, and I would say that the criminal standard requires a jury in effect to believe—to be sure—that this is what happened. I regard “reasonable belief” as a very strong and appropriate phrase to use where the person initiating the procedure is the person with the responsibility to have before him or her all the necessary material.
Lord Newton of Braintree
My Lords, having stuck my neck out first one way and then the other in the earlier part of our proceedings, I had decided to keep my head down on this one. I want to say to my noble and learned friend, given the views I expressed in the House earlier in the day, that he has made me feel better. It may be respectable to keep my head down, so I shall continue to keep it down.
Baroness Hamwee
My Lords, that was a very obvious keeping-down of the head, done in a rather energetic fashion.
I would like to raise a point which I raised—obviously rather ineffectively—at the last stage, and that is to ask why the Government make a different provision for the generality of the Bill than for the temporary power provided in Clause 26? Under that power, the Secretary of State can impose enhanced measures on individuals whom she,
“is satisfied, on the balance of probabilities, are, or have been, involved in terrorism-related activity”.
It does not seem to me that the answer to that question can be that the situation is different. The urgency of the situation—with Parliament not sitting and, as I understand it, a heightened state of security—relates to the ability of the Secretary of State to make an order. However, the balance of probabilities relates to the individual, not to the overall situation.
I am glad to see the noble and learned Lord, Lord Lloyd, nodding. I too feel better now, as it is obviously not a completely stupid question. I do not see where the distinction comes, as we would still be considering individuals. It may be that the noble and learned Lord, Lord Mackay, has answered the question for the Minister, I do not know.
Lord Henley
I am just wondering whether the Opposition want to comment on this matter.
It is very important to start by reminding the House what we have under control orders, what we are proposing and what the amendment proposes. Under the control orders, the standard of proof was a “reasonable suspicion” by the Secretary of State. We considered this, as your Lordships are well aware, in the counterterrorism review, and it was concluded that it was necessary to raise the test of involvement in terrorism-related activity from “reasonable suspicion” to “reasonable belief”. Reasonable belief is considerably stronger than reasonable suspicion, as my noble and learned friend Lord Mackay has said. We have raised that standard, as is right and proper. It will provide an additional safeguard, and is consistent with the approach taken in the Terrorist Asset-Freezing etc. Act 2010.
It is obviously a matter where we have to consider proportionality and the appropriate balance. Again, I have to weary the House by stressing the need for that balance. We consider that a change to reasonable belief will not be prejudicial to national security. It is right that the Secretary of State should be able to take action to protect the public in circumstances where she reasonably believes that an individual has been involved in terrorism-related activity and the measures are necessary. I was grateful for the support of my noble and learned friend in this matter.
It was right to raise the standard of proof to reasonable belief, but we do not believe that it is necessary to go as far as a balance of probabilities, which might be a more appropriate action if this amendment had been considered at the same time as the first amendment we debated and if this were a matter for the courts to decide. As it is, this is a matter for the Home Secretary to decide, and we believe that this is the right action and that a move to a balance of probabilities would provide the wrong balance for the main TPIM regime in terms of ensuring that the public will be protected.
My noble friend Lady Hamwee went on to mention the enhanced TPIM Bill. That is a different matter where we are obviously considering much more draconian measures should they ever, sadly, be necessary. That is something that will be considered in due course by this House and another place as part of the scrutiny of the draft legislation. For this Bill, we believe that getting the balance right means sticking with reasonable belief, which is a considerable improvement on reasonable suspicion. I hope, therefore, that the noble Lord, Lord Pannick, will feel able to withdraw his amendment on this occasion.
Lord Pannick
My Lord, I do feel able to withdraw this amendment. I do so in particular because the noble and learned Lord, Lord Mackay of Clashfern, tells the House that reasonable belief, in the circumstances, is a stronger test than balance of probabilities. I beg leave to withdraw the amendment.
Lord Henley
Lord Henley
My Lords, I spoke to this amendment with Amendment 8. I beg to move.
Lord Henley
Lord Henley
Again, I spoke to this amendment with Amendment 8. I beg to move.
Lord Lloyd of Berwick
“Time limit on measures under section 2
(1) Measures imposed under section 2 shall remain in force for the period of one year, or such lesser period as the court shall determine.
(2) Measures may be renewed for a further period of one year, and no more, on a further application to the court if the court is satisfied on the civil burden of proof that the individual has been involved in terrorist related activity since the imposition of the original measures.”
Lord Lloyd of Berwick
My Lords, very briefly, Clause 5 enables the Secretary of State to renew measures for a further year if conditions A, C and D are satisfied. He does not need to be satisfied of condition B, that there has been fresh terrorist activity during the first year. Amendment 39 has two separate purposes. First, it requires the Secretary of State to be satisfied of fresh terrorist activity during the first year before he automatically renews for the second year. Secondly, it places an absolute limit on renewal of two years. It cannot go beyond that.
Curiously enough, this amendment might have received some support from the noble Lord, Lord Carlile of Berriew. If I remember correctly, it was his view that somebody who had been subject to a control order for two years would have little further potential use as a terrorist. He was rather minded to pose—or had some sympathy with posing—a limit of two years on the extent to which these measures can be renewed.
The Minister said at an earlier stage that it is not the Government’s intention to use measures of this kind to warehouse individuals who are suspected of being terrorists. Yet, as we know, they have been warehoused—if that is the right word—for periods of three, four and five years without ever having been charged or tried. That is happening now. The purpose of this amendment is to ensure that that does not happen in future. There should be a final limit of two years. I beg to move.
Lord Rosser
My Lords, very briefly, this amendment seems to provide for a TPIM to remain in force for no more than a year or a lesser period determined by the court. It also provides that the measures may be renewed for a period of no more than one further year if, on application to the court, the court is satisfied on the civil burden of proof that the individual has been involved in terrorist-related activity since the imposition of the original measures. If that is correct, our view is that those considered to be engaged in serious terrorist activity are not often likely to have so changed their intentions within a period of 12 months. For that reason, it would not be appropriate to end the order. The amendment suggests that it would be, unless there was evidence of further terrorist-related activity. If we understand the amendment correctly, our view is that it would detract from the ability to protect the public. We are not inclined to support it.
Lord Henley
My Lords, I get the impression that the House wishes to move on. I never understand these things—I do not know whether the noble Lord, Lord Hunt, wishes to go out for dinner or whatever—but I will endeavour to be relatively brief.
I was amused for the second consecutive amendment as first the noble Lord, Lord Pannick, and then the noble and learned Lord, Lord Lloyd, cited my absent noble friend Lord Carlile as being a likely supporter of their amendments. It is easier to make these assertions in his absence. We will invite my noble friend to look at Hansard in due course and decide whether he necessarily agreed with the noble Lord or the noble and learned Lord. I just say that in passing.
I thank the noble and learned Lord for his explanation, which would obviously change the provisions relating to the period for which a TPIM notice can have effect. I will set out our thinking on this issue. In his model, there would be a requirement for new terrorism-related activity to have taken place while a TPIM notice is in force, in order to allow that TPIM notice to be extended into a second year. Again I must dare to use the word “balance”. We do not think that this strikes the right balance in the context of preventive orders of this kind. Indeed it would undermine the ability of the Government to protect the people of this country from a risk of terrorism.
The counterterrorism review carefully considered the issue of time limits and how long restrictions such as these should remain in force on the basis of the same evidence. It concluded that extension of a TPIM notice for a further year should only be allowed on one occasion if the notice continues to be necessary in order to protect the public. After that one extension—up to two years—new evidence would be required to impose a new TPIM notice. That is a significant move away from the position in control orders, which can potentially be renewed indefinitely on the basis of the same evidence where the control order remains necessary.
We are of the view that the ongoing necessity for the notice can be made out for a second year on the basis of the original terrorism-related activity. This is particularly so where that activity is very serious, suggesting that the individual’s mindset and intentions, perhaps to do serious harm, will not have changed after just one year subject to restrictive measures. Indeed, there are many court judgments in the control order context confirming that, for the purposes of public protection, ongoing necessity is not dependent on new terrorism-related activity since the imposition of the control order. We do not believe that the new terrorism-related activity should be required in order to extend the original TPIM notice for that one year.
While the Government’s view is that TPIM notices should not be used to warehouse people, and should not be imposed indefinitely on the basis of the same evidence—as can happen under control orders if the statutory test continues to be met—a notice that can only last one year without evidence of new activity undertaken while subject to the measures will not be sufficient to disrupt the threat posed by the individuals concerned in many cases.
Again I come back to the question of balance. We believe that the balance is about right in what we propose—that is, one year with the ability to extend it for another year. If there is to be any extension beyond that, we need new evidence of terrorist-related activity of one sort of another, as set out in the Bill. The limits proposed by the noble and learned Lord’s amendment shift the balance too far the other. I hope that he will be happy to withdraw his amendment on the basis of that explanation of balance.
Lord Lloyd of Berwick
My Lords, I am sad, but nevertheless I withdraw the amendment.
Lord Henley
“(b) on summary conviction in England and Wales, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum, or to both;(ba) on summary conviction in Northern Ireland, to imprisonment for a term not exceeding 6 months or to a fine not exceeding the statutory maximum, or to both;”
“( ) In relation to an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003, the reference in subsection (3)(b) to 12 months is to be read as a reference to 6 months.”
Lord Henley
“(12) The Secretary of State must obtain the consent of the Scottish Ministers to the inclusion in a temporary enhanced TPIM order of any provision—
(a) which would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament, or(b) which otherwise confers functions on the Scottish Ministers.(13) But subsection (12) does not apply to any provision of an enhanced TPIM order which—
(a) applies (with or without modifications) an enactment contained in, or amended by, this Act, or(b) otherwise corresponds to such an enactment.”
Lord Pannick
“( ) This Act expires at the end of the period of 1 year beginning with the day on which it commences.
( ) The Secretary of State may, by order, revive the Act if a draft of such an order is laid before and approved by an affirmative resolution of both Houses of Parliament.
( ) An order under this section expires a year after the day on which it is made.
( ) An order made by the Minister under this section is to be made by statutory instrument.”
Lord Pannick
My Lords, your Lordships have come to the final amendment on Report. Amendment 53 in my name and in the names of the noble Baroness, Lady Hayman, and the noble Lord, Lord Hunt of Kings Heath, would require an annual review of this legislation in Parliament as is currently the case with control orders.
Our debates at Second Reading, in Committee and today on Report have confirmed that the Bill addresses a fundamentally difficult problem for a free society, which is afflicted by the scourge of terrorism. The Bill, regrettably but necessarily, confers powers on the state to impose substantial restrictions and detriments on persons suspected of involvement in terrorism but against whom no proceedings are brought in the criminal courts. These orders will be imposed by the Secretary of State as an administrative matter, given that your Lordships rejected the amendment proposed by the noble and learned Lord, Lord Lloyd of Berwick. On any view, these are exceptional measures in a free society.
It is vital that the continuing need for such exceptional measures be examined every year. This will serve three important purposes. First, it will impose a discipline on Government. Civil servants and Ministers will need every year to consider the continuing case for the provisions and they will need to defend them in Parliament. Secondly, this will provide a means by which the continuing need for the measures can be explained to the public every year, and in particular to those sections of the community that are doubtful as to the need for the measures and their fairness. Thirdly, of course, it will give us—Parliament—an opportunity to express our view every year as to whether the measures continue to be justified. Both your Lordships’ Constitution Committee, of which I am a member, and the Joint Committee on Human Rights have supported the amendment. Indeed, your Lordships’ Constitution Committee in its Report questioned whether it is constitutionally appropriate not to have annual reviews of what it described as a scheme of “extraordinary executive powers”.
In Committee on 1 November—I refer to Hansard cols. 1131-1132—the Minister made three main points. First, he said the Bill contains adequate protection because it provides for a sunset clause after five years. However, 2016 is a long way away, and annual reviews are needed for all the reasons I have given. Secondly, the Minister said the Bill is the product of detailed scrutiny and has struck the right balance in its substantive provisions. The point is that the Bill contains exceptional measures, the need for which will depend on the nature and extent of the threat posed at any particular time. However confident noble Lords may be that the contents of this Bill strike the right balance, this is a context where annual scrutiny is essential. Thirdly, the Minister emphasised that the Secretary of State has power under Clause 21(2) to repeal the powers. However, that is no substitute for an annual obligation on Ministers to come before Parliament so that we can debate, and Ministers can explain to us and to the wider public, whether these wholly exceptional measures are still needed. I beg to move.
Baroness Hayman
My Lords, the noble Lord, Lord Pannick, has spoken with his usual clarity and force and that means I can be very brief. It was the issue of time limiting the provisions of the Prevention of Terrorism Act 2005 that six years ago brought me into conflict with my then own—and then government—Front Bench. I am delighted that the noble Lord, Lord Hunt of Kings Heath, has put his name to the amendment. I have to say, however, that like the noble Lord, Lord Newton, I was disappointed at his attitude on Amendment 1. He invoked the principle of consistency. I think he ought to be careful about that when we review this particular amendment, given that the Labour position then on time limiting was consistently to oppose any form of time limiting on the 2005 Act until two thumping defeats in this House and some fairly vigorous ping-pong.
Lord Hunt of Kings Heath
I am most grateful to my noble—and, dare I say, socialist—friend for raising that. The point I raised on our debate on the first amendment was consistency with the legislation, which we took through and which we were operating.
Baroness Hayman
My Lords, I have always felt that consistency was a dangerous principle for politicians to invoke. I make a serious point here. Of course there is a virtue in consistency, but there is also a Galbraithian view on thoughtless and mindless consistency. I have always felt that the overwhelming obligation for politicians was to be willing and able to justify their inconsistencies as well as to have underlying consistency of principle. However, this is all by way of an aside and I hope the House will at least feel that I am consistent in my view.
As the noble Lord, Lord Pannick, has said, when we are departing from the normal procedures and principles of the criminal law—and there are reports of various committees, both Joint Committees and committees of your Lordships House about the exceptional nature of the provisions in the Bill—there is an obligation upon us as parliamentarians to keep that under review, and always be willing to reassess what we have done and how we have done it.
In the words of the noble Lord, Lord Faulks, in our debate in Committee—I hope that I am not paraphrasing him—we have got it basically right in the Bill and there is no point in having an annual squabble about it. However, I do not see this as an annual squabble. I see it much more as the noble Lord, Lord Pannick, did, as the opportunity to reassess both the need and the efficacy of what we have put in place. These are difficult balances to strike. We do not get them right and perfect every time. There is a discipline imposed by Ministers having to justify each year the continuation of provisions that all of us recognise as important and exceptional and departing from principles that are equally fundamental to how we conduct ourselves as a society.
I feel very strongly that it is not an overwhelming burden to put on Ministers to ask them to have the respect for Parliament and the recognition of the departure from the norm that the measures in this Bill contain once a year, to reassess and bring before Parliament a renewal order that asks whether we have got it as good as we can get it. Therefore, I hope that the House will support the amendment tonight.
Lord Mackay of Clashfern
My Lords, I would like warmly to support this amendment. It is absolutely clear that this procedure is a very special one, outside the ordinary system of courts of law and the like. It is justified on the basis of need by those familiar with the terrorist threat that our nation faces. In the nature of things, that threat must vary, and it must be right that this Parliament should have an opportunity annually to review such special procedures as these. However satisfied we may be—and, obviously, different people will be satisfied to different levels whether the balance is right—it is an altogether exceptional procedure.
The noble Lord, Lord Judd, said earlier that justice must be seen to be done. This is not a procedure in which that is going to happen; in the nature of the procedure, it does not have that characteristic. Therefore, it is highly important that we have a provision that enables us to review each year whether or not this type of procedure is still necessary and efficacious. I agree with everything that the noble Baroness, Lady Hayman, said about this. I found valuable her exposition of how politicians should be consistent, and if they happen to be inconsistent they should have an explanation for it—not just that they have changed sides.
Lord Macdonald of River Glaven
My Lords, I support the amendment for reasons already advanced. For my part, I have no desire at all to see this sort of scheme become a normal and conventional part of our legal arrangements; it is not, for all the reasons that noble Lords have repeatedly advanced this afternoon. It is an exceptional scheme, and it is important that it continues to be seen as such. The amendment lays it bare; it mandates appropriate and continuing scrutiny, engaging the regular attention of this House and providing reassurance that these measures will not continue for a moment longer than they are required or necessary. A strong part of providing that reassurance will be annual scrutiny by this House of the continued necessity for such a scheme as is undoubtedly going to pass into law.
Baroness Kennedy of The Shaws
My Lords, I, too, support the amendment. I am not going to take up the time of the House, because I think that the arguments are simple. It is about the exceptional nature of this shift, which requires us to keep it under scrutiny. I remember having conversations with colleagues when we were discussing control orders, and hearing repeated over and over again in this House how important it was that liberty is maintained and that requires eternal vigilance. That is why when you depart from the norms that are in our system you have to have them under review as often as yearly.
I know that the Minister speaks passionately about liberty—I have heard him do so. I remind him that that vigilance requires that we keep this constantly in front of us, and I think that once a year is not asking too much.
Lord Newton of Braintree
I have three prefatory remarks. First, I apologise to one of my noble friends, to whom I had given the impression that I might simply pack up my tent and go away. Actually, I got so interested that I am still here—and from that she will know that I may not be as totally supportive as she would like.
Secondly, I would just like to say what a joy it is that the noble Baroness, Lady Hayman, is now back in our deliberations rather than presiding over them as Lord Speaker, and to say how good a speech she made alongside that of the noble Lord, Lord Pannick, in supporting the amendment. I will not follow her down the line of discussing obstinacy versus consistency as a virtue, but I am bound to say that one thing that I have observed in government over the years is that when consistency becomes obstinacy, which is what happens on too many occasions with politicians, it is a danger and not an asset.
Thirdly, I would say to my noble and learned friend Lord Mackay, who I was very keen should speak before me, that he has again given me a greater cloak of respectability than I normally have on these occasions. The House will realise from that that I agree entirely with what my noble and learned friend said, and I hope the Government will think again about this, as the case is clear, compelling and strong.
Lord Judd
My Lords, personally, I have the unease that in all that we have done with these special arrangements there is a danger that historically we will have proved inadvertently—maybe—to have given a victory to the extremists and terrorists, because we have abandoned in this area of the administration of justice the principles that we hold dear and believe to be fundamental to our whole system of society and law.
It is absolutely essential that the Executive have to demonstrate all the time why such a risk must be taken and why it is necessary to have these exceptional measures. For that reason, the responsibility is always with the Executive to justify what is being done and therefore to review the process at least once a year is the very least that we can settle for.
Lord Faulks
My Lords, consistency has become something and since I opposed this amendment on the last occasion I intend to be consistent in opposing it on this occasion.
Of course, the arguments are extremely beguiling in favour of an annual review. Any provision which threatens the liberty of the subject demands anxious consideration at every level. But there is a difference between what happened in 2005 and what we are confronted with today. I am sure that those who brought in those provisions—those exceptional and extraordinary measures—hoped that they would not be necessary for more than a short period. Unfortunately, that has not proved to be the case. This Bill is the result of a careful and thorough review of counterterrorism and of mature reflection by a number of people that, sadly, powers of this nature need to remain. There have been important modifications to these powers, including the higher threshold for the Secretary of State before deciding that there should be such provisions and the removal of the relocation measures. There has been a degree of sensitivity over how potentially extreme the provisions are, but the legislation has been the result of a mature consideration and has been scrutinised in a thoroughly orthodox way through both Houses of Parliament. It has not been the result of an accelerated procedure.
I respectfully suggest, although entirely appreciating the arguments that such provisions need regular review, this has had a thoroughgoing review. It can be reviewed again after the end of this Parliament, and I respectfully ask the House to consider rejecting the amendment.
Baroness Hamwee
My Lords, the noble and learned Lord, Lord Lloyd of Berwick, expressed a certain weariness when he spoke on this issue in Committee. I do not think that he used the words “ritualistic” or “formulaic” but that may have been what he had in mind when he referred to the way some of the control order debates seemed to be going. I share that concern, but it leads me to say that we should make sure that renewal of this provision is not ritualistic or formulaic. We should take care to avoid that. However, it is not an argument for saying that we should not undertake that renewal.
We will, I am sure, be told by the Minister that we can debate the issue at any time that any of us succeeds in putting down a debate, and that the Government could repeal TPIMs at any time. Neither of those claims is an answer to the points that have been made. I urge the Government, if they lose the Division that is about to come, to turn it into a virtue and explain annually why it is that any renewal is required. The term “trust” was used quite a lot at an earlier stage in this Bill. Trust does need to be renewed, as well as everything else, to take both your Lordships’ and the country with them. The Government should regard this as an opportunity, not something that should be pictured in any way as a defeat.
Lord Rosser
My Lords, I will be brief. Our own Joint Committee on Human Rights said that the TPIMs remain,
“an extraordinary departure from ordinary principles of criminal due process”.
It went on to recommend that the Bill should also,
“require annual renewal, and so ensure there is an annual opportunity for Parliament to scrutinise and debate the continued necessity for such exceptional measures and the way in which they are working in practice”.
Your Lordships’ Constitution Committee, as the noble Lord, Lord Pannick, said, also questioned whether it was constitutionally appropriate for the extraordinary executive powers involved in TPIMs to remain in being for a lengthy period of time. Whatever one’s views on the need for TPIMs, these are considerable and exceptional measures, and it is surely right and appropriate that Parliament should—as happens currently with control orders—continue to have the opportunity and the duty to decide each year whether the situation remains such that the measures in this Bill and the associated powers should continue in being or instead be allowed to expire.
The fact that debates on the Bill are taking place now does not affect the necessity and appropriateness of proper consideration each year by Parliament of whether the circumstances remain such that these powers, and the way in which they are used and operated, are still needed for a further period of time. It remains to be seen whether the Minister’s position has changed on this issue, but if the noble Lord, Lord Pannick, decides in the light of the Minister’s reply to test the opinion of the House, we should support his amendment.
Lord Henley
My Lords, perhaps I may say how grateful I am to the noble Lord, Lord Pannick, for setting out his amendment and explaining it so carefully. I am also grateful that he set out the arguments I put forward both in Committee and at Second Reading. I will go through them again because I think that the House would like to hear them, and I might be able to persuade noble Lords of the merits of my position. I will not follow the second speaker in the debate, the noble Baroness, Lady Hayman, in her strictures to her own former Front Bench about consistency. I will leave that as an internal family matter that they can sort out among themselves. Consistency is important on some occasions, but that is a matter for the noble Lords, Lord Hunt and Lord Rosser, to consider in due course.
It is important that I set out the Government’s views on why we think it is not necessary to go to an annual review, as opposed to the five-year review that we are proposing. I will set out the argument on three major grounds, more or less as the noble Lord, Lord Pannick did. First—that dread word—we believe that renewal every five years strikes the right balance. It reflects the need to build in effective safeguards to ensure that powers do not remain in force longer than is necessary. It also reflects the competence of Parliament to apply intense scrutiny to legislation—no one can say that this legislation has not had intense scrutiny, and it has not been emergency legislation as on previous occasions—and to arrive at a position that will not need to be reviewed annually. Each new Parliament will have the opportunity to debate this view in the context of the situation at the time and to take its own view. This is in line with the length of Parliaments provided by the Fixed-term Parliaments Act.
Secondly, we believe that annual renewal is unnecessary. The Bill has been subject to full parliamentary scrutiny with the usual timetable allowing for a settled position to be reached. As I stressed earlier, by contrast the control order legislation had to be, necessarily, rushed through with very little opportunity for debate, although there was considerable debate in this House. That made annual renewal an appropriate safeguard for the 2005 Act. Admittedly it was a safeguard that was initially opposed—as the noble Baroness, Lady Hayman, reminded us—by the Government at the time, but it is one that is not necessary in respect of this Bill.
I stress that there are other significant forms of oversight and scrutiny. There will be the annual report by the independent reviewer of terrorism legislation; there will be quarterly reports to Parliament by the Secretary of State—she must report quarterly on the exercise of these powers under the Act—and there will be the usual post-legislative scrutiny which requires a detailed memorandum on the operation of the Act to be submitted to the relevant departmental Select Committee and laid before Parliament. As we discussed when debating many of the earlier amendments and all earlier stages of the Bill, every individual TPIM notice will be carefully scrutinised by the courts.
Thirdly, I stress again—this point was raised by my noble friend Lady Hamwee and others—that there are other means by which the Bill can be amended or repealed. There is an order-making power to repeal the TPIM powers, and if it becomes clear that the powers are no longer needed—we would all welcome that occasion if it should happen—it will be possible at any time during each five-year period for the Home Secretary to repeal the powers by order. If it becomes clear that the powers should be changed, the legislation can be amended by Parliament at any time in the usual way.
We do not, therefore, believe that an annual renewal is necessary. We think a five-year review of these matters strikes the right balance. I appreciate that other noble Lords who have taken part in the debate have strong views on the matter and I understand the concerns of the noble Lord, Lord Pannick. However, I hope—although I doubt very much—that what I have said might persuade him on this occasion to withdraw his amendment.
Lord Mackay of Clashfern
My Lords, first, is it fundamental to the Bill being put before Parliament that the Secretary of State believes, at this moment and in the light of the information that she has, that the Bill is essential? Secondly, if that is the basis of the Bill being put before Parliament, can she say whether in a year’s time, after it passes, the situation will be the same?
Lord Henley
My Lords, the important point is that the Bill is the result of the counterterrorism review that my right honourable friend the Home Secretary initiated and which she reported on earlier this year. Following the review of counterterrorism legislation we came forward with the Bill and other parts of the package that we discussed at earlier stages. My right honourable friend therefore believes, as do I, that the Bill is fundamentally necessary at the moment. However, she has given herself a power, if she feels that the Bill is no longer necessary, to withdraw it. That power is set out in the Bill; I suppose that it is a Henry VIII power which many people would welcome on this occasion, but we would only withdraw the Bill if we felt that it was no longer necessary.
Lord Henley
What I was saying, if the noble Lord will allow me to continue my argument before he intervenes, is that we do not think that an annual review of this by Parliament is necessary: once during each Parliament should be sufficient. However, as I made clear, other reports from the independent reviewer and from my right honourable friend will come before Parliament to inform debate on these matters.
Lord Hunt of Kings Heath
All I wanted to say to the Minister was that while he referred to a Henry VIII clause, he might also have reminded his noble and learned friend of the other Henry VIII clause, which allows the Home Secretary in certain circumstances to go back to control orders.
Lord Henley
My Lords, the noble Lord said it for me. All I am saying is that the Bill can be withdrawn by my right honourable friend, should she so wish. Those powers are set out in the Bill.
Lord Pannick
My Lords, I am disappointed by the Minister’s response, although I admire his powers of advocacy in what I regard as a hopeless cause. This is an exceptional Bill. I am sorry that the Minister feels unable to respond to the wisdom and experience of other noble Lords who have spoken in the debate. The noble Baroness, Lady Kennedy of The Shaws, spoke of eternal vigilance. I hope that your Lordships will at least agree that annual vigilance is essential in relation to this Bill. I wish to test the opinion of the House.
London Olympic Games and Paralympic Games (Amendment) Bill
Lord Rosser
“Security
(1) Section 6 of the London Olympic Games and Paralympic Games Act 2006 (Security) is amended as follows.
(2) After subsection (2) insert—
“(3) Three months prior to the start of the Games, the Government shall report to Parliament on the outcomes of consultations under subsection (2), with specific reference to the following—
(a) the number of police officers to be deployed,(b) the number of military or territorial forces to be deployed to undertake police duties,(c) the number of private security contractors to be deployed to undertake police duties,(d) the level of qualification and training of forces deployed under paragraph (c),(e) the cost of the total security operation,(f) national and border security preparations,in order that the Olympic Delivery Authority may effectively exercise its duties under subsection (1).””
Lord Rosser
My Lords, the amendment seeks to ensure that appropriate measures have been taken on security arrangements. It calls for the Government to report to Parliament on a number of specific issues, which are detailed in the amendment.
We had a debate in Committee about police numbers required at the Olympic and Paralympic Games when the Minister assured us that sufficient police officers will be available, albeit it does appear that this will be done on the basis of quite extensive and quite prolonged overtime working. Since that debate, further issues affecting security have come to light. One concerns what is happening—or perhaps more significantly, what is not happening—at our points of entry. Another concerns the use of security personnel, and another, the use of our Armed Forces. In Committee the Minister said that,
“it is quite possible that the Armed Forces will provide some specialist support … but the exact nature of this requirement is still to be agreed and a number of options are being explored”.—[Official Report, 25/10/11; col. GC 256.]
Since this is a matter on which the Secretary of State for Defence has now surfaced, can the Minister tell us whether any conclusions or decisions have been reached on the use of our Armed Forces—how many, and in what capacity, and what options are still being explored? As there has been talk of the use of ground-to-air missiles, who will make any decision on the availability and use of such missiles?
On security personnel, it is claimed that there has been a significant underestimate of the numbers required. What then is the position? If it is the case that rather more will be needed than originally envisaged, what are the areas of activity or locations where the underestimate was made? Who is advising on the numbers of security personnel needed, and who is making the decisions on how many will be needed, and where and when? How many security personnel will now be needed in total, and what will be the total cost of such personnel? Will that cost be higher than originally estimated, and if so, by how much? Are the security personnel all being provided by one company, or from a range of companies and organisations?
A further issue that has arisen since Committee is what is happening at our points of entry. The Home Secretary said last week that she did not know how many people entered the country who should have been prevented from doing so. As the Government have always claimed that there will be no reduction in front-line services as a result of the cuts, can the Minister give an assurance that there has not been—and will not be—any reduction in the number of front-line UK Border Agency staff involved in security checks, bearing in mind the importance of such checks, particularly in the period running up to and during the Olympic and Paralympic Games?
Can the Minister also give an assurance that the Government now know who is entering the country? We have been told that there are currently times when there are significant delays at our airports—not least Heathrow—and other points of entry. If that is happening currently, what steps do the Government intend to take to ensure that such delays do not happen in the run-up to, and during, the Olympics, without compromising the thoroughness of security checks, which will be more important than ever since the Games will be a tempting target for those bent on committing acts of terrorism? In addition, the Government have said that it is important that people coming from other countries to the Olympics gain a positive impression of our nation. That will not be assisted if there are lengthy delays at points of entry.
There have also been reports that the USA wishes to bring its own security personnel—some of whom would be armed—to protect its own competitors and officials at the Games. Can the Minister say whether that is true and also whether any other countries have indicated such a wish to have their own security personnel? If this is not true, can the Minister say whether the Government would agree to such a request if one was made by any particular country?
Finally, since security at the Games involves the police, the Armed Forces, security companies, and border agency staff, there is a need to ensure that there is proper effective overall co-ordination. In the light of the apparent discovery of an underestimate in the number of security personnel, and the difficulties over handling quickly the numbers coming through our points of entry without compromising security, can the Minister say who, in the run-up to and during the Olympics, is in overall charge with the day-to-day responsibility and accountability for seeing that all aspects of the security operation and all organisations and bodies involved in the different aspects of security are delivering and that their activities are co-ordinated?
The events of the past few days do not inspire confidence that the Government have a proper grip on the situation or that the decisions that need to be taken have been taken or are close to being taken. I hope that the Minister will recognise that when it comes to security, there is a world of difference between knowing what should be happening and knowing what is or is not actually happening. I hope the Minister will be able to provide some firm reassurance on these points when she responds to the amendment. I beg to move.
Lord Patten
My Lords, this amendment is potentially imperfect and deficient in its content. Secondly, it is potentially disturbing and indeed dangerous. I say these things with care and, of course, declaring my interest as a member of the advisory board of the British Olympic Association. For those who know my athletic prowess, this is an unlikely role for me to have, but that is what I do, as a sort of unpaid Parliamentary Private Secretary to the noble Lord, Lord Moynihan, the chairman of the British Olympic Association, who, alas, is unable to be in the Chamber tonight. I have declared that interest. However, the noble Lord, Lord Rosser, mentioned ground-to-air missiles. The last thing I ever expected to have to do in a debate about the Olympics is to declare my interest working with the world’s largest defence company, but that I had better do as ground-to-air missiles have come up, and that should be recorded properly in the register.
Needless to say, in making these critical remarks about deficiency and possible danger, I do so full of good will. The Olympic movement is full of hopes that 2012 is going to be a great success, and therefore I say this in a bipartisan way, hoping to improve matters rather than make them worse. I am against this amendment and if it comes to a vote I shall cheerfully vote against it. If you are going to have this kind of reporting back to Parliament three months before the Games, first, the timing is a bit tight, to put it mildly; secondly, the amendment is deficient in missing some of the big things that should be considered.
The first would be the specific need to check and recheck, through the sorts of channels that are not iterated in this amendment, that the built environment of the Olympic Park should be checked again and again for latent objects or devices which could have been put there during the construction period. I believe that the greatest care has been shown by the people who built the park—there was some pressure early on to make sure that everything was sealed and checked—but there are devices that do have a latency and you can never be too careful.
I suspect that is nothing like as big an issue as my other example of where there are yawning gaps in the drafting: the failure to mention cyber matters at all. If anything is going to happen to disturb the Games apart from random acts of terrorism, involving whatever devices or armaments, which may or may not be successful, it is going to be a cyberattack—on the ticketing, on the transport infrastructure, on a whole range of other matters that can be affected by cyberwarfare, and I use that conventional phrase, I hope, advisedly. If I was at his elbow when the noble Lord, Lord Rosser, was drafting the amendment—and I am not his unpaid Parliamentary Private Secretary—I would have suggested that for completeness these things should have been considered. Alas, they are not. I know they are being considered by my right honourable friend the Home Secretary, the Metropolitan Police, the security adviser to the Olympics and everybody else, but I do not think they should be considered belatedly, three months out from 2012, and with the weight and amount of detail that is going to be prescribed here should this amendment be successful.
This is why I used the words “disturbing” and potentially “dangerous”, because if we do fear the potential problems that have been referred to, then giving great detail about preparedness is rather like giving great detail about a military deployment during that deployment’s beginning and early stages. It is never a good idea to warn those people who are going to cause trouble. The weight of security is obviously going to be very much greater than we thought three or four years ago and that is a very good thing, but I really hope that the noble Lord, Lord Rosser, in this bipartisan spirit that has motivated my speech throughout, of wanting to see 2012 as successful as possible, will, after probing, withdraw his amendment. I know my noble friend the Minister will answer all the points he has raised about ground-to-air missiles and the rest of it—it is somewhat surprising to be debating those things in this Chamber this evening—but it is not very sensible to have this kind of reporting back under the glare of publicity, three months before the Games, informing those people who might try to disturb the Olympic Games exactly what security is there. I think that is entirely wrong. If I was not being bipartisan, I would say it is barking. However, I just say it is misguided.
Lord Addington
My Lords, I am afraid that the last point made by the noble Lord, Lord Patten, is the one that immediately occurred to me. You do not tell somebody how you are going to stop them doing something, or what sort of resources you are going to put in place. I like to think of Report as clarifying rather than probing, so I ask my noble friend to give me one primary assurance: that we will have our initial plans, our reserve plans and then we will have other reserve plans, and that ultimately the resources of the state will be available to secure something as important as the Olympic Games. Whether this requires Robocop running around, with missiles coming out of backpacks, with James Bond running around after him, which seems to be what people are suggesting in the press, whatever is required that we can do to make sure the Games happen safely is what the Government should commit to. If we are suggesting that we should limit ourselves to some predetermined number of staff, that is clearly wrong. No matter what you put on a piece of paper it would be wrong. If it gets that dangerous that in the end we have to cancel, then we will have to cancel. Can my noble friend give us an assurance that the whole resources of the state will, as far as practical, be deployed to make sure these Games are a success?
Baroness Garden of Frognal
My Lords, I am grateful to the noble Lord for tabling this amendment and giving us another opportunity to provide reassurances on this topic. The safety and security of the Olympic and Paralympic Games are of paramount importance to the Government—and for all concerned—and it is only right that we give this subject the full attention that it deserves.
This amendment would require the Government to place before the House, three months before the start of the Games, a report detailing the thrust of such consultations that the Olympic Delivery Authority, in exercising its security responsibilities under Section 6 of the 2006 Act, chooses to have with the Metropolitan Police Commissioner and other relevant police authorities.
As covered in Committee, your Lordships will be aware that, as under the previous Administration, the Government have pursued and are continuing to pursue a policy of maximum transparency in communicating what London 2012 safety and security will look and feel like. This includes the overall London 2012 safety and security strategy, which was updated and republished in March this year and which sets out the overall approach to Olympic and Paralympic safety and security. Updates on security preparations and readiness form part of the Government Olympic Executive’s reports which are published quarterly; indeed, the next one is due very shortly.
Lord Rosser
I thank those Members of your Lordships’ House who have participated in this debate and thank the Minister for her response. She addressed a great many of the points that I raised. I am not sure that all of them were addressed. I am not quite sure whether an undertaking has been given with regard to dealing with the queues which exist at the present time at our airports. If more staff are not provided, presumably this situation could conceivably get worse in the run-up to, and during, the Olympics, when there will be considerable numbers of people coming into the country.
I would comment only that the issue of security is likely to be raised on occasions before we get to the Olympics if further issues are raised in the press about, for example, what is happening at our points of entry and the problems that we appear to be having there, and if we are faced with statements in our media, which appear to have some validity in the light of what the Minister said, that there has been an underestimate of the number of security personnel who will be needed. We would be failing in our duty in this place—as I am sure they would be in the other place—if we did not raise these concerns and ask Ministers to comment on them and, we hope, give appropriate assurances that everything is under control.
Once again, I thank the Minister for her reply. I appreciate that she responded to a great many of the points that I raised and I am grateful to her for that. In the light of what she said, I beg leave to withdraw the amendment.
“Operation of Olympic Route Network
(1) Section 11 of the London Olympic Games and Paralympic Games Act 2006 (Olympic Route Network) is amended as follows.
(2) After subsection (5) insert—
“(6) The Secretary of State will work with the London Organising Committee and the Greater London Authority to produce a strategic overview and detailed proposals for encouraging the use of public transport by—
(a) individuals in possession of a valid Olympic Identity and Accreditation Card,(b) members of the general public, and(c) non-Olympic visitors and other tourists,during the period of the Olympic Games and the Paralympic Games.””
Lord Stevenson of Balmacara
My Lords, we discussed the traffic management provisions for the Olympic route network in Committee and had a good debate. Since then, the Minister has written to many noble Lords and we are very grateful to her for that. In raising this issue again on Report, I do not want it to be felt that we are in any sense being critical of the responses that we have so far had to these debates. I reaffirm that we all share a commitment: we do not want competitors missing their events or officials failing to turn up at the right time just because London is gridlocked.
Following the mention of bipartisanship—I am sorry that the noble Lord, Lord Patten, is no longer in his place as I wanted to raise it for him—I want to mention one other matter. It is not directly related to this amendment but I think it would help the House. In our previous series of debates we had a big discussion on ticketing. It was very pleasing that the head of ticketing at LOCOG made contact with me directly and asked whether we would like a briefing on our side of the House. I said that we would but also suggested bringing in the noble Lord, Lord Higgins, who made some points in Committee that I am sure your Lordships will remember. As a result of that, we had a bipartisan meeting with LOCOG at which we bashed the issue of tickets around. I have not yet seen the letter that the Minister promised to write but I think we may have convinced him that one or two of the things that the Government were offering in Committee—they were certainly in the comments made by the noble Lord, Lord Coe—were not really necessary for where they wanted to get to and that there is a better solution to some of the problems that were raised in the House. That is a good example of how we should progress on these matters. I am very grateful to those who were able to facilitate it.
The discussions at Second Reading and in Committee have not stilled the sense of unease that many of us feel about the provisions in the Bill relating to transport. Nor have they stopped people contacting us or writing to us. It certainly is not wise to get a black cab at the moment, with all that is going on around taxi use of the ORN. Media scares are to be expected but—I hope I speak for everybody in your Lordships’ House—we would be at fault if we did not try everything in our power to ensure success in every aspect of the Games. As the noble Baroness, Lady Grey-Thompson, said in our previous debate, this may not be the sexiest part of the Games’ organisation but you have to get it right if the Games are to be the best yet, as we all hope they will be.
As things stand, the feeling of the House at the end of the previous debate on this issue was that there is a potential PR disaster here. I should like to highlight three of the many concerns that have been raised. First, the laying out and operation of the Olympic lanes—the two central lanes on many parts of the ORN, which at peak may have Olympic vehicles passing down them every six seconds—is bound to have a major impact on the road system in London and cause much change and disruption to normal, day-to-day activity. Secondly, there is a growing sense that there will be two classes of traveller making their way to the Olympic venues: those who glide down the Olympic lanes and those whose journeys are pure hell. Thirdly, there is the need to reduce non-Olympic demand on the Tube—that is, Londoners, non-Games visitors and people going about their everyday lives. We were told that this reduction would be approximately 30 per cent during the Games. That is on top of those reductions that will already have happened as a result of the normal change of the seasons. If people are to get to the venues in reasonable time and London is to keep moving, there must be a three in 10 reduction in usage of the Tube system.
Lord Myners
When the Minister responds to this amendment, it would be helpful to know whether the current expectation is that government Ministers will be able to take advantage of the speedy travel to the Olympic centres and back to their homes; or whether they will travel with the rest of us by the same mechanisms that they deem appropriate for the rest of the population. It is a very simple question to which I hope we will get a very straightforward answer.
Baroness Ford
My Lords, as someone who has been very closely involved with the preparation of the Games, I should like to make one or two points that I hope might be helpful to noble Lords in thinking this through. I think that there will be two classes of people travelling to the Olympics. There will be lunatics who want to go by car, and there will be very sensible people who do what I do every other day, which is to take the Tube—the Central line, the District line or the Jubilee line—to Stratford. There is no better way to get to E20 than by public transport. Anyone who imagines that there is a better way of doing it plainly never makes that journey.
I have also made that journey frequently over the past two or three years during August. It is like living on a different planet. The travelling experience at the end of July and the start of August is completely different from the experience at any other time of year. It is partly that cyclical change in travel patterns that has led us to believe that there will be less pressure during the Games period than there would be at normal times. That may be a vain hope, because people may decide to stay in London. However, experience shows that during that period there is something like a 30 per cent drop-off—the Minister will probably correct me—in passenger transport in the Tube.
The planning that has been put in place is by no means sanguine. One has only to think back to the opening of the Millennium Dome to understand how a poor transport set-up can absolutely mar an occasion and completely destroy its reputation. However, bearing all of that in mind, and thinking through all of that planning, I think that the work that has gone in to arranging the travel plans for the Olympics has been well thought through; by no means has it been complacent or sanguine. It is right to urge people to take public transport. Those who use the Central, Jubilee or District lines to Stratford—and we hope that people will use the Javelin trains from St Pancras too—will realise that, out of peak hours, those trains are virtually empty. There is plenty of capacity there. If people plan their routes properly and choose their times sensibly, I think that they will have a good experience going to and from the centre of London to Stratford.
Baroness Grey-Thompson
My Lords, I declare an interest in that I am a board member of Transport for London, and I also sit on several committees of the London Organising Committee of the Olympic and Paralympic Games. I believe in encouraging those who can use public transport at Games times to do so, and I think that they will find it quick, relatively easy and, dare I say it, fun. London will be busy. It will clearly look, feel and work very differently at Games times. The happiness quotient at each of the six Games that I have attended is perhaps hard to explain. However, the Games-time city has a very different feel to it. It is also important to remember that London will be open for business. This amendment is useful, because it is important that we have an opportunity to highlight the positive sides of London’s public transport system, and there are many; to continue to encourage a wide range of people to think about public transport as a serious option; and to remind ourselves of what we are trying to achieve.
It is commonly accepted that organising an Olympic and Paralympic Games will be a huge logistical challenge, but there are twin objectives—not only to deliver a great 2012 Games, but to keep London and the UK moving. Many positive things are already happening. The transport infrastructure is complete, in operation and delivering an early legacy well ahead of the Games. There has been detailed planning, modelling and testing, aided by the test events programme, and there is the experience that London has from other large events. Detailed transport information is being made available to businesses, and from early next year there will be a lot more information available to help the public plan right up to and during the Games. For many spectators, the Games are still a long way off; they are not thinking that far ahead about how they are going to plan their Games times. However, when their tickets are in their hands, information will be available about how to travel around. From my own sporting background, I understand the need to minimise disruption at Games times. This will be important in how we are perceived internationally.
I would like to take this opportunity to knock down some of the transport myths that seem to be associated with the Games, because I believe that these exacerbate perceptions and put people off thinking about public transport as a sensible option. It is not true that the Olympic route network is only for the Games family. Any vehicle, including taxis, can use the vast majority of the ORN. In London, it covers just 1 per cent of the road network and only one-third consists of Games lanes. Games lanes are only implemented when there is more than one lane available. The largest element of the Games family is the media, followed by athletes, officials, Games workers, and only then sponsors and IOC members. The vast majority of the Games family— 80 to 90 per cent of them—will use buses and coaches to get around.
The second myth is that there are going to be queues of two to three hours to get into stations and on to trains in London during Games time. Again, this is not true. TfL and Network Rail have undertaken modelling to understand the likely demand at key stations, such as London Bridge, if businesses and people do not change their travel behaviour during Games time. This shows that, at certain times and in certain locations, demand will exceed transport capacity, but queues of the length that have been mentioned in the media are not expected. There is ongoing work with businesses to deliver the change in travel patterns and reductions in demand required. That needs to keep going, especially for the smaller businesses. The big businesses understand that they need to plan ahead. I was at a conference a couple of weeks ago and talking to somebody who owns a restaurant close to the Games. He asked me how many potatoes he needed to order. I said that I had no idea, but you need to be thinking about that right now. It is important that we keep reminding those small businesses that they need to start planning well ahead.
The third myth is that there will be 100 days of traffic disruption in London around Games venues, due to the ORN and road restrictions. Once again, this is not true. The ORN comes into operation just a couple of days before the Games and is taken out as soon as it is no longer required.
Much has already been done to encourage the use of public transport, but as we move into the new year, the public will start to think and plan ahead as the Games become more real. It is the role of LOCOG and the stakeholders to decide how the various groups are moved around London. It is in their interest to make public transport work, because this is how the rest of the world will see us. It is important that we do not forget the tourists who are coming to London who will want absolutely nothing to do with the Games. There will be people who may not even think about the Games being on. As we get closer to the Games, and as the competing nations and chefs de mission visit more frequently, many who hold a valid identity and accreditation card will naturally see public transport as a viable option in many circumstances, although I would not encourage competing athletes to use it. At other times, they will find it an easy way to get round. The stories about the best way to get in and out of the city—to go shopping and to do all the other things that athletes do—will spread quickly among them. I do not think that we have to worry too much about this. The chefs de mission have significant experience at Games times in advising their team members on the most efficient way to travel around the busy city. A lot of this will just naturally happen.
Baroness Doocey
My Lords, I declare an interest as a member of the Metropolitan Police Authority and the Home Office Olympic Security Board. Everyone would agree that the Olympic lanes are what I would describe as a necessary evil, because nobody would want athletes not to get to their events on time. I wholeheartedly agree with the noble Baroness that the only sensible way to get to the Games is by Tube; there is no question about that. However, with just 36 weeks to go to the Games, I am concerned that London’s emergency services are still unclear about the circumstances in which they will be allowed to use the Olympic route network.
Last week I chaired a meeting of the Metropolitan Police Authority’s Olympics committee, where the London Ambulance, the London Fire Brigade and British Transport Police came along to the committee to give evidence. All these emergency services expressed deep concern about the Olympic route network. Although agreement has been reached that will allow them to use the Olympic Games lanes when answering emergency calls, no decision has yet been made about allowing emergency vehicles to use these lanes when not answering emergency calls. This means that when emergency services need to get back to base or to move equipment from A to B, they could be faced with sitting in traffic jams for hours on end. It also means that the rail emergency response vehicles would face similar problems. This could have major repercussions in the event of a serious incident on the rail network.
I find it almost unbelievable that with less than eight months to go, this has not yet been resolved. Can I ask the Minister if she can do everything possible to take whatever steps are necessary to get this sorted as a matter of urgency?
Baroness Ford
My Lords, I should apologise to the House and say that I ought to have prefaced my earlier remarks by declaring my interest as chair of the Olympic Park Legacy Company.
Baroness Garden of Frognal
My Lords, I am grateful to the noble Lord, Lord Stevenson, for tabling this amendment and allowing us to have another lively debate. I am also grateful to him for his comments about the spirit of co-operation and bipartisanship in which this Bill has been conducted. It has been a great pleasure to work with noble Lords in trying to ensure that we all achieve the best results for the Olympic and Paralympic Games.
On the matter of transport, I can assure the House that promotion of public transport is at the heart of our transport strategy for the Games and that detailed plans have already been set out in the Olympic Delivery Authority’s Olympic Transport Plan required by Section 10 of the 2006 Act. Indeed, the opening words of the most recent, June 2011, edition of that plan are:
“London 2012 will be the first ‘public transport’ Games”.
I am grateful to the noble Baronesses, Lady Ford and Lady Grey-Thompson, for their support for public transport, and the use of public transport, in the course of the Games. This might be the moment to reassure the noble Lord, Lord Myners, that Ministers will not use the ORN Games lanes.
Next summer the world will come to London to share in the excitement of the Olympic and Paralympic Games. The Games will draw up to 600,000 ticketed spectators daily to London’s transport system. Many more will come to London and other venue cities to join in the wider celebrations. There will be up to 3 million additional trips in London on the busiest day of the Games, in addition to the 24 million trips normally made. It is the scale of the demands that this volume of visitors will place on our transport system, rather than the specific impacts of the operation of the Olympic route network for the Games family, that drives our strategy of promoting travel by public transport, walking or cycling at Games time. The Olympic route network roads will, as I explained in the Committee debate, almost all be fully open for normal traffic and the temporary traffic management measures necessary to make the network work effectively for the Games family will be implemented in a proportionate and targeted manner so as to minimise the impact on normal business. I am grateful to the noble Baroness, Lady Grey-Thompson, for so clearly setting out, and exploding, some of the myths around transport in London at this time.
Our goal is that all spectators travel to the Games by public transport. We have invested £6.5 billion in transport infrastructure since 2005 to boost London’s transport capacity to enable spectators and visitors to get to their events and to keep London moving. Londoners are already benefitting from this transport legacy in advance of the Games. The improvements to the public transport system already delivered include a 50 per cent increase in Docklands Light Rail capacity with lines extended to Woolwich and Stratford International; extra capacity on the Jubilee line, with the signalling upgrade now complete and additional trains already operating at peak times, with more early in 2012; the new high-speed rail service between St Pancras, Stratford International, and destinations in Kent; refurbished and extended London Overground services on the East London and North London lines; upgrades to national rail services on the Lea Valley and Great Eastern lines; King’s Cross-St Pancras and Stratford regional stations essentially rebuilt and expanded, with step-free access and extra capacity; and step-free access now provided at Southfields, serving the Wimbledon venue, and at Green Park, a vital central transport hub during the Games. I have mentioned those facilities in some detail, given the numerous concerns about the problems of transport in London, to show that an awful lot of work has already taken place to improve transport facilities around the capital.
In addition to these upgrades, additional public transport capacity will be provided specifically at Games time. This includes: later evening services on the London Underground, DLR and national rail services from London, with trains running up to 90 minutes later than normal; a high-frequency Javelin rail shuttle service between St Pancras, Stratford International and Ebbsfleet; direct coach services from a range of cities across England and Wales to the Olympic Park, ExCel and Greenwich Park; park-and-ride services from three sites near the M25; and enhanced river services between central London and Greenwich. As a further encouragement to use public transport, all spectators will receive a free all-zones Travelcard for the day of their Games event ticket. A dedicated Games journey planner on the London 2012 website enables ticket holders to plan and book their journeys well in advance of the Games.
Taxis and private hire vehicles will play an important role at Games time, in particular as a travel option for those with reduced mobility. ODA and its partners are working closely with the industries to assess likely demand, to make them aware of the temporary traffic restrictions that will be in place and to mitigate their impact where possible. They are also working to ensure appropriate provision of pick-up and drop-off points at all of the Games venues as well as key transport interchanges. Information packs are being put together for all taxi and private hire drivers, which will cover the ORN, venues and other details about the Games, ensuring that drivers can operate effectively and make the most of the opportunities that the Games offer. I say to my noble friend Lady Doocey that the packs will be distributed in spring next year. More information will be going out but I hear what she says about the emergency services. We will make further inquiries to ensure that all that is in order and come back to her on that.
The amendment seeks to encourage the use of public transport by those with an Olympic identity and accreditation card. For most of the transport needs of the athletes, officials, media and marketing partners who form the Games family, transport by road along the Olympic route network, mostly in buses and coaches, will, as at previous Games, provide the most convenient and effective means of ensuring that they get reliably to where they need to be each and every time. We listened with great interest to the experience of the noble Baroness, Lady Grey-Thompson, in respect of the transport for the Olympic athletes and the Olympic Games family. We are, of course, encouraging the use of public transport as much as possible. For example, the media will use the Heathrow Express to travel between Heathrow, which is LOCOG’s official port of entry, and central London. Transport for London will be providing access to free public transport travel for all members of the Games family.
The Games will, of course, place unprecedented demands on our public transport system, despite the enhancements to capacity I have described in detail and the normal summer seasonal reduction in background demand that can be expected at this time of year, so it will be necessary to reduce non-Olympic demand at key hotspots at times of high Games demand to keep London moving. The latest surveys and forecasting enable those times and places to be identified and the necessary reductions to be specifically targeted. On the basis of the most recent surveys and forecasts, we now know—noble Lords have already indicated this—that we will need to reduce non-Olympic demand by approximately 30 per cent on average across a number of hotspots on both the road and public transport networks. Larger reductions will be needed on certain days at particular times at specific stations and lines. Further details on those hotspots will be published by TfL at the end of this month, but, just to be clear, we are not looking at a blanket reduction of 30 per cent in non-Olympic demand across the whole of London for the entire Games period.
The noble Lord, Lord Stevenson, asked how we will achieve the public transport reductions and whether we were confident that the necessary reductions will be achieved. There is a rolling programme of tracking research used to estimate the level of reduction that may be achieved in 2012. This gathers information on public awareness, propensity to plan and intention to take action to change travel behaviour during the Games period. A whole host of research goes into trying to ensure that we have the best ideas of where the transport hotspots will be and how we can cope with the additional traffic. TfL has been working with businesses since November last year to encourage them to plan to reduce journeys where possible, and reroute, re-time or change the mode of essential journeys. TfL is already working directly with businesses responsible for more than half a million employees in transport hotspots. This will be supplemented next year by extensive public communications to commuters and the wider public.
Finally, the amendment also calls for proposals to promote public transport use by non-Olympic visitors and tourists. I am aware that behind this may be concerns in some quarters that the Olympic and Paralympic Games will deter non-Games tourists from visiting the UK. This has been indicated in tonight’s debate. The Government are committed to ensuring that the tourism industry maximises the economic benefits provided by the Games. Including new money that has recently been announced from the GREAT campaign, plus private sector support, VisitBritain will invest around £127 million in a new international marketing programme. Over the next four years it is expected to deliver 4.6 million extra visitors from overseas and £2.27 billion in extra visitor spend. We have also recently announced the 20.12 per cent discount initiative which will be launched next year by VisitEngland as part of a campaign to use the Games to boost domestic tourism.
Visit England’s campaign is supported by a £3 million investment from the Olympic budget and is expected to deliver 12,000 new jobs and £480 million in extra spend over three years. At this point, I congratulate the noble Baroness, Lady Ford, and her team on their success in achieving the World Athletics in 2017. If we get all the transport right for the Olympics, then 2017 will be a piece of cake.
I hope that has addressed the points that noble Lords have made in this debate. We hope that the non-Olympic visitors and tourists will of course be able to benefit from the significant enhancements to public transport provisions, and that the Olympic lanes will work as efficiently as intended to get the athletes and the Olympic family to and fro. The noble Lord, Lord Stevenson, asked where the previous reductions have been achieved, and we have looked to previous host cities on the reductions and on travel to get indications of travel demand. Sydney, Salt Lake City and Vancouver have all contributed to helping our plans for assessing the numbers likely to be travelling.
I have something here for the noble Baroness, Lady Doocey, on the emergency services. The Games consultation and engagement team is working with the emergency services to ensure that vehicles attending emergencies can move around the city safely and easily. There will be ongoing discussion about the other vehicles she mentioned, the ones that are not actively engaged on emergency services. That is all being debated and consulted on.
I hope that I have been able to demonstrate that we are well under way in delivering a comprehensive and detailed strategy to promote public transport for the Games while also effectively managing the pressures that will be placed on specific parts of that system. On that basis I hope that the noble Lord, Lord Stevenson, will feel able to withdraw his amendment.
Lord Stevenson of Balmacara
Perhaps I may ask the noble Baroness to go back a little in her speech. I heard her say something about one-day travelcards being available to Games ticket holders. Can she confirm that?
Baroness Garden of Frognal
Yes, there will be travelcards available to ticket holders and to those attending the Games.
Lord Stevenson of Balmacara
This is for London only, I assume.
I thank all who have spoken in this debate, particularly my noble friend Lady Ford and the noble Baronesses, Lady Grey-Thompson and Lady Doocey, who shared their expertise in these matters. I am left with three quotes and a conclusion which I would like to cover before we resolve how to take this forward. When the noble Baroness, Lady Grey-Thompson, was talking about modelling, she said that on certain occasions demand is going to exceed supply. That is picked up by the sense of the word hotspot which I assume covers much of the same issue. There is obviously going to be a problem at some point during the Games and we recognise that.
The noble Baroness, Lady Doocey, was worried that emergency service vehicles would be sitting in traffic jams for hours on end, and I hope that she found the Minister’s response helpful. If there are traffic jams, they will not be the only people sitting in them; it is also going to be Londoners and others who wish to go about their ordinary business, including visitors and businesses that may have time-sensitive deliveries to make—for instance newspapers. There is obviously a second concern in that.
The third concern—the one we are all beginning to push at—is that we are making it clear that these will be the world’s first public transport Games, while at the same time recognising that even our enhanced public transport system will not really be able to cope. We have a problem.
Our amendment was an attempt to try to take a little of the potential blame away and bring it back to Parliament. However, I think that it has not found much favour and therefore will not push it further at this stage.
Lord Myners
Before my noble friend finishes, can we ask the Minister to say a little more about the one-day travelcards as I think it may well be the first time that this has been announced? Am I correct in understanding that, as my noble friend says, these are for London travel but that they will cover travel for the journey to and back from the Games, that they will apply to wherever the traveller travels from, and that they will be free? If they are not free, then they are just a return ticket, and not a travelcard at all, so can the Minister confirm what exactly these travelcards cover and will they apply to people going to Weymouth to see the sailing, or to Greenwich to see the equestrian events? Can the Minister be more precise please?
Baroness Garden of Frognal
All spectators will receive a free all-zones travelcard for the day of their Games event ticket, so that will cover the London venues. A dedicated Games journey planner on the London 2012 website will enable ticket holders to plan and book their journeys well in advance of the Games. We are hoping that the all-zones travelcard will be an additional encouragement to the spectators to use public transport.
Lord Stevenson of Balmacara
I am grateful for that useful clarification. Let us paint the scenario. The Ministers are trapped in their cars, not in the Olympic lanes, but possibly hovering close to the Olympic network.
Lord Stevenson of Balmacara
Or they are in the Tube—I will come to that. Everybody who has deliveries to make in London has to make them at unsocial hours with difficult transport arrangements but they have to take notice of that; if they are not worrying about the number of potatoes they have got to buy, they will certainly be worrying about this. They will, we hope, get it right and we will be working on that.
All the extra visitors will be confused and bemused as they often are in London, so no change there, but those who have tickets for the venues will be trying to use a Tube system running at overcapacity. Despite the improvements already mentioned there is very little time—eight months now—until we get into the critical phase.
It does seem a bit of a mess. I do not think there is anything one can do about it, and we must all pull together to try to make sure the best comes out of it. I wish those who are responsible for it all the very best. With that, I withdraw this amendment.
Sovereign Credit Ratings: EUC Report
(13 years, 1 month ago)
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Lord Harrison
To ask Her Majesty’s Government what is their response to the Report of the European Union Committee on Sovereign Credit Ratings: Shooting the Messenger? (21st Report, HL Paper 189).
Lord Harrison
My Lords, I bring to the House’s attention Sovereign Credit Ratings: Shooting the Messenger?, a report of the European Union’s Sub-Committee on Economic and Financial Affairs, and International Trade, which I have the honour to chair.
As noble Lords will be aware, credit rating agencies have had a very high profile since the banking crisis erupted in 2008, in relation to which there has been widespread and, in the committee’s view, deserved criticism of their role. When the banking crisis hit, the rating agencies were revealed to have woefully underestimated the risk that complex financial products, such as mortgage-backed securities, posed. Thus we were told in the evidence that some securities that carried an AAA rating one day were downgraded to a CCC the next. Indeed, many commentators accused the rating agencies of contributing to the severity of the crisis.
In the crisis aftermath, many sovereigns, as well as the European Union, sought to sharpen regulation of the credit rating industry. In the European Union this led to the creation of the European Securities and Markets Authority, or ESMA. With the reputation of the credit rating agencies yet to recover, many people were quick to blame them for exacerbating the European Union sovereign debt crisis after it intensified in 2009. They were accused of failing to predict the crisis, and then of precipitating it by downgrading the ratings of euro area sovereigns too far and too fast. In the midst of this, the Commission in November 2010 launched a public consultation to discuss the need for further regulation in the credit rating industry and invited views on proposals to foster a European credit rating foundation which might challenge the oligopoly of the major rating agencies.
In April 2011, and in the light of these developments, our committee launched this inquiry, seeking to analyse the interaction between the credit rating agencies and sovereign debt, with a particular focus on the role of the CRAs in the euro area crisis. We took evidence during May and June from representatives of the “big three” rating agencies—Fitch Ratings, Moody’s and Standard & Poor’s; from representatives of the OECD and the International Centre for Financial Regulation; from Dr Wolf Klinz, the European Parliament rapporteur; and from the Financial Secretary to the Treasury, Mark Hoban. We also received a welter of additional useful written evidence, for which we are grateful. Our report was published in July and we are pleased that the Government’s response now brings this debate to the Chamber tonight.
The committee concluded that the rating agencies could not be accused of precipitating the euro area crisis. Their downgrades, in reality, reflect the seriousness of the problems that some member states currently face. Indeed, in most cases the CRAs followed, rather than led, market sentiment. We acknowledged that downgrades can, in certain circumstances, exercise a disproportionate influence on markets, exacerbating existing fragile situations. However, whether this happened in relation to the euro area crisis is more difficult to determine. Yet the committee did conclude that the credit rating agencies conspicuously failed to challenge the assumptions on which their assessment of the sustainability of sovereign debt was based in the years running up to the crisis. They palpably failed to identify risks in some member states which began building up long before the crisis hit. However, they were not alone in that misjudgment.
The committee has two central concerns apart from the ones that I have expressed. The first relates to the extent, or otherwise, of competition in the industry. We concluded that the credit rating agency industry is, at present, an oligopoly. The stranglehold of the largely United States-based big three has proved impossible to break. This is not for want of trying on the part of some. As I have already mentioned, the Commission has floated the possibility of the establishment of a European credit rating agency, whose start-up costs could be,
“wholly or partially covered by the public sector”,
although over time,
“public investment could … be phased out”.
The European Parliament Committee on Economic and Monetary Affairs raised the possibility of an independent, non-publicly funded European credit rating foundation. We concluded that there was a compelling argument for a thorough competition inquiry into the structure and regulation of the credit rating industry, but we also felt that the European Union should not fund, either initially or in the long term, a credit rating agency. An EU-sponsored credit rating agency would simply lack credibility with the markets.
Our second concern relates to the use of credit ratings. Sovereign ratings can play a useful role that contributes to the smooth, efficient working of the worldwide sovereign debt market. However, there is a compelling need to reduce the mechanistic role that credit ratings play in regulations, investment mandates and private contracts. This hardwiring of ratings leads to knee-jerk rating changes which can cause deleterious cliff-edge effects, herd behaviour among investors and systemic disruption. Indeed, there is an overwhelming imperative for investors to see sovereign ratings for what they ultimately are: subjective provisions that rely heavily on the personal judgments of rating agency staff. Investors should not follow ratings blindly but should view them as opinions that need to be balanced and confirmed by other market indicators. Responsibility for investment decisions ultimately lies with investors, and they should bear in mind the principle of “caveat emptor”—buyer beware—when deciding how much reliance to place on the judgment of rating agencies.
Where, then, do we stand today? We have received the Government’s response to our report and I am heartened that they agree with so many of the committee’s recommendations. I am sure that the Minister will want to elaborate on the Government’s position.
The question now turns to the Commission. Given that ESMA has only recently taken over the direct regulation of credit rating agencies, we argued in the committee that the new system should be given time to bed down and its effectiveness should be assessed before further changes are made. Yet Commissioner Barnier has pressed the case for further regulation of rating agencies for some time now and today—as if to prove the timeliness of this evening’s debate and the fact that he has obviously read our report—he launched the Commission’s latest proposals. Significant among them is the decision to postpone the proposal to suspend the credit ratings of sovereigns receiving funds. I would like the Minister to respond to that in particular. I underline the fact that, as I understand it, the suggestion is only to postpone the proposal. The Commission also has ambitions to reduce the overreliance on credit ratings, to improve the quality of the rating process and to promote the general obligation on investors to do their own assessment. I hope that the Minister will respond to those three ambitions.
There is also the question that ESMA might be communicated with by the credit rating agencies. That flies in the face of what we said on the committee—that 12 hours is a sufficient break and we do not require the three-day break that might confuse the markets even more because something might be said out of turn. We need more diversity and stricter independence of the credit rating agencies and, again, I ask the Minister to respond to the question of competition.
This is an important issue. Recently the credit rating of France was reduced from AAA, with deleterious effects on the markets. We need to be serious about this. I hope that we can have a good debate and that the Minister will be able to respond to the Commission’s proposals.
Baroness Noakes
My Lords, I had not originally intended to take part in today’s debate. I had seen the report of the EU sub-committee chaired by the noble Lord, Lord Harrison, and agreed with its balanced view and recommendations. I also agreed with the Government’s response to that report. Then I noticed, as the noble Lord, Lord Harrison, has already pointed out, that the noble Lord has cleverly timed this debate to coincide with the expected announcement of the EU Commission’s latest regulatory onslaught on credit rating agencies. So here I am.
I start from the position that we have to push back at the relentless tide of regulation from Europe and that any more regulation has to have the highest level of justification. I also believe we should make a start on returning powers to the UK, but stopping further regulation from Europe is not a bad place to start.
Looked at dispassionately, it is not clear that the rating agencies deserve the degree of punishment that has been meted out to them in the wake of the global financial crisis. Both Europe and the G20 needed scapegoats to cover up the fact that neither Governments nor their regulatory and prudential agencies had the faintest idea of the financial mayhem that was stalking the world in 2007. So the credit rating agencies, which certainly did not cover themselves in glory in relation to structured financial products in that period, ended up subject to a range of regulatory interventions and technical standards.
As is well known, the European Commission has never intended to let the financial crisis go to waste. The noble Lord, Lord Harrison, and I attended a breakfast briefing last week where a senior member of the Commission’s staff positively bragged that the crisis had led to 29 pieces of legislation affecting the financial services sector. His justification for this onslaught was, to say the least, minimal, but he evidently relished the opportunity to increase the regulatory reach of Brussels, and credit rating agencies have been caught up in this Commission land grab.
As the noble Lord, Lord Harrison, has noted, the Commission now wants to ratchet up the regulatory pressure on the rating agencies even further. This appears to be retaliation for their alleged failings in relation to the stressed eurozone economies. There is no doubt that Ireland, Portugal, Greece, Spain and Italy have not enjoyed having their credit ratings reduced—the reductions were late and sudden—but those countries had to face up to the fact that their credit ratings had been overstated for too long.
I completely agree with the report of the sub-committee chaired by the noble Lord, Lord Harrison, that the credit rating agencies did not precipitate or exacerbate the euro area crisis. I also agree that they did a rather bad job of not identifying the real risks in those economies. However, this is not a sufficient excuse for additional regulation.
It took me rather a long time today to confirm whether Commissioner Barnier did in fact launch his latest round of regulatory assault on the credit rating agencies. In fact, one blog this afternoon reported that Commissioner Barnier himself had been downgraded from “punctual” to “tardy” because he was late for the relevant press conference. However, a couple of hours ago I managed to track down a one-page summary of the proposals.
As the noble Lord, Lord Harrison, has noted, one of the things being mooted as part of the proposals is one which would allow credit rating agencies to be silenced if a country was in some kind of crisis intervention. That idea should have been killed at birth and never taken into the heart of EU policy-making. Constraining the credit rating agencies from placing their sovereign debt evaluations in the market is contrary to free speech. It is also impractical because the rating agencies would presumably have to declare that they were unable to issue a rating, which could well trigger a panicked response in the sovereign debt markets. The creation of an information void—or, at least, one with only government-controlled information—is likely to have the worst possible effect on credit markets. Fortunately, the Commission has stepped back from the brink on this and the matter is now marked, in the summary that I saw, as “for further consideration”. I hope that that means that the proposal is gone for good, but we have yet to see.
A dodgy proposal that has survived is that of compulsory rotation of rating agencies every three years or every 10 issues. I share the view of the committee and the Government that greater competition in the rating agency market would be a good thing, but there are problems with the rotation proposals. First, as most issuers already use more than one agency, the impact of the rotation proposal is huge turbulence in what is a very small market. It might well give the smaller agencies an opportunity to improve their position, but does that end actually justify the means? Creating further competition through turbulence has no respectable precedent.
Secondly, there are likely to be real impacts. Certainly, issuers will be faced with varying increased internal costs in dealing with additional rating agencies, possibly annually if they do a lot of issues. More importantly, it is far from clear that the markets which look to credit agencies will accept any new players at face value. Disruption in corporate credit markets, and through that disruption in the real economy, may be the only certain result of these proposals. It is not surprising that the Association of Corporate Treasurers is deeply concerned about these proposals and it wrote to the Commission in clear terms recently. It was disappointing and unsurprising in equal measure that Commissioner Barnier’s spokesman dismissed the association’s views as “a typical lobbying move” that “smacks of desperation”.
A further bad idea is the proposal to create a European framework for civil liability. The sub-committee chaired by the noble Lord, Lord Harrison, had it right when it said that civil liability is best left to member states. It is clear that S&P’s foolish error last week on the rating of France has touched a raw nerve, and has strengthened the resolve of those at the heart of the European project to control and punish credit rating agencies. But anybody who has looked at France’s economic position might marvel that it has hitherto escaped the analytical stringency applied to others in the eurozone. Credit spreads are now telling their own story on France. The mistake was unfortunate, but do we want a credit rating sector terrified of making a mistake, or one which is not prepared to boldly challenge received wisdom? What the markets want and what, for example, France might want, may not coincide. I have not had time to look in detail at the Commission’s proposals in this area, but I hope that they do not live up to the rhetoric of punishing mistakes that was being bandied about last week.
The only good aspect of the latest proposals is that the Commission has dropped the barmy idea of establishing the European credit rating foundation, which the noble Lord, Lord Harrison, has referred to. I understand from the press that there is now a suggestion in Brussels that another non-credit rating agency approach might be adopted, possibly using, for example, the European Court of Auditors. Will the Minister say whether the Government will give any support to an EU move to take credit rating agencies out of sovereign debt ratings? More generally, will my noble friend say whether these new proposals from the Commission will be subject to the UK’s veto, or can they be bulldozed through by qualified majority voting?
The Government’s official response to the committee’s report agreed with the committee that further changes should take effect only once the existing raft of changes had had time to bed in. Will my noble friend confirm that the Government will stick to that position?
Lord Myners
My Lords, I congratulate my noble friend Lord Harrison and his committee on the excellent work that they have done on this issue. They have produced a flawlessly argued case which, on the whole, the Government have very sensibly accepted in their written response. I share with the noble Baroness, Lady Noakes, a great interest in how the Minister will respond to what the Government have said.
I am delighted to see the Minister here as I was a little worried that the noble Lord may himself have been downgraded. The appointment of the noble Lord, Lord Green of Hurstpierpoint, as a member of the Treasury team was relayed to us in a press release issued very quietly by the Treasury and was not given a lot of publicity. He is to give advice to the Chancellor on issues relating to banking, which seems to me to be the job that the noble Lord, Lord Sassoon, was doing. I am delighted to see that the noble Lord, Lord Sassoon, is here and that he has not been downgraded, which would have been a great disappointment to me and to other Members of the House. It would be interesting to know why his advice on banking is not sufficient for the Chancellor, and why the Chancellor now needs the noble Lord, Lord Green, to be a member of the Treasury team.
As the noble Baroness, Lady Noakes, said, credit rating agencies have, to some extent, been used as scapegoats by those who should have taken responsibility for policy errors but instead sought to deflect the blame on to others. The credit rating agencies clearly played a lamentable role in the rating of SIVs, CDOs and other packaged products. They engaged in misdirected behaviour, employed flawed processes and had a business model based on suspect economics: the issuer pays protocol. Some would say, in respect of sovereign debt, that the case is not proven as to whether the rating agencies also had a role in triggering some element of the sovereign crisis. I am more inclined to give the rating agencies the benefit of the doubt and to say that they did not play any significant part in causing the sovereign crisis.
Here I disagree with paragraph 22 of the committee’s report, which says that credit rating agencies play a role in determining the cost to governments of borrowing. They simply do not. The realistic situation of the borrowing nation’s capacity to pay determines the price it pays for credit. The thermometer does not trigger the fever. The credit rating agencies measure the likelihood of repayment. They certainly do not have any impact on the cost of credit. Again, at the risk of giving even more credit to the noble Baroness, Lady Noakes, she was absolutely right in pointing to the case of France, where the credit rating agencies may say one thing about the rating of that country but the pricing of its debt in the markets says something rather different in terms of differentiation between France and Germany, the quality of covenant and the capacity to honour debt obligations.
The reality is that credit rating agencies are a lagging indicator rather than a leading one. They tend to verify the market’s judgment rather than to lead it. We should not be terribly surprised by that. My experience is that, on the whole, credit rating agencies employ rather average people. They are given extraordinary status by Mr Peston and others on television when they talk about changes in rating, but quite frankly, if you are good at the job, you work in an investment bank, a bank or a hedge fund; you do not work for Fitch, Standard & Poor’s or Moody’s. On the whole, these are at best average folk. They express opinions. Their opinions are worth little more than many other opinions—certainly a lot less than those of people who make decisions with real money or authoritative commentators such as Mr Martin Wolf in the Financial Times and others. In many ways, these credit rating agencies are of little consequence at all. We should probably not spend too much time on them, except that they tend to be taken rather seriously by the media and—more importantly—regulators.
We need to understand the way in which the credit rating agencies are hardwired at the moment into regulatory architecture and find a way to eliminate the central role that they play. In that respect, we should strongly support international efforts to reduce the role of credit rating agencies in helping to determine risk-weighted assets and other important calculations that feed into Basel and other capital requirements. Unfortunately, the role of the credit rating agencies is rather helped in this respect by their standing in America, under the SEC regulations, as nationally recognised agencies or quasi-regulatory authorities. This is a deep lacuna. I urge the Financial Policy Committee of the Bank of England to look at the role of credit rating agencies and see whether we can find a way of taking them out of the central role that they currently play.
The implementation of the credit rating agency directive will be in the hands of the European Securities and Markets Authority—ESMA. This has only recently been established but is an important agency because it will exercise direct regulatory authority. I hope the Minister will correct me if I am wrong here, but I believe that ESMA has the power to overrule national regulatory agencies. In other words, the FSA is subordinate to ESMA and could not, if it wished to, introduce higher standards. ESMA has been clear that it intends to ensure that its rules are enforced uniformly across the EU and in so doing will limit the ability of individual countries to require additional measures. Mr Steven Maijoor, the chair of ESMA, was quoted in the Financial Times recently as saying that,
“we are moving toward common supervisory standards”.
The regulations will not be based on the UK’s “comply or explain”. They will be enforced on all national regulatory agencies by ESMA. I would welcome an assurance from the Minister that he will stand up for self-determination of regulation in the UK and not allow us to be steamrollered by ESMA or any other part of the European regulatory architecture.
We saw some very flawed thinking from the European Commission on credit rating agencies—that there should be a government-sponsored CRA, the banning of the publication of ratings, and the pre-approval of methodology, which implies again some process by which these become nationally recognised outcomes rather than the opinions of rather average people. I worry very much about Mr Barnier. I met Mr Barnier when he was a Minister. He came to see us at the Treasury. He came down the corridor and I was watching him. I am a great fan of art and I was rather impressed that he stopped to look at every painting. I thought this is a man with whom I share a common interest—until I realised he was actually looking at his reflection in the glass on every painting, and adjusting his hair or his toupee. This to me is a man whom we should treat with a very long spoon. I hope the Minister will take due care in working with Mr Barnier because we have been forewarned that this man intends to seek even more powers than those he announced today. He said he wants to return to the issue of censoring rating agencies. I sincerely hope that the Government and the Opposition would have no part in endorsing such an activity.
The Financial Secretary to the Treasury—it is not the noble Lord, Lord Sassoon, but Mr Hoban—said in his letter to the noble Lord, Lord Roper, on 28 September that he would be reporting back to us on the work of the Financial Stability Board on rating agencies,
“which was due to report in mid September”.
He actually wrote the letter on 28 September, but I am accustomed to how timing and seasons change when Ministers come to author letters. I would be interested to know whether this reply has been produced and whether the Minister can tell us what the FSB has decided on credit rating agencies.
Finally, as my time expires, I regard the CRAs as just another of those innocent fools and victims who played a part in the financial crisis. Your Lordships have already had an excellent committee report on the auditors. We have now had a report on the credit rating agencies. I think attention should now be turned to the benefit consultants and, finally, to those rascals who decide whether a credit event has been caused in the credit default swaps. Plenty for the Minister to do even though he is now job-sharing with the noble Lord, Lord Green of Hurstpierpoint.
Lord Vallance of Tummel
My Lords, I first congratulate the noble Lord, Lord Harrison, on his admirable chairmanship of our committee during the production of the report. My first brush with the credit rating agencies was when the Select Committee on Economic Affairs produced its report, Banking Supervision and Regulation, in June 2009. We were highly critical of the part the agencies played in the run-up to the preceding year's financial crisis, of their failure to detect the toxicity of many of the financial instruments they rated, of their potential conflicts of interest and—this was not to be laid at their door—of the systemic risk of hard-wiring ratings into financial regulations and the mandates of institutional investors, which the noble Lord, Lord Myners, referred to. Therefore, it comes as something of a surprise to find myself defending the agencies, at least in part, as they sit in the firing line from the Commissioner for the Internal Market.
It also comes as something of a surprise, although a pleasant one, to agree with almost all of the Government's response to the report on sovereign debt ratings. I will not rehearse again the arguments about the distinction between the rating of corporate and sovereign debt that is set out in our report. Suffice it to say that sovereign debt ratings are almost always unsolicited, so the issues of conflict of interest that surround the issuer-pays model and of ratings shopping simply do not apply.
What matters in the context of sovereign debt boils down to three main things. The first is the oligopolistic nature of the credit rating agency market, which is dominated by the three main players. Such a concentration of power is uncomfortable to say the least. The second is the hard-wiring of credit ratings into the regulatory system and the systemic risk that goes with it. The third is the issue of what regulatory constraints are warranted in respect of the methodology, content and timing of credit ratings. This will inevitably include a degree of political judgment overlaying the economic analysis.
As to the nature of the market, I think it is something of a natural oligopoly. An open market for credit ratings will lead inevitably to concentration on a small core of players with the skills, experience and global reach to do the job. In this respect, the market is similar to that of financial auditors. This is one area where I question the Government's view that one should be,
“lowering barriers to entry rather than intervening in the market directly”,
to quote their response to our report. Lowering barriers is a necessary but insufficient approach when there is a natural and entrenched monopoly of this kind. So if Commissioner Barnier wants to rotate the use of agencies by limiting the frequency with which an issuer can use the same agency, he is broadly on the right track. The promotion of competition in this market will mean not just removing potential barriers to entry but the direct handicapping of the large incumbents, although the calibration might need some work. Incidentally, rotation would not bear directly upon unsolicited sovereign debt issues, where potential conflicts of interest do not apply.
As to the phasing out of the hard-wiring of credit ratings in regulatory structures or in the mandates of institutional investors, everyone seems agreed on the objective, whether they are regulators or rating agencies. However, it is one of the things that is easier said than done, as there is a real risk of throwing out the baby with the bath-water, or at least of unintended consequences. One thought that occurs to me is to take a leaf out of the book of UK corporate governance here and apply the principle of “comply or explain”. If minimum levels of credit rating were not mandatory requirements but subject to the comply or explain rule, there would be at least some leeway for financial institutions to use their own judgment, subject to their explanations satisfying the relevant regulators. That limited exercise of judgment might just put a brake on the automatic mass selling of a security that can follow a downgrading which breaches a mandatory requirement. It is a passing thought that the Government might like to bear in mind.
Finally, and specifically with regard to sovereign debt, what regulatory constraints are genuinely warranted as to the method, content and timing of credit ratings? The sensitivity in certain parts of the eurozone to a credit rating agency having the temerity to pass judgment not just on the credit-worthiness of a nation's sovereign debt but, by extension, on the competence and effectiveness of those who are trying to prop it up is very clear. But that is no excuse for what one might call retaliatory regulation—and there is a sense of retaliation in some of the possible measures being aired by the Commission and others.
In terms of principle, there is no question that the agencies need to be properly registered and subject to some degree of regulation, and it is clearly appropriate for ESMA to insist on transparency of methodology. However, to my mind the recent suggestions that ESMA should effectively determine in advance which methodologies are, or are not, to be deployed is right over the top and an undue interference in the market.
As to the Commission’s thankfully postponed suggestion that ESMA should have the power to ban or suspend credit rating when a country is in negotiations or is covered by an international solidarity programme with the EU or IMF, as we said in our report, and has been said this evening, that smacks of censorship. Perhaps the Commission would like to suspend the “Lex” column in the Financial Times on the same grounds. It also smacks of naivety; as the noble Baroness, Lady Noakes pointed out, a ban could easily put the financial markets into a spin. Other commentators would inevitably fill the gap, and the whole exercise could end up being self-defeating. No doubt the Government will do their best to keep that one at bay, should the postponement prove only temporary.
Credit ratings of sovereign debt matter—hence all the sensitivity surrounding them. If you will pardon my lapse into Franco-German, some may have experienced a brief “frisson de Schadenfreude” when Standard & Poor's inadvertently downgraded French sovereign debt earlier in the month. But it was really no laughing matter. The credit rating agencies may not have precipitated, or even significantly exacerbated, the eurozone crisis, but the oligopoly’s sins of omission or commission can do real damage. It follows that the power and dominance of the three large agencies need to be addressed, but to my mind that is best done through promoting structural change in the market and not by more regulation of a retaliatory kind.
Lord Foulkes of Cumnock
My Lords, I join in the warm congratulations to my noble friend Lord Harrison on securing the debate. I am a member of the European Union Select Committee, which is very ably chaired by my noble friend Lord Roper.
I joined the committee just as this report was being concluded, and although I welcome the report, I feel it does not go far enough. I disagree with much of the essence or strength of what has been said up to now. Some of the action of the credit rating agencies has, frankly, been scandalous and it needs more urgent action. As the Minister knows, I have raised it two or three times at Question Time, and although the Minister has been reasonably helpful and wrote to me recently about it, I am not sure that he or the Government are really seized of the concern that is widely held about the action of credit rating agencies and the urgency of action that is necessary.
It is quite ridiculous that three US-based agencies have 95 per cent of the global credit rating agency work. They are private companies, with their own shareholders, their own owners, who often benefit from the decisions made by those agencies. Whether my noble friend Lord Myners—who has disappeared suddenly—thinks they should get any credence or not, they are given great credence, not just by the media, but by a whole range of other people. Yet look at their record. Joseph Stiglitz, the Nobel prize winner, said that the subprime crisis would simply not have happened without the CRAs’ contribution. He says:
“They were the party that performed the alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the rating agencies”.
It was that subprime crisis which started the global financial crisis that we are currently in. Look at the accuracy of their forecasts. They gave positive ratings to AIG and to Lehman Brothers right up until the very moment of their collapse. What an astonishingly poor record that was.
I disagree with the report when it says, “Do not shoot the messenger—they did not exacerbate this situation”. The inherently pro-cyclical way of functioning aggravated the European sovereign debt crisis and pushed several European countries to the brink of bankruptcy. For example, explaining the reasons for Italy’s downgrade on 17 September this year, Standard & Poor’s put forward that,
“market interest rates are anticipated to rise”.
Of course, interest rates would only rise even further as a result of the downgrade by S&P, so it exacerbates the problem and you get this vicious cycle downwards. Of course the creditors are happy, and some of the people behind Standard & Poor’s might be making quite a bit of money out of it.
In the current European context, it is questionable where the true responsibility lies for the austerity and the dire economic consequences we see in nearly all of the European countries in the eurozone, and the social consequences resulting from that. Are democratically elected Governments really able to decide their fiscal and economic policies in full sovereignty and independence, or do Moody’s, S&P’s, and Fitch effectively assume true economic power in the European Union? I think that is a question that needs answering, and I hope we will get a response from the Government in relation to that.
Let us then go to the conflict of interest of credit rating agencies. As I said earlier, they are private companies, and as such their primary purpose is to seek profit and to enhance their market position. The experience of the recent crisis, as well as testimony of former employees of the CRAs, has shown that managerial pressure on analytical units is used in order to modify outcomes and to decide on ratings models which are more likely to enlarge the CRA’s market share in this respect. Accuracy would not seem to be the prime objective of the credit rating agencies.
I think the answer—I disagree with the noble Baroness, Lady Noakes, on this—is that we need to look to the European Union. If this Government were prepared to consider regulation and to deal with this as far as the United Kingdom was concerned, I would welcome that and look at it, but they have ruled that out. The noble Baroness said that she wants less regulation; that is why we need to look to Europe to see some ways of protecting ourselves. I favour the establishment of a European independent credit rating agency. First, such an agency would ensure that we become less dependent on the CRAs’ opinions and would use alternatives to risk assessment in legislation and regulation. Secondly, I would argue that competition between CRAs should be promoted, as some have said already, by lowering the barriers to entry to the market and by increasing transparency. Thirdly, the inherent conflict of interest which I have described in the predominant current business model would be bypassed through sound measures to combine different business models. Rating states and companies needs different criteria; using the same criteria for them does not work.
I would argue that the European Union has the power. I get concerned at this growing Euroscepticism that seems to be infecting both Houses of this Parliament. We saw it with the noble Baroness, Lady Noakes, and, I am afraid, with my noble friend Lord Myners. I am glad that my very good and noble friend Lord Roper is here. He is a long-standing supporter of the European Union and we should be enthusiastic still about what can be achieved collectively. Just a few days after Remembrance Day, we ought to remember why the European Union was set up in the first place. The European Union has an unequivocal mandate in anti-trust matters, determined by the treaty and by directive 2003/6/EC on insider dealing and market manipulation and its amendments, so it has the power to take action in relation to this. I would argue that it should take action.
In summary, the subprime crisis would simply not have happened without credit rating agencies. In the 10 years up to 2007, the revenues of credit rating agencies rose by 900 per cent. That is what they are in it for—to make money. The ratings delivered by credit rating agencies constrain decisions taken by Governments, by pension funds, by banks and by the ECB, because of the credibility given to them. As I said earlier, the three US-based credit rating agencies share 95 per cent of the market. Their business model is riddled with conflicts of interest, and I would argue that fixing credit rating requires tighter regulation of existing private agencies, as well as the establishment of a European independent credit rating agency.
I am not anticipating that the Minister will agree with what I have suggested, but I certainly hope that it will get a positive response from my colleague and noble friend Lord Eatwell, the shadow Minister.
Lord Kerr of Kinlochard
I will not follow the noble Lord, Lord Foulkes, into his trenchant criticism because most of it seems to apply to the role of the credit rating agencies in respect to private issuers; I will stick to the sovereign risk role which is discussed in the admirable report from the committee chaired by the noble Lord, Lord Harrison. I was a member of his committee and he has presented our report clearly. I have virtually nothing to add on the substance.
I do not believe that the credit rating agencies performed very well in the nine or 10 years leading up to the financial crisis. It is very odd that Ireland stayed on an AAA rating from 1999 to 2009—an extraordinary rating—and it is pretty odd that Greece was left by Moody’s unchanged from 2003 to 2009 and then shot down nine notches in under a year and a half.
One of the minor elements in the Commission package of proposals announced today may be quite useful: the idea that there should be more frequent reviews. It suggests six months, which might be worth considering. Most of the other bits in today’s package that seem to be good are the omissions from the rumours of what would be in the package. I do not at all agree with the noble Lord, Lord Foulkes, that it would have been a good idea that the Commission should, as it floated in the summer, put forward the idea of an EU-sponsored, public-sector-paid-for, CRA. That would be a very bad idea for the reasons that the noble Lord, Lord Harrison, has explained. As our report points out, it would be assumed in the markets that,
“EU governments … would have undue influence over its decisions”.
I am puzzled about the present situation of the other very bad idea—it was not floated before we wrote this report, and therefore is not in this report—of the ban on credit ratings, and the power of ESMA to impose temporary exceptional bans. That seems to me to be a rotten idea for a lot of reasons, particularly the one given by the noble Lady, Baroness Noakes, and the noble Lord, Lord Vallance. The moment a credit rating agency signalled that it was under a ban—and it would have to do so, so that the market was not misled into thinking that the previous rating was its considered judgment as of that day and in future—the market would at once react severely, with a panic sell-off of the relevant sovereign debt.
I am very glad to know how the Minister rates these strange events in Brussels today. It looks as if there was a debate in the Commission, and Commissioner Barnier did not win. The text that it has put out today, which explains the draft directive and the draft regulation, says that ESMA will be granted the power to ban sovereign ratings, although such bans would be temporary, exceptional, and subject to strict conditions. In the press release, Monsieur Barnier says,
“The possible suspension of sovereign ratings is a complex issue which … merits further consideration”.
I disagree. It is straightforward, it is black and white, and it is a rotten idea. I hope that the postponement is sine die, and that the Minister may be able to throw some light on that.
There is, in a way, a philosophical problem here. It has been inherent in a lot of things in the European Union since the beginning. Monsieur Barnier says today in his press release that, ratings,
“are not just simple opinions”.
Oh yes they are. That is exactly what they are. We say in our report that investors should not rely on them,
“as an authoritative indicator of creditworthiness, but view them as opinions … to be balanced and confirmed by other market indicators”.
We say caveat emptor should rule. That is because we believe in markets. You could caricature the Barnier philosophy as Colbertian. Ours you could perhaps overwrite as Adam Smith. On one side we have a dirigiste philosophy, and on the other we have the invisible hand. That debate has existed on a lot of much more important matters than this one, and on the whole it is going the right way. The arrival of the Scandinavians and the eastern Europeans has meant that the Colbertians are definitely a minority in the European Union now. I hope the postponement of the idea of suspension means that this issue is also going the right way. The press reports that in the debate in the Commission the British and Swedish commissioners were arguing against the proposal, and that seems plausible. Possibly the debate in the Commission is going the right way because of the admirable report produced by the noble Lord, Lord Harrison. Let us say it could certainly be a factor.
I have a little time left and I want to use the rest of it to raise a slightly wider issue. In the financial crisis and the subsequent lessons-learnt exercises such as the G20, there was general agreement on the need for changes in financial regulation. For EU members, that means changes in EU regulation. I say to the noble Baroness, Lady Noakes, that the Commission is doing its job when it produces drafts. The one produced today is minor, peripheral and not very important. Some of them are very important indeed. Some of them are very silly. In my view, the Tobin tax proposal is very silly and likely to fail for that reason. Some of them are a bit Colbertian and need to be exposed to a good Adam Smith critique, but they are not cooked up on a whim.
This country was part of the international consensus on the need for changes and the Government in whom the noble Lord, Lord Myners, played such a key role was part of that consensus. I say to the noble Lord, Lord Myners, that Michel Barnier is a serious politician who had a long career as an elected politician in France and has had previous successful terms as a commissioner. We should not regard Barnier as a figure of fun. He is not a figure of fun. Nor should we regard some of these regulations as daggers aimed at the heart of London. They are not an anti-British conspiracy. Of course, since they are about financial regulation and the London market is the biggest and most important European market, they are particularly relevant to London.
It is very important that this country plays a central part in the legislative process, making sure that the voice of Adam Smith is properly heard. That might not happen if we were to come to be seen as unconstructive and to describe ourselves as sceptics; if we were seen to be hectoring and unsympathetic in the current debate about the eurozone; if we were showing that we were unaware of what the German constitutional court says, or even what the treaties say; if we were seen to be criticising our partners for prevarication and pusillanimity and delay. They are dealing with a very serious problem. Remember the parable of the bacon and eggs. The 17 eurozone members are the pigs; the 10 non-eurozone members are the hens. Our contribution might be quite useful; theirs is a matter of life and death. This is their currency we are talking about. If, unlike some of the other 10 non-members, we are absolutely determined not to provide any eggs, perhaps we would do well not to cluck quite so much. Perhaps a period of silence, as a great Prime Minister once said, might be called for.
Diplomacy often consists of getting someone else to put forward our ideas as his. He cannot do that if we have already shouted about them aggressively in public, and he will not want to do it if we have previously lambasted him for not acting on them already. I do not expect the Minister to respond to these thoughts but I hope he will take them back with him as he wends his weary way back to Great George Street, where I used to work, and make my successors think about them.
Lord Monks
My Lords, it is a puzzle to me, as it is to some of you, that the three major credit rating agencies, which have made such great errors of judgment in recent years, managed to survive and to prosper. Yet that is the story of the big three, and despite their level of failure investors certainly take notice of their assessments. I can sympathise with what my noble friend Lord Myners said about perhaps not taking them so seriously, but the reality is that many people do and they are a significant influence. I am afraid that we cannot belittle them and pretend that they are a marginal influence. At the very least they are an alibi for investors, with their boards, to say, “Well, it got AAA ratings”, or whatever it was on a particular investment that has gone wrong.
Let us look at their record briefly. Enron was rated AAA. In addition, there were the sub-prime mortgages mentioned by my noble friend Lord Foulkes. The display of a near-fatal lack of curiosity about the people to whom sub-prime mortgages were being sold—mainly people who were low paid and in precarious work—in the United States, was curious, to say the least. Somehow, it was forgotten that there was a risk to those people on the margins of home ownership if interest rates rose a bit and real estate prices fell. The credit rating agencies missed that point. A lot of people missed a lot of points in the economic crisis, as we know, but the credit rating agencies were somewhere at the heart of what went on. They were not on the margins in the C-stream, making comments that people took little note of.
Now the agencies are passing judgments on the troubled eurozone countries. I do not think that they are doing so with much sensitivity to the consequences of their judgments. Several noble Lords referred to the mistake about the downgrade of France last week. The mistake was corrected promptly, but that correction has proved insufficient to quell nervous markets, which had already been betting that France would soon lose its coveted AAA rating. The announcement of the downgrade, therefore, should have been very carefully checked before the judgment was given in the first place, given France’s linchpin position in the eurozone crisis. It clearly was not checked.
Before 2008, credit rating agencies gave dodgy products the benefit of nearly any doubt, provided they were being paid by the issuers of the debt. Now they seem to be compensating for their earlier misjudgments with strict assessments of the sovereign debt of individual countries. I do not believe that there is a conspiracy to do down Europe or the euro. But I do believe that incompetent businesses in a key area like this should pay a price and not fly free.
I congratulate the European Union Committee on the way that this was presented by my noble friend Lord Harrison, and on the analysis, which hits the right note about these agencies. I am more sceptical about the central recommendation, that a more competitive environment will be enough to raise standards. It is obvious that a more competitive environment—as the noble Lord, Lord Vallance, said—could lead to a bidding war between agencies to curry favour with their potential customers.
I do not share the scepticism that several noble Lords expressed about the European Commission proposals. I am not quite sure exactly what the status is of the proposals that were issued this afternoon, but I would not rule out the idea that agencies’ conflicts of interests could be better regulated. Nor would I rule out the idea that agencies might refrain from action during the rescue of a particular country with sovereign debt problems. It is fairly clear that a country in such a position is already in big trouble, without Standard & Poor’s coming along and possibly giving an inaccurate judgment on the situation that the country finds itself in.
I would like to see a register of past performance of credit rating agencies—where they have been right or wrong. That would aid transparency in what is a difficult and risky area.
The other proposal the European Commission was set on—whether it is in the final proposals remains to be seen—was the idea of a civil action in the event of bad advice or a bad rating. People in professions have to pay a price if they are negligent in some way. I do not think that there should be a rush to judgment, or a rush to say that this is another example of Europe trying to barge into the sacred fields of the City of London. The City of London’s future cannot be as a greater Monaco—slightly offshore—if it is to thrive and meet the top standards in the country. It should be welcoming good standards, not appearing, as it often does, to be pushing them away. I do not agree with my noble friend Lord Myners in his judgment of Commissioner Barnier.
I ask the committee, in its future work, to look carefully at the proposals of the Commission to add to its own. We can perhaps find some degree of unity. The Government’s position was reasonably positive: to place a tighter rein on the agencies and develop a more reliable system than the current dangerous oligopoly.
Lord Eatwell
My Lords, a great strength of this report, on which my noble friend Lord Harrison is to be congratulated, is that it distinguishes clearly between the role that rating agencies play in the markets for private securities and the role that they play in the sovereign debt markets. In private markets, rating agencies provide a relatively simple rating for what are often mathematically very complicated financial instruments. Without this sort of interpretation, the markets in complex products could not operate. The role of the rating agencies is to provide confidence to the buyers. Unfortunately, in the recent past that confidence was seriously misplaced, as my noble friends Lord Foulkes and Lord Monks both commented.
However, as the report makes clear, and as the noble Lord, Lord Kerr, pointed out, the task of rating agencies in respect of sovereign debt is quite different. Sovereign debt instruments are typically fairly simple; they are standard bonds of fixed duration. In this instance, the necessary rating skills are quite different from those needed in unpicking a complex statistical model. First, they consist of a devotion to whatever is the conventional economic wisdom of the time. It is convention, not good economics, that matters and often drives markets. Secondly, the sovereign appraisal should include an assessment of the political and economic controversy within and between sovereign states. Here, political fashion inevitably plays a role in determining whether any given package of economic policies is deemed sound or not. As we in this country know to our cost, the current fashion is for austerity—today’s cure for all economic ills.
It is not at all obvious, as the report acknowledges, that the rating agencies have any particular superiority in evaluating sovereign risks over any intelligent investor, as my noble friend Lord Myners emphasised. If the role of rating agencies is so straightforward, why are they of any importance at all in the discussion of sovereign debt? Neither the report nor, disappointingly, the Government’s response addresses this core question. If, as the report’s title suggests, rating agencies are but the messenger, what is the origin of the message that they bear? To put it another way, if they are but the symptom—distressing and perhaps worth treating in itself, but not fundamental—what is the nature of the disease? It is in the light of that more basic issue that we should judge the Government’s response.
The basic issue has two dimensions: the development of the international bond market over the past three or four decades and the particular design of the sovereign bond market in the eurozone. The current structure and scale of international bond markets are a relatively recent phenomenon. For example, today the annual value of cross-border transactions in UK sovereign bonds comfortably exceeds 1,000 per cent of UK GDP. In 1971, the comparable value was nil. A similar explosion of cross-border activity is to be found in the sovereign bond markets of all G7 countries other than Japan. Into this environment of huge cross-border flows is thrust the eurozone, an economic entity larger than the United States of America. The sheer scale of the eurozone economy ensures that any significant bond fund manager anywhere in the world who is seeking to diversify exposure must have major holdings of US dollar bonds and sovereign bonds denominated in euros. However, whereas exposure to the dollar may be obtained by investing in US treasuries, exposure to the euro may be obtained by investing in any of the various eurozone sovereign bonds. Investors have a choice as to which euro sovereign to hold—a choice that is likely to be informed by their estimate of risk and return, and influenced to a greater or lesser degree by the rating agencies. This is a perfect structure for costless speculation and costless hedging, leading to huge flows between euro sovereigns and exposing any given sovereign to almost unlimited speculative pressure via naked trades. This is the disease.
Let me put the matter another way. The state of California, comprising 13 per cent of the US economy, is bankrupt. This has no impact on the US bond market. Greece, comprising 2 per cent of the eurozone economy, is similarly compromised, with disastrous destabilising consequences for the eurozone as a whole. It is against this background of a huge international bond market and a serious design flaw in the eurozone that the Government’s response to the report should be judged.
Do the Government’s proposals, such as they are, help to suppress the symptoms, or do they provide a guide to tackling the disease? The Government rather downplay the report’s criticism of the rating agencies’ performance prior to the sovereign crisis in the eurozone. The report is forthright:
“The valid charge against the rating agencies … is ... that they failed … to identify risks in some Member States”.
The Government’s response ignores this conclusion altogether and focuses instead on the need to share “factually correct information”. Can the Minister explain why the Government do not share the committee’s views on the failings of the rating agencies prior to the crisis?
On the symptoms, the Government are surely right to support measures to reduce hard-wiring of ratings into legislation rules and guidance. Yet the Government’s statement that they believe that,
“the more sophisticated use of ratings by investors should be encouraged”,
is surely one of the more vacuous platitudes of recent times. The Government’s support for greater transparency in the methodologies of the rating agencies, mentioned by the noble Lord, Lord Vallance, is likely to make matters worse rather than better, by increasing volatility as traders, knowing the methodologies, anticipate ratings changes.
In contrast to the noble Baroness, Lady Noakes, the Government express enthusiasm for greater regulation of the ratings agencies. As was pointed out, the Government signed up to this at the G20. Will the Minister tell us what regulatory steps the Government propose and explain how these steps will enhance the smooth operation of sovereign bond markets? What is most striking about the Government’s response is that it makes no attempt whatever to locate the role of the rating agencies in the context of the overall operation of the eurozone sovereign debt market. That, after all, was the topic of the report. Mr Cameron and Mr Osborne have repeatedly urged the eurozone Governments towards action, without spelling out exactly what action they propose. Perhaps the Minister will help fill the void in government thinking this evening by telling us what steps the Government propose should be taken to stabilise the eurozone bond market and where the rating agencies fit in to the Government’s plans.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I start by thanking your Lordships for a thorough and insightful debate on the role of the sovereign credit rating agencies. I particularly thank the noble Lord, Lord Harrison, and the members of EU Sub-Committee A, on Economic and Financial Affairs and International Trade, for their report. It is a report of considerable importance as we continue to live with the consequences of a financial crisis in which credit rating agencies played a significant role, and as we cope with a sovereign debt crisis in which they continue to have a key role.
The Government believe that the report contains a number of valuable insights, with which they largely agree. We have had a surprising alliance of dissenting voices, starting with the noble Lord, Lord Foulkes of Cumnock, who spoke in his characteristically vigorous style. I am sorry that the noble Lord, Lord Myners, did not hear that analysis of the credit rating agency scene, which differed completely from the one that he gave. The noble Lord, Lord Monks, was also a dissenting voice. In a rather different way, the thoughtful analysis of the noble Lord, Lord Eatwell, came to some different conclusions. However, the Government believe that your Lordships’ report is very valuable and will continue to inform the European-led decisions.
We are firmly of the view that credit rating agency reform is needed. However, as the committee rightly highlights, it is also important to remember that credit rating agencies play a critical role in efficient financial markets by providing independent assessments of creditworthiness. Since the financial crisis, Europe has already agreed new regulation on CRAs, which has come into effect. Therefore, today’s new proposals constitute a third round of proposals coming out of Europe since the crisis. I should say at this point that the subject of the debate is for the Government to respond to your Lordships’ committee. I understand that many of the questions concern the European proposals that have emerged just this afternoon. I will address them as far as I can but your Lordships will appreciate the shortness of time in this debate and the fact that my first duty tonight is to respond to the committee’s report. However, we have had a third round of proposals from Europe today.
As has been noted, CRAs are now supervised under the European Securities and Markets Authority and must comply with raised standards on methodology, conflicts of interest and disclosure. That is business that is already agreed. While this represents substantial progress, the Government believe that further CRA reform should focus on three aspects which closely reflect the committee’s overall conclusions. First, it is vital to reduce overreliance on CRA ratings. That point has been made by a number of speakers this evening. We strongly agree with the report that investors must ultimately take responsibility for their own investment decisions—caveat emptor, indeed. The hard-wiring of ratings in legislation, or in the internal risk assessments of financial institutions, leads, among other things, to cliff-edge effects and instability.
Secondly—this was also recommended by the committee—we support increased disclosure of ratings assumptions and process, and of underlying assets embedded in complex products. This will encourage investors to use CRA ratings in a more sophisticated manner. It will also make CRAs more accountable for their ratings.
Finally, we support fostering competition in the credit rating agencies, but without compromising ratings quality. We agree with the committee’s recommendation against the public provision of ratings. Instead, we favour reducing reputational barriers to entry such as through initiatives to establish a central platform of CRA performance statistics. The Government also strongly agree that international consistency on CRA regulation is important. We shall continue to use the Financial Stability Board to stress this because it is not only Europe but IOSCO and others that are coming forward with proposals, so the FSB will be important.
I want to take this opportunity to respond to some of the key conclusions of the report. We agree with the committee’s assessment that CRAs cannot be held responsible for precipitating or exacerbating the euro area crisis. Sovereign downgrades in Europe have reflected fundamental internal and external imbalances and CRA reform should not distract us from the key task of addressing those imbalances. The noble Lord, Lord Eatwell, challenges me with the rather bigger question of what action needs to be taken to stabilise the eurozone. I wish that we had time for that subject tonight, but there will be other opportunities. A lot of critical action is needed. CRA reform is important but it should not distract us from the other actions that he talks about which are for another debate.
We also agree that the proposal to suspend ratings for countries receiving international aid would only reduce information in the financial markets, possibly leading to further contagion. The key to reducing the destabilising effects of rating changes is timely and effective communication by the CRAs, not suspension. The Government agree that CRAs should always seek to learn from their past performance and endeavour to provide markets with timely and accurate ratings. However, the build-up of imbalances in the euro area was not reflected in the data in the run-up to the sovereign crisis, so it is crucial that the quality of national statistics in Europe is improved to underpin the assessment by CRAs and all others.
The committee also suggests that there should be a competition inquiry into the industry—a point that was touched on by the noble Lord, Lord Harrison, and others this evening. The competent authority to survey competition in the industry is the European Commission. It should keep the industry under review. The concentrated nature of the industry has been referred to a number of times, but it is for the Commission to decide whether there is evidence of the abuse of a dominant market position on which to base a competition inquiry. Such an inquiry should have regard to the impact of recent and forthcoming reforms in the CRA industry.
As we know, the debate has been particularly timely because the European Commission today released its proposals for this further package on CRA reform, which I believe will be voted on under qualified majority voting. I have to say at this point that I very much agree with the noble Lord, Lord Kerr of Kinlochard, that it is not necessary or appropriate for the noble Lord, Lord Myners, to lampoon Commissioner Barnier. I hope that this debate is read in Brussels for a lot of the serious comment that is highly relevant to the Commission’s ongoing deliberations; but frankly the comments of the noble Lord, Lord Myners, do the UK absolutely no favours by lowering the tone of the debate in a rather demeaning manner. He sits there and laughs, but it exemplifies why the previous Government made so little progress in many European negotiations. He takes a flippant and dismissive attitude to the Commission, and it really is not necessary.
Our initial response to the Commission’s proposals is very much in line with the committee’s conclusions. We welcome the proposals to reduce the overreliance on CRA ratings and to improve the transparency of ratings, the methodology and the structured finance products. Such transparency will help foster competition. It is worth noting that already 31 CRAs have applied for registration in Europe, so there is evidence of developing competition—a point raised by my noble friend Lord Vallance of Tummel, as well as my noble friend Lady Noakes.
We oppose measures to interfere directly with industry structure or with ratings methodology. We strongly oppose efforts to harmonise and increase the scope of CRA liability, for which we already have an appropriate regime in the United Kingdom.
Clearly, many parties raised concerns about some of the proposals that were suggested earlier—particularly the ban on sovereign ratings and the thought of a publicly funded EU rating agency. We share those concerns and are glad that the Commission has agreed that they merit further reflection. I am not able to say whether it is a sine die, kick-into-the-long-grass situation; we will have to look at the detail and see what happens. However, it is a good first step to see the proposals taken off the table for the moment. Of course, we do not want to see a special regime for regulating sovereign markets, which would reduce their impartiality and comparability and hence their value in international markets.
The Government are committed to reforms that will ensure that credit ratings are credible and transparent, and will continue to serve as a useful indicator to international financial markets. The Government will continue their close engagement with European and international partners to achieve these objectives. We look forward to examining today’s Commission proposals in detail and to keeping the House fully abreast of the Government’s developing response.