House of Lords

Monday 16th July 2012 Lords Chamber

Monday, 16 July 2012.

14:30

Prayers—read by the Lord Bishop of Newcastle.

Schools: Primary School Places

Monday 16th July 2012 Lords Chamber

Question

14:36

Asked By

[Baroness Jones of Whitchurch]

To ask Her Majesty’s Government what action they are taking to create 450,000 additional primary school places across England before the next general election.

[The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)]

My Lords, while it is the responsibility of local authorities to manage the supply of primary places, we have doubled the rate of spending on primary school places from the levels we inherited. In addition, we have allocated a further £1.1 billion over the past year, bringing to £2.7 billion the total we have given to local authorities so far to support additional places. We are working closely with local authorities and will work to reduce costs so that every pound spent goes as far as possible.

[Baroness Jones of Whitchurch]

I thank the Minister for that reply. Can he assure parents that sufficient, properly designed classrooms will be provided to meet all this extra demand? Does he agree that it is unacceptable for teaching to take place in temporary buildings that are not designed for this purpose, as increasingly seems to be the case currently? Do the Government now accept the folly of cancelling the Building Schools for the Future project without having a comparative school-building programme in place? Why are they continuing to give priority to funding new free schools when are not necessarily sited in places of greatest demand and there still remains a shortfall in funding for the more urgently needed extra primary places?

[Lord Hill of Oareford]

My Lords, trying to work backwards, first, so far as free schools are concerned, of the primary schools that we announced on Friday with proposals to come forward for 2013, nearly 90% of those are in areas of basic need where there is a shortage of places. I agree that good design is important but do not accept that temporary buildings cannot be part of a solution. Local authorities need to be free to make the judgments that they think are best to respond to the pressures that they have locally. Generally, as I said with the figures that I have set out, we have doubled the funding we are putting into primary school places. The birth rate started to rise in 2002; it peaked in 2008; so the Government are trying to address a serious challenge in the problem of the growing numbers that we have inherited.

[The Earl of Listowel]

My Lords, is the Minister concerned about the number of primary school head teachers now nearing retirement and how to replace them? Are the Government looking closely at the pilot of 20 school leaders from primary schools in the Future Leaders charitable trust this year, which was so successful for secondary school leaders? Will the Government be looking at that and thinking carefully about how we secure sufficient highly skilled head teachers for primary schools for these 450,000 children?

[Lord Hill of Oareford]

Yes, my Lords. The quality of teaching in primary schools is obviously hugely important and I was encouraged to see today that, for the first time, the number of men applying to teach in primary schools has increased. I think all sides of the House would find that a welcome development. I agree with the noble Earl on the importance of the kind of example that he cites and I am sure we can learn lessons of the kind that he sets out.

[Lord Tope]

My Lords, is the Minister aware that the Greater London Authority’s population prediction shows that there will be more than 150,000 additional primary-aged children living in London in 10 years’ time? Is he further aware that, in addition to funding all the extra places necessary, a particular problem in London is where to put the new classrooms and the new schools? What will the Government do to help access to sites for new schools in London?

[Lord Hill of Oareford]

The noble Lord is right that there is a particular challenge in London with the availability of sites. We intend to work with local authorities to give them capital and to help identify sites. The responsibility for that resides with local authorities, but I agree that the Government must work with them and help to find ways of making sure that we can find as many sites as possible.

[The Lord Bishop of Newcastle]

My Lords, given the continued popularity of church schools, and noting that many are oversubscribed, will the Minister ensure that local authorities have regard to the balance of denominational places in an area by involving diocesan boards of education in decisions about where to target the extra funding that he has mentioned?

[Lord Hill of Oareford]

It is important that local authorities should make sensible decisions about where places are needed, irrespective of the type of school. The Government have made it easier for good, popular schools to be able to expand. Church schools, typically voluntary-aided schools, are their own admissions authorities and so have the ability to expand, but local authorities should address decisions about where to increase places irrespective of the school type.

[Baroness Farrington of Ribbleton]

My Lords, does the Minister agree that it would not be right for an academy to expand to take in primary school pupils, taking away sports facilities from that academy, in an area where the local authority, in Pimlico, says that there is not a need for more primary school places?

[Lord Hill of Oareford]

My Lords, I know the case to which the noble Baroness refers. With regard to new primary provision, in many cases where there is new free school provision coming in, there is a basic need. In the specific case to which she refers, it is also the case that we are trying to increase the supply of excellent places and the academy that is seeking to open a primary has done a brilliant job in turning around a school that was previously failing. It became a sponsored academy under the previous Government. If it can extend that to primary school children, I think that it will be doing a good job.

[Baroness Sharp of Guildford]

What proportion of children in primary schools, given the pressure on places, is likely to be in classes of more than 30 in the next few years?

[Lord Hill of Oareford]

I am not able to give my noble friend precise figures, partly because we are working with local authorities to get a better understanding of the particular pressures at a very local level. I am advised that the number of classes of more than 30 has been falling, but we will need to keep an eye on that and the legislation dealing with it remains in place.

Georgia: Public Services

Monday 16th July 2012 Lords Chamber

Question

14:44

Asked by

[Lord Harries of Pentregarth]

To ask Her Majesty’s Government what lessons they are learning from the introduction of “one-stop shops” for public services in Georgia.

[Lord Wallace of Saltaire]

My Lords, the Government are always willing to learn from examples of good practice from overseas. I compliment the noble and right reverend Lord for highlighting the Georgia case. He may be aware that US Secretary of State, Hillary Clinton, has just made some very complimentary remarks about the Georgian public service halls. The wider public sector in the UK has already done a great deal on one-stop shops, working across organisational boundaries and making it easier for customers to access services in a more joined-up fashion. The implementation of the Government’s Digital by Default agenda will provide government information and services online and in one place that will be simpler, clearer and faster for users.

[Lord Harries of Pentregarth]

I thank the Minister for his reply. I am indeed aware of the Government’s desire to reform public service provision. As he has mentioned, the example of Georgia is truly remarkable. While driving to one such public service hall when I was there recently, our escort asked us for our details. When we arrived only 15 minutes later we were all presented with replica Georgian passports. This was just one example of their speed and user-friendly approach. Will the Minister encourage different government departments to look at the actual design of these halls, because whatever we have in the way of digital provision, there will still need to be a place where some people can go? Secondly, will he see if they can work together, perhaps with the Post Office, in such public service halls?

[Lord Wallace of Saltaire]

I congratulate the noble and right reverend Lord, Lord Harriesvili, on his new citizenship. On the question of design, I have looked at the pictures of some of these new public service halls in Georgia—they are magnificent buildings, on a scale that I do not think would be easily accepted by the media in this country; it is easier for a country that is coming out of a socialist era in the way that Georgia is doing. The Government are aware, however, that the Georgian provision depends heavily on using new technology, and that parallels exactly what we are attempting to do with the Digital by Default exercise.

[Lord Haworth]

My Lords, Georgia is a small, faraway country about which we tend to know very little, although today we now know a little more. The question raised by the noble and right reverend Lord, Lord Harries of Pentregarth, about the way in which Georgia has developed one-stop shops is extremely important. I was with him on the visit to the facility in Rustavi and I was also issued a passport by the Georgians in double-quick time. I also went to a similar facility in a small community high up in the Caucasus, where exactly the same provision is being extended. The modernised interface between public and state that these facilities embody is highly impressive. The Minister may not want to take it from me but he has already mentioned Secretary of State Clinton, although he did not quote her words about,

“very creative and impressive advancements”,

and “modern technological wonder”. Will the Minister reflect on this and possibly consider inviting a delegation of Georgians to come to this country to share best practice with us?

[Lord Wallace of Saltaire]

My Lords, I received a detailed briefing from the Georgian embassy this morning, as they discovered that I was due to answer this Question. We are doing a number of things that work in the same direction: we are looking at the provision of the public service estate, and the capital assets pathfinder exercise, working between central and local government, is looking precisely at how you can bring offices together so that services are integrated. In Hampshire, the new Havant public service village, which is the furthest along in this development, is a project that will bring together Hampshire County Council, Havant Borough Council, Hampshire PCT, Hampshire and Isle of Wight police, Capita, Citizens Advice and other voluntary sector partners in the same building. The aim is to transform public service delivery in Havant. That is very much the sort of thing that we have in mind and, incidentally, will save a considerable amount of space by the time it has finished.

[Lord Cormack]

My Lords, has G4S been to Georgia, and if not, why not?

[Lord Wallace of Saltaire]

My Lords, G4S is an international company but I have absolutely no idea whether it has yet been engaged in Georgia.

[Baroness Hayter of Kentish Town]

My Lords, we are about to have elections for police and crime commissioners, with material only on the web and no leaflets. Digital by Default, which the Minister has mentioned, will do for some, but there are a lot of people who need all sorts of things such as passports, licences and debt advice. Could the Minister go to Georgia himself or possibly send Francis Maude there to see what we could learn about people still needing face-to-face advice?

[Lord Wallace of Saltaire]

My Lords, I have been to Georgia three times in the last 15 years and would love to go there again. The speed at which our population is moving towards using digital services is quite remarkable and I find, as someone of the older generation—like everyone else here, if I may put it tactfully—the estimates of how many people will use digital services by preference in 10 years’ time very encouraging. However, as in Georgia and the Havant exercise, people who do not find digital access quite so easy will still need assistance to help them use facilities that are more easily available online.

[Lord Shipley]

My Lords, does the Minister agree that the £4 billion new investment programme announced today for our rail network needs to be accompanied by a more streamlined planning system and that following the abolition of the Infrastructure Planning Commission, the Secretary of State has become the one-stop shop for major projects? Will the noble Lord confirm that the planning process will be better as a consequence?

[Lord Wallace of Saltaire]

My Lords, that is a little wide of the Question. However, I did book my train tickets for the next two weekends from London to Saltaire online this morning so I am moving in the right direction in using digital means. In terms of planning, all I have done in respect of railways this morning is to check exactly what the Castlefield corridor, part of the new northern hub, is.

[Baroness Knight of Collingtree]

My Lords, is my noble friend aware that there is absolutely no need for him to go to Georgia, nor indeed for visitors to be brought over from there, when they have an excellent ambassador, from Georgia, here in London? I suggest that he talks to the ambassador.

[Lord Wallace of Saltaire]

My Lords, I am embarrassed to admit that I taught the current Georgian ambassador in 1995 and 1996.

Gibraltar

Monday 16th July 2012 Lords Chamber

Question

14:52

Tabled By

[Lord Hoyle]

To ask Her Majesty’s Government what has been their response to incursions into the British sovereign waters off Gibraltar by the Spanish Guardia Civil.

[Lord Anderson of Swansea]

My Lords, on behalf of my noble friend Lord Hoyle, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

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

My Lords, the Royal Navy challenges Guardia Civil and other Spanish state vessels whenever they make unlawful maritime incursions into British Gibraltar territorial waters. In such cases, we also make formal protests to the Spanish Government through diplomatic channels, making clear that such behaviour represents an unacceptable violation of British sovereignty.

[Lord Anderson of Swansea]

My Lords, the Minister is well aware that in spite of the fact that Gibraltar territorial waters are recognised by the UN Convention on the Law of the Sea, there has been a considerable increase in incursions by Guardia Civil vessels into Gibraltar territorial waters. There were none in 2009, eight in 2010, 280 in 2011 and well over 160 this year. In light of that escalation, and to avoid any further increase, will the Government join the Gibraltar Chief Minister, the honourable Fabian Picardo, in challenging our good ally Spain to refer the matter for determination by the International Court of Justice or by the International Tribunal for the Law of the Sea? Otherwise, on behalf of Gibraltar, will we take the matter to those international courts ourselves for final determination?

[Lord Howell of Guildford]

The noble Lord is quite right about the increase in the number of these incursions. The problem about referring the issue to the International Court of Justice is that of course it requires all involved parties to agree to it, which does not appear to be in prospect. We believe that the right way forward is the one we are adopting, which is that the response should be measured, we should continue to press the Spanish Government very carefully and there is no point raising the temperature or tension in these matters, as they can be resolved by discussion. We would like of course to go back to the trilateral talks based on the Cordoba agreement, if we could. They were progressing, but that route, too, seems blocked. The way forward is, as I have described, to insist that these are unlawful maritime incursions and should not be accepted. We raise them in the strongest possible terms with the Spanish Government at every opportunity.

[Lord Luce]

My Lords, is the Minister aware that some 12 years ago, when I was governor of Gibraltar, we faced similar problems, and that there are lessons to be learnt from all this? In welcoming the setting up of the working party by the Government of Gibraltar to work with Spanish fisherman and environmental experts to try to find a way forward, will the Minister nevertheless assure the House that the British Government are providing whatever naval presence is needed to uphold sovereignty?

[Lord Howell of Guildford]

Yes, I can give that assurance, and there have been no complaints from the Gibraltar Government about the lack of adequate resources. There is the Gibraltar squadron, which has two patrol craft, some rigid-framed inflatable boats and crews. The responses they work out can be preceded by radio warnings, but they are effective and will continue, so I can give that assurance.

[Lord Kilclooney]

My Lords, has the increase in these incursions not really arisen since the European Union decided that, as regards environmental matters, the waters around Gibraltar were Spanish and not British? Is this being challenged and are the Government doing anything to expedite the court case?

[Lord Howell of Guildford]

I am not sure that that is the right analysis. That case, which continues, is about how these waters are designated as a European Union special site of community importance, and it is being disputed. The immediate pattern seems to have been that with the new Gibraltar Government the informal agreement which allowed Spanish fishermen certain opportunities to fish, entirely on an informal basis, has ended and the resultant tensions have been fostered by the fact that Spanish fishermen now come accompanied by Guardia Civil vessels, which obviously raise the tension further. That is the cause of the difficulty now. The other issue that the noble Lord raised continues to be disputed vigorously because these are British sovereign waters and any designation as an EU site will be the responsibility of the British and Gibraltar Governments.

[Lord Roper]

My Lords, will the Minister tell the House what other steps are being taken to resolve practical problems between Spain and Gibraltar?

[Lord Howell of Guildford]

There are a range of detailed practical problems that can and should be arranged and should be discussed. We would like to see a move back to the previous trilateral arrangements, which included the British Government, the Spanish Government and Gibraltar and were a good forum for making progress. At the moment, that is not encouraged and does not seem to be favoured by the Spanish Government, so I have to report that the linkages to deal with these smaller matters are really either informal or in small groups. No general strategy is being successfully carried forward, and we would like to see one developed.

[Lord West of Spithead]

My Lords, does the Minister agree that this escalation in events is quite worrying and that while one understands efforts to defuse the situation, we need to do more to get the message across that this is unacceptable? We might otherwise find ourselves in the position we were in on 15 July 1798, when HMS “Lion” took on four Spanish frigates, capturing one and sending the rest running—a position we would not like to be in again.

[Lord Howell of Guildford]

The noble Lord is absolutely right that it could develop seriously, but from the point of view of the Spanish fishing community, the Spanish Government, ourselves or the people of Gibraltar there is no interest in escalating this to the point of any kind of physical action. Therefore, we think that dialogue is the best way forward. We have good relations with the Spanish Government. My right honourable friend the Foreign Secretary met the Spanish Foreign Secretary on 29 May and discussed it, and we think this is the right channel through which to develop a better dialogue and to meet all these detailed issues, including the fishing incursions. Once we have solved them, we would take a broader view about whether Spain is going to co-operate closely with us and Gibraltar on the kind of trilateral regime we had before, but the first thing is to solve the fishing dispute.

[Lord Swinfen]

My Lords, what is done with the vessels that are caught illegally operating in Gibraltarian waters? Are they destroyed?

[Lord Howell of Guildford]

They are escorted and moved out of British sovereign waters by our patrol craft. They are asked to go and they go.

Syria: Olympic Truce

Monday 16th July 2012 Lords Chamber

Question

15:00

Asked By

[Lord Hylton]

To ask Her Majesty’s Government whether they will propose within the United Nations that steps be taken to apply the Olympic Truce in Syria during at least the period of the 2012 Games, and if possible for the traditional 100 days.

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

My Lords, we are committed to the Olympic Truce’s ideals of conflict prevention and peace. In the case of Syria, the six-point plan of the joint special envoy, Kofi Annan, sets out clearly the steps to a ceasefire. This has not been implemented by the Syrian regime, despite its undertaking to do so. We are therefore pressing for full implementation of the Annan plan to stop the terrible violence in Syria and allow a Syrian-led political transition.

[Lord Hylton]

My Lords, I thank the noble Lord for his reply. It seems that the Annan plan has not been accepted in any way by the Syrian Government. Will Her Majesty’s Government consider barring access to this country for the Olympic Games to Syrian athletes, officials and even spectators unless they agree to a truce?

[Lord Howell of Guildford]

Anyone applying to enter the United Kingdom is treated according to our Immigration Rules. If an individual is currently the subject of a European Union or UN travel ban, they will not be able to come to the Games. However, I emphasise that this is a matter that relates to individuals, not to teams generally, groups or nationalities. I repeat: accreditation to the Olympics will be refused to any individual who may present a safety or security risk, or whose presence at the Games or in the UK would not be conducive to the public good.

[Baroness Falkner of Margravine]

My Lords, my noble friend mentioned the Annan plan. Amnesty International reported today that Syria is in a state of civil war. In his Statement to the House of Commons on 11 June, the Foreign Secretary said that if there was a full civil war the Annan plan would be set aside and the United Kingdom would move to a resolution in the Security Council. Are the Government co-operating with the French to do so next week?

[Lord Howell of Guildford]

My understanding was that it was the International Red Cross that raised the concept of civil war, although whether it is qualified to establish an accepted viewpoint is debatable. The British Government are looking at the issue in the light of what has been said and the continuing, horrific and totally unacceptable level of violence. I cannot say more than that at the moment. We have not reached a clear view on the point that my noble friend raised.

[Baroness Symons of Vernham Dean]

My Lords, the Question of the noble Lord, Lord Hylton, is topical for the worst of all possible reasons—we have heard of another appalling atrocity this weekend. I am sure that the Government are very concerned about these terrible reports of slaughter after slaughter, but will the noble Lord tell us whether, the Annan plan notwithstanding, any thought is being given to the creation of safe havens on the borders of Syria, where people can go when they feel that they are in such appalling danger? I am sure we all feel that this is a terrible situation, but we seem utterly stuck in it.

[Lord Howell of Guildford]

I can understand the noble Baroness’s feelings. On the broad issue, Kofi Annan is now in Moscow pressing the Russians who—with the Chinese—are a key part of this story, so that we can move to a Chapter 7 UN resolution. As for safe havens, of course thought is being given to these matters, but the noble Baroness knows that for them to be policed and operated on Syrian soil means the involvement of personnel and conditions inside Syria which simply do not exist at the moment. They would involve much higher risks and many more dangers than we face even at present. As to safe havens, the authorities in Turkey have created some refugee havens and areas to which many people have crossed the border and entered. However, safe havens and corridors within Syria have been considered but are not a realistic possibility as we see it at the moment.

[Lord Bates]

Although I share my noble friend’s revulsion at the events in Syria, the fact is that Syria is a co-sponsor of the Olympic Truce resolution which this Government have done so much to promote, and which this Government proposed to the UN General Assembly last year. These are desperate times and there is a case for desperate measures. Could not one of those measures be to use the Olympic Truce which comes into force on 27 July as the basis on which a delegation involving the previous proposers of the Olympic Truce, China, and the next proposers of the Olympic Truce, Russia, could go to Damascus under the auspices of the UN and the IOC to plead for Syria to honour this important commitment?

[Lord Howell of Guildford]

First, I acknowledge and salute my noble friend Lord Bates’ work in promoting the Olympic Truce ideal, which is widely supported. Of course, the British Government took the lead in co-sponsoring UN Resolution 66/5 on, “Building a peaceful … world”. The question that my noble friend rightly poses, through some very creative thinking, is whether we could not somehow involve China and Russia in joint action to mount more pressure on Damascus—indeed, on both sides in Syria—to cease their appalling and violent activity. A short while ago my right honourable friend the Foreign Secretary agreed with Mr Lavrov, the Russian Foreign Minister, a joint statement on co-operation on the ideals of the Olympic Truce. There is a basis there for further discussion. I am also sure that Kofi Annan will be raising the matter in Moscow now while we are discussing it here. The basic ingredients are there for something along the lines that my noble friend mentioned. However, I am afraid that it is a long haul ahead and there are many difficulties in the way. But the truce is a potential asset in trying to move forward and get a grip on this horrific situation in Syria.

Legislative Reform (Annual Review of Local Authorities) Order 2012

Monday 16th July 2012 Lords Chamber

Motion to Approve

15:06

Moved By

[Baroness Garden of Frognal]

That the draft Legislative Reform Order laid before the House on 10 May be approved.

Relevant document: 1st Report from the Delegated Powers and Regulatory Reform Committee, considered in Grand Committee on 12 July.

Motion agreed.

Further Education Institutions and 16 to 19 Academies (Specification and Disposal of Articles) Regulations 2012

Monday 16th July 2012 Lords Chamber

Motion to Approve

15:07

Moved By

[Lord De Mauley]

That the draft Regulations laid before the House on 24 May be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 July.

Motion agreed.

Nationality, Immigration and Asylum Act 2002 (Authority to Carry) Regulations 2012

Monday 16th July 2012 Lords Chamber

Motion to Approve

15:07

Moved By

[Lord Henley]

That the draft Regulations laid before the House on 30 April be approved.

Relevant document: 1st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 July

Motion agreed.

Smoke-free Private Vehicles Bill [HL]

Monday 16th July 2012 Lords Chamber

Order of Commitment Discharged

15:08

Moved by

[Lord Ribeiro]

That the order of commitment be discharged.

[Lord Ribeiro]

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

Motion agreed.

Supply and Appropriation (Main Estimates) Bill

Monday 16th July 2012 Lords Chamber

Second Reading (and remaining stages)

15:08

Moved By

[Lord Sassoon]

That the Bill be read a second time.

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

Motion

Moved by

[Lord Sassoon]

That the Bill do now pass.

[Lord Grocott]

My Lords, I rise only to reflect that if this were a fully elected House, the proceedings that have just taken us about 30 seconds would probably have taken us three weeks instead.

Bill passed.

Groceries Code Adjudicator Bill [HL]

Monday 16th July 2012 Lords Chamber

15:10

Clause 1 : The Adjudicator

Amendment 1

Moved by

[Lord Browne of Ladyton]

1: Clause 1, page 1, line 3, leave out “There is to be a Groceries Code Adjudicator” and insert “A Groceries Code Adjudicator is established”

[Lord Browne of Ladyton]

My Lords, as I explained on the first day in Committee, having set out to legislate in language that is,

“intended to be easier for everyone to understand”—[Official Report, 22/5/12; col. 761.]

that is, in plain English—it is arguable at least that the Government have failed that test in the first effective sentence, which is in the third line of the Bill. It reads:

“There is to be a Groceries Code Adjudicator”.

As I argued on the first day in Committee, I know no one who speaks plain English who uses that construction. This is not the most important issue that we will discuss in relation to this Bill but it gives your Lordships’ House an opportunity to discuss this issue of plain English, which occupied us intermittently throughout our debate in Committee. Unfortunately, we did not find a comfortable way in which to deal with all aspects of this and some of them may recur in our deliberations on Report.

In order to make my point, I attempted to improve this sentence by simply amending it to read, “There will be a groceries code adjudicator”. I was told by the Minister that that changed the meaning of the sentence and that the construction I had chosen was a prediction and not a statement of fact. However, she graciously agreed to take this matter away and to think on it. Perhaps I may say that that was not surprising because, arguably, the sentence:

“There is to be a Groceries Code Adjudicator”,

also appears to me to have an element of prediction about it.

However, the Minister having graciously offered that opportunity, I grasped it. I too have thought about this sentence. With the assistance of a conversation with the Bill team, I now propose an amendment which reads:

“A Groceries Code Adjudicator is established”.

Now neither of us is in the prediction business. We are in the present tense and this Bill will now establish a groceries code adjudicator, which I hope will find favour with the Government. At this stage of my short life in your Lordships’ House, I should be delighted if I were able to improve a piece of legislation. This is an opportunity for the Government to accept this amendment. I beg to move.

[Lord Knight of Weymouth]

My Lords, this side is entirely supportive of my noble friend’s amendment. I simply ask the Minister if she could briefly update us on her conversations with the noble Lord, Lord True, and his concerns about plain English and the sense of the preambles in the Bill, which were raised in the last moments in Committee.

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

My Lords, the issue of plain English was raised at Second Reading. It was revisited at some length in Committee. The Government have considered this further. Noble Lords will recall that we discussed the possibility of saying, “There will be an adjudicator” or “There shall be an adjudicator”. I am glad to say that the proposal in the amendment in the name of the noble Lord, Lord Browne, is consistent with previous Bills and, I hope, clearer for those reading the Bill. In the spirit of this, and having heard the positions of several noble Lords in Committee, I would be happy to accept the amendment in the name of the noble Lord, Lord Browne.

As to an update on my conversations with the noble Lord, Lord True, I have a fulsome response for him later in the proceedings. Perhaps the noble Lord, Lord Knight of Weymouth, will kindly leave it until then for me to respond.

[Lord Browne of Ladyton]

My Lords, I hope I do not spoil the achievement of having the Government accept this amendment, but I cannot resist the temptation to express how delighted I am that I have managed to effect change to legislation in your Lordships’ House. I am absolutely sure that as we devote a substantial part of the immediate future to discussing the immediate future of your Lordships’ House, this will be cited as a historic moment in which the revising powers of the Chamber were exercised to the benefit of the ordinary people of the country.

Amendment 1 agreed.

15:15

Amendment 2

Moved by

[Lord Grantchester]

2: After Clause 1, insert the following new Clause—
“The Groceries Supply Order
(1) The Secretary of State must make an order to establish the Groceries Supply Order by statutory instrument.
(2) The Secretary of State shall commission a review by the Office of Fair Trading, in consultation with the Adjudicator, into the effectiveness and scope of the Groceries Code to report no later than two years following the commencement of this Act.
(3) An order may not be made under subsection (1) until a review under subsection (2) is completed.
(4) An order made under subsection (1) is subject to the approval of both Houses of Parliament.”

[Lord Grantchester]

My Lords, I declare my farming interests on the register. In moving Amendment 2, I am also speaking to Amendment 26. Having investigated the grocery market on two separate occasions, the Competition Commission found that abuses of market power by retailers damage suppliers’ confidence and their ability to innovate and invest. In turn, this can lead to a reduction in choice and availability and increased costs to consumers. The Competition Commission in 2010 set up a strengthened code of practice and the Bill sets up the adjudicator to enforce the code. We wish to see it enacted as soon as possible.

In Committee, we debated the anomaly that the Bill creates the office of an adjudicator to hear and rule on complaints brought under the groceries supply code of practice, which itself is not on a statutory footing. It was also brought to the House’s attention by the Delegated Powers Committee that the code may be altered or revoked without any parliamentary involvement. This amendment seeks to clarify that Parliament will be able to scrutinise the code’s workings.

Notwithstanding the strengthening of the code in 2010, my noble friend Lord Knight of Weymouth gave further examples of the complaints not covered under the code. The Food and Drink Federation has also given examples of further abuse, such as the unilateral deduction of invoices without sound business reasons or prior agreement. The amendment requires that the Office of Fair Trading, which has competence for the code, must set up a review in consultation with the adjudicator into the effectiveness and scope of the code, to report no later than two years after the Bill becomes enacted. It is vital that the workings of the code are updated and are relevant and responsive in an organic sense to changing market conditions.

Last Wednesday, more than 2,500 dairy farmers came to Parliament to make public the cuts and their concerns about a drop in prices of more than 10% on short notice this spring. At present, this situation is not covered by the code, which only covers the relationship between the top retailers and their immediate suppliers. The code does not cover the whole supply chain. The downward pressure from supermarkets is simply transferred from suppliers to their suppliers. The response of supermarkets to seeing their suppliers reduce prices down the supply chain is to immediately demand a share of the margin created—that is to say, a further reduction to their prices.

This is not the first or an isolated example in the dairy industry. In response to a similar situation in 2002, my noble friend Lord Whitty, when he was Minister of Agriculture, set up the Dairy Industry Supply Chain Forum to encourage relationships through the supply chain. That was 10 years ago. It is disappointing that the dairy industry has not improved over that time. The problems persist.

In response to the EU dairy package, the Minister of State in another place seeks a voluntary code, through Dairy UK, between processors and their suppliers. Indeed, in reply last Wednesday to a question from the noble Baroness, Lady Parminter, the Minister—the noble Lord, Lord Taylor of Holbeach—confirmed the situation. My understanding is that the issues covered are rather limited and unlikely to solve the problems. The Minister says that, without voluntary agreement, he will legislate, but my understanding is that that is not believed. He should legislate. This amendment gives him two years to make it work. If after a review we find that the situation has not improved—and we have seen no evidence over many years of any improvement—the OFT will be able to take effective action, highlighted by the experiences of the adjudicator.

I have highlighted the situation in the dairy industry. I am told that similar problems occur in other sectors. The amendment seeks to give the adjudicator and the OFT wide scope to make an effective code of practice work throughout the supply chain. I beg to move.

[Lord Cameron of Dillington]

My Lords, I first declare my interest as a farmer. I put my name to the amendment because it is important that we remain as flexible and light on our feet as possible in changing circumstances in this area. The effectiveness of the groceries code adjudicator is dependent on the effectiveness of the code. Both are equally important. It is surprising that while the adjudicator and his role are continually under review in Clauses 15 and 16, the review of the code is not given such emphasis.

Clause 13 in its simplicity is not sufficient. It sets out what the adjudicator could do but does not give me any confidence that anything will happen. It is important that as the adjudicator gains more experience, and as all the players inevitably try to push the rules to the limit, we should be able to review their roles and the rules involved. Circumstances change. The rules of rugby change from year to year and from time to time. The rules of Parliament relating to MPs’ and Peers’ expenses change. There are always new problems to be dealt with and overcome. We need to ensure that we can overcome the shortcomings in a structural way—hence subsection (2) of the proposed new clause.

The noble Lord, Lord Grantchester, mentioned the problems of the dairy industry. I do not know whether any review of the dairy code in the light of these recent developments would necessitate change, but the matter would certainly be worth looking at. It is vital that the groceries supply code of practice is not set in concrete. The amendment represents the necessary Kango hammer to free it.

[Lord Whitty]

My Lords, my Amendment 31 is in this group. I apologise to the Minister and the House that I was only a passive presence at Second Reading, and even more passive in Committee, despite my long-standing interest in the subject. I wish the Bill well and I am glad that the Government brought it forward.

I will resist the temptation to give my Second Reading speech now. I will say two things. First, as my noble friend Lord Grantchester said, it is 10 years since I started grappling with this issue and urging the noble Baroness’s predecessors, the competition authorities, to take this seriously. We have had the code since then and this begins to give it serious teeth.

Since I left office as a Minister I have also been a consumer champion. Occasionally I was leant on to say that it was not in the interests of consumers to have a go at the supermarkets by means of the groceries code. Supermarkets have made a very impressive contribution to consumer benefit, in terms of choice, price and convenience. However, it is not in the interests of consumers, even in the medium term, for part of the supply chain to be wiped out, or for supply at the retail end to be restricted in terms of competition if that is done by a large-scale operator. Consumers have benefited from supermarket activity, but they would not benefit from the supermarkets overstretching their ability to control the market.

It is also true, in defence of supermarkets, that it is not only they who could abuse their power in the supply chain and engage in the kind of activity that they are accused of, and which my noble friend and others referred to earlier in our debates on the Bill. As we know with the current situation of milk production, there is a question mark over the behaviour not only of supermarkets but also of large milk processors. My amendment does not seek immediately to broaden the scope of the code but it suggests that, were Amendments 2 and 26 adopted—in other words, were there to be a review—it may well be that it is not just the large retailers that should be included within the code’s provisions. In those circumstances the Minister would not have to wait another 10 years for primary legislation to extend the code and the adjudicator’s powers but, in the light of the reviews required by the other two amendments in this group, would be able by order to extend the provisions of the code to other large operators within the supply chain. That would be beneficial to the small suppliers; it would also give some clarity and restraint to those who were tempted to overuse their monopsonistic or oligopsonistic powers within the food chain. It would be an improvement to this Bill if the possibility of so doing were included in the primary legislation at this stage, rather than have to come back to it in a few years’ time.

[Baroness Wilcox]

My Lords, I understand that the noble Lord, Lord Grantchester, is eager to see a living code that will be responsive to the adjudicator’s experience of the groceries market. Other noble Lords have said they feel the same way, and I understand those concerns. I would like to discuss the noble Lord’s specific amendments but shall first address the issue of principle at stake here.

The adjudicator should clearly be responsive to needs within the industry, not only by prioritisation but by clarifying the code through advice and guidance. The adjudicator should also be able to use their front-line position to raise issues with the competition authorities, which are responsible for the groceries supply order and the groceries code contained within it.

As the noble Lord, Lord Grantchester, has said, the specifics of the dairy industry are being considered elsewhere in government. The adjudicator is not intended to address every problem in the sector, and the adjudicator’s role is clearly limited to the relationship between retailers and their suppliers under the groceries code.

Nevertheless, proposals in this grouping go beyond this natural evolution of the code’s interpretation, and risk undermining the basis for the code itself. Those involved in ensuring that this Bill reached Parliament—campaigners, Select Committee members or Ministers—have emphasised that the justification for this Bill lies in a rigorous market investigation and a finding by the independent competition authorities. This justification would be severely undermined if changes to the code were made without proper process through the competition authorities.

This principle goes beyond the issue of the groceries market and concerns the competition regime as a whole. It is a fundamental principle of the competition regime that remedying competition problems should be addressed by the independent and expert competition authorities, rather than directly by Ministers or Parliament. Oversight of these remedies is likewise the responsibility of the independent competition authorities.

This was at the core of the reforms introduced by the previous Government in the Enterprise Act 2002, which removed Ministers from competition decisions. As the then Secretary of State said at that Bill’s Second Reading:

“The Bill therefore provides that, in the vast majority of cases, with the exception of national security cases only, decisions will be taken by independent competition authorities, free from political interference”.—[Official Report, Commons, 10/4/02; col. 45.]

This principle is continued in the Government’s further reforms set out in the current Enterprise and Regulatory Reform Bill. Although the competition authorities are rightly accountable to Parliament for their overall performance, this is quite different from Ministers or Parliament debating or overseeing particular remedies.

In the case of the code, this means that responsibility for oversight of the code lies with the Office of Fair Trading under Section 162 of the Enterprise Act, not with the adjudicator, as Amendment 26 would have it, nor with the Secretary of State or Parliament, as Amendment 2 sets out. Equally, it is for the competition authorities to decide whether or not to amend the code—not, as the noble Lord, Lord Whitty proposes, the Secretary of State.

I remind noble Lords that the adjudicator has a statutory duty to make recommendations to the OFT if he or she thinks the code should be changed. This provides a flexible way for issues to be escalated whenever needed and therefore contributes to a truly living code, while respecting the existing structure of the Enterprise Act.

15:30

I also want to reassure noble Lords that this does not mean that a full market investigation is needed for any change. As long as evidence is provided of a change of circumstance, the Office of Fair Trading will be able to recommend that the Competition Commission amends the code. For instance, if the adjudicator comes across a new practice among retailers that was not present when the Competition Commission carried out its investigation, it could make a recommendation to the OFT which could lead to a change in the code. This would be far quicker than a market investigation, but crucially it would still be a decision of the independent competition authorities. Both this Government and the previous one as well as many noble Lords on the Cross Benches are strong supporters of maintaining the independence of the competition regime. This is a crucially important principle and one that we should not break, despite the significance of the groceries market to many of us, especially when the Bill already contains provisions which allow us to have the living code the noble Lord has been asking for. I therefore ask the noble Lord to withdraw his amendment.

[Lord Knight of Weymouth]

I am struggling with the Minister’s argument that the amendment in my name and the names of other noble Lords jeopardises the independence of the decision-making. All we are seeking to do in Amendment 2 is have a review by the Office of Fair Trading. There is no presumption about what the outcome of the review would be; we are just suggesting that there should be a review. And in Amendment 26 all that is being suggested is a slight change in emphasis. I respectfully suggest to the noble Baroness that it ought to be a happy compromise for the adjudicator to report annually on the effectiveness of the code. If the adjudicator independently thinks that the code is working fine, he or she should say so. If he or she thinks that there is a problem, he or she should say so, every year.

[Baroness Wilcox]

I hope that I have not been too wordy in my response. It is just that there was a real point of principle here. I felt it was worth going over the ground to make sure I had made it clear that we did not feel that these amendments were relevant at this time. I repeat that responsibility for oversight of the code lies with the Office of Fair Trading under Section 162 of the Enterprise Act, not with the adjudicator, as Amendment 26 would have it, nor with the Secretary of State or Parliament, as Amendment 2 seems to set out. Equally, it is for the competition authorities to decide whether to amend the code, not the Secretary of State, as the noble Lord, Lord Whitty, proposed. I hope that I have clarified the Government’s position.

[Lord Whitty]

We accept that the primacy of the competition authorities in these amendments could be clearer and that the precise wording may not be appropriate. Can the Minister not agree to take away these amendments and write them in such a way that makes the competition authorities’ role clear while establishing the principle of a review and the fact that that review might recommend an extension of the code? That is a point of substance. I take the point of maintaining the role of the competition authorities but a relatively minor amendment from the Minister at a later stage might help.

[Baroness Wilcox]

I am always nervous arguing with the noble Lord, Lord Whitty, given his experience as a Minister and the fact that he was head of the National Consumer Council, a role that I also held. I know the breadth of his knowledge on this subject, which is why I took such a long time to give my answer. This is as far as I can go. I hope that when the noble Lord reads in Hansard that the Bill already requires the adjudicator to recommend changes to the OFT, he will see that I have covered most of his worries and that he will withdraw his amendment.

[Lord Grantchester]

My Lords, we agree that the code is a responsibility for the OFT—that is not in dispute—but we believe that the Minister is getting involved in the EU dairy package between the processors and the dairy farmers. We think that makes her reasons for not accepting the amendment slightly disingenuous. It may be that at Third Reading we can further refine this amendment so that her officials are as happy with it as we are, but we wish to enshrine in the Bill a review, and one that looks into the possibility of an extension of the code throughout the supply chain. I thank the noble Lord, Lord Cameron, and my noble friend Lord Whitty for their support. I do not hear a large volume of support behind the Minister so I beg leave to test the opinion of the House.

15:36

Division 1

Ayes: 164

---

Labour: 130
Crossbench: 26
Bishops: 1
Independent: 1
Plaid Cymru: 1

Noes: 195

---

Conservative: 101
Liberal Democrat: 59
Crossbench: 27
Democratic Unionist Party: 1
Ulster Unionist Party: 1
Bishops: 1
Independent: 1

15:47

Schedule 1: The Adjudicator

Amendment 3

Moved by

[Lord Knight of Weymouth]

3: Schedule 1, page 11, line 8, at end insert “, subject to confirmation by a joint committee of the relevant departmental select committees”

[Lord Knight of Weymouth]

My Lords, the amendment in my name and that of my noble friend Lord Grantchester relates to the role of Parliament in respect of the new office of the groceries code adjudicator. In pushing the amendment which we discussed in Committee and bringing it before the House today, we do so, believe it or not, in the spirit of the coalition agreement. I remind noble Lords that the coalition agreement stated:

“We will strengthen the powers of Select Committees to scrutinise major public appointments”.

In Committee, I reminded noble Lords that that followed manifesto commitments from both the Conservative Party and the Liberal Democrats at the election.

Since we met in Committee, a letter from the noble Baroness’s ministerial colleague, Norman Lamb, to my colleague in the other place, Ian Murray, has to some extent further clarified the Government’s position. Mr Lamb writes that,

“the Government believes that posts which should be subject to pre-appointment hearings will generally be senior non-executive roles which either: play a key role in regulating Government; play a key role in protecting and safeguarding the public’s rights and interests particularly in relation to the actions and decisions of Government; or where it is vital for the reputation and credibility of the public body in question that the post holder, and is seen to be, independent of Ministers and Government”.

I think that the Government need to reflect on whether the BIS and EFRA Select Committees should have a role in confirming the appointment of the groceries code adjudicator, given what the Government are saying. The new office that we are establishing in the Bill is important. It is something which has to have a certain reputation and credibility, and which has to be independent of Ministers and government. I think that this office passes the tests that Mr Lamb sets out in his letter to Mr Murray, although I know that the Minister himself does not agree. He goes on to say:

“The Government does not consider that the groceries code adjudicator, though very important to the groceries sector, would fall within these categories”.

I think that the Government need to reflect on this. I am not going to push this to a vote today, because this is the sort of concession that the Government should want to make to the other place as it is their Select Committees that will have a role in confirming the appointment. However, I would strongly advise, if the Minister is willing to take advice, that this amendment is entirely in the spirit and wording not only of what the coalition agreement, her party’s manifesto commitment and her coalition partner’s manifesto say, but of what, in effect, at least one of the tests that Mr Lamb sets out in his letter to Ian Murray says. I therefore beg to move, for the sake of the debate.

[Lord Borrie]

My Lords, I support my Front-Bench spokesman who has just introduced this amendment. I hope I am right in thinking—the Minister will no doubt correct me if I am wrong—that the Bill currently going through the other place requires that the head of the proposed Competition and Markets Authority should be appointed by a Minister with the approval of the appropriate departmental committee. If that is so, and I am glad to think that it will be so, it emphasises the point that the Minister made in relation to the last amendment—namely the need to firmly establish the competition authorities’ independence of Ministers. She kindly said that this followed the Enterprise Act of the previous Government in their efforts to emphasise the independence of the competition authorities. It seems to me unduly subtle to say that the head of the Competition and Markets Authority, which is to be created shortly, is of a higher calibre of significance and importance than the groceries adjudicator. It is true that the groceries adjudicator’s role is narrower than that of the Competition and Markets Authority but, none the less, it is significant in its field. Indeed, the Government’s whole introduction of the Groceries Code Adjudicator Bill is based on the notion that, in a certain area of significance to the consuming public—supermarkets—the independence to be achieved by the appointment of this adjudicator is of some importance. I therefore hope that the Minister will agree with my noble friend who has introduced this amendment.

[Lord Cameron of Dillington]

My Lords, I am not so certain about this amendment—in fact, I think that I oppose it. If your Lordships have ever been involved in the appointment of a public post you will know that the criteria are very strict and there are many hurdles to be jumped, with independent assessors sticking strictly to the criteria and two or three interviews. I therefore think that this extra hurdle is an unnecessary piece of red tape. I know that it is common practice in the United States, for instance, to throw candidates for this sort of posts to the wolves before they have even got their feet under the table—the wolves, by the way, are the Select Committee—but I think that this is unnecessary. We want someone who is rational, methodical and good at making judgments in a legal or semi-legal context. We do not necessarily want someone who is used to the hurly-burly of political life and who might have to understand that when an MP is being rude to him he does not mean it. He is either showing off or trying to make a name for himself and just getting carried away.

I am opposed to the amendment. Perhaps that is simply because I do not have a particularly high opinion of MPs’ ability to take the right sort of decisions in this instance. It is better to leave it up to the usual channels to appoint a valid candidate who will really be able to do a good job.

[Baroness Wilcox]

My Lords, before I get any further I would like to thank the noble Lord, Lord Cameron, for supporting me, and I will of course respond to the noble Lord, Lord Knight, as well. First, however, I would like to respond to the noble Lord, Lord Borrie, by saying that the role he mentioned is much more significant to the economy as a whole; whereas this role, as he acknowledges, is much more specific, and as such we do not feel that the same type of scrutiny is required. I say to the noble Lord, Lord Knight, that I still feel that it would be inappropriate to lay down in primary legislation a requirement for Select Committee oversight. The procedure for pre-appointment scrutiny was clearly set out in the document published at the time of the previous Government and involves discussion between the Secretary of State and the chair of the relevant Select Committee, not primary legislation. As for whether the adjudicator is a significant enough office to warrant pre-appointment scrutiny, I consider that, despite its importance to the groceries sector, it is not significant enough according to the criteria set out by this Government. However, as any scrutiny would ultimately take place through a committee in the other place, I am sure that if the other place feels strongly enough on this topic then there will be further discussion on the issue at a future stage there. For the moment, I ask the noble Lord to withdraw his amendment.

[Lord Knight of Weymouth]

My Lords, the noble Lord, Lord Cameron, clearly has a relatively low opinion of MPs, which may be shared by others. I would not wish to test that for one moment. The Minister is probably right that it is up to the other place to try to assert the reputation of Members of Parliament, perhaps by shifting on this issue. The noble Baroness said that it is not general practice to set out Select Committee oversight in primary legislation. I am comfortable enough with that. If her ministerial colleague Norman Lamb is happy, when the Bill reaches the other place, to stand up and say, “Let’s please not put this in primary legislation, but we will refer it to the relevant Select Committees for confirmation”, that will do me. If the noble Baroness does not want this to be in primary legislation, that is fine. On the basis that the proposal lives to fight another day elsewhere, I beg leave to withdraw my amendment.

Amendment 3 withdrawn.

Amendment 4

Moved by

[Lord Browne of Ladyton]

4: Schedule 1, page 13, line 24, leave out “Office of Fair Trading” and insert “Competition and Markets Authority”

[Lord Browne of Ladyton]

My Lords, the effect of this group of amendments is to anticipate the passing into law of the Enterprise and Regulatory Reform Bill, which my noble friend Lord Borrie referred to in the previous debate and the provisions of which will combine the competition authority with the Office of Fair Trading. Those two bodies will be merged to create the Competition and Markets Authority. In Committee I spoke to a similar group of amendments but I did not press them too hard because I anticipated that I would be met with an argument that those amendments were premature, the Enterprise and Regulatory Reform Bill being at the early stages of its passage through Parliament. I was not disappointed because the noble Baroness explained in reply that that was exactly her position. I refer noble Lords to col. 99 of the Official Report of the first day in Committee.

The Government’s opposition to this group of amendments was one not of principle but of timing. The noble Baroness pointed out that as the Enterprise and Regulatory Reform Bill had not yet received a Third Reading in the other place—indeed, I think that it only goes into Committee tomorrow in the other place—it would be presumptuous of the Government to accept an amendment at this stage, and that she or another Minister would table similar if not identical amendments at a later stage once the Enterprise and Regulatory Reform Bill had matured and crystallised sufficiently for such amendments not to be presumptuous.

16:00

I accepted the argument at the time and withdrew the amendment. However, I have reflected on it and now bring back this group of amendments because it has been pointed out to me that, in the Crime and Courts Bill—your Lordships will need to follow a number of dates in order to get this point—which is currently before this House and had a First Reading on 10 May, there is a reference in Schedule 3(10) to,

“the chief constable of the Police Service of Scotland”.

The office of the chief constable of the Police Service of Scotland was created by the Police and Fire Reform (Scotland) Act 2012, which, on the day on which the Crime and Courts Bill had its First Reading, was at Stage 1 of its passage in the Scottish Parliament, which has a three-stage process. If ever there was an example of presumption and premature anticipation, that is it. That Act, fortuitously, passed into law on 28 June 2012, but the same Government who resisted my amendments were doing exactly the same thing in the same House of this Parliament on another piece of legislation.

I bring this before your Lordships’ House not because it is the most important point in the Bill—I have got serious points on the Bill, which I will come to—but because if there are rules about this, what are those rules? Why do those rules apply to some people, in terms of legislation, and not to the Executive? I am a great believer in consistency. If the Government can anticipate that another Parliament will pass a piece of legislation that makes sense of drafting that they present to your Lordships’ House, it would surely be consistent with that approach to accept a piece of drafting that anticipates that your Lordships’ House will do something that the Government themselves intend it to do. I beg to move.

[Baroness Wilcox]

My Lords, on the amendments tabled by the noble Lord, Lord Browne, I appreciate that the Competition and Markets Authority, when established, is likely to take on the functions of the OFT and the Competition Commission that are relevant to the adjudicator. The Bill will eventually need to be amended to reflect this. We were very grateful for the noble Lord’s understanding attitude in Committee and suggested that these amendments should be considered at a later stage of the Bill.

Last week, the Enterprise and Regulatory Reform Bill passed through Committee in the House of Commons but is still some way from enactment. For this reason, the Government believe that these amendments are still somewhat premature. Furthermore, I ask noble Lords to note that Clause 58 of the Enterprise and Regulatory Reform Bill includes a power to make consequential amendments to enactments, including enactments made in the same Session as that Bill. Even if this Bill were not amended during its passage to refer to the Competition and Markets Authority in place of the OFT and the Competition Commission, that power could later be used to bring it into line following enactment. Today the noble Lord has asked why the same approach is not taken on every Bill. The answer is that each Bill is different and the Government will consider what approach to take on a case-by-case basis. In this case, where it is relatively easy to amend either Bill at a later stage, the Government have decided to amend it at that later stage and I therefore ask the noble Lord to withdraw his amendment.

[Lord Browne of Ladyton]

My Lords, I am grateful to the Minister for responding to my amendments in what I suspect is the only way that she could. I am reminded of an experience that I had when I was a young solicitor with a client who had a dreadful drink problem. On one occasion I met him in the cells of the local sheriff’s court, and he had a summons for being drunk and incapable and a summons for breach of the peace. I asked him how he was pleading and he said not guilty. I said, “What’s the defence?”, and he said, “As far as breach of the peace is concerned, I was so drunk that I couldn’t speak, so I could not have been shouting and swearing. I am an alcoholic”. I said, “What about the drunk and incapable?”. He said, “I’m teetotal. I don’t drink”. I said, “These defences would appear to be inconsistent”. He said, “But you’re a young man at the beginning of his legal career. You will learn that two separate cases have two separate defences”. I am struck that to some degree my life has come full circle.

I do not intend to press this to the vote at this stage, but I hope that at some point the amendment, along with the position that the Minister has been put into in trying to defend these contradictory positions, may encourage those who draft legislation to be a wee bit more consistent. I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Amendment 5 had been retabled as Amendment 44.

Clause 2 : Arbitration

Amendment 6

Moved by

[Lord Whitty]

6: Clause 2, page 1, line 11, at end insert—
“(3) If a trade association or other third party refers a dispute to arbitration, the Adjudicator may—
(a) accept appointment as arbiter;(b) appoint another person to arbitrate;(c) dismiss the dispute referred as trivial or vexatious or providing insufficient prima facie evidence.”

[Lord Whitty]

My Lords, the amendment goes back to the basic problem about the relations within the food supply chain between the supermarkets and small and medium-sized suppliers and all the attempts to enforce the code and its predecessors without statutory backing. Whether we like it or not, there is an atmosphere of apprehension, anxiety and fear among small suppliers to supermarkets, and a feeling that if they raise problems with the supermarkets under the code, they are in danger of retaliatory action at some later stage—their contracts will be ended, curtailed or put on to a less beneficial basis.

I am aware that this was discussed in Committee and indeed there have been discussions about it since it was first raised, but Clause 2 still appears to allow disputes to be referred to the adjudicator only by the supplier themselves or, alternatively, by the large retailer. My amendment would explicitly allow a case to be referred to the adjudicator by a third party—an appropriate trade association or a farming union—and this would relate to issues that covered more than one supplier, or perhaps only one supplier but where there were general implications of the outcome of that particular case. The amendment would allow third- party initiation by a trade association or farming union but possibly also other third parties that were appropriate—for example, an agricultural charity.

This would not be an open-ended requirement. As with the large retailer, the adjudicator would not have to take the case under this amendment. While Clause 2 requires the adjudicator to take a case from the supplier, although not the large retailer, my amendment would give the adjudicator sufficient grounds for not taking it, on the grounds either of it being trivial or vexatious or because of a lack of prima facie evidence. The argument that this would be used against the supermarkets on spurious grounds by campaigners who were opposed to supermarket activity in unrelated fields would not be a good reason for rejecting the amendment. It would relate to genuine supplier problems but it would protect the supplier, the farmer and the small business from the fear of being retaliated against at a later stage. It would support that supplier if the NFU or trade association took up the case.

I appreciate that the Minister may not like the wording—her officials rarely do—but this must be something on which she could go a little further than she did in Committee to assure us that third parties could take such cases. Only that, I feel, would put an end to the apprehension and the fear among small and not so small suppliers, which are at a serious disadvantage with supermarkets. They would be protected under this code and other legislation. I beg to move.

[Lord Browne of Ladyton]

My Lords, I will speak to the amendment standing in my name, which seeks to insert a mechanism for ensuring the independence and the qualifications of an arbitrator appointed under the code by reference to the provisions of this Bill. It generates, I would argue, a valuable opportunity for the Minister to explain a very complex part of this legislation, which, without an explanation in the Official Report of our deliberations, I fear may not be understood by those who come to apply, or seek to apply, the provisions of this Bill in relation to the code.

As we have already heard, this is a unique piece of legislation, because the basis of it is a code that is owned by the Competition Commission. If the code is repealed, then all this legislation becomes redundant. I embarked on the amendment of this particular part of the Bill because of my then limited understanding of both the arbitration legislation as it applied in England and Wales and the Arbitration (Scotland) Act 2010, which has been passed by the Scottish Parliament and, in part, now applies to Scotland, but which is not yet fully commenced. I was unsure how all these things interacted, but I was certain that at some stage it would be necessary for the Government to make it perfectly clear that the provisions of that legislation, which were carefully debated and thought through both in this Parliament and the Scottish Parliament, and were designed to generate an independent and properly qualified process of arbitration, would properly be applied to this legislation when enacted and to the processes that it was creating. The more I got into it, the more I began to appreciate just how important that was.

With the leave of the House, I will take a few minutes to explain some of this complexity but will leave it to the Minister to explain how all this works. In my discussions with the noble Baroness and her Bill team, both of whom have been extraordinarily generous with their time and in explaining this, we have between us uncovered areas in which this Bill and the code could be improved. I have not endeavoured to do that in this particular amendment, and have removed other amendments that I proposed, because I am confident that at some stage in the progress of this Bill the Government will themselves bring forward some amendments that deal with those issues that have now been uncovered.

This amendment, on plain reading, concerns the qualifications and appointment conditions for an arbitrator under the Bill and has had the benefit of shining a spotlight on a particularly unclear and potentially confusing part of the Bill. To understand how this Bill works, one has to understand the interaction of the arbitration provisions in the Bill with the existing arbitration laws in England, Wales and Northern Ireland, and also with the arbitration provisions in the code itself. It is not easy to follow all this. We are not helped by the fact that the Explanatory Notes compound this lack of clarity rather than resolving it. In particular, paragraph 30 states that the provisions of the Arbitration Act 1996 will “broadly” apply and that,

“the Arbitration (Scotland) Act 2010 will broadly have a similar effect in applying the Scottish Arbitration Rules, except so far as this would be inconsistent”,

with the groceries supply order or the Bill. That was not intended to be clear. It is intended just to report the position which is quite difficult to work out.

16:15

When one interrogates this process closely, one discovers that the provisions of the 1996 Act and the 2010 Act—which are partly enacted by this Bill, but I will come to that in a moment—do not broadly apply; they apply entirely. Arbitrations under the Bill will be statutory arbitrations. One would think that it would therefore follow that the 1996 Act would apply in England, Wales and Northern Ireland and the Scottish legislation would apply to statutory arbitrations in Scotland. However, that is not the case because the Act having been passed in 2010, the Scottish Executive, who have responsibility for bringing its provisions into effect, have specifically said that they do not yet apply to statutory arbitrations. So the ingenious answer in this Bill to that problem is that Clause 21 has the effect of applying those provisions of an Act of the Scottish Parliament, which is not yet in force in Scotland, to arbitrations under this Bill. Apparently the Scottish Government have agreed, and that is to be celebrated. It is not something that the current Scottish Government will tell many people in Scotland, but they have agreed to legislation passed by the Scottish Parliament that is not yet in force as far as statutory arbitrations are concerned being applied to statutory arbitrations under this Bill and code. I welcome that. Indeed, in an earlier debate we had in relation to this Bill, I tried to encourage the Government to have that sort of relaxed attitude towards relationships between Scotland and the rest of the United Kingdom, but I was unsuccessful.

For those of us who are anoraks about devolution and, in particular, devolution to Scotland, the question arises of whether a step like this in the constitutional settlement we have requires a legislative consent Motion of the Scottish Parliament. It appears that the Government’s position and the consensus from BIS, the Office of the Attorney-General in Scotland and the Scottish Government is that an Act of the Scottish Parliament is not required to bring into force legislation in relation to the operation of UK legislation. I would not be surprised if I am losing a number of people in this argument, but I am not really concerned about that because I am only pointing out how complex this is and why it is important that the Government explain how this will work so that the supplier who thinks that he may have something that needs to be attended to by this process has some idea about what he is getting himself into.

Whether an Act of this Parliament in relation to a matter that would otherwise be devolved requires a legislative consent Motion depends upon the application of the purpose test. In other words, is the purpose of this legislation to do with competition law or arbitration law? If it is to do with competition law, it is reserved and Acts of this Parliament do not require legislative consent Motions, even if they encroach upon arbitration law, which is devolved and is an area where the Scottish Parliament has passed an Act that the Scottish Government have quite deliberately not brought completely into force. I am not going to ask your Lordships’ House to debate the purpose test in relation to this legislation because the Government are very clear that it is to do with competition law and it would appear that the Scottish Government agree with them. Interestingly, I do not think anybody has asked the Scottish Parliament what it thinks, but that may be an irrelevance as far as this is concerned.

These are interesting questions. In circumstances where other comparatively trivial matters about the relationship between the Scottish and UK Parliaments and the UK and Scottish Governments have occupied us sometimes for hours in Scotland, how do we come to a situation where an accommodation like this can be created without any recourse, in any circumstances, to either Parliament? This is an interesting and welcome thing to do and I hope that it is a forerunner to a degree of co-operation between our respective Parliaments that we have not seen until now. However, I suggest and predict that this apparently unclear and untransparent way of enacting law makes it difficult, apart from anything else, to know which parts of the Scottish Arbitration Act 2010 are in force and which are not. In some circumstances, it also makes it difficult to work out where it is best and which law applies to an arbitration that comes from this complicated process of the code, our Bill, the 1996 Arbitration Act applying to England, Wales and Northern Ireland and parts of Scotland’s 2010 Act that we are now bringing into force. It would have been much easier for the Scottish Government just to have implemented the 2010 Act in a way that was consistent with all this, but apparently we have got beyond that.

I shall try to avoid the temptation to start discussing which jurisdiction will apply to arbitration, although I have a speaking note about it. There is a question about whether a Scottish supplier will be defeated by the operation of these provisions. A retailer might want his arbitration to be conducted under the rules in Scotland, but find that he is stuck with it being conducted under the rules in England. I will leave that hanging; it may be a debate for the other place. I am not sure that lifting up this particular stone and discovering what was underneath has been of great benefit to your Lordships’ House. Given the discussions that have taken place between me, those advising me, the noble Baroness and her Bill team, I hope that we may get a degree of clarity from the response to this amendment, which will then be there for others to take advantage of.

At least one good thing has come out of this: the groceries code order needs to be amended because it no longer reflects the state of law in Scotland. At some stage, an amendment will have to be brought to this Bill to create the mechanism to change the order. I am happy to leave the noble Baroness and her deeply skilled Bill team, who are across all this in some detail, to explain when that is going to happen. However, it would be better if it happened before the Bill left your Lordships’ House so there cannot be any criticism from the other place that we are not doing our job comprehensively. That is crucial at this particular time. It would be helpful if that could be done before the Bill leaves your Lordships’ House.

[Baroness Wilcox]

My Lords, I thank the noble Lord, Lord Whitty, and the noble Lord, Lord Browne, for these amendments. Regarding the amendment tabled by the noble Lord, Lord Whitty, for reasons I shall explain, we do not believe it should be possible for third parties to refer disputes to arbitration. Clause 2 simply supplements the arbitration provisions in the groceries supply order 2009. Article 11 of the order does not allow a trade association or other third party to refer a dispute to arbitration so, if we provided that in the Bill, we would be departing from the order. In any event, we do not think that it is right that a third party should be able to refer a dispute to arbitration. A dispute is between a retailer and a supplier, not with a third party. If a supplier seeks compensation or some other remedy for its own benefit, it should come forward to submit the dispute to arbitration itself and on a named basis. This is consistent with the normal way in which disputes between two parties are resolved. Any other approach would risk unfairness to the retailer concerned. However, a trade association or other third party will be able to complain to the adjudicator if it considers that a retailer has breached the code. The adjudicator could then take that information into account in deciding whether to commence an investigation. That is how third parties can get involved. There is a distinction between arbitrations, which must be between retailers and suppliers, and investigations, where the adjudicator will be able to consider information from any source, including trade associations.

The remainder of my remarks are now directed more to the amendment of the noble Lord, Lord Browne, concerning the process for appointing an arbitrator, and to explaining why his amendment is not necessary. As I say, Clause 2 supplements the 2009 order. Because the order and the Bill provide for arbitration between retailers and suppliers, the arbitrations will be statutory arbitrations for the purposes of the Arbitration Act 1996 for England, Wales and Northern Ireland and of the Arbitration (Scotland) Act 2010. In the latter case, Clause 21(6) applies the provisions of the 2010 Act, pending that Act coming into force in relation to arbitrations under the Bill.

Section 94 of the Arbitration Act 1996 applies the provisions of Part I of that Act to every statutory arbitration, but this is subject to the adaptations and exclusions in Sections 95 to 98 of that Act. Also, the provisions of Part I will not apply to the extent that they are inconsistent with the groceries supply order 2009 or with the Bill; that is why I used the word “broadly” in referring to Section 94 in Committee. In Scotland, the effect of Section 16 of the Arbitration (Scotland) Act 2010 is similar in applying the Scottish arbitration rules set out in Schedule 1 to that Act to arbitrations under the 2009 order and the Bill. Again, there are certain exceptions set out in Section 16 and, again, the Scottish arbitration rules will not apply to the extent that they are inconsistent with the groceries supply order or the Bill; that is also why I used the word “broadly” in referring to Section 16 in Committee.

I will briefly give a couple of examples of inconsistency. The mechanism for the appointment of an arbitrator in Clause 2 of the Bill and provisions in Article 11(7) of the order for the payment of the arbitrator’s costs will each take precedence over provisions in the Arbitration Act 1996 and the Scottish arbitration rules about appointment and costs. I should also explain at this point that Article 11(6) of the order provides for the arbitration to be conducted in accordance with the rules of the Chartered Institute of Arbitrators or any other dispute resolution body nominated by the appointed arbitrator. The rules of the relevant dispute resolution body and/or provisions of Part I of the Arbitration Act 1996 and the Scottish arbitration rules will protect the parties against the risks of the arbitration being carried out by an arbitrator who is not capable, impartial and fair. I refer in particular to Sections 24, 33 and 68 of the Arbitration Act 1996 and to rules 8, 10, 12, 24 and 68 of the Scottish arbitration rules.

In addition, it is worth noting that the adjudicator, as a public authority, must act reasonably and respect the right of the parties to a fair trial in appointing any arbitrator. Those duties will also act as a safeguard against the appointment of an arbitrator who is not capable, impartial, independent and fair. All that means that the amendment tabled by the noble Lord, Lord Browne, is not necessary.

16:30

On a minor point, we have noted that in at least one respect it would be sensible to bring Article 11 of the order up to date to reflect the Arbitration (Scotland) Act 2010. Article 11(8) refers to Sections 67 to 69 of the Arbitration Act 1996 but not to the similar provisions of the Arbitration (Scotland) Act 2010, which of course came after the order. The Government will therefore consider whether this updating could usefully be facilitated by a minor and technical amendment to our Bill.

Clause 21(6) is a slightly unusual provision but it provides a practical solution to an issue which in our view is technical and uncontroversial. For the reasons I have explained, we want the Scottish arbitration rules in the Arbitration (Scotland) Act 2010 to apply to arbitrations between a retailer and a supplier which take place in Scotland. That will make the position in Scotland similar to the position which applies in England, Wales and Northern Ireland under the Arbitration Act 1996. However, the provisions of the 2010 Act which will bring this about are not yet in force in relation to statutory arbitrations such as these.

As explained in the Explanatory Notes, Clause 21(6) therefore applies the 2010 Act to arbitrations under the order and our Bill as if the 2010 Act were in force, until it is in force. At that point Clause 21(6) will fall away. Therefore, the effect is similar to the commencement of the relevant provisions of the Arbitration (Scotland) Act 2010, but only for that clear and very limited purpose. Therefore, I suggest that Clause 21(6) is a practical solution to what is essentially a timing difference connected with the Scottish arbitration rules, and one which is very specific to the needs of our Bill. I suggest that the position under the 2010 Act is clear.

The question has been raised of whether Clause 21(6) should be the subject of a legislative consent Motion under the Sewel convention. Our view is that the convention is not triggered. The Bill relates to matters of competition law and is a reserved matter. It does not fall within the legislative competence of the Scottish Parliament because, although arbitration generally is a devolved matter, the Scottish Parliament could not provide for matters of arbitration only by the adjudicator or a person appointed by the adjudicator. I hope that I have not spoken too fast for noble Lords to take in the points that they deeply need and, with all those explanations in place, I request that the noble Lord withdraws his amendment.

[Lord Whitty]

My Lords, I thank the Minister for making clear the distinction between a complaint leading to an investigation and one leading to arbitration. However, I still think that there should be a means whereby someone could represent a supplier through the arbitration process as well as triggering an investigation. This may not be the appropriate clause to amend in that respect. The Minister made it clear that we would have to amend the code in order to do that, which I accept.

However, the net effect is that in this Act, the code and all its operations, we have not solved the basic imbalance of power to enable individual suppliers to have the confidence to take a case under this code. Until we do that, this will be only a limited protection, which is welcome in itself and for the teeth that this Act will give them. But it does not address all the fears and apprehensions of farmers and small businesses who are reliant on supermarket orders that they will be treated absolutely fairly.

I suspect that the Minister’s colleagues will get this amendment back in another place, probably from her own side. Therefore, this is not a closed case but, for now, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Amendment 7 not moved.

Clause 4 : Investigations

Amendment 8

Moved by

[Lord Howard of Rising]

8: Clause 4, page 2, line 13, at end insert—
“( ) In deciding whether to carry out an investigation, the Adjudicator may consider only one or both of the following—
(a) information provided by a supplier;(b) information that is publicly available.”

[Lord Howard of Rising]

My Lords, in moving Amendment 8, I shall speak also to Amendments 19 and 20. Before so doing, I declare interests both as a farmer and a supplier to supermarkets. I still cannot get my mind around why there should have been a change from the original drafting of the Bill, which limited complaints to those directly concerned in a transaction. My amendment seeks to do so, so that only those concerned with the business could complain. I can only think that the people who changed this have absolutely no connection with reality or commerce because there is bound to be some form of malicious or frivolous complaint. Anybody who doubts that has only to look at the world around us, where they cannot even fix LIBOR without doing it how it should not be done.

With something that is so open to abuse, it is only right that there has to be some form of corrective mechanism. Indeed, in the Bill there is the ability for the arbitrator to ask for costs from those who put in malicious complaints. Amendment 19 obliges the arbitrator to seek costs. He does not have to seek all of his costs, it is discretionary. Nevertheless, it would act as a deterrent to those who wish to behave badly if it was a certainty that they would have to pay for it. Amendment 20 emphasises that deterrent by asking the adjudicator to include actions that he takes so that it can be seen that he is dealing with those who make irresponsible complaints. This is a very important and necessary amendment to the Bill. I beg to move.

[Lord Razzall]

My Lords, the problem with the amendment of the noble Lord, Lord Howard of Rising, is that when we drill down, the real reason why the previous regime did not work is because a lot of farmers are very nervous and want to preserve their anonymity. That is why the regime, which I know the noble Lords, Lord Howard of Rising and Lord Borrie, and the noble Viscount, rather wish had been maintained, did not actually work in practice. Farmers were afraid that were they to complain and lose their anonymity, they would be victimised by the 10 major supermarkets. That is the reason we want to have this Bill. The amendment would go to the heart of the Bill and that is why it should be rejected.

[Lord Cameron of Dillington]

My Lords, I too am not convinced by any of these amendments, and I support the noble Lord, Lord Razzall, in that. The amendment undermines the point of the Bill and the adjudicator; there is currently an imbalance between the power of the various parties involved in the food supply chain which the Bill tries to redress. Thus, to tie the hands of the adjudicator in this way is not particularly helpful. After all, if we are trying to minimise spurious and vexatious complaints, is it best to limit the complaints to the supplier who may have been personally affected, or is it best to have their grievance or grievances assessed and filtered by a trade association and others, who might be able to point out what is reasonable and what is not? That, of course, is quite apart from the point about anonymity raised by the noble Lord, Lord Razzall.

I am afraid that I cannot support Amendments 19 and 20. The whole point of the Bill is to defend the little man against the power and possible bullying tactics of the big man. The whole point of the groceries code is that legal redress is too costly to risk, even if one thinks one has a case and does not have to succumb to the threat of delisting or other bullying tactics. I like the word “may” in Clause 10 because it deals with time wasters and those who are trying it on, but I strongly object to “must” in Amendments 19 and 20, which would undermine the flexibility of the adjudicator and thus much of the point of the Bill.

[Lord Plumb]

My Lords, I rise for the first time after something like an hour and a half of debate. I am very concerned at the way it has gone so far. I declare an interest as a farmer. In the course of the debate, I thought about the 2,500 farmers who were in Central Hall last week. Every one of them would have difficulty understanding what we have been talking about. We have rightly been talking about legal aspects of the Bill, because they have to be right and clear. However, what concerns the farmer at the moment, as a supplier of goods, is simply fairness in the marketplace. Therefore, farmers believe someone should be appointed to see that that is achieved.

That person—I presume that it will be a team—will have to take responsibility for dealing with issues not only fairly but correctly and with full understanding of what the job is about. They are not there to be involved in competition but to deal with investigation of the market that exists, or of the market that should be. The other day in Central Hall, the Minister held up a pint of milk and a bottle of water to illustrate the difference in price—56p as against 83p. A lot of questions must be asked. Surely it goes without saying that something has to be done and someone must be appointed.

If the person who is appointed finds unfairness on the other side, let it be so. That is their role and responsibility in this field. I do not agree with the amendments in this group, tabled by my noble friend Lord Howard. This amendment would leave the Bill in a similar form to the draft Bill that we saw in May 2011. Nothing has changed, and we are trying to bring about changes in the interests of the industry with which we are concerned.

The amendment would seriously narrow the sources of evidence that the adjudicator could use in launching an investigation into a possible breach of the code. That would be of considerable concern. The powers need to be broadened to allow credible evidence from any person who is prepared to come forward with a legitimate reason for asking the adjudicator to take responsibility and deal with an issue. All organisations, including charities, will have to be able to provide evidence of a breach of the code. This is a crucial element in safeguarding the adjudicator’s duty to protect the identity of the complainants. Therefore it is essential that the investigatory powers in the Bill are safeguarded but not complicated by cumbersome rules that could delay the process of ensuring a fairer functioning supply chain.

[Lord Whitty]

My Lords, I will be brief because the noble Lord, Lord Plumb, has spelt it out. It would be extraordinary if Amendment 8 were accepted and carried by this House. I accepted with some reluctance the noble Baroness’s indication that it would not be possible for third parties such as farming associations or unions to bring cases. I can understand that, but the idea that they should be cut out of providing information or that the adjudicator should be constrained from looking at that information and considering it before making his or her judgment seems extraordinary. I hope that the Minister will reject Amendment 8. It would tie the adjudicator’s hands and be unfair to the complaining supplier.

16:45

[Viscount Eccles]

My Lords, following on from the noble Lord, Lord Whitty, I do not understand,

“information that is publicly available”

as stopping anybody doing anything. The only thing a trade association, for example, has to do is to make its report on an alleged breach of the code public; it does not have to quote the names of companies. It cannot just go to the adjudicator with verbal information. It has to take the trouble to find out where the problems are.

I have huge sympathy with the immense consternation that is going on among dairy farmers. It is an extremely uncomfortable process. If the NFU has reason to believe that the code is not being observed, there is a case for it to collect as much evidence as it wishes from its members, who stay anonymous, and put its report about these breaches of the code into the public arena, presenting it at the same time to the adjudicator. That is a tremendous protection to both the public and the adjudicator; otherwise we shall all be left with a suspicion that what is happening is rumour and hearsay. It seems tremendously important that people’s reasons for doubting whether the code is being adhered to become public.

[Lord Borrie]

The noble Viscount, Lord Eccles, seems to have forgotten that the whole requirement in this Bill is that the investigation can properly go ahead only if there is a reasonable suspicion on behalf of the adjudicator that an investigation is required. That is the essential requirement in the Bill and I do not think it appropriate, for many of the reasons mentioned by the noble Lords, Lord Plumb and Lord Whitty, and others, that it has been so difficult up to now because of the difference in bargaining power between the suppliers and the retailers. In addition to the requirements that are already in this clause, there is no need to establish that the information should be made public, for example by the NFU.

[Lord Knight of Weymouth]

My Lords, I was ready to give an impassioned speech to try to persuade the noble Lord, Lord Howard of Rising, that he was wrong, but I think we have heard enough really good arguments from all sides of the House, so I will not delay the House by doing so. I will simply use the opportunity to thank the National Farmers’ Union, the Food and Drink Federation and the Federation of Small Businesses for their robust position on this, in saying that we should oppose these amendments.

[Baroness Wilcox]

My Lords, the question of who should be able to complain to the adjudicator has been discussed extensively: in consultation, at pre-legislative scrutiny, at Second Reading and in Committee. Along with most noble Lords who have spoken on this issue, the Government consider that the adjudicator should be able to consider evidence from any relevant source when deciding whether to commence an investigation.

The ability of the adjudicator to consider evidence from any source has been described by supplier groups as essential to the adjudicator’s operation. Furthermore, it simply makes sense. If the adjudicator has reasonable grounds to suspect a breach of the code, he or she should be able to initiate an investigation, no matter where the information came from.

My noble friend Lord Howard of Rising has explained that his concerns are motivated in part by the possibility of vexatious or malicious complaints and that is the issue behind Amendments 19 and 20. The Government certainly have some sympathy with this concern. No one wants to see the adjudicator’s time wasted or businesses put under a burden due to vexatious complaints. However, it is important that in the wording used we take into account what is customary as well as the need not to scare off legitimate complainants. As I said in Committee, this is intended to be a strong test directed at irresponsible complaints rather than simply erroneous or weak ones. I note also that the discretionary power to recover costs currently applies to the recovery of costs from both retailers and complainants. There seem to be few grounds for strengthening the requirement on one side without similarly strengthening it on the other. In either case the Government consider that the discretion provided by the word “may” allows the adjudicator to treat each case on its merits. The Government therefore consider that the Bill as it stands provides a necessary deterrent against vexatious complaints. The adjudicator can consider imposing costs on a complainant whose complaint is vexatious or wholly without merit but we do not think it should be mandatory or near-mandatory.

Regarding the amendment to produce an additional annual report, that would be an unnecessarily burdensome piece of bureaucracy. In paragraph 15 of Schedule 1 the adjudicator is already required to keep proper accounts and prepare a statement of accounts each year. These accounts would need to include any costs recovered from retailers or complainants. The application of the power to recover costs could be included in the annual report prepared under Clause 14. I therefore ask the noble Lord to consider withdrawing his amendment.

[Lord Howard of Rising]

I thank the Minister for her remarks and all other noble Lords who have spoken. I just want to point out that it is normal that there is an imbalance between the person paying and the person receiving the money. Why there should be protection in this case I do not know, even though it would be to my own personal benefit. Amendments 19 and 20 come into effect only if the system of complaints is being abused. I cannot see that charging those who have committed the abuse for the cost they have incurred can in any way be unfair. Indeed, it is unfair the other way because it is the people about whom they are complaining who have to pay all the costs. That said, I will not pursue the matter further and I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Schedule 2 : Information powers

Amendment 9

Moved by

[Baroness Wilcox]

9: Schedule 2, page 14, line 20, leave out from “requires” to “the” in line 21 and insert “an individual to attend at a particular place”

[Baroness Wilcox]

My Lords, in Committee my noble friend Lady Byford raised an important question about when the adjudicator should pay travel expenses, which received a great deal of support from the Committee. She asked whether the 10-mile threshold on paying travel expenses was appropriate in rural areas, given that in such areas public transport is often very limited. This amendment is in both our names but the spirit of the amendment is all hers. I am merely speaking to it on her behalf as for personal reasons she cannot be here today. Rather than basing travel expenses on distance or time, we have simply specified that if the adjudicator requires a person to attend a particular place, the adjudicator must pay all that person’s travel expenses. I am grateful to the noble Baroness for bringing this issue to my attention and I hope that noble Lords are happy with this solution, which should benefit all those required to give evidence, particularly in rural areas. I beg to move.

[Lord Plumb]

My Lords, I congratulate my noble friend the Minister on what she has just said. I know that her noble friend Lady Byford will be thrilled to hear the news—in fact, she had already assumed that that would be the answer that she would get. For that reason, I thank the Minister for accepting the amendment. It is extremely important and will be recognised as such as time passes.

Amendment 9 agreed.

Clause 5 : Investigation reports

Amendment 10

Moved by

[Lord Browne of Ladyton]

10: Clause 5, page 2, line 21, at end insert “; and
“(c) the reasons for the findings and any action taken or proposed”

[Lord Browne of Ladyton]

My Lords, Clauses 4 to 10 govern how the adjudicator should conduct investigations and carry out his further powers of enforcement following investigations. Amendment 10 would amend Clause 5, which is the second of those clauses which relate to the publication of reports following investigations. The clause requires the adjudicator to publish a report, which is appropriate. Subsection (2) sets out what the report must specify as a minimum. The amendment would add to that minimum requirement the requirement for a statement of reasons for any finding made by the adjudicator and any action taken or proposed to be taken by him. I moved a similar amendment on the first day in Committee at col. 119 of the Official Report, where I set out the arguments for a requirement for reasons in a report in these circumstances. I do not intend to rehearse those arguments other than to say that it is my firm belief that, if reasons are set out, such a requirement would reduce rather than increase the possibility of challenge at a later date. In the absence of reasons, my experience is that people challenge to find out reasons.

This is consistent with my whole approach to the Bill—I say this for the benefit of the noble Lord, Lord Plumb, who has not had the opportunity to hear me speak in support of the Bill or of its objectives. I have in the past expressed my strong support for the Bill and the mechanism that it creates. My purpose in seeking to amend the legislation is to try to make it clearer, and to make it work more effectively and in a way in which those who need to have confidence in it can do so. I understand the necessity of the legislation, which has to be put at the heart of a relationship which is otherwise deeply unfair and potentially operates to the disadvantage of smaller suppliers. It is helpful to have this opportunity to make it clear that that is my objective. If I am seen to be unduly technical or legal about some of the amendments, I reassure noble Lords that they are all designed to make the legislation work better and to give the Minister the opportunity to explain the necessarily complicated process of how it will work. It may not have been immediately obvious to everybody that there was clarity in the Minister’s response to the amendment that I proposed earlier. I commend her for that, because it will enable those who need to read the reports of our debates to understand the mechanism much better.

When I moved the amendment in Committee, I was grateful for the support of the noble Viscount, Lord Eccles, and my noble friend Lord Borrie. I was grateful, too, for the implied support of the Minister, who said that she thought that it was reasonable that the report should give reasons. She offered to speak to me further about it. I have taken advantage of that opportunity and have had a conversation also with her Bill team, whose help in advancing some of my intentions in relation to the Bill I have referred to. The result of that is a changed amendment which I hope is more felicitously worded than that which I proposed in Committee. I commend the amendment to the House and beg to move.

17:00

[Lord Howard of Rising]

My Lords, I speak to Amendment 11, which is grouped with Amendment 10, the sensible amendment of the noble Lord, Lord Browne. This amendment would seek the inclusion of comments made by the retailer to the adjudicator, and it seems to me only reasonable that both sides of the argument are included where a report is issued. The industry is particularly sensitive to public reputation and it would be unfair if it was not allowed to make its case at the same time as being criticised.

[Viscount Eccles]

My Lords, I do not wish to repeat the arguments made in Committee but I support these two amendments.

[Lord Browne of Ladyton]

My Lords, before the Minister speaks I should perhaps indicate—for the purpose of the record—that I also support the amendment of the noble Lord, Lord Howard of Rising. I think it is entirely consistent with what is fair in relation to the conduct of this process.

[Baroness Wilcox]

My Lords, as I said in Committee, the reports that the adjudicator must publish at the end of each investigation are a vital part of his or her accountability, and an important way of keeping retailers, suppliers and consumers informed of his or her work. While I can understand the intention behind the amendment of my noble friend Lord Howard of Rising, I am not sure that it is necessary. If a retailer wishes to make a public comment on the report, it will be free to do so by issuing a press release or publishing a statement on its website. For this to be included as an annexe to the report itself would appear somewhat unusual, particularly as there would—due to confidentiality—be less possibility of a similar statement from any suppliers.

Furthermore, we think it important that the report is clearly the adjudicator’s report and the adjudicator’s alone. The report should be fair and impartial and should not be coloured by commentary from a retailer with which the adjudicator may or may not agree. As I say, the retailer will be free to make its own statement, and similarly the adjudicator will have no right to have his or her comments on that statement included in it. I therefore ask the noble Lord not to press that amendment.

To move on to the amendment of the noble Lord, Lord Browne, I said two weeks ago that this was interesting and reasonable—he repeated my words exactly—and upon further consideration I am happy to say that my opinion has not changed. It is eminently sensible to require the adjudicator’s investigation reports to contain the reasons for the decisions made, and I am therefore happy to accept that amendment.

[Lord Browne of Ladyton]

My Lords, I am overwhelmed by the scale of my success this afternoon. I suspect I may retire from the lists now. This will be a day that I will never repeat. I thank the noble Baroness for her consistent approach in this case. I thank her and her Bill team once again for their co-operation and engagement with me in an attempt to try and make this amendment work better, and it does. I think that we have, between us, improved the Bill.

Amendment 10 agreed.

Amendment 11 not moved.

Clause 6: Investigations: forms of enforcement

Amendment 11A

Moved by

[Lord Knight of Weymouth]

11A: Clause 6, page 2, line 31, at end insert “which the Adjudicator may impose in any circumstances he sees fit at any time after the Secretary of State has made an order commencing this section”

[Lord Knight of Weymouth]

My Lords, we consider Amendments 15 and 18 to be consequential to Amendment 11A and therefore, if the House passes Amendment 11A, it should be aware that it would also be voting to pass Amendments 15 and 18. I am grateful to the noble Lords, Lord Curry and Lord Cameron, for their support for those two amendments. Amendment 11A specifies that the adjudicator has the power to fine in any circumstances that he or she sees fit as soon as Clause 6 is commenced. That is, it gives the right to fine from day one. It therefore follows that Amendment 15 to Clause 9, which deletes those powers being introduced by order of the Secretary of State, and Amendment 18, which deletes Schedule 3 detailing the order-making process by the Secretary of State, should also be agreed to.

The question of whether the adjudicator should have the power to fine from day one concerns what makes an effective regulator. We have seen regulatory failure in recent times in respect of banks—much as I applaud the action of the FSA in exposing and then fining Barclays over the LIBOR scandal.

How much better would it have been if we had had an effective Press Complaints Commission? Perhaps the grotesque scandal of phone hacking could have been prevented if there had been a regulator with more teeth than just the ability to name and shame. Clearly, the powerful forces of the media have not feared their regulator or the threat of a statutory regulator with real power.

I welcome the Government’s conversion to the principle that the adjudicator may need the power to fine. They listened to the Select Committees, and that is good, but this is not a wholescale Damascene conversion. If they are coming back down the road, it is with no great conviction, as they are not offering those powers from day one of the operation of the adjudicator.

Of course, that should be no great surprise, as it is arguable that the Bill is full of lukewarm commitment. There is no sign of wanting to keep the code alive and updated as circumstances change, as we have discovered. The Bill to establish the adjudicator includes the power to abolish the office by ministerial diktat, as we will debate later today. The concession to allow complaints by third parties was also given in response to the Select Committee, but along with a clause to allow the Government to change their mind back again by another order. The charge of foot-dragging is reasonable.

If the Government were truly listening to the Defra and BIS Select Committees in the other place, the power to fine would be available from inception. The Government said in response to the Select Committee's recommendation:

“If there is evidence of significant non-compliance with the Groceries Code and the existing regime seems not to be sufficiently effective, there is the prospect of a swift introduction of financial penalties, without the need for primary legislation”.

That is their main argument for the way the Bill is currently constructed. The key phrase here is “swift introduction”. Even with the concessions on adjudicator guidance that we will debate shortly, it will still take a long time.

As things currently stand, first, the adjudicator will get up and running and run investigations following complaints. Then, when a significant breach is found, the retailer is named and shamed. It is hard to see that taking less than a year. Then, after a reasonable period, more complaints and another investigation, there may still be significant non-compliance. That will take another year. The adjudicator then decides to use that as evidence of the need for powers to fine and recommends accordingly to the Secretary of State. I find it hard to believe that the decision to fine in principle would then take less than three months for the Secretary of State to consider. Then there will be a consultation on that decision in principle for it to be confirmed and the process of moving orders through Parliament to begin. That will take not less than six months. Then, the adjudicator has the powers and can launch another investigation following a further complaint and then use the powers to fine.

No one can seriously believe that all that can be done sooner than three years after the adjudicator was established. So much for swift introduction. The National Farmers’ Union has always supported fines, but now appears to concede reserve powers because it does not want to delay the Bill. I respect its concern. We have listened carefully to it throughout, but if we decide today to improve the Bill by allowing what others, such as the Federation of Small Businesses, still want, there need be no delay. The FSB has e-mailed me to say:

“We remain concerned that without the ability to impose significant financial penalties, the Adjudicator will find it difficult to be fully effective. While powers contained within the Bill, particularly the ability to name and shame, are important, we believe that the Adjudicator will need a full range of penalties available to it as soon as it is set up to ensure that it is able to deal with the complaints it may face”.

I also refer your Lordships to the campaign on this Bill led by ActionAid, which includes an extraordinary alliance of organisations, as diverse as the FSB, the Country Land and Business Association, Unite the Union, the World Wildlife Fund, WSPA, Friends of the Earth, the Church of England and the Campaign to Protect Rural England—not necessarily normal bedfellows as a group. They say that Parliament should ensure that the adjudicator can,

“launch investigations on the basis of credible evidence provided by third parties, such as business associations, NGOs, trade unions and MPs”.

They add that they should be able to do this from day one. The Government have already agreed in Amendments 16 and 23 that the adjudicator may upon appointment begin drafting guidance on the use of fines, and that concession is welcome. However, that means that, unless the Government decide to dig in their heels and change the Bill back in the Commons, if your Lordships’ House is minded to agree these amendments now there need be no delay. On this side of the House, we are absolutely committed to this Bill making rapid progress. That is why we took it quickly through Committee in the Moses Room, with an extended day; that is why we are progressing relatively quickly today; and that is why we have delivered on our side to the commitment to conclude Lords’ consideration of all stages of the Bill by the Summer Recess.

I would like to add one more thing—on listening. As we have heard from the noble Lord, Lord Plumb, and my noble friend Lord Grantchester, feelings are running high in the dairy sector about how exploited liquid milk producers are. When discussing this crisis with these producers, I tried to reassure them that Parliament was listening and legislating through this Bill, but too many have given up on us and do not believe that we will make any difference. Without the power to fine from day one, they may be right and another chance to rebuild trust in this Parliament will be lost. However, I am pleased that some retailers are listening to these producers, including some supermarkets. I take this opportunity to mention a welcome initiative by Sainsbury’s. In April, the farmers who supply Sainsbury’s milk voted to move to an industry-leading cost of production-based supply model. Following their first pricing review of dairy costs, they increased the price they pay farmers for milk by 0.26p to 30.56p per litre from 1 July. That is a marginal amount, but it is welcome and I am happy to pay tribute to the fact that there are some supermarkets that want to make progress.

Not all large retailers are acting voluntarily, however, so we need to push them down the road of responsibility. It all comes down to whether the adjudicator should grow teeth or be born with them. We are in the process of bringing a guard dog into the world to protect the groceries supply code. Currently, our hound will be able to patrol the perimeter, to sniff out and investigate intruders or potential intruders. The beast will be able to bark if it finds anything, in the hope that someone will notice or that the intruders will think someone will notice and therefore voluntarily back off. However, if the intruders persist, they will do so in the knowledge that the dog has no teeth; it is all bark and no bite, all name and shame and no fines. I hope our guard dog never has cause to bite, but I do want potential intruders to worry that it might and that it can take a chunk out of their profits straight away—not in the future if we decide later perhaps that it needs teeth. We need effective regulation of overmighty vested interests. Retailers making multibillion-pound profits are very mighty indeed. Their suppliers need protection from an effective regulator, and that regulator needs the power to fine from the start.

[Baroness Randerson]

My Lords, I am surprised at the noble Lord’s ferocity on this given the record of the previous Government, which although well-intentioned was hardly decisive and swift on this issue. I think his judgment that it would take three years to bring in fines is very speculative. However, I am sympathetic to his argument. Certainly, I have been listening very carefully to the idea that we need fines from the start.

For that reason, I am very pleased to see Amendments 16 and 23 from the Government in this group, which will ensure that financial penalties can be brought in quickly. Bearing in mind the Government’s philosophy, which is light-touch regulation, I can see that this fits in with that philosophy.

17:15

Having had discussions with supermarkets themselves, it is important to point out that there are penalties other than naming and shaming—although naming and shaming is of huge importance to supermarkets. That process will in itself cost supermarkets money. If they get bad publicity, they will lose customers and that is probably the strongest penalty. I am sure that many noble Lords would agree, whether they are in favour of fines or not, that that naming and shaming process will matter to supermarkets because it has a financial impact.

It is also worth pointing out that there is a cost recovery process available to the adjudicator. He or she can recover the costs of an investigation if it is judged to be right. There is also the fact that the levy will be able to be varied in due course, so that it reflects the amount of time that the adjudicator has spent on each supermarket and the problems that flow from it. That will also have a financial impact. Although fines are in principle an important part of the armoury, I accept that it looks now as if we are to have a mechanism that will enable the adjudicator and the Government to respond rapidly—in quick succession—to ensure that fines become an active part of the deterrent.

[Lord Cameron of Dillington]

My Lords, I put my name to Amendment 15 because I am very much in favour of the immediate application of financial penalties where, after due process, a clear breach of the code has emerged. I do not believe that merely naming and shaming will have any effect at all. Supermarkets know that, in the short term, their customers shop with them largely because they are local. Why would the supermarkets still be chasing a further 44,000,000 square feet of retail space in a recession if they did not believe that? They need more retail space nearer to more customers.

Shoppers stick to their habitual supermarkets either because they are local, as I said, or because they get to know where things are on the shelves and find it much easier to shop that way. It seems that very few supermarket customers actually make shopping decisions based on ethical or moral grounds. There are one or two but they are very few. I suspect that some supermarket staff believe that any publicity is good publicity, so I do not believe that naming and shaming will work. Supermarkets have to feel the effects of their misbehaviour in their pockets, or at least to know that they could.

Clause 9(1) seems to be merely a delaying tactic, which will put off the much-needed effects of this Bill for yet another year or so—maybe three, as the noble Lord, Lord Knight, said—until the Secretary of State grips the issue. I believe we should try to grip the issue now and that the introduction of an effective adjudicator has been delayed long enough. Frankly, there is no point in having an adjudicator unless he or she has the powers to be effective. Of course, we all hope that if they have such effective powers, those will in itself be enough to make it unnecessary for them to be used. However, the powers must be effective, and I do not believe that they will be without the ability to fine.

[Lord Borrie]

My Lords, I am delighted to follow the noble Lord, Lord Cameron. He has made a clear case and, of course, my noble friend on the Front Bench, Lord Knight of Weymouth, made a very powerful case, for a power to fine from day one—in other words, under the Bill itself—without having to wait for some subsequent statutory instrument which may come into force some year or so later. My noble friend Lord Knight made the powerful point that the Government’s commitment to this is lukewarm. Yes, we have the Bill—that is something and it is important; the Government have indicated that it is important—but then they draw back. They draw back from the possibility, among other weapons to be used by the adjudicator, of a fine.

Who might be subject to a fine? We are talking about powerful businesses. Not any supermarket, but only the 10 most powerful supermarkets in the country could possibly be subject to the Bill. Will they be frightened off doing what some of them have done up to now—which is why we have the Bill in the first place—by the other powers that are mentioned; naming and shaming and so on? I do not think so. Mind you, they may not, because of their power, be terribly put out by a substantial fine, but fines can be very effective as a deterrent and, after all, that is what we are mainly concerned about: not the actual imposition of a fine, two fines, or whatever, but the deterrent value of a fine. To have that deterrent value from now, from the moment when the Bill becomes law, rather than at some distant point in the future, is what makes a real difference, it seems to me. I trust that we may succeed in getting the Government to agree to this change.

[The Lord Bishop of Newcastle]

My Lords, I, too, would prefer to have fines in the Bill from the outset, because I believe, like many noble Lords, that that is the most effective way of enforcing the groceries supply code and also that it will prevent the transfer of excessive risk down the supply chain. Nevertheless, like us all, I do not want to delay the Bill any longer than is necessary; I want to get it implemented as soon as possible. I am anxious that, if this power were to be given from day one, it would mean the creation of a rather complicated appeals system which could delay the passing and implementation of the Bill even further and for some considerable time. I would like to be assured about that, if any noble Lord can do so. I wonder whether naming and shaming is the crucial issue for the moment, providing, of course, that retailers are not to be given a statutory right of appeal. I would rather get on with this as soon as possible, even though my own preference would be to have fines in the Bill from day one.

[Lord Plumb]

My Lords, I have been very impressed with what I have heard. I did not expect that there would be many in this House who would press for immediate action. I can see the point very clearly—what the right reverend Prelate has just said is absolutely right—but I would like the Minister to say whether, if there was a delay in the powers being implemented, it would complicate things and make it a much more complicated Bill. I see no reason for that, but it is a question that needs to be answered. If it would, can the Minister say, or give us a guesstimate as to how long it would be before those powers are implemented?

[Lord Whitty]

I, too, support this amendment. It seems to me that this clause as it stands, combined with Schedule 3 and the possible orders under it, the nature of which we do not yet know, could seriously constrain the nature and instances of the financial penalties which the adjudicator felt able to impose.

There are difficulties here. If I look at other regulators, adjudicators or ombudsmen, a delay has rarely awaited the Secretary of State before the provisions for their powers came into practice. I do not see any particular argument why that should be the case here, either immediately, in terms of the year or so’s delay in giving the powers, or in how the powers are exercised in broad terms.

I was going to widen the debate, and I shall still mention this point: financial penalties are one thing—the “fines”, as we normally call them—but quite often the most obviously appropriate remedy would actually be compensation to the supplier that had been disadvantaged by the behaviour and practices of the retailer. I have an amendment following this group that deals with that issue, but it deals with it rather crudely. I have now read the Committee proceedings on this, which indicate the complexity of writing in compensation in the way that I am proposing, and I will therefore not be moving that amendment. However, there ought also to be some process whereby financial penalties are augmented by the ability of the arbiter or the adjudicator to refer the possibility of compensation to appropriate authorities.

In reality, naming and shaming is not enough. Although I agree with the noble Baroness, Lady Randerson, that it can be important for the reputation of the company, fines are even more important in terms of that reputation. At the end of the day, though, the organisation that has been disadvantaged is the small business, the farmer or whoever it is who has been at the receiving end of the abuse. Somehow within this regulation and code there ought to be an ability for the adjudicator to recommend, possibly under the powers of recommendation, that the issue of potential compensation is referred to the appropriate legal authorities. That is missing at the moment, although it could be included within the recommendations.

The point here is that we should not be placing undue time delays or undue constraints on the ability of the adjudicator to impose sufficient redress. If we removed Schedule 3 and altered Clause 9, we would be able to put the Bill into operation as rapidly as possible and establish a more equitable balance within the supply chain.

[The Duke of Montrose]

Is part of the purpose of the adjudicator that the disadvantaged person should not be identified? If that is so, how do they go about talking about compensation?

[Lord Whitty]

The person is not necessarily unidentified; that depends on the supplier. I know that those arguments were made in Committee and I accept that it would not be for the adjudicator to impose compensation or the level of it themselves. However, it ought to be open to the adjudicator to be able to say, “It looks as if a supplier or a number of suppliers have been disadvantaged by this practice and the issue should be referred, effectively, to the courts”. That could be part of the recommendatory powers. That is not the central issue on this group of amendments, though; they are really to remove the constraints on the Secretary of State and allow the adjudicator to have a whole range of potential financial sanctions.

[Lord Howard of Rising]

My Lords, contrary to what has been said by some this afternoon, naming and shaming is a genuine deterrent. In a cut-throat, highly competitive business such as this—reading the results of supermarket chains shows how very quickly they can go downhill from having made substantial profits—naming and shaming is a real deterrent. I also hope that the Minister will remember that the only person who actually pays those fines in the end is the consumer.

17:29

[Baroness Wilcox]

My Lords, I do not want anyone to think we are lukewarm. We introduced this Bill as a priority and did so as soon as possible in this Session. Ever since we started discussing the establishment of an adjudicator, people have been concerned to know whether the adjudicator will have teeth. Central to that discussion has been financial penalties: should they be available at all, should they be a reserve power and how easy should they be to introduce? We are discussing now whether they should be introduced from the beginning. These are of course important questions.

We have carefully considered the sanctions available to the adjudicator and are convinced that this is indeed a Bill with teeth. The wide information-gathering powers, the ability to recover costs from retailers and the ability to raise a levy in a way that causes offenders to pay more all mean that no retailer will want to risk breaching the code. These aspects all ensure that those who breach the code will face a real cost.

However, more important is the sanction of “name and shame”, or the requirement to publish information as it is more properly known. I can assure you, as someone who has worked in this sector directly supplying supermarkets, that this will be an important deterrent, for reputation is extremely important to our biggest retailers. My noble friend Lord Howard of Rising has just spoken from his own experience in support of this. No retailer will want to be publicly named and shamed as having breached the code or having been found against for an action that does not appear to be fair or right. Every customer who goes into that shop will know that this has happened. Furthermore, every retailer will know that financial penalties are in reserve and that, with the amendments the Government tabled last week, they can be brought in very swiftly. Clearly, all retailers will want to avoid this.

I have shown that the adjudicator has teeth. I have shown that the existing powers and sanctions are sufficient to hold retailers to account and give them a clear incentive to obey the code. However, that is not enough. It is not sufficient to show that introducing fines from the outset is not necessary, since people could justly say that we might as well give the adjudicator the power just in case. However, if the power to impose financial penalties is granted, it is very likely to be used. Obviously, each case will be treated on its facts but enforcement authorities will tend, over time, to use the full range of sanctions available to them. That is why I would like to set out why the Government believe that introducing financial penalties from the outset is not only unnecessary but actively undesirable. The reasons for this are twofold. The first concerns proportionality and the second concerns culture.

We must remember that this is a very difficult time for business and our economy is going through a troubled period. Although regulation is sometimes necessary, we must strive to ensure that it is proportionate, so as not to impose unnecessary costs on business. We must also remember that the large supermarkets do a great deal of good for our country, as was confirmed by the Competition Commission in its report. As well as providing employment, their fierce competition has provided unprecedented choice for consumers and driven down food prices in recent years. Currently, with many ordinary families feeling the pinch of both wage freezes and inflation, the big supermarkets’ contribution to keeping prices down is particularly important. The fact that they have to compete with each other publicly, for us all to see, is equally important and another reason why being named and shamed in the middle of all this is not going to please any supermarket group.

Of course, the Competition Commission also found problems in the use of buyer power with respect to suppliers—that is why we are introducing this Bill. However, this is a sector that is fundamentally working well, and that is why we should strive to regulate it in as moderate a way as possible, unless and until it is shown that this is not effective. If compliance with the code can be achieved through “naming and shaming”, that will be far better than imposing fines, the cost of which might ultimately be borne by the consumer anyway.

The second reason for preferring a regime without fines concerns the culture that we are trying to create. The issue of culture was discussed very helpfully in Committee by the right reverend prelate the Bishop of Wakefield and is something I would like to return to. The goal of this Bill, and of the great majority of us in this Chamber, is to encourage retailers to comply with the code. It is not to punish them—that helps no one. It is to make sure they treat their suppliers fairly. The question is how best to encourage that culture of compliance.

The Government believe that the best way is through a proportionate, regulatory regime, focusing on advice, guidance, investigations and name and shame, backed by the threat of financial penalties in reserve. In such a way, the retailers will be encouraged to comply with the code. A punitive, adversarial culture, such as that which would be created by financial penalties, could also work—but much more slowly and at a much higher cost.

I ask noble Lords whether they would prefer that the adjudicator carries out four investigations a year, in each one identifying breaches of the code and correcting them, or that he or she carries out just one, imposes a financial penalty and then gets bogged down by a lengthy court battle as the retailers fight appeal after appeal? Make no mistake, if fines are needed, they will be brought in. The Government are very clear on this. The amendments I have tabled, which noble Lords will be discussing shortly, demonstrate our intent. By removing the double layer of consultation and by allowing the adjudicator to publish guidance on fining prior to being given the power to impose fines, we have ensured that fines can be brought in swiftly if necessary. However, we should first give the more moderate regime a chance.

One might expect the suppliers would push for the retailers to face the maximum penalty. That is their right. However, they have also acknowledged the need to be proportionate. I cite the briefing of the British Brands Group, which has said that fines are “not essential” and of the NFU, which has said that it will not be arguing for the Bill to be amended to allow fines from the outset, provided the Government’s amendments to streamline the process are accepted. If the suppliers are being so measured, should not the Government and Parliament also take a proportionate approach and decide on the most proportionate remedy that will be best for both the country and the economy as a whole?

This is already a Bill with teeth. I therefore ask the noble Lord to withdraw his amendment.

[Lord Knight of Weymouth]

My Lords, there we have it. The Minister started off by saying she was not lukewarm but then spoke with passion as to why the supermarkets should not be fined right now. That was lukewarm about fining supermarkets if ever I heard it. I am grateful to noble Lords who have spoken in this debate, all of whom, with the notable exception of the noble Lord, Lord Howard of Rising, supported fining in principle. I would urge the noble Baroness, Lady Randerson, and her party to vote with their principles rather than with the lame excuses that they have been given. I say to the right reverend prelate the Bishop of Newcastle that the Bill itself sets out how the powers to fine would be introduced, and it is perfectly clear that allowing the powers to fine from day one would not delay the passage of the Bill and the establishment of the adjudicator. However, if we do not pass this amendment, the adjudicator will begin without the powers that he wants and without the teeth that we need as the threat to make sure that people abide by this code. I would like to test the opinion of the House.

17:39

Division 2

Ayes: 186

---

Labour: 146
Crossbench: 27
Independent: 2
Democratic Unionist Party: 1
Ulster Unionist Party: 1
Bishops: 1
Plaid Cymru: 1

Noes: 217

---

Conservative: 129
Liberal Democrat: 65
Crossbench: 17
Independent: 2
Ulster Unionist Party: 1

17:55

Amendment 12 not moved.

Amendment 13

Moved by

[Lord Howard of Rising]

13: Clause 6, page 2, line 31, at end insert—
“(2) A large retailer, subject to any enforcement measure set out in this section, may appeal against those measures to the Competition Appeals Tribunal.
(3) If the Adjudicator requires information to be published, the large retailer may appeal to the Competition Appeals Tribunal—
(a) prior to any information being published; or(b) following the publication of any information.”

[Lord Howard of Rising]

Both this amendment and Amendment 14 deal with appeals. The Minister was gracious enough in Committee to say that she would look at this and she produced a forceful argument in a letter to the noble Lord, Lord Borrie, pointing out the benefits of appealing to the High Court rather than to the Competition Appeal Tribunal. If one accepts her arguments, that still leaves open the question of the ability to appeal. If there is a financial penalty, it is all right to appeal. If there is a recommendation, there is no need to appeal. That leaves publishing information where the only remedy is a judicial review, which seems cumbersome, expensive and would involve delay, which, from debates in Committee, I know that the Minister thinks is unacceptable and undesirable. It would be only fair to have the right of appeal against naming and shaming, which, after all, can be more expensive to a supermarket than a financial penalty. That is to say, the damage to reputation can be considerably greater than a fine. If one is allowed to appeal on a financial penalty, there should surely be a right to appeal on something which could be an even greater punishment and more expensive. I beg to move.

[Lord Plumb]

My Lords, I can assure you that my noble friend Lord Howard really is a noble friend, although in this respect we disagree on the way forward. His amendment suggests that enforcement measures taken by an adjudicator, including naming and shaming, will be subject to the right to appeal to an appeals tribunal. This would surely lead to sclerosis of the adjudicator’s operations and the appeal could become bogged down in an attempt to enforce the groceries code. As we have already heard in the debate so far, there are avenues for retailers if they believe a decision is unfair, such as judicial review. This is the case with the Food Standards Agency. It could refuse to take remedial action, and a Competition Appeal Tribunal is available for making those decisions, such as with the OFT or the commission. I said earlier and I repeat: the adjudicator will not make competition decisions. The job is to investigate whether the groceries code is coupled with fair play in the marketplace. I therefore do not support this amendment.

[Lord Browne of Ladyton]

My Lords, out of consistency I support the noble Lord, Lord Howard of Rising, in Amendment 14. I said in Committee that my view was that the appeals processes, the potential of judicial review which has been generated by this Bill and the existing law are unnecessarily complicated and could be greatly clarified. I do not think that the issues at stake in relation to a decision such as naming and shaming are of anything other than the order in which it is guaranteed that a large retailer will test by judicial review whether or not that decision is appropriate. I expect—and we should anticipate—that these issues will be of such moment to large retailers that they will deploy their legal resources in a way that guarantees a degree of review of any decision. Had the noble Baroness been minded to accept Amendment 11 proposed by the noble Lord, Lord Howard of Rising, I would not have felt it necessary to support this amendment, which introduces to the Bill what I consider to be not only an element of fairness, but one of reality. Had the noble Baroness been minded to allow or require the adjudicator to publish with any report of an investigation the response of a large retailer and make it public, then I would have thought that this would have been sufficient. In the absence of that, a large retailer will want to be vindicated and we will get litigation. It would be better contained inside the process. I know this is not a position supported by most people who broadly take my view of this legislation, but I support it.

18:00

[Lord Borrie]

My Lords, if there is a “naming and shaming” proposal from the adjudicator, according to Clause 8 he or she has got to give written notice specifying,

“what information is to be published … how it must be published… and… the time by which it must be published”.

Clearly, there has to be a response to that. While it is not called an “appeal”, none the less, because notice has to be given by the adjudicator as to what he intends and the supermarket can respond to that, there is a time factor, and there is in effect an opportunity for the supermarket to say further things that it wants to say.

The common-law rule of natural justice, which we all know about, is that everybody has a right to be heard before some decision is made which may be adverse to them. The rule of natural justice as I have always understood it is that you only have an opportunity to be heard once. You cannot call upon some right of appeal under that rule, because that would be giving you the right to be heard twice, and that is not the position. Of course, there is always judicial review but that is, I admit, limited in that you have to show something seriously wrong with the decision, and that no reasonable person would have made such a decision. It is fair enough that anybody should have a right of judicial review to have that checked, but no case for an appeal has been made out. The whole set-up of the adjudicator is meant to be fairly speedy and so on. Subject to the points I have mentioned—you have to be given advance notice about naming and shaming, and you have a right to respond to that—there is no call for any more than that.

[Baroness Wilcox]

My Lords, the question of appeals is important and I can fully understand the desire of my noble friends Lord Howard of Rising and Lord Eccles to return to it at this stage of the Bill. However, although we have considered the matter carefully, the Government’s position remains unchanged.

Financial penalties clearly deserve a full merits right of appeal and the Bill provides for this. However, the other sanctions, including the requirement to publish information, have no direct legal consequence against a retailer. A recommendation is just that and is not binding, and a requirement to publish is essentially simply about distributing and sharing information which will, in all likelihood, be in the adjudicator’s investigation report. For this reason, therefore, judicial review is sufficient.

Although a judicial review will not normally involve a reconsideration of all the factual evidence, it could consider whether the adjudicator had reached a decision which was not supported by the facts, or had taken into account irrelevant facts or had failed to take account of relevant facts. I draw a comparison with the Financial Services Authority. Under the terms of the Financial Services Bill currently proceeding through this House, the FSA—or, in future, the Financial Conduct Authority—may issue public warning notices about a specific firm. Before making such a notice, it must give the firm the opportunity to comment, but there is no right of appeal before publication. Issuing a public warning notice in this way is, given the potential impact on reputation of the financial services firm in question, similar in consequence to our requirement to publish information which also has the benefit of warning those who deal with a retailer that they have been found in breach of the code. The requirement to give the firm the opportunity to comment is similar to that provided in Clause 5(4) of this Bill. This is similar to what the noble Lord, Lord Borrie, has also said on this point.

Furthermore, as I said in Committee, a full right of appeal, requiring the repetition of a detailed fact-finding exercise, could seriously delay the requirement to publish and so substantially diminish its impact. In particular, we expect a full merits appeal of this kind normally to take significantly more time than a judicial review because it involves a reconsideration of all the facts. Taking these matters into account, the Government consider that a full right of appeal is needed only against financial penalties, and that otherwise the possibility of judicial review by the court would be sufficient.

On whether appeals should be in the CAT or the High Court, this is a finely balanced question and I have written to Peers on this matter already. We do not think it would be wrong for either the CAT or the High Court to hear such appeals, nor do we think there is likely to be a significant difference in speed. However, on consideration, we do not think using the CAT would make the best use of its expertise, which is, of course, in competition matters. This is because, although introduced on competition grounds, the context of the adjudicator’s functions concerns contractual and commercial relationships between retailers and suppliers. The expertise needed to address these practices can be found in the High Court, or the Court of Session in Scotland. We do not think that the particular specialist expertise of the CAT is needed in order to consider the adjudicator’s decisions.

A further practical issue is whether, if the CAT were to hear appeals against financial penalties, appeals against costs or judicial reviews of all decisions of the adjudicator were also to be referred to the CAT. To the extent any appeals or reviews remained in the High Court, one could see two separate appeals or reviews on related subjects being taken forward in different fora at the same time. On the other hand, if they all took place in the CAT, this could lead to the CAT making rulings on matters even further from its core competition remit. That is a difficulty which is avoided by the Bill as we have it now. Therefore, in conclusion, we consider that appeals should most appropriately be to the High Court. I therefore ask the noble Lords to consider withdrawing their amendments.

[Lord Howard of Rising]

I thank the Minister for her remarks. I accept that the High Court would be as good a place as the Competition Appeal Tribunal. However, if an appeal is acceptable for a financial penalty, surely an appeal should also be acceptable for naming and shaming. It seems to me that fair play is the objective of this Bill, so surely there should be fair play in the application of the code by the adjudicator. Fair play surely would mean the right of appeal if someone thinks that the adjudicator has got it wrong.

I am grateful to the noble Lord, Lord Browne, for his support and I endorse his comment that, if there is to be no right of appeal, there should be an opportunity for the retailers’ arguments to be included with any report produced by the adjudicator. Having made those points, to which I hope that the Minister will listen, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Clause 8 : Investigations: enforcement using requirements to publish information

Amendment 14 not moved.

Clause 9 : Investigations: enforcement using financial penalties

Amendment 15 not moved.

Schedule 3 : Order conferring power to impose financial penalties

Amendment 16

Moved by

[Baroness Wilcox]

16: Schedule 3, page 15, line 9, leave out paragraphs 4 and 5

[Baroness Wilcox]

My Lords, the question of financial penalties has been central to our deliberations on the Bill. It is, as we have heard today, an important question. The Government have consistently stated their view that financial penalties should be a reserve power, but that it should be possible to bring them in quickly if they prove to be necessary. At Second Reading and in Committee a number of noble Lords, including the noble Lords, Lord Knight, Lord Grantchester, Lord Razzall and Lord Teverson, and the noble Baronesses, Lady Byford and Lady Randerson, and others, expressed the view that the Bill as drafted did not achieve this. Noble Lords indicated that the process for introducing fines was unnecessarily slow and bureaucratic and that it should be simplified. After careful consideration, I agree that noble Lords were right that the process was too slow. The Government have therefore decided to bring forward these amendments.

The amendments draw on the inspiration of the noble Lords, Lord Knight and Lord Grantchester, in that they allow the adjudicator to publish guidance on how it would use financial penalties in advance of the Secretary of State making the order that would confer that power. This means that if the power is granted it can be used straight away, without the need for further consultation, provided that the adjudicator has already published the necessary guidance under Clause 12. To accompany the amendment to Clause 12, we have deleted paragraphs 4 and 5 of Schedule 3.

I would also like to touch on the need for the Secretary of State to consult before introducing financial penalties, an issue which the noble Lords, Lord Razzall and Lord Teverson, raised in Committee. We think that this provision needs to be retained as it would be inappropriate to introduce such a significant change with no consultation. However, my officials have examined the Bill and advised that this consultation could, if desired, take place simultaneously with a triennial review by the Secretary of State. That would further streamline the process if the introduction of fines were being considered at a similar time to a triennial review, although I remind noble Lords that an order under Clause 9 and Schedule 3 does not have to await a triennial review.

We have, as I say, also deleted paragraphs 4 and 5 of Schedule 3 to accompany the amendments to Clause 12. This means that fines could be introduced within six months of the need being identified. All it will require is a three-month consultation and an affirmative order. These amendments have been supported by three of the major supplier organisations: the NFU, the Food and Drink Federation and the British Brands Group. I hope that noble Lords agree that these amendments will significantly streamline the introduction of fines and that they are able to give them their support. I beg to move.

[Lord Knight of Weymouth]

My Lords, I am grateful to the noble Baroness for the concession which results from our debate in Committee. I would also like to take this opportunity to ask again the question that her noble friend Lord Plumb asked in the previous debate. Assuming that the adjudicator has consulted on the guidance around using the powers to fine, how long will it take, once the Secretary of State has made the decision, for these powers to be introduced?

18:15

[Baroness Wilcox]

I am delighted to answer the noble Lord’s question. Fines can be introduced within six months or so of the need being identified. I thought that I had just said that but I am very happy to repeat it.

Amendment 16 agreed.

Amendments 17 and 18 not moved.

Clause 10 : Recovery of investigation costs

Amendments 19 and 20 not moved.

Clause 11 : Advice

Amendment 21

Moved by

[Lord Howard of Rising]

21: Clause 11, page 4, line 13, leave out “may” and insert “must”

[Lord Howard of Rising]

My Lords, this group of amendments is aimed at making it compulsory for the adjudicator to give advice to those seeking it from him. At the moment, there is no obligation. There is a strong argument that he should give advice. The opposing argument has been that he might get involved in frivolous requests if it is compulsory, and that that would mean unnecessary expense. A solution to that would be to make it compulsory to give advice to the large retailers which have to live by this code. They pay his expenses, so they are unlikely to incur unnecessary expense. Perhaps the Minister will consider this point and come back to us at Third Reading. I beg to move.

[Lord True]

My Lords, I intervened briefly in Grand Committee to support my noble friend on part of the amendments in this group. I think that he has already implied the following point in what he said. Clause 12(3) states:

“The Adjudicator may publish guidance about … steps that large retailers need to take in order to comply with the Groceries Code”.

I believe that the adjudicator must give such guidance; otherwise the position would be nonsensical. In Committee I gave the possible example of my local authority publishing a parking order but not putting up signs to say during which hours the parking scheme would operate and with people having to apply to find out that information.

With respect to my noble friend, I think that his amendments are probably rather widely drafted. Looking at the phrase, “may publish guidance about any other matter relating to the groceries code”, I can understand why my noble friend on the Front Bench might want to resist it. However, it might be a fruitful course, between now and Third Reading, if the Government thought about the more confined area to which my noble friend referred. It would seem to offend against natural justice not to tell people the steps they must take to comply with a code which could lead to their being fined, named and shamed or whatever. I hope the Minister will consider that specific point which arises from my noble friend’s Amendment 22 in this group.

[Baroness Wilcox]

My Lords, I have sympathy for the spirit of all three amendments. On Amendments 21 and 22, we certainly consider that an important role of the adjudicator will be to provide advice and guidance. That is why we have included these clauses. It is clearly better if the adjudicator can encourage compliance with the code through light-touch means, such as advice, rather than by enforcing it after a breach has been committed through sanctions. However, as I think my noble friend Lord Howard of Rising would concede, we cannot make these provisions mandatory. The adjudicator must be able to prioritise his or her workload and cannot be required to give advice in all circumstances to any of the 10 retailers or thousands of suppliers who might have a question. Even limiting the “must” to the retailers, could be open to abuse by one retailer at the expense of others.

I ask noble Lords to keep in mind here that the adjudicator will be a public authority and will be required to act reasonably in responding to requests for advice. In that context, some discretion for the adjudicator is appropriate. Equally, while guidance is crucial, I would emphasise that the adjudicator is already required under Clause 12(1), to publish guidance about how he or she will carry out his or her core operations. It would not be meaningful to have a mandatory requirement for the adjudicator to publish guidance on “any other matter relating to the groceries code”. Again, there has to be some flexibility for the adjudicator.

On the other hand, the Government certainly consider that the adjudicator would normally answer reasonable requests, and should normally provide advice where this would aid in the core objective of encouraging compliance with the code. Similarly, sufficient guidance should be provided to ensure that retailers and suppliers have the clarity they need to interact effectively with the adjudicator. This is similar to the expectation that we would have of a local authority. If the adjudicator was not acting appropriately in giving advice and guidance, I am sure that the Secretary of State would take steps to remedy this by issuing guidance to the adjudicator under Clause 15(8). The adjudicator has a statutory obligation to take account of such guidance in carrying out his or her functions, which I hope offers some reassurance to my noble friend Lord Howard.

On Amendment 24, although again I can sympathise with the principle behind the amendment, I do not consider it necessary. This is because the Bill, in Clause 12(4), already requires the adjudicator to consult any persons whom he or she thinks appropriate before publishing guidance. In the vast majority of circumstances this would include the retailers. In the unlikely event that the adjudicator did not consult the retailers before publishing guidance, in a case where it was clear that he or she should have done so, there would be the possibility of judicial review. The adjudicator will be very aware of this, meaning that Amendment 24 is not necessary. I would, therefore, ask the noble Lord to withdraw his amendment.

[Lord Howard of Rising]

My Lords, I thank the noble Baroness for her remarks, disappointing as they are. Of course, the point is that it is always the adjudicator who chooses what advice to give whereas there may be some area that is in doubt which the large retailers would like to know about. Perhaps they will be comforted by the Minister’s remarks, and by the fact that any future Secretary of State will be able to read in Hansard what is expected and call the adjudicator to order. In the mean time, I beg leave to withdraw my amendment.

Amendment 21 withdrawn.

Clause 12 : Guidance

Amendment 22 not moved.

Amendment 23

Moved by

[Baroness Wilcox]

23: Clause 12, page 4, line 30, at end insert—
“( ) If the Secretary of State makes an order under section 9 authorising the Adjudicator to impose financial penalties, the Adjudicator must publish guidance about the criteria that the Adjudicator intends to adopt in deciding the amount of a penalty (and this requirement can be satisfied by guidance published before the order is made).”

Amendment 23 agreed.

Amendment 24 not moved.

Clause 13 : Recommendations to Office of Fair Trading

Amendment 25 not moved.

Clause 14 : Annual report

Amendment 26 and 27 not moved.

Amendment 28

Moved by

[Baroness Wilcox]

28: Clause 14, page 5, line 16, at end insert—
“( ) The Secretary of State must lay a copy of the report before Parliament.”

[Baroness Wilcox]

My Lords, I would like to propose government Amendment 28. I am sure that noble Lords will agree, whatever their perspective on the adjudicator, that it would be appropriate and helpful for a copy of his or her annual report to be laid before Parliament. This should improve scrutiny of the adjudicator both here and in the other place. I hope that noble Lords will welcome this, whether they look forward to taking the opportunity of the report being laid to bury the adjudicator or to praise him. I therefore beg to move.

[Lord Knight of Weymouth]

My Lords, I am going to mark this one down as a victory for us as we moved a very similar amendment in Committee. I would not want my noble friend Lord Browne to think that he had got two and I had not got any at all, so I am very grateful to the Minister.

Amendment 28 agreed.

Clause 15 : Review of Adjudicator and guidance from Secretary of State

Amendment 29 not moved.

Clause 16 : Transfer of Adjudicator functions and abolition etc

Amendment 30

Moved by

[Lord Knight of Weymouth]

30: Clause 16, page 7, line 8, at end insert—
“( ) An order under subsection (2)(a) or (b) is subject to the super-affirmative procedure (see Schedule (Super-Affirmative Procedure)).”

[Lord Knight of Weymouth]

My Lords, in moving Amendment 30, I shall also speak to Amendments 43 and 44. As we interpret the letter that I referred to earlier from the Minister’s friend in the other place, Norman Lamb, to Ian Murray, regarding Select Committee confirmations of the appointment of the adjudicator, it did not show in a good light the Government’s esteem or priority with regard to the adjudicator. However, unlike the Government, we think that this is a significant new public body doing a very important role that people have long campaigned for, not just in the countryside but across the supermarket supply chain.

We therefore think that the process by which this body could be got rid of should mirror what we came up with in this House in the Public Bodies Act. Noble Lords will remember that when the Public Bodies Bill first started here it was not a great piece of legislation, with widespread use of Henry VIII powers, and the relevant committees of this House tore it to shreds. As a result, I am pleased to say the Government listened and we had a much improved Bill by the time it left this House, including introducing the super-affirmative procedure—which we have merely replicated in Amendment 44—for getting rid of public bodies that were listed in that Act. I am simply proposing that we should use the same process for the groceries code adjudicator. It is entirely logical. I suspect that the Minister will resist this amendment, although I would be delighted if she did not. Could she confirm in her reply that it is a cross-government policy that the super-affirmative procedure is particular to the Public Bodies Act and as new public bodies are created by the Government, they will use the affirmative procedure and not the super-affirmative procedure? If that is now cross-government policy, it would be helpful for your Lordships’ House to know, so if the Minister could help in that respect, if not by agreeing to the amendment, that would be wonderful. I beg to move.

[Lord Cameron of Dillington]

My Lords, I am all in favour of sunset clauses for quangos and for posts that are created. I believe it is right that such posts and bodies should be reviewed from time to time to see whether they are fulfilling their purpose or their effectiveness. However, it is also right that they should be reviewed under a proper procedure and consultation with all the relevant parties including Parliament, in spite of my perhaps slightly rude remarks about professional politicians earlier. Clause 16(2) provides for a very inexplicit kind of review for the Secretary of State to carry out. It does not say anything about what sort of review this is. Are we talking about the Secretary of State’s kitchen cabinet or the Treasury? What sort of review is this? Something definitely needs to be clarified. I believe that Amendment 44, albeit with its rather longwinded, legalistic caveats, is probably as good as one can get in terms of clarification. However, I will wait and hear what the Minister has to say about this.

18:30

[Baroness Wilcox]

My Lords, I fully understand the sentiments behind these amendments. All three parties have expressed their agreement that an adjudicator is needed, and the Government have no wish to enable the abolition of the adjudicator without proper parliamentary scrutiny. I remind noble Lords that the intention of Clause 16 is to bring the Bill into line with the broader policy on sunsetting and review, and the need to ensure that regulations and regulators can be removed once there is no longer a need for them. It does not indicate intent to abolish the adjudicator or transfer their functions, but is simply standard practice.

The noble Lord, Lord Knight, suggested that the Government intended to set a precedent for the abolition of new public bodies by affirmative order. It may be the case that it is appropriate to require the abolition of some public bodies by super-affirmative order, but one must consider this on a case-by-case basis, depending on the nature of the body or office. In the case of the adjudicator, first, the adjudicator will not be a “body” in the usual sense of the word but an officeholder, with only a small number of staff who will be seconded rather than directly employed. The adjudicator’s powers will extend to only one area of the economy: the groceries sector. Furthermore, he or she will have a tightly defined role: to enforce the groceries code.

Furthermore, as I said in Committee, the Delegated Powers and Regulatory Reform Committee scrutinised the Bill carefully. The committee is dedicated to the inspection of the procedures for delegated powers, and the Government take its recommendations very seriously. Given the purpose of the Bill and its specificity regarding the functions of the adjudicator, the committee decided that the affirmative procedure would be satisfactory and proportionate in this case.

I thank noble Lords for drawing our attention to the important issue of parliamentary scrutiny. However, one must also consider the issues of parliamentary time and efficiency. The investment of resources required for the super-affirmative procedure would not be proportionate to the functions of the adjudicator. In accordance with the recommendations of the Delegated Powers and Regulatory Reform Committee, we are satisfied that the affirmative procedure is the most appropriate.

The noble Lord, Lord Cameron, asked about the Secretary of State’s review. It is referred to in Clause 15 and would require full consultation with retailers, suppliers and other stakeholders. Finally, the noble Lord, Lord Knight, indicated the importance of listening to committees of the House during the passage of the Public Bodies Bill. We are listening to the relevant committees on this Bill. Given these explanations, I hope that noble Lords will feel satisfied and will not press their amendments.

[Lord Knight of Weymouth]

My Lords, that was a brief but interesting debate. I am most grateful to the noble Lord, Lord Cameron, for his support. The comments of the Minister are now on the record—another demonstration of a somewhat lukewarm view of this body. I do regard it as a body rather than an officeholder. The super-affirmative procedure was used in respect of the Commission for Rural Communities, which was largely an office of the rural advocate. This is one of the many examples in the Bill of where the super-affirmative procedure is used.

This will be a very powerful body—much more powerful than some of the bodies that are being abolished using the super-affirmative procedure. The Minister talked on some occasions about the power of name and shame. On others, when it was convenient, naming and shaming was described as a less powerful ability. I disagree with her. However, given the oddity of the Bill—as my noble friend Lord Browne set out, the Government could get rid of the code without even coming to Parliament—I will not press this, because if they chose to do that without even the “by your leave” of Parliament, we would have a referee without any rules and it would be a straightforward matter to get rid of the post. I am happy to withdraw my amendment.

Amendment 30 withdrawn.

Amendment 31 not moved.

Clause 17 : Information to Secretary of State

Amendment 18

Moved by

[Lord True]

32: Transpose Clause 17 to after Clause 18

[Lord True]

My Lords, I have taken the unusual step of tabling an amendment to transpose two clauses—the effect of which I will come to shortly—to draw the attention of the House to a point that I was not able to raise at Second Reading because I was on local authority business. It was discussed briefly in Grand Committee, but proceedings were curtailed. I do not intend to detain the House long on the matter, but it gives rise to important issues.

I refer to the manner of writing sub-headings in italics, “How does the Adjudicator arbitrate disputes? … How does the Adjudicator carry out investigations?”,

and so on. This is a new way of writing Bills which is reminiscent of the “frequently asked questions” pages on government websites. I tried to use one such page on the HMRC site the other day and was very glad after 10 minutes of struggling to get through to a nice lady who was able to help me.

I was told, first, that there was no discussion with the House about the new way of writing Bill sub-headings. When I asked the House authorities, they said that it had not been discussed and, since the drafting of the Bill was the responsibility of the noble Lord in charge—in this case, a Minister of the Crown—it would not fall within the terms of reference of the Procedure Committee of your Lordships’ House. The Public Bill Office confirmed that it was not possible to amend such sub-headings. My noble friend circulated a very helpful note to noble Lords demonstrating that the Government can contrive to amend the sub-headings in response to issues that are raised in Parliament. That is by grace and favour of the Executive, not by the will or desire of Parliament.

I am suspicious of these sub-headings for several reasons. The first argument put to us is that they are in plain English. I do not think that many of them are. On page 2, line 3, the heading is, “How does the Adjudicator carry out investigations and enforce their findings?”. That is 11 words, whereas “Investigation and enforcement”—which was the old way of doing things and is what is meant—is three words. On line 11 of page 4, the heading is, “What advice, guidance and recommendations does the Adjudicator give?”. That is nine words. Once the sub-heading would have been, “Advice and guidance”. That would be plain English. There are many other examples in the Bill, but I will not take the House through them.

Once we start changing the way in which legislation is written, whatever our good intentions there is the risk, in an area where Parliament has little direct control, that we will tend towards more descriptive writing. Noble Lords will remember that in the late 1990s we had rather more exciting titles to legislation, with “stakeholders” starting to appear in the gracious Speech. There is a risk that value judgments could interpose.

If the sub-headings are intended to be plain English traffic lights or signals to help the public find key matters in Bills, Parliament ought to have some responsibility for them. In Committee, I gave the example of the sub-heading, “How is the Adjudicator supervised?”, which covers the issue of abolition that noble Lords have just discussed. If you are slipping through these sub-headings, you would not find it. Who decides to highlight these things? There are clear difficulties.

Before Clause 14 there is the sub-heading, “What are the Adjudicator’s reporting requirements?”. Again, if a member of the public were accessing the Bill by means of these signposts, they would go to the sub-heading, but the text covers only Clause 14, which concerns the annual report that the adjudicator must publish. However, there are many other reporting requirements on the adjudicator in the Bill. The noble Lord, Lord Browne of Ladyton, won a victory in respect of one of the reports that the adjudicator has to present. The sub-heading goes much wider than the subject of the annual report covered in Clause 14. A real plain English heading for Clause 14 would be the good old, “Annual report”. Why not choose that? Why have this new and potentially misleading wording? I realise that these matters may be beyond my noble friend the Minister, who has been incredibly helpful in responding to them, so I hope that the powers-that-be will think again about the misleading effect that some of these sub-headings might have, or the incomplete information that might be given.

I will not repeat the arguments I gave in Committee about logical inconsistency. I understand that my noble friend has responded positively in relation to the sub-heading on line 1 of page 9: “Will this law mean other changes to the law?”. This is logical nonsense. When the Act comes into effect, the amendments to other legislation will already be law, so the sub-heading is totally illogical. I understand from my noble friend that it is proposed to rethink that. In Committee we discussed the sub-heading on line 3 of page 8: “How is the Adjudicator funded?”. However, the clauses covered, Clause 19 and 20, both speak in terms of how the adjudicator “may” be funded; for example:

“The Adjudicator may require … a levy”,

or:

“The Secretary of State may make grants”.

The new-style sub-heading is illogical because it uses “is” and gets into “may”/“must” arguments.

I agree with the Government that we should keep the law as plain as possible, using short, simple English. The more words you use, the more risk there is of inconsistency. The confusion that can be caused by the placing of headings is illustrated by my amendment, which proposes that Clause 17 should be moved to below Clause 18 because both clauses relate to the handling of information by the adjudicator and the sub-heading is: “How does the Adjudicator handle information?”. I understand that my noble friend has an answer to that.

I will bring my remarks to a conclusion, but we seem to be straying into unnecessary territory. If the Government—the masters of plain English—wish to give the public new signposts to find their way around legislation, let us not complicate the face of legislation; why not have a separate, short document, which may be available electronically? If people wanted to find out what the adjudicator’s reporting requirements were, you could have brief references to Clause 5, Clause 14 and so on, and people could be signposted around the Bill. The way it is done now just leads you to one clause, which gives an incomplete answer.

If this well meaning approach is intended to go forward, for it to be really accessible it should be done separately, not on the face of legislation. If Parliament is not going to be able to amend these sub-headings—and it never has been able to—we should leave the Bill absolutely simple, which would not risk any question of executive value judgments or misleading placement of sub-headings. The pursuit of plain English guidance could be done in a short companion to the legislation, if that is required. The more we go to electronic access to legislation, the more these kinds of sub-headings will become important.

I hope that my noble friend is going to give a favourable response on the sub-headings that will justify the points that I have made. Obviously I do not intend to press this matter to a Division but it affects both Houses of Parliament, and it is reasonable to bring it to the attention of Parliament, given that this is the first Bill in which this new manner of writing legislation has arisen. I beg to move.

[Lord Howard of Rising]

My Lords, I support my noble friend. While he was speaking, I looked through these new italicised sub-headings and was rather entertained. The first one is “How does the Adjudicator arbitrate disputes?”, and the next word down is “Arbitration”. The second sub-heading is “How does the Adjudicator carry out investigations and enforce their findings?”, and the next word down is “Investigations”. The third sub-heading is “What advice, guidance and recommendations does the Adjudicator give?”, and the next word down is “Advice”. Surely if anything is superfluous, these things are.

18:44

[Lord Knight of Weymouth]

My Lords, as I indicated in Committee, I think the noble Lord, Lord True, has a point. At Second Reading I said that I did not find these “folksy” headings—as the noble Baroness, Lady Byford, called them—offensive. I think they are fine, but the noble Lord, Lord True, is right that we here in Parliament should have the ability to amend them. He made mention of the responsibility of the Bill Minister in respect of these headings; of course there are also Private Members’ Bills, where you have to trust the individual parliamentarian to get it right. You could have a campaigning parliamentarian bringing forward Private Member’s legislation who would use the fact that Parliament cannot amend these sub-headings to say some quite odd things.

As the noble Lord, Lord True, says, if we are going to go down this road, the Government and the parliamentary authorities need to give some consideration to how we in Parliament can have some say over these sub-headings and not just leave it to informal chats with whoever is responsible for the Bill.

[The Duke of Montrose]

If the Government feel that they need these interrogatory questions put in print, are the Explanatory Notes not also available online, along with the Bill? Could these questions not be laid out in the Explanatory Notes rather than in the Bill itself?

[Baroness Wilcox]

My Lords, I thank the noble Lord, Lord True, for bringing forward this interesting amendment. While we cannot support this specific amendment, I am able to take into account the noble Lord’s broader points about ensuring that sub-headings are accurate and clear.

First, italicised sub-headings in themselves are not a recent innovation. For example, the Slave Trade Act 1873 groups its clauses using italicised sub-headings such as “Seizure of Slave Ships” and “Bounties”. Although the approach to the precise wording of these italicised sub-headings may have changed, the Government have always striven to write in a way that communicates meaning as clearly as possible to the audience of the day. I have placed a note about this in the Library of both Houses.

Turning to the noble Lord’s specific amendment, I believe that Clause 17 should remain under the sub-heading “How is the Adjudicator supervised?”, because the purpose behind allowing the Secretary of State to require information from the adjudicator is to allow him to supervise the adjudicator through triennial reviews. This is quite separate from the vital issue of how the adjudicator should ensure that it upholds confidentiality when handling information, even though it is clear from Clause 17(2) that there is some relationship between these issues.

However, I have been able to take into account the noble Lord’s points concerning the wording of sub-headings. I have raised these concerns with the Public Bill Office, which has agreed to change “How is the Adjudicator funded?” to “How may the Adjudicator be funded?”, and “Will this law mean other changes to the law?” to “Amendments and transition”.

I hope that the noble Lord is content with these changes, and I am sure that the process of considering the amendments and discussing them for this Bill will help ensure careful drafting of similar headings in future Bills. I therefore beg the noble Lord to withdraw his amendment.

[Lord True]

I thank my noble friend for that response. Rather like the noble Lord, Lord Browne, I should not be churlish when I have a minor victory, as he put it. I do not really see it that way, although I am very grateful for the gracious response of my noble friend the Minister.

The reality is that this style of writing, with question marks, et cetera, is new; it is intended to be new, and when a Government or an Executive make such a change from the traditional, rather arid way of wording these things, it must be construed to be intended to have an effect. That will arouse the interest of other people. I said in Grand Committee, rather fancifully perhaps, that the courts might look at whether this was part of the intention. As the courts, like Parliament, never look at these sub-headings I think that is extremely unlikely. In the course of this debate I believe I have demonstrated that the sub-heading “What are the Adjudicator’s reporting requirements?” above Clause 14 is also nonsense because it does not cover the reports on investigations and so on. I hope my noble friend will take that point to colleagues, because the powers-that-be need to think carefully about this approach.

I am grateful to my noble friend Lord Howard and the noble Lord, Lord Knight of Weymouth, who spoke in this debate. I am interested in the point that the noble Lord, Lord Knight, raised about Private Members’ legislation. It had not occurred to me but it is a significant point. I am also grateful for the support from my noble friend the Duke of Montrose, who made a very sensible suggestion that this signposting could be done to the side of the legislation. In the electronic age it might be much more helpful to do it via the Explanatory Notes or an introduction to the Explanatory Notes. The powers-that-be may want to consider that. I do not wish to detain the House so without more ado I thank the Minister and I beg leave to withdraw my amendment.

Amendment 32 withdrawn.

Clause 18 : Confidentiality

Amendment 33

Moved by

[Lord Browne of Ladyton]

33: Clause 18, page 7, line 23, after “Adjudicator” insert “or the Deputy Adjudicator or any person acting on the Adjudicator’s behalf”

[Lord Browne of Ladyton]

My Lords, if this regime is to work in the way in which all parties in this House intend it to work, suppliers will have to have complete confidence in the confidentiality of their communications with the adjudicator. One can envisage a reluctance from small suppliers, who will see the possibility that they will lose future contracts, from communicating with the adjudicator if they do not think that he and his staff will respect that confidentiality. The purpose of these amendments directed to Clause 17, which deals with the adjudicator’s obligation of confidentiality, is to toughen that obligation up. These five amendments do that in two ways. Two of them extend the obligation of confidentiality beyond the adjudicator to his or her deputy and staff. Two of them remove “may” and make the obligation of confidentiality overtly mandatory and not potentially discretionary by replacing it with “must”, although I am prepared to accept as a matter of law the point that the Minister made when she responded to a similar amendment in Committee. The fifth and last amendment creates a criminal offence for a breach of confidentiality. I will speak to them by reference to the Minister’s responses to similar amendments when we discussed this in Committee.

In relation to extending the obligation beyond the adjudicator to the deputy adjudicator and his or her staff, the Minister’s response was that she was confident that that obligation was already extended beyond the adjudicator. As the Minister and others who were there will remember, we were pressed for time on that day because we had a joint ambition to conclude the Committee stage by a particular time. I am inviting the Minister to go beyond a simple expression of confidence and to explain the mechanism that makes her so confident that the obligation on the adjudicator applies also to the deputy adjudicator and the staff of the adjudicator’s office when it is not spelled out in the Bill.

As far as replacing “may not” with “must not” in terms of respecting confidentiality is concerned, we have already discovered today that in the positive “may” and “must” are not interchangeable. But I am told that “may not” and “must not” have the same force, which I think is right as a matter of law. That is the expression the Minister used; I do not claim credit for it. It occurs to me that if we are legislating for the public and both words mean the same, if we mean “must not” why do we not say “must not”? If we are endeavouring to encourage a degree of confidence in this role on the part of people who are deeply vulnerable then we should say “must not” if we mean “must not”.

Finally, and this is a much more important point, there is a lacuna in this Bill that the obligation of confidentiality is not backed up by any sanctions for breach. We are all aware of the vulnerability of electronic communication and therefore the probability that almost every public office will leak. Something will get out. There is no sanction for a breach in this Bill because the Minister told me that she is confident that the adjudicator and his staff will respect confidentiality. In my time in Government I worked in five different departments and I had confidence in all of them that they would not leak and that they would respect confidentiality. I might find it difficult retrospectively to find evidence that that confidence was well placed.

The Minister went on to say that if a person suffers damage from a breach, then there is the potential for that person to claim damages from the adjudicator or to seek an injunction to prevent a disclosure. But it will be too late if it is leaked. The injunction will mean nothing. In any event, unless one gets a super-injunction, as we have discovered in this country, the very fact that one is seeking an injunction always reveals or at least points to the information. It is very doubtful that any of the people whom we are seeking to protect by this legislation will be in a position to get a super-injunction, not that we would want them to, so they are left with damages.

I envisage this sort of situation. I am a supplier to one of these great monoliths, one of the 10 supermarket chains that we are seeking to regulate by this. I supply them with whatever—fresh strawberries or something; it does not matter. I have a complaint. I tell the adjudicator. The adjudicator says, “There is something in this complaint. In fact, this reveals a very important issue. I am going to take this all the way”. It leaks to my retailer that I was the cause of this complaint. It has caused them a lot of embarrassment and probably cost them a lot of money. I do not get another contract. I challenge anybody to tell me how I will convince any court against the battery of lawyers I will face if I choose to sue Tesco or Asda or any of the 10 retailers—I should not name them; it does not matter who it is—that the damage that I suffered was a direct result of the fact that I complained to the adjudicator. It will be impossible, so there needs to be a sanction. The Minister in her response to me in an earlier debate implicitly accepted that there needs to be a sanction. There is no sanction. Injunction does not fit the bill and it is fanciful to think that small suppliers—everybody is small compared to these supermarkets—will be able to take on the challenge of proving in an action against the adjudicator that it was the adjudicator’s negligence in allowing the confidentiality to be breached that caused the loss.

The Bill needs to impose a criminal sanction to toughen up the confidentiality obligation to the maximum effect. I am supported in this because there are many other pieces of legislation in which this device is used. I have uncovered two but I am sure that researchers would uncover many more. I already know the answer to that so the Minister does not need to deploy the answer that she deployed against me earlier. They are different pieces of legislation so these are different sets of circumstances that require different responses. I am a great believer in consistency. If we can impose a criminal offence on, for example, the legal aid authorities if they breach confidentiality then we should impose the potential for criminal offence on the adjudicator and his staff. I beg to move.

18:59

[Baroness Wilcox]

My Lords, the adjudicator’s obligation to maintain strict standards of confidentiality is integral to the Bill. I therefore thank the noble Lord, Lord Browne, for his careful consideration of how we can make these standards exacting.

As I said in Committee, the Government are confident that the deputy adjudicator and people acting on behalf of the adjudicator would be bound by the duty of confidentiality as set out in the Bill. The deputy and the individuals acting for the adjudicator have no functions which are independent of the adjudicator and can only carry out the adjudicator’s functions. In doing so, they will be subject to the same restrictions as the adjudicator. If a person acting on behalf of the adjudicator breaches Clause 18, normal agency principles will make that a breach of Clause 18 by the adjudicator. Additionally, we are convinced that the words “may not” and “must not” have the same force and meaning here.

The noble Lord has raised the issue of plain English with regard to the amendments. We are confident that the Bill has the correct legal sense as it stands. Although it would not be wrong to use “must not”, we believe that “may not” is slightly better here. The words “may not” in their context here are clearly intended to be prohibitive. If they were permissive, it would mean that the adjudicator was allowed not to make unauthorised disclosures, which would not make sense. If further clarification were needed, the words “prohibitions contained in this section” are used in Clause 18(5).

The noble Lord has also suggested that the creation of a criminal offence is needed to discourage breaches of confidentiality. This seems unnecessary, as the adjudicator will be a public authority and be expected to take his or her statutory duties very seriously.

Perhaps I might also remind noble Lords that Schedule 1 provides for the Secretary of State to,

“dismiss the person if satisfied that the person is unable, unwilling or unfit to perform his or her functions”.

Serious breaches of confidentiality, either personally or from those working for him, have the potential to satisfy these requirements. We therefore believe that the threat of dismissal will be a sufficient deterrent, if indeed a deterrent is needed.

There are therefore ample reasons for the adjudicator and those working for the adjudicator to take care over confidentiality. I agree that strict confidentiality requirements will be essential if the adjudicator is truly to eradicate the climate of fear that we are aiming to address in the Bill. The Government are confident that the Bill provides for these requirements as it stands. I therefore ask the noble Lord to withdraw his amendment.

[Lord Browne of Ladyton]

My Lords, I am grateful to the Minister for the care that she has again taken to address these issues having previously thought that she had seen me off in Grand Committee. I am pleased that we now have further clarity about the basis for her confidence in relation to the extension of the obligation to the deputy adjudicator and his staff—that is helpful. I maintain the position that, if “must not” and “may not” mean the same thing, “must not” is preferable, particularly when you are trying to build confidence among people who are in a weakened position—if they were not in a weakened position, we would not be doing this. I am disappointed, however, in the Minister’s failure to appreciate that there needs to a sanction for a breach of confidentiality which does not imply the dismissal of the adjudicator himself, because that, too, is about building confidence. If people see that a criminal offence will have been committed if their confidentiality is breached, their confidence in the legislation will be increased. I hope that the Minister’s confidence that there will be no leaks is well placed. I will regret it, as much as she will, if she is wrong. I just think that, in this internet age that we live in, it is fanciful to imagine that we are capable of creating an organisation that is leak-proof. However, I have been seen off on this occasion and I shall not come back. I beg leave to withdraw the amendment.

Amendment 33 withdrawn.

Amendments 34 to 37 not moved.

Clause 19 : Levy funding

Amendment 38

Moved by

[Lord Howard of Rising]

38: Clause 19, page 8, line 10, at end insert “, and for the purpose of the first levy and any subsequent annual increase in the levy, the Adjudicator must undertake a consultation process with the specified retailers and consider any submissions received.
( ) The Adjudicator may require the payment of a levy only if an order made by the Secretary of State is in force setting out the amount of the levy and authorising the Adjudicator to do so.”

[Lord Howard of Rising]

My Lords, the amendment would allow large retailers to be consulted when the levy is set. It seems only reasonable, if they are paying the bill, for them to have some voice. The amendment would not oblige the adjudicator to listen to them, but they may make some points which are worth while and even suggest that he take more money than he is asking—who knows?

I also have Amendment 41 in this group. While I accepted the points that the Minister made in Committee about not wanting to create bureaucracy and making sure things were easily handled, I suggested before I withdrew the amendment that any surplus funds at the end of one year should be used in the next year. I think that this might be acceptable to Her Majesty's Government and would be grateful if the Minister could confirm it.

[Lord Razzall]

My Lords, I shall speak to Amendment 39, which is in my name. It is of fundamental importance in relation to the levy funding, because Clause 19(5) indicates that the amount of a levy should be the same for all retailers. We have all received considerable lobbying, particularly from Waitrose, which feels that this is rather unfair and that the amount of the levy should be adjusted so that the retailers which have been penalised or named and shamed the most should pay a higher levy than those which have been penalised less. Waitrose, having taken this line of argument, obviously thinks that it is likely to offend and be named and shamed less than other retailers. It is a straightforward amendment, simply reflecting what I would regard as common sense: that when the amount of the levy is adjusted each year, the people who have been named and shamed the most should pay the most in the next levy.

[Lord Teverson]

My Lords, I support my noble friend’s amendment. It seems to me natural justice that when retailers have to pay a levy, the levy should be related to their culpability, the nuisance and aggravation that they have caused and their contraventions of the code. It is absolutely right that the levy should reflect that and that, in the case of those organisations which have not crossed the adjudicator’s desk, an invoice should not cross theirs either.

[Lord Knight of Weymouth]

My Lords, I am supportive of all the amendments in this group. I suspect that a concession is coming the way of the Liberal Democrat Benches. While I have disagreed with virtually everything that the noble Lord, Lord Howard of Rising, has said on this Bill, he has made a valuable contribution to it and I think that he has got a point here. A graceful concession from the Minister on this one, too, would be wonderful.

[Baroness Wilcox]

My Lords, the amendments tabled by my noble friends Lord Howard of Rising and Lord Eccles are ones that we have discussed before. As I said in Committee, the Government’s intention to fund the adjudicator via a levy is clearly set out in the Bill and in previous policy statements, so I see no need to require an order to be made first.

Regarding the suggestion of consultation on any increase of the levy, my worry is that this would add unnecessary bureaucracy and inflexibility. The adjudicator’s workload will vary depending on the number of complaints received. In some years, it may have very few, in which case the levy needed would be small. In other years, it may carry out major investigations requiring considerable resources, and I remain convinced that the safeguard of requiring the Secretary of State’s approval is the best way to balance flexibility and accountability.

On the subject of flexibility, my noble friends have also tabled an amendment regarding the returning of any unused funds to the retailers. While I believe that “may” adds helpful flexibility, I can assure them that any unused funds would certainly be taken into account when calculating the size of the next levy, so that no more was raised from the retailers than was absolutely necessary. I would therefore ask the noble Lords to withdraw those amendments.

With regards to the amendments tabled by the noble Lords, Lord Razzall and Lord Teverson, and the noble Baroness, Lady Randerson, in Committee, I indicated that the Government were sympathetic to an amendment along these lines. The Government have always stated that the intention should be that as soon as he or she has sufficient experience, the adjudicator should move to a differential levy. After consideration, it therefore seemed unnecessarily bureaucratic to require an order to be passed before this could be done and I am grateful to the noble Lords for bringing forward this amendment.

The fact that individual levies would still need to be approved by the Secretary of State will provide an adequate safeguard against abuse. Furthermore, the ways in which the levy can be raised are clearly specified. The levy must be the same for each retailer or else based on criteria broadly intended to reflect the expense and time the adjudicator expects to spend in dealing with matters relating to each retailer. It could not, for example, be proportional to turnover as that would not fit these specifications.

Noble Lords have said that they wish to see a system in which those who behave badly pay more. The Government concur with this sentiment and I am therefore happy to accept this amendment.

[Lord Howard of Rising]

I am grateful to my noble friend for indicating that the surplus in one year would be set off against the next year. I am completely gobsmacked at getting some support from the noble Lord, Lord Knight. I beg leave to withdraw the amendment.

Amendment 38 withdrawn.

Amendment 39

Moved by

[Lord Razzall]

39: Clause 19, page 8, line 12, leave out from beginning to “based” in line 14 and insert “The Adjudicator may require different specified retailers to pay different amounts of levy but any differences must be”

[Lord Razzall]

I would like to thank the noble Baroness for her gracious acceptance of this amendment. I beg to move.

Amendment 39 agreed.

Amendment 40

Moved by

[Lord Razzall]

40: Clause 19, page 8, line 24, at end insert “(including any criteria under subsection (5))”

Amendment 40 agreed.

Amendment 41 not moved.

Clause 22 : Definitions

Amendment 42 not moved.

Clause 23 : Orders

Amendment 43 not moved

Amendment 44 not moved.

Olympic Games: Security

Monday 16th July 2012 Lords Chamber

Statement

19:13

[The Minister of State, Home Office (Lord Henley)]

My Lords, with the leave of the House, I shall repeat as a Statement an Answer given by my right honourable friend the Home Secretary to an Urgent Question in another place. It is as follows:

“Mr Speaker, since I updated the House on Olympic security last week there have been several allegations in the media, and I want to deal with each of them.

First, it was reported that Ministers knew there would be a shortfall in security staff last year. This is untrue. HMIC reported, at my request, on LOCOG’s security preparations last September, and it recommended several measures. HMIC reported again in February and concluded that LOCOG had plans in place to deliver the required number of security personnel. Neither HMIC report identified specific problems with G4S scheduling.

Secondly, it was reported that the Minister for Crime and Security had attended meetings in which he was told there was a security staff shortage. In fact, G4S repeatedly assured us that they would overshoot their targets. As I told the House on Thursday, G4S only told the Government that they would be unable to meet their contractual obligations last Wednesday and we took immediate action.

Thirdly, it was reported that we must have known about the shortfall because the military was put on standby in April. This is also not the case. Seven thousand five hundred troops have been part of the security plans since December. A further 1,000 were on standby in the event of flooding or other such civil emergencies, and we placed a further 2,000 on standby as a precaution in case the threat level increased. The 3,500 troops whose deployment I announced last Thursday are a direct response to the failure of G4S to meet its contractual obligations. A further contingency will remain.

The Government have strengthened the oversight of the security planning operation since we came to office. I would like to go through, briefly, what has happened since the bid for the Games in 2005.

From the beginning, the organisers planned to use private sector personnel for venue security. LOCOG confirmed they would be using private sector security personnel well before the 2008 Beijing Olympics. LOCOG started the procurement process for security personnel in April 2010.

When we entered government in May 2010 we instigated a comprehensive review of Olympic safety and security planning overseen by the then Security Minister the noble Baroness, Lady Neville-Jones.

That audit and review identified a shortfall in LOCOG’s venue security budget, which we addressed in the Comprehensive Spending Review, but we recognised that with a project of this size and scale, even this additional funding might not ensure the level of security we needed. So I also asked for outside assurance of LOCOG’s venue security planning.

In 2011, I commissioned Her Majesty’s Inspectorate of Constabulary to carry out an inspection of LOCOG’s venue security plans. As I have already said, this led to several recommendations that were acted upon by the Home Office, the police and LOCOG.

LOCOG and the Home Office monitored delivery throughout the following months. G4S assured LOCOG and the Government continuously that it would be able to deliver its contractual obligations, but on Wednesday 11 July, following the difficulties with scheduling which the company has acknowledged, G4S notified LOCOG and the Government that it would not be able to provide the numbers of security personnel specified in its contract.

I want to be clear that this was the first time that G4S admitted to any Minister that it would not be able to deliver the numbers of security personnel that it had promised. We acted immediately to make further contingency arrangements by agreeing the deployment of 3,500 further troops. That brings the total military contribution to the Games to 17,000, including personnel from all three services.

G4S has failed to deliver its contractual obligations, but we have the finest military personnel in the world—troops who are willing, ready and able to step in when their country calls—and we can be sure of their professionalism in helping to deliver a safe and secure Olympic Games”.

My Lords, that concludes the Statement.

19:18

[Baroness Smith of Basildon]

My Lords, I am grateful to the Minister for coming to the House this evening to repeat the Statement.

I have listened carefully to the Statement and in it the Home Secretary says that following a report from HMIC in February 2012, LOCOG and the Home Office monitored delivery throughout the following months. How was that done? What were those checks and monitoring systems that the Government put in place to ensure that security personnel were being trained and would be in the right places at the right times? Did the Home Office and LOCOG fail in their monitoring, or did the Government and LOCOG just hand over the entire security operation to G4S with no checks or monitoring other than a government Minister sitting in meetings listening to false assurances from G4S?

I noted what the Home Secretary said in her Statement about the Minister, James Brokenshire, not receiving information about security staff shortages. So what was the purpose of James Brokenshire attending those meetings? What happened at those meetings? Did LOCOG and the government Ministers just sit there and listen to assurances from G4S that it was on target and everything was okay? Did anyone ask for evidence that that was the case?

Did the Government say, “Is everything going to plan and on time?”. Did G4S say, “Yes”, and did the Government just say, “That’s okay”? If the Home Secretary’s Statement, repeated in your Lordships’ House, that the Home Office and LOCOG weremonitoring delivery, is accurate, it is hard to understand the Home Secretary’s Statement, when she says later:

“I want to be clear that this”—

that is, Wednesday 11 July—

“was the first time that G4S admitted to any Minister that it would not be able to deliver the numbers of security personnel that it had promised”.

It is essential that we know about the monitoring arrangements to which the Home Secretary refers in her Statement. Will the Government publish the minutes or notes of the meetings that James Brokenshire attended on behalf of the Home Office? Can we have an assurance that that is not the usual way that the Government do business with business partners?

When the Home Secretary was asked earlier whether she could confirm the exact number of security staff that G4S would provide for the Games, she appeared unable to do so. I have been given a transcript of what she said in the House of Commons. She said:

“They are, they are, we are, continuing to accredit personnel for G4S and they are continuing to schedule personnel for the Olympic games and the precise balance of the numbers … they will be providing … will become clear over the next few days. But this is, this is, well, I suggest to Honourable Members opposite that they actually look at the statements that have been made by G4S about how they are dealing with this issue and what the problem is and the suggestion that somehow … this is a problem for us is not the case”.

What number of personnel is G4S now saying that it will be able to provide for the Games? What action are the Government taking to ensure that we can all have confidence in the training, support, management and adjustable arrangements for security staff to be in the right place at the right time?

Can the Government assure your Lordships’ House that the shortfall of security staff now being provided by G4S will not result in any additional cost to the public purse? I am greatly relieved that contingency plans were in place, although, obviously, government failures to identify the problem meant that they are having to be used very late in the day. I have great confidence in our Armed Forces—more than in G4S or the Government—but are the Government satisfied with the accommodation arrangements being provided for the Armed Forces, as this is being done at very short notice? I have received a number of reports—I would be happy to receive assurances that they are not correct—of soldiers having to be put up in shopping centres, school gyms and hurriedly constructed large shed-type accommodation. What will be the costs of those and who will meet them?

The Government have assured the Armed Forces that they will not be out of pocket for any family holidays or events that they have booked. That is small consolation for a soldier who has been in Afghanistan and now sees his leave cancelled to undertake security arrangements for the Olympics. Can you imagine how much he would enjoy being with family and friends? Who is meeting those costs?

There is great pride in London hosting the Olympics, and we all want it to be a fantastic experience for everyone who attends and takes part, but the Government really have to get their act together.

19:23

[Lord Henley]

My Lords, I agree with the noble Baroness in her final remarks. I think that all of us want to ensure that this will be a great experience for all those not only taking part in but attending the Olympics. Across all parties, on all sides of this House and another place, we want to ensure that. We also want to ensure that we deal with security matters in the most appropriate manner. That is why I can give the noble Baroness an assurance, as I did in repeating the Statement, that we increased the amount of money available for security after reviews that took place just over a year ago. That was the right thing to do, and we made sure that we have the right plans in place. When these problems arose, as the noble Baroness should have acknowledged, our contingency plans came into effect very well, and there were ways to deal with these matters.

If I may, I will deal with the questions that the noble Baroness put to me one by one. She first asked how we were monitoring these matters. I could run through an extensive list of meetings that Ministers—both the Home Secretary and my honourable friend Mr Brokenshire—had with LOCOG and G4S, but I shall not delay the House at this stage by detailing every meeting, all of which I have listed here. I assure her that we can make public in due course how many meetings there were and when they took place. I will take advice as to whether minutes of those meetings can be made available, but I shall not answer that question for the moment.

I can say that G4S provided detailed data—as it should; that is part of the contractual arrangements—and detailed assurances. As my right honourable friend made clear in her Statement, it was only on 11 July, last week, that G4S admitted that the programme was not on track. I do not think that noble Lords opposite should try to suggest that there is some conspiracy going on. There has been, I will not say a cock-up, but let us say a failure of management, which was not quite what it should have been. I do not know whether the noble Baroness heard the comments made by the chairman of G4S this morning on the radio, but that became apparent from them.

The noble Baroness then asked what numbers G4S will be able to provide. Again, I cannot give her the exact number at this stage. It will depend on how many complete the training and make it through the accreditation process. G4S cannot yet provide a precise answer, but that is no different from other sporting events—although I appreciate that this is a much bigger sporting event—that take place regularly. Sporting events of this sort obviously have to be dealt with by firms of this sort because there is no way that the Government could do it on our own.

On the costs to the public purse, G4S has confirmed that it will meet any extra costs associated with the military deployment, including accommodation and compensating soldiers for any lost leave. On the noble Baroness’s last point, again, I cannot precisely answer what accommodation will be provided for the additional soldiers, but we will ensure that they are accommodated in the most appropriate manner. I can give the categoric assurance that none will be out of pocket in any way and there will not be any extra cost to the public purse, because that will be met by G4S.

19:27

[Lord Higgins]

My Lords, does my noble friend agree that the important thing now is to plan for the immediate future rather than to look further forward? Who is now in overall charge of the security operation? Is a single individual in charge for both those recruited by G4S and the troops who are now being brought in? Secondly, there are reports that the computer to be used to allocate people to their posts was not working properly. Is it working now? Finally, there have been questions whether those recruited have the necessary language qualifications. Is that a problem or not?

[Lord Henley]

My Lords, working backwards through my noble friend’s questions, if people do not have the appropriate language skills, they will not get accreditation to work. I cannot comment on whether the computer has not been working at the moment but I will make inquiries and let my noble friend know. As for who is in charge of the overall security operation, obviously, in the end, my right honourable friend the Home Secretary is in overall charge and that will cascade down through all the usual people below her. The Armed Forces will report to their individual officers, but others will be involved in the process working out. G4S employees will obviously be a responsibility for G4S, but they must be properly accredited before they begin to work on such matters.

[Lord Elystan-Morgan]

My Lords, I raise two questions of a legalistic nature. First, when the contract was placed with G4S, how many other bodies, agencies or companies were in any way shortlisted for consideration? Secondly, the Minister has assured the House that G4S intends to compensate in full any losses suffered. Is that a term of the contract? Was it a penal clause or is it an aspiration on the part of G4S?

[Lord Henley]

My Lords, I do not have the details of the contract in front of me, but I can once again give the assurance that G4S has made it quite clear that it will meet the extra costs resulting from the errors that it has made. I can categorically assure the noble Lord that there were others who bid, but I am not in a position at this stage to say who they were.

[Lord Prescott]

My Lords, this is the third time in eight days that Parliament has received assurances from this Government that the security of the Olympic Games will not be compromised. The Government’s desperation in drafting in not only the Armed Forces but now the police is an indication of the total failure of the private companies involved to deliver on their contractual requirements to ensure Olympic security. Have the Government investigated the question I raised with the Minister during the Statement last Thursday regarding the fact that there are other companies almost bound to collapse and not provide their contractual requirements on fire security matters? Can the Minister tell me?

The desperation involved in drafting in the armed services clearly shows that the Holy Trinity of the Government, LOCOG and G4S has contributed to the failure to provide proper security for the great experience of the Olympics to which the Minister refers. Will the Government reconsider the possibility, particularly with regard to G4S and the police, of the intention to privatise our police forces? G4S is already negotiating for both the West Midlands and Surrey police forces. Will the Minister support the police authority in the Surrey area, which has cancelled its G4S contract, and will he encourage the West Midlands authority to do the same? When will he recognise that public service cannot be replaced by private service?

[Lord Henley]

My Lords, the noble Lord overstates his case, and overstates it rather badly. There is no question of privatising the police force, as he claims, although obviously there are certain parts of police work that can be done by private sector companies. That does not mean we are privatising the police force, which is a separate issue and nothing to do with what is happening here.

We are talking today about the security of the Olympics and different bits of security that will be carried out by different people. As the noble Lord knows perfectly well, private companies are always brought in to provide most of the basic security at any major sporting event in terms of checking bags and checking people as they go in. This is what happens at Wembley, at test matches, at Wimbledon and on many other occasions. The Olympics are no different, except they are bigger.

We entered into a competitive process with a number of companies—G4S won and it has not delivered as it should have done. We have made this clear today and in earlier Statements. We have appropriate contingency plans in place to make sure that if G4S failed in part of its job we could meet our obligations to have an appropriately secure Olympics. That is what we are going to have, so I think the noble Lord going on a rant of this sort is not helpful and does not do any good. We had made sure that we have answered all relevant questions—that is what we hope to do to as well as providing a properly secure Olympics.

[Lord Dannatt]

My Lords, I am sure that the Members of this House want to see a safe and secure Games, and that the last-minute increase in the size of the Armed Forces participation in the security operation will help to guarantee this. It is sad that we have had to have these sharp discussions in advance of the Olympics, attracting negative publicity, but that is life. I am sure the Minister would agree that there should be an investigation after the Games as to how we got into this position. Not wishing to prejudge that, I would like to place it on record, as the Minister did in his Statement, that when the Games were awarded to London in 2005 it was said that they would be civilian-run. However, that defies recent history about very large sporting events such as other Olympic Games. Was it not complacent of the Government of the day not to have planned from the outset for considerable use of the military, which has experience of dealing with large numbers of people and of using a clear chain of command, and might well have prevented the situation that we find ourselves in now?

[Lord Henley]

My Lords, I am very grateful to the noble Lord for his words, particularly when he says that we should not at this stage be making negative comments about the Games. We want them to be a good set of Games—we want them to be secure, but not to be seen as “the security Games”. I am also grateful for his comments about what happened at earlier stages when we were not in government in terms of the original plans for the Games and how they were set up.

It is quite right that we are making use of contingency plans to bring in extra military service personnel to help out on some aspects of the Games, and that earlier on we brought in an extra 5,000 specialists from the Armed Forces to address security matters that only they could ever have dealt with, as we see from HMS “Ocean”, moored in the Thames, and other things that the private sector obviously cannot produce. We are talking here about providing some extra military personnel to deal with the problems created by the issues that G4S had. I am grateful to the noble Lord for his comments.

[Baroness Hamwee]

My Lords, can the Minister assure the House that adequate training will be available, given that so many individuals will be coming to the job so late, and that the right training will be given to people designated to particular jobs? There was an unfortunate item on the news last night when a young man who was said to have been put forward by G4S—I think it was more than he was set up than put forward—indicated his difficulties with language.

As a more general and principled question, will the G4S contract be published? Before I am told that it is commercial and in confidence, I raise the point that both parties to a contract can agree to vary that sort of clause and perhaps G4S can be persuaded that it would be in the public interest, in both senses of the word, that the contract should be published.

[Lord Henley]

My Lords, I can give my noble friend an assurance that everyone doing a job involving security will have adequate training and we shall make sure that people who do not have adequate training will not be accredited.

Regarding whether the G4S contract will be published, that might be a matter for both parties to consider after the event, so let us leave it until then. It might be that G4S wishes to publish it, or that some sort of post-mortem, as my noble friend is suggesting, might be appropriate after these Games. I do not think it is proper that we should create fears that are not necessarily there at this stage.

[Baroness Billingham]

My Lords, we are where we are, and I entirely agree with the Minister that this is not the time for looking retrospectively and trying to find out what happened. However, the fact of the matter is that every week, every day and almost every hour we hear things that are completely disconcerting to the general public and to the people who are going to be involved in the Games, both participants and spectators. The role of the Government should always be the safety of those people and it has to be their priority. I am sure that the more the general public read, the more they are losing confidence and faith in what the Home Secretary has been doing. Heaven knows how we got ourselves into this predicament. I do not want to put it too worryingly, but it looks as if we are almost in a national security crisis and I want to know how bad it has got to be before the Minister does something about that. Every single thing that we have heard today indicates that the security we have always promised to the people coming to watch these Games is not going to be in place. So what is the Minister’s next move—we want to know?

[Lord Henley]

My Lords, again, I suspect that the noble Baroness is exaggerating by saying that every day there is some new problem. There were problems last week and over the weekend there were further press reports that have now been dealt with by my right honourable friend in her Answer, where she made it quite clear that most of them are completely untrue. Although I appreciate that not many have been doing it in this House, when I listened to the debate in another place there was a great deal of unnecessary point-scoring on questions of security. It is very dangerous of the party opposite. I can assure the House that we take security as the absolute top priority but we do not want to turn these Games into the security Games. We want to ensure that there is appropriate protection of individuals, and that will happen. That is why we have reacted as we did and why we set up the contingency plans that we have. They have come into effect as a result of the failures of G4S.

[Lord Glentoran]

My Lords, I was part of the Bill team that worked with Tessa Jowell for several years, from the first time that we brought the Bill through all the way up until the election. We worked together to make sure that these Games were delivered by the British Parliament as a cross-party project. Up until today or yesterday, that has been so and I beg noble Lords not to start nitpicking on cross-party points.

[Lord Henley]

My Lords, I am very grateful for what my noble friend said, particularly about Tessa Jowell and all the work that she has done for the Olympics ever since she put that bid in some time back in 2002, or whenever it started. The point that she made, which again I think my noble friend will be aware of, is that this is not the time to start trying to point-score on a political basis, as has been happening. We want to ensure that we have a good and successful Games, and that they are secure Games. However, we do not want security to dominate them so that they become a security Games. We want a good, successful Games that everyone will enjoy.

[Baroness Tonge]

My Lords, could the Minister persuade our Government to talk to the Government of Israel about transferring, as a good-will gesture, the G4S personnel who are currently guarding—rather brutally—the illegal settlements in the Occupied Territories of Palestine? Could he persuade them to transfer those people, thus making the Games a great experience for Palestinians as well as for Londoners?

[Lord Henley]

My Lords, I do not think that is a point that I need to respond to.

[Lord Mackenzie of Framwellgate]

My Lords, in asking this question I declare an interest that is in the Lords register. Is the Minister aware of the advanced technical means of securing large perimeter areas by means such as radar, which obviously reduce the manpower required for these purposes? Is he aware that some 18 months ago an approach was made to the Olympic security authorities by a company that secured Sydney harbour in Australia? Presentations were given and considerable interest was shown by those who received the presentation but, unfortunately, there does not appear to have been any follow-up by those in charge of security at the Olympic authorities.

[Lord Henley]

My Lords, I agree with the noble Lord that technology can obviously always play a very important part in security but it would be a very rash and foolish Government who relied only on technology. In the end, one needs to have feet on the ground and to have people there who are properly trained and accredited to do the right job.

[Lord Patten]

My Lords, in declaring my interest as a member of the advisory board of the British Olympic Association, whose foremost concern is for the training, welfare, health and, above all, security of British athletes, I congratulate my right honourable friend the Secretary of State for the Home Office very warmly on the action that she has taken. Is my noble friend the Minister convinced, looking forward not back at any post-mortem that might happen, that in the next few weeks—and indeed more than that—the chief executive and top management team of LOCOG have the capacity and capability to be good customers of the security that they are paying for and commissioning? They are in the front line, and have been for many years, in commissioning the security that we have had. Secondly, I also ask my noble friend for an absolute assurance that as the Olympic Games morph and transmogrify into the Paralympic Games there will be no diminution whatever in the level of security provided during the Paralympics as compared to the Olympics, because soft targets are easy targets.

[Lord Henley]

My Lords, I give an assurance to my noble friend that we will maintain security at whatever is the appropriate level on the advice that we receive from those who have an interest in security matters. It is therefore unlikely to be relaxed as the Olympics morph, as my noble friend put it, into the Paralympics. As regards the assurances that he would like from me personally about LOCOG, I have not been involved in any discussions with the officials and management of LOCOG but my right honourable friend the Secretary of State has, as has my honourable friend Mr James Brokenshire. I think they could give assurances to my noble friend that they are satisfied that it will ensure that we maintain the right level of security.

[Lord Addington]

My Lords, does my noble friend agree that this is probably the biggest mistake we have had in the preparation of the Games so far? Will he assure the House, and indeed Parliament, that when we review everything to try to get the soft legacy, which will probably be the biggest part of the legacy of this, we will get a full review of what happened, when and why, so that we can study it at leisure? There should not be any point-scoring now and we should make sure that we learn what has actually happened and ensure that the next Games or event does not repeat these mistakes. Let it make its new ones.

[Lord Henley]

My Lords, I think my noble friend was at the same meeting as me when a number of potential Olympic ambassadors were briefed, and he will then remember that the Secretary of State for Culture, Olympics, Media and Sport said that, however well things went, there were likely to be mistakes. That is in the nature of things and we will look at those mistakes afterwards and ensure that we resolve them so that they do not happen again. My noble friend asks that we ensure that we do not have any further mistakes the next time we have the Olympics. I appreciate that there are one or two Members of this House who might remember the previous Olympics back in 1948. I do not and I am not sure that I will be around for the next time.

[Lord Addington]

There will be the Commonwealth Games.

[Lord Henley]

I appreciate that my noble friend is now saying that there will be the Commonwealth Games in Scotland in two years’ time. I am sure that the Scottish Government will be taking all possible advice on these matters and will learn as much as they can from any possible mistakes that may or may not have happened.

Finance Bill

Monday 16th July 2012 Lords Chamber

Second Reading (and remaining stages)

19:47

Moved By

[Lord Sassoon]

That the Bill be read a second time.

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

My Lords, as noble Lords are well aware, when this Government came into power they inherited the largest peacetime deficit in our history. We are doing everything possible to get the economy moving and to deal with the enormous debts we inherited. Last week’s Fiscal Sustainability Report by the Office for Budget Responsibility highlighted the importance of the Government’s plans to ensure the long-term sustainability of the public finances. Our consolidation plans build on last year’s public sector pensions deal, which the OBR has identified as instrumental in preventing further increases in public sector net debt over the long term.

This Bill implements further reforms to improve the state of the economy. Despite the challenging economic backdrop, we remain committed to supporting growth. The Bill introduces a number of changes to encourage growth in our economy and help businesses of all sizes. The Government have clearly set out their ambition to have the most competitive tax system in the G20. The competitiveness of our tax system diminished over the last decade, as our competitors cut their corporation tax rates. We have taken action to address this. Clauses 5 and 6 make further cuts to the main rate of corporation tax, to a rate of 23% next year. This will be followed by a further cut in the Finance Bill of 2013. A cut in the main rate of corporation tax benefits businesses right across the country. As the CBI said:

“The additional cut in the headline rate of corporation tax will help make the UK a more attractive place for companies to invest, do business and create jobs”.

The Bill also introduces new controlled foreign companies rules designed to improve the UK’s tax competitiveness. These reforms will ensure that this is done in a way that reflects modern, global business practices, significantly reducing the compliance burdens of business. As my right honourable friend the Chancellor said in his Budget Statement, this reform,

“will stop global firms leaving Britain, as they were, and encourage them to start coming here”.—[Official Report, Commons, 21/3/12; col. 802.]

WPP and other major companies have recently announced that they are considering a return to the UK, or that they will move their tax domicile into the UK.

Alongside these reforms, the Bill also introduces a patent box to encourage innovative activity in the UK, but competitiveness is not only about the corporation tax rate. We had been told that the 50p rate of income tax was damaging to our competitiveness and that it would not raise revenue. Indeed, the HMRC report, published alongside the Budget, sets out that the 50p rate is distortive, is damaging to international competitiveness and is an economically inefficient way of raising revenue. In short, the 50p rate has failed. The analysis by HMRC shows that the yield would be, at best, £1 billion and, at worst, may raise nothing at all. This is because the behavioural response has been substantially larger than expected. The 50p rate has damaged the UK’s competitiveness at the very time we must do all we can to improve it. That is why we will reduce the additional rate to 45p from next year. As the CBI said:

“Reducing the 50p income tax rate will send a clear signal that Britain is open for business”.

We want to make the UK the best place in Europe to start, finance and grow a business. That is why the Bill introduces measures to enable greater investment in our small and medium-sized companies. The increases to thresholds and better targeting of the enterprise investment scheme and venture capital trusts in Clauses 39 and 40 will allow businesses to raise equity more easily. The Bill also establishes the new seed enterprise investment scheme to encourage investment into new, early-stage companies by providing tax relief of 50% to investors.

The Bill also provides for individuals. The increase in the personal allowance in Clause 3 will set the value at £8,105 from 6 April this year and we have announced a further increase of £1,100 next year, the largest ever increase in cash terms. The Government are taking 2 million people out of income tax and providing a tax cut to 24 million people. This is a major step towards our commitment to raising the personal allowance to £10,000 by the end of this Parliament.

The Bill also makes changes to the age-related allowances that support our objective to make the tax system simpler and easier for people to understand, but no pensioners will be worse off in cash terms as a result of these changes and this year our triple lock will see the basic state pension increase by over £275. This is £127 more than the previous Government’s plans.

This Government are responsive to the concerns of working families and businesses about the cost of living and the challenges of running a business. That is why we have deferred the fuel duty rise, so that road users are paying 10p a litre less in taxation than they would be doing had Labour still been in power. As RAC Foundation director Professor Stephen Glaister said:

“This is good news for drivers and good news for the country”.

As noble Lords know, this Government have also had to make difficult decisions so that we can tackle the deficit. This includes withdrawing child benefit from households earning more than £50,000. This is a fair way to make savings. We are also taking steps to ensure that the wealthy pay their fair share. The Budget package ensures that the wealthiest will pay five times more than the cost of reducing the additional rate of income tax. The introduction of a new higher rate of stamp duty land tax at 7% on properties sold for more than £2 million will raise over £1 billion in the next five years. The new stamp duty land tax enveloping entry charge rate of 15% will deter those seeking to put their high-value property into corporate structures to avoid tax. The introduction of the UK-Switzerland agreement will ensure that we address the tax loss from those who put their money into Swiss banks to evade tax, and we are tackling tax avoidance with measures in the Bill raising over £1 billion in total.

We will also raise revenue from those sectors that are better able to pay. The increase in the bank levy in Clause 209 will ensure that that the levy will raise around £10 billion from banks over the course of this Parliament, yield that is helping to ensure that we can reduce the deficit, which in turn ensures the stable, low interest rates that are of such benefit to our economy.

The Government are committed to greater consultation on tax policy changes. Most of the measures in the Bill were announced at Budget 2011 and have been subject to extensive consultation. We published more than 400 pages of draft legislation for comment in December and received more than 450 comments. This consultation has ensured better legislation with fewer changes required.

The Bill sets out changes to improve our competitiveness, encourage investment and support our businesses through the recovery. Of course, we always said that recovery would be choppy. In fact, last year the independent Office for Budget Responsibility revealed that the underlying damage to the economy, and our challenge in repairing it, was much greater that anyone had thought. However, we are doing everything possible to confront Britain’s problems, get the economy moving and deal with the enormous debts we inherited. The Bill builds on the progress that the Government have made to date to help families, help business and support economic growth, and I commend it to the House.

19:57

[Baroness Kramer]

My Lords, because of the way in which legislation progresses through the Commons and through this House, I feel that all of us present tonight have discussed all the issues contained in the Bill on numerous occasions. I have to confess to a small temptation just to say, “Please refer to speeches I made earlier”. It means that I shall be brief and just hit on the few issues that I wish to highlight.

To me, the most important measure in the Bill is the raising of the starting threshold for income tax to £8,105 this year and to more than £9,000 next year. Two million low-income earners will have been taken out of paying income tax altogether by this and previous lifts in the threshold and, as the Minister said, some 24 million middle and low-earning income tax payers will have seen their income tax bills reduced by about £330. This has to be right. It moves us well on the way to a starting threshold of £10,000, as set out in the coalition agreement. As a Liberal Democrat, I see it as a significant move towards a threshold that, in essence, starts above the minimum wage, with the notion that there is a relationship between earnings on the minimum wage and the point at which income tax starts. I believe that that has to be right as a major incentive into work and a major measure to tackle long-term poverty.

Cutting taxes significantly at the bottom end of the earnings spectrum is now pretty much taken for granted as the right thing to do across all the parties. I only have a short memory, but I remember all the debates not long ago when this looked pretty revolutionary. The Labour Party chose not to do it in what were considered to be times of plenty, so the fact that it is now being achieved in times of austerity will, I hope, embed this type of philosophy across all the things that we do, no matter which party we come from, as we look at taxation in the future. This is one of the most progressive tax strategies that Governments have adopted in recent years. It has the character of a permanent change and to me is far more effective than the one-off one-year VAT cut that has sometimes been proposed by Labour—which, interestingly, would help the richest members of our community the most.

The Bill also continues to strengthen support for business. I am particularly pleased with the increased incentives for small businesses, new start-ups and entrepreneurs. However, I ask the Government to look at extending the enhanced capital allowances regime to small businesses more widely than just to those in the enterprise zones. I am a member of the All-Party Parliamentary Group on Rebalancing the British Economy, an excellent group that I recommend to the House. Of all the evidence that the group has heard, I have been most struck by that given by Brompton Bicycles, a firm that sells a conventional product but is successful in large part because its manufacturing processes are at the cutting edge of technology. UK small businesses desperately need to accelerate their adoption of new manufacturing technologies to compete and grow. They may not be high-tech in their products, but to be high-tech in their manufacturing tends to make them much more competitive and effective. Incentives to invest in these new processes for small businesses are crucial and I encourage the Government to put this high on their agenda.

The tax avoidance measures in the Bill are very welcome and, I would say, long overdue. Stamp duty has been a particular concern of mine because avoidance by the wealthy is so unfair to the ordinary house buyer. The Bill clamps down on some schemes that use domestic corporate structures to avoid stamp duty, though, in my reading it has not yet eliminated what I would call the Cayman Islands problem—the number of properties that are now already in Cayman Islands trusts or will be put into them in future, avoiding not just stamp duty but also capital gains and inheritance tax. I hope that the Government will make a move on that very soon because it remains a significant loophole and a real sore to every taxpayer who pays up on stamp duty.

Economic growth overshadows all fiscal and economic debates. I am therefore pleased that the Funding for Lending scheme was launched last week by the Treasury and the Bank of England. However, it strikes me as extraordinary that the Treasury and the Bank of England have had to set up a scheme in such a way that banks can get discounted loans only by actually maintaining or increasing lending. That tells you that that they have responded to just about nothing else. To me, that underscores the argument for banking reform, which, hopefully, will be a major occupation for this House after Christmas.

This is a sensible Bill that has been produced in difficult times and I very much hope that we will see it pass.

20:03

[Lord Browne of Belmont]

My Lords, I spoke in this debate last year to express my concern that, despite numerous statements by the Prime Minister before and since the general election about the importance of recognising marriage in the tax system, nothing has happened. It is a great sadness to me that, one year on, that is still the case.

Let us be very clear: the commitment to recognise marriage was in the Conservative manifesto and made it into the coalition agreement, so it is not a policy that has been dropped because of the coalition. The Liberal Democrats have formally been given the right to abstain and, in embracing the coalition agreement, have consented to this. This should ensure a majority adequate to secure the passage of the measure, given that not only Conservative Members of another place will vote for the proposal. There is therefore no reason why the Government should not action their commitment and every reason why they must.

Of course I understand that the coalition agreement pertains to the period 2010-15, so I am not suggesting that the Government have reneged on their commitment. What I am saying is that, given the importance of this commitment, it is a great shame that it has not been given greater priority. Moreover, because of developments since 2010 and the time that it will take to introduce a transferable allowance, I consider that it is now imperative that the introduction of the allowance be made a top priority for 2013.

UK residents find themselves in a relatively unusual position. Only 20.9% of people living in OECD member states are subject to individual taxation without spousal allowances or credits. Most of these live in just two countries—the United Kingdom and Mexico. Among highly developed large economies, the UK is alone in operating a tax system that ignores spousal obligations.

Given that we fail to recognise marriage in the tax system, it is hardly surprising that many married couples in the UK are treated less well than they would be in other developed countries, on average. When the commitment to recognise marriage in the tax system through a transferable allowance was made in 2010, the latest available figures demonstrated that the tax burden on a one-earner married couple with two children and on average wage was 33% greater than the OECD average. Consequently, UK residents faced a greater disincentive to marriage than did most people living in the developed OECD world.

That is of importance for two reasons. The first is child development. The social science evidence is very clear: marriage provides a much more stable environment for child development than cohabitation, so there is no public policy merit in making it harder for people to marry here than in other developed countries. This is hugely important, because the evidence also shows clearly that children raised in stable two-parent homes do much better on average, according to every relevant benchmark, than children raised in single-parent homes. I do not say this to criticise in any way single parents, who for the most part do an excellent job in what sometimes are extremely difficult circumstances, and I believe that they deserve our full support. Rather, I say it because we need to ensure that public policy does not make it more difficult for couples who want to marry to do so in the UK than in other developed OECD countries. If we do not make this change, “broken Britain” should come as no surprise to us.

The second reason is choice. In approaching choice, I am aware that some people find the idea that fiscal policy has anything to do with marriage ridiculous. They assert that people get married for love and they give the impression that any reference to fiscal consideration in the context of marriage is somehow crass and insensitive. These people, who usually in my experience are very well off, make the basic mistake of confusing two different decisions. As I said in last year’s debate, of course people do not fall in love for fiscal reasons. However, when they fall in love and decide that they want to be together, they face a choice: do they marry or cohabit? It is in making that decision that fiscal considerations are very real, particularly if you are on a low to modest income. Statistics demonstrate that 90% of young people aspire to marry, so why then is the marriage rate at an all-time low and the cohabitation rate at an all-time high? Clearly, people have not stopped falling in love and deciding that they want to be together.

I do not want to suggest for a minute that increasing cohabitation is just, or even primarily, the result of fiscal policy—undoubtedly there are other significant cultural factors—but I suggest that fiscal policy is a contributory factor for the evident disconnect between the aspiration to marry and the level of marriages. The fact is that people in the UK fall in love and decide that they want to be together in a context where the option of marrying is more difficult than it is for most people living in the developed OECD world.

Bringing ourselves into line with international best practice and recognising marriage in the tax system will help to make it no more difficult for those who aspire to marry in the UK to do so than is the case for most OECD residents. Moreover, I contend that the case for recognising marriage in the tax system is even stronger today than it was in 2010. Analysis of the latest OECD figures carried out by CARE and presented in Taxation of Families 2010/11 reveals that a one-earner married couple with two children and an average wage now face a tax burden that is 52% greater than the OECD average, a significant increase on the 33% figure for 2010.

This deeply disturbing deterioration impels us to delay no longer the introduction of the transferable allowance. The Prime Minister, who has talked so much about supporting marriage, cannot allow a situation to develop in which the tax disincentives to marriage increase significantly under his premiership. He must ensure that, at least in terms of fiscal policy, it is no more difficult for couples to marry in the UK than it is across the OECD on average.

Before I conclude, I wish to touch on the extremely important subject of Her Majesty’s Revenue and Customs and the IT changes that will need to be implemented in order for the transferable allowance to be given effect. It has been suggested that it could take a year or more for HMRC to make the necessary changes. In the light of this, there are five key questions for the Minister.

First, has the Treasury asked HMRC to assess how long it will take to make the requisite IT changes to introduce the transferable allowance? Secondly, if the answer to the above question is yes, how long did HMRC estimate and, if the answer is no, will the Minister urgently ask them to make an estimate? Thirdly, has the Treasury instructed HMRC to start making the necessary IT changes to facilitate the introduction of the transferable allowance? Fourthly, if the answer to the third question is no, will he urgently ask HMRC to begin making the necessary IT changes? Fifthly, when do the Government intend to bring forward legislation to formally introduce the transferable allowance?

I look forward to the Minister’s reply. If he does not have all the information to hand today, I would be most grateful if he would write to me and place a copy of the letter in the House of Lords Library.

20:12

[Lord Flight]

My Lords, I will say a little about small business and the EIS. The Minister stressed the importance of small businesses in his speech, and I think everybody across all shades of party opinion knows that small business can provide extra employment and boost the economy, and that the proportion of GDP and employment it represents continues to grow.

The EIS has been a considerable success and raised some £12 billion of high-risk equity for small businesses. It was interesting that the French Government sent a delegation over to the UK to look at why the EIS had worked so much better in the UK than the French scheme had in France, even though, on the face of it, the French scheme looked to be more generous. I also make the point that equity is just as important as debt—small businesses cannot, and should not, view bank borrowing as a substitute for equity. As a buffer for survival, equity is absolutely necessary.

At this point, I declare an interest, which is duly in the register, as chairman of the EIS Association, the not-for-profit trade body representing the various professionals involved in promoting and creating EIS offerings. My colleagues from the EIS Association have had an extremely constructive dialogue with HMRC and I pay tribute to the good will and constructive actions of particular individuals in trying to address some of the issues that need addressing, which the Finance Bill does to some extent. I was extremely pleased that the Government listened to the proposals to widen the coverage of the EIS and deal with the follow-on situation of small companies that had survived and grown a bit but needed some more equity capital. It was a pity that the Government were obliged to delay getting EU state aid clearance, as I do not see that these sorts of measures are any of the business of the EU. I am very pleased that the Government did listen and have addressed that.

I am therefore a little disappointed in respect of two big areas in the Finance Bill. The first is the limiting of loss relief to £50,000, or 25% of annual income, which changes the risk-reward nature of EIS investment. In a way, the Government have given with one hand, by widening the parameters, but taken back with the other hand with that measure. Given that small company investment is extremely high-risk, what the loss is going to be with small companies that fail is a material consideration. I know there is some amelioration of that in that losses can be spread over two years for tax purposes, but I feel that this was slightly a political measure and not really thought through in terms of its impact. For all those who invested under EISs in the past on the basis of loss relief, it is also retrospective in that it is being changed after they took the decision to invest based on the then risk/reward parameters.

A minor point is that the list of qualifying investments has been looked at from the negative side but not from the positive side. I cannot see why nursing homes and hotels are not qualifying investments. As the record shows, neither is an area where people make instant profits and both are socially useful. There is a case for reviewing the rules on a positive side.

The second point is perhaps the most material. The EISA has had constructive discussions with the Treasury for some time on measures to stop what I think we and the Government have viewed as abuse of the EIS, where the basic objectives, which we all understand, are being rather used for tax schemes and getting around the rules. Everybody in the industry broadly understands what those abuses are and is pretty constructive about dealing with them. This has led to the new rules in the Finance Bill that create Section 178A of the Income Tax Act 2007. It introduces new disqualifying arrangements which apply to VCTs and the new SEISs as well as EISs. These include test conditions A and B, and if either is met the arrangement is disqualified. I shall read condition A because I get very upset that the drafting of a law in this area can be so entirely opaque:

“Condition A … is that as a result of the money raised by the relevant issue being employed for the purpose of the relevant business activity, the whole or the majority of the amount raised is, in the course of the arrangements, paid to or for the benefit of a party or parties to the arrangements or a person or persons connected with such a party”.

I am afraid it is extremely opaque. I think I know what it is getting at: that where an EIS-qualifying company is to some extent fronting for a larger company that is underwriting its business risk, it is clearly not cricket. I wish that things such as that could be drafted in a way that is a little clearer and more straightforward.

The second condition, condition B, outlaws where a part of business venture, not otherwise qualifying, would qualify. For example, if, say, old people’s homes do not qualify, you separate out a restaurant in the old people’s home which would qualify. Candidly, I cannot particularly see the harm in that if it is employing people and providing a service. It would again be helpful if what the condition means were clear, but I question whether it is of much economic use.

The even bigger issue is that the new arrangements include a process for advanced assurance guidelines by HMRC. This is a form of pre-clearance. In the light of those very opaque conditions A and B, it is almost necessary in order for people to know whether an EIS proposition is okay. It is therefore helpful, but my first point is that it will require HMRC to be adequately resourced to provide and assess these pre-clearances. If not, there will be delays in the funding that small business badly needs.

I believe the initial draft of the Revenue’s guidance notes have, for some reason, been fairly widely circulated, which was not intended. As the notes stand, they are capable of being interpreted in an extremely unhelpful way. Most people know the issues that these guidelines are getting at but, on the face of it, the wording could unintentionally disqualify a range of businesses, especially developing, building, owning and operating solar, wind and other energy projects benefiting from ROCs. Typical characteristics of such investments are: that the majority of the investment comes from one or other EIS fund or VCT; where the business is a start-up; the customer servicing and maintenance function has to be outsourced initially because the business cannot afford to do it itself; and if there are any major engineering or other capital costs, they need to be outsourced to a third party until the business is large enough to be able to afford them. The guidelines include these four characteristics as disqualifying the business for an advanced clearance guideline under something called VCM21035. I cannot believe that it is the Government’s intention to disqualify, in particular, start-ups. It does not mean that these investments are automatically disqualified for EIS relief, but they are disqualified for this new advanced clearance. Of course, the new advanced clearance will, in practice, become an effective prerequisite in that no one is going to invest in an EIS proposition unless it has an advanced clearance under the new arrangements. The guidelines do not say, but could usefully do so, that—notwithstanding the specific guidelines—if the promoters believe the business is not abusive they should explain when they apply for advanced clearance. I think that is particularly relevant to the point I just made about start-up companies in the solar industry.

I also understand that the objectives of most of the fairly extensive clauses in the guidance notes go quite a lot further than what is in the Bill, which I do not think is necessarily intended. The guidance would be much more practical and helpful if it gave illustrations of the things that it seeks to disqualify. As the guidance stands, it would be much more practical for EIS funds to invest in follow-on situations and to avoid start-up seed capital. Again, this is entirely at odds with the objective of the new SEISs.

I hope the guidance notes will be reviewed and refined. At present, they will cause too much uncertainty and lead to a reduction in the flow of EIS funds to perfectly reasonable propositions. The essence of the point is that VCM21035 sets out where HMRC will decline to give advance assurance. At present, as I have just said, this is well beyond the new disqualifying principles within the Act. It also gives HMRC too much discretion to pick and choose whether or not companies get advance clearance. I am sure it is not the Government’s intention to disqualify start-ups from being largely funded by VCTs and EIS funds, nor to disqualify companies which in their early stage need a certain amount of outsourcing.

Finally, another issue that delays the flow of EIS funding is MiFID. Advisers need to be ever more protective if they are to promote EISs to their clients. It is not just a question of their clients signing to say they are a sophisticated investor; the adviser needs to write a paper saying why he considers the client to be a suitable investor for something as high-risk as the EIS. The bottom line is that, other than the most sophisticated advisers, most give up and say, “Well, we’re really not attached to this area. It is too difficult and too risky”. To the extent to which we can have any flexibility under MiFID, it is necessary to make it easier for intermediaries and financial advisers to be able to promote EIS investments.

20:25

[Lord Davies of Oldham]

My Lords, the noble Baroness, Lady Kramer, probably expressed what we are all likely to feel about this debate. We have had in the House a series of economic debates and questions and many opportunities to consider the Budget and its ramifications over quite a considerable period. That may just account for tonight’s fairly limited attendance in consideration of the Finance Bill. Of course, we all recognise the limitations of this House in considering the Bill, but there is no doubt that in the context of the developing economic situation and the Government’s actions over the past few months, it feels as though it has been with us for a very long time indeed. This is not, however, the Bill which the Chancellor introduced. The outstanding feature of this Finance Bill is that it was trailed from the Treasury before the speech was made; the kind of approach which back in 1946 caused a Chancellor to be dismissed for speaking out of turn. These days, of course, trailing things is looked upon as a high political art form, though a great deal of what was trailed then did not turn out to be reality.

We had not been very long into discussions on the Finance Bill before the Government began to exercise a dizzying series of U-turns, whether it was on hot food, static caravans, improvements to listed buildings or charitable donations. All were changes which the Government then dressed up as the result of consultation, when in fact the proposals in the Budget were repudiated by a Chancellor who was fast losing confidence in his own decision taking. The result is that we will have from the Minister a paean of praise to the wisdom of the Government for the way they have handled the economy, with ne’er a mention in his speech of where the resources are meant to come from to fill the gaps which these subsequent concessions have caused in the revenue. We thought many of these original measures were misconceived; the Government have merely spread consternation by their rethinking of the position. The other characteristic of all Treasury Ministers—and the noble Lord, Lord Sassoon, enjoys his part in that role—is that they appear to address everything to deal with the nation in terms of the Finance Bill being concerned with business, taxation and how the country pays its way.

Those are important considerations. They ought to be a substantial part, and inevitably are, of every Budget. But where is the concern about the society that the Bill will impact upon? Where is the concern about social justice? Apart from the phrases about us being “all in this together”, where is the evidence? The Minister indicates that giving a substantial tax concession to millionaires—not mentioning, of course, that the Cabinet consists largely of millionaires—is merely a reflection of the fact that the tax does not raise too much. Of course, there is no consideration at all of the impact upon the nation of a Government asking it to take the deprivations that occur in this Budget: the loss of benefits and the onslaught on vulnerable people in our society. There is no consideration at all that giving a concession to millionaires creates a symbol of a totally unfair approach to government. Is it therefore not surprising that the Government are losing their credibility among the nation, as is clearly evidenced every time the Prime Minister loses control of his arguments at Question Time in the other place?

I understand what the noble Baroness, Lady Kramer, says about taking low-paid people out of income tax. Of course that is to be welcomed. However, she must also recognise that the major priority enjoined by all those who are concerned about the state of British society—and a number of other western societies as well—is that some tackling was necessary during the years when we were in Government of the excessive degree of child poverty, which was a stain upon our society and measure of the unfairnesses which our society metes out. Children, after all, are not responsible for the state they are in, but everybody recognises the crippling disadvantages of being born and trapped in poverty. The Government, of course, are ensuring that that trap becomes even more vicelike in its control through the significant reductions in benefits. We know what that means for children in poverty.

Of course, it may be that some concession was made to lower-paid workers, but it certainly was not made to pensioners. The Government have abandoned their commitment to the age-related allowance for pensioners in line with inflation, and introduced their granny tax.

We have argued that this Budget is so manifestly unfair and inappropriate that the unfairness is being felt throughout society. It is also utterly and totally ineffective. I do not have detailed questions to ask the noble Lord; that is just as well, as I hope that he would be able to restrain his winding-up speech to reasonable limits and he has a great deal to respond to from the noble Lord, Lord Flight—and, indeed, from the noble Lord, Lord Browne of Belmont.

However, I add one caveat to the noble Lord, Lord Browne: we have got to be somewhat judicious in this House when we are commenting on and playing our part in making laws which apply to those who are a generation or two behind us. Their mores are different. That is not to say that we do not recognise that so many value marriage; that is why weddings take place with great panache all the time. I imagine that many noble Lords in this House enjoy, as I do myself, a situation where my marriage is reaching almost 50 years; so I am certainly not going to be against marriage. But I am counselling against giving advice to a generation which has got a different approach to the way in which it expresses its commitments between man and woman. We would all recognise that a decade or so ago expression particularly on the Conservative Benches of this House on issues of equality for homosexuals was totally different from the perspective with which the Conservative Party responds today. I am not so sure about its entire membership in this House but certainly its agreed policy as regards its Members of Parliament. I have slight anxiety about dictating to a younger generation what the incentives should be with regard to their social relationships.

I have one question for the Minister: what is his response to the International Monetary Fund’s announcement today that growth will be 0.6% lower than the Government and the OBR have forecast for this year and will be 0.6% lower next year? The Government are left with the prospect of 0.2% growth this year. What an emergence from a double-dip recession that represents. Even the following year, only 1.6% growth is forecast. Therefore, both years will be manifestly below the average for advanced countries of 1.9% growth.

We are falling further behind in terms of growth and there will be a reduction in our resources. That is why the Government are in such difficulty with regard to their Budget, and why there are such privations on the least well off in our society. Ordinary people are feeling the pinch. There was not a word from the Minister or a single word in this Finance Bill about anything to do with unemployment and scarcely anything to do with employment. One million young people are unemployed. Is the Minister suggesting that they are responsible for that? Have the Government not got some responsibility for tackling those issues? I ask: what in this Bill relates to those issues? There is nothing. After all, if there had been anything, I am sure that the noble Lord would have referred to the issue but, of course, he did not.

We have a Finance Bill which partially reflects the total incompetence of this Government and their dizzying U-turns over the Budget proposals. The Budget is inherently and manifestly unfair, which leads to the nation rejecting and being critical of those who introduced it.

This recession was made in Downing Street. If the Chancellor concentrated rather less on his main bête noir—the Shadow Chancellor, Ed Balls—and a little more on the real economy, we might see a rather better approach to the crisis that this nation is in. It is absolutely clear that part of this is driven by the fundamental beliefs of the Chancellor and those who support him. They are using what is undoubtedly a crisis with regard to public finances to indulge in their commitment to create the smaller state—to reduce welfare and care for those in need. They did it in the 1930s and they are doing it in the second decade of the 21st century. It did not get us out of recession in the 1930s and will not now. The proof is already there. Meanwhile, it is the ordinary citizen of this country who pays the price.

00:00

[Lord Sassoon]

My Lords, as I respond to this debate on the Finance Bill, I thank the dedicated band of noble Lords for contributing to this short and, what was until the last intervention, rather focused debate, before the noble Lord, Lord Davies of Oldham, went off in many different directions. This year’s Finance Bill follows an unprecedented degree of consultation and engagement, and implements many of the changes announced at the Budget. I say to the noble Lord, Lord Davies of Oldham, that there were some 200 measures in the Budget and on three of them, after consultation, we made appropriate changes. Therefore, I think that his characterisation of the Budget-making process, and the changes since, is way off the mark.

First, I will address one or two of the specific points raised before returning to the bigger picture. I start by thanking my noble friend Lady Kramer for pointing out what the noble Lord, Lord Davies of Oldham, seems not to recognise—that we are now engaged in the most progressive tax strategy of any Government in recent years. I completely agree with her. Not only is that the case but it is demonstrably the case. No previous Government have put distributional tables into the Budget document so that it is completely clear where the majority of the pain is falling, which is on those with the broadest shoulders in the top percentiles of the income distribution. I can assure my noble friend that as we carry on the progress on these many issues, we will make sure that we are very alive to loopholes. On stamp duty, for example, there are clearly questions, with possible ways of doing sub-sales avoidance and so on.

My noble friend mentions one offshore financial centre. I think that the agreement with Switzerland, which I referred to in my opening speech, shows that we will work tirelessly to take all appropriate action on that front. The noble Lord, Lord Browne of Belmont, makes a powerful case in relation to marriage. I would not go as far as the noble Lord, Lord Davies of Oldham, in rebutting that case. The coalition agreement commitment remains in place. We keep that commitment, as we do all taxes, under review. The noble Lord would not expect me to say any more this evening, but he has put on the record very clearly his feelings on this matter.

As to the IT systems of HMRC for transferable allowances, again it is an area of questioning that has been raised in another place. There is nothing I can usefully add. We do not tend to give a running commentary on HMRC operational matters. If there is anything more I can do to shed light on the specific questions that the noble Lord, Lord Browne, raises, of course I will write. However, my strong feeling is—as I suspect he realises—that I will not be able to give him anything more on that, but he makes his points very clearly.

My noble friend Lord Flight made some very technical but important points around EIS and VCT schemes in particular. He made the important point that some £12 billion of equity has been raised. These schemes have been extremely successful. As I outlined in my opening speech, we want to expand them. At one point my noble friend characterised them as giving with one hand and taking with the other. We do not see it like that. We have consulted extensively on detailed rules. Many industry groups contributed to the consultation and strongly supported the complete package of changes. However, my noble friend made his point very clearly. We keep these matters under continual review and if there are ways of making the guidance clearer and more helpful, I am sure that his thoughts will be taken on board. I will draw them to the attention of relevant officials. I also take the general point about clearer English, which is something of which we need to be reminded on a regular basis.

The noble Lord, Lord Davies of Oldham, launched a quite extraordinary attack—with which I agreed on a number of matters. My principal point of agreement was with the statement at the end of his speech that this is a recession made in Downing Street. I completely agree. The structural deficit that caused the recession to be as deep and severe as it is came from the overspending in the six years up to the financial crisis of 2008, when the previous Government diverted from the plans they had been left by my right honourable friend the previous Chancellor but three, Kenneth Clarke, who left the nation’s finances in a fine state. If the previous Government had carried on with his plans for a few years more, things would not be in the state that they are.

[Lord Davies of Oldham]

Would the noble Lord extend the same criticism to all the other advanced countries that face exactly the same issues?

[Lord Sassoon]

My Lords, we were left with the largest structural deficit in the G20. We have brought it down from more than 11% to 8%, so we are making good progress—but the size of the task was bigger than in any other major economy.

Without rebutting the full litany and charge sheet—noble Lords would not thank me for keeping them much longer tonight—I absolutely rebut suggestions that we are insensitive to the societal and distributional effects of our measures. I explained the transparency with which we set out the effects of the Budget. It is those on the highest incomes who will pay most. The real results of what we are doing are the 800,000 new jobs that the private sector has created in the past two years. It is only by the private sector creating new jobs that we will be able to afford the better public services that the country needs and the lower taxes that we deserve. New jobs, falling unemployment and falling inflation are the things that the Government are concentrating on, and which the Budget continues to underpin.

Finally, the noble Lord, Lord Davies of Oldham, referred to today’s announcement by the IMF that downgraded global growth prospects. He was right to draw attention to it. The IMF forecast minus 0.3% growth for the eurozone this year. It forecast that the Italian economy will contract by 1.9% and the Spanish economy by 1.5%. It forecast that US growth would be only 2%, and it downgraded forecasts for emerging economy growth. It is in the face of those very strong headwinds that we have to carry on with our deficit reduction programme of tight fiscal discipline and loose money. I am very happy to talk about the 1930s. We do not have time to do it in detail, but tight fiscal discipline and loose money is precisely the prescription that caused a significant increase in growth through the 1930s.

In conclusion, this Government have taken difficult decisions to eliminate our structural current deficit over the coming four years and stimulate a private sector recovery. This strategy has been endorsed by the IMF, the OECD, the European Commission, ratings agencies and UK business organisations. We have always said that recovery would be choppy and our plans would necessarily incorporate a degree of flexibility. This Bill further delivers our commitment to improve our competitiveness, encourage investment and support our businesses, large and small. At the same time, it removes hundreds of thousands of individuals from income tax and helps reduce the cost of living for families across the country, and makes these changes in a way that is fairer and more consultative than any Finance Bill before. I commend this Bill to the House.

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

[Baroness Stowell of Beeston]

My Lords, even though we have concluded all the business on the Order Paper, we expect to receive a message from the Commons tonight. At the moment I cannot offer guidance on a specific time, so I therefore beg to move that the House do adjourn during pleasure until a time to be announced on the annunciator.

20:52

Sitting suspended.

23:25

Parliamentary Commission on Banking Standards

Monday 16th July 2012 Lords Chamber

Message from the Commons

A message was brought from the Commons:

(1) That a Committee of this House be established, to be called the Parliamentary Commission on Banking Standards, to consider and report on—

(a) professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process;

(b) lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy;

and to make recommendations for legislative and other action.

(2) That Mr Andrew Tyrie be Chair of the Commission.

(3) That Mark Garnier, Mr Andrew Love, Mr Pat McFadden and John Thurso be members of the Commission.

(4) That the Commission have leave to join with any committee appointed by the Lords to consider the said matters.

(5) That the Commission may hold meetings under the provisions of paragraph (4) of this order at any time after the Lords has agreed to appoint a committee.

(6) That the Commission shall, except as provided for in this order, follow the procedure of a select committee of this House.

(7) That the Commission shall have power—

(a) to send for persons, papers and records;

(b) to examine witnesses on oath;

(c) to appoint specialist advisers;

(d) to invite specialist advisers (including Counsel appointed as specialist advisers) to examine witnesses;

(e) to adjourn from place to place;

(f) to sit notwithstanding any adjournment of the House; and

(g) to report from time to time.

(8) That the Commission shall have power to appoint sub-committees to consider matters specified by the Commission within the terms of this order and a sub-committee shall have—

(a) the powers in paragraph (7)(a), (b), (e) and (f); and

(b) the power to invite specialist advisers appointed by the Commission (including Counsel appointed as specialist advisers) to examine witnesses;

and the quorum of a sub-committee shall, subject to paragraph (12)(b), be one member of this House.

(9) That the Chair may report to the House an order, resolution or Special Report as an order, resolution or Special Report of the Commission which has not been agreed at a meeting of the Commission if he is satisfied that he has consulted all members of the Commission about the terms of the order, resolution or Special Report and that it represents a decision of the majority of the Commission.

(10) That the quorum of the Commission shall be two members of this House.

(11) That, whenever this House shall stand adjourned other than to the next day, any report, Special Report, order or resolution agreed to by, or evidence taken or received by, the Commission, including any under paragraph (9) of this order, may be published or printed under the authority of this House, shall be deemed to have been reported and shall be reported when this House next sits.

(12) That, when the Commission operates under the provisions of paragraph (4) of this order, the following provisions shall apply—

(a) the quorum of the Commission shall be two members of this House and two members of the House of Lords;

(b) the quorum of any sub-committee shall be one member from either House; and

(c) the power of the Chair to report under paragraph (9) may also be exercised with the Chair’s agreement by a member of the Commission who is a member of the House of Lords.

(13) That the costs of the Commission shall be assessed by the House of Commons Commission from time to time and shall be paid by Her Majesty’s Government for the credit of the House of Commons (Administration) Estimate.

(14) That the Commission shall report on legislative action no later than 18 December 2012 and on other matters as soon as possible thereafter.

(15) That a message be sent to the House of Lords to desire their concurrence.

House adjourned at 11.27 pm.