Grand Committee

Wednesday 17th October 2012 Grand Committee

Wednesday, 17 October 2012.

Arrangement of Business

Wednesday 17th October 2012 Grand Committee

Announcement

15:45

[The Deputy Chairman of Committees (Baroness Harris of Richmond)]

My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

Chief Scientific Advisers: S&T Committee Report

Wednesday 17th October 2012 Grand Committee

Motion to Take Note

15:45

Moved By

[Lord Krebs]

That the Grand Committee takes note of the Report of the Science and Technology Committee on The role and functions of departmental Chief Scientific Advisers (4th Report, Session 2010-12, HL Paper 264).

[Lord Krebs]

My Lords, I beg to move the Motion standing in my name on the Order Paper. I want to start by thanking the members of the Science and Technology Select Committee for their excellent contributions to this inquiry. I want also to thank the clerk and the policy analyst for their outstanding support for the committee and the Minister for the Government’s response to the report, to which I shall return shortly.

In this country, we benefit from what, by international standards, is an excellent system of scientific advice in government. That is of the highest importance. I can think of no area of government policy, whether related to economic growth, enhancing our quality of life, the sustainability of the environment and much else, where scientific advice does not play a central role. When I say “science”, I mean to include engineering and the social sciences as well as the natural sciences.

In one recent review of EU member states, it was reported that while all member states have some kind of system—usually a committee—of providing scientific advice, only four countries other than the UK have independent chief scientific advisers—the Czech Republic, Estonia, Ireland and Latvia. In recent times, we in the UK have been very fortunate to have had a succession of distinguished government chief scientists who have commanded respect from the scientific community and been effective, independent voices for scientific evidence within government.

The Government also have many other sources of independent expert scientific advice, including the 70-plus scientific advisory committees that deal with specific issues such as nutrition, drug use and climate change; the Council for Science and Technology, chaired by Sir John Beddington and Dame Nancy Rothwell, to report to the Prime Minister; and the 14 departmental chief scientific advisers. It is those departmental chief scientific advisers who are the focus of our report.

With all this scientific expert advice in place, your Lordships might think that Ministers are sufficiently well furnished with scientific advice to enable them to base their policies on evidence. This Government have often said that they wish to base their policies on evidence. Sadly, however, it is still the case that the Government, perhaps too often, prefer policy-based evidence rather than evidence-based policy. For instance, the Government still insist on wasting taxpayers’ money on homeopathic treatments and have a Secretary of State for Health who believes that homeopathy works. I hesitate to mention the topical subject of bovine TB and badgers, given my involvement in this policy area during the past 15 years, but I will succumb to the temptation. The fact is that the overwhelming majority of scientific experts have concluded that the policy of killing badgers to control TB in cattle will have only a small beneficial effect, if any. It is essentially a waste of effort and money, and a distraction from the business of getting on top of a serious animal health problem that can have devastating effects on the livelihoods of farmers.

Together with other scientific experts, I would not expect scientific evidence to be the only factor that influences policy in this or any other situation. As is often said, scientists advise and Ministers decide. But where Ministers override the scientific evidence, it is vital that they make it clear that they are doing so and explain their reasons rather than pretending that the science supports their case. Only yesterday, the Food and Farming Minister was reported in the Guardian as saying that the science supports badger culling. If he looked at the evidence and listened to the experts, he would see that it does not.

I turn now to the substance of our report. The inquiry was triggered in part by the downgrading of the chief scientific adviser in the Ministry of Defence from four star to three star; by the failure of DCMS to appoint a chief scientific adviser; and by wider concerns about the lack of consistency of the roles and qualifications of chief scientific advisers across departments. This inconsistency has been highlighted by the Campaign for Science and Engineering’s recent publication of a scorecard. For instance, some departments have CSAs who are senior figures from outside the Civil Service, with established reputations and authority in the scientific and engineering communities; in other departments the CSAs are more junior officials from within the Civil Service.

We recognised in our report that, overall, the system of scientific advice works well, but our recommendations highlighted where improvements could be made to level the playing field up rather than down. We made 19 recommendations and I do not propose to go through all of them.

For me, the three central issues for an effective CSA are authority, independence and access. Authority comes in part from external reputation and in part from level of seniority within the Civil Service system. That is why we recommended that all CSAs should be external appointments and at least at the level of director-general—in old speak, Grade 2. Senior external appointees with a high reputation command both the confidence of stakeholders and, importantly, have the networks to seek advice on matters where they do not have intimate expert knowledge. Knowing whom to ask is crucial for a CSA, especially where the science is uncertain. I know from my own experience as head of the Food Standards Agency that, especially when dealing with the science of difficult problems such as BSE, it is important to know who are the experts and to be able to act as an intelligent customer for expert advice. We were somewhat sceptical of claims that grade no longer matters in the Civil Service. Certainly in my experience it remains one of the most finely graded hierarchical organisations in civilian life.

Independence is also key. A chief scientific adviser must be able to speak truth to power, especially when the truth is inconvenient. Of course, we acknowledge that all civil servants should be able to tell Ministers the facts and the evidence without fear or favour, but we concluded that senior external appointees whose careers do not depend on progression within the Civil Service are more likely to feel uninhibited in telling inconvenient truths. One chief scientific adviser who gave evidence to us, a career civil servant, when asked whether a major policy change in the department following the last election was because the evidence had changed, gave the reply that the evidence as a whole had not changed but that Ministers had been presented with different bits of the evidence. This is clearly unsatisfactory for a chief scientific adviser. Senior external appointees will not guarantee independence but it is more likely to help than to inhibit.

To add a footnote, when Research Fortnight recently contacted the Department for Culture, Media and Sport to ask to speak to its new, internally appointed chief scientific adviser, it was told in terms, “Civil servants do not talk to the press”. This hardly seems to me a case where there is an independent voice within the department.

The third point I wish to highlight is access. We think it is crucial that chief scientific advisers have access to Ministers and access to key policy discussions within their departments. We heard of more than one instance in which departmental chief scientific advisers were sidelined in key policy discussions and/or rarely, if ever, saw the Secretary of State in their department. This is unacceptable.

I turn now to the Government’s response. Quite frankly, we were disappointed—very disappointed—in the Government’s response. We made 19 recommendations, of which the Government unequivocally accepted only eight. Crucially, they did not accept our key recommendations pertaining to the three issues I have highlighted—authority, independence and access. We were disappointed that the Government did not accept our recommendation that chief scientific advisers in departments should always be external appointees with standing in the science and engineering communities. We were disappointed that the Government did not accept our recommendation that chief scientific advisers should routinely sit on departmental boards at the top table to hear policy delivery and policy development. We were disappointed that the Government did not accept our recommendation that chief scientific advisers should be appointed at the equivalent of director-general level or higher. We made these recommendations on the basis of a substantial body of evidence—they were not just plucked from the air.

Subsequently, I have held a follow-up meeting with the head of the Civil Service, Sir Bob Kerslake. He has written a letter to me, as chairman of the Select Committee, to clarify the Government’s response to our report. His letter offers some degree of reassurance but I should like to ask the Minister, when he replies, to clarify further the Government’s position. First, does he agree that it is crucial that departmental chief scientific advisers have authority, independence and access to Ministers, and does he agree that our proposals would go a long way to ensuring that these requirements are met? More specifically, Sir Bob Kerslake’s letter in response to my meeting with him places a great deal of responsibility on the Government Chief Scientific Adviser to ensure that these requirements are met. Can the Minister explain precisely how the Government Chief Scientific Adviser will indeed be able to ensure that this happens?

I am sure that other noble Lords will wish to explore aspects of the report in more detail than I have been able to do in this brief overview, and I look forward to their contributions. I commend this report to the Committee.

15:56

[Lord Jenkin of Roding]

My Lords, I begin by welcoming my noble friend to the Front Bench. It will be the first time that I have spoken in a debate to which he is to reply, and I look forward to that very much.

I warmly commend the committee on what seems to me an extremely valuable and thorough report. Its main purposes were well described by the noble Lord, Lord Krebs, in his introduction. There are of course a number of very important points to which he has drawn our attention and to which I hope we will be able to return.

I want to deal with just one issue, and it can be posed in the form of a question. What is supposed to happen when a chief scientific adviser disagrees with his department’s policy? This was one of the issues explored by the committee. I shall start with the Government’s response, as the noble Lord, Lord Krebs, did. The recommendation was that there should be guidelines for this particularly directed at CSAs. The Government’s response was:

“Evidence given to the Committee by current and former CSAs suggests that this is not a significant problem”.

I disagree with that and I shall give an example. It goes on:

“The Government therefore is not persuaded of the need for a further set of principles specific to the role of CSAs”.

I regard that as a very complacent and disappointing response.

I believe that it is the fundamental job of CSAs to be prepared to challenge their Ministers over a range of issues for which there has to be a proper scientific basis when what is proposed is not in accordance with the scientific evidence or, in the light of the CSAs’ special knowledge, in the best interests of the UK. This can work very well. I took advantage of a short meeting that I had with Sir David King a few days ago to discuss his experience of this. I hope that I am not boring the Committee but this is just to remind us what happened with the foot and mouth epidemic in 2001. Sir David told me that when he came on to the scene the epidemic was clearly going out of control and it appeared that MAFF, the department involved, was not grasping the seriousness of the issue. Sir David became involved and had a meeting with Permanent Secretaries. It was clear that the policy and procedures were not working. They were based on experience of 30 to 35 years earlier and were no longer relevant in the current farming environment.

A team of epidemiological modellers, virologists and logistics modellers was established, who pointed to the need to cull animals at the earliest possible opportunity to avoid the spread of foot and mouth disease, even in advance of a full laboratory test. The immediacy was important and that it should be spread to neighbouring farms as well. He found it necessary to brief the Prime Minister, Mr Blair, and there was subsequently a meeting of COBRA when the policy was outlined and agreed. He promised the Prime Minister that if the models were followed the outbreak would be eradicated by June of that year. At that point the Prime Minister became very interested because he was hoping to have an election in June, so it became very relevant. He kept a close interest and Sir David’s advice was right. He reported to COBRA sometimes twice a day during that whole process. The new strategy was implemented and the result was what had been predicted: cases went down very quickly and the Prime Minister was able to call his election only a week later than he had originally planned. That was a case where the system worked extremely well. I have to say that the election was not the only consequence. After the election the Minister who had been responsible lost his job.

Of course, the Government’s Chief Scientific Adviser has the right of direct access to the Prime Minister over the heads of departmental heads and officials. However, many noble Lords will have had more recent experience which tells a rather different story. It was a rather different situation, but nevertheless I hope that it justifies my statement that the Government’s response is complacent. My interest in this was prompted by a passage in the Select Committee’s report in paragraphs 69 to 71 on what a CSA should do if there is a disagreement with the Government’s policy. There was a sharp difference of views. A number of witnesses told the committee that it should be open and transparent and that what the chief scientific adviser wanted to say should be clear and published. The views came from the Royal Society of Chemistry, the Wellcome Trust, the Institute of Physics and others.

However, another group argued that it should all be held closely within the department. I was particularly struck by a passage cited in the report at paragraph 71, given by Professor David MacKay, the chief scientific adviser of DECC. He expressed a reluctance to disagree in public and said,

“I feel I do my job best if I retain the confidence of ministers. In the past, I used to speak very freely in public and I enjoyed giving frank views, but now I hold those views back more and express them very strongly within the Department, where I feel I am listened to and respected”.

Some of us have recently had the experience of listening to Professor MacKay, and I was struck by the passage in paragraph 71, which I have just quoted. I therefore looked at the evidence to see the context for what the professor was saying on that occasion. There is no printed volume of the evidence; it is nearly 400 pages long and I was told to look at the website. I apologise but I think that this is an important point. A question was asked by the noble Lord, Lord Crickhowell, who is not in his place today. He asked Professor MacKay about CSAs not being bound by ministerial collective responsibility, about whether his reasons for disagreeing with a policy decision had been publicly expressed, and if so, about the reaction of Ministers and others to his department.

We had had the example of hearing Professor MacKay at the nuclear research and development inquiry. Without going into details, the committee was extremely critical of DECC’s policy and attitude, with its lack of evidence of long-term thinking. There were calls for a roadmap going well beyond the 2025 limit, which seemed to be the Government’s forward look. The DECC official who had described the policy was both unconvincing and very negative. He was of course echoed by his then Secretary of State. However, we also heard Professor MacKay, who was very refreshing. As the committee reported, he said that,

“the department is conducting … foresight work on future R&D needs by carrying out a Technology Innovation Needs Assessment … on nuclear which will look beyond the 5-10 year timescale to try to ‘quantify’”,

the need. He went on to describe his pathways programme. To those taking part in those exchanges on that inquiry, that passage clearly gave a very different picture from that given by the official who we had heard earlier. Indeed, we referred to that in paragraph 101 of that report.

Here I come to my main point. Before he gave evidence to that inquiry, Professor MacKay came to ask my opinion. We have had a good relationship over a number of years. He asked, “What does your committee want?”. I said, “David, what we want are your views, not those of your Permanent Secretary”—and, bless him, that was exactly what he did. It greatly helped the committee which, as its report made clear, relied on his evidence as well as that of others for that report. But what happened next? The civil servant who had earlier given evidence to the committee complained to the Permanent Secretary that he had been made to look very foolish. Professor MacKay was then carpeted by the Permanent Secretary and told that he had spoken out of turn.

The consequence lies in the answer that Professor MacKay gave in this report. “Oh yes—I used to talk in public, but now I feel I do better if I don’t”. Is that what we want? If a chief scientific adviser is invited to give evidence to a parliamentary Select Committee, is he not entitled to give his own view, even if it differs from that of a department? Is it really his duty to hold his views back and expose them only within the department? My noble friend Lord Willis said that we were a small, cosy group but of course evidence is heard in public, so this was in public. It would be very helpful if the Government, instead of rejecting the committee’s recommendations for a “set of guidelines”, considered this.

Chief scientific advisers are not the same as departmental civil servants. They have a clear duty to challenge Ministers. They are given much of the independence and authority to be able to do that, as the noble Lord, Lord Krebs, has described, and even on occasions to speak out. I would contend that this is a significant problem, contrary to what was in the answer. I have today had a copy of Sir Bob Kerslake’s letter, which the noble Lord, Lord Krebs, outlined. On recommendation 8, it simply says, “Yes, we’ll make sure that they are subject to the same rules as the civil servants”. That does not answer my question at all. I do not want to hear another repeat of what happened to Professor MacKay after he gave his very useful and telling evidence to the Select Committee on Science and Technology. This has to be dealt with.

16:09

[Lord Hunt of Chesterton]

My Lords, this is an important report on the role of chief scientific advisers and the Government Chief Scientific Adviser. I have had some experience of working with both those people—when I was at the Met Office, here in Parliament and indeed as a university professor. One point to note is that many technical agencies have chief technical advisers, such as the chief scientist at the Met Office and the chief mathematician at GCHQ, and these chief scientists are of increasing importance since the chief executives of many technical agencies are no longer technically qualified. This is therefore an important part of the whole grouping of scientific advice available to the Government.

Furthermore, these agencies—the Met Office, Cefas and GCHQ, and there are many others—report to departments, and an important role of chief scientific advisers to departments is to make use of the scientific ability in these agencies and to ask difficult questions about the effectiveness of the agencies. When I was head of the Met Office, the Government Chief Scientific Adviser, the noble Lord, Lord May, who is going to speak later, said, “Why do you do all this computing of weather? Why don’t you just look at the clouds and use statistics?”. That was a good, challenging question, and we gave him an answer—we had thought about it. We continued to use our modelling but we were well aware of his idea. That kind of challenging approach is necessary in this large and important part of the Government’s scientific effort.

I refer to the final paragraph of the Government’s reply. There was a discussion about how to look at the annual performance of the GCSA and, by extension, the CSAs. I agree with the Government when they say that there are several ways of judging the effectiveness of CSAs, and in that context I want to comment that it is well worth while recording some of the signal achievements of CSAs and Government Chief Scientific Advisers. In some cases they have helped to identify issues and brought them to the Government and indeed to the country, notably on aspects of climate change, food security, emphasised by Sir John Beddington, and natural disasters, in the case of Sir David King. They have introduced new techniques. For example, on comparative modelling the role of Sir David King, whom I have mentioned, was very important, while the use of foresight models was an introduction of the Government’s. That kind of development of new techniques is very important. The one that might still be missing is the use of system methods in government, which is coming in; indeed, the noble Lord, Lord May, is working on that with the Bank of England.

The third aspect of the important role of CSAs is to emphasise and explain the practical aspects of scientific development, sometimes even before they have been published. Sir David King spoke often, perhaps somewhat dangerously, on some of the uncertain aspects of climate change, but he certainly brought it to the public. Recently Sir John Beddington has focused on the question of long periods of static weather, with heat and temperatures and so on. Again, this is an area where the science is still not completely certain but he has felt it to be so important that he has brought it before the public with the sureness of someone with a great scientific reputation.

The other aspect of their important role is that chief scientific advisers have raised the profile of science in government decision-making. However, there are some critiques of the role of CSAs that have not been brought out in this report. The first is the question of whether CSAs are ensuring that we are making the best use of foreign science. I keep commenting on this: Britain’s science is 7% or 8% of the world total but there is a huge volume of important ideas outside that. In the United States there is a strong programme to ensure that they are, as it were, horizon-scanning around the world and looking at the technical approaches of foreign Governments; they are not afraid to do that. One foresight panel that I was familiar with on flooding made almost no use of the experience of the Netherlands, which is not very far away.

The second point in this slight critique is that CSAs could do more with UK Trade & Investment to promote UK science and technology by showing how they are being used in government in a practical way in order then to explain this to other countries. That is something that we discussed in this Room a week ago.

The third point is that they could play a more effective role in the scientific aspects of the UK’s involvement in international bodies. The noble Lord, Lord May, was very active in the Kyoto climate change agreements. However, in my experience and as we have heard—and as we shall discuss tomorrow afternoon on the polar issues—CSAs have not been particularly active in pushing research councils on how they provide expertise through these international panels. That is an extremely important part of the scientific aspect of advising government on policy.

The fourth point is that CSAs have a role in informing Parliament. As we have already heard from the noble Lord, Lord Krebs, there is some belief that CSAs should talk only to Ministers within departments. In fact, they have an extremely important part to play—the point made by the noble Lord, Lord Jenkin—on scientific developments and issues. Appearing at Select Committees is one thing; they also inform Ministers. My own hand was slightly smacked—not by the noble Lord, Lord Oxburgh—when I was at the Met Office and advising the Opposition about various important matters before they came to power. In the United States, the head of the weather service spends the month of August on the Hill, talking to everybody. That is exactly how it should be. They do not have to go to the Hill; they can just go round the corner.

Another important point is that CSAs could do more to promote the important scientific developments emerging from the practical work of departments. I am very glad that the noble Lord, Lord Sainsbury, is with us. I have a slight disagreement with him: his model of science used to go from pure to applied, whereas I believe that it often goes from applied to pure. One of the roles of chief scientific advisers is to see this applied work and ensure that it gets back out into the pure world. There are things that I cannot tell noble Lords about, but some areas of defence technology are leading to very interesting scientific developments. For example, the Met Office lightning programme is now out there and visible; people can use it. It provides the possibility of great new research. There are many government agencies working in data-handling and that is another area.

Another feature of this report is the question of appointment procedures for CSAs in particular departments. Again, it is essential to give signals that these CSAs are important. It should be clear that the Permanent Secretary or his or her deputy should be present at the appointment. If you are told that you are going to be able to speak to the Permanent Secretary but his or her deputy never comes to the appointment process, that sounds a bit hollow. If that was absolutely clear, it would send an important message through the department.

The report rightly recommends that external scientists should be on the panel. Departments would also benefit if the panels included foreign scientists, and the report recommended that CSAs should be scientists of international rank. For example, they could be scientists from international organisations that the government departments work with, so they would be familiar with the work of the department.

I agree with recommendation 7—that CSAs, having right of access to Ministers, should be allowed also to speak to politicians.

Paragraphs 11 and 12 refer to the CSA’s role in steering research, either through direct control with his or her own budget, or indirectly through oversight and the department’s programme. As the departmental CSAs are part time, the latter is probably their major role. It is very difficult to be part time and run your own programme. They can bring outside knowledge of different approaches and connections to other departments.

I believe that when they are appointed CSAs should learn one or two elementary rules of Whitehall; namely, you have a meeting. The CSA might make a good point, to which the Civil Service chairman might say, “Very good point”. However, the written minutes may not correspond with what was said at the meeting. If the CSA does not read the minutes of the meeting afterwards, their “very good point” may not carry through. That is elementary but it is part of the learning curve that might be explained.

In agencies with full-time chief scientists, their main task is running the research programme. However, in most cases a cultural shift is needed so that those chief scientists also have a role in the application of research and the operations of the agencies.

One point that this report misses is that chief scientific advisers have a wide knowledge of science and technology and they should make sure that the methods of science and technology are used at the highest level throughout an agency’s activities. They should be involved in areas relating not only to research but to operations.

A chief social scientist ranging over all departments and agencies could, I am sure, ask questions and improve methodologies in all the departments and agencies with which I am familiar; for example, from how to account for population policies which did not have the benefit of the input of social scientists when they were first discussed to how to present certain long-range forecasts and the many societal effects of that. Social scientists interested in politics could certainly help with the provision of policy advice to Governments. This might have helped with the difficulties in explaining the extraordinary change that took place in the reasoning for action to mitigate climate change from, in the 1990s, being a policy based on a long-term prediction to, after 2001, being a response to current trends. That leads to all sorts of difficulties—as was evident in a recent article asking all sorts of funny questions in the Mail on Sunday that I was looking at in the Library yesterday.

One hopes that this move will be supported even by Nature—I do not know how many scientists have been ridiculed for totally wasting time by a leader in Nature. We were just looking at the effects of wind on people. This was considered to be a joke; nowadays its social aspects are taken seriously, hopefully even by Nature.

00:00

[Lord Willis of Knaresborough]

My Lords, it is a pleasure to follow the noble Lord, Lord Hunt, who made some very good points. They will be recorded in the minutes. It reminds me of my mother-in-law, who, whenever we had an argument, said, “You’ll be right, Phil”, which was a good way of ending it.

I thank the noble Lord, Lord Krebs, the chairman of the committee, for his patience and tolerance during an inquiry which could have gone nowhere but turned out to be incredibly important. Like him, I was disappointed by the Government’s initial response. It is a testimony to his skills of diplomacy that he went back to Sir Bob Kerslake, the Head of the Civil Service, and got a set of responses which “clarified”—I love that word—the Government’s response such that they were far more in support of many of the recommendations which the report made. While that was not ideal, and there is still a long way to go, it was a useful thing for the chairman to do, being a good way of having an interface rather than simply accepting the Government’s position.

This report was not intended as an assault on the Government’s lack of support for DCSAs; in fact, quite the opposite is true, as I think most members of the committee would agree. We recognise just how significant has been successive Governments’ support for this layer of scientific advice for Ministers. It is because it is such an important layer of support that we felt the inquiry was important. Our report sought to ensure that the current system was at least maintained given some of the assaults being made on it and, where possible, enhanced at a time when there were worrying signs that DCSAs were being seen as a luxury that could be dispensed with rather than as an investment to underpin sound evidence-based policy.

My interest in this area arose in the House of Commons when I was chair of the science committee. Many of our inquiries looked at evidence-based policy. The previous Government and this Government proudly say that their policies are based on evidence. It is the job of parliamentarians in both Houses and those outside who scrutinise government policy constantly to ask, “Where is the evidence to support that policy? Where there is no evidence to support that policy, how are you actually going to find the evidence in order to take it forward?”. That is a very good principle. It is the principle of scrutiny, and scientific advisers, both at department level and particularly the Government’s Chief Scientific Adviser, have a crucial role to play in it.

The noble Lord, Lord Krebs, rightly pointed out that there is no lack of scientific advice available to Ministers. In addition to the Government Chief Scientific Adviser and the Government Office for Science, advisory committees, learned societies, professional institutes and countless think tanks put a stream of advice into the public arena which is available for Ministers. The reality is that much of it is not listened to or even read, but the roles of the DCSA and the Government Chief Scientific Adviser are fundamentally different. The individuals holding these posts have the crucial interface between the scientific, academic and commercial world and that of civil servants and Ministers. Their function is not simply to offer advice; in many ways, it is more a challenge function than an advisory one. As the noble Lord, Lord Broers, said in our committee yesterday, they need sharp elbows, demanding presence where it is sometimes not wanted and demanding resources where sometimes they are not available in order to provide evidence as to whether policy can work, or at least whether it has a chance of working. As our report emphasised, their value lies, first, in their independence, the currency of their expertise and their standing within the scientific and commercial community. To carry out that function, they should be appointed at a very senior level. They should have a seat on departmental boards, as they are part of the policy-making as well as implementation machinery, and they should retain their academic or industrial base to remain current.

Why is that needed? Given that every utterance from the Prime Minister and his Ministers—every single challenge facing this nation from ageing to obesity and from the environment to the economy—will require science and engineering solutions, objective scientific advice is not simply desirable but absolutely critical. According to research from the Science Council, 20% of the UK workforce depends on scientific skills to do their job. Some 5.8 million people are currently employed in science-based occupations, and this will increase to more than 7 million by 2030.

To manage and lead this “scientific century”, we need, but do not have, a scientifically literate political class. However, only 11% of MPs have ever had science-based careers and only one MP has come directly from the research laboratory. Not a single member of the current Cabinet is a science graduate. Only five out of 42 Permanent Secretaries have a science or engineering degree, and fewer than 4% of civil servants have a science or engineering background. Indeed, as was said by our previous Government Chief Scientific Adviser, Sir David King, it was an impediment to progress to admit to having a scientific background.

Therefore, it is not surprising that the response to the budget deficit by departments has been to slash departmental spending on R&D and, in some cases, to downgrade their DCSA or, worse still, to delay appointing altogether, as in the case of the DCMS until very recently. In fact, only the DECC is to be credited with bucking that trend by spending more in terms of science. The reasoning defies logic. It is true that BIS has maintained a flat cash settlement during the current CSR for science funding for research councils and for HEFCE—that is very welcome, although in real terms it is a 12% cut—but that appears to have been used as a signal to departments to reduce spending on science. Had reductions come as a percentage of the overall budget, perhaps one could argue that they were “taking their fair share”, but no. Defra, despite the problems that it is currently experiencing, has reduced its R&D budget by 15%, the Department for Transport by 47%, the Ministry of Justice by 27% and the CLG by 45%. The figure for the Department for Education has actually gone up, but that for the FCO is down by 45%, the DWP by 17% and the Ministry of Defence by 11%. That is unacceptable. To argue for science within departments requires powerful, influential and challenging DCSAs to ensure that policy decisions are at least made on an evidential basis rather than on one of political convenience. No one on the Science and Technology Committee argues that DCSAs should make political decisions, nor did we argue in our report that their view should always trump other considerations. However, they are there to provide good evidence and to make clear that when their evidence is not taken by Ministers, they should be fully aware of the consequences. You cannot do that if you hide all those arguments in a back room somewhere; they have to be made public, and resources are needed in order to do that.

The lower the grade of the DCSA, of course, the more difficult it is for them to argue their case. While access to the Permanent Secretary is clearly important, it does not compensate for direct contact with Ministers. It surely does not say a great deal for the status of the DCSA who stated to our inquiry that she could not recall ever having had a meeting with the Secretary of State. Equally, we found the justification of tagging the DCSA role on to an existing brief neither convincing nor acceptable. How can the DCSA in Health provide a challenge when as Chief Medical Officer she is the lead on policy? How can the DCSA in the Treasury perform his challenge function when he is in charge of public spending? I am delighted that he no longer has that function and has only the role of chief microeconomist to contend with.

The report on DCSAs was timely, pertinent and crucial. The Government’s amended response is encouraging and I hope that in 12 months’ time, when the new GCSA is in place, they will have met even further some of our concerns.

I take this opportunity to applaud Sir John Beddington and the way in which he has fought for the departmental scientific advisory service, the way in which he has brought the DCSAs into an informal but effective cross-government group and for his championing of science in government. I recognise, too, the genuinely remarkable talent that exists within our GCSA ranks. Sadly, one of the brightest stars, Sir Bob Watson, is returning to the States after his stint at Defra. His knowledge, wit and wisdom will be sadly missed. Perhaps the new DCSA at Defra will find a homoeopathic remedy for bovine TB to avoid the badger cull.

16:32

[Lord Rees of Ludlow]

My Lords, as the noble Lord, Lord Krebs, explained, among European countries none matches our practice of having DCSAs in most departments. They are plainly a feature of our system that we should welcome and sustain, and the fact that we are having this debate is therefore in itself a positive sign.

Science and technology impinge more and more on our lives, and are therefore more pervasive in government. The issues that they raise are often highly technical and sometimes the underlying science in itself is uncertain and controversial. Almost always, a ministerial choice involves considering social, economic and ethical elements as well, and in these broader areas, of course, scientists speak merely as citizens. Within their remit, though, scientific advisers should not just offer facts; still less should they merely buttress policies already decided. They should be prepared to challenge decision-makers and help them to navigate the uncertainties. This was recognised in the US by President Obama, who opined that scientists’ advice should be heeded,

“even when it’s inconvenient—indeed, especially when it is inconvenient”.

Of course, Obama filled some of his key posts with a dream team of top-rate scientists. They have had a tough and frustrating time, but it is good for all of us that Steve Chu, John Holdren, Jane Lubchenco and the rest are still “hanging in there”. We can learn from their experiences, as the noble Lord, Lord Hunt of Chesterton, emphasised.

It is indeed good practice that CSAs generally come from outside Whitehall and that they serve a limited term of three to five years. They may keep a foothold in some kind of research lab or university, and they should certainly get around and participate in conferences in the UK and abroad. As compared to career civil servants, those recruited from outside are more likely to be plugged into recent research and international science. Their careers do not depend on ingratiating themselves with the hierarchy, which is why we have urged that only in very special situations should these posts be internal appointments.

As has already been emphasised, their rank and reporting line within the hierarchy does matter. Indeed, in the MoD, there is special importance in having someone who is not outranked by his or her French and American counterparts in formal talks and negotiations.

A DCSA’s personality is at least as crucial as their professional standing. They need to operate adeptly in a system that is a real culture shock for those coming from academia or industry. In this respect, we are disadvantaged compared with the United States, where it is easier to identify people who are truly independent but who have enough experience to hit the ground running when parachuted into a Civil Service culture. Senior staff in the US shuffle between government jobs and posts in, for instance, the Brookings Institution or the Harvard Kennedy School of Government whenever the Administration changes. There are always some who are “out” rather than “in”. Here, of course, we do not have the same revolving door system; government service is still generally a lifetime career. For that reason, and because secrecy is more pervasive, those recruited as DCSAs often have a steeper learning curve.

No individual has the breadth of expertise to cope with all that they will encounter. In particular, the issues are often more engineering than academic. That is certainly the case in the MoD, DECC and Defra. That is why a DCSA needs not only a strong in-house team but a network of external contacts, why there are numerous standing and ad hoc committees of experts across Whitehall, and why the guidelines about their independence are crucial. As has also been emphasised, there should be fewer constraints on whether DCSAs can talk to the press than in the case of regular civil servants, otherwise we will replicate what happened in the Bush Administration in the US and what is happening now in Canada. It is also why independent bodies such as the Royal Society and the Royal Academy of Engineering are important.

I shall venture a few words on broader scientific advice which can support DCSAs. Outside bodies such as academies and universities can do more to support them and ensure a richer network of contacts between external experts and policymakers. Declaring an interest as a member of Cambridge University, the new Centre for Science and Policy there aims to do that. Among its activities are not only seminars for politicians and senior officials but a policy fellowships scheme, whereby individuals from Whitehall, business and NGOs spend a week at the university having one-on-one meetings with academics across a range of expertise, helping them to develop new contacts relevant to their brief. Incidentally, the converse of that process—short-term secondments of academics into government departments—should surely be encouraged more as well.

There is one advisory body in the United States which is highly effective there and has no parallel here. It is the JASON group, founded in the 1960s, which involves top-rank academic scientists. They are bankrolled by the US Government but it is a matter of principle that they choose their own new members. They spend about six weeks together in the summer with other meetings during the year, and they tackle applied problems and analysis from a menu that is suggested partly by them and partly by the US Government. They are able to address these problems in depth. The sociology of such a group has not been fully replicated anywhere else. It requires a substantial commitment by people to solve difficult problems. However, there are steps towards this mode in the so-called Blackett groups, set up by Sir John Beddington, where independent experts engage more intensively than just through committee meetings. We should at least try to go a step further towards the intensive JASON model, if not in the military, where it is focused in the US, but in civilian areas within the remit of, for instance, DECC, Defra or the Department for Transport, where some integrated view from independent experts of interdisciplinary strength could be valuable.

A further reason for supporting our committee’s recommendations is that the more clout the DCSAs have, the more effective they will be in leveraging further steps along these lines to enhance the tactical expertise available to Ministers. We will not only cope less well with emergencies if we do not do this but stumble into suboptimal and unco-ordinated plans for developing our transport, environment, energy and health policies.

16:40

[The Earl of Selborne]

My Lords, over the years I have had many reasons to be grateful to departmental chief scientific advisers and, for that matter, Government Chief Scientific Advisers, particularly in my capacity as chairman of the Foundation for Science and Technology—a role which I took over from my noble friend Lord Jenkin. I hope that we have been of some help to chief scientific advisers; they have certainly been helpful to us in formulating policy by ensuring to ensure that what might be called a discussion held with policymakers, parliamentarians, industry, academics and the like can explore a whole range of scientific issues.

That has led me to agree entirely with the thrust of the report that the noble Lord, Lord Krebs, introduced so concisely and clearly. What we are looking for from any chief scientific adviser must be credibility and respect from their own community of scientists and engineers. They must have the ability to speak on level terms and must know who to go to nationally and internationally, as the noble Lord, Lord Hunt, reminded us. There must also be confidence in their ability to navigate the shoals of Whitehall—not necessarily an easy one if coming out of academia. They need good links with the user community, whether doctors, industry, academia or farmers such as myself. Above all, they need independence of mind. When they find that their views do not conform with the Minister’s or the Permanent Secretary’s, they must be prepared to speak out. My noble friend Lord Jenkin dealt very clearly with the issues that arise when the DCSA is stifled.

The role is, clearly, to offer independent advice to Ministers that is underpinned by the evidence base. Much more than that, it is important to recognise that the DCSA has a role within the department to ensure that scientific evidence is used to a consistently high standard throughout. As my noble friend Lord Willis has reminded us, there is not a culture of scientific understanding and appreciation in either Parliament or the Civil Service—at least, not very deeply. Promoting trust of the department’s policies among the user community—the scientific and engineering communities—is a central role. That is where credibility has to be maintained. If the credibility of the DCSA is to be undermined, measures have to be taken to protect his or her credibility. There has to be public trust, too, in the policies of the department on scientific issues. That includes in Parliament; that is very much part of the role of the DCSA.

To achieve these objectives, you are looking for somebody who has communication skills and an understanding of policy issues and risk assessment. They simply must be independent; the idea that it could be an appointment from within the Civil Service seems to beggar belief. My noble friend Lord Jenkin provided an exposition of the need for a protocol that can be followed—guidelines which could be developed—in order that CSAs who have felt the need to express disagreement with policy decisions do not put their relationships at risk with the Permanent Secretary or the Minister. This seems to be absolutely critical. I agree with those who have already said that the Government’s response in that respect has been disappointing. It is not just that the Minister might find it inconvenient. It is much more likely that if the chief scientific adviser cannot speak his mind, the whole department will eventually find that it will return to haunt them.

On reflection, the committee asked a rather unfair question of Sir John Beddington which, nevertheless, he answered with aplomb. We asked him what was his greatest failure and, as we have heard already, he mentioned his inability to persuade the Government that they should not be spending money in the National Health Service on homeopathy.

We also heard examples of the failure of chief scientific advisers to engage effectively within departments. Professor Collins gave us the example of offshore wind, where he was not able to participate in the discussion and the department let him down. Professor Wilde of the Home Office said that when he heard about ID cards it was on the “Today” programme. That is not a very good example but it was clearly a failure to engage the CSA which, in turn, will lead to a lack of trust in policies.

As a farmer, I always follow with interest the scientific issues in the farming and food sector, where public trust has been a real issue for many years. We have already heard mention of BSE, genetic modification, foot and mouth, salmonella, e-coli and much else. We all remember the lesson that public confidence was destroyed by not being transparent enough with the information; by not engaging in a dialogue where you treat the public in an open and frank way and put all the information that you have in an accessible form. Of course, nowadays, that means websites. If you do not do that, the chief scientific adviser, again, will find himself or herself greatly exposed.

That brings me back to badgers. The noble Lord, Lord Krebs, said that he would succumb to temptation and mention badgers. This is a topical issue. The noble Lords, Lord Krebs and Lord May, and 28 other very distinguished scientists published a letter in the Sunday papers to which there has been a response today in the Times. This demonstrates, at least to a layman like me, that this is an area where, at the very least, there is an enormous scientific divide. We are told by two equally eminent groups of people that the culling either will or will not help. The noble Lord, Lord Krebs, has already given his views on that.

This is a topical issue. I looked at the Defra website today to see to what extent this has been taken on board—presumably many people are concerned and confused by this plethora of advice—and the only thing I could find which referred to this particular issue dated back to March 2012. It mentioned the Observer and the BBC and described it as a “myth bust”. In other words, what the BBC and the Observer were saying about the culling lacking scientific support was a myth. I hope the debate moves up a notch to something much more responsible than that.

Do please recognise that you must put in the full evidence that Natural England and other scientists are giving to the Minister and compare it with the contrary evidence that you are getting from others such as Professor John Bourne, who led the original trials and is one of the signatories, and the public must be given credit for having an ability to weigh both arguments. I am not passing judgment as to whether the 30 signatories are right or wrong; I am simply saying that the way the debate has been handled is wrong.

Lastly, let me refer to the need for links from chief scientific advisers into the user community, which will often mean business. Until recently, I chaired the Partners Board of Living with Environmental Change, which included all the research councils, a large number of government departments and agencies, the Met Office, the Environment Agency and many others, and we did one thing which was helpful—we set up a business advisory board. I was enormously impressed by the commitment of those very high-powered members of the business advisory board; in fact, the Minister took much more notice of our advisory board than he did of us. That is perhaps understandable, because the transformation of policies into wealth creation, quality of life or whatever else is their purpose simply will not happen until you engage the user community.

At the moment, in his effort to try to promote the science policies within his department, the chief scientific adviser has a science advisory committee, and there may well be people from business or from the user community on it. However, they are really there as an accident; they are not quite there in order to help the transformational research. So I commend very strongly the idea of something like a business advisory board, or whatever other advisory board, for transforming science into the user community. That is a precedent which could be followed elsewhere.

16:50

[Baroness Warwick of Undercliffe]

My Lords, I am very pleased that the noble Lord, Lord Krebs, has secured this opportunity to consider his committee’s hard-hitting and incisive report. So let me be equally trenchant. This report is hard-hitting because it needs to be. Science is essential to robust policy-making. At a most basic level, science and engineering are essential to finding practical solutions to problems. The fact that all government departments now have a chief scientific adviser, with the inexcusable—in my view—exception of the DCMS, is the measure of the progress made in recent years to ensure that the Government have access to the best scientific expertise and advice. However, science is not yet taken as seriously as it should be in the Civil Service, despite strides in the past 10 or 15 years in having science embedded in decision-making. I had years of dealing with the Civil Service in my time as a trade union official, and I know just how difficult it is to get generalists to take science and specialism seriously. Other noble Lords have made a similar point.

With that in mind, I wish to state both my strong support for the report’s recommendations and my concern at what seemed to me to be a pretty feeble response from the Government. I would like to focus particularly on recommendation 9, that all CSAs should be graded at either Permanent Secretary or Director General level, to ensure that they have the authority and the ability to work across the whole department. The noble Lord, Lord Krebs, made it clear that the role and status of the CSA was one of the main reasons for the inquiry leading to this timely report. I believe that the status and independence of the chief scientific adviser role cuts to the heart of the matter. I draw noble Lords’ attention to paragraphs 74 to 76 in the report, relating to grading, where a former CSA comments on the Civil Service as being rather “status-obsessed” and where the discussion is focused on the hierarchical reality and grade culture of the Civil Service.

This report stresses that it is vital that the chief scientific adviser in any government department be suitably senior. I believe strongly that incumbents of this role, so crucial to evidence-based policy, must have the necessary standing and authority, not just within the scientific community, but to gain access and exert influence where it matters within the Civil Service. Witnesses to the committee’s inquiry repeatedly highlighted the importance of CSAs having access to Ministers and to senior departmental officials and the need for CSAs to be involved early and throughout the policy process. Professor Paul Wiles, former CSA to the Home Office, made the point pretty succinctly by observing that part of the job of a CSA is to make sure that they kick the door down, frankly.

There are plenty of examples in this report of what follows when the door is kept obdurately shut, or when there is no one kicking at the door, or when you simply do not kick hard enough. These include the proposals for biometric ID cards, plans for offshore wind power—as mentioned earlier—and the closure of the Forensic Science Service. A more recent failure comes to mind, that of the franchising process for the West Coast Main Line. We do not yet know the full details, but if civil servants’ risk assessment was incomplete and if economic and financial modelling was inadequate, we can but wonder whether the absence of a chief scientific adviser to the Department of Transport was a factor.

While the report acknowledges that the picture varies across government departments, there are too many examples of where expert advice has been ignored, dismissed or not sought early enough to influence decisions. That failure to either ask for or take expert advice has undermined policy too many times. In the report the Home Office Science and Engineering SEA review is cited as finding a consistent,

“lack of appreciation of the value and importance of scientific evidence among (especially senior) officials”.

The BIS CSA review findings are summarised as showing that some policy officials had little enough motivation to ensure that potentially excellent advice from the then CSA incumbent went through.

It is all the more frustrating, therefore, to note the Government’s response to this report. They seem particularly pusillanimous on the independence of CSAs. To give just a few examples, I return to the question of the CSA’s standing and authority, in recommendation 1, and the importance for a CSA to be a heavyweight within the scientific community. In their response the Government appear to agree, but then say that each department—with, admittedly, the GCSA—should be able to determine this as,

“some of the … expertise may be provided by a support team and therefore may not be a high priority for the CSA”.

Just whose wishes are being served here? The CSA needs to be able to stand up to belligerent Ministers or civil servants, yet here the Government are already bending over backwards to leave it to each department to decide who it is prepared to listen to.

Recommendation 2, that CSAs should be external appointments, is rejected by the Government on the grounds that:

“Departments must be free to carry out open and fair recruitment … without bias as to existing positions of candidates”.

I have more sympathy with this position, but nevertheless I believe that the expectation should be an outside appointment. Sir John Beddington made this point very effectively in his evidence to the committee, and I echo the praise from the noble Lord, Lord Willis, for Sir John in his role. It needs to be recognised that the conventions and trappings of a long career in the Civil Service are hard to shake off.

The Government also rejected recommendation 4, that the GCSA and the head of the Civil Service should look again at current arrangements where the CSA role is combined with other departmental roles. Given the importance of this part-time role, why will they not do this? What are they afraid of? A review may indeed show up weaknesses that need to be dealt with.

There is more government complacency in their rejection of recommendation 16, which suggests that the GCSA, the Government Office for Science and the head of the Civil Service should evaluate departmental scientific advisory bodies to see whether they are the most effective way to critique the departmental use of science and to suggest improvements. In their reply the Government say that they are content with current arrangements for reviewing science advisory councils. They show no recognition that over time a department may become part of groupthink, becoming progressively less independent or brave in its reviews.

The Government’s failure to embrace the committee’s longsighted view on the need for independence in the CSAs’ role is deeply frustrating. No wonder there is talk of kicking down doors. In my view, the report is a well aimed and timely shot across the bows in the long-running skirmish between the Civil Service and science. If we are truly to have evidence-based policy, if we want to be sure that robust, joined-up evidence is at the core of decisions within departments and across government, it is vital that some if not all of the salvos contained in the report hit home.

When I look at the membership of the Science and Technology Committee, I stand in awe of its expertise. Parliament ignores such advice at its peril, and I hope that the Minister will reassure us that it will not be ignored.

16:58

[Baroness Sharp of Guildford]

My Lords, I was not a member of the Science and Technology Committee when this inquiry took place, but I congratulate the noble Lord, Lord Krebs, and the committee as it then was on this highly pertinent report. As others have made clear, if Britain is to compete in a world in which the mastery of science and technology is becoming ever more important, it is vital that our decision-making is aware of leading-edge developments and that the evidence used in decision-making is itself up to date, relevant and applied.

I want to pick up three issues that have been mentioned by many other people but noted in particular in his introduction by the noble Lord, Lord Krebs: first, that chief scientific advisers within departments should have authority, independence and access; secondly, that on the whole they should be external appointments of people with status in their own profession and therefore with their own networks to call upon; and, thirdly, that they should be able to rely upon being able to speak directly to Ministers and senior officials when they feel it necessary to do so.

I have asked to speak in this debate because of my concerns about one particular department, with which I have had more to do than others in terms of the chief scientific adviser appointment. This is the Department for Culture, Media and Sport. My interest in this stems from an inquiry by the Science and Technology Committee back in 2005-06, which I chaired, looking at the application of up-to-date techniques of science and technology to the conservation and preservation of cultural heritage. We called our report Science and Heritage. At that time, the DCMS stood out as resisting the idea of having a chief scientific adviser; while we argued not only that the understanding of the heritage science sector, as we called it, required someone with a good grounding in science but that its responsibilities in relation to, for example, the digital technologies, media and communications, also required someone with these capabilities.

The department came under a good deal of pressure at that time, not only from the committee itself but also from the Government’s Chief Scientific Adviser, and eventually appointed a CSA in 2008. She was a Treasury economist, who had also served at the Department of Health. Nevertheless, she proved herself quick to take up the job and very interested in the department’s issues and its developments and science and technology implications. In particular, she set up a science and research advisory committee, which was expressly seen as a means of accessing expert scientific opinion and as providing Ministers and senior officials with advice on the implications of developments in science and technology for the department’s policies and priorities and to identify issues which might have an impact across the range of DCMS issues. We were concerned as a committee that the role of chief scientific adviser would greatly help such an area where the efforts from one part of the sector to another were extremely fragmented. We wanted to see the chief scientific adviser pulling people together and helping to develop what we called a national heritage science strategy, which has, in fact, since got off the ground.

The committee picked up these issues again and a follow-up report, which identifies some of these things, was issued in July this year. Sadly, however, the post of chief scientific adviser in the department was dropped as part of the restructuring after the general election in 2010 and remained unfilled when we took evidence for the follow-up report from the DCMS in March this year. Indeed, it was also unfilled when the committee was looking at chief scientific advisers. In spite of coming under very considerable pressure at that time from the Government’s Chief Scientific Adviser and its own advisory committee—the science and research advisory committee—it found itself to be really rather rudderless without a chief scientific adviser within the department.

When we took evidence from Ministers during the summer, John Penrose, the then Minister for Tourism and Heritage, said that they were looking for a “workable solution” appropriate to the “scale and needs” of the department. We argued in this follow-up report that two years seemed to be sufficient time for the department to have found a workable solution. However, I am very glad to report that, thanks perhaps to pressure from us and from the Government’s Chief Scientific Adviser, DCMS has now appointed a new scientific adviser. As the noble Lord, Lord Krebs, and my noble friend Lord Willis have pointed out, he comes from the Treasury like his predecessor. Although he was initially an English graduate, and, indeed, an English teacher for some time, he took an MSc in Economics at Birkbeck. He comes to fill the post as head of policy analysis within the department and will cover the principal functions of chief scientific adviser as well.

From the point of view of this report, this appointment illustrates a number of features where the committee expressed considerable reservations. First, it is an internal appointment and the post holder will have other substantive responsibilities in the department. It is a relatively junior appointment, at director—the former Civil Service grade 5—level rather than, as recommended, at a more senior rank. The appointee has no background in science. Although, as I have shown, this was the case also with his predecessor, nevertheless, at a time when the committee had put so much emphasis on this and when the Civil Service could have shown that it had been listening to its strictures, it was extremely disappointing that it should pay no attention to it whatever.

Nevertheless, I wish the incumbent well. Speaking with my hat on as the chair of the Arts and Humanities Research Council and the Engineering and Physical Sciences Research Council joint project on science and heritage which has been going forward for the past five years, I look forward very much to meeting him and I hope that he will enjoy the breadth and challenge of the new job that he has taken on, as did his predecessor.

17:06

[Lord Parekh]

My Lords, I thank the noble Lord, Lord Krebs, for introducing this report. I endorse almost all its recommendations and feel slightly uneasy that I am neither a member of the Science and Technology Committee nor a natural scientist. I might have got in by virtue of being a social scientist—which, again, I am not—because I cross the border between social science and philosophy by being a moral and political philosopher. I therefore have no real competence in the matter, which is precisely why I thought I should use this occasion to think within the framework of the report and open it up a little to raise issues that it hints at but does not systematically pursue. I shall make three general points.

First, chief scientific advisers generally—I think, almost all of them—come from the natural sciences or engineering backgrounds. I can see why this is so historically, but I do not see the rationale. Public policy has profound social consequences and can easily go wrong if it makes wrong assumptions about the nature of society or the profound changes taking place in it. We should therefore widen the background of chief scientific advisers by including sociologists, psychologists and political scientists, who all have an important role. I would wish to go a step further. Public policy does not occur in a cultural vacuum; in fact, it is suffused with cultural assumptions to which scientists are not immune. A form of behaviour that we take to be uniform across the species is shaped by cultural preconditions. Unless, therefore, we begin to understand the cultural factors which are at work, we would have considerable difficulty in understanding even a non-cultural phenomenon such as global warming, let alone rising population or lots of other things.

Culture is at the centre of human existence. Unless we take account of cultural factors in policy-making, we would get our policy as wrong as if it took no account of the natural sciences. This is particularly so in a society like ours, which is increasingly multicultural. If other policy is based on the assumption that we are a Christian or secular society, taking no account either of the Jewish community, the Muslim community, the Hindu community or lots of others, we will simply fail to understand why our fellow citizens behave in the way they do, why they respond to science in the way they do and why the very idea of scientific evidence might frighten them if they take science to be inherently secular and anti-God.

Given all this, it is important that we take account not only of the social sciences but of the humanities, languages and philosophy. Profound changes are taking place at the cultural level and we need to appreciate this. I therefore suggest that there might be a space among the distinguished body of chief scientific advisers for historians, cultural anthropologists and students of humanities—even, perhaps, for students of literature.

If you think along those lines you can see where I am going: it is to locate at the very heart of the Government, at the very heart of their policy decision-making, the natural scientists, the social scientists and the humanities, and to institutionalise a dialogue between the three different perspectives that are central to understanding the kind of society in which we live. Once that dialogue takes place at the very heart of the decision-making process, it will have the capacity to trigger and stimulate similar dialogue at other levels of our society. One then begins to see why knowledge drawn from different areas should be pulled together to shape a more sensible society than we sometimes have.

The Government have already recognised the need for a chief social science adviser but their response is rather tentative. As far as I can see, their response talks in terms of it as one of several options. I do not know what other options they have in mind—I certainly do not see one—so perhaps the Minister, who I gather is not, like me, a natural scientist, will tell us what the Government have in mind. I would have thought that the idea mooted as a possible alternative—namely, joint heads of research—will not work because, in that kind of role, the social science adviser would not have the same authority and the same degree of independence.

My second point is slightly different. We have been talking about scientific advisers and the role that they can play in shaping policy. Scientific advisers are an institutionalised voice of science located in a government department. However, outside the government machinery you have national academies such as the British Academy and the Royal Society, and these bodies can provide cross-disciplinary expertise that can supplement the expertise of chief scientific advisers. The body to which I belong, the British Academy, has done this in recent years in trying to bring together the policy-makers and social scientists and, in some cases, the natural scientists. In discussing foreign policy issues such as Iraq, it brought in historians and linguists to show how that disastrous policy could have been avoided if the policy-making had taken place in a more intelligent and sensitive manner.

National academies can also play an important role in increasing public understanding and awareness of scientific evidence, as well as perhaps increasing public trust in science. An important point that was made earlier is that it is one thing for scientists to be banging away in their discussions with the Government but, if the Government are not scientifically minded, are scientifically illiterate or do not see or are unable to appreciate the point of what is going on, then that evidence, however high a role the chief scientific adviser might occupy on the governing board, the departmental board or whatever, will simply have no impact.

So while looking at the supply side, we must also look at the demand side. We must make the Government want to ensure that their decisions are right, based on scientific evidence and not discredited once they have been taken. That can happen only when we have a scientifically literate political class. That will take years to arrive but at least we can make sure that public opinion puts pressure on the Government. The national academies can increase public awareness and encourage public opinion to exert adequate pressure on the Government to listen to scientists and scientific advisers.

My last point concerns humility. Evidence is absolutely crucial in any decision-making but no decision can be based on evidence alone. Evidence is a necessary but not a sufficient condition. We require evidence, obviously, but also certain normative principles under which we charter, harness and use the evidence for this or that purpose. Evidence therefore tells us what factors are relevant, what the empirical truth is and how important these are. However, all decisions, including policy decisions, are ultimately normative; they involve moral principles and moral commitments of a certain kind, even religious convictions, and they balance various factors in judgment. Mercifully, scientists cannot provide that judgment or those moral principles. The day when scientists begin to provide these things, those scientists will be God.

In any such discussion between scientists and the Government, therefore, the Government need to recognise that scientific evidence is a necessary condition, while scientists need to recognise that scientific evidence is not a sufficient condition. Once each side begins to recognise its own strength as well as its own limitations, a sensible dialogue becomes possible.

17:15

[Lord May of Oxford]

I begin by saying that the UK probably handles these issues better than any other place I know. I part company with my long-standing good friend, the noble Lord, Lord Rees, in that I have lived 20 of my professional years in the United States and 23 here. I know the comparison between the resources, access and influence that I had as Chief Scientific Adviser to John Major and Tony Blair and what is available to the corresponding people in the States, one of whom was quite a good friend. They do not have anything like the same influence or contact, so the criticisms that I am about to make start from the position that we are doing well but could do much better.

I come to this in a rather different way. It is roughly half a century since, as a very young post-doc and newly arrived at Harvard, I had the privilege of hearing CP Snow give the Godkin lectures. These lectures are currently being republished by Cambridge University Press and I have just had the privilege of revisiting them to write an introduction. Snow’s “two cultures” theme runs strongly, if implicitly, through these lectures. He draws several lessons, all of which resonate with the recommendations of our committee, from two critical events in World War II, in which he was an observer as a senior civil servant.

In the first event, in 1935 when war seemed increasingly likely, the distinguished scientist Tizard was asked how best to defend the UK, particularly against bombing from Germany. He promptly put together a committee of real experts: Blackett, Appleton, AV Hill and others. They came forward with a bold and emphatic recommendation that essentially all resources should be concentrated on what we now call radar. This, mark you, was before we knew it worked. The Labour Party was in government then and Churchill was on the outside. Churchill’s adviser, Lindemann, later Lord Cherwell, who was an indifferent scientist but a skilled social climber and courtier, consistently gave Churchill the advice he wanted to hear. He was very much against radar and produced an amusing concatenation of silly ideas as alternatives.

In retrospect it was very fortunate that Churchill was not in a position of influence at that time, because it is generally agreed that radar played a decisive role in Britain’s survival in the 1940 Battle of Britain. By 1942, however, with the war in full swing and with Churchill in power, Lindemann was enthroned as the sole source of scientific advice. There arose a second major row around the question of the effectiveness of the massive bombing of German cities. Lindemann was entirely in favour of this bombing, and one must have sympathy, in the light of what happened in Coventry and London, for doing this. In fact, Tizard made an estimate and suggested that Lindemann’s cost-benefit analyses were out by a factor of five, Blackett said that it was a factor of six, and post-war estimates suggest that it is closer to wrong by a factor of 10. The strategy was not particularly effective and hugely costly both in British lives and in resources, but the Cabinet had heard no advice other than from the egregious Lindemann.

Is this relevant to today’s debate? I think that it is, because the recommendations in the Select Committee’s report are essentially very much along the lines of how Tizard went about handling things. I regret to say that the Government’s response, which is not the Minister’s fault, is essentially in the idiom of Lindemann. If we listen carefully we can hear Snow rotating in his grave.

It will be helpful to sketch briefly the evolution of science advice and policy-making in the UK since World War II, because for several decades after the war, although science people were seen as so important—from the initial people I talked about through Bletchley, and so on—the status of science adviser that persisted as an ad hoc appointment drifted down until it was a sort of one day a week pop-in to talk with the policy unit in No. 10. The really major change that we have almost forgotten and which we take now for granted began in the 1990s and emanated from a grey eminence behind the scenes in the Labour Party, Jeremy Bray, whom some noble Lords will remember. He convinced Neil Kinnock that one of the manifesto commitments for the Kinnock/Major election should be the creation of an office of science and technology, headed by a distinguished scientist and appropriate person brought in at the mandarin, Permanent Secretary level. He would go along to the Wednesday morning meetings of all the other Permanent Secretaries and be given an adequate star.

William Waldegrave persuaded John Major, who won the election, to implement the Kinnock manifesto commitment, and I was the first such person appointed in that wave in 1995-2000. I was succeeded by David King and then by John Beddington. I found it fascinating and challenging, although it was also an experience in the cultural anthropology of the Civil Service. I had always thought that “Yes Minister” was a sitcom, but I discovered that it was a documentary. I had great good fortune; I was really lucky. I had better fortune than some of my successors. Both my Prime Ministers—first, John Major and then Tony Blair—were people who sought informed and honest rather than comfortable advice, and I had direct access to both of them. The two Cabinet Secretaries—Robin Butler and Richard Wilson—could not have been more helpful.

During my time, the Permanent Secretary for trade and industry, where OST was housed, changed. At first it was Peter Gregson and then Michael Scholar. At our first acquaintance we had lunch together and Michael said, “How do you think you are doing?”. I said, “Well, I’m really enjoying it and I feel that I am being moderately effective, but the one thing that is clear is that had I pursued a career in the Civil Service, I would never have made it to the grade of Permanent Secretary”. Michael, with characteristic honesty and the right words said, “That is absolutely right. How shall I put it? You don’t have the courtier skills”. I was confronted, as successors have been, by the kind of resistance to outsiders that we see subtly expressed in the failure to accept so many of the recommendations that have been written by civil servants. Civil servants are not bad people; like everywhere else there are good and bad people, but they have a culture that is not well suited to the sort of things we are talking about.

Let me give noble Lords a very quick sketch of some of these issues. In the early 1990s, the apparent peace dividend—the end of the lunacy about the end of history—meant that the Ministry of Defence had to take big cuts. What did it want to do? It did not want to get rid of its civil servants and so thought that the best thing to do was to spin out the whole of the research enterprise. This would have been a disaster because it would have impaired all relations with the Americans, among other things. This is the first time I have ever claimed this in public, but I think that my biggest achievement was that I kept a big chunk of that. QinetiQ was spun out, but the defence science and technology labs in Porton Down are still in the public sector and still interacting with the Americans. I could not possibly have done that if I had not had the status—four star—and direct access to the Prime Minister and Ministers. I could multiply such examples.

On JASON, given the way the MoD is now, I do not think that JASON is quite appropriate. One of the conclusions that came out of the defence science and technology labs is that we should have more interaction with academia and more attempts should be made to bring in that kind of free-ranging and great strengthening dialogue. The one bee in my bonnet throughout my entire tenure as a non-exec there was to build up the social sciences in the research part of the MoD because then, as you began to go into Iraq, you could ask questions about what was going on in Iraq and what were you going to do when you had won. I was told consistently by people in the MoD that they were too busy to think about that.

I could multiply this endlessly and give you examples that we have already heard, but I will not. After the war, the chief scientist in the MoD, the very distinguished Hermann Bondi, a hugely important person, fought off repeated efforts, one of which I fought off during my brief tenure, to downgrade the post or capture it for a civil servant, but that is what has now happened. It is a real loss. I could multiply these examples more or less indefinitely.

I cannot resist mentioning that the story of FMD and what happened was not quite as rosy and simple as the noble Lord, Lord Jenkin, portrayed. To begin with, it was not Dave King who put together the committee but John Krebs. When he put together the committee of experts on epidemiology—I forget whether it was under MAFF or Defra at that time—not a single one turned up, but Dave did. Dave then took it over and did a super job.

In retrospect, it is clear that if we had been able to use bigger and wider firebreaks and vaccination, we would have stopped things by June. However, that was thwarted by the farmers’ union. The most satisfactory thing took place at the post mortem, where the Royal Society recommended that next time vaccination must be used. Defra had clearly forgotten this, but the Royal Society reminded the Government, and I have a letter signed by Tony Blair apologising for their oversight and saying that it would not reoccur. There is now a rule that if there is another outbreak and vaccination is not part of the strategy, the Permanent Secretary must give reasons in writing to Parliament before abandoning the measure.

Against that background, I conclude by strongly urging the Minister to sweep aside the objections, denials and equivocations that constitute the present Government’s response to this report. It will require a certain amount of courage to go up against them, but I am willing to be as helpful and to enlist people if he wishes. I particularly emphasise the following six recommendations in the following order of importance. The first is recommendation 10: that all CSAs must have a seat on the departmental board. The current response contains some weasel words about the need for flexibility, but flexibility has nothing to do with it. It is another expression that means that we want to put these guys on tap, not on top. The issue here is getting the job done.

The second is recommendation 9: that CSAs must be grade one or at least grade two. Here, again, in wonderful Civil Service double-speak, the Government replied:

“The precise grade of the position should remain a matter for the Permanent Secretary in managing his or her department”.

It has nothing to do with managing the bloody department; the grade has to reflect the importance of the person so that they have the clout to be heard. To accept that recommendation is a no-brainer.

On recommendation 7, on direct access to Ministers, the response does not say that it does not accept it but it uses weasel words to that effect. Again, there is no alternative to an unequivocal agreement to direct access. I know examples—and other people have given them—of chief scientists who just have not had direct access, as they are carefully managed and encapsulated.

Recommendation 1 lists a catalogue of desired qualities. Again, there are weasel words in the response, but they are obviously the things that you want. Recommendation 2 is one of the trickiest. It says that, given that these are the qualities that are wanted, recruitment “necessarily excludes internal candidates”. That is an awkward thing to do. I would recommend that one does not just say that they cannot be internal candidates but rewords it to say, first, that there is a very strong presumption that the appointment will be from outside and, secondly, that if it is not, the Government Chief Scientific Adviser should have a veto and justify it.

Finally, recommendation 8 concerns the formal protocol designed by the Government Chief Scientific Adviser for CSAs when they disagree with Ministers or civil servants about policy decisions that are contrary to scientific advice. I am not going to talk about that because, in the week when badgers are in the news, we do not need to.

17:31

[Viscount Hanworth]

As there can now be no doubt, our politicians and civil servants have an uneasy relationship with scientists and technologists, exemplified by the circumstances of the departmental chief scientific advisers and the roles that they play.

If you look elsewhere in Europe, you will be hard put to find persons who are playing comparable roles. You will not find the counterparts of our chief scientific advisers either in France or in Germany. It is interesting to consider the reasons for their absence there and for their presence here.

There are cultural and historical circumstances that explain the roles of the scientific advisers in the UK that I shall touch on later. In France and Germany, their counterparts are absent for the reason that their civil services are already permeated by scientists and technologists, which implies that there is no need to appoint them to a special role.

Many of the civil servants in France have been educated in les grandes écoles. These establishments fall outside the main framework of the French university system and have traditionally produced many, if not most, of France’s high-ranking civil servants, politicians and executives, as well as many scientists. We tend to date the inception of les grandes écoles from the years following the French Revolution and to attribute them to a Napoleonic initiative. In fact, some of the better known ones, including les Ecoles des Mines and l’Ecole des Ponts et Chaussées, predate the French revolution.

In Germany, a high status is accorded to scientists and engineers, who are well represented in the civil and diplomatic services. The current German ambassador to Britain, for example, is an academic physicist.

In a common perception, the role of scientific advisers in UK government is to represent the scientific point of view. To persons trained in science, this must seem to be a curious requirement which mistakes the fundamental nature of science. Science is not a systematised set of opinions; instead, it is a discourse.

Admittedly, the discourse depends greatly on codified knowledge; and scientists can be arrogant and dismissive of arguments that pay no respect to such knowledge. However, in the main, arrogant opinionation is not the hallmark of science or a common personal characteristic of scientists. If science does encourage any particular traits of personality, surely these are a diffident nature and a tentative opinionation. Such personal characteristics are the very opposites of those that the report we are considering has identified as the necessary qualities of a chief scientific adviser. For this, there are good reasons.

However, it is probably misleading to talk in general of the personal characteristics of scientists or, indeed, to talk of the scientific ethic as if individual scientists necessarily embodied it. The greatest virtues of science are not intrinsic qualities that are inherent in the individual scientists; instead, they are the extrinsic qualities that characterise the realms of scientific discourse. Aberrant opinions and false conclusions, which abound in science, tend to be eliminated in a ruthless manner in the process of scientific debate. This is another feature that is barely recognised or is generally misunderstood in the common perception.

A difference of opinion among scientists is commonly perceived to be a symptom of scientific failure. On occasion, when differences arise, the right-wing press, which is largely inimical to science and to scientists, can be vengeful in its invective. Such invective accompanied the dismissal in 2009 by the Minister of Health of his chief scientific adviser, Professor Nutt, for making observations that were contrary to his own fixed ideas. Professor Nutt had ventured the opinion that cannabis is less harmful to those who smoke it than would be their likely consumption of tobacco and alcohol. He suggested that it should therefore be classified not as a class B drug, in common with alcohol and tobacco, but as a class C drug of a lesser potential harm. The contrast between this mild opinion and the fierce invective to which it gave rise was remarkable. Professor Nutt received the support of many of the chief scientific advisers, some of whom resigned in sympathy on the occasion of his dismissal. This episode highlighted the hazards of the job and illustrated how different the political environment is from the normal scientific environment. It also emphasised that considerable strength of character is often required in the role.

Some persons of remarkable strength of character have filled the role of a chief scientific adviser in the past. The formal arrangements that prevail today date from 1964, at the beginning of the Government of Harold Wilson, and the first person to fill the post was Solly Zuckerman. However, there had been precedents, among which the careers of Churchill’s wartime advisers were perhaps the most influential. The personalities of Henry Tizard and Frederick Lindemann impacted heavily. Lindemann, who became Viscount Cherwell, was—according to a received opinion that has been strongly challenged today—an able scientist with a wide range of competence. He tended to derive firm and inflexible opinions. In the main, valuable services were rendered but sometimes his opinions were decidedly haywire. This created difficulties for his successors and was responsible, in large measure, for the cautious and resistant approach that has often characterised the reactions of senior civil servants to scientific advice. The expectation that the Government Chief Scientific Adviser should be able to give informed opinions on a wide range of matters is also a legacy of Lindemann. To meet this requirement, the chief scientific adviser needs far more support in terms of staff and resources than is currently available. This is a need that the report has clearly identified.

The effect of Harold Wilson’s exaltation of the roles of science and technology has been widely misconstrued. A conventional interpretation is that, despite his commitment to “white heat” technology, his intended scientific revolution came to nothing because of the resistance of the established powers. In fact, the Governments of Harold Wilson were committed to the tasks of curtailing the nation’s expenditure on military and civil aviation, of resisting the ambitions of Britain’s nuclear scientists and of holding many other great technological endeavours in check. Many people would maintain that this was a necessary endeavour. However, its pursuit had an influential effect on the attitudes of the Civil Service to expensive technological projects.

It is precisely such ill effects that the recommendations of the report are designed to counteract, by advocating that the roles of the scientific advisers should be enhanced and that the resources available to them should be increased. The advisers have to contend with the effect of the history that I have recounted. They also have to contend with a culture within our Civil Service that is largely ignorant of the sciences, if not inimical to them. For a hundred years from the beginning of the 19th century to the middle of the 20th century, the education of senior civil servants was predominantly in the classics and humanities. A rapid change then began in the 1950s. It was recognised that it would be more appropriate for civil servants to study economics and law. A degree in politics, philosophy and economics became the paradigm of the appropriate education.

Economics can be described as a philosophical Weltanschauung, which is to say that it represents a powerful overview of science that can afford to ignore the inessential details. There is a common opinion among economists that matters of science and technology are among such details. We need to defeat this false opinion and the Science and Technology Committee has been influential in its endeavour to do so. Unfortunately, it has recently suffered at the hands of those who fail to recognise the importance of its mission and some of its activities are being curtailed.

17:40

[Lord Mitchell]

My Lords, first of all I congratulate the Minister on his new position and welcome him to the job. He and I are both new boys at this and are both non-scientists so we have a difficult task in front of us. I was very fortunate to serve on the Science and Technology Committee, which reported on nanotechnology and food and was chaired by the noble Lord, Lord Krebs. I was able to witness first-hand his mastery of the subject, his team leadership and his ability to tease out every last detail, and in the report before us we see the very same competence. It is an excellent document on an important subject, and it is a tribute both to the noble Lord and to all the other Lords who have spoken in this debate today. I must say a particular word to the noble Lord, Lord May of Oxford; he spoke for 16 minutes and I would have happily sat here for 16 hours listening to what he had to say.

On previous occasions I have lamented the inability of Government to take reports issued by your Lordships’ House as seriously as they should. That is as true of this Government as it was when my party was in power. I just do not understand why a report that was published at the end of February has taken so long to come to the Floor of your Lordships’ House. I know that this is another debate for another occasion, but it is very irksome.

I would also like to add that in 2004 I had the privilege to chair another Science and Technology Committee report on science and treaties. In that report we wrote a section on chief scientific advisers and examined closely whether DfID and the FCO in particular should have CSAs. We achieved one immediate victory in that, shortly after the report was published, DfID indeed appointed its own CSA, and the FCO followed later. The noble Lords, Lord Oxburgh and Lord Hunt, were on that committee at that time. Was the noble Baroness, Lady Sharp, on that committee?

[Baroness Sharp of Guildford]

No, I was not on that one.

[Lord Mitchell]

I shall be referring to that 2004 report tomorrow in the debate on Antarctica, in which several noble Lords speaking today will also be speaking—it is a busy two days. However, to my mind today’s report follows on from the initial recommendation that we made back in 2004. I am no longer a member of the Select Committee on Science and Technology. Obviously I did not sit on this investigation but, when I read the report, the word “frustration” screams through, barely concealed—the lament of scientists at not being appreciated by politicians and not being listened to, in some cases until it is too late. Not much has changed.

Luckily for us, but unluckily for the badger population of this country—I too will succumb to the temptation—we have a very topical example in front of us today of politicians versus scientists. We see how a decision to instigate this cull has been taken against the advice of some of the leading scientists of the country. The cull must be the wrong decision, but why do decisions of this nature happen? Why do the politicians so frequently get it wrong? In my opinion, it happens because politicians live in a different world and march to a different drumbeat. It is this disconnect between politicians and scientists that I would like to address today.

I am a businessman by background. Indeed, they describe me as a serial entrepreneur—I think that that is a compliment but I am never too sure. Businessmen in general make for lousy politicians and the reasons are not difficult to see. In business, the CEO generally takes what they believe is the correct course of action; you make an executive decision and you live and die by the outcome. Often you do not have to persuade your colleagues to back you. The buck stops with you. If you get it right, you get the glory, and if you get it wrong—well, as the CEO of Citibank saw yesterday, you have to fall on your sword. Business is not about 100% success; it is about getting it right more often than getting it wrong. However, politics is a different game. You have to be seen to be infallible. You have to be collegiate—or pretend to be collegiate—you have to take the team with you and you have to live for the moment. In a 24/7 world it is always tomorrow’s headline that matters. We have all seen this but in this new world of social media, where a single tweet can go to hundreds of millions of people in a second, the game becomes even more intense, and it is often a nasty and brutish game. You are never completely sure who is on your side. This is not my personal experience, but it is what I have observed.

Why do I say all this? Because scientists also come from another world—not another planet, but another discipline with a different temperament. Their judgments are evidence-based, their opinions do not pander to the media, their timeframe is long-term and their reputations have to stand the test of time. I am going to say something that many people might not agree with, but I am going to say it all the same: scientists need to learn to play the game. They cannot just lean on the purity of their research. They have to fight for their views to be taken seriously and acted upon. A noble Lord mentioned sharp elbows, and they are absolutely needed. Just as we in the business world have to adapt to the realties of the world of politics, so too should scientists. The game is often murky but that is the world that politicians inhabit, and to get their attention we outsiders have to have guile and square up to them on their territory, or we will never be heard.

Throughout this report we hear about scientists’ frustration at not being taken seriously—“easily marginalised”, I believe it says in the report. We can visualise it now: the Minister has had a bad day, everything has gone wrong, it is late, and his wife has told him that he dare not be home late. He is in a foul, stressed mood. Then in comes the CSA with yet more bad news. They use terminology that the politician does not understand and does not want to understand; he listens, but he does not hear. It is the clash of cultures, and it will be another disaster. I love the expression used in the report about the interchange between the scientist and the Minister: “Truth speaks to power”. That just about sums it up. It reminds me of the old adage: “Don’t let the facts spoil a good story”.

The report spends quite a bit of time focusing on the skills that departmental CSAs must have—his or her standing in the scientific community, communication skills, public engagement, understanding the policy environment and project delivery—but I wonder how many of them actually fit the role. Lack of access is constantly cited; the Minister is too busy to see the CSA. The report even talks about CSAs having to kick down the door, but does that really happen? I am a pretty good door kicker, but I am the first to admit that I am a pretty lousy scientist. We must be careful in seeking attributes in people that in many ways are mutually exclusive.

The report refers to the now infamous NHS IT project where the Blair Government decided to digitise and computerise the whole NHS at a stroke. It is an interesting example. At that time I was a consultant to IBM, not directly on that project but certainly on the periphery. The anticipated benefits of the project were enormous, but so too were the dangers. No businessman I know of would ever have taken on a project of that size without taking it step by step, but for the politician it was the opportunity to change everything at a stroke. Grand plans and glory beckoned but they went pear-shaped, and someone else was left to pick up the pieces. In that case the Government were naive in the extreme, and they were taken to the cleaners. They did not ask the questions and they certainly did not want the unpalatable answers. Those with experience knew that it would all end in tears; £12 billion later, they were right. It was a river of tears, and so it is with chief scientific advisers, who are often right but are so often ignored.

My advice, for what it is worth, is this: CSAs need to be much more politically savvy and must be able to play the game. Perhaps they should be selected from scientists who have ventured into the outside world, from quasi-scientists who are not really scientists but who understand the scientific argument or even from scientists who have ventured into politics—although I concede that there are not many of them.

In summary, we have a real problem. Scientific experts need to be listened to by Government, and this excellent report makes strong recommendations for CSAs to be given much more prominent positions. I believe that CSAs should also be appointed as much on their personalities as they are on their scientific skills.

18:29

[Lord Gardiner of Kimble]

My Lords, first, I thank noble Lords for their kind remarks. I congratulate those noble Lords who have participated in this debate and those who have supported this inquiry, both here today and through their work in the committee. I pay tribute to the noble Lord, Lord Krebs, and the committee for such a thought-provoking inquiry. I am conscious that, as the noble Lord, Lord Mitchell, mentioned and to the disappointment of my noble friend Lord Willis, I am a non-scientist replying to so many eminent scientists. Having read the report, its quality is self-evident. It recognises the value and the standing of the current CSAs and the achievements of Sir John Beddington.

The Government are committed to ensuring that all policy is underpinned by the best science and engineering evidence. The many significant challenges we face in the world today can be addressed only by the implementation of robust and effective policy, applying the best knowledge. CSAs are crucial to delivering this. As the noble Lord, Lord Hunt, rightly pointed out, this must be drawn from all sources—from government agencies to abroad. The enhancements to the CSA network over the past few years demonstrate the commitment to continued improvement. The present GCSA, Sir John Beddington, deserves considerable credit for the effort and expertise he has invested in building and supporting the CSA network over the past five years.

The committee made 19 recommendations, several of which have already been acted on. The report is already a key guiding document for the GCSA, the Government Office for Science and the CSAs. This has been acknowledged by the head of the Civil Service, who, as noble Lords know, recently responded to the noble Lord, Lord Krebs. While not all the recommendations could be accepted in full, the Government are committed to further continued development of the CSA network. The challenge for the future is to deliver effective, excellent policy yet we will have to do so with fewer resources. There are cost implications for departments arising from many of the recommendations made in the report. Very careful attention will have to be given in balancing these against the many competing needs that each department faces. I can reassure your Lordships that, none the less, the Government are committed to delivering the CSA influence that the report aims to promote.

I will now explain the steps being taken to implement some of the key recommendations. First, on the characteristics of chief scientific advisers, the report identified a number of personal characteristics necessary for an effective CSA and made recommendations on the terms and conditions for appointment. The Government agree with the noble Lord, Lord Krebs, on the three criteria of authority, independence and access. The Government consider that the characteristics set out in the report, as emphasised by noble Lords today, are a relevant, appropriate and very useful guide for departments to use in recruiting a CSA.

The noble Lord, Lord Hunt, raised issues relating to recruitment. I can confirm that the GCSA will be closely involved in advising Permanent Secretaries on all CSA appointments. He will also expect to sit on the selection panel and will encourage departments to seek additional external independent advice in the recruitment process.

Turning to the appointments procedure, I want to reassure the noble Baroness, Lady Warwick, that the default position will be to advertise all appointments externally in open competition. However, under the rules of open and transparent appointments, internal candidates cannot be excluded.

Moving on to the issue of the right grade for a CSA, again the Government agree with the noble Baroness, Lady Warwick, and my noble friend Lady Sharp that these are important roles that must have suitable status in their department. As I said earlier, these are difficult times. Departments have gone through restructuring and downsizing at all levels, which has led to a significant reduction in the total number of directors-general and other senior grades across Whitehall. It is simply no longer feasible for there to be an expectation for the CSA always to be at Permanent Secretary or DG level. The Government have agreed that departments should not appoint CSAs below director level and have already held a department to this.

The noble Lords, Lord Rees and Lord May, referred to the position in the MoD. I can assure noble Lords that the post remains one of the most influential within the MoD and a distinguished and respected engineer, Professor Vernon Gibson, has been recruited to this important role.

My noble friend Lady Sharp also raised the issue of the DCMS. As your Lordships will know, the DCMS has been without a CSA for a few years. The department is now very small, with very few senior staff at all, and is unable to appoint a CSA at the level agreed to. The DCMS has appointed a head of analysis who is linked into the network of deputy CSAs and who will receive support from the CSAs in other departments as well as the advisory committee referred to by my noble friend Lady Sharp.

As recommended, the Government have also agreed that the GCSA should contribute to the CSA’s annual performance reviews and a mechanism for this will be in place from this year. The Government also agree with the committee that the CSAs must have the necessary resource, both budget and staff, to carry out their role effectively. Your Lordships acknowledge in your report that departments vary greatly in size, scope and type of evidence they need. It is not therefore sensible to be too prescriptive on what that resource should entail. Governments, with the advice of the GCSA, must be free to balance the many competing needs for limited resources.

In response to the noble Lord, Lord Krebs, I would like to confirm that Sir John Beddington wrote to Permanent Secretary colleagues last month to start discussions on the implementation of all the recommendations to which I have just referred. Professor Sir Bob Watson, until recently the CSA in Defra, presented the issue well. He said, in relation to CSA policy processes, that policy proposals should,

“point to these questions: what do we know? What do we not know? What is controversial? What is uncertain? What are the implications of the uncertainties?”.

If CSAs have any concerns that these questions are not routinely being answered in policy submissions to their Ministers or that they are not sufficiently engaged in the process, they should raise the matter with their Permanent Secretary and with the GCSA. We also accept the importance of CSAs, like other officials, offering challenges to developing policies. I know that my noble friend Lord Jenkin referred to this.

The Government have well-established routes for raising concerns about the policy-making process. These are enshrined in the Civil Service Code by which CSAs are bound for the duration of their appointment and, in turn, Ministers are bound by the principles of scientific advice to Government which are enshrined in the Ministerial Code. I am conscious of the controversy and indeed the specific case of bovine TB as referred to by the noble Lords, Lord Krebs and Lord Mitchell, and my noble friend Lord Selborne. The GCSA is content that the evidence base, including uncertainties and evidence gaps, has been communicated effectively to Ministers.

On the issue of CSA membership of departmental boards and access to Ministers, I hope that the noble Lord, Lord May, knows of the respect that I have for him—indeed, he and I sat on a Select Committee for a year—but, after the greatest consideration was given to these recommendations, it was concluded that the departmental boards did not meet frequently enough, and indeed were not involved in the day-to-day policy process, for them to be the best mechanism for policy to be influenced in the department.

[Lord May of Oxford]

That is a typical Civil Service response. One has to enter the mindset of this devious subculture. Does the noble Lord really take that as an argument?

[Lord Gardiner of Kimble]

I have not yet attended a departmental board. Perhaps I will be better able to tell the noble Lord when I have. It is fair to say, though, that this is not considered to be the best mechanism to deal with the point that he wishes to affect. While we expect that CSAs should have regular and frequent interactions with Ministers, I am bound to say that not even Permanent Secretaries have access on demand.

My noble friend Lord Willis referred to government policies and the need for them to be underpinned by relevant research. I agree with him that R and D budgets should not be seen as a soft touch when overall departmental budgets come under pressure. Indeed, the Government have affirmed the requirement that departments should discuss in advance with the GCSA and Her Majesty’s Treasury any planned reductions in research budgets or expenditure. Sir John Beddington has recently written to all departmental Permanent Secretaries to remind them of that point.

I turn to science advisory councils. Indeed, the noble Viscount, Lord Hanworth, gave an appropriate reminder of the importance of the advisory system. While the Government do not feel that a full review of science advisory councils is necessary, it is acknowledged that there are some specific concerns. The Government Office for Science will therefore be looking at the way in which these bodies identify and prioritise issues for consideration and how their advice is fed back to the department. The GCSA continues to discuss with all departments the benefits that can be gained from having a council. However, we are committed to funding the best evidence from all sources. The noble Lord, Lord Parekh, referred to national academies as important partners, and indeed we need to build on links with industry too.

The noble Lords, Lord Hunt and Lord Parekh, referred to the recommendation for the appointment of a chief social scientist. I assure noble Lords that the Government recognise the importance of the social sciences and are giving careful consideration to the recommendation.

It remains for me to thank all those who have participated in the debate today and to thank the members of the committee again for their extremely valuable report. The recommendations of the report have been taken very seriously and of course I have studied the letter that the head of the Civil Service sent to the noble Lord, Lord Krebs. I hope that that letter reaffirms that, although I understand there may have been disappointment in the early stages, the Government take seriously all that the committee has said, even where we could not accept the proposals in full. That many have been acted on confirms Her Majesty’s Government’s commitment to strengthening their science advisory systems. As so many noble Lords have referred to, with all their expertise, strengthening those advisory systems will benefit the whole nation as we meet the challenges of the future.

18:04

[Lord Krebs]

I thank all those who have taken part in this debate. I have enjoyed it very much and noble Lords who have contributed have illustrated great depth of understanding, experience and expertise. I do not propose to go through any points in detail, because we have already taken up a substantial amount of time. I thank the Minister. His reply, together with the letter from Sir Bob Kerslake, gives us some encouragement that we are perhaps inching in the right direction rather than making a sprint for the finishing line. I can assure the Minister that we will keep an eye on these matters in the Select Committee and will no doubt make our opinion strongly felt if we are not satisfied with the way that the Government respond in the light of Sir Bob Kerslake’s letter.

In closing, I make two further comments. One is to join others who have acknowledged the good work done by Sir John Beddington, the Government’s Chief Scientific Adviser. He has slightly less than six months to serve and, as I mentioned at the beginning, he stands in a long line of distinguished predecessors and has served with exceptional distinction. It will not surprise noble Lords if I give the very last word to the badgers. I want noble Lords to think about what the Government are proposing to embark on. The Environment Secretary will, I believe, announce this week the initiation of the pilot culls, designed to determine the effectiveness and humaneness of free shooting as a way of controlling TB in cattle. Think about what is being done. There are two areas, so there is a sample size of two. There are no control areas. So the analogy is with my being asked to figure out the average height of professors in Oxford. If I said, “I have measured two of them and here is the average height”, you would say, “That is ridiculous. You have to measure 100 or 200”. Then, if you asked whether professors in Oxford were taller than in the rest of the country, and I said that I had not actually looked at what was happening in the rest of the country, that would be ridiculous. It is a completely meaningless, pointless pilot. It emphasises how policy decisions, if they are to be of any sense or value, have to have a scientific underpinning. This is in a department where we have a senior independent chief scientific adviser. In spite of that strong system, the policy makes no sense. In departments where there are weaker systems, things could well be worse. However, I leave it at that point. The last word is with the badgers and I thank everybody very much indeed.

Motion agreed.

18:08

Sitting suspended.

Sudan and South Sudan: EUC Report

Wednesday 17th October 2012 Grand Committee

Motion to Take Note

18:10

Moved by

[Lord Teverson]

That the Grand Committee takes note of the Report of the European Union Committee on The EU: Sudan and South Sudan—follow-up report (28th Report, Session 2010-12, HL Paper 280).

[Lord Teverson]

My Lords, probably at the end of this debate I will not be able to raise the applause that the last debate did. It would be most inappropriate for the subject we are debating this afternoon. This is probably the shortest report ever produced by an EU Committee, but its purpose was specific: to maintain focus—not just within this House but well beyond it—on events going on in Sudan and South Sudan, following our original report published around the time of independence last year. I will give the Grand Committee some background to the issues; we have such an excellent level of contributions to this report that I hope everyone else will then be able to contribute.

Sudan has been much troubled. Since 1955, the year before independence, up to 2005, it was a period of almost continual unrest, except maybe in the late 1970s and early 1980s. Then in 2005, we had the comprehensive peace agreement, very much with the help of the United States, which was seen as a major breakthrough. That led to a referendum in January 2011, which was generally seen as successful in terms of the way it was carried out and its validity, which overwhelmingly called for the independence of South Sudan. On 9 July last year, both Presidents Omar al-Bashir and Salva Kiir were there to celebrate the independence of the first African state to be declared independent by consent. That was a tremendous achievement, not just for that continent, but for the people of both Sudans and the world community.

However, despite that comprehensive peace agreement, a large number of issues were still there: debt, citizenship, most of all the delineation of the border and the status of Abyei in particular, and the issue of oil revenues. As we are an EU sub-committee producing this report, there were a number of EU issues as well, such as the slow establishment of the mission there, but overall those problems internationally between Sudan and South Sudan were of great importance. Not just that—in South Sudan there was very little infrastructure. There were about 50 kilometres of tarmac road, hardly any social infrastructure, rebel forces within South Sudan, an overlarge Sudanese People’s Liberation Army and $11 billion of oil revenues unaccounted for post-2005, when the comprehensive peace agreement took place. That was some challenge and the comprehensive peace agreement was not so comprehensive by the time of independence.

Since that report and since independence, as members of the Grand Committee will know, the problems have been just as large: a huge refugee flow, going both ways, but particularly into South Sudan, has created a grave humanitarian crisis; Sudan’s bombing of South Sudan; and the occupation of the Heglig oil region by South Sudan; which hardly helped that situation and almost led to war around March and April this year. One of the things that stimulated us as a sub-Committee to look at this issue, was South Sudan’s decision to stop the flow of oil through Sudan, which was its only way of exporting oil to the Red Sea at that time. It meant a reduction of public revenues to the South Sudanese Government, who are not well endowed otherwise, of 98%.

In fact, when we circulated the draft report among the EU Committee, one of the members wrote back and said, “You have got this wrong because it says that South Sudan has stopped the oil, whereas clearly you mean it was Sudan”. Of course, it was not. It is like South Sudan having imposed oil sanctions upon itself. Whatever the reasons and however deep the injustice, the sub-committee felt very strongly that this was reckless behaviour by the new state towards its citizens. Of course, within Sudan itself there has been the ethnic cleansing and all the other violence that has taken place in Blue Nile and Southern Kordofan.

In September, there was some light at the end of the tunnel, perhaps, with the agreement made in Ethiopia and all the work that Ethiopia has undertaken in this area around oil and the demilitarisation of the border zone. Having said that, we are aware that it is very easy to turn off oil; it is much less easy to turn it back on again, and the oil in the Sudan region is particularly viscous and waxy, and getting that pipeline to work again is going to be a major issue. In fact, the International Energy Agency estimates that even in five years’ time, output will not be back to the levels that it was before the supply was cut off.

The EU is doing a number of things and we should not forget that some €285 million will be spent on the development budget since independence and up to 2013, and this month a CSDP mission is due to go into Juba airport to help with communications and that area of infrastructure.

Our report says that it is easy to go through all these difficult issues, but the comprehensive peace agreement is still not implemented. Although there has been a resolution, perhaps, on oil revenues and on the demilitarisation of the border, those border disputes are still not resolved and there is still infinite possibility of continued conflict between the two states, and all of history will tell us that it will continue. Clearly, the committee hopes that that will not be the case.

What the region very much needs is for the international community to stay involved. The African Union has played an important role, as has the United States, the United Kingdom and other member states of the European Union. This region must not be forgotten. The international community must help it to reconcile its difficulties. Apart from the important work of China, one thing that is absolutely clear to all of us is that for the foreseeable future the two Sudans need each other, and to live in peaceful coexistence. I beg to move.

18:18

[Lord Trimble]

My Lords, I very much welcome the fact that this debate is taking place comparatively soon since the publication of the report. After taking out the couple of months in the summer, it is a comparatively early debate. I also welcome the new Minister, the noble Baroness, Lady Warsi, to her position. I believe we do not have the honour of being her first debate—I think that was last week—but we welcome her here very much indeed.

This follow-up report is very short, just one page. The background has been ably set out by the noble Lord, Lord Teverson, so I am not going to go through it. The core concerns are set out in paragraphs 3 and 4. Paragraph 3 says:

“The Committee is particularly alarmed that South Sudan has cut off the flow of its own oil”,

and paragraph 4 says that,

“economic or social development in South Sudan will become profoundly difficult, if not impossible, with rapid and serious adverse effects on its economy and people”.

That, of course, is absolutely right.

In many respects, South Sudan’s actions in cutting off the oil struck us as almost suicidal. However, looked at from another point of view, the South Sudanese were in a situation where they believed Khartoum was deliberately using the pipeline as a lever and was misappropriating some of the oil and consequently the proceeds of it. They felt that they could not allow themselves to be held to ransom by Khartoum. If they had said, “The effect of this on us would be horrendous”, they would effectively have put an ace into Khartoum’s hands. Therefore, while the action had all the implications stated in our report, the South Sudanese had to show Khartoum that if need be they could do without the oil, and that eventually this would start to hurt Khartoum and perhaps bring it back to a more reasonable position. Perhaps that happened; I do not know. My comments are speculative. I am aware that there was pressure from others. Perhaps they—and even the Chinese, who had a very clear interest in getting oil out of Sudan and South Sudan—had an effect.

When we think of the impact on South Sudan, we should bear in mind that its level of development is already comparatively low. None the less, it is a rich agricultural area where people exist largely by subsistence. However, the people have narrow margins to deal with and they have problems with intertribal disputes, as occurred last year. Of course, the flood of refugees into South Sudan was something that they could not cope with. We are looking at this from a development point of view; they are looking from the other end of the pipeline, where things appear rather different.

Since we produced the report, there has been a new agreement. On 27 September 2012 the co-operation agreement between the Republic of Sudan and the Republic of South Sudan was signed and countersigned on every page with the initials of the persons involved. Obviously one welcomes it; a new agreement is a good thing. However, one also asks the question: will the agreement be any better than the other agreements in resolving the outstanding problems?

It is important to step back from day-to-day matters and remember some of the basic facts about, first, the nature of Sudan and of the Sudanese Government. Sudan exists within colonial boundaries, and if ever there was a set of completely inappropriate boundaries, this is it. It unites sub-Saharan Africa with the north of the Sahara in terms of the peoples it covers. The ethnic and economic differences are enormous. In a sense, splitting the country is a sensible thing; one could say that it should never have been one unit in the first place. I will come back to this in a moment.

The second thing to bear in mind is the nature of the Khartoum Government. I will not go into detail, but refer noble Lords to comments I made in the 7 December debate on our first report. We are dealing essentially with an Islamist Government. We should remember that this is where bin Laden first moved when the Saudis drove him out of Saudi Arabia. The President of this Government was indicted as a war criminal. The regime has been responsible for enormous atrocities within its current boundaries and also in the area of South Sudan. My impression is that the regime is hunkering down under pressure and doing things reluctantly when it is forced to, and that if ever it gets a chance to get out from under that pressure and try to reclaim part of the authority that it had, or to destabilise others, it will not be able to resist the temptation.

When we consider these two factors we see that in this situation normal diplomacy will not work. The African Union is—perhaps “incapable” is too strong a word, but it is intrinsically unlikely to be effective. It is heavily inhibited by anything that changes the colonial boundaries, because of the implications that would have through country after country south of the Sahara. Furthermore, it is extremely reluctant to pass judgments on the character of Governments. Too many other African countries have skeletons in their own cupboards. Therefore, the African Union will not be effective in dealing with the character of the regime.

The only thing that will work is pressure. The only thing that produced the comprehensive peace agreement was pressure, and by pressure, I do not mean normal diplomatic pressure, I mean really strong pressure, exerted primarily by the US Government, which left Khartoum at one stage fearing that it was facing an existential threat. I am not saying that we should be trying to persuade the current US Administration to do that. I do not think we would have any chance if we tried and, of course, we must not make any assumptions about what might happen in future. As the interim report says, we end up saying that the international community should be doing what it can to bring about the resolution of the outstanding issues, and while, for the sake of politeness, we have to name check the African Union, the European Union and others, we ought to bear in mind that at the heart of the matter the people who are going to bring effective pressure to bear are those with the ability to do so, which, I am afraid, puts the ball back in someone else’s court.

18:25

[The Archbishop of York]

My Lords, in May, I attended a three-day retreat of Anglican and Roman Catholic Bishops in Yei, South Sudan. Unfortunately, the bishops from the Republic of Sudan could not be there because of the political situation. I was struck by how, as Anglicans and Roman Catholics seeking to work as one across both nations, they were committed to working with each other and with Muslim leaders as well for the good of all.

These bishops are close to the grass roots. In their joint statement, they said:

“We begin to wonder whether the International Community still understands the aspirations of the people of South Sudan, as well as the marginalised communities in Sudan”.

The fact is that the needs and aspirations of these noble people are not actually understood in the West.

One thing is absolutely clear: the future well-being of both Sudan and South Sudan depends on achieving peaceful and constructive relations between the two countries. The agreement reached in Addis Ababa between the Presidents of Sudan and South Sudan on 27 September in the course of talks mediated by the African Union high-level panel is good news and represents a significant step back from the brink of war and towards peace. The African Union’s role and, in particular, that of President Mbeki in heading the panel is to be applauded. The support of the international community, including both Her Majesty’s Government and the European Union, has also played an important part.

However, the 27 September agreement is only partial. The oil agreement enabling the resumption of oil production is critical to the economies of both countries, but the oil deal on its own is not enough. Achieving border security, particularly establishing a demilitarised zone along their common border, will be a prerequisite for stability. Stability will require agreement on disputed border areas and, most notably, on the future of Abyei. This needs to be resolved as soon as possible. Although the basis has long been agreed, the Sudan Government have so far rejected every attempt to make progress, despite the considerable efforts and concessions made by South Sudan.

A church delegation led by Archbishop Daniel Deng returned from a visit to Abyei last week. It was shocked by what it saw. The town is deserted and has been completely destroyed. The Catholic church, Catholic and Episcopal Church of Sudan schools, boreholes, administrative offices, government houses, the power station, shops, and even the latrines have all been destroyed. There appear to be no humanitarian agencies working there as, apparently, it is considered part of Sudan, and they do not work cross-border. A huge number of displaced people from Abyei, perhaps as many as 100,000, are in Agok with very few basic services. The people simply ask for what is their right under the Abyei protocol of the comprehensive peace agreement agreed by both parties: a referendum in which they can choose their destiny. All parties should be ready to accept the African Union high-level panel proposal. Abyei cannot endure this much longer. There are some real signs of hope. The four freedoms agreement, under which rights are granted reciprocally to the two countries’ citizens to allow freedom of movement, property ownership, work and residence, is much to be welcomed. This offers much needed safety and stability. The 27 September agreement did not address conflicts internal to Sudan in South Kordofan and Blue Nile, which nevertheless affect both countries.

There can be no military solution. Both parties to the conflict—the Government of Sudan and the Sudan People’s Liberation Army in the north—are militarily well equipped and are set on military success. Both urgently need persuading of the need for a negotiated resolution, which must safeguard the rights of the indigenous population and resist any attempts to force them to flee south and take over their lands and resources. Attacks on civilians by either side must immediately cease, particularly the aerial bombing of civilians by the Sudan armed forces.

Resolving the conflicts in South Kordofan, Blue Nile and Darfur remains critical for the future stability of the Republic of Sudan. Key to this will be the recognition of the reality of Sudan as a multiethnic, multicultural and multireligious nation. The UK and the EU need, in their engagement with the Government of Sudan, to encourage respect for this reality and a constitutional process that enables the inclusion and participation of the whole of Sudanese society.

Freedom of religion is an essential element of respect for human rights in Sudan and needs to be emphasised. There is a significant indigenous Christian presence in Sudan whose rights must be respected. There was a marked deterioration earlier in the year following dangerously provocative language from President Bashir, which included the destruction by a mob of a Presbyterian evangelical church and community centre in Gereif and the destruction by police of an Anglican church in Haj Yusef, both in Khartoum. Anglican church premises in Kadugli were also badly damaged by government forces in June 2011. It is welcome that the local government has taken some steps to work with the church in repairing that building.

Back in South Sudan, the church has a significant role in supporting the transition from armed conflict and in addressing development needs. The church makes a unique contribution in peace-building, and great leadership has been shown by Archbishop Daniel Deng in achieving a regional peace agreement in May 2012 between the different groups in Jonglei State. Development support should be encouraged to ensure a peace dividend becomes apparent so as to consolidate such efforts. In education and health initiatives, the church continues to be a strategic major player. On the first anniversary of South Sudan’s independence in July this year the two archbishops, Anglican and Roman Catholic, Daniel Deng and Paulino Lukudu Loro, reiterated the dream expressed when we met back in May:

“We dream of two nations which are democratic and free, where people of all religions, all ethnic groups, all cultures and all languages enjoy equal human rights based on citizenship. We dream of two nations at peace with each other, cooperating to make best use of their God-given resources, promoting free interaction between their citizens, living side by side in solidarity … We dream of people no longer traumatised, of children who can go to school, of mothers who can attend clinics, of an end to poverty and malnutrition, and of Christians and Muslims who can attend church or mosque freely without fear”.

I call upon Her Majesty’s Government to do all in their power to assist both countries in making this dream a reality, and I welcome this short report.

18:33

[Lord Jay of Ewelme]

My Lords, it is difficult to follow the right reverend Prelate the Archbishop of York, but I shall do my best. I join other noble Lords in welcoming the Minister to her job. It is very good that she is in the Foreign Office and that the ministerial team in the Foreign Office is no longer 100% male. Perhaps the noble Baronesses, Lady Kinnock and Lady Chalker, will join me in saying that.

I feel a slight frustration that in this House, when we discuss Africa, we tend to move from crisis to crisis. I hope that I will be forgiven if I say a few words about Africa more generally before moving on to Sudan. The broader context is changing rapidly. We have come a long way from the day 10 years ago when the economists described Africa as the hopeless continent. There are positive developments. There has been strong growth in sub-Saharan Africa. It was nearly 5% last year and considerably more in some sub-Saharan African countries. Investment and labour productivity are growing.

There are also some startling statistics. Between 2010 and 2050, the population of Africa is expected to double, which means that by 2050 one in every four people in the world will be African. These changes of course provide opportunities and I shall give just a couple more statistics. British exports of goods and services to Africa last year were about the same as those to China and India combined. When I first read that statistic, I blinked slightly and checked it. But I am told that it is true, and African exports to Britain have now doubled since 2000.

With that good news, as always, comes the need for caution. To comment on another part of Africa, something that looks good one year can look pretty ropey the next. Mali was a success story until the takeover in the north and the coup in the south. We now have in the north of Mali, an al-Qaeda/Boko Haram/radical Tuareg state which threatens our interests in the region and across the Mediterranean seaboard. I find it profoundly depressing that just as the desperate scenario in Somalia begins to get better, we risk having a quasi-terrorist state further west. Therefore, there is all the more reason to ensure that the tensions elsewhere in the continent, such as in Sudan, are well handled.

As others have said, the recent agreement between north and south on restarting the oil pipeline is positive, even if it is still fragile. However, that agreement did not touch other flashpoints. It did not touch Abyei, South Kordofan or the Blue Nile, and horror stories in Darfur remain. I feel that there is a slight risk that with the focus on the north and south, we forget about Darfur. We still need to remember that there are atrocities in Darfur which, if they were the only thing in Sudan that attracted our attention, really would attract our attention. I urge that we do not forget that.

While these tensions remain, particularly those between north and south, there remains too the risk of miscalculations leading to renewed and serious conflict. That includes the south overplaying its hand in the expectation that international support will always be there, and the north committing atrocities in the border areas and intervening in the south to a degree that causes the south’s neighbours, perhaps Uganda, to intervene or attempt to intervene to protect it.

Just as the noble Lord, Lord Teverson, said, there is a key role for the international community to work with both Sudans to ensure that those sorts of miscalculations do not happen, and to help with the humanitarian and development needs, particularly in Darfur and the south. There is a need first just to keep Sudan at the top of the international agenda. Good news or relatively good news, such as that over the oil pipeline, is not a reason for shifting our attention elsewhere but for ensuring that there is no backsliding. I hope that the Minister can give us an assurance that Sudan will remain a key part of the Government’s priorities. Despite the difficulties, there is a real need, too, for closer co-operation between the EU, the African Union and, as we said in our report, China, which has a real interest in the north and the south.

There is also a need for new and improved mechanisms for aid funding to meet the huge needs of South Sudan in particular. I declare an interest as chair of the international medical charity, Merlin, which operates in South Sudan and Darfur. A few years ago when I was in Juba, much play was made by donors, bilateral donors and the World Bank of new interim donor co-ordination measures that had been put in place and how they would provide some assurance of continuity. However, three years later, they are still interim measures and there has not really been the improvement in donor co-ordination which will make a real difference to people in South Sudan. I hope that there, too, the Minister can give us an assurance that we will do all we can to ensure that donor co-ordination is improved.

As well as keeping Sudan and South Sudan firmly in the headlights, and ensuring that western countries, the EU and China work together to prevent potential disastrous political miscalculations, we need also—perhaps above all—to strengthen our donor mechanisms and continue to focus on the real humanitarian needs in much of South Sudan and Darfur.

18:41

[Lord Selkirk of Douglas]

My Lords, the speech made the noble Lord, Lord Jay, places this matter very well in its correct context. The deals over oil, trade and security signed by the leaders of Sudan and South Sudan last month were a most welcome development. They have brought hope of a better future for some of the poorest people on earth whose lives have been ravaged by civil war. However, it would be naive to believe that all the economic woes, the plight of the dispossessed refugees and the dangers arising from the volatile border disputes can simply be eliminated overnight.

It is acknowledged that international pressure, particularly from the African Union, helped to produce the recent agreements. However, the committee’s report, which was written before the deals were signed, makes the still very relevant plea that the European Union must work urgently with the African Union and the United Nations to persuade Sudan and South Sudan to seek a mutually advantageous resolution of the outstanding issues between them.

The most important economic issue is how soon oil sales can begin again, as the precarious financial position of both countries has been seriously damaged as a result of the shutdown in oil production in the south in January this year. It will be recalled that at the time of independence in July last year, the new country of South Sudan got two-thirds of the former Sudan’s oil but Khartoum continued to retain the processing and export facilities. Oil sales, in fact, account for around 98% of South Sudan’s budget.

There is also the prospect of negotiations and arguments over the possible development of a pipeline from oil fields in South Sudan through Uganda to the coast of Kenya. Here, I should very much like to congratulate and welcome the Minister, the noble Baroness, Lady Warsi, and to wish her every good fortune. Perhaps she would like to say a word about the possibility of such a pipeline through to Kenya. However, it seems to me that Sudan will assert an interest in any such development and that discussions with a view to finding a meeting of minds are extremely likely to be necessary. Perhaps the Minister can say how best a way forward might be found on that subject. Judging from past experience, the African Union should have a considerable influence in this connection.

While the deal over resuming oil production is the most encouraging aspect of the recent agreements, international pressure should also be maintained. The noble Lord, Lord Trimble, emphasised that point. That pressure should be maintained on both Governments to try to reach a solution on the vexed question of Abyei. I was very pleased that the most reverend Primate the Archbishop of York referred to this and to other urgent matters. A demilitarised buffer zone is part of last month’s agreement but little progress seems to have been made on deciding the future of this disputed border area, which contains valuable oil reserves.

Here again, perhaps the Minister can tell us whether the British Government favour the concept of a referendum being held that could assign the area to one of the two countries or whether they prefer the idea of political negotiations and a negotiated solution that could mean the region being divided between the two Sudans. I note that Sudan has stated a preference for a negotiated solution.

I should also like to ask the Minister about the current status of the EU office in South Sudan following the previous commitment of the noble Baroness, Lady Ashton, the high representative of the EU, to upgrade it into an EU delegation with a new head of delegation, and also about the planning of development support in areas such as law, education, health, water management and food security. The average life expectancy of men in this part of the world is around only 58 years of age. Half the women are not literate, and we know the horrifying total of at least 1.5 million people who died during the long years of warfare between the north and South Sudan. Future generations deserve a great deal better than that.

I was very pleased to have the opportunity to support the noble Lord, Lord Teverson, and his committee in having a follow-up report. As that report urges, European Union countries must continue their efforts to play an effective part, through development aid, in helping the people of these two countries, who have endured so much suffering and upheaval, to achieve a stable, peaceful and economically viable place in the modern world.

18:46

[Lord Anderson of Swansea]

My Lords, I begin by apologising to the Minister and members of the Committee; because the earlier debate overran, I have run into personal problems with a longstanding family engagement, so I may have to leave before the end of the debate.

I welcome the follow-up report and the initial committee report, The EU and Sudan: on the Brink of Change. The very title of the initial report poses two questions. First, clearly the committee remit is restricted to the EU role, thus it does not have the total picture in focus—for example, the atrocities in Darfur. Surely we as a House need to revisit the possibility of a foreign affairs committee in the House of Lords. When I chaired the committee in the other place, I was in favour of such a foreign affairs committee because the world is a big place and, with adequate co-ordination, one could have such a committee.

Secondly, the title says “on the brink of change”. The initial report was published in June, after evidence over the previous months, with a follow-up report in March 2012. However, it is thin in the extreme, with only one witness, the Minister, and was a snapshot of a serious problem at the time, with the oil blockade and war. Happily, things have improved with the agreement of 27 September. This House needs to examine its procedures in order to allow such reports to be debated in a timely manner and not just deal with historic documents.

I will make one other preliminary remark. I looked in vain, in both reports, for any mention of the Commonwealth. The Government trumpet their attachment to the Commonwealth but they seem to ignore it when opportunities like this present themselves, particularly on governance and because of the proximity of Kenya and Uganda—two Commonwealth countries—and given the great experience, for example, of the Commonwealth Parliamentary Association in helping Governments in relation to their own administration.

States divide in different ways. At one extreme is the velvet divorce of the Czechs and Slovaks and at the other is Korea, where, after 60 years, North and South Korea still confront each other across the DMZ. The jury is out as to which of the two models the two Sudans will be closer to. There will certainly be a difficult transition. The wicked fairies at the birth of the new state ensured that there were many unresolved problems ready to flare into conflict. In 2005 the CPA, as the noble Lord, Lord Teverson, has said, left the borders not agreed, for example, on Abyei. The CPA stated that they should be based on a future consultation, but none has been held. There are 1,800 kilometres of border. There are some estimates that the disputed areas range up to 60%; the lowest expert estimate that I have seen is 20%. Of course, the concerns are different. At state level the concern is over the border, mainly related to the division of natural resources, particularly oil. At local level, and for the people, the concern is over access to water and pasturage because of seasonal migrations. Hence the case is for flexibility and soft borders, given the salience of that issue.

I am surprised that the first report did not highlight the expert work of a British-based NGO, Concordis International, with which I was involved over South Africa in the 1980s and Rwanda in the 1990s. I concede that in paragraphs 73 and 238 in the base report there is a recommendation that the EU should play a role in border-management issues, and in paragraph 159 a glancing reference is made to one EU Concordis project. In fact, though, Concordis International has been supported by the European Union since 2009, working to assist with conflict resolution and issues concerning border management and security. Now it has 15 staff based in Khartoum and 18 based in South Sudan, with three more soon to be deployed. The majority of the funding is of course from the EU’s EDF and Instruments for Stability. Activities facilitated by Concordis International include cross-border and migration conferences, the formation and training of peace committees, and capacity building for development projects. The recommendations that it has made from these activities on soft borders, seasonal migration and training for conflict resolution have been passed to the key stakeholders, including the AU panel mediating the conflict, and have been reflected in the September agreements. Perhaps the Minister will say a little about the expectations of those agreements and the key unresolved issues, such as the settlement of refugees and the pipeline projects. Currently the south is dependent on the good will of the north for its oil exports.

There has been a significant contribution by the EU to conflict resolution—prevention in both Sudans—as recommended in the committee’s report. There is, however, a case for saying that the projects could have benefited from an assurance of funding over a longer period. Again, the European Union has played a significant role in financing the work of the AU High-Level Implementation Panel. I understand that the EU delegation in Juba in the south is now in operation, after the delays mentioned in the report. Perhaps the Minister will confirm that.

The base report is valuable, but dated. The Concordis International experience of working with the EU has been very good. The EU has provided funding in a flexible way and shown great interest, enabling it to meet EU objectives based on its experience and modus operandi elsewhere. The EU has also been helpful in the management of grants and overcoming practical and bureaucratic problems.

After so many years of civil war the transition, since I first visited a rather more peaceful Sudan in 1967, was bound to be bumpy. Two highly vulnerable and fragile states emerged in July last year, and many serious political and economic problems remain. In the north the Republic of Sudan is the only country in the world led by an indicted war criminal. Only in September did the Republic withdraw its candidacy for the UN Human Rights Council at a time when its atrocities in Darfur were reported to be worsening. Surely this says something about the “Buggins’s turn” view of the African region in terms of the UN Human Rights Council, which may, alas, repeat the mistakes of its predecessor, the UN Commission.

A year after independence in the south, it is still talked of as a failed state. I cite the Africa Growth Institute at Brookings, the Atlantic and the special report in Le Monde on 7 July, all giving a very gloomy end-of-first-year report. Let us recognise that the EU is just one of the key players involved—others include the African Union, the UN, the US and China—but it should be given credit for its work. Obviously the two Sudans must make the key moves but the international community is playing a positive role in the transition. The base report and the follow-up report are therefore valuable, if dated. I very much hope that the Committee will return to this subject in future and will perhaps be able to give a more positive analysis of the two Sudans.

18:55

[Lord Chidgey]

My Lords, those who have followed events in Sudan through the end of the civil war and the progress of the comprehensive peace agreement will share the disappointment of the Select Committee that many crucial issues left outstanding remain unresolved, in particular the failure fully and faithfully to implement the memorandum of understanding and the tripartite plan to expedite the unhindered delivery of humanitarian assistance in Southern Kordofan and Blue Nile state, and the resolution of the issues of the final status of Abyei and disputed areas. The Security Council, the US mission to the United Nations, the High Representative of the EU for Foreign Affairs and Security Policy, Norway, the UK’s Foreign Secretary William Hague and the tripartite group have all voiced their concerns over the failure to address the continuing humanitarian crisis and have pledged their practical and political support for putting the tripartite agreements, signed in early August, into immediate effect.

This is not to deny the value of the nine agreements reached at the presidential summit on 27 September in Addis Ababa by the presidents of South Sudan and Sudan. In its press statement of 28 September, the UN Security Council recognised that:

“These agreements represent a major breakthrough for the establishment of peace, stability and prosperity in both Sudan and South Sudan and give cause for genuine hope that the peoples of these two countries will realise the fruits of lasting peace and friendship”.

The nine agreements covered oil, citizenship, border demarcation, border monitoring, economic co-operation and other matters. There are still important outstanding issues. The humanitarian situation in Southern Kordofan and Blue Nile is critical. Hundreds of thousands of people are suffering, and this cannot continue any longer. The Government of Sudan must grant full, safe and immediate international humanitarian access and, in co-operation with the tripartite group, implement the MoU and the action plan without further delay.

As the Associate Parliamentary Group for Sudan and South Sudan—of which I am a vice-chair—discovered when it visited South Sudan in April, the new country faces a profound state-building challenge. International investment and skilled returnees are contributing to pockets of economic development and represent a foundation for future growth. The decision to shut down oil production was biting, with the Government set to reduce spending by over 25% from an already low base. Ministry budgets had been slashed and remaining spending was concentrated on salaries, with little left for investment and maintenance. In South Sudan, over 50% of the population lives below the poverty line. Less than 50% of children enrol in primary school and far fewer complete eight years of education, with just one teacher for every 117 children. There is the highest maternal mortality rate in the world, with a one-in-seven chance of a woman dying of pregnancy-related causes. There is only one qualified midwife for every 30,000 people.

Corruption became a major recurring theme throughout the APG delegation’s visit, with concerns expressed that it was becoming fairly ingrained within South Sudan’s fledgling systems. The mismanagement of public funds was a central concern, sitting at the hub of all others, fuelled by avarice and a sense of entitlement. The anti-corruption commission, established in 2005 with a mandate,

“to protect public property and investigate cases of corruption”,

and combat,

“administrative malpractices in public institutions”,

finds, however, that it lacks sufficient authority, independence and transparency. International non-governmental organisations including Global Witness, the Open Society Initiative for Eastern Africa, Oxfam, World Vision and others have all expressed concerns over the continuing humanitarian crisis and the lack of governance and capacity in South Sudan to address it.

There is a call to work more closely with the audit chamber of the South Sudan Government as a key player in the financial management of state funds. The Ministry of Finance needs support, and USAID is tutoring and mentoring the development of budget systems. Acts of Parliament are being passed to bring in financial control and management systems, but donor nations need to press for their implementation. It is no good just passing the Act; it has to be put into force. Global Witness has told me that it is very disappointed about the lack of transparency and accountability in oil governance, with no independent auditor provided. A petroleum law has been passed that calls for open tendering and for all beneficial ownership to be published. Global Witness’s consultant, Dana Wilkins, says:

“Sudan and South Sudan’s citizens are the ultimate owners of their countries’ natural resources. Yet they have been totally cut out of this new oil deal, with no way to verify the amount of oil and money that will be transferred between their governments”.

While the new agreement establishes mechanisms for internal information-sharing and auditing, there are no requirements for transit and financial data to be made public.

The United Kingdom and the EU have important roles to play in building institutions in South Sudan and Sudan and in concentrating on the constitutional process. Again, to quote Oxfam:

“South Sudan and Sudan do not have a European Champion right now and therefore are slightly off the EU Foreign Affairs Council radar”.

The EU has the policies and mechanisms in place and, for the first time, member states have agreed to a joint development programme in South Sudan. There is one joint strategy paper, agreed by the EU institutions and member states. Priority sectors are identified, with donors agreeing to complement each other in their implementation. This is a first and is part of the EU commitment to aid effectiveness but, so far, implementation has been postponed because of South Sudan’s oil crisis. Now the oil agreements are in place, there is an ideal opportunity for the EU and member states to make real progress.

There is a consensus that the humanitarian crisis will continue to dominate the South Sudan agenda for some time. Analysts predict that it will take two generations of long-term engagement to establish basic infrastructure and achieve significant and substantial development of basic services. There is a compelling need for continuing support in capacity-building at all levels of government to gain the benefits of a strong and empowered Parliament.

To this end, the Norwegian Government commissioned a report on training needs in the South Sudan National Legislative Assembly, which was conducted in August 2011—just one month after independence. The analysis was undertaken with the co-operation and support of the Association of European Parliamentarians with Africa, commonly known as AWEPA and of which I am a UK council member. This was part of a capacity-building exercise for this new legislative assembly, the main objective being to analyse its training needs. The majority of assembly staff did not have appropriate academic qualifications for their duties. Qualifications did not match their job descriptions or the departments in which they were deployed. There was a clear need for a wholesale retraining exercise.

As well as having inappropriate skills, over half the assembly staff stressed their concerns over a lack of proficiency in the English language. This was considered alarming, given the move from Arabic to the English language in South Sudan. A close second in skills deficit was that in technical skills, particularly information and communications technology. In the course of a short one-week exercise, the study identified a large capacity-inhibiting skills shortage with massive scope for retraining and confidence building, particularly through exposure to established parliamentary practices.

The National Legislative Assembly of South Sudan has now, with the support of the Netherlands Government and AWEPA, adopted a five-year strategic plan whose core aim, as described by the Assembly Speaker, is that by 2016:

“The National Legislative Assembly will be valued as the central institution in promoting democracy, effectively holding the Executive to account, scrutinising proposed legislation and representing the diverse views of the people of South Sudan”.

The strategic plan is clearly fundamental to South Sudan’s progress towards sustainable government. Recognising that the UK, through DfID, is a major donor in South Sudan, I would like the Minister, either in her response or later by letter, to tell the Committee whether DfID is aware of the strategic plan for South Sudan; if so, how it figures in DfID’s business plan, given that Sudan is one of the UK Government’s top priorities in foreign policy; and what DfID plans to contribute to capacity building and structural support in the National Legislative Assembly, through what means and over what timescale.

19:05

[Lord Cameron of Dillington]

My Lords, following a parliamentary visit to South Sudan last April, I should like to focus on the new country. It will come as no surprise to some noble Lords here that I should also like to focus on agriculture there.

I realise that all the political emphasis now is on coping with the immediate problems and the crisis— I do not think that that is too strong a word—that currently exists in South Sudan: very little food; no real infrastructure to aid the delivery of supplies; no money; too many people running around with guns; too many threats to stability from both without and within; too much corruption; and both national and local government often more real in theory than in practice.

However, as Sub-Committee C’s report of June 2011 made clear, and as we discovered on our visit last April, there is tremendous potential to develop the agriculture of South Sudan as a real tool for development. For a start, we saw a lot of seemingly fertile soil that, to my farmer’s eye, has not been depleted of nutrients as with so many soils elsewhere in Africa. We also discovered that the whole country has masses of water, mostly lying in aquifers throughout the country, just under the surface and easily accessible with only a small amount of investment and help.

So my plea to DfID, the US, the UN and others, including the South Sudanese Government themselves, is: while dealing with the immediate crisis, please do not forget the essential role that agriculture can play in the medium to long-term future. It is agriculture that will kick-start the South Sudanese economy and keep it self-sufficient and resilient, and it is profitable agriculture that will give its women better status and also give those women the nutritional means to keep their children healthy, as well as the money to keep them educated.

Right now, if building roads to help the delivery of aid and supplies, build them with a view to getting future agricultural produce to markets and city centres. If distributing emergency aid and food, consider doing so from well constructed centres that will in future provide the much needed market hubs for those growing food locally. If storing emergency food, build the necessary cold stores to last and in locations of future agricultural production. If much needed water supplies are being constructed for sanitation and life in various venues around South Sudan, then think seriously about future agricultural needs in the way they are designed and located.

There are many ways to think about farming when dealing with today’s tempestuous times but, above all, because knowledge and training are the absolute key to agricultural success in sub-Saharan Africa, start now to educate those from all over the country who are to be the top of your pyramid in the pyramid selling of the necessary knowledge and training. It is only in this way that we will be able to reach out to every community in South Sudan, all of whom are needed to help that country to fulfil its enormous agricultural potential.

I came away in April with the feeling that a growing dependency culture is developing in South Sudan, which is worrying. However, fostering better agriculture, if done in the right way, can foster resilience and self-sufficiency, not dependency. It takes a long time to get an agricultural economy going from scratch, so the sooner we get started, the better.

Finally, I realise that many of the recent political efforts have concentrated on trying to get the oil flowing again so that the South Sudanese Government have funds to operate and can get things done. However, oil, too, can be a distraction, unless it is used to kick-start a real economy. Nigeria and Ghana make two interesting comparatives in this respect. Nigeria had oil and the Government, and possibly tens of thousands of people, did well out of it, but the other 159 million, until recently, failed to develop out of a precarious subsistence existence. Ghana, not quite next door, did not have oil and had the sense to develop its agriculture, and thus this year has a double figure growth rate shared by much of the population. So South Sudan must use its oil revenues in partnership with others, including the UK and the EU, to kick-start its farm production. Like Tanzania, “Agriculture First” must be the slogan for South Sudan if it is to realise its true potential.

19:10

[The Lord Bishop of Exeter]

My Lords, the most reverend Primate the Archbishop of York spoke in some detail of the pressing need for a peaceful and honourable solution to both the conflict that exists between Sudan and Southern Sudan and the internal conflicts within Sudan itself, not least those affecting the South Kordofan and Blue Nile regions. However, whether such a political solution is quickly forthcoming or not, there is currently, as the noble Lord, Lord Chidgey, pointed out, a severe humanitarian need in these same regions—a need that, sadly, is largely unknown to many who live in the West, especially when we compare it to other humanitarian crises of recent years. It is a need that cries out to be responded to effectively, and now.

Last week I had the opportunity of meeting Bishop Andudu Adam Elnail, the Bishop of Kadugli, and heard at first hand how, one year into the renewed conflict between the Government of Sudan and the Sudan People’s Liberation Movement-North, communities in South Kordofan and Blue Nile continue to experience significant humanitarian needs against a backdrop of severely limited humanitarian access. In South Kordofan there are approximately 400,000 internally displaced persons, more than 300,000 of them in areas controlled by the Sudan People’s Liberation Movement and almost 100,000 in Government-controlled areas. In the Blue Nile region 300,000 people have been affected, resulting in some 80,000 refugees in South Sudan and 32,000 in Ethiopia. The situation is deteriorating day by day because of poor harvests and high food prices, a situation that follows two years when harvests were simply not possible due to the conflict.

Despite the provisions of the tripartite agreement between the United Nations, the African Union and the League of Arab States, as yet no agreement has been reached on conducting a needs assessment in the SPLM-North areas. The Government of Sudan have deployed indiscriminate aerial bombardment against military and civilian targets, and for the past year they have not permitted any humanitarian assistance to enter SPLM-N-controlled areas. In these circumstances it would be good to know what Her Majesty’s Government and the EU can do to enlist the support of those countries such as those in the Gulf, which have influence in Khartoum, to exert pressure to ensure progress in the humanitarian access negotiations. In the absence of progress in such negotiations, it would be good to hear what other options are being considered to ensure that humanitarian needs are met.

Among the most pressing needs are effective aid, especially in food security, which in turn requires agricultural inputs and veterinary services, and I endorse all the comments just made by the noble Lord, Lord Cameron, but also health assistance, including support for EPI—expanded programme on immunisation—activities, basic medicine and support to health workers at the level of primary health care. Looking to the longer term, there is also a need for educational aid, which is often overlooked in the act of trying to meet the immediate needs of the present day, not simply in the context of the Sudan. At present the proportion of humanitarian aid for education globally is just 2% of the whole. There seems to be a general consensus among aid agencies that, as a percentage, this needs to be at least doubled. That in turn requires a reaffirmation of the international community’s commitment to universal primary education, both in the lead-up to 2015 and beyond; commitment to learning for all beyond 2015, including for children in conflict-affected and fragile states and those caught up in emergencies; and, to this end, the improved delivery of education in emergencies by establishing pooled funds, with a single policy framework that combines rapid financing for devolved school construction, teacher recruitment and in-service training, support for local communities and the development of capacity at all levels of government. I welcome the comments of the noble Lord, Lord Jay, on the need for more effective donor co-ordination.

Coming back to education, what is needed is education in literacy and skills but also education, without indoctrination, in basic human rights and the ways of co-operation, something that is very difficult when enmity is longstanding and when a young country is, understandably, trying to avoid being told what to do by the wider world. So there is an important issue to do with the nature of education aid in the medium term. It is challenging, and yet such education support is vital for long-term stability and, hence, recovery.

This brings me, briefly, to the potential contribution of the churches. Even though many within the international NGO sector recognise the value of churches and other faith groups at community level and their long-term engagement, there are still huge obstacles to overcome in order to establish operational partnerships. International humanitarian mechanisms do not currently provide space for engagement with non-NGO-shaped actors. There is often a feeling that the Church should come to the NGO forums, rather than the NGOs seeking out the local wisdom of local faith leaders and networks. Churches, like all of civil society, have struggled to build financial, communications and technical capacity—although, compared to local government, their capacity is strong—so new models for accompanying them need to be found. An understanding of the social and spiritual capital of local faith communities needs to be part of strategic planning, and innovative opportunities for engagement should be tested out.

I welcome the fact that the Department for International Development guidelines recognise that local churches are key partners and players in the delivery of aid, including education, even though the same guidelines tend to oversimplify the situation by stating that Sudan is now a largely homogeneous Arab Muslim state. That this latter statement is not true is demonstrated not only by the two major conflicts already referred to—not to mention the continuing conflict in Darfur, which is a case of multiple and diverse ethnicities, although mainly Muslim—but also by the continued persecution experienced by the local Church, something to which the most reverend Primate the Archbishop of York has already referred.

However, although DfID recognises the role of the Church, it is highly unfortunate that UNHCR and other NGOs do not always adopt the same policy. The churches and other religious bodies have a key role to play in both delivery and mediation, and yet often the UNHCR treats them as special interest groups without a general humanitarian agenda. Such an approach not only risks marginalising significant groups that work for the common good but can also exacerbate tension if people believe that they are the subject of discrimination. A genuine partnership here could be so effective, with church leaders often having the potential to act as honest brokers in the local community as well as delivering local aid, especially education. The Archbishop and Lambeth Palace are deeply committed to welcoming and supporting the upcoming UNHCR High Commissioner’s Dialogue on faith to be held this December, as well as to an international interfaith research project called the Joint Learning Initiative on Faith and Local Communities.

I therefore conclude by inviting Her Majesty’s Government to encourage the UNHCR to recognise the crucial role of churches and other religious bodies in places such as Sudan and South Sudan in building the broad coalition that is needed to ensure that vital humanitarian aid, including educational aid, is delivered to the places where it is required.

19:20

[Lord Alton of Liverpool]

My Lords, I welcome the noble Baroness, Lady Warsi, to her new ministerial responsibilities, as others have done. I couple with that my thanks and, I am sure, those of many other noble Lords, to the noble Lord, Lord Howell of Guildford, who dealt with these issues over such a long period and with patience and diligence, and always with great kindness in the way in which he responded to the vexed inquiries that many of us made to him. The noble Baroness, of course, has personal knowledge of Sudan, having travelled there to negotiate the release of Gillian Gibbons, the British teacher who was arrested after her class named a teddy bear after the Prophet Muhammad. I know that the noble Baroness is deeply committed to religious tolerance, to co-existence, and to finding ways of resolving the kinds of conflicts that your Lordships have been discussing today. We should all be extremely pleased that she has these new ministerial responsibilities, and we all, I am sure, wish her well.

Earlier we heard from the noble Lord, Lord Jay, about how Darfur has often been swept to one side in the concerns about north-south relationships. That is true, and I want to return to that issue shortly in my remarks. I begin by referring to the situation in South Kordofan, as the most reverend Primate, the right reverend Prelate and the noble Lord, Lord Chidgey, have done. I have raised this issue on the Floor of the House with my noble friend Lady Cox, who I am sure will expend a lot of her remarks on that question when she comes to speak.

A meeting was held earlier today with members of the All-Party Group on Sudan, of which I am an officer, along with the noble Lord, Lord Chidgey, and others who are here. I was struck during that meeting with senior officials from the Foreign Office by how immediate and contemporary these concerns are. As a result of a reference that they made to an article that appeared in yesterday’s Guardian, I took the trouble to obtain a copy of that article. I have not seen the YouTube video that apparently has been placed on the internet to which the article refers, but it says:

“Dramatic video footage and satellite images have revealed Sudanese security forces are waging a violent campaign in the Nuba mountains comparable to war crimes in Darfur … The Satellite Sentinel Project … shows the terrifying ordeal of a teenager being tied up and interrogated at gunpoint as a village goes up in flames”.

It goes on to say:

“The SSP said a joint unit of Sudanese army, militia and police forces burned and looted Gardud al Badry”.

John Prendergast, co-founder of the Enough Project, a partner in the SSP, was quoted in the Guardian report just yesterday as saying:

“‘We are seeing a repeat of Darfur without the international witnesses’ … He added, ‘Through this campaign of targeted violence, which amounts to crimes against humanity, and its denial of humanitarian access, the government of Sudan is displacing thousands of civilians and contributing to insecurity in the region’”.

Four days ago, an AFP report stated:

“Tanks, artillery and helicopters staged a show of force in the capital of Sudan’s South Kordofan state on Friday, official media said, after unprecedented and deadly rebel shelling of the town”.

The military parade of force was led by Ahmed Haroun, who, along with Field-Marshal Omar al-Bashir, referred to earlier in our debate as president of Sudan and the governor of Kordofan, is also indicted as a war criminal by the International Criminal Court. As I raised with officials earlier today, I hope that we will hear from the Minister what we are doing to ensure that we are taking witness statements from those who have been driven into South Sudan from South Kordofan. Many are in refugee camps. It is perfectly possible, therefore, to take first-hand witness statements of the depredations that have occurred while they have been there. Aerial bombardment continues even while we are meeting.

I turn specifically to Darfur because we are about to reach the 10th anniversary of that conflict, and I hope that the Foreign and Commonwealth Office will take the opportunity, when we reach the anniversary in February next year, to mark it with a series of events, as the all-party group intends to do. Today is a good day to ask the Minister what has happened to Darfur, as did my noble friend Lord Jay and the noble Lord, Lord Anderson, in their remarks. Why is Darfur forgotten while violence is not only continuing, but when one report earlier this month stated that this is,

“the bloodiest year yet in the region”?

Why is the international community so supine in demanding an end to the violence? Since my visit to Darfur in 2004, and the report which I then published then, entitled If This Isn’t Genocide, What Is? 2 million people have been displaced. About 200,000 to 300,000 people have been killed and 90% of the villages have been razed to the ground; and the situation continues to be bleak. Just this week, the acting head of Darfur’s peacekeeping mission, Ms Aichatou Mindjaouldou, highlighted the recent alarming rise in violence with high civilian casualties, calling the trend an “alarming development”. Between 25 and 27 September, more than 70 civilians were killed in Hashaba with reports of aerial bombardments there as well as in South Kordofan. Further west, four Nigerian peacekeepers were killed on 2 October in an ambush near El-Geneina in west Darfur, the area I visited eight years ago.

In the context of the EU sub-committee’s remit—at paragraph 6 the report refers briefly to the “extremely serious” situation in the region—the EU is a member of the Joint Commission which is one of two ceasefire monitoring and implementation mechanisms provided for in the July 2011 Doha Document for Peace in Darfur. It was tasked with resolving disputes referred to it by the Ceasefire Commission, the other mechanism. Perhaps in the sub-committee’s future work, it might be interested to find out why we have failed to put those instruments into operation.

The failure to create some peace has left approximately 3.2 million people in Darfur currently receiving food aid, including some 1.7 million IDPs registered in camps. As I said, Darfur is a dangerous and lawless region. There are fears that the operations of the NGOs and humanitarian agencies that deliver this aid will face increasing difficulty due not only to increasing violence, but also to deliberate attempts by the Government of Sudan to restrict access and impede operations. We have already seen the expulsion of numerous NGOs from Sudan over the past few years, 13 in 2009 and four this year from east Sudan. The situation that is developing there is extremely ominous as well. If the space for humanitarian operations in Darfur continues to narrow, what will be the implications for the millions of people dependent on aid? If the remaining NGOs are made to leave, how will the gap be filled?

Let me mention one of those NGOs. Earlier in the year, with my noble friend Lord Sandwich, I attended a meeting in your Lordships’ House which was addressed by the remarkable Patricia Parker MBE, who is the chief executive officer and chairman of trustees of Kids for Kids, a charity that works in Darfur and whose patrons include the noble Baroness, Lady Rendell, and the noble Lord, Lord Cope. Mrs Parker believes, as I do, that Darfur is has become out of sight and out of mind as the juggernaut of the world media and campaigning activism has simply decided to move on. At the Conservative Party Conference, the Foreign Secretary William Hague specifically highlighted the use of rape as a weapon of war and rightly cited Syria, Rwanda and Bosnia, but not Darfur, where there continue to be almost weekly reports of rape. Why was there this omission and why has it gone out of mind?

In Darfur, rape has led to HIV becoming a major issue. I was sent a photograph last week of a dying little boy in El Fasher hospital who had already seen both his parents die of HIV. Before the conflict erupted in Darfur 10 years ago, HIV was unknown. Since then, year by year, rape has been used as a weapon of war with horrifying consequences. This conflict has been fuelled by a regime whose leaders are indicted by the ICC for crimes against humanity. The Sudanese air force continues to bomb its own people weekly and a recent report from the organisation Waging Peace shows that government-sponsored attacks are increasing in their regularity as the regime continues to work through its local proxies.

It would be good to hear from the Minister what she is doing to ensure that Field Marshall Omar al-Bashir is brought to justice. Have we supported the suggestion made on 5 June by the International Criminal Court prosecutor, Luis Merino Ocampo, as he relinquished his post? He argued that the UN Security Council should consider asking member states and regional organisations to conduct operations to arrest Sudanese officials indicted by the ICC. Is that something which Her Majesty’s Government would be prepared to support?

As the conflict has raged it has led not only to systematic rape, it has decimated the ability of the people to feed themselves and their children. We heard a very pertinent contribution by my noble friend Lord Cameron on the issue of agriculture and the importance of sustainability in terms of people being able to feed themselves. Let me give an illustration of the scale of the problem. Last year, Hilat Ibrahim, a village of 1,500 people, lost 37 children to malnutrition. One in every 12 families has lost a child, and Kids for Kids reports that the majority of families in the villages have not been able to save enough seed to plant this season. Children are facing horrendous conditions in the villages of Darfur, yet again the international media is sadly silent.

In February 2011, Henry Bellingham, then the Minister for Africa, said that,

“we will not be taking our eye off Darfur, as we work tirelessly to establish a lasting peace in that troubled province”.—[Official Report, Commons, 1/2/11; col. 724.]

Yet whatever the words, the violence is increasing, HIV is rampant, children are malnourished and the world has moved on. Even at the height of the violence and when Darfur was in the headlines, aid did not reach two-thirds of the population. The international community claimed that its aid programme was a success because the aim was to help those people who had fled to the camps. But what of the families struggling to survive in the villages in rural areas? The months ahead are set to be the hardest ever.

Over half the population of Darfur has no water source. Almost a quarter of the population, including children, walk more than six miles to reach water in winter. In the summer “hungry” months, many walk more than 20 miles. Walking for water continues to be dangerous, with frequent reports of attacks. UNAMID has at times provided escorts to groups of women from the camps, but not for the women in the villages. With failed crops, women have to scavenge not just for water, but for wood and wild food such as mukheit, which is toxic, but anything is better than nothing if you are trying to survive. It is harder to find scarce food in a group, and still they are attacked. Healthcare in villages has collapsed.

UNAMID is the world’s most expensive peacekeeping force, yet it is regarded by most Darfuris as siding with their oppressors in Khartoum, so ineffective have been its operations. Moreover, its capacity is about to be cut. On 31 July, the UN Security Council adopted Resolution 2063, renewing the mandate of UNAMID for a year. The resolution authorised a reconfiguration of UNAMID to include 16,200 military personnel, 2,310 police personnel and 17 formed police units of a maximum of 140 personnel each. Prior to the adoption, the council was briefed by the joint AU-UN Special Representative for Darfur, Ibrahim Gambari. Mr Gambari said that implementation of the Doha Document for Peace in Darfur was behind schedule and that a new implementation timeline had been created. UNAMID, the world’s largest peacekeeping force, has received a lot of criticism for its failure to protect civilians, a lack of clarity in its protection mandate, and some suspicions from Darfuris that UNAMID is too close to the Government. However, as with the humanitarian agencies, UNAMID has been a victim of the number of restrictions and bureaucratic impediments to its operations by the Government of Sudan. Darfur, as I have said in every respect, is difficult terrain. Its new iteration consists of a number of cuts to troop numbers to reflect the contested suggestion that there had been a “drastic decrease” in the number of people killed in clashes and to enable it to react more rapidly. This does not accord with the description of 2012 as the “bloodiest year yet” in the region.

I would like to hear from the Minister about the renewal of the UNAMID mandate and whether Her Majesty’s Government supported the reductions in the number of peacekeepers in Darfur. What steps have been taken to implement the Doha Document for Peace in Darfur, to which I have already referred? Can she tell us how the UK has highlighted other critical issues, including the escalation in violence that I have mentioned—the attacks against civilians and the use of sexual or gender-based violence? What of the failure of other rebel movements to sign the Doha document? What of the deaths of 10 UNAMID peacekeepers in the past year and the prevention of humanitarian agencies from assessing those most in need?

Given that Khartoum has expelled most international humanitarian groups, whose presence is desperately needed, what representations are we making to the Government of Sudan, the rebel groups and the international partners to urge greater access for the humanitarian organisations? What has been the result of those representations? What assistance might we consider extending beyond our current programmes to communities struggling to survive in rural villages in Darfur? Will we commit to adjusting the balance of spend on bilateral assistance in Darfur towards greater funding for sustainable development projects in rural villages, and encourage other donors to do likewise?

What support will we give to IDP families to enable them to settle in host villages, enabling them to be assimilated in the community through integrated projects? Kids for Kids has a unique “welcome home” package that is sustainable and does that, and I hope that the Minister will agree to meet Mrs Parker to discuss that important work. Can the Minister tell us, either today or through correspondence, what we are doing to promote civil society in Darfur? Finally, what is the Minister’s assessment of the current state of this continuing conflict?

The situation in Darfur, and more broadly in Sudan and South Sudan, requires sustained high-level political action by the European Union and Her Majesty’s Government for years to come. As we approach the 10-year anniversary of the beginning of the conflict in Darfur, we must also remember that this area of the country has been consistently and intentionally marginalised for decades. It will take decades to build peace and stability, and a long-term view of development is essential. Now is most certainly not the time to take our eyes off Darfur.

19:36

[Lord Sheikh]

My Lords, I thank the noble Lord, Lord Teverson, for securing this important debate. I also congratulate my noble friend Lady Warsi on her new appointment. As someone who speaks periodically on foreign affairs, I look forward to her active involvement in these matters. I also commend the noble Lords who sit on the EU Committee for producing such a thorough and informative report, which of course preceded the follow-up report that we are debating today.

Some years ago I visited Juba and have always taken an interest in the region. The situation in Sudan and South Sudan is a major concern for the citizens of those countries and among the African diaspora. It is important to recognise that there is a regional as well as a global dimension to possible further hostilities between Sudan and South Sudan. The international community must continue to take interest and be involved in all issues relating to the two countries. Therefore, I wholeheartedly support the committee’s view that the international community must play a greater role in maintaining peace.

When South Sudan became the world’s newest country last year, owing to the 2005 comprehensive peace agreement, a number of issues remained unresolved with Khartoum. The economically sensitive and disputed areas of oil production and transit fees had essentially led to a stagnation of both economies, since South Sudan stopped pumping oil in January. Both Sudan and South Sudan are heavily reliant on oil revenues: 75% of the oil lies in South Sudan but all the pipelines and processing facilities are in Sudan.

Like Members on all sides of your Lordships’ House, I welcome the recent progress made on this issue. I commend the work of Thabo Mbeki, Pierre Buyoya and Abdulsalami Abubakar, the African Union mediators and former Presidents of South Africa, Burundi and Nigeria respectively, in working tirelessly to achieve this breakthrough. However, I would like to see a resolution to the dispute over the oil-producing Abyei region, preferably through a referendum. It is vital that this should take place once issues surrounding voter eligibility have been resolved.

Darfur remains a source of tension between both countries. My own charity, the Sheikh Abdullah Foundation, has undertaken humanitarian work in Darfur. Rebel groups in Darfur have joined forces with rebels in the Sudanese states of Blue Nile and South Kordofan. The shelling last week of Kadugli in South Kordofan led to the deaths of five people. I welcome the decision by the Sudanese Government to allow relief supplies to enter South Kordofan and Blue Nile states. Sudan has accused South Sudan of backing the Darfur rebel groups, which Juba denies, although a number of reports suggest that it is supporting the rebels operating across the border in Blue Nile and South Kordofan. I would be grateful if the Minister could shed some light on this matter.

The humanitarian situation in South Sudan is a cause for grave concern. It has been reported that children at the Yusuf Batil refugee camp in South Sudan are dying at more than twice the rate that is internationally recognised as an emergency. On average, consistently three or four children under the age of five are dying each day. Yusuf Batil is one of four refugee camps in Maban county and houses more than 100,000 people fleeing the fighting in Blue Nile state. Approximately one-third of all children at the camp are suffering from malnutrition. The lack of clean water and adequate sanitation facilities are also contributing to the high rate of infant mortality.

I wholeheartedly support the work of the Department for International Development in both Sudan and South Sudan. These efforts are changing the lives of many impoverished citizens in both countries. I commend the refugee and aid agencies that are providing food and healthcare to the thousands of displaced persons. I may add that there are several Muslim charities, including Islamic Relief, undertaking vital humanitarian work in South Sudan, where the people are mainly Christians and non-Muslims. These Muslim charities have in fact formed the Muslim Charities Forum to co-ordinate the work of the various charities.

As a landlocked nation, South Sudan must find ways of facilitating trade with its immediate neighbours. The South Sudanese Government have opened a 192 kilometre- long highway, which connects Juba with Nimule on the Ugandan border. The highway goes on from Nimule to meet Kampala, the capital of Uganda, and then runs through Kenya to the port of Mombasa. This highway project, which was funded by the United States Agency for International Development, is expected to significantly boost trade with east Africa. I particularly welcome this infrastructure project because it will reduce the cost of importing goods from Kenya and Uganda, the respective countries of my birth and where I spent my formative years.

I also welcome the announcement by the South Sudanese Government to launch an airline, which reflects the determination by the Government in Juba to address the current challenges surrounding infrastructure. At present, South Sudan has only 300 kilometres of paved roads. China has invested heavily in Sudan’s oilfields where its companies PetroChina and Sinopec are partners of Sudapet, which is owned by the Sudanese Government. China has also made investments in South Sudan, where the Government have announced that they will be receiving a $158 million loan from China to finish building a new airport in Juba.

In making reference to the follow-up report, I share the view that China must ensure that Chinese companies operating in both Sudan and South Sudan are responsible corporate citizens. I would be grateful if the Minister could inform the Committee about the steps that Her Majesty’s Government are taking to encourage China to play a more positive role in the region. The International Monetary Fund stated in its most recent report that South Sudan is failing to reach its economic potential owing to weak state institutions and poor infrastructure. It is therefore essential that Juba invests oil revenues wisely in order to remedy this situation. The stalemate over oil revenue revealed that the economic fortunes of Sudan and South Sudan remain linked. It is vital that Sudan and South Sudan reach agreements on all disputed areas so that both nations can prosper.

The British Government were active members of the comprehensive peace negotiations and the Darfur peace accords; they have an obligation, therefore, to work towards a favourable outcome for citizens in both countries. The international community has a responsibility to strive towards achieving stability in Sudan and South Sudan through building a multinational coalition that produces lasting change.

19:46

[Lord Curry of Kirkharle]

My Lords, I, too, thank the committee for producing this valuable report. It is a very good analysis of the issues faced by Sudan and South Sudan. I need to declare an interest: I am a trustee of Anglican International Development, which is working in South Sudan. I visited South Sudan again in September, about three weeks ago; I met Archbishop Daniel Deng and a number of other bishops. I fully endorse the comments made by the most reverend Primate the Archbishop of York and the right reverend Prelate the Bishop of Exeter about the key role that the Church can play in international development generally, but specifically in South Sudan.

My comments today do not concern the continuing unrest in the border region or in Darfur—however serious that is, it has been well articulated this evening—other than to reinforce the message that, notwithstanding the dreadful suffering that continues as a consequence of the strife, it is a complete distraction at this present time from the desperate need for political stability and economic development.

The lack of oil revenue this year as a result of the tap being turned off has had a significant negative impact on the economy of South Sudan and has eroded the nation of vital resources at this critical time. There is a shortage of fuel and many projects are being seriously delayed. If I can refer to paragraphs 250 and 251 in the report, it is very pleasing to see that a number of EU member states now have a presence in Juba. Our own embassy is up and running and I had very helpful meetings with the ambassador and representatives from DfID. However, the situation is extremely serious, as has been reinforced by all speakers this evening. South Sudan is stuck at the bottom of global development indices and by most measures it is still going backwards. There is an imposing sign on the outskirts of Juba advertising the anti-corruption commission, in front of an empty piece of land. The noble Lord, Lord Chidgey, referred to this. The commission does exist in embryonic form but has an uphill task in undertaking its role.

Paragraph 269 of the report is a critical statement about the need for good governance and a well-functioning justice system, free from corruption. It expresses concern that no major donor has emerged to lead on this. That must be addressed. It would be highly irresponsible of us and of the EU and the United States if we did not do all that we can to influence South Sudan in establishing good governance and good justice systems. Some progress is being made but we must seize this unique moment in time to establish and achieve the outcomes that are necessary for the long-term interests of the people of South Sudan.

The report makes a very good point about the lack of coordination to which other speakers have referred. Lots of very well meaning representatives of NGOs and aid organisations are falling over themselves in their desire to help. Coordination is absolutely critical and desperately needed. AID is working with a number of potential investors in agriculture in South Sudan as well as trying to help small-scale farmers. I absolutely endorse the comments made by the noble Lord, Lord Cameron of Dillington—the potential is huge.

The need, however, is very clear. The people produce very little of their own food—the Minister estimated about 7%. Inflation is rampant and I am amazed that even more people who have no income are not dying of starvation or malnutrition. The need to diversify their economy to become less dependent on oil is very clear. The response to the report in paragraph 256 states that the Government aim to encourage economic growth and diversification in Sudan and South Sudan and the creation of conditions for private sector investment to generate employment for the people. This is absolutely correct and needs to happen. However—I need to choose my words carefully here—the impact of a generation growing up with civil war, a lack of education and a huge dependence culture, which is not just emerging but is endemic, has led to a lack of a work ethic in the men in South Sudan. Employing Sudanese people is a real challenge and many organisations are taking their own staff to South Sudan or recruiting staff in Uganda or Kenya rather than recruiting people in South Sudan. That is a real concern and there is a desperate need for further teaching and training.

There is little or no infrastructure and, until there are some decent roads, at least between the key population centres—which reinforces what the noble Lord, Lord Cameron said—and into Uganda and Kenya, it will be very difficult to attract the level of inward investment needed to diversify the economy. The two need to go hand in hand. It is a massive issue and must be a priority for international development support in conjunction with the Government of South Sudan. There were compounds full of earth-moving equipment standing idle three weeks ago.

South Sudan is a high priority. We must not relax our efforts to assist and to help to influence the transition from civil war to independence, to stable and sound governance with good healthcare and education facilities and economic stability. I hope that our Government will seriously address these issues. We have a huge responsibility. I apologise to noble Lords but I have a long-standing commitment and may have to leave before the end of debate because of the overrunning of the previous debate.

19:55

[Baroness Cox]

My Lords, I add my congratulations to the noble Lord, Lord Teverson, and his comprehensive introduction to this debate. I welcome the noble Baroness, Lady Warsi, to her ministerial position in this capacity. I will focus predominantly on first-hand evidence obtained during a visit to South Sudan with the Humanitarian Aid Relief Trust—or HART—in April this year. We visited Agok, near Abyei, and three camps in the border areas of Sudan and South Sudan at Yida, Doro and Renk. However, I refer very briefly first to nine agreements reached in Addis Ababa, which address many of the issues highlighted in the EU follow-up report and are to be warmly welcomed as a hopeful sign of a major breakthrough in the relations between Sudan and South Sudan. I also welcome the significant progress with regard to reopening the oil pipelines and the distribution of oil revenues.

In this context, I return very briefly to the point made by the noble Lord, Lord Trimble, regarding the Government of South Sudan’s concern over criticism of their decision to cut off the pipeline, believing that the international community did not appreciate its reasons for doing so. These included the Republic of Sudan’s imposition of ludicrously high transfer fees for oil and unprovoked bombings by Sudan across the international border into South Sudan. I can testify to the reality of those bombardments across the international border, having been there at the time of the bombings near Agok and of Bentiu in Unity state.

The Government of South Sudan felt, I believe understandably, that the only leverage available to them to put pressure on the Government of Sudan was to cut off the pipeline, although they fully appreciated this would bring hardship to their own people as well as the people in Sudan.

I turn to our visit to the borders of South Sudan, South Kordofan and Blue Nile. As the right reverend Prelate the Bishop of Exeter has so powerfully highlighted, a humanitarian catastrophe exists. While we were there half a million people had fled from their homes in South Kordofan and Blue Nile because of constant bombardment by the Government of Sudan. Many were hiding in caves with deadly snakes, with little or no access to food, water, shelter or medicine. They said that they feared bombs more than snakes. Civilians have also been too terrified by the bombs to return to their villages to plant or reap harvests. They have been suffering food shortages, causing acute malnutrition. Humanitarian conditions for these internally displaced people deteriorated even further with the problems associated with the rainy season.

A recent assessment in South Kordofan found the nutrition situation verging on critical—81.5% of households are surviving on only one meal a day compared with only 9.5% a year ago and zero two years ago; 65.7% of households have less than one week’s food stock and a significantly smaller than normal harvest is expected as civilians have been unable to harvest crops. The situation is exacerbated by the Khartoum Government continuing to deny humanitarian aid organisations access to the civilian victims of its military offences. There is now an urgent need for targeted supplementary and therapeutic feeding programmes in South Kordofan, with supplementary feeding for children aged six to 59 months and similar needs for the displaced people in Blue Nile.

Given the scale of the humanitarian crisis and Khartoum’s continuing failure to allow aid organisations to access all those in need, will Her Majesty’s Government consider, as a matter of great urgency, provision of funding for life-saving aid for those in need in South Kordofan and Blue Nile? Like my noble friend from Merlin, I must also declare an interest as CEO of HART, currently working in South Sudan, and previously working in the Nuba Mountains of South Kordofan.

I want also to ask the Minister if Her Majesty’s Government will join with others to put more effective pressure on Khartoum to allow and ensure immediate access by aid organisations to all in need in Sudan.

When we visited the camps in South Sudan at Yida and Doro, for people who had been forced to flee into South Sudan from South Kordofan and Blue Nile because of aerial bombardment, the humanitarian situation was already dire and with the rainy season it has become truly catastrophic. According to the UN Refugee Agency, there are now at least 174,000 refugees from South Kordofan and Blue Nile in South Sudan’s Unity and Upper Nile states. In some areas more than 40% are children. Local Sudanese aid workers are reporting high incidences of diarrhoea, skin infections, malaria and typhoid.

According to the UN Refugee Agency, last week about 100 Sudanese refugees from South Kordofan were arriving daily in Yida camp and with the end of the rainy season approaching, UNHCR is expecting an increasing deluge of refugees to arrive.

We also visited the camp at Doro for civilians who have had to flee from Blue Nile to escape aerial bombardment. Conditions were as serious there as those at Yida and much of the neighbouring camp at Jamam is now under water, increasing the risk of malaria and epidemic diseases such as cholera and typhoid.

Finally, we visited the camp at Renk, where civilians deemed “southerners” by the Government of Sudan had been expelled from their homes and were living in horrendous conditions. They were allowed to bring only a few possessions and had built pathetically fragile shelters which were no match for the rains. Many had not wanted to leave their homes or jobs in Sudan, many had never lived in the south. Sudan’s policy of expulsion has caused immense suffering for thousands of civilians.

Will Her Majesty’s Government make representations to the Government of Sudan about the problems still affecting those who were affected by this very disturbing policy? There is a need for an honest appraisal of responsibility for the problems suffered by both nations. Too often there is an implied attribution of moral equivalence with regard to the Governments of Sudan and South Sudan. The ICC-indicted president of Sudan continues to inflict remorseless military offences against his own people in Darfur, South Kordofan and the Blue Nile and to bomb targets across the border in South Sudan. By contrast, South Sudan does not attack its own civilians, nor expel them from the land whatever their race or religion. A failure to call the Government in Khartoum to account for its asymmetrical aggression and systematic violations of human rights of its own people may be seen as a licence for impunity.

Of course, it is also important to recognise many problems in South Sudan, such as inter-tribal conflicts, lawlessness and some disturbing corruption. These need to be addressed. However, the point was emphasised by speakers meeting at Chatham House yesterday that it should be appreciated that violence, such as that which occurred in Jonglei State is inevitable in all such post-conflict situations. It is remarkable, they also emphasised, that there has not been more violence. A similar point was made in a joint statement by the Sudanese Anglican and Roman Catholic archbishops whose people on the ground, including mediators, emphasised that there have been some improvements. That is indeed a great achievement, given the very catastrophic situation prevailing in so much of the country.

In conclusion, the recent agreements offer hope for significant developments to promote much needed peace between the two nations. However, the international community, including the European Union, will need to maintain support, encouragement and apply pressure, where necessary, to ensure that the agreements are fulfilled and that neither Government renege on commitments already given. There is also a need to encourage both Governments to make progress on the outstanding issues, such as those concerning Abyei, South Kordofan and Blue Nile. Let us hope that a subsequent EU report will be able to record positive change and a scenario of hope for the peoples of Sudan and South Sudan who have suffered too much for too long. We all look forward to that day.

20:07

[Baroness Kinnock of Holyhead]

My Lords, I, too, pay tribute to the commitment shown by the EU Committee to the situation in Sudan and South Sudan. We have been provided with a very welcome opportunity to take stock, which Members here this evening have shown they are very capable of doing. I, too, welcome the noble Baroness, Lady Warsi, and wish her well in her new role. I pay tribute, too, as the noble Lord, Lord Alton, did, to the work of the noble Lord, Lord Howell.

The misery and suffering of the people of Sudan and South Sudan is relentless. There are continuing insecurities, humanitarian crises, lack of resources and grave shortages of food. Roads are not being constructed, despite the fact that they are crucial to building unity, security and economic development in that country. Education and health systems are not functioning and water and sanitation needs are not being met. In fact, South Sudan is really living on the edge of disaster and faces perpetual and manifold crises and emergencies.

Against that background, the African Union-promoted agreement, guided by Thabo Mbeke’s African panel made in Addis last month, is worth applauding, as noble Lords have done. But all success now depends on its full and faithful implementation and the urgent use of what could be a brief and positive period that we have now to address outstanding issues. Building a functioning and legitimate South Sudan Government is obviously essential to efforts that have to be made to manage the expectations of the people of South Sudan and to deliver essential services to those who have waited such a long time. Now, even in the context of the insecurity and humanitarian crises in border areas, it remains vital that this work is supported consistently and continually by all donors. Transference to the state is just not happening and clearly, dependence on NGOs has to be reduced.

Central to delivery of sustainable change in South Sudan is that the citizens of that country see the Government in Juba being able to deliver basic services locally across the country, using their own local authorities. Action means so much more than words and intentions when the needs are clearly so great. Traditional authorities must be involved, while at the same time strengthening the role of the state.

This is after all a country where 200,000 dangerously malnourished refugees from Blue Nile have arrived in the past, and where thousands of southerners have returned since 2010. In South Sudan, the health needs are substantial: cholera, measles, meningitis, polio, river blindness, sleeping sickness, yellow fever and whooping cough are all prevalent. It remains the case that what services exist are largely delivered by humanitarian and other NGOs funded by donors. As the noble Lords, Lord Cameron and Lord Curry, have said, the level of dependence in South Sudan is simply not sustainable or desirable.

Can we at last anticipate an end to the flip-flopping between humanitarian aid and development aid, which we have seen for far too long? Most recently, donors—including the UK, I have to say—pulled out of developments following the oil shutdown. However, as soon as that oil deal was reached, they started talking about development aid, and working with government systems. Now we see that current and urgent humanitarian concerns have simply been obscured or ignored completely.

There is a widespread perception that aid is being used in South Sudan as a mechanism for political conditionality, when what the Government of South Sudan really require is an understanding from donors that they need consistent and reliable support. Development and humanitarian aid should never be used to hold a government and people to ransom, because for practical as well as moral reasons, one should never be at the expense of the other.

On the European Union’s engagement, we should certainly support the fact that the EU institutions and member states have agreed to work together to produce a joint strategy paper on the implementation of programmes. However, if it is to be meaningful, it is essential that sectors are identified and donors complement each other in the implementation of that country’s strategy. On paper, this is of course agreed as part of efforts to increase EU aid effectiveness. However, one official was quoted as saying that they agree on something and then each member state continues to do its own thing. It was ever thus. This, I regret to say, includes what I see to be a reluctance demonstrated by the UK to forcefully and enthusiastically join co-ordinated efforts to draw up an all-European Union position.

The preoccupation of European Union member states with East Africa, Palestine, the Amazon, the Sahel, Syria, Yemen, the DRC and Mali—depending on what your various colonial connections happen to be—mean that priority is just not being given to South Sudan. That is clearly and repeatedly reflected in the agendas drawn up by the Foreign Affairs Council. Therefore I ask the Minister: will the UK Government make every effort to push Sudan and South Sudan up the agenda at this very critical time?

Sven Kühn von Burgsdorff, the head of the delegation in Juba, and Dame Rosalind Marsden, the EU special representative, are both doing an excellent job. The delegation and the embassy are up and running, with plans to co-ordinate these efforts. I commend urgent action, especially when the potential for advancing peace and security is great, but the possibility of a descent into disaster is ever present in any fragile state, and of course that remains the case for South Sudan.

In November, South Sudan will join the Cotonou partnership agreement between the African, Caribbean and Pacific Group of States and the EU, and will access European development funds. Very importantly, it will also join ACP partners in what is called the “Everything but Arms” market access agreement with Europe.

Other noble Lords have raised the concerns that we share about the need for peace and security in the South Kordofan and Blue Nile states. Is it not time to do more and end the ambivalence about the clear need for a more strategic approach to deal with these crises, as a number of noble Lords have said? After the Addis agreement, I am afraid we are continuing to see more of what is really just a “wait and see” approach, which has frankly brought nothing more than paralysis in the whole system.

After 18 months of efforts to negotiate humanitarian access, nothing has changed for the people affected by these conflicts. Is it not time now to explore alternatives to repeated failed attempts to negotiate with Khartoum? I also ask the Minister whether she would agree that the efforts to negotiate have failed and diplomatic efforts need to be substituted with a different approach. Many thousands of people are suffering in these areas, and we know full well that the Government of Sudan have absolutely no intention of protecting civilians suffering from starvation. Will the Minister tell us whether any consideration is being given to delivering cross-border aid without the permission of Khartoum? If noble Lords around the Table here were honest, we would say that this is already happening through the efforts of civil society, international partners and, yes, Governments.

When fruitless diplomatic toing and froing has not achieved anything, it is time for the tripartite partners to take effective action. All of this is made more emphatic by the fact that food is being used as a weapon of war. It is time, recognising the realities, that action is taken to deliver food and aid immediately and urgently. The special representative of the UN Secretary-General confirms that progress has been made in South Sudan. Many noble Lords have been, I think, extremely pessimistic and cynical perhaps about what has happened in South Sudan for some, and maybe many, understandable reasons. However, having read a recent report by the UN Secretary-General’s special representative, I will say that state institutions have been strengthened, and militias and rebel groups have been integrated into the national army. Nevertheless, a great deal needs to be done to protect civilians and to broker peaceful coexistence among feuding tribes. Demobilisation is a massive challenge. The salaries of the army, police and other forces make up more than half the budget, and donors and the Government must focus on this challenge of change.

South Sudan now has a new legislature made up of a Legislative Assembly and a Council of State, and there seems to be a real appetite for strengthening and developing the country’s institutions. Work is in progress on new laws, developing political parties, elections and a constitutional review. These are major tasks for an infant democracy. It is surely realistic to understand that it is going to take time. It is also going to take time for the current Government to build the maturity that state-building will demand. The Government of South Sudan also have to insist on increasing transparency and accountability, by introducing new and clear standards of conduct in government.

Corruption must be fought with vigour and elected politicians must be constantly reminded of their obligation to be accountable to the people they serve. All this may seem like a very tall order but many of us who have followed Sudan, and now South Sudan, over many years and other crises in developing countries know that these issues are well worth supporting and encouraging. I hope that we will have future meetings on reports from the European Union Committee which will confirm that these things are happening and that change is taking place for the people of South Sudan.

20:15

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)]

My Lords, I start by thanking the noble Lord, Lord Teverson, for tabling today’s debate, and for providing at its outset a very helpful historical and political summary. I also thank all noble Lords for their kind comments welcoming me to my new role. In my few short weeks as a Minister at the Foreign and Commonwealth Office the Sudans have consistently been a high priority for the FCO, and it is heartening to see such strong interest in this subject from my fellow Peers. I should also commend the continued commitment of the Associate Parliamentary Group for Sudan and South Sudan, many of whom are present tonight.

I welcome the follow-up report of 22 March by EU Sub-Committee C entitled The EU: Sudan and South Sudan. This report, in addition to the longer report from June 2011, made some very useful recommendations. I hope that noble Lords saw the response issued by the Government at the time in which we broadly agreed with the recommendations on international co-operation, particularly with the EU and China, as a means of resolving the disagreements between both countries.

Since the publishing of the report in March, we have seen moments of great tension between the countries. In March the risk of open conflict seemed very real, but following the road map set out by the African Union Peace and Security Council, which was further endorsed by United Nations Security Council Resolution 2046, a new sense of co-operation and negotiation has resulted in agreements on eight key issues between the countries. We welcome these agreements signed on 27 September. They represent a significant step forward towards the goal of resolving all outstanding disputes between the two countries and we congratulate both countries on what they have achieved. It was also a positive sign of what can be achieved through co-operation between the African Union and the United Nations.

Some issues, however, remain unresolved. It is disappointing that no agreement was reached on the final status of Abyei. Final demarcation of the international border remains subject to settling a number of disputes and claims. My noble friend Lord Trimble raised important points about its practical application. The noble Lord, Lord Selkirk, also referred to the possibility of further negotiations or referendums in Abyei. The latest proposal put forward by the African Union would provide for a referendum on final status with important safeguards for the rights of all communities. We believe that this provides a good basis for agreement. The partition of Abyei would be in the interests neither of the residents of the territory nor of the nomadic groups who pass through annually. The noble Lord also raised the issue of an alternative pipeline for oil through Kenya. I understand that the Government of South Sudan continue to study options for alternative pipelines but the only immediate prospect for addressing South Sudan’s economic needs is a resumption of production and export through the existing pipeline in accordance with the agreement signed on 27 September. However, I note the comments of the noble Lord, Lord Cameron, about using the proceeds of oil to invest in sectors that could provide future financial stability.

The noble Baroness, Lady Cox, highlighted the lack of a ceasefire in Southern Kordofan and Blue Nile State and the continued restrictions on humanitarian access. These are greatly worrying. The suffering of people in both states must be addressed and the UK teams in Juba and Khartoum are working closely with the Office for the Co-ordination of Humanitarian Affairs and a range of NGOs to ensure we explore all options to see that assistance reaches those who need it. The noble Baroness always produces very powerful personal accounts of the situation on the ground in Sudan and South Sudan.

The noble Baronesses, Lady Cox and Lady Kinnock, raised cross-border aid. We know that some others are considering how to provide aid across the border from South Sudan. However, there are risks associated with this, including difficulties of ensuring that aid reaches those who need it most. We are also concerned that attempting to provide aid without the consent of the Government of Sudan is likely to put at risk humanitarian assistance to millions elsewhere in Sudan, particularly in Darfur. However, we remain in close contact with a range of NGOs as well as the United Nations, the African Union and the Arab League, to ensure that all options for getting assistance to those who need it are explored.

I can also assure the noble Baroness, Lady Kinnock, that long-term development in South Sudan remains a top priority for the United Kingdom. However, development programmes are based on a partnership in which both sides contribute resources. By halting oil production, South Sudan has denied itself access to 98% of its revenues. The UK and other donors cannot fill that gap. It was essential that we refocused our development programme away from the Government’s longer-term development agenda and towards supporting the most vulnerable and addressing life-saving needs. After the successful agreement on oil revenue, once revenues start flowing in again, we hope that we can restart the development programmes that were planned.

The most reverend Primate the Archbishop of York and the right reverend Prelate the Bishop of Exeter raised the role of churches in South Sudan. We welcome the critical role of the Church in South Sudan, both in conflict resolution among communities and in development, particularly education. We remain committed to working in partnership with the Church on these issues. It has a huge amount of experience, knowledge and reach and we regularly meet representatives of the Church when they are in the UK. I thank the noble Lord, Lord Alton, for his kind remarks about my commitment to the issue of faith and the role of faith organisations, both the role that they play domestically and internationally. I endorse the comments of my noble friend Lord Sheikh in relation to the work of Islamic Relief.

The right reverend Prelate the Bishop of Exeter also raised concerns about the humanitarian crisis in South Kordofan. We are deeply concerned by the plight of the civilians caught up in the fighting in South Kordofan and Blue Nile. The limited assessments available of the humanitarian situation of those in that conflict zone, as well as of those who have sought refuge in South Sudan and Ethiopia, all point to a severe crisis. DfID is working with humanitarian partners better to address the needs of those in the refugee camps and we have set aside resources to meet the needs of those remaining in the conflict zones, once access is possible. We are putting our efforts behind a proposal on arrangements for humanitarian access made by the UN, the AU and the League of Arab States. I agree that the Arab League can play an important role in bringing the Government of Sudan to accept full, independent humanitarian access. We are in close contact with it and will continue to urge it to use its influence with Sudan to this end.

The noble Lord, Lord Jay, and the noble Lord, Lord Alton, are right to highlight ongoing concerns in Darfur. We remain deeply concerned by the security and humanitarian situation in Darfur: 1.7 million Darfurians remain displaced. Through the Department for International Development, humanitarian programmes are providing life-saving support for those in need in Darfur. DfID also supports community-level peace building and stabilisation to tackle the drivers of local conflict. I also assure both noble Lords that DfID is at the forefront of efforts to improve aid co-ordination in South Sudan, in support of the development priorities of the South Sudan Government. Earlier today, the noble Lord, Lord Alton, was kind enough to raise his concerns with officials when they met as part of the All-Party Group on Sudan and South Sudan. The issues raised were quite comprehensive and I have asked my officials to reply in detail to the noble Lord in writing.

The noble Lord, Lord Chidgey, raised the issue of corruption and financial management. DfID provides a significant capacity-building support to the Audit Chamber and the Anti-Corruption Commission. A high-level dialogue on accountability and transparency is led by the UK and the South Sudan Ministry of Finance and is central to our development programme.

On transparency, I agree that there needs to be transparency for the South Sudanese people in the revenues from oil. We are encouraging the Government of South Sudan to adopt the principles of the extraction industry’s transparency initiative.

The noble Lord, Lord Curry, asked about the role of China. China has remained in close touch with both Sudan and South Sudan through negotiations and visits by its special envoy to encourage both sides to negotiate constructively. I understand that the China National Petroleum Corporation is working to support implementation of the deal reached on oil. Our special representative for Sudan and South Sudan has a regular dialogue with his Chinese counterpart to discuss the constructive role that China can play in the peace process and in the development of both countries.

The noble Lord, Lord Anderson of Swansea, raised important issues. In light of him having to leave early, I agree to respond to the noble Lord in writing.

At the moment, we have a situation which we all agree shows a marked improvement from six months ago. Both countries should be applauded, as should the efforts of the African Union, the African Union high-level implementation panel and other countries. However, there is still a great deal of work to do and it will take a continued effort from both countries to settle their remaining differences properly and peacefully.

For our part, the United Kingdom is prepared to do whatever it takes to ensure that the agreements are implemented and finalised and to press for resolution of all outstanding issues. We also remain fully committed to helping the people of both countries through our humanitarian and development projects. We will continue to provide assistance to respond to the humanitarian needs of conflict-affected populations, to ensure security and access to justice, to build basic services, and to encourage more transparent and accountable Governments in both countries. Through all of this, we will continue to work as closely as possible with our key international partners, including the European Union. A united approach is the best way to ensure that both countries remain on the path towards the peaceful future that their people so greatly deserve.

I thank noble Lords for their time today and I look forward to the next opportunity that I have to discuss these matters with them. I hope that next time the discussion will be able to focus once again on the progress that has been made between the two countries.

20:27

[Lord Teverson]

My Lords, I thank all noble Lords for their contributions. I am delighted to see here past members of the sub-committee, particularly those with a much broader experience and on-the-ground expertise in this area who have brought to this subject the passion that our own sub-committee feels is fundamentally important. I thank particularly those who have brought an optimistic note to the debate—particularly the noble Lords, Lord Jay and Lord Cameron, and the noble Baroness, Lady Kinnock—in regard to the future because, as has been said so often, we sometimes look upon Africa negatively when so much is going on across the whole continent.

I thank our clerk, Kathryn Colvin, for all the work she did. Finally, I thank my noble friend Lady Warsi for her response to the debate, for taking on this portfolio and for the enthusiasm that she has for the subject. We look forward to seeing her next week when we discuss EU defence issues, although perhaps that does not come into this area.

The rest of Westminster has given up tonight but we are still here. I commend this report to the Grand Committee and to the House.

Motion agreed.

Committee adjourned at 8.29 pm.

House of Lords

Wednesday 17th October 2012 Lords Chamber

Wednesday, 17 October 2012.

15:00

Prayers—read by the Lord Bishop of Manchester.

Devolved Administrations: Industrial Strategy

Wednesday 17th October 2012 Lords Chamber

Question

15:07

Asked By

[Lord Roberts of Conwy]

To ask Her Majesty’s Government whether their industrial strategy is fully supported by the three devolved Governments.

[Lord Gardiner of Kimble]

My Lords, the Government’s industrial strategy sets out a long-term, whole-government approach to delivering economic growth. Although some measures will be UK-wide, economic development, including financial assistance to industry, is a devolved matter. Her Majesty’s Government lead regular discussions with the devolved Administrations to ensure that the strategy reflects this. This involves consulting devolved Administrations on key policies as well as sharing information and good practice on a regular basis. The Government support growth across the whole UK by introducing ultrafast broadband into Belfast, generating new investment in Scotland for North Sea oil fields, and bringing mobile coverage to 60,000 rural homes in Wales.

[Lord Roberts of Conwy]

I thank my noble friend for his Answer and, of course, compliment him on his elevation to the Front Bench on this auspicious day, when unemployment has fallen by 50,000. Bearing in mind the fact that the unemployment rate in those devolved government areas is higher than the UK average, and bearing in mind their dependence on the state and the public sector, does my noble friend agree that special measures should be taken by the Government to encourage the private sector in these areas? Can he assure me that the Department for Business, Innovation and Skills is collaborating closely with the devolved Administrations to that end, although they are of different political persuasions? That is very much in the interests of the United Kingdom as a whole.

[Lord Gardiner of Kimble]

My Lords, first, I thank my noble friend for his very generous and kind remarks. He is a great champion of Wales. I am delighted by the news this morning that employment has grown to its highest levels since records began in 1971. Indeed, in Wales, there has been an increase in total employment since April 2010 of 67,000.

The Government’s objective is to make the UK the best place to start, run and expand a business. The success of the private sector in all parts of the UK is key to the recovery, and 900,000 private sector jobs have been created in the past two years. I reassure my noble friend that we are working closely with the devolved Administrations. Regardless of political colour, the national interest comes first.

[Lord Stevenson of Balmacara]

I, too, welcome the noble Lord to the Dispatch Box and commiserate that it is not he but the noble Lord, Lord Marland, who is topping up his tan. I listened carefully to his reply to the noble Lord, Lord Roberts, but note that he has failed to explain exactly the detail of the industrial strategy of which he speaks. Without knowing that, it is hard to understand how he can make the judgment that it is fully supported by the three devolved Governments. Will he take this opportunity to confirm that he agrees with the Secretary of State of his department, who said recently:

“The Government lacks the compelling vision … to get the economy growing again”?

[Lord Gardiner of Kimble]

I thank the noble Lord for his initial remarks, but I have to say that the Government’s plan for growth is very clear and outlines 250 measures to deliver the four growth ambitions: the creation of the most competitive tax system in the G20, at the lowest level in the G7; as I said before, to make the UK the best place to start a business; to encourage investment and exports; and to create a more educated workforce that is the most flexible in Europe.

[Lord Elystan-Morgan]

My Lords, the Minister has assured the House that regular discussions take place with regard to devolved subjects. I am sure that the House will agree that that is most laudable, in that it in no way trespasses on the distinctiveness of the devolved Assemblies, but at the same time brings about as much cohesion as possible. However, perhaps I may ask him about matters that have not been devolved. Does the Minister recollect that when the legislation of 1998 was being considered by both Houses, solemn undertakings were given with regard to matters that were not devolved, whereby concordats would be formed so that there could be such a discussion, even in relation to matters that still remain under the authority of this House?

[Lord Gardiner of Kimble]

My Lords, I reassure the noble Lord that all matters, whether reserved or devolved, are regularly discussed with the devolved Administrations. As I said before, the whole purpose of what the UK Government and the devolved Administrations are doing is to work in the national interest to achieve greater economic growth.

[Lord Roberts of Llandudno]

My Lords, what discussions have already taken place with the Welsh Assembly Government to ensure that businesses in Wales have access to loans and the small-business grants that have been announced recently, and that in any promotion of this UK investment project, assistance is available to Welsh industry?

[Lord Gardiner of Kimble]

My Lords, across the United Kingdom, and in Wales of course, there is encouragement for that. In Deeside Enterprise Zone, for instance, the Government have agreed enhanced capital allowances, which will deliver up to 5,000 new jobs. Indeed, the Government are working very closely with the Welsh Government and have provided them with almost £57 million to help to bring broadband to everyone, and superfast speeds to 90% of Welsh homes and businesses. This is all very good news for Wales.

[Lord Wigley]

My Lords, I also wish the Minister well in his new responsibilities, but does he accept that when the devolution settlement was made, the fact that some aspects of economic policy were devolved to Cardiff, Edinburgh and Belfast was a reflection of the need to have flexibility in policy that reflects the needs and aspirations of the three devolved areas? In those circumstances, does he agree that there is two-way traffic on the question of co-operation and will the Government at Westminster support the devolved regimes in their policies, where those are seen as the priorities for those areas?

[Lord Gardiner of Kimble]

My Lords, as I said before, we will of course be sharing information with all devolved Administrations.

[Lord McConnell of Glenscorrodale]

My Lords, are the Government aware that unemployment has gone up in Scotland today, while it has gone down elsewhere in the United Kingdom? Will the Government have immediate discussions with the Scottish Government to ensure that the uncertainty that will now exist in Scotland over the next two years as we lead up to the referendum on Scottish independence does not lead to higher unemployment in Scotland due to uncertainty over investment?

[Lord Gardiner of Kimble]

My Lords, there are regular discussions; and, in fact, there has been an increase in total employment of 54,000 people in Scotland since the general election.

Energy: Shale Gas

Wednesday 17th October 2012 Lords Chamber

Question

15:15

Asked By

[Lord Naseby]

To ask Her Majesty’s Government what is their policy on shale gas extraction in the United Kingdom.

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

My Lords, my department’s key objectives are to ensure that the UK has safe and secure energy supplies for the future. It is also committed to reducing carbon emissions. That is why we are encouraging a diverse and sustainable energy mix and therefore support industry’s endeavours in pursuing new energy sources in the UK such as shale gas.

[Lord Naseby]

I congratulate the Government on the recent announcement encouraging the extraction of gas by fracking. When your Lordships’ House realises that nearly 40% of the United States is now supplied by natural gas, does this not offer a huge opportunity for the United Kingdom to develop cheap and reliable domestic sources of energy, to create jobs, in particular in the greater Blackpool area, to reduce imports of gas and, finally, to improve the environment? At the same time, your Lordships’ House will remember that when North Sea oil was developed, it was a success because of the combination of government working with the industry. This must happen with shale gas as well.

[Baroness Verma]

My noble friend is of course right that the Government are very alert to the possibilities for boosting growth and employment in Lancashire and across the country. If shale gas does prove to be commercially viable, there is every reason to suppose that it will be positive for the economy and employment. However, the industry is at a very early stage of development and we need to make sure that all our commitments to ensuring that it is safe and secure to extract are formally looked at.

[Lord May of Oxford]

The Government are currently on course to fulfil their legally binding commitments under the Climate Change Act—only, however, by virtue of the recession. A second “dash for gas” rather than a speeding up of our decarbonising of electricity generation is flatly inconsistent with the commitments to 2030. Am I correct in assuming that the only way to square this is to maintain the recession, and that that explains some of this?

[Baroness Verma]

No, my Lords. I think the noble Lord knows from his question that that is not the case. We need to look at a wide range of energy sources and make sure that in the long term we fulfil our commitment to the 2030 target, but also that we utilise new renewable sources .

[Lord Howell of Guildford]

Further to my noble friend Lord Naseby’s Question, has my noble friend noticed that in the United States domestic gas prices are up to one-third lower than they are here, that its CO₂ greenhouse gas emissions are falling and are the lowest for 20 years, and that it is attracting a great deal of new industry and manufacturing back into America and creating new jobs? Is this not the sort of balanced model we should be considering?

[Baroness Verma]

My noble friend is absolutely right. However, the conditions in the United States are different from those in the United Kingdom. We first need to make sure that we thoroughly explore the ability to develop shale gas safely and securely. However, it is something that we are looking at very constructively.

[Lord Taylor of Blackburn]

My Lords, can the Minister tell us whether the Government have any idea when shale gas will be viable or not?

[Baroness Verma]

My Lords, I have tried to make it quite clear that we are still exploring all the possibilities for extracting shale gas. As soon as we have the go-ahead, we will report to your Lordships’ House and make a general statement.

[Baroness Parminter]

My Lords, fracking to extract shale gas uses enormous quantities of water, three-quarters of which remains down the wells. Given that the overabstraction from our rivers is already causing huge problems, what can the Minister tell us about the consideration that is being given to water resources in determining our future energy policy?

[Baroness Verma]

My Lords, my noble friend is right to raise her concern, and I hope that I can reassure her that any abstraction of water for industrial purposes is subject to control by the Environment Agency or by corresponding bodies in Scotland and Northern Ireland. The agencies will not permit additional abstraction in any area if they consider that it is not sustainable.

[Baroness Worthington]

My Lords, whether gas comes from fracking or more conventional sources, it is still a source of carbon dioxide and greenhouse gases. Therefore, will the Minister reassure us that in the horse trading that we believe is going on around the Energy Bill at the moment, there will be no concession to reduce our investment in carbon capture and storage in favour of decarbonisation? We must do both, and we must have carbon capture and storage on gas if it is to play a role in the future.

[Baroness Verma]

I absolutely agree with the noble Baroness. It is an exciting technology that can decarbonise coal and gas-fired power stations and large industrial emitters. The Government are absolutely committed to CCS. We have one of the best offers anywhere in the world, including £1 billion in capital funding for our new competition, contracts for difference for low-carbon generation through our electricity market reforms, and £125 million to support research and development.

Equality: EC Policies on Women on Corporate Boards

Wednesday 17th October 2012 Lords Chamber

Question

15:21

Asked by

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what is their assessment of European Commission policies on women on corporate boards.

[Baroness Stowell of Beeston]

My Lords, the European Commission has yet to announce its proposed policy for women on boards. The Government agree with the Commission that increasing the representation of women on the boards of UK-listed companies is important. However, we are not in favour of EU legislation or regulation, including quotas. National-level solutions are best, and evidence shows that, following the Davies review that the Government commissioned in 2010, the UK’s voluntary, business-led approach is working.

[Baroness Falkner of Margravine]

I agree with my noble friend that the EU is probably not the body best placed to deal with this problem, particularly as corporate governance varies from country to country. However, does she agree that the real problem is the lack of progress on getting women executive directors on to FTSE 100 company boards? We have had good progress with non-executive directors; we have something like 22% against the Davies targets, which is progress. However, our flagship companies are not nurturing and developing talent to get people promoted from within. What are the Government proposing to do about that?

[Baroness Stowell of Beeston]

My Lords, my first point is to reinforce what progress has been made since the Davies review on the recruitment of women to boards. Notwithstanding the point that my noble friend made, it is worth saying that the percentage of women on FTSE 100 boards is now 17.3%; that is up from 10.5%. However, my noble friend is right to say that progress in executive ranks is not as fast. More effort is needed in that area, particularly around what is called strengthening the pipeline, so that women are recruited from a wider pool of backgrounds to these executive posts and that we do not rely just on the kind of criteria that are normally placed on men who are recruited to those jobs.

[Baroness Nye]

My Lords, I, too, welcome the increase in the number of women on boards, but does the Minister agree that the voluntary code needs to be reviewed, as the evidence suggests that while the 30% target for female applicants on the long list is being met, these women do not make it on to the shortlist? Surely the code should be extended to include targets for the shortlist as well.

[Baroness Stowell of Beeston]

As I said about the shortlist, the executive search companies are putting forward 30% of women to companies; clearly that is working in getting women into non-executive positions. However, more work is needed to target the executive ranks. As I explained, this will take longer. It is worth noting that in countries such as Norway where there are quotas, the quotas in force for non-executives have not led to a greater improvement among the executive ranks at the same rate. This is a difficult problem that goes much wider than the narrow point we are discussing.

[Lord Watson of Richmond]

My Lords, does the noble Baroness not agree that public opinion plays a very important role in this and that the battle has to be won with public opinion? After all, what is the chance of recovery from recession unless women play a more important leadership role in our top companies?

[Baroness Stowell of Beeston]

My noble friend is absolutely right. The case for women in senior positions, whether they are executive or non-executive, is clear. Women account for nearly half the workforce and women outperform men educationally at every level. We are also responsible for about 70% of household purchasing decisions so it makes sense to have women in positions of authority in the corporate world.

[Baroness Howe of Idlicote]

My Lords, does the noble Baroness agree that a great deal of credit should be given to all sides of the House for encouraging more women in executive positions? Would she also agree that encouraging more boards to make flexible arrangements for men to work will increase the numbers of women who also have family responsibilities and are likely to come through to top executive positions?

[Baroness Stowell of Beeston]

The noble Baroness makes an interesting point. The sooner employers think about the flexible arrangements to which she refers in the context of men as well as women, the more quickly women will be seen not as a special case but as what they rightly are—equal in terms of ability, and the type of people that we want in those positions.

[Baroness O'Cathain]

My Lords, does my noble friend agree that the work commissioned by this Government and continued by the noble Lord, Lord Davies of Abersoch, still continues and that he is very concerned about the issue raised by my noble friend on the pipeline leading to executive directors? I am convinced that progress has been made since 2010 whereby 13.3% of FTSE 100 companies had women on boards at that stage and now 34% of non-executive directors are women. At that stage, there were 21 male-only boards and now there are only eight. However, the work will continue and we do not need an EU directive on quotas because they are patronising.

[Baroness Stowell of Beeston]

There are lots of statistics to show that progress is being made. As far as I am concerned, business needs to show that it wants women and not just that it is willing to put up with them

[Baroness Thornton]

My Lords, notwithstanding the party opposite’s visceral hostility to all things European, I think the Minister concedes that the fact that the European Commission has initiated this discussion will have focused the minds of many FTSE 350 companies on the need to address this problem. What are the Government doing to address the presence of women on public bodies, for example on health boards and clinical commissioning groups? Are the Government monitoring the number of women who are coming forward and are being appointed to those bodies as well?

[Baroness Stowell of Beeston]

Just to be absolutely clear, while we do not support the quotas or the European legislation, we feel very strongly about this issue. I think that I am right in saying that we have a target of 50% for appointments to public bodies by 2020. If I am wrong I will write to the noble Baroness, but we are definitely ensuring that as much effort is made in that area as it is in the corporate world.

[Lord Forsyth of Drumlean]

My Lords, as two-thirds of the European Commission membership are themselves men, would not the Commission do better to put its own house in order before deciding on other people?

[Baroness Stowell of Beeston]

My Lords, I shall not say anything.

Care Services: Elderly People

Wednesday 17th October 2012 Lords Chamber

Question

15:30

Asked By

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what action they propose to take in the light of reports that vulnerable elderly people are obliged to rely on care workers with criminal records.

[Lord Hunt of Kings Heath]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I refer noble Lords to my health interests.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, providers of services are responsible for the safety and quality of the care they provide, and the well-being of the people they care for. Providers should undertake a risk assessment as to whether a criminal record check is needed or not, and what action to take as the result of such a check. Providers should keep a record of this process as an audit trail of their decision-making.

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the noble Earl, and of course we all welcome the rehabilitation of ex-offenders. However, I refer the noble Earl to reports that recent CQC inspections show that more than 220 care agencies working for older people in England have failed to show that they were employing properly qualified and vetted staff. What action will be taken about this? Further, does this not show that the time is now ripe for the statutory regulation of care-home workers?

[Earl Howe]

My Lords, it is the responsibility of the employing organisation to carry out appropriate checks on the people they intend to employ. They should take decisions in the context of their responsibility for the well-being of the people who use the service. That position has not changed, and indeed it must be at the core of the safeguarding agenda. Organisations need to risk-assess the suitability of their staff for the role, considering all the information they have on the person, including criminal record checks. If someone has a criminal conviction, the employer should consider how old and relevant that conviction is in the context of the activities that the person would be undertaking and the characteristics of the people they would be looking after. That situation cannot, I think, change substantively.

[Lord Patel]

My Lords, will the Minister follow up on the question asked by the noble Lord, Lord Hunt? What progress is his department making towards establishing skills requirements in the training and regulation of nurse support workers and care assistants?

[Earl Howe]

My Lords, we recognise that there is a need to drive up standards in this area. More care workers will be trained, including an ambition to double the number of care apprenticeships by 2017. We have commissioned Skills for Health and Skills for Care to develop, before the end of January next year, a code of conduct and minimum training standards for healthcare support workers and adult social care workers in England. We expect that these will cover minimum training or induction standards for a range of support tasks, including personal care and other activities. Through the Health and Social Care Act 2012 we are creating a system of external quality assurance for voluntary registers.

[Baroness Gardner of Parkes]

My Lords, is the Minister aware that it is not just an issue about criminals, but an issue about the total shortage of care, which the previous question addressed very clearly? Does he not think that in general care and healthcare we are sadly missing the SENs, and is it not time to develop additional levels of training to fill the gaps both in care homes and the National Health Service?

[Earl Howe]

My Lords, we need to focus on a mixture of things. As my noble friend rightly says, we need to look at workforce numbers and capacity. We need to look at minimum training standards, which I have referred to, and we need to look at quality. We are doing that by targeting for the first time personal assistants and their employers with greater support and learning through the Workforce Development Fund, which will help with recruitment and retention. We need better leadership because high-quality leadership is essential for the delivery of all the proposals in the care and support White Paper, and we are setting up a new leadership forum to bring together expertise. I should add that we need better intelligence on the ground as well, and that we shall see from the local Healthwatch organisations when they are established.

[Baroness Pitkeathley]

My Lords, the Minister has pointed out that the employer, the provider, is responsible for the recruitment and training of care workers, and I am sure he will confirm that that applies whether they work in the private, the public or, indeed, the voluntary sector. In view of some of the scandals that there have been involving care workers, does he agree that we need to encourage value-based recruitment so that people are recruited not only for their technical skills, which can be provided through training, but for their compassion and empathy?

[Earl Howe]

Yes, I firmly agree with that. It bears upon the point that I alluded to very briefly, which is that the risk assessment process should not just be a tick-box exercise. It should assess the suitability of the individual and their own characteristics, the environment in which they will be working, the kind of people for whom they will be working and whether they have the right skills and characteristics as the people required to do that job.

[Baroness Masham of Ilton]

My Lords, does the Minister agree that it is not only the elderly who are vulnerable but also some very disabled people, including some with learning disabilities?

[Earl Howe]

Yes, like the CQC, we are very clear that when providers are assessed for the recruitment processes that they undertake in relation to those groups of patients and service users, no corners whatever should be cut in the requirements for vetting those people.

[Baroness Jolly]

My Lords, safeguarding the vulnerable needs real commitment from us all. Will the Minister tell the House whether the Government intend to support this by ring-fencing funds, as have Wales and Scotland?

[Earl Howe]

My Lords, we are not taking that approach. However, we have declared our intention to strengthen safeguarding arrangements to prevent and reduce the risk of significant harm to adults in vulnerable situations. That is a key priority for the Government. We intend to put safeguarding adult boards on a statutory footing. This will assist in furthering the agenda which my noble friend rightly raises, by ensuring that organisations involved in safeguarding have to make a co-ordinated contribution to local adult safeguarding work. Of course, it continues to be an offence for a provider to employ a person barred by the Independent Safeguarding Authority.

Constitution Committee

Wednesday 17th October 2012 Lords Chamber

Membership Motion

15:37

Moved By

[The Chairman of Committees]

That Baroness Wheatcroft be appointed a member of the Select Committee in place of Lord Shaw of Northstead, resigned.

Motion agreed.

Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) (No. 3) Regulations 2012

Wednesday 17th October 2012 Lords Chamber

Child Support Maintenance Calculation Regulations 2012

Child Support Maintenance (Changes to Basic Rate Calculation and Minimum Amount of Liability) Regulations 2012

Motions to Approve

Moved By

[Lord Freud]

That the draft Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) (No. 3) Regulations 2012, the draft Child Support Maintenance Calculation Regulations 2012 and the draft Child Support Maintenance (Changes to Basic Rate Calculation and Minimum Amount of Liability) Regulations laid before the House on 2 July be approved.

Relevant documents: 6th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 15 October.

Motions agreed.

Forestry Commissioners (Climate Change Functions) (Scotland) Order 2012 (Consequential Modifications) Order 2012

Wednesday 17th October 2012 Lords Chamber

Motion to Refer to Grand Committee

Moved By

[Lord Wallace of Tankerness]

That the draft Forestry Commissioners (Climate Change Functions) (Scotland) Order 2012 (Consequential Modifications) Order 2012 be referred to a Grand Committee

Motion agreed.

Financial Services Bill

Wednesday 17th October 2012 Lords Chamber

Committee (8th Day)

15:38

Relevant document: 4th Report from the Delegated Powers Committee.

Clause 57 : Treasury power of direction

Amendment 190ZE

Moved by

[Baroness Noakes]

190ZE: Clause 57, page 136, line 4, leave out from “to” to “the” in line 5 and insert “any of the Bank’s powers or functions, including but not limited to”

[Baroness Noakes]

My Lords, Amendment 190ZE is in my name and that of the noble Lord, Lord McFall of Alcluith. This represents the last of the amendments in our joint names which respond to the first report of this Session by the Treasury Select Committee in another place.

Clause 57 provides a welcome power of direction that enables the Treasury to direct the Bank of England when public funds are at risk. The Treasury Select Committee initially recommended that such a power be created when the Bank notified the Treasury that there was a material risk to public funds. The committee regarded such a power of direction as a necessary corollary of the leading role of the Chancellor in any financial crisis. Unfortunately, the Bank of England sought to water this down to a power of direction operating only in relation to certain instruments of crisis management. Even more unfortunately, the Government have sided with the Bank and have restricted the power of direction to the three areas listed in Clause 57(2).

The Treasury Select Committee remains unhappy with this and believes that if the legislation is to stand the test of time, it should not be restricted to the specific tools listed in subsection (2) but should be capable of being exercised in relation to tools not currently considered appropriate; for example, those tools that would be available to the Financial Policy Committee or other tools that have not yet been developed. The Treasury Select Committee believes that this power should be broader and future-proofed.

Amendment 190ZE seeks to achieve this by saying that the direction can relate to any of the powers or functions of the Bank of England, leaving the three specified tools as a non-exclusive list of such powers.

I am told that the House could not hear me in my previous position so I have moved.

[Lord Peston]

Start again.

[Baroness Noakes]

This is a probing amendment for today, not least because I think that it is too wide. For example, it would allow the Treasury to direct the Bank in relation to monetary policy functions, which would not be appropriate. Section 4 of the Bank of England Act 1946, which took the Bank into public ownership, has a general power of direction, which puts monetary policy out of scope. I believe that any Clause 57 power should similarly be constrained but I cannot see that there needs to be any further restriction on the Treasury’s power of direction when public money is at stake.

When my noble friend the Minister replies, can he also explain the relationship between the 1946 Act’s power of direction and the new powers of direction in Clause 57? The 1946 version is very broad and, monetary policy apart, seems to cover everything that is in Clause 57, and more. I do not believe that the 1946 Act power is being repealed or otherwise amended in this Bill, so I am puzzled as to the relationship.

I am aware that general powers of direction have rarely been used in practice, because their force lies mainly in the threat of their use rather than their actual deployment, but I hope that my noble friend the Minister can say what effect Clause 57 has on the existing power of direction. I beg to move.

[Lord Peston]

My Lords, this is a most interesting amendment, which enables us to clarify one or two aspects of the Bill. I literally did not hear the first part of what the noble Baroness was saying, so I was not joking when I suggested that she started again and she may well need to repeat what she said at the beginning.

This amendment brings into focus the relative power of the Bank of England in the areas that the Treasury is concerned with. This has worried quite a few of us throughout the proceedings on the Bill. To put it too simply, the question that emerges is: who really is in charge of the stabilisation process? Before I press that a little bit further, I take it that when in this part of the Bill we are talking about stabilisation powers, we are restricting ourselves to stabilisation powers within the financial services sector and not discussing a subject to which I have devoted most of my academic life; namely, powers to stabilise the whole economy—or, if people had followed my advice, probably destabilise the whole economy. We are not discussing the general question of the theory of economic stabilisation here. We are discussing just stabilisation.

Can the Minister throw some light on the simple question here? Who really is in charge? The noble Baroness includes in her amendment “not limited to”. However, unless this was part of what I did not hear, I do not think she said what else she had in mind that might then arise if it was not limited to these things. It may well be that she did say it and I missed or it may well be that she would like to say it now.

15:45

[Baroness Noakes]

It might help those Members of the Committee who did not hear my opening remarks if I say that my amendment is designed to ensure that the power of direction can be used for all of the functions of the Bank of England not simply those listed in Clause 57(2). I also said that it probably ought to exclude the functions related to monetary policy.

[Lord Tunnicliffe]

I spent some years sitting on the Benches opposite facing the noble Baroness, Lady Noakes, and it comes as a refreshing new experience to find myself so frequently in agreement with her on this Bill. I am sure that will distress her as much as it is distressing me. Unfortunately, her caveating remarks are every bit as important as the lead remarks recommending the amendment.

We would not be able to support the amendment as drafted because, as she rightly points out, it could involve a direction to the MPC. This part of the Bill is a limiting list. The noble Baroness may want to consider either extending the list—we would look at that with great interest—or reversing it and extending the powers to the whole of the activity as her present amendment does and then caveating it with a number of areas where this power could not be used. This is a very useful amendment to develop the debate. I look forward to the Minister’s reply and thank the noble Baroness for proposing it.

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

My Lords, first let me be clear that I do not believe that it would be appropriate to extend the scope of the power in the way that is suggested by this amendment. It would make the power unusable. I was going to remind my noble friend, but she already made the point, that the Treasury already has a very broad power of direction over the Bank. As my noble friend pointed out, Section 4 of the Bank of England Act 1946, which continues and will continue to be operative, as my noble friend says, allows the Treasury to,

“give such directions to the Bank as ... they”,

the Treasury,

“think necessary in the public interest, except in relation to monetary policy”.

I think we are all agreed that the amendment was not intended to cover monetary policy.

[Lord Tunnicliffe]

Does the noble Lord agree that every Committee that has looked at this and reported and all professional commentators take the view that the power is so wide and so nuclear that no Chancellor would ever use it?

[Lord Sassoon]

My Lords, the noble Lord, Lord Tunnicliffe, is getting ahead of me. That was precisely what I was going on to explain. He is absolutely right that the power has never been used. Even at the height of the recent financial crisis, the then Chancellor felt unable to use this power to direct the Bank. Indeed, Alistair Darling’s book is rather interesting on this point. He explains in it that he was told,

“that it might be legally possible”,

to direct the Bank, but that,

“there would be wider implications of such an action. We had set great store by making the Bank independent and a public row between myself and Mervyn would have been disastrous, particularly at this time”.

The 1946 Act direction power is considered, and was considered by a Chancellor very recently, to be such a nuclear option because it is so broad that it would be very difficult to use. This means that any use of the power would likely be interpreted as the Chancellor overruling decisions and judgments that should rightly be for the Bank. This would be seen as a direct challenge to the Bank’s independence and a judgment on the competence of the Bank’s senior executives, which could cause a crisis in leadership in the Bank and a serious loss of public confidence. That line of thinking has prevented Chancellors from using the 1946 Act power in the past, as the fallout could be more damaging than the situation that they might be trying directly to address.

That risk was recognised by the Treasury Committee. That is why their report recommended that,

“the Chancellor should be granted a power to direct the Bank in a crisis which is free of the problems associated with the power under the 1946 Act”.

That is why the new power of direction in Clause 57 is designed to be a targeted and usable power. There will still be the power in the 1946 Act, for the reasons that underlie what my noble friend and the noble Lord, Lord Tunnicliffe, said. It is probably worth maintaining that reserve power somewhere in the system, albeit with the caveat that it is difficult to see the situation in which it might be exercised.

On the other hand, and going to the heart of who is in charge and who is responsible for what is in the new system, it was muddled and confused under the tripartite system but we want to make it much clearer in the new system that the Chancellor and the Treasury are principally there as guardians of public funds. That is why the specific direction in Clause 57 is designed that way. It is targeted. It does not allow the Treasury to overrule the Bank’s decisions and judgments; it allows the Treasury to take the decisions that are rightly for the Government to take. It is designed to allow the Chancellor to intervene to require the Bank to take specific action in a crisis management situation where public funds are at risk. That is why the power covers only the Bank’s crisis management functions, specifically the provision of liquidity and the operation of the special resolution regime. Again, I hope that that helps the noble Lord, Lord Peston, with the intended scope of this.

[Lord Peston]

My Lords, the noble Lord has clarified that very well. I take it that there would still be, as happens all the time, informal meetings between the Chancellor and the Governor, where the Chancellor might say, “Well, it is your decision but I am a bit worried about this or that”. Nothing will infringe on that because, as the noble Lord well knows, no system can work without informal and off the record meetings and things of that sort. This will not get in the way of what one might call ordinary human behaviour.

[Lord Sassoon]

No, indeed. The next time, in another context, the noble Lord challenges me about why we are not disclosing more meetings, I shall remember what he just said about informal and confidential meetings. It is important that they happen. Having seen how things happened before and how they happen now, it is striking to see the much greater regularity of meetings between the principals—they are critical—than happened at some periods in the past. That is very important as a background in peacetime as well as in crisis time.

I hope that is clear. The Bank is in charge of operating the resolution regime, but the Chancellor must agree to any use of public funds and has the final say when they are used. Even setting aside the unintended drafting of Amendment 190ZE to include a power that would be even more widely drawn than the 1946 Act, the targeted power that we have drawn is the appropriate one. If we had drawn the power more widely to allow for future proofing, as my noble friend puts it, I would be standing here defending why we had left such an important area open in the Bill. It is better to draft such a power related to the system as we know it. It is broadly future proofed in the sense that there is a clear distinction between the use of public funds and other matters, and after that helpful debate I hope that my noble friend will withdraw her amendment.

[Lord Barnett]

I thought that the Minister in his earlier answer was about to say that the meetings between the Governor and the Chancellor would be available on the web. The other day he rather misled me and probably the House when he said, in answer to my question about a meeting between the OBR and the Chancellor and how often he had had meetings in the last 12 months, that it was all transparent and on the web. I am no expert in these matters, but I spent quite a bit of time on the web and could not find it there. I asked my noble friend Lord Peston, who is perhaps better on the web. He too spent a lot of time on it and still could not find it, either transparently or non-transparently. Can the Minister explain to the House whether it is misleading to suggest that these things are transparent on the web?

[Lord Sassoon]

My Lords, although I believe that we are allowed to use portable electronic devices in the Chamber, I cannot in 30 seconds find it. I can assure the noble Lord, Lord Barnett, that it is done on either a quarterly or six-monthly basis. I do not know whether the search was made on the OBR website or the Treasury website, but my recollection is that the OBR releases something on its website periodically. I will find the appropriate link and let the noble Lords have it.

[Lord Peston]

I understood him to say the other day that it was on the Treasury website and I wasted three-quarters of an hour this morning. There is lots of good stuff on it. You can spend a happy day searching the Treasury website, but it did not contain anything that the Minister had told us it did contain. We can leave it at that.

[Lord Sassoon]

I apologise if I directed people to the wrong website. I will find the right one, which I think might be the OBR’s own website.

[Baroness Noakes]

My Lords, I thank all noble Lords who have taken part in this short debate. I thank my noble friend for his response. I take the point on general powers of direction. They have not been used since these have been written into statute. They existed in all the nationalised industry legislation, which gives rise to the question as to why they are there, but I am sure Ministers feel more comfortable that they have this nuclear option should nuclear war ever need to break out.

The Treasury Select Committee would still say that it thinks that the power is too narrow. If there were a crisis where it is clear that he should be in charge, the Chancellor should not be restricted in what he can direct the Bank to do. For example, he may feel the need to direct the Bank on the use of macroprudential tools. These are in the hands of the Financial Policy Committee. If the Bank were slow in using them and where it took a particular view on something on which the Chancellor took another, public money would be at risk. The Chancellor ought to be able to get his way on things. On that basis the Government have drafted too narrow a power, but I shall not pursue it any further. It is the Government’s choice, and I beg leave to withdraw the amendment.

Amendment 190ZE withdrawn.

Clauses 57 to 60 agreed.

16:00

Amendment 190ZEZA

Moved by

[Lord Tunnicliffe]

190ZEZA: After Clause 60, insert the following new Clause—
“Duty of coordination: early warning
In furtherance of collaboration under this Part, the Bank of England, FPC, FCA or PRA must provide the Treasury or the Secretary of State with an early warning of the possibility that a notification of a material risk to public funds may be given under any provision of this Part, and must provide full information about circumstances.”

[Lord Tunnicliffe]

My Lords, the intention behind this amendment is twofold. It is to bring more players into the decision about an early notification and to bring in the requirement for early notification. Touching first on bringing new bodies into this, the clause effectively brings the FPC, the FCA and the PRA into the early notification procedure advocated in this clause. The essence of our concern has been rehearsed around the House. It is that the Bill gives enormous power to the Governor of the Bank of England and, in a crisis, he effectively ends up as the gatekeeper of information flowing from the Bank to the Government. We believe that there should be ways of making this gate wider and that where the FCA and the PRA—I shall talk about the FPC in the next amendment—believe that an early warning is required, they should have a duty to consider the circumstances; and where they believe that it makes sense, they should have a duty to communicate that to the Treasury or the Secretary of State. This would clearly require them, as part of their function, to be proactive in their stance when they are horizon-scanning or looking forward at various risks.

The second part of the amendment is about the essence of an early warning. The concept of an early warning is that it is a warning short of a formal notice. The amendment lowers the bar from the form of words in the Bill that implies the “probability” of a material risk or the requirement of the use of public funds to the “possibility”. It echoes the concerns of the Treasury Select Committee in its 21st report which was published on 8 November 2012. Its recommendation at paragraph 166 was:

“We are concerned that the formal notification of a material risk to public funds may still not give the Chancellor enough time to consider other policy options. The Treasury needs to know as early as reasonably possible when it might receive a notification. We therefore recommend that the forthcoming legislation also require the Bank to give the Chancellor an early warning of the possibility that a notification of a material risk to public funds may need to be given, and full information about the circumstances”.

We very much agree with that recommendation and in this amendment we seek to give effect to it.

The process of crisis that we are debating will probably involve protecting the activation of the proactive intervention framework. The noble Baroness, Lady Noakes, knows what I am talking about because she is familiar with the document, The Bank of England, Prudential Regulation Authority: Our Approach to Banking Supervision, published in May 2011. The PIF is described on page 18. It describes five stages of escalation, which presumably are the key stages that lead up to a crisis. There is almost a presumption that there is a clear difference between normal business and a crisis. I hope it never happens, but if it did, it would be an escalating situation. Some of the stages of the proactive intervention framework will be in private. Some will not want to be the subject of a notice, as the final notification as envisaged in the Bill should be. The ability and duty of the Bank to give a notice of possibility would allow those private activities, in the early stages of the PIF, to take place, alerting the Government that they have to start thinking about the possibilities and how they may develop.

The counterargument often revolves around the fact that the Chancellor and the Governor of the Bank of England talk to each other. Of course, at the moment we have two most charming individuals and I am sure that they have useful conversations. However, once again, if you go into the evidence of the Select Committee and its comments, clearly this has not always been true. I am rather sorry that the noble Lord, Lord Lawson, is not in his place so that he could reflect on the events of 1984 when he had to find a great deal of money to save a failing bank and, according to the Select Committee, was advised of that requirement on the morning of the crisis. Equally, one cannot read Alistair Darling’s book without a clear feeling that the day-to-day communication between the Governor of the Bank of England and the Chancellor was less than warm. Certainly, it was not enough to leave one comfortable that the necessary preliminary warning that this amendment envisages would take place at an informal level.

As this crisis gathers, one has to presume a situation that relationships could really be quite bad. They could be in seven years’ time. The new governor might turn out to be less charming than the present one. The Chancellor of the day could well be less charming and communicative than the present one. In fact, there could have been a total breakdown of trust between them. It has happened in the past. This amendment would require a preliminary notice and there would be a dereliction of duty if the Government did not provide this preliminary notice. This mechanism would allow the Government to start their preliminary thinking and consider mitigation measures other than the expenditure of public money—as envisaged in the Bill —and give the lead times necessary. Crucial is a situation of no surprise. We are very uncomfortable about the sense behind some of the remarks, and the extent to which the governor is the gatekeeper of information to the Government. We believe the Government should be equally sensitive and concerned and I commend the amendment to the them.

[Lord Sassoon]

My Lords, I am genuinely puzzled about this amendment. I know that it was put forward in another place by Mr Leslie, the colleague of the noble Lord, Lord Tunnicliffe, and that it is designed to implement a Treasury Select Committee recommendation to create an early-warning mechanism of a risk to public funds. No one would be keener than me to have such a mechanism in place if I believed that it was necessary because I thought that the Treasury would not, under the provisions of this Bill, get sufficient early warning.

However, this provision and the question of an early warning do not rely on what I think we all agree is very important; namely, that there is constant dialogue about a whole range of things between the Treasury and the authorities, including the Bank. The question of an early warning does not rely on that, although we would expect it to carry on because it is working well at the moment.

I believe that the amendment is unnecessary and inappropriate. Therefore, let me carefully go through why. First, as the Government made clear in their response to the Treasury Select Committee, the duty on the Bank to notify the Treasury of risks to public funds already achieves this aim. The existing duty is already designed to give the Treasury an early warning of a potential risk to public funds. That is because Clause 54 sets an extremely low bar for notification; for example, when the Bank or the PRA looks at the position of a firm or a group of firms, if it thinks that a possible future scenario could lead to a situation in which the Treasury might reasonably be expected to decide to use public money to protect stability or the public interest, a notification must be made.

I do not think that the bar could be set much lower than that. For example, in the type of scenario described by the noble Lord, where the Bank is aware that at some point in the future a risk to public funds could arise, the Bank should be making a notification of a risk to public funds under the existing duty in Clause 54. I am happy to put that on the public record again. The Bank completely accepts that and there is no debate about the interpretation of the duty under Clause 54.

With this amendment, the noble Lord also risks undermining the clarity and force of the statutory duty to notify the Chancellor of risks to public funds by broadening the grounds on which it could be triggered to include risks to the FCA’s objectives which do not involve public money. Just as in the previous debate we were talking about issues which related to the line between risk to public money and other matters, again, in relation to this particular early warning, the duty is drafted very deliberately with the line drawn, which is not reflected in the noble Lord’s amendment.

[Lord Tunnicliffe]

I feel that the words used by the Minister are quite a shift. He referred to a “possible future scenario”. As I read Clause 54, it is much closer to a probable future scenario. Will he explain to me—I am sure that he is much more familiar with the Bill than I am, much as I have tried to study it in the past few days—where in statute I can draw the comfort that a possible very low bar to notification is emphasised.

16:14

[Lord Sassoon]

My Lords, the fact is that a regulator would have to look at future scenarios when it is thinking of its duty under Clause 54. The clause refers not to a situation that has arisen but to,

“a material risk of circumstances”,

which links it, as I have said, to the provision of financial assistance. It is clear and simple. There is a lot of other stuff in Clause 54(1), but the key things are,

“that there is a material risk of circumstances within any of the following cases”,

which are then explained in detail. As understood by the Government and the Bank, this is a forward-looking statement and requirement, which obliges them to think about possible future scenarios that could lead to the situations that are then developed in Clause 54. Of course, the duty in Clause 55 is to notify any changes to that.

[Lord Tunnicliffe]

I think that some of what the Minister has just said is quite a shift from what Clause 54 says. I would be delighted if he came forward on Report with some amendments that contained a duty to look at scenarios and a duty to bring forward a notification at the point of a possibility. There has been considerable debate in another place and in various committees, as to what “a material risk” means. There is a commitment in Clause 61 that it must be in the MoU, but as I search the MoU I cannot find it coming readily out to me—I shall be asking about that later. I invite the Minister to consider what he has said and see whether he can improve the legislation so that there will be no ambiguity about the test that the Bank has to apply in bringing forward a notification.

[Lord Peston]

My Lords, perhaps I can help the Minister—it is not a question of persuading him to say yes or no at the moment. Looking at Clause 54, I take “material risk” to mean a significant probability; “possible” is much less than that. I think that my noble friend suggests in his amendment that Clause 54 would be strengthened if we went down the “possible” line, the technical point being—and I do not press it—that there is deep philosophical argument, particularly within probability theory, about the difference between possible and probable.

I interpret the amendment to mean that if the relevant body—whether the Bank of England or another regulator—is looking at a specific part of the financial services sector, or even a specific firm within it, it should let the Government know that it is doing so and that one definitely possible outcome is a need for the use of public funds. The amendment, as I understand it, is simply an attempt to be helpful to HMG when it comes to the control of public money. The Minister may say, “We do not want to know about possibles; we only want to know when the real demand for the money is coming”. That may be his argument, but that is the difference—am I not right?—as to what we are talking about here.

[Lord Sassoon]

Perhaps I did not make sufficiently clear the rather obvious point that we need to look at the heading of Clause 54, “Duty of Bank to notify Treasury of possible need for public funds”. At the risk of stating the obvious—it seems that we need to come back to the obvious—this whole duty is about the notification of a possible need for public funds. If we wanted to say “probable need for public funds”, the Bill would say “probable” in the clause heading, but it does not, it says “possible”. I advise the noble Lord that we are looking at the heading of Clause 54 in part 4 on page 134 of the Bill.

[Lord Peston]

Forgive me. I am willing to accept that I am wrong. I agree that the top line says “possible” but “material risk” is what goes into the material section of the Bill. That seems to me to undermine the clause heading. That seems to me the real point. Why have the Government put in “material risk” if they meant possible risk?

[Lord Sassoon]

My Lords, there are some points where, frankly, I have to take the advice of the legal experts here, which I have done. Frequently Bills, this one included, contain constructions which follow some sort of drafting formula and are sometimes difficult to understand. As I say, my starting point is that if I really thought that the Treasury was not going to get the sort of early warning which the noble Lord, Lord Tunnicliffe, and the Treasury Committee rightly ask for, I would propose a government amendment. I take the point that “possible” appears in a heading and not in Clause 54(1) but it is very clear from the heading that we are talking about the material risk in the context of the possible need for public funds. I assure the Committee that all the advice that I have been given is to the effect that this will achieve the purpose that the noble Lord, Lord Tunnicliffe, desires. Finally, I draw the noble Lord’s attention to paragraph 13 of the draft MoU to find the interaction between the MoU and these issues. On the basis of those explanations, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Tunnicliffe]

My Lords, this has been a useful debate. However, members of the Treasury Committee are concerned that there is confusion about material risk. We will come to the extent to which the MoU does or does not define that. I believe that a Prime Minister once said, “Circumstances, old boy, circumstances”. As I said, I am happy to accept the Minister’s assurance that the legislation will work under the present charming governor and charming Chancellor, but it needs to be future proof. The words that the Minister used in connection with this important point were reassuring but they need to be in the Bill if they are to persist beyond the tenure of the present Government. I hope that he will consider bringing forward an amendment to achieve that. In the mean time, I beg leave to withdraw the amendment.

Amendment 190ZEZA withdrawn.

Amendment 190ZEZB

Moved by

[Lord Tunnicliffe]

190ZEZB: After Clause 60, insert the following new Clause—
“Collaboration under this Part: power to make regulation
(1) The Secretary of State may, by order subject to affirmative resolution in each House of Parliament, add to the list of bodies specified in section 54(4).
(2) The first such order made under this section shall add the FPC to that list.”

[Lord Tunnicliffe]

My Lords, I apologise to the Committee for this extraordinarily clunky amendment. I give a prize to anybody who really understands what we are trying to do. Those who are committed members of the conversation on the Bill will know that at the end of the previous sitting, the Chair, as is typical or traditional, or whatever the right word is, swept through a whole series of clauses which we approved. Unfortunately, that destroyed about five amendments which we had tabled that day.

I am not suggesting malpractice on any part, but it rather ruined the arguments that we wanted to make today, and we have had to find a way around it. The first amendment slipped around it quite comfortably but the second one looks rather difficult to understand.

For the avoidance of doubt, this amendment puts the FPC into the notification process; it is as simple as that. Indeed, if we bring the amendment forward on Report, we will make sure that it is very clear, straightforward and in the right place and that the Committee does not plough it out by accident.

The FPC is at the centre of this Bill. In many ways the FPC is the new activity that will give force to the consideration of stability. I could not find any one place where it is nicely described. The best that I could find is in the Explanatory Notes to the Bill, where paragraph 35 states:

“New section 9C provides that the objective of the FPC is to contribute to the achievement by the Bank of the financial stability objective provided for in section 2A of the BoE Act … Subsection (2) provides that the FPC is to contribute to that objective primarily by identifying, monitoring and taking action to remove or reduce systemic risks (such as those set out in subsection (3)) with a view to protecting and enhancing the resilience of the UK financial system”.

In the FPC, we are seeking to put together the people who are the most able in the country to monitor, consider and mitigate financial instability. We are requiring them to opine on it and to make directions on it. We are requiring them to be the best informed people in the country and the FPC to be the most important body in the country in terms of financial instability. It is therefore strange that the new body is not able to pull what I would call the Clause 54 trigger. The Bill leaves this entirely in the hands of the Governor of the Bank of England. The presumption is that the governor will always provide the best information and the best notification of where a risk is likely to come about.

It is difficult to understand that, because at first sight of the Bill you would expect it to be a narrative about setting up structures and organisations to address the whole issue of financial instability. You would expect it to give those institutions the appropriate powers to understand, to control and to mitigate financial instability. Broadly speaking, the Bill does that; and, broadly speaking, the Bill is not opposed by these Benches in how it seeks to do that.

However, suddenly the narrative stops. The FPC, watching instability occur in the economy, is expected to take actions—quite powerful actions. It is able to instruct the PRA to take certain actions with respect to banks, perhaps to consumer credit, and so on. Yet suddenly, once the deteriorating situation is labelled a crisis, there is no involvement by the FPC. There is the presumption that the Bank of England Governor will be all-knowledgeable, that the FPC will no longer have any role, and that it should not opine on whether the Clause 54 trigger is pulled.

The facts of life are that real organisations have a diversity of opinion, and the FPC, if it is doing its job well, will have interesting and difficult discussions about a gathering storm. We contend that it should be able to decide that, as a result of those discussions, it can advise the Chancellor that a situation is deteriorating and that there may well be a situation in which public funds would be required. If we require this body to have that role, then the FPC will be a safeguard against the possibility that voices that should be heard by the Chancellor are not heard. I beg to move.

16:30

[Lord Newby]

My Lords, amendments to probe the role of the FPC in triggering a public funds notification under Clause 54 were also laid in Committee in the other place. They were inaccurate then and they remain inaccurate now, primarily because these amendments would have no legal effect. The FPC does not have any powers under Parts 1 to 3 of the Banking Act 2009. So in referring to the powers of the FPC under those provisions, the amendment refers to powers that simply do not exist.

The thrust of the noble Lord’s amendment is that the FPC should be able to give notification of risks to public funds separately from the Bank itself. As we have explained previously, the new system that the Government are putting in place is based on making the Bank a single point of accountability for financial stability. Consistent with this, we are making the Bank, and the Bank alone, responsible for notifying the Chancellor of risks to public funds. This is because, as we have seen so strikingly with the tripartite system, the risk of splitting responsibilities over various institutions is that each one thinks that one of the others is responsible, or blames another, when things go wrong, thereby allowing serious risks to fall through the gaps. This will require the Bank and its senior management team to identify and evaluate risks emanating from all parts of the financial sector, working closely with the PRA, the FCA and the FPC.

However, the statutory responsibility for formally notifying the Chancellor must be clear and unequivocal. It is not that the FPC is going to be separate somehow from the Bank and, given that the governor in his new enhanced role is going to chair the FPC, if the governor, representing the Bank, goes to speak to the Chancellor under the terms of Clause 54 he, of necessity, will also be representing the views of the FPC.

We therefore think that the amendment is unnecessary and inappropriate, and ask the noble Lord to withdraw it.

[Lord Tunnicliffe]

My Lords, the essence of this situation was caught in the last part of the noble Lord’s response. If the governor goes to see the Chancellor and, say, does not represent the FPC’s view, that would to some extent be unthinkable. However, our concern is if he does not go to see the Chancellor—that he listens to the debate at the FPC and may find himself in a minority, but still concludes that he has no responsibility to share FPC’s doubt with the Chancellor. We are not talking about competing roles where it is not clear who is responsible. We are not in any way challenging the split of responsibilities set out in the Bill. We accept that the Bank has the executive responsibility to take action in a crisis. We accept that there need to be rules about where the Chancellor comes in and has executive responsibility.

This is not about who is responsible, other than the points raised by the noble Baroness, Lady Noakes, earlier in the debate, where we may think the line has to be moved about a bit on direction. We are not, broadly speaking, challenging the thrust of the Bill and the division; we are challenging the idea that only the Governor of the Bank of England can advise the Chancellor that there is a gathering crisis that may involve the use of public funds. We believe that it is safer to have more bodies involved in that situation and we particularly believe the best qualified body in the land should have a duty to consider whether there is a crisis situation developing and should have a right, if it considers that to be true, to advise the Chancellor.

I can see that I am not persuading the noble Lord but nevertheless the point is important and valid. We may come back to it on Report but in the mean time I beg leave to withdraw the amendment.

Amendment 190ZEZB withdrawn.

Clause 61 : Memorandum of understanding: crisis management

Amendment 190ZEA

Moved by

[Lord Davies of Oldham]

190ZEA: Clause 61, page 137, line 32, after “England” insert “, the FCA”

[Lord Davies of Oldham]

My Lords, in moving Amendment 190ZEA, I will speak also to the other amendments grouped with it. I imagine the Minister feels that his reply earlier was so definitive that the Opposition ought really to pack up their bags and go home at this stage. I have bad news for him—we still have open bags with plenty of issues that we seek to explore, not least because we do not think the Government are clear about the issue of crisis management. This, after all, is the absolute heart of this Bill. We all know the reasons why we are greatly concerned about financial crisis management and the difficulties that have obtained in the past. Therefore, I am afraid that the Minister will have to tolerate the fact that we are going to probe as far as we can within the framework of these Committee proceedings. However, he can of course rest assured that when his answers are totally satisfactory, that will only foreshorten the amount of debate we will need on Report. He stands to gain from giving as full answers as he possibly can that may allay our anxieties at this stage.

All these amendments relate to the memorandum of understanding on crisis management—the blueprint on who has to do what and what would happen in the particular circumstances of any crisis situation. The substance of the memorandum is not in legislation and therefore not quite subject to the scrutiny that we are afforded on other aspects of crisis management. It is being published separately and does not go through quite the same degree of parliamentary scrutiny as the other agents and factors involved in crisis management. Therefore, the Minister is bound to expect us to press hard in this area.

The broad message of this group of amendments is to call for the Financial Conduct Authority to be given an explicit role in the process and its related mechanisms. The tenor of all our amendments today is that the collaboration between the Treasury, the Bank and the regulators is exceptionally important. In particular, why does the Bill allow the Bank, the Treasury and the Prudential Regulation Authority to include in the memorandum provisions on co-operation between any of them and the FCA, but the FCA itself seems to have no reciprocal power? It can like it or lump it; it can accept what is put forward as an agreed position or it can seek to veto, but it is not party to the drafting process. We are concerned about this because the risks of disruption and instability in the financial markets, which are overseen by the FCA, are not being given sufficient weight.

We all appreciate that we are reckoning with the future and that we cannot predict it. We also know that the last people we want to be are generals solving the problems of the last war and not being ready for the next. We understand the very real difficulties that the legislation seeks to address. We can put in place as many suitable mechanisms as possible to try to implement appropriate safeguards, but we cannot be certain that we have got it right, and we cannot foresee totally the type of crisis that might arise. Therefore, we on this side of the House think that properly involving the FCA in crisis management preparations can only enhance the collective pool of knowledge and increase the likelihood of better outcomes.

I recognise that there is an element of repetition in these amendments. The Minister addressed this earlier when he explained how Clause 54 addressed many of these issues. However, we believe that our case merits consideration by the Government. The amendments are framed in a constructive fashion and I hope that the Minister will accept the spirit in which they were tabled and perhaps indicate that the Government might think again. I beg to move.

16:45

[Lord Sassoon]

My Lords, I am very happy to accept the spirit in which the noble Lord, Lord Davies of Oldham, has spoken to the amendments in the name of his noble friend Lord Tunnicliffe. However, the rather hesitant and apologetic tone in which he presented them would make it all the more surprising if I were to say that they found favour with me. They do not, but I will take them seriously because although they replicate amendments that were debated in Committee in another place, of course we as a Government should respond to them.

Why do I believe that it would be a mistake to include the FCA as a full participant in the crisis management MoU? The issue goes right to the heart of what the new regulatory architecture is trying to achieve. The Government are committed to moving away from a tripartite model where accountability was confused and diluted, and responsibilities were overlapping and unclear. There cannot be an issue in the Bill that goes closer to the heart of it than the MoU. A key element in achieving the clarity of responsibilities that we need is making the Bank a single point of accountability for financial stability. We debated that, and it goes to the heart of the architecture. This will help to ensure clarity and focus of communication; it will reduce the potential for delay or confusion; and it will provide the best chance of delivering a timely and successful solution to a risk to public funds. The construction of the MoU, and who is and who is not a party to it, flows directly from that central part of the architecture which this Bill seeks to put in place.

Of course there will be occasions on which the FCA might need to be involved in discussions around financial crisis management. For example, the FCA might have a role in identifying how a scenario might impact on the interests of consumers and in suggesting what action should be taken to protect those interests. However, the FCA does not need to be one of the primary participants in the MoU for those interactions to take place. The legislation provides explicitly for this co-operation between the participants to the MoU and the FCA to be covered in the MoU. That is why, as I am sure the noble Lord, Lord Davies of Oldham, will have noted, paragraph 34 of the draft memorandum sets out that the Bank and the Treasury will involve the FCA and other organisations as necessary. Again, I fully understand and respect the substantive point made by this amendment but it is dealt with through the obligation in the legislation for the co-operation. It is backed up by a paragraph in the draft MoU and that is where we believe it should rest in a way that is compatible with this greater clarity of responsibilities that we have to get into the new system.

To underline the point, the FCA does not have a significant role in the crisis management itself. It is not responsible for responding to or managing serious threats to stability—that is for the PRA and the Bank— nor for prudentially regulating firms that are likely to pose a risk to public funds; a matter for the PRA. Therefore, the FCA does not need to be a primary participant in the crisis MoU alongside the Treasury and the Bank of England. Indeed, I would suggest to the Committee that, if the FCA were included in this way, it would force the FCA to be a participant in meetings and discussions where it had no clear role.

The approach taken by the Bill is the most sensible solution. It ensures an appropriate level of FCA engagement in crisis management, without requiring the conduct regulator to get involved in aspects of crisis management where it has no remit or expertise. I would hope that, on the basis of this explanation of the rationale for the position, the noble Lord would feel able to withdraw the amendment.

[Lord Blackwell]

Before the noble Lord responds, clearly one area where the FCA has particular responsibilities are competition issues relating to the industry. Can my noble friend put on the record that, if a competition issue is raised in a crisis management situation, there will be an explicit expectation that the FCA would be involved it that?

[Lord Sassoon]

My Lords, I believe that paragraph 34 of the MoU is sufficiently widely drawn that the MoU will provide for the Bank and the Treasury to involve the FCA in that circumstance. However, we do not specify, and it would not be right to specify, the particular circumstances because the competition and other remits are made clear in the general objectives and obligations that the authorities are under. I do not believe that there is any lacuna in that respect.

[Lord Flight]

My Lords, I want briefly to support the Government’s position here. I am one of the few people still around who participated in the lifeboat back in 1974 in the wake of the secondary banking crisis then. Although I felt that the Bank of England had been less than perfect in allowing that crisis to develop, the way in which it handled it was first class. It did not cost the taxpayer a penny and the lifeboat got to grips and sorted out the various banks that were, in essence, bust.

The fears that I expressed in the other place at the time of the FiSMA about the tripartite agreement were exactly what transpired. The three parties failed to reach agreement, as I think is now widely recognised and known, and it is a miracle that the banking system did not actually collapse because it was dangerously close to doing so. In a banking crisis which is not about, if you like, conduct and how customers are treated, but for whatever reason is about the potential pack of cards implosion of the banking system, it is crucial that it is the banking regulator entity—in essence the Bank of England in consultation with the Chancellor of the Exchequer of the day—that has clear authority to get on and take the necessary measures promptly.

[Lord Davies of Oldham]

My Lords, I am not sure that we are disputing that last point. We are arguing that there may be a crisis in which the contribution of the FCA would be of considerable importance. Perhaps the Minister will answer this point for the clarification of the Committee and all those interested in this matter. We are not quite clear why the other regulator, the PRA, operates in a different fashion from the FCA with regard to the consultation on the memorandum. I should like the noble Lord at least to identify that factor.

[Lord Sassoon]

I am not quite sure I have understood what clarification the noble Lord is asking for. The simple fact is that we are talking about a memorandum to do with crisis management. Crisis management is to be led by the Bank of England under the clear responsibilities that we have in this framework and therefore the memorandum is focused entirely on matters where the responsibility lies between the Bank and the Treasury in so far as public money is at risk. We are talking about matters where essentially the FCA is an ancillary party because dealing with crisis management is not the FCA’s principal role. It has a lot of other responsibilities in the new system, but crisis management is not one of them. That entirely drives the logic behind who is and who is not party to the MoU. I do not know whether that helps the noble Lord.

[Lord Davies of Oldham]

The Minister is always helpful, if not always totally convincing. We shall think further about this matter and the answers he has given today. For the time being, I beg leave to withdraw the amendment.

Amendment 190ZEA withdrawn.

Amendment 190ZEB

Moved by

[Lord Davies of Oldham]

190ZEB: Clause 61, page 137, line 38, at end insert “which must include risks which significantly impact upon the safety and soundness of PRA-authorised persons, or which put at risk relevant markets functioning well”

[Lord Davies of Oldham]

My Lords, again I apologise to the Committee that this amendment is also a casualty of the fact that we ought to have tabled and discussed it the other evening in the context of Clause 54, but in fact we failed to do so. I would therefore ask the Committee to show a degree of patience and bear in mind the content of Clause 54 which, as the Minister has already identified, is absolutely critical to this part of the Bill. We want to make our argument as it relates to Clause 61 because that is where the amendment is actually located. However, Clause 54, which sets out the circumstances under which a decision is made to notify the Treasury about the need for financial assistance to address a risk to public funds, is the background to the amendment.

The amendment seeks to arrive at a clearer definition of what “material risk” means. We have already had one shot at this issue today and I think we made a modicum of progress, but as my noble friend Lord Peston indicated, if we are not careful we might become engaged in a somewhat philosophical debate about the definition of risk. However, the term “material risk” appears in the Bill and therefore we ought to be as clear as we possibly can about what the term means. In the context of the memorandum of understanding, this amendment states that the memorandum needs to make provision for what the Bank and the Treasury regard as material risk. The amendment requires the definition to include risks that significantly impact on the safety and soundness of PRA-authorised persons and factors that put at risk relevant markets functioning well.

These are specifically and deliberately definitions which directly refer to the roles and objectives of the PRA and the FCA respectively. This is because the Opposition argue that the Bill and the draft memorandum are too vague about the role of the FCA and PRA in circumstances of material risk to public funds. I do not think that our discussion earlier this afternoon cleared this matter up. That is why we are once again giving the Minister the opportunity of being clearer about the matter, perhaps. We want to ensure that the Bank—the governor—will involve the FCA and PRA in these matters. The importance of defining material risk, and concerns that the Bill currently falls short on this, was raised by the committee convened to look at the draft legislation. That pre-legislative committee argued that it should be subject to parliamentary approval and should not be left to the memorandum of understanding.

We have parliamentary colleagues who have a real anxiety about this matter. I do not think that the discussions we have had thus far this afternoon allay all those anxieties. However, the Minister may be able to have a better shot at it a second time. I beg to move.

[Lord Sassoon]

Well, I will have another shot at it, but I do not suppose the schoolmaster opposite will necessarily mark me any better, however well I do. I am under no illusions. Nevertheless, I take this amendment suitably seriously. I will go through the arguments in the expectation that perhaps all will become clear and I will get an alpha plus for this one.

Amendment 190ZEB would link the threshold of the “public funds notification” detailed in Clause 54 to risks that could significantly impact the safety and soundness of PRA-authorised persons or undermine the orderly operation of financial markets.

This amendment would make the public funds trigger confusing, and less, rather than more, effective. I should explain why. The phrase “public funds notification” set out in Clause 54, which is a notification that public funds could be at risk, is precisely that. It is not a notification that there are circumstances in the financial sector that threaten the PRA or FCA’s objective.

The PRA will be responsible for prudential regulation of a large number of small deposit-takers and insurers, many of which can and do fail without any risk to public funds. Requiring the Bank to make a formal notification to the Treasury under Clause 54 every time and any time any of these institutions got into trouble could lead to a relatively large number of notifications where there was in fact no risk to public funds.

Similarly, adding a reference to the FCA’s objective to the definition of material risk in this way would broaden the grounds on which the duty to notify would be triggered to risks which do not involve public money. It would mean that the notification under Clause 54 was not in fact a public funds notification at all. Crucially, this would mean that the Treasury’s power of direction in Clause 57, which is available where there is a live public funds notification, would be available when there is no risk to public funds. I do not know whether that is what was intended here but I hope that the noble Lord would agree that that is not what should be achieved. This matters because decisions to use public funds to resolve a financial crisis are for the Government to take, usually the Chancellor personally. As such, the purpose of Clause 54 is to ensure that the Treasury is always informed when there is a material risk to public funds, and not for other, wider purposes.

17:00

The noble Lord is nodding, which is encouraging. I shall carry on. This does not apply in the same way to problems in the financial sector that do not affect public funds. These matters are the responsibility of the regulators and the Bank of England, not the Treasury. As we discussed in the debate on early warning mechanisms for the notification, the trigger is already wide, with a low threshold: if there is any doubt that public funds may be at risk, the Bank must notify the Treasury.

Of course, there are all sorts of other publication mechanisms for all sorts of other matters, which we have discussed, but here we are talking about a very deliberately targeted issue to do with public funds and a trigger mechanism that relates to that issue, and we do not want to confuse it with other types of notification, which this amendment risks doing.

In conclusion, of course the FCA and PRA should keep the Treasury informed when they are managing significant issues that are of wider public interest but do not impact on public funds, not least because it is Treasury Ministers who will need to explain these issues to Parliament where necessary. This type of communication already goes on routinely between the Treasury and the FSA, on matters such as PPI mis-selling or bank charges. There are provisions in Part 5 of the Bill, which we will be discussing in Committee next week, to ensure that the Treasury and indeed Parliament are informed where there has been potential regulatory failure. However, these are very different matters from the formal notification that public funds may be at risk, which is the sole purpose of Clause 54.

It is quite right that we tease out these issues. If the noble Lord feels that there are gaps in Part 5, I am sure that he will raise them in debate next week and I look forward to that. For the moment, I can assure the noble Lord, Lord Davies of Oldham, and the Committee that the provisions in the Bill as drafted have this direct link between the warning mechanism and the public funds power of the Treasury, with a bar that we believe is sufficiently low, and that we should not risk confusion with the much wider trigger mechanism that Amendment 190ZEB would introduce.

I hope on that basis that at the very least the noble Lord will consider withdrawing his amendment, even if he does not give me an alpha plus for my further explanations.

[Lord Davies of Oldham]

My Lords, it is almost half a century since I was a schoolmaster so I have forgotten what alpha plus means. I cannot remember ever offering one to a student. I might have done to undergraduates later but certainly not in school.

However, I am not going to grade the Minister. I would not want to flatter him too much. After all, he derives enormous satisfaction from these interesting debates and I do not think that I should add to his sense of self-satisfaction at this stage by marking his last effort. Where I was nodding is obvious enough. Of course I agreed with the Minister when he was emphasising that what we are concerned about with the warning mechanism is where public funds might be engaged. That is the nature of Clause 54 and our amendments with regard to Clause 61 also take that very much into account.

I am grateful to the Minister for his commendable contribution today, which I very much enjoyed and I hope the rest of the Committee did. Like him, I am looking forward to our engagement next week on Part 5. As he predicted, he has not heard the end of this matter, although I beg leave to withdraw the amendment.

Amendment 190ZEB withdrawn.

Amendments 190ZEC and 190ZED not moved.

Amendment 190ZEE

Moved by

[Lord Tunnicliffe]

190ZEE: Clause 61, page 138, line 2, at end insert “, and how a temporary Stability Committee would be convened and function in a crisis”

[Lord Tunnicliffe]

My Lords, I shall refer to the memorandum of understanding, particularly paragraph 20. I am mindful that people reading Hansard may wonder which memorandum of understanding it is and where it is. It is Annexe E to A New Approach to Financial Regulation: Securing Stability, Protecting Consumers, Cm 8268, from January 2012.

Paragraph 20 of that document states:

“During a potentially fast-moving crisis, it will become especially important to ensure close and effective coordination so as to maintain coherence in the overall crisis management process. At the heart of institutional coordination during a live crisis will be frequent contact between the Chancellor and the Governor. However, the Chancellor and the Governor may agree to establish ad hoc or standing committees at other levels to support this process”.

That is fine as far as it goes. Our amendment seeks to require in the MoU more detail of how a temporary stability committee—as we have called it but we do not mind what the Government call it—would be convened and how it would function in a crisis. We are essentially saying that we would like a commitment in the Bill to emergency preparedness—to planning how the crisis might be handled.

I have a very strong relationship with the concept of emergency preparedness. It has been part of my whole professional life. My first job was as an airline pilot—third class; I struggled up to second class. We spent our time hurtling down runways with engines on fire and so on and coping with it—not for real, I hasten to add, or there would be piles of burning metal all over the place, but in simulators. It was a crucial part of our role. The public who use those services have every right to expect that people in that critical position spent a great deal of time preparing for emergency.

The next phase of my career in which this was particularly important was when I was managing director of London Underground Ltd. A year before I came into that office we had 31 people at Kings Cross. We got more or less everything wrong that could possibly have been got wrong. Emergency preparedness was part of the series of errors. If we had had good emergency preparedness processes and all other things had gone wrong, in probability nobody would have died. Later in my career I was chairman of the United Kingdom Atomic Energy Authority, which has the potential of course to release radioactivity into the atmosphere and we took the whole issue of emergency preparedness right up to what the role of the non-executive chairman would be in such circumstances.

In the airline business, London Underground and UKAEA, we had the potential to kill tens or hundreds of people—in LU, it was thousands of people. I am happy to reassure anyone reading this debate that we engineered out the scenario that involved thousands of people and London is much more secure for that. Nevertheless, they were grave and important consequences and we took them very seriously. Yet the damage that we could cause through our failure in that mode pales into insignificance compared with the pain the country is suffering in this double-dip recession.

I do not want to go into the causes of where we are today. There is not the slightest chance of the Minister and I having any serious common ground in such a debate. Despite the time we have in front of us this afternoon, it would be rather fruitless to start such a discussion. Yet I do not believe that we would disagree that the banking crisis made a significant contribution. We might argue over what came first or so on, but if the banking system had remained stable through the circumstances as they developed in the last part of the previous decade and the first part of this one, we would be in a much better position. A banking crisis does absolutely enormous damage to an economy—and to the world economy—and needs to be prevented, avoided or handled at all costs.

This amendment invites the Government to set out, at least in terms of duties or some such way, how they do the necessary emergency preparedness for such a crisis. For anybody who has been through a crisis—I have been through some modest ones in my professional career—there is absolutely no question that the extent of emergency preparedness has a significant impact on the ability to handle that crisis. Knowing who to talk to, who to bring together for skills and how to communicate with appropriate external agencies, and the effort put into developing scenarios and looking at the various tools that can be addressed by them, is massively repaid in those scenarios happening.

In my previous professions, very serious scenarios were very improbable. Very serious scenarios in the banking world have proved all too probable. They really happen and cause enormous damage. This amendment seeks to encourage the Government to set out what planning they are doing, how they would convene the committee envisaged in paragraph 20, what functions it would have and how it would involve the main players. In our experience, you have to have the top players involved. I am sure that, for instance, in contemplating a possible unfavourable military situation in the Middle East, the Prime Minister spends part of his time working through how the Government would respond to that and how the process of debate, analysis and so on would take place. I put to the Committee that exactly those sorts of capabilities ought to exist within Government for a possible future banking crisis. I am reasonably confident that they are in place. As a minimum, I hope the Minister can outline what preparedness is envisaged. I ask him to accept the amendment, which would require him to set out that preparedness in a memorandum of understanding. I beg to move.

17:15

[Lord Newby]

My Lords, we have stated many times during this debate that the Government place great importance on effective co-ordination between the relevant authorities. We accept that this will be particularly important with regard to crisis management. That is why the Bill places a legal duty on the Treasury, the Bank and the PRA to co-ordinate their functions, and requires that they prepare a memorandum of understanding setting out how they intend to co-ordinate in a crisis management situation.

Obviously in such a situation the Treasury, Bank and PRA will need to be in regular contact. These events are often by their nature fast-moving or take place outside office hours. The protocols in place for ensuring co-ordination need to be flexible to accommodate this uncertainty. A committee is not necessarily the most appropriate way to deal with every crisis. For example, setting up a formal committee for a crisis event that lasts the duration of a weekend would be overly bureaucratic and cumbersome if the event required a particularly swift and flexible response.

These crises require that. They require frequent and immediate contact between Ministers and senior officials at the Treasury and senior executives at the Bank of England. Each financial crisis situation is different, and sometimes the circumstances will mean that a formal committee process would not be appropriate. If you look at three events which have either been, or had the potential to trigger, a financial crisis, without going into the details you can see how greatly they differ. There was for example BCCI, which was referred to earlier. There were the concerns in the immediate aftermath of the 7/7 bombings. There was the RBS crisis. These happened at different times of the day and at different points in the week. Some were put to one side relatively quickly while others have had long-term consequences. In those circumstances, it is difficult to imagine how you could set out in a memorandum of understanding either how a committee might be formed—we do not think that you always need one—or, if one is formed, how it will be convened and would function.

The memorandum of understanding is currently 39 paragraphs long. I do not know whether, when the noble Lord, Lord Tunnicliffe, was doing his training on the plane or when he was at London Underground, they had instruction manuals and crisis manuals. From working in humble PR, I recall that crisis management plans there ran to page after page. An MoU would not be the right place for these plans. This is not to say that the authorities do not plan. I can reassure the noble Lord that the authorities now have regular war games to prepare for a range of financial crises and participate in a range of cross-governmental operational crisis war games. This is to try to make sure that when a crisis explodes its participants have some preparedness for how they can respond.

That is different from saying that you need a committee in every case, even though we have said in the memorandum that in some cases you might. Certainly it is different from saying that in a memorandum of this scope and length you could set out how a committee could be convened and function. I hope that the noble Lord will be reassured that officials are spending quite a lot of time in crisis management planning and that that is the appropriate way of making sure that we are ready to deal with a crisis, rather than having the formal structure that his amendment would require.

[Lord Tunnicliffe]

My Lords, I thank the noble Lord for his response. I am reassured to a degree about the issues. We are not likely to press this further. The Committee might be reassured if he could flesh out some stronger sense of the preparedness and if he could write us a note that sets out the levels at which people are involved. I am not asking him to make a commitment now. He does not have to do anything as dangerous as that.

The thoughtfulness that has gone into the pre-crisis preparation is crucial. So many organisations fail to do it properly. British Petroleum successfully wrote off something like a quarter of its value through not having an adequate level of preparedness. In the defence sphere, for instance, the committee systems within government for national security and so on are documented as part of the strategic defence plan. Anything the Minister can do to add to our understanding of the depth and height of this preparedness and who is involved would be reassuring. With that request, I beg leave to withdraw the amendment.

Amendment 190ZEE withdrawn.

Amendment 190ZEF

Moved by

[Lord Davies of Oldham]

190ZEF: Clause 61, page 138, line 6, at end insert “, and ensure that the Governor and all Bank of England Deputy Governors and the Chief Executive of the FCA may consult with the Treasury directly”

[Lord Davies of Oldham]

This amendment furthers the points that my noble friend and I have already made this afternoon about widening the range of individuals who should be in a position to contribute their knowledge, experience and advice to a crisis management scenario. We remain concerned that the Government have narrowed the point of action in crisis management. I listened very carefully to what the Minister said about the advantages of that narrowness and fully understand it, but I am still unconvinced that the Government have the Bill right about who should contribute fully to the management of what we all recognise is an issue of very great significance to the nation.

The memorandum of understanding on crisis management must, according to the Bill, make provision about obtaining and sharing information. This amendment seeks to facilitate this requirement and enhance the Bill. We need to ensure that certain key personnel can consult directly with the Treasury. The amendment develops our clearly argued concern that reference in the legislation to “the Bank” is too often taken to mean, or certainly risks being interpreted and acted on as meaning, simply the governor. We argue that the Bank’s deputy governors and the chief executive of the FCA should in the Bill be explicitly enabled to consult directly with the Treasury in such extreme circumstances.

We are worried about the concentration of power and feel that relevant alternative voices must be given the opportunity to be heard in the management of an issue of such great concern for the nation. This is particularly important if there proves to be a difference of opinion within the Bank. We know there are differences of opinion in the Bank on very important matters. One would expect that highly capable individuals with different experience would not always reach an identical opinion. If they did, they would not deserve the high position they occupy because they would be merely yes men or, in one or two cases, yes women.

Under the current formulation of financial regulation, the Chancellor can hear directly from the chairperson of the FSA. Under the new system and the memorandum of understanding, the Chancellor could hear from no one but the governor.

In the other place, the Minister said, “Well, of course, the Bank encompasses a range of people”. We are not convinced about that. We do not feel that the position is explicit enough. It does not address the point about including the FCA in the vital process of obtaining and sharing information. Nor does it indicate that, at a moment of great crisis for the nation, voices which might present a somewhat different view from that of the governor will have their position adequately reflected to the Chancellor. In every other aspect of the role that the Chancellor plays, he welcomes engaging with the opinions of a large section of the population, represented by Parliament. We are talking about crisis management here. It is an extremely important dimension. We all recognise the constraints; I am not sure that it is right that the legislation should so circumscribe those who advise the Chancellor. I beg to move.

[Lord Sassoon]

My Lords, the arguments represented by the amendment have been raised at virtually every stage of this Bill’s progress in both this House and another place. Indeed, my honourable friend the former Financial Secretary speculated that it seemed to reflect the Opposition’s obsession with dominant figures preventing any dissent emerging from within an organisation. That is probably more a reflection of where those concerns are coming from than anything to do with how the Bank of England operates. This is an extraordinary line with which the Opposition persist. I start by repeating what the Government have said on every previous occasion when this point was made. I agree entirely that frequent communication between Treasury Ministers and the senior executives of the central bank and financial regulators is important. However, there is absolutely no need to legislate to ensure that the deputy governors of the Bank and the chief executive of the FCA can speak directly to the Treasury. There is categorically nothing prohibiting that in the legislation or anywhere else. In fact, Treasury Ministers regularly meet the current deputy governor for financial stability and senior executives in the FSA. Senior Treasury officials maintain a virtually constant dialogue with the deputy governors and senior FSA figures via meetings, phone calls and e-mail. The same was true under the previous Government. I was a senior Treasury official in this area for three years. There were many things that did not work well under the previous regime—that is why we are changing it—but I know perfectly well from experience over a long period that official contact with deputy governors works extremely well. I see no reason why that should change in future. It has existed over a considerable number of years and is just a natural part of the way the system operates.

In a financial crisis where public funds were at risk, if one of the deputy governors or the CEO of the FCA felt that there was something that the Treasury should know about, they would of course be able to speak to the Treasury directly. They are senior figures who are well aware of their responsibilities and quite used to making their feelings felt. In the case of the deputy governors, as well as the CEO of the FSA and the future FCA, they will be in front of the Treasury Select Committee. It is extraordinary to suggest in some way that legislation should be required to allow those senior figures in the system to make their views clear, as they have always done in the past.

However, when it comes to the statutory duty to notify the Chancellor formally of a risk to public funds, this responsibility is rightly given to the Bank of England as an institution. In practice, I would expect that in most cases a notification would be made by the governor personally to the Chancellor, but there is no reason why one of the deputy governors cannot send it on behalf of the Bank. The key thing is that it must be a decision of the Bank. As the Government have made clear on multiple occasions, the Bank must come to a view internally about the best way to fulfil the duties and responsibilities that are placed on it, including the duty to notify the Chancellor of risks to public funds.

On the basis of that further explanation of the position, I ask the noble Lord to withdraw Amendment 190ZEF.

[Lord Davies of Oldham]

I am grateful to the noble Lord, who seems to have retaliated because of my failure to give him alpha plus last time by suggesting that I am guilty of excessive plagiarism in my arguments this time. If that proves to be the case, I apologise. However, I insist that he at least accepts that in tabling and speaking to these amendments we think that there is real substance to them and that the Government have a case to make in answer to them. I am grateful for the way in which he has presented that case.

17:30

I am not totally convinced. The Opposition still have great anxieties about the concentration of power in relation to what we all recognise are the most extreme circumstances in which the nation might find itself, short of armed conflict. The collapse of financial institutions and the difficulties we have all faced in recent years is a situation which we have to take every step to ensure never recurs. That is why we feel that we in the Opposition are under an obligation to test the Government in every aspect of the Bill on their understanding of how the legislation will work. I am grateful to the Minister for clarification on this occasion. I beg leave to withdraw the amendment.

Amendment 190ZEF withdrawn.

Amendments 190ZEG to 190ZEK not moved.

Amendment 190ZEL

Moved by

[Lord Tunnicliffe]

190ZEL: Clause 61, page 138, line 24, leave out subsection (7) and insert—
“(7) The memorandum is a measure prescribed by the Treasury by order which shall not be made unless a draft of the order has been laid before and approved by resolution of both Houses of Parliament.”

[Lord Tunnicliffe]

My Lords, the MoU is an important document. We believe that it is incomplete. Earlier, we suggested that it should have some additions relating to what I will call, more generally, emergency preparedness, if only to acknowledge that there should be an acknowledgement that there is a duty to do that. There is a real question mark over whether the commitment to explain material extent is fulfilled in Clause 61(2)(a). I have read the memorandum with care and I do not see in which paragraph that commitment is discharged. I should be grateful if the noble Lord could bring that out in his response. I see curiosity spreading across the faces of the Government.

[Lord Newby]

For clarification, will the noble Lord repeat which duty he is referring to?

[Lord Tunnicliffe]

Clause 61 is entitled “Memorandum of understanding: crisis management”. Clause 61(2) states:

“The memorandum must, in particular, make provision about—

(a) what the Treasury and the Bank regard as a material risk for the purposes of section 54(1)”.

We have had quite a debate about material risk but I cannot see which paragraphs of the memorandum address that duty. I should be grateful if the Government would flesh that out. I do not want to cause the Government undue problems. We would be very happy to see a letter setting that out, although a response now would be delightful. The memorandum is important. It will change because, in my view, it already has question marks over it as it stands, but also because the world will change and, as the world changes, the Government, the Bank and the Treasury will want to change the memorandum. It is crucial that Parliament is involved in such an important document.

This MoU deserves to be a formal document and it deserves to be approved by both Houses. The amendment is a standard amendment such as we find in these situations. It requires an affirmative resolution, first, to register the document and, secondly, to allow for when it might change. I cannot see why it is being resisted. The concept of an MoU is entirely sound but the document, frankly, should be more formal than it is at the moment. Its alteration in the future should be by affirmative resolution of both Houses. I beg to move.

[Lord Newby]

My Lords, I shall start by answering the noble Lord’s question as to where in the memorandum of understanding the question of material risk appears and where it is defined. The principal paragraphs dealing with this matter are paragraphs 8 to 18, but paragraphs 13 to 16 set out the matters that the Bank should take into account in determining the material risk.

The Bill does not actually say that the memorandum of understanding has to define material risk. It says that it must,

“make provision about … what the Treasury and the Bank regard as a material risk”,

which is a slightly different requirement. The paragraphs in the memorandum of understanding to which I have just referred do exactly what the Bill requires the Treasury to do.

[Lord Tunnicliffe]

Forgive me—the noble Lord was going faster than my brain. Will he repeat the paragraph numbers that cover the point?

[Lord Newby]

The whole section is headed “Notification by the Bank of a risk to public funds” and it runs from paragraph 8 to 18. It explains the background and sets out, particularly in paragraphs 13 to 16, the matters that the Bank needs to take into account in determining whether the material risk test is met.

The amendment would transform the MoU into a statutory instrument. In our view, that would severely limit the usefulness of the MoU as secondary legislation is, like primary legislation, extremely prescriptive. It sets out what must and must not be done and confers powers that have legal effect. Although we agree that clear responsibilities are important for effective crisis management, we believe that the Bill sets out the framework for this extremely clearly and the MoU then fleshes that out. That is the role of an MoU. It goes beyond what must, in all cases, be done or not done. It allows the authorities to set out what is likely to happen in given situations and why that is the case and provides an insight into the aims of the authorities involved. We do not believe that it would be possible for the MoU to fulfil this purpose effectively if it were required to be in the form of secondary legislation. That is because it is difficult to impose clear legal constraints on how a crisis is managed because of the wide variety of situations that could be considered as a crisis, each requiring bespoke handling that suits the characteristics of that particular event. Earlier I talked about the different kinds of financial crises we have had in recent years which I think exemplify that point.

It is our view that the MoU should be a living, responsive document, able to change as is needed. Requiring that it should be a piece of secondary legislation would severely curtail the authorities’ ability to change the MoU as circumstances change. As things stand, the MoU can be changed within a matter of days. That requires no huge amount of legal input because it is a working document about how to handle a crisis. That is very different from dealing with a statutory instrument which goes through a different formal process. It would be difficult to deal with a statutory instrument when the House is not sitting and that would be inappropriate.

The Bill already provides for the MoU to be laid before Parliament. It will then be open to scrutiny. The Treasury Select Committee will be able to scrutinise it, as will the Economic Affairs Committee in this House if it decides to do so. In my view, that is the best way to get parliamentary input rather than through an overprescriptive and inappropriate statutory instrument. In view of those arguments, I hope that the noble Lord will withdraw his amendment.

[Lord Tunnicliffe]

My Lords, my experience is that statutory instruments do not have to be that inflexible. Statutory instruments that have to have early effect can be laid and come into effect immediately, if that is appropriate. However, they do require formal scrutiny by Parliament. I have not won many points today and I am not going to win this one. I beg leave to withdraw the amendment.

Amendment 190ZEL withdrawn.

Clause 61 agreed.

Clause 62: Memorandum of understanding: international organisations

Amendment 190A

Moved by

[Lord Flight]

190A: Clause 62, page 139, line 24, at end insert—
“( ) The memorandum must make provision for the UK authorities to consult with the financial services industry and, where appropriate, consumers on initiatives brought forward by the European Supervisory Authorities, the EU institutions and other international organisations.”

[Lord Flight]

My Lords, as everyone will be aware, Clause 62 concerns the MoUs among the Treasury, the Bank of England, the FCA and the PRA and how they intend to co-ordinate their respective functions as they relate to their relations with the various European supervisory authorities, the EU itself and other international organisations. It is perhaps implicit that in order to handle such relations effectively, they should naturally consult the industry and even consumers. However, Clause 62 does not prescribe that that should be the case. As this legislation is generally fully prescriptive, it certainly seems to me that it is at least worth discussing that in arriving at the MoUs there should be consultation. My amendment simply requires that provision is made for the UK authorities to consult thus.

17:45

I also make the wider point that there has almost been a sort of global excess regulatory reaction to the banking crisis. We have the ESMA at a European level; we have the European Banking Authority, which, under the present EU proposals, would have powers to have the last say with regard to banking regulation in this country; and we have international regulatory authorities. All of those bodies effectively are saying what should be done without very much accountability. Therefore, at least to avoid mistakes, it is important for the UK entities to have consulted very fully with the relevant parts of the financial services industry. I pay tribute to the fact that in the main that has happened in practice and that by and large the UK representatives in Brussels seem to have done a pretty good job of looking after UK interests. Nevertheless, as prescriptive legislation is the fashion of the day, I think that there is a strong case for this Bill to prescribe for such consultation.

[Lord Northbrook]

My Lords, I rise to support my noble friend Lord Flight in his Amendment 190A. As far as I can see, Clause 62 currently contains no reference to consulting the financial services industry or, where appropriate, consumers in this area. I think that the clause should be amended to this effect as it is a useful and important potential extra area of consultation.

[Lord Sharkey]

My Lords, my noble friend Lord Flight seeks to amend Clause 62(6). The paragraph states that the MoU that we are discussing,

“need not make provision about co-ordination between the FCA and the PRA in relation to membership of, or relations with, the European Supervisory Authorities”.

However, subsection (1) of the same clause states:

“The Treasury, the Bank of England, the FCA and the PRA … must”—

I emphasise “must”—

“prepare … a memorandum describing how they intend to co-ordinate the exercise of their relevant functions so far as they relate to membership of, or relations with, the European Supervisory Authorities”,

and some others. On the face of it, these two paragraphs appear to directly contradict each other. I am sure that that is not actually the case, but I would be very grateful if my noble friend the Minister could explain why there is no contradiction here and perhaps also explain the purpose of subsection (6).

[Lord Davies of Oldham]

My Lords, I rise briefly to say that it gives me considerable and indeed a rare pleasure to agree with the noble Lord, Lord Flight, and we support his amendment.

[Lord Newby]

My Lords, what we are talking about here is how we make sure that all those who should be consulted are consulted in respect of the work of the European supervisory authorities, the EU institutions and other international organisations. We are talking about the international dimension of the work of the financial services authorities as opposed to the domestic work that we have been looking at up to now.

We agree absolutely that consultation is an important part of the formulation of policy at the international level as well as the domestic level. It is perhaps worth starting by saying a bit about the way in which the international bodies themselves have sought to consult. The EU, following the Lamfalussy report in 2001, has increasingly appointed expert groups comprising industry, academics and consumers as the first stage of formulating policy. The UK has provided many distinguished members of those working groups. For example, the Commission set up a financial services user group, whose members included Mick McAteer, who was a founder director of the Financial Inclusion Centre, and Robin Jarvis, professor of accounting and head of SME affairs at Brunel University. We have therefore had strong UK representation on those European bodies for a long time.

One of the other main pillars of the international regulatory framework is of course the Basel Committee on Banking Supervision. It has consulted widely on its proposals for Basel III, and the Financial Stability Board’s charter clearly states:

“In the development of the FSB’s medium- and long-term strategic plans, principles, standards and guidance, the FSB should consult widely amongst its Members and with other stakeholders including private sector and non-member authorities”.

So at the international level, there has been growing recognition that the board itself needs to consult, and in many ways that will be the most effective level of consultation in respect of provisions that the board is making.

National regulators also have an important role to play in the consultation and feed their views through to the European supervisory authorities. The FSA already takes that responsibility extremely seriously, and the PRA and the FCA plan to do the same.

The regulators will be required to consult on any proposed new rules that are required to implement EU or international regulatory initiatives, except in cases of urgency. The FSA already does that. For example, in July this year, the FSA published a consultation asking for views on how to transpose Solvency II into the UK rulebook. In addition, the FCA and PRA’s contributions to international policymaking processes will be informed by engagement on an ongoing basis with the industry and other relevant bodies. That means that the views of affected parties will be considered at all stages of the policymaking process.

The UK practice has been a mixture of formal and informal consultation, which has meant that the regulatory bodies—the FSA and the Treasury—when going into negotiations in Brussels or at Basel, have taken a lot of trouble to gauge the views of the UK financial services sector and have sought to reflect them effectively. I may be wrong, but I think that the sector feels that that is the case.

Regarding the question asked about why the MoU does not deal with PRA-FCA co-ordination with the ERAs, the PRA-FCA memorandum of understanding is covered in new Section 3E(3)(a) on page 31 of the Bill. I am afraid that I cannot read that out at the moment, but I refer noble Lords to it.

My noble friend Lord Sharkey asked an extremely good question but, as I have explained regarding the way that the authorities are approaching co-ordination, even though not every last detail will be set out in a memorandum of understanding—and some clearly are—the authorities plan to take consultation extremely seriously. Apart from anything else, they have learnt through harsh experience that unless they have done that and are able to carry the industry with them, it just stores up more problems for the future.

I am convinced that the culture of the regulators is that they consult widely with relevant stakeholders and will continue to do that, and that it is not necessary to have an explicit provision in the Bill to ensure that that continues well into the future.

[Lord Flight]

My Lords, I made the point that it had worked pretty well so far. However, we are dealing with new regulatory bodies being set up, and I just repeat the point that this Bill is pretty prescriptive in what it requires. I have, I regret to say, encountered some criticism that the FSA has not gauged the views and criticisms of the different bits of the industry adequately with regard to MiFID 2. We have some MiFID 2 proposals from the EU that are likely to be wholly unworkable and could be very damaging to this country by penalising trading between a London-based party and an overseas party. Although the record is pretty good, it is a little disappointing that on an important recent matter I found criticism of the consultation.

I cannot see why we should not put it in the Bill rather than just relying on it happening automatically. It is not a very great issue, but perhaps the Government might think a little further about this. I do not think it is an onerous requirement. In the mean time, I have raised the issue and beg leave to withdraw the amendment.

Amendment 190A withdrawn.

Clause 62 agreed.

17:58

House resumed.

Sitting suspended.

Young Offenders: Employment and Training

Wednesday 17th October 2012 Lords Chamber

Question for Short Debate

18:05

Tabled By

[Baroness Healy of Primrose Hill]

To ask Her Majesty’s Government what measures they have in place to help young offenders find employment or training on release from prison.

[Baroness Healy of Primrose Hill]

My Lords, I thank the Government for granting this short debate, and I am grateful to the many organisations, including the Library, which offered briefings on young offenders and their opportunities for employment and training on release. I am concerned about the level of reoffending among young people. Most reoffending on release occurs in the first three months, so questions must be asked about the effectiveness of these prison sentences. Can we as a society find a better way for these young men and women to lead a more fulfilling and productive life?

It is believed that the total cost to the UK economy of offending by young people could be as much as £11 billion a year. This is a bad time to be young, with 22% of young adults not in education, employment or training, and just under 1 million 16 to 24 year-olds unemployed. The abolition of the education maintenance allowance, increased tuition fees, cuts to services and further caps to housing and other benefits are creating a hostile climate for our young people.

For young adult offenders, finding long-term, stable employment is an even greater challenge. Young adults in trouble with the law often have particularly high levels of complex needs and come from deeply disadvantaged backgrounds. Frequently they have few or no educational qualifications and no experience of work. Often they lack positive adult role models and suffer high levels of mental ill health and alcohol and drug misuse. This month Sadiq Khan said that a future priority for a Labour Government would be to give the Justice Minister specific responsibility for rooting out mental health problems in our criminal justice system.

In order to reduce reoffending, we must understand the underlying conditions that affect so many young people before we can find solutions that offer hope. Statistics reveal the stark reality of lives lived against the odds. Of young offenders imprisoned in 2012, two-thirds were unemployed, nine out of 10 had been excluded from school, one-quarter had learning difficulties and half had a reading age below that expected of an 11 year-old.

Once released, the picture does not improve. According to the Barrow Cadbury Trust’s Young Adult Manifesto, published in 2009 and developed by T2A, the Transition to Adulthood Alliance, one in five men between the ages of 15 and 21 leaving prison did not know where they were going to live on release. Many of those will have been in care. Black and minority ethnic young adults experienced even higher levels of homelessness and were less likely to have a family or support system to return to.

Unstable accommodation triggers a vicious cycle, severely hindering former prisoners from finding employment. It is believed that around a quarter of employers would not consider employing a homeless person. The Inquiry into the Future for Lifelong Learning organisation points out that difficulties in finding accommodation on release reduce the opportunities for training, education and employment. It suggested that ex-offenders need to find accommodation and employment or training within three weeks of release or they are likely to reoffend.

At the end of June 2012 there were 7,443 young people aged 18 to 20 in prison in England and Wales. Although there has been a welcome steady decline in the number of young people in custody in the past decade, thanks in part to the work of the Youth Justice Board, there are still far too many. Greater use of restorative justice should be examined. What works best to reduce reoffending? T2A has run three pilot projects in Birmingham, London and West Mercia with 36 young offenders. Funded by the Barrow Cadbury Trust, they show very positive results, and the Government should take note. T2A argues that the transition to adulthood is happening later in people’s lives than in recent generations. Research has shown that the adult brain is not fully developed until at least the mid-20s, yet these young adults with complex problems often have to negotiate multiple transitions between services and systems when they reach 18. They can easily fall between the gaps and lose the support that might have helped them make a smooth transition to adulthood.

Young adults aged between 16 and 24 are the group most likely to commit a criminal offence, but with the right intervention and support they are also the group most likely to desist from offending and grow out of crime. Therefore T2A argues that the focus for public expenditure should be on encouraging desistance by concentrating on the factors which are known to reduce crime; namely, employment, housing and health. The pilots gave the young people individual support, resulting in a reduction in the six-month reconviction rate to 9%, compared with the national one-year reconviction rate for 18 to 20 year-olds of 46%. Those participating in the pilots experienced a trebling in employment and were more positive about apprenticeships and courses with a vocational and training element, rather than purely educational courses. The London pilot was particularly effective in finding its clients sustainable apprenticeships. However, accommodation remained a problem. The majority of those who were homeless to begin with did not move into stable accommodation.

The need for assistance with accommodation on release is confirmed in numerous reports. An HM Inspectorate of Prisons report on looked-after children found that a significant number of children and young people had not obtained early release because they had nowhere safe to be released to. HMIP also reported that one-quarter of boys and more than half of girls had been in the care of social services before entering custody.

I am very concerned by the Government’s proposals to deny young people aged under 25 housing benefit. It will mean that many young offenders who do not have families to return to, and who desperately need to find a job or training to help them desist from returning to crime, will be without any kind of home from which to go out and find work, training or education.

In attempting to find solutions to the problem of young people reoffending, the Howard League for Penal Reform argues that the current system sets children and young people up to fail. The league strongly argues that young people should spend much less time in isolation in their cells while in prison and must have increased and more purposeful activities during association and at weekends. This would make a real difference in preparing them for release and the possibilities of taking up employment, training or education.

There appears to be general agreement about what needs to be done. The Government’s Green Paper of December 2010, Breaking the Cycle, recognised that custody should be,

“used sparingly as a last resort as it separates young people from their families and communities, can seriously disrupt education, training and development and is an expensive option that does not deliver good outcomes for young people”.

Therefore, will the Government consider taking a number of steps which would not necessarily increase spending but would make outcomes more effective?

First, they could issue guidance to local authorities to link up with crime-reduction partnerships and the new police and crime commissioners to ensure those young people just released have access to appropriate accommodation.

Secondly, will they encourage local authorities to develop wrap-around support for young adults leaving custody, as recommended by the government-appointed panel which published the After the Riots report?

Thirdly, in partnership with voluntary and probation teams, the Government could develop greater use of “through the gate” support. Mentors can provide the role of a significant adult and enable the young person to stick to their tenancy agreement, training programme or supervision. Young people must not be left to sink or swim on release.

Fourthly, the Government should ensure that planning for resettlement should start from the moment a person enters custody, and include the young person and their families. Those who received visits from their family were twice as likely to gain employment and three times more likely to have accommodation on release.

Fifthly, they could incentivise employers to employ ex-offenders. A good example is the National Grid’s young offender programme of apprenticeships for those still serving sentences, which then guarantees jobs on release. This has resulted in reducing the reoffending rate to below 6%, as compared to the national average of 70%, and is estimated to save the UK taxpayer more than £350 million.

Sixthly, the Government could consider some special financial assistance for these young people to help them through FE colleges and access courses.

Finally, they should reconsider the abolition of housing benefit for those aged under 25. Securing appropriate accommodation on release has been shown to be vital for obtaining employment and therefore preventing reoffending. The Government need to support voluntary bodies, local authorities and employers to give these young people a fresh start for their sake and that of society, and to cut crime and save taxpayers’ money in these austere times.

It is incumbent on all in public life to try to solve this problem of young reoffending. There is growing agreement both here and abroad that access to employment and training, education and housing, health services and help with recovering from substance abuse are all part of the package needed to give young people a second chance on release.

18:15

[Lord Bates]

My Lords, it is a privilege to follow the noble Baroness. On behalf of all who will take part in this debate, I thank her for securing this time for this very important issue to be aired and discussed. I also thank her for the way in which she introduced the debate, which was very even-handed and fair, and reflected the fact that this is not a situation that developed in May 2010 but is something that all Governments have been wrestling with for many years, and needs to be approached as such.

There are a number of speakers who I am looking forward to hearing, particularly my noble friend Lady Stedman-Scott, who, through her wonderful organisation, Tomorrow’s People, has shown how even the most hard-to-reach young people can be picked up, have a future and a job, and work their way out of the problems they have found themselves in early in life. My own contribution comes through growing up on Tyneside, being involved in a church youth group and meeting lots of young people and seeing the problems that they encountered at that time; then through a long involvement in secondary education, and also having visited many young offender institutions, particularly in the north-east of England.

I want to put down one marker before moving on to some of the suggestions and analysis. There is nothing intrinsically different about the young people who enter the criminal justice system. They could be any child—and anyone’s child—but for the environment in which they spend their formative years and the choices that they make. I have no doubt that had a young offender had the good fortune to be born into a home where they were loved and affirmed by their mother and father, had attended one of our outstanding public schools, where expectations of life success were set at a very high level and where they mixed with similarly motivated and secure students, their life choices would have been different, their peer group very different and the outcomes profoundly different. In short, for better or worse, we are all the products of our environment but also of the personal choices that we make in responding to the circumstances in which we find ourselves.

We live in a very unforgiving world. That may seem like a strange thing to say at a time when we are supposed to all be very liberal, but in many ways it is a very dismissive world and culture, in which people are written off, whether they are young people or people in senior positions in public life or sport. It is far too easy for people to be caricatured and written off as problems, particularly in the media. Therefore, it is very important to see these young people as having the same potential and gifts of any young people and to approach the situation in that respect.

This subject is a statistician’s dream. There are statistics everywhere, including those in the excellent briefing pack prepared for this debate by the House of Lords Library. The noble Baroness has highlighted some of those statistics. If she will forgive me, I will repeat one or two because they so clearly point out where the problem lies.

Reference has been made to the fact that 54% of males and 71% of females have no qualifications, which reflects the fact that these young people do not just arrive in the criminal justice system. They arrive there having been excluded from school, having been sent to pupil referral units and having probably been in local authority care at some stage. It is difficult enough to get a job these days when you have a degree. When you have no qualifications and a criminal record, it is challenging to make your way into the jobs market. Again, that is where the work of Tomorrow’s People is so utterly inspirational for me.

We know that often people have mental health disorders. We know—I think this is a key element—that many are involved in drug or alcohol misuse. It is a common denominator throughout. Sometimes there is a tendency to take a soft approach to this and say that people need simply to control their habits. I have visited, an initiative called the Betel Trust. These Betel places say to young offenders who have come out, “What we will do is have a contract. We will offer you a bed, we will give you a job but there is absolutely no alcohol or drugs. It is zero tolerance”. Sometimes that can be a bit harsh because it means that if there is one transgression, the person has to leave the home. However, for those who remain the success rate is quite astonishing, showing drug or alcohol misuse to be a particular cause of offending.

We know that people get drawn into the criminal justice system and therefore it behoves us to do everything we can to keep them out of it. Some 70% highlighted the fact that the major driver for crime was that their peer group consisted of criminals. If you can stop them going into that environment that would seem to be eminently sensible. The costs of this, financially and socially, are dreadful for society but I would argue that they are worse for the young people themselves. The most important thing we can do is to battle for a culture in which we allow people to make a fresh start and tell them that their future is not determined by where they started in life but that their worth is determined by where they finish.

Examples such as the competitors at the Paralympic Games show how people can overcome all manner of difficulties in their early life to achieve incredible success. They are the kind of inspirations and role models that we need. We do not need self-pity. We need to inspire these young people to realise their full potential and full worth.

18:23

[Lord Warner]

My Lords, I congratulate my noble friend on securing this important debate. I agree very much with what she said. I want to speak in more systems terms from my experience in designing Labour’s reforms of the youth justice system after 1997 and my six years as a director of social services in Kent, helping youth people in care and young offenders.

It is a sad fact that so many young people who have been in care end up in our prisons, often from a young age. Many of these young people have been failed by society and the state, in whose care they have been. Their educational attainments are often modest, with literacy and numeracy skills among the lowest in our society. Too many have addiction and mental health problems inadequately addressed by public services. They have too often experienced a pattern of being let down by adults, rejected by their families and not helped to cope with family losses. They can too easily drift into offending after homelessness, exclusion from school and a lack of the skills to compete in today’s job market. By the time they end up in custody, they often have complex needs that cannot easily be addressed by any single agency.

Labour’s youth justice reforms tried to address those needs through radical changes to the structures for handling and supporting young people under 18 at both the local and national levels. At the local level, these provided for multi-agency—that is important—youth offending teams with a single budget and easier access by team members to the services of their own agencies. At the national level was a Youth Justice Board for England and Wales, supporting and performance managing youth offending teams, purchasing custodial places and carrying out research, with a budget for driving change, including bidding for money from government departments for new schemes such as preventive measures.

I do not want to claim that everything we at the board did was wonderful. We certainly had many critics—the board still does. We would not engage in a popularity contest and we could be critical of both local and national bodies. But over a decade or so, and with the wonderful work of the YOTs, the board halved the number of young people committing their first offence and cut by a quarter the number of young people locked up. This record produced the support in this House for the Government stopping the abolition of the Youth Justice Board in the Public Bodies Act. All other groups of offenders have seen their prison populations rise over the same period, so maybe there is something in this systemic approach that we need to learn from.

I do not tell this story for vainglorious reasons but to emphasise the merits of targeting a specific group of offenders and tailoring a set of services and approaches to that group’s very specific circumstances and needs. You also have to put in place local and national mechanisms, processes and organisations, properly funded, that can deliver a complex set of service responses over time. You have to stick with the agenda, irrespective of who is in government. It takes time and effort to change offending behaviour. Short-term programmes and quick fixes do not work. They only let down young offenders and the many splendid staff who try to work with them.

Our failure has been not to apply the same logic to young offenders aged 18 to 21—preferably up to 25—that we applied to the under-18s. That does not mean the same services but the same systemic approach. Older young offenders often have similar needs to the 15-17 year-olds in the reformed youth justice system. They do not just need employment and training but levels of personal support and development to stay away from drugs, stay away from other addictions, stay away from bad company—as the noble Lord, Lord Bates, mentioned—and secure and retain the jobs and training that they need. Above all, they must have access to accommodation. Homelessness is not a basis for reforming young people who are offending.

I do not have time to map out my programme for young offenders over 18 but this Government—or any future Labour Government—need to learn from the experience of the youth justice reforms and develop the same targeted approach to young offenders over 18, dealing with their specific needs, if we are to keep more of them out of prison and help them become productive and participative members of our society. Can the Minister say what will be done specifically to meet the needs of 18-21 year-old young offenders to cut significantly the numbers of them ending up in prison?

18:28

[Baroness Linklater of Butterstone]

My Lords, we are all grateful to the noble Baroness, Lady Healy, for securing a debate on this very important subject. I am very glad to say that I joined forces with the noble Lord, Lord Warner, in rescuing the Youth Justice Board —something of which we should both be jolly proud.

The employment and training of young offenders on release is one of the most important and difficult challenges that they and we face, especially in a recession. A simple jingle goes round the criminal justice world that distils what anyone coming out of prison needs: a roof, a relationship and a job. All three are necessary and interdependent: you cannot have a job without an address; you cannot pay the rent without a job; and it is difficult to sustain a relationship without a place in which to live. Of course, these are also the three things that you are likely to lose when you go to prison.

We have heard many useful statistics already. A couple demonstrate the vulnerability of young offenders and how coping with life after release is particularly hard. A survey by the YJB and HM Inspectorate of Prisons in 2011 showed that 86% had been excluded from school and around half said that they were 14 or younger when they were last in education. Another survey shows that a total of 59% have an IQ of below 79, yet offender behaviour programmes are not generally available to offenders with an IQ below 80.

Speech and language provision is of key importance. These young people often lack essential communication skills necessary for employment, but it is still not routinely available as it should surely be. In 2010, HM Inspectorate found that too many young-adult prison establishments had high levels of unemployment and poor-quality work placements for prisoners, which did not provide the vocational qualifications that they needed. This was despite the required individual learning plans, internal assessments and National Careers Service advice. The result was that 70.6% of those first-time young offenders will go on to reoffend.

We know that the Government through NOMS are now developing a specific strategy for 18 to 24 year-olds and I look forward to hearing more from the Minister about this. It is widely recognised that there is a need for a distinct and radically different approach to young adults in the criminal justice system if things are to improve. The noble Lord, Lord Warner, also referred to this. The Youth Justice Board has developed a new youth-to-adult transitions framework that takes into account the immaturity of this group, who still need a great deal of support because they are not actual adults. Working in three areas of the country with this group since 2009—some in prison and some on community orders—the organisation T2A, which has already been referred to, has tripled its numbers in employment. Its numbers not in training, education, or employment—the NEETs—have halved. This success is because it tailors its interventions specifically to the needs of individual young adults.

The St Giles Trust similarly tailors support in its Through the Gates work, where continuity from prison to the outside world is absolutely vital. It finds housing, education, training and employment for up to 70% of its clients. All this shows what is possible. We must ensure that these appropriately delivered initiatives are widely developed for this group of offenders.

A project funded by Rethinking Crime and Punishment during five years of work, which I chaired, involved bringing local businessmen into prisons in London and Reading. Like most people they had never been near a prison before. Not only were they fascinated by what they found, but interested in employing the young men whom they met. As the noble Lord, Lord Bates, said, they were the very young men from whom they drew their staff out in the community. Our recommendation was that a dedicated business sector co-ordinator should be employed in every prison to maintain informed links with local businesses, which would know and understand local business needs and be the link between prison and this part of the community. I urge the Minister to consider this now.

Finally, brilliant work is being done in a few private sector firms. The National Grid young offender programme, which has already been referred to, has been employing young offenders since 2001. A couple of years ago I went to a reception, at which the noble Lord, Lord Jones, was present and spoke most eloquently, and saw the amazing commitment, enthusiasm and belief in this area of work, which shows what is possible. Dr Mary Harris, the programme director, is a great advocate of offender employment to other businesses and to Ministers. It has now supported 2,000 offenders from 22 prisons, and secured the partnership of over 80 businesses from a wide variety of employment sectors since the beginning.

Another example is Timpson, the shoe empire, which, having started eight years ago with one young offender from Thorn Cross, who is still with them, has now set up several training workshops for offenders with prison industries at HMP Liverpool, HMP Wandsworth and HMP Forest Bank. They train 12 to 14 prisoners at a time with a guaranteed trial period at Timpson, and 75% are still there after six months. With shops all over the country, they can be flexible about where they work, which is brilliant, and Timpson has even started to recruit ex-offenders for other businesses. James Timpson, the chairman, says:

“It’s seen as something that’s good for the business, but also good for society”,

and he is right. I look forward to the Minister’s response.

18:36

[Baroness Young of Hornsey]

My Lords, I, too, congratulate the noble Baroness, Lady Healy of Primrose Hill, on introducing this topic and giving us the opportunity for a measured, though highly passionate, debate.

I want to draw attention to two ostensibly very different projects that achieve remarkable results with young offenders. It is important to note that there is a range of models that work and can thrive and produce long-term success with young offenders if they are supported with a commitment to the long term, as has already been mentioned, and are not seen as either one-offs or short-term fixes. It is also important to have results that can be independently assessed and defended against tabloid accusations of going soft on offenders. When I talk of remarkable results and successes, I am referring to examples of hard evidence of exceptionally low reoffending rates when compared to the norm.

Recent research undertaken with young offenders across several institutions found that 44% of the young men surveyed thought that getting a job was the factor most likely to stop them reoffending. For women, finding a job could potentially, they thought, stop 52% reoffending. Young men who were in custody for the first time were more likely to say they wanted to stop offending than those who had been in custody before. That is a worrying trend given the average reoffending rate of around 70%. The same research found that just under half the young men surveyed anticipated a problem finding a job once they were released, but 72% of the women interviewed foresaw problems finding work.

Many noble Lords have already spoken of the National Grid’s young offender programme and I shall add a few more points that I think are important in the context of this debate. I declare an interest as a freeman of the Tallow Chandlers livery company, which supports the programme through an award scheme. The National Grid programme has been produced through testing, piloting, being cautious and taking risks. That is important to note. The long-term nature of the programme means that it can work with offenders while they are still in prison, towards the end of their sentences, providing training and, crucially, employment. That promise of a job is a real incentive.

First and foremost, the participants learn skills. Yes, they learn employment skills, but they also learn self-discipline and how to deal with authority figures, which for many of them will have been a problem in the past. They gain self-confidence and learn how to motivate themselves. They are accepted on to the programme having satisfied the prison governor and the employer that they are safe to be released into work-based training and, crucially, have achieved a minimum literacy standard. As we know, many young people in prison are not able to complete their studies and therefore have very low literacy levels, but there are schemes around to help them as well as schemes targeted at those who do not have those skills. I will come on to one of those schemes shortly. There is a proper recruitment procedure with interviews et cetera in which they are treated like any other applicant for a job. Crucially, they are given mentoring support both before and after they are released from prison. As we have heard from other noble Lords, that means the reoffending rate is exceptionally low—less than 6%.

Noble Lords have also pointed to the economic and social costs of incarcerating huge swathes of young people. The economic costs run into hundreds of thousands of pounds. The social costs include intergenerational antagonisms, neighbourhoods where residents are uncomfortable and fearful, blighted lives and lack of trust. In addition to diminishing the financial and social costs, employers who participate in this scheme report that employees coming through this route are well-motivated, loyal and hard working, with many progressing up the career ladder into supervisory and managerial positions.

The other project I draw to the House’s attention is an arts project, Dance United. I am sure most noble Lords would agree that prevention is better than cure with regard to young people and crime. Dance United works with young people at most risk of being incarcerated. It is not so concerned with issues such as high levels of literacy and so on. Most of the young people it works with have had really negative experiences at school, at home and in their encounters with police and the criminal justice system. Modern dance may seem an unlikely medium through which to achieve really good results with young offenders and potential offenders, but, believe me, experienced practitioners from diverse backgrounds work with some very tough young women and men. They undergo exceptionally rigorous contemporary dance practice. We are not talking about street dance or hip-hop, but high-level, high-quality dance practice to such a standard that some participants have been admitted into our top dance schools and pursue professional careers, although that is not necessarily the aim. As the company says:

“Dance United works with people in difficult circumstances who are often marginalised in society and whose potential is often unrecognised. Contemporary dance training and performance of the highest quality has the power to unlock this potential. Dance United delivers work that is tough, tightly focused and highly disciplined. No hiding places, no short-cuts, no excuses”.

I cannot emphasise enough that this is not a soft option. Often the chaotic lives that these young people have led mean they have little sense even of how to get up in the morning and perform basic hygiene, let alone adhere to a strict physical and mental regime. They learn a lot about trust, teamwork and working with authority figures, which they have not been able to learn before. I had the good fortune to speak to young people, employers, instructors, facilitators, parents and carers connected with both these programmes. I know they feel they have reaped rich rewards in terms of the successes they have had with the young people they engage with.

One further point I want to make in this debate has been mentioned by the noble Baroness, Lady Healy. I refer to the position with regard to black, Asian and minority ethnic people in the youth justice system. The figures seem to continue to rise and this needs to be looked at in much more detail. I hope that we can return to this topic in the next few months. There are no quick fixes here, obviously. Meanwhile, it is necessary to investigate the root causes and strategies for mitigating these terrible statistics.

After the riots of August 2011, we sentenced about 2,000 people. With the current reoffending rates, that puts us into a downward spiral. It is really important to give support to the kinds of projects that I and other noble Lords have referred to. I hope the Minister will help to persuade his colleagues in the department that these are not soft options.

18:43

[Baroness Stedman-Scott]

My Lords, the subject of this debate is critical to the young people of our country who find themselves being released from custody. I, too, congratulate the noble Baroness, Lady Healy, on securing this debate. My heart beats in concert with her on this, because it is a very important issue. I must declare that I am CEO of Tomorrow’s People. I hope that the work we are doing with young people gives me some insight into how we need to support them when leaving custody; and, even more importantly, supporting them before they get there in the first place.

I am conscious of the work done by others in this field. There is the National Grid, Blue Sky and the Prince’s Trust to name but a few. The statistics of National Grid have been well voiced this evening, so I will not go over them. Blue Sky develops social enterprises for people to work in. It operates contracts and, therefore, is trading. Its concept is “not for profit” but it would call itself a “not for loss” organisation. Certainly, it makes sure that it pays its way in providing invaluable support to young people. The Prince’s Trust, which is well known to all of us, helps young people to start their own businesses.

My experience of these young people is that they are clever and talented. They are just waiting for someone to help them realise their talent and—perhaps I am old-fashioned—to love them so that they can blossom. A great deal is being done to help people make an effective transition from custody but, as the founder of the Salvation Army, William Booth, said when his son was waxing lyrical about the wonderful work that the Salvation Army was doing:

“Bramwell, that and better will do”.

We may be doing good things, but there are more and better things that we can do.

In preparation for my contribution, I read the Local Government Association’s paper on the resettlement of offenders, which lists well the key elements that young people need to make an effective transition from custody. I know that the debate today is focused on finding employment and training on release but other critical things need to be in place if young people are to get the best from any development opportunity. Indeed, when we see what they are, we start to appreciate why things do and do not work.

Those important components include accommodation and long-term mentoring. Let us not work with them for just a few moments; we must stick with them for a year or even longer. We should ensure that they have an acceptable attained level in at least literacy, numeracy and general education. They should also be given some personal development and vocational training. At the heart of the key elements is that these young people are prepared for the world of work and that they are given work experience. Much has been said about work experience and how, sometimes, people are abused but it gives an opportunity for young people to go to an employer and show what they are able to do in the working environment. Most importantly, all these things need to be packaged so that they can get and keep a job.

Recently, I have spoken to a number of young people who are sofa surfing. They go from one house to another sleeping on the sofa. From one day to the next, they never know where they are going to stay. If they do not have a sustainable and stable, in every sense, roof over their head, all the training, employment and support that they are given can be lost because they are worrying about other things.

Long-term personalised mentoring and support is not a commodity business. I regret that we cannot scale it up, solve the problem, stack them high and sell them cheap. It will not work. This should be an individualised and one-to-one practice. The young person in front of you and looking for help needs to be the most important person in the world to you on that day.

One thing that I have learnt at Tomorrow’s People is that it is not the time to walk away when someone gets a job and makes a positive step in their journey. We need to stay with them in order to get the sustainability rates that we want. It is hard enough to get a job if you are well educated, come from a loving home and have everything, as has already been said. If we do not prepare these young people well for the world of work and do not spend as much time with the employer as we do with the young person, we will never effect the integration.

For employers to take on these young people is a big risk, on top of their worries about profits and things like that. We have to give them as much support as we can. Let me give one practical example. We were asked by a very large company to recruit, integrate and induct 12 of the most challenging cases in its community into its workforce. The young people were all assigned a job.

One young girl turned up for work on Monday, Tuesday, Wednesday and Thursday, and everyone was really happy with her. On Friday, she did not show up, so a member of staff drove to her house and knocked on the door. The girl came down in her PJs. She was asked, “Why aren’t you at work?”. She said, “I never went to school on a Friday and no one ever bothered to chase me”. The girl was told to get dressed and get to work. The second week, it happened again, but on the third week she turned up on Monday, Tuesday, Wednesday, Thursday and Friday. The whole thing could have fallen apart for the sake of two car journeys. It is not rocket science, it is not sophistication, it is very practical.

I come to the most difficult part of what I have to say and I hope that the Minister is sitting down and happy. All of this needs money and there is not a lot of that about, is there? I am not making any judgments about that, but I know that there are people, employers and people who care about our society, who are prepared to invest in this area of work through the medium of social impact bonds and social finance. I want the Minister, please, to spend some time seeing whether we can accelerate our social investment activity. Patience is not a virtue I have managed to cultivate and I think that I am going to give up trying, because we need to go faster and the one thing that is holding us up is the commissioning side, from Government. Please do not take that as a judgment: we just need to get better at it.

Young people’s history in this field is well documented and well versed; everyone knows what they have done wrong and I would like us to spend time giving them a destiny and forgetting their history.

18:51

[Baroness Nye]

My Lords, I, too, thank my noble friend Lady Healy for initiating this important debate. As the noble Lord, Lord Bates, said, there is consensus on all Benches; we all want a reduction in crime, a reduction in reoffending, and we want it to go hand in hand with a just system of punishment. This, as all Governments have found, is a very tall order. When Ken Clarke launched his “rehabilitation revolution” in the Breaking the Cycle Green Paper, it was warmly welcomed by reformers. The new Secretary of State uses more punitive rhetoric but still repeats that aim.

I hope that the Minister will tonight give us an idea of the direction of travel for that revolution, because while all sides of your Lordships’ House must and will welcome the reduction in the youth unemployment figures announced today, the background to that revolution is the fact that the long-term youth unemployment figure is still disturbingly high. While 18 to 24 year-olds make up less than 10% of the population, they constitute a third of those on community or suspended sentences and a third of those sentenced to prison every year. As my noble friend Lady Healy said, we all know that those young offenders are more likely to have mental health issues, to have spent some time in care and to have relatively few qualifications.

The Prince’s Trust report Down, But Not Out showed that one in five unemployed young people think that finding a job in the next year is “unachievable” and that three in five describe their inability to find work as “demoralising”. With graduate unemployment running at 20%, it is our responsibility to help those long-term unemployed young people make progress because that is in the social and economic interests of Britain.

We have heard about the third sector programmes which have had excellent success rates and I make no apology for talking again about the work of the National Grid programme. I am sure that Dr Mary Harris’s ears must be burning with the number of times we are about to mention it, but I mention it again because from small things, great success can happen. It started in 1998, training 50 young offenders to become fork-lift truck drivers. In 2002 a second project was established to train young offenders as gas distribution technicians. As has been said, the reoffending rate at that time was 7% and they have managed to bring it down to 6%, when the national rate is 70%.

In 2003, the then Chancellor of the Exchequer announced in the Budget that he had asked Sir John Parker, the chairman of National Grid, to see how the programme could be applied nationally. As a result, as we know, that programme is now partnered with 80 leading companies and more than 2,000 offenders have benefited from it. In 2007 a Smith Institute pamphlet was produced that came out of a seminar held in No. 11 Downing Street. Sir John Parker described the programme as win-win—that is, meeting business and society’s needs—and he is absolutely right. Not only that, it is also of direct benefit to the taxpayer—for every 100 young offenders completing that programme, the savings are more than £17 million. That must be better than paying out taxpayers’ money to lock people up. While obviously it is not a universal panacea, it demonstrates that business can help address a difficult social issue while acting in its own interests at the same time. If National Grid and the other leading companies are able to see the business benefit of a progressive attitude to corporate social responsibility, then the Government should take the lead in encouraging other companies to join in.

One of the factors in the success of the National Grid scheme is the transition from prison to work. The training begins before offenders are released, thereby getting them used to going to work and establishing a commitment to that employer. Mentoring and help in finding accommodation are also important parts of the programme. I would like to mention briefly some other proposals from the Prisoners’ Education Trust and the Young Adult Manifesto of the Transition to Adulthood Alliance.

The Prisoners’ Education Trust evidence to the Education Select Committee inquiry on careers guidance suggested that there should be a career guidance package which would have information about training and education during and after release, have local links to the community and be able to signpost people to the right organisations. Young offenders are only too well aware of the difficulties of finding employment with a criminal record. The work of the Learning Matters advocacy project, which is part of the Prisoners’ Education Trust, found that what would make a difference would be more useful subjects, the same courses being available in different jails, more practical and vocational courses, more level 3 courses and more hours of educational courses.

The T2A manifesto calls for young offender institutions to be twinned with local further education colleges and for a national employment initiative to improve the chances of employment by the private, voluntary and public sectors, but the fact is that these are all measures that try to get young offenders not to reoffend through education and employment opportunities. We all share the aim of stopping young people offending in the first place. However, I am worried that with the Government cutting programmes such as Sure Start, youth club provisions, family intervention projects, Youth Inclusion and the Future Jobs Fund, the future does not look rosy. One of my concerns is that by abolishing the education maintenance allowance, the Government took away the incentive for young people at 16 to stay on in full-time education.

I know that the Government have introduced the youth contract but the Work and Pensions Select Committee has said that it alone is not enough,

“to address the current unacceptably high level of youth unemployment”.

I am, of course, aware that it is the responsibility of every individual to remain inside the law. There is no excuse for crime. I know also that getting a job does not always stop people offending and I know that plenty of people who have jobs offend, but all the evidence shows that a job and basic literacy play a crucial part in the rehabilitation process. Against the background of a double-dip recession, the programmes that could help being cut and with growth proving elusive, I would like to hear from the Minister how the Government will take forward the rehabilitation revolution.

18:57

[Lord Aberdare]

My Lords, I start by declaring an interest as a director of Waltz Programmes, a small social enterprise which has worked with young offenders in partnership with the crime reduction charity Nacro, and with funding from the European Social Fund via the Greater London Assembly. Based on this experience, I would like to comment on three rather specific challenges relating to the issues raised in this debate, which I congratulate the noble Baroness, Lady Healy, on obtaining and introducing so well. I apologise if at this stage of the debate some of what I say may be a little repetitious.

First, what is needed is a seamless process of support, starting while young people are still in custody and continuing all the way into sustained education or employment. We have usually had one of two experiences in working with young offenders. We have worked with groups in custody, who have turned up reliably for every session—they are, after all, in the most literal sense a captive audience—and show great enthusiasm and determination to plan an appropriate path towards work or study and to get into a different peer group on their release. However, once they are released, many of them disappear without trace, despite the best efforts of Nacro’s resettlement brokers and the local youth offending teams to keep track of them and to keep them on track.

Alternatively, we have worked with young offenders who are not in custody. They may have community sentences or be out on licence or with tags. Their average attendance tends to be a depressingly small fraction of the numbers expected, but at least for those who attend regularly support can be offered that ultimately leads them into training or jobs. Lessons to be learnt from this are: support needs to start in custody, where possible; it needs to be on a close one-to-one basis with each individual and it needs to stay close to them all the way through from release to a successful placement.

One of the greatest challenges to this is the difficulty of building up a sufficiently close and trusting relationship in prison for it to continue outside, which in our experience has not been made any easier by the difficulties of agreeing and scheduling in-custody programmes with the Prison Service, particularly when those programmes involve bringing outsiders such as employers in to the prison. I very much support the idea, emphasised by the noble Baroness, Lady Linklater, for a link person in each prison to help make that happen. That has not always been our experience.

Secondly, the majority of young offenders are very far from being ready to go back into education, let alone being job-ready. More than 80% of under-18s in custody have been excluded from school, 25% have special educational needs, 46% are rated as underachieving, and 21% have difficulties with literacy and numeracy. Young people leaving custody face significant barriers, including experience of social exclusion, low self-confidence and self-esteem, problematic family situations, and previous negative educational experiences. They may need a wide range of intensive, one-to-one, specialist support. This may include housing and benefits support; help with literacy and numeracy; help with English language skills; drug and alcohol treatment, which is very important; mental health and other medical support; help with parenting skills in many cases; gang awareness and avoidance—I am not sure whether that has been mentioned in the debate so far, but certainly in a London context it is a crucial element of the process; help with communication and interview skills; mentoring, which has been mentioned; confidence building; life coaching; and I could go on. Above all they need access to a range of education and employment options so that they have some choice about the direction in which they wish to go.

An additional need, sometimes overlooked, is that of support for employers and training organisations, who may be willing to offer places to young offenders but may need considerable extra help to address the challenges that that employment can present. The noble Baroness, Lady Stedman-Scott, mentioned the example of the person who did not turn up on Fridays. The idea put forward by the noble Baroness, Lady Healy, of some sort of incentive for employers is well worth looking into.

Support programmes such as those run by Nacro are valuable for all those who take part in them, but the number who actually get as far as gaining, let alone keeping, training places or jobs within a specified period is likely to be only a low percentage of the total. That brings me to my third and final point, which is that the Government should be careful not to make it impossible for the sort of organisations that are best at delivering such programmes—often small, specialist, local bodies working in partnership or on a multi-agency basis, as the noble Lord, Lord Warner, mentioned—to be able to afford to do so. I am a believer in outcome-based payments, but not in payments by results alone. To illustrate what I mean, we worked last year on a programme that offered up to £5,700 for each young offender placed into sustained work or training. Of that amount, 20% was for pre-entry support, 28% for actually placing them into work or training, and 52%—over half the total—for supporting them to remain there for at least six months. I see that as a very reasonable balance.

A new funding programme that has recently been launched offers between £4,300 and £4,700 per head in total. That is over £1,000 less, of which only 9% is available pre-entry, about 24% on entry into a job or training place, 36% after staying for six months, and a further 31% after a full year. In other words, two-thirds of the total funding available is only payable after six to 12 months of sustained training or employment. Such a model risks acting as a real disincentive to many organisations that are otherwise capable of delivering effective work and training outcomes for young offenders but find it hard to manage cash flow when payment for much of their efforts comes only after six to 12 months.

Young offenders are among the most difficult to place of the very many young people seeking work or training today. I welcome the Government's commitment to providing appropriate support to help them, and hope that in doing so they will recognise and address the challenges that I have mentioned. I look forward to hearing the Minister’s response.

19:05

[Baroness Sherlock]

My Lords, I should start with a confession, which is that 18 months ago I knew precisely nothing about this subject, but that would not have necessarily deterred me from contributing to the debate. In the intervening period, something happened that taught me a lot. I was asked to serve on the Riots Communities and Victims Panel, which the Government appointed to look into the riots of last year. That was an experience that left me profoundly concerned about what happens to the astonishingly high number of young people who end up in Britain’s prisons.

As part of that experience, we went into prisons and talked to a number of young men who had been sent to prison for riot-related offences, and their stories highlighted a lot of the issues that noble Lords have raised. One young man described having applied for hundreds of jobs. He attended 19 interviews and completed two apprenticeships, but had not been able to get a job. If he could not get a job before he went into prison, what were his chances when he came out the other end? Another young man had been employed when he committed the offence, and when I asked, “What are you going to do when you get out?”, said, “I want to go back to my job”. I thought, “You haven’t even begun to appreciate what is going to happen to you when you come out the other end”. As the noble Baroness, Lady Young, pointed out, so many young people do not understand the consequences of what will happen when they have served prison sentences.

When the riots panel published our interim report in November last year, we noted that nearly three-quarters of those brought before the courts for riot-related offences were under 25. Most of those in court had a previous conviction and a small group were serious serial offenders. However, as my noble friend Lady Nye noted, young adults are overrepresented in the prison population. They also seem to be more likely to reoffend. In the year ending March 2010, more than 113,000 young people were given what is rather unpleasantly called a formal disposal, of whom a third committed a proven reoffence within a year.

However, what scared me was that the 2009 re-offending figures state that 65% of offenders aged 18 to 20 who are discharged from a custodial sentence of less than 12 months reoffend within a year. Let me say that again: 18 to 20 year-olds come out of prison after a sentence of under 12 months, and two-thirds of them reoffend within a year. What are we doing about that waste of lives, or indeed of public money? What an astonishing figure. What are we going to do to tackle the lives ruined, not just the young people’s lives but those of the victims of the riots? I had the opportunity to meet all kinds of victims whose lives were ruined too. If these young people go out and reoffend, more people’s lives will be ruined. Even if one does not—and I really do—care about those young offenders, as a society we should at least care about the consequences of failing to treat them appropriately.

The riots panel produced a large report, which I hope the Minister has had every opportunity to read, mark and inwardly digest by now, because much of it related to his areas of responsibility: young people, work, the criminal justice system, and a great deal more. Today, I can pull out only a small number, but I want to ask about just a few of the conclusions we reached. Some of the others have been raised by other noble Lords.

A key issue seems to be the transition between the youth and adult justice systems. We heard all kinds of stories about where this goes wrong. However, aside from the general problems of transition, we heard stories of young people either being unable to take courses or that moving them resulted in the loss of all records, which meant that they could not carry on where they had previously left off. That meant that the value of any education or training they received in prison was simply wasted. The panel recommended that a nominated officer be assigned to each young adult whose case is passed between young offending and probation teams to help to manage that.

As my noble friend Lady Healy noted, the provision of proper wraparound support is crucial. We were impressed by many schemes, such as that operated by the Prince’s Trust, mentioned by the noble Baroness, Lady Stedman-Scott. Its scheme at HMP Lewes includes meeting at the gates, mentoring as role models, having someone on hand to sort out practicalities, and support about everything from college places to housing and employment. They are all crucial to the support. However, there is only so much a mentor can do if appropriate provision is not readily available.

Given that the Minister who has the pleasure of replying today is the noble Lord, Lord Freud, I decided that I would pick out a few issues related to his empire, rather than more generally, as it might make it easier for him to respond. In March, the Government announced that people claiming jobseeker’s allowance in prison or within 15 weeks of leaving would be fast-tracked on to the Work Programme. This seems to be a marvellous idea. Does that include all young people leaving custody, even those on short sentences? Is the fee still £5,600 for getting an offender into work if they stay there for two years, as was the case when the scheme was announced? I can see the Minister nodding. Is that amount enough? I understand that the highest payments to Work Programme contractors who aim to get people into work who are a long way from the labour market is £13,000. If £13,000 is paid for some categories, why is such a small sum paid to those who are helping young offenders get into work, given how difficult we have heard it is for them to get in there?

What happens if someone does not get a job within two years? The riots panel was very concerned in general about young people being parked on the Work Programme. Because of the nature of the contracting arrangements, there came a certain point when there was no economic benefit to the provider to do anything more with them; if they passed that time, you might as well let them sit there. The panel recommended that that simply should not be allowed to happen.

I very much support the point made by the noble Lord, Lord Aberdare, about the importance of contracting directly with some of the smaller voluntary or specialist organisations that have the experience to work directly with this client group. I understand why procurement might tempt the Government into awarding contracts only to large prime contractors and letting sub-contracting arrangements go on, but all the evidence shows that that simply is not working for most voluntary organisations. Many voluntary organisations have gone out of business or are simply unable to work in those conditions. Frankly, I would sooner trust the kind of work described by the noble Baroness, Lady Stedman-Scott, and the work I have heard about from the St Giles Trust and many other voluntary organisations, than something sub-contracted, either from a much larger provider or even directly from Jobcentre Plus.

Finally, what kind of career development advice can be provided to young people coming out of prison? I am still haunted by one young man I spoke to. We asked him to describe what happened when he came in. He thought for quite a long time and then said that when he arrived, someone had asked him: “What do you want to do with your life?”. The reason it was so memorable was that no one had ever asked him what he wanted to do with his life, and maybe someone should have. If no one had up to that point, is that not something that whoever the Government ask to work with these young people should have the time and space to do?

I will not go on as time is short. There have been so many wonderful speeches, and I congratulate my noble friend Lady Healy on having provoked a marvellous debate. I hope very much that the Minister will be able to give us the answers that we need.

19:12

[Lord Rosser]

My Lords, I, too, add my congratulations to my noble friend Lady Healy of Primrose Hill on securing this debate. The contributions of both the noble Baroness and all other Members of your Lordships’ House who have spoken have made this a thoughtful and informative debate.

Young offenders, like other offenders, cost the country money through the damage and disruption they have caused and may cause, in addition to the adverse social consequences of their actions and the impact on their victims. It is in everyone’s interest, not least their own, to try to minimise the likelihood of their reoffending. Not having any money, a job or anywhere to live are three factors that increase the likelihood of reoffending by young offenders leaving prison. Having no money, or hardly any, to buy the basic necessities of life simply encourages action, often in desperation, to obtain money by illegal means or in return for illegal acts. Having no accommodation to go to also increases the likelihood of resuming previous contact with those who would hardly act as a brake in discouraging reoffending and generates a feeling of instability, hopelessness and despair. Having no job, or not being on a worthwhile training programme with a realistic prospect of obtaining a job, means that a significant potential ladder for reaching the goal of turning away from offending and achieving a sense of purpose in life is removed.

Reference has already been made in this debate to reductions in or withdrawal of benefits, both actual and pending, that would adversely affect the already weak financial position of young offenders leaving prison. It would help if the Minister could indicate in his response what effect the Government feel these reductions or withdrawals of benefit will have on the incidence of reoffending by young offenders leaving prison and the basis on which the Government reached whatever may be their conclusions on this specific point.

I hope the Minister will also be able to advise us of what the most recent figures show in respect of the cost of helping a young offender find employment or training, as compared with the savings resulting from an end to reoffending or a reduction in the incidence and level of seriousness of reoffending by that young offender. Money may be in short supply, and helping young offenders in prison and on leaving prison may not be a priority for most of the national media in this country—or perhaps for some politicians. However, it would be helpful to know what the costs and savings figures are on which the Government are presumably basing their approach to deciding how much to spend on training for young offenders in prison, and on training, finding employment and the levels of benefit available for young offenders when they leave prison.

Obviously we can have only one departmental Minister replying to this debate on helping young offenders. However, what does or does not happen to the young offender in prison in respect of skills, training and education has a considerable impact on their position once they leave prison. Once again, it would be helpful if the Minister would talk about the contact and liaison arrangements between the Ministry of Justice and other relevant departments, including his own, to ensure some continuity of training provision and assistance in finding employment for young offenders once they leave prison, and in addressing the problems so many of them face, which were eloquently and forcefully highlighted by many noble Lords.

In a debate on 9 February this year, the noble Lord, Lord McNally, said that the MoJ and the Department for Work and Pensions were in close contact and trying to work through the issues associated with offenders leaving prison. Have we now got beyond the stage of the DWP and MoJ trying to work through the issues, including ensuring no delay over the payment of relevant benefits? Have the issues now been worked through with agreed solutions and processes? If so, what decisions have been made since February, and what policies and processes implemented, that will contribute to helping young offenders find employment or training on release from prison, and will also address the many and diverse problems that so many have to overcome, which were highlighted by many noble Lords? What is the level of contact between the Department for Work and Pensions, the Ministry of Justice and the Department for Communities and Local Government over assistance to young offenders in finding accommodation on release, since their success or otherwise in finding accommodation is likely to have a major impact on their success or otherwise in finding employment or securing training?

Young offenders who have just left prison are likely to be under some form of supervision for a period of time. Apparently the Government are embarking on significant changes in the role of the probation service and the level of private sector involvement in that field. Has the Department for Work and Pensions had any input into the Government’s thinking on the extent of the future role of the probation service, since that, too, could have an impact on young offenders when they are in prison and when they leave?

As my noble friend Lady Healy of Primrose Hill said, schemes have been in existence for some time, run by different organisations, particularly in the voluntary sector, which show that finding and providing training, and finding employment for young offenders by also addressing the problems faced by so many of them, can have a significant impact on reoffending rates. Outside commercial companies are also used to assist in finding employment or training schemes for young offenders leaving prison. Perhaps the Minister will say something about the success rate of these organisations and the nature of the contracts with them. How is having helped someone find employment or an appropriate training course defined and assessed in the contract? Are payments made at different stages in the process? If so, how are they weighted, and how and by whom is the checking and verification undertaken?

Employment and training for young offenders requires resources and commitment. It also requires a mentality that does not think that young people who have committed offences should receive what are described as tough sentences and not much else. Neither will an approach work that considers it inappropriate for young offenders leaving prison to receive publicly funded assistance in finding employment or training—although the continuing high unemployment rate for young people generally does not help the situation.

Finally, I come back to the question of money and resources. Will the Minister say whether the Government regard money spent on the training and education of young offenders in prison, and on helping them find employment or training on their release, as an overall cost to the public purse or as expenditure that produces an overall saving?

19:20

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

My Lords, I join other Peers in thanking the noble Baroness, Lady Healy, for raising this important issue. I also thank all noble Lords for their valuable contributions. Young offenders face multiple barriers in accessing employment, training and jobs on release from prison. If we are to tackle these problems and take effective steps to reduce reoffending, there has to be a co-ordinated response across government departments. Since May 2010, the Government have led positive change on how we tackle the causes of crime to reduce reoffending rates, as a number of noble Lords spelt out. The Government are committed to offering young unemployed people the opportunity to access high quality training relevant to the labour market so that they can gain the skills they need for sustainable employment and enable them to progress in a learning and work environment.

I will do my best to answer as many of the points put to me as possible, but I suspect that I will not get through them all in the limited time available. Before I do so, I will go through some of the steps that DWP is implementing to respond to the noble Baroness, Lady Nye, who looked at the programmes she liked, to try to explain that what we have replaced them with are in many cases doing the job rather better. Since last April, Jobcentre Plus managers and advisers have been given more flexibility to tailor support to claimants and local market needs. To support this, Jobcentre Plus has introduced a suite of measures bringing together communities, the voluntary sector and employers to help people get back to work. That support is complemented by the Get Britain Working measures: the new enterprise allowance supports those looking to start their own business; work clubs help claimants to share skills and experiences; the Work Together programme helps claimants to develop skills through volunteering; work experience is particularly important because it enables young claimants to get a placement with a local business; and finally a range of sector-based work academies which offer pre-employment training and work experience placements.

We added to that in April this year the Youth Contract, providing an additional £1 billion of support for young unemployed people over the next three years. The Youth Contract builds on existing support to provide young people with more intensive adviser support and work experience, as well as providing employers with wage incentives and apprenticeship incentives to encourage them to recruit young people. Within that total, £150 million of new support is directed at the most disengaged 16 and 17 year-olds to help them get into sustained learning, an apprenticeship or a job with training. In addition, we have launched a new innovation fund of £30 million over three years for social investment projects of the kind that the noble Lord, Lord Aberdare, would, I am sure, have his eye on in terms of providing opportunities. These projects aim to support disadvantaged young people and those at risk of disadvantage, with a particular focus on those aged 14 and over. We have completed the first round of commissioning for the projects and we are now looking at the second round.

Apprenticeships are right at the heart of the Government’s drive to equip people of all ages with the skills that employers need to prosper and compete. We want to make it as simple as possible for employers to take on apprentices, and we want advanced and higher level apprenticeships to become the level to which learners and employers aspire.

I am sure that all noble Lords are aware that last year we introduced the Work Programme, the biggest single payment-by-results programme in this country and possibly anywhere else. In response to the inquiry of the noble Baroness, Lady Sherlock, we introduced a feature to ensure that all offenders leaving custody are given immediate support through the Work Programme, on the proviso that they claim jobseeker’s allowance. So it is that group. Of the total of 80,000 leaving, 30,000 are in that category. I can also confirm that when we move to universal credit, the effect will be much wider. Not only can prisoners get on to the benefit system in prison, they are then picked up on day one. As the noble Baroness pointed out, that is a wonderful development.

Is that money enough? That is a good question. We will find out. It can be supplemented by the apprenticeship and employment incentives structures, so that is not all the money that is going to those youngsters. The noble Baroness was concerned that there would be parking after a period; it does not work quite like that. If you get a person into a job within two years, they are sustained well beyond the initial two-year period. You are not locked in to that two-year period; you have two years to start them on the process.

I will now try to pick up on as many other questions as I possibly can. There was an enormous number, so I will not cover them all. Where I have not been able to cover them, I will write.

Many of the questions surrounded my noble friend Lady Linklater’s jingle of a roof, a relationship, and a job, and looking at how one achieves that. When we look at the schools agenda, both the noble Lord, Lord Warner, and the noble Baroness, Lady Healy, talked about the Youth Justice Board which supported the establishment of seven resettlement consortia which aim to provide a co-ordinated approach across local authorities for all young people leaving custody, so that they can access the services that they need to help prevent them from re-offending. Each of these consortia engages with the third sector and private providers through national and local organisations, as the noble Lord, Lord Warner, pointed out.

In addition, the Ministry of Justice is now working with the Department for Education to take forward the commitment in the cross-government Ending Gang and Youth Violence report to explore ways to improve education provision for young people in and released from the secure estate.

The result of the review, Making Prisons Work: Skills for Rehabilitation, which came out in May 2011, means that a refreshed curriculum is being introduced in prisons, and there will be a strong focus on providing training and access to apprenticeships to prepare prisoners for employment. We are increasing collaboration between Jobcentre Plus, the National Careers Service, probation, colleges and other training providers to make sure that they are referred to the appropriate training and work opportunities.

The work in the private sector that my noble friend Lady Linklater talked about is based on the Jobcentre Plus provision of about 180 advisers working in prison, providing help and advice to offenders. Clearly, that ties in with early referral to the Work Programme.

With regard to some of the further measures that the Government are taking, the Home Office has committed £18 million of funding for 2012-13 to support the police, local agencies and the voluntary sector to tackle knife, gun and gang-related violence and prevent young people entering a cycle of crime. An Ending Gang and Youth Violence Team is now place, with the support of a virtual network of more than 100 advisers.

Picking up the concern raised by the noble Baroness, Lady Healy, on housing benefit for under-25s—the “roof” in the jingle—I remind her that that is not government policy, as she suggested; it is a topic of debate at this stage and no decisions have yet been made. I should also point out that were such a decision to be made, the issue that was being discussed was around automatic entitlement to housing; it does not necessarily mean that the most vulnerable groups would be excluded from such housing.

My noble friend Lady Stedman-Scott raised the issue of commissioning. Coincidentally, I have been taking a deep interest in that lately and have been meeting some of the financial groups considering it. She has put her finger precisely on the issue: we need a group that organises the structure between government and providers, a commissioning body or bodies to do that and get it to work well.

I must conclude. Punishment of offending behaviour upholds the values of law and order that all civilised society is based on. We know that work is a primary factor in reducing reoffending. The Government are working hard to ensure that young offenders emerge better equipped to become part of law-abiding communities and better able to reintegrate into society and build the skills necessary to have useful and productive lives.

House adjourned at 7.32 pm.