Grand Committee
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Enterprise and Regulatory Reform Bill
(11 years, 10 months ago)
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The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.
Clause 20 : The Competition and Markets Authority
Amendment 24ZA
Lord Whitty
Lord Whitty
My Lords, we now come to a part of the Bill which, at Second Reading, I said I regarded as in the “relatively good” category compared with some other parts of the Bill that we will be debating. Broadly speaking, that means that we approve of the objectives of this part of the Bill concerning the rationalisation of the competition structure. As we go on, I think we will find that the Government may well have overcomplicated some bits and missed out others, but in principle the merger between the CMA and the OFT will receive general support from this side—in particular, the prospect of it dealing with some of these issues more coherently, both within the new structure and in time, as well as with regard to the relationship between the new competition authority and the concurrent regulators, although we will have a number of queries on that.
Before we make the new organisation work, we need to know what it is there for. As with many Bills introduced by all Governments setting up new organisations, two or three years down the line it is not always easy to derive from the Bill or Act why the organisation was set up. We need an objective so that business knows how to relate to the organisation, so that there is some transparency for the public about its role and so that in particular—I emphasise this, as will my noble friend Lady Hayter—there is clarity about the role of consumers and the ultimate objective of the new organisation to provide choice, customer care and a generally consumer-friendly market in which to operate. The central means in achieving that market is enhancing competition. The organisation also has to be realistic about, and proactive in, responding to market failures.
However, there is one area where I think that the role of the body has been underestimated and that is in relation to explicitly referring to the benefit or detriment of consumers. The aim of the two amendments in this group which are in my name is to tell the public and the organisation what its role really is. Government really does need to set the objectives and scope of this new body, otherwise in 10 years’ time no one will know what is expected of it and we will no doubt be back here within that 10 years looking at whether the competition regime is working. In the mean time, Governments will have to assess its importance, its resourcing and its priorities for the coming few years, and therefore there will be reviews, which will need to go back to the objective of the organisation.
We have attempted to set out in Amendments 24ZA and 24ZC some of those objectives. The first one, in Amendment 24ZA, relates to the CMA’s role in establishing competition and examining market failure and market distortion. We often talk about monopolies in this situation, and mostly it is about monopoly, oligopoly and dominant positions in providing goods and services in particular markets. However, it is also necessary to refer to monopsony. The first competition or anti-trust Acts in this country in the 1940s were very insistent on that point, and there are situations where a potential distortion of the market or abuse of a dominant position relates to the buyer’s market as much as the seller’s market. The Government have indeed recognised this—somewhat belatedly, under both this and the previous Government—in the groceries code, for example, where the power of the oligopoly structure of the supermarkets has a tremendous effect on relatively small companies which are, directly or indirectly, suppliers to those sectors. Therefore, the issue of buying power, as well as of provision of goods and services, is important and that is what these two amendments address.
Amendment 24ZA spells that out briefly and Amendment 24ZC defines it in more detail. Mergers are obviously one distortion of a market, but there is a broader issue of dominant position in a market. We all know that there is no such thing as a perfect market, because all the players in that market are not equal, either in their resources, their skills or their knowledge. Therefore, an unusually dominant player in the market distorts the market as a whole and we need to provide for the new organisation to focus clearly on a dominant position which may not, strictly speaking, be a monopoly or create a monopoly through a new merger.
We need to broaden it a bit and if we look at the areas which are probably those of most frequent consumer complaint, they are dominated by relatively few players. Consumers may experience different effects of the abuse of that market power in different sectors. There are so many sectors now in which there are, effectively, between four and eight companies which dominate and which—if there is not, strictly speaking, any provable cartel—tend to move in unison rather more frequently than a proper market would allow. There is an obvious current example in the energy market; the banking sector is similar. I have mentioned the supermarkets, which work both ways for customers and suppliers. There are other markets, such as the mobile phone market, in which not that many players dominate the market and quite a lot of apparent choice actually limits the range and scope of consumers’ choice.
I think that we need to define this, as I say, so that future generations will understand why it was set up. We need to define it for the new governance of the organisation, and we need to define it for the Minister, successive Ministers—although I wish Ministers a long life in these responsibilities—and for Parliament and the public, so that the new body can be held to account. I am not saying that the form of words we have used here is the be-all and end-all, but I want the Government to consider putting in such a clause to define the role of the organisation. I beg to move.
Lord Lucas
My Lords, I address my amendment in this group, Amendment 24ZCA. I am not sure that we really know how to deal with monopsonies, it has been so long since we had one that was truly powerful. I am not sure that the Bill gives us the ability to deal with them properly. My amendment will make sure that we can, because we can now observe one of these monopsonies in action and in the process of growing, and that is Amazon.
Amazon now has some 90% of the e-book market in the UK; it has something like 50% of the entire book market, e-books and physical books, in the US and close to that in the UK. However, when I have asked the OFT if it will look at some of the practices that Amazon employs in getting to where it is, it says, “No, because none of the major publishers has brought us any evidence”. The publishers will not even come into this House to have tea with me to discuss what is going on. They will not talk to the Guardian. They will not talk to anyone because Amazon is rough, hits hard, has its teeth into publishers’ necks and is sucking their lifeblood. There is no answer. If we are to do something as a nation, we need to equip ourselves with a system that is capable of going to the publishers and saying, “We think there might be something going on here. Please give us some evidence”. At the moment, the OFT is hamstrung and cannot do that. It has to wait until someone brings evidence to it. I would like to see a situation whereby this new body had the power to go out and look on its own account and not wait for evidence to be brought to it, because it is in the nature of monopsonies, particularly the powerful ones, to tie up the people who are involved in them and make it extremely difficult for any of those people to bring a complaint or evidence to the OFT, as it is, on their own accord.
Amazon is no friend to the UK. We may all think that it is a great place to buy—indeed it is, and I am having an interesting Christmas not buying from it. It treats us just as a distribution depot. It is not building a business here. It has no interest in the great history of British intellectual content. It is not like our publishers, who have a care for the nation and the part that the UK played in the world of books. We are just a source of a commodity to Amazon. It pays no tax, as is well known. It abuses VAT whenever it gets the opportunity. It has had a scam going on in Luxembourg for ages, which, thank goodness, the European Union is putting an end to, whereby it paid only 3% tax, rather than 20%. The company has been allowing sellers to hide their identities, so that they can operate VAT scams. It was an active participant in the abuse of low-value consignment relief. It is not a company with morality and it is not a nice organisation. As was said by the publisher who spoke anonymously to the Guardian, you dare not go against it because it would kill you.
Amazon’s terms on e-books are fascinating. As a publisher, you can get 35% of the price that it sells for, if you set the price. If you want more than that, Amazon gets to choose the price and you end up with less. If you are a big publisher, you may end up with only 10% of the price that Amazon is charging for an e-book. If you are selling through Amazon Marketplace, Amazon gets to know your customers, suppliers, prices and volumes; and if something is selling well, Amazon then does it itself. It goes straight to the manufacturer and undercuts you. That is all based on Amazon’s knowledge of your business. If you are selling on Amazon Marketplace, you are forbidden to sell anywhere else at a lower price or you are chucked off. Amazon is a very difficult company to live with.
What we are seeing is a monopsony in its growth phase. It is running on very low net margins in order to destroy the competition and increase its market power. If we act now, there are viable alternatives that will spring up to compete with it. If we leave it, we risk a situation where there is no competition, where there are no publishers any more because Amazon is the only place to publish direct, and where there is no ability to sell e-books other than through Kindles because Amazon controls them, and you cannot put outside software on them. We must give ourselves an opportunity to act, and act sensibly, and we cannot hamstring ourselves by sitting here and waiting for one of this company’s victims to complain before we act.
Lord Borrie
My Lords, this is a useful amendment for my noble friend Lord Whitty to move at the outset because it is broad and makes important points. I also thought that the noble Lord, Lord Lucas, brought an interesting matter before us. I do not think that it is necessary to make that amendment to the Bill because I have little doubt that the Bill as it stands gives the new amalgamated body, the Competition and Markets Authority, all the powers it needs to investigate the problems of which he has spoken.
With regard to my noble friend Lord Whitty’s amendment, it is useful for monopsonies to be included because it makes it clear that there can be a monopoly on the buyer’s side as well as the supplier’s side. Leaving aside a statute dealing with particular matters of Queen Elizabeth I, in Britain the first statute dealing with monopolies was in 1948. Under that Act, together with the legislation of the European Community, which came in when we joined the then Common Market, it was the abuse of monopoly that was regarded as undesirable and something that should be attacked.
Monopoly as such is not necessarily a bad thing. I do not see that it is any different now, in 2012, from what it was in 1948. You can have monopolies that justify themselves and prove themselves for various reasons; for example, it may be feasible to have only one supplier in a local or national area, and as long as the power is not abused, competition authorities do not need to worry about it. My only query to my noble friend Lord Whitty is that the wording of the amendment suggests that he wants action,
“to reduce cartels, monopolies and monopsonies”.
To investigate or inquire into whether the power is misused is one thing, but I very much doubt whether this should be inserted after the very proper requirement of promoting competition.
Viscount Younger of Leckie
I thank noble Lords for their suggested amendments and I appreciate the sentiments expressed by the noble Lord, Lord Whitty, regarding this part of the Bill.
Beginning with the amendments in the names of the noble Baroness, Lady Hayter, and the noble Lord, Lord Whitty, Amendments 24ZA and 24ZC seek to add specific references to some of the CMA’s competition functions and duties into its overarching duty, which is,
“to promote competition, both within and outside the United Kingdom, for the benefit of consumers”.
These include, for example, references to the CMA’s role in tackling mergers and abuse of dominant positions, and in reducing cartels and monopolies.
The CMA’s duty to promote competition reflects its unique position as the UK’s principal competition body, its leadership role in tackling anti-competitive behaviour as part of ensuring markets work well for consumers, and its domestic and international advocacy role. It does not seek to set out all the CMA’s functions. In addition to this overarching duty, the CMA will inherit the full range of the competition functions of the OFT and the Competition Commission, as well as additional consumer enforcement powers.
These functions and powers include: strengthened Competition Act enforcement powers to enable the CMA to tackle anti-competitive monopolies, monopsonies and cartels; strengthened merger controls to enable the new authority to address more effectively anti-competitive mergers that can lead to high prices and poor quality for consumers; a wide range of investigative and remedy-making powers to ensure that markets work well for consumers; and finally, the use of consumer enforcement powers to address business practices that distort competition or impact on consumer choice, even where markets are competitive. We are also providing more speed and rigour in market studies and investigations, and anti-trust cases, to give consumers faster and more robust decisions.
Given that the CMA will have a range of powers to ensure that competition and markets work well, it would not be appropriate to legislate for the CMA’s overarching duty to focus on one of these important competition and consumer tools over another. It is also important to preserve the independence of the CMA to choose the right tool to promote competition and tackle anti-competitive practices. We therefore do not consider that it is necessary or right to specify the particular kinds of anti-competitive features set out in these amendments.
There is also a particular concern over the way in which Amendment 24ZC seeks to gloss the meaning of a dominant position by specifying that it is normally to mean control over a quarter or more of a market. This would contradict European Union jurisprudence on dominance and therefore introduce, by way of a provision in the CMA’s overarching duty, a conflict with the CMA’s actual powers and responsibilities and with the European Union law which underlies them.
Determining whether an undertaking is dominant requires an economic analysis of the state of competition in a market as it is best defined. Market shares can be important indicators but may not be decisive—for example, where there is significant buyer power or low barriers to entry such that the undertaking’s exercise of its power is constrained by the threat of new entry. By introducing this more mechanistic approach to dominance, the amendment would conflict with the way dominance is assessed under European competition law. So it would be wrong for us to introduce this scope for inconsistency and uncertainty by way of an amendment to the CMA’s overarching duty. I hope that noble Lords will accept my explanation, which has taken a little time, for why the overarching duty is just that and why I do not believe that more specific additions are appropriate.
Amendment 24ZCA, tabled by my noble friend Lord Lucas, and bearing in mind his reference to and comments about Amazon and its great buying power, seeks to empower the CMA to investigate any company or arrangement to establish whether a cartel, monopoly or monopsony exists or is being abused without receiving prior complaint. The CMA will, as the OFT can now do, be able to make inquiries whether or not it has received a complaint and will be able to take action on its own initiative in markets where it observes a problem. Indeed, it will inherit the function of obtaining, compiling and keeping under review information about matters relating to the carrying out of its functions under Section 5 of the Enterprise Act 2002.
However, for the authority to use its far-reaching powers of investigation under the Competition Act 1998—such as powers to require the production of specified documentation or information and powers to enter business premises with or without a warrant—Section 25 of the Competition Act 1998 requires it to have reasonable grounds for suspecting that an anti-trust prohibition has been infringed. This strikes the right balance between giving competition authorities effective powers and protecting businesses from overzealous enforcement. If the amendment is intended to undermine this threshold, it would represent a significant weakening of a protection for businesses. As such, as the noble Lord, Lord Borrie, mentioned, I do not consider that the amendment is required. I understand the noble Lord’s concern that allegations of anti-competitive behaviour should be properly investigated and the facts established. Decisions on individual cases and priorities will be for the CMA, which will of course be independent of government.
At the end of the day, it will be for the management of the CMA to ensure that it is a highly effective competition authority, vigorous in the pursuit of anti-competitive behaviour, and the provisions of the Bill, including the creation of the CMA, will assist in this. They are designed to deliver greater coherence in competition policy and practice and a more streamlined approach to decision-making through stronger oversight of the end-to-end case management process, more flexibility in resource utilisation and better incentives and powers to apply the anti-trust and markets tools to deal efficiently with competition problems. In addition, this clause will give the CMA a duty to promote competition, something which neither the OFT nor the Competition Commission have. I hope that my noble friend Lord Lucas will accept that these changes should go a long way to securing that the CMA will be the active champion of competition that we all wish to see.
In the light of my explanation, I ask the noble Lord, Lord Whitty, to withdraw his amendment.
Lord Whitty
My Lords, I thank all noble Lords who have spoken, in particular the noble Lord, Lord Lucas, because he gave an example that I should have thought of. It is clear that Amazon has a dominant position in a buying and selling market. It is exactly the kind of case that we need to be absolutely sure that the provisions of the Bill cover. My noble friend Lord Borrie and the Minister both said that it already does and I hope that is right, but we need to underline the Minister’s words for future use. In a situation such as that of Amazon, in relation to both the suppliers or subcontractors from whom it derives its products and the people to whom it sells, this is a growingly dominant force in all our lives. That is a good example and one we need to test against all the provisions of the Bill.
My thanks also to my noble friend Lord Borrie and to the Minister for rightly saying that monopolies and market dominance are not always a bad thing. That would usually be my line because the assumption that a free market will ultimately always deliver the best outcomes for consumers is not necessarily true. Nevertheless, I would argue that there is a tendency for the less competitive markets to give consumers a worse deal and that improving competition in almost all circumstances—not all, I agree—will give consumers a wider choice. There are situations where broadening competition in practice reduces choice, but in general the consumer benefits from more competition and choice and less market dominance. That means that we have to be quite subtle in defining the overarching role of the CMA. I was slightly puzzled by the Minister saying that we should not augment or unduly prescribe the overarching role. The problem with the way that the Bill is currently set out is that, whereas the OFT and the CMA had clearly defined major roles in the beginning of their respective statutes, this does not. All it says is:
“The CMA must seek to promote competition, both within and outside the United Kingdom, for the benefit of consumers”.
Nobody will argue with that. It is one and a half lines. It does not say what the CMA should look into and how it should judge it. I certainly agree that all market situations into which it looks should be judged as to whether they are an abuse of power to the detriment of consumers.
There are other issues involved in looking at market structures, including international competitiveness et cetera. There are wider issues as well but my amendments attempt to say what the subject matter of the new CMA would be. I do not think that we have yet got that situation. However, clearly my amendments as drafted do not meet universal acclaim. I hope that the Government will, before the Bill finishes, think about whether they need to be a bit more definitive in this area so that we in Parliament and the public in general know exactly what this new organisation is setting out to do.
On the threshold point, there are references in existing legislation to 25% so it is not a new thing. I accept that that should probably not be in the overarching aim. I suspect that we will return to the threshold as we move further into the Bill so I will not prolong that one. I have made the point. I hope the Government will at least give this some consideration and perhaps come up with a different drafting when we move to later stages of the Bill. For the mean time, I beg leave to withdraw the amendment.
Lord Whitty
“( ) The CMA shall have responsibility for the strategic direction of all statutory consumer support including—
(a) advocacy,(b) education,(c) advice,(d) enforcement of redress(e) guidance, and(f) consumer protection,as it relates to competition and fair trading, taking particular account of the interests of vulnerable consumers.”
Lord Whitty
My Lords, this amendment puts the consumer interest at the centre of everything that we are doing. A number of organisations have, one way and another, had some changes proposed to them in the consumer field in recent years, since the advent of this Government, who call it the “consumer landscape”. They are changing the role of the OFT and slightly changing the role of the sector regulators; they have, somewhat to my distress, changed the role of Consumer Focus, the major consumer organisation, previously the National Consumer Council, of which I was chair and the noble Baroness, Lady Oppenheim-Barnes, was a distinguished chair at an early stage. They are not leaving a consumer voice in the same central way as was provided in the previous 37 years. Some of those functions will be done elsewhere, some will be inherited by different bodies and some will be in the public sector, but most will be in the third sector or somewhere in the ether.
That is not a satisfactory position. If the regulator and the industry are to deal with the consumer interest in the central way that the department continues to emphasise in all its publications—though its actions somewhat belie it—we have to be clear where the functions that used to exist now lie. In relation to this part of the Bill, the OFT already included a number of functions beyond the areas of market structure—in other words, beyond merger, monopoly and dominant position. It had general responsibilities to look after the consumer interest, consumer protection and duties and consumer law. Some of those duties are now to go out of the organisation; in fact, on the face of it, most of them are to go out of the organisation, and the new organisation will primarily be concerned with market structures. This could prove to be unsatisfactory. I appreciate that BIS is still issuing consultation papers, replies to consultation and new White Papers in the consumer area, but it would have been more appropriate if they had all been brought together in one Bill. Instead we have some of it in the Public Bodies Act, some of it in this Bill and some of it yet to come—so we do not get a very coherent position.
To be more specific, as the amendments are, the present duties of the OFT include responsibilities for general protection of consumers, including responsibilities for consumer education, information and advice. Section 6 of the Enterprise Act provides for information and advice and Section 8 for support for consumers in the market and the particular provisions in relation to consumer-facing codes of practice for different sectors. Those have been important roles for the OFT, and in addition it has developed other roles, such as the scam-busting role and other interventions in pursuit of consumer protection and acting against consumer detriment. Those roles, as far as I can see, are not to be part of the roles of the CMA.
Section 8 of the Enterprise Act is to be deleted entirely. Amendment 24F reverses that deletion, so that the OFT could continue to provide help to consumers in relation to their general protection and the codes of practice. Section 6 of the Enterprise Act, which deals with education, is still there. However, as I understand it, it will be devolved to Citizens Advice. Indeed, any of these powers can be devolved. However, whether or not the powers are devolved, the question is: which government organisation is responsible for ensuring that they are properly carried out and that consumer detriment is not increased but diminished as a result of the changes?
The amendments seek to deal with what I understand to be a situation that is not covered in the Bill. As I said, consumer education is now to be the responsibility of Citizens Advice. The codes are, vaguely, to be the responsibility of trading standards departments and a new body, the National Trading Standards Board, which is in the process of being established—however, it is not a statutory body or a body mentioned in statute—and another, rather shadowy, body to be established called the Strategic Intelligence, Prevention and Enforcement Partnership, which does not exactly trip off the tongue. Its acronym is SIPEP, which is a particularly apposite title.
It is to all these slightly shadowy bodies, based in part on trading standards and in part on the third sector organisations, that the powers which previously belonged to the OFT—and which were very important in establishing new benchmarks for the consumer interests—are to be devolved somewhere down the line. I am a great admirer of trading standards—indeed, I am a vice-president of the Trading Standards Institute—and have a great respect for it. However, it has for some time—not only under this Government, I am afraid—been deprived of resources and reduced in scope so that its ability to deal with major scams across the borders of local authorities is limited. Although the National Trading Standards Board may enhance that a little, it will not be able to do so without strong backing from the centre. However, that backing from the centre, which the OFT previously provided, is not in this Bill.
My amendments seek to provide a number of things. They seek to restore Section 8 and to ensure that these functions are robustly devolved—because these functions can be devolved; I am not necessarily objecting to that—and that it is made clear to Parliament that they are being devolved. Where they are devolved to public sector bodies such as trading standards departments at local authority level, or to third sector bodies such as Citizens Advice, Parliament should know and deliberately make those decisions.
It is also important that those decisions are reviewed and reversible, and these and later amendments provide for a review system. Much of this is new territory. Taking it away from the centre and pushing it down the line may be a dimension of localism, reducing the role of the state and increasing that of the third sector, but we need some means of judging whether it works or not. I therefore propose five-year reviews and an ability to reverse the devolution of responsibilities. However, we cannot reverse devolution if they are not referred back to either the Secretary of State to give the responsibilities to some other body or to the CMA. All this needs to be in the Bill.
If we do not do that, there is a real danger that we will dilute the achievements of the OFT. I know there have been criticisms—I have had criticisms—but the OFT has raised the standard of consumer protection in this country and is recognised by the consumer movement internationally and by other bodies as having done so. The danger is that the central regulator’s role will be diluted; that it will be differently effective in different parts of the country and in different sectors; and that the independent voice of the consumer will be less than it was previously. This all adds up to a serious diminution of the consumer influence on policy.
I hope we can ensure, even if we do not adopt my exact words, that the Bill makes clear where those responsibilities are going, how they are to be assessed and, if necessary, how they can be reversed and reallocated. I beg to move.
Baroness Oppenheim-Barnes
I would like to make clear at this point that I agree with every single word that the noble Lord said. I hope to have similar support from him when the time comes.
Baroness Crawley
My Lords, as president of the Trading Standards Institute—excuse my cold—I agree very much with my noble friend Lord Whitty that there is a need at this point for precision when it comes to the role and functions of the CMA and the transfer of functions from the OFT. I especially agree when it comes to the funding of the transfer of those functions. There is a lot of uncertainty around that at present. There is a good will and hope but we need some answers from the Minister at this point about both national and local authority funding—the latter is under unprecedented pressure—to ensure that this devolution process operates as best it can and strengthens rather than weakens the role of the consumer. We must have some answers as far as funding of the transfer of functions from the OFT is concerned.
As my noble friend Lord Whitty said, some of the roles of the OFT will go to the National Trading Standards Board. However, as he said, that does not have a statutory underpinning. As far as I can see, it is a new animal in the process of being created. The Minister would help us all if he gave us some idea of the accountability within the creation of the National Trading Standards Board. There is a great deal of work being done, as noble Lords can imagine, to ensure that consumers will continue to be protected to the highest standard. I have nothing but admiration for the people trying to make that work, as far as both trading standards offices and the National Trading Standards Board are concerned, the latter made up of senior trading standards officers working across borders. However, we need some answers from the Minister on both funding and accountability within the board, and some idea of the way in which the Government believe that there can be a cohesive landscape at the end of this process.
Lord Borrie
My Lords, I very much agree with pretty well everything that has just been said by my noble friend Lady Crawley. She is the current president of the Trading Standards Institute, which has done a great deal of good over many years, not only in the individual local authorities which it represents but in getting together on a number of matters. That has reached a kind of culmination in the creation of the National Trading Standards Board, whereby it can get together and discuss matters, particularly a scam or whatever it is in the way of anti-consumer activity that is being indulged in. It gets together and ensures that the stronger of the trading standards offices takes up the cudgel and takes the enforcement action.
One of the most remarkable things about the provisions we are dealing with in the Bill is that we are on Clause 22. We know that Clauses 20 and 21 create the new authority and refer to the amalgamation of the Office of Fair Trading and the Competition Commission. Yet whereas on competition matters the new authority clearly has the powers to deal with anti-competitive activity, the Bill does not deal with the considerable number of powers which the Office of Fair Trading has built up over the years. They are left in limbo. Therefore, there is a great deal of uncertainty, except on the basis of government statements—it is not in the Bill. Only in government statements have we got some idea of who is to do the advocacy for the consumer and who is to do the other matters that my noble friend Lord Whitty has referred to in Amendment 24ZB—consumer education, consumer advice, consumer advocacy and the enforcement of redress.
Viscount Younger of Leckie
My Lords, these amendments recognise the fundamental importance of consumer support and consumer protection, whether it comes in the form of education, advocacy, advice or enforcement of legislation. I therefore thank the noble Lord, Lord Whitty, for the opportunity to discuss this important issue.
Competition is one of the pillars of a strong and vibrant economy. It makes businesses efficient and innovative, allowing the best to grow, innovate and enter new markets. It also drives investments in new and better processes, pushing prices down and quality up for consumers, but competition is only one side of the coin. To reap fully its benefits, consumers must be informed and have the confidence to exercise choice effectively. Unless consumers have the ability to make effective choices, vibrant competition will be inhibited and the businesses offering the best price or the best quality will not necessarily grow.
The current landscape provides consumers with a bewildering array of public, private and voluntary bodies with overlapping responsibilities. Each individual organisation does a very good job and is highly regarded but, taken together, they form a complex landscape that can be difficult for consumers to understand. The complexity and split of responsibility on enforcement cases has also led to a gap in enforcement. The National Audit Office’s 2011 report, Protecting Consumers, which reviewed consumer protection in the UK, found that consumer detriment occurs at national and regional level but the incentives are weighted towards tackling local issues. This contributes to an enforcement gap where large regional and some national cases may not necessarily be addressed.
The OFT estimated the cost to those affected and to the wider economy of activities such as unfair commercial practices and scams to be at least £6.6 billion annually. Any gap in enforcement is therefore significant to consumers and to the economy. The combined competition and consumer landscape reforms aim to deliver a better deal overall for consumers by setting out clearer responsibilities and better co-ordination between enforcers and the consumer advisory bodies.
Specifically, we will better equip trading standards departments to take greater responsibility for consumer law enforcement, and we have created a new National Trading Standards Board with responsibility for prioritising national and cross-local-authority boundary enforcement, tackling issues such as scams, illegal moneylending and rogue and incompetent traders, to provide a more coherent approach to trading standards enforcement.
The CMA will have primary expertise in unfair contract terms legislation and additional consumer enforcement powers to tackle business practices that distort competition or impact on consumer choice, even when markets are generally competitive. This could take the form of tricking consumers into tie-in contracts that might inhibit them from switching suppliers, subjecting consumers to unclear surcharges, or using misleading reference pricing. The CMA will also operate the combined OFT and Competition Commission’s markets regime to ensure that markets work well for consumers. As such, it will have powers to investigate markets such as payment protection insurance, which is a live issue. Business education will be shared between trading standards departments, which will deal with most business-facing initiatives, and the CMA, which will lead on competition advocacy and business education on unfair contract terms legislation.
In addition, as mentioned by the noble Lord, Lord Whitty, we have created SIPEP, the Strategic Intelligence, Prevention and Enforcement Partnership, involving the CMA, the National Trading Standards Board, the new Financial Conduct Authority, Citizens Advice and representatives from Scotland and Northern Ireland collectively to identify issues causing consumer detriment and agree priorities for enforcement, information and education.
These landscape changes have been welcomed by a number of consumer experts. For example, Gillian Guy, chief executive of Citizens Advice, said that this reform, “is good news for consumers”. Ron Gainsford, chief executive of the Trading Standards Institute, said to the committee in the other place that the current proposals strike about the right balance on the relationship that the institute was seeking. Mike O’Connor, the chief executive of Consumer Focus, said of the new strategic partnership:
“Consumer Focus welcomes the creation of SIPEP and we believe that it can make an important contribution to promoting consumers’ interests”.
In order for this new landscape to work in practice, it is essential that there is clarity of responsibility and accountability. Requiring the CMA to provide strategic direction on consumer support functions for which other bodies will be responsible, as provided for by Amendment 24ZB, would undermine in this area and risk further confusion for consumers across the landscape.
I shall now address Amendments 24F, 24G, 24H and 24J collectively. They would widen the transfer scheme set out in Clause 22 to enable the transfer of the OFT and Competition Commission’s functions to bodies other than the CMA and a Minister of State. It would therefore be helpful for me to set out how we intend to enable the transfer. We will be relying on Clauses 20 and 22 and Schedules 4, 5 and 6 to create the CMA and transfer the functions, including those I set out earlier, from the OFT and Competition Commission to the new authority.
In addition, we will be using two orders under the Public Bodies Act to enact changes to the wider consumer landscape. The first order is being laid in draft before Parliament today and we hope that it will come into force in April 2013. This order will transfer the OFT’s function of supporting a public consumer advice scheme to Citizens Advice services in England, Wales and Scotland. We will then transfer the levy for this service. We are also making amendments to a range of consumer legislation to modify the enforcement functions of the OFT.
The second Public Bodies Act order will transfer Consumer Focus’s statutory functions and powers to the Citizens Advice service, and wind up Consumer Focus. It will also transfer the OFT’s estate agency functions to trading standards. We expect to lay this order late in 2013 for it to come into force in 2014.
Finally, Amendment 24 seeks to transfer the OFT’s function of “promoting good consumer practice” to the CMA. We do not consider that this function needs to be transferred to the CMA. In the current regime, Section 8 of the Enterprise Act 2002 gives the OFT a general function of promoting good consumer practice, which recognises its leading role in providing consumer education and its function in relation to approving consumer codes. It is also the provision on which the OFT relies to conduct its international consumer advocacy work.
The noble Lord, Lord Whitty, was concerned that Section 6 of the Enterprise Act 2002 would not be transferred to the CMA. Paragraph 61 of Schedule 5 to this Bill transfers to the CMA the OFT’s function for the provision of information to the public.
Lord Whitty
Either I mis-expressed myself or the noble Viscount has misunderstood. Section 6, which deals with education, is indeed being transferred and then devolved to Citizens Advice and, to some extent, trading standards offices, but Section 8 is being deleted in its entirety, as I understand it.
Viscount Younger of Leckie
I note the point that the noble Lord has made and I will come back to that technical issue shortly.
As I have mentioned, in the new consumer landscape, the Citizens Advice service will take on the lead role in providing consumer-facing education from the OFT, as well as taking over responsibility for consumer advocacy from Consumer Focus. The role of approving consumer codes will be transferred from the OFT to trading standards. The CMA will continue to have an international consumer role; for example, to represent the UK at the OECD’s Committee on Consumer Policy. A specific provision has been made for this in paragraph 19 of Schedule 4 to the Bill.
I will pick up the point made by the noble Lord, Lord Whitty, and the noble Baroness, Lady Crawley, about how trading standards offices will provide a high standard of support against a backdrop of reduced funding. Local authorities make their own decisions about what proportion of their budget to invest in local trading standards services. This had led to variations in the costs and resources allocated to trading standards services. While we are unable to pre-empt local funding decisions, in 2011 the National Audit Office assessed that local trading standards services vary significantly in capacity and annual budgets range from around £240,000 to more than £6 million.
The Government recognise the impact of the current financial climate and our structural reforms, supported by central government funding, for national leadership and co-ordination of enforcement activity will help local services to target high-priority cases for maximum effect. We will continue to ensure that national expenditure complements the local authority contributions and offers as much leverage as possible to ensure overall efficiency.
The noble Lord, Lord Borrie, asked whether the Citizens Advice service would receive additional funding for taking on the consumer advocacy function. Citizens Advice will be allocated an additional £3.72 million to carry out general consumer advocacy work and consumer education and information, previously undertaken by Consumer Focus and the OFT.
I hope that noble Lords will accept my explanation of the relationship between the competition and consumer reforms as to why additions to the CMA’s role and widening of the transfer schemes in this way would not be appropriate. Therefore, I ask the noble Lord, Lord Whitty, to withdraw his amendment.
Lord Whitty
My Lords, I thank the Minister and other noble Lords who have spoken. I thank, in particular, the noble Baroness, Lady Oppenheim-Barnes, for her support. I hope that I will be able to reciprocate but I shall have to wait to hear what she says.
My noble friend Lady Crawley has done a lot in relation to the trading standards organisation. It is important to recognise that the TSI and trading standards offices up and down the country have been engaged with the Government and others in considering what the new landscape looks like. There are two aspects to this. One is that the Minister referred to strengthening and better equipping trading standards bodies to perform the enforcement role, as well as the educational role, which will now also become part of their responsibilities. However, that cannot be done in an atmosphere of fewer resources. The Minister quite rightly said that we are starting from a position of hugely differential funding for trading standards bodies up and down the country, and the NAO also rightly pointed that out, but there is no clarity on how we will address that, let alone on increasing the aggregate amount of resources for the increased level of responsibility and some previously central functions which trading standards are about to take on.
The noble Lord accused my amendments of being likely to create greater confusion. However, at present there is no mention of most of what he went through in some detail. I need to read his words carefully but I think that it needs to be set out more carefully in the public document. There is no mention of the words “national trading standards”, SIPEP, Citizens Advice, or indeed Consumer Focus for that matter. To get clarity, we need a better understanding of where previously central statutory functions are now going. To go back to the money point, we also need to ensure that, when the transfers are made, at least commensurate resources are transferred with them. In the area of consumer advocacy, for example, I know that Citizens Advice has been asked to take on the role of Consumer Focus and, prior to that, activities that came under the NCC.
The Minister referred to £3.7 million. My recollection is that in the last year of the National Consumer Council and the first year of Consumer Focus, the budget for that role—the non-regulated industries part of Consumer Focus—was around £6 million. That was four years ago. Therefore, there is a serious cut and Citizens Advice is not being given a commensurate amount of money to perform the function previously carried out by Consumer Focus.
I fear that the same is likely to be applied to trading standards offices and that they will be asked to do more in a different way—in some cases, starting from scratch—without commensurate resources. At the very least, the Government ought to put in the Bill clarity about where all those responsibilities are going. They should be obliged to produce regulations at a later stage when the transfers are taking place and attach to the resources that they are handing over those that related to responsibilities which were previously central and are now to be carried out at local or third sector level.
I think that the last thing the Bill provides is clarity, and I will be coming back to that point in other contexts, as I am sure others will. The new consumer landscape, or new trading standards landscape, is not spelt out in the Bill. There is some support for some of the measures that the Government are introducing—there is no doubt about that—and there are those who would like to see them set out slightly differently. However, the point I am making is that that is not in the Bill—there is no clarity. Parliament has not been asked to approve or sanction the way in which these transfers are likely to take place and the way in which those responsibilities are in future likely to be delivered and effected. So I do not really accept much of what the Minister says about this part of the Bill. We will undoubtedly return to it.
In reply to my noble friend Lord Borrie, who asked about the fair trading dimension, I am all in favour of the fair trade label and what it does to improve the conditions of workers, particularly in the third world, and the conditions of the environment. That was not what I intended here, and perhaps some better wording would convey the fact that we are concerned not just about market structures but about how providers and buyers of services and goods treat their consumers and suppliers. We need a term that is probably no longer “fair trading”—that is confusing—that reflects the range of responsibilities relating to market abuse in this Bill.
I am sorry to say that the Minister did not entirely convince me. He has not really satisfied me that, under the new set-up, consumer protection—however much of an advantage it is in the market structure areas—will be carried out as effectively, efficiently and in as good a way as it was under the previous structure. Therefore, I am in no doubt that, while I am withdrawing the amendment now, we will return to something like these propositions at a later stage.
Viscount Eccles
I have found it pretty difficult to be sure that I understand exactly what the Bill is trying to do. You practically need a trolley for the papers. It is built on previous Bills, and is still extremely dependent on the 2002 and 1998 Acts. My position on the previous debate would be that if I cannot find it anywhere else it must still be in one of those Acts, and that must be the law of the land.
My interest is in Parts 3 and 4 doing different things. Part 3, in Clause 20, introduces institutional change, whereas Part 4 modifies the competition regime and, in doing so, has a very large number of schedules and is almost completely dependent on previous Acts. It does very little that is not an amendment to an existing Act. The question that I want to probe is why the Government have chosen this particular step of institutional change. There is to be a body corporate known as the Competition and Markets Authority. I thank the Bill team and the Minister very much for trying to settle some of my misunderstandings and doubts in a long correspondence, but I am not entirely reassured.
I go back to the Public Bodies Act, which is quite a recent Act—passed in 2011. Section 2 says:
“A Minister may by order merge any group of bodies or offices specified in Schedule 2 … In this section, to ‘merge’ a group means … to abolish all the bodies or offices in the group, create a new body corporate or office and transfer some or all of the functions of the abolished bodies or offices to the new one, or … to abolish all but one of the bodies or offices in the group and to transfer some or all of the functions of the abolished bodies or offices to the remaining one”.
My question is: why have the Government chosen subsection (2)(a) and not subsection (2)(b)? There does not seem to be a strong case for going any further than abolishing all but one of the bodies and transferring the functions to the remaining one. That is in effect what is happening. We are not getting a new body. I know that the noble Lord, Lord Whitty, was welcoming the new body and trying to make sure that it has new things to do, but that is not the Government’s intention. This is simply the Office of Fair Trading with its name changed. Following the scheme of the Public Bodies Act, which the Government have done, even though they say they are not depending on it, they have at some stage to take account of the reason, purpose and conditions, as in Section 8. In the exercise of public functions, they must have regard to efficiency, effectiveness, economy—the familiar three Es—and accountability. At the moment, I do not think there has been any attempt to describe to Parliament why the creation of this new body would achieve the purpose and conditions of the Public Bodies Act.
Indeed, that seems quite strange at a time when we have to try to restrain expenditure. We would all agree with that: if we saw a reasonable opportunity for restraining expenditure, we would take it. It is a time when, if we can have minimum disruption and allow as many people as possible to carry on doing the things with which they are familiar without being told that they face great change, we should. It is also a time when it is probably better to have the maximum of reality. The reality is that we are being presented with a beefed-up OFT. I have no objection to that as an idea but do not see why it should be sold as a new body. That does not seem to be what it is. I have a piece of evidence that leads to a question. Am I right that under Part 4 of the Bill—which deals with the modification of the competition regime—if the draftsman was to substitute “OFT” in every instance for “CMA”, the modification would be perfectly installed by Parliament and there would be absolutely nothing wrong with it? That demonstrates that what is happening is a change of name and a beefing up of the powers of the OFT, and not the creation of a new body.
Lord Razzall
My Lords, I obviously listened to what my noble friend Lord Eccles said at Second Reading when he made very similar points. I am not clear: does he accept the fundamental need to reform the structure and institutional nature of our competition regime? It is a very straightforward issue, with which—
Viscount Eccles
Perhaps I may just answer that question. I do not accept that, no.
Lord Razzall
Well, that seems to be the fundamental difference between my noble friend and other members of the coalition. I suspect, having heard the Second Reading remarks of a number of members of the Labour Party, that it is also their view that there is a need for such reform. I will not labour the point because it was made at Second Reading, but it is universally regarded throughout the world that our competition regime has all the attributes that every competition regime should have except for being the slowest. That is the real issue that this part of the Bill attempts to deal with. It does not matter if you call it a beefed-up OFT or a beefed-up Competition Commission. What is being reformed is the necessity for practitioners, companies and people involved in the whole competition process to go through two organisations to get the decision that they are likely to require. That is the purpose of the Bill. I am still puzzled as to whether my noble friend, Lord Eccles, who was a distinguished member of one of the bodies that is being abolished, wants to maintain the system as it was when he was that distinguished member.
Baroness Oppenheim-Barnes
My Lords, I am grateful to my noble friend Lord Eccles for tabling this clause stand part debate. I hope it will be for the convenience of the Committee—it will probably save time—if I combine my opposition to this clause with my opposition to a later clause
I did not have any friendly meetings with the Minister or anyone else—no 101s—and so I had to turn my attention to perhaps an even more appropriate body: one of the most distinguished past chairmen of the monopolies commission. He has authorised me to describe his objections to the CMA as it is proposed and says:
“The proposed corporate structure of the new Competition and Markets Authority points to a vast bureaucracy incorporating a range of vaguely linked but not cohesive elements, resembling a large government department. The result will be an enormous sprawling bureaucracy that over time is bound to swell and grow in size. It will be cumbersome to administer, and, inevitably, it will develop a large and costly administration”.
On the important distinction that exists under the present legislation between the OFT and the Competition Commission he said that,
“the distinction in the competition field between the investigatory and prosecutorial functions (OFT) and the judgmental functions of an economic tribunal (Competition Commission), that had been so carefully separated for over 70 years, since the Competition Commission … was formed, will become increasingly blurred within the new single organisation. This separation, which, in my view, is essential for the proper and fair functioning of an effective competition regime, has stood the test of time, and has been respected, and seen as a model, worldwide”.
He made it clear that, on ordinary references, the equivalent of the Competition Commission in the United States is not expected to report for at least two years, usually longer.
He makes an important point that the evidence of material failings in the present structure that could not be improved simply, without wholesale change, is not clear. What is the evidence of the material failings in the present structure that could not be improved?
There are certain important distinctions between the two offices at present. The OFT, a governmental agency like the prosecution services of the state, has a role in bringing proceedings before or referring matters to a body more expert in the conduct of hearings, collecting and reviewing evidence and making independent judgments. The Competition Commission, on the other hand, a body of independent members, is an independent tribunal which gathers and reviews evidence and makes rational and independent findings. The distinction between the two is very important and will be lost.
Over the years, I have had the greatest respect for the monopolies commission. Later, we will come to a clause which will sweep away and abolish the monopolies commission and the Office of Fair Trading after, as has already been said, the National Consumer Council, many other consumer bodies and others who have carried out very respected work over the years have been swept away. During the seven years in which I was responsible, in one way or another, for either the monopolies commission or the Office of Fair Trading, first in the shadow Cabinet in opposition and then in government, I was in touch with both. I found them all to be wonderfully run organisations, not least the Office of Fair Trading as it is now. Indeed, I was such a strong supporter of both that I still bear the scars of the blood I shed trying to get the implementation of their recommendation, in those days, to abolish the gas showrooms.
I fought it and fought it hard; it was a very painful situation. If noble Lords had been in the House of Commons when I announced it they would have some sympathy for me, but it was possible to do it in a different way, which was by denationalisation of the gas industry, and that was not down to me. The chairman and everybody I appointed to either body during that long period have performed their duties, they have not complained and they have done everything that was wanted of them, and today they are being offered a body—the CMA—a diagram of which we have been presented with. It looks to me like a diagram from a medical student’s textbook on some particularly nasty intestinal complaint.
These multipurpose, overlapping powers are said to be capable of providing quick and more flexible results than the regime which will be abolished. More worrying still to me is what seems to be coming in clauses further on. There is nothing in the Bill so far regarding the CMA’s responsibility to ensure that phase 1 and phase 2 of an investigation are both independent and secure. It absolutely should not be acceptable for the first result to be made known to the second investigatory department. There is no requirement for information about recommendations to be kept secret, which is a great omission. Even worse, staff members of a government department can become members of the board, which is a completely unacceptable situation. The board of the present Competition Commission was always completely independent and this is something that has to be preserved.
I turn to the very valuable services provided by the OFT in consumer affairs. So many things have already been swept away. We do not know yet what will happen in so many areas that we will be asked to vote on in the main debates as to be completely unacceptable. The National Consumer Council, as I have already said, has gone—a council that I was on, that I was chairman of, and which produced very carefully researched reports and recommendations. So good were these reports that I was invited—though I had nothing to do with them and I do not claim any praise for how good they were—by the Prime Minister of the day to ensure that I made my maiden speech in your Lordships’ House on the basis of one of its reports, on access to justice. I think that that says a lot for its value—and there were others, of course.
Under Clause 20, there are indications of the new regime that we might accept. In particular, there are lots of aspects of this that I welcome, such as the new role for trading standards bodies. I have always had the greatest respect for everything that they have done, and I cannot think of a better body to carry out such important statutory duties. I also note that NACAB will be expected not only to provide the service but to collate the information and report it where merited to the National Trading Standards Board. One should bear in mind that the members receiving the complaints are unpaid and voluntary, with different qualifications in different things, and they will not be the people who carry out a review and make decisions on what will be passed to the trading standards departments. So at the top they will have to have more people employed in the executive.
I noticed at Second Reading, which I was unfortunately not able to attend but watched in glorious technicolour from my sick bed, that my noble friend Lord Marland announced, to murmurs of joy, that he would increase the amount for Citizens Advice by £1.7 million. My short-term memory is not very good, but my long-term memory is extremely good. I answered a Question on financial assistance from my department for the citizens advice bureaux, in the other place, on 19 November 1979. My reply was:
“As I shall be announcing today, we shall be doubling the level of assistance in 1980–81, compared with this year. We shall provide £3 million next year”.—[Official Report, Commons, 19/11/79; col. 13.]
Today, that would be about £25 million. It is very important to make the point that if the CABs are expected to carry out this new role—I am sure that they will carry it out well, as they have always given excellent service, and I see no reason why they should not continue to do so—I cannot see how £1.7 million, even if it is only a one-year increase, is to cover all the extra work, which is paid work rather than that done by volunteers, that will have to take place.
Finally, I must express one of my most serious concerns of all. That is on the hiatus caused by the abolition of Clause 21 and whatever is put in its place in Clause 20, which at the very earliest could not begin to take place before April 2013, until the Bill has been enacted, or the positions have been filled—and no appointments can be made until the whole Bill is enacted. In that particular perspective, there is the need to provide a timetable for the new system in the Consumer Credit Act, which will be more or less paralysed during this period of delay. I will be very interested to hear what other noble Lords have to say and to what extent they agree with my concerns. I will wait until the actual clause comes up before I go any further on Clause 21.
Lord Stevenson of Balmacara
My Lords, before I start on the detail of what has just been discussed, I welcome the noble Viscount, Lord Younger, to his Front Bench duties on the Bill. We have met on a number of other occasions across this space. I am pleased that he is now able to engage with us on this Bill, which we find of great importance. We look forward to working with him on this and other matters.
We had some doubts about whether we should join in on this clause stand part debate because we were not quite sure where it was coming from. Indeed, I am still not quite sure where the two halves conjoin. There seem to be two different discourses. We are obviously in a two-act drama. Maybe when we get to Clause 21 and hear the other part of the noble Baroness’s speech, we will be able to judge more closely how this comes together. In the debate we have had so far, as so often in clause stand part debates, we begin to distil some of the concerns that have bounced around in some earlier debates. It is worth just reflecting on what we have heard.
From the official Opposition’s point of view, as my noble friend Lord Whitty said, we are not against what is being proposed in principle but have a number of reservations that we will want to feel have been properly tested before we finally sign off on it. We will have opportunities both on Report and possibly at Third Reading to do that. At the moment, having listened to the debate on the first two groups, the jury must still be considered to be out. We have had a lot of confusing signals about what exactly is happening, how the Government wish to approach this and the timing. Very importantly—and it has been the substance of a number of contributions we have heard on this group—what exactly is happening to the functions that are not explicitly stated within the front part of the Bill? Where do they go and with what timing? Most importantly, will the funding required to deliver the functions that are currently being properly delivered be available to support that?
I was very struck by some of the points made by the noble Baroness, Lady Oppenheim-Barnes, about the problems that will come from currently having two separate bodies. The OFT and the Competition Commission have their separate focuses and cultures, one investigative and one judgmental. That careful construction of two separate operations patrolling a common area but with very different functions and levels has been judged over time to be very successful. How will they be brought together and how in particular will the phase one and phase two elements and splits work out? Like the noble Baroness, I looked at the diagram. I did not quite bring out the medical textbook or the nasty intestinal disease analogies that she did, but I can understand where she was coming from in that. It is a rather odd structure. It does not seem to fit any of the management textbooks that I am familiar with in terms of clarity of exposition or additional information that would not be provided by a textual analysis. It is jolly colourful and we should be grateful for that.
We are creating something quite different. As I said, we are not against this but we need to be satisfied about why the Government have chosen this particular route and method of doing it. As was mentioned by the noble Viscount, Lord Eccles, it includes the Public Bodies Bill but also ignores what that says about how to go about this, in creating a body which in a sense already exists. The chair of that body is available should he wish to speak. Perhaps he could share with us what he thinks of the colour diagram that we are talking about—but perhaps he will not. It would be helpful if we could get a little bit more from the Minister about some of the intertextual material that has been brought out in this discussion. I want a better feel for the timing, a sense of certainty about what is or is not being retained within the central core of the CMA and why stuff is being taken out and under what constraints that has been done. Particularly for trading standards and Citizens Advice, I want an absolute assertion from the Minister when he comes to respond that the funding will be available to deliver the sort of services to which we all aspire but which, I am afraid, will not be available in the time.
Viscount Younger of Leckie
My Lords, I say at the outset that I am very grateful for the comments of the noble Lord, Lord Stevenson. I am particularly grateful for the contributions from my noble friends Lady Oppenheim-Barnes and Lord Eccles, who bring a wealth of valuable experience to this debate. I also appreciate the useful meetings that they have had either with me or with officials, or indeed with both.
The UK has one of the best competition regimes in the world but in the current economic environment we need to strive for improvement and further embed conditions in which companies can operate freely in competitive markets that encourage innovation, investment and growth and in which consumers secure the benefits of competition.
Despite its world-class ranking, there are problems with the current regime. As my noble friend Lord Razzall recognises and as he said at Second Reading, the UK competition regime is among the slowest in the world. I am grateful that he has reiterated that point today. Data published in Global Competition Review show that we are one of the three slowest countries when it comes to conducting investigations into anti-competitive agreements, and in the bottom four for investigating abuse of dominance cases. The current regime has also led to problems in terms of the length of time that it takes to conduct market studies and market investigations, which prolongs consumer detriment and uncertainty in markets. For example, between 2002 and 2011, OFT market studies took between three and 21 months, and the end-to-end process of market investigation, including the time taken for the OFT to make a referral, as well as the appeals process, ranged between 33 and 67 months.
Another issue is the uneven nature of references made to the Competition Commission, making it difficult to manage resources. For much of 2006, the Competition Commission was working on five market investigations and in 2008 it was working on four, whereas no references were received in 2008 or 2009. The pattern of merger and regulatory references is also uneven, and that contributes to an overall work pattern of peaks and troughs.
This clause therefore establishes a new Competition and Markets Authority, which will bring together the Competition Commission and the competition and markets functions of the OFT into one body. Despite looking on paper like a medical student’s study sheet—a euphemism for what was mentioned by other noble Lords—the creation of the CMA will mean a single, strong voice for competition which can provide leadership for the sector regulators on competition enforcement. It will mean less duplication and greater consistency of information requests between phase 1 and phase 2, and more flexible deployment of resources and specialist expertise across all its competition tools. It will also mean prompter referrals to phase 2 where necessary, and greater certainty for business from faster and clearer timeframes and more robust decision-making. Finally, it will also mean a one-stop shop for businesses to help them to understand and comply with competition law.
The creation of the CMA has also been welcomed by business groups and practitioners, including the CBI, the Federation of Small Businesses, the Institute of Directors, the Forum of Private Business and the City of London Law Society, which all consider that it will provide efficiencies and boost business confidence. The CMA will be the UK’s premier competition authority and will have at its disposal a full range of approaches to tackle anti-competitive behaviour and make markets work better for consumers and businesses.
This clause therefore gives the CMA a duty to seek to promote competition for the benefit of consumers, both within the UK and internationally. It will be concerned with how firms interact with each other—that is, the supply side—and how firms interact with customers, which is the demand side.
In creating the CMA, we have drawn from the best of the OFT and the Competition Commission. The CMA will therefore retain the separation of decision-making between phase 1 and phase 2 in merger and markets cases, with independent expert panellists taking the phase 2 decisions. These features were highlighted as key strengths of the current regime by Sir John Vickers and some of the other witnesses to the Committee in the other place, and we shall protect those features. The provisions are set out in detail in Schedule 4.
I should like to bring up a matter raised by the noble Viscount, Lord Eccles. He asked what the relationship or distinction was between this Bill and the Public Bodies Act. Section 5 of the Public Bodies Act provides for the modification of the functions of the Office of Fair Trading and the transfer of functions to other bodies. The PBA also allows for the OFT’s functions to be abolished. Further, Section 2 of the PBA provides that the OFT and the Competition Commission may be merged. However, we will not use the Public Bodies Act to enact reforms to the competition regime or to abolish the OFT or CC. Instead, we will be relying on Clause 21, which provides for the abolition of both the OFT and the CC. This is because while the Public Bodies Act allows us to abolish both bodies, and modify and transfer their functions, it does not allow us to create wholly new competition functions and powers for the successor body, the CMA.
I should also like to address a point made by the noble Baroness, Lady Oppenheim-Barnes, on the separation of decision-making in markets and mergers—a matter also raised by the noble Lord, Lord Stevenson. The independence of the phases will be preserved, in as much as paragraph 28 of Schedule 4 specifies that unless otherwise specified, functions of the CMA are exercisable by the CMA board. Similarly to the Competition Commission’s arrangements, paragraph 36 of Schedule 4 requires that where under any enactment—the Enterprise Act or sectoral legislation—the chair of the CMA is required to constitute a group to carry out an inquiry. He must appoint members of the CMA’s panel to an inquiry group in accordance with that enactment and Part 3 of Schedule 4. I hope that that goes some way to reassuring noble Lords.
Finally, I should like to address an issue raised by the noble Lord, Lord Stevenson, about the funding of trading standards departments; this matter was brought up earlier. I covered in our previous debate the issue of where the funding will be. The noble Lord, Lord Whitty, asked specifically about trading standards funding. Perhaps I may add that in 2011-12, we allocated a total of £10.6 million for national and cross-border enforcement in England, Wales and Scotland. However, looking ahead to 2012-13, we have allocated £12.1 million. This is in recognition of the additional responsibilities that trading standards will take on as functions are transitioned from the OFT. This funding is subject to budgets being agreed and the effects which any emerging central pressures may have on the proposed levels of funding. I hope that this goes a little way to answering the comments of the noble Lord, Lord Whitty.
Lord Stevenson of Balmacara
I want to ensure that the record is correct. The previous figure of £10.6 million has now been superseded by £12.1 million. I think that was the sense of what the Minister said. I notice that he has not given us the comparable figures raised by the noble Baroness, Lady Oppenheim-Barnes. What exactly is the Citizen Advice component of that? It would be helpful, if he does not have them, if he could write to us and make sure that we have the figures because several have been floated. It would be nice to have them on the record.
Viscount Younger of Leckie
I note what the noble Lord said, and I will return to him in writing. I commend this clause to the Committee.
Viscount Eccles
Perhaps I may reply to the Minister. I thank everyone who has taken part in the debate. Although there is Clause 21, I was speaking only to Clause 20, which creates a certain difficulty because it is about the creation of the CMA. I asked a specific question: why did the Government choose to form the CMA instead of simply giving additional powers to the OFT? Does this new body amount to anything more than a change in the name of the OFT? With great respect to my noble friend, I did not get an answer to that question.
I quite understand that if you start to debate Clause 20, you are inevitably drawn into the things that are being done by Clause 21 and other parts of the Bill. On the question of whether I am against the structural change, I am here to be convinced—this is Committee. As my noble friend quite correctly said, at Second Reading I cast great doubt over whether this structural change was sensible; I am here to be convinced—or not—and we will see what happens.
One way in which my noble friend tried to convince me—indeed, so did my noble friend on the Front Bench—was through the “slowest” argument. There are plenty of time limits in the 2002 and 1998 Acts. It is not that the existing law does not provide time limits; it is just, it is said, that they have not been kept to. Nobody has explained why they have not been kept to. Understanding that is quite complicated. There are provisions for extensions and there are clever lawyers who are good at arguing for extensions. There is the European competition regime, which quite often can lead you into needing an extension. The regime of time limits is already in existence. I do not see why a statutory change to that regime is going to make any difference to what happens on the ground.
What happens on the ground depends upon the circumstances of each case, the behaviour of the participants in that case and the way in which the case is handled. It may well be that our regime should be quicker, and I would not dissent from that, but it does not need additional legislation. That is one argument that has been put forward as to why we need this institutional change, but I do not accept it. I quite accept that there may have to be competent discussions between professionals—round tables—in the light of the existing legislation and that things should be done in a more expeditious way. Indeed, in the 2002 Act there is a general duty to do everything as expeditiously as possible. I just think that it is another piece of make-believe to say that, if you write it into a law, it is going to happen.
Lord Razzall
I am sorry to interrupt the noble Viscount’s flow. What is his answer to the argument that all the major business organisations and the Law Society are in favour of this recommendation?
Viscount Eccles
My Lords, I have looked quite carefully at what has been said, and it has been quite qualified. In fact, I have had a bit of dialogue with the CBI over recent weeks, and it seems to have been in the same position as me when it started out: it did not understand the Bill. I am not overimpressed—I am never overimpressed—by what lobby groups are said to have said. One has to try to make up one’s own mind—that is possibly why we are here.
The other point made by my noble friend on the Front Bench concerned the varying workload on the Competition Commission. Of course, I completely take that point on board. It has been referred to that I was a member of the Monopolies and Mergers Commission. At one time, I was on three days’ equivalent and I was there all five days; I was on five inquiries and I was chairing three of them. When we had a heavy load of work, we just worked harder. When we did not have such a heavy load of work, we did not work quite so hard. To be serious, that question comes down to what you do about the cost of the commission at times when it is not so busy.
I have not consulted the commission at all on this; I have done all my own research. It has reduced its costs by 23% since the onset of the crisis. I have no doubt that there are ways in which the costs of the commission, if it really does not have so much work, could be reduced further. It has a board and it tends to have more deputy chairmen than it did in my day, and they are rather better paid than we were in my day, even if you go into real terms. Therefore, there are ways in which the cost could be flexed by both the OFT and the Competition Commission. It does not necessarily follow that putting them under one roof and cutting some back-office expenses—and I do not remember that we had much of a back office in the monopolies commission—will do the trick. So I am not persuaded that the opportunity to reduce the cost of the Competition Commission from £17.7 million net to something else is adequate to match the risk being taken if this regime falls to pieces.
“Consumer Panel
(1) The CMA must make and maintain effective arrangements for consulting consumers on the extent to which its general policies and practices are consistent with its purposes under section 20.
(2) Arrangements under this section must include the establishment and maintenance of a panel of persons (to be known as “the Consumer Panel”) to represent the interests of consumers.
(3) The CMA must appoint one of the members of the Consumer Panel to be its chair.
(4) The CMA may appoint to the Consumer Panel such consumers, or persons representing the interests of consumers, as it considers appropriate.
(5) The CMA must secure that membership of the Consumer Panel is such as to give a fair degree of representation to those who are using, or are or may be contemplating using, services otherwise than in connection with businesses carried on by them.”
Baroness Hayter of Kentish Town
My Lords, for the purpose of this amendment, perhaps we can accept that we are going to have a CMA, not prejudging what might happen later, because this amendment suggests that if we have one there should be a consumer panel attached to it.
One of the most effective ways of helping to ensure that regulation is always in the hands of consumers, whether they be clients of lawyers, customers of financial services, receivers of radio and TV programmes, or purchasers of food, is to ensure that the regulatory body always, and continuously, hears the voice of consumers. This is particularly important with any regulator seeking to promote competition, as consumers are key to the whole competition remit that we seek for our economy. They understand better than anyone how the market really does or does not work for them. They know about non-price barriers to shopping around; they understand about tie-in deals; and they are the best to judge whether providers, whether of goods or services, are part of a competitive, responsive market.
More than that, consumer panels, made up of people experienced in representing, researching or advocating for consumers, in complaint handling, or in policy development, bring to the regulatory table expertise in hearing the unmet needs of consumers and of measuring their experiences, both satisfactory and unsatisfactory. They are alert to likely future trends; they can assess how policy will impact on actual behaviours, whether of providers or users; and they can make a significant difference to the work plan and priorities of statutory regulators. We have seen this with the Financial Services Authority, where the panel will morph into the same role with the new Financial Conduct Authority, at the Food Standards Agency, and, as I know well from my former role as its chair, in the Legal Services Board’s consumer panel. The Civil Aviation Authority has established one, and the Office of Rail Regulation is looking to create one, having had an informal panel for a couple of years.
It is not merely consumer representatives who want an economy that is consumer and client focused. In his first blog, the new chief executive of the Investment Management Association, Daniel Godfrey, says that one of his two priorities for 2013 is to work in collaboration with regulators and Governments to create a framework which, in his words, protects clients.
There can be no better way to create such a framework than having consumers or their representatives embedded in the regulatory architecture—not simply from the outside, so that they must shout and scream, put out press releases and lobby and harry, in the way that we see and, often, welcome outside consumer bodies doing, but as part of evidence-based and thoughtful development of policy and practice to ensure that the regulator never forgets, in this case, that the whole point of regulation is to promote and protect consumers’ interests. Indeed, the embedded nature of consumer panels means that they can provide input at the earliest stages of policy formulation before the regulator consults—when, in truth, it has often made up its mind—influencing the culture of the organisation from the inside and helping colleagues to get things right the first time round.
A further advantage is the ability to share market-sensitive information and analysis, which regulators are unlikely to want to show even to consumer bodies, which they generally trust, as well as to test thinking. This can be useful in processes such as price controlling, and for the CMA could be particularly relevant in market investigations. A consumer panel provides expert advice on tap, whereas generalist, outside consumer bodies tend to move in and out of policy areas over time.
Consumer panels are also an important counterweight, especially in areas where industry is well placed to influence or lobby, which would certainly be the case for the CMA. Panels are also surprisingly cost-effective, as being embedded results in economies of scale. In the case of my former Legal Services Consumer Panel, its £44,000 a year budget was a mere pin-prick in the £25 billion of consumer spending in legal services.
Consumer panels also play a key role in accountability by scrutinising the regulator’s work in the name of those whose interests it is meant to pursue. It is very easy, once regulatory institutions have been established, to forget or become rather complacent about the underlying rationale for regulating an economic sector. Moreover, given the effective “outsourcing” of statutory consumer functions, as outlined earlier today by my noble friend Lord Whitty, to non-statutory bodies, with no organisation other than the CMA to oversee or lead these outside bodies, it will be essential that the CMA has clear consumer input to this part of its remit, and that would be a natural task for a consumer panel.
Placing a panel on a statutory footing also guarantees its independence. It can represent the interests of consumers without fear or favour, as the CMA could not terminate a consumer panel if it found it a trifle uncomfortable. Of course, any such panel would need some powers, such as the right to make representations to the CMA, alongside reciprocal duties on the CMA to give reasons when disagreeing with such advice. This would aid transparency but would also be vital to the panel’s ability to influence.
Given the need, in terms of concurrency, for the Secretary of State to consult consumer bodies before removing a regulator’s competitive powers, a CMA consumer panel could have a specific role to play here. Similarly, as is argued in other amendments before the Committee today, a CMA panel would be broader than individual purchasers of goods and services. In particular, the panel would need members who were able to consider the interests of micro-enterprises and small businesses, for example, which sometimes experience even greater detriment than domestic consumers.
The CMA, if it exists, will be a key player in ensuring that our economy is competitive and therefore flourishing, and that it serves the consumer interest well. The creation of a consumer panel would concentrate minds on the end user—the beneficiary of all this regulation. I know that when the noble Lord, Lord Currie—who is in his place today—was the head of Ofcom, he welcomed, and I believe valued, the role that the consumer panel played in that regulation. Therefore, I do not think that he would fear the creation of a consumer panel for the CMA. I beg to move.
Lord Borrie
My Lords, I think that the Committee should accept, as a matter of principle, the point that my noble friend has been enunciating. Indeed, the experience of other regulators, including Ofcom, is that an in-house consumer panel—not strangers to the organisation but working closely with the regulator—is a good idea. Unfortunately, it cannot be called a consumer panel tout court in this Bill because of course there is something called the consumer panel already; that is, the people who make the decisions, the part-timers who are allocated particular jobs and make the final decisions of the CMA. That is all set out in Schedule 4. Perhaps some other means of dealing with my noble friend’s proposition has already been thought of by Her Majesty’s Government.
Lord Skelmersdale
My Lords, before the Minister responds, I note that the noble Baroness, Lady Hayter, has tabled Amendment 24BA, which is obviously a second string to her bow in this matter. I am rather surprised that it has not been grouped with this amendment. Be that as it may, it seems to me that rather than having another panel under the CMA, it would be far preferable to have a consumer representative on the panel that already exists under the Bill.
Viscount Younger of Leckie
My Lords, I thank the noble Baroness, Lady Hayter, for this amendment, which seeks to establish a CMA consumer panel, and I note her very considerable experience in chairing consumer panels over many years.
Close co-operation between the CMA and consumer organisations will be essential to ensure that the CMA is well informed on issues that cause consumer detriment, and that it takes action in the right areas. Competition authorities are well used to taking account of consumer welfare in their activities and this will be the case for the CMA in particular, given its objective to promote competition in the interest of consumers. This is why we have established SIPEP, a new strategic intelligence, prevention and enforcement partnership, which will bring together key consumer bodies, including Citizens Advice and representatives from Scotland and Northern Ireland, to work together to identify those issues that impact on consumers and collectively agree priorities for enforcement, information and education. These will assist in guiding the CMA’s policies and priorities.
In addition to this, the Bill already has extensive provisions on transparency and consultation with consumers and other bodies. The CMA must consult stakeholders, including consumer representative bodies and the general public, on a range of issues that guide its policy. For example, paragraph 12 of Schedule 4 to the Bill provides that as part of its annual plan, the CMA must consult on its main objectives for the year and the relative priorities of each of those objectives. The CMA must also consult on statutory and non-statutory guidance which sets out much of the CMA’s policy and processes. The super-complaint process, in which the OFT is required to provide a fast-track response to certain consumer bodies, will also be retained for the CMA.
Given the consultation requirements, the new approach to enhanced working between the CMA and bodies across the consumer landscape, and the super-complaint process, I hope that the noble Baroness will consider that the arrangements for consulting consumers are already sufficient and will agree to withdraw this amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that response and my noble friend Lord Borrie and the noble Lord, Lord Skelmersdale, for their comments. As usual, my noble friend Lord Borrie goes straight to the point that the name is wrong. Maybe we can negotiate on “consumer forum” or “consumer round table”. However, right as he is on that, wrong are the Government in their response.
Before I turn to the Minister’s comments, perhaps I may say that the comment made by the noble Lord, Lord Skelmersdale, was interesting. It is about whether one person on a board is sufficient to represent all consumers, an issue which the consumer movement has discussed a great deal. It is like being the only woman in a committee and people assuming that you can speak on behalf of all women. When the noble Baroness, Lady Oppenheim-Barnes, was first at meetings—I hope she does not take this badly—she was very often probably the only woman present. Even women of my age are still experiencing that situation now. As the one woman, it was somehow expected that you would speak for all women. It can be the same with consumers. However, as I found on panels, there were BME consumers, rural consumers, old consumers and young consumers, and you need a broad panel, if you like, to reach in, understand and get to a hearing in that way. A middle-class woman such as myself as a consumer rep does not do it, but a much broader-based panel does.
I hope the noble Lord, Lord Skelmersdale, understands that it makes it easier for one consumer representative on a board if there are mechanisms for a much broader consultation.
Lord Skelmersdale
My Lords, if the noble Baroness has finished with her remarks on me, does that mean that she intends to withdraw Amendment 24BA—because, if not, she is speaking against herself?
Baroness Hayter of Kentish Town
I am certainly not. I am suggesting that you need a person on the board with experience—I will come to that—but, on its own, this is not a sufficient condition for making the board work.
Let me now comment on what the Minister has said. If he expects the partnership to carry out the kind of role that consumer panels have carried out, he does not understand what consumer panels have done. A partnership that comes together once a month, once a quarter—I do not know how often it is going to meet; I think it has met only twice so far—simply would not be able to bring the right level of detail to the work of the CMA. Some of the matters the Minister mentioned are exactly those outside functions which will not be carried out by the CMA but by others.
I think I have touched on the problem of consultation. When it goes outside the family to Which? or Citizens Advice, it is put out in a pristine and finished way rather than at an earlier stage. It does not solve the problem.
We will need to think about this matter and possibly come back to it because it is vital to make this new authority work well.
Baroness Oppenheim-Barnes
Before the noble Baroness withdraws her amendment perhaps I may ask her a question arising from the statement made in advance by the Citizens Advice service, which is going to be the home of information, advice, education and advocacy on general consumer matters under the Regulated Industries Unit. This is one of the best pieces of news in the Bill because it will bring together the technical expertise, Consumer Focus and information gathered by the CABs and a unit to represent consumer interests in the regulated sectors—gas services, electrical services, postal services and so on.
This is very important because the regulatory authorities do not always appear to be sympathetic in areas in which they should be. It is not very gratifying or appeasing for consumers when one of the regulated bodies receives a multimillion pound fine for being in breach of their responsibilities because the consumers who have suffered do not receive a single penny of that. All they hear about is this very big sum and they do not know whether it has made any difference to the practices. Also, it has been a very long-standing argument of mine—and I hope that it will be solved by this—that Citizens Advice and Consumer Focus should be able to take up individual matters. That is important because the big regulators will not take up matters such as how the bill is presented. Very often bills are presented in a most confusing and frightening way. EDF sends out bills that look, at first, very frightening to the ordinary eye and certainly to an aged person—particularly when they see £1,000 appearing in big letters on the front, although it is not what they will in fact have to pay. It is an assumption of what they might have to pay if they used a certain amount of electricity, or whatever. This is an important provision and I hope that the noble Baroness will take account of that before she withdraws the amendment.
Baroness Hayter of Kentish Town
I thank the noble Baroness for those comments. The Regulated Industries Unit will be extraordinarily important but, of course, it will cover only post and energy, which is very restrictive. It will not be allowed a role in the sort of areas that the CMA will be dealing with. She raised an interesting question about where the individual goes to. One of the important things about a consumer panel is that it can gather the intelligence, be that from an ombudsman or any other form of individual complaints, and even go into the annual reports of companies to see how they have handled complaints. The panel can then use the intelligence to come to the CMA and perhaps say, “Look, we have done that homework. We know where this market is not working”. My fear is that Citizens Advice, with the best will in the world, will simply be unable to do that. We will have people coming through the door with a lot of debt problems, or who are homeless, or who have just been sacked by their employer, suffered water leaks or whatever. That ability to take intelligence, translate it into policy and feed that into the regulator will be beyond that organisation. That is why we will have to come back to this. However, for the moment, I beg leave to withdraw the amendment.
Viscount Eccles
Viscount Eccles
My Lords, this is another attempt to be reassured and comforted. There has been a lot of talk about the continuity of the practice that has been followed by the combination of the OFT and the Competition Commission. It has been described as phase 1 and phase 2. Although these are not in the Bill, and I suspect that they will not find their way into it, there is no doubt that the duty to continue to see whether something should be referred is there, as is the duty to investigate the reference.
The first phase is investigative and the second is quasi-judicial, as has been mentioned by the noble Lord, Lord Stevenson. However, it is proposed that this should be done under one management, and that creates problems. It is not completely dissimilar to our arguments about clearing banking and investment banking. There is on occasion a need for a Chinese wall, but that is difficult if everyone is in one building. I should like to understand more clearly how we are going to keep that feature of the regime in such a way that the new regime is not challenged—or not constantly challenged.
We have a powerful legal profession in the UK. I am now thinking about business and the ease with which it is apparently being reassured that everything will go much more sweetly. We had some very bright QCs in front of the monopolies commission in my day. They were paid to represent the interests of their clients and they were very good at it. Therefore, I think that the Bill is in danger of knocking down a Chinese wall.
I know that my noble friend has already made some references to what I think he is going to tell me are the safeguards. There will not be the contamination of bias and there will not be conflicts of interest, but I am not at all certain about that and I need to be much more reassured than I am at present.
The effect of these two amendments would be to make a start in separating the board from the panel and not having an overlap between the two. They are perhaps just an effort to put one or two bricks in the bottom of the Chinese wall. I beg to move.
Baroness Hayter of Kentish Town
My Lords, the noble Lord has raised some really important issues. Certainly we would like to hear from the Minister why the Government have chosen this particular set-up, which is an argument that we have just been having in relation to the Financial Services Bill. The question remains as to why any panels under this Bill are not hearing cases completely independently of the CMA board.
I am sorry that I went on earlier about my consumer panel experience but I also have to say that I was a member of the determinations panel of the Pensions Regulator. We were completely independent of the Pensions Regulator. We were appointed by it to ensure that we knew something about pensions but that was about it. Other than that, we were completely independent. We did not work there and we did not know the staff, other than bumping into them in the loo and so on, but we were very independent of them. It was therefore more than a Chinese wall—it amounted to a gap of a good few miles.
Similarly, in our discussions on the Financial Services Bill, we have been trying to ensure that the Regulatory Decisions Committee of the FSA is equally independent of and separate from the FSA. That is partly to do with independence but also because it seems that we should look at whether there is a difference between the two roles of serving on the CMA board and doing hearings and taking decisions. The role of serving on the board is really about setting strategy and policy, whereas the work of the panels is often quite different and calls on a slightly different skill set. Therefore, we are interested in knowing why the Government have not made sure that the investigators are separate from the decision-makers and that their roles are not blurred— I think that was the word used earlier by the noble Baroness, Lady Oppenheim-Barnes, in quoting a former chair of the monopolies commission.
I assume that we all want a strong firewall between investigations and decision-making, so perhaps it is better to make them absolutely separate from the start, rather than going through convoluted ways of achieving that end.
Viscount Younger of Leckie
My Lords, these amendments affect the provisions that provide for a partial overlap of the CMA board, which is responsible for the CMA overall and phase 1 decisions in mergers and markets in particular, and the CMA panel, whose members are responsible for phase 2 decisions in mergers and markets and regulatory appeals. The governance and decision-making arrangements in Schedule 4 are designed to establish a single, coherent competition authority while retaining the separation of decision-making between phase 1 and phase 2; in particular, merger and markets cases.
Paragraph 1 of Schedule 4 provides that at least one person be appointed to both the board and the panel. In the Government’s response to the competition reform consultation, we said that we intend to appoint two or three such people to the board and the panel. The membership provisions being debated here are designed to ensure that the board includes members with experience of the phase 2 processes, and so to address any reluctance of the board to have a matter referred to a group of independent panellists whose decisions are, under paragraph 49, to be taken independently of it and over which it will have no direct control. Ensuring that there is a steady flow of appropriate market investigation is one of the key intended benefits of the creation of the CMA, so the provisions will play an important role.
I believe that the provisions in the amendment in the name of the noble Baroness, Lady Hayter, will undermine the separation of decision-making by allowing board members to take phase 2 decisions. I assure her that the Government would also be concerned about the risks resulting from some of the same people involved in a decision to make a referral also being involved in final decisions at phase 2. It is for this reason that paragraph 33 prevents this from happening.
Paragraph 33 works prospectively, so that where the board will be considering whether a matter should be referred to the chair of the CMA for the constitution of a group of panellists who will be responsible for a phase 2 inquiry, the chair must first determine whether a member of the board might be expected to be appointed to a resulting group. In these circumstances, the person so identified must not participate in the board’s consideration of the referral.
Finally, because the Government intend to appoint two or three people who will be board members and panellists, even where one board member is excluded from considering a referral, other panellists—who will not be involved in the group taking on an inquiry if the matter is referred—will still be able to participate in the board discussion. This provision therefore protects independence of decision-making, while also ensuring that the board includes members with responsibilities across the CMA’s range of functions, and is therefore able to act, at a strategic level, as a coherent body. I therefore ask my noble friend to withdraw his amendment.
Viscount Eccles
My Lords, I am afraid that I am not comforted by that description, least of all by the even flow of work. If that is going to be continually put forward as a serious reason for the structure we are going into, it is very regrettable.
All businesses have to be prepared to flex, to take on more work at some times and less at others. If things are still as they were, quite a lot of the staff of the Competition Commission are seconded; they can be taken back; there is the possibility of bringing in consultancy advice, or not bringing it in; there is a very considerable ability within the present system to flex the resources. If we are going to be told that this even flow is very important, we need to have something in support of the regulatory impact assessment as to how much money we are actually going to save.
We have dismissed the Public Bodies Act, which was about reducing the number of quangos when we could and saving money. That is where this thing started from—we should not forget that. All the rest of it has been tagged on, no doubt as a result of long-term planning inside BIS, which may indeed have seen the Public Bodies Bill as quite an interesting challenge—“Let us see what we can put forward”.
So I am not comforted, but it gets worse than that. I do not want to go through the whole string; I have drafted a series of amendments to try to reassure myself that it is possible to build a Chinese wall. I have not put them down yet and I am not going to talk about them today, but I am going to talk about the panel. It is becoming a technocratic panel under this Bill. It has 11 members; I expect that there may well be more. The composition of this panel and the way in which its prospective members are appointed is very different from the way in which panels have been appointed to the Competition Commission in the past.
This panel has no one in charge—it cannot have anyone in charge. As my noble friend has said, it cannot have the chairman of the CMA in charge because that would knock down the Chinese wall. So who is in charge? No one is in charge. If there was an away day for the panel, who would sit in the chair, for example, if it wanted to discuss how it is to operate as a Competition and Markets Authority group? The panel does not set any rules for that; the rules are set by the CMA. It does not have any staff, so how does it know that it will get the people that it wants?
I remember very well someone who was absolutely gripped by cost-benefit analyses and, when I was looking at a proposed merger between a Canadian whisky company and a Scottish whisky company, I said, “For goodness’ sake, do not send me that cost-benefit analysis”. He was a splendid fellow, but not on this merger inquiry. The way this is structured there will be no one on the panel who will be in a position to behave like that. The panel will have no management authority and no executive responsibility; those will be delivered to it by the CMA.
It may be that noble Lords are glad that I am not a lawyer representing someone coming in front of one of these panels, but I assure the Committee that I could make a seamless argument which said, “This panel is not independent”. At least I would get an adjournment, which would upset my noble friend Lord Razzall because the thing would take longer.
For now, I shall withdraw my amendment, as the Committee would expect. However, I shall revert to the subject and there are other amendments in front of the Committee that offer the opportunity to discuss these matters. At the moment, this phase 1/phase 2 is completely unconvincing. I beg leave to withdraw the amendment.
“(1A) Appointment of a person as chair under sub-paragraph (1)(a) shall be subject to approval by a Select Committee of Parliament.”
Baroness Hayter of Kentish Town
My Lords, the first amendment in the group seeks simply to have the appointment of the chair approved by the relevant Select Committee in accordance with the coalition agreement which said:
“We will strengthen the powers of Select Committees to scrutinise major public appointments”.
That built on the wording of the Conservative manifesto to,
“give Select Committees the right to hold confirmation hearings for major public appointments, including the heads of Quangos”,
and on the Liberal Democrat manifesto which said:
“We will increase Parliamentary scrutiny of Government appointments”.
It is hard to put it any better than that. However, even if the Conservatives, the Liberal Democrats and the coalition had not supported this, it is still a good thing.
Parliamentary oversight of the performance of the CMA is vital. Our economy depends on a vibrant, competitive market and, given the powers and remit of the CMA, it is important that Parliament checks that it is doing its job. So this amendment is part of that trend of transparency.
Amendment 24AB concerns the key appointment in all of this—the chair of the CMA. We are more than content with the “shadow” chair, if I may call the noble Lord, Lord Currie of Marylebone, who is in his place, a mere shadow. The amendment is about any successor of his in due course and the attributes that we would wish to see in any such appointment.
Competition law is not only for economists and lawyers. What economists choose to measure is not a neutral given but depends on what they judge to be important. A recent OFT review of the estate agency industry decided that we needed more of them—that is, more estate agents. Clearly the authors of the review had never walked up and down our high streets. However, that is what they thought rather than that we needed better regulated, more truthful and cheaper estate agents. There was something lacking in an over-economically driven approach which ignored the experience of home buyers. We would therefore look for someone who understood how markets really worked for consumers and had experience of retail or wholesale markets and, even more, who understood the particular needs of vulnerable consumers and how failing markets hit them particularly hard.
Viscount Younger of Leckie
My Lords, I thank the noble Baroness, Lady Hayter, for her amendments, which propose changes to Schedule 4. The Government are committed to increasing transparency and accountability in the public appointments process.
The amendment seeks to make it a statutory requirement for the appointment of the chair of the CMA to be approved by a Select Committee of Parliament. There is already a system in place, introduced by the previous Administration, for agreeing between Parliament and the Executive which of the Government’s public appointments will be subject to a pre-appointment scrutiny hearing. Under this system, the Secretary of State discusses and agrees with the chairman of the relevant Select Committee which appointments will have such a hearing. The Cabinet Office publishes a list of these appointments, most recently in August 2009.
The Government, in their response to the Liaison Committee’s report on Select Committees and public appointments, encouraged Ministers to engage with Select Committee chairs to ensure that the right appointments are receiving Select Committee scrutiny prior to appointment. The current system works well and the Government do not believe that there is any advantage in formalising this process in legislation in respect of individual roles such as that of the chair of the CMA. Indeed, under the current system, a pre-appointment hearing process is already in place for the chairs of the Competition Commission and the OFT.
Amendment 24AB seeks to make it a statutory requirement for the Secretary of State, in appointing the chair of the CMA, to be satisfied that that person has demonstrated an understanding of the impact on consumers of competition and its absence, particularly on vulnerable consumers, as well as of relevant experience in wholesale and retail markets. The appointment of the chair of the CMA is regulated by a code through the Commissioner for Public Appointments, which clearly states that ultimate responsibility for public appointments rests with Ministers. As such, the Secretary of State has been involved in the appointment process for the CMA chair-designate from the beginning and has agreed the selection process and criteria. The published person specification for the CMA chair-designate appointment made clear that knowledge of competition and consumer policy issues, and their implications, was a key requirement.
As noble Lords are aware, at the conclusion of the appointment process, the noble Lord, Lord Currie of Marylebone, was appointed as the chair-designate to the CMA. I am pleased to note that he is in his place. His formal appointment, assuming that the present Bill receives Royal Assent, will entail a pre-appointment hearing by the BIS parliamentary Select Committee. I am sure that noble Lords will agree that since his appointment as CMA chair-designate, the noble Lord has amply demonstrated his knowledge and understanding of the impact of competition and the effects of its absence on consumers.
I agree that it is important that any candidate for the CMA chair role demonstrates their knowledge of competition and consumer policy, as well as relevant experience in wholesale retail markets. However, formalising in legislation that the Secretary of State must be satisfied as to a candidate’s understanding of these issues is unnecessary in practice. It would also give unbalanced prominence in statute to these, albeit important, areas at the expense of other, equally important areas of understanding or qualities that any candidate for the CMA chair role should be able to demonstrate. For this reason, we do not think it necessary or appropriate for there to be such a statutory requirement.
Finally, Amendment 24BB concerns the pay structures of the CMA. Fair pay in the public sector is evidently more essential than ever in the current climate, as is openness of public bodies in their mandates and resource allocation. In light of this, the Government have implemented a number of measures to support recommendations made in Will Hutton’s report on fair pay in the public sector. For example, public bodies are required to publish in the remuneration reports of their annual resource accounts the pay multiple or ratio between the total remuneration of the highest-paid director and the median total remuneration of the staff excluding the highest-paid director. Public bodies, including the OFT and the Competition Commission, are also required to publish pay details, including names, of their most senior civil servants with a salary of more than £150,000. We do not, however, agree with placing a ban on managers earning more than 20 times the pay of the lowest-paid full-time employee in their organisation, as suggested in proposed new sub-paragraph (4) of this amendment. This was rejected by the Hutton review of fair pay in the public sector.
In light of this, we do not consider that a specific statutory requirement is needed for the CMA to ensure fair pay. We also disagree with the part of the amendment that apparently seeks to require that all CMA members appointed for more than three months be in the direct employment of the CMA. It is quite right that the staff of the CMA who are in full-time employment should not be employed through personal service companies, or similar, and therefore be able to avoid paying full national insurance contributions. However, the membership of the CMA will include both non-executive directors and independent panel members. Both of these types of member are needed to bring external expertise to the management of the CMA or particular inquiries. It is an accepted principle of good corporate governance that non-executive directors should scrutinise the performance of the executive management while providing them with external advice, support and scrutiny. I therefore ask the noble Lords to withdraw these amendments.
Baroness Hayter of Kentish Town
I thank the Minister for that. The words “not necessary in the Bill” must be in the word processor for the team behind him, because whatever we ask, the answer is, “Don’t worry, we are doing it. It is not necessary to have it in the Bill”. I am not sure that this is always the best way of writing legislation. There are some things that are very important to have in the Bill as signals and they are also important for accountability.
It is interesting that the Minister, if I heard him correctly, said that the list of appointments which it has been agreed should go to a Select Committee was last published in August 2009. That was in the glorious days, of course, of a Labour Government, happy that they were. Given all the work that this Government have done in changing quangos and changing appointments, the idea that it has not been updated since then leaves me a bit surprised and perhaps reinforces the fact that, sometimes, having this in the Bill is really important.
We have no grounds even for raising the first appointment, as I made clear. We are delighted with the first appointment; we could not have done it better ourselves. If you would like to put us in government, we will do it ourselves. However, we are talking about the future and making sure that the commitment to consumers and their interests is there.
The final thing I will say is that I thought our wording “in the direct employment” covered the chief executive. If I did not word the amendment correctly, that was what it was meant to be. Whether that should be an undertaking in a side letter or something, that point remains. I am sorry that the Minister, who I believe speaks on behalf of a coalition Government with a commitment not just to continuing but to strengthening the powers of Select Committees in major public appointments, feels that that does not allow him to do so in this case. I beg leave to withdraw the amendment.
“(8) Of the persons appointed to membership of the CMA Board under sub-paragraph (1)(b), at least one must have expertise as a representative of consumers.”
Baroness Hayter of Kentish Town
My Lords, the good news for the Committee is that this is the last it will hear from me for a bit. I will hand over to my noble friend Lord Mitchell, whose great success in the Financial Services Bill will, I hope, make the Minister quake as he receives my noble friend’s amendments.
The first of the two amendments in this group, which I move on behalf of my noble friend Lord Whitty and me, concerns the make up of the CMA board, and ensures that, as has already been mentioned, at least one of its members has expertise in representing the interests of consumers. There is a large pool on which to draw for this. For example, they may be former employees or board members of ombudsman schemes or consumer bodies or panels, or else active in the wider consumer movement. I know from the testimony of the financial industry and not just the consumer movement how well received Mick McAteer’s appointment has been, in his work at both the Financial Reporting Council and now the Financial Services Authority. He was formerly with Which?, has been a consumer advocate with long experience of representing consumers at both UK and EU levels, and has brought realism grounded in consumer experience, expertise and a clear consumer focus to the FSA for the past three years—to widespread acclaim. Earlier, a former chair of the National Consumer Council—not one of the two with us today—proved herself to be so invaluable to the FSA that it promoted her to become its vice-chair. Other examples abound.
Our proposal is modest. It is for just one such person, but having that in the Bill also reinforces the fact that the CMA is all about consumer interests and that consumers’ voices must be heard at the highest level. As I said previously in response to a question by the noble Lord, Lord Skelmersdale, this is not instead of a consumer panel. No one person can represent all consumer interests. What is interesting is that that person can be a channel and focus, albeit that they take the full corporate responsibility for the whole board.
The second amendment in the group, Amendment 24BK, is based on the assumption, which we do not necessarily share, about the proposed panels and the tiers mechanism in the new architecture. We have argued that that might not be for the best. For the moment, accepting that that structure is there, our proposal is again to emphasise the need for consumer and competition experts on CMA panels to avoid the risk of making their deliberations insufficiently consumer focused. That would make sure that the CMA and its decision-making panels represented the interests of consumers throughout their work. I beg to move.
Viscount Younger of Leckie
My Lords, Amendment 24BA adds a requirement to appoint at least one person with consumer representative expertise to the CMA board. A similar amendment was proposed by the Opposition in Committee in another place. We share the concern of noble Lords opposite that the reforms promote consumer interests, as mentioned in an earlier debate today. Consumer interests will be at the heart of the CMA. Given this, the amendment is not necessary. It could also undermine the perceived fairness of the CMA. We agree with the point made in the previous Government’s 2001 White Paper on a world-class competition regime that decisions should be made independently on the basis of sound economic analysis of the effects on competition. Independence of government and between the phases enables better decisions, greater certainty for business and more clarity in the regime.
Baroness Hayter of Kentish Town
I thank the Minister for that. How interesting it is that we can have sector specialists such as lawyers and accountants, and they are not conflicted, but you can talk about someone coming from a consumer background and it is immediately assumed that they will be conflicted. Everyone in this Room is a consumer, and consumer representatives speak on our behalf, whether to individual providers, regulators or anyone else. Just because they have done that and built up that expertise, they may be conflicted, but a sector specialist such as an accountant who no doubt has worked with some of these companies is not—I find that very interesting.
It has been very clear that having people from a consumer background on the Legal Services Board and the FSA is valued by people from the industry. To write that into the requirement seems the least that we can do. I see that most of the words that the Minister read were actually written before I had spoken, so perhaps when he looks again at what we have actually said, he may be able to be a little more responsive should we need to bring this back. For the moment, I beg leave to withdraw the amendment.
Lord Mitchell
“11A (1) The CMA shall have a unit dedicated to matters affecting relating to competition issues amongst affecting small and medium-sized enterprises.
(2) Such a unit will pay particular focus to the availability of finance to small and medium-sized enterprises.”
Lord Mitchell
My Lords, despite the prompting of my noble friend Lady Hayter, this will not be a quake-making day. We are much more concerned with doing some serious probing and finding out where the Government stand on certain issues.
One thing that came out of the payday loans amendments, to which my noble friend Lady Hayter referred, was that that issue was not highlighted and made clear in that Bill. The subject that I should like to deal with today is SMEs and how they are addressed in this Bill. We are concerned to make sure that SMEs get prominence and that they are not lost in the fine print of the legislation.
I always have a problem with the expression “SME”. I do not know what it means. A small company can be a one-man band. Then there are medium-sized companies and large companies. Sometimes I feel that medium-sized companies have more in common with large companies than they do with small companies. One definition of a small company is that it has up to 50 employees, a turnover of up to £6.5 million and a balance sheet of up to £3.25 million. For medium-sized companies, the figures are between 50 and 250 employees, a turnover of up to £26 million and a balance sheet of up to £13 million. There are several companies with a turnover well in excess of £26 million but I have never considered them as being large companies; in fact, I have always thought of them as being at the lower end of medium-sized companies. Therefore, I am afraid that some of these definitions are probably very out of date.
However, what is not out of date, as I am sure everyone will agree, is that this business sector—let us call it the SMEs—is very keen to lead the economic recovery of our country. All sorts of reports, including one carried out by GE Capital in conjunction with the Warwick Business School, have come to the conclusion that growth, employment and exports are going to come from this sector and that this is going to be the propellant for any recovery. Indeed, the noble Lord, Lord Heseltine, in his magnificent tome, No Stone Unturned, which I thought was very good and very refreshing, said that if one in 10 of the firms that are sole traders hired their first employee or an extra employee, that would increase employment by 480,000. Therefore, recovery comes from even a small business of three people taking on one extra person.
The first part of the amendment suggests that there is a need to dedicate a unit to matters relating to competition affecting SMEs. Small firms are often faced with problems that big firms also face but, of course, small firms do not have the resources, facilities or expertise to deal with them, and recruiting or hiring a legal team is prohibitively expensive. They do not have the time to read the regulatory judgments; it is just a fact of life. Therefore, we feel that such a unit could be one way of helping small firms to grow. The first part of the amendment would provide SMEs with a specific and direct point of contact within the CMA.
The second part of the amendment proposes that the unit in the CMA will focus particularly on the availability of finance for SMEs. Noble Lords will probably have heard me speak on this issue on several occasions but it is something that concerns me all the time. At the moment, many government financing plans are being announced but most of them are not working and, frankly, I do not understand most of them myself. I wonder how people in small businesses who are not involved with them on a day-to-day basis get to grips with some of these programmes.
My constant mantra is that businesses will not grow unless there is a strategy for growth. What business needs is confidence, certainty and clarity. Not surprisingly, 85% of SMEs bank with the big four high-street banks, but this increases the cost of lending and decreases its availability. That hampers growth because SMEs collectively produce more than half of Britain’s GDP. SMEs are too dependent on the banks. I hear so many stories of the proprietors of an SME or its directors going in to see a bank when they need to finance a good project. The bank manager says “no”, and they walk out as if that is the end of the matter. To many it is the end of the matter, but it should not be. There are many other sources of finance out there, and it would be great to me if the banks had less dominance and influence.
I also feel in my heart of hearts that the high street banking sector is not particularly interested in SMEs. They have had their heads turned and, no matter what happens in the other directions that they have gone into, such as investment banking, I cannot see them ever returning to supporting SMEs as they used to. The Federation of Small Businesses has persistently pointed to this as preventing growth in SMEs, which collectively produce more than half of Britain’s GDP. We think that there should be research on this by the CMA on an ongoing basis, which will be dealt with by my noble friend Lady Hayter in a later group.
A couple of weeks ago, a few Members from the Houses of Parliament went to Germany to see the Sparkasse in Berlin. We have all heard about these organisations, but they really were very impressive. They are small savings banks that are responsible for 40% of German lending, just to the SMEs sector. Because they, by culture, have a long-term investment in their clients, they are able to defer and assess credit risks to a much greater extent than we do with our banking organisations, which seem to assess any lending possibility on a computer model that comes out with a yes or no.
There is a real opportunity for new types of financing banks in this country that would help growth. There is a new business bank called Aldermore. Yesterday, much to the Government’s credit, they announced a £100 million facility for peer-to-peer lending. That is a very interesting new development whereby individuals can lend to businesses. It works on a bidding basis, almost like the reverse of eBay. It is a very exciting area, involving companies such as Funding Circle, Zopa, Boost Capital and Credit Asset Management, which I doubt that any of your Lordships have heard of—and to be frank, neither had I. However, it is a fast-growing area of new funding for small businesses. To summarise this part of the amendment, a unit within the CMA that looks to address this problem on an ongoing basis would be of great benefit to initiating and sustaining economic recovery.
Amendment 25G deals with super-complainants. I am going to say barely anything on it, except that we want groups to be super-complainants, if they want to be, and represent SMEs and want to apply for the status. That leads into Amendment 26E, which would mean that “consumers” includes small businesses with up to 50 employees. That change to the definition of consumer would mean that organisations representing SMEs can apply for super-complainant status. Currently, the OFT has to publish a response to any complaint from a super-complainant in 90 days or refer it to the Competition Commission for further investigation. The CMA will now have those responsibilities. The competition issues that SMEs face, such as those previously concerning the concentrated banking sector and any other problems, could then be quickly highlighted. There is often very little difference between a consumer and a small business. Mr Mike Cherry, the chairman of national policy at the Federation of Small Businesses said, in front of the House of Commons Committee,
“our key message would be that, in very many cases, small businesses are, in fact, no different from consumers.”––[Official Report, Commons, Enterprise and Regulatory Reform Public Bill Committee, 19/6/2012; Q49.]
The Federation of Small Businesses has also said that, while it is not in a position to become super-complainants at this stage, it would welcome the possibility that organisations representing small businesses would be able to apply in future. This amendment therefore seeks to recognise that by changing the definition of consumer to include SMEs, thus opening up the possibility that at some point in future it will be able to register as super-complainants. I beg to move.
Viscount Younger of Leckie
My Lords, I am grateful for these amendments, initiated by the noble Lord, Lord Mitchell, which highlight the importance of competitive markets to small and medium-sized enterprises. I welcome the noble Lord to the Dispatch Box and I hope that I can do a little better, in his eyes, in addressing his issues and concerns than perhaps I did before.
I agree that Britain’s small businesses are absolutely vital in leading the economic recovery, and the Government take its role in this area very seriously. This Bill contains a number of measures that will deliver real benefits to SMEs by strengthening and streamlining the competition regime; for example, it will make entry into markets easier, deter anti-competitive practices and speed up competition cases. While I support the overarching intention behind Amendment 24BC—to support SMEs—I do not believe that a dedicated SME unit within the CMA is necessary.
First, the competition authorities already undertake a range of work that directly benefits SMEs. For example, following an OFT market study into the retail pharmacy sector, a number of administrative restrictions on entry were removed, which enabled more competitors, including SMEs, to enter the market. Another example is in banking, which I know the noble Lord, Lord Mitchell, is particularly focused on. OFT interventions in markets such as personal current accounts, small and medium-sized enterprise banking and cash ISAs have found long-standing problems, such as high concentration, low transparency of fees, low levels of switching and high barriers to entry, which hamper effective competition.
The OFT has launched a programme of work designed to achieve a more competitive and customer-focused retail banking sector, and this will consider both personal and SME banking. The OFT also works actively with bodies representing SMEs, such as the Federation of Small Businesses and the British Chambers of Commerce, to identify competition problems faced by SMEs. The Government expect this engagement to continue when the CMA is established.
I urge caution against restricting the CMA’s ability to allocate its resource independently, according to the priorities of the day. There is also a risk that a dedicated SME unit would be inundated with complaints about competitors, rather than competition issues. This would take vital resources away from competition enforcement itself.
The new clause inserted by Amendment 25G would have the effect of bringing small businesses within the definition of “consumer” in Part 4 of the Enterprise Act, which deals with market investigations. This means that super-complaints could also be brought to the CMA about potential competition issues affecting small businesses.
We need to take care when thinking about small businesses within competitive markets, so that the line between consumers and competitors is very clear. The Government consulted on whether to extend the super-complaint system to SME bodies, as the noble Lord’s amendment proposes. The consultation asked for evidence of the type of issues that may be brought to the CMA as a potential super-complaint by small business organisations, but we did not receive any. Furthermore, the majority of responses to the consultation on this question actually opposed the proposal. Respondents felt strongly that SMEs should not be given special status, which could allow them to challenge business practices that might be pro-competition and efficiency-enhancing.
Amendment 26E would have the effect of bringing small businesses within the definition of “consumers” for the purpose of Part 4 of the Bill, which deals with competition reform. This would have the effect of enabling the CMA to launch a market study into a market which seemed not to be working well for small businesses.
I agree with the sentiment behind this amendment, that the CMA should be able to look at markets that are not working well either for consumers or small businesses. I do not believe that it is necessary because the existing legislation has not to date constrained the OFT from considering business-to-business markets. If there are competition issues in these markets, they will usually ultimately affect end consumers as well.
For example, the OFT’s current review of retail banking will look at SME banking as well as personal consumer banking. The OFT’s aggregates market study, which has now been considered in more detail by the Competition Commission for a market investigation, considered how easy it was for small ready-mixed concrete businesses to source cement and aggregates competitively. I hope that noble Lords will see that the competition authorities already carefully consider competition issues that affect SMEs in the existing regime and that legislating to assign resources to a particular area may prevent the CMA from focusing where enforcement is most needed. I would, therefore, ask the noble Lord to withdraw his amendment.
Lord Mitchell
I thank the Minister for his comprehensive reply. There is a need for a dedicated unit; small and medium-sized enterprises need a particular focus point to which they can refer. Our amendments are a “may”, not a “must”. The Minister gave an example of banking and the OFT. That may be, but here we are today, with high street banks still dominating and other types of banking organisations only just coming through.
In summary, we are trying to set up a mechanism that will enable the CMA as it progresses to take actions in favour of the SME sector—to enable it specifically in that area. I ask the Minister to think about what I have said. We will think about what we have said, and with that, I beg leave to withdraw the amendment.
“(c) set out the consumer benefit which will be achieved as a result of the objectives and priorities as set out in paragraph (a)”
Baroness Hayter of Kentish Town
My Lords, these amendments speak for themselves, so I hope that I can be brief. They are to remind the CMA, and to be certain that it includes in its reports, that it must set out the consumer benefit to be achieved and then monitor and evaluate it in its objectives and priorities. That will make its accountability for achieving this easier to ensure and will enable Parliament, the public, consumer groups and others to have clear evidence on which to assess progress.
Amendment 24BE means checking that the staff are up to the task set for them and that the resources are properly allocated to meet key objectives. Amendment 24BF is to allow Parliament and others to evaluate the cost of this merger into a single body, not just in money, important though that is, but on whether competition is healthier and that cases are being heard more quickly. We all, I assume, support post-legislative scrutiny. This amendment would produce the evidence on which to base that work. I beg to move.
Viscount Younger of Leckie
I am grateful once again to the noble Baroness, Lady Hayter, for the suggested amendments. Amendment 24BD would impose a requirement on the CMA that its annual plan for a forthcoming financial year should contain the consumer benefit that will be achieved as a result of the CMA’s main objectives for the year, and the prioritisation of those objectives.
Under the OFT spending review settlement, the OFT is currently required to provide an estimate of direct savings to consumers from its activities and to assess the associated benefit cost ratio against the current target of 5:1. In 2011 this figure was exceeded to deliver a benefit to cost ratio of 7:1. For the OFT, such a requirement serves to encourage it to maximise benefits to consumers in deciding what work to take forward. By comparison, however, a requirement for the CMA to assess the impact of its future work would be considerably less precise. As well as difficulties in assessing the future benefits of particular cases, the CMA’s caseload itself is not predictable. This amendment could therefore incentivise the CMA to underestimate and underachieve and could also potentially leave the CMA at risk of judicial review if forecasted consumer benefits were not realised.
Amendment 24BE seeks to provide a statutory requirement for the CMA to report in its annual performance report on the skills of its staff and to estimate the resources needed to perform its functions in the following two financial years. As drafted, the Bill provides a statutory requirement for the CMA to produce an annual plan and performance report in which it must set out its objectives for the coming year and the relative priorities, and how it has delivered against these. In addition, both the OFT and the Competition Commission already publish information relating to their staff, such as the development, diversity and engagement of their staff. We expect the same of the CMA. While it is imperative that the CMA has a skilled workforce to carry out its functions, to report on the skills of its workforce on an annual basis will be unnecessarily burdensome to the CMA, we believe.
Finally, Amendment 24BF proposes that the CMA’s first performance report provides an assessment of the transition costs and the impact of reforms on the speed of referrals. Evaluating whether the policy delivers the objectives is essential to ensuring that the CMA is getting it right, as is an assessment of the transitional costs against benefits. However, such an evaluation must provide an assessment of the costs against benefits over an appropriate time period: to do otherwise would not provide an accurate picture of the impact of the policy. A requirement to assess the costs and benefits to the competition regime within the first financial year of the reforms would be far too soon for a realistic assessment of the transition costs and benefits in either financial or competition terms. The Government’s impact assessment of the proposed reforms to the UK competition regime, which includes the transition to the CMA, commits government to a review of the policy in 2018. That is an appropriate point at which to consider the impact of the transition to the CMA in both financial and competition terms. For this reason, we do not consider that it is right for there to be a statutory requirement for the CMA to include within its first annual performance report an assessment of transition costs in both financial and competition terms.
While I welcome the intention behind these amendments, their practical impact could serve to hinder the efficient and smooth working of the CMA as a high-performance organisation. I therefore request that the noble Baroness withdraw these amendments.
Baroness Hayter of Kentish Town
I thank the Minister for that. I assume from what he just said that the requirement on the OFT to measure the balance of its saving to consumers will continue into the CMA.
Baroness Hayter of Kentish Town
In case Hansard did not record that, the answer was a very welcome “yes”, for which I thank him.
The Minister talked about the requirement for reporting on diversity of staff. Needless to say, we welcome that, but it seems to me that if you set up an organisation to do a job, making sure that it has the appropriate staff is central. Its human resources department will know if it is not got enough IT people, it will know if it is short of various staff. All we are asking is that it should share that knowledge with us. For those who say that this is extra work, I believe that a well run organisation knows about staff turnover, who it is recruiting and who it cannot recruit.
Finally, I welcome the fact that there will be a review in 2018. Of course, it is a bit late by then to do anything about it if the Government have made a mistake in doing this. I suppose that it is better late than never, but I hope that the Ministers at the time will at least be asking those questions, even if it is not a statutory requirement. I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, we now come to what may prove next week to be an interesting area: the relationship between the CMA and the sector regulators. This is the first point where it arises in the Bill, and it relates to the list of sector regulators. It is not a substantive point in terms of the nature of that relationship, but because the Government seem to think that that relationship is not entirely right at the moment and we know that we will be getting a hefty amendment in the name of the noble Lord, Lord Marland, next week on the Secretary of State’s powers in relation to the sector regulators and the CMA, it is important that the list of designated sector regulators is in fact the right list.
This amendment and a later one on the more substantive issues attempt to alter the list as set out in the Bill in two ways. The first is to remove Monitor from the list. The second, which I will deal with first, is the issue of how we will deal with the Financial Services Bill, which has yet to receive Royal Assent, and the establishment of the Financial Conduct Authority, because that will be the equivalent sector regulator for financial services and its powers will not be quite the same in some respects as those of the sector regulators that regulate the one-time nationalised industries such as water and gas. Nevertheless, it is the equivalent body and should therefore have an equivalent relationship with the CMA. There is no reference to any financial regulator in any of these lists. That may simply be for the technical and probably constitutional reason that the Financial Services Bill is not yet in law but, if that is the case, then presumably the FSA should appear there. I would like to know the Government’s intentions on that.
There is another complication regarding that Bill: in some respects, the prudential regulator could have an effect on the structure of markets as well. There is therefore a crossover there with the role of the CMA. We will come back to the substance of that, but it would be interesting to know the Government’s intention in that respect.
The other point relates to Monitor. Monitor is the economic regulator, and various other things, under the new National Health Service regime. The issue of competition in the health service was one of enormous complexity during the passage of the NHS reform Bill. It was one over which the Government gave substantial reassurances that the role of competition would not cut across the primary concern of NHS patients, which was that they would be treated effectively, resources would be deployed effectively for them and there would be seamless integration of the health service regarding their treatment. That will cut across the competition criteria that apply to the other sectors covered by the other regulators. Indeed, Monitor itself in its own objectives set out that integration and co-operation are its main priorities.
I think I am right in saying that at least once during the course of the NHS Bill the noble Earl, Lord Howe, indicated that in issues where there was conflict between competition and co-operation in providing a seamless service to the patient, then co-operation would trump competition. I am not arguing that the role of Monitor in increasing competition in the health service should be reopened, but I am saying that it is an entirely different situation from that which applies, for example, to Ofgem or the railways, where there are clear criteria, either continuously or at the point of franchise, about competition. Here, though, it is not the main aim of the health service to maximise choice; choice can be a contributor to patient comfort and outcomes but the main purpose is actually to provide an effective service for the treatment of that patient. The interaction between the CMA and Monitor in the health service, therefore, would be entirely different from the interaction between it and the other sector regulators. That is why I wish to remove Monitor from the list. There may be a separate reason for a relationship, but it is not the same as the rules being proposed for the overall relationship between the CMA and the sector regulators.
I advise the Government, gently, not to reopen this matter—health service reform was difficult enough for them. People are settling down now to make it work but the idea that another authority might come in under this Bill and overrule a health service body trying to square off competition and co-operation would reopen huge anxieties among health service professionals, patient groups and the new commissioning body. The Government would be wise to take it out. They can do it at this point without too much attention but if what they are proposing gets out there, they will be in serious trouble. I beg to move.
Viscount Younger of Leckie
I thank the noble Lord, Lord Whitty, for tabling Amendments 24BFA and 24BG.
Amendment 24BFA would remove Monitor from the list of sector regulators covered by the CMA’s duty to publish an annual concurrency report. The concurrency arrangements to be reported on are the arrangements for co-operation between the CMA and sector regulators in relation to their functions under the Competition Act 1998, in other words anti-trust cases, and under Part 4 of the Enterprise Act 2002, in other words market investigation references.
The concurrency report is part of a wider package of concurrency reforms designed to give the CMA stronger powers to co-ordinate competition work. The Bill will also give the regulators more explicit duties to consider using their general competition powers instead of sector-specific powers. The concurrency report ensures that there is transparency about how the CMA and sector regulators have worked together and how concurrent powers have been used in the regulated sectors. Monitor, whose role is to protect and promote the interests of patients, as the noble Lord, Lord Whitty, has mentioned, will have both regulatory powers—for example, the provider licence—and concurrent powers to address anti-competitive behaviour that is against the interests of patients.
The regulatory powers will reflect the Government’s commitment to retain sector-specific rules for health, building on those put in place by the previous Administration. Monitor will be subject to the new arrangements on the co-ordination of concurrent powers provided for in Clause 45, subject to one exception. The Government have been clear in response to the consultation on competition reform that Monitor’s new explicit duty to consider Competition Act enforcement before taking enforcement action through the provider licence provided under Schedule 14 to the Enterprise Bill will not be commenced until a future date, reflecting the unique characteristics of the health sector.
Subject to this, Monitor will become part of the same concurrency regime as the other sector regulators. So it is right that the concurrency arrangements between the CMA and Monitor and the use of concurrent powers in the health sector should be covered by the concurrency report. This will provide greater transparency and assurance that concurrent competition powers are being used effectively and in the interests of users of health care services.
Turning now to Amendment 24BG, I believe the amendment is intended to ensure that the CMA will have to report on how concurrency arrangements and co-operation and scrutiny of financial services more generally have worked with the FCA and the PRA. However, neither the FCA nor the PRA will have concurrent powers, so the amendment will in practice have no effect.
I know that noble Lords have questioned whether the FCA should have concurrent competition powers. However, the Government accepted the recommendation of the Treasury Select Committee that the case for market investigation reference powers had not yet been made and that the issue should be reviewed when the FCA had bedded into its new role. The Financial Services Bill instead gives the FCA a new competition remit which provides the mandate for the FCA to use its powers to promote effective competition and it will be able to carry out reviews of financial markets. The Financial Conduct Authority will have a tailored power to refer matters to the CMA, which may conduct market investigation or bring Competition Act enforcement proceedings. This mechanism was widely supported by consumer groups and industry and by the Treasury Select Committee.
In addition, the Financial Services Bill includes provision for the competition authorities independently to scrutinise the impact of both the FCA’s and the PRA’s actions on competition. It will of course be important that the FCA and OFT co-ordinate. The FSA and OFT already have an MoU in place and a new one will be put in place between the FCA and the CMA. The CMA, FCA and PRA will be required to report on their performance in their annual reports. I therefore ask the noble Lord, Lord Whitty, to withdraw his amendment.
Lord Whitty
My Lords, I am afraid I do not really accept either of those two propositions. On the financial side, it is true that the FCA does not have the whole range of concurrent powers that all the other regulators do, or in the same form, but it has a substantial number of powers in relation to its treatment of market abuse and consumers and its ability to conduct market studies. I hoped the Minister would say, “We will wait until the Financial Services Bill has passed and then at a later stage in this Bill we will produce a clause that deals with the relationship between the CMA and the FSA as will be, and possibly other parts of the financial regulation side”. I fear that what he actually said is that the abyss has been rolled over by the Treasury.
Quite often in consumer law, we find that general consumer propositions are deemed by the Treasury and the Bank of England not to apply to them. That may indeed be part of the reason why the previous system of regulation of the banking system fell flat on its face. The Minister and his colleagues in this need to be a bit braver in facing up to the Treasury and ensuring that it is subject to the same possibilities of market and consumer abuse as other sectors and therefore should be covered by the same propositions, even though there would be some slight variation in the range of powers. I hope that at some stage in the Bill there will be a point where we take on board the final version of the Financial Services Bill and put that back in.
On Monitor, I fear the Minister is making a serious political misjudgment. It is true that during the course of the NHS Bill the House eventually accepted that there should be a significant increase in competition within the health service structure, but when you look at the actual decisions that will have to be taken by the individual bodies within the health service, their prime concern is that patients and patient groups get the best integrated service for their condition. Therefore, for example, commissioning bodies will need to ensure that, where they commission services from one particular trust or specialist service, that will continue without competitive challenge through the course of treatment for those patients for a number of years. Otherwise, the specialisms within the health service will be destroyed and the seamless journey that is part of Monitor’s objectives for the individual patient will be interrupted by somebody saying, “Actually, you have not observed competition rules in this respect”.
That is not to say that there are not some aspects where there is an overlap. I am saying that the relationship between the CMA and Monitor is different from that for the other sector regulators. I would take it out of that list and the other lists that appear here. If there needs to be a separate memorandum of understanding, let us provide for that, but it will not be the same. If the Government hint that it is the same, I am afraid that there will be a reaction out there that they will find difficult to contain. That will be at best an embarrassment and at worst a threat to the other changes they are trying to make within the health service. I plead with them on this. It is in the interests of Monitor to devise its own structures and relationships and not to assume that it will operate in the same way as a competition authority in other markets. I hope that the Government will change their attitude on this in the course of the Bill. Meanwhile, I beg leave to withdraw the amendment.
“Consumer research16A (1) The CMA must make arrangements for ascertaining information with regards to—
(a) the state of public opinion about the manner in which financial services are provided to consumers;(b) consumer experiences of consumers in relation to the provision of financial services, including—(i) handling of complaints by financial institutions, and(ii) resolution of disputes with financial institutions.(2) The CMA shall consult concurrent regulators where necessary.
(3) The CMA shall publish the conclusions from research carried out under sub-paragraph (1) every two years.
(4) The CMA shall report to the Secretary of State its conclusions and any recommendations arising from research carried out under sub-paragraph (1) every 2 years.
(5) The Secretary of State shall publish a response to any such report within 60 days and lay a copy of that response before Parliament.
(6) This section does not restrict the CMA’s power to make any arrangements that it considers to be incidental or conducive to the carrying out of any of its functions.”
Baroness Hayter of Kentish Town
My Lords, despite the financial sector nominally being competitive—in that there is a choice of banks—we have seen a real lack of satisfaction with banks among consumers.
We do not need to rehearse the mis-selling scandals, with unwitting customers, including small businesses, being sold—as a nice little earner—products that they do not need. We have a reminder of the banks’ record in the newspapers today. Furthermore, we know how hard it has been for people to switch bank accounts— a case made very strongly by the noble Lord, Lord Flight, who is not in his place now, during the discussions on the Financial Services Bill. We know that banks have been unbelievably slow to react to complaints about bank charges—in fact, without the OFT a number of malpractices would still be going on—and that they remain resistant to transparency on fees and charges. Indeed, what I find odd is that no other supplier of a service can simply remove money from one’s bank account without first submitting an invoice or agreeing the amount with the customer.
Banks are slow to deal with complaints, they are resistant to the ombudsman’s activity, and it sometimes feels as though they exist for their staff and their bonuses, rather than to serve the consumer. This smacks of a failing market. Therefore, Amendment 24BH seeks to test that allegation by asking the CMA not to rely on a collection of anecdotes—which does not evidence make—but to undertake some serious consumer research into this market, and to present that, together with any recommendations flowing from it, to the Secretary of State, who should then report back to Parliament.
The other evidence of the lack of a functioning competitive market is the virtual seizing up of finance for small and medium-sized enterprises, and indeed for high-growth businesses, as set out earlier by my noble friend Lord Mitchell. Yet we know that our economic regeneration, and our future, rest on their shoulders. Something is amiss.
This does not feel like a competitive industry when customers cannot get what they want: money for investment. Thus Amendment 24BJ seeks to force the CMA to undertake some serious research on competition in the financial services sector. When we discussed these issues during our debates on the Financial Services Bill, we were told that the CMA would be the lead regulator on competition—the FCA’s role being to promote competition, it seems, rather than deal with its absence—so now we ask the CMA to do just that. I beg to move.
Viscount Younger of Leckie
I thank the noble Baroness, Lady Hayter, for these amendments.
To be effective, the CMA needs to be able to independently determine its own priorities, but its ability to do this would be undermined by the obligation under Amendment 24BH to undertake regular reviews of one particular sector. As we have discussed, the Government are of course determined to improve financial regulation. Markets and market regulation evolve and, by requiring the CMA to carry out studies every two years, this amendment might have the effect of limiting the ability of the CMA to carry out higher-priority work.
The CMA also needs to be able to choose which tool to deploy. During the course of a targeted investigation, Amendment 24BH could require the CMA to produce a general report on the financial sector. In these circumstances, the reporting requirement could waste resources, interfere with an investigation or even act as a disincentive to initiate a separate investigation in the first place.
Finally, while the CMA will be the central competition authority, the FCA will be the lead regulator in the financial services sector, funded by an industry levy. It would be duplicative for the CMA to be required to carry out detailed scrutiny of conduct in the financial services sector at taxpayers’ expense, as required by Amendment 24BH. The OFT and the Competition Commission’s scrutiny powers will be transferred to the CMA by order, under this Bill. New arrangements for co-operation between the CMA and the Financial Conduct Authority will ensure that the two bodies work well together. They will both, of course, have the power to carry out research and publish reports, as envisaged by these amendments. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that. There is one bit of that which I can accept—that it may not be necessary to do this every two years. But there is a major problem in this sector of financial services, and it is time that the Government accepted that. In the Financial Services Bill they are rejigging the architecture, a bit like this, taking the FSA and splitting it in two, sending one bit to Threadneedle Street and letting the other bit stay in Canary Wharf. None of that will seize the problem of the banking industry. I wonder whether the Government are ever going to do it. This was another way to say that this is an industry, and a market, that needs looking at. If it is not going to be done by the FCA, which is not going to have the same powers, surely it should be done by the CMA—if not every two years, even as a one-off now—to see whether we can sort this industry.
This is something that we will certainly need to come back to. The Minister referred to arrangements between the CMA and FCA, but so far the Government have absolutely refused even to accept the obligation to have an MoU between those two. We will come back to that in this Bill. There is something fundamentally wrong in this enormously important sector, which is failing to serve consumers and industry, small companies in particular, and no one seems willing to do anything about it. We will come back to this, maybe without the reference to “two years”. For the moment, I withdraw the amendment.
Viscount Eccles
My Lords, this is a draconian clause. It follows a scheme of the Public Bodies Act in abolishing the Competition Commission and the Office of Fair Trading. It is not an even-handed abolition, because, as I have argued previously, the Office of Fair Trading really continues. It is changing its name to the Competition and Markets Authority, but it is in effect the OFT. I asked about Part 4 and did not get an answer to it. I asked why the Government had made the choice of creating a new body as opposed to continuing with the OFT, and did not get an answer to that either.
At the moment, I am yet to be convinced that these dramatic changes to the structure of the competition regime are justified. That needs to be seen against a background in which the annual cost of the OFT is somewhat over £70 million and the cost of the Competition Commission is somewhat over £15 million. So in the actual money figures, it is 80% the OFT and 20% the Competition Commission. I cannot accept that any argument has been made about money. It is not really claimed in the impact assessment—“ultimately” is the word that is used. I simply do not see that this is an important consideration in the change in structure, and I am conscious of the need to restrain public expenditure. It is said in several places in the Bill that all that this provision is intended to do is to make it somewhat more straightforward for the two organisations to reduce their costs in line with the existing government public spending targets.
We are left with a situation whereby the OFT is taking over the Competition Commission. The commission is disappearing as an executive body and will have no management role—it will not manage itself. It is being turned into panel of mostly, if not all, part-time members—we have not been told—who are part of the Office of Fair Trading. The risk that this will go wrong greatly outweighs any benefits. We have already talked about the need to do things in a more timely fashion. How could I disagree with that? I remember carrying out investigations and coming up with an answer pretty quickly, and it can of course be done under the existing regime. There is nothing wrong with the law.
The money and the timeliness have gone. What else is left? Something is said about the duplication of the provision of information but, unfortunately, I do not see how that holds because if you make a reference, surely the people who will come to some form of judicial judgment have to start from a zero base. They simply cannot rely on what has been done before. Of course they will gather as much information as they can, but that will not stop them needing to obtain self-standing information of their own, in order to come to a semi-judicial decision.
I ask my noble friend: has the department taken legal advice? Has it been to the Attorney-General? The risk that this regime will be challenged is real. I am not just making it up. I cannot see where the benefits outweigh the risk. It seems to me that the risk outweighs the benefits by many times in terms of both time and money. I urge my noble friend to go back and give this another thought because, quite honestly, the game is not worth the candle, the risk is far too great, and the benefits do not exist—and if they do, I have not been told about them. I cannot even imagine what they will be when I am told about them, but I should like to hear them.
I remain unconvinced, as my noble friend Lord Razzall, who is no longer in his place, said. I conclude by saying that I am not in any way casting the smallest of aspersions on the noble Lord, Lord Currie of Marylebone. How could I do that? I was born in the borough of Marylebone. What he has done was done in good faith—being taken on as chairman-designate of something that, at the moment, I believe to be a greatly mistaken structure.
Baroness Oppenheim-Barnes
My Lords, the Committee will be delighted to hear that because I have already made a number of points regarding Clause 20, which obviously related to Clause 21 also, I will not repeat them. However, I must continue to express the concern that was not answered, although I made the point, about the period of hiatus between enactment and the appointment of the new board. None of that can take place. I do not know what the housekeeping requirements are regarding new buildings or offices, but the fact remains that it will be a very damaging hiatus. In particular, as I mentioned at the time, is the effect that the Bill will have on the Consumer Credit Act. Appeals that are brought under the Consumer Credit Act will be in some sort of abeyance. Nothing will happen until the new legislation is enacted and all parts of the various appointments to the two bodies that we have been discussing this afternoon have been made. A lot of concern has been expressed by those in the financial sector about this and we deserve some sort of answer at this stage.
Lord Deben
My Lords, I refer to my entry in the House of Lords register of interests. This gives me a good opportunity to ask one question of the Minister: has he noticed that this Part of the Bill refers to many things which were in the Financial Services Bill and that both are entirely different from everything else the Government are doing? In every other part of the Government’s actions we are reducing the amount of regulation. Much of the Bill is about that, but when we get on to the financial services arrangements, we are laying more and more emphasis upon more and more regulation and there is no indication, in my view, that it is going to be any better. It is really beginning to bug me that much of what has gone wrong was, of course, the fault of the financial services—I am not for one moment denying that—and certainly the fault of the banks, but I cannot honestly say that the regulator has come out of it with a great deal of praise. Indeed, a number of the things that went wrong can be laid directly at the door of the regulator. So the regulator then comes back and says, “Well, the only way to solve these problems is to have more regulation and more powers, so we can get it more wrong.”
My worry is simply that everywhere else in the Government’s programme, the Government have made the argument that if we have too heavy regulation, we do not have innovation, we do not have new things, we do not have new ideas and new mechanisms to meet the new circumstances of Britain, which after all is in competition with the rest of the world. That is the logic, that is the argument; an argument I buy into. The one area in which that is evidently not true is this one. So now we have had two Bills which interrelate and in this Part of the Bill, which is otherwise an admirable Bill, it has merely gone on doing what the Financial Services Bill had so wrongly done elsewhere. So we have an attitude to regulation which is entirely inconsistent.
We have just had two Bills going through the House of Lords and noble Lords may have noticed that the passage of the Civil Aviation Bill was entirely filled with speeches by Ministers about how wonderful it was that the public was now going to have a great deal more say and more appeal, and the regulators were not going to be able to ride roughshod over customers, businesses and the like. At exactly the same time, we introduced another Bill saying there are going to be no appeals, the public are not going to have a say, businesses are not going to have a say but instead we will have tougher and tougher regulations. I find this incomprehensible and as I have tried on several occasions to raise it in detail it would help me a great deal if the Minister would explain the rather curious mismatch.
Of course, the party opposite has not raised this very much because it wants more regulation in every circumstance: we know that. I raise it at this opportunity because I cannot do it on the amendments of the noble Baroness, Lady Hayter, but I think that in 10 years’ time—probably in five years’ time—people will look back at this period in Parliament and say, “What the blazes were they doing making the British financial industry less able to compete and less able to innovate, when they were doing so much good stuff in the whole of the rest of British industry?”.
Baroness Hayter of Kentish Town
I shall try to resist temptation. As to spectacles, of course it was the consumers who most wanted opticians not to be regulated. It has benefited us all because we have been able to buy much cheaper glasses than we used to.
I would like to ask the Minister, in the complete secrecy of this room, with only a few Hansard writers and television watchers present, that if his Government had not wanted a bonfire of the quangos, would this merger ever have gone ahead? Was it just another number in the bonfire of the quangos or did BIS always want this?
Viscount Eccles
Before the Minister replies, I would like to thank the noble Baroness for her comment. There may well be another, very general, explanation. I have worked in the public sector in a number of different bodies. I once received a letter saying that the Minister understood that I did not wish to be reappointed to this body because I was too busy—it was a Department of Trade and Industry body—but that was not the reason. The reason was that I had attended a meeting and voted against a grant to a company because I thought it was not a sound company. However, the grant was passed and paid out and the business went bust. I was too clever because I had got it right and so I had to be removed.
There are few of us here but this important general explanation will be reported in Hansard. There is a strong wish in departments—this is a general comment—to reduce the independence of public bodies, to centralise their activities and to get them back as close to the Ministry as they can. The Competition Commission has been an independent body for 60-something years, so how did it get into the Public Bodies Act that these two organisations would be merged? It cannot have got in as a result of the Cabinet Office saying, “Have you got any good ideas?” There must have been somewhere in the purlieus of BIS a document saying, “Would it not be a good idea to reform the competition regime?”
I believe that this merger has not ever been given the proper consideration by the Government that it needs to assess the risk in what is proposed, and to offset that risk against the apparently negligible benefits.
Baroness Oppenheim-Barnes
To add to what my noble friend has said—we are fortunate to have him here today—I would like to know whether the Bill ever went through Cabinet. I find it difficult to believe that some of these points would not have been raised at that time, and properly so.
Viscount Younger of Leckie
My Lords, the CMA will be equipped with a wide range of tools to remedy anti-competitive practices and to promote effective competition in markets across the UK economy. It has been somewhat of a challenge today to answer the questions raised by my noble friend Lord Eccles, but I am prepared to have another go.
At the beginning and at the end of the day, my noble friend raised the question: why reform the current institutional structure; why make the change? I reiterate that bringing the Competition Commission and the competition functions of the Office of Fair Trading together in a single body provides the opportunity for greater coherence in competition policy and practice, a more streamlined approach to decision making, a stronger oversight of the end-to-end case management process, as I mentioned earlier, more flexibility in resource utilisation and better incentives to use anti-trust and markets tools to deal efficiently with competition problems.
Furthermore, it provides a single powerful advocate to speak for competition across the economy in Europe and globally. While it is not a central driver for the creation of the new CMA, there will be scope for some long-term savings, in particular in corporate governance, back-office functions and accommodation costs. I reiterate that this process is not solely about saving on costs. Some costs will be saved, and it is fully expected that some synergies will be made, but a vast number of skills will be transferred over to the new CMA. I hope that that helps somewhat to allay my noble friend’s fears.
My noble friend Lady Oppenheim-Barnes also raised some questions about the fundamental concept of setting up the CMA. Ministers consider competitive markets to be vital to the economy. That has been said many times in recent weeks and months. BIS Ministers have consistently made it clear that the main purpose of the exercise is to strengthen the competition regime and to support growth rather than to cut costs. The new CMA will be sufficiently resourced to deliver its functions but will not be immune from wider pressures to help deal with the UK’s massive deficit. Savings delivered by the creation of the CMA will mainly be from streamlining, which I mentioned earlier, and eliminating overlaps between phase 1 and phase 2 of investigations. These savings will help to deliver the Government’s existing spending review targets.
The Government are committed to ensuring a smooth transition process and will work closely with the OFT and the Competition Commission to minimise disruption to the organisations while they continue to carry out their important roles and services. I wish to reassure the noble Baroness, Lady Hayter, that this whole process was looked at most carefully in Cabinet.
In response to a question raised by my noble friend Lady Oppenheim-Barnes on the transition, as we are aware, the Government have appointed the noble Lord, Lord Currie of Marylebone, as chair designate of the new CMA and is in the process of recruiting the chief executive designate. Together they will lead the transition to the new CMA. During our Second Reading debate, the noble Lord, Lord Currie, said that in addition to creating a high-performance organisation he was committed, in transition terms, to ensuring,
“that the casework of both the Office of Fair Trading and the Competition Commission continues unimpeded and that the transition of work in progress to the new authority is entirely seamless”.
He assured noble Lords:
“We will safeguard business as usual.’—[Official Report, 14/11/12; col. 1561.]
Finally, I shall answer a question raised by my noble friend Lord Deben about what will happen to the Financial Services and Markets Act in relation to the OFT oversight of the regulatory regime, if I read him correctly. Consideration of competition must be a central feature of the new financial services regulatory regime so we will therefore retain a regime for scrutiny of the regulation of financial services by the CMA. This will apply to both the Financial Conduct Authority and the Prudential Regulation Authority.
Clause 21 and Schedules 5 and 6 provide for the transfer of relevant tools and functions of the OFT and the functions of the Competition Commission to the CMA. The new authority will operate the anti-trust mergers and markets regimes and will determine regulatory appeals and references made to it in the major regulated sectors. It will carry out various ancillary competition scrutiny functions and provide businesses with advice and guidance to help them to understand and comply with competition law. Schedule 5 also provides that certain functions under the Enterprise Act, in particular phase 2 of the mergers and markets processes, will be the responsibility of groups of independent panellists. I commend Clause 21 to the Committee.
Viscount Eccles
Before my noble friend sits down, could I ask that my questions that have not been answered are dealt with in writing? I would appreciate that. As far as I am concerned, this is definitely not the end of the matter. I will review my very real worries about what is being done here and no doubt come back to them at the next stage of the Bill.
Viscount Younger of Leckie
I did not necessarily expect to answer all my noble friend’s questions. However, I have attempted to address on many occasions the question that he has put in terms of the fundamentals of setting up the CMA. I hoped that I had answered him. Clearly I have not and I will certainly write to my noble friend to address the questions that he feels are unanswered.
Viscount Eccles
For the last time, the fundamental question is: are the Government sure that the supposed benefits outweigh the risks? We have not really coped with that at all today. There is a real risk. When the thing is not broken, why try to mend it? The competition regime has been very good over many years. In my opinion, the Government are taking a quite unjustifiable risk of running that regime into a brick wall. That is the question and that is why I am not satisfied that the Government have really thought this through if they cannot tell me that they have taken proper legal advice about the risk they are running. For a very long time, the whole of business and industry has understood that this was done in two places. There was a reference from here and an investigation and determination over there. Change that and—believe you me—a lot of people, when they find out that that is what has happened, are not going to like it. If their lawyers come with them, there could be real trouble. I feel very strongly that the matter of risk needs to be dealt with. It is not a matter of efficiency or effectiveness—you can imagine all sorts of efficiencies, effectiveness and even economies—but a matter of risk.
Baroness Stowell of Beeston
My Lords, this may be a convenient moment for the Committee to adjourn until Tuesday next week at 3.30 pm.
House of Lords
(11 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text
Driving: Blood Alcohol Limit
(11 years, 10 months ago)
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Lord Brooke of Alverthorpe
To ask Her Majesty’s Government whether they will consider introducing a 50 milligram blood alcohol limit for drivers aged under 21.
Earl Attlee
My Lords, the Government have no plans to introduce a lower blood alcohol limit. The North review did not support a lower limit for drivers under 21 and the Government endorsed this. The Department for Transport is considering several options to ensure that newly qualified drivers drive safely.
Lord Brooke of Alverthorpe
As the Minister will be aware, I have shifted my position considerably in the spirit of Christmas. I have moved away from a demand for zero tolerance to what seems to be a reasonable compromise to move forward. I am sorry that in his first response he said that the Government will not move, but at least they are prepared to consider some movement for younger drivers. All the evidence indicates that this is required. Will the Minister confirm to the House that the number of drink-driving deaths went up last year for the first time in a number of years, and that we need to take action in the near future?
Earl Attlee
My Lords, I confirm that there was some unwelcome news on the number of casualties. However, if one looks at the graph, there continues to be a welcome downward trajectory. None the less, across the House, we all need to work hard to continue that downward trajectory.
Baroness Sherlock
My Lords, will the Minister tell the House how many fatalities per year the department believe to have any connection with drink-driving among people under 21?
Earl Attlee
My Lords, I am not sure regarding those under 21. The key figure is 280 drink-related fatalities per year.
Baroness Finlay of Llandaff
My Lords, will the Minister explain what the measures are to improve the safety of young drivers which he alluded to in his first response?
Earl Attlee
My Lords, we are considering all possible options at the moment to continue the downward trend.
Lord Mackenzie of Framwellgate
Will the Minister comment on the increasing and worrying trend of people driving under the influence of drugs? Will he tell the House when it is likely that a device will be approved for roadside testing in this regard?
Earl Attlee
My Lords, during the passage of the Crime and Courts Bill this afternoon we will be taking the drug-driving provisions through. There are two pieces of equipment to be approved: the station-based drug testing equipment, which is on track to be approved by the Home Office shortly, and the roadside drug testing equipment, which is a little more difficult; we need to wait for the outcome of the expert panel which is looking at the appropriate levels before we can set its specification.
Lord Swinfen
My Lords, how long does it take for the blood alcohol level to return to zero from 80 milligrams when the alcohol disperses naturally?
Earl Attlee
My Lords, I do not know, but the key point is that there is no safe limit of alcohol in the blood when driving a vehicle. Therefore, we advise that the best option is not to drink at all.
Lord Harris of Haringey
My Lords, I note that the noble Earl told us that there was a downward trajectory. Will he give us the figures for the number of fatalities in the past year and for the year before that to demonstrate that? What stance are the Government taking on the BMA’s recommendations on this matter?
Earl Attlee
My Lords, the casualty figures were distorted slightly by the number of casualties in 2010, which were slightly lower; we believe that that was due to the bad weather. The key point is that the figures for 2011 were still better than those for 2009.
Lord Roberts of Llandudno
My Lords, will the Minister tell us how the United Kingdom’s blood alcohol limit compares with those of the rest of Europe?
Earl Attlee
My Lords, many European countries have a 50 milligram blood alcohol limit. However, they also have lower penalties at that level. Our policy is to have an 80 milligram limit but very severe penalties if you exceed the limit. This seems to have the right effect because our safety record is better than that on the continent.
Viscount Simon
My Lords, if the noble Earl is saying that 80 milligrams is the correct level for us, what about Scotland and Wales? Presumably they will decrease their level to 50 milligrams.
Earl Attlee
My Lords, the noble Viscount is quite right; Scotland has the power to set a lower limit. However, it cannot change the penalties. If it does change its limit, it will be very interesting to see what the effect will be on casualties.
Baroness Miller of Chilthorne Domer
My Lords, in France it is now compulsory by law to carry a breathalyser kit in one’s car. Is the UK considering anything like that?
Earl Attlee
My Lords, absolutely not. The difficulty with that idea is that it would enable drivers to drink more while believing that they were below the limit. Our policy is that there is no safe level of alcohol in the blood when driving. Therefore, we do not support the compulsory carrying of breathalysers by drivers.
Baroness Hayman
My Lords, when the Minister gave the figures for the number of fatalities involving drink, did all of those incidents involve blood alcohol levels above the current limit? My recollection is that one problem with the issue was that no statistics were kept for accidents involving drinkers who were below the 80 milligram limit but above the 50 milligram limit. Is that information now available?
Earl Attlee
My Lords, it may well be available but I am not aware of it. However, my point is that there is no safe blood alcohol level when one is driving a vehicle.
Lord Cormack
My Lords, my noble friend referred to options and the noble Baroness, Lady Finlay, asked him if he could specify some of the options. Can he give us at least two of them?
Earl Attlee
My Lords, one option—and it is only an option—would be to deal with the problem of tragic accidents where several youngsters are killed in one vehicle. These are very distressing accidents and we need to consider whether we should allow a young driver to carry several youngsters. However, there is a contrary argument, which noble Lords opposite articulated when they were Ministers, that that could have an economic effect. It could mean that the system of one sober driver might not work. So we need to consider carefully what the options are to make sure that there are no unintended consequences.
Baroness Farrington of Ribbleton
My Lords, will the Minister tell your Lordships’ House which drugs will be detected if the detection equipment is found to be reliable?
Earl Attlee
My Lords, we are shortly going to be publishing the review of the expert panel which will tell us which drugs and what levels for each drug will be detected, based on scientific evidence, and the risk associated with them.
Lobbyists: Register
(11 years, 10 months ago)
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Baroness Hayter of Kentish Town
To ask Her Majesty’s Government when they will bring forward proposals for a register of lobbyists.
Lord Wallace of Saltaire
The consultation document Introducing a Statutory Register of Lobbyists was published earlier this year to gather evidence from experts in the field and members of the public. It asked a number of specific questions, the multiple answers to which are informing policy developments in this area.
Baroness Hayter of Kentish Town
Well, my Lords, it does not sound like much action has been taken. Given that the coalition promised to regulate lobbying through a statutory register—in case the noble Lord needs reminding—can he tell us whether it is going to move on this or is it going to wait for the next big scandal before it does so?
Lord Wallace of Saltaire
My Lords, we are certainly intending to move on this but as the noble Baroness will appreciate if she has looked through the replies to the consultation document and the companion report of the Political and Constitutional Reform Committee in the other place, there is a quite remarkable dissensus among respondents. The Government’s summary of replies to the consultation document remarks at one point, in effect, that a lot of those consulted regard themselves as a legitimate part of the political process but regard everyone else as lobbyists. That is part of the problem. The paid lobbyists are a small part of those with whom we are talking, and they wish charities, think tanks, trade unionists and others also to be included on any register of lobbyists.
Lord Tyler
My Lords, does my noble friend agree that the overriding objective must surely be greater transparency? In that regard, while we must obviously avoid excessive complexity because the information has to be accessible and digestible, does he agree that all we really need to know is who is lobbying who about what? The register only goes so far in that respect.
Lord Wallace of Saltaire
My Lords, the Government have moved some way towards greater transparency in terms of who members of the Government meet. I am amazed by the detail in which I have to account quarterly for who I have met over the previous three months, so at one end we are already being more transparent. Part of the origin of the proposals for a lobbying register during the previous Government was the question of how much money was being paid to these specialist lobbying companies to influence Government. That was the origin of the inquiry. For the first time in my life, I sympathised enormously with the evidence given by the TaxPayers’ Alliance to the inquiry in which it said a narrower definition would be rather better.
Lord Campbell-Savours
When the noble Lord fills in the form that he talks about within the department, does he draw a distinction between official and unofficial engagements and does he register them both?
Lord Wallace of Saltaire
Yes, and we have discussed whether I should put down everyone I meet at a party conference. There comes a point where almost the entire political process becomes lobbying. For example, the secretariats of most all-party groups are supported by outside bodies. Are those lobbyists? Is that proper? Should we do away with them? One gets into very deep water quite early on in this field.
Lord Martin of Springburn
My Lords, would journalists in the press gallery, who are therefore registered journalists, be allowed also to be registered lobbyists? In other words, could they hold two occupations?
Lord Wallace of Saltaire
I have to admit that I do not know the answer to that question and will have to write to the noble Lord.
Lord Hamilton of Epsom
Does my noble friend agree that if we restricted the activities of lobbyists and it resulted in fewer all-party groups, that would be a very good idea?
Lord Wallace of Saltaire
There might be no more cakes and wine, I am afraid. Let us be clear: lobbying is an entirely legitimate part of the political process, which would be poorer if we did not have lobbying. The problem is that we have lobbying from professional companies, advocacy groups—many of which are also charities—the CBI, trade unions and others. It is a very complicated area to try to pin down to a single statutory register.
The Countess of Mar
My Lords, when you get a company lobbying, would it be helpful if it were to register on whose behalf it was lobbying, so that when it writes to us, we know who it is lobbying for?
Lord Wallace of Saltaire
My Lords, that is the narrowest definition and where the Government started. The replies to the consultation have taken us much wider than many of us originally intended to be taken. Certainly, the concern—and I am very struck by this in the documents that I am looking at—and perception that there is undue lobbying is very much about large sums of money being paid to professional companies, very often by foreign Governments.
Lord Dubs
My Lords, on the question of all-party groups, does the Minister agree that if professional lobbyists insinuate themselves into all-party groups, that is a breach of the standards that we ought to expect, both as regards this House and the wider public? Although we have had several goes at cleaning this up, there is a lot still to be done.
Lord Wallace of Saltaire
I agree that we have to be very careful about all-party groups. It is a matter for both Houses as much as anything else. However, one might not want to say that Universities UK for example, which happens to assist the All-Party Group for Further Education, Skills and Lifelong Learning, is a lobbying company and should not be allowed to support that group. There is a gradation here; one has to think about what is proper and what is not.
Lord Hughes of Woodside
My Lords, when the Minister writes to the noble Lord, Lord Martin, will he also place a copy in the Library?
Lord Swinfen
My Lords, when we have a register of lobbyists, will it be illegal for those not on the register to lobby?
Lord Wallace of Saltaire
There is a voluntary register of public relations companies, which was established in the wake of an earlier inquiry in 2009. However, one of the three bodies that joined that register has now left it. Even within the public relations industry, they disagree among themselves as to who exactly one should be regulating.
Lord Greaves
My Lords, does my noble friend agree that there is nothing wrong whatever with people and organisations lobbying Members of Parliament and, indeed, lobbying Members of your Lordships’ House, much as though many Members of this House might prefer it not to happen? The important thing is absolute transparency and clear rules about the use of money.
Lord Wallace of Saltaire
I agree very strongly. We all need to defend the usefulness of representational groups, advocacy groups, think tanks and others in contributing to our information. We all get lots of e-mails from those groups as we approach legislation and other things. That is a desperately important part of the open, democratic political process—so long as we are sure that we know what is going on and that it is transparent.
Charities
(11 years, 10 months ago)
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Baroness Pitkeathley
To ask Her Majesty’s Government whether they will take steps to encourage giving to the United Kingdom charitable sector in the light of the recent report UK Giving 2012 that reported a drop in donations of 20 per cent in real terms.
Baroness Pitkeathley
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and draw attention to my charitable interests as listed in the register.
Lord Wallace of Saltaire
My Lords, the report does suggest a worrying drop in giving. However, this is yet to be confirmed as a trend, and there is some debate within the sector about whether this is what charities are experiencing on the ground. The Government remain committed to taking action to ensure that Britain continues to be a generous country, in giving both money and time.
Baroness Pitkeathley
The Minister is right that there is some dispute about the figures, but I wonder whether he is familiar with the latest report by the Charities Aid Foundation that one in six charities think that they will have to close over the next year and that half are already using their reserves because of a fall in donations, cuts in public spending and much increased demand for their services. How do the Government think that this will impact on their vision of the voluntary sector and charities being a vital part of the delivery of public services and, indeed, on the Prime Minister’s hopes for the big society?
Lord Wallace of Saltaire
My Lords, I have also seen that report and looked at it in some detail. It is interesting, incidentally, that as of September this year there were 2,000 more charities registered than there had been three years before so the trend has not, so far, been downwards, but it is worrying. From my experience of the charities sector, and I have visited a large number of additional charities since I took over this post, I am shaken by some that I meet in Yorkshire that are almost entirely dependent on public funds. That seems unwise. I strongly approve of those that raise some of their money through their own activities. The social enterprise model is very much part of what charities should be doing. The Government are doing a whole range of things to encourage the new generation to give more of their time and money. The National Citizen Service is one of them.
Baroness Barker
My Lords, given that the number of donations being given online and by text is increasing, does the Minister agree that charities are losing out, because gift aid is not yet fully digitised? Does he agree that it is imperative that the Government help charities to achieve a universal declaration of gift aid so that online giving can be much more beneficial than it is now?
Lord Wallace of Saltaire
My Lords, I strongly agree with the noble Baroness. We are also looking at the difficulties of payroll giving. The Government want to encourage it. A small number of, by and large, large companies make that easy for their employees. We would like to see an expansion of payroll giving. The figures suggest that older people are now much more generous than the younger generation, and we do not entirely know the reasons. Again, that is not entirely fitting. I trust that all Members of this House are giving at least 10% of their income to charity.
Lord Grenfell
My Lords, I spent some years living in the United States. I was always struck there by the efficacy of the system that they have, in which where contributions to charities are fully deductible. The US Treasury seems to have worked out that the more that is given by individuals, the less the eventual burden on the taxpayers because they are taking up a lot of the strain from the taxpayers. This is not rocket science. Successive Governments here never seem to look at this as a serious proposition. Why not?
Lord Wallace of Saltaire
I do not entirely agree with the noble Lord, Lord Grenfell. I have a relative in the United States who managed, by making donations of various sorts to his university library, to avoid paying almost any tax the previous year. One wants to encourage people to be generous. The Small Charitable Donations Bill, which we will be dealing with next week, is part of that. We need to consider how one asks for larger donations and makes them tax-beneficial. I remind people that legacies are also important, but a charity which I was talking to last week said that the problem with legacies is that people offer them to you, then stick around for many years.
Baroness Berridge
My Lords, have the Government assessed whether the decline in charitable giving is connected to an increasing rise in the practice of charity mugging, commonly called chugging, where members of the public are approached by representatives, who may be working for agencies, to sign a direct debit? In particular why is it that if they are holding a cash tin they need a licence from the local authority, but if they make an approach for a direct debit they do not?
Lord Wallace of Saltaire
My Lords, the noble Lord, Lord Hodgson, dealt with chugging in his review of the Charities Act. We wish to encourage a broader base for giving among small donors. Chugging has been with us for some time. It is not a new phenomenon.
Lord Best
My Lords, in terms of the giving of time through volunteering, as well as the giving of money, it is good news that the Government are supporting more volunteering for sports as part of the legacy from those wonderful games makers at the Olympics. Will that same support for volunteering be extended beyond just sporting activity to other kinds of volunteering, such as the work that the WRVS is currently doing in sending volunteers in to help people who are living alone and suffering from loneliness?
Lord Wallace of Saltaire
My Lords, the Government’s join in scheme is very much intended to take on the spirit of the Olympics and extend it to a whole range of other activities. I visited a National Citizen Service course this summer. I had been relatively sceptical about National Citizen Service until then, but I was completely bowled over by the young people who were taking the course who were learning how to go out, raise money, help people and develop schemes. I would like to see many more people have the opportunity to learn how they can contribute more actively to society. It was a bunch of people from one of the poorer areas of Bradford, and it was delightful to see that they were learning to give their time and were managing to raise money.
Baroness Uddin
My Lords, during the noble Lord’s wide-ranging visits to different areas and charitable organisations, what assessment has he made of the impact of the current economic crisis, particularly on BME women’s organisations, given the Government’s commitment to empowering women and those dealing with domestic violence and increased reports of forced marriages and honour-based violence?
Lord Wallace of Saltaire
My Lords, what happens to different charities depends partly on how heavily they depend on public funds and what their donor or social enterprise base is. I am aware of several charities in Yorkshire that deal particularly with women. Their current trajectory is very different depending on their funding base.
NHS: Clinical Networks
(11 years, 10 months ago)
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Baroness Thornton
To ask Her Majesty’s Government how they will address any shortfall in the funding of clinical networks.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, national funding for clinical networks has been maintained at £33.6 million since 2009. Forty-two million pounds has been allocated by the NHS Commissioning Board to support strategic clinical networks and clinical senates in 2013-14. It is for local health communities and the board to determine the number and size of networks, based on patient flows and clinical relationships, and to deploy their resources appropriately.
Baroness Thornton
I thank the Minister for that Answer. His boss, the Secretary of State, is on the record as saying that clinical networks funding is increasing and will continue, yet on Monday a freedom of information survey revealed severe cuts to budgets and staff in clinical networks, so I wonder who is right. Cancer networks are cut by 26% and stroke and cardiac by 12% in the same period—2009-13—with the loss of hundreds of experienced and motivated staff. Do the figures that the Minister has given to me also cover clinical senates? Will those cuts be restored? What incentives are the Government putting in place to ensure that local health organisations contribute to the additional funding of cancer networks? Indeed, how will the local diabetes networks be supported in the new commissioning regime? We know that these networks work.
Earl Howe
My Lords, I agree with the noble Baroness’s last comment. These networks are extremely valuable. I confirm that the figure I gave her in my Answer of £42 million covers clinical senates as well. It is perfectly correct that the share of the pot which cancer networks will be able to avail of is likely to be smaller next year than it is this year. However, I can categorically confirm that, as I said in my Answer, national funding has not been cut to date and is going up next year very considerably. Furthermore, we should recognise that the Commissioning Board’s announcement amounts to a ringing endorsement of the value of networks in improving patient outcomes. Not only will funding be increased but for the first time there will be nationally supported networks for mental health, dementia and neurological conditions as well as maternity and children’s services. I say to the noble Baroness that recruitment to the networks is proceeding very smoothly and encouragingly.
Lord Sharkey
My Lords, I declare an interest as a lay member of a cancer network lung cancer group. I know the Minister is aware that our survival scores for lung cancer need improvement and that early diagnosis is the key to that improvement. In the light of that, what steps are being taken to make absolutely certain that any reduction in the number, staff or funding of cancer networks does not damage the efforts to improve early diagnosis?
Earl Howe
My Lords, I am grateful to my noble friend. As regards cancer, it is important to look at what the Government are doing across the piece. As the noble Lord may recall, the cancer strategy that we published a while ago is backed by more than £450 million of investment. This is specifically to target earlier diagnosis of cancer; to give GPs increased access to diagnostic tests; to allow for the increased testing and treatment costs in secondary care; to support campaigns; and so on. That is a large sum of money and it is committed.
Lord Kakkar
Does the Minister envisage a role for the to-be-designated academic health science networks in delivering clinical networks in the future? I declare my interest as chair for quality, University College London Partners academic health science partnership.
Earl Howe
My Lords, yes. National guidance is being produced by the NHS Commissioning Board, setting out the different areas of focus for academic health science networks, health and well-being boards, local education and training bodies and clinical senates. The defined geographies of the 12 network support teams have been developed precisely to gain close alignment and therefore promote close relationships and co-operation with the other structures in the new system—including academic health science networks.
Baroness Masham of Ilton
My Lords, how are clinical network members recruited? Are they advertised?
The Countess of Mar
My Lords, the people with CFSME were greatly heartened in 2008 when the Chief Medical Officer ring-fenced £8 million to set up clinical networks on their behalf. They have become disillusioned as the funding of these networks has gradually been cut. There is also no provision for children in the clinical networks. What priority is given to CFSME?
Earl Howe
My Lords, strategic clinical networks are only one category of network in the new system. There is nothing to stop professional groups coming together to share best practice and support professional development. In addition, clinical commissioning groups may well wish to establish networks to support local priorities and ways of working; and providers may use a network model to enable the joint delivery of a service, such as pathology. The noble Baroness, Lady Thornton, rightly referred to the extent to which local providers and commissioners already support strategic clinical networks. So there is a variety of ways of doing this.
Lord Patel
Does the Minister recognise that reducing funding for cancer networks will lead to a reduction in staff and therefore a reduction in the effectiveness of cancer networks?
Earl Howe
My Lords, Professor Sir Mike Richards, the national cancer director, said the other day:
“Although cancer networks will have a smaller proportion of the budget in the future, there are still backroom efficiencies that can be made to make things work more effectively. Increasing the footprint of each network will make them more cost-efficient”.
I have spoken to him personally and he is confident that the available budget can still be used to ensure that there is at least equal cost-effectiveness of networks.
North Korea
(11 years, 10 months ago)
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Lord Alton of Liverpool
To ask Her Majesty’s Government what is their assessment of the impact on regional and world security of North Korea’s recent missile launch.
Lord Alton of Liverpool
My Lords, I beg leave to ask a Question of which I have given private notice. I declare a non-pecuniary interest as the chairman of the All-Party Group on North Korea.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, we condemn North Korea’s satellite launch. This test of its ballistic missile technology is in clear violation of UN Security Council Resolutions 1718 and 1874. This provocative act will only serve to increase regional tensions and undermine prospects for peace in the peninsula. The UK is urgently consulting with the UN Security Council and we have urged North Korea to return to constructive international negotiations.
Lord Alton of Liverpool
My Lords, I am grateful to the Minister for her response. Is not this highly provocative act, coming a week before South Korea’s elections, an attempt to undermine any attempts at peaceful moves for reconciliation and progress? It is also a wicked waste of resources, estimated at some $800 million. That is enough to feed the entire population of North Korea for a year, in a country where malnutrition and starvation are commonplace. Will the Minister tell the House whether the Government have called in the North Korean ambassador and, if so, what will they say to him? Does she welcome China’s statement this morning, in advance of the Security Council meeting, that,
“Pyongyang should … abide by relevant UN Security Council resolutions … which demands the DPRK not to conduct ‘any launch using ballistic missile technology’ and urges it to ‘suspend all activities related to its ballistic missile programme’”?
Baroness Warsi
I agree with the noble Lord. I think that the timing of this testing is indeed important and relevant, so soon after the US elections and the transfer of power in China and just before the elections in Japan and South Korea. We are looking at the timing of this matter in some detail. I also agree with the noble Lord that for a country with extreme poverty to be using resources on developing what we feel to be further nuclear missile technology is not an appropriate use of funds.
I can confirm that the North Korean ambassador to the UK was called to the Foreign and Commonwealth Office today—indeed, possibly as we speak, he is in a meeting with the Permanent Under-Secretary.
The Lord Bishop of Hereford
My Lords, does the Minister agree that in a country where there is so much human suffering, it would behove North Korea rather more to make a priority of alleviating suffering, as well as seeking dialogue and reconciliation, and that this provocative act, as she described it, damages both those targets? Will she ensure that we do not lose sight of the human rights violations in a country where the United Nations estimates that 200,000 people are held in prison camps?
Baroness Warsi
The right reverend Prelate is right. In a country where both resource and energy could be spent on so much, whether on alleviating poverty or on human rights, this does not appear to be an act which is in the interests of its own people.
Lord Triesman
My Lords, I am grateful to the noble Lord, Lord Alton, for raising the Question today, because we share the concern that this missile test will be destabilising regionally and for the world, and may well provide the grounds for a regional arms race and proliferation.
There have been reports today that part of the missile project has been conducted jointly with Iran. Have the Government any further information on that? Will the process that we will go through on the Security Council resolutions have the same characteristics as were announced about an hour and a quarter ago by the United States: that there should be a full head of steam behind the approach to the United Nations, potentially calling for similar sanctions to those in force on Iran?
Baroness Warsi
I can confirm, my Lords, that discussions are ongoing as to how the United Nations Security Council proceeds in this matter: whether it is by way of a further resolution or a presidential statement; whether further sanctions could be applied; and the nature of those sanctions. On the noble Lord’s question about Iran, I do not have any further information at this stage, but if it is something that I can write to him about, I will.
The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, there is plenty of time. Perhaps we could hear from my noble friend and then the noble and gallant Lord.
Baroness Falkner of Margravine
My Lords, this has been the third serious provocation in less than four years by North Korea. The noble Baroness referred to the potential of the UN Security Council meeting. Will she assure the House that in the conversations that will be had with China with respect to potential Security Council sanctions against North Korea, the energy dependence of North Korea on China will be discussed, and that China will be pressed not to continue to provide oil to North Korea?
Lord Guthrie of Craigiebank
My Lords, having been to North Korea reasonably recently and had less than satisfactory conversations with politicians and the military there, I think that we ought to realise that the one thing that unites North Korea is hatred of the United States. We should do everything that we possibly can to try to get the United States to have a better dialogue with North Korea. Wherever you go in North Korea they remember the Korean War—the monuments are all around the country. It is taught to children from the very first year they go to school. I hope that we can try to influence the Americans to understand this, and they could make a big difference. The Korean War was 60 years ago.
Baroness Warsi
The noble and gallant Lord clearly speaks from experience in relation to his own visit and his own dialogue. I can only speak on behalf of our Government. Even in very difficult circumstances we felt it was appropriate to continue our dialogue and our discussions in whatever opportunities present through our embassy in North Korea.
Lord Soley
Can the Minister tell us a little more about the way we are trying to draw China into a longer and deeper discussion about how we deal with North Korea? China has an enormous problem on its own border, not just because of the military side but also because of starving refugees trying to get across that border. Surely a large part of this must be our attempt to get China more fully engaged in a longer-term proposal as this regime is one of the most awful and most dangerous in the world.
Baroness Warsi
I agree with the noble Lord that China has to be part of the solution in relation to North Korea. The noble Lord will be aware that it is part of the six-nation discussions, which of course also include the United States, Russia and Japan.
Lord Marlesford
My Lords, does my noble friend agree that the only long-term solution to the untold misery of the people of North Korea, and the ending of the serious menace that that state poses to regional and indeed world peace, is its absorption into South Korea? Does she agree that the Chinese would not necessarily be averse to that solution?
Baroness Warsi
I think that the future of North Korea goes beyond the remit of this immediate Question.
Lord Grenfell
My Lords, it is good news that the ambassador of North Korea has been called in. I have not heard many people mentioning South Korea—the Republic of Korea—in this exchange. Are Her Majesty’s Government speaking to the South Koreans to urge them not to try to take any kind of unilateral action and that whatever they do, it should be done through the United Nations?
Baroness Warsi
As the noble Lord will appreciate, this was a Private Notice Question. I am not sure if any discussions have taken place immediately, certainly within the past 24 hours, on the specific point that the noble Lord raises. We are, however, in general discussions with the South Koreans on this matter and, as I said earlier, they form part of the six-nation dialogue.
Lord Campbell of Alloway
Is it not the wish of the Government now to consult with America and China on how to deal with this situation? We cannot deal with it single-handed.
Baroness Warsi
My noble friend is right. This is not a matter which the UK would seek to deal with in any way single-handedly.
Statute Law (Repeals) Bill [HL]
(11 years, 10 months ago)
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The Minister of State, Ministry of Justice (Lord McNally)
My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of recommitment be discharged.
Patrick Finucane
(11 years, 10 months ago)
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The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, I would now like to repeat a Statement that was made by the Prime Minister earlier this afternoon in the House of Commons on the murder of Patrick Finucane.
“The murder of Patrick Finucane in his home in North Belfast on Sunday 12 February 1989 was an appalling crime. He was shot 14 times as he sat down for dinner with his wife and three children. His wife was injured, and Patrick Finucane died in front of his family.
In the period since the murder, there have been three full criminal investigations carried out by the former Metropolitan Police Commissioner, Lord Stevens. Taken together, they amount to the biggest criminal investigation in British history, led by the most senior police officer, and consisting of more than 1 million pages of documents and 12,000 witness statements obtained with full police powers. As a result of the third Stevens investigation, one of those responsible, Ken Barrett, was tried and convicted in 2004 for the murder of Patrick Finucane.
There was a further report by Judge Cory. Both Lord Stevens and Judge Cory made it clear that there was state collusion in the murder. This itself was a shocking conclusion, and I apologised to the family on behalf of the British Government when I met them last year. But despite these reports, some 23 years after the murder, there has still been only limited information put into the public domain. The whole country, and beyond, is entitled to know the extent and nature of the collusion, and the extent of the failure of our state and Government. That is why, last October, this Government asked Sir Desmond de Silva to conduct an independent review of the evidence to expose the truth as quickly as possible.
Sir Desmond has had full and unrestricted access to the Lord Stevens archive and to all government papers. These include highly sensitive intelligence files and new and significant information that was not available to either Lord Stevens or Justice Cory, including Cabinet papers, minutes of meetings with Ministers and senior officials, and papers and guidance on agent handling. He has declassified key documents, including original intelligence material, and he has published them in volume 2 of his report today. The decision over what to publish was entirely his own—it was entirely a matter for Sir Desmond de Silva. Sir Desmond’s report has now given us the fullest possible account of the murder of Patrick Finucane and the truth about state collusion. The extent of disclosure in today’s report is without precedent.
Nobody has more pride than me in the work of our Armed Forces, our police service and our security forces. I see at close hand the work they do to keep us safe. As Sir Desmond makes clear, he is looking at,
“an extremely dark and violent time”,
in Northern Ireland’s history. I am sure the House will join me in paying tribute to the police and security forces that served in Northern Ireland, but we should be in no doubt that this report makes extremely difficult reading. It sets out the extent of collusion in areas such as identifying, targeting and murdering Mr Finucane; supplying a weapon and facilitating its later disappearance; and deliberately obstructing subsequent investigations. The report also answers questions about how high up the collusion went, including the role of Ministers at the time. Sir Desmond is satisfied that there was not,
“an over-arching State conspiracy to murder Patrick Finucane”,
but while he rejects any state conspiracy, he does find quite frankly shocking levels of state collusion. Most importantly, Sir Desmond says he is,
“left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA”—
the Ulster Defence Association—
“in February 1989 had it not been for the different strands of involvement by elements of the State”.
He finds that,
“a series of positive actions by employees of the State actively furthered and facilitated his murder”,
and he cites five specific areas of collusion.
First,
“there were extensive ‘leaks’ of security force information to the UDA and other loyalist paramilitary groups”.
Sir Desmond finds that,
“in 1985 the Security Service assessed that 85% of the UDA’s ‘intelligence’ originated from sources within the security forces”.
He is,
“satisfied that this proportion would have remained largely unchanged by … the time of Patrick Finucane's murder”.
Secondly, there was a failure by the authorities to act on threat intelligence. Sir Desmond describes,
“an extraordinary state of affairs ... in which both the Army and the RUC SB”—
Royal Ulster Constabulary Special Branch—
“had prior notice of a series of planned UDA assassinations, yet nothing was done by the RUC to seek to prevent these attacks”.
When you read some of the specific cases in the report —page after page in chapter 7—it is really shocking that this happened in our country. In the case of Patrick Finucane, he says that,
“it should have been clear to the RUC SB from the threat intelligence that ... the UDA were about to mount an imminent attack”,
but,
“it is clear that they took no action whatsoever to act on the threat intelligence”.
Thirdly, Sir Desmond confirms that employees of the state and state agents played “key roles” in the murder. He finds that,
“two agents who were at the time in the pay of … the State were involved”—
Brian Nelson and William Stobie—
“together with another who was to become an agent of the State after his involvement in that murder”.
It cannot be argued that these were rogue agents. Indeed, Sir Desmond concludes that Army informer Brian Nelson should,
“properly be considered to be acting in a position equivalent to an employee of the Ministry of Defence”.
Although Nelson is found to have withheld information from his Army handlers,
“the Army must bear a degree of responsibility for Brian Nelson's targeting activity during 1987-89, including that of Patrick Finucane”.
Most shockingly of all, Sir Desmond says that,
“on the balance of probabilities … an RUC officer or officers did propose Patrick Finucane … as a UDA target when speaking to a loyalist paramilitary”.
Fourthly, there was a failure to investigate and arrest key members of the West Belfast UDA over a long period of time. As I said earlier, Ken Barrett was eventually convicted of the murder, but what is extraordinary is that back in 1991, instead of prosecuting him for murder, as the RUC CID wanted to, the RUC Special Branch decided instead to recruit him as an agent.
Fifthly, this was all part of what Sir Desmond calls a wider,
“relentless attempt to defeat the ends of justice”,
after the murder had taken place. Sir Desmond finds that,
“senior Army officers deliberately lied to criminal investigators”.
The RUC Special Branch, too,
“were responsible for seriously obstructing the investigation”.
On the separate question of how certain Ministers were briefed, while Sir Desmond finds no political conspiracy, he is clear that Ministers were misled. He finds that,
“the Army and Ministry of Defence (MoD) officials provided the Secretary of State for Defence with highly misleading and, in parts, factually inaccurate advice about the … handling of … Nelson”.
On the comments made by Douglas Hogg, Sir Desmond agrees with Lord Stevens that the briefing he received from the RUC meant he was “compromised”. But he goes on to say that there is,
“no basis for any claim that he intended his comments to provide a form of political encouragement for an attack on any solicitor”.
More broadly on the role of Ministers, Sir Desmond says that there is,
“no evidence whatsoever to suggest that any Government Minister had foreknowledge of Patrick Finucane's murder, nor that they were subsequently informed of any intelligence that any agency of the State had received about the threat to his life”.
He says that the then Attorney-General, Sir Patrick Mayhew deserves,
“significant credit for withstanding considerable political pressure designed to ensure that Brian Nelson was not prosecuted”.
As a result, of course, Nelson was prosecuted in 1992, following the first investigation from Lord Stevens.
The collusion demonstrated beyond any doubt by Sir Desmond, which included the involvement of state agents in murder, is totally unacceptable. We do not defend our security forces, or the many who have served in them with great distinction, by trying to claim otherwise. Collusion should never, ever happen. So on behalf of the Government, and the whole country, let me say again to the Finucane family, I am deeply sorry.
It is vital that we learn the lessons of what went wrong, and for Government in particular to address Sir Desmond's criticisms of,
“a wilful and abject failure by successive Governments to provide the clear policy and legal framework necessary for agent-handling operations to take place effectively and within the law”.
Since 1989, many steps have been taken to improve the rules, procedures and oversight of intelligence work. There is now a proper legal basis for the security services, and the Regulation of Investigatory Powers Act 2000 has established a framework for the authorisation of the use and conduct of agents. In addition, the activities of individual agents are now clearly recorded, along with the parameters within which they must work. The Intelligence Services Commissioners and the Office of Surveillance Commissioners now regulate the use of agents and report publicly to this House. Taken together, these changes are designed to ensure that the failures of 1989 could not be made today.
Policing and security in Northern Ireland have been transformed, reflecting the progress that has been made in recent years. The Force Research Unit and the Special Branch of the RUC have both gone, and the Police Service of Northern Ireland is today one of the most scrutinised police forces anywhere in the world. It is accountable to local Ministers and a local policing board and it commands widespread support across the whole community.
Through all these measures, both this Government and their predecessors have shown a determination to do everything possible to ensure that no such collusion ever happens again. We will study Sir Desmond’s report in detail to see what further lessons can be learnt, and I have asked the Secretaries of State for Defence and Northern Ireland and the Cabinet Secretary to report back to me on all the issues that arise from this report. I will publish their responses. Other organisations that are properly independent of Government—police and prosecuting authorities—will want to read the report and consider their own responses.
Sir Desmond says that his conclusion,
“should not be taken to impugn the reputation of the majority of RUC and UDR officers who served with distinction during what was an extraordinarily violent period”.
He goes on to say that,
“it would be a serious mistake for this Report to be used to promote or reinforce a particular narrative of any of the groups involved in the Troubles in Northern Ireland”.
I am sure that those statements will have wide support in this House. We should never forget that over 3,500 people lost their lives and there were many terrible atrocities. Sir Desmond reminds us that the Provisional IRA,
“was the single greatest source of violence during this period”,
and that a full account of the events of the late 1980s,
“would reveal the full calculating brutality of that terrorist group”.
During the Troubles, over 300 RUC officers and 700 British military personnel were killed, with over 13,000 police and military injured. I pay tribute to them and to all those who defended democracy and the rule of law and who have created the conditions for the progress we have seen. We must not take that progress for granted, as we have seen this week, and I pay tribute again to those in the PSNI who are once again in the front line today. We must not and we will not allow Northern Ireland to slip back to its bitter and bloody past.
The Finucane family suffered the most grievous loss and they suffered it in the most appalling way imaginable. I know they oppose this review process and I respect their views. However, I respectfully disagree with them that a public inquiry would produce a fuller picture of what has happened and what went wrong. Indeed, the history of public inquiries in Northern Ireland would suggest that had we gone down that route, we would not know now what we know today.
Northern Ireland has been transformed over the past 20 years and there is still more to do to build a genuinely shared future. One of the things this Government can do to help is to face up honestly when things have gone wrong in the past. If we as a country want to uphold democracy and the rule of law, we must be prepared to be judged by the highest standards, and we must also face up fully when we fall short. In showing once again that we are not afraid to do that, I hope that today’s report can contribute to moving Northern Ireland forward. In that spirit, I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Royall of Blaisdon
My Lords, I thank the Leader of the House for repeating the Statement on Patrick Finucane given by the Prime Minister earlier in the other place. In addition, from the Opposition Benches in this House, I also thank Sir Desmond de Silva for his work and how he went about his task. He has produced a serious report within the terms of reference that he was set. It will take time to absorb its full details. I welcome the Prime Minister’s apology, which was set out in the Statement repeated by the Leader, to the Finucane family. It is the right thing to do.
We should begin by remembering the unimaginable horror of Pat Finucane’s murder. This was a husband, a father, a brother who was murdered in his own home as he sat with his family on a Sunday evening. Some 23 years after this appalling crime, his family still searches for the truth with courage and dignity.
This report provides disturbing and uncomfortable reading for all of us. It makes clear that there was collusion in the murder and a cover-up. Furthermore, it states that,
“agents of the State were involved in carrying out serious violations of human rights up to and including murder”.
Of course, this should not diminish the service of thousands of police officers, soldiers and Security Service personnel who were dedicated to protecting and serving people in Northern Ireland, and who have my admiration and that of all of us in this House today. They will be as appalled as we all are by the findings.
As we examine and assess the findings of this report and whether it is adequate, it is essential that we remember the background. An investigation into the murder of Pat Finucane in which the public had confidence was an important part of the peace process, a process which is held in trust from Government to Government, which began under Sir John Major and has continued since.
In 2001, at Weston Park, the Irish and British Governments agreed to appoint a judge of international standing to examine six cases in which there were serious allegations of collusion by the security forces. This applied in both jurisdictions: the UK and Ireland. It was agreed that in the event that a public inquiry was recommended in any of the cases, the relevant Government would implement that recommendation.
Judge Peter Cory was appointed and recommended that public inquiries were necessary in five cases. Three of those on the UK side have been completed and the one inquiry recommended on the Irish side is expected to report next year. The only outstanding case in which a public inquiry was recommended but has not taken place is that of Pat Finucane.
The previous Government could not reach consensus with the Finucane family on arrangements for an inquiry but, towards the end of our time in office, the Finucane family indicated that they would support a public inquiry under the Inquiries Act 2005 and had begun to discuss a way forward. We on this side continue to believe that we should abide by our obligations under the Weston Park agreement.
First, do the Government recognise the concern that the failure to hold a public inquiry is in breach of agreements that were an essential part of the peace process? Secondly, Sir Desmond has accepted the assurances of the state that he has been given all relevant material. But this is the same state the agents of which were involved in what the report describes at paragraph 116 as,
“carrying out serious violations of human rights up to and including murder”,
and the same state whose previous criminal investigations into this matter were the subject of “serious obstruction”.
Do the Government therefore recognise the concern about the limits to what the de Silva inquiry could do? Will the Leader of the House explain why the Prime Minister believes that a public inquiry would not have produced a fuller picture in which the public could have had confidence, as Mr Justice Cory recommended, not least because of the opportunity to cross-examine witnesses? In his Statement repeated by the Leader, the Prime Minister said he disagreed with the Finucane family that,
“a public inquiry would produce a fuller picture of what happened and what went wrong”.
I respectfully disagree with him.
Thirdly, the de Silva report concludes that,
“a series of positive actions by employees of the State actively furthered and facilitated his murder and that, in the aftermath of the murder, there was a relentless attempt to defeat the ends of justice”.
What do the Government propose to do in response to these serious findings?
Fourthly, the British and Irish Governments have been as one on this issue. Will the Leader of the House say what discussions the Government have had with the Irish Government about the de Silva review, and what the position of the latter is today?
That takes me to the final issue: public confidence. That we continue to build trust and confidence among the communities of Northern Ireland remains crucial. The appalling violence we have seen on the streets of Northern Ireland in recent days should remind us of that. Judge Cory said that a public inquiry was needed into the murder of Pat Finucane because,
“without public scrutiny doubts based solely on myth and suspicion will linger long, fester and spread their malignant infection throughout the Northern Ireland community”.
Can the Government really say with confidence that the whole truth has been established in the case of Pat Finucane? How can we say that when the report is dismissed by his family and many others in Northern Ireland?
We, as the United Kingdom, must accept that sometimes our state did not meet the high standards we set ourselves during the Northern Ireland conflict. The past is painful and often difficult. We believe that we must establish the full and tested truth about Pat Finucane’s murder. We therefore continue to believe that a public inquiry is necessary for his family and for Northern Ireland.
Lord Strathclyde
My Lords, I thank the noble Baroness the Leader of the Opposition for her response to the Statement. She is right that it is essential that we should remember the background against which we operated at that time and, following on from that, she is right to note the enormous changes that have taken place during the course of the past 25 years, most of all during the peace process in the past 20 years. The noble Baroness asked a number of questions, to which I shall try to reply.
Perhaps I can deal with one question relatively quickly, on the Irish Government and their likely position. I can confirm that the Prime Minister spoke this morning to the Taoiseach, Enda Kenny. The position of the Irish Government, that they have been in favour of a public inquiry, has been widely known for a long time. However, they understand why we have taken the decision that we have taken, and they respect that we have been entirely open and frank. I hope that they, like everybody else who has an interest in this issue, will find some comfort in the integrity of the process once they have considered Sir Desmond’s report. The position of the Irish Government is, of course, one for them to determine.
I am well aware that the decision not to hold a public inquiry was controversial. However, our ambition and motivation as a Government was to frame a real question: what is the fastest way to get to the truth and to lay out what happened? We know what has happened in the past with public inquiries; some of them took five or six years, or even longer, cost tens of millions of pounds and perhaps did not even get closer to the truth than de Silva has got in his report today. We therefore very much support our decision to have this inquiry led by Sir Desmond de Silva.
At the time of the general election, this went to the core of the point made by the noble Baroness about confidence in Northern Ireland and in the process that we have conducted. In answer to whether we can say with full confidence that the whole truth has been uncovered, this is a very long report and individual noble Lords will want to review and read with care what has been said. However, it is clear that Sir Desmond de Silva has done the whole nation a tremendous service in trying to get to the heart of the matter and uncover the truth, building on the work that had been done by previous individuals. This was a fast way to find the truth. That is a good thing for Northern Ireland.
With the greatest respect to the noble Baroness, her Government had nine years between Weston Park and the general election to decide to go ahead with a public inquiry. It is not a decision that they took, possibly because they understood as much as we have done the problems of time and expense. The key thing is to get to the truth. I venture to suggest that very few countries would have set it out in so much detail or laid out what went wrong as comprehensively as we have done today. We should all take some pride in a country that is willing to do that. It is an agony in many respects to read what has been said, but it is right to publish and to ensure that people who have been affected can see the work that Desmond de Silva has done. That is very much the basis of the decision that we took and we stand by it.
Earl Attlee
My Lords, I remind the House of the benefit of short questions for my noble friend the Leader of the House, so that he can answer as many as possible.
Lord Alderdice
My Lords, I thank my noble friend for repeating the Statement. I thank the Prime Minister for instituting the de Silva inquiry and for his apologetic and sympathetic response to the Finucane family.
No Member of this House could listen to the Leader of the House reading out the Statement without being deeply shocked and dismayed at its horrifying content. This cannot be other than a source of national shame. One of our citizens was murdered in his own home with the collusion of state agents, and subsequently, for 23 years, there has been obstruction of the proper authorities in the investigation of these matters, including by senior officials in the Ministry of Defence, the police and security services, to the point, according to this report, that Ministers were lied to and misled, and they then misled Parliament. How is it possible to hold our own authorities to account if they are being so grossly misled in this way? This is a time for deep national shame and self reflection because it begs real questions.
It does no credit to our House to refuse to accept the clear reality of what went on. Authorities here must learn that you do not defend democracy by undermining the very principles of democracy, decency, honesty and of abiding by the proper law. I trust, although I frankly do not believe it, that some elements of government in Northern Ireland understand that playing footsie with paramilitaries and colluding with them, including in threats to some of my own friends recently, is no way to promote democracy. It is a travesty of democracy. How can we assure ourselves that these things will not happen in the future? We will not do so merely by responding to this Statement; I trust that there will be a full debate in your Lordships’ House and that we will properly learn the lessons, not by more inquiries but by more decisions as to how we hold these matters to account in the future.
Lord Strathclyde
My Lords, I understand exactly what my noble friend is saying and the force with which he says it, with all the experience and knowledge that he has in his personal background and the part that he has played in Northern Ireland. He is right in saying that none of us could hear the Statement made by the Prime Minister without being deeply shocked and dismayed by what has happened—the level of collusion and the cover up that took place thereafter.
He said that it was a national shame and he is right, but part of dealing with that is to confront it by having the review that we have taken, publicising it and apologising for what happened. There is also the second point, which I think my noble friend was referring to, about what has changed and how to ensure that these things do not happen again. The background within which the security services operate is so entirely different from that existing in the late 1980s when there was no legal framework against which they operated.
RIPA 2000 created a proper legal and policy framework within which to gather intelligence. There is now therefore an unambiguous framework which puts all work relating to agents on a statutory footing and is designed to prevent the same mistakes and abuses being made today. RIPA is also underpinned by a range of non-statutory frameworks and codes of practice which set out clear processes for the day-to-day management of agents by relevant agencies. Managers, the PSNI and the security services are required to ensure that staff comply with this legislation. The Statement referred to the PSNI now being the police force with more scrutiny that any other in the world. I think that that is right.
Lord Maginnis of Drumglass
My Lords, as somebody who has been fortunate to survive 10 murder attempts by the Provisional IRA, I find this isolated apology quite ridiculous. The reality is that the Finucane family were an IRA family. I illustrate this by saying that when I made that allegation publicly and was being sued for libel, the family retracted and paid my legal expenses. Let us not therefore fool ourselves about the “Godfather” Finucane who was killed. If there was connivance, let me say that all of us who served through the heart of the Troubles in Northern Ireland served in such a way that it was impossible to have a secret. Why were there 10 attempts on my life? Why was the noble Lord, Lord Kilclooney, shot? It was because there was conspiracy.
I point out that less than 1% of all terrorist suspects involved in proactive security force operations were killed by the security forces, and that 99% of cases ended in arrest. There were no incidents of unlawful killing in a Special Branch-led operation in Northern Ireland, and the security-force response was totally human-rights compliant. Let us not forget all those years of terrorism and become compelled by a single incident which may in fact—and I will not deny it—have involved conspiracy. If one sought justification—and I do not justify it—it was not without a godfather. Godfathers were responsible for so many murders in Northern Ireland, it should not be forgotten.
Lord Strathclyde
My Lords, the noble Lord, Lord Maginnis, brings his own particular view of these issues. Indeed, Sir Desmond looked at the accusation that Patrick Finucane was a member of PIRA, and on the basis of the evidence that he saw he concluded that he was not. I know that that was not the entire point that the noble Lord was making, but the Government have nothing to add to Sir Desmond’s conclusions on this point.
I am bound to say that the question of PIRA membership is not in this case particularly relevant. The point that was made in the Statement and as a result of the review is that the state should not have been involved in Patrick Finucane’s murder. It is on that basis that the state has made the apology.
Lord King of Bridgwater
My Lords, I declare an interest. I was Secretary of State for Northern Ireland when Patrick Finucane was murdered and I was Secretary of State for Defence when the possible prosecution of Brian Nelson arose. I join my noble friend in recognising —as he did in repeating the Prime Minister’s Statement, and as we all must—that this was an appalling crime of which we should all be ashamed. It should not have happened and it is particularly appalling because there is clear evidence of significant collusion. It was an appalling crime at what the Statement calls a dark and violent time in Northern Ireland. I was not surprised at the contributions of the noble Lords, Lord Maginnis and Lord Alderdice. The House has had the opportunity to sense some of the tensions that so rapidly rise to the surface, and which one can now see on the streets of Belfast.
That is in no sense an excuse for what happened. One of the things that I most resent about this is that the appalling things that happened in this case sully the reputation of very brave security forces who, over all those years and with huge personal suffering to them and their families, stood to protect the Province of Ulster, Northern Ireland, against the risk of total disaster. We should recognise that.
I take exception to one element of the Statement repeated by my noble friend: namely, the phrase “state involvement”, which is now current. I understand why it has arisen. It gives the impression that somehow the Government planned the murder of Patrick Finucane. It is an appalling concept that I as Secretary of State somehow authorised it. Of course, that is totally untrue. In my time I committed myself to trying to save every life that I possibly could on both sides of the community, however people were involved.
What is also clear is that there were incidents in which people were in clear breach of their orders or instructions. The Statement claims that there was no co-ordinated legal basis for the employment of agents. I draw the attention of the House to something in Sir Desmond de Silva’s report which states that agents were being handled at that time under the strict instruction of the Commander Land Forces Northern Ireland, Tony Jeapes, that it was unlawful for any person to authorise any illegal act, and that if there was any possibility of an agent becoming involved in criminality, the assistant chief of staff was to be informed through the commanding officer of the FRU so that preventive measures could be taken. Mr Nelson’s handler was acting in total breach of that instruction at the time. I should say that some of the agents, informers or touts—they go under different names in Northern Ireland—were incredibly brave people who saved an enormous number of lives. The difficulty of handling them should not be underestimated.
This is an impressive report. One or two people have already passed judgment on it. Nobody can have read it yet except the Prime Minister, who obviously was briefed on it. I have only managed to read the executive summary. There is an enormous amount in the report. It needs further study and I will not pay great attention to any comments until people have had a chance to read the report through and then address the issue of whether there should be a further public inquiry. I have great respect for the noble Baroness and understand why she said that a public inquiry might ensure that we would get to the truth. There are no grounds for saying that until we have seen how close we think Sir Desmond de Silva has got to the total truth of the matter, and considered what could be achieved by going for a further public inquiry. This is what challenged the previous Government and why, nine years on, there has been no progress. This is what they were wrestling with. It is difficult to see what the benefit of a public inquiry would be, and I can see some real disadvantages, not least because there should be prosecutions arising from some of the things in the report. If we go for public inquiry, it would probably prevent that being possible.
Lord Strathclyde
My Lords, I very much agree with what my noble friend said about the public inquiry. He has heard what the Prime Minister and I said on that question. My noble friend started by saying that this was an appalling crime. He is right. The key thing for us to remember—this is another thing he said—is that the accusation of state collusion sullies the memory of all those individuals who fought to defend democracy without having to go down this route. That is what makes this so appalling.
Of course I entirely agree with my noble friend that this is a lengthy report that has taken many months to compile. It builds on the work of previous investigations, including that of a distinguished Member of this House. There were a million pages of documents. This is the most comprehensive of comprehensive reports and it requires time to look at it.
On the question of Ministers’ knowledge, de Silva is very clear. He says there is:
“no evidence whatsoever to suggest that any Government Minister had foreknowledge of Patrick Finucane's murder ... nor that they were subsequently informed of any intelligence that any agency of the State had received about the threat to his life”.
There is no evidence at all that any Ministers had any knowledge at the time of Nelson’s targeting activity, or that they were encouraged or directed in any collusive activity with the UDA. That is a very strong statement.
Baroness O'Loan
My Lords, the de Silva report is profoundly disturbing with its statement that Sir Desmond is satisfied that Patrick Finucane was identified by a police officer for targeting, that he was targeted, that he was not warned of the risks to him—risks which existed in 1981, 1985 and 1989—despite the extent of the knowledge of the activities of these UDA men, and that the investigation into his murder was repeatedly obstructed—all examples of state collusion. The Prime Minister has rightly apologised yet again to his family for what the Prime Minister described as,
“shocking levels of state collusion”.
Mr Finucane was not involved in IRA activity. He was a lawyer carrying out his professional duties in profoundly difficult and dangerous circumstances. I am sure that Members of this House will again wish to express their sympathy to the Finucane family, just as I am sure that all those upright officers with integrity in the army, the police and the security services will wish to share their sympathy at the pain that the Finucane family must be experiencing again today.
But this was not an isolated situation. Investigation has shown that this pattern of activity was not unique to the UDA in west Belfast. The Prime Minister has stated, and the noble Lord has repeated, that the Regulation of Investigatory Powers Act has established a framework for the authorisation and conduct of agents. However, as Police Ombudsman I found as recently as 2003 that the Surveillance Commissioner was not being properly informed about UVF agents who were engaged in murders, attempted murders and other very serious crimes. Given the very small office of the Surveillance Commissioner, the pattern and nature of the investigations and inspections which are carried out by the Surveillance Commissioner, and particularly the resources available to the Surveillance Commissioner, is the Minister satisfied that there is adequate funding to enable the identification of any police failures in the handling and management of state agents?
This remains a profoundly important question. We have in Northern Ireland ongoing activities of republican paramilitaries, including the recent bomb in Derry. We have ongoing loyalist paramilitary activity. We have the current loyalist disturbances, which have caused huge distress and damage in Northern Ireland. And most recently we have had threats, not least death threats to a Member of the other place, Naomi Long, who serves constituents in East Belfast. This is a profoundly important matter for the future security of the United Kingdom. I thank the Government for what has been achieved thus far. Having read some of the report this morning, I will consider it further.
Lord Strathclyde
I am very grateful for what the noble Baroness has said. Again it demonstrates what my noble friend Lord King said about the very real tensions that brought about what happened during that dark and miserable period in Ulster. We are all part of a process of moving on from that. Let me deal with the nub of what the noble Baroness said about other cases. If there was collusion here, what else was going on? The Government will carefully consider the conclusions of the report to assess whether it impacts on any other cases. There have been public inquiries, as the noble Baroness knows, into a number of other cases where collusion was alleged. What we have tried to do here is demonstrate that we are prepared to leave no stone unturned in examining these cases and that, where there has been wrongdoing, the Government are prepared to apologise.
Lord Dubs
My Lords, the Leader of the House was slightly unclear when talking about the attitude of the Irish Government. Given that there was a firm agreement between the British and Irish Governments at Weston Park, what is the attitude of the Irish Government to this issue?
Lord Strathclyde
I think what I said was that the position of the Irish Government has been well understood, and that they were in favour of a public inquiry. My right honourable friend spoke to the Taoiseach this morning. They will want to read the report as well and come to their own conclusions, but those conclusions are a matter for the Irish Government.
Lord Empey
My Lords, I have been reading the report since 8.30 am. I do not understand how the Official Opposition can come to the conclusion that another inquiry is needed when there are over 500 pages to be gone through. The inquiries into the six cases that flowed from Weston Park have required very substantial amounts of expenditure and effort put into finding the truth. Is the Leader of the House aware that if there is to be another inquiry into this case—and I am seeking his assurance now that that will not happen—I have a list of at least 13 other cases involving multiple deaths over a very long time that have just been completely airbrushed out of history? Can the Minister give an assurance that we are going to stop this process of ongoing and never-ending inquiries and concentrate on building a genuinely shared future, where we move forward instead of raking over the coals of the past for ever?
Lord Strathclyde
My Lords, the noble Lord is entirely correct in what he says. I understand the way that he says it and the reasons for it. We can spend a great deal of time, energy and money raking over the coals of the past. What we sought to do in setting up this review was to find a distinguished individual with the greatest possible reputation to conduct it. Sir Desmond’s report has now given us the fullest possible account of the murder of Patrick Finucane and the truth about state collusion.
I confirm to the noble Lord that we would not expect any further report to yield more information—it is fully in the public domain. Of course, I recognise that, on all sides, dealing with the past is still a live issue in Northern Ireland. However, there are other opportunities for families who lost loved ones to find out more, beyond inquiries, such as through the work of the historical inquiries team and the coronial inquests. I repeat again what I said a few moments ago: there is a time for us to deal with the past but it is even more important for us to deal with the problems of the future and to engage more and more in maintaining a level of peace for the people for Northern Ireland—all the people of Northern Ireland—so that they can prosper.
Crime and Courts Bill [HL]
(11 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
19:57 - Division on Amendment 119 - Ayes: 150 / Noes: 54 - Amendment 119 agreed.
Lord Beecham
“( ) The Code shall not come into effect until it has been laid before Parliament, and debated by both Houses.”
Lord Beecham
My Lords, I cannot claim the prophetic prescience of my biblical near-namesake, so it is entirely fortuitous that the three amendments to which I speak will be debated the day after the announcement of what the media have described as a $1.9 billion, or £1.2 billion, fine imposed by the US authorities on HSBC in relation to charges of money laundering and sanctions busting. I observe in parenthesis that the financial penalty on the company, like those imposed on other banks, is in reality a penalty inflicted on its shareholders and, arguably, its customers. Be that as it may, the relevance of yesterday’s news is that the fine was imposed by way of a deferred prosecution agreement, which embodied other terms, including greater scrutiny of the bank’s affairs—and the involvement of a monitor to be appointed to that effect—and restrictions on bonuses for its top executives.
All three amendments touch on issues that relate to how such matters might be dealt with in the UK once this Bill is enacted. I referred before to the need to carry public opinion with us as we embark on this significant change to the legal system and the way that we deal with corporations whose activities attract breaches of the law and the possibility of substantial proceedings. Amendments 116DA and 116DB facilitate that by requiring a code of practice for prosecutors and any amended code, drawn up, as they will be, by the Director of Public Prosecutions and the director of the Serious Fraud Office, to be laid before Parliament and debated by both Houses. Again I stress that I am not proposing, as I did in Committee, that the code should be subject to the affirmative procedure, merely that it should be debated. I agree with the Minister’s assertion in his letter to me of 7 November that:
“The fundamental principle of prosecutorial independence means that it is appropriate for the code to be issued by the DPP and DSFO rather than it being put on a statutory footing in regulations by a government Minister”.
My concern is that Parliament should be able to contribute to the consultation that the directors have undertaken to conduct rather than that the code should be included after the event in the DPP’s annual report to the Attorney-General. Given the scale of the wrongdoing in the HSBC case and the amount of the financial penalty, this seems to be a sensible way forward, since the public will obviously draw comparisons between what is likely to happen in this country and what happened in America. It reinforces the similar suggestion that I made, but did not press to a vote, in relation to the Sentencing Council’s guidelines on financial penalties. It will be interesting to learn in due course whether the approach adopted under this measure is likely to leave open the possibilities of penalties approaching the scale recorded in the HSBC case. Perhaps the Minister will indicate, without pre-empting the role of the Sentencing Council, what his view is. I do not intend to seek a vote on these amendments, but I hope that the Government will give further consideration to this issue, especially in the light of these recent developments.
The third amendment stems directly from the American experience and legal system. I am indebted to my honourable friend Emily Thornberry, the shadow Attorney-General, for the information that she supplied before and after a recent visit about the practice of the US Justice Department. I spent 35 years briefing counsel, and it has been a unique and pleasant experience to have undergone this role reversal.
Amendment 119A seeks to adopt the practice and wording set out in the United States Attorneys’ Manual. It is a probing amendment. The US law on corporate criminal liability enhances the prospects of successful prosecutions for fraud because corporations are deemed to be vicariously liable for offences committed by their employees during the course of their duties. Here, by contrast, the prosecution must prove that, to quote the legal phrase, the “directing mind and will” of the company was guilty of the offence, and the concept of the directing mind would imply that a board member or senior manager was involved in the illegality.
I assume that the noble Lord, Lord Green, in his former role as chairman and chief executive of HSBC would, of course, have never countenanced, let alone been involved in, the activities that were the subject of the deferred prosecution agreement in America. I assume that the same will be true of other directors of the company and its managers. In this country, a criminal prosecution of the company would have been much more difficult to mount and the incentive to reach a DPA correspondingly reduced if that principle of the directing mind had been applied.
For this reason, Jonathan Fisher QC of Policy Exchange stated in an article in the Times following the publication of the Government’s consultation paper that:
“it is crucial that the proposed legislation provides that a company is vicariously liable for the acts of employees where a prosecutor can show there was fault or dishonesty by the employees concerned. Unless the Government addresses this critical point, the DPA initiative will be a damp squib”.
There is a precedent for making exceptions to the directing mind principle in the analogous field of bribery law. The Bribery Act 2010 establishes strict liability on a company whose employees or associated persons commit an offence in order to obtain business or a commercial advantage for the company. The company can plead by way of a defence that it has adequate systems and controls to prevent the bribery. There are, of course, other examples where companies could be held liable for breaches of statutory duty.
I should perhaps add that the American experience reinforces the view propounded by my noble and learned friend Lord Goldsmith, who is not in his place this afternoon, that the deferred prosecution agreement procedure should apply to individuals, although I would remain reluctant to see such an extension initially, otherwise than in cases where this might facilitate the application of DPAs to cases of economic crime and fraud.
The outcome of the HSBC case throws into stark relief the difference between the US system and what the Bill in its present form envisages, let alone the current state of the law. In particular, of course, there is every incentive in the US system for a corporation to come to terms on a deferred prosecution agreement because there is the ultimate sanction of a criminal prosecution on the basis of vicarious liability if it does not take that course. Since we all wish to see a sufficient incentive to facilitate the introduction of this new system, I hope that that will appeal to Ministers.
It is asking too much of the Minister to come back with a considered response either today or in the very limited time available before Third Reading, but I hope that the Government will take the opportunity to review and, if need be, to consult further on this issue during proceedings in the House of Commons. The proposal would extend beyond the realm of economic fraud but, as has been demonstrated in America, it can contribute to the success of the innovation which the Bill seeks to create. I beg to move.
Lord Mackay of Clashfern
My Lords, I support the change in position made by the noble Lord, Lord Beecham, between Committee and today regarding allowing Parliament to discuss the prosecution code without it being incorporated in a statutory instrument. It might help the Director of Public Prosecutions, the director of the Serious Fraud Office and the prosecuting authorities generally to have the views of Parliament expressed in a debate in Parliament before the code is finally adopted.
Lord Ahmad of Wimbledon
My Lords, Amendments 116DA and 116DB revisit an issue that we considered in Committee: namely, parliamentary scrutiny of a code of practice for prosecutors to support the DPA scheme. However, as the noble Lord, Lord Beecham, said, the issue has changed somewhat. In providing for a code of practice for prosecutors in relation to DPAs, the Government have been clear that the intention is to ensure consistency with other statutory provisions relating to guidance for prosecutors on operational matters. The noble Lord, Lord Beecham, referred to HSBC and the related US experience. As has been said previously, the DPA is a new addition to the UK system, and we will be looking to apply it at a future point. However, for now the Government’s position has been made clear.
The code of practice for DPAs, in the same way as the code for Crown prosecutors, will provide guidance on the exercise of prosecutorial discretion in making decisions and on key procedural and operational matters concerning DPAs. The independence of prosecutors is fundamental to the effective operation of DPAs. Therefore, it is entirely appropriate for the code for DPAs to be issued by the Director of Public Prosecutions and the director of the Serious Fraud Office. The Government have absolute confidence in the directors.
I hear what my noble and learned friend Lord Mackay mentioned in support of the points made by the noble Lord, Lord Beecham. However, the Government do not consider it necessary to make the code subject to parliamentary scrutiny. As DPAs become enshrined in UK law, I am sure that we will return to these issues. Indeed, the opportunity remains for any noble Lord to raise this issue through appropriate parliamentary procedures, be they QSDs or any other.
The approach to publication of the code provided in the schedule is wholly consistent with that under Sections 9 and 10 of the Prosecution of Offences Act 1985 in respect of the code for Crown prosecutors. The code of practice for DPAs, both the first and any future versions, will be provided to the Attorney-General by way of the Director of Public Prosecutions’ annual report, and he will in turn lay it before Parliament. The Delegated Powers and Regulatory Reform Committee did not raise any concerns about this proposed approach for the code of practice. The code is an operational document that needs to be responsive to the context in which it operates. The proposed amendments would, in particular, restrict the directors’ ability to amend or update the code as necessary to reflect timely changes in the law or lessons learnt having utilised the DPA process. The key elements of a DPA are clearly set out in the Bill. The code of practice will support the operation of the process, and the directors have committed to consult on its contents.
Amendment 119A would introduce a new and very broad basis for corporate criminal liability. Currently, there is a statutory basis for dealing with specific offending on the part of corporate bodies, for example, statutory provisions exist for dealing with corporate manslaughter, bribery and regulatory offending, such as health and safety rules. There is, however, no legislation which expressly creates general criminal liability for companies. Wider corporate liability is founded upon common law rules which attribute liability to a corporate body where the conduct is on the part of the directors, officers and those who occupy roles at the corporate centre. However, reliance is often placed on individual liability where there are many punishments and sanctions available to deal with economic or financial wrongdoing. This is, to a degree, due to the fact that corporate prosecutions are much more difficult and complicated than individual prosecutions and furthermore cases often involve lengthy and costly investigations.
The noble Lord, Lord Beecham, also referred to this point in relation to the Bribery Act 2010. The extent to which the current law of corporate criminal liability can be improved upon by employing the new “failure to prevent” formulation incorporated in the Bribery Act 2010—which the noble Lord’s amendment seeks loosely to emulate—is a matter for long-term examination. As I am sure the noble Lord, Lord Beecham, appreciates, the Bribery Act has been in force for less than 18 months. It is appropriate to allow the provision in the Act to bed down before we examine the extent to which the formulation could be usefully rolled out into other areas. However, I assure the House that the Government are committed to ensuring that investigators, prosecutors and the courts have the right tools to address financial and economic crime effectively, as is evidenced by Schedule 17.
DPAs have been specifically designed to ensure that corporate bodies are held responsible for alleged financial or economic wrongdoing on their part by providing an alternative means of disposal and a broader scope of sanctions. We remain satisfied that it is correct for the Government to focus on offering an additional route for holding to account organisations that are willing to engage in the process or otherwise face prosecution rather than on the basis of the liability itself. The noble Lord, Lord Beecham, also asked me to speculate on any level about the Sentencing Council and what it may arrive at. I am sure he appreciates that it would be totally inappropriate for me to speculate in that regard. In light of my explanations, I hope that the noble Lord, Lord Beecham, will withdraw his amendment.
Lord Beecham
My Lords, I find that slightly disappointing. The Minister did not address the issue of incentivising the DPA process, which is precisely what Amendment 119A would achieve. However, as I indicated, this is a probing amendment. The probe does not seem to have gone in very far, but in the circumstances, I prefer to withdraw both it and the amendment.
Lord Taylor of Holbeach
Lord Taylor of Holbeach
“Immigration cases: appeal rights; and facilitating combined appeals
(1) In section 84(1)(b) of the Nationality, Immigration and Asylum Act 2002 (grounds of appeal: decision unlawful because of race discrimination etc by Northern Ireland public authority) after “1997” insert “or by virtue of section 29 of the Equality Act 2010 (discrimination in the exercise of public functions etc) so far as relating to race as defined by section 9(1) of that Act”.
(2) In section 99 of that Act (pending appeals lapse on issue of certificates)—
(a) in subsection (1) (list of provisions under which certificates may be issued) omit “96(1) or (2),”, and(b) in the title, for “96 to” substitute “97 and”.(3) For section 47(1) of the Immigration, Asylum and Nationality Act 2006 (decision that person is to be removed from the United Kingdom may be made while person can bring appeal) substitute—
“(1) Where the Secretary of State gives written notice of a pre-removal decision to the person affected, the Secretary of State may—
(a) in the document containing that notice,(b) in a document enclosed in the same envelope as that document,(c) otherwise on the occasion when that notice is given to the person, or(d) at any time after that occasion but before an appeal against the pre-removal decision is brought under section 82(1) of the Nationality, Immigration and Asylum Act 2002,also give the person written notice that the person is to be removed from the United Kingdom under this section in accordance with directions given by an immigration officer if and when the person’s leave to enter or remain in the United Kingdom expires.(1A) In subsection (1) “pre-removal decision” means—
(a) a decision on an application—(i) for variation of limited leave to enter or remain in the United Kingdom, and(ii) made before the leave expires,(b) a decision to revoke a person’s leave to enter or remain in the United Kingdom, or (c) a decision to vary a person’s leave to enter or remain in the United Kingdom where the variation will result in the person having no leave to enter or remain in the United Kingdom.””
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, I shall speak also to Amendment 124, which is in the group.
The new clause to be inserted by Amendment 118 makes three separate changes to the legislation governing immigration appeals. The first two respond to amendments tabled in Committee by my noble friend Lord Avebury.
Subsection (1) of the new clause will reinstate a ground of appeal against an immigration decision on race relations grounds. Such a ground of appeal existed prior to the commencement of the Equality Act 2010, but was removed by the consequential amendments made under that Act. The Government’s stated policy remains that there should be a ground of appeal on race relations grounds and we have therefore brought forward this amendment to reinstate a ground of appeal on those grounds.
Subsection (2) of the new clause corrects an anomaly in Section 99 of the Nationality, Immigration and Asylum Act 2002 identified by my noble friend Lord Avebury in Committee. Sections 96 and 99 of that Act are designed to stop repeated appeals being used to frustrate the immigration system. Where the Secretary of State makes an immigration decision that carries a right of appeal, she may also certify that decision on the basis that the application relies on issues that were, or could have been, raised earlier or dealt with at a previous appeal. The effect of certification is to prevent an appeal being brought. However, there is a lack of clarity within the 2002 Act about the effect of certification on appeals that are already under way.
Section 96(7) of the 2002 Act states that a certificate has no effect in relation to an appeal that is already under way, but Section 99, which makes provision for the interaction between certification and appeals in progress, states that a certificate would cause the appeal to lapse. It is government policy that a decision to certify should not cause an appeal that is already under way to lapse, and the contradiction needs to be resolved so that the effect of the legislation is clear. This technical amendment to Section 99 of the Nationality, Immigration and Asylum Act 2002 therefore seeks to clarify that certifying a decision under Section 96 of that Act does not cause a pending appeal to lapse. I thank my noble friend Lord Avebury for bringing that issue to the attention of the House.
Subsection (3) of the new clause will clarify when a decision to remove a person from the United Kingdom can be given in relation to a decision to refuse to vary leave, to curtail leave or to revoke leave. As noble Lords will be aware, this House has considered this issue before. In 2006, the House supported an amendment which then became Section 47 of the Immigration, Asylum and Nationality Act 2006. It provided a power to make immigration removal decisions where a person has statutorily extended leave to remain in the United Kingdom. Statutorily extended leave is leave which continues where an appeal can be brought against a decision to refuse to vary, to curtail or to revoke leave.
The intention behind Section 47 was that decisions should be made simultaneously, thereby allowing any appeal against removal to be heard at the same time as the appeal against the variation or curtailment decisions.
However, the Upper Tribunal in the recent case of Ahmadi concluded that secondary legislation prevents the simultaneous service of these two decisions. It concluded that the removal decision cannot be made until written notice of the decision to refuse to vary a person’s leave to remain has been given to that person. The impact of this decision is that Section 47 no longer works as it was intended, with the consequence that a removal decision can only be made after the initial appeal against a refusal to vary leave, or a decision to curtail leave or revoke leave, had been heard. The removal decision itself would then generate a second right of appeal. The effect will be to add in unnecessary, and indeed unacceptable, delays and costs into the appeals and removal process.
We are challenging the Upper Tribunal’s decision before the Court of Appeal but we have concluded that we should act swiftly to put the effect of Section 47 beyond doubt and restore the construction of that section which Parliament intended when enacting the 2006 Act. The consequential amendment to Clause 33 ensures that the provisions made by the new clause can be extended to any of the Channel Islands or the Isle of Man by Order in Council. I beg to move.
Lord Avebury
My Lords, I am most grateful to the Government for considering the matters raised in my Amendments 148B and 148D in Committee, and for coming up with this new clause which addresses them—as the Minister has explained—in subsections (1) and (2). It appears that subsection (3) of the new clause deals with the problems identified by the Upper Tribunal in the case of Ahmadi, as my noble friend the Minister said, and also that of Adamally and Jaferi. In Ahmadi, Upper Tribunal judge Mr Lane said:
“It would clearly be possible for Parliament to amend s.47 of the 2006 Act, so as to enable the respondent to make simultaneous decisions ... Unless and until that is done ... In practice ... the present usefulness of s.47 is highly questionable”.
This is, I suggest, a good example of the complexity of our immigration law, and the risks incurred by getting the language wrong. If the original Section 47(1) of the Immigration, Asylum and Nationality Act 2006 is being amended, it has taken senior judges and Parliament six years to remedy the flaws that made this particular section unworkable so that it was impossible to remove the persons concerned who had no right to remain in the UK.
We do not even know whether it is indeed the original Section 47(1) that we are amending because the website that is intended to provide your Lordships with the text of Acts as amended carries the warning message:
“There are outstanding changes not yet made by the legislation.gov.uk editorial team to Immigration, Asylum and Nationality Act 2006”.
This is an unsatisfactory situation, which does not apply only in this instance, and I hope that my noble friend might say something about the steps being taken to ensure that legislation.gov.uk is brought up to date, so that your Lordships and another place know what they are being asked to amend.
Lord Lester of Herne Hill
My Lords, perhaps I may add to what my noble friend has just said. My wife is an immigration and asylum judge and from time to time she and her colleagues are sent for training in order to try to understand what the Home Office is producing. I hope that she does not mind my mentioning this, but she and her colleagues find themselves in a quite terrible situation in trying to understand the Kafkaesque material that flows out of the Home Office. There are two people in the Chamber who will understand these amendments—one is the Minister and the other is my noble friend Lord Avebury. I do not understand them. For me to understand them I would have to read the three different Acts of Parliament, all of which are put in play in these amendments, and I would have to listen to and read again what has been said by the Minister. The net result would be that we will continue to have a network of regulations that it is quite impossible for ordinary men and women, including Members of this House, to understand unless and until the Home Office does what we have repeatedly asked it to do for the past many years—to consolidate the legislation into a single measure that can be understood by users, whether they be would-be immigrants, refugees or asylum seekers, or lawyers, NGOs or the public. At the moment it is almost incomprehensible and lacks, therefore, legal clarity. I very much hope that, when I do understand these amendments, what I have just said may be listened to by the Home Secretary and other Ministers who will instruct their officials, please, to come up with consolidating legislation that we can understand.
Lord Taylor of Holbeach
My Lords, I would like to comment on that because one of my responsibilities within the Home Office is regulatory reform. I agree with my noble friend that no area is more complex than the whole business of the Immigration Rules and the procedures surrounding them. The noble Lord, Lord Curry of Kirkharle, is aware of my involvement in this—indeed, the Better Regulation Executive is seeking to support the Home Office in this endeavour. I will bear in mind the comments of my noble friends because I am a great believer in the law being as simple and as clear as possible so that people can understand and operate it in the most effective way. I note very much what my noble friend has said. I hope he will understand that these amendments are designed to achieve the purpose of clarifying the law in areas of ambiguity.
“(6A) After section 50(2)(c) of the 2006 Act (procedure), insert—
“(2A) In respect of any application or claim in connection with immigration (whether or not under the rules referred to in subsection (1) or any other enactment) the Secretary of State may make provision for the communication of an immigration officer with the applicant before a decision is taken in respect of that application or claim.
(2B) Provisions under subsection (2A) may include communication with the individual so as to obtain additional information relevant to their application or claim.”
(6B) Before the coming into force of this section, the Secretary of State must make provision for communication between an immigration officer and the applicant for the purposes of obtaining further necessary information not included in the original application, as provided for under section 50(2A) and (2B) of the 2006 Act.”
Baroness Smith of Basildon
My Lords, perhaps this is a timely amendment in the context of the debate that we have just had and the comments from the noble Lord, Lord Lester of Herne Hill, about having some sort of common-sense approach so legislation could be easily understood. I have called Amendment 118ZA the common-sense amendment, which I hope encourages noble Lords to support it. As the noble Lord, Lord Lester of Herne Hill, says, there is sometimes precious little common sense in how we look at legislation.
This amendment would require the Secretary of State to set in place a procedure to allow for entry clearance officers to communicate—I know that that is a radical step—with applicants during the application process, particularly if the applicant has not provided all the information needed in applying or if there is a need to clarify what may be a minor technical detail. The amendment was inspired by the details of the many cases of visa applications that have been sent to me by individuals over the past few months following debates we have had in this House, and indeed in Committee, on immigration issues.
Many of those who have contacted or written to me have been exasperated by their experience with the UK Border Agency. Whether or not their case has merit, and whether or not their case has been or will be successful, the bureaucracy that should be in place to create logic and order to the process can have the opposite effect. Ministers have said that one of the reasons for the changes they are proposing to the legislation is that applicants do not provide all the information that they should be aware of. However, the fact is that, for the vast majority of people who make such applications, there is confusion and a lack of clarity around the rules. This means that applicants can be refused on the most minor of technicalities or simply because they have not included a single document.
The Independent Chief Inspector of Borders and Immigration, John Vine, raised this very point in his review last year. His report, Entry Clearance Decision-making, noted that in 16% of the cases won on appeal that he reviewed, applicants had been refused on the basis of failure,
“to provide information which they could not have been aware”,
was required at the time of making their application. Even though Ministers consider that they should have been aware, clearly they were not aware. That is a definite example of the lack of clarity about what is required. For further evidence as to why clarity is required, in 33% of the successful appeals that John Vine reviewed, the entry clearance officer had not properly considered the evidence that had been submitted.
Family members of British citizens who want to come over for a visit—perhaps for a wedding or to visit a sick or ailing relative—are being refused entry because of poor decision-making and a lack of clarity over the application process. The Government’s proposal to scrap the right of appeal leaves applicants without any indication of how they should amend their application the second time around, or even whether the same errors of omission or mistakes will continue to be made. That will do nothing to address the problems that the Government have identified. It is also difficult to see how it will reduce costs.
The Government have also conceded this argument. The former Minister for Immigration, now the Minister for Crime and Policing, the right honourable Damian Green, based the argument for scrapping appeals for family visas on the fact that 63% of appeals,
“are lost entirely because of new evidence introduced at the appeal stage”.
Obviously, if the applicant had been clear in the first place as to what was required, he or she would have submitted that information or evidence the first time round. Applicants do not want their application delayed or the uncertainty increased; they want to provide the accurate information. They have not provided it only because of a lack of clarity about what is required.
This problem has got worse. The success rate of appeals against family visit refusals has risen from 19% in 2004 to 37% in 2010. The latest report from the independent chief inspector about the backlog of 147,000 immigration and asylum claims at the UK Border Agency shows that at one point there were 100,000 items of unopened post, including 14,800 recorded delivery letters. This is a shocking state of affairs. It shows that the information being sent on is not being examined adequately.
I stress that I am not laying the blame on entry clearance or immigration officers. I have enormous sympathy with them; they are under huge strain. The Government have cut 5,000 staff from the UK Border Agency, so the workload of individual officers is increasing. The increasing backlog is putting on additional pressure. However, instead of seeking to deal with the chronic problems in the decision-making process, the Government have chosen to scrap appeals entirely. It could be argued that this is an easy option, rather than an effective one. One of the things that I was most struck by in the letters and e-mails I have received—and there have been a very large number of them—is that so many of those errors could have been sorted out relatively easily and more straightforwardly through better communication between the UK Border Agency and the applicant.
I have permission to give an example from one man who has contacted me. I will call him Mr H. However, I can give the Minister the details—he has had information from this gentleman previously. He is an intelligent and articulate British citizen, married to a lady from overseas. They could not understand why their application had been rejected, because they had passed the many hurdles that had been set for them, including the language test. They are now desperate to be living together as man and wife. It was only after I passed the information to the Minister’s office—for which I am grateful; he passed it on to the Minister for Immigration, and the noble Lord, Lord Avebury, also took up this particular case—that Mr H was told what information he had not included. He has since submitted that. However, the lack of clarity about what exactly was required meant that before he received that clarification—and he sent numerous e-mails to the UKBA asking for clarification of what was required—he scanned and sent hundreds of pages because he was so nervous about not including the correct information. He wanted to ensure that the right information was received but he could get no guidance from the UK Border Agency. He then wrote to me that the border agency had lost the appeal. I am pleased to say that it has now been found and he is hoping for a decision before 22 December, when he is returning home to the UK. He hopes that his wife will be able to return with him. Not only has that whole process involved a great deal of stress and worry for him and his wife, but think of the pressure on the overworked immigration officers who have had to consider his first application, deal with his inquiries about what was required for the appeal, and then consider the appeal, which apparently included hundreds of pages of unnecessary information because no one told him what information was required, and he was anxious so he included far too much. His frustration about the whole process is very clear.
Would it not have been easier and cheaper for all concerned if the entry clearance officer had been in a position to contact Mr H originally to let him know what information was missing and give him a certain number of days in which to supply it? That is why we call this a common-sense amendment—it would save time, money and stress.
Lord Avebury
My Lords, I agree with the noble Baroness. A great many of the refusals of applications for leave to enter have been due to misunderstandings about what information is required, and there ought to be a simple procedure for rectifying elementary omissions. I think that I recognise the particular case that she mentioned, because that person has already been in touch with me as well. He made every effort by sending numerous e-mails to the people dealing with the case to try to find out exactly what omission he was guilty of, but was never successful in establishing what further information he needed to provide.
Clause 26 removes the right of appeal against the refusal of a visa to visit family members, except where the appeal is brought on racial discrimination or human rights grounds. I had hoped that in the five months since we considered this matter in Committee, and in the light of the arguments that we advanced then, the Government would have had second thoughts about this clause. It is disappointing to see no sign of that on the Marshalled List.
I shall explain why we felt the need to return to this matter. The Government’s hostility to the right to family life is exemplified by the making of new Immigration Rules making it far more difficult and expensive for spouses and elderly dependent relatives to join heads of households in the UK, reducing the number by an expected 35%, over which the Immigration Minister is already crowing. Clause 26 turns the screw further by preventing appeals that would have been successful under the law as it now stands. I pointed out in Committee that if the argument for Clause 26 was that the number of appeals had risen to far greater levels than were expected when the right of appeal was restored in 2000, as was argued before the Home Affairs Select Committee, the obvious remedy was to get UKBA’s decisions right in the first place. Almost one-third of them are overturned, according to my noble kinsman Lord Henley in Committee, involving the taxpayer in a great deal of unnecessary expense. My noble kinsman said that taking away the right of appeal would lift the burden of processing 50,000 appeals from visa staff, but that was based on the assumption that officials would continue to reject bona fide applications at the same rate as they have in the past. We are told constantly that UKBA is undergoing processes of reform, which will enable them to be more accurate in the first decisions that they make.
After the case of Alvi, which your Lordships have discussed, the information required to be submitted with the visa application is now set out in detail in the rules themselves, so that in theory, there should be fewer cases where an applicant has omitted a particular document. However, considering the volume and complexity of the rules, which was mentioned by my noble friend Lord Lester on the previous amendment, it is inevitable that some applications will be refused for that reason. The Government suggest that persons who have omitted a document should put in a new application rectifying the omission at a cost of £78. That may be a trivial sum to my noble friends on the Front Bench, but it is a lot of money to a poor farmer in Gujarat or Sylhet.
I take the point that a new application is less expensive and faster than an appeal; but where the decision-makers have made an obvious mistake, I do not accept that a genuine family visitor should have to pay twice, and suffer the complications affecting future travel, because the refusal has to be declared not only in the UK but to any other intended destinations to which the applicant may travel. Therefore, it is a blot on the person’s copybook that he will want and need to remove if he is to go anywhere without hindrance.
If a person wins the appeal, it is likely that the tribunal will make a costs order against the Secretary of State, so that the appeal will be free in the end. Moreover, if the refusal was due to disbelief that the applicant would return home at the end of the visit, it is only too probable that a fresh application would yield the same result. Only by appealing can the person attack the errors that led to the original refusal, and it was for that reason that I advised Mrs N from Beirut—whom I think was the person that the noble Baroness was talking about a few minutes ago and whose case I mentioned in Committee—to appeal as well as to ask for the original decision to be reviewed.
Therefore, I am afraid that the reasons that were given by my noble kinsman for thinking that an appeal may not be the best remedy for an unjustified refusal do not hold water. I hope that in the light of that consideration, there should be a simple process that would enable the applicant to lodge supplementary evidence supporting the validity of any document or statement which is challenged, rather than having to start again from scratch.
Lord Lester of Herne Hill
My Lords, many years ago, in 1967, I did the first case in Strasbourg against the United Kingdom: a case called Mohamed Alam & Mohamed Khan. Sir Roy Wilson had produced his report advocating an appeal system. It was as a result of the Strasbourg case and Sir Roy Wilson’s report that the immigration appeals system was first introduced —a system which has gone on until now. I strongly support the explanations and powerful speeches given by the noble Baroness, Lady Smith, and my noble friend Lord Avebury.
What is the situation at the moment? Instead of there being a proper process at first instance before there is an appeal—a process of proper decision-taking based upon the kind of common-sense approach that the noble Baroness, Lady Smith, is advocating—mistakes are made quite frequently. When the appeal comes to someone who is an immigration and asylum judge, often no presenting officer is produced by the Home Office to present the government case or there is no one to represent the applicant. My wife will come home at the end of the day and say, “I have now for the first time to take a proper decision myself as though I were doing it at first instance because I have nobody to help me on either side and I find that the initial decision is defective. I now, on appeal at great public expense, have to correct mistakes which should not have been made in the first place at first instance. The only way in which those mistakes can be corrected is by having an appeal system. It is the only safeguard”.
The system now resembles the fairy story, The Little Prince, which noble Lords may remember, in which the boa constrictor swallows a sheep. One sees the lump of the sheep passing along the boa constrictor. The sheep is the process of taking decisions in this area. Instead of the process being properly determined at first instance and making the need for appeals rare, a great lump, the creature, passes along the snake, which leads to a first-instance appeal, an upper-tier appeal and judicial review.
The remedy is simply the common-sense one. One has at first level as much information as possible for a well informed decision. The advantage of the amendment tabled by the noble Baroness, Lady Smith, is that it would at least enable proper communication between the officer and the applicant or the applicant’s representative. I can see no argument against that, especially if we were to abolish appeals, which I very much hope will not be the case.
Lord Taylor of Holbeach
My Lords, I will address Amendment 118ZA in the name of the noble Baroness, Lady Smith. Before I do so, perhaps I may say that I understand that the contributions made by the noble Baroness and my noble friends Lord Avebury and Lord Lester are designed to build a more efficient system. In my response, I hope that I can demonstrate that that also is the Government’s intention.
The UK Border Agency publishes supporting documents guidance specifically for family visitors. It provides extensive guidance in several languages on the type of documents that customers should consider submitting. Perhaps I may elaborate on that. The UKBA provides guidance on how to fill in the visa application form. It is translated into six languages—Arabic, Chinese, Hindi, Russian, Thai and Turkish. Improvements are also being made to the online visa application process, which will be completed in May 2013. All that is available on UKBA’s website for those wishing to make applications. I should also tell noble Lords that if a refused application is received, the UKBA writes to the refusee to tell them what is missing from their documentation. I believe that this is a valuable way to make sure that the process is as user friendly as possible.
If the amendment in the name of the noble Baroness, Lady Smith, was successful it would put a significant resource burden on entry clearance officers to make inquiries with the minority of applicants—it is a minority of applicants—who do not provide sufficient information with their application. The Government have not been persuaded by the noble Baroness that this is right. Of course there is work to do on continuing to improve the application process. However, the onus must be on applicants to satisfy visa officers that they meet the requirements of the Immigration Rules and to ensure that they have prepared the application properly before submitting it.
Lord Avebury
Will my noble friend deal with the point I made? The exercise of the right of appeal is not only for the purpose of getting the decision reversed but to prevent there being a blot on a person’s record, which may seriously hinder their future ability to travel anywhere?
Lord Taylor of Holbeach
I do not accept that at all. If someone’s application to visit this country is refused, then I regret to say that it must be because either they have failed to fill in the application correctly or there are substantial reasons why they should not be allowed to make that visit. I cannot accept the premise of my noble friend’s argument.
The Government are not persuaded by the case for my noble friend’s Amendment 118A. To accept it would introduce a right of appeal for people who have, for example, practised criminal or other dishonest behaviour, while those who have acted honestly would not have an appeal. It cannot be right that that type of behaviour is rewarded.
Regardless of whether an application is refused, relying on a general ground of refusal, the applicant is free to re-apply setting out why the previous refusal was unjustified. All refusals on general grounds are authorised or reviewed by entry clearance managers before being served. If refused under general grounds, it is also open for an applicant to make a fresh application by providing new evidence which an entry clearance officer will take into account. A refusal under paragraph 320 of the Immigration Rules may also be challenged by a judicial review. Prior to making decisions, all entry clearance officers have to pass a three-week training course, part of which focuses on making decisions using paragraph 320 of the Immigration Rules. There is also an e-learning package specifically relating to the sub-paragraphs of paragraph 320 that may lead to an applicant’s future applications being automatically banned. This package is completed by entry clearance officers during their induction training on arrival at their decision-making post.
I think I have demonstrated that the process is thorough and that there will be considerable advantage to the efficiency of the system and, indeed, to applicants themselves if the Government’s proposals are approved. I trust that I have been able to satisfy my noble friend.
Baroness Smith of Basildon
My Lords, the Minister has always been generous with his time and courteous in his response, but I am sad that he is also disappointing. He seems to have relied on existing guidance being adequate and user-friendly. I thought that my comments that the genuine mistakes that are made could be more easily rectified than they are under the current process or the process proposed by the Government indicated that it is not quite user-friendly. No matter how many languages are used, if people do not understand what is required of them they cannot provide it. Perhaps the Minister thinks the guidance is adequate. If it were adequate, applicants would submit all the information required. There is no interest for applicants to make a mistake or not to supply something that they should.
It beggars belief and is against natural justice that the appeal process can be scrapped and that the Government are not taking steps to improve the original decision-making when the figures show that 37% of appeals are successful.
Lord Taylor of Holbeach
The allegation that we are not taking steps to improve the original decision-making has been refuted by what I said in my response to the amendments. I do not want to make an argument out of this issue, but the Government are very much focused on trying to ensure that the decision-making process is efficient and fair to applicants, as well as to taxpayers.
Baroness Smith of Basildon
I do not doubt that that is the Minister’s intention, but when we hear that the success rate of appeals against family visit visa refusals has risen from 19% in 2004 to 37% in 2010, that does not sound as if the system is getting more efficient, rather that the system is less efficient.
The point I am making is about removing the appeal process at that time. We heard from Sir John Vine about the huge backlog of cases that are currently in the system. There are 100,000 envelopes unopened, including 14,000 containing recorded delivery information. I think that our amendment is a common-sense approach. Remarkably, even the noble and learned Lord, Lord Lester of Herne Hill, who takes a legal approach to these things, agrees with me on this point. I am seeking to be helpful to the Minister and the Government. He may think there are times when I am not, but on this occasion I am seeking to be helpful.
The Minister spoke of the letter which is sent to applicants on reasons for refusal. That reason for refusal may be one very minor, technical matter that can easily be resolved via a phone call. I am extremely disappointed by the Minister’s response. I hope he will take this away and consider further the points that I have made. I beg leave to withdraw the amendment.
Lord Avebury
“(4) This section does not apply if—
(a) the person concerned is stateless,(b) the person concerned has previously made an asylum claim or a human rights claim and been granted leave on that basis, or(c) the person concerned asserts in his or her grounds of appeal an asylum claim or a human rights claim.”
Lord Avebury
My Lords, leaving out this clause would ensure that a person who is outside the country when his or her leave is cut short by the Secretary of State retains the right to return to the UK within the time limit for appeal and thus the right to exercise an appeal in country. At issue are cases where a person’s leave is cut short by the Secretary of State under Section 82(2)(e) of the Nationality, Immigration and Asylum Act 2002 when he is outside of the UK at the time of the refusal.
It happens frequently and not by accident that the Secretary of State takes advantage of a person’s absence to issue the notice, knowing that that person will not be able to return to the UK to exercise the right of appeal. At the moment, that person has an in-country right of appeal against refusal. The courts have had to consider what happens when an individual is outside the UK at the time of the refusal. As I say, these circumstances will not arise by chance. The Secretary of State will have waited until the person is outside the country to serve the notice cancelling their leave. The courts have held that the person has the right to return to the UK and to lodge an appeal within the time limit for appealing if he had been within his previous leave to remain.
Clause 27 provides that such a person will be given no opportunity to return to the UK, reversing the decision of the court in the case of MK. I referred to this case in Committee so there is no reason to repeat the details now. I simply remind your Lordships that MK was a Tunisian refugee in the UK, but was in Italy when his status was revoked by the Home Secretary. His right to contest that decision in the UK was upheld by the court. It is that decision which is reversed by Clause 27.
The clause has been amended to restrict the Secretary of State’s power to exclude an in-country right of appeal to those cases where she exercises the power before the person brings his or her appeal. However, this does not address the fundamental injustice in the clause. In Committee, my noble kinsman said that it was,
“wholly reasonable that judicial scrutiny of the decision should be carried out while the individual remains outside the United Kingdom”.—[Official Report, 4/7/12; col. 719.]
He ignored the fact that a person stranded abroad without access to legal advice and unable to consult face-to-face with his lawyers or to approach witnesses who might testify on his behalf is generally going to be at an overwhelming disadvantage in challenging the Home Secretary’s decision. My noble kinsman said that legal aid would remain available for most applications for judicial review of immigration decisions, and I would be grateful if the Minister would confirm that it will be available in these cases as well.
I mentioned also the Court of Appeal’s finding in the case of MK that the right to an in-country appeal was “valuable” and the fact that pursuing an appeal that turns on character may depend critically on how the litigant appears in court. I submit that it is wholly unreasonable for persons who may have resided in the UK for many years to be put in this position. We are not seeking to undermine what my noble kinsman referred to as,
“the operational integrity of the Home Secretary’s power to exclude an individual from the United Kingdom”.—[Official Report, 4/7/12; col. 721.]
We simply seek to ensure that in exercising this power to change someone’s life drastically for the worse, the Home Secretary must abide by the rule of law.
If the repercussions of Clause 27 are serious for those to whom it applies in general, they would be exceptionally so for stateless persons, refugees and persons granted humanitarian protection. Therefore, retaining for these persons the right to return to the UK within the time limit for appeal and to exercise an appeal in country is only fair. They will find themselves, and possibly their families also, stranded outside the UK and with no other country to which they can legally resort in safety if this clause goes through.
My noble kinsman said in Committee in response to this amendment that it could provide every individual refused under the provision with an in-country right of appeal, as they would merely need to raise human rights or asylum grounds in their appeal. Proposed new subsection (4)(c) would have this consequence, but of course the appeal would succeed only if the asylum or human rights claim was found on appeal to be justified.
The Government are proposing a hugely oppressive measure of stripping a person of their leave to remain while they are outside the UK and leaving them in limbo. They must accept the need to put in place safeguards. It may not be possible to ensure that no one other than those in genuine need of the safeguards benefit, but if that is the only objection to the amendment, my noble friend should say so and we can preserve at least proposed new subsections (4)(a) and (4)(b) on Third Reading. Those who are already stateless or who have been granted leave to remain on the basis of an asylum or human rights claim are surely not to be deprived of a meaningful right of appeal against a decision that will ruin their lives for ever. I beg to move.
Lord Pannick
My Lords, I support the noble Lord, Lord Avebury. As he said, it is very difficult effectively to pursue an appeal from abroad. As I understand the clause that the noble Lord seeks to amend, the Secretary of State may take advantage of the temporary absence abroad of an individual. He or she may wait for the individual to go abroad, and may act even though the individual may be abroad—as often happens—for compassionate reasons such as the ill health of a child or an aged relative. The clause is very unjust and very arbitrary.
Baroness Smith of Basildon
My Lords, when the noble Lord, Lord Avebury, raised this issue in Committee, I raised with the Minister some questions about the process that the Government were seeking to introduce. Like the noble Lord, Lord Avebury, I was not entirely satisfied with the replies I received. In fact, I did not receive responses to some of the questions that I raised. I hope that in the time that has expired since 4 July this year the Home Office has been able to provide some answers to those questions.
The point was raised about someone’s leave to remain being cancelled while they were out of the country. I am still unclear—because I have not had a satisfactory response—about the criteria for cancelling someone’s leave to remain while they are out of the country. Is it a purely administrative decision because the decision-making time has come up for that person—they were going to be denied leave to remain and they happened to be out of the country—or is it the case, as the noble Lords, Lord Pannick and Lord Avebury, suggested, that the Home Secretary will lie in wait for somebody to leave the country, possibly on compassionate grounds, whereupon their leave to remain will be cancelled? It would be helpful to know what the criteria will be and how the decision will be made.
It would also be useful to have information on what proportion of cancelled leave to remain is cancelled when the subject is outside the country as opposed to when the subject is in the country. I asked that in July in Committee and did not receive an answer. There has been some time since July to get that information; I hope that the noble Lord will have it available.
Another issue is the definition of “public good”. The legislation refers to a decision on removing the right to remain as being taken,
“wholly or partly on the ground that it is no longer conducive to the public good for the person to have leave to … remain”.
Is there a definition of when the public good is no longer there, or when it should be decided that there is no public good and that leave to remain should be withdrawn? The Government need to answer questions on this. I was disappointed not to get responses from the previous Minister—I am not suggesting that the present Minister did not answer me in July—and I hope to get some responses today.
Lord Lester of Herne Hill
My Lords, the noble Baroness described me as “noble and learned”. I should not be described in that way because I am not a former law officer or Law Lord—and I am not sure about being noble. However, it is true that I look at matters as a lawyer. I cannot help that; it is a problem that comes with 40 years of doing it.
I am interested to know what the Minister’s response would be to the remark made by the noble Lord, Lord Pannick, when he described this as “arbitrary”. That seems to be a correct way of describing it. Can the Minister explain why, if the amendment tabled by the noble Lord, Lord Avebury, were rejected, the Government would not be highly vulnerable to a legal challenge in our courts or, I dare say, the European Court of Human Rights?
Lord Taylor of Holbeach
My Lords, we set out in Committee the reasons for Clause 27. It demonstrates a current anomaly in legislation that allows high-harm individuals to return here to appeal the decision to cancel leave, despite being excluded from the United Kingdom by the Secretary of State.
Exclusion from the United Kingdom is a key tool in tackling those who seek to cause harm to the United Kingdom. Exclusion is used to tackle a range of conduct including terrorist-related activity, serious criminality and engagement in unacceptable behaviours. The exclusion power is used sparingly and is reserved for those who are considered to be the highest-harm cases. It is therefore crucial that once the Secretary of State makes such a decision, it is given full and immediate effect. It should not be undermined by a separate immigration decision, taken only to give effect to the exclusion, and the accompanying rights of appeal.
Of course any such decision by the Secretary of State should be open to challenge and review by the courts. No one is denying that. However, the Government believe that, given the nature of these cases, it is wholly reasonable that judicial scrutiny of the facts should be carried out while the individual remains outside the United Kingdom. When noble Lords consider the type of conduct that has led to these decisions by the Secretary of State, it seems to be an entirely reasonable and proportionate proposition.
Lord Maclennan of Rogart
The point has already been made in this debate that if such an appeal is made, the appellant is put at a very grave disadvantage as a result of difficulty in communicating with counsel and in speaking to witnesses who may have something to say that is relevant. The rule of law cannot be properly discharged if the Minister cannot find more support for the absence of the appellant.
Lord Taylor of Holbeach
I tend to disagree with the noble Lord. I cannot see why it should be possible to allow somebody whom the Secretary of State for the Home Department has decided to exclude to return to this country purely to pursue an appeal against that decision. I do not accept that that is reasonable and that is why we have included this clause in the Bill.
Lord Pannick
I am grateful to the noble Lord. Is not the point that however reprehensible the allegations against the individual, if they are present in this country then they are entitled to remain and pursue an appeal? The question is whether, because of the accident that they may be abroad for a day or two for entirely understandable compassionate reasons and because the Secretary of State takes advantage of that absence to make a decision, they should then be unable to pursue an appeal while within the United Kingdom.
Lord Taylor of Holbeach
I think we disagree on that. Noble Lords will understand the premise on which the Government are basing their decision. It cannot be right to allow someone to return to this country when the decision has already been made by the Secretary of State that that person is considered to be undesirable to admit to this country and that is the reason for their exclusion. I should perhaps help the debate by giving some figures. Since 2005, 426 individuals have been excluded on the grounds of national security, unacceptable behaviour, serious criminality or war crimes. Annual figures have varied over the years from 111 in 2007 to 40 last year. Incidences of the decision to exclude an individual with an accompanying decision to cancel leave have totalled 30 over that period. The most was seven in one year and the fewest was two. This year to date: nil. I hope that helps noble Lords to put this matter in perspective. The Government have a responsibility for the security of the country and I hope that will carry some weight with noble Lords in this argument.
I will now carry on with what I was intending to say. Clause 27 seeks to provide the Secretary of State with a certification power where she decides that the decision to cancel leave under Section 82(2)(e) of the Nationality, Immigration and Asylum Act 2002 was taken on the grounds that the individual’s presence in the United Kingdom would not be conducive to the public good. The individual must be outside the United Kingdom at the time of the decision for the Clause 27 provision to have effect, the effect being that on certification the in-country right of appeal under Section 92 of the Nationality, Immigration and Asylum Act 2002 no longer applies to such a decision, which means that the person has an appeal from outside the United Kingdom. To be clear, the individual will still have a full merits appeal but that will be exercisable from outside the United Kingdom instead of from within the United Kingdom. We accept that the power to remove appeal rights from the United Kingdom to abroad must be reserved for highest-harm cases. This is why we have restricted the application of the certification power to individuals where the decision to cancel their leave is based on the Secretary of State’s assessment that their presence in the United Kingdom is not conducive to the public good. We have also expressly stated that this applies only to individuals outside the United Kingdom at the time of that decision.
Such cases have been, and will remain, the exception rather than the norm. Clause 27 seeks to maintain the operational integrity of the Secretary of State’s power to exclude an individual from the United Kingdom. Such decisions are not taken lightly and are reserved for the highest-harm individuals. It is therefore imperative that such a decision remains operationally effective, pending judicial scrutiny. For these reasons I cannot support Amendment 118D, which seeks to remove Clause 27 from the Bill. Similarly, Amendment 118C could seriously undermine the Government’s ability to secure our borders against individuals who pose a threat to the United Kingdom. The amendment would exclude from Clause 27 those individuals who are stateless, those who have previously been granted leave to enter, those who remain based on a successful asylum or human rights claim, and those who raise human rights or asylum issues in their grounds for appeal. As previously stated, it is right that we provide protection to those in need and the Government remain committed to their international obligations to such individuals. However, the Government also have an important obligation to protect the public from high-harm individuals whose actions pose a threat to national security or the rule of law.
Lord Lester of Herne Hill
I am sorry to interrupt the Minister but I am now genuinely bemused. We know from the Chahal case that the Special Immigration Appeals Commission was set up so that appeals could be dealt with through closed material proceedings, protecting national security and the interests of justice. I welcomed that because I care about national security as well as justice, and that scheme had to be introduced because the European court said so. Now we are in a position where the Government concede that, if the high-harm person is within this country, they should have the necessary right of appeal. The noble Lord, Lord Pannick, made the point that if the high-harm person happens to be abroad for compassionate reasons, it is arbitrary and irrational that that person should not be in as good a position as if he were in this country. Simply using the Home Secretary’s power to say that someone’s presence is not conducive to the public good, which is what happened in Chahal, is arbitrary. That is what is bewildering us. We cannot understand why the interests of national security should not, at this point, understand the needs of the rule of law.
Lord Taylor of Holbeach
I am not a lawyer but I am, I hope, filled with common sense. It strikes me as being quite nonsensical to allow an individual back into this country to pursue an appeal against exclusion. The exclusion decision, if I may say so, is taken on grounds that the noble Lord has admitted may well include protecting national security. Indeed, criminality and protecting national security are the only grounds on which high-harm individuals may be pursued. Their right of appeal is not removed. The question is whether they should be readmitted to this country to pursue that appeal. I suggest that is nonsensical and I cannot accept the noble Lord’s position on the matter.
I was explaining that for many of these cases the primary objective is to protect the public from individuals where credible evidence suggests involvement in terrorist-related activity or serious criminality. In other cases, it is to protect the public from individuals intent on inciting others to commit crime or on creating divisions between communities. Therefore, the legislative proposal is designed to target the highest-harm cases, and it is proportionate, for the protection of the public, to ensure that any appeal for which a full-merits appeal right still exists is from outside the United Kingdom.
Amendment 118C would potentially provide every individual refused under this provision with an in-country right of appeal as they would simply need to raise human rights or asylum grounds in their appeal. That cannot be right and for that reason we are unable to support the amendment. I hope that, in the light of my remarks, my noble friend Lord Avebury will understand the drivers behind this clause and why the Government have to ask him to withdraw his amendment.
Baroness Butler-Sloss
I have been listening to this debate without any particularly strong views either way. However, perhaps the Minister can assist with this question. On the assumption that a stateless person, for instance, or indeed anyone else who has been refused a return, is outside the country somewhere, how on earth does he or she actually continue an appeal?
Lord Taylor of Holbeach
My Lords, the process of appeal is open to anybody and the circumstances in which they have found themselves is a matter for them. This country and its Government have decided that their presence in this country is not conducive to the public good, which I think is a reasonable decision for the Government to make. It is open to challenge through the judicial process and that individual still has a right of appeal. It is not for me to suggest the details of ways in which that appeal should be processed.
Lord Gilbert
I, too, have been listening very closely to this debate, with no expertise whatever. However, I take on board the concerns of various noble Lords. Could not the matter be satisfactorily resolved by placing on the person making a decision the requirement to let the individual under suspicion know when a decision is going to be taken?
Lord Taylor of Holbeach
I think that would be counterproductive. If the noble Lord thinks through the circumstances of that question, he will understand that.
Lord Woolf
Am I right in thinking that this form of appeal from outside the country has been part of the immigration process for a substantial period? In addition, is it not the case that it can be a written process and that forms can be used for the purposes of the appeal?
Lord Taylor of Holbeach
The noble and learned Lord is perfectly correct in that regard.
Lord Mackay of Clashfern
My Lords, just before my noble friend sits down, I would like to understand the position. Somebody is outside the country having had leave to remain in it previously; the Secretary of State gets information to suggest that that person would be dangerous to the country if he or she returns; and the Secretary of State decides, on that information, that that is so. Is the position then that, in order to comply with the amendment of the noble Lord, Lord Avebury, the Secretary of State would have to allow that person, whom he or she believes to be a dangerous person to the security of the country, back to lodge an appeal? Why should that be? Why should the Secretary of State allow somebody, whom he or she thinks to be a danger to the country, to come back into the country solely for the purpose of appealing against that judgment? If he does come back into the country, there is at least a risk that his activities will not be confined to appealing but may include doing what the Home Secretary has considered constitutes the possibility of danger to the country.
Lord Avebury
My Lords, the crux of the matter is that the Minister suggests that credible evidence exists for the Home Secretary to have made this decision that the person has been involved in serious criminality, terrorism and so on. The Secretary of State waits until the person goes abroad for some reason, whether it be for compassionate reasons, as the noble Lord, Lord Pannick, has suggested, or for any other reason, and then pounces—
Lord Taylor of Holbeach
I realise we are on Report, but I will just say to the noble Lord that it may be that the conduct that leads to the Home Secretary making this decision takes place while this individual is abroad. I think the notion that this is a premeditated trap is false. It is more to do with the possibility that the individual, while abroad, makes contact with someone, or evidence comes to light as to their true intent, or what they might do when they return to this country becomes apparent, and the Home Secretary wishes to deal with the problem.
Lord Avebury
I do not know. The noble Lord has raised this for the first time. It has often been suggested that the Home Secretary does pounce when somebody is abroad for personal reasons. In the case of MK, which I quoted in Committee and mentioned again briefly during this debate, those acting on behalf of MK certainly believed that the Home Secretary deliberately waited until he was abroad before exercising this power.
The Minister was relying on the Home Secretary having credible evidence of this person’s activities being in the nature of serious criminality, terrorism and so on. One has to take that on trust. In nine cases out of 10, this individual is not going to be able to appeal. The individual will be stateless, as the noble and learned Baroness has just suggested, and that was the case with MK. He was a recognised refugee in this country when he went to Italy, I think. He was in Italy when the Home Secretary made the order against him, making it virtually impossible for him to exercise a worthwhile right of appeal.
I know of cases where it has been alleged that somebody’s presence in the United Kingdom is non-conducive to the public good. I had long correspondence with successive Secretaries of State trying to discover the issue in a particular case—that of the leader of the Jammu Kashmir Liberation Front, who was formally a refugee in this country and was declared by the Home Secretary to be non-conducive to the public good after he had been arrested on charges of terrorism and acquitted. Nevertheless, he was sent packing and has not been readmitted to the United Kingdom since then. I made great efforts to persuade Secretaries of State that he is no danger to the public in this country and that his activities as the leader of the Jammu Kashmir Liberation Front have been peaceful, but I have never been able to get behind the decision. The decision that somebody’s presence is non-conducive to the public good is one that the Secretary of State exercises by his or her absolute authority, and it is difficult to challenge.
I am grateful to the noble Lord, Lord Pannick, and my noble friend Lord Lester for the support that they have given to this amendment. I was thinking of testing the opinion of the House. I have decided at this stage not to, but to think further about what my noble friend has said in reply and to consider what methods we have for dealing with this situation. It is a serious flaw in our procedures to force somebody, who is in exile and has no access to lawyers or to witnesses, as my noble friend has just said, to attempt to refute allegations of which he may be only dimly aware. For the time being, I beg leave to withdraw the amendment.
Baroness Meacher
Baroness Meacher
I shall speak also to Amendment 118GA and shall not speak to Amendment 118G. I also wish to register my support for Amendment 118J, tabled by the noble Baroness, Lady Hamwee.
The aim of Amendment 118E is to clarify in law that Clause 29 is seeking to improve road safety and that whether a drug is controlled is irrelevant in this context. The Government aim to treat driving under the influence of drugs and alcohol on the same basis is to be applauded, but if it is irrelevant to road safety that alcohol is uncontrolled, why should it be relevant whether a stimulant or other drug is controlled? Surely the important point is whether the stimulant is affecting the driver’s safety behind the wheel.
I can illustrate the irrationality of the clause as it stands with an example. We know that when a controlled drug, such as ecstasy, is heavily contaminated, young people will switch to a similar, but uncontrolled drug, a powder, bought over the internet, probably from China. If there are two drivers, one driving dangerously because of the level of ecstasy in their body and the other driving dangerously because of the same level of the legal stimulant in their body, there is no difference in terms of traffic safety between the two drivers. Both are equally dangerous and surely should be charged, presumably for dangerous driving. I ask the Minister either to accept the amendment or to explain to the House why an intoxicated driver on a psychoactive substance, which the authorities simply have not yet had the time to ban—or perhaps they will never get around to it, as it takes them many years—should be treated more leniently than his friend on the same quantity of a controlled but no more intoxicating drug.
Baroness Hamwee
My Lords, semaphore signals made across the Chamber are always excessively polite. I do not want to take too much of your Lordships’ time on these amendments, but that is not to say that I do not think they are important. However, I am aware that some noble Lords may be hoping to get on to another amendment soon.
The letter which some noble Lords have received from the noble Earl, copying us in and updating us—if I can put it that way—on the findings of the expert panel was extremely helpful. However, it confirms not only some of the points to which the noble Baroness referred but that this is very much still a work in progress. At the previous stage, the Minister referred to the vast array of drugs which needed to be considered. That is certainly the case given the existence of controlled, uncontrolled, traditional and designer drugs. Drugs are not as easy to deal with—if that is the right word —as alcohol. The Department for Transport has not yet published the expert panel’s report, which may be more relevant to the next group of amendments, but it has provided some reassurances, albeit they are not yet in the public domain in the normal sense of the word.
I support what the noble Baroness said about looking at the effect of drugs rather than assessing whether they are classed as controlled drugs. Dr Wolff’s very helpful presentation, which some of us were able to attend, explained that the panel’s work is based on an assessment of risk. That, it seems to me, is absolutely at the heart of what the noble Baroness has said. We are all aware that, as regards psychoactive drugs which are not yet controlled and may never be, chemists around the world are looking at old pharmacopoeia and designing new drugs. They will always be ahead of the rest of us in terms of the proper control of these substances.
I support Amendment 118K. I am impressed that the noble Baroness, Lady Smith, has managed to incorporate “knowingly” in the amendment by drafting another paragraph. I struggled to find a way of incorporating “knowingly”. My approach was not as ambitious as hers. My Amendment 118J would insert “substantially” to make paragraph (b) read:
“D took the drug substantially in accordance with any directions given”.
This provision refers to prescribed medicines. I am aware that it is very easy to forget to take a prescription medicine at precisely the right time. I have done that, and I am sure that most other noble Lords have done it. The medicine may state that it should be taken with a meal, but you might have missed the meal. Patients are human, and they forget. They do what they think is best in catching up with the daily dose. The panel said that it was important to strengthen medical information but warned individuals about the risks of consuming the relevant drug and driving, particularly if alcohol is also consumed. It recommended that healthcare practitioners should be better informed about these risks. I am sure that that is right and admirable, but I do not think that it wholly meets the point. As has been said, road safety is involved in this matter. The balance between protection and having the flexibility required to take account of human imperfections is difficult to strike. Again, we are talking about inappropriate risk.
Amendment 118M was suggested by the Joint Committee on Human Rights and concerns spiked drinks. Its report refers to the,
“apparent increase in recent years of incidents of spiking drinks in public places, in particular with so-called ‘date-rape drugs’ … We are also anxious about the impact of strict liability criminal convictions on individuals’ CRB checks, even where disqualification from driving may have been avoided through a special reasons hearing”.
The committee states earlier in its report that the point may have been made that a drink has been spiked. It is not impressed by the Government’s objection to permitting a “spiked drinks” defence. The committee states that,
“the Government’s objection does not hold good if such a defence imposed the legal burden of proof, as opposed to the evidential burden of proof, on the defendant: that is, if the Bill provided for a defence only if the defendant can prove that the drug was present in their body due to the intervention of a third party without the defendant’s knowledge or consent. We are concerned that the new strict liability offence as presently drafted is incompatible with the presumption of innocence in the absence of a spiked drinks defence which casts the legal burden of proof on the defendant”.
Therefore, the committee recommended this amendment to your Lordships and, indeed, to Parliament.
Lord Walton of Detchant
My Lords, I wish to speak briefly in relation to this group of amendments and Clause 29, largely in order, I hope, to receive reassurance from the Minister.
A number of medical bodies and a pharmaceutical company have drawn to my attention the possibility that this legislation and the testing systems could mean that patients taking legal medication for chronic pain might well face prosecution. Patients with chronic pain well established on a stable dose of prescription or over-the-counter opioid analgesics may have levels of metabolites in their system well above any threshold used for roadside or police station testing, even though such levels of these metabolites would not in any sense impair their ability to drive. Patients driving while taking these remedies might then be subjected to the threat of criminal prosecution or, at the very least, might face stressful allegations and the onerous burden of proving that they were not impaired and that there was no other reason why they should not be driving.
The defence included in the legislation is welcome. Subsection (3) of proposed new Section 5A states:
“the specified controlled drug had been prescribed or supplied to D for medical or dental purposes”,
and that,
“D took the drug in accordance with any directions given by the person by whom the drug was prescribed or supplied”.
That is very helpful, but the concern that has been drawn to my attention is that, although that defence sounds absolutely solid, it would be available only once a case has progressed. It might therefore not protect innocent patients from the stress and inconvenience of arrest, further testing and potential prosecution. The wording of the defence does not put the burden of proof on the prosecution; the onus is on patients to show that they took the prescribed medication in accordance with instructions. This might well prove to be a difficult task, and it would be unjust to criminalise an innocent patient as a result of a technicality. Will the Minister reassure me that this particular clause is strong and solid enough to avoid that problem?
Baroness Smith of Basildon
My Lords, I shall speak to Amendments 118H, 118K and 118L. I say to the Minister at the outset that we totally support what the Government seek to achieve here. We appreciate that this is not a drugs amendment, it is a road safety measure, but the Minister will have heard from the comments already made that there is support for the Government’s intention but also some concerns about how it would operate in practice against those who are not the legislation’s targets. Drug-driving is a problem that we are all incredibly keen to see addressed. I refer to a case that the Minister will know well, of 14 year-old Lillian Groves, who was run over and killed by a driver who had taken drugs. This illustrates the importance of ensuring that the police have every tool available to tackle those who take illegal drugs and then drive, creating a danger to themselves and others. My concerns are not about the principle of what the Government seek to achieve, but—as the noble Lord, Lord Walton, and the other noble Baronesses have said—its implementation. We need to ensure that the legislation hits the right target and does not affect the innocent on prescribed medication. We have to get it right.
I thank the Minister for the briefings that he has provided and for the opportunity to meet him and his officials. I hope he can say enough today to satisfy us that the drafting of these clauses will not unnecessarily impact on those whom it is not intended to affect. The amendments I have put forward largely replicate those tabled in Committee and seek to strengthen the defence for individuals on prescription drugs who, through a simple error and no fault of their own, have been found above a certain limit. Amendment 118H would delete the existing new Section 5A(3)(b) of the Road Traffic Act, which requires individuals on prescription medication to “show that” they took the prescribed drug in accordance with any and all instructions, both from the doctor and manufacturer. There are serious concerns that requiring positive proof that the individual complied with all advice is pretty onerous. Instead we propose Amendment 118K, which would mean that individuals could not use their prescription as a defence if it was proved that they had taken the dosage knowingly —the point made by the noble Baroness—contrary to any advice given by a doctor or supplier. That additional wording in brackets picks up on the points about manufacturer’s instructions being required to be considered as part of the prescriber’s or supplier’s advice, rather than placing the burden on the patient to read and understand all and any such instructions. The noble Lord, Lord Walton of Detchant, made the same point. We share his concern about how fair it is for patients on long-term pain medication to find themselves in such a situation and having to show that they have complied with absolutely every medical requirement.
We are worried that we risk criminalising individuals on medication on the basis of a technicality, simply for failing to correctly interpret an element of the patient information leaflet. It could be a slight, insignificant deviation from the instructions. The noble Baroness, Lady Hamwee, made the point about the timing of when a medication could be taken. What if the advice from a doctor differs from that on the manufacturer’s small print? Under the proposed new subsection (4)(a), patients would have to have done something positive, contrary to the instructions they had received, rather than have to positively prove that they acted in accordance with advice. It changes the emphasis of the proof.
New subsection (4) also focuses on what is probably the main medical aspect of the period when the body is getting used to the prescribed drug in the system. This has been mentioned by other noble Lords. Deleting new subsection (3)(b) and the use solely of the caveat in new subsection (4) then fits more appropriately with the evidential requirements of new subsection (5). Patients would be able to show that they have a prescription. They could take a copy of it or carry a letter from the prescriber. Evidence could be produced at a police station. However, the evidential burden of new subsection (3)(b) on patients if they had to “show that” they followed any and all instructions would be considerable. Clearly we are not seeking to protect anyone who is unfit to drive, but although the Government intend this new offence to mirror drink-driving limit offences, taking prescription medication that would otherwise be illegal does not automatically make someone unfit to drive; I am thinking specifically about pain medication.
As an example of why I am concerned, and to take what could happen to somebody sequentially, if an individual on medication has perhaps been rear-ended through no fault of their own, the police would arrive and, currently, breathalyse both drivers. Under the new legislation, they would “drugalyse”, or drug test, both drivers. The test might indicate that they are over the limit, but it does not tell the officer undertaking the test how far over the limit they are. So what would happen next to that individual? If they say that they have a prescription for the medication they are taking but do not have the prescription with them, how can they prove that they have taken medication in accordance with medical advice and not taken illegal drugs? Would they be taken to the police station, where obviously at some point they would be able to prove that they have a prescription? That would clearly be an inconvenience and could be particularly distressing. We do not want to reach a situation where individuals are deterred from taking their medication—again I am thinking specifically about long-term pain relief—because some individuals would be more of a hazard without their pain-relief medication than if they were on it.
The Home Office has been developing roadside “drugalyser” tests for the past 10 years. Without these, the individual would have to be taken to a police station for testing. When do the Government expect roadside drug tests to be available to the police? Do the Government intend to implement the new offence before roadside drug tests are available? How often would they expect the test to be used? Considering their high cost, I presume that the police would undertake a breathalyser test first. How often would the Government expect roadside drug tests to be used in the same cases as a breathalyser? Also, looking through the information that has been supplied, any assessment of the proportion of cases in which the Government expect to find individuals below the alcohol limit but above the limit for a certain concentration of controlled substance was missing.
Despite the good intentions—which we support—what concerns me is that the details of how it will work in practice have not been worked through for those on prescription medication. I am grateful to the Minister for sending me the letter from the chair of the drug-driving panel, Dr Kim Wolff, which the noble Baroness, Lady Meacher, has also referred to. However, I am extremely disappointed that the expert panel has not been able to publish its interim report before this stage of the Bill, though I think Ministers indicated we would be able to get it. Clearly, the levels that the panel is likely to recommend—particularly in the case of prescribed drugs—and the rationale behind the recommendations would have been a huge help in our deliberations today. They may have clarified a number of the issues that I and other noble Lords have raised. What is encouraging is Dr Wolff’s assurance in her letter that:
“In considering what limits should be set for common prescription medication, the Panel has looked at normal therapeutic ranges used in prescriptions, compared to those found in addicts misusing medicines”.
In relation to morphine, she said that the panel,
“are considering a limit that is significantly above the average concentrations of morphine in blood found in cancer patients receiving long-term steady-state doses of morphine”.
However, Dr Wolff also states that the panel’s primary consideration is,
“clear scientific evidence of risk of road traffic accidents”,
and that in the case of, for instance, prescribed benzodiazepine drugs:
“risk is especially high during the first four weeks of treatment and is particularly increased when benzodiazepines are consumed in combination with alcohol”.
Here, Dr Wolff outlines the inherent difficulties in setting a blanket limit in the case of medicated drugs, because tolerance can change over time and is subject to variation by other factors. I suspect that the Minister will be unable to answer at this stage whether the panel, on the evidence so far, will set a limit for benzodiazepine much lower than the average level for someone on long-term drug use, because of the increased risk in the first four weeks of medication. However, that is an important consideration in the implementation of these clauses.
Much of how this will be implemented will hang on the recommendations that the panel makes, which we do not have available. How will it factor in the effects of mixing drugs with alcohol? Will it feel compelled to set the limit a lot lower than the average dosage because of the risk of increased road safety problems when the drug is mixed with alcohol—even a quantity of alcohol below the legal limit? Someone could be below the legal limit on drugs and below the legal limit of alcohol but still be a danger to themselves and other road users, because the Government’s offence does not provide—understandably, because we have not yet had the report of the panel—for a combined alcohol and drug limit for certain controlled substances.
We all want all drug drivers who are a danger taken off the roads. We totally support the Government’s aims. However, we need to ensure that we are going after the right people. I hope that the Minister can give some assurances that he will look again to reassure himself and this House about the defence in this group of clauses for people on prescription medication, to ensure that it is appropriate and fair; that he will not shut the door on ensuring that the legislation hits the right note; and that he will take away the comments made today.
I hope that the Minister can answer my final question clearly. Can he confirm that the Government would not consider it appropriate for any action to be taken against those on prescribed medication, unless it is clear that their driving is impaired?
Earl Attlee
My Lords, I recognise that the amendments relate to concerns about the Government’s approach to drug-driving and, in particular, how the new offence will affect drivers who take prescription or over-the-counter medicines. I am grateful to the noble Baroness, Lady Smith, for her recognition of the problem. I will try as hard as I can to reassure the House that your Lordships’ fears will not materialise.
First, I emphasise that any passengers would not be screened for drugs following a vehicle being stopped by the police and the driver being tested for drugs. The noble Baroness asked me a number of very good questions, and I will answer them first, before going into detail. She asked, in effect, how much discretion a policeman has to arrest for drug-driving. Whether an officer decides to arrest and continue an investigation, including carrying out an evidential blood test, once someone has proved positive in a drug screening test, will depend on the facts of a particular case. Officers will be aware of the statutory defence of taking a specified controlled drug in accordance with medical advice and prescription.
As for the CPS, in reaching a decision as to which cases to prosecute, Crown prosecutors must take into account the Code for Crown Prosecutors. The code includes a requirement that prosecutors should swiftly stop cases where the public interest clearly does not require prosecution. I will return to that in a moment.
The noble Baroness also asked me about publication of the expert panel report. The expert panel is independent of government. It is important that it takes the time that it needs. Advising on which drugs the new offence should cover and on limits to set for driving purposes are complicated issues which require careful consideration. The expert panel has considered a wide range of drugs and has needed to reconcile the available evidence from the UK and abroad. This means that it has taken longer than we anticipated for the panel to report. The Government intend to publish a copy of the report of the expert panel on drug-driving as soon as we are able after the report is finalised. Of course, we will not proceed further with the secondary legislation until we have the expert panel’s report.
The noble Baroness also asked me about roadside drug tests. The Government expect roadside drug test equipment to be available in 2014, when we anticipate bringing the new offence into force. We would expect breath tests to be conducted first, as they are quicker and easier. We cannot speculate on how many tests would be taken, as that is an operational matter for the police.
Baroness Smith of Basildon
My Lords, I am sorry to intervene but I just want the noble Earl to clarify the point about the instructions. Proposed new Section 5A(3)(b) says that D, the person who has been arrested,
“took the drug in accordance with any directions given by the person by whom the drug was prescribed or supplied, and with any accompanying instructions (so far as consistent with any such directions) given by the manufacturer or distributor of the drug”.
Is the Minister absolutely clear in his comments today that the doctor’s instructions with the drugs would always override any manufacturer’s instructions and that that would be a defence in law?
Earl Attlee
My Lords, as I understand it, the doctor’s instructions will trump the leaflet. If I am wrong on that I will write. Also, the leaflet normally refers to the doctor’s advice so the leaflet would give the trumping authority to the doctor.
The medical defence places what is known as an “evidential” burden on a person accused of committing the offence. This means that the accused person must simply put forward enough evidence to “raise an issue” regarding the defence that is worth consideration by the court, following which it is for the prosecution to prove beyond reasonable doubt that the defence cannot be relied on.
I know that the noble Baroness, Lady Smith, and my noble friend Lady Hamwee are concerned that a patient who inadvertently deviates slightly from the recommended dosage might be unable to rely on the medical defence. I want to reassure the House that the Government and the independent panel will take into account the normal therapeutic ranges for medication when considering what limits should be set for drugs. This will reduce the risk of patients who take medical drugs correctly being affected by this legislation. The panel will be well aware of the risks pointed out by my noble friend Lady Hamwee. I would also like to point out that in the terms of reference, term 6 is:
“To establish the likelihood of whether these concentrations would be exceeded through prescribed or otherwise legally obtained drugs (as distinct from illicit drugs)”.
A small minority of individuals taking long-term medication at elevated concentrations could be in excess of the specified limit for a particular drug, as was so well explained to the House by the noble Lord, Lord Walton of Detchant. In most cases such users would only come to notice if their driving is impaired—when they can be dealt with under the existing offence in Section 4 of the Road Traffic Act 1988—or for some other reason requiring police action. Another point to note is that the Code for Crown Prosecutors specifically states that prosecutors “should swiftly stop cases”, as I have already mentioned.
Furthermore, the Government expect that the courts will take a sensible approach to the operation of the new offence. For example, a defendant seeking to rely on the medical defence may be afforded more or less leeway depending on the facts of a particular case, such as the nature of the medical advice provided, including the wording of any leaflet accompanying the medicine.
Finally, in Amendment 118GA the noble Baroness, Lady Meacher, has also proposed that primary legislation should include requirements for testing to be reliable and for the Government to set limits that are linked to road safety. We do not consider it necessary to set these requirements in legislation. First, the preliminary testing devices currently being developed would undergo a rigorous type approval process before being used for enforcement purposes. This type approval process is so rigorous that it is taking some time to secure approval and I have raised this issue with my right honourable friend the Secretary of State because we need this equipment in operation. However, it is vital to the integrity of our system of justice that the courts can rely on the evidence of the new equipment. Furthermore, evidentially testing using blood or urine specimens is already carried out for the enforcement of the existing drink and drug-driving offences without any express requirement for the testing to be reliable.
Secondly, we are clear that the purpose of the new offence is to improve road safety, as I have already stressed, so careful consideration will be given to the advice received from the expert panel and to the responses to the public consultation before setting any specified limits and regulations. The regulations would then need to be specifically approved by Parliament using the affirmative procedure. The new offence is intended to enable more effective law enforcement and to improve road safety by deterring drug-impaired driving and bringing more drug-impaired drivers to justice. In light of the points I have raised I hope the noble Baroness, Lady Meacher, will agree to withdraw her amendment and that my noble friend Lady Hamwee and the noble Baroness, Lady Smith, will not press their amendments. I have been asked many detailed questions. Where I have not answered them I will write, and no doubt another place will look very carefully at these provisions.
Baroness Meacher
I thank the Minister for his response. I remain completely unconvinced that there is any logic at all in differentiating between controlled and uncontrolled drugs. I would submit that the North committee, to which the Minister referred, had no awareness of the incredible flood of new substances coming into this country. It is a vast number. There were 65 new substances this year, 49 last year and 41 the year before. That changes the entire environment within which we work and Ministers may come to regret the idea that this legislation should also fail to take account of those changes.
Earl Attlee
My Lords, we asked the expert panel to consider the drugs that we thought were causing a road safety problem but the last thing we said was that it should consider any other drugs that it thinks necessary.
Baroness Meacher
I know that noble Lords do not want me to take any more time because people need to move on. My only other small point is that the Minister referred to risk as being the main indicator of the need for action rather than impairment. I would suggest that the two are incredibly closely related. The importance of impairment is to avoid discrimination against certain groups and the stopping of drivers in particular communities when there may be no indication of an impairment of driving. It is those matters which we should be aware of. That said, at this stage anyway, I will withdraw the amendment although I may come back at Third Reading because we still await the outcome of the expert panel’s deliberations.
Baroness Hamwee
“( ) Before regulations under subsection (8) are laid before Parliament, the Secretary of State shall publish a report regarding the controlled drug proposed to be specified and the limit proposed to be specified.”
Baroness Hamwee
My Lords, I hope to be very brief on this amendment and on Amendment 118P. These amendments deal with the regulations which, as the noble Earl has assured the House, will not be proceeded with until a good deal more work is done. My first amendment would provide for a report from the Secretary of State about the,
“drug proposed to be specified and the limit proposed to be specified”,
before laying regulations. Like all other noble Lords who have taken an interest in this, I am very keen that the decision should be made on the basis of evidence. This amendment is to suggest that the evidence base should be in the public domain and easily accessed before we are asked to deal with regulations.
I said a few minutes ago that there is a huge array of drugs. I was quoting the noble Lord, Lord Henley, when I said that but, having seen that remark in Hansard, it struck me that it may be difficult to decide whether to support regulations that cover more than one drug or where there is concern about the limit applying to a particular drug. It would be very helpful to have regulations made a drug at a time so that the vote can be very clear when the matter comes before both Houses of Parliament. Following the points that have been made about the importance of controlling drug-driving, I hope that the House would be able to vote for the inclusion of a particular drug without jeopardising the inclusion of another if there is concern about one which is on a list or the limit for one which is on the list. I beg to move.
Earl Attlee
My Lords, I would point out first that these are very important clauses and it is right that the House looks carefully at them. I know that these amendments relate to concerns around how the Government will implement the new offence. Amendment 118N proposes that the Government should be required to publish a report regarding the controlled drugs and limits to be specified in regulations before such regulations are laid before Parliament. The Government do not consider that such a requirement is needed. Clause 29 already requires the Government to consult before specifying in regulations the drugs and limits for the new offence. The Government also intend to publish a copy of the report of the expert panel on drug driving shortly. I have already provided an explanation to the House on the reasons for its delay. The consultation will set out the evidence base for specifying particular controlled drugs and limits in regulations.
Amendment 118P proposes that individual sets of regulations should be drafted for each controlled drug to be covered by the new offence. I recognise the importance of considering carefully the specified limits for each controlled drug. That is why we will consult on the drugs to be included in the offence and the limits which should be specified. It will be open to anyone to respond to that consultation and their response will be considered carefully. Drafting a new set of regulations for each controlled drug would be time-consuming for the Government to prepare and for Parliament to consider, and would be likely to involve much unnecessary repetition. It could also make it more difficult for those seeking to use the legislation since there would be multiple sets of regulations to refer to, making the relevant law unnecessarily complex.
The Government therefore believe that it would be better for all concerned for a single set of regulations to be produced following consultation. In the event that the regulations were not approved by Parliament due to the inclusion of a particular specified drug or limit, the Government would amend the regulations and lay a further draft before Parliament for approval. In the light of the points I have raised, I hope that the noble Baroness, Lady Hamwee, will be willing to withdraw her amendment.
Baroness Hamwee
My Lords, for speed, I will not comment on that other than to thank the noble Earl. I beg leave to withdraw the amendment.
“Public orderPublic order offences
(1) The Public Order Act 1986 is amended as follows.
(2) In section 5(1) (harassment, alarm or distress) for “, abusive or insulting” in the two places where it occurs substitute “or abusive”.
(3) In section 6(4) (mental element: miscellaneous) for “, abusive or insulting” in the two places where it occurs substitute “or abusive”.”
Lord Dear
My Lords, in introducing Amendment 119 I have in the front of my mind the words attributed to Voltaire as far back as 1759:
“I may disagree with what you say, but I will defend to the death your right to say it”.
That is what it is all about tonight. The amendment seeks to curb what I believe is an increasing misuse of the criminal law so as to curb or prevent the proper exercise of free speech. The amendment intends that the word “insulting” should be taken out of Section 5 of the Public Order Act 1986 and that Section 6 of that Act should be similarly amended to take account of the earlier change.
It might help your Lordships if I examine the history of the inclusion of the word “insulting” in legislation to illustrate how and why we have arrived at the current state of affairs—a state of affairs that, I would venture to suggest, is wholly unacceptable. In the mid-1930s, there was a progressive increase in severe public disorder on the streets of east London and in other great cities of this country, when supporters of Mosley’s black-shirted fascists were clashing with both moderate left-wing and extreme left-wing opponents. The law then was proving inadequate to deal with the problem and, as a result, the Public Order Act 1936 was enacted. It did a number of things. It introduced a number of very serious new measures: for example, to authorise or ban public marches and demonstrations; to ban quasi-military organisations; to outlaw the wearing of political uniforms in public; and so on.
At a much less serious level, Section 5 of that Act introduced the now familiar words whereby it became a criminal offence to use “threatening, abusive or insulting” words or behaviour in a public place or at a public meeting whereby a breach of the peace was occasioned or likely to be occasioned. I would ask your Lordships to fasten on to the important words there: “threatening, abusive or insulting” and “breach of the peace”. That legislation stood the test of time, and the police regularly resorted to arrests for breaches of Section 5 in what might loosely be described as disorderly or hooligan behaviour on a typical Friday or Saturday night.
Fifty years later, as part of a general tidying-up of the law that deals with public disorder, the Public Order Act 1986 reflected much of the thinking that lay behind the old Section 5. It re-enacted the legislation that made it a criminal offence to use,
“threatening, abusive or insulting words or behaviour”,
and extended it to circumstances covering displays of any writing or sign in a public or private place within the hearing or sight of a person likely to be caused harassment, alarm or distress. It removed the reference to breach of the peace and it did not require any intent to cause harassment. Clearly, the intention of the new Act was to require a greater degree of particularity in the statute so as to increase protection for vulnerable individuals.
So far, so good, and the new Section 5 also appeared to work well for a time; but not for very long. With the wisdom of hindsight, it is clear that there has been a steady increase of cases where the words “insulting words or behaviour causing distress” were being misapplied in circumstances where individuals or organisations disagreed with comments made about their own sexual orientation, general beliefs or objectives, and where the criminal sanction offered by Section 5 was used by them deliberately to curb or suppress the proper exercise of free speech, either by prosecution, or by utilising the undoubted chilling effect of a threat of prosecution.
There are numerous examples, and some of them are enshrined in the folklore that has grown up round this subject. For example, the student arrested in a demonstration for suggesting that a police horse was “gay”; the street preacher arrested for saying that he regarded homosexuality as “sinful”; the 16 year-old boy arrested for holding up a placard that read “Scientology is a dangerous cult”; the pensioner threatened by police with arrest for putting a sign in his window that read “Religions are fairy stories for adults”; and the man arrested and charged after he growled at a dog, even though the dog owner did not wish to prosecute. There was no mention of what the dog wanted. There were the animal rights activists who were threatened with police action useless they removed little models of seals from public view; seals that had been red-painted to represent blood. The list goes on and on, and I will not weary your Lordships with more examples.
Whose fault is it? Who should we blame? Obviously, on occasions the police are to blame. They have not exercised always the degree of common sense and discretion that would properly have resulted in a blind eye being turned to the conduct in question. Often, however, the police have been manipulated by those whose tactic has been to complain to the police on the spot and insist on police intervention, with the express or implied threat of a complaint against them unless action is taken. A now often risk-averse police service, and sometimes risk-averse prosecutors as well, have found it safer to mount a prosecution and leave the courts to adjudicate.
If change is in the air—the change that is projected into Amendment 119—how much support is there for it? I remember the Committee stage of the Counter-Terrorism Bill in 2008 when I tabled the amendment to prevent the then Government from extending the limit on pre-charge detention of terror suspects from 28 days to 42 days. As with this debate about freedom of speech, that issue was concerned with a major constitutional freedom. As with this issue today, there was a long run into the debate. But in 2008, opinions were divided. I was confronted then with all the alternative arguments: in person, in your Lordships’ House and outside, by letter and e-mail. There were debates on the radio, on television and in the press. There were arguments for and against, before the amendment was carried with a majority of 191.
But what a contrast that was with the current situation. With only one exception—I will refer to that later—I have not heard a word in argument for the retention of “insulting” in Section 5. There have been no personal approaches to me, either here or outside; no letters or e-mails; no telephone calls. Every comment in the media is supportive. I understand from colleagues in the House that they have been the recipients of a flood—or is it a blizzard?—of letters from people outside in all walks of life supporting the amendment. There appears on that basis to be little or no opposition. I wait with interest to see what is voiced tonight.
And look at the support. The noble Lord, Lord Macdonald of River Glaven, until recently the Director of Public Prosecutions, has signed the amendment and written a detailed opinion that I have circulated individually to Members of your Lordships’ House. It gives a brilliant resumé of the substantial legal arguments supporting this change. The noble Baroness, Lady Kennedy of The Shaws, an eminent QC and chairman of Justice, and the noble and learned Lord, Lord Mackay of Clashfern, one of the most respected Lord Chancellors of recent years, have also signed the amendment. I am very grateful to all three for their interest and support.
But there is much more, and from individuals or organisations that do not always work harmoniously one with the other. The National Secular Society and the Christian Institute are often at odds, but here they stand shoulder to shoulder supporting the amendment. I should like to record my warm thanks to the staff of the Christian Institute for the administrative help that they have given me prior to this debate. There are also the Peter Tatchell Foundation; the Bow Group; the Freedom Association; the Equality and Human Rights Commission; and the Joint Committee on Human Rights, which reported as recently as 20 November, saying:
“We understand the sensitivities with certain communities on this issue, but nonetheless we support an amendment to the Bill which reduces the scope of s. 5 Public Order Act … on the basis that criminalising insulting words or behaviour constitutes a disproportionate interference with freedom of expression”.
Justice fully supports the amendment, writing:
“It is essential for the progress of society that we do not ossify public views by censoring debate on matters of current public controversy”.
Liberty would scrap the whole of Section 5, not just one word; but it has pledged wholehearted support, saying:
“The amendment would herald a very significant victory for freedom of expression”.
I will not go on; there are other organisations, and perhaps they will forgive me for not adding to this very long list and taking time tonight.
Where do the police stand in all of this—for it is front-line officers who are so often caught up in the practical application of these laws? The Association of Chief Police Officers has declared that it is not opposed to the change. Only the Police Federation expressed reservations; it is the one organisation that I know has doubts about this. The Police Federation fears that the amendment would reduce the powers of police in dealing with disturbances on the street that were low- level but nevertheless troublesome. I suggest that those fears are misplaced. Most of us know that the federation is feeling bruised at the moment. Change is not at the top of its agenda. But it might well take heart from the letter that the current DPP, Keir Starmer QC, wrote to me only last week, in which he said:
“The issue has been the subject of consultations by the Home Office in both 2009 and 2011. On both occasions, the CPS responded confirming that we are not in favour of a legislative amendment to remove the word ‘insulting’ from section 5. However, having now considered the case law in greater depth, we are unable to identify a case in which the alleged behaviour leading to a conviction could not properly have been characterised as ‘abusive’ as well as ‘insulting’. I therefore agree that the word ‘insulting’ could safely be removed without the risk of undermining the ability of the CPS to bring prosecutions”.
That is a very significant message indeed, and from a very significant player. As noble Lords will readily appreciate, we now have the current DPP and his predecessor both saying that the amendment can and should be carried.
This amendment, if carried, would not leave a hole in the law. Section 5 in its curtailed form would still allow prosecution for “threatening or abusive behaviour”, and there are tougher and more targeted laws, such as incitement to racial hatred, and a range of aggravated offences where hostility to the group to which the individual belongs is taken into account. Along with general laws, such as public nuisance and breach of the peace, these give the police all the powers they need to protect minority groups. It is minority groups that the law needs to look at particularly, and they would not be left out. The “abusive” limb of Section 5 covers most, if not all, genuine cases of public disorder. I will not go into the judgment in Southard v DPP, but one could find that explored there in some detail. Any repeated harassment of an individual is caught by the Protection from Harassment Act while those who, for example, burn poppies on Remembrance Sunday would be caught by Section 4A of the Public Order Act, which outlaws intentional harassment, alarm or distress.
Having tried to deal with a brief resumé of how we are where we are, looked at the abuse of Section 5 and examined some of the relevant legal provisions, I have to ask: is there any reason why this amendment should not have a clear run up the final straight to the finishing tape? Almost inevitably, as happens in life, one problem remains—a fly of fairly considerable proportions in this particular jar of ointment—and I have to say that it concerns the Home Office. The Home Office launched a public consultation on 13 October last year that sought views on three issues. Two of those are of no interest in this debate today, but one examined the possibility of removing “insulting” from Section 5. I think, though without proof, that that is the consultation that the DPP referred to before he changed his view. That consultation closed on 13 January this year. As noble Lords will know, the guidance is that the Government should respond to a public consultation within three months—that is to say, in this case, some time in April this year. To date, we have not heard a word.
At Second Reading of the Protection of Freedoms Bill in November 2011, and again on the fourth day of the debate on the Queen’s Speech in May this year, I declared that, but for the consultation period, I would have tabled an amendment to delete “insulting” from Section 5. In winding-up that latter debate, the Minister asked for patience. On 4 July this year, when the noble Lord, Lord Mawhinney, raised the issue again, the Minister again requested that we remain patient. Still there is silence. It is now over 14 months since the consultation was launched, over 10 months since it closed and over five months since the Minister asked for a little more time to consider the matter. What is going on? Is it procrastination, prevarication or bureaucratic incompetence? I do not know but, whatever the answer, I suggest very strongly that we should not and cannot wait any longer.
I opened this debate with a quotation, and I finish with another. Echoing the judgment of the European Court of Human Rights in Handyside v UK, Lord Justice Sedley, when he allowed the appeal of a street preacher for an offence under Section 5 in Redmond-Bate v DPP, said:
“Free speech includes not only the inoffensive but the irritating, the contentious, the eccentric, the heretical, the unwelcome and the provocative provided it does not tend to provoke violence. Freedom only to speak inoffensively is not worth having”.
In short, the removal of “insulting” from Section 5 will ensure that where words are not abusive and, importantly, where there does not exist any evidence of intent to harass, alarm or cause distress, nor any likelihood of fear of violence or actual violence, then those words will not be illegal, even though they may insult. You do not have to agree with the sentiments expressed—only with the right of the proposer to voice them in benign circumstances. You can be reassured that the remainder of the criminal law in this area will continue to protect all groups and individuals who are intentionally insulted.
I put it one last way. To oppose this amendment is to support and to play into the hands of those whose sole aim is to suppress views with which they do not agree, come what may. I ask this House to recognise the current abuse of the criminal process, to reflect on the need to protect basic freedoms under the law, to remember that freedom of speech is one of the most important civil liberties—some would argue, the most important civil liberty—and to support the amendment. I beg to move.
Baroness Kennedy of The Shaws
My Lords, I support the amendment. I will not take long because I hope that we will move to a vote very quickly. I am the chair of Justice, the legal organisation, and I can say with confidence that that organisation, which represents the legal profession up and down the country, is wholehearted in its support of this amendment. The stories that the noble Lord, Lord Dear, has told of ridiculous cases being brought before the courts could be replicated in robing rooms and courtrooms throughout the land, and I am afraid that it really is time that we put a stop to this.
A very famous American judge once spoke about the importance of the marketplace of ideas, which means listening to views that sometimes one does not like, sometimes, as Lord Justice Sedley said, are irritating, sometimes are provocative, sometimes are heretical and sometimes might upset us. However, that is what democracy is all about, and we should take pride in it.
I wholeheartedly support the noble Lord, Lord Dear, in this amendment, and I hope that all noble Lords who are here will see the importance of this. Unfortunately, the thin-skinned are not serving our democracy well by seeking to have these cases brought. I pity the police who are put into this difficult position, and I am glad to see that both the former Director of Public Prosecutions and the current one recognise that the law is there to deal with truly offensive behaviour or that would lead to further crime and disorder. I hope that noble Lords will support the amendment.
Lord Mackay of Clashfern
My Lords, as the third string, it seems to me that freedom of expression is an extremely important part of our democratic heritage, and it has not been won without quite important sacrifices by many people who have gone before us. It is a criterion for seeing whether democracy is supported that freedom of speech is supported strongly.
Some matters connected with freedom of speech are very topical at present with regard to the public press, but the notion that freedom of speech can be tampered with without serious consequences to our democracy is a considerable mistake. The amendment would be an important step in clearing our situation regarding freedom of speech. There is no menace in an insult. Abusive or threatening language is different. It is menacing to people and, rightly, is subject to criminal law. An insult, though, is in no way threatening, except as a challenge to what I am saying. Surely we have all had one or two challenges to what we say, and we are usually the better for it, sometimes by strengthening our argument in favour of what we are saying and sometimes leading to wise reconsideration and withdrawal. I suppose that all of us have had such experiences.
I support very strongly the amendment moved by the noble Lord, Lord Dear, and I hope that if the Government are going to finish their consultation, they will do so in the right direction. It seems to me that they have taken a long time. Often that is necessary in order to clear up some issues, but I am sure my noble friend will explain tonight exactly what the position is in relation to this consultation. Why has the result not been given within the timescale that the Government themselves set?
Lord Morris of Aberavon
I rise briefly in support of the masterly way in which the noble Lord, Lord Dear, has introduced and covered every aspect of this amendment. I just want to say three things. First, freedom of speech is essential. There is always a tendency for there to be well intended restrictions, and then there are unintended consequences. This is what has happened in this particular sphere.
Secondly, it is crucial that the Director of Public Prosecutions has changed his mind. I have a great respect —having been the Attorney-General and responsible for the Director of Public Prosecutions—for the experience and wisdom of the director, whoever he happens to be. In this case, he has said—and I repeat what has already been said,
“we are unable to identify a case in which the alleged behaviour leading to conviction could not properly be characterised as ‘abusive’ as well as ‘insulting’”.
He said the word “insulting” could “safely be removed”. I think we should pay regard to that opinion. The correspondence we have heard of and received describes excess of zeal by a particular officer, which has led to the distress of those who have been prosecuted. The last example given by the noble Lord, Lord Dear, concerned the causing of distress to a pair of Labradors by saying “woof woof” in the hearing of a policeman. That is true; it happened, it was prosecuted and the person was convicted and fined £50. Fortunately, that conviction was quashed on appeal. I will not go on; I think the case is proved.
Baroness Butler-Sloss
My Lords, like many other people, I received a large number of e-mails and letters all going one way in support of the noble Lord’s amendment. I would just like to tell the House about one letter I received. In my very untidy desk, I have lost it, but it was about a lay preacher who preaches on the street and preaches on Sundays in church. He happens to subscribe to a literal form of the Old Testament with which I do not agree, but he was preaching on his literal interpretation in the street. Someone complained to the police, and he was arrested and spent seven hours in the police station. He was placed on police bail on the order that he was not allowed to preach. If that is not an abuse of the freedom of speech, I do not know what is. I cannot understand why the Minister and the Government are not supporting this amendment.
Baroness Hamwee
My Lords, I was hoping that my noble friend Lord Macdonald would be in his place as he was a little earlier. I hope he is not stuck in a lift or something. I want to put on record on his behalf, on my behalf and on behalf a number of people who are becoming quite vocal, my wholehearted support for this amendment, and I speak for a number of colleagues. I put my name to the equivalent amendment at the previous stage and, as I recall it, the noble Lord, Lord Mawhinney, said, “For heaven’s sake, even the Liberal Democrats have this as party policy”. Well, we do; we would have gone further, but we are happy to go as far as is before us tonight.
Baroness Smith of Basildon
My Lords, as we have heard, it is nearly a year since the Government launched their consultation on public order policing and whether the word “insulting” should be removed from Section 5 of the Public Order Act. In the Committee on this Bill—a good five months after the close of the consultation—the Minister said that he hoped that at Report stage, the Government,
“will be able to put forward the Government’s considered view to the House”.—[Official Report, 4/7/2012; col. 781.]
Since then, the Government had a further five months to come to a decision, and yet—unless the Minister is going to make an announcement this evening—even at this stage, we still have not had a public announcement from the Government about their position, or about the findings and evidence from the consultation which your Lordships’ House has asked for.
I say to the Minister that this is typical of this Bill. From the National Crime Agency framework document, the debate we had earlier and the panel report on drug driving, evidence that would have assisted this House in consideration of the Bill and been welcomed by noble Lords for scrutiny has not been available to your Lordships’ House. It does this House, and those proposing the amendment today, a grave disservice that the Government are so tardy bringing forward information that is crucial to this debate. I share the frustration of the proposers at the Government’s failure to provide this information for the debate today. Are the Government finally able to state their considered position now or will we have more evasion and more waiting for a consultation that closed many months ago?
I understand some of the difficulty for Ministers; it lies in the nature of coalition Government. The Liberal Democrats, at their spring conference this year, passed a motion to repeal this part of the legislation. We also know from names on the amendment that a number on the Conservative Benches—as we heard this evening—also support removal. The campaign is led in the other place by David Davis MP. If there is so much interest in this issue, why have the Government not brought forward the results of the consultation in order to have a proper, informed debate on the merits of the issue, rather than leaving it to campaigners?
I am not suggesting for one moment that the law as it stands is perfect in its application; we have heard numerous examples why it is not. I appreciate that there are grave concerns that there are cases where its use by the police and the CPS has been disproportionate and, indeed, ridiculous at times. There is a very strong argument for better guidance on the application of this clause to ensure that its use is always appropriate and effective.
However, we are concerned that the evidence of the need for its removal has not been presented to your Lordships’ House. We do not want to risk removing a useful tool which currently enables the police to address homophobic and religiously offensive issues. There is still a huge grey area when it comes to these issues.
Many of your Lordships have said that they received no correspondence in favour of “insulting” remaining; I did receive such correspondence. I tried to look at it in balance with the other correspondence I had. YouGov polling estimates that over 400,000 lesbian, gay and bisexual people a year experience homophobic insults, abuse and harassment. Furthermore, 77% of victims of homophobic crimes and incidents do not report them to the police because they have no confidence that the police will or can do anything. I question whether it is right to take tools away from the police which they could use properly to address these sorts of hate crimes and what message that will send. We need a proper debate on whether the existing law is the right approach. It has to be done on an evidential basis, which is why I find it totally unacceptable that the Government apparently have evidence which they are not bringing forward.
We have heard examples of disproportionate and ridiculous use of the legislation, but there are also examples of its proportionate use. I have been sent these by Stonewall. I am not normally shy and retiring or very modest in my approach, but I am loath to read out the insults and the behaviour that was hurled at a Mr Braithewaite, when he intervened for a fellow passenger on his train, Heather Williams, who had been accosted by a third passenger—the defendant—for being transsexual. The language that was used and the behaviour towards them led to a prosecution and a successful conviction under Section 5 of the Public Order Act. I do not believe anybody in this House would want to tolerate or allow that kind of behaviour to go unpunished.
If there are to be changes in the law, there should be a full examination of the evidence. We want to ensure that people like that are properly punished for their crimes. The letter today from the Director of Public Prosecutions should be fully considered in the light of what he has to say, and the Government’s response to their consultation.
Baroness Kennedy of The Shaws
Perhaps I may ask my noble friend whether the word “abusive” would deal with that. The law is there to deal with it. The example that my noble friend has just given could be met with the law in the way being proposed by this amendment.
Baroness Smith of Basildon
My Lords, it may well be. The answer is that I do not know. There has to be a proper examination of the evidence. If I was absolutely clear, and if we could be absolutely confident that this poor woman, Miss Williams, who was abused on a train, would be covered without the word “insulting”, I would move forward on this. I think that we could accept that. Until we have evidence from the Government that allows us to be absolutely clear that we are protecting people who are subject to abuse and insult—
Lord Morris of Aberavon
If my noble friend wants evidence, would she not take into account the views of the Director of Public Prosecutions who is in charge of all prosecutions and has reached the view that without this word there are sufficient grounds to prosecute in this kind of instance?
Baroness Smith of Basildon
My Lords, I would absolutely take that view on information from the Director of Public Prosecutions. However, that also has to be seen in line with the consultation that the Government have undertaken. A letter produced today does not give me confidence that we would protect those people. I do not know whether the Director of Public Prosecutions has looked at the case of Mr Braithewaite and Heather Williams, if that is what he has in mind. If the DPP could give an assurance on that case and other successful prosecutions, it would give me a lot of reassurance that we are not removing protection.
Lord Morris of Aberavon
My noble friend must have regard to the fact that the director is the head of the prosecution service. He is in charge of the Crown Prosecution Service. It is the CPS which takes the decision on whether a prosecution should take place. From his long experience at the Bar and in the law, I am sure that he has taken into account the views of all his colleagues in the service. Is that to be disregarded?
Baroness Smith of Basildon
My Lords, I am not disputing that. I am disputing that that should be taken in context with the other information. We have been waiting for almost a year for the Government’s consultation response. It is a disgrace that it has not been made available to the House. It is for the Government to justify that and not me.
Lord Thomas of Gresford
We would not sully our ears with the expressions used in the instance that the noble Baroness has given. Was it not abusive? Was it not threatening? Was it merely insulting?
Baroness Smith of Basildon
My understanding of the case concerning Mr Braithewaite and Miss Williams is that the defendant was charged and convicted of a Section 5 Public Order Act offence for the homophobic insults. There were other offences as well, but homophobic insults were a significant part of that prosecution. It is for the Government to bring forward what they intend to do. I am not against change or further discussion on this but, on the evidence today, I want to see the evidence from the Government in much greater detail and to know exactly what the outcomes and the consequences would be for those who the law currently protects.
Lord Taylor of Holbeach
My Lords, I understand the interest that has been shown in this debate. I thank the noble Baroness, Lady Smith, for at least demonstrating that the issues that the House has to consider are perhaps a little more complicated than some of the speeches have implied. It is important to stress that there was a further sentence to the letter of which the noble Lord, Lord Dear, kindly sent me a copy. After the comments about the ability to prosecute, the letter continued:
“However, I appreciate there are other policy considerations involved”.
He is right that the Government have to consider the full implications of this amendment.
Let us make it clear: the Government are not seeking to change the law. It is this debate and this amendment that are seeking to change the law. The law has existed and has protected free speech, and incidents have been demonstrated. But we need to be properly considerate before we change the law in this area.
Lord Taylor of Holbeach
I am sorry, but I am not prepared to give way. I want the House to hear the argument that has gone through the Government.
We have considered this matter at great length—for too long, as the noble Baroness has suggested—and we have reached the firm view that Section 5 should not be reformed. There is insufficient evidence that the removal of the word “insulting” would be beneficial overall. I regret that this decision will not be welcomed by everyone, but I assure the House that it has been given careful consideration. I regret to say that should the noble Lord, Lord Dear, seek to test the opinion of the House, I will urge noble Lords—
Lord Morris of Aberavon
Would the noble Lord like to comment on the fact that the Director of Public Prosecutions has changed his mind? How do the Government respond to and answer that change of decision?
Lord Taylor of Holbeach
The letter is available, no doubt, from the noble Lord, Lord Dear, in full. I suggest that noble Lords read the full text of the letter, not just selective quotations.
Lord Maginnis of Drumglass
In so far as I understand the term “abusive”—most noble Lords will understand that term—can the Minister define in legal terms the word “insulting”? I have not heard in anything that he said tonight a proper definition of “insulting”. I have heard it defined by the Opposition Front Bench. I shall leave my question at that. Can the Minister define “insulting”?
Lord Dear
My Lords, I shall respond to one thing. Lest there should be any doubt that I might have been concealing something in the letter from Keir Starmer QC, the DPP, having safely said that you can take “insulting” out of the section, in the last line he says:
“However, I also appreciate there are other policy considerations involved”.
I am bemused. I think that he probably knew something that I did not: that the Government are confused.
I hope that noble Lords on both Front Benches will allow me to say that I am totally confused by their attitude. We have a picture on the one hand that everything is well, despite the fact that the current DPP, the ex-DPP and the ex-Lord Chancellor—a plethora of legal minds in this House—have said that “insulting” can and should come out. The law is not leaving a hole in its place; “abusive” will cover it. There is the safety net of Section 4A, what is left of Section 5 and other legislation. I am deeply disappointed. I had hoped that the Government would support this, with the wide-ranging, voluminous support that there is on all sides of the House, from people who have much better experience than me.
The signals that have been sent tonight—indeed, that have been sent to all of us in the preceding few days—show that many noble Lords have put themselves about very considerably to hear this debate, travelling from the far corners of this country; I do not use those words lightly. We have waited far too long for this. Although I regret to have to say so, I beg leave to test the opinion of the House.
Lord Taylor of Holbeach
“( ) an order under paragraph 76E of Schedule 12;”
Lord Taylor of Holbeach
Lord Pannick
Baroness Deech
“( ) section (Appeals relating to regulation of the Bar);”
Lord Pannick
“( ) section (Abolition of scandalising the judiciary as form of contempt of court);”
Lord Taylor of Holbeach
“( ) Subsection (11) applies to section (Use of force in self-defence at place of residence) only so far as the provisions amended extend to England and Wales or apply in relation to service offences.”
Public Services
(11 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Boateng
To ask Her Majesty’s Government what steps they intend to take to enable the voluntary sector to participate in the delivery of public services.
Lord Boateng
My Lords, I am grateful for the opportunity to ask this Question. I am even more grateful to the numerous noble Lords on all sides of the House who have indicated a willingness to speak in this short debate. The numbers themselves indicate the extent of enthusiasm and interest in the House in the voluntary sector. That comes as no surprise, because noble Lords of this House, on all sides, will have cut their teeth in public service in the course of engagement with and membership of voluntary organisations of all sorts. We are enthusiasts for the role of the voluntary sector and its capacity to contribute to the civic life of our country. We owe it a debt of gratitude.
This is a time of risk and opportunity for the sector. The opportunity lies in the undoubted commitment of this Government and indeed the appetite of peoples of all political persuasions and none for public service reform. We want to see the delivery of our public services improved and made more efficient. We believe— overwhelmingly, in my experience—that the voluntary sector has a role to play in enabling that to happen. It is a source of innovation; it permits a greater degree of connection with our citizens because it operates close to the ground; and it is a source of passion, enthusiasm and activism within communities up and down the country.
The opportunity is there for the public sector to take to its heart the voluntary sector, to embrace it and to enable it to contribute to the reform process. Many of us hope and believe that that was the impulse that lay behind the Prime Minister’s promotion of the big society. I have never been one of those who decried that term and ambition. I believe quite unabashedly in the big society where that means the active involvement of the citizen and their enablement and empowerment to take responsibility for the improvement of the community as a whole. It is summed up in the South African principle of “ubuntu”: we are what we are because of others, and our relationship with others shapes not only ourselves but also our society for the better.
That is why I was glad—along with a number of noble Lords in this House and honourable Members in the other—to accept the invitation of the Association of Chief Executives of Voluntary Organisations to join the Commission on Big Society. It produced a report which was widely welcomed by the voluntary sector and received by Government. We would benefit from a considered and detailed response from the Government. I hope that that will be forthcoming, and I look forward very much to the Minister’s response to the debate this evening, in view of his wealth of experience in the not-for-profit sector.
Central to the report’s findings was the call for a better partnership between central and local government and the voluntary sector. It made a number of practical proposals, which I will come to, as to how that partnership might be enhanced. The opportunity is there, if the Government will but take it, to find a partner for change and improvement in the voluntary sector. However, there is also risk. Only this week we saw published by the Charities Aid Foundation and the National Council for Voluntary Organisations a report on UK giving in 2012 that found that donations to charity had fallen by 20% in real terms in the past year. This means that £1.7 billion less is being given to charity. In addition, fewer people are donating to charity, and the average amount given by donors also fell. This undoubtedly reflects the period of austerity and the challenging economic times in which we live.
Even more worrying was the concern highlighted by a trawl of some 252 senior workers in charities by the Charities Aid Foundation. The results, also published this week, highlighted the severe threat facing many of our nations’ charities. The survey found that 17% of those asked said that is was likely that their charity would face closure in the next 12 months; 40% worry that their charity may have to close if the economic situation does not improve; nearly half—49%—of charities asked had been forced to use their reserves to cover income shortfalls over the last year; and more than one-quarter—some 26%—have cut front-line services.
This is not a plea for more resources for charities in these straitened times. Of course, one always hopes for more resources and greater giving to charities. I hope that the Minister will pass on to the Chancellor of the Exchequer and the Chief Secretary that there is more that Her Majesty’s Revenue and Customs could do in reviewing the gift aid system and to promote giving; I hope it will do so. However, the main purpose of this debate is to ask what we can do and we should be doing to promote the partnership between the voluntary sector on the one hand and central and local government on the other. I argue that this partnership is at the heart of the reform of public services and the better delivery of services to the public.
That partnership was enshrined in the compact between the voluntary sector and government which was initiated by the previous Government and which has been carried on by the current Government—and to their credit. It sets out the key principles of the approach which needs to be taken to improve the relationship to the mutual advantage of both. The compact is itself subject to stresses and strains at this time. The recent Compact Voice report on local authorities and the voluntary and community sector found that up to 50% of local authorities are in fact cutting the voluntary and community sector disproportionately. What will the Government do to ensure that local authorities are sticking to best value guidance? One year on from the publication of the NAO report into compact implementation, what demonstrable progress has been made in the implementation of its recommendations?
I also raise with the Government the issue of commissioning. If there is to be an effective partnership between the voluntary and statutory sectors at a time of public service reform, we need effective public service commissioning. We need to see that the Public Services (Social Value) Act is effectively implemented. We need flexible commissioning approaches which allow potential providers to deliver in consortia and partnerships and to assist that progress. We also need to invest in the capacity of the provider base, particularly those smaller organisations which are working with vulnerable or hard-to-reach groups. Very often it is those hard-to-reach groups that can be adversely affected by the payment by results approach adopted by government. I do not deny that there is value in the approach, but I fear that bad practices such as cherry picking and going for low-hanging fruit, the targets that are easiest to achieve, may lead to a situation in which we will fail to serve those most in need—the most difficult to reach of those suffering from a disability, and the most hardened of those being served by the excellent charities working in the field of rehabilitation, crime prevention and with the homeless—if we adopt a payment by results approach.
What are the Government doing to ensure that emerging payment by results methods have effective tariff systems? They can make a huge difference to ensuring that government and the voluntary sector are working effectively together to address the needs of the most vulnerable. What are the Government doing to support the voluntary sector in the transition to payment by results models?
I will end there. This is an important debate. I will welcome the Minister’s response to these questions and to the many others that no doubt we will hear from other noble Lords.
Baroness Stedman-Scott
My Lords, I thank the noble Lord, Lord Boateng, and congratulate him on securing this debate. I declare an interest as the chief executive of Tomorrow’s People and a trustee of New Philanthropy Capital.
The subject matter is important to our country, our communities and our Government. We need professional, effective and robust public services delivered by whoever can best do the job. Noble Lords will need no confirmation that I am completely committed to the voluntary sector and the role that it plays. That it has a role to play in the delivery of public services I have no doubt. However, there are real challenges for both government and the sector if this is to happen and if we are all to step up to the mark.
I hope that my contribution to this debate will be seen as challenging but helpful, ambitious but realistic. It is not a case simply of assuming that the sector can step up to the challenge; it will have to consider some significant issues. I have no desire to set the hares running, but while I know that the Work Programme is new and in its early stages, there are significant lessons that we can all learn from the process of becoming involved in it. That applies to the sector and to government. The sooner we learn those lessons for the benefit of the people we are all in business to serve, the better.
I will address my first remarks to the sector; I am talking to myself now, in the nicest possible way. There needs to be a maturity in measuring impact in a consistent way. This is crucial. It is not what we as a sector believe that we can do, it is what we know we can do, with evidence to back up what we know we can achieve. My second point concerns financial capacity and capability. The issue of working capital needs to be understood. The payment by results point made by the noble Lord, Lord Boateng, is critical. Nobody I have spoken to has a problem with being judged on their results, but it is no good going into these things believing you can achieve something if you cannot prove it. If the voluntary sector is going to come into public service in a serious way, we must face the issue of scaling up. Sometimes in scaling up, organisations lose the magic of what they can do. Sometimes in becoming too big, we lose something. We must not compromise mission for volume and vanity. Coco Chanel said: “Turnover is vanity, profit is reality and cash flow is sanity”. That applies also to the voluntary sector.
I turn now to the Government and say to the Minister that there needs to be maturity in the commissioning process. Progress has been made. This has been demonstrated by the DWP innovation fund. I am grateful to the Government for that, but some people have said to me: “If only the Government would commission what works rather than what can be traded at the lowest fiscal cost”. We may get value into that. I am the first to understand that we are in very difficult times and that cost is a major factor. However, sometimes we spoil the ship for a ha’porth of tar.
It never does any harm to remember the people we are in business to serve. We have to hold them at the heart of what we do. Can the sector step up to the mark? Of course it can—but with changes. I am sure that with government procurement changes we can all do a much better job.
Baroness Barker
My Lords, I, too, thank the noble Lord, Lord Boateng, for introducing this debate. I declare an interest; I have a consultancy called Third Sector Business.
Three years after the financial crisis in the City, the shock waves are making their way out to local government and to charities. The noble Lord mentioned the survey results that came out this week from the Charities Aid Foundation. They should have come as no surprise. The survey showed that there are approximately 10,000 charities that are very vulnerable because they derive a large percentage of their income from delivering services through contracts with local authorities. Probably some of the charities have lost sight of the purpose for which they were set up. Some of them may deserve to move over and make way for more innovative and interesting social enterprises that are very tech-savvy and cost-effective; but some of them for years have been subsidising local authority service provision, and some of them are very important to the communities that they serve and to which they bring additional benefits. Therefore, some of the organisations deserve help to survive.
The Government recognised that in April this year when the Cabinet Office launched the £10 million Investment and Contract Readiness Fund, run by Social Investment Business. That is a three-year programme, but it is urgent that learning from the programme should be got out quickly to charities that clearly need to develop new business models and the sort of skills that the noble Baroness, Lady Stedman-Scott, talked about, such as measuring their impact, knowing their cost base and, above all, being able to demonstrate that they are the best organisations to serve the people who need public services.
In 2007-08, the Public Administration Committee published Public Services and the Third Sector: Rhetoric to Reality, in which it asked: “Does size matter?”. It is a hugely important question. In future, public services that will be delivered by the third sector will primarily be those where it can be demonstrated that money is being saved elsewhere in the public expenditure budget. The problem with that is that often the people who deliver the services have real difficulty demonstrating the savings and the value to other parts of the public service system. Under the previous Government, Total Place budgeting began to address that issue. Under this Government, community budgeting is going to continue—but it has a long way to go before it will be possible for one public service commissioner to say, hand on heart, that giving money to a particular voluntary organisation has definitely saved money.
It is particularly important for models of preventive services—in other words, services that apply across whole communities that are at risk rather than to individuals. Will the Government put greater effort into developing the community budgeting skills of local authorities and of the voluntary sector? Community budgeting will only work, as the noble Baroness, Lady Stedman-Scott, said, if we have a commissioning process which is sufficiently flexible to deal with the major problems which we have. There is a question about how we configure large and small voluntary organisations in future to deliver public services on the scale which we know is going to be necessary. We know that in social care, in order to relieve the pressure on NHS budgets, the voluntary sector is going to have to deliver a lot of high-quality services. In conclusion, this is going to be a very turbulent but quite exciting time if the Government can assist the voluntary sector with two or three specific targeted things which I have mentioned. I hope the Minister will say that they can.
Lord Adebowale
My Lords, I will start by thanking the noble Lord, Lord Boateng, for his foresight in leading this debate. It is a very important issue which goes to the heart of what we might call a civilised society and the future of social services generally. In particular, it is a privilege to hear my good friends and colleagues, the noble Baronesses, Lady Stedman-Scott and Lady Barker, speak. Their comments were appropriate and timely. I was particularly keen to hear the philosophical reference to the ubuntu—something we should remember not just in the not-for-profit sector but in business generally. I declare an interest as the chief executive of Turning Point. I do not know whether Turning Point is too big or not. I am often amused by this reference to too big or too small in the not-for-profit business but not necessarily in any other business. Ours is an organisation that employs nearly 3,000 people and has services in 250 locations with a turnover of 80 million quid. That is not vanity; it is just a fact, and we will, I hope, make a surplus. The fact that we are not for profit does not mean that we are for deficit. This is an important point.
I want to refer to the not-for-profit sector’s and the voluntary sector’s contributions to health and social care, because that is my interest at the moment, and to the impact of spending cuts. In reference to health and social care, it is important to note that voluntary sector and, although I do not particularly like the word, not-for-profit sector organisations contribute a huge amount across a wide range of public services. I want to restrict my contribution to the health and social care sector, which is the focus of my day job. It is estimated that 57% of the not-for-profit sector workforce is employed in health and social care, which amounts to around 437,000 people. Over £4 billion-worth of health and social care services are provided by charities and social enterprises. Turning Point is a social enterprise. These services provide vital support to people at the sharp end of the inverse care law. It has been an ongoing theme of my existence as a Peer constantly to refer to the fact that those most in need of health and social care services tend to get them least. I could make reference to employment and other services that fit within that law. Often these people are at their most vulnerable and unwell. Not-for-profit organisations have specialist skills when it comes to delivering services to those with complex needs and the ability to innovate and offer tailored services that people can have confidence in was mentioned by the noble Lord, Lord Boateng.
The sheer size of the not-for-profit sector and what it offers means that its contribution to health and social care in particular is invaluable. However, both the public and not-for-profit sectors are facing very difficult times. The cuts are biting and we are all feeling the effects of reduced budgets. Many smaller charities are at risk of closing entirely. I think it is worth repeating the reference made by the noble Lord, Lord Boateng, to the Charities Aid Foundation which showed that one in six charities believe they face closure in the coming year amid public spending cutbacks and falling donations. Not-for-profit organisations are having to think long and hard about how they can remain sustainable when faced with local authority and health budget cuts while maintaining the quality of services and support that they provide to the people that need it. My own organisation, as has been reported and as some of your Lordships will be aware, is having to make some very difficult decisions in order to continue to provide high-quality services to support the most vulnerable people in society. The proposals that we are currently discussing with our staff and union were borne out of economic necessity and the decision to announce them was not taken lightly. The very tough economic climate means that we and other providers are facing the prospect of dwindling local budgets and the changing demands of commissioners who have less funds at their disposal.
I acknowledge that local authorities are working very hard to protect frontline social care services but it is a fact that they are facing a 28% reduction to their government grants. According to the Autumn Statement austerity is now also set to last for longer than expected—at least until 2017-18 if we are lucky—and the IFS has warned that more cuts will be needed in the future to plug the black hole in spending that it has identified of up to £27 billion. Given the vulnerability and lack of ring-fencing around much local government funding, the prospect of further cuts and their potential impact is deeply concerning. Everyone in the sector will have seen Barnet Council’s graph of doom which illustrates the acute social care funding pressure that local authorities are already facing as well as giving a warning for the future. The Government need to ensure that there is adequate local funding in the future so that fundamental social care needs can be met. Local authorities, care providers and the voluntary sector must be able to maintain and protect the quality of services and care that they provide. This is not just about the Government’s enthusiasm for the sector; it is about the Government’s ability actually to acknowledge the challenge facing public services at this time and to work in partnership with the not-for-profit sector, the private sector and the public sector to reverse the inverse care law.
Lord Judd
My Lords, as one who, like many others in this House, has spent a great deal of my life in voluntary agencies, I very much welcome the way in which my noble friend introduced this debate. It is absolutely undeniable that, with their integrity, experience, ethos and principles, voluntary agencies have a great deal to contribute to effective public service. They are free of the pressures of shareholders and profit. They are there to serve.
However, if this is to be the success that we all want it to be, we have to watch some issues very carefully. One is that this is genuine partnership and not simply voluntary agencies being contracted to provide a service defined by government. There must be an interplay between the agencies and the Government as to what the right services are and how they should be delivered. I was very worried once when I visited a young offender institution where there were dedicated workers on a contract to get those within the institution into jobs. As they did their work, they became convinced that there were quite a number of youngsters who were quite unfit to go straight into jobs and needed a lot more support, help and counselling before they would be ready to go into the employment sector. They got absolutely no credit for spending time on this; in fact, as they put it to me, they were endangering the contract because their job was to deliver people into jobs. That seems to be something we must look at very carefully, because it is a real danger, which could turn a good adventure into a sad story.
The other danger that we must take seriously is financial dependency. If voluntary agencies are working increasingly on government contracts, will their existence as agencies become dependent on that kind of income? I raise this because if I became convinced of anything in my time as director of Oxfam, it was that responsible advocacy could be one of the greatest services to those with whom we were working. By building real relationships of solidarity and real experience at the ground level, we were able to speak to government and society about the real underlying challenges we faced. I think it would be very unfortunate if, by the way that the scheme developed, agencies started self-censorship or dumbing down their advocacy role. That would be to betray their unique contribution.
As a member of the party I am in, I am in politics because I care about public services—I want the highest quality services. However, having worked in the voluntary sector, both as a volunteer and a staffer, I must say that the essence of the voluntary sector at its best is that it is a catalyst or challenge to society; it uses its experience to widen society’s outlook and to increase the sense of responsibly in society and, indeed, in government. As we take this opportunity forward, we must guard that principle as fiercely as we possibly can.
Baroness Tyler of Enfield
My Lords, I add my congratulations to the noble Lord, Lord Boateng, on securing this very timely debate and start by declaring my interest as president of the National Children’s Bureau and vice-president of the charity Relate. I want to focus briefly on the importance of the voluntary sector in delivering vital services to vulnerable children and young people, as well as to older people, and to stress the importance of collaboration between sectors.
The children’s voluntary sector represents a quarter of the voluntary sector—34,000 organisations, the vast majority of which are small, local and with a low budget. It currently relies more on public funding than the voluntary sector overall, so is particularly vulnerable to austerity. Research so far suggests that it is also struggling to access new funding streams such as private sector funding and the newly emerging social investment market. In 2012, the NCB and the National Council for Voluntary Organisations estimated that children’s charities face cuts nearing £405 million between 2010-11 and 2015-16.
Despite austerity and despite these cutbacks, the children’s voluntary sector is doing invaluable work to identify and address social inequalities that, if unaddressed, can last a lifetime. I will give one quick example, of a project called Making it REAL—Raising Early Achievement in Literacy. It is a great project, with the NCB working in collaboration with eight children’s centres. The programme so far has touched nearly 500 carers, parents and grandparents, nearly 400 child participants and nearly 150 younger siblings through home visits and events in Sheffield and Oldham. Parents have improved their knowledge and confidence to support their children’s learning and children have progressed to the stage where nearly 90% can name a favourite book, compared to less than a quarter at the start, and more than 70% enjoy books most days compared to a mere 13% at the outset. I say that to try to bring this debate to life.
There are many other examples that I would love to give noble Lords but I have not got the time to show how the voluntary sector can really add value to the way the statutory sector delivers its statutory services. There are so many excellent examples of co-operation, and a very good report—which I commend to the House—called the Ripple Effect has set out some very good case studies in this area.
The services delivered range from cradle to grave. I have talked about children’s services but will very briefly talk about the work of the WRVS, which has 43,000 volunteers giving practical and emotional support to 100,000 older people monthly. It co-ordinates public services, and the home from hospital services provide support to older people after hospital discharge. By carrying out very simple tasks, shopping or making sure the right foods are available, they make a huge contribution to older people’s reablement. As my noble friend Lady Barker pointed, out the NHS is spared hospital costs to a very large degree. It is a real win-win.
This debate allows us an opportunity to ponder the way forward. The voluntary sector offers great potential for help in joining up services and making the best use of limited funds. I know that the children and families voluntary sector is eager to work with the Government to create a strategy which will enable it to become more sustainable and resilient during these difficult times. It will need a two-pronged approach. The voluntary sector needs to do all that it can to manage reduced resources and cut costs, including pursuing different business models and mergers, investing in its voluntary workforce and reinvigorating its fundraising strategies in all the ways that it can.
The Government have a clear role in engaging with the sector to develop the sort of transformation strategy that will help small and local charities to become much more resilient. This is likely to work better if it brings together representatives of the voluntary sector, service commissioners and potential investors. Will the Government be prepared to enter into these discussions with the sector to try to develop this sort of transformation strategy?
Lord Mawson
My Lords, I thank the noble Lord, Lord Boateng, for this timely debate. I have spent the past 35 years demonstrating in practice how the voluntary sector can play a crucial role in innovation and in delivering public services in new ways that focus on the customer. How can it use its position, sitting between the often large bureaucracies of the public and private sectors, to bring much needed innovation in the delivery of public services?
The Health and Social Care Act eloquently mentions this. Integration, innovation, and enterprise are found in the legislation that encourages us to go local. These are important words, but words alone will not make this happen. New thinking and hard work are required. So how do we enable more voluntary sector organisations to win and deliver more public service contracts in a way that is a game changer?
First, you should start small and learn how to innovate and deliver public services well in one place before you exercise that overused phrase, “Roll it out”. The micro and the macro are connected. The Government should choose six projects located in specifically identified areas in the inner city, suburbia, the countryside and the north and south of England, and get it right in a few places and really understand what the blockages are, and not roll out a national programme before this has been done.
Steve Jobs obsessed about creating his first Apple store. He hid away for nine months in a warehouse and was fanatical about the small details. Apple is now one of the most valuable companies in the world. If the voluntary sector has a role, it must be in innovation, creating integrated customer-focused services and lifting the game. I worry that the Government have become very adept at talking and simply putting old men in new clothes.
My second point focuses on how best to get the voluntary sector to deliver. Simply encouraging it to play a role in delivering public services will achieve little. The rules, specifying to the nth degree how a contract is to be delivered rather than enabling the supplier to propose different solutions, possibly by integrating different services, constrict much needed flexibility and creativity. The VCS plays this bureaucratic game as well or badly as the public and business sectors. You are not good at delivery just because you are under the banner of “voluntary sector”. Flexibility is desperately needed, and I am pleased that the noble Lord, Lord Heseltine, makes this point in his important report.
If you want innovation, you need to create space for it to happen and reward it. It is amazing how the new academy infrastructure for schools, for example, is quickly starting to look exactly like local authority education departments by another name. This happened 30 years ago when the Government got hold of housing associations and dumbed down their entrepreneurial flair. The business community moving into the health sector is starting to look like a public sector response with a few more bells and whistles. Working relationships with social entrepreneurs are not cementing fast enough because the Government are not commissioning services to create new, lean, innovative relationships. Bureaucracy speaks to bureaucracy. It does not understand any other language. The procurement systems of this country are broken. I have tried to raise these concerns with the Government. The noble Lord, Lord Gardiner, and I have talked about this, but no one seems to follow through on the practical detail. We have tried, but I have received no practical response that is interested in getting hold of this detail.
Generally, the gap in expertise and imagination is in the statutory and public sectors. While there is a procurement college now for large contracts, will the Minister tell us where is the support for innovation in the £20,000 contracts and for the hundreds of thousands of statutory and quango staff? Real change in public service must involve senior leadership. Otherwise it will quickly be regressive. In relative terms, contracts to the VCS are small and so the senior staff—the CEOs—do not often get involved themselves. What would happen if the procurement processes encouraged this engagement?
The Prime Minister once talked about the big society but, like the third way, it seems to have lost its way. I am interested in small societies and those teams of local players who can make all the difference. In order to see results, we need to understand the practice of what people on the ground do, and we need to help them to grow and up their skills in an organic way. They must be encouraged by us to innovate and deliver more, but we must not put elephants on their backs. We should incentivise this joined-up leadership, encourage these relationships between business and social entrepreneurs and build them into the procurement contracts. This is how we will create social value and innovation and move it to scale. It is all about relationships.
Lord Best
My Lords, I, too, thank the noble Lord, Lord Boateng, for initiating this excellent debate.
I want to use my few minutes to make a practical point about the engagement of smaller charities and community-based organisations which currently find it very hard to win contracts to provide local services. Local authorities and health trusts, as well as central government, are often reluctant to entrust public money to these smaller bodies because they are unlikely to have capital to invest or assets to borrow against and they are inherently insecure financially, so there is a risk to public funds should they fail. Thus, despite the emphasis on localism and the fact that smaller bodies may well have the all-important trust of local communities, knowledge of neighbourhood issues, access to volunteers and real commitment at the grass-roots level, they lose out to major, national, often profit-making, organisations.
Sometimes the small charity or the community-based social enterprise finds itself used as “bid candy” to help the major players—the prime contractors—win contracts for public services, but then sees very little of the action thereafter. My proposal is that these smaller local bodies team up with the major housing associations operating in their area. Today’s housing associations are an enormously significant part of the voluntary sector. They are non-profit social businesses embedded in specific places with a full range of managerial skills that can provide the financial security and longevity which service funders desire. Together, the housing associations hold assets worth, at the last estimate, more than £109 billion. I declare my interest as chair of the Hanover Housing Association.
There is a large and growing number of examples of how this partnership between a quite small community-based organisation and a well resourced housing association can deliver a local service with an implicit guarantee against bankruptcy or failure because of the strength of the housing association’s balance sheet. A report out last week from the think tank ResPublica demonstrates how lots of housing associations are now delivering on the localism agenda by acting as vehicles, enablers, capacity builders and brokers for community activities of many kinds. I have time to give only one example. I visited a brilliant project in September supported by Aspire Housing, a housing association with homes in north Staffordshire and south Cheshire. The association has teamed up with a number of local social enterprises, of which this project was one, to provide employment and training for well over 1,000 young people each year by successfully organising apprenticeships and the skills that get them into work.
I accept that my proposal for more of these partnerships to enable the voluntary sector to deliver more and better public services could be undermined by welfare reform changes that impoverish housing association tenants and thereby jeopardise the finances of the housing associations, but that is a story for another day. Tonight, I would greatly welcome hearing the Minister’s response to this way of squaring the circle and enabling funders to work with a financially secure, well grounded, safe social business in the form of a strong housing association in partnership with really local voluntary sector, non-profit, charitable and social enterprises.
Baroness Royall of Blaisdon
My Lords, I am grateful to my noble friend Lord Boeteng for enabling this debate. It is especially important when all services are under immense and increasing pressure, due to a combination of cuts and increased demand. As noble Lords have said, this is a crucial time for decisions about the future of public services. I have always strongly believed in partnerships between local and national government and the private and voluntary sectors. For too long and for too many people, the goal was to move away from public services, notwithstanding their quality. What might be called the G4 moment at the Olympics removed ideological blinkers, so that once again quality and value are to the forefront. Quality and value—not just for money—must be the key. The Public Services (Social Value) Act is a significant step forward and should ensure that the additional social, environmental and economic benefits that an organisation provides will be taken into consideration when a contract is being awarded.
There are superb voluntary services in our country, which are innovative catalysts and add value, on which millions of often the most vulnerable depend and without which society would crumble. They are often community based, with real knowledge of, and a stake in, the community that they serve. However, the systems are complex and commissioning needs improvement, as so many noble Lords have said. I ask the Minister what the Government are doing to ensure voluntary sector involvement in the commissioning process. While it is right that charities should be enabled to deliver public services, they should not have to fill in the gaping holes which are left up and down the country as councils withdraw from certain services because of budgetary pressure. Many councils do a brilliant job and, with vision and innovation, provide or commission new ways of delivering services. However most have now made all the cuts that are possible without severely impacting on the citizens they serve. It is the voluntary sector that has to pick up the pieces when their own income is being cut.
Too often charities have to shoulder burdens caused by a shrinking state. As Sir Stuart Etherington, the NCVO’s chief executive, has said:
“Often it is charities, that are best placed to provide this specialist support and we are urging the Government to make a number of changes that would enable charities to play a fuller role. We know from our own research that charities are working extremely hard to service even the hardest to help, often by having to dip into their own reserves”.
Many noble Lords, including my noble friend, mentioned the Compact Voice report, which found that up to 50% of local authorities are cutting grant funding to the voluntary sector disproportionately. I hope that the Minister will not say that it is not a matter for the Government but for local authorities to choose how to spend their money. That simply would not do. Devolution of responsibility must not be dereliction of duty. Partnership working is crucial and one of the things we are trying to do in the Forest of Dean is to provide a comprehensive and seamless system of social care with our local NHS community services and community hospitals, working with Crossroads Care and other charities which are delivering services but wish to do more. However, as noble Lords have said, it is difficult for small charities such as the ones with which I am involved, like Forest Sensory Services, to get involved. The system is so complex and is devised for bigger charities.
The noble Lord, Lord Adebowale, spoke of the social care sector. Many public services currently delivered by the voluntary sector relate to vulnerable, marginalised and disadvantaged groups. The work is often not valued and salaries have historically been lower than they should be. We live in difficult economic times, when organisations and individuals are hurting, but I trust that the Government will do all they can to promote the living wage. Apart from being the right thing to do, it is a means of cutting back the budget for working tax credits. I am proud that 19 Labour councils now pay the living wage and many also ensure that those with whom they have contracts also pay the living wage. A living wage brings dignity and we have to raise the esteem we have for those who work in caring and other community services. Of course, many people in the voluntary sector are volunteers and we could not exist without them. A recent WRVS study showed that older people who volunteer are less depressed, have a better quality of life and are happier.
I close by celebrating the fantastic contribution that the voluntary sector and volunteers make to our society. As we look at the future of public services there is so much more to be done and we must do it.
Lord Wallace of Saltaire
My Lords, this has been an excellent debate and I look forward to many more on this theme. I thank the noble Lord, Lord Boateng, enormously for the way he introduced this debate. This is a cross-party and cross-government issue in which we are attempting to go through a major cultural change in the way in which the state, centrally and locally, delivers services in partnership with the voluntary sector, rather than simply as a contractor of it, as a number of noble Lords have said.
I am interested that no noble Lord has cited the new report from Social Enterprise UK, which contains some sharp language which I am sure that the noble Baroness, Lady Royall, would welcome, on the dangers of ending up, through outsourcing, with a private oligopoly of firms that are too big to fail and have a stranglehold on the outsourcing sector. The Government are aware of that, and a great deal of what we are now attempting to do is to make it easier for smaller enterprises and those which do not have the financial reserves and the skills to prepare complex contracts successfully to achieve a relationship with government. The Commissioning Academy is now getting under way, training central officials to simplify the contracting process between government and the voluntary sector, thus advertising small contracts available on government websites to make it easier to find out what is going on.
This is, of course, a long-term development and, in some ways, a revolutionary development. We are now admitting that we have a limited government and that we cannot provide for our society everything that is needed through the state itself.
At a meeting in Paris, I sat between one of my party colleagues in government and a senior French Minister. He was saying, “We share a similar set of problems. We in Britain are spending nearly 45% of our GDP on public services; but you are spending 55% of your GDP on public services”. I thought, “That is a very important gap”. Part of the problem that we all have—the previous Labour Government faced this—is that we have a public who resist paying higher taxes but want better services. That is a problem that is going to get worse in the next 10 to 20 years because our older population is growing. The possibilities of what one can provide in social care and healthcare are rising, so the pressures are intense. We have to find ways of providing a mix of state and voluntary services which can provide the quality that we need.
We hope that we are moving toward real partnership. Even there, I have to say that, as we are accounting for public money, and we are having to contract out public money, the question is how one achieves a balanced partnership where the state is paying and the Daily Mail is looking over the state’s shoulder to see whether it is spending the money properly. That is a relationship that we will have to learn about as we go on.
As we all know—I certainly remember from when I was a politician in Manchester—there is deep suspicion among large local authorities of the volunteer and the amateur. Only the full-time council employee could be trusted to do things. That is part of what we need to change. We also recognise that there is a deep problem in London. A lot of people in London—politicians, journalists and officials—do not really believe that people in Birmingham, Manchester or Leeds can be trusted to do things on their own. Manchester, Birmingham and Leeds are very large local authorities and, in their turn, do not trust some local enterprises which really understand what is happening in parts of Leeds or Bradford to begin to deliver the sort of public services which are needed.
As has been said by several participants in this debate, the voluntary sector is often best when it is small and local. The noble Lord, Lord Mawson, spoke about those teams of local players, and I think that he meant personal relationships. That is fine, but it does not fit the model of state provision of services. We have to find ways around that. The noble Lord, Lord Boateng, and others talked about giving instructions to local government. If we believe in pursuing the localism agenda, we have to encourage local government rather than sending the sort of mass packs of instructions that Governments have tended to do over the past 25 years or more. We have to encourage them to go in for community budgeting—double devolution, which the previous Government and this one have also talked about. We have to recognise that our city local authorities —Birmingham is larger than several European Union member states—have to be encouraged to push things down from the local authority level to the communities below them.
This is a set of challenges for the voluntary sector as well. As the noble Baroness, Lady Stedman-Scott, and others have said, a lot of social enterprises and charities do not have the skills needed to get into these large procurement exercises. The charities I have been involved in lacked accounting and legal skills. We have had to learn by packing the trustees and getting accountants and lawyers to provide their services pro bono. If you are going to be getting into contracting with the Government you need a certain level of contracting skills and that, again, is something which the Government are experimenting with as we try to simplify the contracting process.
Working relations with social entrepreneurs, as the noble Lord, Lord Mawson, knows well, are never going to be easy. The way in which states have to operate does not easily absorb the individualist—the entrepreneur—who wants to do things in an entirely different way. We have to live with that tension and we have to do our best to make it work. Although I recall with some amusement being told that various government departments have wanted to replicate in other cities in England what the noble Lord, Lord Mawson, has achieved in east London. They have worked on this but not quite found the right non-conformist Ministers to lead it. It is again part of the problem with the voluntary sector which requires determined individual leadership.
The Government are pursuing a partnership with the voluntary sector. We are learning as we go forward. We are experimenting, as the noble Baroness, Lady Barker, said, with new forms of financial assistance and support. We are very conscious, for example, that in one or two cases social enterprises have failed in bidding for government contracts because they could not demonstrate that they had the financial reserves to guarantee that they would be able to carry out the contract through a particularly difficult period.
We all hope that the Public Services (Social Value) Act, which is just about to come into operation, will help a great deal although estimating and calculating social value and standing up to the Public Accounts Committee asking you whether your department did deliver social value may not entirely be an easy thing to do. I am also engaged through the Cabinet Office in Civil Service reform. Getting officials out of their offices and changing the ways they think about the sort of services they are delivering again is part of this whole process. The voluntary sector, in turn, also has to adjust.
I was fascinated to hear the noble Baroness, Lady Barker, talk about a period of turbulence. In political science there is the phrase “creative destruction”. I fear that what she is suggesting is that some charities will fail to make the grade and others will come into greater prominence. However, when one looks at the figures of turnover in the number of charities registered with the Charities Commission one realises that this is a continuing process. Charities die; other charities come into effect.
The noble Lord, Lord Best, said something extremely interesting about housing associations. A couple of weeks ago a good friend of mine who has just retired from a big housing association was making almost exactly those points. Housing associations have the funds, the presence and the weight to be able to do a lot of things that smaller and more fragile bodies cannot. I think that is a model we all need to take on board. Housing associations can actually do broader things within the local communities of which they of course form a part.
We are learning as we go along. The Government and the voluntary sector know that this is a long journey. We will be publishing tomorrow a new document about making it easier for civil society organisations to do business with the state. I think it will address some of the issues that the noble Baroness, Lady Tyler, raised in her speech. This is of course part of a process whereby we hope to be building a better and easier relationship with the voluntary sector. It would be much easier if the economy were growing at 2% to 3% a year but, in the circumstances where the economy is not growing, we all hope that in two or three years’ time that will be the case. Our aim should be a plurality of social enterprises, charities and others working with local government and with agencies of national government to deliver the quality of services which we need in an increasingly difficult environment, with an older and more diverse society. That society will be coping with a very large range of different challenges.