Grand Committee
(11 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Enterprise and Regulatory Reform Bill
(11 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.
Viscount Eccles
I would like to detain the Committee briefly on a point of clarification that arose out of last week’s proceedings. Grand Committee Hansard for last week states:
“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”.—[Official Report, 12/12/12; col. GC 335.]
The Committee will remember that we were debating the creation of the CMA under Clause 20. In col. 338, my noble friend Lord Razzall said that,
“all the major business organisations and the Law Society are in favour of this recommendation”.—[Official Report, 12/12/12; col. GC 338.]
That did not tally with my memory of the Government's response to the consultation on this matter.
Paragraph 317 of the consultation, which was admittedly published some time ago, states:
“A number of respondents expressed stronger concerns about the creation of the CMA and did not support it. Notably, the City of London Law Society and the Joint Working Party of the Bars and Law Societies of the UK on Competition Law (‘Joint Working Party’), echoed by many individual law firms in their responses, considered the proposed CMA to involve some real disadvantages that outweigh the potential efficiency benefits”.
So the government document published in March said in terms that neither the City of London Law Society nor the Law Society, which are two completely different organisations, supported the creation of the CMA.
Now I recognise that they may have changed their minds. When three Front Benches agree something it seems to become inevitable and in true British style they decided to make the best of it. But at that time it is quite clear that they did not agree.
I have gone over the ground with the Law Society. I confess that my impression is that it has not changed its mind. It repeats that,
“the merger is not expected to achieve any material cost savings; and, although there is potential for a single CMA to deliver efficiencies of the kind mentioned in the Consultation Paper, the [Joint Working Party] is very doubtful about the scale of such benefits. More importantly, the [Joint Working Party] sees a real risk that the benefits of the merger will in practice be more than outweighed by the loss of the benefits of independent decision-making by separate organisations”.
The Law Society ends by saying:
“The scale of these risks is such that the [Joint Working Party] is not persuaded of the case for a single CMA”.
As the whole burden of my own argument was that we were running into trouble with the legal profession if we created the CMA on a single-institution basis, it was quite important to clarify where these two important organisations now stand.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland)
My Lords, as my noble friend said, we did not actually mention the Law Society, but he has responded with a statement from the Law Society. We mentioned the City of London Law Society, which, as he said, is a totally separate body. I quote from a statement made by Mr Robert Bell, the chairman, on 21 June 2012. The CMA,
“will help competition policy be more cohesive, and it will help streamline the regulatory process, which, in turn, will provide efficiencies and boost business confidence in the rigour of the competition system in this country”.
He also said:
“There are benefits to be gained. On the merger of the CC and the OFT, we do not really have a very strong position, but we are pleased to see in the Bill that the checks and balances between first-stage and second-stage merger investigations and market investigations have been retained. There is potential to streamline the regulatory process and make it faster”.
I am very content with that statement. It is unequivocal, and it is just one example, which was used by my noble friend on a previous day in Committee, of a number of institutions that supported it. I hope that that clarifies the position.
The Deputy Chairman
My Lords, there is no question before the Committee so we cannot have a debate. I call Amendment 24C.
Schedule 5 : Amendments related to Part 3
Amendment 24C
Lord Marland
(b) for “Commission” substitute “CMA”.
Lord Marland
Thank you, Deputy Chairman. This is a government amendment. First, I would like to put on record my thanks to the officials. Not only have we had a confetti of amendments to deal with on this Bill but, late last night, they were all changed into different groupings. That has meant a huge amount of work for them but they have done it with good cheer. It has been difficult not only for them but for the rest of us. However, we shall press on as hard as we can. We have only 23 amendments to get through today so let us hope that we can do it. I am sure that people want to go home tonight for Christmas.
These government amendments are minor amendments. They are quite technical, which rules me out of the equation pretty early on, but they are consistent with what is intended. I hope that they will find favour with the Opposition and other Peers. I beg to move.
Lord Stevenson of Balmacara
My Lords, we have very few comments to make on the substantive point in the amendments before us. We accept the drafting; it is very appropriate. On Amendment 25A, which is included in the group but was not specifically spoken to by the noble Lord, I simply note that this matter will come up later on in discussions. Although I have no comments to make at this stage, that does not mean that we will not wish to raise one or two points later. I agree that the rest of the amendments are technical.
I apologise for the slightly odd grouping of Amendment 26AD. It is not in my name but I shall speak to it—which will confuse matters even further.
Lord Marland
Is the noble Baroness, Lady Hayter, already on her Christmas holiday?
Lord Stevenson of Balmacara
She certainly is not. She is working hard on other matters elsewhere, to which I will need to repair. That is why I asked if we could group the amendments rather oddly, although I think they work in the scheme of things. I shall speak to them briefly at this point.
The point of concurrency, which is raised in these substantive amendments, raises an issue in relation to the way that the new architecture which has been proposed will operate. Clearly we take a view, which I think is common around your Lordships’ House, that functioning competition and certainty are the two single most important conditions that markets require to sustain investment and drive innovation. Those conditions are best aided by clear, robust and agile competition regimes. That condition is most required in fast-moving sectors, such as telecommunications, where the market is in a state of constant, relentless evolution.
The recent experience of competition oversight of one section of the telecommunications market—the pay TV market—highlights two critical failings that the Bill must address: the slow-moving pace of investigations and the confusion that might be caused by differing outcomes between sectoral and competition authorities. Although it is right that the CMA should be the ultimate protector of the basic principles of competition law, surely it cannot do so effectively in isolation from market developments and, in particular, from advice that may be available within the sectoral regulators.
In my remarks I want to refer to recent investigations of the pay TV market in considering questions of pace and lack of collaboration. I recognise that some of my remarks will delve deep into regulatory matters and it may be appropriate for the Minister, even although he has taken an extended Christmas break, to respond to me in writing if he wishes to go into some of the points that I am going to make.
On slow pace, UK consumers have enjoyed more than a decade and a half of investigation into competition in the content/pay TV market by Ofcom, the Competition Commission, the Office of Fair Trading and the European Commission. Inevitably, much effort has been duplicated. Nevertheless issues in the market have been identified and yet no lasting remedies have been proposed to tackle a consumer harm that the Competition Commission had initially estimated cost consumers £50 million to £60 million per year in inflated prices for premium content.
Inconsistency, or lack of collaboration, is the other point I want to make. In August 2012, just a week apart, both the Competition Commission and the Competition Appeal Tribunal reached completely inconsistent and contradictory conclusions on two aspects of the state of the pay TV market. On 2 August 2012, the Competition Commission concluded that Sky has market power and that competition in the pay TV retail market is “ineffective”. On 8 August 2012, the Competition Appeals Tribunal issued a completely different view to both the Competition Commission and previous Ofcom statements, concluding that there were no substantive competitive concerns regarding Sky’s supply of premium sports channels.
Surely what we need is for the different layers of a regulatory regime to work together in the best interests of the consumer. This amendment seeks to ensure that the CMA acts in co-operation with sectoral regulators when exercising its competition powers to share information; undertake joint working, investigation and, if needed, remedies; and to keep the performance of each sectoral regulator against its competition powers under periodic review.
The CMA should provide the central core of expertise in these cases. It should have primary responsibility for conducting the full competition investigation and ultimately should take the decision on all aspects in competition cases. A reformed and strengthened competition authority acting within the parameters of competition law is best placed to objectively apply competition principles consistently across all sectors.
However, it cannot effectively judge the competitive conditions of a given market in isolation from the sectoral experts. So we believe that the sectoral regulator is best placed to make the initial assessment as to whether competition concerns may potentially arise in a given scenario. In recent history—certainly where the pay TV market is concerned—that stage of the process has taken far too long.
In addition, there should be a renewed emphasis placed on sectoral regulators to reach a speedy judgment on whether referral to the CMA for full market investigation is indeed warranted. But the role of any sectoral regulator should not stop at speedy referral. Rather, it is vital that it also provides a supportive and advisory role to the CMA, imparting knowledge and experience in the sector which the CMA would take into account as appropriate, and where appropriate taking a central role in considering any remedies that might be required.
Lord Marland
I apologise; I should have dealt with this amendment in the same grouping. Clause 45, as was rightly said, will bolster concurrency by giving the CMA stronger powers to co-ordinate Competition Act enforcement work and giving regulators explicit duties to consider using the Competition Act. Amendment 26AD is intended to add to these arrangements to make sector regulators make an early decision on whether to refer a matter to the CMA for an in-depth investigation. It would also allow the regulators to take exclusive responsibility themselves for remedying a problem in a market.
I do not believe that this amendment is necessary. First, it is the Government’s intention that new timeframes for market processes will apply to sector regulators. This will be effected by subordinate legislation later in the year under this Bill. Therefore we recognise the need for a timeframe—but we will get to that, as I said, with subordinate legislation.
Secondly, there are existing provisions in the relevant sector legislation which prevent duplicate market investigations by the relevant regulators and the CMA. Furthermore, the CMA in looking at a market should be able to consider whether action by a regulator is impeding competition. Amendment 26AD therefore is not appropriate and I would ask the noble Lord to withdraw it.
Lord Marland
“( ) In subsection (1), in the words before paragraph (a), for “Commission” substitute “CMA”.
Lord Whitty
“Powers to reverse transfers
(1) Where regulations are made under section 22(4A) to transfer consumer functions, duties and responsibilities to other statutory bodies or to non-statutory bodies, those regulations shall also stipulate powers to require the return of those functions either to the CMA or to the Secretary of State, subject to subsections (2) and (3).
(2) Those regulations shall also require the Secretary of State to carry out at least every five years a review of any transfer to other bodies under section 22(4A) as to whether those functions, duties and responsibilities have been carried out effectively by the transferee body; and that the transferee body and other relevant parties will be consulted over such a review.
(3) A negative finding from such a review under subsection (2) will be necessary before the Secretary of State uses the powers to reverse a transfer under subsection (1).”
Lord Whitty
My Lords, we return to the issue that I raised in the Minister’s absence during our last session, on what exactly is happening to the functions and duties of the OFT which are not being subsumed within the CMA. I apologise to the noble Viscount, Lord Younger, that I had not seen his letter of 12 December when we debated it last time. Included with that letter was a draft order under the Public Bodies Act; reading that and its Explanatory Notes, I have to put Ministers on notice that when that comes before the House I shall object to a large range of its areas. It includes not only the abolition of various bits of consumer regulation and protection but the movement of functions from the OFT, and therefore the CMA, to the trading standards operation on the one hand and to Citizens Advice on the other.
That movement, which we debated briefly last time, includes the move of responsibilities to organisations that are not mentioned in statute, although some of them are mentioned in the draft order. This relates to the slightly shadowy national trading standards body and another body, which I think is called SIPEP. I forget what that stands for exactly, but it is another body that will absorb what were previously statutory duties of the OFT. We have debated that move but this amendment would provide for the ability of a future Secretary of State to reverse that devolution at any point.
While I have great admiration for Citizens Advice and for the trading standards organisation—indeed, I am a vice-president thereof—there is some doubt as to whether they will be able to cope. For example, will trading standards cope with a whole range of scam-busting or code-forming operations which were previously done or overseen by the OFT? Concerning Citizens Advice, while there are some functions of Consumer Focus and some of the OFT with which it will be able to cope in its present structure, on others there is some doubt whether Citizens Advice will have sufficient resources and expertise to conduct them. However, I strongly support the transfer of Consumer Direct from the OFT to Citizens Advice.
I wish Citizens Advice well with its new responsibilities but there has to be a reserve power somewhere here to reverse that decision. As far as I can see in this Bill, and as far as I read the order, there is no power to reverse those decisions. My amendment would provide for that power. It is one that I hope would not need to be used, because we will have to settle down with the consequences of earlier decisions. However, if it is needed it ought to be in the Bill and I therefore beg to move this amendment.
Lord Marland
My Lords, I recognise the amendment and I have just handed the noble Lord, Lord Whitty, a letter that was written to him. I am sorry that he has not been able to see it or that it did not arrive on time, but I hope that it deals with a number of issues raised earlier in the debate which run concurrently. As he will see, that is a copy; there is one out there for him.
A number of these elements have already been debated; they have had a good airing. In addition, to remind and inform, the Government understand that the consumer regime landscape needs reviewing. We have committed to do that in 2018, so we have a long-stop position if the system is not operating. We believe that reversing the generic powers of the Secretary of State would be wrong, because it would create fundamental uncertainty for consumers. It is important in all this that the consumer understands the direction of travel and where it is coming from. As I said, we will be reviewing the landscape in 2018, which gives us a long-stop position if we all agree that the system is not working, but we believe that it will. On that basis, I hope that the noble Lord will withdraw his amendment.
Lord Whitty
My Lords, I certainly hope that when everything settles down, it will all work, but it is interesting that on other matters which the Government are changing, they are providing accounts reviews, reversals, sunset clauses, or whatever. It seems odd that they do not do so in this case. I hope that the Government will keep that under review. It may eventually need to be covered in the order or some parallel order if it is not in the primary legislation but, for today, I beg leave to withdraw the amendment.
Lord Whitty
“Completed mergers
(1) Section 22 of the Enterprise Act 2002 (“the 2002 Act”), (duty to make references in relation to completed mergers) is amended as follows.
(2) After subsection (1) insert—
“(1A) When considering whether or not a situation results in a substantial lessening of competition for the purposes of subsection (1) above, the CMA shall take into account—
(a) the long term ability of the merged entity to compete effectively; and(b) the likely long term effect on consumers.””
Lord Whitty
My Lords, I shall speak also to Amendment 24M. Amendment 24L deals with what issues the CMA will have to take into account when dealing with completed mergers. The principle should also apply to prospective mergers. When asking whether competition is lessened, as the clauses refer to, we need to consider why we want competition to be maintained or increased. Competition is not, in my view, an end in itself; it is about the efficiency of the newly created entity, its ability to compete—globally, in some instances—and whether it is in the long-term interests of consumers. In the vast majority of cases, the long-term interests of consumers are served by more competition rather than less. Therefore, lessening competition can be, and usually is, a detriment to consumers, but there are instances where that is not the case. Not all competition results in benefits to consumers.
Mergers can often reduce competition but sometimes manage to increase customer service and improve the way in which customers regard the supplier of the product or service. Unravelling mergers, particularly completed mergers, could, on occasion, result in less customer service. Hence, as well as a straightforward metric on what share of the market is covered by an already completed merger, we need to assess what the future of the new entity will be in terms of its long-term global competitiveness, which may not be relevant in all markets, but will be relevant in quite a few, and, in all markets, what is the effect on long-term consumer benefit of detriment. That needs to be written into the Bill. It should not be just a question of the metric of market share.
Amendment 24M also deals with consumer interests. Clause 23 deals with the investigative powers of the CMA. It includes provisions which are three and a half pages long but do not mention consumers once. Clause 23(2) deals with permitted purposes—that is, on what grounds investigations can take place. The amendment simply suggests that one of those permitted purposes ought to be in order to investigate situations when the CMA gets complaints or references from consumer organisations, specifically from those organisations which are designated as having super-complaint powers—that is, they can bring a worked-up super-complaint under present legislation to the OFT or the Competition Commission.
Designated bodies include Which?. They also include Citizens Advice and for the time being Consumer Focus. We will argue separately for a role for small businesses. A super-complaint has to be investigated. To get to that stage the consumer organisations must have a fully worked-out case. There are a number of cases that the OFT has looked into. I have a list here, which includes the supply of beer in UK pubs. Apparently CAMRA is a designated consumer organisation, which I had forgotten and am gratified to hear. We brought in a case when I was chair of the National Consumer Council and Consumer Focus on home credit. Citizens Advice first raised payment protection insurance, which is now a huge consumer issue, with its knock-on effect on other areas of consumer detriment yet to be completely resolved. There are a large number of super-complaints that have been considered over the last five years or so.
Consumer organisations also receive information about things that do not really amount to a super-complaint, or that would take too long, or that are too complex to turn into a super-complaint. At the moment the Bill covers neither the situation with super-complaints leading to an investigation nor complaints raised by designated consumer organisations that are short of a super-complaint. Amendment 24M deals with that situation. It deals with it under the mergers section and should also logically apply to the markets situation. These two amendments would embed more reference to consumers and the way in which consumers and consumer organisations can get into this competition system. I beg to move.
Lord Borrie
I support my noble friend Lord Whitty. He and the Minister, no doubt, will recall that when the Bill was going through the other place the then Minister, Mr Norman Lamb—I think that he now has a different post—got into a lot of discussion, because many people were concerned that the only interest of the consumer that was being expressed or mentioned was the consumer’s short-term interest. You can find references in Hansard, when this was being discussed in the other place, where the Minister emphasised more than once that we must be especially interested in the long-term interests of the consumer. These amendments are concerned with that.
Clearly you can have a merger which, in the short-term interest of the consumer, would seem to be a bad thing. A merger can lead to less competition when a company, rather than battling with other companies in the same field, is no longer inhibited by the competition from the company with which it is merging. We and the relevant regulatory bodies, especially the CMA, need to be concerned with the long-term interest. That is what matters in the long run. What immediately occurs this year or next year may be very unimportant compared with what it leads to. We want to know what are the long-term interest and benefit, or the disbenefit, to the consumer. That is what will count in the long run.
Lord Marland
My Lords, I am much taken with the words of the noble Lord, Lord Whitty, which were underlined by the noble Lord, Lord Borrie. The three categories that the noble Lord, Lord Whitty, mentions—efficiency, global leadership and the long-term interest of consumers, which was amplified by the noble Lord, Lord Borrie—are fundamental to everything that we are trying to do. I am glad that they have been so accurately and succinctly encapsulated by the noble Lords opposite.
We have to remember that the CMA is an expert in competition and in these issues. We must also remember, although I am the wrong person to preach this, that competition law is based on the principle of improving consumer welfare. I firmly believe that the CMA—through its, some would say, very narrow area of activity, which is focusing on competition—will put at the front of its list improving consumer welfare, efficiency and things like that. There will be two phases, as we know. First it will go to the OFT and then to the CMA, so it will have been looked at twice. We will debate later, if we may, the super-complaints system and how that operates—an issue to which the noble Lord, Lord Whitty, made reference.
I turn to Amendment 24M. The CMA will be able to use its powers of assessment for any merger, and that is exactly what it should be doing; it will look at it from top to bottom. It is provided with these information-gathering powers, which will apply end to end for the whole process of a merger. Again, we have that base covered. I reiterate that I am glad that the noble Lord and I are singing from the same hymn sheet in our belief that efficiency, global leadership and the value of the long-term interests of the consumer are fundamental. I invite the noble Lord to withdraw his amendment.
Lord Whitty
My Lords, I did not understand the beginning of the Minister’s helpful reply because it seemed to refer to the OFT and then the CMA. I shall come to the issue of the complexity of the internal two-stage process at a later amendment—
Lord Marland
Sorry, I should clarify that the CMA has both phases. Currently it has the OFT and the CMA as we phase in that policy.
Lord Whitty
I am grateful to the Minister for that, as well as for saying that he completely recognises the need for the long-term consumer interest to be understood in these investigations. If he could delete “understood” and say “written in”, I would be at one with him, but we shall see what happens at later stages. For the moment, I beg leave to withdraw the amendment.
Lord Whitty
“Mergers in the regulated financial services sectors
In respect of mergers or proposed mergers in the regulated financial services sectors, the criteria for thresholds shall be more than 25% of a defined market of any financial service sector or more than 15% of two or more markets where the merger or proposed merger cover more than one financial market.”
Lord Whitty
My Lords, the body politic has suffered over the past few years from two major crises—a dreadful economic crisis as a result of problems in the financial sector and a major political crisis, which is about to be debated down the hall, on the media side. The amendment suggests that there have to be special considerations in the operation of the new CMA in relation to both these areas. This is a probing amendment to see whether the Government agree that one needs to look at those two sectors in a rather different way—particularly, in this regard, the financial sector.
This issue is complicated by the fact that the Financial Services Bill does not yet have Her Majesty’s signature on it, as well as by the fact that the FCA, as it will be, will not have exactly the same kind of concurrent powers as some of the other sector regulators. There will be some powers in the Bank of England and in the proposed PRA, as well as in the FCA. Well, good luck with all that; the Government seem to be replacing a much reviled tripartite system of regulation of the financial sector with a quintipartite one, and we will see how that works out. One of the factors in that, though, must be the CMA.
The complexity in the financial sector, with ever-increasing interrelations between the different parts of that sector both locally and nationally—plus we are waiting for a banking Bill shortly, and other provisions are coming out of the banking commission—means that there is turmoil in what we believe ought to be the structure of the financial sector. Do we believe in Glass-Steagall or in, as the EU Commission requires lawyers to do, selling off some outlets in order to provide more choice? How does this fit with a general duty on the CMA to look at the structure of, among other things, the financial system? Following the financial crisis—admittedly things could have changed a little since then—we had about 40% of retail banking and about 30% of the mortgage provisions in one place. That seems to be a market situation that deserves investigation. Indeed, I recall telling the previous Government that at the time. However, it is something that has not been completely and definitively tackled and it will fall in part, at least, in the CMA’s lap.
I do not expect the Government to accept the wording of this amendment, but it indicates that we will need to have some threshold provisions that probably need to be different. It may be in the area of the structure of the financial markets. We need to know which markets, how we define them and who does it—the CMA, the FCA or both?
Although I do not expect the Minister to accept the amendment, I do expect the Government to recognise that whatever happens, the CMA will have to give particular priority to the financial sector and will almost certainly need to have different criteria in relation to that sector than elsewhere, if only for global and political reasons. I beg to move.
Lord Marland
I am sorry that telling the previous Government fell on deaf ears. I fear that it might do the same as regards this Government, as the noble Lord has already recognised. We all recognise what the noble Lord is saying. Incredible hardship has been caused to our great country and we must make sure that it does not happen again. I believe that the OFT and CMA will inherit these powers. There is a governor in place with two criteria. One is that if the target’s turnover is greater than £70 million, the merger can be investigated and/or if the combined share of supply or acquisition of particular goods and services of the companies is 25% or more, that is known as the share supply threshold, which can also be investigated.
There are some pretty low thresholds in place which would capture the excellent examples given by the noble Lord, particularly in the mortgage market. These have to be applied rigorously. I hope that, as we debate the Bill, more will come out on the important issues that he raises. On that basis, I hope that he will withdraw his amendment.
Lord Whitty
I thank the Minister for that. We may well return to the issue, but for now I beg leave to withdraw the amendment.
Lord Whitty
“( ) The provisions of section 23 relating to mergers and prospective mergers in the media and financial services sectors shall also apply to the provisions in this section on interim measures.”
Lord Whitty
My Lords, we now move on to the other contentious sector: the media, and in particular the media sector dealing with news provision.
Amendment 24P simply argues that any special provision in the financial and media sectors needs to be reflected in the interim provisions as well as the basic provisions. In one sense, I will say no more about that because there will be a consequential amendment if the Minister agrees. The key amendment in this group is Amendment 25EA. When it comes to the media, particularly the news media, much wider issues are relevant with regard to market structure than those of size, market share, abuse of market power or unfair trading.
It will not have escaped the Committee’s attention that over the past few months there has been considerable attention on this area, with a fair amount of debate on the role of newspapers and media ownership over our national life and a huge range of aspects of public interest. As I said before, a rather oversubscribed debate will take place in the Chamber shortly. We will no doubt return to this issue. But most of that debate is not concerned about the issues relevant to this Committee and Bill. It is concerned with issues of press’s behaviour, privacy, the freedom of the press, possible regulation as against state control and so forth. That has nothing to do with what I am talking about here.
The issue that lies behind these debates—I will not be pontificating on it today as I cannot speak in the Chamber at the same time as I am speaking here, although I see that my noble friend Lord Stevenson is able to do so, if he is able to speak at all—and the reason why the press has been in its own headlines for so long, relates to the structure of the market and the structure of ownership. I am gingerly stepping into that debate today; I fear that we will almost certainly return to it.
A truly free press requires diversity of opinion, and that requires plurality of ownership. I am not one of those who thinks that the Murdoch empire is uniquely evil or that its journalists are uniquely scurrilous or unscrupulous, although one or two of them seem to be pitching for that title. The issue is that it is uniquely powerful and dominant in market terms. That is an issue for the Bill, where the issue of state regulation is not the same as is being debated in the Chamber, because there has always been regulation in the Competition Acts, the Enterprise Acts and the Communications Acts of the structure of the media sector, as of others.
Lord Justice Leveson looked at that and made eight recommendations right at the back of his report which have received very little attention but are relevant to the Bill. Towards the end of the Statement on Leveson, I asked the noble Lord, Lord McNally, whether the Government will take advantage of the Bill, going through the House as it is, to add to it provisions implementing those relatively uncontroversial recommendations of Leveson. As I said, that is nothing to do with state control or a free press but concerns plurality and competition.
In his response, the noble Lord did not say no. He said that it was above his pay grade. The noble Lord, Lord Strathclyde, was sitting next to him, so apparently it was above his pay grade as well. I suspect, with regret, that it is beyond the pay grade of the noble Lord, Lord Marland. It cannot be beyond everybody’s pay grade. Those eight paragraphs at the back of the summary of Leveson are bang in this area. They focus on plurality, how you measure it, the need to cover related sectors such as the internet as well as the press, the need, as we discussed in relation to the financial sector, for a different threshold of intervention, the role of Ofcom, periodic reviews, public interest, and so on, and the role of the Secretary of State.
Those are areas of interest to which the competition authorities will eventually have to pay attention. Unless the Government consider that the structure of the news media requires entirely separate legislation on the market structure front, which I think would be a dangerous road for them to go down, it is relatively easy for them to consider it in the context of the Bill. I would rather advise them to do so.
My Amendment 25EA concerns the least controversial, I think, of the Leveson recommendations. We could have come up with a whole lot of amendments attempting to implement them all, but I think that that is the Government’s responsibility. The ball lies in the Government’s court on this. They have said that they accept all but the contentious dimensions of Leveson. They have not objected to these provisions. My amendment simply states that, before any intervention by the Secretary of State, there has to be consultation on media issues. That is uncontentious in itself but, put into the wider context, it provides a base for some intervention in this area.
Whoever it is—at whatever pay grade—who decides these things, there needs to be an early decision on whether we are going to use the Bill to implement the plurality recommendations. I think it would be easier for the Government to do it in the Bill and I rather advise them to do so. I am sure that the Minister cannot tell us today the answer to that, but if not today, then by Report—which will be towards the end of January, at the earliest—we should know which way we are going. That will mean providing either significant amendments to this part of the Bill or a clear indication of an alternative approach. The delay, buck-passing, and so on, cannot go on that long. I do not expect much from the Minister today, he will be gratified to hear, but I do expect the Government to come back on this one and I am putting the ball clearly in their court. I beg to move.
Lord Marland
I thought that that was a brilliant speech by the noble Lord, Lord Whitty—
Lord Borrie
My noble friend Lord Whitty has made a most useful point. There is no doubt at all that this Bill, and this part of the Bill, is a convenient vehicle. Governments often look for convenient vehicles to do things that they have already decided to deal with. In this case that may not be so, but I suggest that if it seems convenient to the noble Lord, Lord Whitty, I have no doubt that it will seem convenient to some members of the Government.
I think that what we on this side of the Committee this afternoon are saying is that we are not worried about particular words in an amendment, and we are not expecting the Minister to accept these particular amendments. However, we are expecting the Minister to take this back to his people with higher pay rates than he has, and indeed to the Ministry of Justice and all the other departments that are probably interested in this subject, because plurality of the media is vitally important. It is a public interest concept beyond competition. It is subsidiary to competition, in a sense. We want competition because we want plurality. We want plurality because we want diversity of opinions throughout the industry. The Bill is a convenient opportunity to deal with an aspect of Leveson which, I am sure, is not the most controversial at all—but it happens to be with us, and it happens to be on the Government’s agenda. There also happens to be a Report stage and a Third Reading at which he can take this further.
Lord Brooke of Sutton Mandeville
My Lords, knowing the nature of this Government and the fact that not everyone in it is paid, I wonder whether before my noble friend the Minister gets up, he could tell us whether he has a pay grade at all. If he does not then, quite clearly, he has an all-inclusive alibi against anything which is said to him from the opposite side.
Lord Marland
As I was about to say before I so rudely interrupted the speech of the noble Lord, Lord Borrie, for which I apologise, I thought that the noble Lord, Lord Whitty, made a brilliant speech. If he wants to go into the Chamber I will do a deal with him: he can dump the rest of his amendments and he is very welcome to go.
The Deputy Chairman of Committees
My Lords, there is a Division in the Chamber. The Committee will be adjourned for 10 minutes.
Lord Marland
I will rewind the clock, my Lords. This has been a brilliant debate and I do urge the noble Lord, Lord Whitty, to consider my offer of going next door and withdrawing the amendments. The offer is still open. The noble Lord, Lord Brooke, mentioned pay grades. I know exactly whose pay grade this is in. Certainly it is not in mine, because I am in the unpaid grade—voluntarily, I hasten to add, although most people would think that it was by necessity rather than by volunteering. This is in the pay grade of the Prime Minister. He will look at all this. There is a lot of aerial warfare going on at the moment—discussion which appropriately should be fully aired and debated. We have, obviously, notified DCMS of the noble Lord’s considerations of this recommendation, and it is considering them. It will consider them in the round in view of the overall Leveson position, and then that will rise like cream to the top to the Prime Minister for him to decide. As the noble Lord rightly says, we will doubtless revisit this. Indeed, more importantly, we should revisit it. On that basis, I hope that the noble Lord will withdraw his amendment.
Lord Whitty
My Lords, I am grateful to the noble Lord for his remarks. When the cream eventually reaches the Prime Minister I hope at least a footnote on this debate is enclosed.
This is a bigger and in some senses, a wider issue, but it is also an issue that is very relevant to this Bill. It is one that we need to get a decision on relatively early. There has been some move to all-party discussions on the other side of Leveson. If there is legislation to be proposed, in whatever form, it will have to include this. I would hope that we can come through this very difficult crisis with the news media with a cross-party agreement on how we should proceed. I hope that what little we can do here will help that. In the mean time, I beg leave to withdraw the amendment.
Viscount Eccles
Viscount Eccles
My Lords, I want to probe the Government’s attitude towards penalties in this part of the Bill. My amendment would take out an order-making power which is there by virtue of an amendment to Section 94 of the 2002 Act. There is already, of course, a power to settle turnover and to levy damages. That power comes from Section 28(2) of the 2002 Act. Indeed a statutory instrument was laid in 2003—the Enterprise Act 2002 (Merger Fees and Determination of Turnover) Order 2003.
Why do we need a new power and why do we need the new power to run in parallel with the old power? The Government state in their submission to the Delegated Powers and Regulatory Reform Committee:
“This new penalty will run in parallel with the existing civil enforcement mechanism for failure to comply with interim measures under section 94 such that a person could potentially be liable to damages under Section 94 and a financial penalty under clause 25.”
Some explanation is needed of the Government’s approach to penalties in this part of the Bill. In following a policy of simplifying and deregulating things, and creating more certainty for business, it could be argued that this overlap between two penalty regimes is going in the opposite direction. In thinking about that, I would be interested to know from my noble friend, what has been the experience under Section 28(2) and the statutory instrument which flowed from it. Are we absolutely sure that we need both? I beg to move.
Lord Marland
My Lords, I am grateful to my noble friend for raising this complex issue. In terms of the methodology, I undertake to look at it in some detail. This will come along in secondary legislation, once we have had a chance to look at it, because it is not a straightforward matter. We are applying rules in terms of financial turnover and in terms of percentage of the market. We then need to know how to enforce the penalties. Clause 25 provides the CMA with the power to impose a fine of up to 5% of the worldwide turnover. That is the effect of the clause that we have created. It is complex and my noble friend has drawn our attention to it. We will look at it in secondary legislation rather than having something in the Bill. I hope that that will encourage my noble friend to withdraw his amendment.
Viscount Eccles
I am grateful to my noble friend for that reply. It probably needs to be looked at because it seems to me that here we have some sort of tightening of the screw. If you believe in tightening the screws—frankly, I do not—and you believe in civil sanctions and administrative fining, which I find a difficult subject, one has to justify why one is hardening up the regime. I do not have up-to-date information so I do not know whether any damages have been levied under the existing statutory instrument. If there have not been any, which seems quite likely, it is even more important that this hardening of the position be justified. I beg leave to withdraw the amendment.
Lord Whitty
“(3) Subject to the time limits set out in Schedule 8, the Board of the CMA shall make procedural arrangement for the operation of investigations and references conducted by the CMA.”
Lord Whitty
My Lords, these amendments have been tabled simply to raise the issue. The Government may well have a different solution. They all relate to the incredibly detailed provisions in Schedule 8 for the procedures and time limits of how the CMA should carry out its business. We have nine pages of procedures set down in the schedule. I think it is a lawyer’s paradise and a regulator’s nightmare. These amendments suggest different ways in which we can simplify them, while at the same time remaining bomb-proofed to judicial review and so on.
Some of the problem stems simply from the amalgamation of the two bodies and having to preserve two stages of the investigation. Consequently, there will have to be ring-fences, Chinese walls and, for all I know, barbed wire and high hedges, but it does not need to be as complicated as this. Is setting it out in statute, in a complex and incomprehensible schedule, the best way to deal with it? My noble friend Lady Hayter mentioned the other day that it might be better to leave the board of the CMA to sort out in detail what the procedures should be, like most regulators and most organisations. The role of the board could be separated from the role of the investigators, as other regulators, such as the pensions’ regulator, do.
These amendments are tabled to give us a brief debate on the issue. They offer a number of alternatives. Amendment 24Q would make it clear that the board can set its own procedures, subject to the time limits. Amendments 25ZA, 25ZB and 25ZC would delete those paragraphs of Schedule 8 that relate to procedures and just leave the time limits. The Question that Schedule 8 stand part could delete the whole of that schedule and leave everything to the board. There are probably other options.
The Minister’s amendment was a tiny snip. We need wholesale pruning of this schedule, but it does not appear to be on offer. I seriously suggest that, if we leave it like this, the CMA will get caught up in procedural challenges and threats of judicial review. Every corporate lawyer in the land will be looking at this and ensuring that they follow every dot and comma of it. I think that the Government would be wiser to prune it and leave much more to the CMA board to sort out for itself. I beg to move.
Viscount Eccles
My Lords, I am very grateful to the noble Lord, Lord Whitty, because his contribution means I do not really have to say much about Clause 26 stand part. The real effect of knocking out Clause 26 would be to knock out Schedule 8, so perhaps we can elide the two.
This is a very tricky area and I am sure that it should be thought about again. There is already a time-limit regime—lots of it from 1998 and 2002—and there is a clear general duty of expedition, which is referred to in Clause 26:
“duty of expedition in relation to references”.
It is clear in the current legislation that everyone is supposed to do things in as timely manner as possible. The question then arises of why the Secretary of State thinks that his or her intervention is helpful in this matter, which was very much the line along which the noble Lord, Lord Whitty, was going. I cannot see that it is helpful, nor that it is consistent with the coalition’s policy towards these matters. I thought that we believed in decentralisation, deregulation and trusting the professionals. It seems quite strange to introduce this regime, and of course it has to be hedged about with all sorts of escape clauses. If something gets as far as Brussels, all time limits are off the table; it says so in the schedule. The 40 days can be extended by 20 days, you can stop the clock in certain circumstances and—again I agree with the noble Lord, Lord Whitty—the lawyers will have great fun, as they always do, with this kind of overcomplicated and apparently statutorily enforceable system because they find ways around it. I am very much in support of the noble Lord’s amendment—if it is not to be accepted as it is, I very much support the way in which he put it across.
Lord Marland
We have had two excellent points of view, but the reality is as follows. Britain is seventh worst out of eight regimes in the world in terms of speed, in a review carried out by KPMG. That is a terrible place to be. We are seeking here to give some real clout to the process. Yes, the OFT exists on a 40-day rule but it is not statutory, and as a result 15 out of 76 cases have exceeded that time limit. We want to enforce that limit because it is absolutely no good being seventh out of eight in the world. We are enforcing the 40 days and we have put a period of undertaking in lieu of 50 days, as opposed to nil, and a period of implementation of 12 weeks, as opposed to nil. That is a very big step forward.
Often you are damned if you do and damned if you don’t, but one thing is for certain: we have to get our speed and efficiency up in getting these deals sorted, because that sends a clear message to industries that are merging. As we know, businesses want one thing, and that is clear messages. I therefore feel that this is the right approach for this Government. I do not totally disagree with the noble Lord, Lord Whitty, as on many occasions—I have rarely disagreed with him—we could perhaps have taken a more aggressive stance. This is a very good start, though; we will of course keep these things under review, but this is progress. On that basis, I hope that the noble Lord will withdraw his amendment and, when we come to it, that my noble friend Lord Eccles will do the same.
Lord Whitty
My Lords, I thank the noble Viscount for his support on this issue; I shall definitely support him on the next one. He is probably silent because there is not a lot more to be said. But yes, speed is of the essence and expedition ought to be a clear and central responsibility of the board of the CMA. Frankly, having all this to check and double check is the enemy of expedition, not its friend. Although I totally agree with the Government’s objective here, I do not think this will achieve it. Perhaps they will look at it again at some point. I beg leave to withdraw.
Viscount Eccles
Very briefly, my Lords, my noble friend’s answer is an abdication of management. If you believe that public bodies should be of a certain strength and have a certain independence but then you say, “Of course, they cannot be trusted to do the job unless we can visit them and beat them over the head every now and again”, if we keep on going down that road, we will not only be turning more and more people out there in the country off the political system but completely missing the right target, which is not the legislation but the behaviour under it. That is what Ministers need to concentrate on. I am very disappointed that my noble friend cannot say whether, since May 2010, there has been any improvement in the performance of managing the way that time is spent in the OFT. If that is so, it is a kind of double abdication.
Lord Hunt of Wirral
“Small mergersSmall mergers
(1) Section 23 of the 2002 Act (relevant merger situations) is amended as follows.
(2) After subsection (9) insert—
“(10) A relevant merger situation shall not be created where the value of the turnover in the United Kingdom of the enterprise being taken over does not exceed £5 million.””
Lord Hunt of Wirral
My Lords, in proposing this new clause I am concerned about the impact of the current merger regime on small companies. I hope that every effort will be made by my noble friend to lighten the burden. Small companies wishing to grow through merger face a disproportionate cost in the professional fees that have to be incurred in dealing with an OFT investigation. I am seeking to highlight small mergers and to insert, after Clause 26, a new clause which would exempt such small mergers.
At the moment, the Bill misses a great opportunity to exempt or deregulate small mergers. I would have thought that there could be a simple measure based on turnover, which would allow small companies to merge and restructure without the threat of costly intervention by the proposed Competition and Markets Authority. Small companies just do not have the financial and management resources to justify responding to an in-depth CMA review, which I am told would cost between £50,000 and £100,000 or even more. The risk alone of an in-depth review, with the smaller risk of a phase 2 review, can lead to small and defensible mergers being abandoned at quite an early stage. I want the Committee to understand that I believe there is a point where the costs of reviewing a potentially anti-competitive merger exceed any likely damage to consumer interests.
On its own reports, the OFT has reviewed mergers where the turnover of the acquired company was about £100,000. I have also been made aware of a merger of two small companies where the target had a turnover of £500,000; with the OFT narrowly defining the share of supply, there were legal fees of over £100,000 in dealing with the OFT investigation. With the associated cost of professional fees and management time easily reaching a similar figure it must be clear that merger activity would be reduced and growth opportunities for small firms would be diminished unless this approach changes, and I hope that it will.
In this new Clause, I suggested that a turnover figure of £5 million for the acquisition could be applied. That is a proportionate and reasonable figure. This received strong endorsement from the consultation, when one analyses the responses. It is interesting that in Italy, Prime Minister Monti, who is still the Prime Minister and was formerly the EU Commissioner for Competition, has recently announced a liberalising measure that introduces a new turnover exemption of €47 million for the company being acquired. I do not want to say that we should follow that example, but I believe that it is possible to introduce a safeguard to limit the use of this exception over a certain time period to address the concerns of a large company increasing its market position. I leave it to my noble friend to decide what this safeguard should be. This amendment would allow more freedom for small companies to merge and grow without unnecessary regulatory cost. I beg to move.
Lord Berkeley
My Lords, I have a few worries about this amendment. It sounds fine for the companies. They will merge, grow and make more money. That is wonderful. What if you are a consumer at the other end of these events? I see something of this in the West Country where I live. There are a number of quite small companies there and occasionally they play around at trying to take each other over or merge, and you end up with monopoly situations. I do not know what the solution is.
A monopoly with a turnover of under £5 million is just as dangerous to the consumer as a monopoly with one of £100 million. Competition is key. I do not know whether there is a simple way for the new authority to look at this and possibly not get involved but suggest another route. It is wrong to put a figure on this and just allow companies to merge, because they are small, without looking at the consequence of the merger on the customer and whether there is still competition for whatever services that are provided rather than turning the company into a monopoly.
Viscount Eccles
My Lords, I very much support my noble friend Lord Hunt of Wirral’s amendment. Key to this is the definition of “market”. You can dance on the head of a pin and end up with a single supermarket in the Scilly Isles or somewhere and say that that is a market. First, this is a very good amendment and I hope that the Government will take it up. Secondly, the key is to be clear in the publications that are put out what a market is. I can remember occasions when we sat down and argued extensively over whether something that was said to be a market really was one. That is key to coming to the right judgment about whether something should be referred.
I doubt that there will ever be a market where a company has less than £5 million turnover and the anti-competitive effects are such that it should be referred. It comes back to one thing only. Are the public paying higher prices than they should reasonably expect to pay? The rest is fluff and twitter. It is the prices that the public are paying that matter. If there were examples, maybe there would have to be a review of a figure of £5 million, but £5 million is pretty safe on the basis of an accurate definition of “market”.
Lord Mitchell
My Lords, I have listened with great interest to the words of the noble Lord, Lord Hunt of Wirral, and the noble Viscount, Lord Eccles. We, too, are always looking for reasonable ways to ensure that SMEs—or SEs, small companies, in this respect—are not subject to too much regulation.
Perhaps I am confused on this, but currently in the 2002 Act there are two criteria as to whether competition authorities should take an interest in a merger. The first, which we have spoken about today, is whether the turnover of the business is in excess of £70 million. This is a considerably higher level than what is being proposed today, so it is unlikely that any company with a turnover of £5 million being taken over would be investigated.
The second criterion, though, the one that we are paying most attention to today, stipulates that where two merging businesses have an effective market share of over 25%, that becomes a relevant merger situation for the competition bodies to consider. That 25% is an important threshold as to whether some form of monopoly is taking place and therefore, as the noble Viscount said, the value to the consumer is affected prejudicially.
At present, it appears that the only effect of Amendment 25 is to exclude the possibility of the CMA looking into a merger if the turnover of the business being taken over was above the £5 million threshold, even if the combined market share were to be more than 25%. Those are scenarios in which we might not wish to tie the CMA’s hands in this fashion. A tech company, for example, could have a low turnover but a high market share, particularly in a locality, and as a result the CMA might want to take a look at a merger between it and a dominant company in that market, or there could be some form of geographical dominance.
I find myself sympathetic with the thinking behind this because, as far as I am concerned, the more competition the better at all times, and I am also sympathetic with keeping red tape away from small businesses. However, it appears that when it comes to mergers, such protections are already offered, and this amendment could damage something even more important to SMEs—a strong competition environment. We definitely want to think about what has been said today; some important points have been raised. We will wait for the next round at Report.
Lord Marland
My Lords, the amendment is interesting; on the one hand, the noble Lord, Lord Berkeley, has made a compelling point, as indeed, on the other hand, did my noble friend Lord Hunt. Both points, although they differ, are things that we all want to safeguard against. The other point that was not made is that the amendment would not safeguard against the big company buying the small company, which we also want to safeguard against. I think that we are all talking the same language and, on that basis, if my noble friend Lord Hunt of Wirral, will allow us, I think we ought to take this issue away, roll our sleeves up a little more with some hot towels—or cold, if he prefers; some days I prefer cold, I must say—and look at it a bit further. If he is happy on that basis, I ask him to withdraw his amendment.
Lord Hunt of Wirral
My Lords, I am not just happy but enthusiastic in my response. There are not many Ministers who respond so positively and with such an open mind. I quickly say, “Done!”. I recognise that the noble Lord, Lord Berkeley, has an important point about protecting the consumer, and I recognise that I still have to persuade the noble Lord, Lord Mitchell. However, I am grateful to my noble friend Lord Eccles for his support. Yes, let us go away. As we all talking the same language, we do not need an interpreter; we just need action, not words. I beg leave to withdraw the amendment.
Lord Marland
“( ) omit paragraph (b),”
Lord Whitty
“(5) In a “cross-market reference” the key concern will be whether the practice or practices identified in the reference cause significant consumer detriment.
(6) In the case of a “cross-market reference”, the markets identified as the most likely areas for occurrence of the potential cross-market problem at the launch of the investigation may be extended to other markets if prima facie evidence suggests the possibility of the same practices arising in those markets.”
Lord Whitty
My Lords, the amendment deals with cross-market issues and, I hope helpfully, suggests some flexibility. Other amendments simply insert a clearer reference to the consumer interest. I greatly welcome the reference in this part of the Bill to cross-market cases. Often, consumer or supplier abuse found in one sector is also rife in others. Traditionally, monopolies commission, OFT or Competition Commission references and investigations have tended to be siloed in vertical divisions. There are some horizontal abuses, in particular in relation to what I would call trading practices rather than necessarily market dominance. I suspect that with the growth of digital selling, we will have more consumer detriment arising from techniques which apply across a whole range of sectors.
Amendment 25B is a probing amendment to try to find out how this will work. I am not clear whether the cross-market reference has to designate both the practice and the sector in which it is suspected that it applies, or whether it just has to designate the practice. That is unclear in the Bill. If it requires reference to the sector as well, then Amendment 25B says, if you have found it in one sector, or two or three sectors, and you are starting an investigation or a reference, you need to provide for that to be extended to others. One frequent market or unfair trading abuse is the misuse of prepayment. That is a traditional one. That can apply in different respects to everything from paying for a ticket to a pop concert to buying a sofa or booking a holiday—there were tragic issues with the Christmas club and Farepak a few years ago—or paying for gym membership. If the service does not transpire or the goods never arrive, it does not really matter which sector the business is in, the practice needs tying down.
I hope that that is what is covered by the cross-market reference. I need confirmation, however, that you do not have to stipulate sector by sector where the suspicion arises. An investigation could start out knowing that there are problems in one sector but not until well into the process identifying them in another.
The other amendments in the group simply re-emphasise the need explicitly to look at competition from the point of view of the long-term detriment of consumers. Schedule 9 again does not once mention consumers. Amendments 25C to 25E would simply write into the key paragraphs of that schedule,
“to the detriment of consumers”,
to make it clear. I beg to move.
Lord Marland
My Lords, no one knows more about consumer protection than the noble Lord, Lord Whitty. He had a distinguished time as chairman of Consumer Focus, for which we are very grateful. It is also interesting to learn what he does during the day: he went to a pop concert, bought a sofa and had a holiday—the man never fails to surprise me. He is of course right about the consumer, and far be it from me to disagree.
I would like to point out that his amendments, being probing amendments, have asked the right questions, and I can answer them. One of those questions was whether this applies to both practice and sector or one or the other. It applies to both, and I hope that that gives him assurance. The existing provisions in Section 135 of the Enterprise Act will enable the CMA to vary the scope of a cross-market investigation. That was news to me and I think it is to him as well. I assure him that enforcing effective competition for the benefit of consumers is already embedded within the market regime, and I hope that that gives him the comfort that he was looking for. I hope that on that basis he feels able to withdraw his amendment.
Lord Whitty
My Lords, I thank the Minister for that, particularly the reference back to the Competition Act, which I had not picked up. It is quite clear that we have that flexibility in a cross-market reference to a particular practice.
On the schedule itself, I accept that the Government’s intention is that it is the consumer detriment or benefit that needs to be assessed. It would be nice if the parliamentary draughtsman could occasionally remind us of that; I am afraid that he has failed to do so in this schedule. If there is anything that the Government can do quietly at later stages without upsetting too many people, but pleasing me, I would be extremely grateful. In the mean time, I beg leave to withdraw the amendment.
Lord Whitty
My Lords, I have tabled my intention to oppose Clause 29. It is not that the clause does not bring in some useful stuff, but I find myself in some bemusement over quite what the Government ultimately intend in relation to the public interest and the kind of interventions in that regard. I am hoping for some clarification of the strategy here. I do not yet know whether or not I agree with the Government because it is not clear in the clause, or in anything that anyone has so far said, what lies behind Clause 29. I hope that I will be a bit wiser at the end of this debate.
At present, as I understand it, the criteria under which the OFT and the CMA operate are clearly related to market structures or competition, and only the Secretary of State can intervene to require them to look at wider issues of public interest or himself deal with issues of public interest. A narrow definition of what the public interest is operates at present, principally, as I understand it, relating to national security. We all know, though, that when high-profile mergers come up, the public, by which I mean both interested parties, consumers, suppliers, workers, the financial press and so on, are often concerned about much wider issues than competition as such—the issues of employment or the potential loss of employment, the loss of UK control, technology, intellectual property or international competitiveness as well as the long-term effect on consumers, workers, communities, the environment, and so on.
Almost all these issues get raised when we are faced with a big merger. For example, in the Kraft takeover of that old and respected English company, Cadbury, all these things were gone over with a fine-toothed comb, but none of them was particularly relevant to the final agreement to the merger. Perhaps I can make one little gripe: despite assurances, the Bristol factory in fact closed. There was no issue of national security and no other issue on which the Secretary of State felt able directly to intervene, although there was a requirement frequently to explain the position to Parliament and to committees of another place.
There are two arguments. One is what constitutes the public interest beyond the stipulations of the competition regime. The other is who invokes the public interest and how. As I read Clause 29, it seems to attempt to transfer some of the responsibility of the Secretary of State on to the CMA; it does not at all attempt to define the public interest. One could take different positions on this. Some would say that the Secretary of State should retain some responsibility, as is largely the case now. Some would say that he or she should retain that control but have a wider range of criteria on which to define the public interest.
You could also say that the CMA should be able to invoke the wider public interest, such as competitiveness or employment issues, but that the Secretary of State should still retain powers to intervene as an alternative. Others say that the Secretary of State should be the judge of national security issues but that the CMA should have other aspects of the public interest in mind in its investigations and decisions. At the other extreme, some say that the CMA should have the sole role and that politicians should keep out of it. I think that the Government are veering towards that position but are not quite getting there. The cleanest position, which some of my colleagues have taken, is that the Secretary of State should have the sole initiative in issues of wider public interest and that the public interest definition should be narrow.
I take a wider view; I tend to think that the CMA should be able to initiate consideration of what the wider issues are if it considers that those could outweigh the competition issues. I do not think that, on this front, the Government’s position was clearly spelt out in the House of Commons or elsewhere. This clause stand part debate gives the Minister the ability to spell out clearly and precisely where the Government are going with this. Once we are clear on that, we can decide whether we take it any further at a later stage, but at the moment I am essentially unclear, so I hope that it can be clarified now.
Viscount Eccles
My Lords, in supporting the thesis of the noble Lord, Lord Whitty, I just wonder whether this is meant to be unclear. It is very long and there are lots of tos and fros. You get caught up in considerations of exactly how independent the CMA is when something called public interest comes on the horizon. My suspicion is that it is not very independent at all. Schedule 4 makes certain that you had better do what you are told when the chips are down. It also seems to me that the weakening of the operations of phase 2 by the creation of a panel that floats freely without being rooted into the ground in any way that I can see also makes it all a bit unclear. Surely the sort of panels that there have been on the Competition Commission have been pretty good at public interest considerations, which vary widely. I entirely agree that there needs to be some clarity as to what this is all for.
Lord Marland
My Lords, I will break with tradition and, much to my officials’ relief, read from a prepared script on this one, because it is way above my unpaid grade.
Public interest cases are particularly important to the UK, so it is right that the Secretary of State receives the best possible expert advice on these cases. This clause gives the Secretary of State the option to ask the CMA to look at public interest issues in the round with competition issues. I hope that that clarifies one of the points the noble Lord, Lord Whitty, made. This will enable the CMA to provide comprehensive recommendations on both issues. The Competition Commission can already do this in merger cases.
This clause does not give the Secretary of State additional powers to intervene in market investigations—he already has the power to intervene on certain public interest grounds, and these are not changing. Currently the Secretary of State can only intervene where there are issues of national security.
It will not be the CMA’s decision on where the balance is between competition issues and public interest issues. This will remain, as it should, a decision for Ministers who are accountable to Parliament. The CMA will be the UK’s primary competition authority and will therefore overwhelmingly be focused on competition enforcement.
The CMA, like the Competition Commission, will have expert staff and panel members with a wide range of experience. If the CMA does not have enough in-depth expertise on the specific public interest matter in question, the clause allows for a public interest expert, or experts, to be appointed, who would work alongside CMA teams.
To my way of thinking that gives a very clear understanding of the position on a quite complicated issue. I think the noble Lord, Lord Whitty, has initiated a very good debate. On that basis I commend this clause to the Committee.
Viscount Eccles
The trouble is that it does not tell us why it is there. It tells us something about what could happen under it, but not why it is there. I would enjoy a freedom of information application to find out where this started and what it really means.
Lord Whitty
I thank the Minister. The noble Viscount, Lord Eccles, as ever, is opening my eyes to wider objectives of government legislation. The objective of obfuscating everything is, I suspect, part of legislation more frequently than we would care to admit or like. I felt today it worked slightly to clarify the Government’s position. I am very grateful to the Minister for that. I shall study his words carefully, as they say. My initial take is that I might, on balance, disagree with it, but I will need to look at that and may return to it. It was a useful question to ask and we will see how this works out in practice and whether we need to return to it on Report. I beg leave to withdraw the Amendment.
Lord Whitty
“(d) assisting the CMA in assessing complaints brought to them by bodies designated as super-complaint bodies, including complaints which are not formally super-complaints.”
Lord Whitty
My Lords, I have effectively spoken to this under an earlier item, so I will not move it today.
Lord Berkeley
My Lords, this is a very quick, probing amendment. It gives the CMA powers to seek information in support of a market study. That is useful. I imagine this is where one occasionally reads about dawn raids on companies that allegedly may have transgressed—it makes interesting reading. However, when one talks about the sector regulators, it is not clear to me whether they would also have the same powers of investigation in Clause 30 as the CMA would have.
I have been talking to one or two of them and will bring some of the issues up in a later amendment. It would be useful to know the position on this. I think they would find it useful to have such powers in the initial stages of their investigations. It certainly is not clear to me whether they do have these powers and I look forward to the Minister’s comments.
Lord Marland
My Lords, we are trying to streamline the processes, as the noble Lord, Lord Berkeley, would acknowledge. We are trying to speed them up, as we have already debated. That is central to the Bill. As a result the CMA needs access to the relevant information, which it has. There have been a number of cases where the OFT has had difficulty getting to the information that it requires from the market-study stage, so this is being done to make sure that it does. The clause extends the powers to request the information and ask parties to give evidence so that consistent powers will cover the whole piece. They are subject to statutory limits. The most important thing is that business has clarity of vision and knows the direction of travel, and that is why speed, time limits and penalties send a clear message to business.
The noble Lord, Lord Berkeley, asked quite rightly if sector regulators have Clause 30 powers. We need to look at this more carefully. We have not come to a firm landing on it, but we could perhaps have dialogue on this together before Report. If we can bottom that out we will, but if we cannot we will make a commitment to look at it in secondary legislation. I commend this clause.
Lord Berkeley
I am grateful to the Minister for his comments. As we discussed in a previous amendment, one of the objectives of the Bill is to streamline things and reduce the costs of activities connected to investigations. I am sure that he is aware that the better sector regulators—I will talk about them later—are probably able to undertake this work cheaply and quickly, and with sectoral special knowledge that you would not expect the CMA to have. I welcome his interest in looking at this, and perhaps we will be in touch before the next stage. On that basis, I am happy to see the clause stand part.
Lord Whitty
Lord Whitty
My Lords, this amendment and the others in this group are pretty straightforward and deal with the level of fines in relation to Schedule 11, which relates to non-disclosure or falsification of information in the course of an investigation. It is about the maximum level of fines.
The maximum level of £15,000 or £30,000 would be significant fines to the kind of small businesses to which the noble Lord, Lord Hunt of Wirral, referred earlier. For many in large markets, though, these would be a flea bite. For the investigatory powers to work, they need to be able to ensure that the procedures are honestly met by those companies that they are investigating.
It is unlikely in any case that small businesses would be caught under these provisions; it is middle-sized and larger companies that are likely to be caught. You need a deterrent to dishonesty, which is effectively what this is. We are suggesting that up to 10% of turnover would be an appropriate deterrent whereas, frankly, £15,000 would not. That runs through all these amendments. The Government would be wise to look at this again. I beg to move.
Viscount Eccles
My Lords, I part company a little from the noble Lord, Lord Whitty, here and I shall illustrate why. I think that the Competition Commission has had the power to exercise civil sanction or administer fines—I am not too sure exactly what it can and cannot do. On the information that it has sent me, it has not ever done so, yet I have not heard any complaints that people have not given it the information that it has asked for.
A fundamental point needs to be remembered. We live under the law by consent. If the assumption is that people will live under the law only if they are threatened with fines and that the fines are big enough, and you go on down that road, in the end, people will not obey the law by consent.
Lord Borrie
Surely the noble Viscount would agree that these things sometimes have a deterrent value. People know about them; there is no need for them to be served with a writ.
Viscount Eccles
I quite agree about deterrents: a nuclear bomb is a deterrent. You have to provide a deterrent. Everyone will say, “Well we expected that, so now we’ll only go to 70 and not 90”. I am sorry, but I do not agree with the philosophy behind such a system. The minimum number of sanctions and penalties that you can achieve is the best, and the greatest degree of things working properly by consent is the best way to go.
Lord Marland
I have to disagree with my noble friend Lord Eccles because I believe that you should have deterrents. I think that the general public would want us to impose deterrents for those who do not comply with statutory rules, so I am afraid that he and I do not converge on that.
The noble Lord, Lord Whitty, is right to talk about deterrents. First, I point out that this is not just £30,000, it is £30,000 or 10% of turnover, so that deals with some of those companies that did not fall into the net that he was talking about. For very large companies, the Competition Commission can fine a daily rate of £15,000 per day with no limits, which is a serious deterrent.
The other point that I emphasise is that the Competition Commission has never had to impose a fine for non-compliance with a request, which shows that the system is working and has worked. I hope that on that basis the noble Lord will withdraw the amendment.
Lord Berkeley
Before the noble Lord sits down, I was interested in his comments about the £30,000, the £15,000, or whatever it is plus the 10%, plus a daily rate of £15,000 or something.
Lord Marland
Can I just clarify that? I did not say plus. It is £30,000 or 10% of turnover, and the Competition Commission can charge a daily rate of £15,000.
Lord Berkeley
I am grateful to the Minister. I am wondering why the daily rate should not be a percentage as well. One is talking about a big range between small companies and multinationals. Frankly, £15,000 a day for a big company is really nothing.
Lord Marland
I have made a mistake. It is not “or 10% of turnover”; it is a fixed rate of £30,000—not 10% of turnover—and £15,000 per day. The noble Lord, Lord Berkeley, asked where the deterrents are. The deterrents are the £15,000 per day, which has no limit on it unless the Competition Commission determines that it should have. So it lies within its power, if the noble Lord understands me.
Lord Berkeley
I am grateful to the Minister for that clarification. I still think that £15,000 a day for a big company is chicken feed; they will not notice it, even if it goes on for several years. I am no expert at levelling fines but I have been investigating the potential level of fine, admittedly on the Government, but it concerns the Thames Water tunnel outside here. The figure being bandied around there is £1 billion if we are lucky. That is a project that is worth £4 billion, and maybe there is a company with a turnover of £4 billion involved in this competition issue. The figure seems to be slightly low and out of proportion. I do not know whether it is a deterrent. Perhaps the Minister could reflect on whether a percentage for a daily rate would not be an additional deterrent.
Lord Whitty
My Lords, I am grateful to the Minister for clarifying that; I was getting a bit confused myself. If he had been right first time, my amendments would not have been necessary. I accept that there is a daily rate and that is an important consideration. I am sorry to part company with the noble Viscount—I am sure that we will be back on the same course at some point—but you need a deterrent in these cases. The question is what level of deterrent is effective enough to ensure that you will never have to impose it. It seems to me that these amounts are a bit low, given the size of the markets that we may be talking about.
I hope that the Government look at this again. Among other things, they will probably find that some of the sector regulators have tighter powers on the disclosure of information than this. I think I am right in saying that Ofwat does, for example, in relation to misleading information. I declare a brief past interest: I was on the board of Ofwat for a short period. We will probably find that these are rather minimalist maxima and they could do with further review. I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, this is very straightforward. It is a matter of clarity. Clause 31 refers at several points to “relevant authority” and I assume that that means the CMA or possibly, in some cases, trading standards through to local authorities. The amendments in this group refer to the CMA or a local authority. Is that right? If not, there is some confusion. Or is it just the CMA itself? The Minister might wish to consider this improvement. I beg to move.
Lord Marland
My Lords, I can get to the nub of this very quickly. The relevant bodies in this case are only the Secretary of State and the CMA. That is why we would not want to accept the amendment. It would not be appropriate to widen that, particularly embracing non-competition bodies in the organisation. I hope that that is the clarification that the noble Lord, Lord Whitty, was looking for and I hope that he withdraws his amendment.
Lord Whitty
In which case, my Lords, surely it would be sensible to say the Secretary of State or the CMA—then we would all be clear. I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, these amendments are straightforward. Part of the rationale for the merger has been to speed everything up. The time limits here seem generous in relation to Schedule 12 on market studies—admittedly, that is only part of the Bill—and I thought I would take the opportunity to try to speed them up a bit. I am relying on the Minister to tell me why not. I beg to move.
Lord Marland
I cannot tell the noble Lord why not; I asked the very same question of my officials. It is a perfectly reasonable comment for him to make. If we can work together to see where the dynamics exist, we might be able to see if it is practical to improve this a little. I do not think that we will be able to do anything too dramatic, but the noble Lord makes a good point. We have said all along that this is all about speed of process. As I have agreed with his overall point, I hope that the noble Lord will agree for the moment to withdraw his amendment so that we can discuss this later.
Lord Berkeley
Before the noble Lord sits down, I have a question in relation to these time periods. I have had a little experience of trying to do something like this in the railway sector. My recollection is that a long time is taken between when the notice is issued saying that the authority will conduct such a study and when it has sufficient information to allow the clock to start running. Reading the Bill and my noble friend’s amendments, I am not sure whether these numbers—from six months to four months—apply to the time between the notice being issued or where the clock starts ticking and the authority believes that it has sufficient information. Maybe my noble friend has more information on this, but it is a point worth looking at when we come back to it.
Lord Whitty
My Lords, in reply to my noble friend, Lord Berkeley, the point would be from when the clock starts rather than just a twinkle in the eye of the regulator. I accept that everything is a little arbitrary to some extent, but if we are trying to turn the screws and stop us from being seventh out of eight of the competition authorities within the larger countries in Europe, we should take every opportunity to speed things up. If the Minister wishes to have another look at this, I would be grateful. I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, these amendments are a little more complicated. I am not sure that I understand this myself, I concede to the Minister. They address the issue of employees giving information to the Competition Commission, in this case during the course of anti-trust cases. As I understand it, Clause 33 provides, in secret price-fixing cases for example, powers to ask questions of the employees about the undertakings concerned.
By definition, the actual knowledge of price-fixing will be confined to a few relatively senior people—directors of the company or their senior managers or agents. However, it is the nature of an enterprise that people get to know these things one way or another. Sometimes, indeed, employees who themselves may be quite high up but not immediately responsible for the area get to know about it, or it could be a secretary or a clerk in the finance department, or whatever. They might volunteer the information, or at least respond once the investigators are on the case. The investigators would be using the powers within this clause, and they may get information voluntarily or from pressing a junior employee to say something that, frankly, was damaging, or would be seen as damaging, to the position of the company that had been carrying out the price-fixing, bid-rigging or whatever.
The changes proposed in my amendments would try to ensure that those employees, of whatever status, who give or volunteer information have at least as much protection as in the Employment Rights Act provisions for whistleblowers. It is therefore important that this is put beyond doubt, so this is effectively a “for the avoidance of doubt” clause. Otherwise the investigation may itself be inhibited on the one hand because people will not come forward with information, while on the other hand it could mean that individuals are prosecuted for breach of commercial confidence or, if they have refused information, are themselves prosecuted individually, rather than the company or the senior management or directors concerned, for failure to provide that information. I accept that there may be better ways of doing this but I am anxious that such people, as well as the investigation, should be protected by some clarification here. I beg to move.
Lord Borrie
My noble friend Lord Whitty has tabled a very valuable amendment here. It is most important that any employee who public-spiritedly, and in the public interest, discloses information that he has from his employment that may indicate some illegality on the part of his employer or senior employees must be protected. The Public Interest Disclosure Act is now embodied in the Employment Rights Act, which we discussed at an earlier stage, and it is most important that nothing be done elsewhere in the Bill that would damage that protection.
In some countries—in the United States, for example—employees and others get what is called a leniency benefit. They may have had some guilt themselves in knowing about an illegality that their firm was committing, but they may get leniency by informing the powers that be of what that illegality is. This provision does not go as far as that; I bring that point up only to make it clear that in some countries the protection given to the whistleblower is even better than in ours. Our protection is good and is embodied in the Bill, and the amendment that my noble friend wants to introduce would ensure that that protection existed.
Lord Marland
That was a veritable tour de force from the noble Lord, Lord Borrie, as one would expect. Just to deal with the issue of whistleblowers, I want noble Lords to understand that nothing in this clause would affect the rules relating to whistleblowers at all; that is key. I shall read out the speaking note on this—my goodness, I might get used to this—because it is a complicated issue; the noble Lord, Lord Whitty, himself wanted to clarify this in his own mind, so between us we might be able to muddle through and clarify both our minds.
The amendment is to Clause 33, which gives the CMA an important new power to require certain individuals to answer questions during an anti-trust investigation. The new power is similar to the current power to require a person to answer questions, which exists under Section 193(1) of the Enterprise Act 2002 in the context of criminal cartel offence investigations. The Bill will correct the anomaly that a person can be required to answer questions in criminal cartel investigations but not anti-trust investigations, including into cartels.
Such a power should be subject to safeguards, however. We have proposed provisions akin to those made in relation to cartels by Section 197 of the Enterprise Act, to provide that statements made by an individual in response to a requirement imposed under the new section can be used in evidence against the individual or the relevant undertaking only in limited circumstances. Those are the safeguards that the amendment would remove, and I therefore hope that, on reflection, the noble Lord will see that in effect extending the power to ask questions to the anti-trust area, we also need to transpose the associated protections for individuals and undertakings.
I hope that that is as clear as daylight to the noble Lord. In the light of that, I hope that he will withdraw his amendment.
Lord Whitty
My Lords, it is six o’clock on 18 December, so there is not much daylight, but I am grateful to the noble Lord for some reassurance on that. I am not sure where we are restating the existing provisions. I am grateful for the intervention of my noble friend Lord Borrie, because he points out that, on the one hand, investigations depend on people telling the truth and that, in other countries, there are rather stronger protections than we have.
If the Minister is right that my amendment would make the protection worse, I will clearly withdraw it. I will have a look at how the interplay between the various existing provisions protects that position. Whether they are responsible themselves and therefore a degree of what the Americans would call plea-bargaining is appropriate or whether they are simply imparting knowledge which they have acquired in one way or another, we need to protect such people. Any hint that the Bill would change that is important.
Clearly, I am not doing it in the right way. I will read what the noble Lord said and see whether I need to take the matter any further, but I am very grateful for his response. I beg leave to withdraw the amendment.
Viscount Eccles
Viscount Eccles
My Lords, I am probing to see whether there is some way in which some of these arrangements could be drafted to simplify their implementation. I worry about the amount of work that we are giving the legal profession by some of these arrangements. This is a very complicated piece of paper chase. New Section 40A amends the 1998 Act. We have been talking mostly about the 2002 Act. It relates to powers when conducting investigations, to failure to produce documents, destroying or falsifying documents, and providing false or misleading information. The 1998 Act contains in Section 27 powers to enter premises without a warrant and with a warrant. In a statutory instrument in 2004—which, incidentally, is not included in the latest printed edition of the 1998 Act, you have to find it some other way, but it is an amendment to the 1998 Act, statutory instrument 1261 —there is a power to enter domestic premises with a warrant. That is the 1998 Act. However, new Clause 26A to that Act, which we have just been looking at, is in Clause 33 of this Bill. That leads me to ask one or two questions.
I should say to the Bill team: thank you for your assistance with my eventually finding Amendment 28A and that statutory instrument because it was a very interesting chase. No wonder I could not find it in the 1998 Act; it was not there.
New Clause 26A(6) says,
“For the purposes of this section … an individual has a connection with an undertaking if he or she is or was … concerned in the management or control of the undertaking”.
I started to get into a terrible panic and wondered what sort of information I might be required to provide about when I was laying graphite cores in nuclear power stations or something. Is there any limitation on that subsection, such as a statute of limitations?
I have many questions in my mind, but I shall limit myself. With regard to new Clause 40A in Clause 34, BIS’s presentation to the Delegated Powers Committee says that the Bill,
“removes … criminal sanctions attached to failure to comply … and replaces them with a new civil sanction”.
However, when I read the amendments in Clause 34, particularly the ones near the end about omitting subsections (1) to (4) and so on, I could see where we were omitting certain of the criminal sanctions, but there followed two or three other clauses in the 1998 Act that seemed still to apply and still to envisage criminal proceedings. All that I am asking is that some real effort is made to clarify some of these matters in a way that means that businesses, their secretarial departments and legal departments will understand them, and they will not have to go to outside lawyers too much. We keep on talking about making things certain so that people know that they can get on and do the things that they want to but, believe you me, it is some endeavour to find out what this means. I beg to move.
Lord Whitty
My Lords, I am in danger of re-establishing my alliance with the noble Viscount. There are aspects of this clause that could do with clarification. It had not struck me until he spoke that the wording,
“is or was … employed by”,
might refer to when they were an employee, a subcontractor or a director 20 years ago, and that would still be covered by this clause. Clearly the noble Viscount’s previous career flashed past him. Mine did so a little earlier this afternoon when watching the interplay between the Minister and his team; I recall that many decades ago my Civil Service career was clearly doomed when I passed the Secretary of State an illegible note during the course of one bit of legislation. There must be equivalent things that people have seen, and have had in their hands; they may not have realised their importance at the time but they still have vague knowledge of them. The criminal sanctions that are implied by the interplay of the various pieces of past legislation here could raise anxieties that the Government do not really intend. The noble Viscount is essentially right that perhaps once again the draftsman could have another look at this. Clearly the noble Viscount and I will quietly let any amendments on this front through at later stages.
Lord Marland
Perhaps I could explain to the noble Lord, Lord Whitty, and to my noble friend Lord Eccles that all that the clause does is to allow the CMA to conduct a more effective and timely anti-trust investigation. We are imposing civil fines, to be quicker and more effective, which will have some bite to them. The reason for this is that not one criminal prosecution for non-compliance has been pursued. That shows either that the CMA does not want to pursue it because it is too complicated, or that it is in the margin.
We are retaining criminal sanctions for obstructing an officer exercising powers to enter premises, destroying or falsifying documents, or giving false or misleading information—they will remain. The imposition of civil fines rather than criminal sanctions to speed up the action on anti-trust is also in line with the European law that features that. On that basis, I hope that my noble friend might withdraw his amendment.
Viscount Eccles
I thank my noble friend. Can he deal, if not now then later, with this point about an individual having had a connection with an undertaking? As a provision in Section 26A, which is one of the new clauses covered by this enforcement power, it seems pretty wide-ranging. I am pleased to be told that the criminal sanctions are staying for certain parts of the 1998 Act regime. On that, the presentation of the Delegated Powers and Regulatory Reform Committee was rather ambiguous, but we have cleared that up.
In the argument that says that if people know that there are all sorts of horrendous and complicated penalties, with extensive legal costs attached to them—even if you go down the route of new Section 40A, costs will still be attached—we are basically, steadily saying that nobody can be trusted. We are losing touch with the idea that people do things by consent and because they trust each other. That is very regrettable. Meanwhile I beg to withdraw.
Lord Berkeley
Lord Berkeley
This is a probing amendment. Subsection 36(4) of the Bill provides for one or more of the CMA’s functions to be delegated to one or more members of a panel—for example, decisions in competition cases. It would be useful to hear the Minister’s comments as to whether this is something that the Government envisage for the sector regulators. There is an option, which was discussed in the Government’s consultation, but which was not set out in the Bill, for regulators to be relieved of their decision-making powers in competition cases. Is that still an option on the table, possibly through secondary legislation and for the decision then to be vested with the panels that are set up for that purpose under this clause? Some of the sector regulators are concerned about exactly what the intention is. I beg to move.
Lord Whitty
My Lords, I think that my noble friend Lord Berkeley is right to seek verification on this. A later government amendment will propose what he fears. At that stage, I shall certainly propose that we need a much more conciliatory regime between the Secretary of State, the CMA and the sector regulators, otherwise we shall get into serious trouble. It is important that we get clarity on the issue.
Lord Marland
The noble Lord, Lord Berkeley, gets to the point. I am grateful for his brevity. I am reliably informed that the rules under Section 51 will apply to the sector regulators. The same principles will apply but the rules may differ a little in detail. Of course, as he would say, the devil is in the detail but I am sure that within the detail there is quite a wide canvas. I hope that clarifies the situation for the noble Lord.
Lord Berkeley
I am grateful to the Minister but I wonder whether, within his broad canvas, or whatever, he has any views about whether any secondary legislation will be introduced on the issue which may or may not be helpful. I noticed that within this group there is the Question that Clause 40 stand part and Amendment 26BF, in the name of my noble friend Lord Whitty. I would be pleased to hear what he says about that because I have some comments on it too.
Lord Whitty
My Lords, I was going to leave that because my Amendment 26BF is an attempt to tidy up the provisions on review, along with another amendment that I cannot find immediately. There are separate provisions on the mergers, the markets and the anti-trust provisions, as to when we review them. I am in favour of the Government’s policy that we review legislation every so often but I think that it should be done simply and that we should look at the whole of the legislation. Essentially, that is what Amendment 26BF to Clause 48 is about. I was not going to move it today because I think that it requires the interplay of other parts of the Bill but I think a review of the totality of the Bill, all at the same time, would be helpful and should be built into the Bill in some way at a later stage.
Lord Marland
Perhaps I may first reply to the noble Lord, Lord Whitty. We will review this in five years’ time, as I think he recognises. That deals with his point. The precise detail will be discussed with sector regulators themselves and, once we have done that, we will obviously publish what has been achieved. On that basis, I hope that that satisfies the noble Lord.
Lord Whitty
Lord Whitty
My Lords, this is really a drafting amendment. Section 35 of the 1998 Act refers to “serious, irreparable damage”. I agree that that is too high a threshold and I assume that is behind the government amendment, but what is wrong with the present definition is surely the reference to “irreparable” which, by definition, is prospective, difficult to define, a bit subjective and therefore should go. To dilute “serious” to “significant”—I think it is a dilution—seems to reduce the threshold too far and is equally subjective. I consider that the word “serious” is probably better unless the Minister has a very good reason for sticking with the word “significant”. I beg to move.
Lord Marland
As the noble Lord says, it is a matter of conjecture and we will obviously look at it. I am not sure that I would be prepared to concede that change. I think that both definitions hit the target and I know that the noble Lord, Lord Whitty, is trying to find the right word. We will look at it again to see whether it is the right word. At the moment I am perfectly happy with our drafting but, as the noble Lord knows from our past together, we are always open to discussing these things. I am glad that the noble Lord withdrew Amendment 26AA because there is an existing MoU between the OFT and the CMA, which answers that question.
Lord Whitty
I am grateful to the Minister for that and I beg to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, Clause 41 makes some very significant changes to the law on cartels. At present, the competition authorities have to establish dishonesty by finding the directors or senior management of a company or their agents engaging in, say, market carve-ups, bid-rigging or price-fixing. “Dishonesty” takes us into the criminal law and, as a threshold, it is rather subjective at the point where it is triggered. I think that the Government are therefore convinced that it is too high a threshold and inhibits prosecution—or even investigation—into areas where a positive act of dishonesty has to be assumed, prima facie, before you start investigating. I understand and agree with that, in principle, and I agree on that part of the clause which removes the dishonesty threshold.
However, since making that judgment I have received representations, as colleagues no doubt have, from various groups of lawyers saying that this gets us into a worse situation than we started with because if you remove “dishonesty”, there will be court challenges as to why you proceeded in that case. I am not going to read out any of their learned opinions—the Minister will no doubt be grateful for that—but they indicate that there are still difficulties with doing that, which are in one sense compounded by the second part of this clause. I am hoping to remove subsections (4) and (5) but they interact and this is therefore complex, yet again.
The second part of this clause was introduced very late. It was not debated in another place and I object to it in principle. In effect, it is saying that if you inform people that you are engaging in market rigging, no offence has been committed. I understand that this was a sweetener to some industrial pressure from the CBI and others, but it is wrong. It is a highly detrimental provision; in effect, it is returning to the situation where there were registered cartels. We came away from that many decades ago and I think rightly so. If a bid rigging exercise exists, if a cartel of purchasers exists, if a price ring is in operation, if a market carve-up is taking place, surely it does not matter whether you told your lawyer or the Daily Telegraph that it is there. It is distorting competition and having an effect on market suppliers. Even if you told your customers, or at least some of them who are your suppliers, or even registered the matter with the authorities, it does not alter the fact that this is potentially an unfair trading practice. The effects are a distortion of the trade and the market and ultimately probably a detriment to consumers or suppliers. The CMA needs to be able to investigate that.
I appreciate that transparency; having told somebody can be mitigation in particular cases. However, I do not understand that it is an absolute defence, which is what effectively this clause seems to say. I think the Government need to clarify the first part of the clause and delete the second part. I think it is ill thought-out and an unwise concession to pressure. If we build on—but make clearer—how we can enforce this and trigger a threshold without the dishonesty provision being there, we certainly should not go down the road of transparency being a defence. It is not a defence, nor does it achieve the objective of freer markets, greater competition and better benefit to consumers. I beg to move.
Lord Marland
I take from this that the noble Lord, Lord Whitty, agrees with his own Front Bench in the other place that the removal of the dishonesty issue makes it easier to prosecute and therefore is a much better system. Clearly there has been a lot of consensus in the other place. I am not sure, because I was not involved in the debate in the other place, that we have put in a clause that bears any relevance to the provision that he is trying to impose. I have just confirmed that with my officials, who would concur.
At the end of the day, it is important that we should prosecute people who have formed cartels dishonestly—by marginal dishonesty. We all agree to that. It is reasonable that we provide notice for arrangements, for those who are likely to be affected, such as companies and their customers. It is very clear that where people breach these things we must use the strong arm of the law to create the necessary deterrents that involve market rigging, share rigging and all the usual things that are unpleasant and corrupt in many ways.
I think there is more debate to be had around this particular issue—there is more bottoming out to be had. As always, we are very grateful for the thinking that has gone into the amendments of the noble Lord, Lord Whitty. As he has said, we have had representations from various bodies. It is incumbent on us to listen to that. I think our direction of travel is right. There may be some tightening up of the wording needed to reflect the comments that the noble Lord has made as a result of those people who have contacted him. Obviously, as with all things, we make that undertaking. I hope that satisfies the objectivity of his excellent amendment and that he will withdraw it.
Lord Whitty
My Lords, I am grateful to the Minister for saying that he will look at the situation again. I want to clarify my position: I agree that the “dishonestly” threshold should go. We need to make sure that we do this in a robust way and that is what these legal opinions suggest we should have another look at. However, my understanding is that the second part was not debated in another place and that the Bill effectively says that, if you can prove that you have been transparent, the cartel may not exist. That seems odd. If it simply said, “If you have told your suppliers or customers that this is the way that you and your alleged competitors are dealing with it”, that would perhaps be some mitigation, but it cannot be an absolute defence. It cannot be, as the Bill says,
“Circumstances in which cartel offence not committed”.
I think that this is wrongheaded thinking and should come out entirely. However, if the Minister is looking at all this again, I am quite happy to wait and see what he and his colleagues in the department come up with on this clause. I beg leave to withdraw the amendment.
Lord Marland
“Power to remove concurrent competition functions of sectoral regulators
(1) The Secretary of State may by order made by statutory instrument amend any enactment so as to remove from a sectoral regulator either or both of the following—
(a) all the functions of the regulator under Part 1 of the 1998 Act that are exercisable concurrently by the regulator and the Competition and Markets Authority (“the CMA”) or that would be so exercisable but for provision made by virtue of section 54(5)(e) of that Act;(b) all the functions of the regulator under Part 4 of the 2002 Act that are exercisable concurrently by the regulator and the CMA.(2) An order under subsection (1) may make such other amendments of any enactment as the Secretary of State considers appropriate in consequence of the removal of the functions.
(3) Each of the following is a sectoral regulator—
(a) the Office of Communications;(b) the Gas and Electricity Markets Authority;(c) the Water Services Regulation Authority;(d) the Office of Rail Regulation;(e) the Northern Ireland Authority for Utility Regulation;(f) the Civil Aviation Authority.(4) Before making an order under subsection (1), the Secretary of State must consult—
(a) the regulator whose functions would be removed by the order,(b) any bodies who appear to the Secretary of State to represent the interests of persons in respect of whom those functions are exercisable (“regulated providers”),(c) any bodies who appear to the Secretary of State to represent the interests of persons who use the services supplied by regulated providers,(d) the CMA,(e) where the regulator is the Office of Rail Regulation, the Scottish Ministers,(f) where the regulator is the Northern Ireland Authority for Utility Regulation, the Department of Enterprise, Trade and Investment in Northern Ireland and the Department for Regional Development in Northern Ireland,(g) where the regulator is the Water Services Regulation Authority, the Welsh Ministers, and(h) in any case, such other persons as the Secretary of State considers appropriate.(5) An order under this section may include transitional, transitory or saving provision.
(6) A statutory instrument containing an order under this section is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(7) In this section—
“amend” includes repeal or revoke;
“enactment” includes—
(a) an enactment contained in subordinate legislation (within the meaning of the Interpretation Act 1978), (b) an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament,(c) an enactment contained in, or in an instrument made under, a Measure or Act of the National Assembly for Wales, and(d) an enactment contained in, or in an instrument made under, Northern Ireland legislation.(8) The references to the CMA in subsections (1) and (4) are to be read, in relation to any time before the commencement of section 20(3), as references to the Office of Fair Trading.”
Lord Marland
My Lords, Clause 45 gives the Competition and Markets Authority stronger powers to co-ordinate Competition Act enforcement work and gives sector regulators explicit duties to consider using the Competition Act. This will strengthen the regime for the concurrent competition powers.
The Government want to send a further signal about the need for the strong and effective use of competition powers across the regulated sectors. The Government therefore propose, under Amendment 26B, that if the new concurrency arrangements do not work and a regulator fails to produce better outcomes, the Secretary of State will have a power to ensure that the OFT and then the CMA take sole responsibility for applying concurrent competition powers in that regulated sector.
This will be a reserve power and the Government see its existence as being entirely consistent with our aim throughout to see improvements in the concurrency regime. The use of the power would be subject to a full consultation with those likely to be affected by the proposal to exercise the power, including businesses and customers, and an impact assessment process as well as the affirmative resolution procedure.
Nothing in the current provisions in the Bill or the new clause is intended to affect the Government’s commitment that Monitor will have concurrent powers so that competition rules can be applied by a sector-specific regulator with healthcare expertise. We have therefore revised the new clause in Amendment 26B, following the debate in Committee last week, to make sure that this is absolutely clear. Monitor’s concurrent powers will therefore not be subject to this clause. I acknowledge the amendment put down by, I think, the noble Lord, Lord Whitty and the noble Baroness, Lady Hayter of Kentish Town, which made a very good point. I hope that that finds favour.
I turn to the amendments to the new clause proposed by the noble Lord, Lord Whitty, and the noble Baroness, Lady Hayter. The Financial Conduct Authority will not have concurrent competition powers so it would not be right to make it subject to this power. Instead, we have provided tailored powers of competition scrutiny of the FCA by the competition authorities in the Financial Services Bill.
The Secretary of State would have to publicly consult and gain Parliament’s approval before an order could be made. He would also no doubt want to take into account the CMA’s concurrency report. In our view, Amendments 26BA, 26BB and 26BC are therefore unnecessary.
Amendment 26BD would provide for arrangements for the co-ordination of concurrency, which in many respects—for example, on information-sharing—will mirror the arrangements for co-ordination that will be made under Clause 45. It would also duplicate the main features of Amendment 26B in giving the Secretary of State the power to make an order removing the concurrent powers of a sector regulator. Given this, we believe that this amendment is also unnecessary.
I beg to move Amendment 26B and I hope that, in the light of what I have said, the noble Lords will not press their other amendments.
Amendment 26BA (to Amendment 26B)
Lord Whitty
“(g) the Financial Conduct Authority”
Lord Whitty
My Lords, I am extraordinarily grateful to the Minister for accepting that Monitor should come out. My amendment was to the original version of this amendment, and I thought that I would have to make that speech all over again. Luckily, as he has pointed out, it has been removed. I am glad that the Government took my advice on that; I think that they should remove any reference to Monitor anywhere in the Bill, and I hope that they will do so.
My only other point regarding the list was that we need to make some reference to financial regulators. Although, as I have said before, the Financial Services Bill has not yet received Her Majesty’s assent, we are in a position where we will have a Financial Conduct Authority and a Prudential Regulation Authority under the auspices of the Bank of England, which may well be taking measures that affect the structure of the financial sector. Therefore, although I am not suggesting that there be a reference to the FCA or the PRA, there should be some reference to the concurrency with the financial sector, albeit that the concurrent powers are not quite the same. So there is still a little issue with the list.
The more general problem with what the clause provides, however, is quite an important one. I am happier with the original clause that encouraged the sector regulators to use their competition powers. Actually, that clause merely requires them to consider using the competition powers; the noble Lord’s letter said “instead of” their sector powers, whereas they need to see which powers are best. The clause is fine on that, so I approve of the clause. However, I do not approve of the government clause that the Minister has just moved. It relates to the relationship between the sector regulators and the CMA, and that is clearly going to be crucial. We touched on this a few times earlier; indeed, my noble friend Lord Stevenson referred to it under the first amendment.
We need to change the present system. Frankly, some of the sector regulators have been overdefensive about their role with regard to using competition powers themselves, rather than their more familiar sector-specific powers relating to licences, franchising and so on, and very resistant to any suggestion that the Competition Commission should look at the competition structure of their sectors as a whole. On the other hand, it has also been true that both the Competition Commission and the OFT have been somewhat loath themselves to intervene in regulated markets, although I know that at one stage the Competition Commission was quite anxious to look at the energy market, with which the Minister is very familiar, but Ministers helped Ofgem to resist that. As I understand it, that was the position under both Administrations, and that needs to be addressed.
However, while the relationship between the two does need to be restated, the Minister has used the nuclear option. I assume that, like the nuclear deterrent, he is hoping that it will never be used, but it will mean compliance by the sector regulators, which will be using their competition powers more frequently, or they will meekly be prepared to hand over cases to the CMA under the threat in this amendment that their powers will be taken away by the Secretary of State completely, either on a particular issue or in total. That does not seem on its own to be the correct approach. We need the big print to be about co-operation between the CMA and sector regulators.
Amendment 26B would give the Secretary of State draconian powers to reduce the whole role of sector regulators and leave them with only their sector-specific powers. That is counterproductive to what we were trying to achieve, which was more use of competition powers with all regulators.
As my noble friend Lord Stevenson suggested this morning—or, rather, this afternoon; it just feels like this morning—we need a more co-operative approach between regulators. Unfortunately, the Minister rejected the particular option proposed by my noble friend at that stage.
In this group, we propose another option with Amendment 26BD. That requires a memorandum of understanding. Some of that exists already, but it will need to be boosted between each of the regulators and the CMA. It would eventually allow the CMA to ask the Secretary of State to require the CMA to take over provisions—again, either in a particular case or more generally—but that would be after a period when a co-operative and conciliatory memorandum of understanding had been working. That requires joint working, sharing of information, and so forth. This would still allow the CMA to conduct periodic reviews into how this was going with the sector regulators, but it would be far preferable to the nuclear powers that the Minister’s amendment gives to the Secretary of State.
I hope that we could accept this more conciliatory approach. I also hope that, even if the Minister’s amendment still stands and ours does not, the two amendments to his amendment, which would require the Secretary of State to give reasons for his action and to take note of the CMA's periodic reviews, would at least add a more objective context and require the Secretary of State to go through a significant number of hoops rather than jump straight into taking powers from the sector regulator. It is a more constructive approach. I prefer our amendment but, if the Minister is not prepared to accept that, the amendments to his amendment should be accepted.
This is a delicate area and one in which the CMA’s relations with the sector regulators will be very important. We could get it horribly wrong. The big stick that the Minister’s amendment implies is probably not the right way to be going about it. I beg to move.
Lord Berkeley
My Lords, I share my noble friend Lord Whitty’s serious concern about Amendment 26B. It goes to the heart of independent regulation. As I recall, going back a long time now, these regulators were created to be demonstrably totally independent of the Government. The Secretary of State probably appoints the chairman, but he cannot remove him unless he does something very naughty, bad or financially uncertain.
The principle of independent regulation without government interference—and Governments of all hues have a pretty bad reputation about interfering in different things—is fundamental to the operation of a regulated monopoly or series of monopolies. That is certainly the case in the railways and Network Rail, and to some extent it is the case in the water and power industries
The Deputy Chairman of Committees (Lord Faulkner of Worcester)
We have a Division in the Chamber. The Committee will stand adjourned until Members have returned or for 10 minutes, whichever is the sooner.
The Deputy Chairman of Committees
My Lords, before the Division, we were debating Amendment 26BA.
Lord Berkeley
My Lords, I had just about finished, but want to conclude by saying that I hope that the Minister and our other colleagues will look at the proposed new clause very carefully before Report, because there are some serious things wrong with it. I commend the amendments of my noble friend Lord Whitty for consideration.
Lord Bradshaw
I endorse what has been said by the noble Lord, Lord Berkeley. The proposed new clause states:
“The Secretary of State may by order made by statutory instrument amend any enactment so as to remove from a sectoral regulator either or both”.
How long is that going to take? If there is a weakness in the regulation, which is apparent, and even if the Secretary of State can recognise it, how long is the remedial action which is set in the Bill likely to take to bring into force? If a regulator is incompetent, surely there must be other ways of getting him to move over. He has a board of his own which, if he is exaggerated in his actions, can take action to rein him in. However, the whole edifice which is built here is wrong. I know two of the regulators involved and I have known some of the regulators in the past. Generally speaking, they are extremely competent people and probably more competent than the people who would advise the Secretary of State to use these powers. I believe that the powers are heavy-handed and very long-winded into the bargain.
Lord Berkeley
What would the noble Lord, Lord Bradshaw, think if there developed a debate between the Office of Rail Regulation, which is the regulator that we probably both know best, and the Government, and the Government said to the ORR, “You’re not pursuing this competition case in the way that we think you should, and it should go to somebody else who, like the CMA, could do it better.”? Is that not serious interference in the independence of the regulator?
Lord Bradshaw
Yes. Perhaps I may take another example; the Civil Aviation Authority, which I do know something about. It has a most excellent regulator—it is somebody whom I know personally, although I have never had any dealings with him as regulator of that industry—but issues of competition are likely to emerge in the airports business. He is a really independent person, and I cannot believe that somebody whose functions are created according to the mechanism set down here is likely to do the job any better.
Lord Marland
The noble Lord, Lord Whitty, indicated that he was minded not to support our amendment and what I am about to say is therefore largely academic because I will not support his amendment. However, let me explain, because there is not an awful lot between me and the noble Lord, Lord Berkeley.
We expect the CMA to work closely with the regulator. That is best, and we totally agree that government would be wrong to intervene in that process, as the noble Lord rightly said. That is something in which I strongly believe. Most organisations are better when government does not interfere in them. They are full of competent people, as the noble Lord, Lord Bradshaw, said, who have served us well over a period of time. We are a very well regulated society, certainly compared with most other countries.
However, there needs to be a clear signal that if this does not work or there is abuse of the system, the Government have the opportunity to invade in this area, and that is exactly how it should be. In that way you are protecting the consumer—the customer—against bad practice, not interpreting the rules properly and so on. If the Secretary of State were to intervene, he would almost certainly have to put that before Parliament to seek its approval. We are all on the same side as regards the spirit of the amendment. “We are all in this together” is the phrase that we like to use most.
I would be disappointed if the noble Lord, Lord Whitty, could not agree to our amendment and invited me to withdraw it. However, we are all singing from the same hymn sheet, and I totally respect the views of noble Lords who have spoken because this issue is important. It is absolutely fundamental that the system works without government intervening aggressively in it.
Lord Berkeley
Can the noble Lord expand a little on the reasons for when this would happen? He quoted bad practice and lack of interpretation of the rules, but it is not moving far away from the reasons for sacking, for example, the chairman of the board of the rail regulator if they have not behaved properly. If things have got that bad, one would expect them to resign anyway if this kind of thing came about. On that basis, I should have thought that there are already enough powers to change what the regulator is doing if it is really so ineffective. Given the proposed MoUs, the system would probably work much better. I am still not persuaded that there is a good enough reason for going through all this. Perhaps I have got it wrong.
Lord Marland
All that is important is that the consumer or customer, by which we mean the general public, recognises that if there is malpractice—a rare event—misinterpretation or something like that, someone ultimately has to be able to intervene in that process to ensure that it is put on the right track. One would hope that people would do the honourable thing and resign. However, sadly, we are not entirely in that world any more; it passed us by a few years ago, to my great regret. One could not therefore ultimately rely on that happening and you need a deterrent for it. The noble Lord, Lord Berkeley, knows this better than I do. He knows regulators backwards and has been involved closely with them. I have huge respect for his knowledge in that area.
All this seeks to do is complement the existing reforms that we are putting in the Bill. As I have said, it is a good government amendment and the amendments enunciated by the noble Lord, Lord Whitty, are of interest and not unnecessarily unreasonable, but they could be clarified.
Lord Bradshaw
Perhaps the noble Lord would answer my question about how long it will take to bring the machinery into effect. If, for example, the Government are dissatisfied with the way an industry is being regulated, they presumably will make that clear. But if they have to resort subsequently to producing a statutory instrument, how long will it take for that to have an effect?
Lord Marland
The Secretary of State would intervene only if an agreement had not been reached with the various parties on the direction of travel. As we all know, that is a big “if”. He then has to do an impact assessment and would have to consult for three months. I apologise, it would be for 12 weeks. Whether it is 12 weeks or three months is a very important differentiation because sometimes we work on working weeks and on others we do not. Therefore, let us say 12 weeks.
I do not think that any of this is unreasonable. If we have failed to determine through the channels of discussions why something is being done wrong, or are getting nowhere with it and feel that the public are better protected by the action that we are going to take, we have to have a way to be able to do it. That is all that we are seeking to do.
Lord Whitty
My Lords, I am grateful to the noble Lords, Lord Bradshaw and Lord Berkeley, and the Minister. That sounded fairly conciliatory from the Minister. I am not entirely sure that I should seize on “not unreasonable” or “not unnecessary” as indicating approval of my approach. Nevertheless, I think that it was generally positive.
However, probably neither of our amendments is ideal. I hope the main theme that the Minister is taking away from all this discussion is, if you want a reserved power, it has to be very clearly a reserved power in extremis. In order not to get there, you need some provisions of co-operation between the various regulators. All these regulators operate different types of market and you cannot have the CMA being asked to second-guess them every five minutes.
I am not quite as sanguine as the noble Lords, Lord Bradshaw and Lord Berkeley, are about some of the other regulators. It may all be fine in the railways, although I am not sure that I would agree with that as a consumer and passenger. Certainly, I have had my rows with Ofgem. I am not very happy about Ofwat and some aspects of even Ofcom, which generally speaking is a better regulator. I also had recent experience of the Northern Ireland regulator that regulates the energy industry except for the main supply of energy in the Province, which is the oil industry and definitely needs regulation.
I am not saying that everything in the garden is rosy with these independent regulators as they stand—it definitely is not. They all need to raise their game. But raising the game by having a prospect of an intervention by the Secretary of State and giving all their powers to someone else seems to be overkill. We must have an upfront co-operation and only a very distant reserve power in any alternative clause that the Minister may propose at a later stage. It would be sensible for him to consider mine and other representations that have been made.
The noble Lord, Lord Berkeley, raised a number of concerns, which are very important for the Government to take on board. The threat of this would undermine confidence in the markets. Key investment markets, such as energy, water, aviation, railways, telecoms and so on are key areas where we need to sustain a degree of confidence in the near permanence of the regulatory system.
The relationship between the regulators and the industry is very important. I am not talking about cosy relationships but about known, established and reasonably long-term relationships. The issue of the EU, which my noble friend Lord Berkeley raised, is also important. We need to be careful when we are intervening and what, at the end of the day, would be quite a draconian power.
I hope the Minister will take this away. It is important that we review the performance of regulators. But we should not do that on a case-by-case basis or because of suddenly saying that they are not doing their job 100%. Other forms of review could be built into the regulation—indeed, the Government are doing that in other areas—rather than taking a power that looks at first glance to be a draconian intervention by the Secretary of State.
I am sure that the Government and their Civil Service can come up with a better form of words for dealing with this if they wish to. It may be something that we should leave until much later. But if they intend to do so, I am happy to give my co-operation to them with my experience with regulators, as will my noble friends and the noble Lord, Lord Bradshaw. However, this will not work and it could be quite detrimental.
I am grateful to everyone who has participated. I am sure that we will return to this in some form or other at the next stage. I beg leave to withdraw my amendment.
Lord Whitty
“(1) There shall be established a separate section of the CMA where the CMA acts as an appeal body in respect of decisions of sectoral regulators, and each individual appeal shall be headed by a member of the CMA Board.
(2) ”
Lord Whitty
My Lords, this last amendment—which we will all be grateful about—deals with a separate issue of the relationship between the future CMA and the sector regulators. It is entirely different from the use of competition powers. It deals with the situation of appeals against decisions of the sector regulator to what is now the Competition Commission, which will be the CMA. That is a different function. In effect it is the Competition Commission becoming the CMA and acting as the Court of Appeal.
This role is only briefly recognised in the Bill. It is arguable that such arrangements should not be maintained in the new situation, since it is in effect one regulator second guessing another. Indeed, if the previous amendment stands, the potential conflict of interest in this area is actually quite acute. For the moment, that appeals system remains and is separate from the harmonious relationship that we wish to see on competition matters between the CMA and sector regulators.
These appeals are usually about price control decisions or the costs that are taken into account by regulators in setting the frameworks. Those decisions can be appealed by the industry as with the decisions of Ofwat in its price review, or current decisions by Ofgem in terms of how much it has allowed the National Grid as regards its area investment programme and so forth.
I am not sure whether the statistics will show this but I understand that the number of appeals has increased. That is surprising because there has been a decrease in the direct and specific price control regimes. My experience suggests that of the recent decisions by the Northern Ireland utility regulator, almost all of them are in appeal now or were recently.
I also know that Ofwat’s five-yearly price review is always subject to threats of appeal, although there are relatively few actual appeals. As I say, I know that there now is an issue in relation to National Grid and Ofgem’s decisions, so there are a lot of these about. We have to be clear that the expertise is there in the CMA to deal with them.
Lord Marland
My Lords, let me assure the noble Lord, Lord Whitty, that we totally recognise the need for specialist advice, which already exists in the Competition Commission. The CMA would take that expert body of experience and there is no intention of this being delegated to the staff. The CMA will have independent panellists, who will take on specialist areas, and we will ensure that those panellists take their decisions independently of their parties, of the regulators, of the Government and, indeed, of the CMA board if necessary. They will then deliver their advice to the CMA board, which will make the decision. I believe that this amendment is not necessary and I hope the noble Lord would agree that this deals with his concern. I therefore invite him to withdraw his amendment.
Lord Whitty
My Lords, I appreciate what the Minister says about the panels. I am not sure that I can identify where that is in the Bill, which was one reason for putting this down. In a sense, it is not about whether you leave it to the staff; it is about whether there is within the organisation the expertise—procedural and legal, as well as sector-specific—that is needed to take these appeals.
As this is the last amendment today, I thank the Minister for his patience, as I thank those of your Lordships who have persevered through the whole of this afternoon on this. I hope that we have at least given the Government some thoughts for improving the Bill. There will be a few issues to which we will return. I would welcome it if someone could write to me about where the panels bit is in the Bill and how the CMA is likely to deal with these appeals in future. For the moment, however, a happy Christmas to everybody and I beg leave to withdraw the amendment.
Lord Marland
( ) Omit subsections (1) to (3).
( ) In subsection (4), omit “or subsection (3)(a) above”.
( ) In the heading, for “sections 25 and 31” substitute “section 25”.”
Lord Gardiner of Kimble
My Lords, this may be a convenient moment for the Committee to adjourn until Wednesday 9 January at 3.45 pm.
House of Lords
(11 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text
National Lottery
(11 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text
Lord Naseby
To ask Her Majesty’s Government what action they propose to take to safeguard the position of the National Lottery in the light of competition from groups of local society lotteries.
Viscount Younger of Leckie
The Health Lottery is the most significant scheme that promotes numerous society lotteries under a single banner. Since it was launched in October 2011, the Government have been monitoring its impact on the National Lottery and other society lotteries. While there appears to be a limited impact overall, the Government want to ensure that the lottery market delivers the maximum benefit to charities and other good causes, including those supported by the National Lottery. The Secretary of State for Culture, Media and Sport has therefore announced today the Government’s intention to consult in the new year on whether to increase the minimum percentage of the proceeds that certain society lotteries have to return to their good causes.
Lord Naseby
Is my noble friend aware that when the National Lottery was set up in 1993, 28p in the pound went to good causes and 12p went to the Exchequer as a levy, whereas the Health Lottery provides only up to 20p in prizes and no subvention to the Treasury? Against that background, and with recent calculations that the Health Lottery has siphoned off £70 million that would have gone to the National Lottery, does my noble friend really think that consultation is the right approach? Would it not be preferable to have an amending Bill that re-emphasises that the National Lottery is a monopoly and is there to provide for good causes throughout the nation?
Viscount Younger of Leckie
My Lords, I do not agree with the idea of an amending Bill. Independent research that we commissioned and have published today suggests that there is a potential sales diversion of up to £300,000 a week. Camelot believes that it is potentially up to £1.5 million a week. It is difficult to assess the true figure due to seasonal factors and complexities in customer behaviour. However, an impact at these levels would be relatively minimal, particularly in the context of National Lottery sales, which are on track to beat last year’s record sales figures of £6.5 billion. The Government are determined to ensure that the lottery market delivers the maximum benefit to good causes, which is why we wish to consider whether the minimum amount that society lotteries are required to provide to their good causes is set at the right level.
Lord Collins of Highbury
My Lords, is it not an obvious loophole in the idea of a national monopoly when the Health Lottery’s 51 supposedly separate companies have the same three directors, office addresses and branding? It is in effect enabling it to operate as an alternative national lottery with a £510 million turnover. Is it not time to act now?
Viscount Younger of Leckie
I suggest to the noble Lord that any issues relating to that are for the Gambling Commission. The National Lottery, I remind noble Lords, generated more than £92 billion from its inception in 1994 to mid-November this year. The annual sales figure for the year to April 2012 was £6.5 million, which is the highest since the start of the lottery. Therefore, it is a very successful operation.
Lord Hodgson of Astley Abbotts
Is my noble friend aware that people who give to local lotteries often do so because they wish to support a specific cause and, as such, will not give to a national lottery? In that sense, their contributions are additive. Since the National Lottery grew by 8.1% in the half-year to September—that is £264 million—what does it need protecting from? Would it not be better to let a thousand flowers bloom, encourage localism and not interfere?
Viscount Younger of Leckie
I agree with my noble friend. He gives me an opportunity to say that the Health Lottery has raised more than £28 million for good causes. Its turnover last year was £119 million. Although it has not been long since its inception, it has been highly successful and has benefited more than 30,000 people across Great Britain. Relations have been developed with strategic partners, including the Alzheimer’s Society and the Carers Trust.
Baroness Farrington of Ribbleton
My Lords, can the Minister explain to the House why his answer to the question from my noble friend Lord Collins was “the Gambling Commission” and not “government policy” in determining what should happen?
Viscount Younger of Leckie
I will stick to my original answer: my understanding is that it is up to the Gambling Commission to decide these matters.
Lord Sharkey
But, my Lords, the Gambling Commission itself has recently stated in court proceedings that the Health Lottery was clearly designed to circumvent the proceeds limits, the gambling equivalent of a tax avoidance scheme that exploits loopholes in legislation. Is the Government not about closing such loopholes?
Viscount Younger of Leckie
I thank my noble friend for that question, but the holistic approach to the lottery, which includes the National Lottery and the Health Lottery, has proved highly successful and we hope that it will continue. However, the Government will continue to monitor the progress of the operation, particularly of the Health Lottery and the society lotteries.
Lord Foulkes of Cumnock
Has the Minister estimated how much money is diverted away from the National Lottery by the EuroMillions lottery, and how much of the EuroMillions lottery goes to good causes in the United Kingdom?
Viscount Younger of Leckie
I do not have the answer to the noble Lord’s question but I will certainly get back to him. However, given that the National Lottery does not bite too much into the Health Lottery, I would hazard a guess that EuroMillions does not have too much effect.
Baroness Gardner of Parkes
Can the Minister tell me whether all the money from the Health Lottery really goes to health charities, and can he confirm whether my noble friend Lord Naseby is right that no money goes to the Exchequer? These days, when we are trying to see that money does go to the Exchequer, why is that?
Viscount Younger of Leckie
First, I just wish to clarify that no duty is paid to the Exchequer from the local society lotteries and the Health Lottery. To answer the first question, “Health Lottery” is an over-arching description of 51 other lotteries which focus on a range of good causes, including some health charities.
Lord Taylor of Blackburn
My Lords, does the noble Viscount agree that, in answering the noble Lord, Lord Naseby, he was stretching it a bit too far by saying that the Treasury was a good cause?
Lord Phillips of Sudbury
My Lords, I declare an interest as a member of the National Lotteries Charities Board at its inception. Given the booming income of the National Lottery and other lotteries, has any work been done on the anti-social effects of this huge amount spent by the public?
Viscount Younger of Leckie
I do not believe that there is an anti-social effect. I am not entirely clear what my noble friend is aiming at, but perhaps I can talk to him later.
Mali
(11 years, 5 months ago)
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Lord Risby
To ask Her Majesty’s Government what discussions they have had with the Government of Algeria in relation to the situation in Mali.
Lord Wallace of Saltaire
My Lords, the UK has regular and frequent discussions with the Algerian Government on the situation in Mali. My right honourable friend the Foreign Secretary discussed Mali and the Sahel when he met Algeria’s Foreign Minister, Mourad Medelci, in London on 21 November. The Prime Minister’s special representative for the Sahel, Stephen O’Brien, MP, visited Algiers from 6 to 8 December for further discussions on the situation in Mali. Alistair Burt, the FCO Minister for the Middle East and north Africa, also discussed the Sahel with the Algerian Minister for the Overseas Community, Dr Belkacem Sahli, on 29 November.
Lord Risby
My Lords, I declare an interest as the Prime Minister’s trade envoy for Algeria. Given the appalling humanitarian and security crisis in Mali, does my noble friend agree that if at all possible there should be a regional solution to this problem, whether it is done diplomatically or by military means, to resolve what is an increasingly tragic situation? Does my noble friend further agree that, as the bulk of the income obtained by these terrorist fanatics is from the drugs trade and kidnapping, the resolute attitude of the Algerian Government, which is simply not to pay ransoms, should be applauded and appreciated?
Lord Wallace of Saltaire
My Lords, there has to be a regional resolution to this problem. The northern borders of Mali are artificial lines drawn on maps in largely uninhabited areas and these groups clearly go across them with a great deal of ease. The Tuareg, one of the main sets of tribes involved in the conflict, live in southern Algeria, south-western Libya, northern Mali, and so on. Therefore, there has to be a regional solution. This cannot be resolved by one or two states alone.
Lord Chidgey
My Lords, what plans do the Government have to develop stability and security throughout a unitary Mali by advocating that the grievances of the Tuareg should be addressed en route to a democratic unified Mali and by providing succour to the probably 400,000 refugees expected to result from a proposed military intervention by ECOWAS forces?
Lord Wallace of Saltaire
My Lords, the figures I have show that there is something approaching that number of displaced people—those who are internally displaced or who have moved across the borders already. Therefore, we already have a rather desperate situation. Reinstating a unified Mali is not entirely easy. Mali armed forces as they currently exist are small, weak and underequipped. Nevertheless, some of them are in effect in charge of the Government and have just replaced the Prime Minister.
The Earl of Sandwich
Does the Minister agree that there are considerable British interests in Mali, not least through the humanitarian organisations? Would it not be better to encourage and reinforce civil society and better governance in Mali itself rather than even contemplating armed intervention?
Lord Wallace of Saltaire
My Lords, the noble Earl knows well that encouraging the growth of civil society is a slow and long-term business. We have a rather immediate crisis which, if I may remind noble Lords, is partly an unanticipated result of the collapse of the Gaddafi regime. Many of those who sparked off the current crisis were Tuareg soldiers in the Libyan army returning from Libya after the fall of Gaddafi with some very effective heavy weapons.
Syria: Humanitarian Aid
(11 years, 5 months ago)
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Lord Selkirk of Douglas
To ask Her Majesty’s Government whether they have plans to reorder priorities in the humanitarian aid programmes of the United Kingdom and the European Union, in view of the number of refugees in Turkey, Jordan and other countries bordering Syria, and displaced persons within Syria.
Baroness Northover
My Lords, the UK is a leading donor to the humanitarian response for Syria. We have provided £53.5 million in support, and we continue to consider what more we can do. UK aid is prioritised to ensure that help reaches those who need it most. We are working closely with our humanitarian partners to provide a flexible, co-ordinated relief effort.
Lord Selkirk of Douglas
I thank the Minister for her reply. Will she promise to keep in mind the more than 525,000 refugees, whose number increases daily by 3,000, more than three-quarters of whom are children and women, and who are suffering from freezing winter weather, inadequate clothing, some of them on near-starvation rations, and most of them facing the constant threat of sickness and disease? Can she definitely confirm that every effort will be made to increase humanitarian aid through the UN and relief agencies in the face of this escalating crisis and the urgent needs of the refugees?
Baroness Northover
My Lords, I can assure my noble friend that the dire situation in Syria is very much in our minds. The United Kingdom is a major donor in this situation. I imagine that he is aware that the United Nations will issue a revised appeal tomorrow for further support. One of the problems here is that the UN appeals so far are severely underfunded. However, the United Kingdom is well aware of the significance of this crisis and, as I say, is a major contributor.
Lord Wright of Richmond
My Lords, is the Minister aware of recent press reports that armed gangs have been thieving aid and donations from displaced Syrians in Syria and Turkey? Does she agree that this makes it all the more important that all our aid, from HMG and the European Union, should be channelled through the international agencies? Does she accept that there is a potential contradiction between exploring all options to help the Syrian Opposition and—to quote from the Prime Minister’s Statement yesterday—giving further,
“support for the protection of civilians”,
many of whom are subject to discrimination and worse from elements within the Opposition and at least two of whom are now officially classified as terrorists by the United States Government?
Baroness Northover
The noble Lord will be well aware from experience how difficult it is to work in Syria at the moment. We pay tribute to those who are doing so. We note, for example, that the UN has had to pull back a number of its workers from Damascus. We are aware of challenges and, as he says, it is extremely important to work through the international organisations which are best placed to get in the aid that is required. We are assisting, in terms of peace-building, training and so on, the National Coalition for the Syrian Revolution and Opposition Forces but we are aware of how diverse the members of that group are. We are emphasising that they should work together inclusively for the benefit of all the people of Syria but we are aware of the challenges there too.
Baroness Uddin
My Lords, is the noble Baroness aware that recently His Majesty the King Abdullah was in Parliament and that he briefed a number of Members across both Houses? He echoed much of what the noble Lord, Lord Selkirk, has said about the need for emergency relief and support to continue. Will the Minister assure the House that a quick response will be made to aid particularly the Jordanians? What timeframe is she looking at to ensure that refugees receive the maximum amount of support? Furthermore—
Baroness Uddin
Will she also say what support is being provided by the other Arab Governments in partnership with our Government?
Baroness Northover
The noble Baroness is right about the contribution by Jordan and the other neighbours. The other day I met King Abdullah’s uncle, Prince Hassan, who made the same point. Jordan is receiving £11 million from us to support the refugees. We pay tribute to the countries around in that regard. In terms of the other donors, the Arab League is the fourth-largest donor in the region; the United Kingdom is the sixth.
The Lord Bishop of Exeter
My Lords, the latest UNHCR refugee figures, as quoted by the noble Lord, Lord Selkirk, truly are shocking. They reflect the protracted brutality of the ongoing conflict. Will the Minister give an assurance that within the generous and strategic response to the humanitarian situation on Syria’s borders, adequate provision is being given to those refugees who are survivors of sexual and gender-based violence? Will she also say what is being done to document these abuses in order that in due course the perpetrators are brought to justice?
Baroness Northover
The right reverend Prelate makes an important point. One of the striking things about this conflict, as in other cases, is the large amount of sexual violence, which is widespread and systematic. We hear reports of sexual abuse and domestic violence, and also of young girls being forced into early marriage among the refugees. Therefore we are extremely concerned.
We are providing clinical care and counselling for 12,000 Syrian refugees in Jordan who have experienced such trauma and sexual assault. I note the point about making sure that this is documented. It has struck me that this is better documented than may have been the case in the past but we still have a long way to go in terms of recognising the significance of this.
Baroness Hussein-Ece
My Lords, my noble friend will be aware that Turkey is shouldering the cost of the humanitarian aid for people from Syria crossing over its borders. They are currently accommodating 138,000 refugees in 14 camps at a cost so far of $500 million and rising. So, in the absence of any peace deal, what steps is the United Kingdom taking to lead international efforts to increase aid and support to Turkey, and what proportion of the figure she quoted earlier is going to Turkey?
Baroness Northover
We certainly commend Turkey’s extraordinary hospitality in looking after the Syrian refugees who are crossing their border. As I mentioned, the UK is providing £24 million in humanitarian aid. Overall, we are providing £53.5 million in response to the crisis; £29.5 million is going to those inside Syria; £24 million is going to the refugees outside, of which £3 million is supporting refugees in Turkey.
We are working with the international community, which is focused on supporting the neighbouring countries, and we will keep this under constant review.
Baroness Symons of Vernham Dean
My Lords, may I press the noble Baroness further about the situation in Jordan? When he was in this country last week, the King of Jordan stressed the urgency of the situation in a very small country which has few natural resources of its own. It also has a further refugee problem with the Palestinians.
To echo the question specifically in relation to Jordan, what proportion of the money we are giving is going to Jordan, and is the Minister satisfied that that money is getting there fast enough to help an urgent position on the ground?
Baroness Northover
The noble Baroness is right about the significance of Jordan. Jordan has hosted many Palestinian refugees and they are supported by UNRRA. The United Kingdom has increased their contribution to support those Palestinian refugees.
Of the £24 million from the United Kingdom that I mentioned, which is supporting refugees generally, £11 million is going to Jordan. The international community and the noble Baroness, Lady Amos, who is UN Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator, are constantly monitoring where the need is greatest. The problem is not so much what the United Kingdom is doing, but making sure that other countries step up to the mark and contribute as well.
Banks: Money-laundering
(11 years, 5 months ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government whether they are satisfied that sufficient steps have been taken to prevent money-laundering by United Kingdom banks.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the UK is internationally recognised as having one of the most robust anti-money-laundering regimes in the world. However, no Government should ever be satisfied that sufficient steps have been taken to prevent money-laundering by those who handle money in the UK. It is an ongoing multi-billion pound threat to the financial system. However, the Financial Services Authority is taking an increasingly robust approach to supervision, demonstrated by recent enforcement actions against banks and their staff.
Baroness Williams of Crosby
I thank the Minister for that reply but last year alone the amount of fines paid to the United States regulatory authority from British banks alone came to no less than £6.4 billion, in comparison to the amount paid to the Financial Services Authority from the same banks, which came to £140 million. The discrepancy is clear.
These were not minor crimes. They included not only money-laundering but fixing the LIBOR rate, breaking the sanctions regimes against Iran and other countries and, not least, money-laundering that included drugs cartels in Mexico and Colombia. Does the noble Lord therefore agree with Andrew Bailey, the CEO of the prudential authority that is shortly to be established, that it is impossible to prosecute major banks on grounds of confidence? Does he take that view or the view that I hold, which is that unless we prosecute major banks that commit crimes of this kind, we will find ourselves with a City that no longer has its traditional reputation for integrity and fair dealing, which is absolutely crucial to its future and which many of us recognise must be re-established, if necessary with radical measures?
Lord Sassoon
My Lords, I agree with the numbers that my noble friend shared with us. However, the traditional approaches in the UK and US towards fines have been very different. I believe that my noble friend’s numbers go wider than the narrow question of money-laundering. As I said, the FSA has levied much larger fines in recent years. Prosecutions are, of course, possible and should be pursued where appropriate, whether against bank staff or potentially against the banks. However, Mr Bailey is also correct that there are circumstances in which the prosecution of a bank could have the consequence of putting the future of that bank in jeopardy. Therefore, considerations may arise in extreme cases regarding the stability of the system if a major bank was closed down. Those considerations have to be taken into account.
Lord Hylton
My Lords, does the Minister accept that the present British regime causes unintended consequences for legitimate people opening bank accounts, for example, for perfectly bona fide reasons?
Lord Sassoon
My Lords, I certainly accept that there is unfinished business to be done around the whole “know your customer” and opening bank accounts regime. Many of us know what difficulty that causes, whether on our own account or on that of our children. This is something that we discussed during the passage of the Financial Services Bill. It is interesting that some banks require less detail and paperwork than others. I wish they would all make this process as easy as possible for their customers, consistent with the regulations that apply.
Lord Oakeshott of Seagrove Bay
My Lords, on that topic, I wonder whether the noble Lord and other noble Lords bank with HSBC. I have done so for the past 30 years. Last week I was rather surprised to be asked by bank staff to show them my passport and a utility bill. I am not sure whether noble Lords realise but we are all politically exposed persons in regulator-speak; some of us may be more so than others. But, honestly, is this not mindless box-ticking? Do they really need to check our passports to know the difference between a British baron and a Mexican drugs baron? Is not the reality that these monster banks such as HSBC and RBS are, as the Minister touched on, frankly, not just too big to fail but too big to regulate and too big for any single board to control?
Lord Sassoon
My Lords, on the first of my noble friend’s points, I certainly agree that the banks need to get much more intelligent about this matter. I have met in the Treasury senior bankers on the retail or wealth management side of these banks to make precisely my noble friend’s point: namely, that they need to be intelligent about this matter. This must not be a box-ticking exercise. I have made the same point to the chairman of the FSA. My noble friend raises a very important point.
Lord Eatwell
My Lords, I believe that this is the last time the noble Lord will appear at the Dispatch Box in his current position. I am sure that the whole House wishes him well in his future endeavours.
Turning to the Question, the FSA rulebook states that the chief executive function is the function of,
“having the responsibility … for the conduct of the whole of the business”.
Indeed, the notion of chief executive responsibility is at the heart of the FSA’s regulatory philosophy. While I understand the concept of the independence of the FSA, given that it has been established that HSBC has committed very serious money-laundering offences, would the noble Lord expect the FSA to implement its own rulebook and would he therefore expect it to take enforcement action against the relevant chief executive of HSBC?
Lord Sassoon
My Lords, I am grateful to the noble Lord, Lord Eatwell, for his kind words, but I regret to say that the House may have me at the Dispatch Box again for the Topical Question tomorrow, unless I can persuade a colleague to take it from me. As for HSBC, the FSA will do what it should as the independent regulator in this area. However, it is important that the FSA has agreed a series of additional measures with the HSBC board, including establishing a committee of the main board of the bank with a mandate to oversee matters relating to anti-money-laundering, reviewing relevant group policies, appointing a group level money-laundering reporting officer and having an independent monitor in place to look at the bank’s compliance across the group with UK anti-money-laundering regimes. The FSA has agreed a tough series of measures with HSBC right across the group.
Growth and Infrastructure Bill
(11 years, 5 months ago)
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Prevention of Social Housing Fraud Bill
(11 years, 5 months ago)
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Baroness Eaton
My Lords, I understand that no amendments to this Bill have been set down and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Crime and Courts Bill [HL]
(11 years, 5 months ago)
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16:17 - Division on Amendment 2 - Ayes: 233 / Noes: 191 - Amendment 2 agreed.
18:32 - Division on Amendment 9 - Ayes: 187 / Noes: 159 - Amendment 9 agreed.
Lord Avebury
“Immigration appeals: asylum and humanitarian protection
(1) Section 83 of the Nationality, Immigration and Asylum Act 2002 is amended as follows.
(2) In subsection (1)(b) omit the words “Kingdom” to the end and insert “, and—
(a) the leave has been granted for a period exceeding one year (or periods exceeding one year in aggregate); or(b) the person is under 18 years of age at the time of the grant of leave; or(c) there are reasonable grounds to believe that the person is a victim of human trafficking.”
Lord Avebury
My Lords, this amendment provides that an appeal against a refusal of asylum by someone who has been granted leave to enter for a year or less can be exercised by a child or trafficked person. On Report a similar amendment to remove restriction in all cases was considered. The Minister complained that this was too wide, because it would have afforded a right of appeal to people other than children and trafficked persons. I have therefore confined this amendment to those classes of persons in the hope that a more restricted version of the amendment may prove acceptable to the Government.
Children and trafficked persons who are refugees are entitled to recognition as such, and to enjoy the rights and entitlements of refugees, including for example higher education at home student rates, a travel document and family reunion, and obviously to the security that that recognition brings. The law should not take them to the brink of removal before they can assert their rights to recognition. The Minister suggested that the delay imposed on these children’s applications for asylum was not unreasonable because they were close to adulthood. Actually, time and again the courts have ruled that adulthood is not a moment of sudden transition at which the risks to which children are exposed suddenly disappear. Lord Justice Maurice Kay summarised the authority in a recent case, KA (Afghanistan), when he stated that,
“it does not matter that the appellants are now over 18 because ‘there is no temporal bright line across which the risks to and the needs of the child suddenly disappear’. The line of authority which is said to support this analysis includes”—
and here the judge rattled off a list which I will not bore your Lordships by repeating.
My noble friend kindly wrote to me on 20 November, saying that the amendment would lead to costly multiple appeals. This is, in fact, not the case. Those who appeal and are recognised as refugees will obviously not need a further appeal. The only persons who would have more than one appeal are those whose applications are rejected, who then lose the appeal against refusal, and who the Home Office decides to remove. They would then have a right of appeal against removal, as would anyone else facing that decision. The appeal would, no doubt, rest to a large extent on evidence from the earlier appeal on both sides, and therefore the costs are not likely to be large.
I am not sure where my noble friend gets his idea of multiple fruitless appeals from, and his suggestion that my original amendment would have resulted in significant cost to the taxpayer was not accurate. This amendment is even less open to that criticism, and the limited costs that it entails must be set against the failure to respect the rights of refugees who are denied protection for a year. I ask my noble friend whether the Government have sought the views of the UNHCR on this matter and, if not, whether they will do so and circulate the answer in time for those views to be considered when the Bill is debated in another place.
When the Government ratified the Council of Europe Convention on Action against Trafficking in Human Beings, the Immigration Law Practitioners’ Association tried to persuade them to grant trafficked persons leave to remain for a year and a day in order to avoid this problem. The request was refused, and if the Home Office was concerned that it would have meant a handful of people aged 16 years and nine months getting three months’ more leave than they would otherwise have done, the amendment offers an alternative, whereby the Home Office can grant the period of leave that it chooses but an appeal against refusal of asylum can still take place.
I turn to the second amendment in the group. There were some misunderstandings in the debate on this proposed new clause on Report, and it is in the hope of clearing them up that I ask your Lordships to spend a moment or two once again considering an amendment similar to one I moved previously, which recognises the true circumstances in which the clause is intended to be used. The Minister said 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”.—[Official Report, 12/12/12; col. 1103.]
He was speculating, but what he described is contrary to stated Home Office policy. I am reliably informed that this policy is to wait until a person is outside the country to deprive them of leave to remain. This has been repeatedly confirmed in meetings with the Immigration Law Practitioners’ Association and, indeed, at the semi-public ILPA annual general meeting, which was attended by some 100 members on 27 November 2010. On that occasion, the statement was made by Tony Dalton MBE, then assistant director and chief case worker at the nationality and European casework department of the UKBA. ILPA tells me that it is not aware of any case in which some intervening act has prompted the deprivation. That is not to say that it has never happened, but it is certainly not the norm. In many cases, the deprivation notice is served immediately after the person has left the country. There is simply no time for new evidence to come to light or for the person to have done anything that would make him subject to the notice.
ILPA dealt in detail with this in its evidence to the Joint Committee on Human Rights inquiry into extradition policy in January 2011. Subsequent to that, there was the decision of Mr Justice Mitting, sitting in the Special Immigration Appeals Commission in the case of L1, where the matter at stake was deprivation of citizenship. In paragraph 12(i) of his ruling, the judge said:
“The Secretary of State’s decision to deprive the Appellant of his citizenship was one which had clearly been contemplated before it was taken. The natural inference, which we draw, from the events described, is that she waited until he had left the United Kingdom before setting the process in train”.
The Minister may also have unintentionally misled the House when he said in reply to the noble and learned Lord, Lord Woolf—also in column 1103—that exclusion while a person is out of the country has been part of the immigration process for a substantial period. It was indeed at one time, until it was declared unlawful on 16 January 2012 as a matter of statutory construction in the case of MK, as discussed in the Immigration Law Practitioners’ Association’s evidence on extradition to the Joint Committee on Human Rights. If it is done at the moment then the law is being broken.
Lord Elton
My Lords, forgive me. I want to make, not a pre-emptive remark, but an introductory one. I apologise to your Lordships for intruding on your discussions on this particular amendment, but I am very surprised by the form and volume of the Marshalled List at Third Reading. Having been here for 39 years I do not recall there being anything like this in the past. I draw your Lordships’ attention to paragraph 8.142 of the Companion, and suggest that this is a matter to be considered by the Procedure Committee before we continue in the next Session.
Lord Pannick
My Lords, I understand that Amendment 5, to which I wish I speak, arises in particular out of concern that the House may unintentionally have been misled on Report. I support the noble Lord, Lord Avebury, on Amendment 5. I fully understand the argument deployed by the Government on Report—it would be absurd to allow a person regarded as dangerous back into the country in order to pursue an appeal. My concern is that legal practitioners understand the policy of the Home Office to be to wait until a person with leave to remain travels abroad before then making the decision to curtail their leave, with the express intention of depriving them of the right of appeal from within the United Kingdom. That seems to be difficult to reconcile with the rule of law. I ask the Minister in his response to Amendment 5 at least to give the House an assurance that decisions to curtail leave to remain will not be deliberately delayed until a person travels abroad, with the intention of depriving them of a right of appeal from within this country.
Baroness Butler-Sloss
My Lords, I declare an interest as co-chair of the human trafficking parliamentary group. If there are reasonable grounds for someone being understood to be a victim of trafficking, it would be extraordinarily unjust and contrary both to the Council of Europe’s convention and the directive of the European Union, to both of which the Government are signatories, to treat that victim in the way that it is possible that he or she would be treated if the amendment were not passed.
The Earl of Listowel
My Lords, I would be most grateful if the Minister could clarify the position, raised by the noble Lord, Lord Avebury, regarding this sudden moment of transition at the age of 18. I would appreciate him reassuring the House that the Government do not consider there to be a single cut-off immediately after the child moves past the age of 18 but that there is humane consideration of a young person’s need for a transition into adulthood. With young people who have been traumatised—for instance, those who have been trafficked—one sees that their development may well be delayed and one has to allow for that. In the Children (Leaving Care) Act, we see special consideration being given to their needs, because of their early trauma, up to the age of 21 and, in some cases, until the age of 25. We need to pay attention to the developmental needs of children and to recognise that some children, particularly those who have been traumatised in their early life, need more care and attention as they make that transition into adulthood.
Baroness Smith of Basildon
My Lords, I see that the Minister is eager to respond, which I can well understand. I do not intend to detain the House; the noble Lords, Lord Avebury and Lord Pannick, the noble Earl, Lord Listowel, and the noble and learned Baroness, Lady Butler-Sloss, have made some powerful points. There were some important questions there, particularly regarding the policy of the Home Office, to which it would be helpful if the Minister is able to respond.
On the point made by the noble Lord, Lord Elton, an unusually large number of amendments are before your Lordships’ House today for a Third Reading. I do not recall seeing as many in my time in this House or in the other place. I can see Ministers nodding in agreement. Perhaps they could consider whether the Bill’s needing considerable discussion has something to do with its inadequacy when it was first presented to your Lordships' House. Noble Lords have made great efforts, particularly where they have supported the Government’s policies in principle, to look at the detail. However, in many cases—and perhaps understandably given that three completely new sections of the Bill were not envisaged when the timetable was set, and given the changes of Ministers and changes of policy that we have seen—it has been very difficult.
I appreciate that time is limited today, and I do take issue with the scheduling. We have three important debates with a large number of speakers tonight, and it will be difficult to complete the business within the rules of the Companion, to which the noble Lord, Lord Elton, was right to draw the House’s attention, so I do not wish to repeat the comments that have been made. However, there are some important questions here.
I raised some questions on Report which came back to the issue of public safety. As the noble Lord, Lord Pannick, pointed out, people understand, and I think that the House understands, why if somebody is a danger to the public they should not have leave to remain. The question is about the process and why somebody becomes a danger to the public when they leave the country, as the noble Lord said, but not when they are in the country. There is an issue of process here and it would be helpful if the Minister were able to address those points. However, noble Lords who have already spoken, including the noble Lord, Lord Avebury, have raised and done justice to the issues, so I do not intend to repeat them, but I would be very interested in the Minister’s response.
Lord Elton
Before the noble Baroness sits down, I should say that the Clerk of the Parliaments has kindly pointed out that I should have been looking at paragraph 8.143, not 8.142; therefore what we are doing is in order, but is far in advance of anything I remember in my earlier years. However, things do move on.
Baroness Smith of Basildon
I readily concede the noble Lord’s encyclopaedic knowledge of the Companion, but I think the reasons why the amendments have been brought forward today are very good. However, it is unusual, and perhaps it would have been better to have had longer discussions about some of these issues, and to have had responses that satisfied the House earlier in the Bill’s proceedings.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, I am sorry if my responses on Report failed to satisfy the House; I hope that I can satisfy it today. I understand that the scheduling of today’s business was agreed through the usual channels, and nobody has a more vested interest in the speedy resolution of business than I do, as I believe I will be the last speaker on today’s business.
My noble friend quite rightly pointed out that his amendments are similar to those which he tabled on Report. I explained then that our principal reasons for resisting the first amendment were the detrimental impact on the statutory appeals framework, and the increased number of appeals and costs that would result. Although this amendment is framed more tightly and specifically, the same detrimental impact will result from it. While I recognise the intention of the amendment is to reduce the delay in bringing an appeal for children and trafficked persons, the consequences for the appeals framework are not justified.
Only a minority of unaccompanied children who claim asylum are affected by this policy in the way described by my noble friend Lord Avebury. It affects only those who are older than 16 and a half when refused asylum but granted some other form of leave. These children are close to adulthood and have a right of appeal should a decision be taken to remove them after their leave runs out at age 17 and a half. As I said last time, this delay is not unreasonable.
I say to the noble Earl, Lord Listowel, that the age of 18 is a statutory boundary between childhood and adulthood, and Governments have to live within the constraints of that. It is important to recognise that in all cases, before a child or trafficked person is removed from the UK, they will be entitled to a right of appeal. That is part of the process.
The Government’s policy ensures that individuals do not have multiple appeal rights over a brief period of time, possibly raising the same arguments on each occasion as matters may not have evolved since their last appeal. The amendment would undermine this key principle of the Secretary of State’s asylum appeals framework.
I turn now to Amendment 5, which my noble friend has also brought back. As I set out previously, the individuals we are seeking to capture in this clause are those excluded by the Secretary of State—that is to say, they are individuals who pose the highest threat to the public, be it for engagement in terrorism, serious criminality or unacceptable behaviour. It is therefore only right that an appeal against the cancellation of leave decision that accompanied the Secretary of State’s decision to exclude takes place from outside of the United Kingdom.
To be absolutely clear—I do not want noble Lords to feel that I am seeking to mislead them in any way—and as has been raised in previous debates, there is no policy of waiting for an individual to leave the United Kingdom before excluding them. Indeed, a series of deportation orders in cases in respect of national security activity are ongoing at the moment. However, in many of these cases we are talking about a situation where an individual leaves the United Kingdom for a period of time to meet with like-minded individuals and potentially to acquire new skills which, if utilised back in the United Kingdom, can pose a significant and serious threat to the population as a whole. That is why in such cases, having seen the intent of their activities while abroad, the Secretary of State takes the decision to exclude on the grounds of non-conduciveness. It would be a highly risky strategy to allow such individuals simply to come back to the United Kingdom and to exercise a right of appeal. It would also undermine a crucial disruption tool used for the protection of the general public.
Lord Avebury
My Lords, I am most grateful for the renewed support of the noble Lord, Lord Pannick, the noble and learned Baroness, Lady Butler-Sloss, the noble Earl, Lord Listowel, and the noble Baroness, Lady Smith of Basildon. What they have said demonstrates that there is still serious concern across the Floor of the House with regard to both these amendments, particularly in the case of the noble Earl, Lord Listowel, on the rights of the child, which are being jeopardised by the current system. There is a serious question as to whether the system we have now is compatible with our signature to the UN Convention on the Rights of the Child. However, both that and concerns about the right of appeal only from abroad may have to wait for further consideration in another place, where I hope that these issues will be picked up. I honestly do not think that my noble friend, although he has tried hard, has given us satisfactory answers to many of the points that have been raised. I mention in particular whether the Home Office has a policy of lying in wait. I cited the detailed evidence which has been—
Lord Taylor of Holbeach
I am sorry but I did make it patently clear that there is no policy of waiting for people to leave the country before taking these proceedings. That is a matter of fact. I did answer the question.
Lord Avebury
I know that my noble friend said that, but he did not respond to the point I made about the evidence which has been provided for us by the Immigration Law Practitioners’ Association. It says that in many cases the notice is served the day after a person has left the country and that the policy was acknowledged by a senior UKBA official when the matter was addressed at the ILPA AGM in front of 100 people in November 2010. My noble friend did not deny that that evidence existed, nor did he attempt to refute it. If he had said that in the cases where a person’s presence was deemed to be “non-conducive to the public good” the Home Office would not wait until somebody went abroad for a short period, I would have been far happier. The case that he described—where someone is known to be departing from the United Kingdom with the intention of plotting with like-minded individuals abroad to commit or plan further offences against our laws—is, again, hypothetical, but the existence of the suspicions could have enabled the Secretary of State to serve that person with a notice before he left the country. Therefore, there was an element of premeditation in the way that the Secretary of State exercised her powers in the particular case that my noble friend described.
I do not think that we are going to get any further with this matter this afternoon. I shall have to leave it for our colleagues in another place to renew the discussions on both these amendments, as I hope they will. In the mean time, I beg leave to withdraw the amendment.
Baroness Meacher
“Enforcement services
(1) The Legal Services Act 2007 is amended as follows.
(2) After section 125 insert—
“125A Extension of Part 6 to enforcement services
(1) For the purposes of this Part (and sections 1, 21 and 27 as they apply in relation to this Part)—
(a) the Bailiffs and Enforcement Agents Council is to be treated as an approved regulator;(b) enforcement services are to be treated as a reserved legal activity;(c) a person authorised under sections 63 and 64 of the Tribunals Courts and Enforcement Act services is to be treated as an authorised person in relation to that activity;(d) the Bailiffs and Enforcement Agents Council is to be treated as a relevant authorising body in relation to such a person, and(e) regulations under the Tribunals Courts and Enforcement Act 2007 and the National Standards for Enforcement Agents are to be treated as regulatory arrangements of the Bailiffs and Enforcement Agents Council as an approved regulator.(2) For the purposes of sections 112 and 145 (as extended by this section), a person authorised under sections 63 and 64 of the Tribunals Courts and Enforcement Act is to be treated as a “relevant authorised person” in relation to the Regulator.””
Baroness Meacher
My Lords, Amendment 2 seeks to provide some protection for vulnerable people who have suffered unacceptably at the hands of a bailiff. The amendment provides complainants with access to the Legal Ombudsman if the internal complaints processes fail to resolve a dispute. I should make it clear that the Legal Ombudsman is able and willing to take on this role, which would be quite compatible with other work that the ombudsman is already doing or is shortly to take on.
On Report, I moved a much more ambitious amendment that would have introduced independent regulation of bailiffs. This amendment is just one small element of such a system, but a very important one. In the health service, which I know, the independent health ombudsman is crucial in ensuring that lessons are learnt from complaints and that the quality of service improves. This is what an independent appeals process is all about—improving the quality of service and stamping out bad practice. Nowhere is this more important than in the debt collection field.
As we know, the job of a bailiff is intensely difficult. Extracting money or goods from a person who, for whatever reason, has fallen into debt is almost inevitably confrontational. Very many of those people will be vulnerable, and that is really my point. They may be disabled or mentally ill, or they may be mothers with young children or elderly people with failing memories or full-scale dementia.
We also know that hundreds of thousands of households could be confronted by bailiffs for the very first time when further cuts and caps are applied to the welfare benefits system at the end of March next year. Households affected by the housing benefit cap, the overall benefits cap and a council tax of 20%, which will be new to them, and who cannot move into smaller accommodation or into a cheaper area may find their income after paying rent very substantially lower than anything that they are used to. If a family cares for a relative nearby or their property has been adapted for a disabled child, it will be impractical to move.
Your Lordships know very well the problems that families will face next year. Many will be unable to eat and to keep warm. I make this point only because these families, with their inevitable debts, will be in a completely new situation. They will not have confronted this situation before, and it will be a deeply shocking experience. The bailiffs who come to their doors demanding payment will inevitably include those who are by nature aggressive and who may have limited communication skills and little, if any, empathy for vulnerable people.
Citizens Advice says that it dealt with 24,700 problems relating to private bailiffs last year, including forcing entry to a home—knocking the door down—seizure of exempt goods that they should not have seized, harassment and intimidation. These numbers will soar next year. To make matters worse, there are particular reasons why bailiffs are more likely to make mistakes than other operatives or professions, including the archaic legislation and case law, going back to the Middle Ages, and the plethora of different legislation applying to different debts. Having made a mistake, bailiffs are much more likely to become aggressive.
The case for oversight of the bailiff industry and for a grievance procedure delivered independently from bailiff firms has been accepted by previous Conservative and Labour Governments. Only an independent complaints ombudsman can deliver redress in a way that is consistent with principles of administrative justice, award financial restitution where appropriate, publish data on good and bad practice and, most importantly, make recommendations for improvements.
The coalition agreement identified that there is a serious problem with bailiffs acting aggressively and that vulnerable debtors need protection from that. I thank the Minister, the noble Lord, Lord McNally, for a helpful and, in some ways, positive discussion yesterday and for his follow-up letter. In that letter—I hope he will not mind my quoting it—he said:
“We recognise that this is a widespread problem. We understand that the actions taken by many bailiffs can be, at best, deliberately belligerent and, at worst, aggressive or threatening”.
Furthermore, the Minister agrees with us that the people affected,
“will often be the most vulnerable in society”.
He adds:
“We cannot allow them to be subject to bullying behaviour by bailiffs and are committed to taking action to prevent this”.
The noble Lord, Lord McNally, also refers to the despicable behaviour that some debtors have had to endure. I myself could not express more strongly the reasons for this amendment.
When we have independent regulators for most, if not all, the professions where practitioners are highly educated, talented and carefully selected to ensure that their personalities are just as they should be for the job, how can any Government reject the proposal for part of a regulatory function—an independent appeal process—for bailiffs? The Minister explained that they need to take more time to decide how best to protect vulnerable people. However, I do not believe that the decision, in principle, that an independent appeals process is justified requires any more time. The proposal has been considered for more than 20 years. The Government themselves have spent seven months looking at these issues and want to pass this legislation while they continue deliberating on how and to what extent they will protect vulnerable people from abuse by bailiffs. The Government should have clarified the minimalist system that I believe they plan to put in place before bringing forward this legislation. I do not think that it is acceptable to bring forward the legislation before we know what the Government plan to do.
I now understand that an independent appeals process could be introduced by regulations, but there is no assurance at all that the Government will introduce an independent appeals process. Without this amendment, nothing in this legislation will ensure that that is done. I regard this as the absolute minimum required to begin a process of improving the quality of service of bailiffs. If the Minister feels unable to agree the detail of this amendment but will make a commitment on the Floor of the House that an independent appeals process will be introduced to cover bailiffs, I shall be content to withdraw the amendment. However, if the Government can tell us only that they will do their best, then I believe we owe it to the many harassed, abused and terrified vulnerable people to seek to pass this amendment. I await the Minister’s reply and beg to move.
Lord Lucas
My Lords, I should declare an interest as chair of the Enforcement Law Reform Group. As such, I count many bailiffs among my acquaintances—and do not know one who would not support this amendment. Everybody in the bailiff industry, from those who have spent a lifetime in it to the most vocal advocates of the poor, wants regulation and a complaints system. This has been an active subject in government since 1980. We have had several times when action has been promised and no times when action has resulted. It is high time that the Government did something. The previous Minister in charge of this promised that he would do something, and it was delayed and delayed. We have a new Minister in charge and again we are promised that something will happen, but nothing substantial has come forward. It is time we had action. It is no bad thing that we in this House should pass an amendment signalling just how seriously we regard this constant delay. It is very important that whatever we do about regulation, we have an appeals process: some way in which bad behaviour can be brought to book and in which complaints can be heard.
There are pros and cons of doing it in any particular direction. I have had very good experiences with ombudsmen—not in this area, but others; it is a system that works well. But it is not good enough to have no appeals process. Having done bailiff regulation in whatever way the Government propose to do it, we cannot even think of not having a serious system of appeal and for dealing with bad practice. Without it, the bad practice will not disappear. The serious members of the bailiff profession very much want it to, but they need the Government’s help. The Government have set up a system of remuneration for bailiffs which invites bad practice, because it makes it uncommercial and uncompetitive to behave according to the rules. Under those circumstances one should not be surprised that things get pushed a bit. Proposals and studies on the proper system of remuneration for bailiffs have been around for a long time; we have not yet seen them implemented. The Government ought to make progress, and I should be delighted if the Minister would give a firm promise on this to prevent the noble Baroness pressing her amendment. However, if she does press it, and if I am unhappy with what the Minister says, I shall be in the Lobby with her.
Lord Kirkwood of Kirkhope
I follow my noble friend Lord Lucas and concur with what he and the noble Baroness, Lady Meacher, said. The House owes her a debt of gratitude for pursuing this matter to Third Reading. After these proceedings the House has many important duties and discussions, so I want to be brief. I concur with everything said by the noble Baroness, Lady Meacher. However, unusually for me given the context of the discussion, I want to ask my noble friend on the Front Bench a party-political question. It is a very simple one. The governing coalition agreement makes specific reference to more protection against aggressive bailiffs; that is what we as a coalition Government in 2010 undertook to do. Can the Minister assure me that in 2015, when the coalition agreement runs its course, he will be able to provide me with an answer to the question, “What additional protection against aggressive bailiffs have we as a junior coalition partner been able to provide?”? That is a very important question and I am certain that it will be asked.
That is the first point I want to make. The second point is that time is now running out; I know this as well as the noble Baroness, Lady Meacher. April 2013 is not a cliff edge that will suddenly cause an explosion of debt-enforcement proceedings. However, that date marks a significant change to the risks faced by low-income households against a very difficult financial background, which we all know about. It is not safe to leave in place the current inadequate proceedings—the framework within which debt enforcement is conducted—against the background of what we all hope will be a short-term period of financial distress. These low-income families have nowhere else to go. They are, by definition, the most vulnerable people in the country. Sometimes their heritable property and homes are at stake, so the stakes for them could not be higher. It is therefore essential that we do everything in our power to make sure that the rules are observed.
No one is suggesting that debt enforcement cannot be pursued. That would be quite wrong. There is no party politics in this, and I am not making a party-political complaint, but the department has been sitting on this for far too long. Speaking for myself, if the Minister is not able to give the noble Baroness, Lady Meacher, her amendment as stated, I want to know how long it will take for him to bring about the change that the amendment requests. I know the Minister very well, and I know that he takes these issues seriously. I know that he has strength as a political operator and a huge amount of experience. I do not believe that it is impossible for someone of his stature to go back to the department and say, “You have a maximum of 12 months to sort this out, otherwise my reputation as a Minister will come under attack”. That is all he needs to do because if I was his senior adviser on this matter and he raised an eyebrow and uttered sentences of that kind, I would not think twice about trying to sort the problem. Time is not on our side.
People get touched by debt-enforcement proceedings after they have had personal experience. I know this because when I was fledgling provincial solicitor I used to instruct sheriff officers who were subject to the control of the sheriff. Any sheriff officer who got on the wrong side of the rules in front of Sheriff James Patterson in Jedburgh Court got a dose of Jedburgh justice himself. As a solicitor for organisations such as the then South of Scotland Electricity Board, I found that the operation of debt enforcement was perfectly controlled but deeply affecting. I remember as a young solicitor understanding the effects of properly enforced debt obligations on families in a small rural community. They made a real mark on me. My experience since is that anybody who is touched by any element of debt-enforcement proceedings is traumatised in a way that few other occurrences—domestic, personal or otherwise—produce, so we have a double obligation to try to get these things right.
I am about to retire as a lay member of the General Medical Council. For the past four years, I have had an engaging and enjoyable time watching the beneficial effects of a sensible, light-touch regulation system with licences, appeals and complaints that put a framework around everything that the professionals in the system do. I am absolutely persuaded that it is in the interests of bailiffs, debtors, creditors, courts and everyone else to have a playing field on which the rules are absolutely clear. The essential elements of that are an appeal system that people understand, a competent complaints service and licences that can be withdrawn if people flagrantly abuse the rules. It works in medicine and in other walks of life—it will work in debt-enforcement proceedings.
In conclusion, I say to my noble friend that, as coalition partners, we not only have to provide an answer before 2015 to the urgent political question of providing more protection but, more importantly, we have to get the system in place before universal credit compounds all the benefit problems, council tax debts and other issues to which the noble Baroness, Lady Meacher, referred. Time is running out. We must get this done. I know the Minister understands the importance of this, so the key thing for me is the timeline. If the Minister does not in his response put his own imprimatur that he will get this done in a reasonable time, I may follow the noble Baroness into the Lobby if she decides to press this to a Division.
The Lord Bishop of Lichfield
My Lords, I too am glad to support the noble Baroness, Lady Meacher, and her amendment which seeks to establish a statutory ombudsman for complaints about bailiffs. I am glad to do so also because Wednesbury, of the famous Wednesbury rules, comes from the ancient Black Country town in my diocese where the recession and austerity have acquainted many citizens with bailiffs for the first time.
Most of us have had the infuriating experience of having our wheels clamped by a private company and of officials who then would not listen to reason. How much worse it must be to have one’s personal possessions, or even one’s home, taken away. It is vital that those authorised on our behalf to collect fines should be properly accountable and their behaviour regulated.
The second reason I want to support this amendment is that the citizens advice bureaux, the Zacchaeus 2000 Trust and the Money Advisory Trust are all behind it. They have been concerned about the practices of some private bailiffs for many years. As we have heard, CABs dealt with getting on for 250,000 problems to do with private bailiffs this past year. They have some heartrending examples of people being pushed into unpayable debt by bailiffs acting illegally. We must do all in our power to prevent vulnerable people being led to believe that the justice system in our country is all about the rich punishing the poor. The present system of certifying county courts fails to monitor individual bailiffs’ behaviour; it is intimidating and costly for vulnerable people to bring complaints and there is no power for a court to award redress.
The Zacchaeus 2000 Trust helps 650 impoverished debtors a year in London. It is convinced that there is a relationship between debt and mental illness and between destitution and poor maternal nutrition and, consequently, babies with lifetime mental and physical illness. Zacchaeus 2000 meets bailiffs when they are enforcing council tax and fines on impoverished debtors. Of course, the courts must be supported and their penalties enforced but we do not want the ethos of the car clampers to be repeated in debt collecting in our poorest boroughs.
The present system is widely perceived as unsatisfactory and toothless. A legal ombudsman would give debtors and the advice sector a proper remedy when bailiffs do not comply with the Wednesbury standards.
Lord Cormack
My Lords, I came to listen and I do not think I have ever heard more powerful, convincing pleas for a Christmas gesture from a Government. I will not repeat the justifiably flattering things my noble friend Lord Kirkwood said about my noble friend Lord McNally, but he is a man of imagination and sensitivity and I hope he will realise that, if this House exists for anything, it is to say to the Government on issues such as this, “You have not got it right”. If the Government are consulting, it is for the House to say that they have to do it quickly and come back with something that will satisfy the points made by the noble Baroness, Lady Meacher. The right reverend Prelate talked about wheel clamping, an interesting and rather good analogy. But the inconvenience that we might suffer if our wheels are clamped is as nothing compared to the anguish and misery inflicted upon a destitute family.
In Lincoln, we are in the process of revealing Lincoln Castle. We have a large grant from the Heritage Lottery Fund. I am acting as chairman of the Historic Lincoln Trust. One of the things that we are going to do is restore and recreate the prison in Lincoln Castle. When people come and look at that they will see the conditions in which debtors were kept. When we read David Copperfield and about the life of Dickens himself, we think, “Good gracious, could people have been put in prison for debt?”. Yes, they were and, yes, we should know about it.
Is there any equivalent today? Yes, this is perilously close to it. It visits upon people who are among the most vulnerable and often the least articulate a horror that leaves the disintegration of their lives in its wake. We are not saying that there should not be procedures for debt enforcement, or that people should not face up to their obligations as best they can. All we are saying is that there should be an ethic and a code so that those who are acting as the agents of the creditor do not act with insensitivity, or even a brutality, which is incompatible with civilised life and living.
On that note, I say to my noble friend that this is a season of good will. This is a time when we ought to have particular regard for the most vulnerable and least fortunate in our society. Here we have the opportunity in your Lordships’ House of putting down a marker if my noble friend is unable to give us a reassuring reply. I thought that I had done my voting for this year last week, when the Government—rather foolishly, in my opinion—pressed on against the noble Lord, Lord Dear, and got a thorough hiding for their pains. I thought that I had done my voting and would not be doing any more. However, unless my noble friend can give a satisfactory reply, we might have to do the same again.
I conclude on this note, by repeating that this is the sort of thing for which your Lordships’ House exists. If we cannot do this, it is difficult to justify our being here. I believe passionately in our being here, as I have tried to demonstrate over the past two years. I want us to be here, reformed to a degree, but for a very long time to come. However, I would not be able to look at myself in the mirror if I did not support what the noble Baroness so eloquently put before us a few minutes ago.
The Earl of Listowel
My Lords, it is hard to follow the eloquence and persuasiveness of the noble Lord, Lord Cormack. I will briefly say how strongly I support my noble friend Lady Meacher’s amendment. I was most grateful for the trouble that the Minister took on Report to reassure us that, further down the line, measures would be taken that would protect these vulnerable people. However, again and again we have heard that this is an enduring, long-term issue. The people at risk are highly vulnerable.
I asked the Minister on Report what protections there might be for pregnant women and women with children under two years of age. That is an emotive question, but it is an emotive question for a very good reason. We have always appreciated how important that stage in a child’s development is, and the importance of the relationship between mother and child in that early time of life. More and more, however, the research is highlighting that the very relationship between the mother and child in that earliest time actually shapes the child’s brain. The valiant efforts made by the right honourable Iain Duncan Smith and Graham Allen MP to get more early intervention for our children are, I believe, based on this evidence.
We should know this kind of detail after this matter has been debated for so long. It should not be somewhere way down the line once we have legislated. I hope, therefore, that the Minister will come back with something more reassuring at this point, otherwise I am afraid that I will feel forced to follow my noble friend through the Division Lobby.
Baroness Hamwee
My Lords, over the years I have been very much persuaded on this issue by those who have put forward the arguments that we have heard this afternoon. However, my noble friend made a point on Report which I confess I had not thought of before. That was that we should ensure that the banks and other lenders are taken along with new arrangements, because it is so important to keep the flow of credit—something that your Lordships have discussed on many occasions.
When he comes to reply, will the Minister tell your Lordships any more about discussions with the banks or other lending institutions? After all, many discussions have taken place with the lending institutions about the availability of credit. His point was important; when he spoke last week I realised that there is another side to this. I absolutely take the points that were made about the behaviour of some bailiffs, but that very cohort, or constituency, of those who are affected would be affected if credit were not available.
Lord Beecham
My Lords, I raised the issue of bailiffs at Second Reading. I followed it up with a Written Question which asked when the Government would respond to consultation. I was told, as I have reminded the House before, that it would be some time in the autumn. Autumn is now safely past us and we do not yet have a response. I spoke in Committee and subscribed to the amendment moved by the noble Baroness, Lady Meacher, on Report. I would have been very happy to subscribe to today’s amendment had it not been for the fact that there were already four signatures on it, which would have left me as a fifth wheel on the coach of the noble Baroness.
I strongly support her amendment because it is important to get some movement here. As my noble friend Lady Smith has pointed out, the Government have introduced three substantial new proposals to the Bill at a late stage. Two of them were at least subject to the recommitment procedure, and followed consultations—consultations, incidentally, which began after the consultation closed on the whole issue of bailiffs, on which the Government consulted last winter and spring. The third amendment, which deals with self-defence, was of course tabled two days before Report, with no apparent consultation with anybody at all beforehand.
I entirely subscribe to and share the views of noble Lords who believe that the Minister is absolutely genuine in his concern about this matter, but why has it taken his department so long to consult all relevant bodies? There was an extensive consultation period; seven months have now passed. What further consultations, if any, have taken place—that is a legitimate question to ask—and with what result? The Minister indicated, in answer to previous questions, that he hoped that there would be a response by the end of November. We are now past that date, and there is still nothing to be seen. As the noble Lord, Lord Kirkwood, has pointed out, time is not running out completely, but it is running out fast against a particular deadline.
Incidentally, I hope that the noble Lord, Lord Kirkwood, will consider another aspect of the coalition agreement, to which I have made previous reference during the passage of this Bill, namely the part of that agreement which indicated that the Government would introduce a threshold of £25,000, below which it would not be possible to obtain charging orders. On the first day back in January we will have in Grand Committee regulations prescribing a £1,000, instead of a £25,000, threshold. No doubt we will have an opportunity to debate that on a subsequent occasion.
In respect of this matter, the noble Baroness’s amendment is, as she put it, almost the least that could be done to get some progress quickly on this matter. If the Government do not accede to this request and if we are looking to another Bill to come forward—I do not know how many Ministry of Justice Bills we can expect to see in the next Session of Parliament—it clearly will take a long time. In the mean time, as other noble Lords have pointed out, there will be the potential for substantial suffering on the part of far too many people—not merely adults because children would be affected as well, including children in the most vulnerable and difficult of circumstances. It is simply unforgiveable that the department has let down the Minister, which is the fair way to put it, in progressing this matter. I hope that the noble Lord will feel able to accept the noble Baroness’s amendment. If not, I certainly shall advise my colleagues on these Benches to join her in the Lobby.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, perhaps it will at least allow the Whips to send out the necessary message that I can make no commitment to the noble Baroness beyond what I have said in meetings and at various stages of this Bill. I will briefly try to explain why not. I have listened to this debate and I have listened to the concern of the House. Yes, the House can send messages but, in truth, the matter is being dealt with. I note that my noble friend Lord Lucas said that the matter had been being discussed for the past 33 years and that the noble Baroness, Lady Meacher, referred to merely the past 20 years. Therefore, I am not too apologetic that the department is taking a little time to take this matter forward.
The consultation paper sets out the objectives, including providing more protection against aggressive bailiffs while spelling out the need for effective enforcement; a fair, transparent and sustainable costs regime that provides adequate remuneration; and minimising excessive regulation on business while ensuring effective protection for the vulnerable. That is the balance that we are trying to get right.
In previous stages of the Bill, I have outlined that the Government are clear that aggressive bailiff action is unacceptable. We remain committed to bringing forward reforms which will protect the public from this and ensure that enforcement action is proportionate. We have a firm commitment in the coalition agreement to effect this and we will not falter. The Government understand that bailiff action can be, by its nature, a deeply unpleasant experience for those in debt. We also understand how this can be exacerbated by unnecessarily aggressive and threatening behaviour by some bailiffs. Those who are subject to bailiff action are often the most vulnerable people in society, as has been repeated on a number of occasions in this debate. We will not stand by and allow them to be subject to needless bullying, which can have a very real and significant effect on their well-being.
However, as I have highlighted previously, the Government are looking to tackle problem bailiffs in a number of ways. These are set out in the wide package of proposals within our Transforming Bailiff Action consultation paper. This package of proposals will focus on the root causes of many complaints. Among other proposed reforms, it will improve clarity so that everyone knows where they stand by stipulating when and how a bailiff can enter a property, what they can take and, not least, what they can charge.
The noble Baroness’s amendment will not address these issues, nor will it supply debtors with an independent complaints process which will meet their needs. The Legal Services Act contemplates a service relationship between professionals, such as solicitors and their clients, which is not present between bailiffs and debtors. Under this amendment, debtors would not be able to complain to the Legal Ombudsman because the bailiff is not providing them with a service as required for complaints under the Act. It is therefore neither appropriate nor sensible to try to force the regulation of bailiffs into this framework which is not constructed to address the circumstances in question.
Baroness Meacher
My Lords, I thank all those who have spoken. I thank the noble Lords, Lord Lucas and Lord Cormack, for their comments from the Conservative Benches. I thank the noble Lord, Lord Kirkwood, and I thank the right reverend Prelate the Bishop of Lichfield for his time in preparing to speak in this debate. I also thank the noble Baroness, Lady Hamwee, and the noble Earl, Lord Listowel, and I am particularly grateful for the support of the noble Lord, Lord Beecham.
I was involved in the debate about bailiffs 20 years ago, but I accept that the debate has been going on longer than that. I am assured that this amendment would provide the protection of an independent appeal process and the legal ombudsman recognises this. I therefore do not accept that comment. I am grateful to the Minister for meeting me on two occasions and in writing a lengthy letter yesterday, but I have to confess that his comments are deeply disappointing. I therefore wish to test the opinion of the House.
“Chief Executive of the Supreme Court of the United Kingdom
(1) The Constitutional Reform Act 2005 is amended as follows.
(2) For section 48(2) (chief executive), substitute—
“(2) The President of the Supreme Court shall appoint the Chief Executive in accordance with the arrangements for the time being in force for the selection of persons to be employed in the civil service of the State.”
(3) In section 49(2) (officers and staff), omit the words “with the agreement of the Lord Chancellor.””
Lord Phillips of Worth Matravers
My Lords, I apologise for the fact that I was not able to be present to move a similar amendment on Report, but I could not have improved on the explanation of its merits given then to the House by the noble Lord, Lord Pannick. The amendment is needed to remedy two anomalies in the Constitutional Reform Act 2005, which, in its present form, impacts adversely on the independence of the Supreme Court.
The first anomaly arises from the terms of Section 48(2) of the Act, which provides that the Lord Chancellor must appoint the chief executive after consulting the president of the court. The effect of the amendment is to make the president of the Supreme Court, rather than the Lord Chancellor, responsible for the appointment of the chief executive of the court. The amendment is appropriate because the Act expressly provides that the functions of the chief executive of the Supreme Court are to be carried out in accordance with the directions of the president of the court. Those functions include the non-judicial functions of the court in so far as the president delegates them to the chief executive.
More generally, the Act requires the chief executive to ensure that the court’s resources are used to provide an efficient and effective system to support the court in carrying on its business. The president and chief executive of the court work in partnership to ensure that the court operates efficiently. Under Section 50 of the Act, the Lord Chancellor is responsible for ensuring that the court has the resources that he thinks are appropriate to enable the court to carry on its business, but he has no role under the statute in relation to the manner in which the court is run. This is quite deliberate. The whole object of the creation of the Supreme Court was to make sure that it was, and was seen to be, independent of the legislature and the Executive.
The chief executive is the accounting officer of the Supreme Court and, as such, reports not to the Lord Chancellor but direct to Parliament in accordance with Section 54 of the Act. This requires the chief executive to prepare a report after each financial year, which the Lord Chancellor is required to lay before each House of Parliament.
The first danger of the provision that the chief executive be appointed by the Lord Chancellor is that the Lord Chancellor, when making the appointment, will be concerned to appoint a candidate who will have regard to his wishes when deciding on the administrative arrangements of the court. Let me make it plain that there is no suggestion that this consideration influenced the appointment of the first chief executive of the court. The noble Lord, Lord Pannick, explained to the House how she was appointed by an ad hoc commission that included three Law Lords, under the chairmanship of a Civil Service commissioner. There is no complaint about what happened on that occasion. That process resulted in the appointment of Jennifer Rowe. I take this opportunity to recognise the admirable way in which she has performed her duties under my presidency, and to confirm that she is rightly recognised as deserving much of the credit for the successful birth and early years of the Supreme Court.
The second danger of the provision is that, because the Lord Chancellor appoints the chief executive, the chief executive will be expected to defer to the wishes of the Lord Chancellor in relation to the manner in which the Supreme Court is managed. Such an interpretation of the Act might not seem unreasonable. After all, the Lord Chancellor is to provide the court with such resources as he thinks are appropriate for the court to carry on its business. Why should he then not have a say in how those resources are used? The answer is of course that this would be in conflict with the objective of the creation of the Supreme Court, which was to give effect to the separation of powers. Lest there be any doubt about this, perhaps I may remind the House of what the noble and learned Lord, Lord Falconer, the then Lord Chancellor, said to the House on 14 December 2004, when bringing forward the amendments which became the governance sections of the Constitutional Reform Act. He said:
“The chief executive will be able to allocate resources as he considers appropriate to ensure an effective and efficient system to support the court in carrying out its business. In other words, the chief executive will be solely responsible for the administration of the court, in accordance with directions from the president, and will be free from ministerial control”.—[Official Report, 14/12/04; col. 1237.]
The danger that there will be a perception that the chief executive should defer to the wishes of the Lord Chancellor is a real one. I must tell the House that during my presidency it was made quite clear to me that those who served in the Ministry of Justice at all levels were of this view. It made relations with the Ministry of Justice difficult. When responding on Report to the noble Lord, Lord Pannick, the Minister, the noble Lord, Lord Ahmad of Wimbledon, said that,
“the Government retain a fundamental concern with regard to accountability and proper lines of accountability which need to be established so that the elected Government are responsible for the proper fiscal and managerial operation of the court”.—[Official Report, 4/12/12; col. 653.]
Far from justifying the Government’s opposition to the amendment, that statement underlined its desirability, for the chief executive of the Supreme Court is accountable not to Ministers but to the president of the court and to Parliament.
The second anomaly that the amendment is designed to cure arises from the terms of Section 49(2) of the 2005 Act, which requires the chief executive to obtain the agreement of the Lord Chancellor on the number of officers and staff of the court, and on the terms upon which they are to be appointed. The staffing needs of the court are quite complex. They include security officers; secretaries for the justices and administrators; librarians; judicial assistants; operators of the television system that provides live coverage of the proceedings of the court; the staff of the communications department; cleaners; and the staff of the public cafeteria. It makes no sense at all for the chief executive to be required to obtain the consent of the Lord Chancellor, through his officials, on the number and terms of employment of this diverse staff complement. These are matters which pre-eminently should be decided by the chief executive, working in consultation with the president, who himself will be in a position to obtain the views of the other justices as to their needs. There is nothing useful that the Lord Chancellor’s officials can add. Furthermore, the requirement to obtain the consent of the Lord Chancellor to these matters detracts from the independence, and the appearance of independence, of the Supreme Court, which was the objective of its creation. On Report, the noble Lord, Lord Pannick, did not press this amendment on the understanding that it raised a live issue that was subject to ongoing discussions in which the president of the court was involved.
This morning, the president, the noble and learned Lord, Lord Neuberger, informed me that these discussions had not borne fruit and that, in particular, he had been given no justification for the present form of the relevant provisions in the 2005 Act. Shortly before I came into the Chamber, I received on my BlackBerry a copy of a letter written by the Lord Chancellor to the noble and learned Lord, explaining that the Government would not be in a position to agree to the amendment because further time was required to consider its implications. I am not at present persuaded that there is any need for further time, but I look forward to hearing what the Minister has to say about this in due course. I beg to move.
Lord Pannick
My Lords, perhaps I may add two points to what the noble and learned Lord, Lord Phillips of Worth Matravers, said. The first is to inform your Lordships that the chairman of your Lordships’ Constitution Committee, the noble Baroness, Lady Jay of Paddington, whom I am pleased to see in her place today, wrote to the Minister on 10 December stating the committee’s support for the amendment on the basis that,
“it is not constitutionally appropriate”,
for the Lord Chancellor to retain his present functions in relation to the appointment of the chief executive of the Supreme Court and in relation to the deployment of the court’s staff.
The second point that I want to emphasise is that allowing the Lord Chancellor to retain these functions is impossible to reconcile with the Supreme Court being seen as independent of the other organs of government. The need for the Supreme Court to be seen as independent was the main reason why it was created by the 2005 Act and why the Law Lords left this place. It is of especial importance that the administration of the Supreme Court is seen to be independent of the Executive when the Executive are the respondent in a very a large proportion of the cases heard by the Supreme Court. This amendment is of constitutional importance; the arguments in its favour are simply overwhelming.
Lord Lloyd of Berwick
My Lords, if your Lordships can bear a third lawyer in a row, I, too, would like to express my support for the amendment. I regret that I was not able to be present at Report stage, but if I had been I should certainly have spoken in favour of the amendment.
The Government’s fundamental concern, as described on Report by the noble Lord, Lord Ahmad, is that there should be “proper lines of accountability”—a quotation already referred to by my noble and learned friend Lord Phillips. My noble and learned friend and my noble friend have already dealt with that argument effectively, so I shall say no more about it.
The noble Lord, Lord Ahmad, also said that he would not revisit the arguments that had been raised historically. It is here that I want to add just a few words, because I was more directly concerned with the terms on which the 2005 Act was passed than either my noble friend or my noble and learned friend. The main argument in favour of setting up the Supreme Court was of course the presence of the Law Lords in this place, which was said to be contrary to the principle of the separation of powers. I never accepted that argument. It seemed to me then, as it seems to me now, that the Law Lords were as independent of the Executive as the members of the Supreme Court are now—neither more nor less.
Whatever the theory of the separation of powers, the reality was that the separation was complete. The back-up argument in those days was based on perception. Although we in Parliament knew very well that the law Lords were independent of the Executive, that was not—so it was said—the perception of the public, or at least of some members of the public. However, there was never any evidence to suggest that that was the perception of the public except, if I remember correctly, a single piece of anecdotal evidence. This led the noble Lord, Lord Norton of Louth in a most memorable speech—I wish he was in his position to hear me say this—to describe the whole exercise as having been based on,
“the perception of a perception”.—[Official Report, 4/7/07; col. 1094.]
However, here we are—as the saying goes—and we must go on from here.
Having created the Supreme Court at a cost of £100 million, not to mention the huge increase in the annual cost of running it, we must now take it as it is and complete the job. I cannot imagine any provision more likely to create the impression of interference by the Executive in the affairs of the Supreme Court than that the chief executive should be appointed by the Lord Chancellor. If the Lord Chancellor was here, it would be no answer for him to say that in practice he would accept the nomination of a selection committee. The perception is there and, in this case, the reality is there.
I cannot remember whether we discussed Section 48(2) in the Select Committee that sat for many weeks. Nor can I remember why, in the end, we accepted the section as it stands, unless we perhaps had in mind the old style of Lord Chancellor before the Constitutional Reform Act 2005, rather than the new Lord Chancellor as he has become. Whatever thought processes went through our heads, I am now convinced that the section was a mistake, and therefore I am very glad to support the amendment.
Lord Goodhart
My Lords, I am going to take a rather unusual position on this and say that I am afraid I do not agree with Amendment 3. I was considerably involved in the drafting of the Constitutional Reform Act 2005 and I had no objection at that time to Sections 48 and 49, which are now objected to in this amendment. The reason why I do not welcome this amendment is that the chief executive is an administrator, not a judge. That being so, I see no serious reason why Lord Chancellors should not continue to be involved in the proceedings of Sections 48 and 49 as they now are. The administration of an issue which involves both those in charge of costs and those in charge of the law needs to recognise the real issues here because of the way in which the funds get to the Supreme Court.
I am in general a strong supporter of the two former judges who have put their names to this amendment and of the noble Lord, Lord Pannick, but in this case I fail to be able to agree with them as they would clearly like.
Baroness Butler-Sloss
My Lords, although this may seem to be a technical point to some Members of the House, it is actually a matter of very considerable importance. It is wrong in law and it is constitutionally inappropriate. I am very surprised that the noble Lord, Lord Goodhart, who is an excellent lawyer, has not picked up either of those points. I have to say that the Minister, the noble Lord, Lord Ahmad, got it wrong, and it is important to get it right. It is important to preserve the separation of the judiciary, and I speak as someone who is not a member of the Supreme Court and was not a member of the Judicial Committee. However, the separation of the judiciary from the Executive is crucial at every level, so to have the chief executive of the Supreme Court answerable to the Lord Chancellor and not to the president of the Supreme Court is, to say the least, an anomaly. Also, rather more seriously, it is incorrect. This needs to be put right, otherwise there really will be a perception that the Lord Chancellor not only controls the finances but controls the person who controls the financing of the Supreme Court. I strongly support this amendment.
Lord Goldsmith
My Lords, I am the first Member to speak to this amendment who was a member of the Government at the time that the Constitutional Reform Act 2005 was passed. I support the amendment, as I did on Report, at which point I gave the House an anecdote to illustrate why I think that it is right. It is because of the risk of the perception of a lack of independence, about which the noble and learned Lord, Lord Phillips of Worth Matravers, and others have spoken. I do not want to repeat what I said at the previous stage but, in the light of what may be said by the noble Lord, Lord McNally, it is right to remind ourselves how the Constitutional Reform Act came about.
The Act did not come about—how can I put this politely?—in the most orderly way, and the consequence was that we rather scrambled to get to the conclusions. I am happy to see my noble and learned friend Lord Irvine of Lairg in his place and I should say that a number of noble Lords were involved in the process. However, it does not surprise me that, despite those valiant efforts, in the end we did not get the legislation completely right, and this is a provision which we did not get completely right. If we had known about the examples to which the noble and learned Lord, Lord Phillips of Worth Matravers, has at least referred, if not identified, and if the risk could have been seen that the chief executive somehow being responsible to the Lord Chancellor might lead to the view that the Supreme Court was in some way connected to the Government so that the Government were able to influence its decisions, we would not have included this provision. Therefore, despite the time spent on the Bill, in the end much of it was done through discussions between my noble and learned friend Lord Falconer of Thoroton and the then Lord Chief Justice, the noble and learned Lord, Lord Woolf, although a lot also happened on the Floor of the House. If the only thing that was not quite right was this particular provision, it was still a considerable triumph, but I hope that the noble Lord, Lord McNally, those behind him and of course ultimately the Lord Chancellor will see that this is a small but hugely important change that will do no harm at all to any of the issues of administration.
The Lord Chancellor is not responsible for the finances of the Supreme Court, a point that was made clear by my noble and learned friend Lord Falconer in, I think, the very passage to which the noble and learned Lord, Lord Phillips of Worth Matravers, referred. What would happen is that a bid would be put forward that could not be altered and it would then come directly from the Consolidated Fund. I do not think that there is anything to be accountable for. For those reasons, I strongly support the amendment.
Lord Lester of Herne Hill
My Lords, I strongly supported, as did my party, the separation of the traditional branch from the legislative branch. At the time, I disagreed with the noble and learned Lord, Lord Lloyd of Berwick, as my party does today, about the need for it. We thought—and think—that perceptions mattered very much, and it was a great embarrassment when we travelled around the world to discover that the rest of the world could not understand how judges could take part in or vote in our debates and that the Lord Chancellor could sit in politically sensitive cases. Therefore, we strongly supported the reform process, as I do and as my noble friend Lord Goodhart does.
I disagree with my noble friend Lord Goodhart for the reason given many years ago by the noble and learned Lord, Lord Browne-Wilkinson, when he gave a notable lecture about the independence of the judiciary and warned about the way in which questions of resources and management from the Treasury could encroach on judicial independence. It was a very enlightened and courageous lecture. I agree with the noble and learned Lord, Lord Phillips, and the noble Lord, Lord Pannick, about the function of the chief executive, especially when the Lord Chancellor is not an old-fashioned, legally qualified Lord Chancellor, who, from his experience, would instinctively understand the need for judicial independence. In my view, it is all the more important that the chief executive should be accountable to the president of the Supreme Court of the United Kingdom and not to a non-legally qualified Minister. For that reason, and because we do not have a written constitution that spells out the separation of powers but only an Act of Parliament, I believe it is particularly important that the law should be clear on this in our legislation. Therefore, I support the amendment.
Lord Woolf
My Lords, I add my voice to those who support this amendment. I do so with diffidence, because it may appear to the House that perhaps everything that could be said on the subject has already been said; but I hope that I will be forgiven for two reasons. The first is that, as was stated a few moments ago by the noble and learned Lord, Lord Goldsmith, it was my responsibility, as Lord Chief Justice at the relevant time, to be the spokesman for the judiciary. I had very many conversations with the person who became Lord Chancellor after the noble and learned Lord, Lord Irvine, when we strove to find the right answer to various activities which took place within the court system and which would take place in the relationship between the courts and government after the changes that the Constitutional Reform Act was going to bring about. I am afraid that I must have nodded on this point because I did not realise its significance at the time; I certainly do so now.
Secondly, in relation to the intervention of the noble Lord, Lord Goodhart, I suspect that he is influenced—as I would have been influenced, perhaps, not to attach the importance that I should have done to this point—by the fact that there was a great tradition within the Lord Chancellor’s Department, as in the judiciary, that the civil servants who supported the court system could do so without undermining the independence of the judiciary. Throughout my judicial career, I worked very closely with senior civil servants and civil servants at all levels, and there was never a problem. The Permanent Secretary at the department fully understood what the independence of the judiciary required. The unfortunate fact is that in those days there was a tradition in the Ministry of Justice of civil servants and, indeed, Ministers spending substantial time in the Ministry of Justice—or, as it was then called, the Lord Chancellor’s Department—and if they did not know at the outset the complexities of that very special relationship within a very short time of being there, they came to understand it because the whole ethos of the Lord Chancellor’s Department was that they must focus at all times on protecting the independence of the judiciary. I believe that, so far as the courts are concerned, that continues to be the position.
Baroness Jay of Paddington
My Lords, I think I am the first non-lawyer to contribute, very briefly, to this debate. I see the Minister raising his hand and hope he will accept the point I will make.
As the House is aware, I am the chairman of your Lordships’ Select Committee on the Constitution and, as the noble Lord, Lord Pannick, said, have written to the Minister in that capacity about this amendment, simply to express the view that the committee, in its meeting last week, endorsed the amendment that has been proposed by the noble and learned Lord, Lord Phillips. I am very grateful to the Minister for writing back to me in a letter, with today’s date, which he concludes by saying:
“I can assure you that the Government remains committed to working with the Court to consider these issues”,
which he says are, of course, complex.
I was therefore a little disturbed to hear from the noble and learned Lord, Lord Phillips, in his introduction to the debate, that he felt that his discussions with the current president of the Supreme Court, the noble and learned Lord, Lord Neuberger, have run into the ground or “come to nothing”, which I think was the phrase he used. I would be grateful if the Minister, in replying, could perhaps elucidate, or expand a little more on that sentence that he has written in his reply to me, that the Government are committed to working with the court to achieve these ends.
Lord Brown of Eaton-under-Heywood
My Lords, I, too, feel compelled to say just a word in support of this amendment. I support it for the reasons already eloquently given by my noble and learned friend Lord Phillips of Worth Matravers and other noble Lords and have no intention of repeating those. I echo, too, his tribute to the present chief executive of the court, Jenny Rowe, who has worked tirelessly in setting up the court and progressing it over the three years that it has existed. I confirm—because I remember it all too well—what my noble and learned friend Lord Woolf said about the problem that the present wording of the legislation caused with regard to the chief executive’s role at an earlier stage in the court’s life.
On the critical point at issue, I respectfully suggest just this to your Lordships: constitutionally, it is no more appropriate for the Lord Chancellor to appoint the chief executive of the Supreme Court merely after consulting with the president of that court than it would be for the president of the Supreme Court, after merely consulting with the Lord Chancellor, to appoint the Permanent Secretary of the Ministry of Justice. The separation of powers means just that—the judiciary is not the Executive.
Lord Beecham
My Lords, I speak with diffidence as, I think, the ninth lawyer to speak in this debate—albeit from the junior branch of the profession—to add my support to the amendment moved by the noble and learned Lord, Lord Phillips. For the avoidance of doubt, I should say that my noble and learned friend Lord Falconer, who is not in his place tonight, would have supported this amendment, were he here. He has made that very clear. My noble and learned friend Lord Goldsmith is right to say that the legislation under which the present situation obtains was imperfect. It is now an opportunity for the House and, I hope, the other place, to correct what was a mistake—forgivable, but nevertheless a mistake. The independence of the judiciary, particularly that of the Supreme Court, must be at the heart of our judicial system. It is timely that we are discussing this amendment tonight, because in the House of Commons today the Justice and Security Bill is being debated. The role of the judiciary in relation to certain proceedings, which we have debated at length in your Lordships’ House, is very much part of those discussions. In addition, there are proposals in the air around judicial review and, again, the role of the judiciary in a particularly important and sensitive area of law.
Perception counts for a good deal in these matters. I entirely endorse the views of all but one of the noble Lords who have spoken tonight, that it is important to reinforce the independence of the judiciary. That independence has not in substance been threatened over the past few years, but there is always a risk that at some point it might be, and that in any event it might be perceived to be an issue on the part of the public. I do not know whether the noble and learned Lord will seek to test the opinion of the House if the Minister cannot provide a clear, unequivocal response to the suggestion here. Frankly, I cannot think why it should take any time at all for there to be discussions about the issue, which seems to me perfectly straightforward. If the noble and learned Lord seeks to test the opinion of the House, again, I will invite my colleagues to support him through the Lobbies.
Lord Butler of Brockwell
My Lords, I hesitate to intervene in the debate when so many distinguished members of the judiciary have spoken. The fact that I do so is the fault of the noble Lord, Lord Lester. Many years ago, when the noble and learned Lord, Lord Browne-Wilkinson, was about to deliver the lecture to which the noble Lord, Lord Lester, referred, the noble Lord, Lord Lester, encouraged me to speak to the noble and learned Lord and argue the case for the interest of the Treasury in the administration of justice. I had a very interesting debate with the noble and learned Lord, although I made absolutely no impact on him at all.
However, I want to put in a contrary voice because the administration of the courts, including the Supreme Court, is a matter of administration. It takes place at the taxpayer’s expense. It is therefore necessary that the Government have an interest in and a responsibility for it; on these administrative matters and the use of resources it is legitimate for the Government to have a proper interest. I argue that that does not impinge on the independence of the judiciary. The independence of the judiciary, which refers to its operation as judges, and here we are talking about an administrative matter. In that case, the arrangement that exists at the moment, which was legislated for and brought into effect by the Constitutional Reform Act, is probably right. However, I realise that, in the light of the views of the members of the judiciary, this is not a popular view.
Lord Lester of Herne Hill
The noble Lord’s memory is correct. Does he remember that consideration of arguments of the kind he has just given led some of us to say we shall follow Australia and ring-fence the budget of the Supreme Court? That is, we should either ring-fence as they do in Australia, or ensure that the money comes from Parliament and not the Government. Does he remember that those were arguments at the time, counter to his suggestion?
Lord Butler of Brockwell
Yes, I remember those arguments well. The issue is to what extent the Government—the Executive—should have an interest in this matter. I think that the arrangements that were introduced protect the independence of the Supreme Court and the judiciary, and I would not want to change them.
Lord McNally
My Lords, I often think how well served we are by the depth and richness of the judicial talent that serves here in the House of Lords. I often think it, but perhaps not tonight.
This has been an interesting debate, full of mea culpas. The noble and learned Lord, Lord Lloyd, cannot quite remember how he let this through the committee on which he was serving; the noble and learned Lord, Lord Woolf, must have nodded when it went through; and the noble and learned Lord, Lord Goldsmith, said that the previous Government did not get it perfectly right. The fact is that this is an Act of Parliament carried by the previous Administration. I was very pleased to find out the intentions of the noble and learned Lord, Lord Falconer, at the last minute, although they did not really surprise me, but it seems strange that we should be discussing this.
Let me make my position perfectly clear. One of the things of which I am most proud in my parliamentary life is the steadfastness with which the Liberal Democrats delivered the votes in this House to carry through the reform that delivered us the Supreme Court. I have been a strong believer in the Supreme Court from that time—I think a little ahead of the noble and learned Lord, Lord Phillips, in devotion to the separation of powers—and that should stand in the record about my attitude to this amendment.
Of course it is possible for your Lordships to send strong messages to the other place. Let us remember that very shortly another place will be debating this Bill. However, I urge noble Lords to ponder whether it is the best way to send such a message. The Lord Chancellor can read, and I will make sure that part of his Christmas reading is the Hansard of this debate, but negotiations are going on. The noble Baroness, Lady Jay, asked whether the discussions have run into the ground. No, there has been discussion at official level in the two weeks since this issue was raised, and the letter that was quoted was from the Lord Chancellor to the noble and learned Lord, Lord Neuberger, pointing out that the Government are still considering this matter.
Let me clarify for the record that the Government do not have any concerns about the accountability of the UK Supreme Court. While there is no doubt that the Executive has a legitimate interest in the effective and efficient administration of all courts—a point that the noble Lord, Lord Butler, made very eloquently—the Government fully respect the independence of the judiciary and our duty to uphold that independence.
The amendment tabled reflects concerns about the present arrangements concerning the appointment of the chief executive, the staffing arrangements for the court and the ramifications of those arrangements for the independence of the court. This is a matter of great constitutional importance—a point made by the noble Lord, Lord Pannick. I emphasise that it is a matter of great constitutional importance, so when the noble Lord, Lord Beecham, with the impetuosity of a young solicitor says, “Why can’t this be handled?”, it is because it is a matter of great constitutional importance. It has been raised by a former president of the Supreme Court. It has been raised today by former high office holders—Attorneys-General, Lord Chief Justices and other Supreme Court justices. Nobody is underestimating its importance. However, I most humbly say—I am beginning to learn how lawyers manage to insult each other with the most exquisite politeness—that on a matter of this constitutional importance, where the Lord Chancellor of the day is saying that he is in negotiations and discussions with the president of the Supreme Court, it is not particularly helpful for this House to pass an amendment on the hoof in this way.
Lord Phillips of Worth Matravers
My Lords, I am grateful to those who have supported the amendment and to the Minister for the exquisite politeness with which he has responded to it. I also commend his eloquence, for I confess that before he stood up it was my intention to seek the opinion of the House on this matter. However, he has persuaded me that there is merit in permitting discussions, which he has repeatedly emphasised are ongoing and very real, to continue without that impetus. Accordingly, I beg leave to withdraw the amendment.
Lord Bradley
“Provide assistance for vulnerable defendants through intermediaries
(1) An accused person in criminal proceedings is eligible for assistance by virtue of this section if the courts considers that the quality of that person’s participation in and understanding of court proceedings or of the evidence given by that person is likely to be diminished by reason of any circumstances falling within subsection (2).
(2) The circumstances falling within this subsection are that the accused person—
(a) suffers from mental disorder within the meaning of the Mental Health Act 1983, or(b) otherwise has a significant impairment of intelligence and social functioning.(3) Where the court determines that the accused person is eligible for assistance by virtue of this section, the court may then give a direction under this section providing for—
(a) assistance of the accused in preparing for court proceedings and in instructing the accused person’s legal representative to be provided by a person approved by the court for the purposes of this section (“an intermediary”),(b) assistance of the accused person in understanding and participating in court proceedings to be provided by the intermediary, and(c) the examination of the accused person to be conducted through the intermediary. (4) The Secretary of State may, by regulations, make provision about the recruitment, accreditation, training and appraisal of intermediaries approved by courts under this section.”
Lord Bradley
My Lords, I will not detain the House long on this new clause, as there was a good debate on the issue on Report, led admirably by the noble Baroness, Lady Linklater, who I am pleased to see in her place this evening. However, it is appropriate at Third Reading to press the Government again, briefly, on this overall matter, and particularly on the use of intermediaries in the court.
The issue of vulnerable defendants is well laid out in the report Fair Access to Justice from the Prison Reform Trust—I declare an interest as a trustee—and from my own independent report to the Government in 2009 on mental health, learning disabilities and the criminal justice system. The latter highlighted the need for vulnerable people to be supported in the criminal justice system along the criminal justice pathway; to be sure, among other things, that judges, magistrates and court staff are aware of the problems of the defendant at their first appearance in court; and that the defendant has the best opportunity for a fair trial. I add briefly that I am pleased that the current Government are in the process of implementing the 82 recommendations in my report. I praise the excellent work of the offender health division in the Department of Health and the Ministry of Justice through the cross-government National Programme Board. I hope that there will be no new barriers to the national rollout of liaison diversion services when the NHS Commissioning Board is fully established.
The new clause would ensure that, where necessary, vulnerable defendants are provided with the appropriate support to enable them to participate effectively in court proceedings, and in preparing for their own trial. One such measure is support provided by an intermediary, whose role is to facilitate two-way communication between the vulnerable individual and other participants in the court proceedings; and to ensure that their communication is as complete, accurate and coherent as possible.
Intermediaries are appointed for vulnerable witnesses, are registered, and are subject to a stringent selection, training and accreditation process, as well as quality assurance, regulation and monitoring procedures. Although vulnerable defendants do not have the same statutory rights to special measures as vulnerable witnesses do, intermediaries can be appointed at the discretion of the court. However, intermediaries who are appointed to support vulnerable defendants are not registered or regulated. The practice of registered and non-registered intermediaries being potentially in the same trial and paid different fees is clearly an anomaly in the Act.
My noble friend Lord Beecham spoke in support of the amendments to support vulnerable defendants, urging the Minister to take the time to take the amendment back so that he could report further at Third Reading. I can do no better than to quote the noble and learned Lord, Lord Woolf, who also supported the amendment:
“It is the judge’s most important duty to ensure the fairness of the trial. However, the problem identified by the noble Baroness, Lady Linklater, is one that the judge simply cannot tackle himself. There needs to be hands-on assistance of the sort she indicates”.—[Official Report, 10/12/12; col. 878.]
Responding on behalf of the Government, the Justice Minister, the noble Lord, Lord McNally, agreed to take the amendment away and to write to Peers who had supported the amendment,
“to explain why I cannot do so and what we are doing to keep this matter under review”.—[Official Report, 10/12/12; col. 879.]
I know that the Minister has written to the appropriate noble Lords on this matter. I understand that one of the key issues in that letter, which was sent earlier this month, is about resources. I hope that the Minister has taken the opportunity between Report and today to reflect further on the matter.
I realise that some eminent judges are present, so I am reluctant to be too certain on these matters, but when I was doing my review I went around many courts, and saw that when vulnerable defendants appeared for the first time there was a huge cost to the court in delays because of lack of support for that defendant. That often meant that the court process was delayed or adjourned to enable the issues around mental health and learning disabilities to be properly identified and assessed before the trial could continue.
The resource implication, therefore, is well offset by ensuring that vulnerable defendants at the first court appearance have that support in place. That would be cost-effective and, most importantly, would ensure that the person who is identified as vulnerable has as fair a trial as possible. I beg to move.
Lord Ramsbotham
My Lords, I put my name to this amendment for two reasons. The first was that earlier in the work on this Bill, my noble friend Lord Rix, who unfortunately cannot be in his place tonight, and I, together spoke with the president of the Queen’s Bench Division; he in his capacity as chairman of the All-Party Group on Learning Disabilities, and I as chairman of the All-Party Group on Speech and Language Difficulties. We were very concerned at the implications of people not being able to be properly represented, and, therefore, not being able to understand the court processes that they were likely to go through.
One reason why I have added my name to this amendment is because I have since learnt, from the chairman of the Magistrates’ Association, that there has been a very large increase in the number of out-of-court settlements. He quoted to me the fact that 50% of crimes of violence are now dealt with out of court. This worries me, as it worried my noble friend and I when we spoke to the president of the Queen’s Bench Division, because it is just as important that people are represented during those out-of-court engagements with the police as it is that they are in court.
I know that there is a resource issue, but like the noble Lord, Lord Bradley, I have to ask whether this is not a resource issue that we cannot afford not to tackle because of the resulting cost of not taking appropriate action on behalf of these defendants, who otherwise cannot take part properly in the court and out-of-court processes.
The Earl of Listowel
My Lords, I support this amendment. More than 60% of children in the youth justice system have communication difficulties. An inspectorate of probation report—published today, I believe, or at least reported by the BBC today—was very critical of the services for looked-after children in the youth justice system. Many of these children are placed away from home, apparently without good reason, and some young offender teams do not pay attention to the emotional impact on these children of being in care. The chief inspector said, in the BBC article:
“What we saw in this inspection really shocked us … All of these things are impacting on their life chances—what we are seeing for these children are very poor outcomes … Youth offending team workers’ aspirations for the children were ‘depressingly low’”.
The report said many staff had become “desensitised” and were “under-qualified”.
I am not sure whether looked-after children would be categorised as vulnerable defendants in this system. I am sure that many of them would because they have additional problems, which arise from their trauma. I hope that this emphasises the point that vulnerable defendants—particularly vulnerable young defendants—need proper intermediaries to provide them with assistance in the courts.
Baroness Linklater of Butterstone
My Lords, I support my noble friend—he is my noble friend although he is on the other side of the Chamber—in what he said about intermediaries. I spoke about this issue on Report. I believe that the underlying problem is the lack of even-handedness and fairness between what witnesses with a whole range of special needs can have and what defendants with similar special needs can have. Witnesses are entitled to qualified, registered, accredited, paid and trained intermediaries to represent them. Defendants do not have that entitlement; nor do they have the same rights. When they need it, they tend to have this kind of support at the discretion of the court. They do not get registered or regulated people and they get people who are paid a lower fee.
My question to my noble friend is: what is the justification for this discrepancy when, surely, everyone is entitled to a fair hearing and to proper justice in court? I thank the noble Lord, Lord McNally, for his letter in which he referred to Section 104 of the Coroners and Justice Act 2009 and stated that “certain vulnerable defendants” can receive assistance from an intermediary. At the end of that paragraph, he stated that the Government had decided to defer the implementation until full consideration could be given to the practical arrangements and resource implications. He stated that the Government were still looking at the practical and resource issues, and had no immediate plans to bring Section 104 into force. That seems clear to me and I find it astonishing, distressing and wrong that this kind of discrimination should be taking place between groups of people—witnesses and defendants—with similar needs. I hope that my noble friend can reassure me and give me an answer on that.
Baroness Kennedy of The Shaws
My Lords, it comes as a sort of alarm to hear the noble Lord, Lord Ramsbotham, indicate that there may be vulnerable people who, because they are unrepresented and do not have adequate support, may be agreeing out of court to cautions or to certain kinds of settlement of charges against them without proper legal advice. That should be a serious source of concern. In responding, I hope that the Minister will have something positive to say. Undoubtedly, the removal of legal aid is having that kind of outcome. I await with interest what the Minister will say. I support any protection that there can be for the vulnerable in the courts.
Lord Beecham
My Lords, I take the Government’s point about resources, but as my noble friend rightly points out, there are two sides to that equation. One is the cost to the system, which can flow from inadequate representation of defendants, adjournments and the rest of it, as well as the cost of providing it. Of course, there are defendants who get assistance in the form of interpretation. As it turns out, recent developments in interpreting services have been, to put it mildly, controversial. Contracts have been given to organisations that apparently have not performed very well, at considerable cost in terms of the fees paid to them. Equally, as might be the case in connection with people who are unable to understand proceedings and follow them unassisted, some of the interpreters who turned up to the courts were simply not up to the job. It has been something of a disaster.
This is an analogy for the Government to look at in terms of providing services for people who, for different reasons, are unable perhaps to follow a case properly, to understand it properly, or to give proper instructions to their legal advisers. I hope that the Government will look at that and look at this position in the round. The noble Baroness has already identified the discrepancy between witnesses and defendants. Here, we potentially have two classes of defendants, some of whom may not speak English adequately and for whom interpretation will be provided, and others who may not be able to follow because of learning disabilities or other aspects, and for whom nothing would be provided.
Looking at the whole situation surely is sensible. I hope that the Government will acknowledge that there is a disjunction here between what is provided for different classes of defendants, and will not simply put this on the back shelf but will look at it with a degree of urgency. Miscarriages of justice can flow at any time from failure to provide adequate assistance, whether that is legal aid or, as in this case at least, the kind of support that can be offered by those described in my noble friend’s amendment. I hope that the Government will acknowledge that there is an issue here and that, at the very least, if they are not able to respond firmly and conclusively tonight, that they will give it more urgent attention than was indicated in the letter which was recently sent out.
Lord Ahmad of Wimbledon
My Lords, I must admit that, as I listened to the debate, time stopped for a moment when I saw the annunciator freeze. I do not know whether that was due to the weight of arguments that were presented on the previous amendment. Nevertheless, my attention remains focused on this one. As noble Lords acknowledged—including the noble Lords, Lord Bradley and Lord Beecham—my noble friend Lord McNally, following the last debate, wrote to interested Peers on this amendment.
I have nothing specific to add but certainly I will seek to answer some of the questions that arose. As was said on Report in response to an amendment moved by my noble friend Lady Linklater, there is already a provision in statute for “certain vulnerable defendants” to receive assistance from an intermediary when giving evidence. I shall return to that point in a moment. That is in Section 104 of the Coroners and Justice Act 2009.
The point was made about the Government deferring implementation. It is important to understand that they decided to defer implementation until full consideration could be given to the practical arrangements and resource implications. I reassure the House that we are still looking at these practical and resource issues because they are important.
On the points raised about discrimination, not only does Section 104 provide for intermediaries to be used in support of defendants but the courts already have the power under common law to order such use when they consider it necessary.
The noble Lord, Lord Ramsbotham, referred to vulnerable defendants. As I said, common-law powers exist to appoint an intermediary to assist vulnerable defendants if and when the courts consider it necessary. Guidance, therefore—the Government have moved forward on this—on appointing intermediaries in such circumstances was issued to all courts last year. It is the duty of the courts to ensure that defendants receive a fair trial. In the case of vulnerable defendants, that entails making sure that they fully understand what is taking place and that trials are conducted to timetables that take account of their ability to concentrate.
The noble Baroness, Lady Kennedy, made a point about a fair trial for all vulnerable defendants. To give a couple of examples, the court can make an order allowing a vulnerable defendant, for example, to give evidence over a live link. Much more can also be done by the defendant’s legal representative to aid communication. A vulnerable defendant should always be represented, as one of the criteria in the interests of justice test that is used to determine whether an applicant is entitled to legal aid is that the defendant may not be able to understand the court proceedings.
Coming back to the crux of the point, it is the duty of the courts to ensure that defendants receive a fair trial. The Government are committed to ensuring that vulnerable defendants fully understand what is taking place. I have already alluded to the fact that much can be done in terms of the defendant’s legal representative to aid communication.
In view of the reassurances that I have given, the letter written by my noble friend Lord McNally and the assurance that the Government are looking at this and at the common-law provisions that exist, I hope that the noble Lord will be minded to withdraw his amendment.
Lord Ramsbotham
My Lords, I wonder whether the Minister could answer a question about the increase in the number of out-of-court settlements. This is of extreme concern to the Magistrates’ Association, not least because of the increase in the number of out-of-court settlements of cases involving violence.
Lord Ahmad of Wimbledon
The noble Lord raises an important point and, with the permission of the House, the Minister will write to him directly on that point. With the amendment as it stands, this issue may not have a direct impact, but the noble Lord raises an important point and the Minister will write to him.
Lord Bradley
It is disappointing that between Report and Third Reading the Government have not reached the conclusion that they should immediately implement Section 104, but I assure the Minister, as he would expect, that we will continue to pursue this matter with the implementation of the National Liaison and Diversion Programme, which fits neatly with the provisions for vulnerable defendants in court, to ensure that there is fairness of approach between witnesses and defendants in court proceedings. However, in the light of the Minister’s comments, I beg leave to withdraw the amendment.
“Encouragement of diversity in appointments to the Supreme Court(1) Part 3 of the Constitutional Reform Act 2005 is amended as follows.
(2) After section 31, insert—
“31A Diversity
The Lord Chancellor and any selection commission convened under section 26 must, in performing their functions under sections 27 to 31, have regard to the need to encourage diversity in the range of persons available for selection for appointments.””
Lord Marks of Henley-on-Thames
My Lords, I spoke on the topic of judicial diversity at some length on Report and I shall not detain the House long in this debate.
There is a consensus across this House and in Government on how important it is that the arrangements for encouraging judicial diversity should apply across the court system and particularly in the Supreme Court, and that the duty to encourage diversity should be specifically imposed at the highest level. It is for that reason that I welcome the Government’s Amendment 8. to which the noble Lord, Lord Pannick, and I have added our names. By imposing the duty, as the amendment does, to,
“take such steps as that office-holder”—
either the Lord Chancellor or the Lord Chief Justice of England and Wales—
“considers appropriate for the purpose of encouraging judicial diversity”,
the duty is imposed in respect of those two officeholders’ exercise of all their functions where that duty may be relevant.
Amendment 8 may make my Amendment 6 unnecessary because it applies to judicial appointments to the Supreme Court. This leads me to my Amendment 7, which would permit a tie-breaker or tipping-point procedure to apply to appointments to the Supreme Court. There is no difference in principle between the Government and the movers of this amendment—myself, the noble Baroness, Lady Hamwee, and the noble Lord, Lord Pannick—as to the appropriateness of such a procedure. The procedure applies to other appointments lower down the system as a result of the Bill, but without the amendment it does not apply to appointments to the Supreme Court.
The Government have no difficulty in accepting the principle but my noble friend expressed the view that its application was already permitted by Section 159 of the Equality Act 2010. I took the liberty of writing in some detail to my noble friend to explain why I took a different view and, while I may not have completely convinced his officials of the rightness of my position, I now understand that the Government are inclined to resolve the issue by putting the matter beyond doubt at a later stage in the passage of this Bill. On the basis that I am right about that and that the amendment will be made, then I am grateful to the Government for their concession and will say nothing more at this stage.
Lord McNally
I do not wish to pre-empt or shorten the debate, but it might help if I were to say something here. I hope that my noble friend Lord Marks will withdraw Amendment 6 as it is overtaken by the subsequent amendment. I will respond first to my noble friend’s Amendment 7, which seeks to apply a tipping-point principle to appointments to the UK Supreme Court.
The Government’s position has always been that a tipping-point principle should apply to the Supreme Court and we believed, as he said, that the tipping point in Section 159 of the Equality Act 2010 already applied to such appointments. However, as my noble friend Lord Marks explained, there could be a contrary legal view and I can see that there may be merit in the argument that this matter should be put beyond doubt. Therefore, I am happy to say that my right honourable friend the Lord Chancellor is content for me to take this amendment away for consideration with a view to returning to the matter when the Bill goes to the other place.
Amendment 8 concerns whether the Lord Chancellor and Lord Chief Justice should be under a statutory duty to encourage judicial diversity. Following the debate on this issue on Report, I agreed to discuss the matter further with the Lord Chancellor and Lord Chief Justice in order to reflect the strength of feeling expressed by the House. Amendment 8 is in response to that further consideration.
There is much agreement in the House about the importance of a diverse judiciary that more closely reflects our society. There is also agreement that strong leadership is needed to bring about this change. Amendment 8 helps achieve that leadership by giving a clear declaration of the importance of the Lord Chancellor and the Lord Chief Justice promoting diversity. Therefore, as I explained, in view of the reasons and undertakings I have given, I hope that my noble friend Lord Marks will withdraw Amendment 6 and will not move Amendment 7. I commend to the House Amendment 8, relating to a diversity duty, and I thank the Constitution Committee and other noble Lords who made the case so strongly for an amendment of this sort. I emphasise again that I will take away Amendment 7 for suitable representation in the other place.
Baroness Jay of Paddington
My Lords, my name is not on this amendment but I have spoken several times on this subject during the course of the Bill. I welcome the Minister’s further discussions with the Lord Chancellor, and the government amendment. As he said, it reflects the Constitution Committee’s considerations of this matter which, as he mentioned in the discussion on a previous amendment, have been going on since the beginning of this year. I am delighted that he has taken the view that he has and that he is proposing Amendment 8.
Lord Pannick
My Lords, I, too, am very grateful to the Minister for bringing forward Amendment 8. It is important to underline that Amendment 8, and the personal obligation that it will place on the Lord Chancellor and the Lord Chief Justice, is not to question in any way the commitment and the work done in this field by the current Lord Chief Justice, Lord Judge, which has been considerable. Nor is it to suggest that appointments to the Bench should be made other than on merit. There are highly qualified women and members of ethnic minorities at the Bar, in solicitors’ firms, in the CPS and in the government legal service, and every effort needs to be made to communicate the message that applications from them for judicial appointment would be specially welcomed.
The House heard in Committee and at Report the personal commitment of the noble Lord, Lord McNally, on the issue of promoting judicial diversity. I am pleased that through his efforts the amendment has been tabled on behalf of the Government.
Baroness Prashar
My Lords, I, too, welcome this amendment and thank the Minister for accepting the arguments. The Judicial Appointments Commission recommended this way back in 2008 and I am delighted that it has been agreed and that it is recognised that promoting diversity is a tripartite effort and that leadership is much needed. I want to put on record my thanks.
Baroness Benjamin
My Lords, I would not normally speak in a debate such as this, but this matter is very close to my heart. I thank my noble friend for bringing forward the amendment and, most of all, thank the Minister for his response. I hope that this provision will be embedded in our society to make sure that people of diverse backgrounds feel as if they matter and that people care.
Baroness Neuberger
My Lords, as noble Lords know, I chaired the Advisory Panel on Judicial Diversity a couple of years ago. I have had lengthy conversations with the Minister on this subject. I am absolutely delighted—and want to place it on record—that we have Amendment 8 and that this commitment is now on the statute book. This really is a wonderful day.
Lord Beecham
My Lords, the Opposition are delighted to join in this outbreak of consensus and congratulate the Minister on a very statesmanlike response.
Lord McNally
Given those interventions, I wish only to quote somebody who never made it to this House and say that this is not the end of the beginning. I knew that I would get that wrong, but noble Lords know what I mean—it is the end of the beginning. Of course, the person I am quoting rehearsed these things much more than I do. However, I hope that this is the start of a real drive for diversity. Those who have just contributed to the debate have played a major part in that. However, as we sometimes find in other debates in this House, there is battle still to be joined in this area.
Lord Beecham
Perhaps the Minister would care to fortify himself before these debates in the same way that Mr Churchill did.
Lord McNally
“Encouraging diversity9A In Part 6 of the Constitutional Reform Act 2005 (other provisions relating to the judiciary) after section 137 insert—
“137A Encouragement of diversity
Each of the Lord Chancellor and the Lord Chief Justice of England and Wales must take such steps as that office-holder considers appropriate for the purpose of encouraging judicial diversity.””
Lord Woolf
“Part 6A Provision for female offenders28A (1) Contracts made by the Secretary of State with probation trusts shall require each probation trust to make appropriate provision for the delivery of services to female offenders.
(2) Provision under sub-paragraph (1) shall include provision for women wherever appropriate to carry out unpaid work and participate in programmes designed to change offending behaviour with the particular needs of women in mind.”
Lord Woolf
My Lords, I begin by disclosing an interest in respect of this amendment as chairman of the Prison Reform Trust. I also acknowledge at the outset that this amendment, which is supported by the noble Lord, Lord Ramsbotham, builds on an amendment tabled by the noble Baroness, Lady Linklater, and mirrors an amendment tabled by the noble Baroness, Lady Hamwee. I am grateful to them for the work they have done.
The noble Lord, Lord Rosser, supported the amendments which were proposed on Report. I hope that that will be his position today. I also hope that the good will which has just been displayed on both sides of the House will continue and apply to these amendments as they are very much like the amendments that the Minister and I have discussed on a number of occasions with regard to restorative justice. These amendments come out of the very distinguished report of the noble Baroness, Lady Corston, which is well known to this House, A Review of Women with Particular Vulnerabilities in the Criminal Justice System. That report was made as long ago as 2007 and at the time was received by all Members of this House with approval. I hope that I may take up a moment of the House’s time to read paragraph 3 of the report’s executive summary, which seems to me to sum up the report. The noble Baroness said that,
“it is timely to bring about a radical change in the way we treat women throughout the whole of the criminal justice system and this must include not just those who offend but also those at risk of offending”.
She said that this will require,
“a radical new approach, treating women both holistically and individually—a woman-centred approach”.
She continued:
“I have concluded that there needs to be a fundamental rethinking about the way in which services for this group of vulnerable women, particularly for mental health and substance misuse in the community are provided and assessed. There needs to be an extension of the network of women’s community centres to support women who offend or are at risk of offending and to direct young women out of pathways that lead into crime”.
I urge the House to accept that the amendments are very much in the spirit of that report. When similar amendments were proposed on Report, the Minister was very sympathetic towards them, as one would expect. However, he advanced the argument that that was not the time to accept them because the Government’s strategy regarding women in the criminal justice system had not yet been rolled out. He pointed out that the fact that a Minister had been appointed to be the champion of women in this area was a huge advantage and that we should be reassured by that and accept that the Government had the right intentions although they were not in a position to move on the matter at that stage. Certainly, I readily accept that the appointment of the Minister to whom I have referred, Helen Grant, is a great advance in this field. Her appointment should be warmly welcomed. I anticipate that over time great things will come from that.
However, we have drafted the amendments which the House is now considering in a way which we respectfully suggest could not in any way interfere with the rolling out of the Government’s strategy, once that strategy is revealed. If I am wrong in what I have just said and the Minister can indicate to me why, some five years after the publication of the Corston report, the amendment should not be the first recognition in legislation of what the report recommended, I will certainly consider my position further. However, I am bound to indicate to the Minister that, although I accept entirely that his intentions are the very best, I cannot see how the amendment could cause any embarrassment to the rolling out of the strategy to which I referred. I beg to move.
Baroness Corston
My Lords, I congratulate the noble and learned Lord, Lord Woolf, on tabling this amendment, for which I signify my support. However, I have to convey to the House an element of great frustration in that by the time the strategy which we have been promised is published three years will have been wasted. I have now wasted quite a lot of my patience listening to Ministers say they are following the Corston report. It is not true.
I entirely endorse what the noble and learned Lord, Lord Woolf, said about women at risk of offending. Giving money to a probation trust does not provide any services to women at risk. This is something that over time I have pointed out to Ministers and which I conveyed this morning to the Justice Committee of another place. Given the time of day and the pressure of business, I wish briefly to signify my agreement to the amendment tabled by the noble and learned Lord, Lord Woolf, and to urge the Government not to waste any more time.
Lord Ramsbotham
My Lords, I echo everything that my noble and learned friend Lord Woolf has said. That is why I have added my name in support of the amendment. I also note what the noble Baroness, Lady Corston, said about the strategy. This is not the first time that we have had a champion to take forward women’s issues. I am interested that most recently the shadow Minister of Justice in the other place supported the cries which many of us have made over many years for a women’s justice board rather than just a champion. However, that is not the point of the discussion today.
I shall speak for a short time to my Amendment 10, which mirrors the suggestion for women but points out the need for special treatment of young adult offenders. I do this with a slightly heavy heart because six months ago, during earlier consideration of the Bill, we were promised a government response to the probation consultation. I had hoped that we would have had that by now setting out how probation trusts would be enabled to deliver appropriate support and rehabilitation arrangements for young adult offenders. It has not happened. I warmly agreed with the noble Lord, Lord McNally, in Committee when he said that if only we could extend some of the lessons that we have learnt from the treatment of young offenders under the age of 18, we might be able to have a similar impact on those aged 18 to 21 or 18 to 25. That has not happened. I note with wry amusement that the Minister castigates those of us who question current plans to commission justice services on a payment by results basis by saying we are looking a gift horse in the mouth because of the Prime Minister’s involvement in the rehabilitation process. I have to say that I have been looking for gift horses in this field for the past 17 years and they have all turned out to be chimeras and flown away.
Several times when discussing this issue I have suggested that instead of the clocks around this House saying 0:10, they should say PANT—standing for “people are not things”. We have had too much about things and not enough about people in this particular group. I shall quote four reasons. Young adults have many complex needs. They come on top of the physical and mental maturing that is taking place. When you add homelessness, poverty, unemployment, educational failure, substance misuse, mental health problems and victimisation, exacerbated by all child support services ceasing at the age of 18, you have an unhappy group. Although the age group makes up only 4% of the population, 15% of those starting community sentences come from it, as do 14% of those starting custody. When no one is responsible for looking after them in the criminal justice system, then you have a group which clearly needs attention.
It is interesting that the Barrow Cadbury Trust’s Transition to Adulthood Alliance has proved that imposing additional requirements without the necessary support to help these people understand what a sense of responsibility means and to address the underlying causes of offending and their chaotic lifestyles is likely to set them up to fail. This all boils down to the fact that people are at the heart of looking after the needs of these young adult offenders. In particular, there needs to be long-term contact with a responsible adult. That is worth all the programmes, initiatives, commissioning and payment by results that you can think of. Somebody is going to make that difference. If I make an impassioned appeal yet again for this amendment, it is because people are at the heart of what this country is all about. As I have said many times, if we as a nation continue to make inappropriate support and rehabilitation arrangements for this vulnerable group, then we fail them and deserve to be castigated for doing that.
Baroness Kennedy of The Shaws
My Lords, I too support this amendment. Those who work at the front line with women who come before the courts share the frustration voiced by my noble friend Lady Corston. So much time has passed since her report that it is a serious failure for us as a nation that we have not dealt with this issue of women offenders and the best way of responding to it. I know that the Minister is well aware of the statistics. About 80% of the women who come before the courts are victims, brought up in homes where domestic violence was part of the round or where they were sexually abused. They are more victims than many who readily bear that title. Over 60% of them suffer from mental illness and 66% are mothers with children. When we send them to prison, we actually visit the effects on whole families, bringing the care system into play. Housing is often lost and the consequences are dire.
Real speed is needed to respond to this. I attended a conference only a week ago chaired by the previous Chief Inspector of Prisons, Dame Anne Owers. The room was full of people who work on the front line in the probation service. All said that they hoped the Government would take urgent action. I support the amendment but I also want us to say that my noble friend Lady Corston did an absolutely vital piece of work. It reiterated what many people had said before, recently in Scotland by Dame Elish Angiolini. I hope that the Government will see that this is a story that has been told over and over again. Somehow we have to respond with greater speed than has happened so far.
Baroness Howe of Idlicote
My Lords, as someone who has put her name to amendment after amendment on this issue of why on earth we did not include women in a Bill on crime and courts, I hope that the Government will do something about it. The Corston report is totally brilliant. We have all agreed that. It set out the areas that needed attention and not just that: we all know that there were many reports before it. It is not just a question of five years, but of report after report making special recommendations about the needs of women offenders. We all know the degree of mental health problems and sexual and other forms of abuse that these women have had over the years. Equally, we know of the terrible damage to children when families are broken up and children taken into care.
Returning to what my noble friend said about young offenders, I was looking at a report by the probation inspectorate. Ofsted and, I think, Estyn did a sample looking at the support that these young people had. Many of them have, no doubt, come from homes such as this, and have been in care for goodness knows how long. More than a third of these children examined by the inspectorate were placed more than 100 miles from home, and a lot of them were found in situations where they were almost next door to offenders. One was found having sex with a 15 year-old boy in a children’s home. It is not exactly a pretty picture.
Although we did not manage to reach these amendments on the days that we were promised they would be reached, and therefore could not vote on them and cannot vote on them now, will the Government please think very hard about making these changes? I have waited a long time this afternoon and have not taken up time on other amendments. We should not wait just because we have a brilliant Minister; I am sure that she is brilliant. Above all, I hope that we can now ensure that mention is made in the Bill of the needs of women, who are a very important group.
Lord Phillips of Sudbury
My Lords, I hope I will be forgiven if I contribute briefly to this debate because I have taken little part in it hitherto. However, I cannot resist rising to speak strongly in favour of Amendment 10.
I started my life in the legal profession traipsing around the magistrates’ courts of eastern England. For several years, I said to myself at the end of every day that there but for the grace of God would I have gone. We are an extraordinary race. We are so intelligent and forward-thinking in many ways, yet when it comes to penal affairs, we have an extraordinary ability to fail to see our own best interests. Today, we would all agree that community life is at a low ebb, and the weaker that the communities of this country are, the greater the likelihood of certain groups of young adults casting themselves adrift and offending against the mores of society, which, unfortunately, they often do.
We are in a society obsessed with money, celebrity and sex. There is a group of young men and women who think nothing of themselves and are thought nothing of. They have succeeded at nothing and failed at everything. Educationally, they are a failure. They have little prospects, little ambition, little self-esteem and no respect. It is this group who Amendment 10 seeks to help. Again and again, we allow our distaste for the behaviour of many of these young people to stand in the way of intelligent redress. It is in our self-interest to ensure that this amendment, or something like it, is passed and that Governments of all persuasions are required to do something specific about it. It is for those reasons that I strongly support Amendment 10.
The Earl of Listowel
My Lords, as we have heard, many of these women will, as children, have been abused in their own homes. A disproportionate number will have then entered the care system, and a disproportionate number of those will then have their children taken into care. A disproportionate number of the young people we have been discussing will have been abused in their homes when they were children and will have been taken into the care system. Although there have been improvements in that system, many will have experienced multiple foster placements—as many as 30, and some more than 30. They will often have experienced many changes in social worker.
I commend these amendments to the Government and I particularly commend the words of my noble friend Lord Ramsbotham when he said that what these young people need is a long-term, enduring and reliable relationship with a responsible adult. Again and again, reports into the care system identify that continuity and reliability is the key to improving outcomes for these young people. I hope that the Minister can give some encouraging response to these amendments, as I am sure that he will.
Lord Rosser
My Lords, given that this is Third Reading, I will attempt to be reasonably brief. I want to talk separately to the two amendments in the group.
We support the principle behind Amendment 10, given that it is clearly designed to enhance the prospects of rehabilitation and reduce reoffending. That amendment is, no doubt, prompted by the fact that many child-focused support services fall away when young people reach the age of 18. Our reservation relates to the potential cost of delivering the services called for in that amendment because it seems to be a little open-ended, unlike the amendment on female offenders, which is more specific.
The first part of Amendment 10 requires each probation trust,
“to make appropriate provision for the delivery of services to young adult offenders”,
and goes on to say that this,
“shall include provision for services which provide support and rehabilitation appropriate to the level of maturity of young adult offenders and which increases the likelihood of compliance with community orders”.
In other words, it would appear that these services will either be in addition to community orders or be extensions of community orders, because that amendment refers to these services increasing,
“the likelihood of compliance with community orders”.
It is not clear what these services will be and whether they are likely to involve a significant, or potentially significant, financial commitment going well beyond existing and projected levels of expenditure.
The issue raised by Amendment 10 is important and will, no doubt, receive further consideration when the Bill reaches the other place, including on the financial and resource commitments that would or would not be involved. However, because we do not have a feel for the cost of implementing that amendment in a way necessary to achieve the objectives referred to by the noble Lord, Lord Ramsbotham, we are not able to give it our support tonight and will abstain if it is put to a vote.
Turning to Amendment 9, we had a discussion on Report about provision for female offenders. In his response, the Minister reiterated what the Government have been doing in this field and then stated that they would no longer be publishing their strategic objectives for female offenders by the end of this year, which the noble Lord had indicated in Committee was the intention, due apparently to change of Secretary of State in September. The noble Lord told us that the delay was good news, which presumably means that if the Government had kept to their declared intention, as stated by the Minister in Committee, it would not be such good news.
The Minister’s argument for rejecting the amendments moved by two of his noble friends on Report was not one of cost—indeed, he told us of additional money being provided for the funding of women’s community services—but was simply because he did not think that the present situation would be improved by a statutory commitment on provision for female offenders, as provided for in those amendments. As has already been commented on, the noble Lord went on to say that some of his colleagues had an ability to look gift horses in the mouth. He did not tell us why the situation would not be improved by a statutory commitment. There is a body of opinion in your Lordships’ House that thinks that a statutory commitment in a Bill—with a schedule on dealing non-custodially with offenders that makes no specific reference to, or provision for, women, and with NOMS funding for women’s centres guaranteed only until March 2013—will be far more effective than soothing words and sincere good intentions in ensuring that appropriate provision for female offenders is made, now and in the future, through agreeing to the amendment. We support it and will do so, should it be put to a vote.
Lord McNally
My Lords, we are soon to be passing the three-hour limit for these debates at Third Reading. A reoccurring theme in all the debates on the Bill has been the straying into what I would describe as Second Reading speeches and an attempt to rerun cases that have been made. I respectfully say to the House that if this is going to be the norm, we may well have to talk to the Opposition about how we handle Third Readings. I am not talking about whose amendment it is, I am talking about the usual channels. If we continually have complete reruns of debates, it does make business management extremely difficult. Sometimes I think that noble Lords overemphasise winning votes in this House; making things happen. I actually think that what has the greater influence is the well argued debate rather than the vote, but perhaps that is because I am getting used to being beaten at this Dispatch Box.
We had an informed and extensive debate about female and young adult offenders on recommital and Report. I would also say that sometimes the speeches of the noble Lord, Lord Ramsbotham, make it sound as though nothing has happened in the past 17 years. Successive Governments have grappled with this, and certainly during my term of office I have fought very hard to put the specific problems of female prisoners to the forefront. I fully accept the points that were made by the noble Baroness, Lady Kennedy. I am disappointed that the noble Baroness, Lady Corston, thinks that nothing has been done with her report. We expect to publish in January, and I make no apologies for the delay; I would rather get something right than meet an artificial deadline. I hope that when we publish in the new year noble Lords will see the work that Helen Grant has been carrying out with the support of the Lord Chancellor. As I have said before, do not belittle the fact that a Conservative Lord Chancellor has openly said that he sees the necessity of giving priority to women prisoners, as he said today at Questions in the House of Commons. Hopefully in the new year we will put that strategy into place, and I am sure that we will have a good opportunity to debate that.
Equally with young adults, it is not a matter of carving out from one Government to another on this. I read the report that was published today about young people in care with a sense of collective shame at how these things are being dealt with. However, as those who have previously had those responsibilities know, it is often a matter of convincing colleagues in government, and finding resources when there is competition from other departments that have equally strong arguments. I do not think there is any doubt that we believe that the rehabilitation of both groups is important. We strongly agree with the arguments that have been employed, and that is why we are already investing significant effort and resource to ensure that female and young adult offenders receive the right support.
In the previous debate, I gave examples of the many projects, including those in Lancashire, Durham and Derbyshire, that trusts are running for female offenders. For young adults, likewise, many probation trusts are already coming up with innovative approaches to supporting this group. For example, in London the trust is working on an imaginative project by which some staff will work in both the youth offending team and the trust. This is to ensure that the transition between the youth and adult estate works effectively. In the east of England, probation staff have been developing closer links with leaving care services to ensure that the particular needs of these young adults are being met.
I hope, therefore, that noble Lords will recognise the Government’s strong commitment to providing the right support for women and young adult offenders. There is agreement across this House that we need to do so. What we are debating is the mechanism for delivering that support, not whether we should deliver it. It is important to be clear here that the projects I mention have not been centrally imposed. They have been delivered from the ground up, by committed and passionate staff in probation trusts, to respond to the needs of women and young adults in the area.
Local innovation is critical if we are to have effective services for these groups. I believe the system we already have strikes a good balance between local innovation and central support. I do not believe that a statutory duty is necessary to deliver this.
The relationship between NOMS and probation trusts already gives a framework that ensures these groups are prioritised. For example, trusts are already required by the NOMS Commissioning Intentions document to make appropriate provision for women in the community. Trusts are currently discussing their proposals for services for female offenders in 2013-14 with commissioning experts at NOMS, and will be challenged where these do not appear to be sufficiently robust.
Similarly, I have already mentioned on Report that the operating manual on unpaid work requires that women should be allocated to work placements which take account of their needs. This sets out a presumption that female offenders will not be required to work alongside male offenders.
On young adults, our current system balances local delivery with central support. As with female offenders, trusts are required by NOMS to commission or deliver an appropriate range of services to address the causes of young adults’ offending. To support this, NOMS has provided trusts with information on the specific needs of young adults that will help them and other providers take an evidence-based, effective approach to tackling re-offending. This system allows for local decision-making on how best to meet the needs of these groups.
In short, I wholeheartedly agree with the arguments that noble Lords have made about improving outcomes for female and young adult offenders. I hope that I have reassured noble Lords that NOMS and probation trusts are already taking a tailored approach to supporting them. However, our focus should be on supporting local areas to make further improvements. The system that we have already allows for this. Creating new statutory duties for trusts is not the right way to bring about the improvements that we want for these two groups.
In light of these assurances, I hope that the noble and learned Lord, Lord Woolf, and the noble Lord, Lord Ramsbotham, will agree not to press their amendments. Perhaps I may give just one little bit of encouragement to the noble and learned Lord, Lord Woolf. Yes, we did have lots of talks about restorative justice, and restorative justice is in this Bill, but getting it into the Bill took lots of talks between and within departments, letters to various Cabinet committees et cetera. Some of these things take time, but there should be no doubt that young offenders and women offenders are on the Government’s radar. Ministers at the MoJ, and particularly my colleague, Helen Grant, are working very hard to make progress in these areas. With those assurances, I hope that noble Lords will agree not to press their amendments.
Lord Woolf
My Lords, I thank those who have spoken in favour of the amendment and all those who have taken part in this debate, and I thank the Minister for his response. I hope that he will accept from me that I have no reservations in accepting that he sincerely believes what he has just said to the House.
However, there is a difference between the approach of the Minister and that which I was urging upon the House. I say that the situation with regard to women in the criminal justice system is one where there is a crying need for there to appear in the statute something which speaks of Parliament’s concern.
I have great sympathy for my noble friend Lady Corston in her feeling of frustration at a lack of action in respect of her report, which was welcomed so warmly. It seems to me that, in view of the issue between us and because the Minister has not sought to identify any possible prejudice that could come—
Lord McNally
I can only make one last appeal to the noble and learned Lord. Does he really think that it will advance one inch the cause that he espouses if we have a Division at this point, where people who have not been in the debate will come in and be told, “Oh, you’re voting in favour of women or voting against women.”?
Lord McNally
It is no use saying “shame”. There is no division between us, and to suggest that there is does not further the cause.
Lord Woolf
Well, of course, I listen very attentively to what the Minister says, but perhaps he will forgive me if I bring the agony to an end by indicating that, as I see it, there is nothing in the proposed provision which can harm the Government’s good intentions. I think that there is a difference of view here: between those who feel that the statute should contain a statement of recognition of the special position of women in the criminal justice system and those who do not. In those circumstances, I seek the opinion of the House in respect of my amendment.
Lord Ramsbotham
“Part 7AProvision for young adult offenders30A (1) Contracts made by the Secretary of State with probation trusts shall require each probation trust to make appropriate provision for the delivery of services to young adult offenders.
(2) Provision under sub-paragraph (1) shall include provision for services which provide support and rehabilitation appropriate to the level of maturity of young adult offenders and which increases the likelihood of compliance with community orders.
(3) For the purposes of this paragraph “young adult offender” means a person who is aged at least 18 but under 21 when convicted.”
Lord Ramsbotham
I listened with care to what was said, particularly on the question of resources. I think that in the circumstances it makes absolute sense for this amendment to go to the other place and to be debated as fully as possible. Therefore, I shall not move this amendment.
Arrangement of Business
(11 years, 5 months ago)
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Baroness Anelay of St Johns
My Lords, this may be a convenient point to make a business statement relating to the proceedings today. Clearly, when the matters before us were set down, we had anticipated in the usual channels that the approach to Third Reading would be normal—that is, the practice of the House is normally to resolve major points of difference by the end of Report stage and to use Third Reading for tidying up. Therefore, in the usual channels we felt that we were making an appropriate disposition of business today, whereby this Bill would be followed in the normal manner by a short Second Reading and that, after that, we could have a debate on—if I can colloquially call it this—matters of Leveson.
This Third Reading has gone beyond the normal time that one would expect for a Third Reading, and indeed some of the discussions have gone quite wide. Therefore, something that one might describe it as a little bit of a delegation came from those interested Peers who had been sitting very patiently waiting for their opportunity to take part in what, after all, is a major debate on the press and the media and all the matters surrounding the important report that was issued and known colloquially as the Leveson report. Those Peers felt that it had now become inappropriate for the House to consider the matter at a late hour.
I had some discussions with the members of that little, but very forceful, delegation, who felt that they were relaying some of the views of other Members. I certainly listened very carefully. I have had discussions with the opposition Front Bench, and I am very grateful to them, as ever, for their co-operation in the usual channels. As a result, it has been agreed that the Leveson debate will not proceed today but that we will find a date for it as soon as possible early in the new year. I have already had preliminary discussions with the Opposition and I feel sure that we will be able to find a convenient date very quickly. As soon as that has been achieved, I will naturally make a statement to the House. If it is a matter that we cannot resolve before the House rises, I will ensure that all party groups and the Convenor are able to put out the message as soon as possible so that the inconvenience which has clearly been experienced by the large number of Peers wanting to speak today is perhaps brought to an early end.
Lord Bassam of Brighton
My Lords, on behalf of the Opposition I thank the noble Baroness for her statement. She has been very gracious in agreeing to rearrange the business. It will not be to everybody’s convenience, but at least it will be at a more convenient time and will enable a more congenial debate. Therefore, on behalf of these Benches, I am very grateful to the Government for their swift action on this point.
Lord Soley
My Lords, the Leveson debate is incredibly important not just for this House but for people around the country. For us to have held the debate in the early hours of the morning—which is what it would have gone into—would, frankly, have been profoundly wrong. I know that I have an interest, inasmuch as I produced the first Bill on the press some 20-odd years ago, as well as many other things, but I really feel that we would not have done ourselves or the public any good if we had continued with this. Therefore, in my view, the Government have made the right decision. I appreciate that it is inconvenient for some people, but it is the right decision and I am grateful.
Lord Stoddart of Swindon
My Lords, the statement just made by the Chief Whip is a very wise one, but perhaps I may put this point to her. The Leveson report is very long and detailed. Would she consider, along with the other parties, whether we should have a two-day debate when it comes back in the new year?
Baroness Anelay of St Johns
My Lords, I have already had preliminary discussions about the revised debate with the Leader and chief representatives of the Opposition and I am grateful for that. I shall consider all the options with regard to tabling the debate. Suffice it to say that we will ensure that enough time is made available and that adequate advance notice is given of the rescheduling of the debate.
Lord Prescott
My Lords, with regard to the new timing of this debate, I accept that a delegation had to get home instead of taking part in it and I understand the difficulties, although it was their choice rather than that of this House. However, will the Chief Whip make sure that we have the debate before any decisions are made? This is a chance for the House of Lords to give an opinion on the most important issue of the day, but if we end up giving that opinion after the decisions have been made, that will be most unfortunate. That is what we have given up tonight. Although we cannot tell when all this will be settled, let us at least find a time that allows us the possibility of expressing our views before any decisions are arrived at.
Baroness Anelay of St Johns
My Lords, I agree entirely with the noble Lord, Lord Prescott. The matter of urgency was impressed on me by the delegation.
Lord Palmer
My Lords, does not the Chief Whip agree that the noble Lord, Lord Trees, ought to be given a letter of apology? He has gone through the agony of having to wait to make his maiden speech, but now he has had to postpone it. That really is pretty agonising.
Baroness Anelay of St Johns
My Lords, I think that perhaps the noble Lord, Lord Trees, in waiting to make his maiden speech, has seen how self-regulation takes place in this House. Sometimes the rules are so elastic that no one can predict the way in which our debates may extrapolate and develop into new realms.
The Earl of Erroll
My Lords, this Third Reading underlines the importance of returning to our previous custom of pressing amendments to a Division at the Committee stage as a matter of principle and then tidying up on Report. The practice of withdrawing amendments in Committee and then pressing them on Report is leading to this problem of tidying up at Third Reading. I think that we should return to our old custom of pressing most issues to a Division in Committee, even if they are deficient in some way, because the Report stage is for tidying up.
Crime and Courts Bill [HL]
(11 years, 5 months ago)
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The Deputy Speaker (Baroness Fookes)
Perhaps I may assume that the House is now ready to return to the Bill.
Amendment 11
Lord Goldsmith
Lord Goldsmith
My Lords, this amendment can be dealt with briefly, and I would have said that before the Chief Whip made her statement. It concerns the question of the extent of the discretion that prosecutors will have, subject to the double lock of supervision by the courts, in reaching agreements on deferred prosecution agreements. Along with other noble Lords, including the noble Lord, Lord Marks of Henley-on-Thames, I have been concerned that the Bill does not appear to provide a discretion on the maximum reduction of financial penalty. For example, on 10 December at col. 968 the noble Lord, Lord Ahmad of Wimbledon, talked about a maximum discount of one-third, and it was not the first time that that had been said. That led me to consider whether that was the view of the prosecutors, and having made inquiries of them, it turns out that that is not what they thought the Bill was going to do. It was because of that, and only because of that, that I wanted to raise the matter again for clarification.
I wrote to the noble Lord, Lord McNally, and I am grateful to him and to his officials for his detailed response. What I asked in substance was whether it was in fact the case that one-third was not the maximum discount on the financial penalty that could be agreed; it could be greater than that. I understand from the Minister’s response that, shortly put, the one-third discount is not the maximum that can be agreed and that in appropriate cases, there could be an agreement—I underline, subject to the agreement of the court—which could be greater than that. If that clarification can be made, which otherwise would go uncorrected, although I personally would still prefer to see a greater discretion, at least it would deal with the major problem of an apparent one-third maximum reduction. For those reasons, I beg to move.
Lord Beecham
My Lords, I support the amendment moved by my noble and learned friend, although I do not anticipate that he will seek to divide the House on it. It is interesting to note that the amendment has come before the House on the same day as a question from the noble Baroness, Lady Williams of Crosby, that referred, of course, to the settlement of cases in America. She referred to a billion-pound settlement reached under a deferred prosecution agreement over there and contrasted that with the very modest levels of financial penalty incurred in this country under processes that usually involve the Serious Fraud Office or, in revenue cases, Her Majesty’s Revenue and Customs.
Throughout our debates on deferred prosecution agreements, my noble and learned friend has pointed to the need to incentivise potential corporate defendants. At the moment they are only corporate defendants, but in due course there may be a case for extending them to individual defendants. He has stressed the need to adopt this procedure rather than rely on prosecution because, as has been pointed out on several occasions, the success rate of the Serious Fraud Office in these cases has been, to put it mildly, not very marked. Unless there is a credible threat of a successful prosecution, there is virtually no incentive for a defendant corporation to plead guilty and every incentive for it to contest the case. The corporation has a very reasonable prospect of being successful. The case would seem to be similar in revenue cases, hitherto at any rate. HMRC has been apt to settle for rather more modest amounts than one might have expected relative to the level of abuse that is alleged to have taken place. The advantage of the agreements, as has been pointed out by my noble and learned friend and several other noble Lords, is not only that there is a financial penalty available as part of the agreement, but that other measures are available as well.
An additional reason for the Government, through their relevant agencies, to press for a deferred prosecution agreement is because, first, there is a greater incentive for companies to settle, knowing that they will not have to meet the full costs which they can take into account in balancing their considerations about whether to defend or not, and secondly, from the public interest perspective, there can be additional conditions that might apply to such an agreement. Those might be monitoring, changes in practice and so on. Furthermore, there can be a period during which matters can be reviewed. All of this suggests that greater flexibility in discounting from what might be expected to be the maximum fine would assist the whole process, although that does raise the question of what the sentencing guidelines from the Sentencing Council will be with regard to these penalties. Perhaps we ought to be moving more in the direction of the level of fines imposed under the American system, which it is hoped would increase the incentives.
My noble and learned friend is clearly minded to accept the position on the basis of the Minister’s letter. From the Opposition’s perspective, we are content with that, and we look forward to seeing in due course how the system moves forward. We would hope also to have an opportunity to review it, as has been discussed in previous debates. I commend my noble and learned friend on his persistence in this matter and the Minister on what has apparently been a sympathetic response.
Lord Ahmad of Wimbledon
My Lords, it is always a pleasure to respond to the noble and learned Lord, Lord Goldsmith, at a rather earlier hour than has been the case in our previous exchanges, and that is always welcome. However, perhaps it is later than I thought would be the case.
Following the debate on Report, I know that my noble friend Lord McNally has corresponded with the noble and learned Lord and reassured him that paragraph 5(4) of Schedule 16 affords a broad discretion to prosecutors and the court when considering a financial penalty term for a deferred prosecution agreement. In particular, on the specific point raised by the noble and learned Lord, my noble friend Lord McNally has confirmed in his letter that the extent of the discretion is such that scope to reduce financial penalty will not be restricted to a maximum of one-third in all cases.
It is appropriate that the noble and learned Lord, Lord Goldsmith, has pointed to the additional discounts in the sentence available for convicted offenders under Section 73 of the Serious Organised Crime and Police Act 2005, which was predated by more informal arrangements. It is our view that in a suitable case the parties to a DPA and the court could consider whether this further discount might be available. The level of any such additional discount would depend on the circumstances and of course reflect the level of assistance given; and the parties should be guided by sentencing practice and pre-existing case law on this matter.
In the light of these assurances and the correspondence that has taken place, and, of course, the related assurances that I have given, I trust that the noble and learned Lord, Lord Goldsmith, will withdraw his amendment.
Lord Goldsmith
My Lords, I thank the noble Lord, Lord Beecham, for what he said and for reminding us and the Government that we are going to come back to review these arrangements, we very much hope, for a number of reasons, including this one. My primary concern was to get an assurance that one-third was not the maximum discount that could be agreed. In the light of that assurance, I beg leave to withdraw the amendment.
Lord Taylor of Holbeach
My Lords, I would like to take this opportunity to thank the Bill team for its support. This has been a long, complex Bill, and two departments of government have had to contend with two different Ministers. If I might say so, my noble friend Lord McNally and I have enjoyed working together on this Bill. My noble friend has, of course, had a change of partner since Committee stage, and I know that my noble friend Lord Henley would like to be associated with these remarks. I thank, too, those who have supported us through this Bill.
Lord Beecham
My Lords, I echo the thanks to the Bill team for its support and to the Ministers. I congratulate the noble Lord, Lord McNally, on his new civil partnership. I also commend and thank the noble Lord, Lord Henley, for his contribution. I feel as though I and my colleagues—I speak now for two opposition teams as well—are emerging from a six-month sentence, which is perhaps an appropriate way to regard these past few months dealing with this Bill. It has been a challenging but instructive and, at times, entertaining experience, and I am grateful that for the most part it has been conducted in the usual spirit of your Lordships’ House. We look forward to future pieces of legislation—preferably deferred for a while; some of us need some time to recover.
I am grateful to the ministerial team and, indeed, to noble Lords—especially noble and learned Lords—who have contributed so much to a very considered deliberation of an important measure.
Small Charitable Donations Bill
(11 years, 5 months ago)
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Lord Newby
My Lords, the gift aid small donations scheme was announced as part of a package of measures to encourage charitable giving in the 2011 Budget. It is a complementary scheme to gift aid, which, as noble Lords will be aware, is one of the main tax reliefs available to charities and their donors and is now worth more than £1 billion per year to the charity sector.
The Government recognised, however, that charities were missing out on a significant amount of potential gift aid income because it is not practical for them to collect gift aid declarations from passers-by in the street or members of a congregation who give small cash donations. This Bill, therefore, enables charities to claim a gift aid-style top-up payment on those small cash donations without the need for a gift aid declaration. Most charities will be able to claim top-up payments on up to £5,000 worth of small cash donations in a tax year. This means that they will have up to an additional £1,250 of income each year to help advance their charitable purposes. This is a significant boost to the charitable sector, which will particularly help small and grass-roots charities. Her Majesty’s Revenue and Customs estimates that this scheme will be worth approximately £100 million in additional funding to the sector each year once the scheme is fully up and running.
In constructing the scheme, the Government have had to strike a balance. The scheme must be fair and affordable, and it must be protected from fraud. Unfortunately, all repayment schemes attract fraud. HMRC already experiences fraudulent claims for gift aid—which is a more secure system than the new scheme will be—because charities have to keep more records of their gift aid donations. The gift aid small donations scheme is cash-based, so there will be only a limited paper trail. That means that it is highly likely that some fraudsters will be attracted to the new scheme, so it has been necessary to put some safeguards in place.
First, a charity must have had at least two years of a good gift aid track record with HMRC and have made successful gift aid claims in at least two out of the last four tax years. This will allow HMRC to get a good picture of a charity’s ability to claim gift aid correctly.
Secondly, charities and community amateur sports clubs must also claim gift aid alongside any claims for top-up payments under the gift aid small donations scheme. This means that a charity will need to successfully claim on traditional gift aid donations worth at least 10% of their claims under the new scheme in the same tax year. For example, to claim top-up payments on £5,000 of small donations, a charity must also claim gift aid on at least £500 of other donations in that year. This matching requirement allows HMRC to monitor the continuing compliance of the charity. The new scheme is designed to be light on paperwork, so it will be difficult for HMRC to comprehensively check whether a charity is compliant. So the ability to check the gift aid claimed by the charity gives HMRC a reasonable proxy to ensure that the charity is also claiming correctly under the new scheme.
Following representations in another place that the eligibility criteria were too strict, the Government tabled amendments that have reduced the matching condition from a minimum of 50% of gift-aided donations to 10%. The Government also agreed to reduce the eligibility criteria to claim under the scheme. A charity may become eligible to claim under the scheme after two complete tax years instead of three. In addition, instead of maintaining a gift aid claims record in at least three years out of seven, charities will need to claim in only two years out of four. These changes make the scheme more accessible, increasing the number of charities that can benefit and reducing the burden placed upon them.
As well as being accessible and protected, the scheme is designed to be fair. The Government recognised that an allowance of £5,000 per charity would have significantly inequitable results for some charities. Charities that perform similar activities are often structured differently for historical reasons. That means that, if every charity received this £5,000 allowance only, some charities could claim many hundreds—if not thousands—of times more in top-up payments than others. For example, every parish church in the Church of England is a charity, while the Roman Catholic Church is structured with a charity at diocese level, with some 200 parish churches forming part of each charity. Without special rules, the Church of England would have been eligible for many hundreds of times more claims under the scheme than the Catholic Church.
For this reason we have introduced the community buildings rules. These enable charities to claim an extra £5,000 allowance if they conduct charitable activities in a community building and meet certain other criteria. Charities that meet the criteria will be able to claim an extra £5,000 worth of small donations for each building in which they carry out charitable activities. HMRC will be issuing guidance to help charities understand the legislation and whether it applies to them. For charities that are unsure of their status, HMRC will be happy to give bespoke guidance.
This Bill represents a boost to the charitable sector by enabling charities to claim new top-up payments on small donations where it is currently difficult or impossible to collect the necessary paperwork for gift aid to apply. I commend the Bill to the House.
Baroness Hayter of Kentish Town
My Lords, first, I thank the noble Lord, Lord Hodgson, as through a small misunderstanding the names on the speakers list got put in the wrong order. I am not he. I also thank the Minister for introducing this welcome Bill.
The recent fall-off in charitable income—20% according to one recent report—particularly affects small and medium-sized charities, and this Bill is perhaps therefore even more important than it was when it started its life. Indeed, we understand that some one in six charities is threatened with closure and up to 40% worry that they may have to close if the economic situation fails to improve. A recent ACEVO report commissioned by the Cabinet Office revealed that charities stand to lose £1 billion this year as a direct result of government actions, at a time when demands on many charities are increasing, not least as a result of the Government’s economic policies. Nearly half the charities covered in this month’s CAF survey have been forced to use reserves to cover income shortfalls, with a quarter cutting some of their services.
We welcome the intention of the Bill and, indeed, its timing. We are not alone. The RNLI called it,
“a great opportunity for charities”.—[Official Report, Commons, Small Charitable Donations Bill Committee, 16/10/12; col. 36.]
The Institute of Fundraising estimates that it will benefit “a range of charities”.
The idea is good but the Government have made things far more complicated than they need to be. “Overly bureaucratic”, says the National Association for Voluntary and Community Action. Peter Lewis of the Institute of Fundraising said:
“The way that it has been drafted makes it far more difficult than Gift Aid itself”.
The Charities Aid Foundation, with all its experience and knowledge in the field, believes that,
“many charities that should be eligible for the Small Donations Scheme will struggle to access it”.
In particular, it stated that,
“linking the Small Donations Scheme to Gift Aid ... means that there is a hidden codicil”—
to the scheme—
“which should read ‘as long as they are also claiming sufficient normal Gift Aid on other donations, and have been doing so for at least two years’. This makes it less likely that very small organisations will be able to benefit from the scheme”.
Although we heartily wish the Bill well, we ask the Minister to think seriously about the problems raised repeatedly in the other House, especially where no movement was made by the Government. Of course, we are delighted with the changes that were made, in particular the changed ratio from 2:1 to 10:1, which opens up the scheme to many more charities, and the reduction from three to two years to qualify. I pay tribute to my colleagues in the other place, Cathy Jamieson and Gareth Thomas, whose determination and hard work, and in particular their understanding of the sector, enabled them to change the Minister’s mind. I hope that I will have similar success this evening; if not in amending the Bill, at least in getting a commitment out of the Minister. I will come on to that.
In seeking to assist small charities, the Government have come up with the most complicated of procedures that will involve far too much paperwork. This risks undermining their whole purpose. Of course, given that there is so much paperwork, there will undoubtedly be charities—Eton comes to mind—that will be well placed to take advantage. I am sure Eton has a large staff and, no doubt, a whole office dedicated to fundraising and gift aid. However, small grass-roots charities, parent-teacher associations or groups looking after victims or those with drink problems will not be able to. Many have no full-time staff, and they are exactly the charities that are answering phones, seeing clients, teaching riding to disabled children or running food banks. There is too much bureaucracy for them to handle.
Indeed, it seems that HMRC is more concerned with fraud than helping charities—the same HMRC, we must remember, which fails to tax Amazon, Starbucks, or Google, whose own executive chair said that he was,
“very proud of the structure that we set up”,
which was based on government incentives.
Will the Minister assure the House that those small but essential charities will be able to operate the complexity of this scheme, without the mass advice of a Google-sized team of lawyers and accountants? What thought has been given to those small charities which, by virtue of their size or lack of big donors, are not able to take advantage of gift aid and will therefore be excluded? Even those who do use gift aid are concerned, as the noble Baroness, Lady Barker, said in your Lordships’ House on Wednesday, that despite the fact that,
“the number of donations being given online and by text is increasing … charities are losing out, because gift aid is not yet fully digitised”.—[Official Report, 12/12/12; col. 1059.]
The scheme will succeed only if small local charities are aware of it, but these are precisely the ones less likely to be involved with the Charity Finance Group, the NCVO, CAF or the other umbrella organisations. How are they going to hear of it? We were disappointed that the Charity Commission chose not to give evidence to the Public Bill Committee. It makes us wonder how big a role it sees for itself in promoting the scheme—but if the commission does not do it, who will? Will the Minister outline his plans for publicising the scheme? We have heard talk of road shows, but we know that small charities do not have the time to spend time at those. I hope there will be something a bit more imaginative.
Perhaps the biggest problem with this overcomplicated scheme is the set of regulations covering community buildings. Although this might have been designed to assist church collections—which we thoroughly understand and endorse—it has ended up disadvantaging some of our most important groups. The RNLI is one organisation that has concerns, given that lifeboats, needless to say, carry out their work not in buildings but at sea. Where does the defined charitable activity take place: at sea or in the lifeboat station? If donation points are outside the station, how can one determine whether a donation was made during charitable activities or events? The definitions are too specific and not grounded in reality. Given such concerns about the workability of the new scheme, will the Minister tell the House whether HMT—or HMRC—consulted with relevant experts on the charity sector and, if so, which ones?
I come to the point where I seek a commitment from the Minister. We want this Bill to work. We need this Bill to work. However, it is key, given that we cannot amend it, that the Government look long and hard after two years at whether it is achieving all that we hoped for it. I therefore ask the Minister, quite simply, to commit to undertaking a review that will ask that question and report its results to Parliament. We need to know: how many charities are benefiting from the scheme; which are full, exempt or excepted charities; what the total outgoings on the scheme have been and how much extra money reached the charities, as well as the cost of administering it; and, finally, the level of identified fraudulent claims.
I feel certain that the Minister himself will want to know the answer to these questions. Will he undertake to share them with this Parliament—not after five years but after two? If the scheme does not work, those charities will need help by some other route to enable them to continue to do their work.
Lord Hodgson of Astley Abbotts
My Lords, this may be a slim Bill but, as has already been made clear, it is an important one and I warmly endorse the purposes behind it. I do so for the very obvious reason that it is common knowledge that fundraising for charities is not easy at present. Of the surveys that the noble Baroness referred to, at least one indicates the impact on charities of the economic crisis and subsequent recession. These competitive pressures have led to the emergence of some unusual stresses. Between 2.30 pm and 3 pm, we were discussing the Question from my noble friend Lord Naseby about the competitive pressure on the National Lottery. That body saw an increase of 8.6%, or £246 million, in the six months to September, but it is clearly concerned about its competitive position. So that macrostatistic, along with a lot of microstatistics, indicate why this Bill is particularly important to smaller charities.
Turning to the Bill itself, I begin by congratulating my noble friend and the Government on the steps taken to increase accessibility. As he pointed out, the historic record required to enter the scheme is being eased from three out of the past seven years to two out of the past four, and the multiplier is being increased from 2:1 to 10:1. This will be particularly important for newly-established charities, which will not have a well established donor basis. My noble friend kindly arranged a briefing on the Bill last week. I have one or two questions, of which I gave him advance warning then.
The first question relates to the nature of the two qualifying years. Do they have to be consecutive or not? He reassured me at the briefing that they do not. I would be grateful if we could hear that on the Floor of the House, because there is a lot of sector interest in the detail of this Bill. Could he explain, therefore, how that ties in with Clause 2(2)? Clause 2 is headed, “Meaning of ‘eligible charity’”. Subsection (2) says:
“If a charity did not make any successful gift aid exemption claims in a period of 2 consecutive tax years, any claim … is to be disregarded”.
My noble friend indicated that “consecutive” was not an important word but the wording of the Bill seems to indicate that it might be. I am sure that his Bill team will have a simple answer to that, but it would be helpful to have it on the record.
The second area of concern is what I describe as “in again, out again”. Smaller charities have periods of intense activity interspersed with periods of quietude. I will take an example of a medium-sized charity in a city, focused on homelessness. The charity may experience a period of very strong professional or volunteer leadership, which leads to a high level of activity; as a result, probably, a successful entry is made to the new gift aid scheme. However, after a time this dynamic leadership moves on and is succeeded by less active individuals. During this stewardship, among other things, gift aid applications are not made. After the fallow period, new people arrive once again, who find that gift aid applications were not made in any of the past four years. It would be helpful for us to know whether this will be a one-off entry—once in the scheme, you are in it—or whether there is a constant rolling programme whereby two out of four years must be kept in order for the charity to remain eligible.
On this part of this Bill, I need to make a plea on behalf of newly-formed charities. The House will be aware that the problem for many smaller charities is how to fund their central expenses—what we might describe as keeping the office warm and the lights on. It may be difficult to find funding for the provision of services but it can be found, whether it comes from local or national government or from grant-giving foundations; but not, for example, for the cost of preparing the bid for these contracts, or indeed for keeping the organisation running. For such charities this new gift aid scheme could be highly significant. Of course, the charity will have to be four years old before it can become eligible.
My noble friend quite properly and understandably underlined the dangers of tax evasion. I have no doubt that that may be thought to be more prevalent in newer charities. For all charities—new, old or well established—HMRC requires a “fit and proper” test to be met. Given the particular needs of newer charities, it would be helpful if my noble friend could explain why it was felt that the “fit and proper” test was not good enough for smaller charities when they were set up, and whether any thought has been given to other ways of including smaller, newer charities—for example, by having a lower level of multiple during those formative, probationary years, or perhaps a multiplier of only 5:1, as opposed to 10:1. Any danger of tax evasion would then be commensurately reduced.
My final set of questions is grouped around the heading, “What happens next?”. In the Public Bill Committee in the other place on 16 October, Mr John Preston, the national stewardship officer for the Church of England, explained that the church currently spends 200,000 hours of volunteer time administering the present gift aid system. He expressed the hope to the Public Bill Committee that this time commitment would be reduced following the passage of the Bill. An illuminating remark followed from Mr John Hemming, the Liberal Democrat MP for Birmingham Yardley:
“What you are saying is that it is not necessarily stuff in the Bill”,
that matters,
“it is a question of how HMRC handles it. Referring specifically to the Bill, is there something we can simplify—to make it easier—or is it really just a question of how HMRC takes it?”—[Official Report, Commons, Public Bill Committee, 16/10/12; col. 5.]
It would be helpful, therefore—here I follow the noble Baroness, Lady Hayter of Kentish Town—to talk a little about the timetable for introducing the scheme and the nature of the publicity that will be followed. I assume that HMRC will write to every gift aid charity to try to publicise it in that way and to explain how these concessions would work. My noble friend referred in his opening remarks to the fact that guidance would be provided. I hope that he will forgive me for saying that the guidance needs to be very simple. These are small charities working on a shoestring; they do not have access to accountants or lawyers. The guidance needs to be as user-friendly as possible.
I gave my noble friend advance notice that I wanted to take the opportunity this evening to talk about the relationship between HMRC and charities. I wanted him to take on board—and perhaps discuss with HMRC—the attitude it is adopting towards the charitable status of many smaller charities. I want to give the House an example. This charity has an income of £15,849 in the year in question. In August 2012 it received a notice from HMRC asking it to complete a form CT600 (short), because it is a small charity. The form was sent off in September. Two weeks later HMRC returned the form, saying that it no longer accepted paper forms—HMRC had, of course, sent it out in the first place—and that filing had to be done online. To file online requires a user ID number, a UTR number—UTR stands for unique tax reference—and a corporation tax activation code. On receipt of these, about a fortnight later, the trustees tried to file again and were refused. They were told to wait because the corporation tax activation code was not yet working. After waiting two more weeks, they tried again; again, they could not file, because the link on the HMRC website that should have read “How to file a return” was missing. They then resorted to the HMRC helpdesk. They were logged on to a form which appeared to be CT600 (long)—in other words, for a large company—whereas they wanted a CT600 (short) form. Further inquiries to the helpdesk revealed that one logged on to the long form anyway and it automatically adjusted itself to the short form as one went along. However, this was not clear to the uninitiated in advance.
So it went on. The final surprise to the trustees was when they offered to send in a PDF of their audited accounts, which provides independent verification of their accuracy, they were told that these were not required. This process took from August 19 to November 5 —this for a charity with revenue below £16,000 per annum. I cannot begin to guess what the cost was to HMRC of all this backing and filling. However, this is just one of many examples. I hope that my noble friend will use this and, indeed, the other examples that I would be happy to provide to urge the tax authorities to be proportionate and open and to understand how the smaller charity sector works.
The second area I want to raise tonight is the tax position of foundations. I gave my noble friend a heads-up on this, and I am afraid that, because I had not dug into the full question, I may have slightly misled him. A family foundation with a permanent endowment is not able to reclaim the 10% advance corporation tax on the donations it gives. Foundations were caught up in Gordon Brown’s raid on pension funds. Their income, and therefore their grant-giving potential, was reduced by 10%. The question on which I seek an answer tonight is: why should foundations not be able to gift aid that tax allowance to tax-recipient charities as private individuals can? It is not a question of double-dipping gift aid, because the permanent endowment on which gift aid may well have been claimed and taken remains intact. Why cannot gift aid be given on the returns that the permanent endowment has earned? I appreciate that these are technical questions but they are important to the charitable sector. I am not asking my noble friend to give a full response tonight; I am more than happy for him to write to me and put a copy in the Library. In welcoming this Bill, I am asking the Minister to make sure that all the good it is planned to do, and that we hope it will do, will not be undone by heavy-handed bureaucracy by the tax authorities.
Baroness Barker
My Lords, I declare an interest. I am the owner of a consultancy third-sector business that works with a lot of charities and social enterprises. In that regard, I should say that when I sat down to look at a Bill about the governance of charities, tax and eligibility, I felt as though I had had an early Christmas present. Thank you so much for sending me something that might seem boring to other people. I do not want to speak on behalf of the right reverend Prelate the Bishop of Exeter, who I am delighted is going to follow me, but, no doubt, given all the excitement going on in the church over the past couple of months, he is looking forward to a rather sedate ecumenical debate on tax as a relief because he is coming up to his busiest period of the year.
I imagine that every noble Lord who has spoken in this debate welcomed, as I did, the Chancellor’s announcement in Budget 2011 that we would have this scheme. When one first considers the gift aid small donation scheme, there is a tendency to think that we are talking about small charities. We are not. We are talking about small donations, and we could be talking about the biggest charities of the lot—the RSPCA and RNLI. It is important to bear that in mind. Nevertheless, there is particular added importance to the Bill now. The noble Baroness, Lady Hayter, mentioned the Charities Aid Foundation report and the ACEVO report. Having seen them, we all know that the outlook for charities, like that for other sectors, is going to be really bleak for the next few years. It is predicted that charities may lose up to £1 billion from a total income of £11 billion. That is an awful lot of money. In the charitable sector, that is an awful lot of jobs and an awful lot of community effort and social capital. This scheme, small as it may be, is none the less very welcome. If it succeeds in generating an income of between £50 million in 2013-14 and £115 million in 2016-17, it will be welcome.
I, too, have real difficulty with the way in which this Bill has been written. It seems that the original intention was to try to enable charities to derive maximum benefit from donations for which they cannot get names and addresses. The immediate default position of HMRC is fraud. We know that charities are used by unscrupulous people to perpetrate fraud, but that seems to characterise an awful lot of the relationship between HMRC and charities. At the end of my speech, I shall speak a little about how I think that might change. I understand that the Government have a duty to make sure that abuse and tax evasion are not in the system, but, like the noble Baroness, Lady Hayter, I sincerely hope that the same degree of assiduous attention is paid to the affairs of Google, Amazon and Starbucks.
What research was conducted by HMRC with the sector when it was putting together its proposals? I have read this Bill putting myself in the shoes of a treasurer of a small organisation and my heart sank the more that I read of it. I ask in particular because of the issue of connected charities. I listened very carefully to what the Minister said and I understand that taking the idea of connection as it relates to personal taxation and trying to apply that to charities has been done in a spirit of trying to generate some equality between different types of charity which, as he said, are set up in different ways for historical reasons. All the evidence from the charitable sector in the past three years is that rather than splitting up and becoming more profuse in their networks, charities are having to rationalise. We have had mergers galore as charities seek to make themselves not only more sustainable, but to ensure that like every other sector, they are becoming as smart, efficient and economical as they possibly can be in order to make their money go further. How realistic does the Minister think it is that charities will deliberately split their operations in the hope of generating a potential tax earning of £1,250?
What is the intention on community buildings? Is it to recognise the additional difficulties that charities have if they have to carry out their activities in community buildings or is it about trying to be fair to different groups of people who differ for other reasons? I read this part several times and it was not until I read it thinking it was about churches that it began to make some sense to me. I have some sympathy with it. I understand that it does not mention churches because it could also apply to secular organisations, such as scouts and guides, but the way that this is written is going to set up some anomalies. Worse than that, I think it is going to set up some confusion. Would the communal part of a housing association premises which is used once a week or once a month by an older people’s group for a lunch club or whatever be ruled out on the grounds that the premises are deemed to be largely of a domiciliary nature? Can the Minister clarify that?
My most important plea echoes what the noble Lord, Lord Hodgson of Astley Abbotts, said: when the guidance for this is written, can it be written up in real examples? I fear that if it is written in the terms in which it appears in the Bill, there will be a dramatic amount of confusion. Can the Minister tell us whether HMRC has a default position, or will have in this case, that it will draft the guidance in direct consultation with the users and the people who will be implementing it and trying to work with this legislation? I went to a very interesting meeting at NCVO during the summer. It was part of its digital hub. I understand that there is an online community of churchwardens. They are largely men in their late 70s or 80s. They conduct online discussions about their churches and the work that they do. They sound like a fascinating bunch of people. They are more familiar with iPads than some Members of your Lordships’ House.
I say that because it takes me to my last point. I am going to go back and talk about the modernisation of gift aid and modernisation of the relationship between HMRC and charities. The Bill tends to display a rather old-fashioned view of charities, even small ones. The biggest and most effective weapon against fraud is transparency. HMRC could have said it was a condition of this scheme that a charity had to have a website—it could be a most basic website—where the charity must publish its annual report and financial statement, including a part saying what money had been received using the gift aid small donation scheme. It would have meant that any organisation would have to do that in its community. HMRC would not have to look at it—the community could go and look at it. Believe me, people would be as willing to shop a charity they thought was being dodgy as someone seeking benefits. I honestly think it is time to facilitate a programme of modernisation between HMRC and charities because, if we do not, we are in danger of equipping charities to fight the war that has just been fought, not the serious battles ahead. Having said that, I welcome the intent behind this scheme and I hope it works well in practice.
The Lord Bishop of Exeter
My Lords, I declare an interest as chairman of the Churches’ Legislation Advisory Service, which represents all the main Christian and Jewish communities in the UK. On behalf of them and these Benches I welcome this Bill.
It was clear from the start that the Bill, first published in the Commons, was going to be helpful to the voluntary sector and to the churches in particular. However, there were fears then that some of its requirements were going to be too restrictive, particularly for small charities. I am glad to note, though, that before the Bill was published—and while it was going through the Commons—there were several informal and very productive discussions with officials. We are very pleased that Ministers have been so willing to listen to our concerns.
The reduction of the gift aid matching criteria from 1:1 in the original Bill to 1:10 in the Bill before your Lordships’ House will be very welcome to small congregations. Equally, the reduction in the time that a charity needs to have a successful gift aid claims history to participate in the scheme will make life a little easier for new charities, although I still question whether both this requirement and the matching one are really necessary.
As we have heard, churches vary enormously in the way they are structured as charities. For example, each Church of England parish—all 16,500 of them—is a separate charity, but the Salvation Army is a national charity with one registration number.
As the Minister has pointed out, the community buildings element in the scheme was introduced to create some degree of equitable treatment for charities such as the Salvation Army and the Roman Catholic Church that are not organised and registered at local level. The community buildings provisions in the Bill are still fairly complex, but I acknowledge that the Government have gone a long way towards meeting our initial criticisms and we welcome that.
Similarly, we felt that the initial proposals on connected charities ran the risk of connecting entirely different charities just because they had trustees in common—for example, where a trustee of a local music society is also a trustee of a local church charity. We are pleased that Ministers have clarified the position on that. However, I hope that this is an area where developing practice will be monitored, as there is still considered to be some risk that HMRC may try to suggest that local churches, or groupings within intermediate church bodies, are connected even though it would seem that the definition of connection in the Bill would not support this interpretation. For Church of England parishes there may be some additional protection in that parochial church councils are not trusts but bodies corporate. However, for other denominations and faith groups the situation may not be as clear cut.
The Church of England estimates that the scheme will be worth about £15 million to our parishes. On that basis, it will probably be worth at least that amount to other faith groups, if not more. That is extremely valuable but I will make a couple of suggestions that would make it more valuable still.
The first concerns simplicity. I am grateful to the noble Baroness, Lady Hayter, for her observations and I will not repeat them. Everyone in the voluntary sector is very much aware that a scheme of this nature is open to abuse and fraudulent claims, but I hope that HMRC will take a proportionate approach to regulation. We all know that no charity is immune from the occasional rogue trustee or treasurer, but the overwhelming majority of charities are honest and careful in their dealings with HMRC.
The second concerns payment methods. The scheme is about payments in cash only. One of the accompanying documents released with the Autumn Statement said that the Treasury wants to look at gift aid in light of the fact that people now give online and by text. It said:
“The Government will examine whether the administration of Gift Aid can be improved to reflect new ways of giving money to charity, in particular digital giving”.
While the Government are doing that, can they also look at how the small donations scheme is working? I can understand why Ministers want to keep the scheme simple at the outset but the world is moving inexorably in the direction of non-cash donations and perhaps at some point the scheme is going to have to take account of that. I should also say that for one religious group—the Orthodox Jewish community—a cash donation in the collection plate at the Sabbath service is simply not an option because Orthodox Jews are forbidden to carry money on the Sabbath.
This Bill is, inevitably, a complex one, but larger churches, including the Church of England, are reasonably confident of being able to produce full guidance notes in a simple format. It will be important though to ensure that the complexity of the Bill is accompanied by appropriate and accessible guidance across the whole sector.
In this context it needs to be remembered that gift aid is processed for the most part locally by volunteers. As we have heard, in the Church of England alone it has been estimated that it takes around 200,000 hours of volunteer time to do this, and we would not wish this to be increased by additional complexity. Finding further ways of refining operational simplicity would not come amiss, particularly for the benefit of smaller charities and churches,
It may be a matter of some small tweaks to the Bill’s provisions, but also for guidance to be given to HMRC. I echo the questions already asked by the noble Lord, Lord Hodgson, and I look forward to the Minister’s response. With those very slight reservations, I warmly welcome the Bill.
Lord Newby
My Lords, I am extremely grateful to all noble Lords who have spoken in this debate. I am very pleased that we decided to postpone the Leveson debate because if we had not there would be about 50 people grumbling at the fact that I will now attempt to answer the questions that speakers in the debate raised.
One concern everybody has raised is about whether the scheme is too difficult to administer and overbureaucratic, to which there are several answers. The key thing is that, at one level, it is very straightforward to operate. Charities are already filling in forms for gift aid. Under the scheme they simply have to tick a box to say that they want to claim additional cash under this additional scheme and they will get it. They do not have to fill in another form. If they are operating out of a community building, they have to give the address of the building. We are not talking about a long and hugely complicated form at all. It is very straightforward. That is one of the key things that HMRC is trying to do. It has to strike a balance between something relatively simple and something that is not open to fraud.
I confess that I started my professional life working in Customs and Excise, helping to devise schemes to help small shopkeepers account for VAT. There was a particularly assiduous Scotsman in our group who spent all his time in a corner trying to work out how shopkeepers could defraud Customs and Excise. We ended up with really quite complicated schemes as a result. They were designed to be simple, but because people were very worried about fraud—and you were talking about, as it were, real money then—we ended up with seven schemes which were designed to be simple but none of them was quite as simple as we had hoped. That is a danger of which HMRC have over the years become more aware, and why the scheme is designed to be as straightforward as possible.
Obviously, charities are not going to look at the Act, but at the guidance from HMRC. As a number of people have said, the guidance itself will be extremely difficult. HMRC is planning to produce two levels of guidance. First, a starter level will set out the rules as simply as possible; most charities will only need to use that, which will supplement the very easy form. Secondly, detailed guidance will explain how the law works to larger charities and charity representatives who want that degree of detail. HMRC will also help and advise charity representatives who want to develop their own guidance; we are thinking here possibly of the churches as an example.
A number of noble Lords asked about consultation with the charitable sector. HMRC undertook a public consultation on the detail of the scheme that ran from March until May this year. It was eight weeks long and 83 organisations and individuals responded to it. HMRC also held meetings with groups of interested people during the consultation period. It has been consulting on the detailed proposals with some charity representatives throughout the development of the legislation, including the Charity Finance Group and the Institute of Fundraising.
Over the summer, the Bill was used as a pilot for the public reading stage in another place. This is a new approach, a supplementary consultation stage where members of the public and organisations can give detailed comments on the draft Bill via the web. Sadly— I think it is rather sad—only 23 individuals and organisations responded to the public reading stage, and a number of them had already been involved in the consultation. It was a useful additional scheme, but whether or not it really added a huge amount is slightly doubtful.
The noble Baroness, Lady Hayter, and the right reverend Prelate raised the question of digital donations. The Government said in the Autumn Statement that we are examining whether the administration of Gift Aid can be improved to reflect new ways of giving money to charity, particularly digital giving. Obviously, young people in particular are going to give their money digitally; there is no doubt about that. As we are finding in many parts of legislation, the Government are, if anything, struggling to keep up with reality just as the digital revolution is changing the way we do everything.
We are starting this scheme with cash because we feel that that way we can make it work relatively easily, but we are going to look at digital giving and at digitising Gift Aid administration more generally. It is only a matter of time before we do all these things but, while people are currently worried about some of the complexities of the Bill, we are keen not to make them more complex at this stage and at least get going with straightforward cash donations.
Noble Lords asked about the publicity for the new scheme. HMRC is planning a four-stage publicity campaign over the next few months to alert charities to the new system and donation scheme. As well as media publicity, HMRC is planning to write in the new year to every charity that has claimed Gift Aid within the past three years to tell them about this scheme and about Gift Aid online. HMRC has also asked the charity representative bodies to help it spread the message.
The noble Baroness, Lady Hayter, asked me to commit myself to a review. The Government have committed themselves to a review. That is the good news. Sad to say, from the noble Baroness’s point of view, but entirely appropriately, the review is to be after three years. This is a relatively standard period for review after a scheme has come in and we definitely plan to do that. In the mean time, HMRC publishes national statistics on the cost of charitable tax relief three times a year. Once up and running, HMRC will publish details about the Gift Aid small donation scheme. These figures will be national statistics.
HMRC does not publish details of fraud rates, although as it received about £10 million of fraudulent Gift Aid claims last year, it is not an insignificant amount. Although, obviously, the last thing in the mind of the vast bulk of charities is fraud, there are people who will exploit any scheme if they think that they can do well out of it.
The noble Lord, Lord Hodgson, asked a number of questions. He asked about the detailed wording in the Bill on Clause 2(2), which refers to “2 consecutive … years”. Clause 2(2) does that because charities will need to make a Gift Aid claim at least every other year. The qualifying period is now two years, so it would be inappropriate to allow a charity a gap of two years or more in order to do so. I hope that that clarifies the position.
Baroness Barker
My Lords, could the Minister write to some of us to explain that point a little further?
Lord Newby
I would be only too pleased to write to all noble Lords here. Basically, it is the interaction of the general Gift Aid scheme and this particular element of it; but I will write to clarify that point absolutely.
The noble Lord, Lord Hodgson, asked again about the cost and whether HMRC would be proportionate, not heavy-handed, and efficient. He will not be surprised to hear me say that, of course, that is what HMRC plans to be. I hope it will be. My experience, working in HRMC—or Customs and Excise as it was—was that it did a lot of things extremely efficiently, and every now and then it did something which was less than efficient. It was the less-than-efficient examples which tended to get most of the publicity. I know that the relevant section of HMRC understands the point that the noble Lord is making. The Government are not setting up this scheme in order not to hand out the cash. We are setting up the scheme because we are very keen that it is successful and is able to help charities in this way.
The noble Lord asked about foundations and why they are in a position that is different from that of individuals. I am tempted to say, “Because they are not individuals”, but I will happily write to him with some of the background as to their tax treatment, which I absolutely understand is different from that of an individual.
He asked whether a two-year period was necessary, because a charity must already have been through the registration process, including the “fit and proper person” test. The test helps to ensure that charities, community amateur sports clubs and other organisations entitled to charity tax reliefs are not managed or controlled by individuals who might misuse the tax relief. Unfortunately, as I said earlier, fraudsters have been known to exploit charity tax relief, so the “fit and proper person” test exists to prevent that. However, even if a charity appears to be compliant in the first few years, changes in personnel can affect its attitude to compliance, so HMRC will need to continue to have evidence on which to base its assessment of the risk that the charity poses in relation to the scheme. That is why we have gone for a two-year qualification period. We believe that that gives an adequate protection against potential fraud, because people will have had to be up and running, making the thing work. Equally, it is not too long, which was the concern about the original proposals.
The noble Baroness, Lady Barker, asked specifically whether it would be possible under this scheme to collect funds and claim the gift aid from activities in housing association premises. To take a simple example, if the charity is a small local charity linked to a specific housing association and it wants to raise money from a collection in its premises or in a pub or anywhere else, it can do that. Things get more complicated if it is a branch of a large housing association—somewhat like a Catholic church—which wants to pray in aid the community building rules. In that case, because the housing association premises are essentially residential premises, it will not be able to do that, because that is the definition we have put in place.
That demonstrates that tax is complicated. There is no system we could have put in place that would have had any reasonable protection against fraud and which would not have run up against those kinds of complexities—and undoubtedly there will be anomalies. However, with tax, the choice before you is not whether you have anomalies but whether you do something or not. You are bound to have these anomalies. We took the view that putting in place a scheme that enabled charities to have access to £100 million was worth it, even though we knew that there would be some anomalies, because they come with the territory, as it were.
I believe I have answered the point that the noble Baroness, Lady Barker, raised about guidance to users. We are doing that on the various levels that she talked about. We have consulted, and will continue to consult, the standing body that HMRC has for dealing with the charity sector as a whole.
The noble Baroness made the very interesting suggestion of having a website, on which reports and a financial statement would be put. That is a possibility. I suspect that, if we had done that, someone would say that it was grossly unfair to small charities that did not have a website. However, given that we expect everybody in respect of benefits to use electronic communications, and that HMRC increasingly wants taxpayers to use them, it is not an unreasonable suggestion, and I am sure that my colleagues in HMRC will look at it.
The right reverend Prelate asked a couple of questions about simplicity and whether all the requirements were needed. As I said before, we had to take a view, and that view was that this struck the right balance between ease of access to the scheme and protection against possible fraud.
This debate has demonstrated that, if this were not a money Bill, we would be having extremely interesting discussions in Committee and on Report. Sadly, however, this is a money Bill. I therefore hope that I have been able to deal with the points that have been raised—
Lord Hodgson of Astley Abbotts
I did not hear the Minister address this directly but do I take it from the commencement date of the Act that Gift Aid under the new scheme will be available in the next financial year, starting 6 April 2013? Will it be in by then?
Lord Newby
My Lords, I believe that it will be but, again, if I am mistaken, I will include that in the letter that I have already committed to write to the noble Lord.
We have sought to strike the right balance between effectiveness, accessibility and security, and I believe that we have achieved that. The scheme will deliver an important new stream of revenue to the charity sector. I therefore commend this Bill to the House.