Grand Committee
Housing
Lord Dubs
My Lords, there is a very serious housing crisis in this country. Too many families are homeless, badly housed or in temporary accommodation. The situation has got worse largely as a result of coalition policies: first, too little housebuilding, especially for the poorest members of our society; and, secondly, the results of government policies on welfare. The more I have looked into this situation, in preparation for this debate and even before that, the more I feel that one cannot look at housing in isolation; one has to look at the whole social welfare system in order to understand the effect of changing the social welfare on housing. Part of what I want to say will be to do with that.
One has to ask: why is there such a housing crisis? No peacetime Government since the 1920s have presided over fewer housing completions than this Government of the past two years. It is actually getting worse. In 2012, housing starts were 11% lower and dropped below 100,000. Housebuilding in Britain has now hit new lows. The actual figure of housing starts last year was 98,280. New home starts have been lower in every single quarter than when Labour left power in 2010.
We have a definition of statutory homelessness—I do not believe it covers all homelessness but it is a working definition—and that has risen by more than a third since the election that brought the coalition to power. At the end of the second quarter of 2010, the number of homeless people stood at 10,100 and hit 13,890 in the last quarter. In practical terms, homelessness may be higher than that because the statutory definition is somewhat limited.
The Government have introduced the benefit cap, which I believe will make more people homeless. In London alone 7,000 families stand to lose more than £100 a week. Mr Leslie Morphy, the chief executive of Crisis, the homelessness charity, said:
“For the sake of cutting just a few pounds a week from their benefits, families and individuals are being forced out of their homes, to be put up in B&Bs or temporary accommodation that costs us all far more”.
The Labour Party’s contention is that there are regional variations and the Government’s benefit-cap approach has not taken account of that fact—it is not a matter of one size fits all. The Labour leader, Ed Miliband, said that the benefits cap should take into account housing costs in each region. He said:
“We've said we're in favour of a benefit cap but it has got to be adjusted regionally depending on housing costs in each region. The danger of the way the government is doing the cap is that it forces people into temporary accommodation, bed and breakfasts, which drives up costs not reduces them. And actually what we're seeing with the welfare bill is, despite the cuts the government is making, the welfare bill rising and not falling”.
That is a real condemnation that the Government are putting people through a lot of pain, allegedly to save money, and they are not even saving the money.
What we all call the bedroom tax is going to have a very important effect on housing. Frankly, it is hard to find anybody who has a good word to say about this policy. It is likely to cost far more than it saves. It has been estimated that 31% of working-age housing benefit claimants in the social rented sector—that is, 660,000 claimants—are likely to be affected by this measure. The problem is that there simply is not the smaller accommodation for people to move into. If there were, it might just about be a viable policy. For example, in the Hull City Council area, 4,700 tenants are likely to be affected by the policy but the council has only 73 one- or two-bedroom properties to let. It does not make any sense. How can it be possible to force, drive or coerce—whatever word one wants to use—tenants out of accommodation in which they are alleged to have an extra bedroom when there is nowhere else for them to go?
The other killer is that two-thirds of the households being hit contain within the home someone who is disabled. The Government have tried to meet the needs of disabled people in such circumstances, but it is going to be very cumbersome to measure those needs. Indeed, we know that disability is not a constant. People with disabilities often find that they have a developing condition, so that someone who is a bit disabled one day may be more disabled in the future. If they are forced out of their home, the situation can become particularly difficult for that family.
It has been estimated that, over the past four years, the cost to councils of bed and breakfast hostels and shelters has been £2 billion. The problem is that the figure is increasing, which makes any savings to be made on the welfare bill look even more remote. There is now a clear pressure on families to move out of central London simply because they cannot be rehoused in their own local area; that is to say, never mind that they cannot afford the rent because of the benefits cap because there is also the bedroom tax. London boroughs in particular are rapidly accelerating the rehousing of homeless households outside their home boroughs. During the year up to this April, almost 11,000 households were rehoused in this way, a rise of 16% on the previous 12 months. Most of those households left inner London for the cheaper outer suburbs, but some were moved to towns completely outside the capital, such as Dartford in Kent and Slough in Berkshire, or to the borough of Spelthorne in Surrey. Inevitably this has put a strain on local services and many council leaders outside London are now complaining about it. For example, Mr Edward Smith, a Conservative councillor in Enfield, has said:
“The pressure will not abate … Before long, we will have to build more secondary schools”.
That will be one of the consequences of the Government’s policy on welfare. The leader of Slough borough council has said:
“You can’t just pitch up halfway through a year and expect to get a school place. It’s not McDonald’s”.
The housing Minister, Mark Prisk, insists that councils should be careful about placing families in B&Bs that are far from their home boroughs:
“There is absolutely no excuse for families to be sent miles away without proper regard for their circumstances, or to be placed in unsuitable bed and breakfast accommodation for long periods of time”.
That is fine, but the trouble is that the policy is not happening. He may be insisting on it, but it is simply not the way it is working. I should mention in passing that rough sleeping rose by 23% two years ago and by 6% last year, which represents a rise of a third since 2010. Rough sleeping is, of course, one of the most serious aspects of housing difficulties.
I turn briefly to the issue of temporary accommodation. The latest Government figures show that 53,130 households were living in temporary accommodation at the end of 2012, a rise of 9% on the previous year. The statutory limit for families living in bed and breakfast accommodation is six weeks. However, estimates suggest that a third of British local authorities are in breach of this limit, largely because of the shortage of suitable temporary accommodation. Last year, 12 of Britain’s biggest cities spent £464 million on temporary accommodation, an increase of almost 6%, while the London boroughs are budgeting for significant further increases this year.
Before I conclude, I want to say a word about overcrowding. There is a definition of overcrowding, but even accepting that definition, it varies according to the type of accommodation in which the household or family is living. Under the definition, almost 7% of social renters and 6% of private renters are overcrowded in their accommodation. I appreciate that the Government’s answer is that the bedroom tax will deal with overcrowding and that the Minister will quote figures to show how many people have spare accommodation. I have already talked about why the policy is not working. If one could simply switch people from one to the other property within the same neighbourhood, it might be easier, but housing does not work that way and the Government must surely know that. The problem is that the policy is causing enormous dislocation to households and families. If people have to move a long way away from where they have been settled, that is upsetting for them, it is not desirable and it is yet another sign that the Government’s policies are not working. There is a real crisis here and everyone who is looking at it says that it is getting worse. I hope that the Government will do something about it because the next Labour Government will certainly have to.
Baroness Maddock
My Lords, I thank the noble Lord, Lord Dubs, for introducing a housing debate, which we have far too infrequently in the House of Lords. Twenty years ago when I entered the House of Commons, I devoted considerable time in my first or second year there—I am not sure which it was—to the Housing Bill which was then proceeding through Parliament. We focused a lot on the duties of local councils to the homeless. Not long before that, one of my colleagues who was at that time the MP for the Isle of Wight, had, successfully introduced a Private Member’s Bill to establish some of the first duties to be imposed on local authorities with regard to homeless people. But here we are, 20 years later, still facing a situation in which we are unable to provide sufficient housing for people in our country. I find it even more amazing that for many of those years our economy was doing very well, yet we did not address the need for more affordable homes. We were raking in huge amounts of stamp duty. At the beginning of the previous Labour Government’s term of office, less than £1 billion was received in stamp duty; by the end, it was many billions of pounds. I said at the time that we should have used some of that money to address the shortage of social housing. If a fraction of that money had been spent on social housing, we would be in a much happier situation today.
The noble Lord, Lord Dubs, described the housing crisis. I agree that when the coalition came to power in May 2010, we inherited a housing crisis. Some 1.5 million homes had been lost from the stock under previous Governments since 1979. Those Governments continually failed to build enough homes to cover the social housing that was sold off. We saw social housing waiting lists soar from 1 million in 1997 to 1.8 million in 2010. Housing targets were routinely missed. Even the top-down regional spatial strategies of the previous Labour Government consistently failed to meet that Government’s targets and, in the last year of that Government, they fell short by 78,000. We find ourselves with not enough affordable homes to go round and a difficult task for the coalition to address when we are also trying to address the effects of the economic crisis we are still going through. The coalition announced in the comprehensive spending review that it would build 150,000 new social homes during this Parliament, and it now expects to exceed that. I am sure that my noble friend the Minister will give us a little more detail on that when he replies to the debate. The coalition has also committed more than £160 million to bringing empty homes back into use as social and private housing—another issue on which I have campaigned for the past 20 or so years. A total of 11,200 homes will be brought back into use as part of this fund. This comfortably exceeds the target that was set of 3,300. However, another 5,000 homes will be brought back into use as part of the £300 million capital programme, taking the total to over 16,000.
The noble Lord, Lord Dubs, rightly discussed how we deal with families living in temporary homes and in bed and breakfast for rather longer periods than anybody would want, and asked what the Government were going to do about that. Local authorities have a duty to provide temporary accommodation and it is up to them how they meet that duty, although it is, of course, subject to central government guidance. There are two main reasons why we need to deal with this. One, of course, is the human cost, which has already been mentioned. It is not only the awfulness of not having a home of your own to imagine living in for a period but the effect on children’s education and so on. We would all agree that human misery is one of the most important reasons why we have to deal with this.
At the same time as trying to alleviate human misery, one spends money, and therefore the financial cost of putting people in temporary accommodation is huge, as the noble Lord, Lord Dubs, said. A recent report stated that the 12 largest cities spent nearly £2 billion on temporary accommodation in the past four years. That is enough to build 72,000 homes. In the past year, the cost of bed and breakfast has risen by more than 25%. If you look at the financial benefits of building more homes, it is clear that the money should be focused on this because we get a benefit of around £2.84 for every £1 spent.
As I intimated earlier, part of the action and a lot of the solutions have to be local. I declare an interest as a vice-president of the Local Government Association, and I am grateful to it for some of the information that I will mention about how local authorities are dealing with this. As the noble Lord, Lord Dubs, said, it is clear that the way local authorities deal with those in bed and breakfast and temporary accommodation varies hugely. In December last year, the worst offender was, amazingly, Conservative-run Croydon which had 156 households in bed and breakfast for more than six weeks, followed by Labour-run Barking and Dagenham which had 69 households. Some of the councils run by Liberal Democrats have very low numbers, but I shall not labour that point.
The picture is emerging for a variety of reasons. The noble Lord, Lord Dubs, pointed out the changes to benefits and so on, and there are new pressures on councils. Even councils that have a very good record on dealing with people in this situation are finding it very difficult. I asked the Local Government Association for some information about what the best local authorities are doing in this respect. One thing is very clear: if local authorities maintain a balanced portfolio of accommodation, they are in a much better position to spread the risk and to respond when markets and funding change. The other key thing is having an efficient housing benefit service that landlords who are taking people can rely on. Councils that work very hard to maintain good relationships with providers by not messing them around and being very responsive do better at keeping people out of bed and breakfast.
There are two particular things I would like to highlight about the London Borough of Sutton which, as noble Lords will know, is run by the Liberal Democrats. My noble friend Lord Tope was the leader of the council for many years. It was considering closing a local authority-owned care home, not an easy thing to do, because of the way care was changing. It decided to use the building for temporary accommodation. The path was quite tricky because it was closing a care home and the stereotypes that people discuss when homeless families are coming to live in their area had to be overcome. It has been a long process, but the council envisages that the converted property will provide accommodation for between 40 and 43 families that would otherwise face the dislocation of living outside the borough for several months. That backs up the other point that I made about the importance of councils working with private sector providers to find tenancies for families. They have worked very hard to attract landlords, keep them and deal with them. I particularly noticed that they prepare a helpful and innovative welcome pack for landlords, and they have been advised that they value this very much. That way, they have been able to keep a pool of landlords that help them to meet their statutory responsibilities.
I hope that my noble friend will be able to enlarge on some of the issues that I have talked about. It is important that we deal with this, because, as I say, the most important thing is the human misery for families who have to live in these conditions. My mother left my father when I was 11, and we went to live in a small town on the south coast. We lived in private rented accommodation and never stayed more than nine months in any place. I am pleased to say that, in my grown-up life, I have not had to do that—so I can say from first-hand experience that this is not satisfactory. We are a wealthy nation, we have known about this for 20 years, and we still have not managed to do anything about it. We all need to work to try to spread best practice. We are where we are with the money and benefits and so on, and I hope that the Government will work with local authorities to help to spread best practice to try to reduce the misery for families in these conditions.
Baroness Dean of Thornton-le-Fylde
My Lords, I thank my noble friend Lord Dubs for initiating this debate. I am delighted to be back on the same stamping ground with the noble Baroness, Lady Maddock. For quite a long time, she and I shared many debates and exchanges on social housing, and she is a great stalwart of it. Indeed, she has worked for a long time in it, so I am delighted to see her name on the speakers list.
My noble friend has dealt with the subject of the housing shortage. It might seem quite a crass statement to make, but I believe that the people out there could not care less about political policy or about who is dealing with it and who is right or wrong. They care about having a home, which provides so much to the rest of their lives. It brings stability, a feeling of well-being, security, and the opportunity for them to bring their children up in the family environment that they want. At the other end of life, for older people who may be occupying accommodation that we may agree is rather larger than they need, it is nevertheless where they have been for years and years—and it provides the opportunity for their daughter or son, or another member of their family, or even a carer that they may need from time to time, to stay with them. So the housing shortage is not just about housing; it is about the whole of our lives.
The bedroom tax, as it has been christened, is not a new idea. It was something that was discussed and sought to be applied—and was applied, in some respects—many years ago. But then it was concentrated on students going off to university and the family having affordable rented accommodation from a housing association or local authority, when it was said that the bedroom was no longer needed. So I do not want this to be a party-political debate, but let us put one or two things straight. With the new affordable homes budget, the money available from central government to the provision of affordable housing has been cut by 60%. The previous Government allocated £8.4 billion for the three-year period from 2008 to 2011, under the last comprehensive spending review that they applied. The current Government have allocated just over half of that, at £4.5 billion for the four-year period 2011 to 2015. The Homes and Communities Agency has announced—and the agency knows, because they are the people who allocate the funding for affordable homes—that it is down 68% year on year. That figure meant that in 2010-11 just under 50,000 new-build, affordable homes were started. It was the first year of the new coalition but the last year of the previous Government’s comprehensive spending review. That was the number of new homes in the first year of this Government but in 2011-12 it dropped substantially to 15,700 homes. So here we are with a housing shortage, and it is going to get worse rather than better.
The Minister, Grant Shapps, announced that the Government claim that by 2015 170,000 new homes will have been provided under government funding. However, what he did not say was that 70,000 of that 170,000 were started by the previous Government. So let us get the facts straight: the previous Government were not an utter failure. They did not build as many homes as I would have liked and I would have been critical of the policy, but it is not all down to the previous Government. In any case, even if there is a part of you that feels it was and you want to rectify the situation, you do not do it by cutting the budget by half or, indeed, by claiming that you are building houses that you did not actually commence.
Many of us are old enough to remember the television film “Cathy Come Home”. Not only was it searing for people who were homeless and interested in the subject; it really shocked the country. The day after the programme was shown, everybody was saying, “We didn’t know it was as bad as this and we need to do something about it”. Something did then start to be done by the then Conservative Government. If you talk to Shelter and housing providers who deal with homelessness, they will say that it is now time for another “Cathy Come Home” film to be made because we are going backwards as a nation—we are not making any progress.
I started by saying that housing affects whole lives and that it is not just a matter of where people stay. That is true. It was certainly brought home to me when, as chairman of the Housing Corporation, I went to a lot of areas. It was the simple statements that brought home to me the difference that housing could make. I remember one mother standing up at a local conference that we had organised. She said, “Since we’ve moved into this council flat, it has made two key differences to my kids. One is that one of my children was always off school with colds and being unwell. Now we are in a decent home, I’ve suddenly realised that they’re going to school regularly. Their health has improved substantially. But also their attention at school has improved because they have somewhere to sit and do their homework. Yes, they do it in the kitchen—we don’t have a spare room—but there’s a homeliness there and there’s peace and quiet for them, and it’s made a substantial difference to our family’s quality of life”.
I agree that with the bedroom tax and housing shortage we concentrate on areas of biggest need—London and the periphery of London—but we should not forget the provincial cities, which increasingly also have problems with homelessness. Nor should we forget the rural areas, as many people tend to do. They think that they are sublime areas in which to live, but some of the greatest housing poverty in this country is in those areas and we must not forget that.
Housing is at the centre of our lives and impacts on our lives, and where it impacts negatively, society picks up the bill further down the line, whether it is a bill relating to health problems or children not concentrating or getting the attention they need at school. Therefore, it has an enormous impact on their life chances, as I think we all recognise.
There is one other factor, which is the overall medium and long-term impact on registered social landlords. If they are not getting the money to build, obviously they will not build, so what are the long-term prospects for the prosperity of these organisations? If the registered housebuilding sector, such as housing associations, is diminishing, what does the future hold? What will happen if we start to dilute or reduce their ability? Remember that, although they are called housing associations, one great asset they bring to housing is that they do not just build houses. Until recently, I was a non-executive director of Taylor Wimpey. We were not in the regeneration game; we were in the game of building houses. Housing associations are great regeneration agencies. They look at the whole community and provide services that other organisations cannot or do not provide. If because of their balance sheet they are restricted on their investment, and therefore on their overall strategic policy and have to draw back—and remember that they are also substantially funded by the private sector through bonds and other means—when we come through the Government’s austerity measures, we will not have the facilities to pump-prime the massive housebuilding programme that we need.
I am not saying that this Government are responsible for the serious housing shortage, but they are actually ensuring that we do not get out of the housing problem. Their policies are regressive rather than progressive in this whole area. I ask the Minister to address how the Government are going to deal with this growing problem—the social scars and the homelessness that we see, with people begging on our streets. We need to have an incremental policy that will reduce those problems in our society.
Lord Collins of Highbury
My Lords, I, too, thank my noble friend Lord Dubs for initiating this debate. As he said, even using the limited definition of “statutory homelessness”, that went from 10,100 at the end of 2010 to 13,570 at the end of 2012. As a result, local authorities are placing a worrying number of families in temporary accommodation. There were 53,130 households living in temporary accommodation at the end of 2012, 9% higher than the previous year. The failure to tackle this problem, as highlighted by my noble friend Lady Dean, is devastating for many families and, according to new research by the Bureau of Investigative Journalism, referred to by my noble friend, is proving incredibly costly.
The UK has spent almost £2 billion over the past four years housing vulnerable homeless families in short-term, temporary accommodation. In that time, £1.88 billion has gone on temporary accommodation in 12 of Britain’s biggest cities—enough to build 72,000 homes in London and house all 53,000 or so households which are currently homeless, as the noble Baroness, Lady Maddock, said. As my noble friend Lord Dubs highlighted, London Councils are rapidly accelerating the rehousing of homeless households outside their home boroughs; 32,643 homeless households have been rehoused out of their borough since 2009. In the year to April, 10,832 households were rehoused in this way, a 15.86% rise on the previous 12 months, and 44,860 households in temporary accommodation—84%—were in self-contained accommodation. Moreover, 40,860 of those in temporary accommodation included dependent children and/or pregnant women, in which households there were 76,790 children or expected children. Of these, the number placed in bed-and-breakfast accommodation increased from 630 at the end of March 2010 to 1,690 at the end of December.
Official guidance says that bed-and-breakfast accommodation should be avoided wherever possible and is not suitable for families with children or pregnant women,
“unless there is no alternative accommodation available and then only for a maximum of six weeks”.
However, a recent freedom of information request showed that the number of families with children and/or a pregnant woman housed in bed and breakfast for six weeks or more has risen more than eightfold since the coalition came to power.
As my noble friend Lord Dubs said in opening this debate, we face the biggest housing crisis in a generation, and the Government’s housing and economic policies are not helping. The first priority must be to address, by building more homes, the housing shortage that is the underlying cause of homelessness, overcrowding, high rents and low standards of accommodation. House-building is crucial to the economic recovery and in helping to get families on the housing ladder. The Government have launched four major housing schemes in three years and made more than 300 announcements on housing, yet all these schemes have so far completely failed to tackle the housing crisis. By simply stimulating demand through plans for help-to-buy mortgage guarantees and equity loans rather than directly boosting supply, there is a danger that they will simply push up prices. Although we had some positive news this morning from the Nationwide Building Society that first-time buyers are beginning to get into the housing market, it is still too little and, perhaps, a little too late.
As we have heard in this debate, we also need subsidised housing for those who cannot afford to purchase or to pay full market rents. Action on affordable homes is needed, and the announcement that an extra £225 million will be available is welcome news, but only £125 million will be spent before 2015 according to the OBR and, as my noble friend Lady Dean said, that is dwarfed by the £4 billion cut in funding for affordable housing that the Chancellor made in his first budget.
While one government department introduces measures to support housing, another exacerbates the problem, as we heard from my noble friend Lord Dubs. The bedroom tax, the levy on housing association and council tenants deemed to have a spare room, penalises those in work as well as those who must find the money from their other benefits by cutting back on essentials. While scrapping this measure would be best, when the Government are reviewing its impact, will they consider the current discretionary housing payments, which local authorities need to deploy in the many cases of hardship where tenants cannot be offered a suitable smaller property?
As chair of a credit union, I am only too aware of the issues that my noble friend Lady Dean raised. Many housing associations have tenants who are going to be hit by the welfare changes and are anticipating major problems of rent arrears. This not only means they must cut back on spending on new housing investment just when the Government need them to do more but, as the noble Lord, Lord Best, highlighted in his contribution on the gracious Speech, they will be less able to undertake broader community work, such as addressing those with special needs, tackling anti-social behaviour and supporting young people into training and jobs.
At the root of the temporary housing problem is the failure to build enough affordable housing. With the huge squeeze in living standards and a faltering economy, the Government’s failure to provide affordable housing means that millions of families are priced out of living in a decent home. As my noble friend Lady Dean pointed out, official statistics from the Homes and Communities Agency show that affordable housing starts collapsed in the last financial year by 68%, dropping from 49,363 in 2010-11 to only 15,698 in 2011-12. Furthermore, at 80% of market rent, many of the homes under the Government’s affordable homes programme are not affordable in many parts of the country.
The Labour Party has previously called on the Chancellor to use the money raised from the 4G mobile spectrum auction to build 100,000 affordable homes, and the leader of the Labour Party, Ed Miliband, has also called for an immediate tax on bankers’ bonuses to fund 25,000 affordable homes.
As we have heard in contributions from all sides in today’s debate, and as my noble friends pointed out, for people in our communities this is not a party-political issue but one that affects them and needs urgent action. I ask the Minister to respond in detailing what urgent action is to be taken.
Lord Ahmad of Wimbledon
My Lords, I join other noble Lords in commending the noble Lord, Lord Dubs, for initiating this debate. In doing so, I thank all noble Lords who have participated in debating what is, undoubtedly, an important issue. In responding, I should say from the outset that the Government see—and certainly I saw this at first hand during my tenure in local government—that the best way in which to tackle homelessness is not by politicising it, as the noble Baroness, Lady Dean, said. This is about people’s future and their lives, and often their families, who are desperately in need of support to get themselves on their feet. I totally share the sentiments, as expressed by the noble Baroness, about ensuring that what we do is to put the people at the centre of any reforms or changes that we seek to make.
I also recognise that the issues raised by noble Lords in the debate reflect the growing importance of housing, acknowledged by all sides. This is not something new; the housing crisis is a reality that has been faced by successive Governments, and which this Government are certainly facing up to today.
I turn to a few facts. I acknowledge that, if one casts one’s mind back to about 2003, there were then about 135,000 households in England that were accepted as being homeless by local authorities. At the end of last year, this figure was just in excess of 53,000. I would like to clarify one point. The noble Lord, Lord Dubs, raised the issue of 53,000 in terms of temporary bed and breakfast accommodation, which is currently 4,000. Overall numbers in temporary accommodation are much smaller than they reached in 2004, when it was closer to 100,000. That said—and we can talk about statistics—I acknowledge the fact that, after 2004 the previous Government took some stringent steps to address that particular need, and also to bring it to the attention of local authorities, which are at the forefront of tackling this particular issue.
The Government are committed to tackling and preventing homelessness and reducing the use of bed and breakfast accommodation. This is reflected in the increased level of funding that we have provided for homelessness work at what are, as my noble friend Lady Maddock acknowledged, very challenging times for the Government. The Government have invested £470 million over the spending review period in prevention of homelessness, including the reduced use of temporary accommodation. There has been an additional £70 million this year, including £18.5 million to tackle rough sleeping, targeted at local authorities and £20 million for a transition fund.
I share the sentiments that have been expressed by several noble Lords. The Government are keen to ensure that local authorities support homeless households into stable, secure and suitable long-term accommodation as soon as possible. In my time as a local councillor, I saw for myself the importance of this issue, particularly where children have spent long periods in temporary accommodation. It can be very damaging. That is why we have retained the order introduced by the previous Government in 2004 to limit the use of bed and breakfast accommodation, and I will return to this in a moment. The order makes it illegal to place families in this type of accommodation for any longer than six weeks.
I fully acknowledge that despite the order, during the first half of last year we did see an increase in the use of bed and breakfast accommodation, but I am pleased to say that when the latest figures were released in March, the numbers had dropped in comparison with the preceding quarter. However, I reiterate that the Government are in no way complacent about this. Where authorities are placing families in bed and breakfast accommodation for longer than six weeks, let me make it clear that it is unlawful and unacceptable. I share the concerns expressed by the noble Lord, Lord Dubs, in this regard. Officials at the Department for Communities and Local Government are working closely with those local authorities which have the highest number of families in bed and breakfast accommodation to help them address the issue. We are confident that the numbers being left in this type of accommodation for longer than six weeks can be reduced.
The noble Lord, Lord Dubs, also mentioned the issue of rough sleeping. We will make sure that we continue to tackle and prevent rough sleeping, and I am greatly encouraged by the success here in London of the mayor’s No Second Night Out pilot project, which has ensured that 87% of new rough sleepers do not spend a second night on the streets of London. We are rolling out the No Second Night Out project nationally, and all local authorities are planning to introduce the scheme. Many key rough sleeping areas like Merseyside, Greater Manchester, Oxford and Northamptonshire are already operating schemes. Again, I am very supportive of this. I focused on a project for my own party which looked in particular at inner cities, and I know how acute the challenge and associated problems of rough sleeping can be.
I want also to address the location of the housing being offered by local authorities. Vulnerable households need protection and it is not acceptable for families to be dumped en masse long distances away from home. This matter has been raised by my honourable friend Mark Prisk, the housing Minister, and it is a point that he has reiterated and made clear to councils. For our part, we introduced new powers in the Localism Act 2011 so that councils can now use good quality private rented sector accommodation to meet the main homelessness duty, thus helping to reduce the need to use temporary accommodation. Where councils do feel the need to move families away from their home borough, they must by law take account of the suitability of the accommodation being offered to each homeless household and consider the impact that the change in location will have, including possible disruption to employment, education and, of course, caring responsibilities. The law is clear, and councils not doing this will be challenged. During the consultation for the suitability order, both the London Development Agency and London Councils welcomed the flexibility afforded to local authorities to discharge their homelessness duty in the private sector.
The issue of the suitability order and outer borough policy was again a concern of the noble Lord, Lord Dubs. It will ensure proper accommodation. For the information of noble Lords, it will look at five broad areas: the physical condition of the property, health and safety, matters relating to the property such as electricity and fire safety, licensing for houses in multiple occupation, landlord behaviour and elements of good management.
Several noble Lords, including the noble Lord, Lord Dubs, and my noble friend Lady Maddock, mentioned overcrowding. As has been acknowledged by various speakers, the Government aim to deliver some 200,000 new affordable homes by 2016-17. This will be achieved through our new Affordable Homes Programme and additional homes under the Housing Guarantee Scheme. With a total investment that includes £19.5 billion from the private sector, our main affordable programme remains on track to deliver 170,000 new affordable homes for rent and ownership by March 2015. I totally acknowledge that this is not just about quoting figures; we need to ensure that we build those houses—a sentiment aired by the noble Baroness, Lady Dean, which I share. Up to a further 30,000 homes will also have been started on site by March 2015, supported by our affordable housing guarantee of £10 billion and a grant of £450 million. Taken together, the reforms to social housing allocations, homelessness and tenure in the Localism Act 2011 will make it easier for social landlords to manage their existing stock generally to reduce homelessness.
I have already alluded to the fact that 200,000 new affordable homes will be delivered, and we are on target to achieve that. Almost 58,000 affordable homes, including first-buy homes, were delivered in 2011-12, which is a third more than the average delivery in the 10 years between 2001 and 2009-10. We are also confident about delivery. In 2011-12, the HCA exceeded its target by more than 13,000. Almost 60,000 completions have been delivered in the first 18 months of the affordable homes programme—that is, 37% of the 170,000 being delivered between 2001 and 2015. The UK Statistics Authority has confirmed that there was a loss of 421,000 social rented homes under the previous Government. The extension to the affordable homes guarantee programme to 2016-17 will, we believe, help providers to develop stronger bids for more homes. In the 2013 spending round, we will be looking at the range of policy options on the supply of affordable housing beyond 2015. This will give providers greater clarity on the policy relating to affordable housing beyond 2015 to inform their long-term business planning.
My noble friend Lady Maddock raised the issue of certain local councils. I know the challenges faced by, for example, Croydon, which she highlighted. It is a borough not too far from where I used to serve as a local councillor. I know for a fact that the Government are working with Croydon to reduce those figures. We are informed that they have come down significantly and, indeed, are set to reduce further. However, I would highlight that, because of new arrivals into the UK, Croydon faces particular acute challenges in housing provision.
My noble friend Lady Maddock raised the issue of best practice among councils, and this is very important. Perhaps I may again quote the noble Baroness, Lady Dean: this is not about politics; it is about ensuring that we get the right result. Where there is good practice, whether it is in a Conservative council, a Lib Dem council, a Labour council or a council of whatever other colour we may conjure up in the years ahead, it is important that that practice is adhered to and shared. I acknowledge the work done by, for example, London Councils in London and by the LGA across the UK in encouraging this.
As noble Lords may be aware, we have also recently announced the gold standard scheme, which is being run by NHAS and Winchester City Council, with nearly £2 million being made available for a peer review and accreditation scheme. Again, we hope that this will allow us to share good practice across the country.
In addressing issues of overcrowding, I also wish to mention HomeSwap Direct, which will make it easier for underoccupying households to help each other. It is too early to say whether the removal of the spare room subsidy will reduce overcrowding, but we are seeing a significant increase in applicants for home swaps and a 28% increase in the swap rate.
At this point, I want to turn to a concern raised by the noble Lords, Lord Dubs and Lord Collins of Highbury, and indeed by other noble Lords, not just in this debate but previously, relating to what has been referred to in the media as a bedroom tax but was in fact a subsidy granted by the Government. There are specific exemptions and mitigations that I wish to highlight in this regard. Those mitigations and exemptions apply, for example, to approved foster carers and to the parents of adult children in the Armed Forces who normally live at home but are deployed on operations. People living in supported exempt accommodation are not affected by this measure. DWP guidance is that local authorities may also allow an extra bedroom to address issues of disability, particularly where a disabled child or children are unable to share a room because of their severe disability. As I believe the noble Lord, Lord Collins, acknowledged, a discretionary fund is available. I do not want to go into individual cases but we are encouraging this, and the Government have made £350 million available in discretionary housing payments across the spending period to help the most vulnerable people through this reform. These will be distributed at local authorities’ discretion. If local authorities are very much on the front line in dealing with these issues, it is important that they address them and that money is provided to do so.
The noble Baroness, Lady Dean, talked about the cut in the housing budget. We have increased the supply of affordable housing compared with the average over the years 2001 to 2009 and 2010. The affordable rent product allows us to achieve much better value for money and the average grant is in the region of about £22,000 per unit. However, I acknowledge the point made by the noble Baroness in her usual articulate fashion that it is not just a question of stating what is being built but of ensuring that new houses are built to address local needs. The Government remain committed to fulfilling our promises and targets in this regard.
I believe that I have covered most of the issues that were raised. The noble Lord, Lord Collins of Highbury, referred to bed-and-breakfast accommodation. I acknowledge that some councils are not fulfilling their pledge on the six-week limit. My honourable friend the housing Minister has looked at this and the ministerial working group on homelessness is calling on local housing authorities to deliver on the 10 challenges, which include a commitment not to use B&B accommodation for families. Recently, Mark Prisk, the Minister concerned, held a round table with London boroughs with high homelessness numbers, including families in B&B accommodation, to address these issues and to share good practice across boroughs, to which my noble friend Lady Maddock referred.
I once again reiterate that the Government remain absolutely committed to addressing homelessness. We believe that progress is being made in reducing current homelessness levels across the country. Does more need to be done? Of course, it does. We need to look at the extended use of bed-and-breakfast accommodation beyond six weeks and to ensure that there is greater affordability in the market by increasing the supply of affordable homes. Through the ministerial working group on homelessness we are working across government to tackle the complex drivers of homelessness. Although these remain difficult times for all of us, we are calling on local authorities to play their part in tackling this issue. There is no excuse for housing families in unsuitable accommodation, be that bed-and-breakfast or other unsuitable accommodation. We continue to work with local authorities, organisations such as London Councils and the LGA to ensure that good practice prevails. No council should send tenants en masse to different parts of the country, so we have changed the law to ensure that local authorities properly consider the location of accommodation alongside other matters.
The Government remain committed to tackling this issue, which we are confronting despite the challenges. I know from my own experience that there is nothing better than turning a key, walking through a door and entering a house that meets the family’s needs. We are committed to fulfilling that aspiration for homeless people. That should remain at the centre of our thinking.
Kenya: Presidential Election
(11 years, 6 months ago)
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Lord Chidgey
To ask Her Majesty’s Government what representations they are making to the Government of Kenya concerning the impact within the region of the outcome of the recent presidential election in that country.
Lord Chidgey
My Lords, this is a remarkable year for Kenya. In December, it will celebrate 50 years of independence from Britain, after Kenya’s founding father, Jomo Kenyatta, took over the reins of government as Prime Minister in 1963. A year later, Kenya’s Parliament amended the constitution to make Kenya a republic, with Jomo Kenyatta as its first President.
There was much pessimism during Kenya’s build-up to independence. Kenyatta had been tried, convicted and imprisoned by the British for “managing” the armed insurrection known as the Mau Mau on charges that were widely regarded as spurious. He was described by a former British governor as the,
“leader to darkness and death”.
Yet he was instrumental, even in the sensitive areas of the so-called White Highlands, in calling for peace and unity. When he died in 1978, he was admired—in an era of instability in post-independence Africa—as having presided over stability and economic advance for his country.
Today his oldest son, Uhuru Kenyatta, is the fourth President of Kenya since independence. He was elected in March when, again, there were gloomy forecasts of violence, chaos and political instability. Like his father, Uhuru Kenyatta can take considerable credit for peaceful elections, particularly when elaborate electronic equipment failed and Kenyans had to endure a week of waiting as the votes were counted manually.
Kenyatta and his Jubilee Alliance were clear winners and thus avoided a run-off against his main political opponent, Raila Odinga and his Coalition for Reform and Democracy. The Jubilee Alliance won by just 8,000 votes, a victory confirmed by Kenya’s Supreme Court. Raila Odinga must take credit, too, for accepting the result, which unquestionably kept his supporters off the streets. However, the country remains sharply divided across ethnic lines, which is a major challenge for the new Administration.
In the disastrous 2007 elections, there had been a similarly close result between Raila Odinga and the former President, Mwai Kibaki, which caused appalling intertribal violence and loss of life. This in turn led to the involvement of the International Criminal Court at The Hague, when Kenya’s Parliament decided not to establish a special tribunal. Charges of crimes against humanity were brought against Uhuru Kenyatta and his running mate—and now Vice-President—William Ruto for their alleged roles in the post-election violence of six years ago. At that time they were on opposite sides, but to their credit both men have now agreed to attend the hearings to clear their names. However, it has produced an extraordinary situation with no coherent way forward at the present time. Kenyans remember that during the 2008 post-election violence, Kenyatta went to one of the worst-affected areas, the Rift Valley town of Naivasha, and publicly called for peace, showing considerable personal courage in doing so—not unlike his father before him.
His father’s regime had changed the constitution, but Uhuru Kenyatta inherited a radically different constitution from that which had served Kenya for nearly 50 years. For the first time, the country has a two-tier Parliament: the Senate or upper house, with 67 nationally elected individuals, and a much expanded lower house, the National Assembly, comprising 349 MPs, divided into 28 parliamentary committees. The country has also adopted a devolved system of government with 47 counties each with its own governor and supportive county assembly. This takes the place of the previous provincial administration and moves Kenya away from a centralised system of government and domination by the ruling party and Executive. The new system will be a significant challenge for President Kenyatta to deliver.
The British Government describe the modern-day relationship between the United Kingdom and Kenya as one of partnership. With Britain as the former colonial power, there is a special historic and cultural relationship, as well as commercial and strategic linkages that are vital to both countries. For example, Britain has more than £4 billion invested in Kenya and is home to half the top 10 taxpaying companies in the country. British visitors are also vital for Kenya’s tourism industry, while Britain is Kenya’s second-largest bilateral donor, contributing more than £100 million a year. Trade between Britain and Kenya exceeds £1 billion a year, with British exports to Kenya rising by 38% between 2010 and 2011. No small part of Kenya’s trade with the UK are the millions of cut flowers and tonnes of high-value vegetables heading for British homes every year.
For its part, Kenya is a critical regional business hub, with the largest and most robust economy in the region, and the trading gateway not only to the countries of the East African Community but to eastern Congo and central Africa. A new rail, road and pipeline proposal seeks to link South Sudan with a new port at Lamu, opening up new opportunities for investment. Furthermore, there is enormous potential in oil, gas and minerals in Kenya itself, with substantial oil strikes in the north of the country which could transform the economy in the next decade.
While Kenya is developing as an IT hub with an ambitious new project designed to create an equivalent of Silicon Valley within 60 kilometres of Nairobi, Kenya’s highly articulate and entrepreneurial business class is well placed to lead the regional IT revolution, as Kenya led the world in creating the M-Pesa electronic banking system through the use of mobile telephones. The British-based Eastern Africa Association recently commented that significant numbers of new investors from abroad are attracted to Kenya both as a regional centre and because of its prospects and mineral resources. British investors and expertise are fully behind Kenya Vision 2030, Kenya’s target to become a middle-income country.
The centre of a key region for Britain’s commercial interests, Kenya makes considerable sacrifices in the cause of regional security, including by providing refuge for tens of thousands of Somali refugees. Five thousand Kenyan troops are playing an important role in keeping al-Shabaab at bay in Somalia and in combating piracy along the coast, where anti-piracy activities involve 27 countries, with the result that there are 80% fewer hijacking cases since co-ordinated international action was first taken 18 months ago. The British Army trains 10,000 British soldiers in Kenya every year for active service in Afghanistan and other theatres of war. There are shared values and mutual respect between the Armed Forces of both countries.
In this 50th anniversary year, never have interests between the United Kingdom and Kenya been more important or interdependent. Few in Kenya will forget that while Her Majesty the Queen has just celebrated her Diamond Jubilee, 60 years ago she journeyed to Kenya as a Princess and, while at Treetops, received news of her father’s death and so returned to England as Queen.
Following the decision of the Kenyan Supreme Court to uphold Kenya’s recent election results, Prime Minister David Cameron wrote to congratulate the then President-elect Kenyatta and his team. He stressed that President Kenyatta’s election represented the end of a remarkable process in which more Kenyans than ever before turned out to vote. The Prime Minister urged the Kenyan people to be proud of the strong signal that they have sent to the world about their determination to exercise their democratic right peacefully. He added that the Kenyan people had made their sovereign choice and had resolved disputes through the rule of law and the strong institutions of the Supreme Court and due constitutional process. Despite the delicacy of the International Criminal Court proceedings, President Uhuru Kenyatta was welcomed to London for the Somalia conference and met with Prime Minister Cameron, a recognition of shared interests between Britain and Kenya and the peaceful political transition for which President Kenyatta deserves considerable credit.
One note of concern is over the slowness of the investigation into the death of Alexander Monson at Palm Beach Hospital after being detained overnight in police custody in Ukunda. Over a year since his death occurred, what progress has been made in liaison with the Kenyan authorities with investigations into the causes, and what discussions have been held with President Kenyatta’s office since his election on this point?
There is a strong commitment to the partnership that exists between Kenya and the UK. Our relationship is deep and historic, with a substantial shared agenda of stability, security, development and prosperity that benefits both our countries. We in this House look forward to working with Kenya’s new Government to build on this relationship and to help to realise the great potential of a united Kenya, in line with Vision 2030.
Lord Anderson of Swansea
I am delighted to follow the noble Lord. He and I share a common love affair with Africa, along with the noble Earl, Lord Sandwich, and I agree with all that he has said in his analysis. The elections in Kenya were good news, in part for what did not happen. There was no repetition of the awful events of 2007 and the tribal massacres and there was an ending of what had been a muddle in Africa, where Presidents in uniform had often been the order of the day. That was the case for a number of reasons, including the new constitution, the new electoral commission, the Supreme Court and, as some might more cynically say, because two of the opponents at that time had now become the President and Vice-President. Of course, there were allegations of vote-rigging, but the President received a majority on the first round—the turnout in the elections of roughly 80% puts us to shame in terms of enthusiasm for voting. It was an excellent example of the loser, having first questioned the results, then wholeheartedly accepting it as soon as the Supreme Court had given its ruling.
I need hardly stress the importance of Kenya, as the noble Lord has done, with its internal growth and the extent of UK interests. Externally, Kenya has been a force for good in the region. Like the noble Lord, I think not only about Somalia and Kenya’s assistance against piracy, including with the courts, but also about Kenya as a key ally against terrorism in the region—and, of course, as a good Commonwealth partner.
The problem is clear, as the noble Lord said; it is the one posed by the International Criminal Court, especially for us, now that the President and his Vice-President are both indictees. It is something of an embarrassment for us and for the international community. Clearly, the indictees have been properly elected—the first time that that has happened. Do we shun them or have minimum contact? What consultations have there been with our European Union partners and with the Commonwealth? Already the President has been to the Somalia conference in London and I assume that he will attend the Commonwealth Heads of Government Meeting in Sri Lanka. The experience of the indicted President al-Bashir in Sudan is quite different. Here we have a good ally, too big to ignore. Is it still the case that the proceedings are scheduled to begin in July or, as some rather hope, is the case collapsing? I suspect that the British Government would want the whole procedure at the International Criminal Court to fade far away so that we can forget it.
This raises a general point about the work of the International Criminal Court. After the series of ad hoc tribunals in the 1980s and 1990s, the Rome treaty on the International Criminal Court was warmly welcomed at the time. Yet, of course, there is not universal membership—I believe that the current membership is about 130 or 140—and there has been only one conviction in the period since 2002. Equally, a number of key countries, including the United States and other P5 members, are not members of the International Criminal Court.
Perhaps philosophically we have here a clash between justice and politics. Some will say, “Let justice be done whatever the result”, yet there is the question of politics. For example, suppose in Syria President Assad were to say, “Yes, my time is up. I will be prepared to go into a friendly country in exile, together with members of my family and entourage, so long as no proceedings are taken against me”. There would be a great temptation in the international community to proceed against him because of the very clear massacres and human rights violations in Syria. However, allowing him to move into a safe haven could save many thousands of lives. This is part of the dilemma that the international community would face.
I refer to the criticisms made at the inauguration of the new President by President Museveni of neighbouring Uganda. He said—and perhaps we should not pay too much attention to this—that it is to be noted that all the indictees thus far have been African. Is there a degree of bias against Africa in the ICC? Is it right that there has been poor evidence-gathering on behalf of the ICC—for example, too great a willingness to collude with Presidents, as it is alleged happened in the Congo and perhaps with Prime Minister Odinga in Kenya? I think that that probably is answered by the fact that the indictees included members of both Mr Odinga’s party and that of President Kenyatta. At least, those criticisms need to be examined.
What is the Government’s view? Do they accept in part the criticisms of President Museveni on the validity? Perhaps it would be helpful if the Minister, in responding, could say specifically how we intend to deal with the President of such an important Commonwealth country. What are the instructions to our high commissioner, remembering that these proceedings may take many years and there will be, as the Kenyans say, a trial by Skype? Do the Government, at least in part, accept the criticism of the conduct of the International Criminal Court raised by President Museveni?
The Earl of Sandwich
My Lords, this is an interesting subject and I thank the noble Lord, Lord Chidgey, for introducing it. We can all feel considerable satisfaction with the Kenyan elections. Not only were they peaceful and the outcome decisive, but the electoral process was internationally approved as free and fair. This was a great relief to all who remember the terrible experience at the end of 2007. I was in Kenya with a CPA delegation shortly after that. Having visited Kisumu, where many of the killings took place, I can still feel a chill on hearing first-hand accounts of what had happened.
We cannot simply dismiss it as ethnic violence between Luo and Kikuyu, as we are prone to do when we are talking about Africa. It was on one side armed gangs, stirred up for political and ethnic reasons, but on the other it was the police, with a shoot-to-kill mandate, who simply opened fire. This is still, for Kenyans, a very recent experience. There are still burnt-out buildings and camps for the displaced, who still await proper homes.
Incidentally, I have watched traffic police beating up minor offenders in Nairobi and it is not a pleasant experience. The police in the latest election also used excessive force and even live ammunition against some demonstrators in Nairobi and Kisumu. However, according to the International Crisis Group, they generally showed much more restraint and efficiency this time, as in the rapid deployment to put down further violence in Mombasa.
The election violence of five years ago is of course the reason for the uncertainty surrounding the ICC indictment of President Kenyatta, who is to appear before the court in July. The noble Lord, Lord Chidgey, and I visited Khartoum a couple of years ago, and we are both well aware of the irony of the Kenyan position alongside that of President al-Bashir in Sudan. President al-Bashir has taken little notice of the ICC and, despite the obvious inconvenience of sanctions, he carries on normally and goes on unauthorised visits abroad. At the same time, on the l0th anniversary of Darfur, the Foreign Office happens to have mentioned in its latest report that there has been progress on human rights in Sudan, such as the appointment of an independent commission on human rights, so perhaps good behaviour somehow pays off.
Long-term African presidents, even elected ones, seem to think that they have earned some impunity because of their long service. In passing, I could also mention the apparent integrity of President Museveni of Uganda, whom we have all admired. This week, he decided to close down the highly respected Daily Monitor and two radio stations simply because they reported disaffection among the generals about his son’s possible succession in three years’ time. When you are high and mighty in Africa, you get away with a lot.
The ICC does appear to Africans to be biased against African states, although I know that our Government would deny that. It is a very contentious issue. The Minister may well say that due process is being followed and that the ICC has merely taken over from the local tribunals. The UK was one of the original backers of the ICC in 2002 and has consistently supported it at the Security Council. It is argued that the extent of violence in Africa justifies a higher level of international judicial involvement, which can take the weight off the courts in the countries concerned. In that direction, much is expected of the ICC’s first African chief prosecutor, Fatou Bensouda, a former justice minister in the Gambia.
However, perceptions also matter, and inevitably there is post-colonial resentment of Britain and other European powers suspected of trying to influence the political scene in Kenya. There was already some feeling during the elections that European diplomats were playing a negative role, although this was denied. People see that, as the noble Lord, Lord Anderson, said, the ICC has an Achilles heel in that major powers, including the US, China, Russia, Japan and India, have refused to join it, so that it therefore has no genuine international standing.
I enjoyed reading the Commons debate about Kenya on 20 March, in which Eric Joyce raised the issue of the ICC’s image. He has a lot of experience of the rough and tumble of life, especially in central Africa, and he analysed—I thought very fairly—the limited status of the ICC as a world arbitrator, showing that in practice it has drawn up indictments only in Africa. Perhaps the Minister could explain how it is that the ICC suddenly seemed to take over from the local tribunals in Kenya, of which much was expected after the last elections. I remember that we debated that. The Mombasa court, of course, has since rightly earned a reputation for its role in the EU-backed Operation Atalanta campaign against Somali piracy and for taking the lion’s share of the prosecutions there.
Because of the high rank of those accused for inciting post-election violence, political pressure was bound to be brought to bear on the Kenyan judiciary in the years after 2007. Witnesses are withdrawing or changing their statements even now for this reason and because of the time that has since elapsed. I gather that William Ruto’s case has been deferred, and therefore there is a real risk that the whole ICC prosecution will be postponed again and, ultimately, cancelled. This would not reflect well on the new Jubilee Alliance Government, who have declared themselves anxious to conform to the new constitution and preserve the independence of the judiciary. Mr Uhuru Kenyatta, as the son and namesake of the founder of Kenya’s independence movement, will want to get on with the business of governing and, we all hope, ridding the country of its worst excesses, many of which lie within government itself.
To begin with, as the International Crisis Group has argued, the new Government need to show robust commitment to the implementation of the new constitution, in particular to devolution, land reform, the fight against corruption, and national reconciliation. Ask anyone involved in wildlife conservation and tourism in Kenya and Tanzania about corruption and they will say it is their worst enemy because it flouts the law, condones poaching and enables very senior civil servants to draw salaries without actually doing anything.
There is always a correlation between corruption, violence and poverty, especially in crowded urban areas such as Kibera. To mitigate this, DfID Kenya has many innovative projects throughout the country; I will not list them all. It concentrates on a whole range of issues, including: improving maternal and reproductive health; increasing school access and the quality of education; and helping Kenya to develop green energy and adapt to a changing climate. Good governance is another priority. Parliamentary exchanges, including training and shared technology, are carried out very effectively by the CPA and the Westminster Foundation for Democracy, as I saw for myself in 2008.
I know that the noble Baroness has a human rights brief and is closely associated with the Government’s campaign to join the once-despised Human Rights Council, for which I applaud her. As a younger-generation Minister, she will understand that the UK cannot condemn human rights abuses without accepting its own historic responsibilities. I am thinking of the compensation claim of a limited number of Mau Mau victims of British Army torture following their successful High Court ruling in October 2012, for which negotiations are under way. This case sets a precedent and will have significant repercussions in other Commonwealth countries.
As the noble Lords, Lord Chidgey and Lord Anderson, have said, despite this cloud on the horizon Britain has enjoyed very good relations with Kenya; for example, inviting the President to the Somalia conference. The whole east African region has benefited from Kenya’s growing international trade and the oil boom. Kenya’s success in curbing the power of al-Shabaab in Somalia has won worldwide admiration. The training in Kenya of British troops, which was mentioned by the noble Lord, Lord Chidgey, seems likely to continue. Our FCO and Trade Ministers have promoted Kenya’s Vision 2030, which involves leading British investors. All that must be to the good. On these and many other fronts, Kenya can be proud of its relationship with Britain, and vice versa.
As we are having an African debate, I will close by commending Archbishop Desmond Tutu on the receipt of the Templeton Prize. I gather he is in this House today. I witnessed the ceremony yesterday. Of course, he accepted the prize with his usual humility.
Lord Triesman
My Lords, I start with an apology. I intended no discourtesy to the Committee but an urgent family medical problem delayed me. I hope that no one will take offence. I am very grateful that I am able to contribute, and have been advised on what has been said so far.
In the disputed election of 2007, approximately 1,200 people lost their lives. The conflict was glibly and inaccurately described in much of our media as “tribal”, whereas the complexity of the land grievances, separatism issues, corruption, ethnic tensions and a culture of impunity all contributed. Kenyan state institutions, including regional bodies, had not and still have not addressed the sharp socio-economic inequalities which fed the events of 2007. Our Foreign Secretary at the time, David Miliband called on,
“Kenya’s political leaders and democratic institutions to work together to address those concerns, seriously, in a spirit of unity”.
Together with the then Secretary of State, my right honourable friend Douglas Alexander, he said the election marked a “pivotal moment for Kenya”. They emphasised, quite rightly, the democratic processes have,
“to be seen to be fair in the eyes of the Kenyan people”.
Through the next two years, the Government of this country provided aid to support democratic reform and the work of civil society institutions and offered strong support for the role taken, with his customary energy, by Kofi Annan in the reform process. I extend my appreciation—and probably that of all of us—to him. Six years on we have seen an election which tested Kenyan democracy before polling day on 4 March and the declaration of the result on 9 March by the Independent Electoral and Boundaries Commission. The election was tested by a number of attacks on security forces on the coast and Somali border areas, principally launched by separatists. But the enormous queues that formed, the desire of people to vote, and even the bane, which we all suffer from, from time to time, of computer glitches, did not change the fact that the outcome was immeasurably more peaceful than it had been at the previous election.
Uhuru Kenyatta was declared elected on the first ballot, and his election was immediately challenged by former Prime Minister Odinga who immediately challenged his victory in court. The Supreme Court unanimously upheld the declaration of Mr Kenyatta’s victory rejecting claims of electoral rigging. Mr Odinga held a press conference immediately—and it was helpful that he did—to accept the decision and acknowledge defeat.
A process that involved a ballot box and a full court hearing demonstrated what the chief justice declared had been a,
“free, fair, transparent and credible”,
election. It had taken massive levels of policing to achieve, but it is of the greatest significance to Kenya and to sub-Saharan Africa as a whole that the process was vindicated. Mr Kenyatta was sworn in, as noble Lords know. I rehearse these facts only because the issues which should now focus our attention have to be understood against that backdrop.
For me there are three sets of issues upon which I would welcome the Minister’s view. The first is that the new president is currently charged with crimes against humanity at the International Criminal Court. He may well be the first person who has been elected as head of state while facing such charges. Inevitably, these circumstances produce a real diplomatic difficulty in calibrating our relationship with Kenya and its new president, a difficulty all too evident when he recently visited the United Kingdom for the Somalia conference. That was handled very carefully and sensitively in all the circumstances by the Prime Minister. The charges relate to allegations, which he has consistently denied, that he choreographed inter-communal violence after the 2007 presidential election. He has repeatedly said that he would work with the court to clear his name. Since we are clear that there should never be impunity, it must follow that the legal process must be completed satisfactorily to yield a decision in one direction or another. He appears to share the view that that is what is desirable, which is in my view to his credit.
Let me be plain that when I have read criticisms, particularly from President Museveni of Uganda, that the ICC process constitutes “blackmail”, to use his word—an unfortunate word in the circumstances—or demonstrates why Africans should distrust the ICC generally, I do not accept that view at all. Where it has acted, as it acted in Africa with Charles Taylor, in events with which I was directly involved as a Minister, or seeks to act with respect to the president of Sudan over Darfur, there has always been, or is currently, a case to answer. These are cases about crimes that have been committed in Africa. But the proposition is also true for President Milosevic, and General Mladic in Bosnia. No impunity in my view means no impunity, and that has been the attitude that, generally speaking, the ICC has taken, and which I believe that Governments of all persuasions in this country have systematically supported. The notion that it has been directed specifically at Africa seems to fly in the face of almost all the recent evidence.
I make no inference in saying this about President Kenyatta or what happened in 2007, but I am encouraged by his willingness to answer the charges and his intention to clear his name. His intent may also be signalled by some of the appointments he has made to his Government, because they could hardly be said to be people who are desirous of avoiding legal consequences or proper processes. I mention particularly the appointment of Mrs Amina Mohamed as Secretary for Foreign Affairs. She is a world class diplomat and has an outstanding legal reputation. Her work in international organisations has been first class.
The Minister may be able to tell us by how much the position has altered since the election campaign, or if it has altered. During the campaign, the EU and the United States limited themselves to what they described as “essential contacts” with ICC indictees, but that, I suspect, can be only a short-term position. We must balance such a policy with fostering close ties with Kenya. It is a vital ally in sub-Saharan Africa and, I think, across Africa more generally, both in economic terms and in the regional battle with militant Islam. It would be a mistake to abandon political or trading influence in Africa, and certainly not in east Africa, to the commercial interests of China or some of the other major Asian powers. How will the Government strike this balance and how rapidly will they do so? Does the Minister agree that the earliest possible attempt to grasp what I think is a new opening in relations with Kenya would be prudent?
Secondly, local commentators, including Mr Kenyatta, have suggested that the United Kingdom interfered in the elections by deploying abnormal numbers of British soldiers to Kenya both before the polls and since, and have claimed that our high commissioner, Dr Christian Turner, who I believe is an excellent diplomat in the FCO, had somehow taken part in what was described as a “rather animated involvement” in Kenya’s election. Let me be clear: I do not believe the allegations. I know the people involved and I have thought about it, and I repeat that I do not believe them. However, it might be as well to put on the public record through Hansard the statement of the Government that these were not interventions of that kind, and they should not disturb our relationship with Kenya.
Finally, let me turn briefly to the Kenyan economy at this new juncture. There are different assessments of the prospects for the Kenyan economy. I have read papers by the World Bank, the African Development Bank and the International Monetary Fund. Many see the prospect of significant developments in what is a very entrepreneurial economy that involves significant numbers of the Kenyan people, not least the women who run so many of the small businesses in Africa generally, and certainly in east Africa. Equally, if the country were to become more isolated and it was impossible to create the kind of relationship that I have tried to describe, it may well be that rather than moving upwards and becoming more successful, the economy will drop through several layers. In my view, it is hard to get on to the first rungs of the ladder of economic development and to take the steps towards prosperity that we all desire for sub-Saharan Africa. It is very easy to fall off those first rungs and find yourself back where you started. I would be pleased to hear if the Minister takes a view on the Kenyan economy and what steps might be taken by the United Kingdom and, indeed, by the European Union, which is no small player in this, to ensure that the 44 million people of Kenya receive their entitlement; that is, to look with optimism to the future.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, I start by thanking my noble friend Lord Chidgey for proposing this debate.
As noble Lords are aware, in March the Kenyan people elected their fourth president since independence. Last week, nominees to the new Kenyan Cabinet were confirmed by the Kenyan Parliament. Kenya now has a new senate and new devolved administrations. It is therefore a timely moment to take stock of what this means for Kenya, for our relationship with Kenya and for the region.
At the outset, I echo much of what has been said by the noble Lord, Lord Triesman. I also echo his support both for the ICC and for our general relationship with Kenya. Our partnership with Kenya is both deep and broad. We enjoy a shared history that has given us strong personal links. Some 20,000 British nationals live in Kenya and some 200,000 visit Kenya each year—more than from any other country. The noble Lord, Lord Chidgey, referred to this.
I assure the noble Earl, Lord Sandwich, that the modern-day relationship should be, and is, viewed as a partnership. We have a mutual interest in strong trade, defence and security co-operation. Britain is, for example, the largest commercial investor in Kenya. Last year, DfID’s Kenya programme was worth more than £92 million, and this year it is forecast to rise to £143 million. The UK trains 10,000 troops in Kenya each year and we work together closely on regional security issues, such as Somalia and counterterrorism. We look forward to building on this substantial shared agenda in our partnership, including on the economy and in trade.
Kenya’s general election in March was the most complex in its history, with voters electing candidates in six separate votes. It was also one of the most peaceful. We congratulate the Kenyan people on this achievement, and we congratulate President Kenyatta on his victory. After the terrible violence of 2007-08, in which more than 1,000 people were killed, this outcome could not have been taken for granted. It means that Kenya is now in a position to build on the reforms started under the previous Government and described in its 2010 constitution. Kenya is well placed to achieve a more secure and more prosperous future.
The UK played an important role in supporting successful elections. We provided £16 million in funding to support peaceful and credible elections, some of it delivered through the United Nations Development Programme. This helped to ensure that a record 14 million Kenyans were registered to vote and had greater confidence that their vote would count.
The noble Lord, Lord Triesman, referred specifically to the election process. The assistance that we provided was designed to achieve credible and peaceful elections. The UK provided £16 million to fund a range of projects to support free and safe elections, including support to the electoral commission. Our support contributed to the production of a more accurate voter register, using separate optical mark technology and putting in place an independent parallel vote counting system. This helped to ensure that more than 14 million Kenyans were registered to vote and therefore had greater confidence in the vote. I utterly reject any allegations of interference by the UK Government and the British high commissioner. We have always said that the election was a choice for Kenyans alone to decide, and we did not endorse any one candidate over another.
Turning back to the issue of the International Criminal Court, which was raised by all noble Lords, President Kenyatta, alongside Deputy President William Ruto and journalist Joshua Sang, are facing charges at the International Criminal Court. Of course, there have been recent changes and concerns in relation to witness statements. However, we support the court as the cornerstone of international justice. As my right honourable friend the Foreign Secretary said in July last year:
“We have learnt from history that you cannot have lasting peace without justice, accountability and reconciliation”.
We believe that the ICC process has already served peace in Kenya by providing access to justice for both victims and accused and by encouraging responsible campaigning in the recent election.
We must let the ICC process run its course. It is for the court to run the trials, and it goes without saying that we will respect its decision. We have no role in that judicial process. We welcome President Kenyatta’s commitment to respect Kenya’s international obligations, and we welcome the fact that he continues to co-operate with the ICC. We believe that the suspects must be considered innocent until proven guilty before that court. Our engagement will reflect this and we will judge our approach according to the issue. This approach is consistent with that taken by the EU and many other international partners. In the mean time, we do not think that the issue should dominate our bilateral relationship.
The noble Lord, Lord Chidgey, asked whether the cases would still be heard in July. That is for the ICC to manage. The trials, including setting trial dates, will be a matter for the ICC and we will respect the decisions that it takes.
The noble Lord, Lord Anderson, asked broader questions about the ICC, including the question of bias against Africa. I echo the words of the noble Lord, Lord Triesman. The ICC is an impartial, professional and independent court. It is a court of last resort which is complementary to the national legal system, and it gets involved only when national authorities are unable or unwilling to prosecute. Kenya and 121 other countries are state parties to the Rome statute of the court, including half the countries in Africa. That is a positive sign. There are more parties to the Rome statute from African states than from any other region.
The noble Lord, Lord Anderson, also mentioned the criticism of the ICC by the Ugandan President. Of course, the ICC is a young institution and has a long road ahead. It is the first organisation of its kind; it breaks new ground with every case and ruling, and is required to cover most of the globe, often while conflict is still occurring. It is only 10 years old and criticism is therefore inevitable. But I know from my own dealings with, and policy responsibility for, the ICC, it is a system that we must continue to support. The noble Earl, Lord Sandwich, asked how the ICC came to take on the Kenya cases. Initially we encouraged a local process but it was the Kenyan Parliament’s decision not to establish a special tribunal that led to the ICC taking on the cases.
Returning to Kenya’s broader relationships in the region, we are pleased that President Kenyatta was able to attend the Somalia conference. Kenya is one of Somalia’s most important partners and has a vital role to play in bringing stability to Somalia. It has nearly 5,000 troops in Somalia and is actively engaged in discussions on local administration arrangements. It is also host to more than 500,000 Somali refugees, more than any other nation. It was therefore important that Kenya was represented at the conference at the highest level.
My right honourable friends the Prime Minister and the Foreign Secretary met President Kenyatta at the Somali conference, and I thank the noble Lord, Lord Triesman, for his warm comments about the way in which that conference was handled. As well as co-ordinating our approach to Somalia, those meetings provided a valuable opportunity to establish the basis for a future working relationship on a shared agenda, from regional security to prosperity and development. Following the conference, we will continue to engage with the Somali Government to deliver lasting change in Somalia.
We are grateful to Kenya for providing protection and assistance to refugees from Somalia and will continue to support it in shouldering that burden. But the Somalia conference also recognised the importance of scaling up efforts to create the security, political and developmental conditions inside Somalia to make the voluntary and sustainable return of refugees viable. We also endorsed the tripartite dialogue initiated by the Somali and Kenyan Governments alongside the UN High Commissioner for Refugees, which we hope will lead to a framework for refugee return.
Another facet of UK-Kenya co-operation in the region concerns piracy, which again is linked to Somalia. Encouraging progress has been made: 12 May was the anniversary of the last successful hijacking by pirates off the coast of Somalia. Pirate attacks in the waters off Somalia have fallen. Kenya is on the front line in responding to this reprehensible practice. It currently holds 130 suspected or convicted pirates in its prisons and has previously accepted the transfer of 14 suspected pirates from UK vessels for prosecution. However, it is important that we continue to co-operate closely to sustain this progress. We are in discussions with the Kenyan Government to renegotiate a memorandum of understanding that would facilitate the future transfer of additional pirate suspects to be brought to justice in the Kenyan courts.
Kenya plays an important role in other regional issues, such as Sudan. Kenya facilitated negotiation of the 2005 comprehensive peace agreement that brought to an end the long-running civil war in Sudan. We look forward to Kenya encouraging both countries to continue implementation of the Addis agreements.
Kenya is also a regional economic hub, with the biggest economy in the region. The IMF estimates that GDP growth will be 5.8% this year. Other East African Community countries rely on its infrastructure, as we saw at the end of the previous decade, when the crisis in Kenya resulted in a quadrupling of oil prices in Uganda. Through TradeMark East Africa, the UK is supporting regional trade and infrastructure integration. The programme aims to see a 15% reduction in transport time, above-trend increases in intraregional trade and exports, and a 60% reduction in non-tariff barriers.
Supporting regional integration and better infrastructure is also good for UK business. Britain remains the largest cumulative investor in Kenya and bilateral trade amounts to £1 billion each year. UK firms are leading the way in helping Kenya to develop its resources in the energy sector. These efforts are supported by the Foreign and Commonwealth Office and UKTI. My honourable friend the Minister for Africa is leading a high-value opportunity programme that highlights opportunities for British businesses in the oil and gas sector in east Africa and helps them to access these markets.
My noble friend Lord Chidgey asked about the case of Alexander Monson. It is now more than a year since his tragic death, and I am heartened that Lord Monson has found our assistance helpful. We have been active on this case at both ministerial and official levels. My colleague, the Minister for Africa, raised the case with the then Minister for Internal Security in Kenya in October last year. Officials in Kenya have raised it with the Police Inspector General, the Attorney-General and the Chief Registrar of the Judiciary, and we will continue to raise this matter. Regrettably, the Independent Policing Oversight Authority currently reviewing the police investigation has not offered an assessment of progress to date, or given us an indication of when the investigation will be completed. We continue to urge the Kenyan authorities to conduct a thorough and urgent review of the case and to keep the Monson family informed of developments. I am sure that this is not the best news that the family would like to hear, but I can assure them, through the noble Lord, that we are doing all we can. The prospects of a public inquest into this case are unclear, at least while the investigation remains ongoing, but we are committed to supporting the noble Lord, Lord Monson, in his search for answers and stand ready to support him and his legal team in their calls for a public inquest if the investigation fails to demonstrate that a full and transparent investigation took place.
The noble Earl, Lord Sandwich, raised the Mau Mau issue. We believe that there should be a debate about the past. It is an enduring feature of our democracy that we have to be willing to learn from our own history. We understand the pain and grievance felt by those on all sides who were involved in this divisive and bloody event of the emergency period in Kenya. It is right that those who feel that they have a case are free to take it to the courts. Our relationship with Kenya and its people has moved on and is now characterised by close co-operation and partnership, building on the many positives of our shared history. The parties exploring the possibility of a settlement in this case are Kenyan clients of Leigh Day and are currently in discussions. In these circumstances, it is possibly inappropriate for me to comment further at this stage.
In conclusion, we agree that our relationship with Kenya is important and that we have a wide-ranging shared agenda. Regional security issues and trade are areas of particularly active co-operation and we want to strengthen our links with Kenya across the board. The appointment of a new Kenyan Government committed to upholding their international commitments provides an opportunity to work together on our mutual interests with renewed vigour.
Pakistan: Religious Violence
(11 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Avebury
To ask Her Majesty’s Government what representations they have made to the Government of Pakistan on curbing religious violence in that country.
Lord Avebury
My Lords, there are good reasons why the international community needs to pay attention to the upsurge of religious violence and hatred in Pakistan over recent years, and indeed to the related political violence during the recent elections in which more than 100 people were killed. Pakistan is due to be the largest recipient of UK aid in the world when it gets £446 million in 2014-15. It also receives billions of dollars from the United States in both economic and military aid in the effort to shore up the country’s stability. However, since 2001, an estimated 30,000 civilians have been killed in religious and political assassinations and massacres—all that aid money has not reduced the level of violence in Pakistan. There was a temporary lull during Pervez Musharraf’s presidency between 1999 and 2007, but over the past few years there has been a further deterioration.
At the same time, the stability of Pakistan has become vital to the peace of the region, with the withdrawal of allied forces from Afghanistan. The new Prime Minister, Nawaz Sharif, has said that he will help the process by allowing NATO to use Pakistan’s roads for the transit of troops and equipment, but large convoys of US or UK forces on their way home will make a tempting target for the local Taliban and its associates. The presence of well organised and well armed groups of terrorists in Pakistan also poses a threat to neighbouring states, as we saw from the Mumbai atrocity in 2008.
Last Wednesday, my noble friend Lord Ashdown of Norton-sub-Hamdon perceptively suggested that Russia’s support for Assad was not a matter of looking after its only remaining supporter in the Middle East but a consequence of its experience in Dagestan and other Muslim republics where there was a war between Sunnis and Shias. My noble friend Lord King of Bridgwater also referred to the Shia-Sunni conflict, and he coupled this with the spread of jihadism and fundamentalism. In Syria and Iraq, there are interreligious civil wars.
The agenda of Sunni extremists such as al-Qaeda and its imitators across the Islamic world is to eliminate the Shia and other varieties of Islam, as well as the Kaffirs or unbelievers, from the face of the earth. Their ultimate goal is a universal caliphate based on what they imagine were the principles of governance under the four “rightly guided caliphs” who followed the Prophet in the seventh century. In Pakistan, one active and ruthless group of terrorists belonging to this loose coalition is the Lashkar-e-Jhangvi. This outfit tried to kill Nawaz Sharif when he was Prime Minister in 1999, and the suicide bomber who killed Prime Minister Benazir Bhutto and 26 others in 2007 was probably a member of the organisation. It claimed responsibility for the murder of four American oil workers in 1997 and for the bombing of the Protestant International Church in Islamabad in March 2002. But its main target has always been the Shia, as it brazenly acknowledges when it takes credit for the atrocities that it commits. The group says that the Shia are infidels, that they should be labelled as non-Muslims under the law, and that they are “wajib-ul-qatl”, an Urdu expression meaning “worthy to be killed”.
A semi-legal organisation with the same ideology of hatred is the Ahle Sunnat Wal Jamaat, which took over from a banned organisation called Sipah-e-Sahaba. The ASWJ fielded 130 candidates in the recent Pakistani elections, generally under the banners of the PML-N and an alliance of five Sunni religious parties generally known as the MDN. Under one of these labels, a man who had spent five years in prison for murdering six people in 1998 was elected to a seat in Punjab, and other terrorists may well now also be MPs. The Election Commission of Pakistan directed that in 55 constituencies, listed sectarian terrorists should be disqualified from standing, but it turned out that this was not within the powers conferred on returning officers by the ECP itself.
I am not going to recite the whole appalling history of the crimes perpetrated by these terrorists because it would take all day, but a couple of examples illustrate their mode of operations. On 3 April 2012, six buses were stopped in Chilas in the northern territories en route to Gilgit, Baltistan. The male passengers were taken off the buses and their identity cards examined for Shia names. At least 25 were shot dead on the spot. No official report has been published on this massacre and, although I understand that four or five people were arrested, no trials have taken place.
In January, twin bomb blasts in the busy market area at Alamdar Road, Quetta, killed at least 108 people and injured 120. A LeJ spokesman telephoned the media to say that it had committed this outrage and threatened that no Shia would be allowed to leave Balochistan alive. In February, a bomb contained in a water tanker exploded in Hazara Town, Quetta, killing at least 92 people and injuring more than 200. The police arrested 170 suspects, but there has been no news of trials, let alone convictions. In March, a bomb in the Shia area of Abbas Town in Karachi killed 45 people and wounded 150. These atrocities and the targeted assassinations of Shia intellectuals are part of a concerted attempt to wipe out the entire Shia population of Pakistan. That is genocide, as defined in Article 2 of the UN Convention on the Prevention and Punishment of the Crime of Genocide.
I have been sent hundreds of eyewitness statements and other reports from Shia organisations throughout Pakistan on these events, and have forwarded them to the UN Special Rapporteurs on Religious Freedom and on Extrajudicial Executions. I know that the Government do not intervene in the choice of subjects the special procedures take up, but as this is obviously one that would demand resources well beyond those available to the special rapporteurs, I would be grateful if we might consider making a one-off contribution to the Human Rights Commission, if the matter is pursued.
The special procedures should also take action on the relentless persecution of the Ahmadi Muslims, in spite of the enormous contribution they have made to the development of Pakistan; for example, in the persons of Sir Zafarullah Khan, the first Foreign Minister of Pakistan, and Dr Abdus Salam, Pakistan’s only Nobel Prize-winner. The most heinous atrocity against this community was in May 2010, when simultaneous terrorist attacks on its two principal mosques in Lahore during Friday prayers killed 94 people and injured more than 120. The Ahmadis have been declared non-Muslims, are victims of relentless persecution under the blasphemy laws, are denied voting rights and are in practice denied access to the higher ranks of all the professions.
As with the Shia, the Ahmadis are victims of targeted assassinations, encouraged by another extremist organisation, the Khatme Nabuwwat, which is free to spread its messages of hatred and violence. In 2012, 20 Ahmadis were killed, and the leader of the community in Rabwah, the centre of the community, was tortured to death by the police. Ahmadi places of worship were demolished, mostly in Punjab, and the police themselves demolished graves in Faisalabad and Mangat Uncha. A dozen armed men vandalised 120 gravestones in Model Town, Lahore. Dozens of Ahmadis were arbitrarily arrested, and Ahmadi publications were summarily banned. The Friday Times said that the fetters imposed on the Ahmadi community were reminiscent of the restrictions imposed on the Jews by Nazi Germany in 1935.
I return to the ideology which threatens the survival of religious minorities and poses an even wider menace to the safety and stability of Pakistan itself, being promoted as it is in mosques and madrassahs financed by Saudi money to the tune of an estimated $100 million a year. It is intolerant and exclusivist, maintaining that all who do not subscribe to the Salafist version of Islam are infidels belonging to the Dar al-Harb, the realm of the unbeliever. In the extreme forms it takes in Pakistan, it promotes sectarian and religious hatred and teaches that killing unbelievers is approved by God. We need a worldwide strategy to combat this monstrous ideology. I believe that such is the magnitude of the danger it presents to world peace, only the United Nations Security Council has the authority and resources to grapple with it. I hope that the Government will consider how best to raise it at that level.
Lord Desai
My Lords, we are very grateful to the noble Lord, Lord Avebury, for bringing this topic to our attention. He described the problem, and I do not need to add very much. I shall concentrate on the why of this problem and on what we can do about it as an interested party.
A persistent problem since the foundation of Pakistan is its duality. Although Muhammad Jinnah supported a Muslim nation in pre-independence India, he was not an Islamist or a very religious person. He wanted a western, liberal regime for the large Muslim population in the subcontinent. As it happened, the majority of Muslims lived in Hindu-majority areas, and Muslims in Muslim-majority areas were a minority of Muslims. Pakistan was established, but soon after its establishment, Jinnah and Liaquat Ali Khan died, so there has been an identity problem. Is Pakistan a western, liberal-type democratic regime or a state founded upon the Islamic faith that should put forward Islamic policies? Along the way, especially after the departure of East Pakistan—Bangladesh—a persistent problem has been the tendency to emphasise Islamic anger, most particularly by military dictators who have no democratic legitimacy. Zia-ul-Haq played the Islamic card and was encouraged to do so because at that time the Americans were interested in getting the Russians out of Afghanistan, so they aided Zia-ul-Haq in his programmes.
To some extent, some of the emphasis on orthodoxy and Islamism has been engendered by international forces, but there is a problem that even in establishing an Islamic nation, sectarian violence within Islam is the most serious problem of Pakistan. As the noble Lord, Lord Avebury, has already pointed out, it is a Sunni/Shia, Sunni/Ahmadi battle. There is also a battle against Christians. There has been violence against the non-Muslim minority in Pakistan, which was 10% at the time of independence, but has now dwindled to about 2% or 2.5%.
How do we understand and tackle this religious violence? As the noble Lord pointed out, you have to see Pakistan not as a part of south Asia but as the eastern limit of western Asia. The tensions in Iraq, Syria, Egypt and Iran between Sunnis and Shias—Iraq is the battleground of Sunnis and Shias—are now happening in Pakistan. One thing we ought to be able to do is to contribute to a real understanding of why it has happened. In UK universities, government, NGOs and embassies, we have expertise; we ought to understand why the problem persists. How much of this problem is religious and how much economic and social? Are there economic and social roots to this battle between Shias and Sunnis? In India, for instance, some of the so-called communal riots have economic and social roots. They may be jockeying for land, jobs or economic resources.
Our first task should be to deepen our understanding so that we can help Pakistani society and the Pakistani Government to understand and tackle this problem. Obviously, we cannot say anything to a sovereign country about how it should conduct its affairs.
I think that going to the UN Security Council, as the noble Lord, Lord Avebury, suggested, would be a drastic step and I do not know whether the Security Council would actually decide anything, given the Cold War differences that persist. As an interested power with a large diaspora from Pakistan, we really ought to try to help Pakistan to reach an understanding and do whatever we can to ameliorate the situation.
The most interesting thing that has happened in Pakistan is the establishment of a new Government. For the first time in its history, Pakistan has had a proper constitutional transition from one democratically elected Government to another. Pakistan may be turning over a new leaf. Our task is to be there to help Pakistan improve matters at home as far as possible.
Lord Alton of Liverpool
My Lords, the combination of inadequate religious freedom protections and an entrenched climate of impunity has strengthened the position of the more violent groups in Pakistani society, described by the noble Lord, Lord Avebury, which have long been allowed to promote their own interpretation of Islam, narrowing the space for difference. What begins as an anti-minority sentiment can later divide the majority.
The noble Lords, Lord Avebury and Lord Desai, rightly referenced the alarming growth of anti-Shia violence in Pakistan. In 2012, at least 325 members of the Shia Muslim population were killed in targeted attacks. In this context, counterextremism discussions with Pakistan are clearly incomplete without measures intended to bolster the protection and promotion of religious freedom or belief. Pursuant to the Written Answer that the Minister gave me on 17 May, I would be keen to know when we will raise these questions with the new Government.
Pakistan’s blasphemy laws and anti-Ahmadi provisions remain key concerns. The blasphemy laws lack any definition of terms and ignore the question of intent. False accusations can be easily registered, as evidential requirements are inadequate. Dozens were charged in 2012 and at least 16 people remain on death row for blasphemy, while another 20 have been given life sentences. In 2010, Asia Bibi, a Christian from Punjab province, became the first woman in Pakistan’s history to be sentenced to death for blasphemy, and continues to languish in prison. Can the Minister tell us when we last raised her case with the authorities in Pakistan? The resolution of last year’s case against the Christian teenager Rimsha Masih was cited by Pakistan as an illustration that the situation is improving, but the subsequent blasphemy-related attacks on hundreds of Christian homes in Badami Bagh in Lahore in March this year suggests otherwise.
Access to justice is problematic for all vulnerable communities in Pakistan, including minorities. Perpetrators are rarely brought to justice, which means that minorities are often viewed as easy targets. Ahmadis, Christians, Hindus, Shias, Sufis and Sikhs have all been badly affected, with Shia communities suffering by far the most casualties. Hate speech and the propagation of inflammatory messages is a standard precursor to religiously motivated violence, but it is rarely punished in Pakistan, despite the fact that relevant legislation already exists. Even government officials inciting violence have not been held accountable for their actions.
The police and members of the judiciary need to be made far more aware of human rights and the unacceptability of impunity. In the aftermath of the Badami Bagh violence, many commented that it would not have taken place if the perpetrators of previous mob incidents—Gojra in 2009, Sangla Hill in 2005, Shanti Nagar in 1997—had been adequately dealt with. Official investigation reports exist for at least the high-profile cases. Will the Minister be pressing the incoming Government to make these public, or indeed to shed light on the murder of the federal Minister, Shahbaz Bhatti, whose killers have never been identified? If the case of an assassinated Cabinet Minister remains unsolved, how can ordinary citizens have faith in the justice system and why should potential attackers fear the law?
Knowing that he was likely to be assassinated, Shahbaz Bhatti once said that he hoped his stand would send,
“a message of hope to the people living a life of disappointment, disillusionment and despair”,
adding that his life was dedicated to the “oppressed, downtrodden and marginalised” and to,
“struggle for human equality, social justice, religious freedom, and to uplift and empower the religious minorities’ communities”.
Will we be pressing for an end to impunity and the repeal of the anti-Ahmadi provisions in the constitution, which legitimise violence and social prejudice? What will we be saying about gender-based violence, the abduction, forced marriage and forcible conversion of Christian and Hindu women and girls, which has increased in frequency in the past couple of years, with perpetrators emboldened by the relatively low likelihood of conviction? We have heard about the increase in aid provision this year from £267 million to £446 million, with Pakistan about to become the largest recipient of UK aid. What are we going to do in using that aid to press for the removal of hate-driven material from schools and emphasising the importance of forming teachers who nurture respect and tolerance? Donors such as the UK need to be sure that they are not inadvertently funding materials that bolster messages of religious intolerance and violence in Pakistan.
In 1947, at the time of partition, Muhammad Ali Jinnah, gave a speech to the New Delhi Press Club, setting out the basis on which the new state of Pakistan was to be founded. In it, he forcefully defended the rights of minorities to be protected and to have their beliefs respected. He said:
“Minorities, to whichever community they may belong, will be safeguarded. Their religion, faith or belief will be secure. There will be no interference of any kind with their freedom of worship. They will have their protection with regard to their religion, faith, their life and their culture. They will be, in all respects, the citizens of Pakistan without any distinction of caste and creed”.
Pakistan’s new Government owe it to his memory, and to the memory of men such as Shahbaz Bhatti, and to girls such as Malala Yousufzai, the 15 year-old who was shot by the Taliban for pressing for the right of women to an education, and to the millions who bravely defied the Taliban to vote in recent elections in Pakistan, to make those sentiments a reality.
Lord Soley
I agree with a great deal of what has been said. I commend the noble Lord, Lord Avebury, on the way he spoke and his well known commitment to freedom and religious tolerance. Let us deal with the political point first. I think that we all accept that Pakistan came very near to being a failed state with nuclear weapons. As the noble Lord, Lord Desai, hinted, there are indications of a movement away from that towards being a more stable state. We must do all that we can to encourage that, and I know that the Government, as did the previous Government, are doing all that they can to help development and structure the rule of law.
The problem then becomes the issue of religion. We need to discuss that more openly, and I commend the noble Baroness, Lady Warsi, for the way in which she has raised this issue in public. At times, we tip-toe around it, for understandable and good reasons, because we are afraid of making a difficult situation worse or because we do not have the necessary depth of understanding and are afraid about making statements that might be misunderstood. Yesterday we saw an example in Iran, where a religious leader decided to exclude certain people from standing in the forthcoming elections. That is based on the assumption that the state is run on a religious guidance principle and that there is not a political judgment below that. I take the view that religions—not just Islam, but most religions—are a form of ideology. The problem then becomes how far you pursue that in a very heavy ideological way and how tolerant you can be of minorities. The noble Lord, Lord Alton, has indicated a number of ways. When it becomes very authoritarian, religious minorities of any type are vulnerable.
I follow what the noble Baroness, Lady Warsi, said in response on the Statement on Syria on Monday on the Floor of the House. I asked how we dealt with the struggle between Sunni and Shia, and she indicated that in her background that difference between them was not a problem some 20 years ago. I agree with that; I knew of the differences, but I was not aware of any problem. I have certainly become aware of them strongly in recent years. What troubles me—and I had difficulty getting figures on this—is that well over 10 million Muslims have been killed in conflict, mainly in countries that have a majority Muslim faith. The majority have been killed not by Jews, Hindus, Christians, westerners, Russians, Chinese or anyone else, but by other Muslims.
We have to face the fact that a struggle is going on within Islam for its heart and soul. I am clear about whose side I would be on in this. I believe strongly in the rule of law and democratic principles, so I do not want to see the extremist ideology win in such circumstances. However, the question for a country like Britain—or, indeed, for people within Islam itself who do not want to see that happen is this: how do you respond to it? It is immensely difficult.
Britain has an impressive record of close relationships with Pakistan and, indeed, with many other states where Islam is the predominant force. We have many people who hold to Islamic values here. As we know, it is not just one of the fastest growing religions in the world, it is also one of the fastest growing religions in the United Kingdom. That might give us some influence. Perhaps what I was heading towards on Monday last with my question about Syria to the Minister is this: could we not play a role in what is almost a civil war within Islam in setting up discussions between the competing factions in a safe situation; that is, in Britain? That is because, frankly, they cannot do that in Pakistan. If you tried to arrange meetings between the Sunnis and the Shias in Pakistan in its current state, or indeed in Iraq or Syria, everyone would be in acute danger. We have seen that in the assassinations, bomb attacks and so on. There is a case for looking to see whether we can help, and that requires using the established leaders of Islam within the UK who recognise that there is a struggle for the heart and soul of Islam. It is a great religion. Although I do not like religions of any type—I am not religious and never have been—I recognise the importance of religion to many people. When people belonging to a religion are caught up in violent disputes that involve their own people being killed, we need to think of ways of helping them to discuss their problems in a more constructive manner. We have to face the fact that a struggle is going on within Islam for the heart and soul of Islam. I am clear about whose side I would be on in this. I believe very strongly in the rule of law and democratic principles, so I do not want to see the extremist ideology win in circumstances like this. However, the question for a country like Britain or, indeed, for people within Islam itself who do not want to see that happen is this: how do you respond to it? It is immensely difficult.
Britain has an impressive record of close relationships with Pakistan and, indeed, with many other states where Islam is the predominant force. We have many people who hold to Islamic values here. As we know, it is not just one of the fastest growing religions in the world, it is also one of the fastest growing religions in the United Kingdom. That might give us some influence. Perhaps what I was heading towards on Monday with my question about Syria to the Minister is this: could we not play a role in what is almost a civil war within Islam in setting up discussions between the competing factions in a safe situation; that is, in Britain? Frankly, they cannot do that in Pakistan. If you tried to arrange meetings between the Sunnis and the Shias in Pakistan in its current state, or indeed in Iraq or Syria, everyone would be in acute danger. We have seen that in the assassinations, bomb attacks and so on.
There is a case for seeing whether we can help, and that requires using the established leaders of Islam within the UK who recognise that there is a struggle for the heart and soul of Islam. It is a great religion. Although I do not like religions of any type—I am not religious and never have been—I recognise the importance of religion to many people. When people belonging to a religion are caught up in violent disputes that involve more of their own people being killed than are killed by others, we need to think of ways to helping them to discuss their problems in a more constructive manner.
Lord Hussain
My Lords, I am grateful to my noble friend Lord Avebury for securing this debate. Over the past couple of decades, reports of religious and ethnic intolerance in Pakistan have hit the headlines in the world’s media many times. Pakistan’s current scenario provides many examples of the increasingly intolerant behaviour of its society, including the tragic murders of Salmaan Taseer, the governor of Punjab, and of Federal Minister Shahbaz Bhatti, and the burning of properties belonging to religious minorities in Shanti Nagar, Bhamiwala and Gojra. In the city of Quetta during January and February this year alone, nearly 200 Shias of the Hazara ethnic group were killed in two separate bomb attacks, while in March in Karachi, some 50 Shias were killed in a truck bombing that caused extensive damage in the Shia neighbourhood. Ahmadi, Christian and Hindu communities are continuously being reported as the victims of sectarian violence in many parts of Pakistan.
Meanwhile, NGO and aid workers have been targeted across the country, often by criminal gangs and sectarian groups that are hostile to their work. The death on 13 March 2013 of Parveen Rehman, a leading NGO activist in Karachi and the director of the Orangi Pilot Project, one of the largest housing and drainage projects in slum areas in all of Asia, caused outrage in Pakistan and around the world. Her killing showed how powerful the land-grabbing mafia, whose abuses she brought to light, have become and the impunity they enjoy. Her tragic death followed the killing of some 16 aid workers in separate incidents during December and January.
Many people attribute this surge in religious tension to Pakistan’s blasphemy law, which prohibits blasphemy against any recognised religion, providing penalties ranging from a fine to death. However, I am not aware of any executions having been undertaken under the blasphemy law so far. It has to be said that, from the date of its inception, Pakistan was a moderate, liberal and tolerant Islamic country. Very few cases of intolerance were reported during the best part of the first 35 years of its life.
There could be multiple reasons or causes for the change of attitude in that society. I would like to look into some of them.
The first and, in my view, biggest reason for the drastic change is the direct result of the western countries’ response, led by the United States, to the Soviet invasion of Afghanistan in 1979. Pakistan was asked to play a front-line state role by allowing its soil to be used to harbour, train and launch mujaheddin to fight the Soviet forces in Afghanistan. After the Soviet withdrawal, the western allies walked away from the scene and left Pakistan with tens of thousands of armed mujaheddin, hundreds of madrassahs and millions of Afghan refugees to deal with. Those mujaheddin became Taliban and turned on Pakistan in their witch-hunt for what they perceived to be anti-Islamic forces. With their misguided and narrow interpretation of Islam—often described as Salafi or Wahabi ideology—they targeted non-Muslim communities as well as various Muslim sects that disagreed with their interpretation. Their actions included bomb attacks, shooting, suicide attacks, arson and kidnapping. Rival factions responded in the same manner, making the law and order situation even worse.
The post-9/11 military action against the Taliban in Afghanistan pushed the Taliban deep into Pakistan. Since then, terror attacks on civilian, Pakistani military and the law enforcement agencies have intensified. According to the Express Tribune of 27 March this year,
“Pakistan has lost 49,000 lives since the apocalyptic attacks on World Trade Center and Pentagon in the United States on September 11, 2001”.
According to the Weekly Pulse of 10 June 2011:
“Pakistan has suffered the colossal financial losses of more than $68 billion … in the … war on terror since 2001”.
Pakistan had to use its armed forces to clear the Swat Valley and many other areas from the control of extremists. The perpetrators of this cycle of violence were rarely caught and brought to justice, which encouraged rival political groups, criminal gangs, drugs and land mafia and individuals to use the same methods to settle their own scores.
In many people’s view, different criminal gangs use these situations to their own advantage. For example, human traffickers would help to spread fear and insecurity successfully in the victim communities and offer advice—which is often very costly—to flee the country and obtain asylum. This advice is quite popular in some parts of Pakistan. In my own experience, religious violence in areas of Azad Jammu and Kashmir is almost non-existent, yet in the past few years thousands of people from these areas have successfully obtained asylum in many countries, including the United Kingdom, France, Canada, Spain and Australia.
To combat terrorism, remould extremism, improve education and promote community cohesion, Pakistan needs some practical support in improving its law and order. It needs a transformation of its education system, particularly in the religious schools, the madrassahs; an impartial judiciary; and transparent, efficient and good governance. I understand that Her Majesty’s Government are providing substantial support to Pakistan in many areas. Can the Minister tell us what results we are seeing in this regard, and can she assure the House that our commitment will continue despite the challenges?
Lord Ahmed
My Lords, I join all noble Lords who have praised the noble Lord, Lord Avebury, for securing this short debate and for his commitment to human rights and raising issues of minorities around the world, and in particular in Pakistan.
I begin by congratulating the parties that have won elections, Mian Nawaz Sharif, and also Imran Khan, because we expect a different type of governance from them. Their Government will need huge support because they face many challenges—on energy, economy, human rights, corruption, debt and sorting out this dysfunctional Government. I think perhaps there is work for the UN to try to help so that the law and order situation can also be improved.
Pakistan has suffered from the Soviet Union invasion and the war on terror, and I believe that there are external proxy wars in Pakistan as well. That is why various figures have been mentioned; the noble Lord, Lord Hussain, mentioned 49,000 lives, and the noble Lord, Lord Avebury, mentioned 30,000 civilians. I know that more than 6,000 police officers and army personnel have lost their lives. That is more than in any other country that has been fighting the war on terror. People have been killed in mosques, houses, businesses, bazaars and offices; even Pakistan’s intelligence service headquarters in Lahore, Peshawar, Quetta and Karachi have been attacked. I say this because I will come to some conclusions later and make some recommendations. Even Pakistan’s army headquarters were attacked.
We have heard about the appalling violence against Christian, Ahmadi, Hindu and Shia communities and minorities. The noble Lord, Lord Alton, mentioned that at least 325 Shia were murdered last year. A barrister told me that last year 1,450 deaths were recorded, and there were targeted killings in Mardan, Kohistan, Mansehra, Gilgit and Karachi—and the list goes on. Even though under Pakistan’s constitution there is complete equality for every citizen, we know that in this part of the world religious extremists, whether the BJP in India or the Islamists in Pakistan, use religion for political power. Even Sunni tribes have been driven out of the villages of Beshara and Bohra. There is lawlessness in Baluchistan, whether by nationalists or the al-Qaeda-linked and banned organisation Lashkar-e Jhangvi, and there are attacks on the Hazara community. The worst thing is not the appalling terrorist attacks that take place but the fact the Government were silent and did nothing, until the coffins of victims were left on the road for days, after which the Prime Minister and government officials came from Islamabad and the bodies were buried.
I shall say a little about the allegations made in London about a political mafia. We know that there are nationalists and in Karachi there are land mafias, drug mafias, extortion mafias and political mafias. Serious allegations have been made against Mr Altaf Hussain, the leader of the MQM. I have an e-mail from an association of journalists in Pakistan stating that journalists’ families have been threatened. In his address, which was televised on 11, 13 and 15 May, Mr Hussain made direct threats against people who were protesting at the Three Swords roundabout. People have drawn my attention to the offences committed under Sections 44, 45 and 46 of the Serious Crime Act and inciting terrorism overseas. The British high commissioner in Islamabad and the British Government have been approached in relation to that. Will the Minister say whether the Government have had complaints and what action they or Scotland Yard will take against this gentleman, who is sitting in London and threatening Pakistan’s security?
Finally, I turn to what is needed in Pakistan. Strengthening the criminal law against terrorism is very important. People who were arrested for attacking the GHQ are now out. Every speaker has mentioned people not being prosecuted, but that is because they have been able to run free as the laws are not tight enough. Pakistan needs help, and I ask the Minister whether any help is available to the Pakistani Government in tightening up criminal and terrorism laws.
Police officers must be appointed on merit, although in Karachi the MQM has been insisting on police officers belonging to its group. No wonder there are so many problems. The rest of Pakistan is the same; it is not only happening in Karachi. As I said, such appointments must be based on merit, witnesses must receive protection and be free of intimidation, and there must be protection for officers and judges. There must be engagement with political forces which are disenfranchised and want to be part of the mainstream politics. There also has to be targeted action against al-Qaeda-linked organisations, whoever they are; they cannot hide behind political parties. We have to encourage this.
Finally, Pakistan needs help rather than criticism. I do not think that there is a war going on within Islam; a lot of it is political, and that needs to be resolved politically as well.
Lord Triesman
My Lords, I join in thanking the noble Lord, Lord Avebury. As I suspect is the case for other noble Lords, the preparation for this debate has made some pretty depressing reading. I have looked at the Questions from Richard Burden MP and Angus Robertson MP, as well as the very many Questions from the noble Lord, Lord Alton, which have raised the issue of a whole sequence of really appalling circumstances. Questions have been robustly replied to by Mr Burt in the other place. Having read the replies, I think that the noble Lord, Lord Alton, has every right to be proud of his determination to test the Government on these and other issues, but he is perhaps also entitled to feel a little frustrated when the responses are that we are engaged in close monitoring and raising the issues. Perhaps that is all that one can reasonably say we are in a position to do, but I think we should explore some other options.
Alongside parliamentary discussion, there has been a great deal of other discouraging and dispiriting coverage. Hindus and Christians say that they are living in hell. Their accounts say that they will try any means to get their families out of the country. Other newspaper accounts—not always with the detail that might be most useful—describe the violent persecution of Shias by Sunnis, who, as the noble Lord, Lord Avebury, said, regard some or perhaps all of the Shia population as heretical, and in some instances not Muslims at all. There is systematic suppression, targeted killings and endemic discrimination. Just a few moments ago, the noble Lord, Lord Hussain, added to the depressing story and, quite rightly, reminded us of the history of the way in which the western powers dealt with the Soviet invasion of Afghanistan and its consequences. I thank him for that insight.
Perhaps I may start with one or two basic points. First, these terrible events and persecutions are taking place in a nation which has itself become the subject of more terrorist violence than almost anywhere else on the planet. Secondly, despite the threat of international terrorism, there seems on occasion to be some ambivalence in Pakistan about how to deal with it. That is illustrated by the relative ease with which Osama bin Laden could live in Abbottabad without anybody trying to remove him from Pakistani territory. As has been said in this debate, there seems on occasion to be a lack of response to extremist violence. There has been little discussion of nuclear proliferation issues, and the threats seem, as a number of noble Lords have said, to mean that we have to focus still more intently on Pakistan and recognise that the strategic content of what is taking place is fundamental to us as well. Thirdly, it is important for America to engage and to resist calls to sever links—something that one hears around the international circuit. I should be grateful if the Minister could set out the extent of our co-ordination with the United States on this question.
I ask these questions and make these points because, with the sixth largest population and the sixth largest military in the world, and with a nuclear arsenal, the country is—to borrow a concept from the world of finance—too big to fail. My noble friend Lord Soley was right to point out that there is a risk of it becoming a failed state. It is also too mission-critical for us in relation to Afghanistan and the withdrawal from that country. Other noble Lords have covered that point.
My noble friend Lord Desai asked why Pakistan is in its current position and made the point that the transition to democratic government is at least a positive sign. What are the sources of our influence? I accept that they are limited and they certainly require us to understand with greater sympathy what might be possible. For a start, nearly 1 million citizens of this country have direct ties to Pakistan. I wonder whether we have tried to encourage the discussion that could be held here among that very significant number of well meaning and honourable people, as my noble friend Lord Soley suggested. As the noble Lord, Lord Avebury, said, aside from our becoming Pakistan’s largest aid donor, we are its second biggest investor and fourth biggest trading partner. What leverage does this kind of economic engagement offer us? Might it be in any respect a vehicle for knowledge transfer and economic stimulus? Unless religious zealots try to prevent the modernisation of the economy, these may be ways in which relationships could become more productive and deeper.
In respect of religious freedoms, which are at the centre of this debate, and the active engagement with women’s rights that we wish to see, I wonder whether in the Commonwealth the Harare principles could be extended, better codified and urged on all Commonwealth members. This is one of the occasions when people talk in an interfaith sense of the need to win hearts and minds. That need certainly exists, but I confess that when I hear those words, I fear that they are a formula to avoid dealing with something that is rather more profound and difficult. When we call for gradual influence from the Commonwealth or comment on the impact of the diaspora here, it should not come to mean doing very little else.
I share the view that has been expressed, not least by the noble Lord, Lord Avebury, that some of the persecutions that have been described are crimes of concern to humanity. I choose the word carefully and do not seek to be offensive, but they are crimes, and they would be in any part of the international community. Persuasion is, of course, very important and reshaping attitudes is vital but the buck must stop somewhere in all this. We need to explore urgently the role of the international community, perhaps through the United Nations in the discussions it has about the responsibility to protect, or, indeed, in the need to look further east to other Asian communities to begin to build a regional dynamic which is also economically sustainable. As I say, these are things that need to be explored with some urgency. Pakistan is too big to fail and I am afraid that some crimes are too big to fail to act upon.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, I start by thanking my noble friend Lord Avebury for allowing us the opportunity to discuss this important and, indeed, timely matter. As I listened to so much expertise around this Room on religion, Pakistan, human rights and minorities, I began to think that my record of finishing within the allotted time, in which I take pride, might well be broken today. However, I will try not to go beyond my time. As the Minister with responsibility for both Pakistan and human rights policy, I am increasingly concerned about the levels of interreligious and intrareligious violence in Pakistan, as are all noble Lords present. Pakistan remains a country of concern in the annual FCO report on human rights and democracy, with the treatment of minorities representing one of the several acute human rights challenges that the country faces. Noble Lords will be aware that this and the intertwined issue of freedom of religion or belief have long been personal priorities for me, and I shall continue to use every opportunity I have to address them.
Some very interesting thoughts were raised by my noble friend Lord Hussain in relation to intrareligious tensions. I am thankful for his expertise and what he brought to the debate today. The noble Lord, Lord Desai, again raised the issue of the interpretation of faiths, while the noble Lord, Lord Soley, asked whether we could have some of these more difficult debates on UK soil if the opportunity presents itself.
We are building up FCO expertise on religion and in understanding these very difficult intrareligious disputes. To repeat what I said in the House the other day, 25 years ago when I was growing up, being from a mixed Sunni-Shia background was not discussed or seen as being unusual. The good that has come out of the intrareligious harmony in this country is that this debate is not live in the United Kingdom. Many of the national bodies that speak on issues affecting British Muslim communities are represented by both Shias and Sunnis—long may that continue.
Returning to the concerns raised in the Human Rights and Democracy report, the promotion and protection of the right to freedom of religion or belief is one of the Government’s key human rights priorities; there is also the UN Declaration on the Elimination of All Forms of Intolerance and of Discrimination Based on Religion or Belief. Violence and persecution such as we have seen in Pakistan and in other countries across the world are the ultimate manifestation of intolerance and discrimination. We regularly see that where minorities are being attacked, other fundamental freedoms are also under threat.
I am committed to international action to address these issues. I spoke about this at the UN General Assembly last year. In January this year, I hosted an international ministerial conference in London on the freedom of religion or belief, where I felt it was important to build political consensus on the red lines around tolerance and the basic practice that we could expect each state to implement. Those discussions are continuing and are starting to solidify international consensus around the need to do more to combat religious intolerance and promote the right to freedom of religion or belief. Pakistan is engaging internationally on these issues both through that process—the adviser to the President on religious affairs was present—as well through the OIC-led Istanbul process, the UN Human Rights Council, the UN General Assembly and our bilateral discussions.
My noble friend Lord Avebury asked whether we need to raise this at the United Nations. I know that the Secretary-General has taken note of the extremist attacks in Pakistan. He has been very vocal in condemning them. We continue to discuss these matters at multilateral UN level and, of course, at bilateral level.
We value our partnership with Pakistan, with its many distinctive characteristics, including the close personal connections between our citizens. There are more than 1 million journeys between the two countries every year. Britain is committed to an enduring relationship with Pakistan built on mutual trust and respect and on our many shared interests. As David Cameron said on his first visit to Pakistan as Prime Minister, there is the opportunity for “naya aghraz”—a fresh start. We are an unswerving supporter of Pakistan’s development and its democratic future. It is a broad relationship. Yes, it is based on security and terrorism, the economy and trade, but it is also based on culture, community and—dare I say?—cricket. Our understanding is nuanced and measured and the relationship is stronger than ever before. The noble Lord, Lord Triesman, asked what leverage we have. I would say that all of the above are opportunities for us to leverage and make that relationship respond better.
I take this opportunity to applaud the recent elections in Pakistan. The elections on 11 May were a crucial milestone in Pakistan’s democratic history. It is the first time that power has transferred democratically between one civilian Government and another after a full term. I welcome the strengthening and laying down of deep roots of democracy in Pakistan. These elections were among the most credible in Pakistan’s history. There was an improved electoral register and the highest ever number of female and new voters. To protect that credibility, we hope that all allegations of malpractice will be thoroughly investigated.
Pakistan’s elections have strengthened democracy and the voice of the Pakistani people. They have given the incoming national and provincial Governments a clear mandate to meet the very significant challenges that Pakistan confronts, which we would like to help Pakistan in meeting. The new Government, whatever their make-up, will face some real challenges in their first 100 days, including a very difficult economic situation and critical energy shortfalls. We encourage all political parties to work together to use the start of the new parliamentary term to tackle the country’s problems.
The UK is committed to working closely with Pakistan on these challenges. Where appropriate, we can share our experience of the need for tough decisions to deliver future growth and prosperity. Our friendship and close ties mean that we feel Pakistan’s losses deeply. As was said by many noble Lords today, Pakistan has lost a shocking 40,000 civilians in the battle against terrorism and extremism. We feel the sacrifices that Pakistan has made, and we feel for the people who continue to make those sacrifices, specifically the minorities that suffer violence and discrimination. I have seen at first hand the positive impact of Pakistan’s minority communities on society. The focus of my visit to Pakistan in January last year was to meet and show solidarity with the Christian community in Karachi. I was able to meet the Archbishop of Karachi and see the inspirational work of Sister John Berchmans Conway, a nun from Ireland who has lived in Karachi for most of her life educating the next generation of young girls in Pakistan. She recalled fondly her memories of teaching the late Benazir Bhutto. I am delighted that she has been awarded a civil order by the Pakistan state for her contribution; it is well deserved.
In March, however, in a shocking incident of religious violence, rioters targeted a poor Christian community in the Joseph Colony neighbourhood of Lahore, damaging property and forcing people out of their homes. At the time, I discussed the attacks in detail with Paul Bhatti, who was then Pakistan’s Minister for National Harmony and Minority Affairs and is, of course, the brother of the tragically assassinated Shahbaz Bhatti. I expressed my sympathy and pledged our ongoing support in tackling sectarianism and religious persecution. Those riots were sparked by an allegation of blasphemy against one member of the Christian community. The blasphemy laws remain a highly sensitive subject in Pakistan. Indeed, some of those who have called for its reform have been tragically targeted by extremists, as my noble friend Lord Hussain mentioned in his speech
The infamous blasphemy laws are frequently misused against both non-Muslims and Muslims, a point that I continue to stress. I will make sure that we continue to raise the issue and that we carry on working closely with civil society in Pakistan and with groups in the UK to encourage interfaith dialogue. This is a sensitive issue, but that will never deter us from raising it. We will continue to do so at every opportunity.
I had the privilege of sharing dinner with Shahbaz Bhatti only weeks before his assassination. We talked about the work that we were going to do together, and I am pleased that, despite that tragedy, his brother Paul Bhatti, who has been in government, will continue to work with me. However, it is only right that those who assassinated Shahbaz Bhatti are brought to justice, and we will continue to raise the issue at every opportunity.
The Christian community is not alone in being targeted. I am increasingly concerned about attacks on Shia Muslims, in particular those of the Hazara community. I was saddened by the bombings in Quetta and Karachi earlier this year which killed many innocent members of the Hazara community. Such acts of sectarian violence demonstrate an appalling contempt for religion and for human life. However, this year is not a one-off and, as Human Rights Watch and others have highlighted, violent attacks against Shia Muslims have been on the increase. Moreover, the violence is not isolated to Shia Muslims. We have also seen terrible attacks on Sunni mosques in the Malakand district. We have condemned those attacks. As the Prime Minister has said, when it comes to terrorism, Pakistan’s enemy is our enemy.
Continuing discrimination against the Ahmadi community remains a matter of concern. We have again expressed these concerns in this year’s Annual Human Rights and Democracy Report, as we did during the universal periodic review at the UN Human Rights Council last October. Of course, I had the benefit of the great expertise of my noble friend Lord Ahmad of Wimbledon, who is sitting with me during this debate.
The noble Lord, Lord Alton, asked when we last raised the case of Asia Bibi. I referred to the case directly last year with Shahbaz Sharif, then the chief minister of Punjab, who is tipped to be the chief minister again, and who is, of course, the brother of the potential future Prime Minister. They are powerful figures who are now in position in government and thus able, it is hoped, to take these matters further.
My noble friend Lord Hussain asked about the aid being provided to Pakistan. Over the next four years, we will support 4 million children in schools, many of them girls. In the light of the Malala Yousafzai case, we can see why support for education is so important. We are also supporting programmes that allow women to access credit, prevent mothers dying in childbirth and provide practical job training for tens of thousands of people. Pakistan could become the UK’s largest recipient of aid, averaging up to £350 million a year, but this increase is dependent on securing value-for-money results. It will also be linked to the Pakistan Government’s progress on reform at federal and provincial levels, including taking tangible steps to build a dynamic economy, strengthen the tax base and tackle corruption. As I have said before, it cannot be right that the taxes of the people of this country are used to support the poor in Pakistan when the rich in that country refuse to pay their taxes. UK aid is helping to address the underlying grievance that creates an environment in which extremism can flourish. It tackles inequality and promotes social justice.
The noble Lord, Lord Ahmed, raised the MQM and Altaf Hussain. Again, I am saddened by the recent outbreak of violence in Karachi, including the assassination of Zahra Hussain, a respected and popular political figure. The UK Government strongly condemn all acts of violence in Karachi, and we sympathise deeply with the victims, their families and all the law-abiding citizens of the city. The noble Lord referred specifically to the role of the MQM in the violence. Let me reassure noble Lords and the many members of the public who have written in that there is no place for the incitement of hatred or violence in the UK, and we have strict laws in place to deal with it. The Metropolitan Police has received an unprecedented number of complaints about alleged comments made by Mr Altaf Hussain. It is now formally investigating those comments and in due course it will take appropriate action.
In conclusion, it is in all our interests for Pakistan to be stable and prosperous. Religious tolerance is vital for peace and prosperity to flourish in that country, and the UK is committed to supporting efforts to achieve that. The British Government will continue to stress the importance of improving religious tolerance with the newly elected Government in Pakistan. Lastly, I apologise for breaking my record and not sticking to the time.
Leveson Report: Media Plurality
Lord Sharkey
To ask Her Majesty’s Government how they plan to take forward issues of media plurality in the light of the Leveson report.
Lord Sharkey
My Lords, like most noble Lords, I very much welcomed the cross-party agreement on press regulation, and I very much hope that the current apparent contest between two rival versions of the royal charter is resolved in favour of the charter approved by Parliament. I am certain that our royal charter will help to prevent the kind of gross, shameful and even criminal behaviour that the Leveson report detailed so graphically. But no matter how very welcome this progress towards regulation is, I believe it is entirely timely for us to remind ourselves that Lord Justice Leveson was charged to look at both regulation of the press and ownership of the press—both important and, I believe, equally important.
It is worth recalling briefly why we have had to discuss regulation of the press at all. The obvious and shameful behaviour of elements of the press is the proximate reason, of course. However, much of this behaviour was also illegal or in clear violation of the press’s own code of conduct, which raises the questions of why the law was not enforced and the code not applied. The reason for these failures is to be found in the historic cosiness between politicians, the police and some parts of the print media. The cosiness existed—and perhaps still exists; we shall see—because of the perceived power of the press to punish or reward political parties or individuals. This perceived power exists largely because of the sheer size and reach of some parts of the print media, and it was this perceived power, by virtue of size and influence, that allowed parts of our press to consider themselves above the law or immune from the consequences of breaking it. It was the sense of power and immunity that fostered the widespread and corrupt culture that Leveson detailed in his report.
I am certain that regulation of the press is a necessary condition for reforming this culture, but I am equally certain that it is not sufficient. Size and reach have been the drivers of press misbehaviour and of the complicity of other of our institutions in that misbehaviour. As long as there are great concentrations of media ownership, the drivers of potential future misbehaviour will always be present. To make sure that regulation of the press achieves long-lasting and deep cultural reform, we must also address the issue of concentration of media ownership. If we do not do that, the chances are that not far down the road we will find ourselves back again in the last chance saloon commissioning Leveson mark 2.
It is quite striking, looking back at the various media crises of the past few years, to see how little discussion there has been in the media of the issue of media concentration and pluralism. One can see why this may be, of course, but it will have to change. There needs to be more public discussion, more examination, more analysis and simply more noise about the whole area of who owns what and what they do with it. There is a clear lesson from the setting up of the Leveson inquiry, which is that the public is slow to take notice and the Government are slow to act unless there is a clear problem to address. Of course, I acknowledge that there is already a considerable body of research and argument about what to do about concentration of media ownership. However, as I shall illustrate in a moment, much of that work has not entered the public consciousness, and quite a lot of this work seems, at first or even second glance, to be as easy to grasp as quantum physics.
It is in this context that I should say how very much I welcome the inquiry currently being held by the Lords Select Committee on Communications under the chairmanship of the noble Lord, Lord Inglewood. I have seen the written evidence so far submitted to the committee in the very helpful documents provided for this debate by the Library. Although I shall touch on some of the themes and characteristics of these documents, I shall, as is proper, leave their full examination to the committee. I should also say that I very much look forward to hearing the remarks of the noble Lord, Lord Inglewood, in a few moments.
There are those who say that the whole issue of media concentration is just too complex to deal with in any satisfactory way. It is easy to see why people might say that. The problem is not in setting down what we would like to achieve. Ofcom defines the desired outcome of a plural market as,
“ensuring there is a diversity of viewpoints available and consumed across and within media enterprises and ... preventing any one media owner or voice having too much influence over public opinion and the political agenda”.
This is a pretty good objective and, as Lord Justice Leveson noted, it seems to be generally acceptable. The problems arise over how much is too much, and over how you measure it. Here is an invitation to complexity, eagerly seized by Ofcom.
In its report to the Secretary of State, Ofcom considered three types of broad metric: availability, consumption and impact. Within these, it considered five different types of consumption metric. The measurement proposals were certainly comprehensive, but also very complicated. Leveson noted this. He said that,
“its complexity is also a disadvantage, in that it will be difficult for most people to understand and could come under sustained attack from those media providers who feel that they may be the subject of plurality concerns”.
There is a very important point here: a complex system of ensuring plurality simply will not work. It will be opaque, user-unfriendly, difficult to explain and a bonanza for lawyers. What we need is simplicity and a measure that acknowledges the reality that the media exist in a revenue and profit-driven marketplace. When profits can be magicked away—something that we have seen quite a lot of recently—revenue is the best and simplest indicator of dominance.
There are already simple proposals for a measurement framework based on revenue, some put forward by Claire Enders and Professor Barnett. I urge the Minister to consider very carefully the merit of those simple proposals. Everyone will understand a rule that says that you cannot have more than X% of market revenue. If you can measure market presence easily, as I believe you can with such a simple rule, then Leveson’s next question applies: what action should be taken if plurality rules are breached? Again, simplicity and the commercial world should be our guide. The answer is that rule breach should lead to divestment. That is what happens when the size of an ordinary commercial company presents a danger, and it is what should happen to media organisations too.
One frequent additional source of complication in discussions of what to do about media plurality is the internet. Or, more precisely, should we include Google, Facebook, Twitter and others in our list of media organisations that should be scrutinised for possible concentration of power and influence? I know there has been a lot of discussion about all this, but again I think there is a simple and simplifying approach available to us. There should be a very simple test. Do these and similar very large internet players exercise meaningful editorial control? If they do, include them; if they do not, then do not. As things stand, I do not believe that any of these companies exercise meaningful editorial control. If it is simply their size that presents a problem, it is surely a commercial problem and best dealt with by the CMA.
In the time available, I have been able to deal with only some aspects of the issues surrounding media plurality. I am very much aware, for example, that the place of local and regional media in all this deserves detailed discussion at some point. I very much look forward to hearing the contributions of other noble Lords on the subject of plurality.
I also want to say to the Minister that I do not underestimate the difficulties that the Government will have in finding a solution to this problem, just as I hope that the Minister does not underestimate the need actually to find a solution in the near future. I realise that when the Minister replies to the Question—which is, it is worth repeating: “To ask Her Majesty’s Government how they plan to take forward issues of media plurality in the light of the Leveson Report”—he will almost certainly not be able to give us dates or a very precise plan, but I should be very grateful if he could at least describe the process and the road map by which the Government intend to progress the matter, assuming that they intend to do so.
Lord Inglewood
My Lords, as my noble friend Lord Sharkey pointed out to the Committee, the House’s Communications Select Committee determined on 19 March that its next inquiry would be into media plurality. On 26 March, members of the committee agreed a call for evidence that was issued shortly thereafter. It had a deadline for submissions of 1 May. We intend the inquiry to be as far-ranging and wide-ranging as possible. We believe that is right and proper. We shall consider as diverse a range of views right across the spectrum of opinion as we can, and we intend the inquiry to be comprehensive.
On 13 May, we received a response from the Department for Culture, Media and Sport that struck me, the chairman, as—I shall put it this way—disappointing. After all, it was a response to a call for evidence from a Select Committee of Parliament. Having shared the response with other members of the committee, they agreed that it was a bit thin and, as a result, I wrote back to the Secretary of State for the department, drawing her attention to the committee’s concerns and the response’s shortcomings. Today, at 2.22 pm, in an example of what you might describe as “just-in-time government” the Secretary of State responded. I shall share one paragraph of her letter with the committee. She wrote that media plurality is an important and complex issue, and the questions raised in our inquiry get right to its heart. She went on to say that the Government will shortly be setting out how they plan to seek views on these issues and how they may take forward Lord Justice Leveson’s recommendations and that, in the light of that, it did not seem appropriate to give a government position at this stage. She wrote that the Government are grateful that we have launched an inquiry to look at this area in greater depth and envisage the committee’s scrutiny and findings providing valuable help and support to the Government’s work in this area. I understand what the Secretary of State is saying and, perhaps more importantly, I appreciate what is behind her words.
Speaking for myself, without any reference to other members of the committee, I accept the point she makes, subject to what seems to me to be a very important proviso, which is that we need to know with certainty what this timetable is going to be. I am rather more emphatic than my noble friend Lord Sharkey about what the road map—to use the current phrase—for this process might be. During this Parliament, first there was going to be a Green Paper, which was delayed and then disappeared and was replaced by a White Paper. The date of publication of the White Paper seems to have been delayed and further delayed. If noble Lords remember the play “Waiting for Godot”, the characters were waiting for Godot at the beginning of the play and they were waiting for Godot when it concluded. Against that background, I ask my noble friend a very simple question: can he give us firm indications, to which the Government will adhere, about the process to which the Secretary of State has alluded? I invite him to put the reply in the Library of the House.
The committee wishes to co-operate with the Government in consideration of these matters but, at the same time, we have to deal with each other in good faith. My noble friend may not be able to give a precise reply now but I hope very much that in his concluding remarks he will indicate that he will, in an appropriate period—for example, within a couple of weeks after we get back from the forthcoming short recess—provide the House with a very clear indication of exactly what is going on and, as and where appropriate, furnish the committee, which feels very strongly about this, with the information that will help it in the inquiry. In considering a topic such as media plurality in the way that this House’s Select Committee is doing, it matters that we have some idea—and I am using the slightly vague words “some idea”—of what on earth the Government think, even if as a result of the inquiries and consultations that have been carried out they subsequently change their mind. It seems to me that it has never been a problem for a Government to change their mind to a conclusion that is better than their provisional one. I look forward to hearing my noble friend’s response.
Lord Lipsey
My Lords, I congratulate the noble Lord, Lord Sharkey, on bringing this important issue before us this afternoon. I just want to make a few short, almost staccato, points about the importance of media plurality.
In doing so, I do not underestimate the benefits that some of the big media companies have brought to the people of our country. Sky, for example, has revolutionised everything from sports coverage, where its standards have had to spread to other broadcasters, to, for example, the arts, where Sky Arts is frankly often upmarket of the pot-pourri that is now BBC Four. Therefore, there are advantages and they must not be forgotten. I have had advantages myself since News International provided me with a comfortable living after the electorate unaccountably removed the Government whom I served in 1979. I am grateful to it for that.
That said, monopoly in general is a bad thing and monopoly in media is a particularly bad thing, as it affects not only one sector but the whole of society. I just want to reflect on some episodes in recent history that I think have brought home the extreme importance of, certainly, holding the line against further media concentration and, preferably, rolling back the concentration that still exists, despite the impact of the internet. It is a scary thought that if it had not been for the fact that the hacking scandal broke precisely when it did, the then Culture Secretary, Jeremy Hunt, would have waved through News Corporation’s takeover of the 60.9% of BSkyB that it did not own. He came within days of doing so before the company realised that it would have to withdraw the bid. It came that close.
We have also seen the dangers of monopoly in the way that the Leveson debate has been conducted. I have felt that we have been living in parallel universes. There has been the universe of the reasonably rational debate that has been occurring in Parliament, taking a progressive direction and ending with three-party agreement—a rational process and a rational debate where advocates of minimal parliamentary interference have made their points along with those who have said that something had to be done. I think that we came to quite a good solution. But you would not have the faintest idea of what that debate had comprised had you relied on the newspapers.
I cite as an example a debate in the Chamber on 25 March. In that debate, the noble Lord, Lord Black—and I will choose my words with great care—made a contribution that most noble Lords present did not feel was among the most distinguished of that particular evening. But in the newspapers next day, in particular the News International newspapers, only one contribution to that debate received a single mention—that of the noble Lord, Lord Black, in defence of the very extreme position that he has taken. That is not plurality.
Another example and an important caveat is that sometimes the newspapers say, “Yes, we must be allowed to amalgamate to develop things. Of course, we will offer safeguards if there are threats”. I now draw attention to another incident of which very little will have been read by anyone in any national newspaper. When James Harding decided to quit as editor of the Times—we will not go into the reasons—Rupert Murdoch wished to appoint as his successors John Witherow at the Times and Martin Ivens at the Sunday Times. I should say that I have the reverse of any objection to either of them. Martin Ivens has been a good friend of mine over a number of years, although we do not see eye to eye politically. I know why the appointment was suggested.
However, a system was set up at News International as a result of the contested takeover, now 20 years ago, whereby the national directors have to approve the appointment of editors. For reasons that I will not go into today, although I may at some future point, they have not approved the appointments. What has happened? What you would expect to happen with Mr Murdoch has happened. They continue as acting editors. That is the title that both of them hold and they will no doubt continue in that vein for as long as is necessary. Put not your faith in safeguards: they will come to nothing.
The final point that I will make might have some appeal to the Minister and the Government. If the British Government do not do anything, Brussels is now chomping at the bit in its desire to get involved and to interfere in a very fundamental way with the press. I quote from the consultant Alison Sprague. She says that a recent EU consultation,
“advocates a much more proactive role by the Commission in the areas of media freedom and plurality in member states”.
I was in the House recently when a pressure group was advocating precisely such interference on a European basis. By God, I do not know what that would do to the press if it ever happened, but I know what it would do to the Conservative Party. I trust, therefore, that we will find a home-baked solution to this and not wait for Brussels to impose a Brussels-based solution.
Lord Stoneham of Droxford
My business experience in the media sector confirmed to me that free markets and competition do not reach a steady state equilibrium where competition markets ensure fair and free competition. Most owners seek more market share to give them greater dominance and control in their markets, to better control prices, set higher margins and increase profits, particularly if greater market share deters new entrants. These media markets are not in fact that big and the players are very limited.
The growth of online and other media channels is encouraging diversity, which is to be welcomed, but the bigger companies retain great power and may in time sweep up the diversity of the principal new entrants into their control. This is how they normally work. It is also a fact that not simply objective measures of fair competition need to prevail in the media sector.
My noble friend Lord Sharkey described the Ofcom definition of plurality as ensuring there is a diversity of viewpoints available and consumed across and within media enterprises and preventing any one media owner or voice having too much influence over public opinion and the political agenda. Inevitably, in making the second judgment there is bound to be an element of subjectivity, particularly determining what “too much influence” is.
One overriding conclusion from Leveson must be that one media group did have too much influence. But sadly, in my view, Leveson did not address plurality concerns as much as he should have done and there will be much less point in adopting his recommendations on standards and complaints unless we do. There is a danger that prolonged arguments over complaints regulation and standards means that plurality is being pushed into the long grass and ignored when it should be central to everything.
The one publisher who was too influential and too dominant was News International. The Sun dominated the tabloid market, and the Sunday Times and the Times together were pretty dominant in the old broadsheet market, or at least they more than challenged the Telegraph, and undermined other competitors through aggressive pricing campaigns made possible by much larger resources. The growing importance of Sky as a non-domestic satellite broadcaster—now with almost 50% more resources than the BBC—adds to its influence even though its news share is low.
A lot of issues arose from this combined market dominance of News International. It affected the way politicians dealt with the company and the grovelling it indulged in to gain a political competitive advantage. It affected the way its power could be regulated as any attempt to restrain the company could be repulsed by aggressive and effective lobbying, as we saw when issues of control arose relating to Sky and News International. It affected the industry’s plans for investigating complaints. It also affected the police, who always felt that they had to keep the company on side. Fortunately, dominance eventually bred arrogance as executives and editors whose hinterland of judgment was faulty severely damaged the reputation of News International. However, it could fight back and undermine anyone coming for it, whether politician, policeman, journalist or major competitor. It began to think that it was untouchable, and for a time it was. However, that reputation was damaged once the pack of cards was convincingly challenged.
What we need now is a new policy and definition of plurality to build on the work of Leveson: otherwise, it will all be in vain. I find it inconceivable that News International should be able to hold onto its news market share while coming again to gain total control of Sky. As the noble Lord, Lord Lipsey, said, it is incredible how near it got with another faulty proposal for independent directors. The current procedure for mergers must be retained, but it will need to be more open and transparent. We have to ask ourselves why a 25% share of revenues should not be the simple control. We will need a more explicit definition of plurality for the four-yearly Ofcom review of the sector if it is maintained, as I believe it should be.
Lord Parekh
My Lords, I thank the noble Lord, Lord Sharkey, for securing and introducing this debate. I want to approach this question slightly differently. In the Leveson report and elsewhere there is an enormous emphasis on who owns what, on what percentage of shares in the media are owned by News International or any other body.
Ownership is certainly important, because our ultimate concern in a democracy is to ensure that the media are balanced, objective, impartial and represent a diversity of points of view. This is what the political culture of a democracy is about. Ownership becomes important only in so far as it stands in the way of these objectives, which of course it does. I do not doubt that at all. After all, Murdoch’s 173 newspapers worldwide supported the Iraq war. That kind of homogeneity does not spring up from nowhere; somebody is imposing it. My good friend, the noble Lord, Lord Lipsey, just told us what happened when one particular Peer speaks and he alone is mentioned in the newspapers.
Yet supposing we had not one but five Rupert Murdochs—not one press baron but five press barons—would that necessarily guarantee the kind of democratic culture that we want? That happens in India, where not one but half a dozen barons have control. What happens? They collude, form a cartel and break rules, as various oil companies and banks have done; or collectively, they are subject to certain commercial pressures, and therefore end up behaving in exactly the same way; or they have certain common interests as proprietors, and therefore while they may compete, when their common interests are at stake they are all as one.
While ownership is important, it is not enough. I do not want us in this country to make the mistake of thinking that if no one owns more than 30% or 40% of shares in the media, somehow the problem will disappear or the problem will be solved. It will not; it will continue to haunt us. As I said, it is perfectly possible for press barons to collude, unite, form a cartel and continue the ugly practices that we would rightly condemn.
It also does not matter whether or not these people are domiciled because indigenous capitalists are not necessarily better than those settled abroad, nor does it matter whether or not they pay taxes here. We seem to be clutching at straws. I suggest that the problem is so deep that, although ownership is important, we need to concentrate on other things as well. We should be prepared for a world in which you might have multiple ownership but still the problem that worries us continues to haunt us. There may be a lack of balance and impartiality, no diversity of views and all the phone hacking and ugly practices that brought the Leveson inquiry into existence.
Nor do I think it is terribly important to inquire how often the Culture Secretary or the Prime Minister has met this or that media mogul. It is all right for public consumption but this is not how decisions are made. Friends of the Prime Minister talk to friends of media moguls and things get decided, or the media create a climate which channels the Prime Minister’s or Culture Secretary’s thinking in a certain direction. Looking at the log or the e-mails sent would not by itself help us to understand how decisions are made. Therefore, I suggest, with great humility, as I am not a media man but a boring, abstract philosopher, that we need to concentrate first, on how to stop this sort of thing happening irrespective of how many owners we have, and, secondly, on the concrete, positive mechanisms of self-correction that we can build into our system.
I want to run though half a dozen ideas which I have canvassed in my writings and in various speeches I have made in your Lordships’ House. First, I entirely agree that we need a strong regulatory mechanism and must insist on and enforce certain standards that Leveson has urged. Secondly, we must have an independent and publicly funded body to audit the media coverage of important issues; assess how they have covered these issues on the bases of accuracy, impartiality, balance and self-correcting procedures; and inform the public which media have behaved in which way. I refer to the example just given by the noble Lord, Lord Lipsey. We should name and shame the media in exactly the same way that we name and shame schools, teachers and NHS trusts.
Thirdly, we should make sure that the media give regular space to alternative points of view. There is no reason why 10% or 15% of the space in any newspaper or media—as used to be the case in Canada and elsewhere—or even 15% or 20% of the space could not be allocated to those who take a different point of view. Public funds should be made available to marginalised groups to enable them to articulate and promote their point of view.
Fourthly, we must safeguard the integrity of publicly owned institutions such as the BBC and ensure that they remain objective, command popular support and provide an alternative to the profit-driven media. Fifthly, there is no reason why Parliament cannot have a Select Committee on media coverage and hold public hearings where newspaper proprietors, journalists and others are required to explain why they have covered events in a particular way. Such a committee could examine systematic lies about membership of the European Union or about immigration. There is no reason why a parliamentary committee could not call press barons to account and ask them to explain their actions. I will speak for one minute more and then I am through.
Sixthly, MPs and Peers are expected to declare their interests, and I have never understood why journalists are not required to declare theirs. If a journalist has enjoyed the hospitality of a company or is a member of a party and writes about an event, it is important that he should declare his political and financial interests. Similarly, a newspaper editorial should not comment on an issue in which the owner of that newspaper has a stake. The constraints imposed on MPs and Peers should also be imposed on media proprietors and journalists.
Lord Whitty
My Lords, I thank the noble Lord, Lord Sharkey, for raising this debate. I put my name down because I am suffering some frustration in this area. Since Leveson reported, we have focused on the behavioural aspects of journalists and not on what is not the longest part of Leveson but is an extremely important part, and deals with morality.
While I do not disagree with some of the suggestions made by the noble Lord, Lord Parekh, about action, ownership is absolutely important. I go back to what I said on the first Statement on Leveson, which is that a truly free press requires diversity of opinion, and diversity of opinion requires plurality of ownership. We do not have anything like plurality of ownership. Oligopoly can be as bad as monopoly and sometimes, whatever the structure of ownership, people will behave badly, but if you have a press and a media system that are overwhelmingly dominated by very large companies, the public interest, and the interests of democracy and diversity of opinion, are not served. Leveson recognised that and made a number of proposals on that front.
Since then, we have had hours of parliamentary debate in this House and elsewhere on the behavioural aspects. We have at least two propositions on various forms of royal charter and have had acres of coverage in the newspapers. I therefore understand why emotions are raised by the issue and I sympathise with both sides to some extent. I recognise the hurt that victims feel and that they want to see something done. Likewise, I recognise that journalists are concerned about the freedom of the press. I understand why we have had that debate. However, the other side of it, the plurality side, deserves equal attention.
I raised this on the first day that Leveson was reported to this House and was told by the noble Lord, Lord McNally, that any decision on it was above his pay grade. I got a similar reply during the passage of the Enterprise and Regulatory Reform Bill, which dealt with the competition structure and would have been a perfect vehicle for the Government to come forward with some proposals. Eventually, they did not, even at the last minute. When I tried again at that final stage, it was not really discussed because of the kerfuffle about the royal charter. I received a letter from the noble Viscount, Lord Younger of Leckie, saying that in his recommendations Lord Justice Leveson did not address the technical means of achieving his outcomes but acknowledging that this is an important issue. It then said:
“In light of that, the Government will consult to seek views on these proposals and, most importantly, how they might work in practice. This will be in place before the summer recess”.
We are getting fairly close to the Summer Recess, but we have heard nothing else.
One light on the horizon is the committee chaired by the noble Lord, Lord Inglewood, and his initiatives in this respect, but the reply that he got from the Secretary of State, which he has just related to us, does not give me great encouragement to believe that the Government are moving forward. Certainly, it does not suggest to the Select Committee that it is going to get much from the Secretary of State before the Summer Recess. I wish the Communications Select Committee good speed. I hope that it manages to get some government engagement but, at the moment, the suspicion is that this element of Leveson has been put on the back burner or kicked into the long grass, whatever expression that you care to use, because politicians in the Government and perhaps the political class more widely than the Government are concerned that we must not upset the owners of the media, in particular the print media, as well as cross-media ownership.
Unless we grasp this nettle, Governments from here on will be equally hesitant to take a line that will be rubbished by major media moguls. It is right that in all countries there are big owners of newspapers and television stations and so forth and that politicians always have to recognise that and deal with them. In this country, there is a particular structure with the domination of Murdoch. I agree with my noble friend Lord Lipsey that Murdoch has brought some benefits to this country. I do not think that his journalists are more evil than anybody else, but they are uniquely powerful, and democracy cannot allow uniquely powerful organisations to continue to dominate our news media. I therefore hope that the Minister can tell us today rather more than he told us when he replied to the noble Lord, Lord Stoneham, recently, when he said that the Government were still thinking about it. I hope that they will do something, preferably before the Summer Recess.
Lord Stevenson of Balmacara
My Lords, I thank the noble Lord, Lord Sharkey, for securing this debate and I thank all noble Lords for their contributions. There has been a reasonable degree of unanimity around what we have been discussing, which is all to the good and plays to the spirit of the royal charter debates that we had. We therefore have something that we should continue to build on.
When introducing his speech, the noble Lord, Lord Sharkey, gave us a good and quick tour d’horizon of how we got to where we are, which echoed a lot of what I have thought about the issue. He has also picked up an important point that there a lacuna in the public’s understanding and awareness of why media plurality is so important and how we need to deal with it. I was also struck by the point made by the noble Lord, Lord Inglewood, and his frustration at being isolated and not having sufficient guidance about where the Government stood on this. He likened it to the play, “Waiting for Godot”. I think that it is more like “The Maltese Falcon”. I smell a McGuffin in the air; I am not sure what it is, but that is the point of McGuffins—we do not know what they are. They certainly take your eye off where the action is and leave you grasping for how events turn out. I suspect that we are in that sort of mode where there is something happening but, rather like Rosencrantz and Guildenstern —to change my metaphor again—it is all happening just a bit offstage and we are not part of it.
I have three important things to say—well, they are important to me and I hope that they are to those who are listening. First, if one reads the whole of Leveson, which I have, it is a very rich resource for those interested in this area, and not all of it is ever quoted or brought out. The section on plurality, as my noble friend Lord Whitty said, it is not as long or extensive as some of the other stuff, but it is very important. Leveson analyses it out in a way that I have never seen before, but it is worth reflecting on why we care so much about plurality. It is not because plurality is not important but because it is only a surrogate for what I think is at the heart of the debate, which is trying to ensure that the media are indeed of central importance for a healthy and well informed democracy. Therefore, control of the media should not be concentrated in too few hands. That is a slightly different way from how many people, particularly media commentators, have done it. We have tended to rush to a view and have brought up measurement schemes and other things around what we can find out about plurality as an issue in itself. In fact, it is only a surrogate for what we are trying to get at, which is about a different discourse and a different culture around the engagement of those people with our democracy.
In a sense, the Communications Act 2003, for which my party was responsible, has very good measures on plurality. It says that there are two needs in any assessment of this: a sufficient plurality of views in newspapers in each market for newspapers; and, changing slightly, a need for sufficient plurality of persons with control of the media enterprises serving every audience in the UK. We can see why it is important but we must bear in mind that it is only a surrogate.
My second point is that we have tended to use as the measuring medium news and current affairs when considering plurality. Others have mentioned this before but increasingly, particularly in a multimedia- and internet-based society, we have to think of many more things. YouTube is not news and current affairs but that is where most people now gather information and ideas. If we are looking at news and current affairs only in a very traditional sense, we may be led astray.
My third point is on the purpose of this debate, and I hope that the focus of the Minister when he responds will be on what Leveson actually recommended. Nobody has referred to that. We have existing regulation in place, much of which Leveson regards as being satisfactory. There are only a few areas where he thinks that there should be change. It is about trying to bridge the gap between where the noble Lord, Lord Inglewood, is and wants to be, where my noble friend Lord Whitty would like to be by the Summer Recess, and where the Minister probably is—I hope that he is running fast to catch up. The gap is not that big. We are not asking for a huge amount.
I go back to the point about democracy: we must be clear about what we are looking at. Let us keep that under review because in a changing world and a changing environment, it is not necessarily sufficient to concentrate only on news and current affairs. Secondly and obviously, we must now begin to measure and to include online publications in any market assessment for consideration of plurality. Much more work should be done on the theory of how media priority should be measured. That point has been touched on several times in the debate. It is not easy and can be very complicated. I do not think it is as simple as the noble Lord, Lord Sharkey, was trying to suggest. There has to be more to it, as I have tried to say in my argument.
The question of whether or not one can rely on competition law has been raised. Leveson says that,
“the levels of influence that would give rise to concerns in relation to plurality must be lower, and probably considerably lower, than the levels of concentration that would give rise to competition concerns”.
That is an important point. He thinks that the levels must be reduced for the media. The Government should consider whether periodic plurality reviews should take place. We agree with that and I think some are already happening. The final points that Leveson makes are about who takes the final decision. We did not touch on that but I think it is important because it was raised—in spades—in terms of the BSkyB issues. The Secretary of State should remain responsible for public interest decisions.
There is not much to change; much of that is in place. It would not take much for the Minister to convince us that action has been taken and I look forward to hearing from him.
Lord Gardiner of Kimble
My Lords, I thank my noble friend Lord Sharkey for this short debate on how the Government plan to take forward the issues of media ownership and plurality in the light of Lord Justice Leveson’s report. This clearly is an important issue, and plurality is vital for a healthy and well informed democracy. It is equally clear that we must get this right, and I have listened very carefully to the many comments made by your Lordships today.
In September 2011, this Government publicly commissioned Ofcom to provide advice on the issue of media plurality, which was then considered by Lord Justice Leveson. I think the noble Lord, Lord Stevenson of Balmacara, put some sharp focus on the fact that it may not have been the largest part of the report, but that does not mean to say that it is not a very important part of it, as other noble Lords have indicated.
As was acknowledged by Lord Justice Leveson, the broad constraints of the work that the inquiry had to undertake meant that there was not sufficient time to look at these matters in detail. As a result, Lord Justice Leveson’s recommendations in this area were,
“at the level of desirable outcomes and broad policy framework, rather than the technical means of achieving those outcomes”.
That, I think, recognises that plurality is a complex issue: it is concerned with what is available in terms of the number of different media voices but also with what information people consume. As was identified by Lord Justice Leveson, a number of questions flow from this. The first relates to scope—for example, how far plurality rules apply to online as well as to more traditional news platforms. A second question relates to measurement—the number and range of metrics that provide an indication of the level of plurality and, indeed, sufficient plurality. I agree with the noble Lord, Lord Stevenson of Balmacara, that there is a complexity about these matters; it is not a quick fix. A third question relates to remedies—the range of available remedies, whether structural or behavioural. A fourth question relates to triggers for action—what might trigger a review of plurality or action, such as the imposition of a remedy. I also agree with the point raised by the noble Lord about whether periodic plurality reviews or an extension to the public interest are most likely to provide a timely warning of and response to plurality concerns that develop as a result of organic growth.
The Government have committed to seek views on these issues and on how to take forward Lord Justice Leveson’s recommendations. I am very conscious of the strictures of the noble Lord, Lord Whitty, and my noble friend Lord Inglewood on these matters, but I can assure noble Lords that this will be a thorough and well thought-out piece of work, and the process will begin this summer. It will build on Ofcom’s advice and Lord Justice Leveson’s recommendations in this area. I also emphasise, conscious of what my noble friend Lord Inglewood has said, that the work of your Lordships’ Communications Committee will provide another valuable source of evidence and analysis. I believe, having discussed this with colleagues, that this is the reason for the manner in which the response was couched, not because there was any lack of courtesy or understanding, and that this work will be immensely valuable to the considerations.
My noble friend Lord Sharkey raised the idea of a revenue cap, as indeed did other noble Lords. At times, the Opposition have raised this as well and have made similar recommendations. As the Ofcom report highlights, this may well present difficulties. The dynamic nature of the UK’s communications sector means that at this stage it will be hard to find a generally accepted consensus on a definition of the UK’s cross-media market, or have the same view of its revenue and of the revenue accorded to firms operating with it. There is more work to do in that area.
One aspect raised by a number of noble Lords, including my noble friend Lord Stoneham—the noble Lord, Lord Stevenson of Balmacara, used the words “in a changing world” that I was particularly struck by—is that we have seen such changes to the face of the media over just the past decade. There is the online sector and we will see all sorts of other innovations that we have not thought of yet. That is why I think that Lord Justice Leveson concluded that these should be part of any market assessment of plurality. Within 10 years, Google News and Facebook have become two of the three most used online sources for news after the BBC. I have, of course, noted what my noble friend Lord Sharkey said, but we need to address the influence of the providers of news generally. Nevertheless, consumers are benefiting from these new services, so it is important that in any new plurality regime such innovation continues to be supported.
I understand that the Opposition have proposed a cap on the UK’s national newspaper circulation. I am as yet unclear whether this would be defined by print run or by readership, but as the whole media market is changing, that may not actually address the issue in the most skilful way. In a world in which people get their news from multiple sources and use a range of different platforms to access news content, the extent to which newspaper circulation correlates to influence may potentially become less clear.
I was also very interested in what the noble Lord, Lord Parekh, had to say on ownership, about some of the experiences from the Indian media, and the six points he made. The point is that the trend of change introduces other new challenges. While exposure to a great range of new sources is undoubtedly positive, an increasing array of information also heightens the possibility that people will use internet search engines to modify selectively their own news intake. Indeed, search engines support this by prioritising news content based on a user’s previous searches. This is why Ofcom highlighted that the availability, consumption and impact of news media were relevant measures of plurality. The report made clear that an inflexible prohibition on market share was not currently advisable. It stated that,
“setting absolute limits leaves no room to take account of the broader context, and this creates a risk that it is not possible to address issues of commercial sustainability and innovation in an appropriate manner”.
Lord Justice Leveson similarly concluded that no compelling evidence was put forward to support arguments for any fixed cap on media market share.
It is for those reasons that I used the words “quick fix”. Colleagues may not appreciate them, but I think that a quick fix is not sensible and we need to proceed with care. That is why Lord Justice Leveson recommended that work should be undertaken with the industry on a measurement framework for plurality in order to achieve as great a measure of consensus as possible on the theory of how it should be measured. In many communities, the issue will be the extent to which there is a regional source of news alongside the BBC. Some expressed concern about the growing predominance of our national news market by foreign news media. We need to think very carefully as to the extent to which any new plurality regime might in practice give the foreign news media a competitive advantage. These issues all warrant a level of detailed consideration that was not possible in the context of Lord Justice Leveson’s inquiry.
In all this, clearly we must not forget the strength of the UK’s news sector. We have world-leading journalism and a wide range of trusted providers and editorial voices. I think the observations of the noble Lord, Lord Lipsey, on European interests will strike home but, to be honest, the Government are not likely to expect or permit Brussels to take on what is a UK responsibility. However tempting it may be and however strongly people feel, we have a responsibility to make sound decisions in the best interests of the country as a whole. This necessarily entails due process and engagement with those concerned to minimise the risks of unintended consequences—for example, around innovation and growth.
I want to assure your Lordships that work is in hand. I am conscious that a number of noble Lords, and perhaps all noble Lords here, want to have some indication that the Government take this issue seriously. It is serious, which is why it needs to be done properly. The Government will set out this summer how they plan to seek views on these issues and how to take forward Lord Justice Leveson’s recommendations.
Lord Inglewood
Before my noble friend the Minister sits down, perhaps I might make two points having heard his interesting remarks. First, can he confirm that he will write to me in response to my remarks? Secondly, can he tell the Committee when the last day of summer comes?
Lord Gardiner of Kimble
I am of course always very happy to write to my noble friend and I shall confirm the points that I made. I will reply to his other point by saying that I know when the first day of autumn is.
House of Lords
Daylight Saving
(11 years, 6 months ago)
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Lord Tanlaw
To ask Her Majesty’s Government what assessment they have made of whether the re-introduction of single/double summer time will reduce road deaths; and whether they will publish the road casualty statistics, including date and time, from the 1968-71 daylight saving experiment to inform debate on the matter.
Earl Attlee
My Lords, we estimate that 54 deaths and 185 serious casualties would be avoided annually across Great Britain if single/double summer time were adopted. However, this would have a much wider effect on the economy and society, which must also be taken into account. The Department for Transport does not hold road casualty statistics from before 1979. Officials are investigating whether other organisations hold the statistics. If they can be obtained, I will make them available.
Lord Tanlaw
If I heard the noble Earl correctly, it is very encouraging that the Department for Transport now recognises the connection between daylight saving and a reduction in accidents. Indeed, the statistics seem to prove that. Is the noble Earl aware that it is 45 years since 1968 and that 40 transient Transport Ministers have taken on the job since then? The Minister seems to be the first one who has seen this connection. Will he therefore consider having a debate to deal with the full implications of daylight saving and give an undertaking that, whatever happens with Scotland over independence or any concessions given to it, the time in Scotland will remain the same as south of the border?
Earl Attlee
My Lords, the department’s admission that there would be casualty savings is not new, but the available savings for each year as we reduce the overall number of casualties are only approximately one-third of the annual reduction in casualties that we expect. I would be delighted to have a debate in your Lordships’ House, but of course that is a matter for the usual channels.
Baroness Sharples
Will my noble friend congratulate the noble Lord, Lord Tanlaw, in asking this question over more than 30 years? I have heard him do so many times.
Earl Attlee
My Lords, I look forward with bated breath when the noble Lord stands to see whether he will ask about something else. One has to be persistent, but whether the noble Lord will achieve his desired outcome I cannot say.
Lord Berkeley
My Lords, taking into account the value of a human life, which I think the department uses in looking at accidents, I calculate that on the noble Earl’s figures the saving would be in the order of £5 billion. He was much vaguer about the economic downsides. Will he explain more about the economic disadvantages of this change?
Earl Attlee
My Lords, the noble Lord is quite right: there are serious disadvantages. In the aviation industry, for instance, in the long term it would be positive. However, it would take three years to adapt to the time change, and the aviation industry would need five years’ notice of the change. In addition, it would need another three years if we wanted to go back.
Lord Lee of Trafford
My Lords, apart from the obvious road safety benefits, does my noble friend appreciate that the tourism industry estimates that £3.5 billion of extra revenue and 80,000 new jobs will be generated with double summer time. That is 80,000 jobs across all skill levels. When will the Government stop being so wet on this issue?
Earl Attlee
My Lords, the Government are not being wet on the issue. If the noble Lord would like to start negotiations with Mr Willie Walsh, he is welcome to do so. However, I accept that the noble Lord’s analysis about the effect on tourism and leisure activities. That is a very good point. I am acutely aware of it when I attend the Great Dorset Steam Fair in September, because by 8 o’clock it is getting dark.
Lord Grocott
The Minister talked about going back. Is it not worth while looking at the history book rather than the crystal ball on this issue? It has been tried once and Parliament, the Government and presumably public opinion—my memory is not that precise—decided that it was an experiment that had not been successful and that we should revert to the previous situation. In the spirit of openness, will the Minister place in the Library a copy of the arguments that were used in order to end the experiment that was deemed at the time to have been unsuccessful?
Earl Attlee
My Lords, I suspect that the debates in Hansard will be very illuminating as to why at that point it was decided not to persist with the experiment. As the aviation industry has developed considerably since the trial, it would have much greater effect on that industry. It would probably not have such an adverse effect on the construction industry and in agriculture, however, because much more artificial lighting is now used by them.
Lord Tebbit
Would it not be considerably better if we put the savings into the subsequent costs of pensions and healthcare of those who, according to the noble Lord, Lord Tanlaw, suffer premature death on the roads?
Earl Attlee
My Lords, I did not quite get my noble friend’s point. However, if we did this as a trial, because the savings in casualties are only a third of the projected annual savings, we would not be sure whether it was a bad year, a good year, or just the effect of the trial.
Lord Davies of Oldham
My Lords, I have considerable sympathy with argument made by the noble Lord, Lord Tanlaw. The statistics have pointed this way for a considerable period. However, surely it would be inopportune for the Government to consider legislation on this matter at present, knowing full well that a significant body of opinion in Scotland is very hostile to the measure and it would look as though this Parliament were seeking to pre-empt the important issues of the referendum.
Earl Attlee
The noble Lord makes a very good point. The difficulty in Scotland, if we went for single/double summer time is that it would be getting light at 10 o’clock in the morning in some places. Time is a devolved matter for Scotland and for Northern Ireland, but the Government are clear that there should be one time zone throughout the United Kingdom.
Baroness Knight of Collingtree
My Lords, is it not the case that when the matter was previously investigated, no change was made mainly because of the danger to young children going to school on dark mornings on roads that had not been cleared of snow and that sort of thing? When considering this issue, let us not forget that there is a strong case to look after small children going to school?
Earl Attlee
I absolutely agree that there is a strong case for looking after children on the roads, but our calculations tell us that in road safety terms the change would be positive. I assure the House that every time this is raised, Ministers such as me ask officials all the searching questions but we come up with the same answer that it would be very difficult to do a trial and that there are very serious objections to it.
Syria
(11 years, 6 months ago)
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Lord Foulkes of Cumnock
To ask Her Majesty’s Government what circumstances they consider would justify an escalation of action by external Governments in Syria.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, we have continually escalated our involvement in Syria in response to the deteriorating situation. The conflict has now reached catastrophic proportions: 80,000 people have been killed, and millions have fled their homes. In response, we have committed an additional £30 million for humanitarian assistance and doubled our support to the moderate opposition to £20 million. We strongly support the US-Russia plan to convene an international conference with both the opposition and the Syrian regime.
Lord Foulkes of Cumnock
My Lords, with respect to the Minister, that does not answer my Question. Does she agree that lifting the arms embargo would be the first dangerous step towards military intervention, which could only worsen the situation and would not solve the problem in Syria? Will she urge the Prime Minister and the Foreign Secretary to redouble their efforts for a political solution and, above all, to do nothing that would jeopardise it?
Baroness Warsi
I agree with the noble Lord that the only way in which this matter will eventually be resolved will be through a political solution. It is important that we bear in mind the change in circumstances. As the noble Lord is aware, we have at stages changed the way that the arms embargo has been applied. We started by providing very basic equipment such as cameras and satellite phones, and training, with a view to making sure that the abuses that were being committed in Syria were documented. We then stepped that up: we supplied generators, water purification tablets and other items of humanitarian support. However, after January of this year, when the arms embargo was amended, we stepped up support again and this time provided protective gear and protective armoured vehicles. We are seeking a further amendment to increase the pressure on the Assad regime to say that, at this stage, no options are off the table.
Baroness Williams of Crosby
My Lords, let us hope and pray that the Russian-American conference will be successful. We should give it every possible support. I suggest to my noble friend that one of the things we might do at the upcoming G8 discussions is to try to recruit as many people as possible to commit themselves to funding the huge refugee problem in Turkey and in Jordan. She will be well aware that Jordan is almost breaking under the strain. Sadly, in the past few days, for the first time, we have seen refugees from Syria being turned back because Jordan, which is a well intentioned state, is simply unable to deal with them. Will she consider suggesting that Ministers at the G8 make the best pitch they possibly can to get multilateral support for the refugees in Turkey and, even more, in Jordan?
Baroness Warsi
I always listen with great interest to my noble friend’s comments. She comes to these matters with great expertise. Of course, I share her concerns. There has been the largest humanitarian aid appeal ever, of $1.5 billion—71% of that has been funded, but it is still tragically underfunded. The latest Friends of Syria meeting, which took place in April, was about making sure that donor countries that had pledged actually put their money on the table. We have seen an increase, and we continue to push for that increase. The Foreign Secretary is today in Oman, again at a core group of the Friends of Syria meeting, to build the basic foundations for a political solution to be more likely at the Geneva meeting. Of course, the issue of humanitarian aid will be discussed there, as it will be at the G8 meeting.
Lord Elystan-Morgan
My Lords, I respectfully put to the noble Baroness a question that I have raised previously, with regard to the recognition given to the opposition by Her Majesty’s Government. Was it de jure recognition, which is the fullest category, or was it de facto? Or was it recognition as a belligerent status? All these matters are governed by strict rules of public international law, as the noble Baroness will know. If I am right, and it was in fact a de facto recognition, is there any intention on the part of Her Majesty’s Government to escalate to a de jure recognition?
Baroness Warsi
I will probably have to write to the noble Lord in relation to the specific legal recognition. The recognition at this stage is because we feel that the transitional national coalition represents a broad coalition of the views of the Syrian people. However, I will write to the noble Lord about the specific legal parameters within which that recognition can be defined.
Baroness Goudie
We hope that we will get peace. Lebanon is also at breaking point. Even more importantly, under Security Council Resolution 1325, it was agreed in 2000 and further in 2010 that women—both women from the country and women from outside—should be at the peace table to resolve the conflict. Furthermore, parties committing sexual violence, as is happening in this conflict, should be prosecuted, including Members of the Parliament of that country who are allowing it to happen and not speaking out against it.
Baroness Warsi
I think that the short answer to the noble Baroness is yes on her first point—the national coalition is broadening its base, which includes women—and yes on her second point. We already have teams looking at the specific issue of sexual violence in conflict in Syria.
Lord Hurd of Westwell
Would my noble friend agree that it rather looks, announcement by announcement and step by step, as if the Government are moving perilously close to agreeing with some form of intervention in this matter? Before taking any further steps, will they apply as strictly as they can what seems to me to be the essential criterion: that, as a result of any intervention, the people concerned—the mass of the population in Syria—will be better off? Unless the Government can be assured that they would be better off as a result of intervention, it is much better to leave it alone.
Baroness Warsi
What I would say to my noble friend is that there are no no-risk options. Every option on the table and every potential option carries with it risks. That is why we firmly stand by the position that a political solution is the way to resolve this matter. Of course, at the same time, we cannot just stand by and allow a situation that has led to 80,000 people being killed, half the population of Syria being displaced and abuse happening on a daily basis, and say that the best option is to do nothing. That is why we have developed our policy on an incremental basis. We will continue to do so, and I assure noble Lords, including my noble friend, that I will continue to come back to this House and ensure that its views are fully taken into consideration in developing that policy.
Publishing: Public Lending Right
Baroness Benjamin
To ask Her Majesty’s Government what discussions they have had about the extension of the Public Lending Right, as set out in the Digital Economy Act 2010, to e-books and audio books.
Baroness Benjamin
My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and declare an interest.
Lord Gardiner of Kimble
The Government commissioned an independent review of e-lending in public libraries in England last year and the panel, led by William Sieghart, recommended that the public lending right be extended to e-books and audiobooks. The government response to the review, published on 27 March, sets out that the Government will consider commencing the provisions of the Digital Economy Act to extend PLR to on-site loans of e-books and audiobooks.
Baroness Benjamin
I thank my noble friend for that Answer, but is he aware that the loan of e-books and audiobooks is increasing and that public libraries are lending them without the copyright owner’s permission—meaning that, technically, libraries are infringing copyright because those books are not yet within the PLR system? Does he agree that public lending rights should be extended without delay to cover digital, audio and e-books, so that writers can be properly compensated for the use of their work, as recommended in the Sieghart review?
Lord Gardiner of Kimble
My Lords, the first thing to say is that e-lending is indeed increasing. It is still about 3% of the total, but it is undoubtedly increasing. Non-print book rights holders are currently conferred lending rights by the Copyright, Designs and Patents Act 1988. The law requires library authorities to reach appropriate agreements with non-print rights holders and with other parties on behalf of those rights holders. Indeed, library authorities offering e-lending must do so by contracting the services of third-party aggregators, who liaise with publishers on their behalf.
Lord Howarth of Newport
Does the Minister recognise that the authors’ public lending scheme has been very successful indeed over many years and that it has become an established part of our culture? We afford recognition to authors by way of a payment for each loan by public libraries of their physical books. Is it not now long overdue that we extended that practice to e-books and audiobooks? The Government have prevaricated for a long time. Will they now stop hanging about?
Lord Gardiner of Kimble
My Lords, in fact more than 23,000 writers, illustrators, photographers, translators and editors who have contributed to print books lent out by public libraries currently receive payments each year up to a maximum of £6,600. It is precisely why the Government asked William Sieghart to come forward with the review. Further work is being undertaken this year.
The Earl of Clancarty
My Lords, given that the government response to the Sieghart review confirms that including remote lending in the PLR requires primary legislation, are the Government considering introducing this—and, if so, when?
Lord Gardiner of Kimble
The noble Earl is absolutely right that remote lending is distinct from on-site lending, as I noted when I went to Diss library only last Saturday, and there are arrangements for that. The noble Earl made the point that there will need to be primary legislation. The Government are aware of that. They need to consider also the complexity with the copyright directive, but this matter is being considered.
Lord Clement-Jones
My Lords, with the Intellectual Property Bill now before the House, will my noble friend confirm that that will be an ideal opportunity to introduce public lending rights for remote e-lending?
Lord Gardiner of Kimble
My Lords, that is an interesting point. It is fair to repeat my words about further work. Some important research work, undertaken and funded by the British Library Trust, is under way this year. That is going to help us furnish better details because this whole area is undoubtedly evolving.
Lord Wills
My Lords, will the Minister say what estimate has been made of the income made by local authorities for charging out e-books and digital books? If he cannot give an answer today, please would he agree to write to me with such an estimate? In asking this question, I declare my interest in this matter.
Lord Gardiner of Kimble
I understand that, in fact, libraries are not charging for lending e-books. I will look into this in further detail, but when I asked the question, I was led to believe that public libraries were not charging. I will come back to the noble Lord with further clarification.
Insurance: Flood Risk Areas
(11 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, we are at an advanced stage in negotiations with insurers towards a successor to the statement of principles. Insurers have voluntarily agreed to abide by the current agreement until 31 July to allow time for the outstanding issues to be concluded.
Lord Dubs
My Lords, will the Minister confirm that there were 500,000 insurance claims for flooding last year and that 2.5 million properties are deemed by the Environment Agency to be at risk of flooding? He will know that the negotiations have gone on for a long time. Does he accept that it is vital that they are brought to a rapid conclusion to safeguard the position of many homes in the country and to ensure that people can sell their houses, which at the moment may prove impossible?
Lord De Mauley
My Lords, I broadly agree with the noble Lord that negotiations must be brought to a satisfactory conclusion as soon as possible. That is what we are working on, as I have said. It is worth saying that the Secretary of State has received a letter from the ABI—I have ensured that a copy is in the Library—in which it confirms that its members agree to continue to meet their commitments for a further month to enable the resolution of negotiations. To me this clearly demonstrates its good intentions and its determination to reach an agreement.
Lord Elton
My Lords, given the scale of the problem that already exists, will my noble friend make certain that no planning permission is granted to any developments of residential property in flood areas in future, because there are plenty of those bids in place?
Lord De Mauley
My Lords, my noble friend makes an important point. He should know that the National Planning Policy Framework seeks to ensure that development is located away from flood risk wherever possible.
Lord Wigley
My Lords, the Minister will be aware of the considerable number of floods along the Welsh coastline—Dyffryn Clwyd, the Conwy Valley, Ceredigion —over recent years. Some of these locations have had, twice in recent years, a one in 1,000-year event, making insurance virtually impossible. Can he guarantee that when this agreement has come into force after 31 July, or whenever, none of these households will be unable to obtain the necessary insurance cover?
Lord De Mauley
My Lords, my heart, and I am sure the hearts of all noble Lords, goes out to those who have suffered from these events. It really is a horrible thing to happen. It has happened to me, so I sympathise with them. Our view is that action taken to reduce flood risk is the best way of keeping insurance available and affordable, which is why we are spending more than £2.3 billion over four years to tackle flooding and, indeed, coastal erosion risks. I have a lot of sympathy with what the noble Lord says.
Lord Greaves
It is very welcome that the ABI has agreed to extend by a month the operation of the statement of principles, but this has been going on now for a long time. It is at least a year since I first asked a Question about it, and Members of this House and of the Commons have been asking questions at almost weekly intervals ever since. We were told that the negotiations were “constructive”, then that they were “arduous and difficult”, then that they were “urgent”. Now we are told that they are “at an advanced stage”. Will the Minister explain to the House, in words of one syllable, just what the problem is?
Lord De Mauley
I am not sure about words of one syllable, my Lords. Negotiations, and I know that some noble Lords opposite are very experienced in them, are very complex things, and this is a particularly complicated subject. We are working on it. The letter from the ABI is a good demonstration that we are close to a solution.
Lord Foulkes of Cumnock
My Lords, how are the Scottish Government involved in these discussions, since the insurance industry stretches throughout the United Kingdom?
Lord De Mauley
I absolutely agree with the noble Lord that this problem affects the whole of the United Kingdom. The devolved Administrations are closely involved in the discussions.
Lord Roberts of Llandudno
My Lords, is the Minister having discussions not only in England but in Wales, Scotland and Northern Ireland? As my friend the noble Lord, Lord Wigley, has indicated, we have suffered from serious flooding and that is going to increase as climate change becomes more severe. Is there not a new urgency in this and a necessity to work together to resolve this question?
Lord De Mauley
My Lords, I agree with that. To answer my noble friend’s question and to add to my answer to the noble Lord, Lord Foulkes, I should say that we have regular ministerial meetings with Ministers from the devolved Administrations—in fact, I attended one this week—and this subject regularly comes up.
Lord Campbell-Savours
My Lords, has the Minister himself been directly involved in these negotiations? If he has, does he know what the obstacle is? What is the problem? What is holding them up?
Lord De Mauley
I have to admit to the noble Lord that this is not in my policy area, so I have not. I attend the regular ministerial meetings so I know a certain amount about what is going on. In negotiations, it is very important that the intricate details are kept confidential, and I hope that the noble Lord will understand that, but, as I say, I am confident that we are working towards a solution.
Lord Knight of Weymouth
My Lords, the noble Lord, Lord Greaves, is right that the time that it has taken to reach this agreement is unacceptable. Last week we discussed the Defra delays over doing something about plastic bags. This week we return to this question. I declare my interest as someone whose home was flooded last July. Why do we keep having these Defra delays? Is it that Ministers are not showing leadership and providing a sense of urgency, or is it that right now it is impossible for this Government to agree about anything?
Lord De Mauley
My Lords, whenever we talk about flood insurance, the noble Lord leads with his chin. I just say this to him, once again: the statement of principles, which his Government put in place, did nothing about affordability. That is what we are seeking to tackle this time.
Baroness McIntosh of Hudnall
My Lords, given the information in the press at the weekend showing the vulnerability to flooding in urban areas—I do not know whether the Minister saw that information, but it was really quite alarming and a lot of it was about London—does he agree that many people who are in fact vulnerable to flooding probably do not know that they are, because they do not live near a river or on the coast? They are vulnerable to the breakdown of the infrastructure that allows waste water to be taken away when there are heavy rains. What have the Government been doing to encourage local authorities to prevent people from, for example, tarmacing over their front gardens, which makes the likelihood of flooding in those circumstances much greater?
Lord De Mauley
On the noble Baroness’s specific question, it is one of a panoply of issues that need to be addressed. I will write to her further on that. She specifically mentioned London. London is a very important component of this. The Environment Agency has a plan to tackle the issue, called the Thames Estuary 2100 Plan. A key strength of the plan is its adaptability, which allows us to deploy different options to manage flood risk as new climate change guidance emerges.
Lord Phillips of Sudbury
What assumptions about global warming underlie the negotiations?
Lord Elton
My Lords, could my noble friend throw a little light on his answer to my earlier question, which I interpret as meaning that permission to develop residential property in a flood plain would be denied wherever possible? Can he tell us in what circumstance it might be impossible to deny such permission?
Lord De Mauley
My Lords, development in areas of flood risk is permitted only exceptionally, where there are wider sustainability considerations. In all cases, it must be safe and not increase flood risk elsewhere. And, where possible, overall flood risk should be reduced.
Commissioner for Standards
The Chairman of Committees
That this House do extend the term of appointment of Paul Kernaghan CBE QPM as House of Lords Commissioner for Standards to 1 June 2016.
The Chairman of Committees (Lord Sewel)
My Lords, on 2 June 2010, the House agreed to appoint Mr Paul Kernaghan as the Commissioner for Standards for an initial period of three years. In April of this year, following consultation with the commissioner himself and the chairman of the sub-committee on Lords’ interests, the noble Baroness, Lady Manningham-Buller, the Clerk of the Parliaments invited the House Committee to agree that Mr Kernaghan should be appointed for a further three years. The House Committee approved the reappointment for a further, final three-year term. I therefore beg to move that the House do extend the term of appointment of Mr Kernaghan to 1 June 2016.
Lord Martin of Springburn
My Lords, can the Chairman of Committees give assurances that this will be the final contract? I have no objection to the extension, but there are good reasons for giving a parliamentary commissioner a fixed contract. It would be a worrying situation if, perhaps in 2016, the chairman or another chairman came along and said, “Perhaps we will extend again”. That would be a worry for the House.
The Chairman of Committees
I am very happy to give that assurance. That argument has very much been taken on board by the House Committee and this is clearly for a final three-year period.
Reservoirs Act 1975 (Exemptions, Appeals and Inspections) (England) Regulations 2013
(11 years, 6 months ago)
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Lord De Mauley
That the draft regulations laid before the House on 26 March be approved.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, Session 2012-13, considered in Grand Committee on 20 May.
Duty to Participate in Education or Training (Alternative Ways of Working) Regulations 2013
Baroness Garden of Frognal
That the draft regulations and order laid before the House on 14 March be approved.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, Session 2012-13, considered in Grand Committee on 20 May.
Industrial Training Levy (Engineering Construction Industry Training Board) Order 2013
Viscount Younger of Leckie
That the draft order laid before the House on 25 March be approved.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, Session 2012-13, considered in Grand Committee on 20 May.
Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013
(11 years, 6 months ago)
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Lord Newby
That the draft regulations laid before the House on 26 March be approved.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, Session 2012-13, considered in Grand Committee on 20 May.
Police Act 1997 (Criminal Record Certificates: Relevant Matters) (Amendment) (England and Wales) Order 2013
(11 years, 6 months ago)
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Lord Taylor of Holbeach
That the draft orders laid before the House on 26 March be approved.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, Session 2012-13, considered in Grand Committee on 21 May.
Offender Rehabilitation Bill [HL]
Lord Ahmad of Wimbledon
That it be an instruction to the Committee of the Whole House to which the Offender Rehabilitation Bill [HL] has been committed that they consider the bill in the following order:
Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 to 7, Schedule 3, Clauses 8 to 12, Schedule 4, Clause 13, Schedule 5, Clauses 14 to 17, Schedule 6, Clauses 18 and 19, Schedule 7, Clauses 20 to 22.
Mesothelioma Bill [HL]
(11 years, 6 months ago)
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Earl Attlee
That it be an instruction to the Grand Committee to which the Mesothelioma Bill [HL] has been committed that they consider the bill in the following order:
Clauses 1 to 11, Schedule 1. Clause 12, Schedule 2, Clauses 13 to 21.
Care Bill [HL]
(11 years, 6 months ago)
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Earl Howe
That it be an instruction to the Committee of the Whole House to which the Care Bill [HL] has been committed that they consider the bill in the following order:
Clause 83, Schedule 5, Clauses 84 to 91, Schedule 6, Clauses 92 to 96, Schedule 7, Clauses 97 to 100, Schedule 8, Clauses 101 to 106, Clauses 74 to 82, Clauses 1 to 38, Schedule 1, Clauses 39 to 42, Schedule 2, Clauses 43 to 67, Schedule 3, Clause 68, Schedule 4, Clauses 69 to 73, Clauses 107 to 113.
Intellectual Property Bill [HL]
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, following the gracious Speech, predictably and understandably, there was considerable interest in the Bills which were read out. One major newspaper chose to use a scaling system of one to five to describe the importance of each Bill in terms of its impact on our lives, with a crown motif. The Intellectual Property Bill was given no less than three—perhaps best described as the triple crown. Three crowns are worth having, and so are the measures in the Bill.
The Government recognise the importance that intellectual property rights play in our economy. Total annual investment in IP rights represents 4.3% of UK GDP. We are always looking to clear obstacles that stand in the way of investment in IP-intensive businesses and innovation. That is why we have introduced the Bill.
I will set out the background to the Bill. In November 2010, the Prime Minister commissioned a review of intellectual property and growth—the so-called Hargreaves review. It examined how the intellectual property framework could better contribute to UK economic growth. The Government responded in August 2011, broadly accepting the recommendations and committing to bring forward policy proposals. Some of these require primary legislation, others secondary legislation, and some can be handled outside the legislative framework. A number of proposals were brought forward in the Enterprise and Regulatory Reform Act 2013, which was given Royal Assent last month, as your Lordships will know.
Professor Hargreaves called on the Government to take action on the important and growing design sector and to deal with the “patchwork” of intellectual property rights for designs which puts it at a disadvantage in comparison with other sectors. The Government’s call for evidence on the UK design legal framework in September 2011 led to further thinking and analysis. This was followed by a formal consultation in September 2012. I am now pleased to bring to this House a Bill which seeks to implement the results of that consultation.
With Hargreaves in mind, the Bill before your Lordships has three broad aims: first, to simplify and improve design and patent protection to help businesses and, in particular, small and medium-sized enterprises; secondly, to clarify the intellectual property legal framework; and, thirdly, to ensure that the international IP system supports UK businesses effectively. The Bill proposes changes to help businesses to better understand what is protected under the law, reduce the need for costly litigation and to provide greater certainty for investors in new designs and technologies. Cutting red tape and helping to speed up the granting of patents internationally will help businesses protect their innovations more easily. These reforms are vital to helping Britain to succeed in a competitive global market.
I turn to the issues facing businesses which the Bill seeks to address. Businesses will benefit from greater legal certainty and clarity over what can be protected. This will allow investment in new design, with lower risk of copying, and a potential for an increase in trade. Greater certainty over legal rights could lead to a reduction in the use and cost of legal services to business.
Design owners, particularly small businesses, have told the Government that their designs are often blatantly and deliberately copied. The Government want to increase protection for registered design holders and to reduce the scale of design theft. Design rights should be given the same level of protection as copyright and trademarks. The armoury of enforcement agencies should be increased.
To this end the Bill introduces a new criminal offence for deliberate copying in the course of business. To clarify: if a person deliberately copies a registered design without the consent of its owner in order to profit from it, they would be subject to criminal sanctions. A conviction would require the high standard of proof necessary in any criminal case. In addition, enforcement agencies would bring proceedings in criminal cases only if it were in the public interest to pursue a conviction.
Extending criminal sanctions to registered designs would create a coherent approach to enforcement and protection. Infringers do not divide up the rights they plan to steal. If criminals produced a fake product, for example a golf club, they would steal the golf club design as much as the trade mark and any copyright existing in the instructions for use and the packaging. The sanction would act as a deterrent and provide proportionate punitive measures. A criminal offence will only apply to deliberate and intentional copying of a registered design. Where someone has infringed a registered design right unintentionally it would continue to be up to the parties to pursue any case with the civil courts if they chose to do so. We will have ample opportunity to discuss this particular matter further in Committee.
In addition, the Government are also seeking to simplify the law and intellectual property framework to provide better support to businesses. This will include making it easier for businesses to enforce their design rights and to understand who owns what. The changes are intended to help reform the system by harmonising it, where appropriate, with international regimes. In particular, we want to make it easier for small businesses and individual designers to use and navigate the system.
One example of this is the provision for the United Kingdom to join the Hague international designs registration system. Joining this system will allow businesses to include the UK in an international design application. This will streamline the registration process for businesses which want to register in a number of countries and will lead to direct savings. A legal firm has estimated that the cost of registration in six countries is currently up to £7,500. In contrast, the same number of registrations would cost less than £500 under the Hague system.
In addition to reducing costs for business by streamlining processes and registration systems, this Bill also seeks to reduce costs for business in the area of litigation. At present the cost of IP litigation is seen by many as prohibitive. For example, a small or medium-sized enterprise responding to our consultation told us that it had received advice that it would cost it £100,000 to bring revocation proceedings against a competitor’s patent. The potential for this level of cost meant that it was unable to challenge in court a patent that it believed to be invalid. In this Bill we are expanding the patent opinions service and introducing a new design opinion service. The services will provide low-cost alternatives to costly litigation.
Since the Intellectual Property Office launched the non-binding patent opinions service in 2005, nearly 200 opinions have been issued. The service enables parties to resolve disputes without the need for costly litigation. Users of the opinions service are primarily small and medium-sized enterprises, but a number of large businesses, such as Dyson, have also used this service. The expansion of the patent opinions service and creation of a design opinion service are part of the Government’s wider strategy to enable them to support businesses to enforce their IP rights.
Other positive changes include the introduction of a small claims track into the patents county court for copyright, trademark and unregistered designs cases, for claims of up to £10,000. Many rights holders who could not previously afford to go to court can now do so. The small claims track provides a cheap and swift resolution to their IP disputes. The extension of the opinions services seeks to build upon this by providing an alternative route for resolving disputes.
I now turn to the other changes being made to patent law. The Bill proposes a number of changes to aspects of patents legislation, to provide clarity and legal certainty to users of the patent system. An example of this is enabling the Intellectual Property Office to share information on unpublished patent applications with its counterparts in other patent offices, on a strictly confidential basis. This will help clear existing backlogs and speed up clearance times.
An additional year of waiting, also known as “patent pending” time in the USA, Japan and Europe, has been estimated to reduce growth, due to lost innovation and enterprise, by up to £7.6 billion in the global economy. By reducing duplication of work and speeding up the patent granting process overseas, UK businesses applying for European, US and Japanese patents in addition to UK patents could increase the value of their patents by £4.2 million per annum. The Bill seeks to bring about these economic benefits to business.
Let me now turn to the reform of the European patent system, which this Bill will enable. This will allow UK businesses to apply for a single patent to be administered across Europe. The change could bring about direct savings to UK businesses of up to £40 million per annum in translation costs alone. The proposed creation of a unified patent court will mean a single regime for enforcement of patents in almost all EU countries. In February this year, my right honourable friend the Secretary of State for Business, Innovation and Skills signed the agreement which will lead to the establishment of the court.
In the Bill we are making an amendment to UK patent law to enable the Government to give effect to this agreement at a future date. We shall bring forward an order for the approval of this House and the other place. This is a key step towards the establishment of a unitary patent court, part of which will be based in London. According to independent estimates, hosting part of the unified patent court in London could also bring a benefit of around £200 million to the UK economy.
I now move on to the changes being made to the Freedom of Information Act. This Act currently protects research information held by public authorities which are subject to the Act, but other than in Scotland there is no dedicated exemption for information obtained during a programme of study. The Bill introduces a new exemption into the Freedom of Information Act to protect continuing programmes of research intended for future publication by public authorities. This will achieve parity with Scotland.
The change was recommended in the Justice Committee’s post-legislative scrutiny of the Freedom of Information Act, and ensures public sector research bodies, including universities, can where necessary protect their research findings pre-publication. This will provide public sector researchers with clarity and certainty. It also provides the opportunity to validate and analyse research results before putting them into the public domain, or before any related patent application has been filed.
I turn to the Secretary of State’s duty to produce an annual report to Parliament. The Hargreaves review stressed the importance of intellectual property for innovation and growth. It noted, however, that IP policy development was characterised by an incomplete evidence base and strong lobbying activity. This requirement is intended to act as an incentive to improve the way in which policy development takes account of innovation and growth. It will also increase transparency and enable a wider range of stakeholders to scrutinise the IPO’s activity.
In summary, the measures contained in the Bill are designed to help SMEs, larger businesses and the research sector. They strengthen and simplify intellectual property law. Following the Hargreaves review, and before the bringing-forward of this Bill, the Government consulted extensively with stakeholders. The formal responses to the relevant consultations have been placed in the Libraries of both Houses. We continue to engage with the wider IP community, and are thankful to the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys. They have organised a seminar in early June, which my officials will attend. As IP Minister, I have met the CIPA and ITMA myself and found their feedback on the Government’s consultation very instructive.
This is a technical Bill and I am certain that noble Lords will wish to scrutinise these measures in more detail in Committee. To assist with this, my officials have produced a text highlighting the amendments proposed to the relevant legislation, which I shall place in the Libraries of both Houses. In addition, the Government will make available documents in advance of Committee stage which will clearly set out the details of what related secondary legislation will include. I look forward to engaging further with your Lordships as the Bill progresses. Before the Committee stage I shall be holding a meeting for all Peers in Committee Room 2A at 4 pm on 4 June to which, of course, you are all most welcome.
I particularly wish to welcome today the noble and learned Lord, Lord Walker of Gestingthorpe, on his return to the House of Lords. The noble and learned Lord has a long and distinguished legal career and, I am certain, will bring great expertise to the House. I look forward to hearing his maiden speech in the debate today. I commend the Bill to the House and beg to move.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for introducing the Bill and for the courtesy of the meeting that I had with him yesterday. We look forward to working together on this legislation.
I am joined on the Front Bench by my noble friend Lord Young of Norwood Green, a veteran, he tells me, of the Digital Economy Act 2010—which we discussed at Question Time but which seems to have disappeared. That means that he has form in this area, and I give warning to the Minister that there will many detailed discussions in Committee on some areas of the Bill. Like the Minister, we look forward to the maiden speech of the noble and learned Lord, Lord Walker of Gestingthorpe.
The UK’s intellectual property framework, which includes copyright, design rights, patents and trademarks, should support and encourage companies large and small as well as individuals to innovate by introducing new products and processes or through opening up new markets. Our IP framework has evolved over time, but we live in a fast-moving world and ongoing effort by government is required to simplify and streamline the IP framework and make sure that it better serves the needs of the UK.
After a long period of inactivity, the Government have produced two Bills dealing with intellectual property in the space of barely 12 months. I would like to think that this is because they have finally woken up to the need to modernise our IP regime and to support our creative industries, but given the considerable time and effort which had to be put into the ERR Bill and the ongoing furore about the Hargreaves recommendations on copyright exceptions, which are due to come before the House in a series of SIs later this year, we have to recognise that the jury is out on this matter.
This slim Bill hardly lives up to the rhetoric in the gracious Speech, let alone its Long Title, and so slim is it that one might almost wonder whether it started out as a minor section tagged on to the end of a much bigger Bill—perhaps the missing communications Bill, about which we heard so much in the early days of the coalition Government but which seems to have died a death. Is this yet more evidence of the strains within the main government party?
Whatever its provenance, the Bill is yet another attempt by the department to tinker with one or two fringe areas in IP. It represents another piecemeal approach, picking up issues that happen to be at the top of the pile, rather than doing what the industry is crying out for and what was recommended by Hargreaves; that is, a root-and-branch job with strong evidence within a coherent plan that will provide crucial support for our creative industries to grow and prosper and, in turn, contribute to the rebalancing of our economy.
It is worth recalling that some of the measures that were included in the Enterprise and Regulatory Reform Act will have the effect of gifting lengthy and valuable copyrights back to companies that manufacture chairs and other objects, and wallpapers. Many of the copyright exceptions that will come forward in secondary legislation later this Session will directly impact on profitable businesses that currently trade on rights purchased and acquired over many decades. Changes to the IP regime are not to be taken lightly and they need to be considered properly and with due regard both to fairness and enterprise.
I suspect that the problems which arise in this area stem in part from the continuing split in responsibilities for IP between BIS and DCMS which bedevils this area. The Minister styles himself as the IP Minister—indeed, he referred to himself as such earlier—but, with DCMS directly responsible for film, broadcasting, the performing and the visual arts, and the cultural industries more generally, that claim has a hollow ring. Having said all that, I agree with the Minister that this modest Intellectual Property Bill is broadly a positive measure and, while we will be doing what we can to improve it, we will do so in a constructive manner, as we want the Bill to go forward.
As the Minister said, the Intellectual Property Bill is intended to help businesses better understand the protections afforded by IP law, to reduce the need for costly litigation and to provide greater certainty for investors in new designs and technologies—something that we can all get behind.
The measures in Part 1 flow, as was said, from the Hargreaves review of intellectual property, published in May 2011. They have been crafted after extensive work and consultation by the IPO, which we acknowledge, and after several years of energetic lobbying by the design industry, which has long argued for greater protection for design work. However, the Hargreaves report found that our design system is amazingly complex. There are five ways to protect designs—UK registered designs, UK unregistered designs, UK copyright, community registered and community unregistered designs. Indeed, the Hargreaves report recommended that no action be taken until a much more detailed survey of evidence had been prepared.
The issue is complicated by the wide range of industries involved. Different industries have different levels and types of need from the IP framework. For example, the fashion industry lives with a high rate of appropriation of its designs. It does, however, frequently pursue infringement of trade marks.
Evidence submitted to the Hargreaves review was predominantly concerned with protection and enforcement issues and raised the discrepancy in levels of protection between design rights, which protect technical design, and copyright, which largely protects artistic designs. This applied both in terms of the duration and availability of rights and their enforcement. Unlike copyright, which is supported by criminal sanctions and is therefore of interest to police and trading standards officers, design rights offer only civil sanctions. However, Clause 13, which sets out to change that, applies only for registered designs, not unregistered designs.
Clearly, there is a case for offering effective remedies to designers who find that their ideas are simply taken over and used without compensation, and this situation is exacerbated in the small companies that make up the design community, which have often invested time and money in developing these designs but either could not afford to take enforcement action or found the law inadequate to do so. Can the Minister explain the rationale for excluding unregistered designs, when ACID reports that the majority of the UK’s 350,000 designers rely on unregistered design rights, with 18,000 to 25,000 unregistered designs lodged with ACID each year, compared with only 4,000 registered with the authorities annually? The development of the copyright hub may well be relevant to the design sector and perhaps the Minister could say whether it is envisaged that it will include design interests of interest to this Bill. If it does, that needs to be taken into account.
The Government rely on saying that,
“blatant, deliberate copying of designs, for commercial gain safe in the knowledge that many of the victims will be unlikely to have the resources to respond, is an act worthy of punishment”,
and believe that the UK needs,
“a coherent approach to the protection of intellectual property rights”,
as copyright and trade mark infringements can attract criminal penalties in certain circumstances. The Government say that their approach is supported by a number of respondents to the IPO consultation, in particular SMEs and independent designers, who criticised the time, cost and uncertainty of existing civil remedies and said that they found it difficult to protect their designs against deliberate copying. On the other hand, the measure is opposed by the IP Federation, the Intellectual Property Bar Association, the City of London Law Society, the Chartered Institute of Patent Attorneys and a number of IP lawyers and specialists, as well as Dyson and the Ministry of Defence.
In particular, this group questions the evidence relied on by the Government to argue that such a measure is necessary. It argues that this area of law is too complex for juries to consider and that criminalisation would require specialist courts. It says that criminalisation is inadequate in the context of a civil wrong and that criminalising design infringement would be akin to criminalising breach of contract. On the comparison with trade mark and copyright, it points to the fact that prosecution largely occurs in cases where the rights are clear and a serious public harm has occurred. Finally, and perhaps crucially, it argues that criminalisation would create a “chilling effect” on innovation, where deliberate activities are genuinely believed to be non-infringing, but would have no defence.
In this context, creating a serious criminal offence punishable by a maximum penalty of 10 years’ imprisonment for copying of a registered design needs careful consideration. I look forward to hearing why the Minister thinks that existing remedies for design infringement, which include injunctive relief, damages and costs, are inadequate; and why he thinks it necessary to introduce the stigma of a criminal record into what is a highly technical field.
Part 2 of the Bill amends the Patent Act 1977 and the main measure here, as we have heard, is to provide for the Agreement on a Unified Patent Court to be brought into effect in the UK. We on this side welcome the agreement, which establishes a unified patent court within participating EC countries. The agreement means that it will be possible to apply to the European Patent Office for a single patent that will have effect across all participating countries and, for some issues, can be litigated in the new unified patent court. This seems to be a very good example of the EU working together and countries coming together to harmonise regulation and assist businesses. I trust that this is not one of the issues on which the Prime Minister will be seeking a UK opt-out. There is likely to be sufficient work allocated to the UK to justify two centres for the UPC in the UK. Can the Minister confirm that this is the case and that, if so, a sensible approach here would be to locate one of these in Scotland?
Part 3 of the Bill creates a new exemption under the Freedom of Information Act 2000 for continuing programmes of research intended for future publication, which we welcome. This formed an amendment that my noble friend Lady Warwick of Undercliffe, with several other noble Lords, notably the noble Baroness, Lady Brinton, who is in her place, argued for during the passage of the Protection of Freedoms Bill. The Justice Committee of another place took up this argument and the Government have finally accepted that some real harm could flow from the premature exposure of ongoing research material. I congratulate the Government on taking this step.
We also welcome the requirement being placed, under Clause 20, on the Secretary of State to report annually to Parliament on how the activities of the IPO have supported innovation and growth in the UK. If I recall correctly, suggestions for an annual report on IP were discussed during the ERR Bill in an amendment moved by the noble Lord, Lord Jenkin, who is in his place. The terms of the report as specified in the Bill are rather narrower than was suggested in our discussion, and this is something to which we might return in Committee.
Finally, there are some areas of IP law that have not made it into the Bill, but which we might consider in Committee. These include various considerations of the differences across the design rights legislation and the way in which criminal offences already in existence do not seem to match well with that. We will come to these in Committee, to which I look forward.
Lord Clement-Jones
My Lords, I thank the Minister for his characteristically careful exposition of the Bill and for the amendments to legislation briefing that he provided beforehand. I am also very much looking forward to the maiden speech of the noble and learned Lord, Lord Walker of Gestingthorpe, a fellow alumnus of Trinity College, Cambridge. I am sure that we are all looking forward to it.
I shall not re-rehearse some of the points made on the Enterprise and Regulatory Reform Bill, when we had a full canter through the intellectual property policy issues. As the noble Lord, Lord Stevenson, said, later in the year we will have the statutory instruments bringing forward further policy recommendations of the Hargreaves report. I agree with him, however, that the separation between the DCMS and BIS in terms of intellectual property and the creative industries is unfortunate. It was not done by the previous Government. It is not being done by this Government, but a common intellectual property and creative industries Minister is much to be desired.
I broadly welcome the changes in the field of patent and design law made by the Bill. As the Minister says, it is particularly technical in nature. The setting-up of a new unified patent court is an essential ingredient of the new unitary patent, which is effectively the realisation of a long-standing, six-year ambition by the IPO, strongly supported by successive British Governments. There will be a branch of the central division of the court in London. Here I must declare an interest as a partner in a global law firm. I hope that the parties will have the freedom to choose which branch of the court to litigate in. I welcome many of the other provisions relating to patents, which will benefit small business in terms of simplification and cost. I hope that the Minister will confirm that court fees in particular will be affordable to small business.
There is, however, clearly confusion between the Government’s press release, which estimated some £200 million of benefits, and the Explanatory Notes, which put them at £2 million per annum over 20 years—yet another demonstration of the benefits of EU membership. Generally, doing away with the need for validation in every country should mean that the cost of protecting inventions for the whole of the internal market will be much reduced. However, my noble friend will be aware of considerable concern about the changes to the opinion service under Clause 15(4), which gives power to the comptroller to revoke a patent after issuing an opinion. This, it is strongly argued, would be a deterrent to using that service.
I welcome many of the detailed measures in relation to registered and unregistered design right which, as the Alliance for Intellectual Property says, has long been a forgotten IP right. It is also one which Anti Copying In Design, or ACID, has been pressing for. In particular, there is: the change in ownership of unregistered designs commissioned by a third party so that the designer will be the initial owner of the design, not the commissioner; clarifying the meaning of “qualification by first marketing”; the introduction of a non-binding opinion service for registered designs; and enabling UK SMEs to gain protection, in addition to the EU, through territories covered by the Hague agreement.
However, the scope of the Long Title provides an opportunity to extend some of the provisions of the Bill relating to designs and to correct some anomalies within existing IP law. I would like to outline those today and I hope we will be debating them on further stages of the Bill. On measures relating to design, Clause 13 introduces a new criminal offence of deliberate infringement of a registered design right. While this is a welcome move—and I do not agree with some of the points made by the noble Lord, Lord Stevenson—to be of any benefit to the vast majority of designers in this country, the Bill needs amending so that criminal sanctions will also apply to the deliberate infringement of unregistered designs.
Design is of key importance to the UK economy. It is estimated that there are in the region of 350,000 designers in the UK, as has been mentioned, and that UK businesses spend some £35.5 billion on design each year. The majority of the UK’s design community are lone, micro or small and medium-sized enterprises. Eighty-seven per cent have fewer than 10 employees and 60% have fewer than four. Yet there are only approximately 4,000 designs registered annually in the UK. Each year, between 18,000 and 25,000 unregistered designs are lodged with ACID’s data design bank by its approximately 1,100 members, so it is reasonable to assume that the majority of the UK’s designers rely on unregistered design rights and copyright.
The introduction of criminal sanctions for deliberate registered design infringement is of course a progressive step, as this is the first time that criminal sanctions will mirror those for copyright and trade marks, but why is this new criminal offence limited to the infringement only of registered designs? Surely, criminal sanctions need to apply to unregistered design rights, as they do to copyright, to have any real and lasting benefit to UK designers. I plan to make the case in greater detail in Committee, but criminal sanctions have been available for copyright infringement since 1862, and for trade mark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Copyright, trade marks and unregistered design rights are all property rights, and so is a registered design. But whereas persistent copying of the first two constitutes a serious criminal offence punishable by up to 10 years’ imprisonment, persistent copying of designs is currently not a criminal offence at all. This is completely anomalous.
Persistently copying a two-dimensional drawing of a design or a design document can therefore give rise to criminal liability. Yet when this 2D work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship—and we have many happy memories of discussing that on the enterprise Bill—copying that 3D version would not be a criminal offence. I fail to understand the reason for the policy decision behind that. How do the Government justify giving a higher level of protection to a 2D design than is given to the 3D manifestation of that design?
Civil action is often very difficult, given the inequality of arms between designer and infringer. I will give further examples of that in Committee. In some cases we have a designer with a turnover of £50,000 a year versus an £8 billion-turnover company. It is grossly unequal when one considers the possibility of taking civil action. One might argue that this was an attempt to incentivise design registration and increase revenue for the IPO, which, of course, we should be reminded is a trading body. I hope that the Minister will confirm that financial considerations have not been elevated above the needs of the majority of UK designers who rely on unregistered rights. Finally on the new criminal penalties, why have Section 110 of the CDPA and Section 101 of the Trade Marks Act, which ensure that company officers are liable if conniving or consenting, not been replicated here? Surely that is a crucial omission.
I turn to Clause 20 and the content of the annual report. The clause contains a very welcome requirement for the Secretary of State to report annually on the activities of the Intellectual Property Office and how it has supported innovation and growth. The clause is, in part, a response to the recent consultation on the role of the IPO. Overall, this is a positive step and provides a much-needed focus for the IPO’s activity. However, it is at the moment limited in scope and needs to be expanded. During the consultation, UK Music argued that there should be a requirement to report on how the activities of the IPO have maximised growth and innovation arising from the creation and exploitation of intellectual property. The Government accepted this point in their response to the consultation, while acknowledging that such a requirement cannot be restricted to existing industries and business models. However, the commitment is not currently explicit within the clause. Committee stage presents us with an opportunity to incorporate a clear reference as to how the IPO’s activities have supported IP businesses.
Similarly, paragraph 91 in the Explanatory Notes that accompany the Bill suggest that the report will cover new legislation and policy developments, including those related to copyright licensing. The music industry made a voluntary commitment, as part of Richard Hooper’s Copyright Works report last year, to report annually on progress around joint licensing. This is a welcome step and I believe that we can expect the first such report from the industry via UK Music later this year. But the Minister gave an assurance at Grand Committee stage of the Enterprise and Regulatory Reform Bill in January that this would be included in the annual report. This is reflected in the Explanatory Notes. However, it is not included in the clause in the Bill. Why not?
On Report, the Minister encouraged us to think that the report would also include updates on the state of protection of metadata and of cross-border co-operation. The noble Lord, Lord Howarth of Newport, was keen for the report to contain discussion about how the Intellectual Property Office seeks to balance its defence of the interests of intellectual property holders with the interests of the dissemination of knowledge. I am sure that he will expand on that today. Will the report also review the operation of the unified patent and the court? I very much hope that the Minister can confirm these specifics, either now or in Committee.
There are other areas where there is the opportunity to correct anomalies in intellectual property law for potential inclusion in the Intellectual Property Bill: first, to increase the maximum penalty for digital copyright theft to match that available for physical copyright theft. Criminal offences for online copyright theft have maximum penalties of two years’ imprisonment. However, criminal offences for physical copyright theft have maximum penalties of 10 years’ imprisonment. This discrepancy came about because the new offences were introduced by secondary legislation, using the European Communities Act 1972, as part of the UK’s implementation of the copyright directive in 2003. Penalties for new criminal offences, introduced by secondary legislation via the ECA, are limited to two years’ imprisonment. That was also after my right honourable friend Vince Cable’s Private Member’s Bill, which increased penalties for criminal copyright offences to harmonise them with those available for trade mark offences at 10 years. I very much hope that I have a receptive audience. Surely, criminal sanctions should not be dependent on whether the offence is taking place in an online or physical environment. Intellectual property is being stolen whatever format is being used.
Secondly, the discrepancies in the level of financial penalties available in magistrates’ courts should be addressed. Thirdly, a deterrent element to UK civil damages should be introduced for IP infringement by providing for the awarding of exemplary damages. This was recommended by the Gowers report, the report of the Culture, Media and Sport Select Committee in 2007, and so on.
Fourthly, the Government should use the Bill to extend the public lending right to remote e-lending. Over the past few months, William Sieghart and a distinguished advisory panel have reviewed myriad issues and concerns around the subject of e-lending in libraries. It is a very good report that I very much hope will be implemented. The Government have now committed to pursuing the legislation, and it seems that the Bill is a good instrument for doing so.
Finally, the Minister is exploring the question of unfair contracts, which he undertook to do on Report on the ERR Bill. I very much hope that this will happen during the passage of this Bill, which would provide a useful vehicle for any such changes.
There a number of other issues in the Bill relating to Clauses 1, 7 and 19, which I will raise in Committee, but I hope that the Minister will answer at least some of the questions that I have raised.
Baroness Buscombe
My Lords, I, too, very much look forward to the maiden speech of the noble and learned Lord, Lord Walker of Gestingthorpe.
It is testament to the importance of intellectual property and the value of the creative industries that this House is again considering the issue of copyright as the ink of the Enterprise and Regulatory Reform Act has barely dried. Indeed, I was surprised and very pleased when Her Majesty the Queen spoke in the gracious Speech of a “further Bill” which,
“will make it easier for businesses to protect their intellectual property”.
This aim reflects what I and many others in this House have long recognised: that this country has a strong and vibrant creative industries sector which, as the Secretary of State for Culture recently stated, should be central to the UK’s economic growth. I have to say that it is a bit rich of the noble Lord, Lord Stevenson of Balmacara, to begin his speech by saying that this is a sign that the Government have finally woken up to the importance of intellectual property. I might say that his previous Government never woke up.
Of course, I agree with the Minister that we must have a copyright regime which is fit for the digital age. However, this should not mean that we cannot also protect our most valuable assets—simply put, our creators. Indeed, the title of the Bill suggests that this is what this legislation is all about. It suggests to me that creators will at last be properly recognised and properly paid for their works in this digital age. The question is: does the Bill deliver? Is this an opportunity missed?
There is much to commend in the Bill. However, I want to take it a step further. Given our rich cultural history of Shakespeare, Dickens and Elgar, it might be easy to take for granted our world-leading creators and creative industries and to forget the extent to which we are enriched by them, culturally and economically. Without artists, who rely on a fair and secure copyright regime to be paid for their work, we would be a much poorer society in so many ways.
The current copyright climate is regrettably highly divided. There is a wide perception that large and well funded businesses such as Google and Yahoo! have more influence than creators on decision-makers around the world. These companies are too often portrayed, usually by themselves, as pioneers on the frontier of digital development, held back by the creative analogue luddites. I believe that this view of the search engines is wrong and, more importantly, short-sighted. These digital businesses need creators and their content to drive their businesses as much as they need the software developers to provide new ways to develop that content.
In the future, as the markets converge, these businesses will demand more high-quality content and innovation from the creative industries. These two groups are increasingly dependent on the same ecosystem to survive. However, there is a problem here, a huge problem which calls into question the worth of introducing more legislation to protect intellectual property when the powerful can continue to exploit with alacrity and for their own ends the creative work of others.
I want to make it clear at this point that I am not joining some populist—this week’s—bandwagon. This is an issue which I have been raising for over a decade and I now feel I must spell it out very simply for those who might think it has to do with tax. It does not. It is about how these search engines, otherwise known as content aggregators, make their money in the first place. It is also something of which I have personal experience. As chief executive of the Advertising Association, I visited Google back in 2005 to talk to its management about following its mantra of “doing the right thing” and supporting the system of self-regulation for advertising. Its firm and first response was that it was a technology company and that somehow that is where its value-added, its income, came from—not advertising.
Where is the integrity in that? If you do not think the right thing, you will not do it. I remember thinking then that these people make the BBC look almost humble—no mean feat. Let me explain how it works. The key question is: how do search engines—content aggregators—make money? How, for example, will Yahoo! recoup more than the $1 billion it has paid for Tumblr? Yahoo! will, I suggest, judge when the time is right to seek to attract advertisers to Tumblr. What attracts advertisers? Good content. Yahoo! will treat that valuable content produced by hard work and so many brilliant, creative minds—many of them British—as free and advertisers will pay Tumblr to appear next to that content. It is essentially a David versus Goliath situation—David is the creator. What we as legislators should be doing is making sure, to the best of our ability, that David is paid. If the Google model is followed, David will probably not be paid.
In 2009, Eric Schmidt, then CEO now executive chairman of Google, made it very clear when he said: “All we care about is the end user”—meaning, of course, the consumer not the creator. A recent article by Luke Johnson, someone with considerable business experience, a track record of success and a former chairman of Channel 4, is instructive. He said:
“Essentially, Google is a gigantic parasite that makes a fortune from exploiting the creativity and entrepreneurship of others. Its search engines do not actually make anything; they just take advantage of the achievements of others”.
He went on to say:
“Google has been destroying the cultural capital that is so vital to our economic success. If the concept of copyright is obliterated, then our creative industries will be shattered, since there will be no protection of original work”.
Strong stuff, but it needs to be said. As Luke also stated in his article:
“Sadly, Britain is particularly vulnerable to Google’s predations in this regard, since our creative industries are one of the fields in which we are world leaders”.
I was reminded of this only last week when I was lucky enough to attend the Ivor Novello awards, awards that champion great British authors and musicians. In that world, we are simply the best. In his opening speech, the chief executive of the Performing Right Society made a plea for politicians to recognise the importance of protecting our valuable British intellectual property. That protection is being constantly eroded by these corporate raiders—US companies taking advantage of great British content. Will this Bill address this? I fear it will not. I am afraid that this Bill, while a good Bill and one, I should stress, I wholeheartedly support as far as it goes, is tinkering at the edges. Perhaps legislation is not the answer. Perhaps this requires a sea change in the culture of the way the search engines do business. In many ways that is so much harder than just introducing legislation.
That said, of course, there are many positive proposals in the Bill. There are in the region of 350,000 designers in the UK and UK businesses spend in the region of £335 billion on design each year. I welcome the greater protections which the draft Bill proposed, in particular a more proportionate response to deliberate infringements of design rights, although I hope that the Government will consider further how the rights of unregistered design can equally be protected. There will clearly be many opportunities for this House to discuss these issues. However, as this House begins these discussions and begins to scrutinise the Bill, I would urge the Minister and the Government to remember the need to secure a copyright regime which protects and nurtures our creators and creative industries. More importantly, I urge them not to be distracted by those big businesses which have the most to gain from the illusion of a war between consumers, creators and businesses.
I believe that we should be striving to ensure that our copyright laws give our creative industries the incentive and freedom to grow and innovate. This will ensure that we can all benefit from their significant talents and skills, culturally and economically. Only this morning, the Prime Minister made it very clear on Radio 4 that he will continue to introduce bold policies and measures to drive our economic success. He also talked about the global race. Effective intellectual property law would make a good, strong contribution to that aim.
Lord Browne of Ladyton
My Lords, in the introductory remarks of the noble Viscount, for which I thank him, he used the active verbs of strengthening, improving, simplifying and clarifying the law. The robust contribution from the noble Baroness, Lady Buscombe, indicated the metrics against which the Government may be judged in relation to their ambition to strengthen, improve and clarify the law. The House should be grateful to her for setting that metric, even if it appears an impossible task, if I may say so from my inexpert observation.
That leads me to my second point. I consider my engagement with this Bill to be a learning process. During in excess of 20 years of practising law in Scotland before I was elected to the House of Commons, I had only the most fleeting engagement with intellectual property law, so in preparation for this short speech I tried to acquaint myself with some of the complexity in this area of law. I have to say that I found it extremely complex. I came in this morning and my heart sank somewhat when I saw that immediately following me was the noble Lord, Lord Walker of Gestingthorpe, who will be making his maiden speech. I suspect that my inexpertise will be exposed substantially by his learned contribution to our debate. None the less, I am looking forward to it, even if it has that consequence.
I welcome the Bill—I suppose that I should say that, as everyone else has—as far as it goes. It is part of a process and it is perfectly clear that the Government are engaged in a process and will be judged against a number of metrics, including some that they have set for themselves, which I shall return to in a moment. I will make three general points and three specific points in my short contribution. First, I welcome the Bill because it gives me, a Scot who is a unionist, an opportunity to celebrate the United Kingdom. This is a not entirely unique event in your Lordships’ House, but they are fewer and further between than they used to be. This is an opportunity for us to consider an area of UK law that is extremely important to the whole United Kingdom, including Scotland, and we should make the most of it. We should make the most of it particularly in the context of what is going on in Scotland at the moment and the important decision that the people of Scotland will have to make next year in their referendum. It is important because the Hargreaves review suggested that changes effected at a UK level but in the context of proper international priorities had the potential to add of the order of £7.9 billion to the UK’s economy.
We are debating this Bill the day after the SNP Government in Scotland published a document entitled Scotland’s Economy: the Case for Independence. For noble Lords who have not had a chance to read it, the document does what Scots always do when talking on this issue: they celebrate the achievement of innovation, innovators and inventors in Scotland. I can do it as well as everybody else: from the discovery of penicillin by Alexander Fleming, who was born and brought up in the constituency I represented, through the invention of television—the list is endless, and all Scots can recite it as we learn it at our mother’s knee—to the creation of Dolly the sheep and the bio-industries in Scotland. However, conspicuously absent from that document is some of the detail of how an independent Scotland, separated from the United Kingdom and consequently from this body of law, would seek to recreate what already exists, with all the criticisms we have heard or that have been implied in the reviews, and so on? How will it be done in a way that will not make Scotland a good hunting ground for those who wish to exploit other people’s intellectual property rights, even if for a comparatively short time in an interim period? There is no engagement in this document with the nuts and bolts, the detail and the complexity.
For most of us who have been engaged in this debate since it started, that is not surprising. There is a consistent failure to engage with the nuts and bolts and the challenges of independence for Scotland, even against the reasonable request that Scotland should be maintained at the level that it is in a number of areas of life through this transition period if the people of Scotland choose independence. I do not think that there is any indication that they will, but we cannot be complacent.
Much more important, it is incumbent on the Government and politicians to highlight opportunities that show the people of Scotland and of the United Kingdom the value of the union. This is a great opportunity to do so. This body of law is being reviewed in this considered way for the protection of those who are innovators and inventors in Scotland. It is a good opportunity for Ministers of the Crown legitimately to be in Scotland, talking about something at a UK level that affects the nuts and bolts of Scottish society in a way that does not look as though Ministers are going there to frighten the Scottish people against the consequences of independence but are there just to engage with them and explain how important this area of law is. I encourage the Minister and his colleagues in government to do just that during the process of the Bill, and to overtly engage and make it clear to the Scottish people how much they benefit from having this degree of support.
My second general point is that this Bill highlights the value of good regulation—the contributions thus far reveal that. There has been a tendency in this House, particularly recently, which I fear has been driven by the Government—to undermine the value of regulation. Good regulation that addresses the protection of just the sorts of skills and innovation that have been addressed in this debate is important. It is important and valuable to the country that we are, and it is slightly ironic that our Prime Minister should have set the challenge to those who reviewed this to find a form of regulation that will necessarily involve additional regulation. We have had some debate already about the possibility of increasing and creating criminal offences. The Prime Minister charged those responsible for this to increase regulation in a way that will be a driver of the economy. We should be honest that there are two sides to regulation. I make the point that the Government should be honest.
The other area in which the Government need to be honest is that the Bill highlights the value of the European Union. I understand that the Hargreaves review attaches the highest immediate priority to achieving a unified EU patent court and patent system. That is utterly counterintuitive to the direction of travel of the public discourse on the European Union that is going on at the moment. Why is this voice not being heard? Where are the Government Ministers who are saying, “Actually, there is a place in the structure of our society for an additional European court? We think that it will help innovators and others in a positive way to build our economy and to drive innovation and wealth in the country”. I regret that the Government do not have the courage to put this argument forward as strongly as they should, and instead concentrate on the negatives in relation to the structures of Europe while—one might say through the back door—adding to those structures and doing it in the form of a patent court. It is remarkable.
My specific points have already been addressed, but I will highlight them. They relate first to Clause 13, which concerns the creation of a criminal offence. I am compelled by the logic of the argument that if one is to create an additional criminal offence in this area, it is illogical to restrict it only to registered designs, when unregistered designs in particular are such a significant element of this area of practice. However, in the broad analysis, I am persuaded that the Hargreaves review recommendation in this regard was the right one, and that the preponderance of evidence suggests that there is no justification for an additional criminal offence. It strikes me that in this very narrow area the creation of a criminal offence, potentially carrying these quite significant penalties, is taking a sledgehammer to crack a nut. It may operate in the way in which has been suggested, which is that no one will ever need to be prosecuted, because it will be a deterrent, but I doubt very much that that will be the case.
I suspect—in fact, I probably know—that in Scotland there is likely to be very little capacity for the investigation of offences of this complexity. It is unlikely to become a priority over all of the other issues that we face in relation to criminal prosecutions. I wonder whether the noble Viscount might indicate at some stage what degree of engagement there has been with the Crown Office, with the Scottish Law Commission and with the Scottish Government about the necessity or the sheer value of an additional criminal offence, particularly in Scotland, which is a separate jurisdiction in the criminal sense. It would be helpful to me, with the background that I have and the ambition that I have that the Bill will have some visibility in Scotland, to know what degree of communication there has been with the Scottish Government and other institutions in Scotland.
My second point relates to the challenge that the Government have set themselves to report annually in relation, effectively, to the success of the Bill and this area of law in meeting and achieving the objectives they set themselves in Clause 20. I wonder why the Government have restricted this method of reporting to this area of law. Why is it only in the area of IP law that we are to have reports about the success of legislation against the objectives that they set themselves? It would be an interesting principle to apply. The House and Parliament may be encouraged to replicate this provision in other pieces of legislation that are presented to it, so that reports over time will show whether or not the amendments that we make to the law, often having been persuaded by the Government that they will have certain consequences, are having those consequences. I wonder how we are to judge these reports. What metrics have to be applied to judge whether or not the changes to the law are as successful as the Government hope? I would be assisted in that regard if the noble Viscount would, in summing up, indicate how this is to be judged.
My final point is to reinforce what my noble friend Lord Stevenson said about the unitary court. Is it the Government’s expectation that there will be two of these courts, and is it their plan that one of them will sit in Scotland? If that is right, that again would be a very welcome fact to communicate to the people of Scotland so that they understand the importance of their place in this law in relation to their ambitions to share in the prosperity that this suggests. I reinforce the point I made about the United Kingdom to the noble Viscount and I would welcome it if he gave me some indication, either in summing up this debate or separately, of what communication there has been between the Government here, the Government in Scotland, the Scottish Parliament, the Scottish Law Commission and other institutions in Scotland so that I can follow that up during the course of my continued learning process in this, and can ensure that the Scottish voice is heard in these debates and discussions and communicated back to the people of Scotland.
Lord Walker of Gestingthorpe
My Lords, coming back to your Lordships’ House as I have, after three and a half years’ hard labour in the Supreme Court on the other side of Parliament Square, I have been touched by the friendliness and helpfulness of so many of your Lordships and the officers and staff of the House, whether or not they had any acquaintance with me in my earlier incarnation as a Law Lord. When I was a Law Lord I followed the practice of some, but not all, of my colleagues in sticking to the day job. That is why, more than 10 years after I became a Member of your Lordships’ House, I am making my maiden speech today. It will, I fear, be a very modest contribution, which will disappoint some of your Lordships, who have made kind remarks.
My first serious encounter with intellectual property law was about 20 years ago, when I was first appointed as a High Court judge in the Chancery Division, and the allocation of responsibilities between judges in that division was the task of the Vice-Chancellor, my noble and learned friend Lord Scott of Foscote, who I see is lurking behind me. He rang me up and said he was going to make me a judge of the Patents Court. I should explain, perhaps, that the Patents Court is a sub-division of the Chancery Division, and that most of its work is done by judges who have been patent experts all their lives. However, because patent litigation goes on for a long time and judges cannot sit in judgment on cases on which they have advised, there is a need for some supernumeraries. I said to the Vice-Chancellor, “I ought to tell you that I do not have a single O-level in any science subject”. I am not proud of that, but it is true; I had a very old-fashioned education. This carried no weight at all with the Vice-Chancellor. He said that I would find it an interesting intellectual experience, and hung up on me. It has indeed been a most interesting intellectual experience and I have learnt just a little bit of science along the way.
Maiden speeches are not meant to be controversial. I hope it is not controversial to say that one of the most important and problematic provisions of the Bill is Clause 16, which introduces a new Section 88A to the Patents Act 1977, and provides for a unified patent court. This is a remarkably bold step forward, on which successive Governments are to be congratulated, because it has been a very long haul indeed. It is a long, and in many ways sad, story. The European patent convention, which was signed in Munich in 1973, was in fact a pan-European measure; it was not an EU measure at all. Part of the difficulty, I suspect, is that it took the EU a very long time to recognise that the Community patent convention was simply dead in the water, because it was signed by only seven member states, including the UK, when unanimity was required. It is perhaps right to say that the failure of the EU to recognise that it was dead in the water is one of the reasons why it was been such a long and hard struggle to get to the agreement signed in Brussels last February.
One difficulty under the European patent convention was that, although a single application produced a bundle or sheaf of patents good in each contracting state, enforcement of the patent rights required litigation in different countries. Where a European patent was attacked as invalid or enforced in infringement proceedings in the courts of a number of different states, there were several well known—indeed, I might say notorious —cases in which national courts administering the same law under the European patent convention reached different conclusions. In particular, there were several cases in which the courts of Germany and the Netherlands reached different conclusions from those reached in the courts of England.
That has sometimes been explained by the very different procedure that applied in different member states. Typically, in this country, there would be a long trial—long oral proceedings with, perhaps, days of cross-examination of expert witnesses—whereas, in Germany or the Netherlands, the procedure would be conducted much more on paper. It is therefore a truly bold and radical move that jurisdiction is now to be divided not by national boundaries but by sectors of the fields of science and technology in which patents are granted. It is a bold and unpredictable move. As so often, I suggest that the devil will be in the detail. For instance, we are told that there are to be procedural changes made in the new unified patent court. It will be important to see them.
As the clause would enable the Secretary of State to act merely by a draft order that requires the approval of both Houses, it will be important to see as much as possible in Committee what will be in that vital order placed before both Houses by the Secretary of State to understand just how far the unified court, as far as it sits in London—or, as it may be, in Edinburgh—will adopt a different procedure from that applied in the court at present. All those are matters that I hope to follow closely in the Bill’s later stages.
Lord Sheikh
My Lords, I must begin by congratulating and extending a very warm welcome to the noble and learned Lord, Lord Walker of Gestingthorpe, to your Lordships’ House. It is a pleasure for me to follow his maiden speech in today’s debate. He brings with him an excellent array of credentials in the field of law, the depth and quality of which I think we all agree was reflected in his marvellous contribution today.
The noble and learned Lord was called to the Bar at Lincoln’s Inn, where he served as treasurer in 2010. That holds personal resonance for me, because my brother and niece were also called to the Bar at the same Inn of Court. He has built a career filled with remarkable achievements in the legal profession, including appointment as a Queen’s Counsel in 1982 and serving as a High Court judge and as a Lord Justice of Appeal. Most notably, his career as a judge culminated in his appointment as one of the original Justices of the Supreme Court on its inauguration in 2009.
The reverence for the noble and learned Lord’s work has stretched even beyond these shores. He served as a non-permanent judge of the Hong Kong Court of Final Appeal. He is also a strong family man with four children, and last year he celebrated his golden wedding anniversary with his wife Suzanne. With his legal expertise and undoubted other qualities, he will be an invaluable addition to your Lordships’ Chamber, and I commend him on his maiden speech.
I am pleased to speak in the Second Reading of the Bill, as it has personal resonance for me. I briefly talked about the matter in a speech that I made in your Lordships’ House following her Majesty’s most gracious Speech. On that note, I declare an interest in that I was previously the chairman and chief executive of an organisation that arranged insurance schemes for the protection of patents and copyrights. I therefore have first-hand knowledge of how part of an organisation’s resources and finances are often utilised for the purposes of intellectual property.
I have been heartened by our Government’s commitment to reforming intellectual property law ever since coming to power. We have seen a strong and consistent desire to see the changes through in the interests of removing obstructions for businesses and ultimately assisting economic growth. Ian Hargreaves and his panel should be commended for their work, particularly in the light of the Government accepting the majority of its findings and recommendations. The legislation in this area, as the report stated, is falling behind what is needed and must be reformed to make the most of today’s challenges—and, indeed, those of the future.
At the very heart of the Bill is the concept of helping to release innovation that is otherwise being stifled by current intellectual property laws. For me, some of the key proposals that will no doubt provide the greatest returns are those intended to allow a greater degree of flexibility to aspiring designers and creators. The Government made clear in their response to the Hargreaves report that they are concerned at the extent to which businesses and entrepreneurs are restricted and prevented from realising their full potential due to the heavy chains and shackles of outdated legislation.
I believe in the free and competitive spirit of the market and everybody’s right to reap the rewards of their creations, but I also realise that innovation and creativity do not always come from completely original, alien concepts; they are also bred from inspirations, from the merging, adapting and fine-tuning of ideas. I am very supportive of limiting the protection of trivial features of design both to curtail overly opportunistic designers from making unreasonable claims and to clear up uncertainty where cases are taken before the courts.
I also believe strongly in the provisions enabling a right of prior use by third parties of designs that are subsequently registered by others. Again, that is a concept based on fairness and the recognition that substantial work is often undertaken before the process of legal registration. It also allows for what the Department for Business, Innovation and Skills has referred to as the “limited exploitation” which such third parties should rightly be entitled to in the circumstances. However, it is also crucial that we implement measures to ensure that our talents here at home are adequately protected and thus encouraged to develop further.
I am particularly pleased to see provisions being made to amend the Freedom of Information Act for continuing programmes of research intended for future publication. I believe that the increased transparency provided by the Freedom of Information Act has, on the whole, been good for the public, not least in the name of political accountability. However, in some circumstances, such disclosure will inevitably pose a threat to the integrity and potential economic gain of such research. When the Justice Select Committee looked at this matter last year, it was informed by Universities UK that there was strong concern across the country about how such early releases of information are threatening the competitiveness of our universities against each other and, perhaps more importantly, internationally.
Freedom of information is a concept introduced on the basis of it being very much in the public interest, and I would argue that this tweaking of the original legislation takes it even further down that road. A natural extension of this is the introduction of protection from infringement in relation to acts undertaken privately and, in particular, in teaching and experimenting. It simply does not make sense for activities undertaken with no commercial purpose to be susceptible to laws designed to protect designers from commercial loss, and it is good to see that the Bill takes note of this.
In order adequately to protect our designers and creators, we must also ensure that the law is accessible to them and properly serves their interests. The Bill makes very clear that the deliberate copying of a registered design is to be rightly designated a criminal offence that is dealt with by criminal courts, and clearly outlines the conditions and circumstances in which an offence is to be considered as such. This is perhaps the most important advance made by the Bill, giving designers the concise guidance they need, further deterring those who look to produce and sell counterfeit products, and helping to bring the law in this area uniformly into line with that of breaching copyright and trade marks. I am also pleased that time has deliberately been taken to ensure appropriate lines of defence for those accused of such offences. This is a firm policy that still ensures that genuinely innocent individuals who unintentionally break the rules will not be caught by it.
As well as ensuring strength and clarity in intellectual property laws, it is also crucial that we streamline internationally where possible. We live in a globalised world, and these laws must reflect that. The power which the Bill provides for ratification of the unitary patent court agreement will provide an essential step in seeing this beneficial mechanism finally implemented. The opportunity for businesses to create single EU-wide patents for products, rather than separately across all countries, as well as to litigate where necessary in one unitary court covering all countries, will reduce costs and administration substantially. In fact, the Intellectual Property Office estimates that this will benefit UK business by about £40 million per year. The negotiations on this have been long and arduous for all countries involved, and we must now seize the opportunity to make it happen.
I am sure all the noble Lords in this House will agree that small businesses form the backbone of our economy and will be the driving force behind our economic recovery. I am therefore supportive of any and all measures designed to help SMEs better utilise the systems of protection that are available to them. In this vein, it is long overdue that we accede to the Hague agreement, and I am extremely pleased to see this included in the Bill. The current anomaly whereby companies can apply for protection covering only the whole of the EU has been hampering our small businesses for too long. They are unlikely to require such wide protection and often find it difficult to meet the costs of such a substantial registration. The Hague system is a sensible system, and it is about time we implemented it in the United Kingdom, both in the name of simplicity of administration and, even more importantly, in giving our small businesses a route to target specific markets with their products and services. It will also enable us to encourage other countries to sign up, thus opening up our markets further.
Finally, the proposed IPO opinions service for UK-registered designs seems to be the most obvious and progressive step forward in furthering direct government support for innovation, particularly given the success of the existing service, which has proved both cheap and efficient to use, and with the vast majority of opinions requested being issued within the target timeframe of three months. In 2010, the IPO conducted a survey of the users of its opinions service, and 70% declared that they would be in favour of the service’s expansion. Several reviews, including Hargreaves, have found that the expense and time needed to resolve intellectual property disputes can actually prevent small businesses from making proper use of their rights, and thus act as a barrier to innovation. Therefore, such a service can be a valuable tool in helping to avoid costly litigation. Such a service will help to ensure that intellectual property remains the preserve of innovators, rather than those with the deepest pockets.
Reform of our intellectual property laws is long overdue. I believe that the Bill provides the clarity, transparency and overall efficiency that our innovators need to help them flourish and realise their full potential in assisting our economic growth.
Lord Borrie
My Lords, I add my welcome to the maiden speech of the noble and learned Lord, Lord Walker of Gestingthorpe. It was a very valuable speech and from his remarks I understand that he will be able to take part in the Committee stage of the Bill. He will be very welcome there and, no doubt, in the other debates that he will take part in as he chooses. I was not surprised that the consultation document said that the law relating to design is complex and difficult to understand. It went on to say that it is difficult to enforce the law relating to design. I therefore suggest that the Government’s proposal in Clause 13, whereby civil remedies are given the benefit of criminal sanctions, provided there is a deliberate breach of a registered design, will be an extremely helpful addition.
The consultation document dealing with this matter referred to SMEs as the people—mostly designers—who are likely to lack the resources to challenge infringement themselves. In the debate on the gracious Speech, I ventured to suggest that a major problem for SMEs was not getting paid by their suppliers, a loss of cash flow and so on. I suggested that a public official is needed to assist them. It is rather a similar proposition that I make now—namely, that with registered designs it should be possible for SMEs and other designers to have the benefit of a public official to put forward the possibility of a criminal charge against deliberate infringements. The public official in this case will be trading standards officers up and down the country. I declare an interest as a vice-president of the Trading Standards Institute.
One of the things that I want to make clear today is that, over the years, I have also had a long interest in competition policy or competition law and the need to deal firmly with anti-trust or anti-competitive practices. The new body that we in this House set up—together with the other House, of course—the Competition and Markets Authority, will be a much more significant body than those that it replaces; it will be very powerful.
I want to make it clear that, in relation to intellectual property, there is sometimes a tension between the general importance of competition in promoting efficiency in the provision of goods and services and the value of intellectual property. As many people have already said in today’s debate, the invention of new products and new designs and other outcomes of creative talent in the industry requires intellectual property. However, I suggest that intellectual property rights may be inherently anti-competitive because they create barriers to entry into the market by others who are not the first people, and therefore have not managed to register their property rights. If the intellectual property is particularly powerful and lasts for an unduly long time, surely it is anti-competitive and not what we in this House, with this Bill, are encouraging with regard to people who are granted intellectual property.
Once obtained, intellectual property rights, whether patents, copyright or registered design, can all operate initially as being pro-competitive, of course, but if the protection continues for too long, beyond a reasonable time, clearly that restricts competition from other parties and people. For that reason, I have some doubt about the proposition in the Bill that unregistered designs should receive the benefit of intellectual property rights along with registered designs. It is interesting that an unregistered design lasts for 15 years. That is a monopoly position for 15 years, which may be less than justified. In relation to unregistered designs, and indeed other aspects of intellectual property, are the Government content with the period of benefit that the owner of the patent, design or whatever it is has for its invention and its creative outcome?
One very welcome provision in the Bill, as other people—although not all of them—have said, is the obligation on the Intellectual Property Office to give a non-binding but none the less authoritative opinion. The validity of the design is then given a firm basis, with an opinion available that will not be costly. I noticed that the consultative document talks about a modest fee of £200. As this has not been referred to today, I do not know if the Minister could confirm whether that is the intention, but clearly that is a very modest sum compared with any sort of legal action that someone would otherwise have to bring for infringement. The Federation of Small Businesses, which no doubt has written to many of us on the subject of intellectual property, feels very strongly that the service has helped with regard to patents, where it has been available for some time, and could be very useful regarding designs, enabling one to get a firm opinion from an authoritative body without having to go through court proceedings.
The Earl of Erroll
My Lords, the excellent maiden speech by the noble and learned Lord, Lord Walker of Gestingthorpe, suddenly reminded me of something from about the time when I had just about finished my A-levels. My parents were great friends with the late Lord Jauncey of Tullichettle, and they were having lunch with him in Edinburgh when he was just an advocate. I found him struggling with some simple chemistry and science books. I had done physics, chemistry and maths. He was struggling to understand polymers, because he was taking a case regarding coatings on razorblades. I gave him a quick rundown on polymers and polymer coatings, at the end of which he said he understood it perfectly and went on to win his case. He suggested to me that I ought to become an advocate and a patent lawyer. Probably one of the bigger mistakes in my life is that I did not take his advice. Still, I have ended up in other places.
One of the interesting things about the Bill, as people have pointed out, is the anomaly of the silos in government. The copyright and culture side of it sits in DCMS, while the other stuff, which generates huge amounts of jobs, industry and work, sits in the IPO, which comes under BIS. However, the two things are basically related. When we talk about the creative industries, where does the creativity cross over between the two? There are a lot of anomalies as a result of this approach of splitting the area into two when it comes to legislation. There is a principle, I think, that we cannot have two departments sponsoring one Bill, or something like that—I am not quite sure how it works. As a result, we get a dichotomy, a mismatch, and all these things.
The noble Lord, Lord Borrie, for instance, is worried that 15 years is too long to protect an unregistered design. Well, an unregistered copyright, which may be generated purely by accident—after all, you get copyright simply by writing a letter, even if no one intended ever to make any money off it—lasts for the life of the author plus 70 years, which causes huge problems elsewhere and does not advance the cause of other intellectual property and research there. There is a complete mismatch between the two, and the whole area needs some proper, maybe philosophical, thought about it in order to rationalise it.
I ought to declare an interest. I am an adviser to Flexeye Ltd, whose software is being used very cleverly by a major manufacturer to try to protect its intellectual property and designs where it is manufacturing in foreign countries and it knows that people are going to try to rip it off and make copies. How you control access is an interesting and important problem. As people have been pointing out, there is a huge amount of money in this area.
I shall run through the clauses quickly. Clause 4, on fair use, which is essential and very good, says that we can use these things in teaching and in other areas and for private use. That is very good and it is obvious, so why could we not also have had it in the other Bill with regard to cultural copyright? If it is needed in one Bill, why not in the other? The fair use provision is essential.
Then we have Clause 7, about prior use. It should not apply if someone inadvertently uses something. There is a defence for the person whose design is being used; the third party has to prove that it is not copied from the design. The trouble is that if the design that they are copying from is unregistered, how do you prove that they copied it from that design unless you actually find evidence of that? I can see an opportunity for a nice little business looking at unregistered designs, getting some money and then invoking the prior use clause so that you actually have use of it. Then if you wanted to extend the use, you would have to enter into an arrangement with the person who had the registered design. You could use this exemption for registered designs to get an advantage. That needs looking at.
Clause 13 is also about copying. It applies to registered designs: why not to unregistered ones as well? Again, there is a constant mismatch in the Bill between registered and unregistered. DCMS sees no such difference regarding copyright; copyright is copyright, whether it is registered or unregistered. Maybe we should apply the Bill’s principles in the Copyright, Designs and Patents Act where it applies to copyright, or maybe we should apply that Act’s principles here. I find that mismatch difficult.
I reinforce what the noble Lord, Lord Clement-Jones, said about 2D and 3D. I am not quite sure how the legislation applies here, but we now have 3D printers, so copying something in three dimensions now is not a problem. As for the idea behind the discrepancy between the two, we can make 3D copies cheaply now; the printers are only around £2,000.
On Clause 16, a quick note was passed to me from the Law Society of Scotland. This has already been said, but I am going to say it more precisely to reinforce it. The note said that it would be very nice if one division of the court of first instance of the unified patent court could in fact, should they win enough cases, be the Court of Session in Scotland. I wanted quickly to reinforce that.
I was most intrigued by the provision in paragraph 3 of the Schedule to extend the period to a year and a day. Why do they suddenly want the extra day? You do not get that in leasehold; you do not get it in lots of other laws. I could envisage a renewal period, or whatever it might be, being rolled forward by a day all the time. I thought there was a very good reason for ending it on the 365th day, or whatever, and then starting it again on day one. I just hope they do not introduce this principle elsewhere, because it could lead to chaos.
I very much welcome Clause 19, which is about protection from requests under the Freedom of Information Act for research. This is long overdue, because there have been some very difficult cases. I think that at the moment you are required to have a commercial reason not to disclose. We have to have it for pure research and other things because we do not know how long it will be before some of this stuff is useful. This whole business of an academic moving from one establishment to another and then requesting information from the previous establishment because he knows it is there can cause a lot of problems to people’s credibility and the amount of investment in some of those data sets being gathered for research.
In general, the Bill is very good, and I look forward to seeing it progressing.
Lord Howarth of Newport
My Lords, I have no interests to declare. I have no financial benefit from any dealings in relation to intellectual property and I have not talked to anybody seeking to lobby us on this Bill. I say this, which noble Lords may consider to be superfluous, because policy-making in the field of intellectual property is peculiarly beset by lobbying. It is good for the House and it is good for everyone who may take an interest in our proceedings that, as we in this House and Members of the other place take part in the scrutiny of this legislation, we make it clear where we are coming from.
The Minister is a serial legislator. He hardly draws breath between concluding legislating on one intellectual property Bill and bringing in another. We should praise him for his enthusiasm to make progress and for his invaluable helpfulness to all of us across the House. When we come to Committee, I am sure that our proceedings will be greatly enhanced by the participation of the noble and learned Lord, Lord Walker of Gestingthorpe, who made very clear the distinguished background from which he comes. I am sure that with his participation in Committee the proceedings will be, in his words, a most interesting intellectual experience.
It would not be fair to say that this Bill—this pudding—lacks a theme. The themes of simplification, clarification, streamlining and the aligning of United Kingdom law with European Union law are consistently there and are desirable themes. If you put in your thumb, you will extract some very good plums: protection from infringement of private acts, experiments in teaching, the improvement in the right to prior use, the extension of the opinion service, the improvement in the small claims service, accession to the Hague agreement and the part of the Bill that deals with the unified patent court and its somewhat Solomonic partial presence in London. The provisions on the court are a real feather in the Government’s cap. They indicate, by the way, that colleagues in the European Union do expect the United Kingdom to remain as members of the European Union. If the Minister should suddenly withdraw Clause 16, we will know that the paranoia of his party in relation to Europe has entered an even more advanced stage. I trust that that will not happen.
I look forward to the Minister, in the course of our various proceedings, expounding more of his vision of what the Government’s role is in relation to intellectual property and what the principles are that should guide policy development—how we should seek to ensure that it contributes to the promotion of innovation, creativity and growth. The Government did very well to commission the Hargreaves report, which seems to me to be a masterly piece of work. We should also appreciate the recent NESTA report, one of the co-authors of which was Professor Hargreaves. That provides very helpful background to our thinking in this general area.
The Government recognised in their response to Hargreaves that intellectual property is a double-edged sword—that was not their phrase, but it was the purport. For my part, I consider intellectual property to be a necessary evil. The question for us as policy-makers and legislators is whether it is now right to continue to reinforce traditional approaches and build on traditional structures, as this Bill does; or has the time come when we need to rethink more radically how intellectual property policy and legislation should be formulated in the era of the digital economy, when knowledge can instantly, easily and costlessly be transmitted across the globe and when we are seeing that the conventional configuration of policies—not just in the IP field—is producing rising inequality with grievous consequences, not only in our own nation but across the world?
Of course, it is necessary to incentivise innovation and it is just to reward creative advance; there are pragmatic and moral reasons for enabling those who innovate to recoup their investment. The pharmaceutical industry, for example, faces colossal costs in development, not least in testing the safety of new products, and we all want the industry to be successful in producing a new generation of antibiotics. However, let us not forget that the protection of intellectual property is protectionism; it creates monopoly and restrictive practice and restrains trade. Therefore, it should be kept to the necessary minimum. How to establish what that minimum is must be based on evidence of the benefits of protection to the economy, to society and to culture.
I understand that there are now economists within the Intellectual Property Office. That might help their deliberations as they advise Ministers, but I wonder whether they are thinking additionally of recruiting philosophers or artists or people who work in developing countries as the judgments to be made are very difficult. Of course we want a strong pharmaceutical industry in this country; we want new drugs to make the lives of our people better. However, we do not want people who live in much poorer parts of the world to have to go without. There are moral and prudential reasons for seeking to prevent the immiseration of the poorest people in the world, sometimes known a little insensitively as the “bottom billion”.
During the passage of the Enterprise and Regulatory Reform Bill, we had some skirmishes on the subject of furniture design, and I wondered how appropriate it was that the present holders of design rights to Eames chairs should be enabled, for a further considerable period, to profit from that monopoly and prevent people in households with modest incomes having the pleasure of beautifully designed Eames chairs in their homes. We continue to need to reflect on these questions. Was it right that Bill Gates was able to patent his operating system on such terms that, through the iron grip that he had on that industry, he was able to make colossal amounts of money? Would $50,000 have been a good enough reward for his originality? Was it really right that it should have been $50 billion? After all, many others were nearly at the same point of development in that field.
It is a problem with monopoly that it will tend to snuff out other businesses and abort other potential. Would it not be better that we should have many more small and medium-sized enterprises rather than a few giant multinationals with the problems in connection with them that we have recently been reflecting on? We should be seeking a more equal diffusion of wealth and, with that, we will have a more rapid spread of ideas and, all in all, a greater increase in wealth. I agree on this with some of the thoughts that my noble friend Lord Borrie was advancing.
The default position of Governments in this country seems to have been to extend the term of protection. I would have wanted to have seen at least the same energy and emphasis on other aspects of policy development to assist the growth of businesses and the development of our culture, as they intend to do through policy on intellectual property: more emphasis on investment in research and development; more effort to get appropriate sources of finance available to entrepreneurs; more work in developing the necessary skills among our people; and faster creation of the infrastructure that we need. We have tended to rely perhaps too much on the protection of intellectual property.
The period for which intellectual property is protected should therefore be the minimum necessary to achieve the incentivisation of entrepreneurs and to enable them to recoup their investment. The object of policy should not be to enable people to get fat on monopoly profits, however charitable they subsequently may be. We in the West are at risk of adopting some hypocritical attitudes on this matter. The G8, the IMF and the World Bank impose free-market systems on the developing world—and not just on the developing world, but on great areas of the world that are in abject poverty and could not be said to be developing. Yet, historically, in our own economies, we were protectionist. We did not operate free-market systems in the early phases of the industrialisation of our economies. We continue to be protectionist in relation to intellectual property. It is perhaps no surprise that the growth of poor areas of the world—sub-Saharan Africa and elsewhere—has slowed and, indeed, failed altogether in the 30 years since the free-market orthodoxy has been imposed there.
Moreover, attempts at global protection of intellectual property risk being futile because they are unenforceable. Just as this country and other European countries did in the early periods of industrialisation, they show contempt towards the intellectual property rights of foreigners. We have seen the significant recent judgment on Novartis in India where the court took the view that a product that Novartis was claiming was new was not, in fact, new. In other parts of the world, protectionism is not masked, or even decently clothed, by legal formality.
The collapse of the neo-conservative economic model since 1980 has meant, ironically, that we in the West are depending increasingly for our growth on the performance of the emerging economies which are the most flagrant violators of intellectual property. We might mention China, for example; perhaps in some ways it is lucky that it is as cavalier as it is about intellectual property rights.
I do not condone theft, but hand-wringing does not amount to much of a policy. As digital technology becomes increasingly important in the global economy, so enforcement becomes more difficult still. We have seen the predicament of the music industry, the publishing industry and photographers. New digital industrial techniques are spreading fast into other areas of traded goods: 3D printing is clearly enormously ominous for many established manufacturers. So far, the handgun that has been made by 3D printing is only primitive, but it will not be long before those same furniture manufacturers will have to worry that it will be remarkably easy, with the use of a 3D printer, to replicate an Eames chair or anything else.
If our interest is to promote creativity and increase wealth, is it better to protect intellectual property? Or is it better to diffuse knowledge and to minimise barriers to downloading and to copying? Is it right therefore to criminalise the deliberate copying of a registered design for someone’s commercial advantage? Maybe it is, because we are dealing with theft. Perhaps it is a good thing to help an aggrieved businessman not to have to waste time and money going through civil court procedures. However, we worry elsewhere that we have a tendency rather blithely to create new criminal offences, and I am not sure that we should be creating new criminal offences here, particularly with the draconian penalties attached to this one.
Are there other ways in which we can provide the just reward that innovators and creators ought to have? With digital technology, the tensions increase between our desire to maximise profit and our desire to maximise the public benefit. Where the variable costs of replication fall very low—or, indeed, to nil—the greater is the opportunity cost of protection, of inhibiting the market, of postponing the day when the generality of people can enjoy the benefit of the new knowledge and of forgoing the earlier enhancement of human opportunities that the new knowledge could provide.
In debates on this matter at the beginning of the American republic, Thomas Jefferson opposed the protection of intellectual property. He argued that ideas are like air and no one should own them. He lost the argument. Alexander Hamilton, the first Treasury Secretary, inaugurated the tradition of protectionism in the US, and it is far from exhausted to this day.
There was an old view, however, that goods for which the marginal costs are close to zero are inherently public goods. Bridges and roads are cited in this argument: once the capital cost of creating the bridge or road has been incurred, it is to the advantage of society and the economy that as many people as possible should, as quickly as possible, be able to use those bridges and roads. Maybe creators should receive their reward not from a rigged market but from, in some instances, taxpayers or charitable funds on a national or international level—people negotiating to purchase intellectual property or access to it on behalf of the community. I know that that is countercultural and that it may seem entirely fanciful in the fiscal situation in which we find ourselves. We should at least be aware of the costs and disbenefits of protecting intellectual property.
In Committee we should assess the merits of the provisions of the Bill by reference to their practicality and the benefits that they will foreseeably confer on innovation and growth, but also by reference to a wider criterion: the net benefit to the economy and, more broadly, to culture, society and communities across the globe. The interests of the incumbent producer, legitimate as they are, are only one part of what we should properly consider. As the noble Lord, Lord Clement-Jones, said, when we are considering what the reporting duty of the Secretary of State should be, we may want to amend what the Government have so far written in Clause 20 to take his responsibilities beyond consideration only of the effect on,
“innovation and of economic growth in the United Kingdom”.
Baroness Brinton
My Lords, I will start by declaring an interest. My husband is a research engineer who works for Cambridge Consultants, which works with clients to develop patents and copyright protection. I also remind the House that in the past—it is not a current interest—I was a venture capitalist, helping mainly academics spin ideas out of university and into the commercial world. That was a long time ago, in the 1980s.
Before I start I will address the comment made by the noble Lord, Lord Howarth, who said that perhaps we have too much protection. I disagree with him very strongly. It is important that people who have designed items, whether that is electronic design, music or a creative work of art, should be recognised and should have any recompense due to them for that. We live in a world where the counterfeit and fake are commonplace, and they are a form of theft. One thing the Bill will do is to make it that much harder for those who want to go against the authorship and ownership of works. The noble Lord raised a valid point about monopoly and the issue of the Windows operating system. However, that is not a case of intellectual property but of competition law, which is a different matter.
I support the Bill—almost exclusively across it—but I will focus my remarks on three clauses, given many of the comments made by noble Lords earlier in the debate. I will address Clause 4 on the arrangements for teaching and experimentation not infringing design rights, Clause 16 on the unified patent court, and Clause 19, which provides qualified exemption from freedom of information requests for pre-publication research.
I will start with the last clause. I had hoped that we would not hear any noble Lords opposing the inclusion of this clause, so I was slightly concerned that my noble friend Lord Clement-Jones said that we would have to come back to look at this in further detail in Committee. We fought long and hard during the passage of the Protection of Freedoms Bill to have a review of this case. We argued that it was absolutely essential because those engaged in research, including universities and publicly-funded research centres, would be at risk from the increased access to information set out in the Protection of Freedoms Bill. Although we did not win the argument then, I was grateful that the Minister undertook to pass the complex and thorny issues to the Justice Committee’s post-legislative scrutiny committee in another place. As we know, it confirmed that there was a need for a specific exemption, and I thank the Government for the addition of Clause 19, which sets this out.
The clause makes it clear that the exemption requires that disclosure of the information would be prejudicial to the interests of the research programme, of the institution or even the individual undertaking it, or of an individual participating in it. Therefore it is not a carte blanche for those carrying out research to hold anything private longer term. It is also important to note that exemptions with similar effects exist in the Freedom of Information (Scotland) Act, and in Irish and US legislation. While I, too, am a unionist, I say to the noble Lord, Lord Browne of Ladyton, that Scotland got it right first on this one.
The key reason that this exemption is necessary is, as I have already mentioned, the risk of harm to the quality and reputation of UK research. Misleading information can enter the public domain before it has been cleaned, checked, and subjected to analysis and—importantly—to peer review. Researchers can be challenged on their approach or findings before they have had a chance to address flaws in their work. Very particularly, in relation to health-related research, individuals who get some information might misdiagnose or medicate themselves on the basis of misleading information that is gaining currency but is supported by incomplete research. That could damage the UK’s reputation for quality research.
As other noble Lords mentioned, it could also undermine the competitive position of UK research. University research is fundamental to our global competitiveness, and is considered second only to that of the United States. It is also a highly competitive field. Premature disclosure of research information will enable international competitors to profit from work undertaken in UK universities before the originators have had a fair opportunity to protect their ideas or secure grants for future research. I am sure that that is why the US legislated in this area.
It may also be difficult or impossible to secure publication opportunities in reputable journals if findings are already in the public domain. Publication records influence university income via the Research Excellence Framework, as well as universities’ ability to secure future grants and commercial contracts, and, importantly, to attract academic staff and students. This harms our universities’ competitive interests, if not necessarily their commercial ones.
Research at an early stage may have a potential but not actual commercial value, and it is worrying that without this clause it is possible to discourage research partnership with commercial and charitable bodies. We went through quite specific examples during the passage of the Protection of Freedoms Bill that showed that had this continued, the UK would not have been a good place to have a commercial arrangement. Universities were already beginning to have to draw up very complex contracts with their commercial partners to try to protect them from this.
I will give one example. In response to a freedom of information request, one university stated:
“Formal analysis of the data at individual-participant level is still being undertaken by the trial team. We believe releasing data at the individual-participant level would prejudice publication of future study papers. It would also inhibit”,
the institution,
“from maximising the output from the information obtained and could set a precedent that may affect our”—
the university’s—
“ability to attract research funding and participants in the future”.
Therefore, this is not hypothetical. It is likely to cause damage, and I welcome the inclusion of Clause 19 to provide protection.
I now move to Clause 4, on exceptions to the infringement of design rights. As others have already mentioned, we had considerable debate during the passage of the Enterprise and Regulatory Reform Bill on this very issue. I respect and understand the concerns put forward by my noble friends Lady Buscombe and Lord Clement-Jones in those debates and others, making sure that those who had designed things had the right to any recompense and recognition that came thereby. However, taken in the extreme, it has meant that institutions, whether colleges, specialist conservatoires or universities, would not be able to use examples of unregistered design to teach the next generation of brilliant designers in this country. That seems completely counterintuitive. I am therefore delighted that Clause 4 remedies that. The noble Earl, Lord Erroll, expressed a concern that this would not pick up the points that we discussed during the passage of that Bill. As I understand it, it does, but if I am wrong, perhaps the Minister will clarify that.
Finally, I turn to Clause 16, which establishes the unified patent court system. I am very grateful to the noble Lord, Lord Walker of Gestingthorpe, who in his maiden speech eloquently set out the difficulties of the old system, some of which I remember from the 1980s. Clause 16 will benefit UK businesses, especially, as has been mentioned, SMEs and researchers, but I will focus on individual entrepreneurs who do not necessarily have the support or the funding that companies may have, or that institutions have through researchers.
Comments have been made about saving money, which is absolutely critical. We absolutely must be able to protect inventions and designs and sell them to different markets overseas. What is worse, however, when there has been an infringement, is that the cost of having to sue through a number of courts to get justice has often killed the product itself. This has come at the worst moment for a patent holder, who may be trying to get the next round of funding to commercialise their product. It is not just individuals and small businesses. Dyson spends a very large amount of money rightly defending the patents on its products. Some of the reduction in costs here and the simplification through the unified patent court system will remedy this.
London is a natural home for such an institution, particularly with the strength of the legal market in the capital, which I understand adds £6 billion gross in value to the UK’s economy annually, as well as helping to offset any loss of existing business to the parts of the new court that are to be established elsewhere. I hope that it would certainly sit in session in Edinburgh, too.
It is important to make the most of the opportunity presented by the new court to reinforce London’s leading position in the provision of legal and financial services, all of which need to be around when developing patents and copyright designs. The Lord Chancellor’s Plan for Growth: Promoting the UK’s Legal Services Sector, updated in March, aims to,
“promote the UK as the global centre of legal arbitration and commercial law services”,
while the Unlocking Disputes campaign, led by TheCityUK and the legal professions, is also working hard to promote London’s dispute-resolution facilities to a worldwide audience. The placing of the universal patent court will give London real strength as a financial and legal centre as we start to move out of the difficult time of austerity. I welcome the EU-level agreement we have secured that the branch of the central division will be based in London, but the detail of how it will operate is critical.
Will the Government ensure that the fees for using the court are affordable for micro-businesses, SMEs and individual inventors? Will the Government take a central role in negotiations on the rules of procedure for the unified patent court to ensure that lower-value patent disputes are dealt with cost-effectively? What will happen when an invention encompasses multiple forms of technology and falls within the jurisdiction of different branches, whether one patent or a bundle of patents? Guidance will be critical, possibly even in regulation. Will the new unified patent court be included in the review set out in Clause 20? It clearly makes sense for this to happen.
In conclusion, the Bill has much to commend it. I believe it has the capacity to make it easier to register and protect designs and inventions while giving very specific protection to those public bodies undertaking research so that their work will not be compromised by freedom of information requests pre-publication. Finally, I join the many others who said that the successful negotiations regarding the unified patent court demonstrate once again that there are some real successes in our membership of the EU. I would like to hear the EU equivalent of, “What did the Romans ever do for us?” asked more frequently. In this case I believe that it will help business growth in both the UK and the EU economies, which is absolutely vital as part of our path to economic recovery.
Baroness Warwick of Undercliffe
My Lords, I join others in congratulating the noble and learned Lord, Lord Walker of Gestingthorpe. The clarity and pertinence of his maiden speech indicate what we have missed in the 10 years he served previously in this House when he felt that he must exercise restraint. I look forward to his further contributions to our debates.
At this Second Reading I want to speak on the same issue that I raised in the Queen’s Speech debate last week: that of Clause 19. I can be brief. I am delighted to see that Clause 19 contains provisions that will provide a new exemption under the Freedom of Information Act for information connected with research at pre-publication stage. I endorse and hope to reinforce the points so eloquently made on this issue by the noble Baroness, Lady Brinton. I note that the Clause 19 provision is a carefully worded and limited exemption that will be available for use in certain limited circumstances. It is worth noting, as others have said, that such an exemption already exists in the Scottish freedom of information legislation.
Many of us in this House, notably the noble Baroness, Lady Brinton, worked hard to persuade the Government of the need for such an exemption during the passage of the Protection of Freedoms Bill. We were not successful then, although Ministers gave us a very careful hearing. Subsequent post-legislative scrutiny of the Act confirmed that there is indeed a need to ensure that research that is still under way should be protected.
Universities UK argued consistently that existing exemptions are inadequate, but also made it clear that universities are certainly not hostile to the Freedom of Information Act, or to greater openness in research. Universities have in fact done a great deal to ensure that the majority of FOI requests are complied with. A recent survey carried out for Universities UK by Jisc showed that universities complied with 63% of FOI requests in 2010. There have also been real moves towards further openness in research through a commitment to open access. Most universities have a repository that could be used to showcase and share all their open-access publications, as well as doctoral theses and other material. Increasingly, such repositories are also used to support research management and reporting. UK universities, backed by the Government and funders, are leading the way internationally in providing free online access to research publications and data.
Having said that, universities are fairly unusual among the so-called “public authorities” that are subject to the Freedom of Information Act. As independent bodies that are decreasingly reliant on public funds, they also operate in a highly competitive environment. I do not believe that the Freedom of Information Act fully anticipates the complications that arise when dealing with FOI requests in the university context. This has been demonstrated to good effect by a number of recent cases involving university research.
Until now universities have had relatively few requests for information relating to research, but this appears to be changing. Recent high-profile instances illustrate how FOI requests can be used to intimidate researchers working in controversial fields or to gain competitive advantage. To give one example, during the passage of the Protection of Freedoms Bill, I understand that the University of Oxford received a request for research data from a large nationwide health study, submitted by a company with a significant commercial interest in it. Although the request was subsequently not pursued, the research group lost significant research time in attempting to rebut the request, and the university incurred significant legal costs in the process.
Universities UK has examples of academics who received FOI requests relating to ongoing research from people who they believed to be their academic competitors. Queen Mary, University of London, had a case where research data was requested while the analysis was still being undertaken. They feared that releasing the data would lead to their losing the chance to publish their own results in respected journals. Like all universities, it pointed out that publications are vital in the assessment of quality as part of the research excellence framework, and of course in attracting future funding. Universities argue that if research data are made public prematurely, before the normal scrutiny and challenge of the peer-review process, it could not only undermine an individual or an institution’s reputation for quality but lead to misleading information and data getting into the public domain.
I do not believe that this was how the Freedom of Information Act was intended to work, and I do not believe it is in our national interest that this situation should be ignored. I warmly welcome the fact that the Government are acting now to prevent such damage occurring.
Lord Young of Norwood Green
My Lords, I start by thanking the Minister and noble Lords from around the House for what has been an extensive and very interesting debate. As I look around I see that a number of the usual suspects have been rounded up. I was actually a bit surprised that the noble Baroness, Lady Buscombe, is not in her place, as she said that we had not done anything on it. I spent at least three months of my life, together with a few others, examining the sheer delights of the Digital Economy Bill. We might not have got it all right; it was an unfinished work, as it ended up being decimated in the wash-up. Nevertheless, we understood and recognised the importance of this area of policy.
I, too, congratulate the noble and learned Lord, Lord Walker, on his maiden speech. It is a reincarnation and a giving-up of a 10-year vow of silence. He has an advantage on me; he obviously has some O-levels. I did not have any. I can only reflect that I once came second in a chemistry exam, but the remark on my report was, “Amazing. His behaviour in class is not so good”. It has lingered with me for 60-plus years. I am sure that the noble and learned Lord will make a very powerful contribution, given his experience in the area of patents.
I think it was my noble friend Lord Stevenson who said that this is a slim Bill. My experience is that it can soon become obese, given the weight of amendments that it is likely to attract. It makes important changes to the UK design framework in line with some of what was proposed in the Hargreaves review. Measures that we have already heard about include changes to the scope of design, the protection and ownership of design, new routes of appeal against decisions made by the registrar relating to design, a power for the Secretary of State to provide for a non-binding opinions service—as a number of noble Lords have said, a very welcome provision—and provision for the inspection of documents. The Bill puts in place provisions to allow the UK implementation of the Geneva act of the Hague agreement. Most of these provisions are straightforward and positive and go some way towards strengthening and clarifying the framework, although we fear that they might not go very far in addressing the complexity of what the Hargreaves report referred to as a “patchwork of protection”.
The Bill amends the law relating to patents to enable patent owners to provide public notice of their patent rights; to expand the circumstances in which the IPO may issue an opinion in relation to patents; to allow the IPO to share information on unpublished patent applications with international partners; and to provide for the agreement establishing a unified patent court—a provision which seems to have met with universal approval around the House today and on we should congratulate the Government. An interesting question about whether there would be two courts was posed and I have no doubt that the Minister will pick it up. The noble Baroness, Lady Brinton, mentioned lower-value patents and keeping those costs down, which is also very important.
Finally, as we heard from the noble Baroness and from my noble friend Lady Warwick, Clause 19 introduces an exemption into the FOI Act in relation to research and a duty on the Secretary of State to report to Parliament on how the IPO’s activities are supporting growth and innovation, both of which we support. The idea of reporting on growth and innovation was commented on by a number of noble Lords, including my noble friend Lord Browne. Both the extent of the report and whether this idea could be extended were raised. I do not think that I need go any further on research and the FOI Act, because they were covered extensively by my noble friend Lady Warwick and the noble Baroness, Lady Brinton.
Much of what is proposed in the Bill is intended to simplify the law and to ensure that it is understood, enforced and better supports innovation. As my noble friend Lord Howarth said, an interesting balance needs to be achieved between the desire to reward creativity and innovation and ensuring that competition and further innovation are not stifled. That will be a difficult judgment for us to make, and probably one of the most crucial, as we take the Bill through its Committee stage. The devil will be in the detail and we will ensure that the Bill gets the scrutiny it deserves.
We will look at each clause in detail to see how the Bill may be improved, and I must admit that I have some sympathy with the Minister as he tries to deal with the range of issues that have already been raised. Another issue which came up in relation to innovation versus competition was the domination of Microsoft over the years. Of course, it has not been total domination, as open source software, Linux and other systems became available. The noble Baroness, Lady Buscombe, made a strong contribution to the debate on the power of the search engines. It was interesting, but I was not quite sure that I grasped what her solution would be to that world domination—no doubt that will emerge in Committee.
There was a significant difference of opinion on the key issue of whether to criminalise in relation to registered designs—the noble Lord, Lord Clement-Jones, wanted the offence to include unregistered designs as well. As I listened to the noble Lord’s comments on that, one thought occurred to me: why do we not do something about the cost of registering designs? I would welcome the Minister’s comment on that. In this day and age where most things are being dealt with online, it should not be beyond the wit of man to reduce costs in this area; and if we are serious about stimulating the creative industries then we should be able to do so. A number of noble Lords expressed concern about extending criminality in this area. At this stage, all we would say is that we will pursue this matter extensively in Committee to see whether there are clear definitions and whether criminality is capable of being limited to those few examples of deliberate attempts to pirate and then copyright the theft.
The Minister referred to the small claims track into the patents county court. We welcome that as a useful step forward.
We share the Government’s view about the importance of the creative industries. Although there has been a lot of government rhetoric on this topic, enough is still not being done to support this essential sector of our economy. The Bill will of course play a part, but we have to recognise that the creative industries account for 3% of the UK economy and provide some 1.5 million direct jobs. They are one of the great success stories of our country and a driver for jobs and growth, yet there are concerns that they could be left behind without a clear strategy and leadership on the part of this Government.
This is a broadly positive Bill which we will engage with constructively and seek to improve. However, on its own, it is not up to the task of rebuilding our economy and creating growth in our industries, although it will play a significant role.
Viscount Younger of Leckie
My Lords, I thank all noble Lords who have taken part in this debate. It has certainly been wide-ranging and interesting, and I particularly welcome the support for the Bill from all sides of the House. Many points were raised and I shall do my best to address them all. If I am unable to do so, I shall write to the Peers concerned.
I first pay tribute to the noble and learned Lord, Lord Walker of Gestingthorpe, for a splendid maiden speech. He clearly demonstrated to the House his long and distinguished legal experience and knowledge with the wise words that he spoke on the unified patent court. I am delighted that he has chosen the Intellectual Property Bill as a platform from which to relaunch himself into this House. We look forward to hearing more from him in Committee and onwards.
I thank my noble friend Lord Sheikh for his supportive comments on the purpose behind the Bill and how its provisions support that purpose. He raised the issue of an opinions service for designs and asked whether this might be extended to cover unregistered designs. I welcome his support to this effect. The law has been crafted in such a way as to allow this service to cover both registered and unregistered designs. As my noble friend will appreciate, details of how the service will operate will be set down later in secondary legislation. On this subject, the noble Lord, Lord Borrie, asked me to confirm that the cost of an opinion would be a “modest” £200. I welcome his positive comments about the opinions service. As he mentioned, the Government’s response suggested that a fee of £200 would match that for the existing and well used patent opinions service. This will be subject to consultation, as will other details of how the service will operate.
My noble friend Lady Buscombe, in giving broad support to the Bill, made some interesting points about some of the powerful players in our digital age—she referred to them as “content aggregators”. The clear message is the need, which I agree with, to improve the quality of the content. They should have a responsibility and a moral duty to run their businesses reputably.
In respect of the search engines and creators it is important to acknowledge the value of both. The Government are in discussions with the industries, with both groups, to tackle online infringement of copyright, including responsible online advertising. I therefore value the points that my noble friend Lady Buscombe made today.
I thank the noble Lord, Lord Browne of Ladyton, for his many comments. He made an important point about celebrating this IP Bill as an important area of law that affects the whole of the UK, and I welcome his comments about the importance of the union to Scotland. This Bill is UK-wide and the Government hope that people across the UK will welcome the benefits to business that it will bring.
The introduction of criminal sanctions for the deliberate copying of a UK or EU-registered design was mentioned, which resulted in a lively debate. The noble Lord, Lord Stevenson, raised the question of the rationale for criminalising design theft and asked why the existing remedies are not enough. Extending criminal sanctions to registered designs will give them the same level of protection as the infringement of copyright and trade marks. This will create a coherent approach to enforcement and protection and also recognises that the creativity of design is as important to the UK economy as music protected by copyright and brands protected by trade marks. Creating a criminal offence for the copying of a registered design could help to reduce the scale of design theft in the UK. It will do so by acting as a deterrent against those who deliberately copy the designs of others.
The Government recognise that this is finely balanced and that there are arguments on both sides. Indeed, the noble Lord, Lord Howarth, alluded to that balance in his fine speech. Nevertheless, we believe that the Bill as drafted will provide strengthened protection for the design sector but in a measured and clearly defined way that does not prevent follow-on innovation by those genuinely seeking to create new designs.
The noble Lord, Lord Stevenson, and my noble friends Lord Clement-Jones and Lady Buscombe asked about the rationale of the policy for not including unregistered rights. The offence covers registered designs because the existence of a registration certificate gives a particular starting point, including what the designs looked like, who they belong to and when the right started. That information is not so readily available, as noble Lords might appreciate, for unregistered designs, making it more difficult for the designer to prove and for the authorities to act on.
My noble friend Lord Clement-Jones raised a concern about the level of penalties for certain offences and asked why the Government had not addressed certain discrepancies in the level of financial payments available in magistrates’ courts for trade marks and copyrights. Sections 85 to 87 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 make provisions to raise the maximum fines available in magistrates’ courts. The Government are working to implement these provisions, which will take effect with regard to all offences.
My noble friend Lord Clement-Jones, supported by the noble Earl, Lord Erroll, raised the issue of 2-D and 3-D and asked specifically whether the Bill would mean that 2-D works would be treated differently from 3-D works. This situation arises because copyright protection, which is currently covered by criminal sanctions, applies to, for example, a design drawing but not to a design made from that drawing. In proceeding in the way that we have, we have recognised the difficulties associated with proving matters such as subsistence and in relation to those rights, but there are also other issues not associated with copyright that need to be considered. For example, unregistered design rights can be exploited legitimately subject to licensing agreements by third parties for the last five years of their existence. This could be jeopardised if criminal sanctions applied before that period. For example, we know that 2,097 applications to use designs in the last five years were filed in 2012.
My noble friend Lord Clement-Jones asked rather mischievously whether the motivation behind introducing criminal sanctions for registered designs was to increase the income from the Intellectual Property Office by encouraging registration. I reassure the House that that is not the case. The measures in the Bill will protect designs registered both in the UK and through EU Community-registered design.
The noble Lord, Lord Stevenson, raised the matter of the unified patent court and asked whether this would not be an area where my right honourable friend the Prime Minister would seek an EU opt-out. I suggest that the noble Lord, Lord Howarth, was encouraging me to give a broader view of our European position, but I will not be drawn on that particular matter. The unitary patent is an important part of the Government's internal market and growth agendas. The Prime Minister has made it very clear that he wants Britain in the EU and he wants to maintain our influence in shaping the debate on the things that really matter; for example, reducing burdens on business and encouraging growth. The unitary patent court agreement is an agreement negotiated by all member states that have chosen to be part of it. The Government have signed up to the agreement because we believe that it would be good for UK businesses—clearly, I have been drawn on that to a certain extent after all.
The noble Lords, Lord Stevenson and Lord Browne of Ladyton, raised an interesting point about Scotland and the unified patent court. I can assure them both that the Government are working very closely with the devolved Administrations to ensure that the needs of users throughout the United Kingdom are considered. Ensuring local access to justice is a key element of the unified patent court and that is why the agreement makes provisions for setting up local divisions of the court. These local divisions are in addition to the central division, part of which will be hosted in London. I believe that the noble Lord, Lord Browne, alluded to that in his speech. The UK could host a local division and it would be possible to host more than one if the level of case work is high enough to require it. The UK would be expected to pay for the facilities such as the building, IT equipment and administrative staff of any division that we host.
The noble Lord, Lord Stevenson of Balmacara, raised the question of copyright and root-and-branch reform. I want to address this particular question because it was raised by the noble Lord, Lord Howarth, as a broader, more overarching matter relating to our intentions for intellectual property. I am grateful to the noble Lord, Lord Stevenson, for his acknowledgement that the intellectual property framework must change to promote innovation and protect creators. In that important interest, he suggests that root-and-branch reform of copyright is needed with proper consideration of evidence. What he proposes, however, is a major undertaking and the Government, in the light of the Hargreaves review, have committed not to undertake any further major review into intellectual property in this Parliament. We want to make progress with the measures that we have already put forward.
My noble friend Lord Clement-Jones expressed concern over the Intellectual Property Office’s ability to revoke patents, which the Bill will allow through the patent opinions service. The power will be to initiate revocation proceedings against the patent if an opinion concludes that it lacks novelty or an inventive step. That does not mean that the patent will be revoked straight away, and a provision is made so that the patentee can request a review of the opinion as well as an appeal of any review. The patentee will also have the opportunity to make observations and amendments to the specification and any decision to revoke a patent will be appealable to the High Court. The power will mirror the power that the Intellectual Property Office already has to revoke patents under Section 73(1) of the Patents Act 1977.
My noble friend Lord Clement-Jones and the noble Lords, Lord Stevenson and Lord Browne of Ladyton, raised the issue of the annual report of the Intellectual Property Office, spoke of the proposals in the Bill for reporting and suggested that the scope for reporting is somewhat narrow. There were suggestions that the clause on the Secretary of State’s reporting duty could contain an explicit commitment that the Government will report on how the IPO's activities have supported IP businesses with a focus on growth. I can reassure noble Lords that the Government will report on how the IPO's activities have supported IP-owning businesses whether through legislative changes or the delivery of services to help businesses protect and exploit their IP more effectively. The annual report will need to have a wider scope than the support of IP businesses. This is why the clause refers in broad terms to innovation and economic growth in the United Kingdom. It will therefore be important to ensure that the scope of the report is not drawn too narrowly in legislation.
The noble Lord, Lord Browne of Ladyton, raised the question of the proposal to expand the reporting duty to other areas of policy and asked why assurances on copyright-licensing issues will not be in the report and not reflected in the Bill. The report will cover new legislation and policy developments in the field of intellectual property, as has been made clear. During the debates on the Enterprise and Regulatory Reform Act I gave an undertaking that the report will also cover policies and services that impact on the licensing of intellectual property. One example is the Copyright Hub which noble Lords will be aware is currently under development.
The noble Lords, Lord Stevenson and Lord Borrie, and my noble friend Lord Clement-Jones raised the question of responsibility for intellectual property policy across government. The issue of responsibility for the creative industries was also raised. I am, as noble Lords will know, the IP Minister, and I can assure the House that I take this role very seriously. I also work closely with my colleague in the other place, Ed Vaizey, who has responsibility for the creative industries and their funding, and we are working together closely to deliver support for all UK businesses.
The noble Lord, Lord Browne of Ladyton, asked what communication had taken place with the Scottish Crown Office and the Law Commission about the value of the criminal sanctions to Scotland. He also asked what level of consultation had taken place with the Scottish Government. I can confirm that my officials have been in discussions with their Scottish counterparts, particularly in relation to the important point made about criminal sanctions. The clause dealing with this issue makes specific reference to the position in Scotland, given the different legal systems there.
My noble friend Lord Clement-Jones raised an important point about the parity between sanctions in relation to online and physical goods. The Government recognise that there is a discrepancy between the two offences. However, as this is an economic crime, it is right that the emphasis should be placed on fines. The issue was addressed in the Digital Economy Act, which increased financial penalties on conviction for digital and physical copyright theft of up to £50,000 so that they are now the same. Prosecutors also now use fraud legislation to obtain convictions more effectively. Increasing sanctions under the CDPA is therefore unnecessary at present although the Government will certainly keep the issue under review.
My noble friend Lord Clement-Jones raised the issue of unfair contracts for creators. During the proceedings on the Enterprise and Regulatory Reform Act a commitment to look at this issue was made. On the issue of contract terms, I am happy to repeat the precise commitment that I made to the House then to discuss this important and complex matter further. To that end I intend to meet my noble friend Lord Clement-Jones and the Creators’ Rights Alliance.
The noble Lords, Lord Borrie and Lord Howarth, and the noble Earl, Lord Erroll, raised the matter of intellectual property and competition and asked whether the period of intellectual property protection was right and why there are differences between intellectual property rights. If the period of intellectual property rights is set correctly, the protection afforded can reward innovation and creativity properly without being anti-competitive. The Government believe that the various periods referred to for different rights are, on balance, the right ones. They reward creativity and innovation while encouraging the sharing of information. This allows others to innovate further, but in a fair and balanced way. This issue mirrors some of the points that the noble Lord, Lord Howarth, made.
The noble Lord also raised the question of whether the Government were focused too much on intellectual property rights and whether they should turn their attention to skills, research and business support. That is a fair point. However, this Bill is only one part of the Government’s agenda. I agree that it is just as important to focus on research, skills and other business support. It is a point well made.
My noble friend Lord Clement-Jones also asked about extending the public lending right to remote e-loans. It is a matter—I was in the Chamber myself—that was raised in an Oral Question in the House earlier today. I can reassure him that the Department for Culture, Media and Sport is giving careful consideration to the extension of the public lending right to onsite loans of audio books and e-books. This is following William Sieghart’s review of e-lending in public libraries. The department is considering, for example, the implications for public lending right funding in the context of the number of remote loans of e-books. The department is also awaiting the results of research led by the Society of Chief Librarians. As a result, and as my noble friend will be aware, no decisions have yet been made. I therefore hope that he will agree that it seems too soon to legislate on the matter now.
I would like to raise a point concerning the speech of the noble Lord, Lord Howarth, who raised a number of interesting and important points in relation to the Bill. As always he gave an engaging speech and I thank him. I agree with him that there is an important balance to be struck between the rightful benefits to owners of intellectual property and the impact on others in the economy and in society. I look forward to having further discussions with him on this matter.
In speaking to Clause 19, my noble friend Lady Brinton, supported by the noble Baroness, Lady Warwick, and the noble Lord, Lord Stevenson, raised the issue of a newly qualified exemption for pre-publication research in the Freedom of Information Act. I thank noble Lords for their clear and cogent examination and explanation of the purpose and benefits of Clause 19. The Government have always said that they would look carefully at the evidence. We recognise the strength of the case identified by the Justice Select Committee and have included this provision in the Bill as a result. We hope that it will provide reassurance and clarity, and to those working in the publicly funded research sector in particular.
Noble Lords may have raised some further points which I have been unable to address and of course I will write to them on those. We will have the Committee stage in a few weeks’ time, when, after a well deserved break for your Lordships over the Whitsun Recess, we can return refreshed to discuss the more detailed points. I look forward to that process. As your Lordships know, my door is always open, as is that of my officials, to listen and to provide as much information as possible. With that, I commend the Bill to the House.
Local Audit and Accountability Bill [HL]
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, the local Audit and Accountability Bill is another important step in our plans to strengthen local democracy and transparency. It is the final step in a programme of reforms to local audit that will secure millions in savings, protect important local freedoms and further increase the localism agenda in three specific ways.
First, it will allow local bodies to take control of their own audit arrangements, and replace the Audit Commission with a new framework for local audit that is robust and retains a focus on value for money. Secondly, it safeguards the contribution that our independent local press makes to local democracy. Thirdly, it protects the taxpayer against excessive increases set by the levying bodies.
I should like to focus on each of these in turn but, before doing so, let me rehearse the context of the Bill. The Government are doing everything we can to bring down our inherited deficit, achieve sensible savings for the taxpayer and give local people greater say in decision-making. As part of this, the coalition agreement pledged to reduce the cost and number of quangos. It also pledged to end the era of top-down government by giving new powers to local councils, communities, neighbourhoods and individuals. We have already ended assessment and inspection of local authorities—that is, comprehensive area assessments and local area agreements—freeing local authorities from centrally imposed targets and £25 million in annual compliance costs. Currently, the Audit Commission appoints auditors for nearly 11,000 local public bodies, which are responsible for some £200 billion of public expenditure. It is however no longer fit for purpose, its remit and functions having expanded significantly beyond their original intention. It has become unnecessarily centralist and bureaucratic.
Local independent audit is essential to ensure that those who handle public money spend it in the public interest, but there is no reason why local authorities should not be able to appoint their own auditors—something the private sector, charities, foundation trusts and academies do as a matter of course. We have been open about our plans to abolish the Audit Commission and replace it with a local regime. The Government consulted extensively on the proposals, including publishing a draft Bill for pre-legislative scrutiny. Over the past two years, we have stopped the Audit Commission exercising many of its functions, privatised its in-house audit practice—resulting in a 40% reduction in audit fees for local bodies—scaled back its other activities and cut overhead costs. The Bill is the final piece in the jigsaw and it will now abolish the Audit Commission completely. It will bring down the curtain on the centralised arrangements for the audit of local bodies and replace them with a new framework.
Local bodies will be firmly in the driving seat. Under the Bill’s provisions, they will appoint auditors of their own from an open and competitive market. They will have to publish information about the appointment of an auditor within 28 days of that appointment being made. To safeguard the integrity of this process, they will need to consult and take into account the advice of an independent auditor panel. We know, because we have been told so, that local government has concerns about these auditor panels but the Bill provides a flexible approach. These local bodies will be able to use an existing committee, if it meets the independence requirements, establish a small new panel or combine with other public bodies to appoint auditors collectively.
After listening to views, we will be retaining a limited audit regime for smaller authorities: that is, those with a turnover below £6.5 million. Local bodies with an annual turnover below £25,000 will be exempted from automatic external audit altogether, although a mechanism will be retained for auditor-led scrutiny if problems are perceived to have arisen. New transparency requirements for smaller authorities will enable electors to access the information about accounts and governance that they need to hold the authority to account.
I have heard the arguments that this Bill will affect the independence and quality of the audit process, so it is important to underline that we are strenuously safeguarding the integrity of the local audit system. The scope of that system will broadly remain the same: auditors will look not just at the accuracy of the financial statements but at value for money. Auditors will continue to be required to comply with a code of audit practice and have regard to accompanying guidance, which will be set by the independent and impartial National Audit Office. Parliament will retain its oversight role by approving this code.
The National Audit Office will also slightly increase the number of value-for-money studies it carries out to enable it to undertake examinations that take account of local delivery. This will enable a wider view to be taken on the use of public money. There will continue to be a statutory duty on auditors to make public interest reports, and they will be able to recover their costs from the audited body for undertaking an investigation. There will also be a new requirement on local bodies to publish any public interest reports and their response.
The Financial Reporting Council will oversee the monitoring of the quality of audits, as it already does for the private sector. This will align the regulatory system for local public audit more closely with the private sector and remove unnecessary duplication. Recognised supervisory bodies—professional accountancy bodies—will register audit firms and assess those individuals responsible for signing audit reports. We are working very closely with these professional organisations to develop the detailed arrangements and ensure a smooth transition to the new regulatory framework.
Meanwhile, the Bill also protects the rights of local taxpayers to inspect a local authority’s accounts and to raise concerns with the auditor, who may report on these matters if necessary. Whistleblowers will also be protected by amending the relevant whistleblowing legislation so that they can raise matters of concern confidentially with the auditor or the Comptroller and Auditor-General, without prejudicing their employment. The Government also recognise the value of the national fraud initiative. The Bill transfers the Audit Commission’s data-matching powers to the Secretary of State, the Minister for the Cabinet Office or another authorised Minister, so that the work to prevent and detect fraud at local level can continue.
The local audit system we are proposing to put in place will maintain, we believe, a high quality of audit. It will also be markedly improved in terms of efficiency and cost effectiveness. Overall, these reforms will deliver estimated savings of £1.2 billion over 10 years, which is rather more than originally anticipated. Authorities will not just have greater control over how much they pay for the services; they will have greater incentives to keep their costs down, since they will no longer have to fund the Audit Commission’s overheads and other activities.
I know that consultation respondents and Select Committees have raised a question about the current lack of competition in the audit market. However, the outsourcing of the Audit Commission’s in-house audit practice has already increased the number of suppliers in the market from five to seven, with at least a dozen firms passing the pre-qualification questionnaire. We expect a greater number of smaller contracts to be available once local bodies start to appoint their own auditors. This will open up much more opportunity for smaller firms.
The other provisions covered in the Bill include those relating to local authority publicity. We have made it clear all the way through that we expect local authorities to conform to the publicity code. Many are not doing that at the moment; councils such as Tower Hamlets and Greenwich are not. We are therefore taking powers in this Bill to make that code something that local authorities will have to apply.
The final matter here is the question of levying bodies. We have been conscious that levying bodies are not part of the council tax system or the referendums, while they can have an enormous effect on council tax bills. In some areas, levies account for over half of the local council tax requirements. In Liverpool they account for 56%—a very high percentage, which is not given any democratic oversight. Percentage increases in levies year-on-year have consistently outstripped the increase in council tax as a whole. In 2011-12, levies in England increased by 4.1% at a time when Band D bills were frozen, and this year authorities in Greater Manchester have increased their bills by more than the 2% referendum threshold set. Without the Bill, any tax increases by levying bodies effectively mean that large elements of council tax demands remain beyond direct democratic control. Local taxpayers must have the right to approve or veto all council tax increases above the approved amount, without having to worry that some elements of that increase are beyond their control.
The provisions contained in this Bill will strengthen localism and democracy. They will put local bodies in charge of their own audit arrangements, help save council tax payers money and ensure that elected representatives can continue to be held to account. I commend this Bill to the House.
Lord McKenzie of Luton
My Lords, I thank the noble Baroness, Lady Hanham, for introducing the Bill and for yesterday’s briefing. As we have heard, the Bill introduces a new audit regime for local authorities and health bodies, although the Government have not been able to resist tagging on two largely unrelated matters: amendments to the council tax referendum rules and draconian powers concerning observance of the code on local authority publicity. My noble friend Lord Beecham will deal with each of these in detail in Committee, but I shall make a few comments before moving on to the meat of the audit proposals.
Clause 39 revisits the council tax referendum provisions, which we discussed a couple of years ago in what was then the Localism Bill. The effect of this clause is to include in the definition of a relevant amount of council tax certain levies and these have hitherto, as we have heard, been excluded in the calculation, such that any increase in council tax resulting from an increase in the levy would not of itself cause a determination that any level of council tax would be excessive or trigger the requirement for a referendum. In future, levies will be included so that a disproportionate levy increase could trigger a referendum requirement by the local authority or, more likely, the local authority will seek to absorb a sufficient part of that increase within its budget to avoid a referendum, a potentially awful dilemma given the precarious state of the finances of most local authorities.
The legislation allows calculations of future limits to reflect circumstances where local authorities would have breached the council tax threshold in the current year if the new rules had applied to it. This has the whiff of retrospection and perhaps the Minister would say in what circumstances the Government would use Clause 39 to penalise local authorities which had complied in every way with the rules as they stood when their council tax levels were set. Can the Minister say how many and which authorities would be caught by this retrospection?
We have particular concerns with this provision where local authorities have entered into arrangements predicated on a certain increasing levy stream. It is understood that the city deal with Leeds, for example, has been promised an investment fund partly financed by an increased levy from the integrated transport authority. In these circumstances, where arrangements have been put in hand for vital infrastructure based on the existing law and with the specific agreement of the Government, there is a strong case for some transitional protection. We will press this case in Committee.
We support the code of recommended practice on local authority publicity as being broadly sensible but the Government have yet to produce any evidence about widespread breaches of the code to justify giving the Secretary of State such widespread powers as are contained in Clause 38. Once again, the declared localist is determined to micromanage from the centre but I will leave our detailed critique to the tender mercies of my noble friend Lord Beecham.
It looks as though it has taken three years for the Secretary of State to get round finally to abolishing the Audit Commission. We are not campaigning for its retention but we need to be reassured that new arrangements maintain auditor independence, encourage probity and make appropriate provision for whistleblowers. We also need to examine the gaps which potentially arise from the demise of the commission, which means that no single body will have overall responsibility for supervising and co-ordinating local public audit. We also need clarity on the costs as well as the benefits that might accrue from this. This will be a major part of our task in Committee.
One of the hopes for the Bill is that by transferring the commissioning of local audits to local public bodies and by the provision of audit to be transferred to private sector audit firms, there will be a strengthening and growth of an open and competitive audit market. We think the jury is very much out on whether this will be the case with the risk that, over time, the big four will come to dominate the market, certainly among larger authorities, as they do in the private sector. They earn some 99% of audit fees paid by FTSE 100 companies at present. It is understood that there were only some 13 audit firms—I think the noble Baroness mentioned 12—which pre-qualified when the Audit Commission was going through the process of outsourcing 70% of its audit practice. That is an advance on four but still only a fraction of the audit firms in the market. For the year ended 31 March 2013, of the nearly 800 local authorities, health bodies, fire and rescue authorities and so on audited by private sector firms, only seven different firms were appointed, as we have heard, but more than 90% of these bodies were audited by just five different firms—the big four plus Grant Thornton.
CIPFA has expressed concerns in particular about the need to recognise the wider scope of public audit which is conducted in the public interest. Its briefing says:
“This wider scope goes further than private sector audit in requiring regularity, propriety, probity and value for money to be considered”—
rather than solely—
“providing an audit opinion on financial statements”.
It also states that these additional responsibilities should be reflected in a number of areas including the arrangements for the appropriate training and supervision of registered local auditors where the Bill is currently silent.
We agree with this approach. There is a need also to ensure that the Financial Reporting Council is up to speed on the wider scope of public sector audit, a point raised by the pre-legislative scrutiny committee, and that the arrangements for assuring the quality of audits—major and others—are sound. Whether all of this leads to lower audit fees remains to be seen. What seems clear is that foregoing the prospect of a single buyer means that the huge savings which the commission was able to generate—a quarter of a billion pounds over five years—will not be available in the future. The savings will endure for a few more years because I believe that the contracts run to 2017, although they can be extended to 2020. But if there is market concentration over time, this will eventually lead to higher, not lower, fees, although joint procurement and framework agreements will be one route to counteract this.
We want to see a timely process whereby Parliament can assess what is happening to the cost of audits, particularly for smaller authorities, and in Committee we will test the practicalities of retention of some central procurement capability. It would seem that the Government are warming to the NALC/SLCC's proposal for bulk procurement for its sector and look forward to the Minister’s comments on that. We will also wish to be reassured on the rules that will govern auditors selling other services to their audit clients and what safeguards should be in place to prevent conflicts of interest.
As a means of safeguarding auditor independence the Bill requires relevant authorities to have an independent panel to provide advice on the appointment of auditors. Other than for health bodies, the panels must have a majority of independent members and an independent chair. As the Minister indicated, she is aware of concerns which have been expressed about the capacity of all authorities to set up such a panel, although the prospect of sharing is permitted. The possibility of having overlap and confusion between an independent panel and an audit committee has also been raised. Can the Minister say how that will be handled where the two exist side by side, if they do?
Conclusions have not yet been reached over the final destination of the National Fraud Initiative, although it is understood from our discussions with the Minister yesterday that this is under active consideration. Are these deliberations likely to be concluded by the time we reach Committee stage?
Schedule 9 to the Bill covers data matching and includes provision for the possible extension of the purposes for which data matching might be deployed. Can the Minister say whether there are specific plans and a timescale for this extension to be undertaken? The Audit Commission suggests that a further purpose might be added covering the prevention and detection of maladministration and error, which might assist in identifying overseas patients who are not entitled to free NHS treatment. Would the Government support that?
We welcome the requirement placed on the NAO to consult with representatives of relevant authorities in the planning of its examinations into the economy, efficiency and effectiveness of how such authorities use their resources. It is important that the NAO is properly resourced to carry out its expanded role and we would not wish to see some formal limit placed on the number of studies it can undertake. At present, of course, the Audit Commission acts as an intermediary between government departments, the NAO and auditors. How does the Minister see alternative arrangements developing in the future?
There is much else to pursue in Committee. Audit may be a bit of a dry subject that does not arouse the passions of many of our colleagues but it is a vital part of our democracy that underpins accountability. Done properly, it is an independent assurance of how public resources have been spent and how services are being delivered on our behalf. Maintenance of its integrity is fundamental. We will approach this Bill constructively to this end.
Lord Tope
My Lords, as always, I must begin by declaring my interest as a London borough councillor and, again as always, I thank the Minister for the careful and considerate way in which she explained the main provisions of the Bill. I am also pleased that my noble friend Lord Shipley will again be working with me on the Bill, bringing with him his many years of experience, some of them as leader of Newcastle City Council. In particular, I welcome the return to local government business of my noble friend Lord Palmer of Childs Hill, who I think has been insulted by the suggestion that audit is anything approaching dull. My noble friend is one of the relatively few chartered accountants I know of who actually understands public sector accountancy and, indeed, has much experience as chair of a local authority audit committee—a post to which, I believe, he was unanimously re-elected only yesterday evening.
The Audit Commission has been a very long time going. Few of us regret its demise and I am pleased to hear that the noble Lord, Lord McKenzie, is not campaigning for its resurrection. Much of what it did, particularly in its early days, was good and helpful but, as the Minister said, its mission grew and grew. Few of us in local government will regret the passing of the assessment and inspection regime. By the end, it was expensive and, frankly, oppressive and rewarded most those who knew best how to play the game.
As the Minister will know but perhaps many others here do not, the Congress of the Council of Europe is carrying out one of its local democracy audits this year to assess how well the UK conforms to its Charter of Local Self-Government. I am pleased to say that the ending of this regime is judged to allow the UK to meet the requirements of Article 8.2 of the charter for the first time since the UK signed it in 1997. That is an important step forward that I did not wish to pas unnoticed in your Lordships’ House.
We must, however, be careful that we do not throw the baby out with the bath water, and that we keep the best and get rid of the rest. In particular, we must address concerns of CIPFA, the Chartered Institute of Public Finance and Accountancy. It feels that the Bill presents an opportunity to embed the wider scope of public audit. Given that this point was well made by CIPFA and others in the consultation, will the Minister explain why the Government have clearly decided not to do so?
I also share the concern of CIPFA, the LGA and others about the proposed arrangements for audit, the relationship with a council’s audit committee, many of which are chaired by a member of the opposition, and the appointment of auditors. My noble friend Lord Palmer will no doubt speak more about this with considerable personal knowledge and we shall certainly need to examine it in detail in Grand Committee. Let me say at this stage that I really do wonder why the Government believe it is either necessary or desirable, or indeed possible, to have independent auditor panels. In my long experience of local government, I have yet to meet anyone who has been clamouring to be a member of an independent auditor panel. That is not usually the way in which public engagement is sought by the public.
There is also much to be said for national procurement of auditors, and I am pleased that the Minister has made clear that local authorities will certainly be able to procure collectively. The LGA is arguing that national procurement should at least be an option. That is one of the measures that will no doubt be examined in Committee.
The proposed role of the National Audit Office will also be explored in more detail and I hope that it will prove useful. Certainly the requirement to consult with relevant parties on any studies is very welcome, but there is concern about mission creep, based at least in part on experience with the Audit Commission, to which the Minister has already referred, which started well but grew and grew. We will not wish that to happen to the National Audit Office. With these proposals it should not happen, and I am sure that we will explore ways to prevent even the possibility. For instance, the LGA is suggesting a statutory limit for the number of studies each year. Given the financial regime in which we are working, I am sure that that will be desirable. Perhaps the Minister will say a little more in her summing up about the role of the National Audit Office, which essentially reports to Parliament, as distinct from local government, and how the parliamentary exercise will be carried out.
Without doubt, the most controversial part of this Bill is Clause 38, giving statutory backing to the existing publicity code. As the noble Lord, Lord McKenzie said, most if not all in local government support the publicity code as a voluntary code. However, there is widespread concern and perhaps some misunderstanding about why it is intended to back the code with statutory provisions. As usual, we ask the Government for objective evidence that the problem is so widespread and so serious that this action, which is hardly consistent with localism, is necessary and why existing powers are insufficient to deal with the very few well publicised cases of abuse, such as in Tower Hamlets or, arguably, Lambeth. I am looking forward to the no doubt robust defence by the noble Lord, Lord Beecham, of the activities in those boroughs and perhaps one or two other authorities—certainly not the majority. All we have had from the Government is rather silly and misleading statements from the Secretary of State about “town hall Pravdas”. That might in itself be a breach of the publicity code.
The overwhelming majority of local authority magazines or newspapers fall well within the scope of the publicity code and are not in the least controversial. In my experience, in every survey of public opinion that I have known, the public say they want more information, not less, and all of us would say that they have a right to that information. Local authority publications that comply with the publicity code are one way, and arguably still the best way, to provide it for the great majority of the public who do not regularly search their council’s website, or who have neither the ability nor the wish to do so at all.
It has been argued that local authority newspapers or magazines are a threat to local newspapers, but there is no evidence to support that. A quarterly magazine with little or no advertising is hardly a threat to a weekly newspaper. Indeed, the opposite is often the case and there are far more places where the practical partnership between the local council and the independent local press brings mutual benefit to each than places where anyone thinks there is a problem.
Many regret that the Bill does not remove the requirement to publish statutory notices in the local press. The LGA states that this requirement alone costs local authorities £26 million a year, yet no one would seriously argue that it is either the best or most cost-effective way of communicating information to the public, or even to those with a particular professional interest in the subject matter. I understand that the Government are carrying out a review of this requirement, coincidental to but separate from the Bill. Will the Minister tell us more about this review and whether its conclusions will be reached in time for them to be included before the Bill is enacted, possibly early next year? I am sure that we will spend much time on this part of the Bill, which has caused great alarm, yet I am sure that the Minister will be able to reassure us today that its proposals will make no difference at all to what the great majority of local authorities do now.
Finally, we come to the issue of extending council tax referendums to include levies and precepts from other bodies. As I have said many times in your Lordships’ House, I am strongly opposed to council tax referendums, which are really just the latest manifestation of capping by central government. It has always seemed to be a fundamental democratic principle that the role of a local elected councillor is to balance the needs of the local community with the cost to that community of meeting those needs—and to be properly and effectively accountable to the local community for the decisions taken in doing so. Council tax capping by whatever name or disguise runs contrary to that democratic principle.
It follows therefore that I would be much happier if the Bill abolished council tax referendums altogether, rather than extending their scope; but given that this is not going to happen, I can certainly understand the logic of this proposal and we will examine its effects in greater detail in Committee. The noble Lord, Lord McKenzie, has already asked about the retrospective nature of this provision. By the time the Bill is enacted, we will be almost completely through the current financial year and attention will be entirely focused on the coming financial year, 2014-15. I hope that when the Minister replies, she will be able to reassure us and say something helpful about the retrospective nature of this, and whether we will be seriously looking in the early part of the next financial year at decisions legitimately taken about the current financial year.
I understand that we are currently offered the prospect of 24 hours in Grand Committee to better understand the Bill and its implications. I am sure this will prepare us well to make it an even better Bill on Report. I look forward to working again with the usual team on all sides of the House to do just that.
The Earl of Lytton
My Lords, I start, as others have done, by declaring interests. I am the president of the National Association of Local Councils, which I will refer to as NALC, and I recently accepted an invitation to become one of the Local Government Association’s many vice-presidents, so I shall be in good company declaring that interest along with many of your Lordships. One of my children is employed by one of the big four accountancy and audit practices. It is only fair to point that out, but I am not a finance person and I look at the reality that sits behind this Bill in terms of everyday life.
NALC can be extremely pleased with the ongoing dialogue it has had with the department. I particularly thank the Minister for the helpful opportunities for discussion that this has generated. I hope that there may be the possibility, between this stage and the next, for some of the staff from NALC to come and meet her and her officials to bottom out some of the detail on this, which I think would be quite important. I shall concentrate fundamentally on the application to parish and town councils. Like many modern Bills, the principles are set out in the primary legislation, but we are left to deal with regulation at a later stage. However, we need to be particularly vigilant about what we lay the foundations for at this juncture.
There is a lot to welcome in this Bill. On audit, as has already been said, I accept that it is an absolutely basic tool for holding to account those who control and handle significant sums of taxpayers’ money, or, in the private sector, shareholders’ assets. The core ingredients, however, are that it should be purposeful, cost-efficient and proportionate. It does not make sense to remove centralist mechanisms by creating some dispersed arrangement that is complex or uncertain, fails to provide real transparency or is excessively costly. Like the noble Lord, Lord McKenzie, I fear that long-term there will be higher costs.
NALC has made it clear that it looks for six key factors on audit. The first is a proportionate and cost-effective but limited assurance audit regime for parish and town councils, with particular exemptions for very low-spending parish and town councils. Secondly, it feels that the national procurement of external audit—already mentioned—may well be the most efficient way of procuring audit on the most cost-effective basis. I think NALC is at one with the LGA on this. It then wants the establishment of a self-financing, sector-led body to undertake this audit procurement, particularly for smaller local public bodies, including parish and town councils.
NALC feels that it is vital that there is a right for electors to inspect the accounts of parish and town councils, but that any new transparency arrangements need to be proportionate. They need to be practical and cost-effective and there needs to be a financial safeguard for parish and town councils in the event of auditor-led scrutiny; in other words, to guard against parish funds being hijacked by those with some deconstructive agenda, of which the Minister will be well aware. While reading the Bill and the various bits of paperwork we received, I wondered how one would have an audit panel with a majority of independent members on it. In my limited knowledge of local government geometry, I wondered how that would work. I suppose it would have to come from these Benches.
Moving swiftly to the code of publicity, I understand that this is the “accountability” that sits behind the title of the Bill. I understand that the Government have consulted, but they are asking the House to agree these proposals without our knowing the outcome of that consultation. I should like to know what the outcome is and the Government’s response. I hope this was not an instance of setting out to canvass opinions when the decision was already made. Perhaps the Minister would clarify that at some juncture.
The proposals stand in considerable contrast to the direction of travel of the audit. It appears to be a transfer to the Secretary of State of significant additional statutory powers. I am bound to say that it walks and looks like a Henry VIII clause. It is a puzzle to me, because I am not aware—I echo other noble Lords—of any instance in which the Secretary of State has actually intervened under the current code of recommended practice. I have to ask where the objective need is for the statute?
I noticed the comment by the noble Lord, Lord Tope, about the issue of the regional press. I recall that my late father once christened a West Country local newspaper the “Trumpet of Truth”—not its real name —on account of its serial and culpable inaccuracies, bias and other mischief. I leave that particular point parked, but there is no particular evidence that parish and town councils compete unfairly with local newspapers and there is no reason why the code should be put into primary legislation. The existing code provides for action to be taken if there is evidence. Again, there have been no breaches of which I am aware. Giving more powers to the Secretary of State looks anti-localist, and we need to ask whether it is necessary for parliamentary time to be taken up by this and whether there is a problem in the first place.
This may be a lawyer’s matter—forgive me if I tread on others’ toes—but the code as it stands seems to be couched in nebulous terms. I wonder whether it is the right sort of document to form the basis of a statutory code? My final point concerns parish polls. In this respect, the Bill needs some strengthening. The Localism Act, as originally drafted, included provisions that were subsequently removed with other clauses on referendums. That leaves us with Schedule 12 to the Local Government Act 1972, which sets out the circumstances in which a poll at a parish meeting may be demanded. The trigger is unbelievably low: fewer than 10 electors or one-third of the local government electors present, whichever is the lower. This is far too lax. It is an open door for the vexatious use of parish polls on matters that may not even directly affect—or affect at all—the local area. The responsibilities of the parish and town councils are what should be in focus. If they are not, it is a waste of taxpayers’ money. I am concerned about a comment made by the Audit Commission that it could be a matter of an auditor deeming that the money so expended had not been correctly incurred. That is not very good if the thing happens after the accounting period is finished and you are in a parish council meeting and have to make a decision. The guidance needs to be a lot clearer so that everybody knows where they are up front.
I look forward to the further deliberations on the Bill. I sometimes wonder whether the philosophy and direction of travel of the Bill, and of localism more generally, is entirely coherent. On the Growth and Infrastructure Bill, the Government argued that businesses need certainty. I buy that to a considerable degree but so do municipalities and parishes. Uncertainty adds cost and risk, and in this case increases public expenditure. We need to do everything that we can to avoid falling into that trap. I wish this Bill in all other respects a good passage, and I am sure that we will have plenty of interesting times trying to knock it into slighter better shape that it is now.
Baroness Eaton
My Lords, I declare an interest as a vice-president of the Local Government Association, of which I am a former chairman. I also declare my interest as an elected member for Bingley Rural since 1986 on Bradford Metropolitan Council, where I had the privilege of being the leader between 2000 and 2006. I thank my noble friend the Minister for the clarity of her explanations and her willingness to have briefing meetings. I regret that I was unable to attend yesterday.
We are very well aware of the significant implications of the Bill for local government. As someone who has worked in local government for many years, I warmly welcome the Government’s commitment to cutting back on external inspection. Any measures that reduce interference with, and the burdens on, local government have to be welcomed. It is therefore regrettable that many of the proposed measures in the Bill centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at a local level. The provisions to extend the referendum powers introduced in the Localism Act strike me as being anti-localist in nature and difficult to implement in practice.
On a point of principle, local elections exist so that people can pass judgment on the performance of their councils and the amount of council tax they charge. The United Kingdom is a representative democracy. We do not hold referendums every time the national government raise taxes, quite often by more than 2%, so why should we impose referendums on councils for managing their own finances? Elsewhere, the Bill reads as if it is possible for the Secretary of State to impose a different referendum limit on local authorities where their council tax increase for 2013-14 would have been excessive under the new definition, but not under the current definition. That is not fair to those who obeyed the rules, only to find out that the goal posts might be moved. It is like revising the speed limit downwards and then fining any motorist who has not obeyed the new limit before it was introduced.
From my experience as the LGA chairman, local government in England is subject to a variety of different levying arrangements in different areas, covering issues such as transport and drainage. As the proposals are currently drafted, there is the risk of serious perverse outcomes. For example, a drainage board in an area of high flood risk might be denied the funding it needs to improve flood defences without subjecting the local authority to one or more council tax referendums. Not only is this an additional cost to the local authority, it inhibits the delivery of government policy on flood defences. Likewise, growth measures, such as the building of new transport infrastructure, might be caught by this provision. Will the Minister please look further at these concerns? If there are particular issues that the Government have with individual levying authorities it makes more sense to sort these out individually rather than modifying the entire structure of local government finance.
A further measure in the Bill that is causing concern for councils has already been mentioned by my noble friend Lord Tope. I refer to the proposal for a statutory code of practice on local authority publicity. This clause is unnecessary as there is no evidence that council publications are competing unfairly with local newspapers and, by the Government’s own admission, very few councils are breaking the existing recommendations. The Bill, as currently drafted, will introduce some very wide-ranging powers that will allow central government to direct a local authority regardless of whether it is complying with the code. That strikes me as a charter for central government to interfere, meddle with and second-guess councils.
It is also worth noting that the majority of councils produce newsletters because they are the most cost-effective way of reaching 90% or more of the local population. In my authority, which has well over 500,000 people, the publication does not look like a newspaper, has no political content whatever and is used regularly to inform people of changes in refuse collection, summer play schemes, and many things that they may well not have the benefit of enjoying but for the knowledge that they gain from the publication. By way of comparison with the council newsletters, 1% of local newspapers reach 90% or more people.
Before Parliament legislates to change the status of the code, I feel that the Government should set out the evidence for their decision. Will my noble friend the Minister therefore consider commissioning an independent review to establish what, if any, impact council publications have on local newspapers?
As I said at the opening of my speech, the Government's commitment to cutting back on the red tape of central inspection has been most welcome. This Bill makes provision for the appointment of local audit, the duties on auditors and local authorities and the role of the National Audit Office. Procuring local audit is a costly exercise for councils. In Clause 9, the Bill requires councils to have an independent audit panel that will advise the councils on their appointments. Others have mentioned, and certainly early indications show, that councils will have considerable practical difficulties finding enough suitably knowledgeable independent local people willing to serve in this capacity. I was pleased that the Minister did say that there is going to be some flexibility. Even so, I think that this area needs a great deal of thorough consideration during the Committee stage if this whole process is not to be incredibly burdensome.
It is also worth noting that national procurement of external audit is the most efficient way of procuring audit, at the best possible cost to local councils. This was demonstrated by the recent tendering exercise carried out by the Audit Commission. That exercise delivered savings to councils of £250 million. As a result, I would like the Government to ensure that sufficient flexibility is retained in the Bill to allow national procurement to continue as a way of helping councils secure savings for the future. As the Local Government Association has said, amending the Bill to allow for national procurement does not imply ministerial agreement to the approach. It simply demonstrates a willingness to keep the option available for the future.
I should like to finish by talking about the role of the National Audit Office. Having been critical of some of the provisions in this legislation, I am delighted to see that the Government have listened to advice from local government on the need for the National Audit Office to consult relevant parties when developing value for money studies. It is crucial that the National Audit Office works with councils on its programmes of studies, as this is the best way to achieve the most efficient system.
I do, however, share the view held by the LGA that there should be a limitation on the number of studies the National Audit Office is able to conduct each year. I am concerned that there is potential for mission creep given the absence of any constraints or limits regarding the total number of studies per year. This burden is precisely the sort of the thing the Government have rightly tried to prevent under the new audit regime and it would be a shame for the National Audit Office to become the “Audit Commission lite”.
The reduction in central inspection and changes to the audit regime are largely welcome. But I do hope that the Minister takes my constructive criticism of the council tax referendum and publicity code provisions in the spirit in which they are meant. I would welcome a Government response to my fears of the unintended consequences of the council tax clauses. I would also like the Minister to explain why the provisions for the publicity code create such wide-ranging powers for central government when there are hardly any councils breaking the spirit of existing guidance.
I feel that it is the role of this Chamber to offer an honest assessment of the measures put before us and arguably our most crucial role is helping to improve legislation in a spirit of consensual debate. I am sure that, across the House, we can improve this Bill in the way we need to.
Lord Christopher
My Lords, I first declare a specific interest. For six years I was one of the commissioners of the Audit Commission. I found that a very rewarding and learning experience. We are approaching this whole matter with some risk. It is worth recording that the commission was set up by Lady Thatcher, who only a few weeks ago was said farewell to and regarded by very many as the finest Prime Minister that Britain has had since Winston Churchill. I am not going to argue about that, but that was the feeling. The Bill that proposed setting up the Audit Commission was put through Parliament by the now noble Lord, Lord Heseltine, a man held in high regard and called back to serve only recently to advise the Government on how to advance business. He made a report on this not that long ago.
The second controller of the Audit Commission was Sir Howard Davies, who only last week was called in by the Government to produce a report on what should happen to London airways. The Audit Commission did not involve people of minor importance or minor ability. We are now seeking to get rid of it. It is worth quoting something that the noble Lord, Lord Heseltine, said at the time, which was that he saw this,
“in the mainstream of the Government’s economic policy.”
I thought efficiency and cost-effectiveness were in the mainstream of the present Government’s policy, but I do not believe that is going to be the effect of this Bill.
The chairman of the commission under whom I served was Sir David Cooksey, one of Britain’s most successful and efficient businessmen. However some people may have seen the commission, it was certainly not what I have heard described. It was a catholic bank of people drawn from a number of walks of life—local government, central government and the opposition. Over that period, I very rarely, if ever, sensed that one’s political views mattered in the context of the issue on the table. The objective was invariably: there is a problem, what is the best solution? Now we are looking at a proposal that will effectively move it to the status of a profession. With respect to the noble Earl, Lord Lytton, whose views I find most interesting and helpful, even the president of the organisation that runs accountancy indicated that it was in dire need of some reform. He expressed the reasons why.
I wonder why this is being done. I have been what I would call an outside insider in local government for a number of years. I have never had a phone call, a letter or a representation from a member of a local council—county or district—to say, “Please get the Audit Commission off my back”. As for citizens, I have never heard anyone complain to me, “I feel deprived and lonely because I do not have close access to the auditors”. What people are complaining most about in this context are potholes and planning applications. They are little concerned about structures, as is demonstrated by the poor turnout at elections for local authorities.
The coalition is demolishing a very successful professional asset of this country. It has been a source for the map which local government was holding to operate with true cost-effectiveness, and it has worked extraordinarily well. The idea suggested here, and by the Secretary of State from time to time, is that it has outgrown itself. It could easily have been restricted economically had that road been chosen.
Most people sense that this is a bone-dry issue, but it was not and is not. Perhaps I may cheer up your Lordships with a couple of cases that I saw dealt with—rare perhaps, but underneath will still lie the deep anxieties of auditors. One is from Labour and one is from the Conservatives, so I am not being selective. The Labour example was the somewhat left-wing authority of Hammersmith and Fulham which, towards the end of the 1980s, had what one might describe as an interest rate swaps crisis. It had massive exposure to interest rate swaps, all on one side of the market, relying on high interest rates when they were falling. The borrowing was £308 million, and it was distributed worldwide at the time. Who assisted in clearing it up? The Audit Commission. How, under the Bill, could such a case be dealt with?
The Conservative example, which most people will remember, is the Dame Shirley Porter scandal. She was the chairman of Westminster Council. At the time, in 1987, it owned 23,000 council homes; 10,000 people were on the housing list; and 9,800 homes were designated as being for sale. The proposal was to ship out of Westminster enough people to allow it to select the people who would replace them in their council houses. I pay tribute to John Magill, the accountant, who kept his nerve throughout that extremely difficult case, which went on for several years. I can see the box files of evidence now; they were yards long. The commission stood its ground; the accountant stood his ground. I am sorry that the noble Lord, Lord Pannick, has left the Chamber. It was towards the end of the operation when, wondering whether we were right, the council decided to get independent advice on our judgment to appeal at the end of the day. In his absence, I thank the noble Lord, Lord Pannick, for giving us the advice needed to allow us to keep our nerve. The sum involved was £12 million. It would have been a very serious problem for any local auditor to deal with and hold their ground with that potential bill facing them.
Parliament is proceeding with the Bill on very limited knowledge. The Minister has already told me in answer to a Written Question, and I am sure she will repeat it, that Parliament knew exactly what our intentions were and what we were about. What I contest is that Parliament has been given information of a nature that would materially assist it in arriving at a sensible conclusion. There has been a pre-emption of Parliament here in a way that may just get through on the basis that it has been told what we are about, but it has certainly missed out on vital information. This would be a rather interesting case for the Public Accounts Committee to look at in the context of the House of Lords Constitution Committee’s report on this matter, published recently. At the heart of that is that a Bill should receive, if one wants to pre-empt it, a demonstrably successful Second Reading in the House of Commons. We have a Second Reading here, with hardly a massive audience, on the eve of a bank holiday. I wonder whether that was a sensible arrangement.
What is important is the detail underneath the words used. I would like to have a look at some of that. I am conscious of the clock but it is important that this comes out. The impact assessment is quite a thick document. You need to be a nerd, and certainly very knowledgeable, to work your way through it, and at the end of it you do not always understand it. As I say, the net benefit over 10 years of this operation will be £1.28 billion. It is refined a bit: £731 million over five years, 2012-17. I imagine that the dates will need to be revised. Annually, that is about £182 million. It is not at all clear to me how these figures were calculated. The Government have very much based the figures on the outsourcing—perhaps not quite the word—of audit.
The Audit Commission—reduced, incidentally, from nearly 1,000 to 70 staff—has made a calculation comparing local choice with the current procurement process. Its view is that the arrangements we have now would, in fact, save the public purse just over £200 million over a five-year period. The alternative is very much higher costs of audit. This paper has not been published. It would be interesting if the noble Baroness could put a copy in the Library.
In 2011, her department appointed FTI Consulting Ltd to,
“provide expert research and advice on the transfer to the private sector of the Audit Commission’s in-house audit practice”.
I quote from the report:
“Conventional economic theory states, that, all other things equal, competition leads to lower prices”.
This is the argument.
“Under a single buyer, however, there are lower prices than under a competitive market”.
I do not think that Parliament has been told that that is the advice the Government had.
I move now to the issue of value for money. It is not clear to me whether any value for money studies are actually in the paper. I have to say that they have been rather derided by some of the statements made by the Government. I will give the House some examples of these value for money studies. I cannot find the damned things, but there are five studies that have been carried out over the past few years that show very clearly that, given the amount of money that is available, if local authorities follow through on the recommendations they can save considerable sums of money. The studies show that the potential savings are over £1 billion. I know that the Government say it is the intention that these should be carried out, but fewer in number and by someone else. I question whether there is any possibility whatever of savings of that magnitude being produced by someone else in any reasonable time period. In my judgment, that simply is not possible.
Where does this all this leave me? It was clear from day one, when this issue was first in Appendix 7 to a Bill whose name I forget, but it was the first Bill to lay waste to the quangos, that whoever was responsible for it did not comprehend at all that they needed primary legislation to get rid of the Audit Commission. That is why we have waited for so long—it must be a year, I suppose—for this Bill to come forward. It is clear to me even now that the real value of the Audit Commission is either not appreciated by the Government or not acknowledged for reasons that I do not understand. I cannot see how their figures can possibly balance over a reasonable span of time.
In my view, notwithstanding what my noble friend Lord McKenzie said, this is a bad, unnecessary and reckless Bill. Indeed, I believe that the whole operation is a folly that the country will regret.
Lord Palmer of Childs Hill
My Lords, following on from that resounding vote of confidence, I need to declare an interest, although I think that my interest has already been declared for me by my noble friend Lord Tope, my friend of 27 years and currently on Barnet Council. I am probably the only Member of your Lordships’ House who still chairs an audit committee of a London borough. As my noble friend said, I was rather stupidly elected last night and, as noble Lords possibly know, the protocol in most boroughs and local authorities is that it is an opposition councillor who fulfils that post. That is what we did when we were in power, and I am glad to see that this is what has happened in the borough of Barnet when the Conservatives are in power.
I understand the desire to put the publicity code on a statutory basis, to prevent councils wasting public money on council-produced newspapers and magazines, often containing political propaganda, even at the level of, “Aren't we doing well?”—and very often it is purely at that sort of level. Putting it on a statutory basis, as framed, is unnecessary and heavy-handed. Local authorities need to communicate and local newspapers are useful, but are not as effective as they were. In my locality I find that I no longer know who the editor is, or even if there is one. I do not recognise the names of the local journalists, who are reduced in number, mainly office-based and changing with great rapidity. The journal, be it local authority or commercial, is in the end only as good as the guy delivering it—or not delivering it, as the case may be. London boroughs support commercial newspapers; I think that my noble friend Lord Tope referred to a figure of £26 million nationally. Some £4 million per annum in London is spent on advertising.
I believe that this aspect of the Bill is aimed at that small minority of councils that misuse public money for overtly political purposes. I hope that the Minister will confirm that during the passage of the Bill we can come up with a less heavy-handed way of dealing with this. My noble friends Lord Tope and Lady Eaton both referred to this. The Minister said this Government are against top-down government, but what is this if not top-down government?
I now turn to the abolition of the much-reduced-in-size Audit Commission, and the setting up of a system of locally appointed external auditors. A main concern of the Bill is the preserving of auditor independence. Currently, it is the Audit Commission that appoints external auditors and that is seen as preserving auditor independence. It prevents cherry-picking of audit opinions and helps the interaction with the local authority start on a level playing field. There might also be a concern from auditors, who quite naturally might believe that issuing unfavourable audit opinions may adversely impact on their ability to obtain contracts in the future, as the very people that they might criticise in their audit opinions will have a say in their future appointments.
The Bill attempts to cover this through an independent panel to appoint auditors, but, again, these panellists—as has been mentioned by other noble Lords—will need to be skilful individuals who understand what is important in terms of external auditor characteristics and can assess value for money. Moreover, these panels will be joint panels, appointing to a number of local authorities, and will—with difficulty—need to ensure that conflicts of interests are resolved. The conflict I envision is between internal audit and external audit. In the London Borough of Barnet, one major accounting firm has been appointed by the Audit Commission to carry out the audit while locally, the internal audit team is enhanced by a contract with a separate team from a major accounting firm. Therefore, if this goes out to an independent panel, one can see pretty clearly that there could be conflicts where an internal auditor might have to resign in order to be the external auditor. It is incredibly complex.
The Bill concentrates on the appointment of external auditors, but the reality—and I am speaking as the current chair of an audit committee—is that external audit at a reasonable cost is only as good as the internal audit team of that local authority. In carrying out the external audit, the auditor will first look at the internal audit process and determine what reliance could be placed on it. I cannot see any comment on this in the Bill.
Then there is the process and transparency of the authority’s audit committee. In Barnet, we have a committee of Labour councillors, Conservative councillors, two independents who are not councillors and me, a Liberal Democrat opposition councillor, as chairman. We involve the public, many of whom are investigative bloggers, who have a space in the agenda to ask questions and supplementary questions, which I must admit officers sometimes find extremely uncomfortable. At the last meeting, there were 15 questions plus supplementary questions which I, as chairman, had to answer, even though I am not a member of the administration. The audit committee sessions are often recorded on video by these members of the public and appear on their blog sites, Facebook and the like. I must tell your Lordships that I find this a great benefit because it is actually challenging and brings transparency, however much at times it might seem uncomfortable.
A considerable amount of audit of process is done by the internal team which, if necessary, buys in extra accountancy capacity. Any service area of the council that is seen to have produced less than a satisfactory grading is then required to send its service area director and/or assistant director to come and explain how they intend to tackle the problem. It is not a blame culture: if the report at the next meeting is still unsatisfactory, they have to come back to be grilled again by the audit committee, which is all-party and no-party. I am pleased to say that it is rarely necessary for a director or assistant director to come back. We give them time between the meetings, and, invariably, the satisfactory grading is achieved by that method.
The noble Lord, Lord Christopher, said that this was not to do with potholes, which concern most people. This shows he does not know what happens on an audit committee. If there was a problem with potholes, it would at least be brought up by members of the public, if nobody else. It would be addressed by the audit committee. The director and assistant director of that service area would be called to that committee to explain and, by the next meeting, one would have to have some resolution of that problem. That is what the audit committee of a local authority does.
The noble Lord, Lord Christopher, also mentioned the millions of pounds lost through incorrect investment. We have experience of that in the London Borough of Barnet. A former Conservative administration borrowed money at a good rate of interest; the noble Lord mentioned the same thing. It invested £27.4 million in Icelandic banks. That was not a good decision. What happened? How was this dealt with? Not by the Audit Commission. It was dealt with by a combination of local authorities led by Kent County Council, which combined to deal with the Icelandic Government and banks. Most of that money, amazingly, is coming back—they are actually very lucky. It was nothing to do with the Audit Commission. It was, and can be, done locally. The noble Lord, Lord Christopher, also mentioned value for money as a criterion. That criterion will be dealt with by the National Audit Office under the new regulations.
The theory for the changes in where the audit committee procures audit services to the Companies Act model is that they will increase competition, reduce fees and increase quality. My question is whether it will. I am not convinced. The noble Lord, Lord McKenzie, spoke about the transfer of audits from the Audit Commission to other firms of accountants. Is it not amazing that the Audit Commission, which used to do a lot of the audits itself, has over the past few years transferred 70% of audits to audit firms? The noble Lord, Lord McKenzie, raises the point that few of those firms have had that. He also mentioned that the firm in addition to the four main firms was Grant Thornton, which is still very large. Is it not amazing that, to my knowledge, Grant Thornton got the maximum number of audits permitted of those direct audits lost by the Audit Commission? It took on a lot.
I welcome the expansion to other firms. As a practising chartered accountant, a local councillor and someone dealing with people in business, I can say that a large organisation such as a local authority has to be extremely courageous, as Sir Humphrey would probably have said, to go anywhere other than the larger firms. Although it might seem a good deal—maybe it is more cost-effective and you will get a good deal—if something goes wrong, you will be criticised very fiercely for not having gone to KPMG or PricewaterhouseCoopers. Many local authorities will naturally take the safe course of going to one of the larger firms. We must consider during the passage of the Bill how we can make it easier for that to happen.
I was somewhat appalled when my noble friend Lord Tope said that we have another 24 hours of this Bill; I am only relieved that it is not all in one sitting. I look forward to the Bill being amended and improved during that process.
Lord Christopher
I advise the noble Lord, Lord Palmer, and the House that 70% of audits being outsourced —if that is the word—has been the case for a long time; it is not a sudden decision. Secondly, I apologise for possibly misleading the House: the £1 billion saving I mentioned in relation to the value-for-money studies was actually £2 billion, and the £1 billion has been raised under the fraud initiative.
Lord True
My Lords, I, too, declare an interest as leader of a London borough council and a member of the Leaders’ Committee of London Councils. I thank my noble friend for the way in which she introduced this legislation, and apologise to her for not being able to attend her briefing yesterday as I was present at a committee of your Lordships’ House at the same time.
I hope I do not surprise my noble friend too much by saying that this Bill is welcome in many ways. I join other noble Lords in saluting the abolition of the giant bureaucratic industry of performance assessment and so on that grew up under the Audit Commission after 1997. I do not for a moment take away from what the noble Lord, Lord Christopher, whose work I respect immensely, has said. He is right to point to the many good things that were done by the Audit Commission in the past, but that regime became overblown and it is an enormous relief to local authorities that the Government have acted to restrain it. Therefore, I very much welcome that part of the Bill.
On the other hand, as others have said, there are in the Bill some new fiddlesome interventions from the centre. I also note, with others, that the powers given by Clause 34 to the National Audit Office, if understandable in principle, have alarmed some local authority organisations. They fear that the clause leaves on the statute book mechanisms by which a central body could begin to recreate the performance assessment industry.
Having read the Bill, it seems to me that subsections (5), (6) and (9) of Clause 34 offer safeguards against that happening. No doubt, we will explore that in Committee. I also have some reservations about the absolute abolition of the provision to allow for national procurement of potential auditors. We have just heard a very powerful speech on matters of audit, and I will not follow that specific line. However, some arrangements in the Bill look very cumbersome, and I agree with the comments that have been made about how the independent panels will work. As we have just heard, there are merits in many of the existing Audit Commission arrangements. Perhaps it would have been better to enable various local regimes with due safeguards, but to leave the power to conduct national procurement in place.
On local audit and accountability, this Bill goes wider than just local authorities, as it refers to other local bodies, including some NHS bodies but not others. I shall spend a little time on that. The Bill misses an opportunity for local authorities to play a more constructive role in securing effective audit and accountability of public bodies operating in their local authority area. I will dwell specifically on the local accountability of the NHS for its use of resources. This omission from the Bill—the NHS weaves in and out of it at different stages—is a little disappointing, at a time when the Government are rightly promoting health and social services integration, a process in which my own authority has been actively engaged for some time. The Government have also acted—again, it is greatly welcomed by many authorities—to give local councils a greater role in health. I do not believe that as local authorities, health trusts and commissioning groups grow together, audit arrangements can stay apart and be handled through separate strands of legislation. There is a growing perception that parts of the NHS regard themselves as beyond reach in questions of local accountability.
I cite the example of Croydon Primary Care Trust, where, in 2011, a new management team uncovered serious financial problems. An investigation by Ernst & Young followed, which confirmed a discrepancy in the accounts of some £28 million, roughly equivalent to the cost of a new secondary school or more than a fifth of my local authority’s annual discretionary budget. Even then, when faced with such findings, the NHS represented Ernst & Young’s report in its own way to gloss over some of the realities of what had occurred. Had that taken place in a local authority, I would have been forced to consider my position. Instead, the board member within the trust who first raised concerns was eased out as a disruptive influence, and a massive black hole in the accounts was apparently covered by the stroke of a pen and the insertion of balancing items by what proved to be an unqualified person. In the private sector this would have counted as false accounting, and would have had the direst consequences for those involved. In a local authority it would unquestionably have cost the jobs, not only of the person involved but of top management, who had failed to exercise due supervisory control and had put an unqualified person in such a position.
Yet what happened in this local NHS body in response to the auditor’s report? No one initially lost their post, except the man who had wanted something done about the matter. The people involved were quietly transferred to other jobs elsewhere in the NHS. Other health trusts were told they would have to fill the gap in finance by transfers of money held centrally on their behalf, to the detriment of health resources in properly managed and more efficient areas. The six local authorities that were affected, including my own, which have the duty to safeguard the interests of local people, were understandably scandalised by such procedures.
To ensure effective audit and a proper response to the comments of the auditor Ernst & Young, we set up a joint scrutiny committee to look into what had happened, suggest appropriate remedies to improve local public accountability and get a proper response to audit from this local public body. Again, what happened? There was a wall of silence and a climate of non-co-operation and cover-up. Most of the key witnesses who were invited to assist the scrutiny committee simply declined to appear. Calls came from the centre, asking the authorities involved not to rock the boat. I have to say that I was myself approached at one point by a senior NHS manager, who urged me to let the matter drop.
A devastating report finally emerged from this joint scrutiny committee, exposing in detail what had happened and taking up the original auditor’s report. It set out a range of concrete recommendations for action to prevent any recurrence, to safeguard use of public money and ensure proper public scrutiny of audit reports on local bodies within the NHS. Inevitably, lawyers acting on behalf of some of those who had previously declined to co-operate glided into the offices of those who had tried to get to the bottom of their actions to gag, or seek to gag, aspects of the report, frankly.
If the local audit and accountability of NHS and other local bodies that affect local communities is to have any meaning, there must be a place for public scrutiny. Local authorities have an obvious role in this. I shall return to this matter in Committee, and I will have to consider whether, under protection, I need to detail a little more of what I consider to be the shocking background to this case and the careless attitude to the use of NHS resources that was involved.
I hope that my noble friend may be prepared to consider amendments to strengthen the audit and the scrutiny of the response to audit role beyond the measures already in the Bill. I believe there is a role for local authorities in this. At the very least, we should find ways to ensure adoption of the joint scrutiny committee’s recommendations in order to protect local people and local authorities from what is frankly the incompetence and derogation from any sense of public responsibility that was displayed by some people in this case. NHS bodies are key local bodies, and we have the opportunity to use this Bill to strengthen their accountability to local people.
I will be brief on other matters. On publicity, I am a slight dissenter. I share the views of others that the system we have now operates relatively well, and no doubt we will review the evidence base for the proposals. However, when I took office in 2010, I abolished my own authority’s glossy newspaper. I would do the same again, as it did not in my view add much to the sum of human knowledge, so fast is the world of communications evolving. However, local authorities must communicate with local people and, increasingly, hear back from them. Increasingly, this will be done by online and web-based methods. Despite the limits on penetration, online communication is growing fast. It is a necessary instrument of dynamic, localist initiatives in which often differentiated approaches and priorities are enabled within local authority areas. Already in our own localism initiatives, for example, we so far have six separate web-based newsletters that allow two-way communication between the public and the local authority. This is a vital emerging instrument for effective and responsive governance. I will want to be assured that regulations under the Bill will not affect such communication, as it enables localist public involvement in decision-making and in no way competes with local newspapers.
Finally, on council tax referendums, here, too, I am a slight dissenter. The day after 100,000 people voted no to Heathrow expansion by a margin of three to one in a local referendum conducted by my authority and the borough of Hillingdon, you probably would not expect me to stand up to oppose the concept of local referendums—indeed, I was rather disappointed that some of the referendum proposals were dropped from the Localism Bill, as my noble friend knows. I am not all out against council tax referendums, although I perhaps rather impishly hope that my noble friend may suggest to her colleagues that they consider legislating to give central government the same duty to have regard to the results of local referendums as it imposes on us to have regard to its dictates.
I shall not today follow others—we have heard some very significant contributions—into the complex field of how to increase democratic control on precepting or levying authorities and what the Government now propose in Clause 39. However, the matter is definitely complex—I use the word advisedly—and will need close examination in Committee if local authorities that seek to behave properly are not to be penalised for the profligate actions of levying or precepting bodies, because that is effectively what often happens now. If in a referendum an overall quantum is rejected, a levying body can simply say, “Go away. We have the power to impose the levy”, and the council must not then be left having to reduce its services because of the profligacy of others.
With these riders, I add my voice to those who have welcomed the basic core of the Bill. I support the abolition of the Audit Commission and the bureaucracy that went with it, hearing the reservations that have been expressed by some, and thank my noble friend for bringing the Bill forward.
Lord Shipley
My Lords, I declare my interest as a vice-president of the Local Government Association. I have found this a very helpful debate. It has identified all the key issues that we need to examine in Committee and I look forward to doing that.
I agree with the main thrust of the Bill in terms of audit. It was right to abolish the Audit Commission and the complex inspection regime that it had created. Probity and soundness in council finances can be assured without the overly centralised machinery of the Audit Commission, which acted as regulator, commissioner and provider of services as well as the setter of its own fees. Councils should be accountable to their electors rather than to the centrally imposed target culture which the Audit Commission introduced and which took so much officer and member time to deal with. However, in abolishing the Audit Commission, we have to ensure that the public interest in what councils do is safeguarded. With a few amendments, this Bill can do that.
When I was a board member of One North East, the regional development agency, and a member of its audit committee, I found it hard to understand why the RDA was audited by the National Audit Office whereas my council was audited by the Audit Commission. I never felt that two national auditing organisations were needed. I felt that savings could be made and the public interest secured more cheaply. It is no surprise to me that there have been large savings of 40% in recent audit procurement exercises—savings that councils can redirect into services.
So I welcome the new role of the National Audit Office. It will prepare the code of audit practice and undertake some thematic studies to be driven primarily by value for money and I welcome that. It must beware of mission creep, trying to do too much and spreading itself too thinly. It must also beware of simply identifying problems rather than solutions. The Audit Commission was excellent at financial audit and sometimes good in value-for-money studies, although too rigid in its tick-box inspection regime, but it was much poorer, at least in my experience, in devising solutions. Time and again we would be criticised for a problem that we already knew about and understood—an example is health inequalities—but it was rare to get a clear statement on actions needed or budgets required to deliver solutions. I hope that the National Audit Office does not fall into the same trap of thinking it has been useful when really it has not. But I doubt it will, because the change to the NAO undertaking thematic studies is the right approach.
Might I offer to the Minister some ideas as to what the NAO might look at in its early days? It could examine the benefits or otherwise of unitary councils or perhaps the potential for increasing local procurement. Here we have a proposal for audit to be procured more locally, but actually there is potential for greater local procurement and improving the relationship of local suppliers with their local council. Might it also look at the impact of the living wage in those places and on those councils where it has been adopted with an assessment of its potential for wider application?
Like other noble Lords, I understand the concerns about the local public audit section of the Bill for the Chartered Institute of Public Finance and Accountancy. I am surprised that these have been made both at the public consultation stage and in evidence to the Pre-legislative Scrutiny Committee but none of it has been acted on. I am keen to hear from the Minister why that is. Maybe we should be looking at this specific issue very carefully, as other noble Lords have said, in Committee.
Public auditing needs to be conducted in the public interest. Put another way, private sector auditing primarily concerns providing an audit opinion on financial statements. Public sector auditing requires something more in terms of propriety, probity and value for money. I have come to the conclusion, particularly from listening to this debate, that we have to be very clear on this matter during the passage of the Bill.
A separate issue has arisen in the course of the debate, which was raised by CIPFA, and that is the auditor panels. I agree that where audit committees already exist, it might be sensible to build on those rather than establishing separate auditor panels. I hope that we can look very carefully in Committee at audit committees, where they exist, and auditor panels. But above all, we have to maintain two things. First, we must maintain the independence of the audit structures away from any suggestion of party political influence or control. That takes us to the issue of independence. Audit committees and auditor panels have to have a majority of independent people externally appointed through robust mechanisms to make sure that the right people, who will be working in the public interest, are appointed to those posts.
The second need is to ensure real competition in the provision of audit services. Again there has been discussion in the House about that and about how it can be done. I am encouraged to hear that many more than the big four audit companies will be involved in auditing local councils. Competition keeps costs down. I hope that we will see regular changes in auditors by a specific authority, too, to ensure that things never get too cosy. We must have a discussion on local as opposed to national procurement and I hope that we will do that effectively in Committee.
Can I mention briefly the publicity code, referred to in Clause 38? It is not a problem for me that there is to be a statutory code. Here I support the Government. The reason is simple. The Government do not publish newspapers, and nor should local councils. It is one thing for councils to publish information; it is absolutely right that they should, be it on the web, or be it a quarterly or bi-monthly publication. I have no difficulty with that. I do have a difficulty with weekly newspapers, which run the risk of being seen as propaganda. If we want a free press it has to be free of any suggestion of party-political influence. I see a weekly newspaper as a step too far. It is likely, inevitably, to verge on the propagandist.
There is an important issue around the notices, however. Requiring councils to advertise them in local newspapers can be expensive, at around £40 million a year. I am not sure that that is as cost-effective as it might be and conceivably it is outside the requirements for the National Audit Office to deliver value for money. Councils should be free to devise their own solutions to this. There are many ways in which it could be done, not just on the web but in regular reports to ward committees, and so on. There are things that can be done to reach a wider audience.
Finally, on referendums, my position differs from that of the Government. I have never liked the power given to the Secretary of State to cap council tax rises and order a referendum over an arbitrary figure selected in Whitehall. There are four reasons.
First, it is against the principles of localism. Secondly, accountability is better done through the election of councillors at local elections. Thirdly, the Government do not hold referendums when they increase taxation. When VAT was increased two or three years ago there was no national referendum on it. It is unclear to me why it should be thought that referendums are right when local councils increase council tax. Fourthly, council tax levels can differ widely, something we do not talk enough about. Levels in neighbouring councils, whether you compare at band D or compare the average amount paid in a council area, can vary by several hundred pounds. If one council decides to raise a bit more money to protect essential services, such as libraries, swimming pools or local facilities, or to provide a decent standard of adult social care, why should it have to hold a referendum to do so?
The Bill could make things worse. I am not clear why Clause 39 is needed at all. I have major problems over the issue of levies. What is being proposed as regards levies counting as part of the Secretary of State’s decision about the maximum council tax rise is not acceptable. I believe that it will have to be amended in Committee. It certainly cannot be retrospective but, more than that, even if a referendum decides that an increase should not be permitted for a levying body, a local council would be left picking up the bill for it. In doing so the council would therefore have to cut services. I do not think that this is acceptable. I am starting to wonder whether Clause 39 is needed at all in the Bill and hope that we will explore that too in Committee.
Lord Beecham
My Lords, I declare an interest, as so many others have, as a vice-president of the LGA. I am also a member of Newcastle City Council and a member of its audit committee, which incidentally is independently chaired.
As my noble friend Lord McKenzie reminded us, it is nearly three years since the Government announced their intention to abolish the Audit Commission. Characteristically, in yet another demonstration of their contempt for the parliamentary process, they have effectively achieved their objective by virtue of pre-legislative implementation of a policy that they have not deigned to submit to parliamentary scrutiny. Parliament was not invited to the bedside of this apparently terminally ill patient. We have merely been called upon to act as pall-bearers at its internment.
I had my differences with the commission during the 25 years for which I served as vice-chairman and chairman, successively, of the Association of Metropolitan Authorities and the Local Government Association, not least over its propensity to reach for a headline when publishing its reports. Yet it played an important part in highlighting issues of efficiency, effectiveness and good governance, which made a significant contribution to making local government the most efficient part of the public sector. I recall that in his second incarnation as Secretary of State for the Environment, the noble Lord, Lord Heseltine, who is not in his place today, invited me to become a member of the commission. I declined because I thought that there might be a conflict with my role of chair of the AMA, although the offer was useful in rebutting claims from Conservative councillors in Newcastle that I was the leader of a profligate council. I note in parentheses that we have not had a Conservative council in Newcastle for the past 17 years.
Latterly, the commission had responsibility for health as well as local government, which was precisely what was needed given the overlap of responsibilities now recognised with the return to local government of the responsibility for public health removed in Sir Keith Joseph’s 1973 reorganisation of the NHS, and the provisions of the health and social care Bill now being launched in your Lordships’ House. So why has this legacy of the Thatcher era—one of its more benign bequests, as we were reminded by my noble friend Lord Christopher—been abandoned? The answer seems to be embodied largely in the person of the Secretary of State.
Your Lordships will perhaps be familiar with the distressing condition known as obsessive compulsive disorder. Mr Pickles seems to be afflicted with a kindred but more destructive condition: obsessive compulsion disorder. In addition to a long-standing obsession with the commission, which appears to date back to his brief period as leader of Bradford City Council—I pay tribute at least to one of his successors, the noble Baroness, Lady Eaton, for her contribution to this debate—the Bill reflects two other symptoms. They are the power to direct councils to comply with directions in the code of practice on local authority publicity, which, I remind your Lordships, is already restricted to four publications a year, and changes to the council tax referendum process, on which the Secretary of State is so keen, to include levy-making bodies—but in this case with the added ingredient of retrospection.
The position is well explained, appropriately, in the Explanatory Notes to the Bill. These provisions are contained in Clause 39, in subsections (14) to (16). The explanation given is that they,
“allow the Secretary of State to determine a category of authority on the basis of whether its relevant basic amount of council tax for … 2013-14 would have been excessive if the relevant basic amount in that year and 2012-13 had been calculated in accordance with the newly-amended legislation. In short, this explicitly allows the Secretary of State to consider the impact of previous levy increases when setting”,
referendum thresholds for 2014-15. I have drawn the attention of the noble Baroness, Lady Jay, as chair of the Constitution Committee, to this flagrant departure from normal and good practice. The effect of the provision could of course include councils, and therefore council tax payers, in the considerable expense of holding a referendum not on their own budget but on that of another body, over which they have no direct control. It could also lead to some authorities covered by a single levy-making body being required to hold a referendum and some not, depending on how close their council tax rate was to the threshold as determined.
The idiosyncratic nature of the Secretary of State was well illustrated earlier this year when he denounced councils for setting council tax just under the referendum threshold, as if they were somehow cheating the system. He seemed to threaten to lower the threshold accordingly next year. So go over the threshold this year and you will have a referendum; go just under it and you will have one next year. Will the Minister say whether there is any truth in the rumour that the next threshold will be a 0% increase?
Most of your Lordships, although not the noble Lord, Lord Shipley, regard the proposal about publicity in Clause 38 as equally objectionable. The original restrictions were partly based on the specious grounds that council newspapers or publications were somehow putting the local press out of business. That ignores the reality that all the print media are suffering from a combination of factors, including the growth of online media, free newspapers, which are often published by the local press, social media and local radio, and, of course, a decline in advertising, in part as a result of the recession. As has previously been mentioned in the debate, coverage of local government affairs has declined hugely in the past 20 years and the number of journalists has been cut. The noble Lord, Lord Palmer, certainly recognised that point.
As we have heard, the local press benefits hugely from council advertising to the extent of some £26 million a year, even without one of the unlamented features of the Audit Commission. That was a requirement proposed, I am sorry to say, by the previous Government, to publish annually some 200 performance indicators in a paid-for newspaper. That is not something that in my experience led to a significant increase in sales on the day of publication.
I suppose it is possible for some publications to stray into the political arena, but there are mechanisms to challenge such inappropriate behaviour without the Secretary of State setting himself up as a censor. By the way, when will the Government stop civil servants acting as spokesmen and using the personal pronoun, as many of them do, when defending government policies? It is not the job of civil servants to speak in that way about government policy.
Incidentally, I am challenged by the noble Lord, Lord Tope, to refer to Lambeth and Tower Hamlets. Tower Hamlets is not a Labour authority; it has the dubious benefit, as a result of one of the Government’s proposals, of having an elected mayor, who is not a Labour elected mayor.
Mr Pickles often talks of his early flirtation with communism. It appears he has not quite shed his belief in democratic centralism, the hallmark of the Lenin and Stalin regimes. I suppose we should be grateful that he has not required councils to act on his other obsessions, such as weekly bin collections, sacking chief executives, banning biscuits from council meetings or whatever else would appeal to such organisations as the TaxPayers’ Alliance or UKIP, or to the right-wing press.
As a final reference to the cavalier approach so often adopted by the Government as a whole and in particular by the Secretary of State, I remind the House that neither of these two measures, on referendums and publications, were included in the draft Bill which was considered by the ad hoc draft Bill committee in the House of Commons. Once again, extraneous and controversial measures have been spatchcocked into a Bill at short notice. The Government’s contempt for due process could not be clearer. My noble friend Lord Christopher was entirely right to draw attention to that.
Turning to the more prosaic and technical parts of the Bill, so lucidly analysed by my noble friend Lord McKenzie and other noble Lords, I regret the diminished capacity for value-for-money studies and the quality and improvement agendas which the Audit Commission was so effective in promoting. The National Audit Office will conduct only six value-for-money studies a year. Significantly, we learnt from a meeting that the noble Baroness kindly organised yesterday, that those studies will essentially be directed at the impact of central government spending, and will not, therefore, be likely to deal with such issues as the noble Lord, Lord Shipley, raised about the possible advantages of unitary government or the living wage. Those are not directly related to central government spending.
On the other hand, the commission conducted 16 such studies across the whole field. The potential of Total Place or, as it is now known, Community Budgets, will not be exploited fully on that partial basis. These are areas in which a cost-cutting approach to assessment ought to be made, involving both central and local government, and that is unlikely to take place under the auspices of the National Audit Office, if it is to carry out its responsibilities in the way that we learnt yesterday. That is particularly regrettable in the health and social care fields, which, after all, we in your Lordships’ House have begun debating and in which the need for closer working relationships is emphatically emphasised.
Health will now potentially have a separate field of auditors, although the same firm might end up auditing the clinical commissioning group and the local council, presumably with different staff. There is a notion, ventilated in the ad hoc sub-committee’s deliberations, that the Local Government Association will be able, in some respects, to replace the commission’s work and to sustain its improvement programme. I am afraid that is illusory. The Local Government Association has been the target of another of the Secretary of State’s obsessions. He has cut its funding, topsliced from the revenue support grant, from £41.3 million a year to £25.5 million, or by 38%. That has significant implications for its staffing and capacity to represent the sector and enhance its effectiveness. Interestingly, £25 million is the sum that local government is paying into the coffers of the local press for the statutory advertisements to which other noble Lords have referred.
As my noble friend Lord McKenzie has pointed out, the privatisation of district audit and the new tendering system leaves a handful of large accountancy firms, many of which have other services to sell to the councils that they are auditing, to have an effective oligopoly of the audit role, at least in the larger councils. The noble Lord, Lord Shipley, exaggerates the benefits of the change. There are not a large number of firms. Seven are accredited nationally, two of which are arms of just one organisation. Therefore, there are effectively six firms, one with a couple of branches. That does not offer a vast choice. There will be a requirement to retender every five years but your Lordships might think that it would be better if the requirement were to be a change of auditors every five years to ensure that there is a turn-around and that the relationship does not get too close. That is a matter that we can perhaps pursue in Committee.
This is in many respects a bad and unworthy Bill. I hope that all who proclaim themselves localists, who wish to promote informed debate and decision-making at a local and national level, and who are concerned at the manner and form in which this legislation comes to us, will combine to improve it. The Minister has a long and distinguished record in local government. She is looking somewhat sceptical. I have no intention of doing anything but praising her at this stage because she is a localist and has a relationship with local government that I can only wish other of her ministerial colleagues would share. We will work with her and I hope that across the House we will be able to improve the Bill—it certainly needs improvement.
Before I resume my place, there is another matter that I understand is also to be raised by the Minister. I wish to pay tribute to the outgoing Yeoman Usher, who performs his last day as an official in this House before his well deserved retirement. For someone who has both a royal function in this House and is responsible for the organisation of security he was, appropriately, a lieutenant-colonel in the Army Royal Logistics Corps.
Perhaps his most celebrated moment in the course of his activities was when, shortly after the last general election, he deputised for Black Rod at the State Opening of Parliament. I understand that he struck the Commons Chamber door in the correct place, which may take some doing, and then successfully ran the gauntlet of the traditional barbed wit of my honourable friend in the Commons, Dennis Skinner, which he deflected with extreme courtesy.
I am personally grateful to the Yeoman Usher for the very helpful induction he gave me, along with noble Lord, Lord Popat, before we were introduced into the House. We clearly owe our promotion to our respective Front Benches to his wise advice. Since joining this House as Yeoman Usher in 2009, he has always performed his role here with great aplomb, efficiency and courtesy. He will be missed by us all, and I am sure noble Lords will join me in wishing him well for the future.
Baroness Hanham
My Lords, I will follow what the noble Lord said about the Yeoman Usher. We do not like losing senior members of staff in this House. We always like them and he has been no exception. We, too, wish him well. I thank the noble Lord for giving the background to his appointment and time here. It saves me from having to do so, but I certainly endorse what he said and wish the Yeoman Usher well as he leaves this House. We will remember him fondly and affectionately for his time here.
The noble Lord, Lord Beecham, is looking slightly sceptical. He is always very kind, although there is usually a sting in the tail. I do not I accuse him of being a scorpion—
Baroness Hanham
That was a lucky hit.
We have had a long debate on three matters within one Bill. That was most unusual. Usually we have many more and we have managed to spend nearly two hours on these three matters. Noble Lords have raised a number of points and clearly we will come back to all of them. I hope that the noble Lords who spoke today will take part in Committee, because sometimes there is a tendency for people to come and deliver their thoughts but not carry them forward in Committee. I hope as many noble Lords as possible will do that.
I have no doubt that the noble Lords, Lord McKenzie and Lord Beecham, will be in their seats in Committee, and we will pick up many of the remarks and comments that have been made about the detail of what happens with the abolition of the Audit Commission. I did not get a sense of any great exasperation—except perhaps from the noble Lord, Lord Christopher—that the Audit Commission was coming to the end of its days. However, I understand that there are questions to be asked about how the process will go forward to ensure that local government has in place a proper system and that the integrity of the process of auditing is maintained.
I have sheaves of answers to questions and I do not want to go through all of them. Because of the time, everybody will want to go. I will deal with just one or two areas. The question was raised about the training and supervision of auditors. The noble Lord, Lord McKenzie, raised this point. Recognised supervisory bodies are being put into place and they will lay down the rules and the training that must be implicit in auditors applying to do work for local authorities. We can discuss this further, but we can be sure that there is an understanding that auditors must first understand local government finance, apart from anything else; that seems pretty basic. They will also have to be independent from the authority. This point was made by the noble Lord, Lord Palmer. There should be absolutely clear independence between the audit committee and the auditors. I think we shall be able to satisfy the noble Lord that this is what will happen.
A number of noble Lords raised the question of whether just four companies would bid for this audit. I said in my opening remarks that we expected considerably more than those four. Thirteen fulfilled the pre-qualification when it was put out. With the expectation that local authorities will seek auditors independently, or perhaps come together in a small cohort, there will be a requirement for more local auditors who are smaller companies. They will have to be properly qualified and be able to do their job, and while the suggestion is that for safety’s sake everybody will go for the big four, I hope and believe that there is an opening for others to take part.
The noble Lord, Lord McKenzie, asked about the difference between the auditor panel and audit committees. The noble Lord, Lord Palmer, was also interested in this aspect. The audit committees were clearly the supervisory committees of the councils’ own accounts and finance; they were in-house. The auditor panel will be there to ensure that auditors are selected and chosen properly against proper backgrounds. They will also be there to ensure that the external auditors carry out their role.
It is important to take a step away and have independent members in the majority. These committees do not have to be big. I should think that most authorities would be able to find two or three people who will fulfil the role of being independent and who have some idea of what it is all about. It is not unusual for local authorities to have to find independent members; they do it for standards boards and other things, and many of them have them on their pension fund committees as well. It is not beyond the wit of local authorities to find suitable people to sit on these committees to ensure the integrity of what is being done.
The internal audit is not in the Bill because it deals only with external audit arrangements. The requirements for local authorities to maintain effective internal audit has been included in the accounts regulations since 1974. A point was made by the noble Lord, Lord Palmer, who is obviously very experienced, and he will recognise that that is the situation. The regulations are made under the Audit Commission Act but we intend that those regulations made under Clause 31 will make similar provision in the future. The requirement for health service bodies to maintain the internal audit is dealt with separately under the National Health Service Acts.
The noble Lord, Lord McKenzie, asked about the national fraud investigation and what will happen when the Audit Commission is abolished. A final decision has not been made on where it will be placed but it is extremely important that it carries on the work that it is doing, so we will consider it very carefully. I am sure that we can discuss that.
The noble Lord, Lord Tope, asked why the opportunity to broaden the scope of the audit was not taken. We understand that the audit of public funds needs a broader scope than the audit of companies. After consultation we decided that the same scope of the audit provides a good balance between maintaining the high quality of audit and audit fees. The noble Lord, Lord Palmer, again with his experience, suggested that auditors will be reluctant to criticise that appointment for fear of not being reappointed. They have statutory duties to consider whether they need to make public interest reports; so they cannot be so biased in favour of the local authority that they do not do that. Local people have a right to appeal and they will have to deal with that as well. I do not think that they will be in a position to be reluctant; it will be part of their duties to ensure that they take those up.
We have dealt with the big four. The noble Lords, Lord Tope and Lord True, and the noble Baroness, Lady Eaton, asked how we would prevent mission creep in the National Audit Office’s role and said that it should not undertake studies that are not required. The National Audit Office already does studies on government spending. We expect it to add no more than about six to that, which will include local government on a wider scale rather than individual local authorities.
I shall turn to the other two areas on which we received some comments. On levying by external authorities, there are examples where those levies are a very substantial part of the council tax bill. Often, very little consideration is given by those bodies to what those levels are. It is important that they are taken account of.
On the question of retrospection and whether anything this year will be taken into account for next year, no decision has been taken at all about referendums yet. The principles for 2014 will be set out by the Secretary of State later on when he has taken into account all relevant factors, including the position of levies, in due course.
The issue of the principles that might trigger council referendums has long since passed; it was dealt with in previous legislation.
The noble Lord, Lord McKenzie, asked about levies and city deals, particularly with Manchester. Again, the Secretary of State can take account of this when he is looking at the principles that might trigger a referendum, but we intend that local people should have a say before any excessive bills are imposed upon them—in other words, with a referendum.
On publicity, there have been a number of triggers. One of them is that there has been pressure on the local press from local authority newspapers; the other is that some of them have been overtly political. There are examples of where local government publications are still within the political area, and also where they are being issued so often that they are becoming a pressure on the local press. We all agree that the local press is a very important part of being able to inform local people of what is going on, and what the councils are doing. It is worth pointing out that taking action about these papers was not only in the coalition agreement but was a pledge in the general manifestos of both the coalition partners. There is a publicity code already, as noble Lords know, and it will just be a question of giving the Secretary of State powers of direction where he thinks there is an overenthusiasm on the part of local authorities undertaking these publications.
The noble Earl, Lord Lytton, described the direction requiring compliance with the code as being nebulous. I am sure that we will have an opportunity to discuss that further in due course.
Finally, the noble Lord, Lord Tope, asked about statutory notices. We are aware of the burden that placing statutory notices in newspapers has on local authorities. The Secretary of State has stated that,
“in the internet age … commercial newspapers should expect that over time there will be less state advertising”.—[Official Report, Commons, Seventh Delegated Legislation Committee, 23/3/11; col. 18.]
That would imply that they can be carried out in other ways.
I know we are going to come back to many of these points. Noble Lords must forgive me if I have not specifically picked up any of the points that they have made. If they think that it would be helpful to have a reply before we go into Committee where I have not answered them I will make sure that happens. Otherwise, I look forward—
Lord True
Before my noble friend sits down, she has not responded—I understand why and I do not complain about it—to the gravamen of my speech, which related to the ability of certain local bodies, in this case, an NHS body, to evade accountability and proper response to a report from an auditor. Will she undertake to hold discussions about that before Committee?
Baroness Hanham
My Lords, I certainly will. I apologise to my noble friend. It would perhaps be better if we discussed that before we take it on. The noble Earl, Lord Lytton, asked me whether we could discuss the audit for small authorities. Of course, I am delighted to do that as well; we will make arrangements for that, once we have all had a good Recess and time to put these things behind us for a day or two.
Baroness Anelay of St Johns
My Lords, in moving the adjournment of the House, I refer to the fact that I was pleased to hear tributes paid by the noble Lord, Lord Beecham, and my noble friend Lady Hanham to the work of Lieutenant Colonel Ted Lloyd-Jukes as our Yeoman Usher in this House.
Baroness Anelay of St Johns
Of course, formal tributes will be paid when we reach the normal stage in December, but it was most appropriate that they should be made at this stage, as we will not see that much more of him here. We will have very good memories of the service that he has given. I know that we all wish him a happy retirement. I know that he will shortly stand ready to bear the Mace out of the Chamber on his last day. I beg to move.